<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1998
REGISTRATION NO. 333-412198
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
<TABLE>
<S> <C> <C>
NEVADA 7011 86-0857506
NEVADA 7011 86-0857505
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
<TABLE>
<S> <C>
BRIAN MCMULLAN
1160 TOWN CENTER DRIVE CHIEF EXECUTIVE OFFICER
SUITE 200 THE RESORT AT SUMMERLIN, INC.
LAS VEGAS, NEVADA 89134 1160 TOWN CENTER DRIVE
(702) 869-7000 SUITE 200
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE LAS VEGAS, NEVADA 89134
NUMBER, (702) 869-7000
INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL (NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE
EXECUTIVE OFFICES NUMBER, INCLUDING AREA CODE, OF REGISTRANTS'
AND PRINCIPAL PLACE OF BUSINESS) AGENT FOR SERVICE)
</TABLE>
------------------------
COPY TO:
VICTOR L. WALLACE II, ESQ.
BAKER & HOSTETLER LLP
303 EAST 17TH AVENUE
SUITE 1100
DENVER, COLORADO 80203
(303) 861-0600
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the registration statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
======================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
Series B 13% Senior
Subordinated PIK Notes due
2007........................ $100,000,000 100% $100,000,000 $30,303.03
TOTAL............... $100,000,000 100% $100,000,000 $30,303.03
======================================================================================================================
</TABLE>
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-4 ITEM HEADING OR LOCATION IN
NUMBER AND CAPTION INFORMATION STATEMENT - PROSPECTUS
------------------ ----------------------------------
<S> <C>
A. Information about the Transaction
1. Forepart of Registration Statement and Outside Front
Cover Page of Information Statement - Prospectus..... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Information Statement - Prospectus................... Inside Front Cover Page of Prospectus;
Available Information; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information.................................... Prospectus Summary; Selected Financial
Information; Risk Factors
4. Terms of the Transaction............................... Prospectus Summary; Comparison of Shareholder
Rights; Description of Captial Stock
5. Pro Forma Financial Information........................ *
6. Material Contracts with Company Being Acquired......... *
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters........ *
8. Interests of Named Experts and Counsel................. *
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities....................... Management
B. Information about the Transaction
10. Information with Respect to S-3 Registrants............ *
11. Incorporation of Certain Information by Reference...... *
12. Information with Respect to S-2 or S-3 Registrants..... *
12. Information with Respect to S-2 or S-3 Registrants..... *
13. Incorporation of Certain Information by Reference...... *
14. Information With Respect to Registrants Other than S-2
or S-3 Registrants................................... Available Information; Prospectus Summary;
Selected Financial Data; Index to Financial
Statements
C. Information About Company Being Acquired
15. Information With Respect to S-3 Companies.............. *
16. Information With Respect to S-2 or S-3 Companies....... *
17. Information With Respect to Companies Other Than S-2 or
S-3 Companies........................................ *
D. Voting and Management Information
18. Information if Proxies, Consents or Authorizations are
to be Solicited...................................... *
19. Information if Proxies, Consents or Authorizations are
not to be Solicited in an Exchange Order............. Outside Front Cover Page of Prospectus;
Prospectus Summary
</TABLE>
- ---------------
* Answer is negative or item is not applicable.
<PAGE> 3
PROSPECTUS
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF
SERIES B 13% SENIOR SUBORDINATED PIK NOTES DUE 2007
REGISTERED UNDER THE SECURITIES ACT FOR EACH $1,000
IN PRINCIPAL AMOUNT OF $100.0 MILLION PRINCIPAL AMOUNT
OUTSTANDING 13% SENIOR SUBORDINATED
PIK NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED.
------------------------
The Resort at Summerlin, Limited Partnership, a Nevada limited partnership
(the "Partnership"), and The Resort at Summerlin, Inc., a Nevada corporation and
the general partner of the Partnership ("RAS" and collectively with the
Partnership, the "Issuers"), hereby offer (the "Exchange Offer"), upon the terms
and conditions set forth in this Prospectus (this "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange
$1,000 principal amount of their Series B 13% Senior Subordinated PIK Notes due
2007 (the "Exchange Notes"), registered under the Securities Act of 1933, as
amended (the "Securities Act") for each $1,000 principal amount of their $100.0
million principal amount outstanding 13.0% Senior Subordinated PIK Notes due
2007 (the "Original Notes" and collectively with the Exchange Notes, the
"Notes"). The form and terms of the Exchange Notes are the same as the form and
terms of the Original Notes, except that the Exchange Notes will bear a Series B
designation, will be registered under the Securities Act, will not bear legends
restricting transfer and will not contain certain provisions relating to an
increase in the interest rate under certain circumstances relating to the timing
of Exchange Offer. The Exchange Notes will evidence the same indebtedness as the
Original Notes and will be issued under and be entitled to the benefits of the
December 31, 1997 Indenture (the "Indenture"), among the Partnership, RAS and
United States Trust Company of New York as trustee (the "Trustee"). For the
definitions of certain terms utilized herein, see "Glossary." See "The Exchange
Offer" and "Description of the Notes."
The Issuers will accept for exchange any and all Original Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time on
, 1998, unless extended by the Issuers in their sole discretion (the
"Expiration Date"). Tenders of the Original Notes may be withdrawn at any time
prior to 5:00 p.m. on the Expiration Date. The Exchange Offer is subject to
certain customary conditions.
(continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD
BE CONSIDERED BY PURCHASERS OF THE EXCHANGE NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NEITHER THE NEVADA GAMING COMMISSION NOR THE NEVADA STATE GAMING CONTROL BOARD
NOR THE COLORADO DIVISION OF GAMING NOR THE COLORADO GAMING COMMISSION HAS
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS
OF THE SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 4
(continued from previous page)
Interest on the Notes will be payable semi-annually on each June 15 and
December 15, commencing June 15, 1998. Interest on the Notes is payable either
in cash or in additional Notes, at the option of the Issuers, through June 15,
1999, and thereafter is payable in cash. The Notes will mature on December 15,
2007. The Notes are redeemable at the option of the Issuers, in whole or in
part, at any time on or after December 15, 2002, at the redemption prices set
forth herein, plus accrued and unpaid interest, if any, to the date of
redemption. The Issuers, at their option, also may redeem in the aggregate up to
$35.0 million, or 35.0% of the original principal amount of the Notes, from time
to time prior to December 31, 2000 at 113.0% of the aggregate principal amount
so redeemed, plus accrued and unpaid interest to the redemption date, with the
cash proceeds received from one or more underwritten primary public offerings
for cash by the Partnership of its limited partnership interests, or options,
warrants or rights with respect to its partnership interests pursuant to an
effective registration statement under the Securities Act ("Public Equity
Offering"), provided that at least $65.0 million of the original principal
amount of the Notes remain outstanding following redemption. See "Description of
the Notes -- Optional Redemption."
If any of the Nevada Gaming Commission (the "Nevada Commission"), the
Nevada State Gaming Control Board (the "Nevada Board"), the City of Las Vegas,
Nevada or any other gaming regulatory body or other agency which has or may at
any time after December 31, 1997 have jurisdiction over the gaming activities of
the Partnership or any of its Affiliates or Subsidiaries (collectively, the
"Nevada Gaming Authorities") requires a registered owner of the Notes (a
"Holder") or beneficial owner of the Notes to be licensed, qualified or found
suitable in order to maintain any gaming license or franchise of the Partnership
and the Holder or beneficial owner fails to apply for such license within 30
days or if the Holder is not so licensed, the Issuers have the option to redeem
the Notes of such Holder or beneficial owner at a redemption price equal to the
lesser of (i) the price at which the Notes were acquired by the Holder; or (ii)
the fair market value of the Notes on such redemption date; or (iii) the
principal amount of such Notes. In the case of redemption for the acquisition
price or fair market value, the redemption payment will not include accrued
interest or any redemption premium unless payment is permitted by the applicable
Nevada Gaming Authority, in which case such interest or premium shall be paid
through the earlier of the date of redemption or the date of any finding of any
unsuitability. See "Regulation and Licensing -- Nevada" and "Description of the
Notes -- Optional Redemption -- Regulatory Redemption."
Upon the occurrence of a Change of Control and upon the repayment of the
Senior Indebtedness or with the consent of the holders of the Senior
Indebtedness, each Holder of the Notes will be entitled to require the Issuers
to offer to repurchase such Holder's Notes at a price equal to 101.0% of the
principal amount plus any accrued and unpaid interest to the repurchase date.
See "Description of the Notes -- Change of Control Offer."
The Notes are not subject to any sinking fund requirement and will be
considered to be issued with original issue discount ("OID") for U.S. federal
income tax purposes. Although cash interest may not be payable on the Notes
prior to June 15, 1999, OID (the difference between the sum of all principal and
interest payable on the Notes and the portion of the issue price of the Units,
as part of which the Original Notes were sold, allocable to the Notes) will
accrue from December 31, 1997 (the "Issue Date") and will be included as
interest income periodically (including periods ending prior to June 15, 1999)
in a U.S. Holder's gross income for U.S. federal income tax purposes in advance
of receipt of the cash payment to which the interest income is attributable. See
"Certain United States Federal Income Tax Consequences."
The Exchange Notes will be general senior unsecured obligations of the
Issuers subordinate in right of payment to all existing and future Senior
Indebtedness of the Issuers, including $100.0 million aggregate principal amount
of First Mortgage Notes which are secured by a perfected first security interest
in all assets of the Resort Casino (the "Mortgage Notes"), and senior in right
of payment to any other subordinated Indebtedness which is expressly subordinate
or junior in right of payment to the Notes or a Subsidiary Guarantee pursuant to
a written agreement (the "Subordinated Obligations"). The Exchange Notes will be
effectively subordinated in right of payment to all secured Indebtedness and
Indebtedness of the Issuers arising pursuant to the December 30, 1997 Credit
Agreement (the "Credit Agreement") among the Issuers
ii
<PAGE> 5
and the National Westminster Bank PLC as administrative agent (the
"Administrative Agent") (collectively the "Senior Indebtedness"). The Indenture
permits the Partnership to incur additional Indebtedness (including secured
Indebtedness and other additional Senior Indebtedness) subject to certain
limitations. Upon completion of the Resort Casino, the Issuers are expected to
have an aggregate amount of $100.0 million of Senior Indebtedness outstanding.
See "Risk Factors -- High Level of Indebtedness and Leverage," "Use of Proceeds"
and "Capitalization."
The Original Notes were sold by the Issuers on the Issue Date to NatWest
Capital Markets Limited (the "Initial Purchaser") in reliance upon an exemption
under the Securities Act as part of series of transactions (the "144A Offering")
consisting of the offer and sale of (i) 100,000 units (the "Units"), each Unit
consisting of $1,000 in principal amount of the Original Notes and a warrant
(each, a "Corporate Warrant") to purchase one share of common stock (the "Common
Stock") of RAS Warrant Co., a Nevada corporation ("Warrant Co."), and (ii)
$100.0 million aggregate principal amount of the Mortgage Notes. The Initial
Purchaser resold the Units to Qualified Institutional Buyers in reliance upon
Rule 144A under the Securities Act ("Rule 144A"). As part of the 144A Offering
and as required by the December 30, 1997 Warrant Agreement (the "Partnership
Warrant Agreement") by and among the Partnership, Warrant Co. and United States
Trust Company of New York as warrant agent, Warrant Co. also received 100,000
warrants (the "Partnership Warrants" and collectively with the Corporate
Warrants, the "Warrants"), each of which grant to Warrant Co. the right to
purchase one limited partnership interest in the Partnership, representing
0.00008% of the total partnership interests in the Partnership. The Exchange
Notes are being offered in exchange for the Original Notes as required by the
December 31, 1997 Exchange and Registration Rights Agreement among the
Partnership, RAS, the limited partners of the Partnership, Warrant Co. and the
Initial Purchaser (the "Registration Rights Agreement"). Neither the
Partnership, RAS nor Warrant Co. has any obligation under the Registration
Rights Agreement or any other agreement to exchange or register the Warrants
under the Securities Act. See "The Exchange Offer."
Based upon no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Partnership
believes Exchange Note Holders (other than certain broker-dealers and Affiliates
of the Issuers) may offer for resale, resell or transfer the Exchange Notes
without compliance with the registration and prospectus delivery requirements of
the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of the Holders' business and the Holders have no arrangement
with any person to participate in the distribution of the Exchange Notes. The
Issuers have not sought a no-action letter with respect to the Exchange Offer,
and there is no assurance that the Commission would make a similar determination
with respect to the Exchange Offer. Tendering Holders wishing to accept the
Exchange Offer must represent to the Issuers that these conditions have been
met. See "The Exchange Offer -- Resale of the Exchange Notes." Each
broker-dealer that receives Exchange Notes for its account pursuant to the
Exchange Offer (a "Participating Broker-Dealer") must acknowledge that it will
deliver a prospectus in connection with any resale of the Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Original Notes where such Original Notes were acquired
by such Participating Broker-Dealer as a result of market-making activities or
other trading activities. The Issuers have agreed that, for a period of 180 days
after the Expiration Date, they will make this Prospectus available to any
Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution."
Original Notes not tendered and accepted in the Exchange Offer will
continue to hold such Original Notes, will be entitled to all the rights and
benefits thereof, and will be subject to the limitations applicable thereto
under the Indenture and with respect to transfer under the Securities Act.
Following consummation of the Exchange Offer, the Issuers will have no further
obligation to the Original Note Holders to provide for the registration under
the Securities Act of the Original Notes. The Issuers will pay all the expenses
incurred by them incident to the Exchange Offer and will not receive any
proceeds from the Exchange Offer. See "The Exchange Offer."
There previously has not been any public market for the Notes. The Issuers
do not intend to list the Exchange Notes on any securities exchange or to seek
approval for quotation through any automated quotation system. There can be no
assurance that an active market for the Exchange Notes will develop. See
iii
<PAGE> 6
"Risk Factors -- Absence of a Public Market." To the extent that Original Notes
are tendered and accepted in the Exchange Offer, any trading market of
untendered and tendered but unaccepted Original Notes could be adversely
affected.
Certain Persons participating in this Exchange Offer may engage in
transactions that stabilize, maintain, or otherwise affect the price of the
Original Notes or the Exchange Notes, including passive market making. For a
description of these activities, see "Plan of Distribution."
AVAILABLE INFORMATION
The Issuers have filed with the Commission a Registration Statement on Form
S-4 together with all amendments, exhibits, and schedules thereto (the
"Registration Statement") pursuant to the Securities Act, and the rules and
regulations promulgated thereunder, for the Exchange Notes being offered hereby.
This Prospectus does not contain all the information contained in the
Registration Statement. For further information concerning the Issuers and the
Exchange Offer, reference is made to the Registration Statement. Statements made
in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the document or matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. The Registration Statement,
including the exhibits thereto, can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of such site is http://www.sec.gov.
As a result of the filing of the Registration Statement with the
Commission, the Company will become subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and will
be required to file periodic reports and other information with the Commission.
The obligation of the Company to file periodic reports and other information
with the Commission will be suspended if the Notes are held of record by fewer
than 300 Holders as of the beginning of any fiscal year of the Partnership other
than the fiscal year in which the Registration Statement is declared effective.
The Partnership has agreed that, if not required to do so, while any of the
Notes remain outstanding, it will furnish to the Note Holders and file with the
Commission (unless the Commission will not accept such a filing) (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K, including for
each a "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and, with respect to the annual information only, a report
thereon by the Company's independent auditors, and (ii) all current reports that
would be required to be filed with the Commission on Form 8-K if the Partnership
was required to file such reports.
NOTICE TO INVESTORS
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY NOTES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
iv
<PAGE> 7
IMPORTANT
To tender Original Notes, the following procedures must be followed:
Each beneficial owner owning interests in Original Notes through a DTC
Participant must instruct the Participant to cause the Original Notes to be
tendered in accordance with the procedures set forth in this Prospectus and
in the Letter of Transmittal.
Each participant (a "DTC Participant") in the Depository Trust Company
("DTC") holding Original Notes through DTC must (i) electronically transmit
its acceptance to DTC through the DTC Automated Tender Offer Program
("ATOP"), for which the transaction will be eligible, and DTC will then
edit and verify the acceptance, execute a book-entry delivery to the
account of the United States Trust Company of New York (the "Exchange
Agent") at DTC and send an Agent's Message to the Exchange Agent for its
acceptance, or (ii) comply with the guaranteed delivery procedures
described under "The Exchange Offer -- Guaranteed Delivery Procedures." By
tendering through ATOP, DTC Participants will expressly acknowledge receipt
of the accompanying Letter of Transmittal and agree to be bound by its
terms and the Issuers will be able to enforce such agreement against such
DTC participants.
Each Holder must (i) complete and sign the accompanying Letter of
Transmittal, and mail or deliver such Letter of Transmittal, and all other
documents required by the Letter of Transmittal (together with
certificates) representing all tendered Original Notes, to the Exchange
Agent at its address set forth under "The Exchange Offer -- Exchange
Agent," or (ii) comply with the guaranteed delivery procedures described
under "The Exchange Offer -- Guaranteed Delivery Procedures."
For purposes of this Prospectus, "Tendering Holder" means (i) each DTC
Participant that has properly transmitted (and not properly withdrawn) its
acceptance through ATOP and in respect of which DTC has sent an Agent's Message,
(ii) each Holder that has timely delivered to the Exchange Agent (and not
properly withdrawn) a properly completed and duly executed Letter of
Transmittal, and any other documents required by the Letter of Transmittal
(together with certificates) representing all tendered Original Notes, or (iii)
each DTC Participant or Holder that has complied with the guaranteed delivery
procedures set forth herein.
The information in this Prospectus concerning DTC and its book-entry
systems has been obtained by the Issuers from sources that the Issuers believe
to be reliable, and the Issuers take no responsibility for the accuracy thereof.
v
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial information and statements, and notes thereto,
appearing elsewhere in this Prospectus. This Prospectus contains forward-looking
statements that involve risks and uncertainties. The Partnership's actual
results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to, those discussed in "Risk Factors." See "Glossary" for
the definition of certain terms used in this Prospectus.
THE PARTNERSHIP
The Partnership plans to construct, own and operate The Resort at
Summerlin, a Mediterranean-style luxury hotel, casino and spa complex (the
"Resort Casino"), to be located approximately nine miles from the Las Vegas
Strip (the "Strip") and approximately 20 minutes from McCarran International
Airport. The 54.5-acre Resort Casino site (the "Resort Casino Site") is located
at the gateway to the Summerlin master-planned community ("Summerlin"), a
three-time award-winning, 22,500-acre land development of Howard Hughes
Properties, Limited Partnership ("HHP"), an affiliate of Howard Hughes
Corporation, a subsidiary of the Rouse Corporation. The Resort Casino is
designed to offer a complete range of amenities including two five-star hotels
with a total of 556 rooms and suites, a 50,000 square foot gaming facility, a
40,000 square foot state-of-the-art spa and fitness facility, up to eight
restaurants of varied cuisine and an indoor/outdoor buffet, a 60,000 square foot
lifestyle complex, and a 50,000 square foot conference and banquet center. The
Resort Casino has contracted for the right to reserve up to 75.0% of the tee
times at the adjoining Tournament Players Club ("TPC") at the Canyons golf
course ("TPC Canyons"), home to the Senior PGA Tour's Las Vegas Senior Classic,
and the Resort Casino Site is located near eight additional golf courses. The
Issuers believe that, when completed, the Resort Casino will represent one of a
few five-star resorts with gaming in the United States and a premier "off-Strip"
casino in Las Vegas. Construction of the Resort Casino began in January 1998
with an opening to the general public scheduled in April 1999.
BUSINESS AND MARKETING STRATEGY
The business and the goal of the Partnership's marketing strategy are to
(i) create the Resort Casino as a premier off-Strip location with geographic
exclusivity, (ii) deliver superior resort amenities within the local off-Strip
market, (iii) target middle- to upper-income customers, (iv) capitalize on its
marquee hotel flag and extensive travel network relationship, (v) carefully
manage construction costs and risks with a proven design and build team, and
(vi) leverage management's track record and continuity.
- CREATE A PREMIER OFF-STRIP LOCATION WITH GEOGRAPHIC EXCLUSIVITY. At the
time of its completion, the Resort Casino is expected to be the only
luxury destination in the United States with gaming and nine golf courses
within a five-minute drive of the Resort Casino Site. The Resort Casino
will be situated at the gateway to Summerlin, having a projected 1999
population base of 235,000 residents within a five-mile radius. Located
at the intersection of Rampart Boulevard and Summerlin Parkway, two
principal traffic arteries in northwest Las Vegas, the area is readily
accessible from most major points in the city including downtown Las
Vegas (approximately eight miles), the Strip (approximately nine miles)
and McCarran International Airport (approximately 15 miles).
Accessibility will be further enhanced by the planned connection of the
Las Vegas beltway to Summerlin Parkway in the year 2000.
TPC Canyons is adjacent to the Resort Casino Site. Immediately to the
south and east of the Resort Casino Site is the Angel Park Golf Club
which includes two regulation 18-hole courses and an executive, 12-hole
par three course. An additional six 18-hole public and private golf
courses are within five minutes of the Resort Casino Site. The Resort
Casino will offer panoramic views of the adjoining golf courses as well
as Las Vegas and the Strip to the east and the Red Rock Canyon National
Park to the west.
The Partnership has obtained rights of first offer from HHP to develop an
additional four designated gaming sites in the Summerlin development
which rights may be assigned to certain unrestricted subsidiaries in
certain circumstances. See "Risk Factors -- Competition." Additionally,
Nevada Senate Bill #208, enacted in July 1997, from which the Resort
Casino and the additional four gaming
1
<PAGE> 9
sites are exempt, limits the development of casinos near residential
neighborhoods, churches and schools, restricting entry by competitors
into the market.
- DELIVER SUPERIOR RESORT AMENITIES. The Resort Casino is designed along
the lines of a Scottsdale- or Palm Springs-type facility with
Mediterranean-style architecture, intimate ambiance and strong focus on
service intended to create a lifestyle experience for its guests and
offer visitors a haven from the pressures of daily life. The Partnership
believes that this atmosphere is generally unavailable in Las Vegas or
other gaming locales in the United States. The Resort Casino's hotels
will feature 508 standard rooms and 64 suites. At approximately 564
square feet, the Resort Casino's standard guest room will be among the
most spacious in Las Vegas. The circular-design casino will be situated
at the hub of the Resort Casino and is expected to feature 50,000 square
feet of gaming space, 1,200 slot machines, 40 table games, a sports and
race betting club and two salons prives for higher stake slots and table
games. For golfers, the Resort Casino will be able to reserve up to 75.0%
of the tee times at TPC Canyons and will benefit from an additional 156
holes of golf within five minutes of the Resort Casino Site. The Resort
Casino also will include a 40,000 square foot upscale spa and fitness
facility with state-of-the-art equipment designed to the same standards
as the award-winning Grand Wailea, Hawaii and Golden Door, California spa
resorts. Guests will have various indoor and outdoor dining options
including up to eight restaurants of varied cuisine and a large,
roof-deck buffet. The Resort Casino also will include a technologically
advanced, flexible-design business meeting center to cater to executive
retreats and conferences. All the components in the development will be
linked by the lifestyle complex (the "Lifestyle Complex"), which is
designed to facilitate indoor and outdoor activity and highlighted by
terraces, fountains and pools. The Lifestyle Complex will include gourmet
food and wine shops, a cigar shop, a beauty salon and other boutique
outlets selected to encourage frequent visits by local residents.
- TARGET MIDDLE- TO UPPER-INCOME CUSTOMER SEGMENTS. The Resort Casino will
be specifically tailored to cater to the affluent, higher-end customer.
The Partnership expects the Resort Casino's hotels and recreational
amenities will appeal to customers from the following principal long-term
markets:
The Captive Summerlin Market. The population within a five-mile radius of
the Resort Casino, which encompasses Summerlin and some of the most
affluent and desirable residential neighborhoods in metropolitan Las
Vegas, is estimated to be 211,000 and is projected to grow to 235,000 by
1999. The population of Clark County has grown approximately 48.0% since
1990, and the population within a five-mile radius of the Resort Casino
Site is projected to continue growing at approximately 5.0% per year
according to the Bureau of Business and Economic Research at the
University of Nevada, Reno ("BBER"). The median household income for
residents in this target market is approximately 21.0% above the Las
Vegas median household income and approximately 30.0% above the United
States national average according to Wells Gaming Research. The
Partnership's goal is to position the Resort Casino as the Summerlin
residents' "country club."
Middle-to Upper-Income Local Market. The Issuers believe this segment is
characterized by a highly profitable, repeat clientele that has long been
underserved by "local" casinos, and expect the Resort Casino will appeal
strongly to the affluent local population, including the estimated 72.0%
of adult Las Vegas residents who game, and will represent one of the few
resorts servicing the local market's demand for upscale recreation,
dining and entertainment.
Golfer/Gamer and Resort Vacationer. According to Wells Gaming Research,
approximately 1.9 million golfer/gamers visit Las Vegas at least once
annually and 43.0% of golfer/gamers spend over $1,500 per trip. The
Issuers believe that the Resort Casino will represent the only gaming
resort in the United States in close proximity to two TPC and seven other
golf courses. Additionally, the high levels of service and amenities
expected to be provided by the Resort Casino will cater to resort table
players with gaming budgets from $5,000 to $250,000 per visit.
Local and Out-of-State Conferences and Banquets. The Resort Casino is
expected to have one of the few high-tech business meeting facilities in
Las Vegas catering to small- and mid-size conferences.
2
<PAGE> 10
Designed with the necessary services and amenities to cater to executive
retreats including ample parking, the Resort Casino will provide an ideal
setting for small- to mid-size conferences and will have the capacity to host
charity and social events for up to 1,100 people in dinner seating.
- CAPITALIZE ON MARQUEE HOTEL FLAG AND TRAVEL NETWORK RELATIONSHIP. The
Partnership has entered into an agreement with Regent Hotels Worldwide,
Inc. ("Regent International"), an affiliate of the Carlson Hospitality
group, as its five-star hotel flag. The Regent International hotels are a
group of world-class, luxury hotels concentrated around the Pacific Rim,
with the Resort Casino representing its only property in Las Vegas.
Regent International's only flagged property in the U.S. is the Regent
Beverly Wilshire-Los Angeles. The Resort Casino will benefit from
Regent's reservation network and Carlson Wagonlit Travel, which currently
books approximately 400,000 room nights per year in Las Vegas with no
existing Las Vegas hotel affiliate.
- CAREFULLY MANAGE CONSTRUCTION COSTS AND RISKS WITH PROVEN DESIGN AND
BUILD TEAM. RAS's management has a proven track record of resort and
casino design, construction, development and operation, including Sun
International's Carousel, one of the largest and most profitable casinos
in South Africa, and the Prairie Knights and Speaking Rock casinos in the
United States. The Issuers have assembled an experienced project team.
The Partnership has signed a $133.0 million guaranteed maximum price
construction management contract (the "Construction Contract") with J.A.
Jones Construction ("J.A. Jones"), a subsidiary of J.A. Jones, Inc., one
of the world's leading general contractors with $2.0 billion of annual
revenue. J.A. Jones, Inc. is a subsidiary of Philipp Holzmann AG, a
German contracting company with $12.0 billion of revenue which is an
affiliate of Deutsche Bank AG with several major projects to its credit,
including renovation of the West and East wings of the White House in
Washington, D.C., the world's tallest buildings -- the Twin Towers of
Kuala Lumpur-- and Sun International's Paradise Island Bahamas Phase II.
A completion guaranty covering certain cost overruns has been provided by
J.A. Jones, Inc. The Resort Casino was designed by Paul Steelman, Ltd.
(the "Architect"), one of the nation's leading casino design firms whose
principal, Paul Steelman, is a beneficial owner of a 5.0% limited
partnership interest in the Partnership. The Architect's projects include
work for, among others, Mirage Resorts, Caesars, Harrah's and Sun
International. For the Resort Casino grounds, the Partnership has
contracted with Lifescapes International ("Lifescapes"), among the
nation's leading landscape design firms. Lifescapes' projects include The
Mirage, Bellagio, Treasure Island and Jurassic Park at Universal Studios.
Total construction hard costs are budgeted at approximately $133.0
million. The Partnership has provided contingency and completion reserve
funds of approximately $4.4 million and has subordinated the $3.0 million
development fee of Swiss Casinos of America, Inc., formerly Seven Circle
Gaming Corporation ("SCA"), the 91.26% limited partner of the Partnership
and the parent of RAS, to the successful on-budget completion of the
Resort Casino. The anticipated reserves represent approximately 3.3% of
total construction hard costs.
- LEVERAGE MANAGEMENT TEAM TRACK RECORD AND CONTINUITY. The Partnership
expects to leverage the gaming experience and track record of RAS's
senior and middle management. RAS's senior management has a cumulative 75
years of experience in the gaming and resort industry. Brian McMullan and
Jim Fonseca, the Chief Executive Officer and President and Senior Vice
President Gaming Operations of RAS, respectively, have worked together
for over 20 years. Quinton Boshoff, the Senior Vice President Slot
Operations of RAS, has worked with Mr. McMullan and Mr. Fonseca for over
11 years, and all were previously employed by Sun International, an
international casino group. Messrs. McMullan, Fonseca and Boshoff
participated in the design, building and operation of six casinos in
South Africa, including Sun International's Carousel. John Tipton, the
Senior Vice President, Chief Financial Officer and General Counsel of
RAS, served in Colorado Governor Roy Romer's cabinet as Executive
Director of the Colorado Department of Revenue, during which time he
drafted and implemented casino gaming legislation in Colorado. RAS's
middle management includes nine gaming and non-gaming professionals with
experience principally in the United States, the United Kingdom and
southern Africa. See "Management."
3
<PAGE> 11
SEVEN CIRCLE GAMING CORPORATION
Based in Las Vegas, Nevada, SCA was formed in 1989 and is a majority-owned
(83.0%) subsidiary of Tivolino Holding AG (the "Swiss Parent") which is owned by
Hans Jecklin, the Chairman of the Board of Directors of RAS, and his family. SCA
was formed for the primary purpose of acquiring, developing and managing casino
and resort properties in the United States. The Swiss Parent currently owns or
operates 23 gaming establishments, hotels, restaurants and other businesses in
Europe, and leases and/or operates additional gaming establishments in the
United States. The Swiss Parent is a leading gaming operator in Switzerland with
gaming facilities located throughout Switzerland, the Netherlands and Great
Britain. As with the Swiss Parent, SCA's activities extend beyond the casino
operations and include the management of a hotel, restaurants, retail outlets,
bars and live entertainment.
RESORT CASINO OWNERSHIP STRUCTURE
The following is an ownership chart of the Resort Casino.
[OWNERSHIP CHART]
4
<PAGE> 12
THE ORIGINAL NOTES OFFERING
ORIGINAL NOTES................ Pursuant to the December 31, 1997 Purchase
Agreement (the "Purchase Agreement"), the
Issuers sold $100.0 million aggregate principal
amount of the Original Notes to the Initial
Purchaser as part of the Units in the 144A
Offering. The Initial Purchaser subsequently
resold the Original Notes to Qualified
Institutional Buyers pursuant to Rule 144A.
REGISTRATION RIGHTS
AGREEMENT..................... Pursuant to the Purchase Agreement, the Issuers
and the Initial Purchaser entered into the
Registration Rights Agreement, which granted
Original Notes Holders certain exchange and
registration rights, which the Exchange Offer
is intended to satisfy. No offer to exchange
the Warrants is being made in this Prospectus
and neither the Partnership nor Warrant Co. is
obligated to register or exchange the Warrants
pursuant to the Registration Rights Agreement
or otherwise.
THE EXCHANGE OFFER
SECURITIES OFFERED............ $100 million aggregate principal amount of
Series B 13% Senior Subordinated PIK Notes due
2007.
ISSUERS....................... The Resort at Summerlin, Limited Partnership
The Resort at Summerlin, Inc.
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
(702) 869-7000
THE EXCHANGE OFFER............ $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of
Original Notes that are properly tendered and
accepted. As of the date of this Prospectus,
$100.0 million aggregate principal amount of
Original Notes are outstanding. The Issuers
will issue the Exchange Notes on or promptly
after the Expiration Date. The Exchange Offer
is not conditioned upon any minimum aggregate
principal amount of Notes being tendered.
Based upon the interpretations by the staff of
the Commission set forth in no-action letters
issued to third parties, the Issuers believe
the Exchange Notes may be offered for resale,
resold and otherwise transferred by any Holder
thereof (other than certain broker-dealers and
Affiliates of the Issuers) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that
the Exchange Notes are acquired in the ordinary
course of the Holder's business and the Holder
is not engaged in, does not intend to
participate and has no arrangement with any
person to participate in, and does not intend
to engage in, any distribution of the Exchange
Notes.
Each Exchange Notes Holder, other than a
broker-dealer, must represent that such
conditions have been met. In addition, each
Participating Broker-Dealer that receives
Exchange Notes for its account must acknowledge
that it will deliver a Prospectus in connection
with any resale of Exchange Notes. Each
Tendering
5
<PAGE> 13
Holder is required to represent in the Letter
of Transmittal that, among other things, the
Exchange Notes will be acquired by the Holder
in the ordinary course of business and the
Holder does not intend to participate and has
no arrangement or understanding with any person
to participate in the distribution of such
Exchange Notes.
Participating Broker-Dealers acquiring Original
Notes for their own account as a result of
market-making activities or other trading
activities may be statutory underwriters. The
Letter of Transmittal accompanying this
Prospectus states that by so acknowledging and
delivering a prospectus, a Participating
Broker-Dealer will not be deemed to admit that
it is an "underwriter" within the meaning of
the Securities Act. A broker-dealer may
nonetheless be deemed to be an "underwriter"
under the Securities Act notwithstanding such
disclaimer. This Prospectus, as it may be
amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in
connection with resale of Exchange Notes
received in exchange for Original Notes where
the Original Notes were acquired by the
Participating Broker-Dealer as a result of
market-making activities or other trading
activities. Pursuant to the Registration Rights
Agreement, the Issuers have agreed that, for a
period of 180 days after the Expiration Date,
they will provide this Prospectus to any
Participating Broker-Dealer for use in
connection with any resale. See "The Exchange
Offer -- Purpose and Effect of the Exchange
Offer" and "Plan of Distribution."
Any Holder who tenders with the intention to
participate, or for the purpose of
participating, in a distribution of the
Exchange Notes will not be able to rely on the
position of the staff of the Commission set
forth in no-action letters and, in the absence
of an exemption, must comply with the
registration and prospectus delivery
requirements of the Securities Act for any
resale. Failure to comply with these
requirements may result in liability under the
Securities Act.
EXPIRATION DATE............... 5:00 p.m., New York City time, on ,
1998 unless extended by the Issuers in their
sole discretion. See "The Exchange
Offer -- Expiration Date; Extensions;
Amendments."
ACCRUED INTEREST ON EXCHANGE
NOTES......................... Each Exchange Note will bear interest from the
most recent date to which interest has been
paid on the Original Notes, or, if no interest
has been paid on the Original Notes, from
December 31, 1997.
CONDITIONS TO THE EXCHANGE
OFFER......................... The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Issuers. The Issuers reserve the right to
terminate or amend the Exchange Offer at any
time prior to the Expiration Date upon the
occurrence of any such condition. The Exchange
Offer is not conditioned upon any minimum
aggregate principal amount of Original Notes
being tendered or accepted for exchange. See
"The Exchange Offer -- Conditions."
6
<PAGE> 14
CONSEQUENCES OF FAILURE TO
EXCHANGE...................... Any Original Notes not tendered pursuant to the
Exchange Offer will remain outstanding and
accrue interest and will remain "restricted
securities" under the Securities Act, the
liquidity of which could be adversely affected
upon the completion of the Exchange Offer. See
"Risk Factors -- Consequences of Failure to
Exchange" and "The Exchange
Offer -- Consequences of Failure to Exchange."
U.S. FEDERAL INCOME TAX
CONSEQUENCES................ The exchange of the Original Notes for the
Exchange Notes pursuant to the Exchange Offer
will not be a taxable event for U.S. federal
income tax purposes. See "Certain U.S. Federal
Income Tax Considerations."
USE OF PROCEEDS............... There will be no cash proceeds to the Issuers
from the Exchange Offer. See "Use of Proceeds."
PROCEDURES FOR TENDERING
TENDERING ORIGINAL NOTES...... Each Beneficial Owner through a DTC Participant
must instruct the DTC Participant to cause
Original Notes to be tendered in accordance
with the procedures set forth in this
Prospectus and in the Letter of Transmittal.
See "The Exchange Offer -- Procedures for
Tendering -- Original Notes Held by DTC." Each
DTC Participant in DTC holding Original Notes
through DTC must (i) electronically transmit
acceptance to DTC through the ATOP, for which
the transaction will be eligible, and DTC will
then edit and verify the acceptance, execute a
book-entry delivery to the Exchange Agent's
account at DTC and send an Agent's Message to
the Exchange Agent for its acceptance, or (ii)
comply with the guaranteed delivery procedures
set forth in this Prospectus and in the Letter
of Transmittal. By tendering through ATOP, DTC
Participants will expressly acknowledge receipt
of the Letter of Transmittal and agree to be
bound by its terms and the Issuers will be able
to enforce such agreement against such DTC
participants. See "The Exchange
Offer -- Procedures for Tendering -- Original
Notes Held Through DTC" and "-- Guaranteed
Delivery Procedures -- Original Notes Held
Through DTC."
Each Tendering Holder must (i) submit a Letter
of Transmittal and all other required
documents, together with certificates
representing all tendered Original Notes, to
the Exchange Agent, or (ii) comply with the
guaranteed delivery procedures. See "The
Exchange Offer -- Procedures for Tendering,"
"-- Exchange Agent," and "-- Guaranteed
Delivery Procedures -- Original Notes Held by
Holders." Each Tendering Holder will represent
that, among other things, (i) it is not a
broker-dealer tendering Original Notes acquired
directly from the Issuers for its own account,
(ii) the Exchange Notes are being acquired in
the ordinary course of its business, and (iii)
it is not an Affiliate of the Issuers. See "The
Exchange Offer -- Procedures for Tendering."
7
<PAGE> 15
GUARANTEED DELIVERY
PROCEDURES.................... Tendering Holders who are DTC Participants but
cannot transmit their acceptances through ATOP
prior to the Expiration Date may tender in
accordance with the procedures set forth in
this Prospectus and in the Letter of
Transmittal. See "The Exchange Offer --
Guaranteed Delivery Procedures." Tendering
Holders (i) whose Original Notes are not
immediately available and will not be available
for tendering prior to the Expiration Date, or
(ii) who cannot deliver their Original Notes,
the Letter of Transmittal, or any other
required documents to the Exchange Agent prior
to the Expiration Date may tender in accordance
with the procedures set forth in this
Prospectus. See "The Exchange
Offer -- Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS............. The tender of Original Notes pursuant to the
Exchange Offer may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange
Offer -- Withdrawal of Tenders."
UNTENDERED ORIGINAL NOTES..... Following the consummation of the Exchange
Offer, Original Note Holders who elect not to
tender will not have any further exchange
rights and will continue to hold Original Notes
subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for
such Original Notes could be adversely
affected. See "The Exchange
Offer -- Consequences of Failure to Exchange."
SHELF REGISTRATION
STATEMENT..................... Under certain circumstances described in the
Registration Rights Agreement, certain Original
Note Holders (including Holders who are not
permitted to participate in the Exchange Offer)
may require the Issuers to file and use their
best efforts to cause to become effective a
shelf registration statement under the
Securities Act for resales of Original Notes.
See "The Exchange Offer -- Purpose and Effect
of the Exchange Offer."
SPECIAL PROCEDURE FOR
BENEFICIAL OWNERS............. Any beneficial owner owning interests in
Original Notes whose Original Notes are
registered in the name of a broker-dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact the
registered Holder promptly and instruct the
registered Holder to tender on the Beneficial
Owner's behalf. A Beneficial Owner wishing to
tender directly must, prior to completing and
executing the Letter of Transmittal and
delivering its Original Notes, either cause the
Original Notes to be registered in the
Beneficial Owner's name or obtain a properly
completed bond power from the registered
Holder. The transfer of registered ownership
may take considerable time. The Company will
keep the Exchange Offer open for not less than
30 days in order to provide for the transfer of
registered ownership. See "The Exchange
Offer -- Procedures for Tendering -- Original
Notes Held Through DTC."
EXCHANGE AGENT................ United States Trust Company of New York. See
"The Exchange Offer -- Exchange Agent."
8
<PAGE> 16
THE EXCHANGE NOTES
GENERAL....................... The Exchange Notes and the Original Notes are
identical in all material respects, except that
(i) the Exchange Notes have been registered
under the Securities Act and will not bear
legends restricting transfer, and (ii) the
Exchange Note Holders will not be entitled to
certain rights under the Registration Rights
Agreement, including the provisions providing
for an increase in the interest rate on the
Original Notes in certain circumstances
relating to the timing of the Exchange Offer,
which rights will terminate when the Exchange
Offer is consummated. See "The Exchange
Offer -- Purpose and Effect of the Exchange
Offer." The Exchange Notes will evidence the
same debt as the Original Notes and will be
entitled to the benefits of the Indenture. See
"Description of the Notes."
NOTES OFFERED................. $100.0 million principal amount of Series B 13%
Senior Subordinated PIK Notes due 2007.
MATURITY DATE................. December 15, 2007.
INTEREST PAYMENT DATES........ Interest will accrue on the Exchange Notes from
the date of issuance and will be payable
semi-annually on each June 15 and December 15,
commencing on , 1998. The Exchange
Notes will bear interest from the later to have
occurred of (i) the most recent date to which
interest has been paid on the Original Notes,
or (ii) December 31, 1997.
INTEREST...................... 13.0% per annum accruing from the date of
issuance, payable semi-annually beginning
, 1998 either in cash or in
additional Notes, at the option of the Issuers,
through June 15, 1999, and thereafter only in
cash. See "Risk Factors -- Substantial
Leverage."
RANKING....................... Unsecured and subordinated in right of payment
to all existing and future Senior Indebtedness
of the Issuers, including the Mortgage Notes.
The Notes will rank senior to any future
Subordinated Obligations of the Issuers. As of
December 31, 1997, on a pro forma basis after
giving effect to the completion of the Resort
Casino, the aggregate principal amount of the
Issuers' outstanding Senior Indebtedness was
$100.0 million (assuming that all of the
Mortgage Notes were issued) and the Issuers had
no outstanding Subordinated Obligations. See
"Description of the Notes -- Ranking and
Subordination."
OPTIONAL REDEMPTION........... Except as described below under "Change of
Control" and "Regulatory Redemption," the
Issuers may not redeem the Notes until December
15, 2002, at which time the Issuers may redeem
the Exchange Notes, in whole or in part, at any
time at the redemption prices set forth herein,
together with accrued and unpaid interest. In
addition, at any time and from time to time
prior to December 15, 2000, the Issuers may,
subject to certain requirements, redeem up to
$35.0 million, or 35.0% of the aggregate
principal amount of the Notes with the cash
proceeds received from one or
9
<PAGE> 17
more Public Equity Offerings at a redemption
price equal to 113.0% of the principal amount
to be redeemed, together with any accrued and
unpaid interest. See "Description of the
Notes -- Optional Redemption."
REGULATORY REDEMPTION......... If a Nevada Gaming Authority requires that a
Holder or beneficial owner of the Notes must be
licensed, qualified or found suitable in order
to maintain any gaming license or franchise of
the Partnership and the Holder or Beneficial
Owner fails to apply for such license within 30
days or applies but is not licensed, the
Issuers may redeem the Notes of such Holder or
Beneficial Owner at a redemption price equal to
the lesser of (i) the price at which the Notes
were acquired by the Holder or Beneficial
Owner, (ii) the fair market value of the Notes
on the redemption date, and (iii) the principal
amount of the Notes. See "Regulation and
Licensing -- Nevada" and "Description of the
Notes -- Optional Redemption -- Regulatory
Redemption."
CHANGE OF CONTROL............. Upon a Change of Control, the Issuers, upon the
repayment of the Senior Indebtedness or with
the consent of the holders of the Senior
Indebtedness, will be required to offer to
repurchase the Notes for 101.0% of the
principal amount thereof and any accrued and
unpaid interest. See "Description of the
Notes -- Optional Redemption" and "-- Change of
Control."
GUARANTEES BY FUTURE
SUBSIDIARIES.................. The Notes will be unconditionally jointly and
severally guaranteed on a senior subordinated
unsecured basis (the "Subsidiary Guarantees")
by all future direct and indirect Restricted
Subsidiaries having either assets, capital or
stockholders' equity in excess of $10,000 (the
"Guarantors"). Each Subsidiary Guarantee also
will be effectively subordinated to all secured
Indebtedness of a Guarantor. As of the date of
this Prospectus, there are no Restricted
Subsidiaries or Subsidiary Guarantees. See
"Description of the Notes -- Certain
Covenants -- Future Subsidiary Guarantors."
ORIGINAL ISSUE DISCOUNT....... The Notes will be considered to be issued with
OID for U.S. federal income tax purposes.
Although cash interest may not be paid on the
Notes prior to December 15, 1999, OID (the
difference between the sum of all principal and
interest payable on the Notes and the portion
of the issue price of the Units allocable to
the Notes) will accrue from the Issue Date and
will be included as interest income
periodically (including periods ending prior to
June 15, 1999) in a U.S. Holder's gross income
for U.S. federal income tax purposes in advance
of receipt of the cash payment to which the
income is attributable. See "Certain U.S.
Federal Income Tax Consequences."
RESTRICTIVE COVENANTS......... The Indenture limits (i) the incurrence of
additional Indebtedness by each of the Issuers
and the Restricted Subsidiaries, (ii) the
payment of dividends on, and redemption of,
capital stock of the Issuers and the redemption
of certain Subordinated Obligations of
10
<PAGE> 18
the Issuers, (iii) investments, (iv) sales of
assets and subsidiary stock, (v) transactions
with Affiliates, and (vi) consolidations,
mergers and transfers of all or substantially
all the assets of the Issuers. Any negative
pledge in respect to the securities of the
Issuers may require the approval of the Nevada
Commission to remain effective upon the
issuance of a Gaming License to the Issuers
and/or Warrant Co. The Indenture also prohibits
certain restrictions on distributions from
Restricted Subsidiaries. See "Description of
the Notes -- Certain Covenants."
EVENTS OF DEFAULT............. Events of Default under the Indenture include
(i) a default of any payment of interest when
due which continues for 30 days, (ii) a default
in the payment of principal when due at
maturity or otherwise, (iii) the failure of the
Issuers, the Partnership or the Guarantors to
comply with certain covenants or other
provisions of the Indenture, (iv) the uncured
failure of the Partnership or any Restricted
Subsidiary to pay any Indebtedness in excess of
$5.0 million when due, (v) certain events of
bankruptcy, insolvency, or reorganization of
the Issuers or a significant Subsidiary or the
existence of a final, nonappealable judgment
against the Issuers or a significant subsidiary
in excess of $2.0 million, and (vi) the failure
of the Resort Casino to commence hotel and
gaming operations by October 2, 1999. See
"Description of the Notes -- Events of
Default."
TRUSTEE....................... United States Trust Company of New York shall
act as the Trustee under the Indenture and has
been appointed by the Issuers as Registrar and
Paying Agent for the Notes. See "Description of
the Notes -- The Trustee."
For more complete information regarding the
Notes, see "Description of the Notes."
OTHER AGREEMENTS
DISBURSEMENT AGREEMENT........ The Issuers, the Administrative Agent, the
Trustee and First Security Trust Company of
Nevada as disbursement agent (the "Disbursement
Agent") and account agent (the "Account Agent")
entered into a December 31, 1997 Disbursement
Agreement (the "Disbursement Agreement") which
established conditions to, and the sequencing
of, funding construction of the Resort Casino.
Nevada Construction Services, Inc. acts as the
construction consultant (the "Construction
Consultant") under the Disbursement Agreement
and will be required to approve each request by
the Issuers for the disbursement of funds. See
"Description of Disbursement Agreement."
CONSTRUCTION CONTRACT......... The Partnership has executed the Construction
Contract with J.A. Jones. The fee payable
pursuant to the Construction Contract is based
upon the cost of the work plus the fee payable
to J.A. Jones up to a guaranteed maximum price
of $133.0 million. The Construction Contract
provides for liquidated damages of up to $4.0
million assessable against J.A. Jones for its
failure to satisfy certain timing requirements.
See "Additional Material
Agreements -- Construction Contract and
Completion Guaranty."
11
<PAGE> 19
CONSTRUCTION MANAGEMENT
CONTRACT...................... The Partnership has executed a Construction
Management Contract (the "Construction
Management Contract") with Rider Hunt (NV)
L.L.C. ("Rider Hunt") which will provide
certain administrative services related to the
Construction Contract, including development of
cash flow reports and forecasts; advising of
variances between actual and budgeted costs; in
consultation with the Partnership and the
Architect, rejecting work not in conformity
with the Construction Contract; preparing
valuations of amounts due the respective
contractors; and recording the progress of
construction of the Resort Casino. Rider Hunt
is not authorized to approve significant change
orders under the Construction Contract.
COMPLETION GUARANTY........... There is a completion guaranty covering certain
cost overruns from J.A. Jones, Inc., the parent
of J.A. Jones.
RISK FACTORS
Prior to tendering for Exchange Notes, the Original Note Holders should
carefully consider the matters discussed under "Risk Factors" which,
individually or in the aggregate, could have a material adverse effect on the
financial condition of the Partnership and the Issuers' ability to pay the
Indebtedness, including the Notes.
SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data set forth below as of
December 31, 1997 and December 31, 1996, for the year ended December 31, 1997,
and for the period from inception through December 31, 1996, have been derived
from the financial statements of RAS and the Partnership included elsewhere
herein which have been audited by Ernst & Young L.L.P., independent auditors,
and should be read in conjunction with those financial statements (including the
notes thereto) and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," all appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
RAS CONSOLIDATED 1997 1996
---------------- ------------ -----------
<S> <C> <C>
Statement of Operations Data:
Revenues.................................................. $ -- $ --
Costs and Expenses:
General and administrative................................ 498,427 84,458
Depreciation and amortization............................. 113,312 --
Other Income (Expense):
Interest income........................................... 41,255 --
Interest expense.......................................... (48,346) --
------------ -----------
Loss before limited partners' interests..................... (618,830) (84,458)
Limited partners' interests................................. (608,145) (83,613)
------------ -----------
Net loss.................................................... $ (10,685) $ (845)
============ ===========
</TABLE>
12
<PAGE> 20
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................. $175,491,628 $ --
Property and equipment.................................... 20,871,112 17,154,547
Total assets.............................................. 226,237,440 18,646,981
Total current liabilities................................. 1,127,313 --
Long-term debt, net of discount........................... 154,131,067 --
Warrants redeemable for partnership interest.............. 5,869,565 --
Total liabilities......................................... 161,127,945 18,146,826
Total stockholder's equity................................ 670,970 500,155
Total liabilities, limited partners' interest and
stockholder's equity................................... 226,237,440 18,646,981
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
THE PARTNERSHIP 1997 1996
--------------- ------------ -----------
<S> <C> <C>
Statement of Operations Data:
Revenues.................................................. $ -- $ --
Cost and Expenses:
General and administrative................................ 493,885 84,458
Depreciation and amortization............................. 113,312 --
Other Income (Expense):
Interest income........................................... 41,255 --
Interest expense.......................................... (48,346) --
Net loss.................................................... $ (614,288) $ (84,458)
============ ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................. $175,487,660 $ --
Property and equipment.................................... 20,871,112 17,154,547
Total assets.............................................. 226,233,472 18,645,981
Total current liabilities................................. 1,126,303 --
Long-term debt, net of discount........................... 154,131,067 --
Warrants redeemable for partnership interest.............. 5,869,565 --
Total liabilities......................................... 161,126,935 --
Total partnership interest................................ 65,106,537 18,645,981
Total liabilities and partnership interest................ 226,233,472 18,645,981
</TABLE>
13
<PAGE> 21
RISK FACTORS
The Exchange Notes offered hereby involve a high degree of risk, including
the risks described below. Prospective Tendering Holders should carefully
consider the specific factors set forth below, as well as the other information
contained in this Prospectus, before deciding to tender the Original Notes for
the Exchange Notes.
This Prospectus contains certain "forward-looking statements" which
represent the Partnership's expectations or beliefs, including, but not limited
to, statements concerning industry performance and the Partnership's operations,
performance, financial condition, plans, growth and strategies. Any statements
contained in this Prospectus that are not statements of historical fact may be
deemed to be forward looking statements. Without limiting the generality of the
foregoing, words such as "may," "will," "expect," "anticipate," "intend,"
"could," "estimate" or "continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties,
certain of which are beyond the Partnership's control, and actual results may
differ materially depending on a variety of important factors, including those
described below in this "Risk Factors" section and elsewhere in this Prospectus.
NEW PROJECT; LACK OF OPERATING HISTORY
The Partnership plans to open the Resort Casino in April 1999, and the
Resort Casino has had no earnings or operations to date. Although several
members of RAS's management have experience constructing and operating resort
hotels of comparable or greater scope than the Resort Casino, neither the
Partnership, RAS nor RAS's management has previously been involved in
constructing or operating a luxury destination resort in the Las Vegas market.
The Partnership is a start-up entity and will be subject to all of the risks
inherent in establishing a new business enterprise, including, but not limited
to, unanticipated construction, licensing, permitting and operating problems,
and having no proven ability to market and operate a new gaming and resort
venture in the Las Vegas market. There can be no assurance that the Resort
Casino will open as scheduled or that, once opened, it will achieve profitable
operations.
SUBSTANTIAL LEVERAGE
Upon the issuance of the Original Notes and the Mortgage Notes, the Issuers
had significant debt service obligations. The ability of the Issuers to meet
their debt service and other obligations depends upon their future performance
and is subject to financial, economic and other factors, many of which are
beyond their control. As of December 31, 1997, on a pro forma basis after giving
effect to the completion of the Resort Casino, the Issuers had an aggregate of
$100.0 million of outstanding Senior Indebtedness and the Partnership had
partners' contributed capital of $65.8 million. See "Capitalization." The
Indenture permits the Partnership to incur additional Indebtedness, including
Senior Indebtedness, subject to certain limitations. See "Description of the
Notes."
The Partnership's high degree of leverage has important consequences to the
Note Holders, including: (i) the Partnership's ability to obtain additional
financing in the future is restricted; (ii) a substantial portion of the
Partnership's cash flow from operations must be dedicated to the payment of
principal and interest on its Indebtedness, thereby reducing the funds available
to the Partnership for other purposes; (iii) the Mortgage Notes will be secured
and mature prior to the Notes; (iv) the Partnership may be substantially more
leveraged than certain of its competitors, which may place it at a competitive
disadvantage; and (v) the Partnership's substantial degree of leverage may limit
its flexibility to adjust to changing market conditions, reduce its ability to
withstand competitive pressures and make it more vulnerable to a downturn in
general economic conditions or its business. See "Description of the Notes."
ABILITY TO SERVICE DEBT
The Partnership's ability to make scheduled payments or to refinance its
obligations with respect to its Indebtedness will depend on its financial and
operating performance, which is subject to prevailing economic conditions and to
certain financial, business and other factors beyond its control. If the
Partnership's cash flow
14
<PAGE> 22
and capital resources are insufficient to fund its debt service obligations, the
Partnership may be forced to reduce or delay planned expansion and capital
expenditures, sell assets, obtain additional equity capital or restructure its
debt. There can be no assurance that the Partnership's operating results, cash
flow and capital resources will be sufficient for future payment of its
Indebtedness. In the absence of such operating results and resources, the
Partnership could face substantial liquidity problems and might be required to
dispose of material assets or operations to meet its debt service and other
obligations. There can be no assurance as to the timing of such sales or the
proceeds that the Partnership could realize therefrom. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." There can be no assurance that
the Issuers will be able to repay their Indebtedness upon maturity. Any default
by the Issuers under the Indebtedness, including the Mortgage Notes, would
subject the Issuers to risk of foreclosure on substantially all of their assets
to the extent necessary in order to repay any amounts due under the Indebtedness
including, but not limited to, principal, interest, penalties or other costs and
expenses incurred in the event of a default. Any such default would have a
material adverse effect on the financial condition of the Partnership and the
Issuers' ability to pay the Indebtedness, including the Notes.
SUBORDINATION; ASSET ENCUMBRANCES
The Original Notes are, and the Exchange Notes will be, unsecured senior
subordinated obligations of the Partnership and will be expressly subordinated
in right of payment to all existing and future Senior Indebtedness, including
the principal of, any premium, interest on, and all other amounts due on or
payable under, the Mortgage Notes. As of December 31, 1997, on a pro forma basis
after giving effect to the completion of the Resort Casino, approximately $100.0
million of Senior Indebtedness was outstanding. The Partnership also is
permitted under the Indenture to incur additional Senior Indebtedness. By reason
of such subordination, in the event of the insolvency, liquidation,
reorganization, dissolution or other winding-up of the Partnership or upon a
default in payment with respect to, or the acceleration of, any Senior
Indebtedness, the holders of Senior Indebtedness must be paid in full before the
Note Holders are paid. Under such circumstances, the holders of any additional
debt ranking pari passu with the Notes would be entitled to share ratably with
the Note Holders in the proceeds of any distribution. This may have the effect
of reducing the amount of proceeds paid to Note Holders. See "Description of the
Notes."
The Partnership has granted Mortgage Notes lenders security interests in
substantially all of the current and future assets of the Partnership, including
a pledge of all of the issued and outstanding shares of capital stock of the
Partnership's future subsidiaries. In the event of any default on secured
Indebtedness, including the Mortgage Notes, the lenders of such Indebtedness
will have a prior secured claim on the Partnership interests and assets. An
attempted or actual foreclosure by any lenders would have a material adverse
effect on the Issuers, the financial condition of the Partnership and the
Issuers' ability to pay the Indebtedness, including the Notes.
RESTRICTIONS UNDER DEBT AGREEMENTS
The Indenture contains covenants that, among other things, limit the
ability of the Issuers and their Restricted Subsidiaries, if any, to incur
additional Indebtedness, incur liens, pay dividends and make certain other
restricted payments, make certain investments, consummate certain asset sales,
enter into certain transactions with Affiliates, issue subsidiary stock, create
dividend or other payment restrictions affecting Restricted Subsidiaries,
consolidate or merge with any other Person or transfer all or substantially all
of the assets of the Issuers. See "Description of the Notes -- Certain
Covenants." The Mortgage Notes and the up to $10.0 million revolving credit
facility under the Credit Agreement, and any extensions, revisions,
refinancings, restatements or replacements thereof (the "Revolving Credit
Facility") contain restrictive covenants which generally are more restrictive
than those in the Indenture and further limit the ability of the Issuers and
their Subsidiaries to prepay Indebtedness (including the Notes). The Mortgage
Notes and the Revolving Credit Facility require the Partnership to maintain
specified consolidated financial ratios and satisfy certain consolidated
financial tests. The Issuers' ability to meet those ratios and tests may be
affected by events beyond their control, and there can be no assurance that the
Issuers will meet those ratios and tests. A breach of any of the covenants under
the Mortgage Notes, the Revolving Credit Facility or the Indenture
15
<PAGE> 23
could result in a default under other outstanding indebtedness, including the
Mortgage Notes, the Revolving Credit Facility and the Indenture. If an event of
default occurs under the Mortgage Notes or the Revolving Credit Facility, the
lenders may elect to declare all amounts outstanding thereunder, together with
accrued interest, to be immediately due and payable. If the Issuers are unable
to repay those amounts, the lenders could proceed against the collateral pledged
as security for the Indebtedness. Any such action taken by the lenders under the
Mortgage Notes, the Revolving Credit Facility or other Indebtedness will likely
result in an acceleration of the Indebtedness under the Notes. The Mortgage
Notes or the Revolving Credit Facility are secured by substantially all of the
real property and contract rights of the Partnership relating to the
construction of the Resort Casino.
CONSTRUCTION AND BUDGET RISKS
The Partnership has entered a guaranteed maximum price contract with J.A.
Jones. While the Issuers believe that the nature of the guaranteed maximum price
contract, plus $4.4 million of contingency and construction reserves and $26.0
million of forecasted cash at opening, will be sufficient to cover any
construction-related overages, there can be no assurance that this will be the
case. To provide additional protection against cost overruns, SCA's $3.0 million
development fee will not be paid until the successful completion of the Resort
Casino at or below the projected cost, including the contingency and
construction completion reserve. The contingency and construction reserves equal
approximately 3.3% of budgeted construction hard costs.
The Construction Contract contains a provision wherein the Partnership has
given to J.A. Jones the right to act as agent for and execute all subcontracts
and purchase orders as agent for and on behalf of the Partnership. There is a
substantial risk that this relationship between the Partnership and J.A. Jones
will result in, among other items, possible litigation against and liability of
the Partnership rather than against J.A. Jones as is the case in the normal
relationship between an owner and its contractor.
Construction projects such as the construction of the Resort Casino entail
significant risks, including, without limitation, shortages of skilled labor and
materials, unforeseen engineering, environmental or geological problems, work
stoppages, weather interference, floods and unanticipated cost increases. The
anticipated costs and construction schedule are based upon budgets, conceptual
design documents and construction schedule estimates prepared by the Partnership
in consultation with the Architect, an independent construction estimation firm,
and contractors. Construction, equipment or staffing problems or difficulties in
obtaining any of the requisite licenses, permits, allocations and authorizations
from regulatory authorities could increase the total cost, delay or prevent the
construction or operation of the Resort Casino or otherwise affect the design
and features of the Resort Casino. There can be no assurance that the budgeted
cost of the Resort Casino will not be exceeded or that it will commence
operations within the contemplated time frame, if at all.
DEPENDENCE ON KEY MARKETS
The Partnership's success depends upon acceptance of the Resort Casino by
visitors to Las Vegas, golfer/gamers and local Las Vegas residents. There can be
no assurance that the population and economic strength of Summerlin and the
surrounding area, including Las Vegas, will continue to grow, that the
Partnership will be able to attract a sufficient number of local gamers or hotel
guests to the Resort Casino or that local gamers and the hotel guests will seek
the amenities offered by the Resort Casino. The Partnership's inability to
attract a sufficient number of local gamers or hotel guests may have a material
adverse effect on the financial performance of the Partnership and the Issuers'
ability to service the Indebtedness, including the Notes.
GAMING REGULATION
Prior to the commencement of construction of the Resort Casino, Seven
Circle Resorts of Nevada, Inc. ("SCRN"), a wholly-owned subsidiary of SCA,
obtained a Nevada distributor's license from the Nevada Commission. In addition,
the Swiss Parent and SCA were registered by the Nevada Gaming Authorities as a
16
<PAGE> 24
holding company and an intermediary company, respectively, of SCRN. Prior to
opening the Resort Casino, the Partnership will apply for a nonrestricted Nevada
gaming license and RAS will apply for registration as an intermediary company
and/or licensing as a general partner, as applicable. The gaming operations and
the ownership of securities of the Issuers are subject to extensive regulation
by the Nevada Gaming Authorities, each of which has broad authority with respect
to licensing and registration of entities and individuals involved with the
Issuers, including the Note Holders.
The Partnership and RAS, the general partner of the Partnership, may be
required to disclose the identities of the Note Holders to the Nevada Gaming
Authorities upon request. The Nevada Commission may, in its discretion, require
the Note Holders to file an application, be investigated and be found suitable
to hold the Notes. Additionally, the Nevada Commission may, in its discretion,
require the holder of any debt security of an entity registered by the Nevada
Commission as a publicly traded corporation (a "Registered Company") to file an
application, be investigated and be found suitable to own the debt security of a
Registered Company. If the Nevada Commission determines that a person is
unsuitable (an "unsuitable person") to own the securities of a Registered
Company, then, pursuant to the Nevada Gaming Control Act and the regulations
promulgated thereunder (collectively, the "Nevada Act"), the Registered Company
may 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 an 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. The Partnership and RAS will be required to
be registered by the Nevada Commission as Registered Companies upon the
effectiveness of the Exchange Offer and the licensing of the Partnership.
Each Note Holder shall be deemed to have agreed (to the extent permitted by
law) that if the Nevada Gaming Authorities determine that a Note Holder or
beneficial owner of the Notes must be found suitable for any reason and if the
Note Holder or beneficial owner either refuses to file an application or is
found to be an unsuitable person, the Note Holder shall dispose of the Holder's
Notes within 30 days of a request by the Issuers or such other date if so
ordered by the Nevada Gaming Authorities. Any Holder which refuses or fails to
dispose of Notes will be deemed to have agreed to the foregoing restrictions on
voting, remuneration, dividend and distribution payment and redemption. The
Issuers also will have the right to redeem the Notes from any Holder at any time
to prevent the loss or material impairment of a Gaming License or an application
for a Gaming License.
Although the Partnership and RAS believe that they will obtain all
necessary Gaming Licenses prior to the completion of the Resort Casino, there
can be no assurance that all Gaming Licenses will be obtained by the completion
of the Resort Casino, if at all, given the complexity of the licensing
procedures under the Nevada Act and the broad authority of the Nevada Gaming
Authorities. A failure to obtain such Gaming Licenses by the Resort Casino's
completion could have a material adverse effect on the financial performance of
the Partnership and the Issuers' ability to service the Indebtedness, including
the Notes, and, if not obtained within 180 days from the Commencement Date, will
constitute a Default under the Indenture.
The Nevada Gaming Authorities may, among other things, revoke the gaming
license of any licensed entity (a "Licensee") or the registration of a
Registered Company or any entity registered as a holding or intermediary company
of a Licensee. In addition, the Nevada Gaming Authorities may revoke the license
or finding of suitability of any officer, director, controlling person,
shareholder, limited partner, noteholder or key employee of a licensed or
registered entity. If the Gaming Licenses of the Issuers are revoked for any
reason, the Nevada Gaming Authorities may require the closing of the Resort
Casino, which would result in a material adverse effect on the financial
performance of the Partnership and the Issuers' ability to service the
Indebtedness, including the Notes. The Partnership and certain of its officers,
directors, partners and key employees either will apply or have applied for
licensing with the Nevada Gaming Authorities. In addition, prior to opening, the
Partnership must apply for and receive a City of Las Vegas Gaming License and a
liquor license.
17
<PAGE> 25
Upon the effectiveness of the Exchange Offer, the Partnership and RAS will
each be a "publicly traded corporation" under the Nevada Act. In order for an
entity that is a "publicly traded corporation" to receive a gaming license, the
Nevada Commission must grant an exemption to the Partnership from a regulatory
provision in the Nevada Act which makes publicly traded corporations ineligible
to apply for or hold a gaming license. However, the Nevada Commission has
exempted companies from this provision in the past and has granted gaming
licenses to publicly traded corporations. The Partnership intends to apply for
an exemption from this eligibility requirement (the "Exemption") in connection
with its application for a Gaming License. In connection with licensing and
receipt of the Exemption, RAS and the Partnership will each be required to be
registered by the Nevada Commission as a Registered Company. After becoming a
Registered Company, neither the Partnership nor RAS may make a public offering
of any securities without the prior approval of the Nevada Commission if the
securities or the 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. Such approval, if given, does not
constitute a finding, recommendation or approval by the Nevada Board or the
Nevada Commission as to the accuracy or adequacy of the Prospectus or the
investment merits of the securities. Any representation to the contrary is
unlawful.
The regulations of the Nevada Board and the Nevada Commission also provide
that any entity which is not an "affiliated company," as defined in the Nevada
Act, or which is not otherwise subject to the provisions of the Nevada Act, such
as the Partnership and RAS, which plans to make a public offering of securities,
the proceeds from which are intended for the construction or operation of gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes, may apply to the Nevada Commission for prior approval of such
offering. The Nevada Commission may find an applicant unsuitable based solely on
its failure to submit such an application, unless upon a written request for a
ruling, the Nevada Board Chairman has ruled that it is not necessary to submit
such an application. The Exchange Offer will qualify as a public offering. The
Issuers have filed a written request (the "Ruling Request") with the Nevada
Board Chairman for a ruling that it is not necessary to submit the Exchange
Offer for prior approval. On March 27, 1998, the Nevada Board Chairman granted
the Issuers' Ruling Request, ruling that the Exchange Offer need not be
submitted to the Nevada Board or the Nevada Commission for prior approval.
In addition, if the Partnership and RAS are each registered as a Registered
Company and have been granted certain exemptions by the Nevada Commission, any
beneficial owner of the Partnership's or RAS's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated, and have his suitability determined. Beneficial owners of more
than 10.0% of a Registered Company's voting securities must apply for a finding
of suitability within thirty days after the Chairman of the Nevada Board mails
written notice requiring such filing. Under certain circumstances, an
"institutional investor" beneficially owning more than 10.0% but not more than
15.0% of the Partnership's voting securities may apply to the Nevada Commission
for a waiver of such finding of suitability requirements. In any event, the
applicant must pay all costs of investigation incurred by the Nevada Gaming
Authorities in conducting any such investigation. See "Regulation and
Licensing -- Nevada" and "Description of the Notes -- Optional
Redemption -- Regulatory Redemption".
The Swiss Parent and SCA operate in other jurisdictions with gaming
regulatory bodies. Regulatory actions against the Swiss Parent or SCA in these
jurisdictions could have a material adverse effect on the Partnership's ability
to obtain or maintain a Nevada license or approval. See "Regulation and
Licensing."
AVAILABILITY AND RETENTION OF KEY MANAGEMENT AND OTHER EMPLOYEES
The development, construction and successful commercialization of the
Resort Casino require a highly skilled and experienced team of managers. The
Partnership is highly dependent on the efforts and abilities of RAS, its general
partner, and the senior management of RAS, particularly Mr. McMullan, President
and Chief Executive Officer of RAS; Mr. Fonseca, the Senior Vice President of
Gaming Operations of RAS; Mr. Boshoff, the Senior Vice President of Slot
Operations of RAS; Mr. Tipton, the Senior Vice President, Chief Financial
Officer and General Counsel of RAS; and Mr. Smith, the Financial Controller of
RAS. Additionally, the quality of hires associated with the hotel and gaming
operations will be critical to the success of the Resort Casino. It may be
difficult to attract, retain and train qualified employees due to its location
and
18
<PAGE> 26
the fact that other facilities may be approaching completion. A failure to
attract or retain qualified management and personnel at all levels or the loss
of any of RAS's key executives could have a material adverse effect on the
financial performance of the Partnership and the Issuers' ability to service the
Indebtedness, including the Notes.
COMPETITION
Both the gaming and resort hotel industries are highly fragmented and
characterized by a high degree of competition among a large number of
participants. Many of the Partnership's competitors are much larger than the
Partnership and have substantially greater resources. The Resort Casino will
face competition from all other casinos and hotels in the Las Vegas area,
including competitors that primarily target local residents and casinos and
hotels located on the Strip, on the Boulder Highway and in downtown Las Vegas.
The Resort Casino also will face competition from non-hotel gaming facilities
that target local residents of Las Vegas. Several new hotel casinos either have
recently opened or are currently under construction on the Strip, including
Monte Carlo, a 3,000-room hotel casino which opened in June 1996; New York, New
York, a 2,500-room hotel-casino which opened in January 1997; the Venetian, a
3,000 room hotel casino, with plans to expand to 6,000 rooms which is expected
to open in April 1999; and Bellagio, a 3,000-room hotel casino which is expected
to open during 1998. In addition, several new projects and expansions have been
announced including Paris, Mandalay Bay, Lake Las Vegas, Mountain Spa, Ritz
Carlton and Marriott Marquis at MGM Grand and the Aladdin, each of which may be
completed within the next several years and would significantly increase the
total number of hotel rooms and gaming capacity in Las Vegas and its environs.
In addition, Coast Resorts plans to build The Sundance Casino a short distance
from the Resort Casino on Rampart Boulevard. The construction of new properties
and the expansion or enhancement of existing properties by competitors may have
a material adverse effect on the financial performance of the Partnership and
the Issuers' ability to service the Indebtedness, including the Notes.
The Partnership holds rights of first offer (the "Right of First Offer")
granted by HHC with respect to the four other potential gaming sites in
Summerlin. The Partnership's ability to develop these sites is dependent upon
numerous factors, including the timing of the receipt of a Right of First Offer,
the financial condition of the Partnership, the ability of the Partnership to
finance the development of the Resort Casino Site, and other factors, many of
which are beyond control of the Partnership. Development of one or more of these
sites by one or more competitors of the Partnership may have a material adverse
effect on the financial condition of the Partnership and the Issuers' ability to
service the Indebtedness, including the Notes.
The Partnership will also compete for gaming customers with casinos located
in the Laughlin and Reno-Lake Tahoe areas of Nevada; in Atlantic City, New
Jersey; and in other parts of the world, including gaming on cruise ships and
international gaming operations, as well as with state-sponsored lotteries, on-
and off-track wagering, card parlors, riverboat, dockside, land-based and Native
American gaming ventures and other forms of legalized gaming in the United
States. In addition, several states recently have legalized, and several other
states are currently considering legalizing, casino gaming. The development of
casino properties similar to those in Las Vegas in areas close to Nevada,
particularly California and Arizona, may have a material adverse effect on the
financial condition of the Partnership and the ability of the Issuers to service
the Indebtedness, including the Notes.
POSSIBLE LEGISLATION
In May 1996, a U.S. Senate committee established the Gambling Impact Study
Commission ("GISC") to conduct a comprehensive study of all matters relating to
the impact of gaming in the United States. No later than 18 months after the
enactment of such legislation, the GISC was required to issue a report
containing its findings and conclusions, together with recommendations for
legislation and administrative actions. Any such recommendations, if enacted
into law, could adversely impact the gaming industry and have a material adverse
effect on the financial condition of the Partnership and the Issuers' ability to
service the Indebtedness, including the Notes. As of the date of this
Prospectus, GISC has not issued a report.
19
<PAGE> 27
The Nevada legislature has, from time to time, considered imposing
additional state taxes on all gaming establishments. Any material increase in
taxes, or the imposition of any additional taxes or fees on the Partnership,
could have a material adverse effect on the financial condition of the
Partnership and the Issuers' ability to service the Indebtedness, including the
Notes.
REGENT HOTEL FRANCHISE
The Partnership has entered into an agreement with Regent International, an
affiliate of the Carlson Hospitality group, to serve as its five-star hotel
flag. Although Regent International plans on expanding into the U.S. market, it
currently only has one franchisee in the U.S. and does not currently have
significant brand name recognition domestically. Failure of Regent International
to penetrate the U.S. market and obtain brand name recognition may have a
material adverse effect on the financial condition of the Partnership and the
Issuers' ability to service the Indebtedness, including the Notes.
The Partnership selected Regent International, in part, on the expectation
that the Hotels will receive five-star ratings by one or more rating
organizations. Although Regent International hotels have been granted five-star
ratings in the past, there can be no assurance that the Hotels will receive a
five-star rating. The failure of the Hotels to obtain a five-star rating could
have a material adverse effect on the financial condition of the Partnership and
the Issuers' ability to service the Indebtedness, including the Notes.
CONTROL BY SIGNIFICANT STOCKHOLDER
Upon consummation of the Exchange Offer, SCA will beneficially own
approximately 92.0% of the outstanding equity interests of the Partnership and
100.0% of the outstanding stock of RAS, the general partner of the Partnership,
and will be able to control the affairs of RAS and the Partnership. SCA is
controlled by Mr. Jecklin, the Chairman of the Board of RAS, through the Swiss
Parent and certain voting arrangements that expire in 2004. By virtue of such
ownership, SCA will have the power to direct the affairs of the Partnership and
to determine the outcome of all matters required to be submitted to the limited
partners of the Partnership for approval, including any amendments to the
Agreement of Limited Partnership, as amended, of the Partnership (the
"Partnership Agreement"). The interest of SCA as equity holders may differ from
the interest of the Note Holders. See "-- Competition," "Certain Transactions"
and "Ownership of Interests."
FRAUDULENT CONVEYANCES AND PREFERENTIAL TRANSFERS
The ability of the Note Holders to enforce the Notes or any Subsidiary
Guarantees may be limited by certain fraudulent conveyance and revocatory laws,
which may be used by a court to avoid or subordinate the Notes or Subsidiary
Guarantees. The requirements for establishing a fraudulent conveyance or
revocatory transfer vary depending on the law of the jurisdiction being applied.
Generally, if under federal and certain state statutes in a bankruptcy,
reorganization, rehabilitation or similar proceeding in respect of the Issuers
or a Guarantor, or in a lawsuit by or on behalf of creditors against the Issuers
or a Guarantor, a court were to find that (i) the Issuers or the Guarantor
incurred Indebtedness in connection with the Notes (including the Subsidiary
Guarantee) with the intent of hindering, delaying or defrauding current or
future creditors of the Issuers or the Guarantor, or (ii) the Issuers or the
Guarantor received less than reasonably equivalent value or fair consideration
for incurring the Indebtedness for the Notes (including the Subsidiary
Guarantee) and the Issuers or the Guarantor (a) were insolvent at the time of
the incurrence of the Indebtedness for the Notes (including the Subsidiary
Guarantee), (b) were rendered insolvent by incurring the Indebtedness for the
Notes (including the Subsidiary Guarantee), (c) were engaged or about to engage
in a business or transaction for which its assets constituted unreasonably small
capital, or (d) were intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured, such court could void in
whole or in part the obligations of the Issuers or the Guarantor in connection
with the Notes (including the Subsidiary Guarantee) and/or subordinate claims of
the Note Holder (including the Subsidiary Guarantee) to all other debts of the
Issuers or the Guarantor, including the Senior Indebtedness. If the obligations
of the Issuers or a Guarantor for the Notes (including a Subsidiary Guarantee)
were subordinated to all such debt, there can be
20
<PAGE> 28
no assurance that, after payment of the other debts of the Issuers or the
Guarantor, there would be sufficient assets to pay such subordinated claims for
the Notes or the Subsidiary Guarantee.
The measures of insolvency for purposes of the foregoing will vary
depending upon the law of the jurisdiction being applied in any such proceeding.
Generally, however, an entity will be considered insolvent if the sum of its
respective debts was greater than the fair saleable value of all of its property
at a fair valuation or if the present fair salable value of its assets is less
than the amount that will be required to pay its probable liability on its
existing debts, as they become absolute and matured.
If certain bankruptcy or insolvency proceedings were initiated by or
against an Issuer or any Guarantor within 90 days after any payment by such
Issuer or such Guarantor with respect to the Notes or a Subsidiary Guarantee,
respectively, or after the issuance of any Subsidiary Guarantee, or if the
Partnership or such Guarantor, as applicable, anticipated becoming insolvent at
the time of such payment or issuance, all or a portion of such payment, or, in
the case of the issuance of a Subsidiary Guarantee, such Subsidiary Guarantee,
could be voided as a preferential transfer under federal bankruptcy or
applicable state insolvency law, and the recipient of such payment could be
required to return such payment.
CHANGE OF CONTROL PROVISIONS
In the event of a Change of Control, each Note Holder will have the right
to require the Partnership to repurchase the Holder's Notes at 101.0% of the
principal amount thereof plus accrued interest. This right of redemption is
subordinate to the Revolving Credit Facility and the rights of all Senior
Indebtedness, including the Mortgage Notes, and effectively all Indebtedness of
the Partnership's Subsidiaries. In order for the Partnership to repurchase the
Notes as a result of a Change of Control, it will be necessary for the
Partnership either to obtain the consent of the requisite holders of Mortgage
Notes and the requisite lenders under the Revolving Credit Facility or to repay
the Mortgage Notes and Revolving Credit Facility in full. These requirements and
subordination of the Notes could prevent the Partnership from repurchasing the
Notes, which would cause a default under the Notes and the Partnership's other
Indebtedness. See "Description of the Notes -- Change of Control."
ENVIRONMENTAL RISKS AND REGULATION
As is the case with any owner or operator of real property, the Partnership
is subject to a variety of federal, state and local governmental regulations
relating to the use, storage, discharge, emission and disposal of hazardous
materials. Failure to comply with environmental laws could result in the
imposition of severe penalties or restrictions on operations by government
agencies or courts of law which could adversely affect operations. The
Partnership does not have environmental liability insurance to cover most such
events, and the environmental liability insurance coverage it maintains to cover
certain events includes significant limitations and exclusions. In addition, if
the Partnership discovers any significant environmental contamination affecting
any of its properties, the Partnership could face material remediation costs or
additional development costs for future expansion activities. See
"Business -- Properties."
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real estate may be
required to investigate and remediate hazardous or toxic substances or petroleum
product releases at such property and may be held liable to a governmental
entity or to private parties for property damage and for investigation and
remediation costs incurred by such parties in connection with the contamination.
Such laws typically impose remediation responsibility and liability without
regard to whether the owner knew or caused the presence of the contaminants, and
the liability under such laws has been interpreted to be joint and several
unless the harm is divisible and there is a reasonable basis for allocation of
responsibility. The costs of investigation, remediation or removal of such
substances may be substantial, and the presence of such substances, or the
failure properly to remediate the contamination on such property, may adversely
affect the owner's ability to sell or rent such property or to borrow using such
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances at a disposal or treatment facility also may be
liable for the costs of removal or remediation of hazardous or toxic substances
at such disposal or treatment facility, whether or not such facility is owned or
operated by such
21
<PAGE> 29
person. In addition, some environmental laws create a lien on the contaminated
site in favor of the government for damages and costs incurred in connection
with the contamination. Finally, the owner of a site may be subject to common
law claims by third parties for damages and costs resulting from environmental
contamination emanating from such site.
Certain federal, state and local laws, regulations and ordinances govern
the removal, encapsulation or disturbance of asbestos-containing materials
("ACM") when such materials are in poor condition or in the event of
construction, remodeling, renovation or demolition of a building. Such laws may
impose liability for release of ACM and may permit third parties to seek
recovery from owners or operators for personal injury resulting from ACM. In
connection with its ownership and operation of the properties, the Partnership
potentially may be liable for such costs.
The Partnership is not aware of any environmental liability that the
Partnership believes could have a material adverse effect on the Partnership's
financial condition or the Issuers' ability to pay the Indebtedness, including
the Notes. Nevertheless, it is possible that there are material environmental
liabilities of which the Partnership is unaware. Moreover, there is no assurance
that (i) future laws, ordinances or regulations will not impose any material
environmental liability or (ii) the current environmental condition of the
Resort Casino Site or any future properties will not be affected by the
condition of land or operations in the vicinity of the properties (such as the
presence of underground storage tanks) or third parties unrelated to the
Partnership.
The Partnership has not been notified by any governmental authority, and is
not otherwise aware, of any material noncompliance, liability or claim relating
to hazardous or toxic substances or petroleum products in connection with
ownership of the Resort Casino Site.
AMERICANS WITH DISABILITIES ACT COMPLIANCE
Under the American with Disabilities Act (the "ADA") places of public
accommodation or commercial facilities are required to meet certain federal
requirements for access and use by disabled persons. Although the Partnership
believes the Resort Casino Site is in material compliance with the ADA, the
Partnership may incur additional costs in connection with ADA compliance in the
future. Also, the ADA and other federal, state and local laws and regulations
concerning access by disabled persons may require modifications to the
Partnership's properties. Non-compliance with the ADA could result in the
imposition of fines, awards of damages to private litigants or an order to
correct non-compliance.
REDEMPTION AND/OR DISPOSAL OF NOTES PURSUANT TO REGULATORY REQUIREMENTS
If a Holder or beneficial owner of a Note is required by any Gaming
Authority to be found suitable, such Holder will be required to apply for a
finding of suitability within 30 days after request of the Gaming Authority or
such other time prescribed by the Gaming Authority. The applicant for a finding
of suitability must pay all costs of the investigation for such finding of
suitability. If a Holder or beneficial owner is required to be found suitable
and is not found suitable by the Gaming Authority, such person may be required
pursuant to the terms of the Notes or law to dispose of the Notes. If a Gaming
Authority determines that a person is unsuitable to own the Notes, then the
Issuers may be subject to sanctions, including the loss of its regulatory
approvals, if, without the prior approval of the applicable Gaming Authority,
they (i) pay to the unsuitable person any dividend, interest, or any
distribution whatsoever, (ii) recognize any voting rights by the unsuitable
person in connection with the Notes, (iii) pay the unsuitable person
remuneration in any form, or (iv) make any payment to the unsuitable person by
way of principal, redemption, conversion, exchange, liquidation or similar
transaction. Further, if the Holder or beneficial owner of the Notes is required
to be found suitable and is not found suitable by a Gaming Authority, (i) such
person shall, upon request of the Issuers, dispose of the person's Notes within
30 days or within the time prescribed by such Gaming Authority, whichever is
earlier (and if not so disposed of, the person is deemed to agree to be bound by
the restrictions described in the previous sentence), or (ii) the Issuers may,
at their option, redeem the person's Notes at the lesser of (a) the principal
amount thereof, (b) the fair market value of the Notes, or (c) the price at
which the Notes were acquired by the person, without, in any case, accrued and
unpaid interest to the date of the finding of unsuitability by the Gaming
Authority, unless payment of such interest is permitted by the Gaming Authority.
22
<PAGE> 30
See "Regulation and Licensing -- Nevada" and "Description of the
Notes -- Optional Redemption -- Regulatory Redemption."
ORIGINAL ISSUE DISCOUNT
The Original Notes were issued with OID (the difference between the stated
redemption price at maturity of the Original Notes and the issue price of the
Original Notes) for U.S. federal income tax purposes. OID accrues from the Issue
Date and generally will be includable as interest income in the U.S. Holder's
gross income for U.S. federal income tax purposes in advance of the cash
payments to which the income is attributable. If a bankruptcy case is commenced
by or against the Partnership under the United States Bankruptcy Code (the
"Bankruptcy Code") after the issuance of the Notes, the claim of a Note Holder
with respect to the principal amount thereof may be limited to an amount equal
to the sum of (i) the initial offering price allocable to the Notes and (ii) the
portion of OID which is not deemed to constitute "unmatured interest" for
purposes of the Bankruptcy Code. Any OID that was not amortized as of any such
bankruptcy filing would constitute "unmatured interest." See "Certain U.S.
Federal Income Tax Consequences."
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
The Original Notes were issued to, and, the Company believes, are currently
owned by, a relatively small number of Beneficial Owners. Prior to the Exchange
Offer, there has not been any public market for the Original Notes. The Original
Notes have not been registered under the Securities Act and will be subject to
restrictions on transferability to the extent that they are not exchanged for
Exchange Notes by Holders who are entitled to participate in the Exchange Offer.
The Original Note Holders (other than any Holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) who are not
eligible to participate in the Exchange Offer are entitled to certain
registration rights, and the Company is required to file a Shelf Registration
Statement for such Original Notes. The Exchange Notes will constitute a new
issue of securities with no established trading market. The Company does not
intend to list the Exchange Notes on any national securities exchange or seek
the admission thereof to trading in the National Association of Securities
Dealers Automated Quotation System. The Initial Purchaser has advised the
Company that it currently intends to make a market in the Exchange Notes, but it
is not obligated to do so and may discontinue market making at any time. In
addition, any market making activity will be subject to the limits imposed by
the Securities Act and the Exchange Act and may be limited during the Exchange
Offer and the pendency of any Shelf Registration Statement. No assurance can be
given that an active public or other market will develop for the Exchange Notes
or as to the liquidity of the trading market for the Exchange Notes. If a
trading market does not develop or develops and is not maintained, Holders may
experience difficulty in reselling the Exchange Notes or may be unable to sell
them at all. Any market for the Exchange Notes which develops may be
discontinued at any time.
If a public trading market develops for the Exchange Notes, future trading
prices will depend on many factors including, among other things, prevailing
interest rates, the Company's results of operations and the market for similar
securities. Depending on these and other factors, the Exchange Notes may trade
at a discount from their principal amount.
CONSEQUENCES OF FAILURE TO EXCHANGE ORIGINAL NOTES
Original Note Holders who do not tender will remain subject to the
restrictions on transfer of the Original Notes which were issued in a private
transaction and were not registered under the Securities Act and applicable
state securities laws. In general, the Original Notes may not be offered or sold
unless registered under the Securities Act and applicable state securities laws,
or pursuant to an exemption therefrom. The Company does not intend to register
the Original Notes under the Securities Act. Any Original Note Holder who
tenders in the Exchange Offer for the purpose of participating in a distribution
may be deemed to have received restricted securities and will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale. To the extent Original Notes are
tendered and accepted in the Exchange Offer, the trading market, if any, for the
Original Notes not tendered could be adversely affected. See "The Exchange
Offer."
23
<PAGE> 31
USE OF PROCEEDS
There will be no cash proceeds payable to the Partnership from the issuance
of the Exchange Notes pursuant to the Exchange Offer.
The proceeds from the 144A Offering, together with the proceeds from the
Mortgage Notes and equity contributions, are being used to construct, develop
and equip the Resort Casino as described below:
<TABLE>
<CAPTION>
USES $ IN MILLIONS
- ---- -------------
<S> <C>
Land(1).................................................. $ 17.8
Construction Hard Costs(2)............................... 133.0
FF&E, Gaming Equipment and MIS(3)........................ 48.5
Construction Soft Costs(4)............................... 9.8
Net Working Capital(5)................................... 5.9
Cash Interest and Fees, Net(6)........................... 0.3
Licenses, Taxes and Fees................................. 7.8
Pre-Opening Expenses..................................... 14.3
Contingency and Construction Completion Reserves(7)...... 4.4
Interest in Escrow(8).................................... 12.4
Transaction Fees and Expenses............................ 13.3
------
Total Uses..................................... $267.5
======
</TABLE>
- ---------------
(1) Land acquisition cost paid in August 1996 was $16.6 million for the purchase
of the 54.5 acre Resort Casino Site and option fees totalling $1.2 million
to obtain option rights with respect to the Option Parcel, which were
assigned to SCA prior to the completion of the 144A Offering. See "Certain
Transactions -- Option and Right of First Offer."
(2) The Partnership has executed the Construction Contract with J.A. Jones and
the Construction Management Contract with Rider Hunt.
(3) The Partnership has the ability to lease up to $15.0 million of additional
furniture, fixtures and equipment.
(4) Construction soft costs consist principally of architectural, engineering
and sewer and water connection fees.
(5) Net working capital represents principally cash and coin for the Resort
Casino and four months prepaid gaming taxes.
(6) The Resort Casino is scheduled to open in April 1999. "Cash Interest and
Fees, Net" equals the total of interest expense and commitment fees on the
Mortgage Notes, net of interest income.
(7) Represents excess cash available for construction cost overruns, if any, in
addition to other cost overrun provisions.
(8) Represents five quarters of interest on the Mortgage Notes based on an
estimated interest rate of 9.95%.
24
<PAGE> 32
CAPITALIZATION
The following table sets forth the capitalization of the Partnership as of
December 31, 1997 after the completion of the 144A Offering. This table should
be read in conjunction with the financial statements and the notes thereto, "Use
of Proceeds," and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1997
ACTUAL AS ADJUSTED(1)
------------------ ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Long-term debt:
Mortgage Notes........................... $ 60.0 $100.0
Original Notes(2)........................ 94.1 94.1
Warrants(2).............................. 5.9 5.9
------ ------
Total long-term debt.................. 160.0 200.0
Partners' capital:
Partners' contributed capital(3)...... 65.8 65.8
Deficit accumulated during development
stage............................... (.7) (.7)
------ ------
Total partnership interest....... 65.1 65.1
------ ------
Total capitalization............. $225.1 $265.1
====== ======
</TABLE>
- ---------------
(1) Adjusted capitalization includes the Issuers' Drawdown of the remaining
$40.0 million of Mortgage Notes commitment.
(2) Through June 15, 1999, interest is payable in either cash or by issuing
additional Notes. The Issuers expect to pay interest through June 15, 1999
by issuing additional Notes, which would increase the principal amount of
the Notes to $120.8 million, assuming an interest rate of 13.0%. For GAAP
purposes the Partnership has allocated the $100.0 million of proceeds from
the sale of the Units as follows (in millions):
<TABLE>
<S> <C>
Original Notes...................... $94.1
Warrants............................ 5.9
------
Total............................... $100.0
======
</TABLE>
The $5.9 million of OID on the issue of the Original Notes will be amortized
over the term of the Original Notes using the effective interest method. The
Partnership accrues additional interest in connection with the Warrants. See
Note 2 to the Financial Statements.
(3) The components of partners' contributed capital are (i) approximately $63.0
million in cash from SCA, and (ii) approximately $4.5 million in cash from
other limited partners less (iii) $500,000 of licensing costs carried on the
books of SCRN and (iv) $1.2 million of option payments assigned to SCA. See
"Certain Transactions -- Option and Right of First Offer."
Contributed capital of RAS at December 31, 1997 is $700,000 (actual and as
adjusted). RAS has no long-term debt.
25
<PAGE> 33
SELECTED CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data set forth below as of
December 31, 1997 and December 31, 1996, for the year ended December 31, 1997,
and for the period from inception through December 31, 1996, have been derived
from the financial statements of RAS and the Partnership included elsewhere
herein which have been audited by Ernst & Young L.L.P., independent auditors,
and should be read in conjunction with those financial statements (including the
notes thereto) and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations", all appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
RAS CONSOLIDATED 1997 1996
---------------- ------------ -----------
<S> <C> <C>
Statement of Operations Data:
Revenues.................................................. $ -- $ --
Costs and Expenses:
General and administrative................................ 498,427 84,458
Depreciation and amortization............................. 113,312 --
Other Income (Expense):
Interest income........................................... 41,255 --
Interest expense.......................................... (48,346) --
------------ -----------
Loss before limited partners' interests..................... (618,830) (84,458)
Limited partners' interests................................. (608,145) (83,613)
------------ -----------
Net loss.................................................... $ (10,685) $ (845)
============ ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................. $175,491,628 $ --
Property and equipment.................................... 20,871,112 17,154,547
Total assets.............................................. 226,237,440 18,646,981
Total current liabilities................................. 1,127,313 --
Long-term debt, net of discount........................... 154,131,067 --
Warrants redeemable for partnership interest.............. 5,869,565 --
Total liabilities......................................... 161,127,945 18,146,826
Total stockholder's equity................................ 670,970 500,155
Total liabilities, limited partners' interest and
stockholder's equity................................... 226,237,440 18,646,981
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
THE PARTNERSHIP 1997 1996
--------------- ------------ -----------
<S> <C> <C>
Statement of Operations Data:
Revenues.................................................. $ -- $ --
Cost and Expenses:
General and administrative................................ 493,885 84,458
Depreciation and amortization............................. 113,312 --
Other Income (Expense):
Interest income........................................... 41,255 --
Interest expense.......................................... (48,346) --
------------ -----------
Net loss.................................................... $ (614,288) $ (84,458)
============ ===========
</TABLE>
26
<PAGE> 34
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................. $175,487,660 $ --
Property and equipment.................................... 20,871,112 17,154,547
Total assets.............................................. 226,233,472 18,645,981
Total current liabilities................................. 1,126,303 --
Long-term debt, net of discount........................... 154,131,067 --
Warrants redeemable for partnership interest.............. 5,869,565 --
Total liabilities......................................... 161,126,935 --
Total partnership interest................................ 65,106,537 18,645,981
Total liabilities and partnership interest................ 226,233,472 18,645,981
</TABLE>
27
<PAGE> 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Partnership should be read in conjunction with the information
contained in the Financial Statements, including the notes thereto, and the
other financial information appearing elsewhere in this Prospectus. The
following discussion includes forward-looking statements that involve certain
risks and uncertainties. See "Risk Factors."
DEVELOPMENT ACTIVITIES
The Partnership is constructing, and will own and operate, the Resort
Casino which is expected to include two luxury five-star hotel facilities, a
casino, a spa and fitness center, and a retail, meeting and entertainment
complex in Las Vegas, Nevada. The Resort Casino is expected to commence
operations in the second quarter of 1999. Construction of the Resort Casino
began in January 1998.
RESULTS OF OPERATIONS
RAS was incorporated in Nevada in June 1996, and the Partnership was formed
in Nevada in August 1996. Because the Issuers are in the development stage and
have had no significant operating results, the results of operations are not
discussed. See the Financial Statements for the Issuers' historical results of
operation.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997, approximately $51.4 million of the estimated total
project cost of $267.5 million had been expended or incurred to fund
construction and development of the Resort Casino. Of the costs incurred,
approximately $21.0 million represents land, construction in progress and
furniture, fixtures and equipment, and the balance represents related
development costs, financing costs and funds deposited into the Mortgage Notes
interest escrow account.
The remaining construction and development costs for the Resort Casino are
expected to be funded from a combination of (i) gross proceeds from the offering
of the Mortgage Notes of approximately $100.0 million, (ii) gross proceeds from
the 144A Offering of approximately $100.0 million, and (iii) the Equity
Contribution, which was fully funded prior to the closing date of the 144A
Offering. See "Use of Proceeds" and "Description of the Notes."
The Mortgage Notes consist of up to $100.0 million of loans ("Construction
Loans") which may be used to finance construction of the Resort Casino, with the
principal amount of Construction Loans outstanding on the Commencement Date to
convert into term loans (the "Term Loans"). Construction Loans and Term Loans
may not be re-borrowed once repaid. Advances on the Construction Loans may be
made after the Issue Date pursuant to a maximum of four drawdowns (each a
"Drawdown"), of at least $10.0 million each on a quarter end from March 31, 1998
through March 31, 1999. See "Certain Material Agreements -- Disbursement
Agreement." In addition, a portion, if any, of the maximum $100.0 million not
incurred as Construction Loans (but not in excess of $10.0 million) will be made
available on and after the Commencement Date under the Revolving Credit Facility
which will be available from the Commencement Date to March 31, 2004 (the
"Maturity Date"). The Partnership may obtain additional sources of liquidity, if
necessary, including (i) up to $15.0 million of lease financing for furniture,
fixtures and equipment and (ii) up to $5.0 million of unsecured debt.
The funds provided by these sources are expected to be sufficient to
develop, construct and commence operations of the Resort Casino assuming there
are no significant delays, material cost or construction cost overruns or that
any delays, material cost and construction cost overruns are covered by (i) the
Partnership's contingency and construction completion reserves of $4.4 million,
(ii) the subordination of SCA's $3.0 million development fee and (iii) various
insurance policies. See "Insurance Requirements."
Following the completion of the Resort Casino, the Issuers expect to fund
their operations and capital requirements from (i) operating cash flow; (ii) a
forecasted cash balance upon opening of $26.0 million
28
<PAGE> 36
and/or (iii) additional indebtedness of up to $10.0 million under the Revolving
Credit Facility. Such financing is subject to certain conditions, including
completion of the Resort Casino. See "Risk Factors."
Although no additional funding for the Resort Casino is currently
contemplated (other than described above), the Partnership may seek, if
necessary and to the extent permitted under the Mortgage Notes and the Notes,
additional financing through additional bank borrowings or debt or equity
financing. There can be no assurance that additional financing, if needed, will
be available to the Partnership and, if available, that the financing will be on
terms favorable to the Partnership. Finally, there can be no assurance that new
business developments or other unforeseen events will not occur resulting in the
need to raise additional funds.
29
<PAGE> 37
BUSINESS
GENERAL
The Partnership plans to construct, own and operate the Resort Casino, a
Mediterranean-style luxury hotel, casino and spa complex, to be located
approximately nine miles from the Strip and approximately 20 minutes from
McCarran International Airport. The Resort Casino Site is located at the gateway
to Summerlin, a three-time award-winning, 22,500-acre land development of HHP.
The Resort Casino is designed to offer a complete range of amenities including
two five-star hotels with a total of 556 rooms and suites, a 50,000 square foot
gaming facility, a 40,000 square foot state-of-the-art spa and fitness facility,
up to eight restaurants of varied cuisine and an indoor/outdoor buffet, a 60,000
square foot lifestyle complex, and a 50,000 square foot conference and banquet
center. The Resort Casino has contracted to reserve up to 75.0% of the tee times
at the adjoining TPC Canyons, home to the Senior PGA Tour's Las Vegas Senior
Classic, and the Resort Casino Site is located near eight additional golf
courses. Management believes that, when completed, the Resort Casino will
represent one of a few five-star resorts with gaming in the United States and a
premier "off-Strip" casino in Las Vegas. Construction of the Resort Casino began
in January 1998 with an opening to the general public scheduled for April 1999.
RAS was incorporated in Nevada in June 1996, and the Partnership was formed
as a limited partnership in Nevada in August 1996. The executive offices of the
Issuers are located at 1160 Town Center Drive, Suite 200, Las Vegas, Nevada
89134 and the telephone number is (702) 869-7000.
BUSINESS AND MARKETING STRATEGY
The Partnership's business and the goal of its marketing strategy is to (i)
create the Resort Casino as a premier off-Strip location with geographic
exclusivity, (ii) deliver superior and market-unique resort amenities within the
local off-Strip market, (iii) target middle- to upper-income customers, (iv)
capitalize on its marquee hotel flag and extensive travel network relationship,
(v) carefully manage construction costs and risks with a proven design and build
team, and (vi) leverage management's track record and continuity.
- CREATE A PREMIER OFF-STRIP LOCATION WITH GEOGRAPHIC EXCLUSIVITY. At the
time of its completion, the Resort Casino is expected to be the only
luxury destination of its kind in the United States with gaming and nine
golf courses within a five-minute drive of the Resort Casino Site. The
Resort Casino will be situated at the gateway to Summerlin having a
projected 1999 population base of 235,000 residents within a five-mile
radius. Located at the intersection of Rampart Boulevard and Summerlin
Parkway, two principal traffic arteries in northwest Las Vegas, the area
is readily accessible from most major points in the city including
downtown Las Vegas (approximately eight miles), the Strip (approximately
nine miles) and McCarran International Airport (approximately 15 miles).
Accessibility will be further enhanced by the planned connection of the
Las Vegas beltway to Summerlin Parkway by 2000.
TPC Canyons is adjacent to the Resort Casino Site. Immediately to the
south and east of the Resort Casino Site is the Angel Park Golf Club
which includes two regulation 18-hole courses and an executive, 12-hole
par three course. An additional six 18-hole public and private golf
courses are within five minutes of the Resort Casino Site. The Resort
Casino will offer panoramic views of the adjoining golf courses as well
as of Las Vegas and the Strip to the east and the Red Rock Canyon
National Park to the west.
The Partnership has obtained the Right of First Offer from HHP to develop
an additional four designated gaming sites in Summerlin which rights may
be assigned to certain unrestricted Subsidiaries in certain
circumstances. See "Risk Factors -- Competition." Additionally, Nevada
Senate Bill #208, enacted in July 1997, from which the Resort Casino and
the additional four gaming sites subject to the Right of First Offer are
exempt, limits the development of casinos near residential
neighborhoods, churches and schools, preventing entry by competitors
into the market.
- DELIVER SUPERIOR RESORT AMENITIES. The Resort Casino is designed along
the lines of a Scottsdale- or Palm Springs-type facility with
Mediterranean-style architecture, intimate ambiance and strong focus
30
<PAGE> 38
on service intended to create a lifestyle experience for its guests and
offer visitors a haven from the pressures of daily life. The Partnership
believes that this atmosphere is generally unavailable in Las Vegas or
other gaming locales in the United States. The Resort Casino's two Hotels
will feature 508 standard rooms and 64 suites. At approximately 564
square feet, the Resort Casino's standard guest room will be among the
most spacious in Las Vegas. The circular design casino will be situated
at the hub of the Resort Casino and will feature 50,000 square feet of
gaming space, including 1,200 slot machines, 40 table games, a sports and
race betting club and two salons prives for higher stake slots and table
games. For golfers, the Resort Casino will be able to reserve up to 75.0%
of the tee times at TPC Canyons and will benefit from an additional 156
holes of golf within five minutes of the Resort Casino Site. The Resort
Casino also will include a 40,000 square foot upscale spa and fitness
facility with state-of-the-art equipment designed to the same standards
as the award-winning Grand Wailea, Hawaii and Golden Door, California spa
resorts. Guests will have various indoor and outdoor dining options
including up to eight restaurants of varied cuisine and a large,
roof-deck buffet. The Resort Casino also will include a technologically
advanced, flexible design business meeting center to cater to executive
retreats and conferences. The Lifestyle Complex, which is designed to
facilitate indoor and outdoor activity and highlighted by terraces,
fountains and pools, will link all the components in the Resort Casino.
The Lifestyle Complex will include gourmet food and wine shops, a cigar
shop, a beauty salon and other boutique outlets selected to encourage
frequent visits by local residents.
- TARGET MIDDLE- TO UPPER-INCOME CUSTOMER SEGMENTS. The Resort Casino will
be specifically tailored to cater to the affluent, higher-end customer.
The Partnership expects the Resort Casino's Hotels and recreational
amenities will appeal to customers from the following principal long-term
markets:
The Captive Summerlin Market. According to BBER, the population within a
five-mile radius of the Resort Casino Site, which encompasses Summerlin
and some of the most affluent and desirable residential neighborhoods in
metropolitan Las Vegas, is estimated to be 211,000 and is projected to
grow to 235,000 by 1999. The population of Clark County has grown
approximately 48.0% since 1990, and the population within a five-mile
radius of the Resort Casino Site is projected to continue growing at
approximately 5.0% per year according to BBER. The median household income
for residents in this target market is approximately 21.0% above the Las
Vegas median household income and approximately 30.0% above the United
States national average according to Wells Gaming Research. The
Partnership's goal is to position the Resort Casino as the Summerlin
residents' "country club."
Middle- to Upper-Income Local Market. The Issuers believe this segment is
characterized by a highly profitable, repeat clientele that has long been
under-served by "local" casinos. The Issuers expect the Resort Casino will
appeal strongly to the affluent local population, including the estimated
72.0% of adult Las Vegas residents who game, and will represent the only
resort servicing the local market's demand for upscale recreation, dining
and entertainment.
Golfer/Gamer and Resort Vacationer. According to Wells Gaming Research,
approximately 1.9 million golfer/gamers visit Las Vegas at least once
annually and 43.0% of golfer/gamers spend over $1,500 per trip. The
Issuers believe the Resort Casino will represent the only gaming resort in
the United States in close proximity to two TPC and seven other golf
courses. Additionally, the high levels of service and amenities expected
to be provided by the Resort Casino will cater to resort table players
with gaming budgets from $5,000 to $250,000 per visit.
Local and Out-of-State Conferences and Banquets. The Resort Casino is
expected to have one of the few high-tech business meeting facilities in
Las Vegas catering to small- and mid-size conferences. Designed with the
necessary services and amenities to cater to executive retreats, including
ample parking, the Resort Casino will provide an ideal setting for small-
to mid-sized conferences and will have the capacity to host charity and
social events for up to 1,100 people in dinner seating.
- CAPITALIZE ON MARQUEE HOTEL FLAG AND TRAVEL NETWORK RELATIONSHIP. The
Partnership has entered into an agreement with Regent International, an
affiliate of the Carlson Hospitality group, to serve as its five-star
hotel flag. The Regent International hotels are a group of world-class,
luxury hotels
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<PAGE> 39
concentrated around the Pacific Rim, with the Resort Casino representing
its only property in Las Vegas. As of the date of this Prospectus, Regent
International's only flagged property in the U.S. is the Regent Beverly
Wilshire-Los Angeles. The Resort Casino will benefit from Regent's
reservation network and Carlson Wagonlit Travel, which currently books
approximately 400,000 room nights per year in Las Vegas with no existing
Las Vegas hotel affiliate.
- CAREFULLY MANAGE CONSTRUCTION COSTS AND RISKS WITH PROVEN DESIGN AND
BUILD TEAM. The management of RAS, the general partner of the
Partnership, has a proven track record of resort and casino design,
construction, development and operation including Sun International's
Carousel, one of the largest and most profitable casinos in South Africa,
and the Prairie Knights and Speaking Rock casinos in the United States.
The Issuers have assembled an experienced project team. The Partnership
has signed a $133.0 million guaranteed maximum price Construction
Contract with J.A. Jones, a subsidiary of J.A. Jones, Inc., one of the
world's leading general contractors with $2.0 billion of annual revenue.
J.A. Jones, Inc. is a subsidiary of Philipp Holzmann AG, a German
contracting company, with $12.0 billion of revenue, which is an Affiliate
of Deutsche Bank AG, with several major projects to its credit, including
the renovation of the West and East wings of the White House in
Washington, D.C., the world's tallest buildings, the Twin Towers of Kuala
Lumpur, and Sun International's Paradise Island Bahamas Phase II. A
completion guaranty covering certain cost overruns has been provided by
J.A. Jones, Inc. The Resort Casino was designed by the Architect, one of
the nation's leading casino design firms whose principal, Mr. Steelman,
is a beneficial owner of a 5.0% limited partnership interest in the
Partnership, whose projects include work for, among others, Mirage
Resorts, Caesars, Harrah's and Sun International. For the Resort Casino
grounds, the Partnership has contracted with Lifescapes, among the
nation's leading landscape design firms. Lifescapes' projects include The
Mirage, Bellagio, Treasure Island and Jurassic Park at Universal Studios.
Total construction hard costs are budgeted at approximately $133.0
million. The Partnership has provided contingency and completion reserve
funds of approximately $4.4 million and has subordinated the $3.0 million
development fee of SCA, the 91.26% limited partner of the Partnership and
the parent of RAS, to the successful on-budget completion of the Resort
Casino. The anticipated reserves represent approximately 3.3% of total
construction hard costs.
- LEVERAGE MANAGEMENT TEAM TRACK RECORD AND CONTINUITY. The Partnership
expects to leverage the gaming experience and track record of RAS's
senior and middle management. RAS's senior management has a cumulative 75
years of experience in the gaming and resort industry. Messrs. McMullan
and Fonseca, the President and Chief Executive Officer and Senior Vice
President Gaming Operations of RAS, respectively, have worked together
for over 20 years. Mr. Boshoff, the Senior Vice President Slot Operations
of RAS, has worked with Mr. McMullan and Mr. Fonesca for over 11 years.
Messrs. McMullan, Fonseca and Boshoff each were previously employed by
Sun International, an international casino group, and participated in
designing, building and operating six casinos in South Africa including
Sun International's Carousel. Mr. Tipton, the Senior Vice President,
Chief Financial Officer and General Counsel of RAS, served in Colorado
Governor Roy Romer's cabinet as Executive Director of the Colorado
Department of Revenue, during which time he successfully drafted and
implemented casino gaming legislation. The Partnership's middle
management includes nine gaming and non-gaming professionals with
experience principally in the United States, the United Kingdom and
southern Africa. See "Management."
SWISS CASINOS OF AMERICA, INC.
Based in Las Vegas, Nevada, SCA was formed in 1989 and is a majority-owned
(83.0%) subsidiary of the Swiss Parent which is owned by Mr. Jecklin, the
Chairman of the Board of Directors of RAS, and his family. SCA was formed for
the primary purpose of acquiring, developing and managing casino and resort
properties in the United States. The Swiss parent currently owns or operates
more than 25 gaming establishments, hotels, restaurants and other businesses
throughout Europe, and leases and/or operates additional gaming establishments
in the United States. The Swiss parent is a leading gaming operator in
Switzerland and also has gaming facilities in the Netherlands and Great Britain.
As with the Swiss Parent,
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<PAGE> 40
SCA's activities extend beyond the casino operations and include the management
of hotels, restaurants, retail outlets, bars and live entertainment.
THE RESORT CASINO
Hotels
The Resort Casino is designed with two six-story hotels with a combined 556
guest rooms and suites (the "Hotels"). The Issuers believe it is critical to
keep each Hotel small enough to retain the ambiance and service expected of a
five-star operation. A full range of hotel services are anticipated, including
business services, concierge and transportation services, 24-hour room service,
spa and fitness facilities, dining and lounge offerings, laundry and valet
services, state-of-the-art telecommunications systems, and luxury guest and bath
amenities. Examples of the Hotels' anticipated level of service include: (i)
early morning coffee service in the lobby, available from room service and from
an in-room coffee machine; (ii) bottled mineral water and towels available to
joggers; (iii) pre-registration for VIP and all returning guests; (iv) 24-hour
bellman, valet and reception coverage; (v) a currency exchange board; (vi)
multi-lingual concierge; (vii) bonded, professional babysitting services; (viii)
messages delivered to room and printed on good stock in an envelope; (ix) voice
mail; and (x) one-hour or overnight shoeshine, pressing and laundry.
The Issuers believe that the quality and size of the Hotel rooms will be
one of the most attractive features to its guests. The Hotel's standard guest
room will be approximately 564 square feet, making it among the most spacious in
Las Vegas. The rooms will be designed to offer resort guests the sense of
comfort expected at a five-star resort and will be furnished with quality
bedding, king-size feather pillows, mini-bars in all rooms, in-room safes,
appropriate night stands and lighting, AM/FM clock radios, three 2-line
telephones, remote control cable television in an enclosed, built-in armoire,
dressers, desk, chair and ottoman, a full-length mirror and artwork. Jogging
maps and high quality publications will be provided. The guest rooms are
expected to have marble and carpet floor coverings and will have synthetic
plaster walls and wood wainscoting. The bathrooms will have a combination of
ceramic tile and marble floors and synthetic plaster walls, with marble and
ceramic tile walls in the separate whirlpool bath and shower stalls. The vanity
will be marble and offer two sinks and a make-up area.
Gaming Operations
Situated at the hub of the Resort Casino, the casino (the "Casino") will
emphasize comfort, space and informality, and consist of approximately 50,000
square feet of gaming space, with 1,200 slot machines, 40 table games and a
sports and race betting club. Two salons prives will offer higher stakes slots
and table games in a more intimate setting. The Issuers believe that with one of
the lowest ratios of gaming positions per square foot in Las Vegas, the Casino
will provide a gaming experience generally not available in the local market.
Management believes that few casinos in the Las Vegas market that cater to
Las Vegas residents place a significant emphasis on table games. The Resort
Casino's marketing efforts will emphasize its table game limits and credit
facilities. Maximum bet limits will accommodate many of the local players who
currently patronize the Strip due to the prevailing low maximum bet limits
imposed by the other local casinos. The table operation will be marketed
directly to local players and visitors with table gaming budgets from $5,000 to
$250,000. Unlike many local casinos, the Issuers anticipate that the Resort
Casino will extend credit to any customers who can establish creditworthiness,
irrespective of whether they are residents or visitors.
Food and Beverage
Few restaurants are currently available within Summerlin and the
neighboring communities. The Resort Casino will seek to target this market need
by offering nine separate dining facilities and nine bars and lounges, including
several in the Lifestyle Complex. The largest dining facility is expected to be
a 532-seat indoor/ outdoor buffet serving two meals daily on the second floor of
the Casino with panoramic views of the mountains, golf courses and city lights.
The Resort Casino also will have eight other restaurants offering a variety of
menus at many price points. Currently the Partnership has executed one lease for
a steak and seafood restaurant and plans to enter into at least four additional
leases with different restaurant operators to
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<PAGE> 41
operate restaurants at the Resort Casino serving Asian, French and Italian
cuisines. See "Additional Material Agreements -- Restaurant Lease Agreements."
Lifestyle Complex
The 60,000 square foot Lifestyle Complex, which will tie together the
Resort Casino's restaurants, shops and other entertainment areas, is designed to
facilitate indoor and outdoor activities with Mediterranean-themed terraces,
fountains and pools. The Lifestyle Complex will target middle- to upper-income
residents and is expected to include:
<TABLE>
<S> <C>
- - Gift Shop - Cigar Shop
- - Florist - Gourmet Delicatessen
- - Golf Pro Shop - Patisserie
- - Chocolatier - Ice Cream Parlor
- - Authentic Irish Pub - Travel Agency
- - Wine Shop - Beauty Salon
</TABLE>
The Partnership expects to provide live blues and jazz performances as well
as other entertainment in the Lifestyle Complex.
Executive Office, Conference and Banquet Complex
For meetings and conferences, the Resort Casino will have 50,000 square
feet of dedicated conference room and meeting space available, outfitted with
audio and visual support equipment. An on-site business center with a mix of
small and large rooms will provide corporate travelers with access to the latest
technology including full service audio-visual equipment, computer terminals,
laser printers, telephones, fax machines, online market updates and other
business services. The office and conference complex will be designed to support
the Resort Casino's strategy of attracting out-of-state group business (such as
corporate retreats and small conventions) as well as meetings of local
residents. The Partnership will provide state-of-the-art audiovisual equipment
and a technician who will help executive conferees produce computer animated
audio-visual presentations. The conference center is expected to be the local
venue of choice for charity events, company functions and weddings. The
immediate proximity to 174 holes of golf is expected to be a key additional
element in the Resort Casino's attractiveness as a center for small meetings.
Recreational Amenities
The Resort Casino's recreational facilities will include access to the
18-hole TPC Canyons golf course, a high-end spa facility, a fully equipped
fitness center, walking trails and outdoor pools with lush landscaping. The
Resort Casino anticipates offering local residents fee paying memberships to the
spa, health club and pools.
Golf. The Resort Casino will be associated with the highly rated,
18-hole, TPC Canyons golf course which currently plays host to the Senior PGA
Tour's Las Vegas Senior Classic. As part of a contractual agreement with the TPC
Canyons, the Resort Casino will have the ability to control 50.0% of the
available tee times for the next 99 years. At the Resort Casino's option, this
percentage may be increased to 75.0%.
TPC Canyons is one of 17 TPC clubs and courses nationwide. Home to over 100
PGA Tour and Senior PGA Tour events, the TPC network has a reputation for
providing some of the finest golf facilities in the world. TPC Canyons was
designed by and for PGA professionals in consultation with Raymond Floyd, one of
the world's top professional golfers. TPC Canyons is a stadium course, naturally
incorporated into the desert terrain with a variety of trees, elevation changes,
steep ravines and a canyon lake. With more than 60 tees, wide fairway landing
areas and soft, rolling greens, the course appeals to players of all abilities.
TPC Canyons also has a practice facility, realistic target greens and a complete
short game area with practice bunkers. In addition to the course and practice
facility, TPC Canyons features a large clubhouse with a full-service grille
offering breakfast, lunch and dinner, a full-service golf shop offering a
complete line of apparel, equipment and TPC specialty items and fully equipped
locker facilities.
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Just to the north of the Resort Casino is the TPC Summerlin championship
course, home to the PGA Tour's annual Las Vegas Invitational and the site of
Tiger Woods' first PGA tour victory. TPC Summerlin is a private club that will
be accessible to the Resort Casino's best customers as guests of the
Partnership. Moreover, for those golfers desiring a variety of course offerings
during their stay in Las Vegas, an additional 48 holes of golf are available at
Angel Park including a lighted 12-hole par three course. Five other public and
private 18-hole courses are located within a five minute drive of the Resort
Casino Site.
In total, guests of the Resort Casino will be in close proximity to the
following courses:
LAS VEGAS GOLF COURSES
(IMMEDIATE AREAS OF THE RESORT CASINO)
<TABLE>
<CAPTION>
COURSE NAME LOCATION HOLES ESTIMATED ROUNDS/YR.
----------- -------- ----- --------------------
<S> <C> <C> <C>
TPC Canyons....................... Adjoining 18 44,000
TPC Summerlin..................... Immediately North 18 32,000
Angel Park........................ Immediately South and East 36 120,000
Angel Park (Executive)............ Immediately South and East 12 --
Badlands.......................... 1/2 Mile South 18 53,000
Palm Valley....................... Sun City 18 65,000
Highland Falls.................... Sun City 18 60,000
Eagle Crest....................... Sun City 18 35,000
Canyon Gate Country Club.......... 2 Miles South 18 27,000
---
TOTAL HOLES............. 174
</TABLE>
Superior Spa and Fitness Center. The Resort Casino will contain a 40,000
square foot superior spa, salon and fitness center, which the Issuers believe
will be one of the largest and best equipped in Las Vegas. Resort Casino guests
and members will have access to facilities including locker rooms, showers,
steam room, sauna, whirlpool and specialty baths, and a cascading waterfall
shower. The spa is expected to offer a variety of treatments, including facials
(European, Glycolic, Moor Mud, Fango, Teen, Back, and Summerlin Spa Deluxe,
among others), massages from around the world (Swedish, Shiatsu, Sports, Reiki,
etc.), body treatments including mud wraps, seaweed wraps, aromatherapy oil
wraps, body scrubs and polishes, and honey steam wraps, watsu pool, and
traditional Indian Ayurvedic treatments.
The salon will provide hair care services including cuts, conditioning,
coloring, weaves, braids, and bridal services. The salon also will offer
manicures, pedicures, make-up and waxing. The spa's boutique will sell fitness
attire, Resort Casino logo wear, hydrotherapy bath products, massage and
aromatherapy oils, and skin care products.
The fitness center will contain state-of-the-art workout equipment
including Gravitrons, Stairmasters, treadmills, rowing machines and Lifecycles;
an aerobics studio; and a full range of weight training equipment. The fitness
center will be staffed with certified personal fitness trainers and trainers,
aerobics, step, toning, stretch and yoga instructors.
Gardens and Swimming Pool. The Resort Casino is expected to have an 11,000
square foot outdoor pool and children's pool. The pool area will offer Resort
Casino guests and members lush landscaping in a tropical setting. Food and
drinks as well as towels and other services will be available poolside. Thirteen
pool cabanas will be available on a fee basis for added privacy and a putting
green and lounge will be adjacent to the pool area. Several acres of elaborate
landscaping, water features and walking paths will be incorporated throughout
the Resort Casino Site.
PARKING AND TRANSPORTATION
The Resort Casino will have parking sufficient to accommodate both
out-of-town and local guests. A four-level covered parking structure will
provide parking for approximately 1,000 vehicles with surface parking provided
for an additional 1,550 vehicles. Resort Casino guests and visitors will have
the option of either
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<PAGE> 43
self-parking their vehicles or using a complimentary valet service. The Resort
Casino will provide transportation for VIP guests to and from the airport and
shuttles and limousines to the Strip and popular shows.
FUTURE SITES AND DEVELOPMENT
The Resort at Summerlin is located at the only approved gaming site in the
portion of Summerlin known as Summerlin North. The Partnership has obtained the
Right of First Offer from HHP for future development on the four approved gaming
sites in Summerlin South and West which rights, in certain circumstances, may be
assigned to an affiliate of SCA in exchange for an equity interest in such
affiliate. Development of Summerlin South began in 1997, and Summerlin West is
anticipated to be developed over the next five to 10 years. The Issuers believe
this geographic exclusivity enhances the Partnership's future prospects in the
Las Vegas market that will give the Resort Casino a sustainable competitive
advantage. See "Risk Factors -- Competition." Moreover, recently passed
legislation will further restrict the ability of new casinos to enter the
Partnership's targeted market.
CONSTRUCTION SCHEDULE AND BUDGET
Construction of the Resort Casino began in January 1998 with a targeted
completion in April 1999.
DESIGN AND CONSTRUCTION TEAM
The Issuers have assembled what they believe to be a highly qualified team
of specialists to design and construct the Resort Casino.
General Contractor
J.A. Jones, the construction manager for the Resort Casino, is a
wholly-owned subsidiary of J.A. Jones, Inc., one of the nation's leading general
contractors. Founded in 1890, J.A. Jones, Inc. is a wholly-owned subsidiary of
Philipp Holzmann AG, a $12.0 billion revenue European contractor. J.A. Jones,
Inc.'s portfolio of completed projects include: (i) the renovation of the East
Wing and West Wing of The White House; (ii) the world's tallest buildings, the
"Twin Towers" of Kuala Lumpur; (iii) the Ritz Carlton in Naples, Florida; (iv)
the Four Seasons Hotel in Chicago, Illinois; (v) the Galleria Shopping Mall in
Dallas, Texas; (vi) the Federal Triangle Building in Washington, DC; and (vii)
the AT&T Building in New York, New York. Current projects include (a) the U.S.
Federal Courthouse in Las Vegas, Nevada, and (b) Sun International's Atlantis
Casino Resort Phase II in Paradise Island, Bahamas. A third-party construction
manager will be engaged to act as construction manager for the Resort Casino.
Architect
Paul Steelman Ltd., one of the largest architectural firms in the world
specializing in casino entertainment design, is the principal Architect for the
Resort Casino. Mr. Steelman, who founded the firm in 1987 after having worked
with Mirage Resorts for nine years, is the beneficial owner of a five percent
limited partnership interest in the Partnership. In the last 30 months, the
Architect has overseen the design of over 20 gaming entertainment resorts that
include, among others: The Mirage, Caesars Palace (renovation), The MGM Theme
Park, Harrah's (renovations) and Caesars Magical Empire, Las Vegas, Nevada; Sun
City, Bophuthatswana; Harrah's Tunica, Sheraton Tunica, Lady Luck Coahoma and
Harrah's Vicksburg's, Mississippi; Harrah's Ak-Chin, Arizona; Treasure Chest and
Harrah's Shreve Star, Louisiana; Lady Luck Bettendorf, Iowa; Sheraton, Lima,
Peru; Jackpot Casino, Casino Thun and Casino, Locarno, Switzerland; Sheraton
Halifax and Sheraton Sydney, Canada; Casino Riviera, Cannes, France; Speaking
Rock, Texas; Dover Downs Video Lottery, Delaware; Harrah's Skagit Valley,
Washington; and Prairie Knights, North Dakota.
Landscape Architect
The Architect has retained Lifescapes International ("Lifescapes"), a
leading gaming and entertainment landscape architectural firm. Lifescapes is a
world leader in landscape design focusing on quality while taking
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<PAGE> 44
into account environmental and conservation concerns. The following
representative projects have either been completed or are in process by
Lifescapes: The Mirage, Bellagio, Treasure Island, South Coast Village, Shadow
Creek Golf Course, Luxor Hotel, Las Vegas Strip Landscape Beautification
Project, Canyon Gate, Showcase Entertainment Complex, and Peccole Ranch,
Queensridge, Las Vegas, Nevada; Beau Rivage Biloxi, Mississippi; South Coast
Plaza Renovation Work, Newport Beach, Jurassic Park-The Ride, Hollywood, Sea
World, San Diego, Shamu Stadium, San Diego, and Knott's Berry Farm, Buena Park,
California; Players Island, Lake Charles, Louisiana; Entertainment Mall 7 & 8,
Bangkok, Thailand; Players Island, Maryland Heights, Missouri; and the Rain
Forest Cafe, Woodfield Mall, Chicago, Illinois.
PROPERTIES
The Partnership acquired the Resort Casino Site at the intersection of
Summerlin Parkway and Rampart Boulevard in Las Vegas, Nevada in August 1996 for
approximately $16.6 million. The Partnership maintains two offices: (i)
Corporate Office at 1160 Town Center Drive, Suite 200 Las Vegas, Nevada 89134
and (ii) Development Office at 3330 West Desert Inn Road, Unit 5, Las Vegas,
Nevada 89102. The respective telephone numbers are (702) 869-7000 and (702)
869-7500.
EMPLOYEES
The Partnership anticipates that it will directly employ approximately
1,600 employees in connection with the Resort Casino. The Partnership will be
required to undertake a major recruiting and training program prior to the
opening of the Resort Casino at a time when other major new facilities may be
approaching completion and also recruiting employees. The Partnership believes
that it will be able to attract and retain a sufficient number of qualified
individuals to operate the Resort Casino.
LITIGATION
The Partnership, RAS, the general partner of the Partnership, and its
Subsidiaries are not currently parties to any claims or legal actions.
ENVIRONMENTAL MATTERS
The Partnership's operations and properties are subject to a wide variety
of increasingly complex and stringent environmental laws. The Issuers believe
their operations and properties are in compliance in all material respects with
environmental laws. Based upon its experience to date, the Issuers believe that
the future cost of compliance with and liability under existing environmental
laws will not have a material adverse effect on the financial condition of the
Partnership and the Issuers' ability to service the Indebtedness, including the
Notes. There can be no assurance, however, that this will be the case. See "Risk
Factors -- Environmental Risks and Regulation."
LAS VEGAS MARKET AND INDUSTRY
BACKGROUND INFORMATION
Overview
Las Vegas is the oldest and largest gaming market in the United States.
Market Analysis
The Las Vegas metro area gaming market is divided into four geographic
sectors: the Downtown area, the Strip area, the North Las Vegas area and the
Boulder Strip area. The Strip is the location of approximately 40 casinos,
including Las Vegas' largest and newest mega-casinos. The Downtown area includes
18 casinos on and near Fremont Street in old Las Vegas. The oldest of these
include Binion's Horseshoe, Sam Boyd's Fremont, the Four Queens, Fitzgeralds and
the Golden Nugget. The Boulder Strip features suburban casinos, which are
primarily low- and middle-market facilities. The largest properties include
Boulder Station, Sam's Town and the Showboat, with Sunset Station further south
near the residential areas of Henderson and Green
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<PAGE> 45
Valley. This market is comprised largely of local residents and their guests.
North Las Vegas similarly caters to middle-market locals with some planned
upscale local and tourist venues. The largest properties currently operating in
this area are the Fiesta, Santa Fe, Arizona Charlie's and Texas Station.
New development in Las Vegas is occurring primarily on the Strip. The last
three major casinos to open in the Strip area were the Monte Carlo, Stratosphere
and New York-New York. Bellagio is expected to open in late 1998 and will be
followed in 1999 by Mandalay Bay, Paris, the new Aladdin, the Venetian and
Planet Hollywood. In addition to this development, existing properties on the
Strip are undergoing substantial renovation and improvement to upgrade
facilities and increase hotel and gaming capacity. Apart from expansion of
existing properties, the only new developments announced in the vicinity of the
Resort Casino Site are Cactus Kate's (one block northwest of the Fiesta) and The
Sundance Casino (at the intersection of Rampart and Alta), both of which are
expected to open after 1999.
LAS VEGAS OCCUPANCY AND VISITATION STATISTICS
According to the Las Vegas Convention and Visitors Authority (the "LVCVA"),
in 1996 there were a total of 29,636,361 visitors to Las Vegas, a 2.2% increase
over 1995, when Las Vegas welcomed 29,002,122 visitors. The greatest yearly
increase experienced in the last five years occurred between 1993 and 1994, when
visitation grew by approximately 20.0%. According to the LVCVA, approximately
44.0% of visitors to Las Vegas currently arrive by air, up from 30.0% in 1970.
The city is served by McCarran International Airport, which has grown
substantially over the last several decades to keep pace with visitor demand
generated by the gaming and lodging market. The airport serves more than 20
scheduled air carriers and 19 charter service airlines.
In terms of passenger volume in 1996, McCarran International Airport hosted
83,000 passengers daily, making it the nation's 10th busiest airport and the
16th busiest airport in the world. In addition, Federal Aviation Authority and
county officials projected that the annual number of passengers could increase
from 30.5 million in 1996 to 38.7 million in 2000. A $500.0 million expansion
project is under way at McCarran International Airport to handle the increasing
volume of air passengers. Phase I of the project includes adding 26 gates by
June 1, 1998, installing an automatic transit system (people mover) and
expanding the baggage claim area, runways and the north ticketing lobby. When
Phase I of the project is completed, it will increase
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parking by 87.0%, gates by 40.0%, baggage claim area by 33.0%, ticket counters
by 16.0% and main carrier runway by 33.0%.
<TABLE>
<CAPTION>
TOTAL
TOTAL NUMBER OF OCCUPANCY % AVERAGE NUMBER OF
NUMBER % HOTEL & MOTEL % ------------- NUMBER AIRLINE %
YEAR OF VISITORS CHG. ROOMS CHG. HOTEL MOTEL OF NIGHTS PASSENGERS CHG.
- --------------- ----------- ---- ------------- ---- ----- ----- --------- ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 14,194,189 N/A 53,067 N/A N/A N/A N/A 10,924,047 N/A
1986 15,196,284 7.1% 56,484 6.4% 86.3% 70.9% 3.9 12,428,748 13.8%
1987 16,216,102 6.7 58,474 3.5 87.0 74.0 4.0 15,582,302 25.4
1988 17,199,808 6.1 61,394 5.0 89.3 73.7 3.6 16,231,199 4.2
1989 18,129,684 5.4 67,391 9.8 89.8 72.5 3.3 17,106,948 5.4
1990 20,954,420 15.6 73,730 9.4 89.1 69.8 3.0 19,089,684 11.6
1991 21,315,116 1.7 76,879 4.3 85.2 62.6 3.1 20,171,969 5.7
1992 21,886,865 2.7 76,523 (3.0) 88.8 66.1 3.3 20,912,585 3.7
1993 23,522,593 7.5 86,053 12.5 92.6 69.7 3.1 22,492,156 7.6
1994 28,214,362 19.9 88,590 2.9 92.6 73.2 3.1 26,850,486 19.4
1995 29,002,122 2.8 90,046 1.7 91.4 72.4 3.5 28,027,239 4.4
1996 29,636,361 2.2 99,072 10.0 93.4 75.7 3.7 30,459,965 8.7
% Change 108.8% 86.7% 178.8%
Compound Annual
Growth Rate 6.9% 5.8% 9.8%
</TABLE>
- ---------------
Data Source: LVCVA.
LAS VEGAS GAMING SUMMARY
According to the 1995-96 Visitor Profile Study by the LVCVA, the typical
Las Vegas visitor is married, employed, college educated, from the West, 40
years or older, and with a household income of $40,000 or more. The percentage
of tourists who game decreased from 92.0% to 87.0% between 1994 and 1996. Also,
gaming tourists are spending somewhat less on gaming as a percentage of total
spending, and more on non-gaming entertainment and lodging; but total revenues
continue to grow. The average gaming budget per visitor per trip has increased
from approximately $450 in 1990 to more than $580 in 1996. At the same time, the
average gaming duration has gone from almost five hours in 1990 to just over
four hours in 1996. According to the study, 72.0% of adult Clark County
residents game at least occasionally, and this percentage has been increasing in
recent years. In 1996, the Las Vegas Metro area had a total population of
998,758, of whom 70.8% (707,548) were adults and 509,435 were casino gamers. Las
Vegas residents who game do so, on average, just over once per week and 54.0%
game at least once a week. The LVCVA 1995-96 study indicates an average of 52.74
visits per year among locals, up from 48.71 in the 1993-94 study.
According to the 1995-96 LVCVA study, approximately 44.0% of local
residents game at off-Strip casinos.
In terms of gaming spend, the LVCVA arrived at a mean spend per visit of
$51.44 (in 1995 dollars or $57.90 inflated at 3.0% per annum to 1999 dollars).
This estimate is lower than the LVCVA's 1993-94 estimate of $58.23 as residents
appear to be visiting casinos more often but spending less per visit. The
increased emphasis on non-gaming amenities also may have contributed to this
trend.
THE LAS VEGAS "LOCALS" MARKET AND LOCAL COMPETITION
Las Vegas is one of the fastest growing cities in the United States. The
current rate of immigration is approximately 4,000 people per month. Clark
County's population has grown from 463,087 in 1980, to approximately 1.1 million
in 1996 and is projected to exceed 2.0 million in 2010, according to BBER. The
Issuers believe that as major new Strip properties are built and opened over the
next several years, the resulting employment is likely to fuel further
population growth in suburban Las Vegas.
39
<PAGE> 47
In 1995, Las Vegas was the first choice as a retirement destination in the
United States. In the past eight years, a number of new residential developments
aimed at the local market have appeared. Much of this growth is situated on the
Boulder Highway (Sam's Town, Boulder Station), Rancho Drive (Texas Station,
Fiesta) and immediately west of I-15 and the Strip (Rio, Palace Station, The
Orleans and Gold Coast).
Of the casinos in the local market that opened prior to December 1996, the
Issuers believe that none, with the exception of The Rio, has followed the lead
of The Mirage and attempted to position itself at the quality end of the market.
Essentially all of these new properties have repeated the same formula: standard
rooms with economy class furnishings, dark interiors in the casino, low limits,
predominantly video poker and discounted food. In addition, amenities are
targeted toward lower- to middle-income clientele.
THE GOLFER/GAMER MARKET
In 1995, the total United States market for golfer/gamers was estimated to
be approximately 5.9 million and, of the destinations visited, six states
accounted for more than half of the visits, according to Wells Gaming Research.
Nevada had the largest share with 16.8%. Ninety percent of golfer/gamers travel
in a party of two or more, and 32.5% have visited Las Vegas during the last
twelve months.
The Issuers believe very few of the existing Las Vegas properties have a
competitive product in this segment of the market. Only the Desert Inn and the
Las Vegas Hilton have a golf course adjacent to their properties. In the future,
the proposed development of the Lake Las Vegas complex could create a
significant competitor in the market. However, the Resort Casino will have the
advantage of being first to the market with its product, it will be associated
directly with a TPC course which is host to a nationally televised tournament,
and 174 holes of golf are within a five-minute drive of the Resort Casino Site.
The Resort Casino Site is also only about 20 minutes from McCarran International
Airport and 15 minutes from the Strip. From the PGA Tour and Senior PGA Tour
events, the Summerlin name enjoys a degree of recognition in the United States
among the golfing community which, the Issuers believe, will benefit the Resort
Casino.
At present, those resorts in the southwestern United States which offer a
competitive product for the golfer, but are situated outside Nevada, are unable
to offer the gaming attractions which will be available at the Resort Casino.
Arizona and California have a limited number of casinos on Indian reservations,
but the Issuers believe that there are problems with the location of these
casinos and in neither state is it possible to offer the full service gaming
product which is available in Nevada. The Issuers believe that the Resort Casino
is in a good position with regard to its market, a position that Issuers believe
will enable it to charge premium rates and attract more affluent customers.
REGULATION AND LICENSING
NEVADA
The ownership and operation of casino gaming facilities in Nevada are
subject to the Nevada Act, various local regulations and the licensing and
regulatory control of 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 fiscal affairs 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
though taxation and licensing fees. Change in such laws, regulations and
procedures could have a material adverse effect on the financial condition of
the Partnership and the Issuers' ability to service the Indebtedness, including
the Notes.
40
<PAGE> 48
The Partnership will be required to be licensed by the Nevada Gaming
Authorities. Gaming Licenses require the periodic payment of fees and taxes and
are not transferable. Once registered by the Nevada Commission as Registered
Companies, the Issuers will be required periodically to submit detailed
financial and operating reports to the Nevada Commission and furnish any other
information which the Nevada Commission may require. No person may be a partner
of, or receive any percentage of profits from, the Partnership without first
obtaining licenses and approvals from the Nevada Gaming Authorities ("Gaming
Approvals").
In connection with the licensing and registration of the Partnership, RAS
will be required to be registered and found suitable as an intermediary company
of the Partnership and as a Registered Company and/or licensed as the general
partner. In connection with the registration of RAS as an intermediary company
and/or licensure as the general partner, each direct and indirect owner of RAS,
including without limitation, SCGC, the Swiss Parent and their respective owners
(collectively, the "RAS Owners") will be required to obtain from the Nevada
Gaming Authorities the applicable Gaming Approvals.
Upon the effectiveness of the Exchange Offer, the Partnership and RAS each
will be a "publicly traded corporation" as defined in the Nevada Act. In order
to receive a Gaming License as a publicly traded corporation, the Partnership
must be exempted by the Nevada Commission from a prohibition in the Nevada Act
which makes Registered Companies ineligible to apply for or hold a Gaming
License. The Nevada Commission has exempted Registered Companies from this
provision in the past and has granted gaming licenses to publicly traded
corporations. The Partnership intends to apply for the Exemption in connection
with its application for a Gaming License. In connection with licensing and
receipt of the Exemption, RAS and the Partnership each also will be required to
be registered by the Nevada Commission as a Registered Company. The following
regulatory requirements will be applicable to the Partnership and RAS upon their
receipt of all necessary Gaming Approvals from the Nevada Gaming Authorities. If
Warrant Co. also becomes registered by the Nevada Commission as a Registered
Company, the regulatory requirements will become applicable to Warrant Co. The
Partnership, RAS and the RAS Owners have not yet obtained from the Nevada Gaming
Authorities the Gaming Approvals required in order for the Partnership to
conduct gaming operations at the Resort Casino, and there can be no assurance
that such Gaming Approvals will be obtained, or that they will be obtained on a
timely basis. There can also be no assurance that the Partnership's officers,
partners and key employees will obtain Gaming Approvals from the Nevada Gaming
Authorities. The failure of either of the Issuers and their officers, partners,
directors, stockholders and key employees to obtain Gaming Approval may have a
material adverse effect on the Partnership's financial condition and the
Issuers' ability to service the Indebtedness, including the Notes.
As a Registered Company, the Partnership will be required periodically to
submit detailed financial information and operating reports to the Nevada
Commission and furnish any other information that the Nevada Commission may
require. No person may become a partner of, or receive any percentage of profits
from, a Licensee without first obtaining licenses and approvals from the Nevada
Gaming Authorities.
The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Partnership, RAS,
Warrant Co. and the RAS Owners to determine whether such individual is suitable
or should be licensed as a business associate of a gaming licensee. Officers,
managers and certain key employees of the Partnership, RAS, Warrant Co., SCA and
the Swiss Parent must file applications with the Nevada Gaming Authorities and
will be required to be licensed, or found suitable, by the Nevada Gaming
Authorities. The Nevada Gaming Authorities may deny an application for licensing
or a finding of suitability for any cause 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, or the gaming licensee by
whom the applicant is employed or for whom the applicant serves, must pay all
the costs of the investigation. Changes in licensed positions must be reported
to the Nevada Gaming Authorities, and the Nevada Gaming Authorities have
jurisdiction to disapprove a change in a position.
If the Gaming Authorities were to find an officer, director, partner,
stockholder or key employee unsuitable for licensing or to continue having a
relationship with the Partnership, RAS, Warrant Co., SCA or
41
<PAGE> 49
the Swiss Parent, the entities involved would have to sever all relationships
with such person. In addition, the Nevada Commission may require the
Partnership, RAS, Warrant Co., SCA or the Swiss Parent to terminate the
employment of any person who refuses to file appropriate applications.
Determinations of suitability or of questions pertaining to licensing are not
subject to judicial review in Nevada.
If the Partnership, RAS, Warrant Co., SCA or the Swiss Parent violated the
Nevada Act, the Gaming Licenses the Partnership would hold could be limited,
conditioned, suspended or revoked, subject to compliance with certain statutory
and regulatory procedures. In addition, the Swiss Parent, SCA, RAS, Warrant Co.,
the Partnership, 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 the Resort Casino and, under certain circumstances, earnings generated
during the supervisor's appointment (except for the reasonable rental value
thereof) could be forfeited to the State of Nevada. Limitation, conditioning or
suspension of any Gaming License or the appointment of a supervisor could (and
revocation of any Gaming License would) materially adversely affect the
financial condition of the Partnership and the Issuers' ability to service the
Indebtedness, including the Notes.
Even if a Registered Company is granted certain exemptions by the Nevada
Commission, any beneficial holder of the Registered Company's voting securities,
regardless of the number of securities owned, may be required to file an
application, be investigated, and have his suitability as a beneficial holder of
the Registered Company's 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. Each beneficial owner of an
interest in the Partnership may be required to be licensed or found suitable.
The applicant must pay all costs of investigation incurred by the Gaming
Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5.0% of a
Registered Company's voting securities to report the acquisition to the Nevada
Commission. The Nevada Act requires that beneficial owners of more than 10.0% of
a Registered Company's voting securities apply to the Nevada Commission for a
finding of suitability within 30 days after the Chairman of the Nevada Board
mails the written notice requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which acquires
beneficial ownership of more than 10.0%, but not more than 15.0%, of a
Registered Company's voting securities may apply to the Nevada Commission for a
waiver of such finding of suitability requirements if the institutional investor
holds the voting securities for investment purposes only. An institutional
investor is not deemed to hold voting securities for investment purposes unless
the voting securities are acquired and 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 the board of directors
of a Registered Company, any change in a Registered Company's corporate charter,
bylaws, management, policies or operations, or any of its gaming affiliates, or
any other action which the Nevada Commission finds to be inconsistent with
holding a Registered Company's 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 its management, policies or operations; and (iii) other
activities as the Nevada Commission may determine to be consistent with
investment intent. A corporation, partnership or trust which is a beneficial
owner that must be found suitable, must submit detailed business and financial
information including a list of beneficial owners and must pay all costs of
investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Nevada Commission or
the Chairman of the Nevada Board may be found unsuitable, including any record
owner who, upon request, fails to identify a beneficial owner. Any stockholder
found unsuitable and who holds, directly or indirectly, any beneficial ownership
of the voting securities of a Registered Company beyond such period of time as
may be prescribed by the Nevada Commission may be guilty of a criminal offense.
A Registered Company is subject to disciplinary action if, after it receives
notice that a person is unsuitable to be a stockholder or limited partner or to
have any other relationship with the Resort Casino or an affiliate, it (i) pays
that person any dividend or interest upon voting securities of the
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<PAGE> 50
Registered Company, (ii) allows that person to exercise, directly or indirectly,
any voting right conferred through securities held by that person, (iii) pays
remuneration in any form to that person for services rendered or otherwise, or
(iv) fails to pursue all lawful efforts to require the unsuitable person to
relinquish his voting securities for cash at fair market value.
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Company (such as the Notes) to file applications,
be investigated and be found suitable to own the debt security of a Registered
Company. If the Nevada Commission determines that a person is unsuitable to own
a debt security, then pursuant to the Nevada Act, the Registered Company 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.
All Registered Companies are required to maintain a current ledger in
Nevada reflecting all ownership interests, 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. A failure to make such
disclosure may be grounds for finding the record holder unsuitable. All
Registered Companies also are required to render maximum assistance in
determining the identity of the beneficial owner. The Nevada Commission has the
power to require that certificates representing ownership interest in a
Registered Company bear a legend indicating that such securities are subject to
the Nevada Act. It is unknown at this time whether the Nevada Commission will
impose this requirement on the Partnership, RAS or Warrant Co.
None of the Swiss Parent, SCA, RAS, Warrant Co. or the Partnership may make
a public offering of its securities (including the Exchange Offer) without the
prior approval of the Nevada Commission if the securities or the 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. Such approval, if given, 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, and any
representation to the contrary is unlawful.
The regulations of the Nevada Board and the Nevada Commission also provide
that any entity which is not an "affiliated company," as defined in the Nevada
Act, or which is not otherwise subject to the provisions of the Nevada Act, such
as the Partnership and RAS, which plans to make a public offering of securities
intending to use such securities, or the proceeds from the sale thereof, for the
construction or operation of gaming facilities in Nevada, or to retire or extend
obligations incurred for such purposes, may apply to the Nevada Commission for
prior approval of the offering. The Nevada Commission may find an applicant
unsuitable based solely on the fact that it did not submit such an application,
unless upon a written request for a ruling, the Nevada Board Chairman has ruled
that it is not necessary to submit an application. The Exchange Offer will
qualify as a public offering. The Issuers have filed a Ruling Request with the
Nevada Board Chairman for a ruling that it is not necessary to submit the
Exchange Offer for prior approval. On March 27, 1998, the Nevada Board Chairman
granted the Issuers' Ruling Request, ruling that the Exchange Offer need not be
submitted to the Nevada Board or the Nevada Commission for prior approval.
Changes in control of a Registered Company through merger, consolidation,
stock or asset acquisitions, management or consulting agreements, or any act or
conduct by a person whereby he obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to acquire control of a
Registered Company must satisfy the Nevada Board and the Nevada Commission in a
variety of stringent standards prior to assuming control of the Registered
Company. The Nevada Commission also may require controlling stockholders,
officers, directors and other persons having 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.
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<PAGE> 51
The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Companies 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 operators and their Affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environmental for the orderly governance of
corporate affairs. Approvals are, in certain circumstances, required from the
Nevada Commission before a Registered Company 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 recapitalization proposed by a
Registered Company's Board of Directors in response to a tender offer made
directly to a Registered Company's stockholders or partners for the purposes of
acquiring control of a Registered Company.
License fees and taxes vary depending on the type of gaming or activity
involved and are payable to the State of Nevada and to the counties and cities
in which the 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 casino entertainment tax also is paid by the
Partnership where certain entertainment is provided in a cabaret, nightclub,
cocktail lounge or casino showroom in connection with the serving or selling of
food, refreshments or merchandise. Licensees such as SCRN that hold a
distributor's license also pay certain fees and taxes to the State of Nevada.
Any Licensee who proposes to become involved in a gaming venture outside of
Nevada is required to deposit and maintain with the Nevada Board a revolving
fund in the amount of $10,000 to pay the expenses of investigation of the Nevada
Board of its participation in such foreign gaming. The revolving fund is subject
to increase or decrease in the discretion of the Nevada Commission. Thereafter,
Licensees are required to comply with certain reporting requirements imposed by
the Nevada Act. Licensees also are 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 harmful to the State of Nevada or
its ability to collect gaming taxes and fees, or employ a person in a foreign
operation who has been denied a license or finding of suitability in Nevada on
the ground of personal unsuitability.
The sale of alcoholic beverages by the Partnership on the premises of the
Resort Casino also will be subject to licensing, control and regulation by the
City of Las Vegas. All licenses are revocable and are not transferable. The City
of Las Vegas has full power to limit, condition, suspend or revoke any such
license, and any such disciplinary action could or suspension or revocation
would have a material adverse effect on the financial condition of the
Partnership and the Issuers' ability to service the Indebtedness, including the
Notes.
Gaming Taxes
With the exception of lotteries, nearly all types of gaming are legal in
Nevada. Taxes on nonrestricted gaming locations (more than 15 slot machines) are
paid monthly on a sliding scale: 3.0% on the first $50,000 of gross gaming
revenues, 5.0% on the next $90,000 and 6.25% on revenues exceeding $140,000.
There is a 10.0% tax on all admissions, concessions, merchandise and services
for certain events and other forms of entertainment offered by the gaming
establishment. Quarterly and annual fees are assessed by the state, county and
local governments based on the number of table games and slot machines.
COLORADO
The Swiss Parent and SCA are subject to the jurisdiction of Colorado gaming
authorities, as is the current Colorado licensee, Tivolino Teller House, Inc., a
wholly-owned subsidiary of SCA. Neither the Partnership nor RAS are subject to
such jurisdiction. Accordingly, although the Resort Casino does not fall
44
<PAGE> 52
within the jurisdiction of Colorado gaming authorities, this section is being
provided solely to disclose the jurisdictional issues Colorado gaming
authorities place on the Swiss Parent and SCA.
Pursuant to the Limited Gaming Act of 1991 (the "Colorado Act") and the
rules and regulations promulgated thereunder (collectively the "rules"), the
ownership and operation of limited gaming facilities in Colorado, however
acquired, are subject to extensive regulation. The Colorado Act created the
Division of Gaming (the "Colorado Division") within the Colorado Department of
Revenue and the Colorado Limited Gaming Control Commission (the "Colorado Gaming
Commission") to license, implement, regulate, and supervise the conduct of
limited gaming. The Director of the Colorado Division (the "Colorado Director"),
under the general supervision of the Colorado Gaming Commission, is granted
broad powers to ensure compliance with the Colorado Act and the rules.
The Colorado Gaming Commission has authority to issue retail gaming,
operator, key employee and support licenses for slot machine manufacturers and
distributors. The Colorado director also has the authority to issue key employee
and support licenses. All such licenses are renewable annually for operators and
biannually for all other licenses. The Colorado Gaming Commission has broad
discretion to condition, suspend, revoke, limit or restrict a license at any
time. The Colorado Gaming Commission may issue temporary licenses with a
duration of up to six months. The Colorado Gaming Commission also has authority
to impose fines against licensees.
All license applicants must demonstrate to the Colorado Gaming Commission
that they are suitable for licensing and are of good moral character. Applicants
who are career offenders, have certain criminal convictions, have associations
with career offender cartels or have certain pending criminal charges are
disqualified from licensure. Licensure by the Colorado Gaming Commission or the
Colorado Director is a revocable privilege and not a vested interest or property
right. All licenses are nontransferable.
All applicants for Colorado gaming licenses must complete comprehensive
application forms, pay required fees, and provide all information required by
the Colorado Gaming Commission and the Colorado Division. The Colorado Division
conducts a thorough background investigation of each applicant or any persons or
entities associated with the applicant. The investigation may cover the
background, personal history, financial associations, character, record and
reputation of the applicant. The applicant pays the full cost of the background
investigation. There is no limit on the cost or duration of the background
investigation. Applicants who do not provide all requested information during a
background investigation may be denied a gaming license.
The current practice of the Colorado Division and the Colorado Gaming
Commission, which may change at any time, is to require every officer and
director, or equivalent office holders for non-corporate applicants, and 5.0% or
greater beneficial owners of an applicant or licensee to complete background
investigation forms, provide comprehensive information and submit to a full
background investigation conducted by the Colorado Division and Colorado Gaming
Commission. The Colorado Division may require information from and conduct
background investigations of persons holding less than a 5.0% beneficial
interest in an applicant or licensee.
Persons found unsuitable by the Colorado Gaming Commission may be required
immediately to terminate any interest in, association or agreement with, or
relationship to a licensee. A finding of unsuitability with respect to any
officer, director, employee, associate, lender or beneficial owner of a licensee
or applicant may also jeopardize the licensee's license or applicant's license
application. Licenses may be conditioned upon termination of any relationship
with unsuitable persons.
Colorado Act licensees are required to maintain detailed books and records
which accurately account for all monies and business transactions. Books and
records must be furnished upon demand to the Colorado Gaming Commission, the
Colorado Division and other law enforcement authorities. The rules also
establish extensive playing procedures, standards, requirements and rules of
play for poker, blackjack and slot machines.
Violations of the Colorado Act, or any of the rules, is a criminal offense.
Persons violating the Colorado Act or the rules may, in addition to any gaming
license suspension or revocation, be subject to criminal prosecution resulting
in incarceration, fines or both.
45
<PAGE> 53
NORTH DAKOTA
The Swiss Parent, Seven Circle Resorts, Inc. ("SCR"), a wholly-owned
subsidiary of SCA, and SCA, but not the Partnership nor RAS, are subject to the
jurisdiction of the Indian Gaming Regulatory Act of 1988 ("IGRA"), which is
administered by the National Indian Gaming Commission ("NIGC"), and also are
subject to statutes relating to contracts with Indian tribes, which are
administered by the Secretary of the Interior and the Bureau of Indian Affairs.
Since neither the Partnership nor RAS are subject to the jurisdiction discussed
in this section, the Resort Casino does not fall within the jurisdiction of any
Indian gaming authority. This section is being provided solely to disclose
Indian gaming authority jurisdiction placed on the Swiss Parent, SCR and SCA.
Indian tribes are sovereign nations with their own governmental systems,
which have primary regulatory authority over gaming on land within the tribe's
jurisdiction. Therefore, persons engaged in gaming activities, including SCR,
are subject to the provisions of tribal ordinances and regulations on gaming.
These ordinances are subject to review by NIGC under certain standards
established by IGRA. The possession of a valid license from the Standing Rock
Sioux Tribe is an ongoing condition of the management agreement. In addition,
SCR, the Swiss Parent and SCA are subject to the jurisdiction of the State of
North Dakota Attorney General, pursuant to the Tribe-state compact between the
State of North Dakota and the Standing Rock Sioux tribe.
IGRA requires NIGC to approve management contracts and certain collateral
agreements. NIGC has approved a management contract between SCR and the Standing
Rock Sioux Tribe (the "Tribe"). SCR's management agreement with the Standing
Rock Sioux Tribe expires in June 1999. If renewed, the term of said renewal
would be for two years, as provided in the management agreement, or for such
other term as negotiated between SCR and the Tribe.
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<PAGE> 54
MANAGEMENT
DIRECTORS, OFFICERS AND SENIOR MANAGEMENT
The current directors and executive officers of RAS, the general partner of
the Partnership, are:
<TABLE>
<CAPTION>
NAME TITLE AGE COUNTRY OF CITIZENSHIP DIRECTOR/OFFICER SINCE
---- ----- --- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Hans Jecklin.......... Chairman of the Board 52 Switzerland 1996
Christiane Jecklin.... Director 52 Switzerland 1996
Brian McMullan........ Director, President and 51 United Kingdom 1996
Chief Executive Officer
John Tipton........... Director, Senior Vice 51 United States 1996
President, Chief
Financial Officer and
General Counsel
Jim Fonseca........... Director, Senior Vice 48 United Kingdom 1996
President Gaming
Operations
Quinton Boshoff....... Director, Senior Vice 44 South Africa 1996
President Slot Operations
Jeff Smith............ Treasurer, Secretary and 32 United States 1996
Financial Controller
</TABLE>
Hans Jecklin, the Chairman of the Board of RAS since June 1996, and husband
of Christiane Jecklin, first became involved in the gaming industry in Zurich,
Switzerland in 1968. In 1975, he founded the predecessor to Tivolino Holding AG
in Zurich, whose core business was gaming. Today, the Swiss Parent's operations
include gaming, hotels, restaurants and real estate investment.
Christiane Jecklin, a director of RAS since June 1996, and the wife of Hans
Jecklin, has been involved in the gaming industry and the management of SCA
since its formation in 1989.
Brian McMullan, the President and Chief Executive Officer of RAS and a
director since June 1996, has nearly 30 years of gaming experience, much of that
time in senior management positions for some of the largest gaming companies in
Great Britain and South Africa. Mr. McMullan entered the gaming industry in
Britain in 1968. From 1986 to 1992, Mr. McMullan served as Sun International's
Director of Gaming Operations, where he was responsible for the gaming
operations.
John Tipton, Senior Vice President, Chief Financial Officer and General
Counsel of RAS and a director since June 1996, has over 25 years experience in
the private and public sector, including a number of years in private legal
practice during which time he was managing partner of Calkins, Kramer, Grimshaw
& Harring, a Denver law firm. From 1988 to 1992, Mr. Tipton served as Executive
Director of the Colorado Department of Revenue, where he was charged with
drafting and implementing the casino gaming legislation in Colorado. He also was
responsible for managing the Colorado Lottery, the Colorado Division of Gaming
and pari-mutuel racing in Colorado. Mr. Tipton joined SCA in 1993 and is
responsible for regulatory, development and legal matters.
Jim Fonseca, Senior Vice President Gaming Operations of RAS and a director
since June 1996, has over 25 years of gaming experience. Starting in 1972, he
worked for a number of London casinos and has experience in the primary casino
table games. From 1987 to 1992, Mr. Fonseca was Regional Gaming Manager of Sun
International (Bophuthatswana) Ltd.
Quinton Boshoff, the Senior Vice President Slot Operations of RAS and a
director since June 1996, entered the gaming business in southern Africa in
1979. As Regional Slots Manager of Sun International (Bophuthatswana) Ltd., Mr.
Boshoff led a team in marketing, security and operating procedures with respect
to slot development. In 1992 Mr. Boshoff came to the U.S. as a founder of SCR.
Jeff Smith, the Treasurer, Secretary and Financial Controller of RAS since
June 1996, has been involved in the casino and resort industry for over ten
years. From 1986 to 1991, Mr. Smith was an accountant at Ernst
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<PAGE> 55
& Young, LLP. Mr. Smith joined SCA in 1991 and has been involved in the openings
of all three U.S. properties.
ADDITIONAL SENIOR MANAGEMENT
Additional senior management of the Partnership includes:
<TABLE>
<CAPTION>
COUNTRY OF
NAME TITLE AGE CITIZENSHIP
---- ----- --- -----------
<S> <C> <C> <C>
David Atkins................... Vice President -- Table Games 37 United Kingdom
Richard Coleman................ Group Internal Audit Manager 57 United Kingdom
David Colling.................. Construction Manager 51 United States
Jim Currie..................... Slots Technical Manager 38 United Kingdom
Daniel de Waal................. Management Information Systems 33 South Africa
Director
Delores Edwards................ Recruitment Director 49 United States
Campbell Jamieson.............. Vice President -- Slot 38 Zimbabwe
Operations
Tristan Kaatze................. Vice President and Chief 36 United Kingdom
Financial Officer
Sean McGuinness................ Assistant General Counsel 34 United States
</TABLE>
The Resort at Summerlin will be managed directly by the senior management
of RAS. In addition to the officers and directors listed above, the Partnership
has a management team with substantial experience in the various aspects of its
business operations. All of these members of senior management are employed on
an "at will" basis. As a part of the strategy for the successful operation of
the Resort Casino, the Partnership intends to hire a number of management
personnel from the Nevada market with experience specifically in the operation
of gaming, hotel and resort facilities in Nevada. See "Risk Factors -- New
Project; Lack of Operating History" and "-- Availability and Retention of Key
Management and Other Employees."
David Atkins (Vice President -- Table Games) has more than 15 years gaming
operational experience in London, southern Africa and the United States. At Sun
International he was Casino Manager or Deputy Casino Manager at three resorts:
Wild Coast Sun, Morula Sun and The Carousel, with responsibility for 118 table
games at these properties. In addition, Mr. Atkins was a member of the
development and operating team at The Carousel, the largest casino in Africa
with 48 tables and 1,700 slots.
Richard Coleman (Group Internal Audit Manager) has worked as a dealer and
in middle management in the London gaming industry throughout the 1960s and
1970s prior to joining Playboy in Atlantic City in 1979 as training manager.
Since 1982, Mr. Coleman has worked predominantly in internal audit in London,
South Africa and the U.S. In this capacity, he has worked with Price Waterhouse
in South Africa, Ernst & Young, LLP in the U.S. and with the Las Vegas office of
Arthur Andersen, LLP in the preparation of the Internal Control System.
David Colling (Construction Manager) has more than 20 years experience in
the construction industry, holding the positions of Owner's
Representative/Project Manager, Project Estimator and Project Superintendent.
Jim Currie (Slots Technical Manager) joined Sun International in 1985.
During his career he has held the positions of Slots Technical Manager at Sun
City, The Carousel and Morula Sun, with responsibility for more than 3,500 slot
machines.
Daniel de Waal (Management Information Systems Director) has experience in
the field of information systems and worked for several computer and office
equipment concerns in South Africa. Mr. de Waal was a member of the development
and installation team at The Carousel, a 1,700 slot, 48 table operation after
which he served for six years as its MIS director. Mr. de Waal is an Enterprise
Certified Novell Engineer, and is a Certified Computer Professional in the U.S.
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<PAGE> 56
Delores Edwards (Recruitment Director) has 25 years experience in
recruiting, including 10 years running her own executive search firm. Ms.
Edwards has been involved in most recruiting for SCA properties, including the
openings of The Teller House, Prairie Knights Casino and Speaking Rock Casino &
Entertainment Centre. Ms. Edwards worked with Watson Wyatt International in the
development of the skill-based compensation plan that is in place at all SCA
operations.
Campbell Jamieson (Vice President -- Slot Operations) has over 16 years
experience in the gaming industry. Mr. Jamieson has held many positions in slots
operations, both technical and floor. During his twelve years with Sun
International, Mr. Jamieson was Complex Slots Manager at Sun City and The
Carousel, with responsibility for more than 3,000 slot machines and in excess of
1,000 staff.
Tristan Kaatze (Vice President and Chief Financial Officer) is a chartered
accountant in South Africa who spent nine years at Sun International and held
positions both in the corporate office and operating units. Most recently, Mr.
Kaatze served as Chief Financial Officer of Sun City.
Sean McGuinness (Assistant General Counsel) first became involved in the
gaming industry in 1989. Mr. McGuinness served with the Iowa Racing and Gaming
Commission and the Mississippi Gaming Commission before representing several
gaming companies in private law practice in the State of Mississippi. Mr.
McGuinness' clients in the State of Mississippi included Bally Entertainment
Corporation and Trump Hotels and Casino Resorts. Mr. McGuinness became Assistant
General Counsel of the Partnership in March 1997.
The Swiss Parent's reputation is as the pioneer of casino games in
Switzerland. In 1993, Swiss voters approved the introduction of full-scale
casinos throughout their country. Since then, the Swiss Parent has established
strategic alliances with "Kursaals" (gaming and entertainment facilities under
municipal control) and, in conjunction with these entities, it operates gaming
facilities in Locarno, Bern, Geneva, Thun, Schaffhausen, Rheinfelden, and, in a
joint venture with Casinos Austria, Lugano, Luzern and St. Moritz. Additional
facilities at Brunnen, Pfaffikon, Stans and St. Gallen will open in the near
future. In addition to gaming, all of these operations offer restaurants, bars
and entertainment facilities. The Swiss Parent operates a casino in The Hague,
the Netherlands as well as 13 "arcades" in Great Britain.
EXECUTIVE COMPENSATION
Substantially all management and general and administrative services,
including the services of Messrs. McMullan, Tipton, Fonseca, Boshoff and Smith,
certain members of additional senior management, certain clerical and
administrative employees, and certain other general and administrative support
including office space, will be provided to the Partnership by SCA either
directly or through SCR, its wholly-owned subsidiary. All executive officers of
the Partnership will be compensated by SCR and neither the Partnership nor RAS
will pay any compensation to any of the Partnership's executive officers. In
consideration of the foregoing, in 1998 the Partnership will pay to SCR a fee of
approximately $2.0 million plus 65.0% (estimated to be approximately $100,000)
of SCR's overhead. The fee paid by the Partnership to SCR was $356,103 for 1996
and approximately $2.3 million for 1997. The fee is subject to renegotiation
annually between the Partnership and SCR. The current fee was not, and any
future fee will not be, the result of arms-length negotiations between the
Partnership and SCR.
EMPLOYMENT AGREEMENTS AND EQUITY ARRANGEMENTS
There are no employment agreements between either of the Issuers and any of
the directors or executive officers of RAS or senior operating management of the
Partnership or RAS. Messrs. McMullan, Tipton, Fonseca and Boshoff (the
"Executives") are employees of SCR, a wholly owned subsidiary of SCA, and each
has an employment agreement which may be terminated by any of the Executives or
SCR with 90 days prior written notice.
INDEMNIFICATION AND LIMITATION OF LIABILITY
As permitted under the Nevada General Corporation Law, the Partnership's
Partnership Agreement and the Bylaws of RAS eliminate the personal liability and
provide for the indemnification of the partners, officers,
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<PAGE> 57
directors, employees, agents or Affiliates of the Partnership or RAS for any
damages, action, suit or proceeding provided that such person acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Partnership or RAS, as applicable, and, with respect
to any criminal action, had no reasonable cause to believe his conduct was
unlawful.
The Bylaws of RAS also provide for indemnification of officers and
directors of RAS and persons who serve at the request of RAS as a director,
officer, employee, agent or trustee of another corporation, partnership, joint
venture, trust or other enterprise, to the full extent allowed by Nevada law.
The Nevada General Corporation Law authorizes indemnification of officers,
directors and persons serving other entities in certain capacities at the
request of the corporation, subject to certain conditions and limitations set
forth therein, against all expenses and liabilities incurred by or imposed upon
them as a result of actions, suits and proceedings brought against them in such
capacity if they acted in good faith, in a manner they reasonably believed to be
in, or not opposed to, the best interests of the corporation, and, with respect
to any criminal action, they had reasonable cause to believe the conduct was
lawful.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Issuers
pursuant to the foregoing provisions, the Issuers have been informed that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act, and is therefore unenforceable.
CERTAIN TRANSACTIONS
MANAGEMENT FEES
Pursuant to the terms of the Partnership Agreement, RAS is entitled to 3.0%
of the monthly net revenues of the Partnership, and 6.0% of the monthly EBITDA
with the net revenue fee deducted each calendar month, as compensation for
management of the Partnership. The maximum amount of compensation payable to
RAS, however, shall not exceed 10.0% of the Partnership's total net revenue.
Distribution of these fees shall be made on a quarterly basis, subject to the
terms of the Indenture and the Credit Agreement. Such compensation shall be
subordinated to the Notes and the Mortgage Notes.
Substantially all management and general and administrative services,
including the services of Messrs. McMullan, Tipton, Fonseca, Boshoff and Smith,
certain members of additional senior management, certain clerical and
administrative employees, and certain other general and administrative support
including office space, will be provided to the Partnership by SCA either
directly or through SCR, its wholly-owned subsidiary. All executive officers of
the Partnership will be compensated by SCR and neither the Partnership nor RAS
will pay any compensation to any of the Partnership's executive officers. In
consideration of the foregoing, in 1998 the Partnership will pay to SCR a fee of
approximately $2.0 million plus 65.0% (estimated to be approximately $100,000)
of SCR's overhead. The fee paid by the Partnership to SCR was $356,103 for 1996
and approximately $2.3 million for 1997. The fee is subject to renegotiation
annually between the Partnership and SCR. The current fee was not, and any
future fee will not be, the result of arms-length negotiations between the
Partnership and SCR.
DEVELOPMENT FEE
The Partnership will pay to SCA a development fee equal to $3.0 million,
which will be subordinated to the Notes and the Mortgage Notes, for services it
has rendered, and will render, in connection with the development of the Resort
Casino.
OPTION AND RIGHT OF FIRST OFFER
Prior to completion of the 144A Offering, the Partnership assigned its
option rights on a 22.5-acre parcel (the "Option Parcel") adjacent to the Resort
Casino to SCA subject to the approval of HHP. The right to purchase the Option
Parcel was originally purchased by the Partnership for $1.2 million. It is
anticipated that a new entity will be established for any development of the
Option Parcel. Any interest retained by SCA in the
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<PAGE> 58
Option Parcel development and any other economic benefit from the Option Parcel
will be shared by the partners based upon their Partnership interests.
The Partnership currently holds the Right of First Offer with respect to
the other four potential gaming sites in Summerlin. If the Partnership is given
a notice to exercise its Right of First Offer, and it elects to exercise such
right, it must first attempt to develop and finance such site under the terms of
the Indenture and Credit Agreement. If, however, the financing of such site is
restricted under the Indenture and Credit Agreement, the Partnership will then
be permitted to assign such rights to an affiliate of SCA in exchange for an
equity interest in such affiliate provided, however, that SCA owns at least
85.0% of such affiliate. The determination of the value of the Right of First
Offer that may be assigned to the affiliate of SCA will be determined by the
general partner of the Partnership, currently RAS, a wholly-owned subsidiary of
SCA. RAS currently holds a 1.0% interest in the Partnership as the general
partner. SCA also owns a limited partnership interest that represents
approximately 91.3% of the Partnership's total interests, without taking into
account the Warrants.
ARCHITECT'S LIMITED PARTNERSHIP INTEREST
Christiana L. P., an entity controlled by Paul Steelman, the principal of
the Architect, owns a 5.0% limited partnership interest in the Partnership. The
Partnership entered into the Architect Agreement with the Architect prior to the
consummation of the 144A Offering pursuant to which the Architect shall be paid
compensation of approximately $2.4 million and any reimbursable expenses. The
Architect Agreement also provides for additional expenditures of up to
approximately $2.3 million primarily for third party engineering, landscaping
and other consulting fees.
CERTAIN BUSINESS RELATIONSHIPS
Mr. Jecklin, the Chairman of the Board of RAS, is the Chairman of the Board
of SCA and the Swiss Parent. Additionally, Messrs. McMullan, Tipton, Fonseca,
Boshoff and Smith, the executive officers of RAS, also serve as executive
officers of SCA.
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<PAGE> 59
OWNERSHIP OF INTERESTS
The following table sets forth certain information with respect to the
beneficial ownership of the common stock of RAS and the partnership interests in
the Partnership by (i) each person who, to the knowledge of RAS and the
Partnership, beneficially owns more than 5.0% of the outstanding common stock of
RAS, and owns any partnership interest in the Partnership and (ii) all executive
officers and directors of RAS as a group that is expected upon the completion of
the Exchange Offer. As of December 31, 1997, RAS had 1,000 shares of outstanding
common stock, all of which has voting rights.
RAS
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP PERCENTAGE
------------------- -------------------- ----------
<S> <C> <C>
SCA......................................................... 1,000 100.0%
Hans Jecklin(2)............................................. 623 62.3
Christiane Jecklin(3)....................................... 207 20.7
Brian McMullan(4)........................................... 60 6.0
John Tipton(5).............................................. 30 3.0
Jim Fonseca(6).............................................. 40 4.0
Quinton Boshoff(7).......................................... 30 3.0
Jeff Smith.................................................. -- --
All executive officers and directors of RAS as a group...... 990 99.0%
</TABLE>
- ---------------
(1) The address of each person named herein is c/o The Resort at Summerlin,
Inc., 1160 Town Center Drive, Suite 200, Las Vegas, Nevada 89134.
(2) Mr. Jecklin is the beneficial owner of 6,230 shares of SCA. Excludes 2,070
shares of SCA owned by Christiane Jecklin, his wife, in which he disclaims
beneficial interest.
(3) Ms. Jecklin is the beneficial owner of 2,070 shares of SCA. Excludes 6,230
shares of SCA owned by Hans Jecklin, her husband, in which she disclaims
beneficial interest.
(4) Mr. McMullan owns 600 shares of SCA.
(5) Mr. Tipton owns 300 shares of SCA.
(6) Mr. Fonseca owns 400 shares of SCA.
(7) Mr. Boshoff owns 300 shares of SCA.
THE PARTNERSHIP
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP
BENEFICIAL OWNER(1)(2) PERCENTAGE
---------------------- ----------
<S> <C>
RAS (general partner)(3).................................... 1.0%
SCA(4)...................................................... 92.3
Christiana L.P.(5).......................................... 5.0
Hans Jecklin(6)............................................. 57.5
Christiane Jecklin(7)....................................... 19.1
Brian McMullan(8)........................................... 5.5
John Tipton(9).............................................. 2.8
Jim Fonseca(10)............................................. 3.7
Quinton Boshoff(11)......................................... 2.8
Jeff Smith.................................................. --
All executive officers and directors of RAS as a
group(12)................................................. 92.3%
</TABLE>
- ---------------
(1) The address of each person named herein is c/o The Resort at Summerlin,
Limited Partnership, 1160 Town Center Drive, Suite 200, Las Vegas, Nevada
89134.
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<PAGE> 60
(2) Percentages do not include the percentage ownership attributable to the
Warrants.
(3) RAS is a wholly-owned subsidiary of SCA.
(4) SCA holds a 91.3% limited partnership interest and a beneficial 1.0%
general partnership interest in the Partnership.
(5) This entity is controlled by Mr. Steelman, the principal of the Architect.
See "Certain Transactions."
(6) Mr. Jecklin is the beneficial owner of 6,230 shares of SCA, which owns a
91.3% limited partnership interest and a beneficial 1.0% general
partnership interest in the Partnership. Excludes 2,070 shares of SCA owned
by Christiane Jecklin, his wife, in which he disclaims beneficial interest.
(7) Ms. Jecklin is the beneficial owner of 2,070 shares of SCA, which owns a
91.3% limited partnership interest and a beneficial 1.0% general
partnership interest in the Partnership. Excludes 6,230 shares of SCA owned
by Hans Jecklin, her husband, in which she disclaims beneficial interest.
(8) Mr. McMullan owns 600 shares of SCA, which owns a 91.3% limited partnership
interest and a beneficial 1.0% general partnership interest in the
Partnership.
(9) Mr. Tipton owns 300 shares of SCA, which owns a 91.3% limited partnership
interest and a beneficial 1.0% general partnership interest in the
Partnership.
(10) Mr. Fonseca owns 400 shares of SCA, which owns a 91.3% limited partnership
interest and a beneficial 1.0% general partnership interest in the
Partnership.
(11) Mr. Boshoff owns 300 shares of SCA, which owns a 91.3% limited partnership
interest and a beneficial 1.0% general partnership interest in the
Partnership.
(12) Messrs. Jecklin, McMullan, Tipton, Fonseca and Boshoff and Smith are
directors and executive officers, of SCA, which owns all the outstanding
shares of common stock of RAS, and such persons, as a group, beneficially
own 100.0% of SCA's common stock and, therefore, may be deemed to
beneficially own all the Partnership interests held by RAS and SCA. In
addition, through certain voting arrangements that expire in 2004, Mr.
Jecklin has the power to vote all the shares of common stock of SCA owned
by the Executives, which totals 16.0% of the outstanding stock of SCA. Mr.
Jecklin, through his ownership and control of the Swiss Parent, also has
voting and dispositive power with respect to 83.0% of the outstanding stock
of SCA, all of which is owned by the Swiss Parent. The remaining 1.0% is
held by a director of the Swiss Parent.
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<PAGE> 61
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Original Notes were originally sold by the Issuers on December 31,
1997, to the Initial Purchaser pursuant to the Purchase Agreement. The Initial
Purchaser subsequently resold the Original Notes to Qualified Institutional
Buyers pursuant to Rule 144A, or institutional "accredited investors" as defined
in Rule 501(a) (1), (2), (3) or (7) of Regulation D under the Securities Act. As
provided in the Purchase Agreement, the Issuers entered into the Registration
Rights Agreement, pursuant to which the Issuers have agreed, for the benefit of
the Holders of the Original Notes, at the Issuers' cost, to (i) file a
registration statement with the Commission or before April 30, 1998 (the "Filing
Date") with respect to the Exchange Offer for the Exchange Notes, (ii) use their
best efforts to cause the Registration Statement to be declared effective under
the Securities Act on or before June 29, 1998, and (iii) use their best efforts
to consummate the Exchange Offer on or before July 29, 1998. Upon the
Registration Statement being declared effective, the Issuers will offer the
Exchange Notes in exchange for the Original Notes. The Issuers will keep the
Exchange Offer open for no less than 30 business days (or longer if required by
applicable law) after the date on which notice of the Exchange Offer is mailed
to the Holders.
For each Original Note properly tendered and accepted pursuant to the
Exchange Offer, the Holder will receive an Exchange Note having a principal
amount equal to that of the Original Note tendered. Interest on each Exchange
Note will accrue or accumulate from the last interest payment date on which
interest was paid on the Original Note tendered in exchange therefor or, if no
interest has been paid on such Original Note, from December 31, 1997.
Each Original Note Holder who wishes to exchange the Original Notes for
Exchange Notes in the Exchange Offer will be required to represent in the Letter
of Transmittal that (i) any Exchange Notes to be received by it will be acquired
in the ordinary course of its business, (ii) at the time of commencement of the
Exchange Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Notes,
and (iii) it is not an Affiliate of the Issuers.
If (i) the Issuers are not required to file the Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law, including all applicable Gaming Laws or Commission
policy, or (ii) any holder of Transfer Restricted Securities notifies the
Issuers prior to the 20th day following consummation of the Exchange Offer that
(A) it is prohibited by law or Commission policy from participating in the
Exchange Offer, or (B) it may not resell the Exchange Notes, acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Registration Statement is not appropriate or
available for such resales, or (C) that it is a broker-dealer and owns Original
Notes acquired directly from the Issuers, or if for any other reason the
Exchange Offer is not consummated on or before July 29, 1998, or, under certain
other circumstances, if the Initial Purchaser or any Original Note Holder (other
than the Initial Purchaser) who is not eligible to participate in the Exchange
Offer shall so request (a "Shelf Request"), the Issuers, will at their cost (a)
within 120 days of such Shelf Request, file a shelf registration statement
relating to the offer and sale of the then outstanding Original Notes (a "Shelf
Registration Statement"); (b) use their best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act no
later than 180 days following a Shelf Request; and (c) use their best efforts to
keep effective the Shelf Registration Statement until the earlier of December
31, 1999 or such shorter period terminating when all of the Original Notes
covered by the Shelf Registration Statement or all of the Original Notes become
eligible for resale pursuant to Rule 144 without volume restrictions. The
Issuers will, in the event of the filing of a Shelf Registration Statement,
provide to each Original Note Holder copies of the prospectus which is a part of
the Shelf Registration Statement, notify each such Holder when such Shelf
Registration Statement has become effective and take certain other actions
required to permit unrestricted resales of the Original Notes. A Holder that
sells its Notes pursuant to the Shelf Registration Statement generally will be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement which are
applicable to such Holder (including indemnifica-
54
<PAGE> 62
tion obligations). If the Issuers fail to comply with the above provisions or if
such registration statements fail to become effective, then, as liquidated
damages, additional interest (the "Additional Interest") shall become payable
with respect to the Original Notes as follows:
(i) if the Registration Statement or Shelf Registration Statement is
not filed, in the case of the Registration Statement, on or before April
30, 1998 or, in the case of the Shelf Registration Statement, within 120
days following a Shelf Request, Additional Interest of 0.25% per annum
shall accrue on the Original Notes over and above the stated rate for the
first 90 days commencing on April 30, 1998 or such Shelf Request,
respectively, such Additional Interest increasing by an additional 0.25%
per annum at the beginning of each subsequent 30-day period;
(ii) if the Registration Statement or Shelf Registration Statement is
not declared effective, in the case of the Registration Statement, on or
before June 29, 1998 or, in the case of the Shelf Registration Statement,
within 180 days following a Shelf Request, Additional Interest of 0.25% per
annum shall accrue on the Original Notes over and above the stated rate for
the first 90 days commencing on June 29, 1998 or such Shelf Request,
respectively, such Additional Interest increasing by an additional 0.25%
per annum at the beginning of each subsequent 30-day period; or
(iii) if (A) the Issuers have not exchanged all Original Notes validly
tendered in accordance with the terms of the Exchange Offer on or prior to
July 29, 1998, or (B) the Registration Statement ceases to be effective at
any time prior to the time that the Exchange Offer is consummated, or (C)
if applicable, the Shelf Registration Statement has been declared effective
and such Shelf Registration Statement ceases to be effective at any time
prior to December 31, 1999 (unless all the Original Notes have been sold
thereunder), then Additional Interest of 0.25% per annum shall accrue on
the Original Notes over and above the stated rate for the first 30 days
commencing on (x) July 29, 1998 with respect to the Original Notes validly
tendered and not exchanged by the Issuers in the case of (A) above, or (y)
the date the Registration Statement ceases to be effective or usable for
its intended purpose in the case of (B) above, or (z) the day such Shelf
Registration Statement ceases to be effective in the case of (C) above,
such Additional Interest increasing by an additional 0.25% per annum at the
beginning of each subsequent 30-day period; provided that all Additional
Interest on the Original Notes may not exceed in the aggregate 2.0% per
annum; and that (1) upon the filing of the Registration Statement or Shelf
Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or Shelf
Registration Statement (in the case of (ii) above), or (3) upon the
exchange of Exchange Notes for all Original Notes tendered (in the case of
clause (iii)(A) above), or upon the effectiveness of the Registration
Statement which had ceased to remain effective (in the case of clause
(iii)(B) above), or upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause
(iii)(C) above), Additional Interest on the Original Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall
cease to accrue.
Any Additional Interest due will be payable on the same original interest
payment dates as the Original Notes.
The regulations of the Nevada Board and the Nevada Commission also provide
that any entity which is not an "affiliated company," as defined in the Nevada
Act, or which is not otherwise subject to the provisions of the Nevada Act or
regulations, such as each of the Issuers, which plans to make a public offering
of securities or the proceeds from the sale of which are intended for the
construction or operation of gaming facilities in Nevada, or to retire or extend
obligations incurred for such purposes, may apply to the Nevada Commission for
prior approval of such offering. The Nevada Commission may find an applicant
unsuitable based solely on the fact that it did not submit such an application,
unless upon a written Ruling Request, the Nevada Board Chairman has ruled that
it is not necessary to submit an application. The Exchange Offer will qualify as
a public offering. The Issuers filed a Ruling Request with the Nevada Board
Chairman. On March 27, 1998, the Nevada Board Chairman granted the Issuers'
Ruling Request, ruling that the Exchange Offer need not be submitted to the
Nevada Board or the Nevada Commission for prior approval. See
55
<PAGE> 63
"Regulation and Licensing -- Nevada" and "Description of the Notes -- Optional
Redemption -- Regulatory Redemption."
Following the consummation of the Exchange Offer, the Holders eligible to
participate in the Exchange Offer but who did not tender their Original Notes
will not have any further exchange or registration rights and the Original Notes
will continue to be subject to certain restrictions on transfer adversely
affecting the liquidity of the Original Notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuers will accept Original Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
Expiration Date. The Issuers will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of Original Notes tendered
and identical to those accepted in the Exchange Offer. Holders may tender some
or all of their Original Notes pursuant to the Exchange Offer. However, Original
Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are identical to the Original
Notes in all material respects except (i) the Exchange Notes bear a Series B
designation, (ii) the Exchange Notes have been registered under the Securities
Act and hence will not bear legends restricting the transfer thereof, and (iii)
the Exchange Notes will not contain certain provisions relating to an increase
in the interest rate relating to the timing of the Exchange Offer, which rights
will terminate when the Exchange Offer is consummated. The Exchange Notes will
evidence the same debt as the Original Notes and will be entitled to the
benefits of the Indenture.
As of the date of this Prospectus, $100.0 million aggregate principal
amount of Original Notes are outstanding. The Issuers have fixed 5:00 p.m., New
York City time, on , 1998, as the record date for the Exchange Offer
for purposes of determining the persons to whom this Prospectus and the Letter
of Transmittal will be mailed initially. Original Note Holders do not have any
appraisal or dissenters' rights under the General Corporation Law of Nevada or
the Indenture in connection with the Exchange Offer. The Issuers intend to
conduct the Exchange Offer in accordance with the applicable requirements of the
Exchange Act and the rules and regulations of the Commission thereunder. The
Issuers shall be deemed to have accepted validly tendered Original Notes when,
as and if the Issuers have given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the Tendering Holders for the
purpose of receiving the Exchange Notes from the Issuers. If any tendered
Original Notes are not accepted for exchange because of an invalid tender, the
occurrence of certain other events set forth herein or otherwise, the
certificates for any unaccepted Original Notes will be returned, without
expense, to the Tendering Holder thereof as promptly as practicable after the
Expiration Date. Tendering Holders will not be required to pay brokerage
commissions or fees or, subject to the instructions of the Letter of
Transmittal, transfer taxes with respect to the exchange of Original Notes
pursuant to the Exchange Offer. The Issuers will pay all charges and expenses,
other than the transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Issuers, in their sole discretion, extend the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Issuers will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
Holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
The Issuers reserve the right (i) to delay acceptance of any Original
Notes, to extend the Exchange Offer or to terminate the Exchange Offer if any of
the conditions set forth below under "-- Conditions" shall not have been
satisfied, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance,
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extension, termination or any amendment will be followed as promptly as
practicable by oral or written notice thereof to the registered Holders.
PROCEDURES FOR TENDERING
The tender of Original Notes pursuant to any of the procedures set forth in
this Prospectus and in the Letter of Transmittal will constitute a binding
agreement between the Tendering Holder and the Issuers in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal. The tender of Original Notes will constitute an agreement to
deliver good and marketable title to all tendered Original Notes prior to the
Expiration Date free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind.
EXCEPT AS PROVIDED IN "-- GUARANTEED DELIVERY PROCEDURES," UNLESS THE
ORIGINAL NOTES BEING TENDERED ARE DEPOSITED BY THE HOLDER WITH THE EXCHANGE
AGENT PRIOR TO THE EXPIRATION DATE (ACCOMPANIED BY A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL), THE ISSUERS MAY, AT THEIR OPTION, REJECT SUCH
TENDER. ISSUANCE OF EXCHANGE NOTES WILL BE MADE ONLY AGAINST DEPOSIT OF TENDERED
ORIGINAL NOTES AND DELIVERY OF ALL OTHER REQUIRED DOCUMENTS. NOTWITHSTANDING THE
FOREGOING, DTC PARTICIPANTS TENDERING THROUGH ATOP WILL BE DEEMED TO HAVE MADE
VALID DELIVERY WHERE THE EXCHANGE AGENT RECEIVES AN AGENT'S MESSAGE PRIOR TO THE
EXPIRATION DATE.
To tender Original Notes properly, the following procedures must be
followed:
Original Notes held through DTC. Each beneficial owner owning interests in
Original Notes holding Original Notes through a DTC Participant must instruct
such DTC Participant to cause its Original Notes to be tendered in accordance
with the procedures set forth in this Prospectus.
Pursuant to an authorization given by DTC to the DTC Participants, each DTC
Participant holding Original Notes through DTC must (i) electronically transmit
its acceptance through ATOP, and DTC will then edit and verify the acceptance,
execute a book-entry delivery to the Exchange Agent's account at DTC and send an
Agent's Message to the Exchange Agent for its acceptance, or (ii) comply with
the guaranteed delivery procedures set forth below and in the Notice of
Guaranteed Delivery. See "-- Guaranteed Delivery Procedures."
The Exchange Agent will (promptly after the date of this Prospectus)
establish accounts at DTC for purposes of the Exchange Offer with respect to
Original Notes held through DTC, and any financial institution that is a DTC
Participant may make book-entry delivery of interests in Original Notes into the
Exchange Agent's account through ATOP. However, although delivery of interests
in the Original Notes may be effected through book-entry transfer into the
Exchange Agent's account through ATOP, an Agent's Message in connection with
such book-entry transfer, and any other required documents, must be, in any
case, transmitted to and received by the Exchange Agent at its address set forth
under "-- Exchange Agent," or the guaranteed delivery procedures set forth below
must be complied with, in each case, prior to the Expiration Date. Delivery of
documents to DTC does not constitute delivery to the Exchange Agent. The
confirmation of a book-entry transfer into the Exchange Agent's account at DTC
as described above is referred to herein as a "Book-Entry Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
each DTC Participant tendering through ATOP that such DTC Participants have
received a Letter of Transmittal and agree to be bound by the terms of such
Letter of Transmittal and that the Issuers may enforce such agreement against
such DTC Participants.
Cede & Co., as the Holder of the global certificates representing the
Original Notes (the "Global Notes"), will tender a portion of each of the Global
Notes equal to the aggregate principal amount due at the stated maturity for
which instructions to tender are given by DTC Participants.
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<PAGE> 65
Original Notes held by Holders. Each Holder must (i) complete and sign and
mail or deliver the accompanying Letter of Transmittal, and any other documents
required by such Letter of Transmittal, together with certificates representing
all tendered Original Notes, to the Exchange Agent at its address set forth
under "-- Exchange Agent," or (ii) comply with the guaranteed delivery
procedures set forth below and in the Notice of Guaranteed Delivery. See
"-- Guaranteed Delivery Procedures."
All signatures on a Letter of Transmittal must be guaranteed by any member
firm of a registered national securities exchange or of the National Association
of Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor" institution
within the meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible
Institution"); provided, however, that signatures on a Letter of Transmittal
need not be guaranteed if such Original Notes are tendered for the account of an
Eligible Institution including (as such terms are defined in Rule 17Ad-15): (i)
a bank; (ii) a broker, dealer, municipal securities dealer, municipal securities
broker, government securities dealer or government securities broker; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings institution that is a
participant in a Securities Transfer Association recognized program.
If a Letter of Transmittal or any Original Notes is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, agent, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person must so indicate when signing, and proper evidence satisfactory to
the Issuers of the authority of such person so to act must be submitted.
Holders should indicate in the applicable box in the Letter of Transmittal
the name and address to which substitute certificates evidencing Original Notes
for amounts not tendered are to be issued or sent, if different from the name
and address of the person signing such Letter of Transmittal. In the case of
issuance in a different name, the employer identification or social security
number of the person named must also be indicated. If no instructions are given,
such Original Notes not tendered, as the case may be, will be returned to the
person signing such Letter of Transmittal.
By tendering, each Holder and each DTC Participant will make to the Issuers
the representations set forth in the third paragraph under the heading
"-- Purpose and Effect of the Exchange Offer."
No alternative, conditional, irregular or contingent tenders will be
accepted (unless waived). By executing a Letter of Transmittal or transmitting
an acceptance through ATOP, as the case may be, each Tendering Holder waives any
right to receive any notice of the acceptance for purchase of its Original
Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Original Notes will be resolved by the
Issuers, whose determination will be final and binding. The Issuers reserve the
absolute right to reject any or all tenders that are not in proper form or the
acceptance of which may, in the opinion of counsel for the Issuers, be unlawful.
The Issuers also reserve the absolute right to waive any condition to the
Exchange Offer and any irregularities or conditions of tender as to particular
Original Notes. The Issuers' interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will be
final and binding. Unless waived, any irregularities in connection with tenders
must be cured within such time as the Issuers shall determine. The Issuers and
the Exchange Agent shall not be under any duty to give notification of defects
in such tenders and shall not incur liabilities for failure to give such
notification. Tenders of Original Notes will not be deemed to have been made
until such irregularities have been cured or waived. Any Original Notes received
by the Exchange Agent that are not properly tendered and as to which the
irregularities have not been cured or waived will be returned by the Exchange
Agent to the Tendering Holder, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
LETTERS OF TRANSMITTAL AND ORIGINAL NOTES MUST BE SENT ONLY TO THE EXCHANGE
AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR ORIGINAL NOTES TO THE ISSUERS OR
DTC.
The method of delivery of Original Notes and Letters of Transmittal, any
required signature guaranties and all other required documents, including
delivery through DTC and any acceptance through ATOP, is at
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<PAGE> 66
the election and risk of the persons tendering and delivering acceptances or
Letters of Transmittal and, except as otherwise provided in the applicable
Letter of Transmittal, delivery will be deemed made only when actually received
by the Exchange Agent. If delivery is by mail, it is suggested that the Holder
use properly insured, registered mail with return receipt requested, and that
the mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Original Notes held through DTC. DTC Participants holding Original Notes
through DTC who wish to cause their Original Notes to be tendered, but who
cannot transmit their acceptances through ATOP prior to the Expiration Date, may
cause a tender to be effected if:
(a) guaranteed delivery is made by or through an Eligible Institution;
(b) prior to 5:00 p.m., New York City time on the Expiration Date, the
Exchange Agent receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by mail, hand delivery,
facsimile transmission or overnight courier) substantially in the form
provided by the Issuers herewith; and
(c) Book-Entry Confirmation and an Agent's Message in connection
therewith (as described above) are received by the Exchange Agent within
three NYSE trading days after the date of the execution of the Notice of
Guaranteed Delivery.
Original Notes Held by Holders. Holders who wish to tender their Original
Notes and (i) whose Original Notes are not immediately available, (ii) who
cannot deliver their Original Notes, the Letter of Transmittal or any other
required documents to the Exchange Agent, or (iii) who cannot complete the
procedures for book-entry transfer, prior to the Expiration Date, may effect a
tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to 5:00 p.m., New York City time on the Expiration Date, the
Exchange Agent receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) setting forth the name and address of the Holder,
the certificate number(s) of such Original Notes and the principal amount
of Original Notes tendered, stating that the tender is being made thereby
and guaranteeing that, within three NYSE trading days after the Expiration
Date, the Letter of Transmittal (or facsimile thereof) together with the
certificates representing the Original Notes (or a confirmation of
book-entry transfer of such Original Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility), and any other documents
required by such Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Original Notes in proper form for transfer (or a confirmation or book-entry
transfer of such Original Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), and all other documents required by such
Letter of Transmittal are received by the Exchange Agent upon three NYSE
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Original Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
Original Notes held through DTC. DTC Participants holding Original Notes
who have transmitted their acceptances through ATOP may, prior to 5:00 p.m., New
York City time, on the Expiration Date, withdraw the instruction given thereby
by delivering to the Exchange Agent, at its address set forth under "-- Exchange
Agent," a written, telegraphic or facsimile notice of withdrawal of such
instruction. Such notice of withdrawal
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<PAGE> 67
must contain the name and number of the DTC Participant, the principal amount
due at the stated maturity or number of shares of the Original Notes to which
such withdrawal related and the signature of the DTC Participant. Withdrawal of
such an instruction will be effective upon receipt of such written notice of
withdrawal by the Exchange Agent.
Original Notes held by Holders. Holders may withdraw a tender of Original
Notes in the Exchange Offer, by a telegram, telex, letter or facsimile
transmission notice of withdrawal received by the Exchange Agent at its address
set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date.
Any such notice of withdrawal must (i) specify the name of the person having
deposited the Original Notes to be withdrawn (the "Depositor"), (ii) identify
the Original Notes to be withdrawn (including the certificate number(s) and
principal amount due at the stated maturity of such Original Notes, or, in the
case of Original Notes transferred by book-entry transfer, the name and number
of the account at the Book-Entry Transfer Facility to be credited), (iii) be
signed by the Holder in the same manner as the original signature on the Letter
of Transmittal by which such Original Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Original Notes register the
transfer of such Original Notes into the name of the person withdrawing the
tender, and (iv) specify the name in which any such Original Notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Issuers, whose determination shall be final and binding on
all parties. Any Original Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no Exchange Notes will
be issued with respect thereto unless the Original Notes so withdrawn are
validly retendered. Any Original Notes which have been tendered but which are
not accepted for exchange will be returned to the Holder thereof without cost to
such Holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Original Notes may be
retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
All signatures on a notice of withdrawal must be guaranteed by an Eligible
Institution; provided, however, that signatures on the notice of withdrawal need
not be guaranteed if the Original Notes being withdrawn are held for the account
of an Eligible Institution.
A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC Participant or a Holder, as the case may be, in the same manner as the
person's name appears on its transmission through ATOP or Letter of Transmittal,
as the case may be, to which such withdrawal relates. If a notice of withdrawal
is signed by a trustee, partner, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person must so indicate when signing
and must submit with the revocation appropriate evidence of authority to execute
the notice of withdrawal. A DTC Participant or a Holder may withdraw an
instruction or a tender, as the case may be, only if such withdrawal complies
with the provisions of this Prospectus.
A withdrawal of a tender of Original Notes by a DTC Participant or a
Holder, as the case may be, may be rescinded only by a new transmission of an
acceptance through ATOP or execution and delivery of a new Letter of
Transmittal, as the case may be, in accordance with the procedures described
herein.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Issuers shall not
be required to accept for exchange or exchange any Original Notes, and may
terminate or amend the Exchange Offer as provided herein before the acceptance
of such Original Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange
Offer which, in the judgment of the Issuers upon written advice of
counsel, could reasonably be expected to impair materially the
ability of the Issuers to proceed with the Exchange Offer or any
material adverse development has occurred in any existing action or
proceeding with respect to the Issuers or any of the Subsidiaries;
or
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<PAGE> 68
(b) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the
judgment of the Issuers and based on written advice of counsel,
could reasonably be expected to impair materially the ability of the
Issuers to proceed with the Exchange Offer or impair materially the
contemplated benefits of the Exchange Offer to the Issuers; or
(c) any governmental approval has not been obtained, which approval the
Issuers shall, in their discretion and based on written advice of
counsel, deem necessary for the consummation of the Exchange Offer
as contemplated hereby.
If any of the conditions are not satisfied, the Issuers may (i) refuse to
accept any Original Notes and return all tendered Original Notes to the
Tendering Holders, (ii) extend the Exchange Offer and retain all Original Notes
tendered prior to the expiration of the Exchange Offer, subject, however, to the
rights of Holders to withdraw such Original Notes (see "-- Withdrawal of
Tenders") or (iii) waive such unsatisfied conditions with respect to the
Exchange Offer and accept all properly tendered Original Notes which have not
been withdrawn.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Facsimile Number: (212) 780-0592
Delivery to an address other than as set forth above, or transmission of
instructions via a facsimile number other than the one set forth above, will not
constitute a valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuers. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Issuers and their Affiliates.
The Issuers have not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Issuers, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Issuers. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Original Notes, which is face value, less the OID attributed to the Warrants, as
reflected in the Issuers' accounting records on the date of exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Issuers. The expenses of the Exchange Offer will be capitalized and amortized
over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Original Notes that are not exchanged for Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Original
Notes may be resold only (i) to the Issuers (upon
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redemption thereof or otherwise), (ii) so long as the Original Notes are
eligible for resale pursuant to Rule 144A, to a person inside the United States
whom the seller reasonably believes is a Qualified Institutional Buyer within
the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A,
in accordance with Rule 144, or pursuant to another exemption from the
registration requirements of the Securities Act (and based upon an opinion of
counsel reasonably acceptable to the Issuers), (iii) outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904 under
the Securities Act, or (iv) pursuant to an effective registration statement
under the Securities Act, in each case in accordance with any applicable
securities laws of any state of the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of the Exchange Notes, based on interpretations by
the staff of the Commission set forth in no-action letters issued to third
parties, the Issuers believe that a Holder or other person who receives Exchange
Notes in the ordinary course of business, whether or not such person is the
Holder (other than (i) a broker-dealer who purchases such Exchange Notes from
the Issuers to resell pursuant to Rule 144A or any other available exemption
under the Securities Act or (ii) a person that is an "affiliate" of the Issuers
within the meaning of Rule 405 under the Securities Act) who receives Exchange
Notes in exchange for Original Notes, and who is not participating, does not
intend to participate, and has no arrangement or understanding with such person
to participate in the distribution of the Exchange Notes, will be allowed to
resell the Exchange Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the Exchange Notes a
prospectus that satisfies the requirements of Section 10 of the Securities Act.
However, if any Holder acquires Exchange Notes in the Exchange Offer for the
purpose of distributing or participating in a distribution of the Exchange
Notes, such Holder cannot rely on the position of the staff of the Commission
enunciated in such no-action letters or any similar interpretive letters, and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is otherwise available. Further, each Participating
Broker-Dealer that receives Exchange Notes for its own account in exchange for
Original Notes, where such securities were acquired by such Participating
Broker-Dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each Holder accepting the Exchange Offer is required to represent to
the Issuers in the Letter of Transmittal that (i) the Exchange Notes are to be
acquired by the Holder or the person receiving such Exchange Notes, whether or
not such person is the Holder, in the ordinary course of business, (ii) the
Holder or any such other person (other than a Participating Broker-Dealer
referred to in the next sentence) is not engaging and does not intend to engage,
in the distribution of the Exchange Notes, (iii) the Holder or any such other
person has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iv) neither the Holder nor any such other
person is an "affiliate" of the Issuers within the meaning of Rule 405 under the
Securities Act, and (v) the Holder or any such other person acknowledges that if
such Holder or other person participates in the Exchange Offer for the purpose
of distributing the Exchange Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the Exchange Notes and cannot rely on the no-action letters. As
indicated above, each Participating Broker-Dealer that receives Exchange Notes
for its own account in exchange for Original Notes must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. For a
description of the procedures for such resales by Participating Broker-Dealers,
see "Plan of Distribution."
DESCRIPTION OF THE NOTES
The following summary of certain provisions of the Indenture and the Notes
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Indenture (including the
definitions of certain terms therein and those terms made a part thereof by the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act")) and the
Notes. See "Glossary" beginning on page 94 for definitions of certain
capitalized terms. Capitalized terms that are used but not otherwise defined
herein
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have the meanings assigned to them in the Indenture and such definitions are
incorporated herein by reference.
The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes except that (i) the Exchange Notes bear a Series B
designation, (ii) the Exchange Notes have been registered under the Securities
Act and hence will not bear legends restricting the transfer thereof, and (iii)
the Exchange Note Holders will not be entitled to certain rights under the
Registration Rights Agreement relating to an increase in the interest rate
relating to the timing of the Exchange Offer, which rights will terminate when
the Exchange Offer is consummated. The terms of the Exchange Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act as in effect on December 31, 1997 for a statement of them. A
copy of the form of Indenture may be obtained from the Issuers or the Commission
by any Holder or prospective investor upon request. See "Additional
Information."
The Original Notes were, and the Exchange Notes will be, issued pursuant to
the Indenture. Principal of, premium, if any, and interest on the Notes will be
payable, and the Notes may be exchanged or transferred, at the office or agency
of the Issuers in the Borough of Manhattan, the City of New York (which
initially shall be the corporate trust office of the Trustee in New York, New
York), except that, at the option of the Issuers, cash payments of interest may
be made by check mailed to the Note Holders. Initially, the Trustee will act as
Paying Agent and Registrar for the Notes. The Notes may be presented for
registration of transfer, and the Original Notes may be presented for exchange,
at the offices of the Registrar, which initially will be the Trustee's corporate
trust office. The Issuers may change any Paying Agent and Registrar without
notice to Note Holders.
The Exchange Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge will be made for any registration of transfer or exchange of
Exchange Notes, but the Issuers may require payment of a sum sufficient to cover
any transfer tax or other similar governmental charge payable in connection
therewith.
PRINCIPAL AMOUNT, MATURITY AND INTEREST PAYMENTS
In December 1997, the Issuers jointly and severally sold $100.0 million
aggregate principal amount of Original Notes to the Initial Purchaser in the
144A Offering. The Notes will mature on December 15, 2007 and bear interest at
the rate of 13.0% per annum from December 31, 1997 or from the most recent date
to which interest has been paid or provided for, which will be payable
semiannually on each Interest Payment Date, commencing on June 15, 1998, to
Holders of record at the close of business on June 1 or December 1 immediately
preceding the Interest Payment Date. The interest rate on the Notes is subject
to increase under certain circumstances. See "The Exchange Offer." Interest will
be payable only in cash or in additional Notes on each Interest Payment Date, at
the option of the Issuers, until June 15, 1999, and thereafter will be payable
in cash. To the extent any cash interest is not paid after June 15, 1999, the
amount not paid will bear interest at the interest rate then applicable to the
Notes plus 2.0%. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The Notes will not be entitled to the benefit
of any mandatory sinking fund.
OPTIONAL REDEMPTION
Except as described under "-- Regulatory Redemption" or under "-- Optional
Redemption Upon Public Equity Offering," the Notes will not be redeemable at the
option of the Issuers until December 15, 2002, at which time the Notes will be
redeemable, in whole or in part, at the Issuers' option at any time upon not
less than 30 nor more than 60 days notice by first-class mail at the following
redemption prices, if redeemed during
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the 12-month period commencing on December 15 of the years set forth below, plus
accrued and unpaid interest to the redemption date:
<TABLE>
<CAPTION>
REDEMPTION
12 MONTHS COMMENCING DECEMBER 15 PRICE
-------------------------------- ----------
<S> <C>
2002........................................................ 106.50%
2003........................................................ 104.33
2004........................................................ 102.17
2005 and thereafter......................................... 100.00%
</TABLE>
Optional Redemption Upon Public Equity Offering. At any time prior to
December 15, 2000, and not more than 90 days after the consummation of any
Public Equity Offering, each of the Issuers at its option may redeem up to 35.0%
of the aggregate principal amount of the Notes with the Net Cash Proceeds of one
or more Public Equity Offerings by the Partnership at a redemption price equal
to 113.0% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of redemption, provided that there is a Public
Market at the time of such redemption and that after any such redemption at
least $65.0 million of the original principal amount of the Notes remains
outstanding.
Selection. The Notes will be selected for any redemption by the Trustee on
a pro rata basis, by lot or by such other method as the Trustee in its sole
discretion deems to be fair and appropriate, provided that for a partial
redemption with the Net Cash Proceeds of a Public Equity Offering, selection of
the Notes for redemption shall be made by the Trustee only on a pro rata basis
unless such method is otherwise prohibited. The Notes may be redeemed in
multiples of $1,000 principal amount only. Notice of redemption will be sent by
first class mail, postage prepaid, at least 30 days (unless a shorter period is
acceptable to the Trustee) but not more than 60 days prior to the date fixed for
redemption to each Holder whose Notes are to be redeemed. If any Note is to be
redeemed partially, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder upon cancellation of the original Note. On and after any
redemption date, interest will cease to accrue on the Notes (or part thereof)
called for redemption as long as either of the Issuers has deposited with the
Paying Agent funds in satisfaction of the redemption price pursuant to the
Indenture.
Regulatory Redemption. If any Gaming Authority requires that a Holder or
beneficial owner of the Notes be licensed, qualified or found suitable under any
applicable Gaming Laws in order to maintain any gaming license or franchise of
the Partnership under any applicable Gaming Laws, and the Holder or beneficial
owner fails to apply (at its sole cost and expense) for a license, qualification
or finding of suitability within 30 days after being requested to do so by the
Gaming Authority (or such other period that may be required by such Gaming
Authority), or if such Holder or beneficial owner is not so licensed, qualified
or found suitable, the Issuers shall have the right, at their option, (i) to
require such Holder or beneficial owner to dispose of the Notes within 30 days
of receipt of such finding by the Gaming Authority (or such other date as may be
required by the applicable Gaming Authority), or (ii) to call for redemption
(pursuant to the procedures of the Indenture unless otherwise required by a
Gaming Authority) of the Notes of such Holder or beneficial owner at a
redemption price equal to the lesser of the principal amount, the fair market
value thereof or the price at which such Holder or beneficial owner acquired the
Notes, together with, in either case, accrued and unpaid interest. See "Risk
Factors -- Gaming Regulation" and "Regulation and Licensing -- Nevada."
RANKING AND SUBORDINATION
The Original Notes are, and the Exchange Notes will be, general unsecured
obligations of the Issuers subordinated in right of payment to payment in full
of all existing and future Senior Indebtedness, and will be senior or pari passu
in right of payment to all existing and future subordinated Indebtedness.
Payment from the proceeds of U.S. Government Obligations held in any defeasance
trust is not subordinate to any Senior Indebtedness or subject to the
restrictions described herein. See "-- Defeasance." At December 31, 1997, the
outstanding Senior Indebtedness of the Issuers to which the Notes were
subordinated was $100.0 million.
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Although the Indenture limits the additional Indebtedness that the Issuers may
incur, the amount of such Indebtedness could be substantial and, in any case,
such Indebtedness may be Senior Indebtedness. See "-- Certain
Covenants -- Limitation on Indebtedness."
Upon any distribution to creditors of an Issuer in a liquidation or
dissolution of such Issuer or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Issuer or its property, an
assignment for the benefit of creditors or any marshaling of an Issuer's assets
and liabilities, the Holders will be entitled to receive payment in full of all
obligations due in respect of such Senior Indebtedness (including interest after
the commencement of any such proceeding, whether or not an allowable claim, at
the rate specified in the applicable Senior Indebtedness) before the Holders
will be entitled to receive any payment with respect to the Notes. Until all
obligations with respect to Senior Indebtedness are paid in full, any
distribution to which the Holders would be entitled will be made to the holders
of Senior Indebtedness (except that the Holders may receive and retain permitted
Subordinated Obligations and payments made from the defeasance trust). See
"-- Defeasance."
The Issuers may not pay principal of, premium (if any) or interest on, the
Notes or make any deposit pursuant to the provisions described under
"-- Defeasance" below and may not otherwise purchase, redeem or otherwise retire
any Notes if (i) any Designated Senior Indebtedness is not paid when due, or
(ii) any other default on Designated Senior Indebtedness occurs and the maturity
of such Designated Senior Indebtedness is accelerated in accordance with its
terms unless, in either case, the default has been cured or waived and any such
acceleration has been rescinded or such Designated Senior Indebtedness has been
paid in full in cash or Cash Equivalents. However, the Issuers may pay the Notes
without regard to the foregoing if the Issuers and the Trustee receive written
notice approving such payment from the Representative of the Designated Senior
Indebtedness with respect to which either of the events set forth in clause (i)
or (ii) of the immediately preceding sentence has occurred and is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the second preceding sentence) with respect to any Designated
Senior Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Issuers may not pay the Notes for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Issuers) of
written notice (a "Blockage Notice") of such default from the Representative of
the Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Issuers from the Person or Persons who gave such Blockage Notice, (ii) by
repayment in full in cash or Cash Equivalents of such Designated Senior
Indebtedness, or (iii) because the default giving rise to such Blockage Notice
is no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this paragraph), unless the Holders of such Designated Senior
Indebtedness or the Representative of such Holders have accelerated the maturity
of such Designated Senior Indebtedness, the Issuers may resume payments on the
Notes after the end of the Payment Blockage Period. Not more than one Blockage
Notice may be given in any consecutive 360-day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness during such
period. In no event, however, may the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any 360 consecutive day period. For purposes of this paragraph, no
default or event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of the Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors who are holders of Designated Senior
Indebtedness (including holders of the Mortgage Notes) may recover more,
ratably, than the Holders of Notes, and creditors who are not holders of Senior
Indebtedness (including Holders of the Notes) may recover less, ratably, than
holders of Senior Indebtedness. There can be no assurance that, in the event of
insolvency, creditors will recover any portion of amounts owed by the Issuers.
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ACCOUNTS
On the Issue Date the Issuers deposited in an account (the "Notes Proceeds
Account") maintained with First Security Trust Company of Nevada as the Account
Agent the net proceeds of the Original Notes. The amounts in the Notes Proceeds
Account (which were comprised solely of cash and Cash Equivalents) will be used
only to satisfy construction and development costs and will be disbursed
pursuant to the Disbursement Agreement. See "Description of Disbursement
Agreement."
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Note Holder will have the
right to require the Issuers to repurchase for cash all or any part of such
Holder's Notes for 101.0% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase. A Change of Control is (i) any
sale, lease, exchange or other transfer (collectively, a "Transfer") (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Partnership and its Subsidiaries; (ii) the adoption of a plan
relating to the liquidation or dissolution of the Partnership; (iii) RAS ceasing
to be the sole General Partner of the Partnership; or (iv) the Existing Partners
failing to own in the aggregate, directly or indirectly, at least 50.0% of the
General Partner.
No earlier than 30 days and no later than 60 days following a Change of
Control (or if the Notes have been repaid in full at such time), the Issuers
shall notify each holder of the Change of Control and the Holder's right to
require the Issuers to repurchase (within 70 to 90 days of the notice) such
Holder's Notes for 101.0% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase and any applicable procedures
not inconsistent with the Indenture.
If any amounts are owing under the Credit Facility, at the time of a Change
of Control, prior to the mailing of the notice to the Holders but in any event
within 30 days following the Change of Control, the Issuers will (i) repay in
full all obligations under the Credit Facilities, (ii) offer to repay in full
all obligations under such Credit Facilities and repay the obligations under the
Credit Facilities of each lender who has accepted such offer, or (iii) obtain
the requisite consents under such Credit Facilities to permit the repurchase of
the Notes pursuant to a Change of Control offer. The Issuers will be required to
comply with the provisions described in the preceding sentence prior to
complying with their obligations to repurchase Notes in the event of a Change of
Control. As a result, a Holder may not be able to compel the Issuers to
repurchase such Holder's Notes unless the Issuers are able at such time to
refinance all Indebtedness, or obtain requisite consents, under such Credit
Facilities. The failure of the Issuers for 30 days after notice to comply with
their obligations to repurchase (once permitted to do so) Notes in the event of
a Change of Control will constitute an Event of Default under the Indenture.
The Issuers will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes. To the extent that the provisions of
any securities laws or regulations conflict with provisions of the Indenture,
the Issuers will comply with the applicable securities laws and regulations and
shall not, as a result of such compliance, be deemed to have breached their
obligations described in the Indenture.
The Issuers will not make any required repurchase of Subordinated
Obligations until at least 30 days after the Issuers are required to make
purchases of the Notes following a Change of Control.
The definition of "Change of Control" includes, among other transactions, a
disposition of all or substantially all of the property and assets of the
Partnership and its Subsidiaries. The phrase "all or substantially all" as used
in the Indenture varies according to the facts and circumstances of the subject
transaction, has no clearly established meaning under New York law (which is the
law which governs the Indenture) and is subject to judicial interpretation.
Accordingly, in certain circumstances there may exist uncertainty as to whether
a transaction is a disposition of "all or substantially all" of the property or
assets and whether a Change of Control has occurred.
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CERTAIN COVENANTS
The Indenture contains certain covenants including, among others, the
following:
Limitation on Indebtedness
(a) The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, incur any Indebtedness other than (i) ranking pari passu with
or which is expressly subordinate and junior in right of payment to, the Notes,
if no Default or Event of Default shall have occurred and be continuing at the
time of such incurrence or would occur as a consequence of such incurrence and
the Consolidated Coverage Ratio would be equal to at least 2.00 to 1.00 and (ii)
Senior Indebtedness if no Default or Event of Default shall have occurred and be
continuing at the time of such incurrence or would occur as a consequence of
such incurrence and the Consolidated Coverage Ratio would be at least equal to
2.50 to 1.00 (collectively, the "Coverage Ratio Indebtedness"); and
(b) The following Indebtedness (collectively, the "Additional Permitted
Indebtedness"):
(i) Indebtedness under the Credit Agreement, in an aggregate principal
amount outstanding at any time not to exceed $100.0 million (less the
amount of any repayments of principal of the Mortgage Notes and any
permanent reductions in the amount of available borrowings under the
Revolving Credit Facility as a result of repayments made thereunder);
(ii) the incurrence by the Partnership or any of its Restricted
Subsidiaries of Indebtedness (including Capitalized Lease Obligations,
Attributable Indebtedness incurred in connection with a Sale/ Leaseback
Transaction or purchase money obligations), incurred for the purpose of
financing all or any part of the purchase or lease of personal property or
equipment or financing existing casino equipment used in the business of
the Partnership or a Restricted Subsidiary, in an aggregate principal
amount (including any permitted refinancing thereof) not to exceed $15.0
million (plus accrued interest thereon and the amount of reasonable
expenses incurred and premium paid in connection with any permitted
refinancing) outstanding at any time;
(iii) Indebtedness of the Partnership owing to and held by any
Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to
and held by the Partnership or any Wholly-Owned Subsidiary; provided that
any subsequent issuance or transfer of any Capital Stock or any other event
which results in any such Wholly-Owned Subsidiary ceasing to be a
Wholly-Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Partnership or any Wholly-Owned Subsidiary) shall be deemed
to constitute the incurrence of such Indebtedness by the issuer thereof;
(iv) Indebtedness represented by, or Refinancing Indebtedness of, (a)
the Notes, (b) the Subsidiary Guarantee, and (c) any Coverage Ratio
Indebtedness;
(v)(A) Indebtedness, or Refinancing Indebtedness, of a Restricted
Subsidiary outstanding on the date on which such Restricted Subsidiary was
acquired by the Partnership (other than Indebtedness incurred in
anticipation of, or to provide all or any portion of the funds or credit
support utilized to consummate the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Subsidiary or was otherwise acquired by the Partnership); provided that at
the time such Restricted Subsidiary is acquired by the Partnership, the
Partnership would have been able to incur an additional $1.00 of Coverage
Ratio Indebtedness;
(vi) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Partnership or any
of its Restricted Subsidiaries to their suppliers, lessors, licensees,
contractors, franchises or customers in the ordinary course of their
business, (B) in respect of performance bonds or similar obligations of the
Partnership or any of its Restricted Subsidiaries for or in connection with
pledges, deposits or payments made or given in the ordinary course of
business in connection with or to secure statutory, regulatory or similar
obligations, including obligations under health, safety or environmental
obligations, and (C) arising from Guarantees to suppliers, lessors,
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licensees, contractors, franchises or customers of obligations (other than
Indebtedness) incurred in the ordinary course of business;
(vii) Indebtedness under certain Currency Agreements entered into for
bona fide hedging purposes of the Partnership or its Restricted
Subsidiaries (as determined in good faith by the General Partner of the
Partnership) and which correspond in terms of notional amount, duration,
currencies and interest rates as applicable, to Indebtedness of the
Partnership or its Restricted Subsidiaries incurred without violation of
the Indenture or to business transactions of the Partnership or its
Restricted Subsidiaries on customary terms entered into in the ordinary
course of business;
(viii) Indebtedness from indemnification agreements, adjustment of
purchase price or similar obligations, or from Guarantees or letters of
credits, surety bonds or performance bonds securing any obligations of the
Partnership or any of its Restricted Subsidiaries pursuant to such
agreements, in each case incurred in connection with the disposition of any
business assets or Restricted Subsidiary of the Partnership (other than
Guarantees of Indebtedness or other obligations incurred by any Person
acquiring all or any portion of such business assets or Restricted
Subsidiary of the Partnership for the purpose of financing such
acquisition) in a principal amount not to exceed the gross proceeds
actually received by the Partnership or any of its Restricted Subsidiaries
in connection with such disposition and which, together with all other such
Indebtedness, does not exceed $2.0 million;
(ix) Indebtedness consisting of (A) Guarantees by the Partnership
(provided the Partnership could have incurred such Indebtedness directly
without violation of the Indenture) and (B) Guarantees by a Restricted
Subsidiary of Indebtedness incurred by the Partnership without violation of
the Indenture (provided such Restricted Subsidiary could have incurred such
Indebtedness directly without violation of the Indenture);
(x) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument issued by the
Partnership or its Subsidiaries drawn against insufficient funds in the
ordinary course of business in an amount not to exceed $250,000 at any
time, provided that such Indebtedness is extinguished within two business
days of its incurrence; and
(xi) any other Indebtedness in an aggregate principal amount not to
exceed $5.0 million.
Neither the Partnership nor any Restricted Subsidiary shall incur any
Indebtedness under paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to refinance any Subordinated Obligations of the
Partnership unless such Indebtedness shall be subordinated to the Notes to at
least the same extent as such Subordinated Obligations. No Restricted Subsidiary
shall incur any Indebtedness under paragraph (b) above if the proceeds thereof
are used, directly or indirectly, to refinance any Guarantor Subordinated
Obligation of such Subsidiary Guarantor unless such Indebtedness shall be
subordinated to the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee to at least the same extent as such Guarantor Subordinated
Obligation.
The Partnership will not permit any Unrestricted Subsidiary to incur any
Indebtedness other than Non-Recourse Debt (as such term is defined in the
Indenture).
Limitation on Restricted Payments
The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries, directly or indirectly, to (i) declare or pay any dividend or make
any distribution on or in respect of its Capital Stock except (A) dividends or
distributions payable in its Capital Stock (other than Disqualified Stock) or in
options, warrants or other rights to purchase such Capital Stock and (B)
dividends or distributions payable to the Partnership or a Restricted Subsidiary
which holds any equity interest in the paying Restricted Subsidiary (and if the
Restricted Subsidiary paying the dividend or making the distribution is not a
Wholly-Owned Subsidiary, to its other holders of Capital Stock on a pro rata
basis), (ii) purchase, redeem, retire or otherwise acquire for value any Capital
Stock of the Partnership held by Persons other than a Wholly-Owned Subsidiary of
the Partnership or any Capital Stock of a Restricted Subsidiary of the
Partnership held by any Affiliate of the Partnership, other than a Wholly-Owned
Subsidiary (in either case, other than in exchange for its Capital
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Stock (other than Disqualified Stock)), (iii) purchase, repurchase, redeem,
defease or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Obligations, or (iv) make any Investment (other than a Permitted Investment) in
any Person (each of the foregoing being referred to as a "Restricted Payment");
if at the time the Partnership or such Restricted Subsidiary makes such
Restricted Payment: (A) a Default shall have occurred and be continuing (or
would result therefrom); or (B) the Partnership is not able to incur an
additional $1.00 of Coverage Ratio Indebtedness; or (C) the aggregate amount of
such Restricted Payment and all other Restricted Payments declared or made
subsequent to the Issue Date would exceed the sum of (1) 50.0% of the
Consolidated Net Income accrued during the period (treated as one accounting
period) from the first day of the fiscal quarter beginning on or after the Issue
Date to the end of the most recent fiscal quarter ending prior to the date of
such Restricted Payment as to which financial results are available (but in no
event ending more than 135 days prior to the date of such Restricted Payment)
(or, in case such Consolidated Net Income shall be a deficit, minus 100.0% of
such deficit); (2) the aggregate net proceeds received by the Partnership from
the issue or sale of its Capital Stock (other than Disqualified Stock) or other
capital contributions subsequent to the Issue Date (other than net proceeds
received from an issuance or sale of such Capital Stock to (x) a Subsidiary of
the Partnership, (y) an employee stock ownership plan or similar trust or (z)
management employees of the Partnership or any Subsidiary of the Partnership
(other than sales of Capital Stock (other than Disqualified Stock) to management
employees of the Partnership pursuant to bona fide employee stock option plans
of the Partnership); provided that the value of any non-cash net proceeds shall
be as determined by the General Partner in good faith where non-cash net
proceeds are $2.0 million or more, by a nationally-recognized independent
investment banking firm); (3) the amount by which Indebtedness of the
Partnership is reduced on the Partnership's balance sheet upon the conversion or
exchange (other than by a Restricted Subsidiary of the Partnership) subsequent
to the Issue Date of any Indebtedness of the Partnership convertible or
exchangeable for Capital Stock of the Partnership (less the amount of any cash,
or other property, distributed by the Partnership upon such conversion or
exchange); and (4) the amount equal to the net reduction in Investments (other
than Permitted Investments) made after the Issue Date by the Partnership or any
of its Restricted Subsidiaries in any Person resulting from (i) repurchases or
redemptions of such Investments by such Person, proceeds realized upon the sale
of such Investment to an unaffiliated purchaser, repayments of loans or advances
or other transfers of assets by such Person to the Partnership or any Restricted
Subsidiary of the Partnership or (ii) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously included in the calculation of
the amount of Restricted Payments; provided that no amount shall be included
under this clause (4) to the extent included in Consolidated Net Income.
Restricted Payments do not include (i) any purchase or redemption of
Capital Stock or Subordinated Obligations of the Partnership made by exchange
for, or out of the proceeds of the substantially concurrent sale of, Capital
Stock of the Partnership (other than Disqualified Stock and other than Capital
Stock issued or sold to a Subsidiary, an employee stock ownership plan or
similar trust, or management employees of the Partnership or any Subsidiary of
the Partnership); provided that (A) such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale shall be excluded from the calculation of aggregate
net proceeds to the Partnership from the sale or issuance of Capital Stock for
purposes of determining Restricted Payments; (ii) any permitted purchase or
redemption of Subordinated Obligations made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations;
provided that such purchase or redemption shall be excluded in the calculation
of the amount of Restricted Payments; (iii) any permitted purchase or redemption
of Subordinated Obligations from Net Available Cash (such purchase or redemption
to be excluded in the calculation of Restricted Payments); (iv) distributions
paid within 60 days after the date of declaration if such distributions would
have been permitted on the date of declaration (such distributions to be
included in the calculation of the amount of Restricted Payments); (v) permitted
transfer of the Right of First Offer to an Affiliate of SCA; (vi) distributions
to the General Partner or limited partners of the Partnership as Tax Allowance
Amounts payable in cash and made as distributions to all partners; (vii) any
redemption or purchase by the Issuers or any Restricted Subsidiary of Capital
Stock or Subordinated Obligations of either of
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the Issuers required by a Gaming Authority in order to preserve a material
Gaming License; provided, that such efforts do not jeopardize any material
Gaming License, the Issuers or such Restricted Subsidiary shall have diligently
tried to find a third-party purchaser for such Capital Stock or Subordinated
Obligations and no third-party purchaser acceptable to the applicable Gaming
Authority was willing to purchase such Capital Stock or Subordinated Obligations
within a time period acceptable to such Gaming Authority and (viii) the payment
of the subordinated development fee due to SCA in an amount not to exceed $3.0
million; provided, that in the case of clauses (i), (ii), (iii), (v) and (viii),
no Default or Event of Default shall have occurred or be continuing at the time
of such payment or as a result thereof.
For purposes of determining compliance with the foregoing covenant,
Restricted Payments may be made with cash or non-cash assets, provided that any
Restricted Payment made other than in cash shall be valued at the fair market
value (determined in good faith by the General Partner) of the assets so
utilized in making such Restricted Payment, provided, that (i) in the case of
any Restricted Payment made with capital stock or indebtedness, such Restricted
Payment shall be deemed to be made in an amount equal to the greater of the fair
market value thereof and the liquidation preference (if any) or principal amount
of the Capital Stock or Indebtedness, as the case may be, so utilized, and (ii)
in the case of any Restricted Payment in an aggregate amount in excess of $2.0
million, a written fairness opinion of the valuation thereof shall be issued by
a nationally-recognized independent investment banking firm.
Limitation on Liens
The Indenture will provide that the Partnership shall not and shall not
permit any Restricted Subsidiary to, directly or indirectly, create or permit to
exist any Liens except for Permitted Liens.
Limitation on Layered Indebtedness
The Partnership shall not, directly or indirectly, incur any Indebtedness,
and shall not permit any Subsidiary Guarantor to incur any Indebtedness that is
expressly subordinate in right of payment to any other Indebtedness of the
Partnership or such Subsidiary Guarantor unless such Indebtedness is expressly
subordinate in right of payment to, or ranks pari passu in all respects with,
the Notes or the Subsidiary Guarantee of such Subsidiary Guarantor.
Limitation on Business Activities of the Partnership
The Partnership shall not, and shall not permit any Restricted Subsidiary
to, engage, directly or indirectly, in any business other than a Permitted
Business.
Limitation on Business Activities of RAS
RAS shall not engage in or conduct any trade or business other than the
incurrence as a joint and several obligor of permitted Indebtedness of the
Partnership and the holding of the Capital Stock of the Partnership issued to
RAS and activities incidental thereto. RAS shall not create, capitalize or
otherwise own or acquire any Subsidiary. See "-- Limitation on Indebtedness."
Limitation on Restrictions on Distributions from Restricted Subsidiaries
The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any such Restricted Subsidiary to
(i) pay dividends or make any other distributions on its Capital Stock or pay
any Indebtedness or other obligation owed to the Partnership, (ii) make any
loans or advances to the Partnership, or (iii) transfer any of its property or
assets to the Partnership, except: (a) any encumbrance or restriction pursuant
to an agreement in effect at or entered into on the Issue Date (including the
Credit Agreement); (b) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any Indebtedness
issued by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Partnership and outstanding on such
date (other than Indebtedness incurred in anticipation of, or to provide all or
any portion of the funds or credit support utilized to consummate, the
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transaction or series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary of the Partnership or was acquired by
the Partnership); (c) any encumbrance or restriction with respect to such a
Restricted Subsidiary pursuant to an agreement evidencing Indebtedness incurred
without violation of the Indenture or effecting certain permitted refinancing of
Indebtedness provided that the encumbrances and restrictions with respect to
Restricted Subsidiaries contained in any of such agreement, refinancing
agreement or amendment, taken as a whole, are no less favorable to the holders
of the Notes in any material respect, as determined in good faith by the General
Partner, than encumbrances and restrictions with respect to Restricted
Subsidiaries contained in agreements in effect at, or entered into on, the Issue
Date; (d) any encumbrance or restriction (A) that restricts in a customary
manner the subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract or similar property or asset, (B) by
virtue of any transfer of, agreement to transfer, option or right with respect
to, or Lien on, any property or assets of the Partnership or any Restricted
Subsidiary not otherwise prohibited by the Indenture, (C) that is included in a
licensing agreement to the extent such restrictions limit the transfer of the
property subject to such licensing agreement, or (D) arising or agreed to in the
ordinary course of business and that does not, individually or in the aggregate,
detract from the value of property or assets of the Partnership or any of its
Subsidiaries in any manner material to the Partnership or any such Restricted
Subsidiary; (e) restrictions contained in security agreements, mortgages or
similar documents securing Indebtedness of a Restricted Subsidiary to the extent
such restrictions restrict the transfer of the property subject to such security
agreements; (f) any instrument governing or evidencing Indebtedness of a Person
acquired by the Partnership or any Restricted Subsidiary of the Partnership at
the time of such acquisition, which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than the Person
so acquired; provided that such Indebtedness is not incurred in connection with
or in contemplation of such acquisition; (g) any restriction with respect to
such a Restricted Subsidiary imposed pursuant to an agreement entered into for
the sale or disposition of all or substantially all the Capital Stock or assets
of such Restricted Subsidiary pending the closing of such sale or disposition;
(h) encumbrances or restrictions imposed by any Gaming Authority; and (i)
encumbrances or restrictions arising or existing by reason of applicable law.
Limitation on Sales of Assets and Subsidiary Stock
(a) The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless (i) the Partnership or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as determined in good faith
by the General Partner (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition, (ii)
at least 80.0% of the consideration is either cash or Cash Equivalents, and
(iii) an amount equal to 100.0% of the Net Available Cash from such Asset
Disposition is applied by the Partnership (or such Restricted Subsidiary, as the
case may be) within the time required by the Indenture and subject to the
Partnership receiving certain minimum amounts of Net Available Cash (A) first,
to the extent the Partnership or any Restricted Subsidiary elects (or is
required by the terms of any Senior Indebtedness), (x) to prepay, repay or
purchase Senior Indebtedness or (y) to the investment in or acquisition of
Additional Assets within 365 days from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; (B) second, within 365
days from the receipt of such Net Available Cash to make an offer to purchase
Notes at 101.0% of their principal amount plus accrued and unpaid interest, if
any, thereon; (C) third, to prepay, repay or repurchase Indebtedness (other than
Preferred Stock) of a Wholly-Owned Subsidiary (in each case other than
Indebtedness owed to the Partnership); and (D) fourth, to (w) the investment in
or acquisition of Additional Assets, (x) the making of Temporary Cash
Investments, (y) the prepayment, repayment or purchase of Indebtedness of the
Partnership (other than Indebtedness owing to any Subsidiary of the Partnership)
or Indebtedness of any Subsidiary (other than Indebtedness owed to the
Partnership or any of its Subsidiaries) or (z) any other purpose otherwise
permitted under the Indenture. Notwithstanding the foregoing provisions, the
Partnership and its Restricted Subsidiaries shall not be required to apply any
Net Available Cash in accordance with the foregoing restrictions except to the
extent that the aggregate Net Available Cash from all Asset Dispositions which
are not applied in accordance with this covenant at any time exceed $5.0
million. The Partnership shall not be required to make an offer for Notes
pursuant to this covenant if the Net Available Cash available therefor (after
application of the proceeds as
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provided in clause (A)) is less than $5.0 million for any particular Asset
Disposition (which lesser amounts shall be carried forward for purposes of
determining whether an offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
For the purposes of this covenant, the following will be deemed to be cash:
(x) the assumption by the transferee of Senior Indebtedness of the Partnership
or any Restricted Subsidiary of the Partnership and the release of the
Partnership or such Restricted Subsidiary from all liability on such Senior
Indebtedness in connection with such Asset Disposition (in which case the
Partnership shall, without further action, be deemed to have applied such
assumed Indebtedness in accordance with clause (A) of the preceding paragraph)
and (y) securities received by the Partnership or any Restricted Subsidiary of
the Partnership from the transferee that are promptly (and in any event within
60 days) converted by the Partnership or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to clause (a) (iii) (B), the Issuers will be required to purchase
Notes tendered pursuant to an offer by the Issuers for the Notes at a purchase
price of 101.0% of their principal amount plus accrued and unpaid interest, if
any, to the purchase date in accordance with the procedures (including prorating
in the event of oversubscription) set forth in the Indenture. If the aggregate
purchase price of the Notes tendered pursuant to the offer is less than the Net
Available Cash allotted to the purchase of the Notes, the Issuers will apply the
remaining Net Available Cash in accordance with clauses (a) (iii) (C) or (D)
above.
Limitation on Affiliate Transactions
The Partnership will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or conduct any transaction
or series of related transactions (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with or for the
benefit of any Affiliate of the Partnership, other than a Wholly-Owned
Subsidiary or RAS (an "Affiliate Transaction"), unless: (i) the terms of such
Affiliate Transaction are no less favorable to the Partnership or such
Restricted Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's-length dealings with a non-Affiliate; (ii)
Affiliate Transactions involving an aggregate amount in excess of $1.0 million
have been approved by of the Board of Directors of the General Partner including
a majority of the disinterested Directors, if any; and (iii) for Affiliate
Transactions in excess of $2.0 million, the Partnership has received a written
fairness opinion from a nationally-recognized independent investment banking
firm.
The foregoing shall not apply to (i) any permitted Restricted Payment, (ii)
any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
or any stock options and stock ownership plans for the benefit of employees,
officers and directors, consultants and advisors approved by the General
Partner, (iii) loans or advances to employees in the ordinary course of business
of the Partnership or any of its Restricted Subsidiaries in an aggregate amount
outstanding not to exceed $250,000 to any employee or $1.0 million in the
aggregate at any time, (iv) any transaction between Wholly-Owned Subsidiaries,
(v) indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Partnership and its Restricted
Subsidiaries, in each case in the ordinary course of business, (vi) transactions
pursuant to agreements in existence on the Issue Date which are (x) described in
the Prospectus or (y) otherwise, in the aggregate, immaterial to the Partnership
and its Restricted Subsidiaries taken as a whole, (vii) any employment,
noncompetition or confidentiality agreements entered into by the Partnership or
any of its Restricted Subsidiaries with its employees in the ordinary course of
business, (viii) provided that no Default or Event of Default exists or would
occur as a consequence of such payment, payment of the management fee to the
General Partner in an amount not to exceed 3.0% of net revenues ("Net Revenue
Fee") plus 6.0% of EBITDAM (net of the Net Revenue Fee), (ix) the issuance of
Capital Stock of the Partnership (other than Disqualified Stock), and (x)
payments to SCR for amounts allocated by SCR to the Partnership for compensation
(whether deferred or current) of SCR employees providing services to the
Partnership and related expenses. In addition, if an opportunity arises to
develop further sites in the Summerlin master planned community as a result of a
Right of First Offer, and the Partnership elects to pursue such opportunity, the
Partnership shall use its reasonable efforts to pursue such opportunity to
develop and finance such site under the existing terms of the Indenture or
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Credit Agreement. If the Indenture or the Credit Agreement, however, restrict
the Partnership's ability to pursue such opportunity, the foregoing paragraph
(a) shall not prohibit the Partnership from transferring the Right of First
Offer to an Affiliate of SCA established by SCA to pursue such opportunity;
provided, that, such Affiliate is at least 85.0% owned by SCA (directly or
indirectly) and the Partnership receives an interest in such Affiliate equal to
the value of the Right of First Offer as determined in good faith by the Board
of Directors of the General Partner.
Limitation on Issuances of Capital Stock of Restricted Subsidiaries
The Partnership will not permit any of its Restricted Subsidiaries to issue
any Capital Stock to any Person (other than to the Partnership or a Wholly-Owned
Subsidiary) or permit any other Person to own any Capital Stock of a Restricted
Subsidiary of the Partnership, if as a result thereof such Restricted Subsidiary
would no longer be a Restricted Subsidiary, provided that neither the
Partnership nor any of its Restricted Subsidiaries is prohibited from selling,
leasing or otherwise disposing of all of the Capital Stock of any Restricted
Subsidiary or designating a Restricted Subsidiary as an Unrestricted Subsidiary
in compliance with the Indenture.
Limitation on Sale/Leaseback Transactions
The Partnership will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, a Guarantee or otherwise become liable with
respect to any Sale/Leaseback Transaction with respect to any property or assets
unless (i) the Partnership or such Restricted Subsidiary would be entitled to
pursuant to the Indenture to incur Indebtedness secured by a Permitted Lien on
such property or assets in an amount equal to the Attributable Indebtedness with
respect to such Sale/Leaseback Transaction, (ii) the Net Cash Proceeds from such
Sale/Leaseback Transaction are at least equal to the fair market value of the
property or assets subject to such Sale/Leaseback Transaction (such fair market
value determined, in the event such property or assets have a fair market value
in excess of $1.0 million, no more than 30 days prior to the effective date of
such Sale/Leaseback Transaction, by the General Partner as evidenced by a
resolution of the Board of Directors of the General Partner), and (iii) the Net
Cash Proceeds of such Sale/Leaseback Transaction are applied in accordance with
the provisions described under "-- Limitation on Sales of Assets and Subsidiary
Stock."
SEC Reports
The Issuers shall file with the Trustee and provide to the Note Holders,
within 15 days after filing with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may by rules and regulations
prescribe) which the Issuers file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act or similar information if the Issuers are not required
to file such reports within 15 days after it would have been required to file it
with the Commission.
Limitation on Designations of Unrestricted Subsidiaries
The Partnership may designate any Subsidiary of the Partnership (other than
a Subsidiary of the Partnership which owns Capital Stock of a Restricted
Subsidiary) as an "Unrestricted Subsidiary" under the Indenture (a
"Designation") only if at the time of Designation:
(a) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation; and
(b) the Partnership would be permitted under the Indenture to make an
Investment (assuming the effectiveness of such Designation) in an amount
(the "Designation Amount") equal to the sum of (i) fair market value of the
Capital Stock of such Subsidiary owned by the Partnership and the
Restricted Subsidiaries, and (ii) the aggregate amount of other Investments
of the Partnership and the Restricted Subsidiaries in such Subsidiary; and
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(c) the Partnership would be permitted to incur an additional $1.00 of
Coverage Ratio Indebtedness (other than Permitted Indebtedness) described
under "-- Limitation on Indebtedness."
In the event of a Designation, the Partnership shall be deemed to have made
an Investment constituting a Restricted Payment. See "-- Limitation on
Restricted Payments." Neither the Partnership or any Restricted Subsidiary may
at any time (x) provide direct or indirect credit support for or a guarantee of
any Indebtedness of any Unrestricted Subsidiary, (y) be directly or indirectly
liable for any Indebtedness of any Unrestricted Subsidiary, or (z) be directly
or indirectly liable for any Indebtedness which provides that the holder thereof
may declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary), except
to the extent permitted under the Indenture. See "-- Limitation on Restricted
Payments."
The Partnership may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then
become a Restricted Subsidiary, if:
(a) no Default has occurred and is continuing at the time of, and
after giving effect to, such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of the
Indenture.
Limitation on Status as Investment Company
The Indenture will prohibit the Issuers and the Restricted Subsidiaries of
the Partnership from being required to register as an "investment company" (as
defined in the Investment Company Act of 1940, as amended).
Future Subsidiary Guarantors
All present and future Restricted Subsidiaries will, jointly and severally,
guarantee, irrevocably and unconditionally, all principal, premium, if any, and
interest on the Notes on a senior subordinated basis. If the Partnership or any
of its Restricted Subsidiaries acquires or creates another Restricted Subsidiary
after the Issue Date, the Restricted Subsidiary shall execute a Subsidiary
Guarantee and deliver to the Trustee an Opinion of Counsel relating to the
enforceability and authorization of the Subsidiary Guarantee.
The Indebtedness evidenced by each Subsidiary Guarantee (including any
required payment of principal of, premium, if any, and interest) will be
subordinated to Guarantor Senior Indebtedness on substantially the same basis as
the Notes are subordinated to Senior Indebtedness. Although the Indenture
contains limitations on the amount of additional Indebtedness that the
Partnership's Restricted Subsidiaries may incur, under certain circumstances the
amount of such Indebtedness could be substantial and, in any case, such
Indebtedness may be Guarantor Senior Indebtedness. See "Certain
Covenants -- Limitation on Indebtedness" and "-- Ranking and Subordination."
The obligations of each Subsidiary Guarantor will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor (including, without limitation,
Guarantees of the Mortgage Notes and after giving effect to any collections from
or payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to its contribution obligations under the Indenture), will
result in the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law. Each Subsidiary Guarantor that makes a payment or
distribution under a Subsidiary Guarantee shall be entitled to contribution from
each other Subsidiary Guarantor of a pro rata amount based on the Adjusted Net
Assets of each Subsidiary Guarantor.
Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Partnership or another Subsidiary Guarantor without limitation.
Each Subsidiary Guarantor may consolidate with or merge
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into or sell all or substantially all its assets to a corporation, partnership
or trust other than the Partnership or another Subsidiary Guarantor (whether or
not affiliated with the Subsidiary Guarantor). Upon the sale or disposition of a
Subsidiary Guarantor (or all or substantially all of its assets) to a Person
(whether or not an Affiliate of the Subsidiary Guarantor) which is not a
Subsidiary of the Partnership, which sale or disposition is otherwise in
compliance with the Indenture such Subsidiary Guarantor shall be deemed released
from all its obligations under the Indenture and its Subsidiary Guarantee and
such Subsidiary Guarantee shall terminate; provided that any such termination
occurs only to the extent that all obligations of such Subsidiary Guarantor
under all of its pledges of assets or other security interests which secure any
other Indebtedness of the Partnership shall also terminate upon such release,
sale or transfer. See "-- Certain Covenants -- Limitation on Sales of Assets and
Subsidiary Stock."
Taxes
The Issuers will, and the Partnership will cause the Restricted
Subsidiaries to, pay and discharge when due and payable all taxes, levies,
imposts, duties or other governmental charges ("Taxes") imposed on it or on its
income or profits or on any of its properties except such Taxes which are being
contested in good faith in appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP.
Merger and Consolidation
Neither the Partnership nor Warrant Co. shall consolidate with or merge
with or into, or convey, transfer or lease all or substantially all of its
assets to, any Person, unless: (i) the resulting, surviving or transferee Person
(the "Successor Entity") is a corporation, partnership, trust or limited
liability company organized and existing under the laws of the United States of
America, any state or the District of Columbia and the Successor Entity (if not
the Partnership) expressly assumes, by supplemental indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all obligations
of the Partnership under the Notes and the Indenture; (ii) immediately after
giving effect to such transaction (and treating any Indebtedness that becomes an
obligation of the Successor Entity or any Subsidiary of the Successor Entity as
a result of such transaction as having been incurred by the Successor Entity or
such Restricted Subsidiary at the time of such transaction), no Default or Event
of Default exists; (iii) immediately after giving effect to such transaction,
the Successor Entity (A) shall have a Consolidated Net Worth equal or greater
than the Consolidated Net Worth of the Partnership immediately prior to such
transaction and (B) shall be able to incur at least an additional $1.00 of
Coverage Ratio Indebtedness; (iv) the Partnership shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
the consolidation, merger or transfer and such supplemental indenture (if any)
complies with the Indenture; and (v) there has been delivered to the Trustee an
Opinion of Counsel to the effect that Holders of the Notes will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of such
consolidation, merger, conveyance, transfer or lease and will be subject to U.S.
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such consolidation, merger, conveyance,
transfer or lease had not occurred.
The Successor Entity will succeed to, and be substituted for, and may
exercise every right and power of, the Partnership under the Indenture, but, in
the case of a lease of all or substantially all its assets, the Partnership will
not be released from the obligation to pay the principal of and interest on the
Notes.
Notwithstanding the foregoing, any Restricted Subsidiary of the Partnership
may consolidate with, merge into or transfer all or part of its properties and
assets to the Partnership.
EVENTS OF DEFAULT
Each of the following constitutes an Event of Default under the Indenture:
(i) a default in any payment of interest on any Note when due which continues
for 30 days, (ii) a default in the payment of principal of any Note when due at
its Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, (iii) the failure by the Partnership to comply with
its obligations under the "Merger and Consolidation" covenant described under
"Certain Covenants" above, (iv) the failure by the Issuers to
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comply for 30 days after notice with any of its obligations under the covenants
described under "Change of Control" above or under covenants described under
"Certain Covenants" above (in each case, other than a failure to purchase Notes
when required which shall constitute an Event of Default under clause (ii)
above), other than "Merger and Consolidation," (v) the failure by the Issuers or
any Subsidiary Guarantor to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Partnership or
any Restricted Subsidiary is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds $5.0 million
and such default shall not have been cured or such acceleration rescinded after
a 10-day period, (vii) certain events of bankruptcy, insolvency or
reorganization of the Issuers or a Significant Subsidiary (the "bankruptcy
provisions"), (viii) any judgment or decree for the payment of money in excess
of $2.0 million (to the extent not covered by insurance) is rendered against the
Issuers or a Significant Subsidiary and such judgment or decree shall remain
undischarged or unstayed for a period of 60 days after such judgment becomes
final and nonappealable (the "judgment default provision"), (ix) any Subsidiary
Guarantee by a Significant Subsidiary ceases to be in full force and effect
(except as contemplated by the terms of the Indenture) or any Subsidiary
Guarantor that is a Significant Subsidiary denies or disaffirms its obligations
under the Indenture or its Subsidiary Guarantee and such Default continues for
10 days, (x) after the Resort Casino is completed, revocation, termination,
suspension or other cessation of effectiveness of any Gaming License, which
results in the total cessation or total suspension of gaming operations for a
period of more than 90 consecutive days at the Resort Casino, or (xi) the Resort
Casino has not commenced hotel and gaming operations by October 2, 1999.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25.0% in principal amount of the outstanding Notes by notice to the
Issuers may declare the principal of and accrued and unpaid interest, if any, on
all the Notes to be immediately due and payable. If an Event of Default relating
to certain events of bankruptcy, insolvency or reorganization of the Issuers
occurs, the principal of and accrued and unpaid interest on all the Notes will
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holders. Under certain circumstances, the
Holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration.
If an Event of Default occurs and is continuing, the Trustee will be under
no obligation to exercise any of the rights or powers under the Indenture at the
request or direction of any of the Holders unless such Holders have offered to
the Trustee reasonable indemnity or security against any loss, liability or
expense. Except to enforce the right to receive payment of principal, premium
(if any) or interest when due, no Holder may pursue any remedy with respect to
the Indenture or the Notes unless (i) such Holder has previously given the
Trustee notice that an Event of Default is continuing, (ii) Holders of at least
25.0% in principal amount of the outstanding Notes have requested the Trustee to
pursue the remedy, (iii) such Holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense, (iv) the Trustee
has not complied with such request within 60 days after the receipt, and (v) the
Holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the Holders of a majority in principal amount of the outstanding
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee. The Trustee may refuse to follow any direction that conflicts with
law or the Indenture or that the Trustee determines is unduly prejudicial to the
rights of any other Holder or that would subject the Trustee to liability. Prior
to taking any action under the Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
If a Default occurs and is continuing and is known to the Trustee, the
Trustee must mail to each Holder notice of the Default within 90 days after it
occurs. Except in the case of a Default in the payment of principal of, premium
(if any) or interest on any Note, the Trustee may withhold notice, provided it
determines in good faith that withholding notice is in the interests of the
Holders. In addition, the Partnership is required to deliver to the Trustee,
within 90 days after the end of each fiscal year, a certificate indicating
whether the signers thereof know of any Default that occurred during the
previous year. The Partnership also is required to deliver to the Trustee,
within 30 days after the occurrence thereof, written notice of certain Defaults.
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AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding and any past default or compliance with any provisions may be waived
with the consent of the Holders of a majority in principal amount of the Notes
then outstanding. However, without the consent of each Holder of an outstanding
Note affected, no amendment may, among other things, (i) reduce the amount of
Notes whose Holders must consent to an amendment, (ii) reduce the stated rate
of, or extend the stated time for payment of, interest on any Note, (iii) reduce
the principal of or extend the Stated Maturity of any Note, (iv) reduce the
premium payable upon the redemption or repurchase of any Note or change the time
at which any Note may be redeemed as described under "Optional Redemption"
above, (v) make any Note payable in money other than that stated in the Note,
(vi) impair the right of any holder to receive payment of principal of and
interest on such Holder's Notes on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such
Holder's Notes, or (vii) make any change in the amendment provisions which
require each Holder's consent or in the waiver provisions.
Without the consent of any Holder, the Issuers and the Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation, partnership, trust or
limited liability company of the obligations of the Issuers under the Indenture
(provided that there has been delivered to the Trustee an Opinion of Counsel to
the effect that Holders of Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such assumption and will be
subject to U.S. federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such assumption had not
occurred), to provide for uncertificated Notes in addition to or in place of
certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner such
that the uncertificated Notes are described in Section 163(f)(2)(B) of the
Code), to add further Guarantees with respect to the Notes, to secure the Notes,
to add to the covenants of the Issuers for the benefit of the Holders or to
surrender any right or power conferred upon the Issuers, to make any change that
does not adversely affect the rights of any Holder or to comply with any
requirement of the Commission in connection with the qualification of the
Indenture under the Trust Indenture Act.
After an amendment under the Indenture becomes effective, the Issuers are
required to mail to the Holders a notice briefly describing such amendment.
However, the failure to give such notice to all the Holders or any defect
therein will not impair or affect the validity of the amendment.
DEFEASANCE
The Issuers at any time may terminate all their obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a Registrar and Paying Agent in respect of the
Notes. The Issuers at any time may terminate their obligations under most of the
covenants and certain other provisions of the Indenture ("covenant defeasance").
The Issuers may exercise their legal defeasance option notwithstanding
their prior exercise of its covenant defeasance option. If the Issuers exercise
their legal defeasance option, payment of the Notes may not be accelerated
because of an Event of Default with respect thereto. If the Issuers exercise
their covenant defeasance option, payment of the Notes may not be accelerated
because certain specified Events of Default or because of the failure of the
Issuers to comply with certain restrictions concerning merger and consolidation.
In order to exercise either defeasance option, the Issuers must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of
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such deposit and defeasance and will be subject to U.S. federal income tax on
the same amount and in the same manner and at the same times as would have been
the case if such deposit and defeasance had not occurred (and, in the case of
legal defeasance only, such Opinion of Counsel must be based on a ruling of the
Internal Revenue Service or other change in applicable U.S. federal income tax
law).
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture will cease to be of further effect (except as otherwise
expressly provided for in the Indenture) when either (i) all outstanding Notes
have been delivered (other than lost, stolen or destroyed Notes which have been
replaced) to the Trustee for cancellation or (ii) all outstanding Notes have
become due and payable, whether at maturity or as a result of the mailing of a
notice of redemption pursuant to the terms of the Indenture and the Issuers have
irrevocably deposited with the Trustee funds sufficient to pay at maturity or
upon redemption all outstanding Notes, including interest thereon, and, in
either case, the Issuers have paid all other sums payable under the Indenture.
The Trustee is required to acknowledge satisfaction and discharge of the
Indenture on demand of the Issuers accompanied by an Officer's Certificate and
an Opinion of Counsel at the cost and expense of the Issuers.
TRANSFER AND EXCHANGE
Upon any transfer of a Note, the Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents, and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar is not required to transfer or exchange any Notes selected for
redemption nor is the Registrar required to transfer or exchange any Notes for a
period of 15 days before a selection of Notes to be redeemed. The registered
Holder of a Note may be treated as the owner of it for all purposes.
THE TRUSTEE
United States Trust Company of New York is to be the Trustee under the
Indenture and has been appointed by the Issuers as Registrar and Paying Agent
with regard to the Notes.
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Issuers, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim a security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest, it must
eliminate such conflict or resign.
The Holders of a majority in aggregate principal amount of the then
outstanding Notes issued under the Indenture will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy
available to the Trustee. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured) the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any of the Holders of the Notes issued thereunder unless they
shall have offered to the Trustee security and indemnity satisfactory to it.
DESCRIPTION OF DISBURSEMENT AGREEMENT
On December 31, 1997, the Issuers, National Westminster Bank PLC, as the
administrative agent for the Mortgage Notes (the "Administrative Agent"), the
Trustee, the Account Agents (the "Account Agents"), in respect of the Accounts
described below, and First Security Trust Company of Nevada, as the Disbursement
Agent entered into a Disbursement Agreement (the "Disbursement Agreement"). The
following summary of the material provisions of the Disbursement Agreement does
not purport to be complete and is qualified in its entirety by reference to the
Disbursement Agreement, including the definitions therein of certain terms used
below. Capitalized terms that are used but not otherwise defined in this
Prospectus have the meanings assigned to them in the Disbursement Agreement.
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GENERAL
The Disbursement Agreement establishes the conditions to, and the relative
sequencing of, the making of disbursements from the Equity Contribution, the
proceeds from the Original Notes and the Mortgage Notes and establishes the
obligations of the Administrative Agent and the Trustee to make disbursements
under their respective funding commitments upon satisfaction of such conditions.
FUNDING ORDER
The Disbursement Agreement sets forth the sequencing order in which funds
from the various sources will be made available to the Partnership.
All disbursement requests permitted to be made from the proceeds of the
Original Notes, the Mortgage Notes and Equity Contributions shall be funded in
the following sequence: (i) from the Equity Contributions and certain other cash
amounts received by the Issuers and on deposit from time to time in the
Partnership's funds account (the "Partnership Funds Account"), until exhausted,
(ii) from the net proceeds of the Original Notes deposited in the Notes Proceeds
Account, and (iii) from the net proceeds of the Mortgage Notes deposited in the
Mortgage Notes Proceeds Account.
Construction of the Resort Casino commenced in January 1998, and the
Issuers have incurred significant costs in connection with the Resort Casino.
Pursuant to the Disbursement Agreement, the Construction Consultant will confirm
that such costs were incurred within the parameters set forth in the approved
budget for the Resort Casino (the "Project Budget") as in effect at the time of
such confirmation.
ACCOUNTS
In order to implement the funding of disbursements, there have been
established certain accounts, each of which is subject to a security interest in
favor of the lenders under the Credit Facilities (provided that the net proceeds
of the Original Notes are subject to a security interest in favor of the holders
of the Mortgage Notes only). Such accounts will include the following:
Partnership Funds Account
The net proceeds of the Equity Contribution and all other contributions
required to be made by or on behalf of the Partnership (except to the extent
used to pay costs of the Resort Casino incurred prior to the Issue Date) shall
be deposited into the Partnership Funds Account. Subject to certain exceptions,
there shall also be deposited into the Partnership Funds Account (i) all amounts
received by the Partnership in respect of liquidated or other damages under the
Construction Contract and certain other contracts and (ii) all advanced deposits
and revenues from operation of the Resort Casino, in each case, prior to the
Commencement Date. Amounts in the Partnership Funds Account shall be held in
escrow and invested in cash or Cash Equivalents by the Account Agent until
transferred from time to time, on each disbursement date, to the Disbursement
Account for the payment of costs of the Resort Casino. Investment income from
amounts on deposit in the Partnership Funds Account shall be deposited therein.
Notes Proceeds Account
The net proceeds of the Original Notes were deposited in the Notes proceeds
account (the "Notes Proceeds Account"). Amounts on deposit in the Notes Proceeds
Account are held in escrow and invested in cash or Cash Equivalents by the
Account Agent with respect thereto until (i) transferred from time to time on
each disbursement date to the Disbursement Account for the payment of costs of
the Resort Casino and (ii) upon the occurrence of certain events, to repurchase
a portion of the Subordinated Notes. Investment income from amounts on deposit
in the Notes Proceeds Account shall be deposited therein.
Mortgage Notes Proceeds Account
The net proceeds of the Mortgage Notes will be deposited into the Mortgage
Notes Proceeds Account. Amounts on deposit in the Mortgage Notes Proceeds
Account will be held in escrow and invested in cash or
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Cash Equivalents by the Account Agent with respect thereto until (i) transferred
from time to time on each disbursement date, to the Disbursement Account for the
payment of costs of the Resort Casino and (ii) upon the occurrence of certain
events, to repurchase a portion of the Mortgage Notes. Investment income from
the Mortgage Notes Proceeds Account shall be deposited therein.
Disbursement Account
It is anticipated that all disbursements for major costs of the Resort
Casino will be made from the Disbursement Account. The Disbursement Agent will
transfer from the Partnership Funds Account, the Notes Proceeds Account and the
Mortgage Notes Proceeds Account, in that order and to the extent necessary, the
disbursement to be funded therefrom. Amounts in the Disbursement Account will be
applied to pay costs of the Resort Casino by disbursement to the Construction
Manager and others providing goods or services to the Resort Casino.
FUNDING CONDITIONS
The Disbursement Agreement will permit the Partnership to submit
disbursement requests once a month. The Disbursement Agreement will authorize
disbursement requests only upon the satisfaction of various conditions
precedent. These conditions include, among others: (i) delivery by the Issuers
of a disbursement request and certificate certifying, among other things, (a)
the application of funds to be disbursed, (b) the substantial conformity of
construction undertaken to date with the plans and specifications, in accordance
with the Construction Contract, (c) the expectation that the Resort Casino will
achieve the July 2, 1999 Commencement Date, (d) the accuracy of the Project
Budget, in accordance with the Construction Contract, (e) the sufficiency of
remaining funds to complete the Resort Casino and (f) compliance with line item
budget allocations in accordance with the Construction Contract, taking into
account allocations for contingencies; (ii) delivery by the Construction
Manager, the Construction Consultant and the Architect of certificates
corroborating various matters set forth in the Issuers' disbursement request and
certificate; (iii) the representations and warranties of the Issuers in the
Credit Agreement being true and correct in all material respects as if made on
such date; and (iv) that no Default or Event of Default exists under the Credit
Agreement.
INSURANCE REQUIREMENTS
Marsh & McLennan, an international insurance brokerage/consulting firm, has
been engaged as the Resort Casino's insurance broker to assist in purchasing the
insurance coverage for the Resort Casino. The insurance requirements are set
forth in the Construction Contract with J.A. Jones. See "Additional Material
Agreements -- Construction Contract and Completion Guaranty." The following
summary of the material provisions of the insurance requirements does not
purport to be complete and is qualified in its entirety by reference to the
Construction Contract.
The Partnership is the primary insured for all insurance coverages and
determines which contractors and suppliers are included under the coverages. Any
contractor or supplier not included under the coverages is required to provide
indemnification to the owners of the Resort Casino and to provide reasonable
limits of insurance. Such contractors or suppliers also will be required to
provide property insurance to the extent that they maintain an insurable
interest in property located at the Resort Casino.
The Issuers believe that the insurance requirements of the Construction
Contract provide commercially appropriate protections against insurable risks
that could arise in connection with the construction and operation of the Resort
Casino.
BUILDER'S RISK AND OTHER PROPERTY INSURANCE
The coverages include: (i) builder's risk insurance to cover the physical
risk of loss to the Resort Casino during the course of construction and the
insurable interests of the contractors and suppliers, and (ii) delay
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and loss of profits insurance for losses arising out of physical losses
occurring either at the Resort Casino site or at selected off-site facilities
that are providing equipment or materials for the Resort Casino.
PROJECT LIABILITY
General liability insurance coverage includes: (i) bodily injury and
property damage insurance (for the Resort Casino and, in the Partnership's
discretion, all or some of the contractors and suppliers) during the
construction period and an additional period thereafter, and (ii) workers'
compensation and employer's liability insurance for the contractors and
suppliers. General liability insurance coverage may also include pollution
liability insurance.
FORCE MAJEURE
The coverage includes: (i) insurance to cover the economic losses arising
from additional interest payments resulting from the failure of the construction
project to be completed in a timely manner, and (ii) insurance for cost overruns
and/or otherwise uninsured delays.
LIMITS AND DEDUCTIBLES
Limits and deductibles are set in what the Issuers believe are commercially
appropriate amounts.
ADDITIONAL MATERIAL AGREEMENTS
The following summarizes the material terms of certain material agreements
to which the Partnership is a party, but does not purport to be complete and is
qualified in its entirety by reference to the agreements describe herein. Copies
of such agreements are available upon request to the Partnership. Capitalized
terms used but not otherwise defined herein shall have the meaning ascribed to
such terms in the agreement being described (unless otherwise indicated).
HOTEL LICENSE AGREEMENT
The Partnership has entered into a December 16, 1997 License Agreement (the
"License Agreement") with Regent International (a subsidiary of Carlson
Companies, Inc.), pursuant to which Regent International agreed to license to
the Partnership the right to flag the Hotels located at the Resort Casino and to
use Regent International's trade name, trademarks and systems in connection with
the operations of the Hotels. The License Agreement relates to non-gaming
operations only and provides for the Partnership or its affiliates to be the
sole Regent International licensee(s) in Clark County, Nevada.
The term of the License Agreement is 15 years. The Partnership has the
right to terminate the License Agreement on December 31, 2005 or December 31,
2010 if: (i) on December 31, 2004, Regent International does not have at least
20 hotels or 6,000 guest rooms in or under contract to become part of the Regent
International system, at least one-half of which must be located in the United
States, Canada, Mexico and the Caribbean, or (ii) prior to December 31, 2009,
Regent International does not have at least 40 hotels or 12,000 guest rooms in
or under contract to become part of the Regent International system. The
Partnership also has the right to terminate the License Agreement for any reason
upon payment of a $2.0 million termination fee if (i) the Partnership abandons
development of the Hotels on the Resort Casino Site, or (ii) the opening date of
the Resort Casino does not occur by June 15, 2000. The License Agreement
requires the Partnership to commence construction of the Hotels on or before
March 1, 1998. Pursuant to the License Agreement, the Hotels are to be
constructed in accordance with Regent International's standard requirements and
image generally consistent with those required of other Regent International
hotels.
The Partnership has paid to Regent International a nonrefundable initial
fee of $50,000 and is required to pay to Regent International a continuing fee
(the "Continuing Fee") equal to 1.75% of the Hotels' gross revenues per month.
In addition, the Partnership is expected to pay to Regent International a
reservation fee equal to (i) a fixed fee which is currently $200 per guest room
per year but which may be increased by not more than 5.0% for any calendar year
after January 1, 2001 at Regent's discretion, and (ii) a variable fee of
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3.0% of the gross room revenue derived from all reservations made through the
Regent International central reservation system. A marketing fee of 1.5% of the
Hotel's gross revenue per month is also expected to be payable by the
Partnership to Regent International under the License Agreement. The License
Agreement also is expected to provide for certain program fees, for
participation in Regent International's system programs and services imposed on
all Regent International hotels.
Pursuant to the License Agreement, Regent International will provide access
to its central reservation system on a basis generally comparable with all other
Regent International hotels in order to facilitate worldwide reservations at the
Hotels. In addition, Regent International will provide training to the
Partnership's employees with respect to the reservation system and the Hotels'
property management system software.
The marketing fees, reservation fees and certain other fees designated by
Regent International and paid by the Partnership will constitute part of a fund
(the "RSM Fund") established by Regent International and consisting of similar
fees paid by other Regent International hotels. The RSM Fund is to be used for
promotion and marketing of Regent International hotels, generating business for
the hotels, developing and conducting training programs, providing reservation
services and paying certain administrative and other expenses of the RSM Fund.
Prior to the opening date of the Hotels, the Hotels' general manager and
other members of the Hotels' staff primarily responsible for sales, front
office, accounting, reservations, human resources, training, rooms and food and
beverage must satisfy certain Regent International specific orientation and
training programs. Regent International will assist the Partnership, at no
additional cost to the Partnership, with the initial announcements and events
with respect to the grand opening of the Hotels and related public relations and
publicity for pre-opening and opening of the Hotels. Regent International will
also provide general consulting services and will include the Hotels in all
local, regional and worldwide tactical promotional and advertising programs
directed at the business, leisure and conference market. The License Agreement
places certain limitations on the rights of the Partnership to assign the
License Agreement or to transfer the Hotels without Regent International's prior
approval. Certain transfers of equity interests in the Partnership are permitted
without Regent International's consent, provided that effective control of the
Partnership has not changed. Pursuant to the License Agreement, the Partnership
is obligated to indemnify Regent International from and against all claims,
lawsuits, damages, obligations, liabilities and actions and judgments alleged by
any person or entity against Regent International arising out of or as a result
of or in connection with the Partnership's operation of the Hotels or the
Partnership's negligence.
SUBORDINATION, STABILIZATION AND ASSUMPTION AGREEMENT
In conjunction with the License Agreement, the Partnership and Regent
International entered into the December 16, 1997 Subordination, Stabilization
and Assumption Agreement pursuant to which Regent International has agreed to
subordinate the Continuing Fee to the Credit Facilities for the 15-month period
commencing on the date the Partnership opens the Hotels for business. Pursuant
to the Subordination Agreement, during the first 15 months following the opening
of the Hotels, in the event the actual revenues of the Hotels fall below
approximately $2.6 million (during the first 12 months) or approximately $2.9
million (during the 13th, 14th and 15th months) in any month, then the
Continuing Fee for that month will be accrued but not paid. At any time during
the first 15-month period, in the event the cumulative actual revenues for the
Hotels are equal to or greater than 80.0% of the projected cumulative revenue,
then the accrued Continuing Fee shall be paid. At the end of the first 15-month
period, any accrued Continuing Fee shall be paid in full to Regent International
within 20 days following the end of the 16th full month of operation.
CONSTRUCTION CONTRACT AND COMPLETION GUARANTY
The Partnership has entered into the Construction Contract for the Resort
Casino with J.A. Jones which provides for payment based on the cost of the work
plus a fee payable to J.A. Jones including a guaranteed maximum price of $133.0
million, subject to increase to $136.0 million for change orders (including an
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additional $2.5 million to cover modifications to the second Hotel tower if such
modifications and pricing can be mutually agreed to by the Partnership and J.A.
Jones).
Based upon the Construction Contract, the Partnership anticipates that the
Resort Casino will be substantially completed on or before February 5, 1999. The
Construction Contract provides for liquidated damages of up to $4.0 million
assessable against J.A. Jones for its failure to satisfy certain timing
requirements, and contains a provision which provides that J.A. Jones is acting
agent for the Partnership and authorized to enter into all subcontracts as agent
for the Partnership.
It is currently contemplated by management that insurance for the Resort
Casino will be provided through an owner-controlled insurance program or
"wrap-up" with required limits of insurance as set forth in the Construction
Contract.
CONSTRUCTION MANAGEMENT CONTRACT
The Partnership has entered into a "Standard Form of Agreement Between
Owner and Project Construction Management Consultant Where the Project
Construction Management Consultant is NOT a Constructor, (AIA Document
B801/Cma)" with certain modifications, with Rider Hunt, which will provide
certain services as project construction management consultant in connection
with the construction of the Resort Casino. The fees to be paid to Rider Hunt
include $20,000 per month plus reimbursement of certain expenses. Such
compensation may be subject to further adjustment based upon the modifications,
if any, to the second Hotel.
Under the Construction Management Contract, it is expected that Rider Hunt
will provide administrative services related to the Construction Contract,
including development of cash flow reports and forecasts; advising of variances
between actual and budgeted costs; in consultation with the Partnership and the
Architect, rejecting work not in conformity with the Construction Contract;
preparing valuations of amounts due the respective contractors; and recording
the progress of construction of the Resort Casino. Rider Hunt is not authorized
to approve significant change orders under the Construction Contract.
ARCHITECT AGREEMENT
The Partnership has selected Paul Steelman, Ltd. as the Architect for the
Resort Casino. Management has entered into an agreement with the Architect based
upon, with some modifications, the American Institute of Architects "Standard
Form of Agreement Between Owner and Architect Where the Construction Manager is
NOT a Constructor -- Construction Manager -- Adviser Edition" (the "Architect
Agreement"). Pursuant to the Architect Agreement, the Partnership will pay the
Architect base compensation of approximately $2.4 million, any reimbursable
expenses of the architect and approximately $2.3 million to various consultants
providing services related to the construction and design of the Resort Casino.
The Architect Agreement requires the Architect to provide certain services
including the preparation of final construction drawings and specifications for
construction of the Resort Casino that comply with all applicable laws,
statutes, ordinances, codes, rules and regulations, assisting the Partnership in
negotiating the final Construction Contract with J.A. Jones, inspecting the work
as the work progresses and certifying the requests for payment received from
J.A. Jones, and providing contract administration in accordance with the general
conditions to the Construction Contract. The Issuers did not provide the
Architect with authority to approve significant change orders under the
Construction Contract.
AGREEMENTS WITH HHP
Development Agreement
In connection with the acquisition of the resort site and option to
purchase the Option Parcel, the Partnership entered into a development agreement
(the "Declaration") with HHP pursuant to the which the Partnership (i) agreed to
develop the Resort Casino Site subject to the restrictions, covenants,
conditions, reservations and limitations contained in the Declaration, and (ii)
granted to HHP the right to repurchase the
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Resort Casino Site in the event the Partnership failed to commence construction
of its improvements on the Resort Casino Site within the time frame described in
the Declaration.
The construction of any improvements on the Resort Casino Site is subject
to the prior written approval of HHP. The Partnership has agreed, prior to the
commencement of the construction of any improvements upon the Resort Casino
Site, to submit to HHP for its review and approval final drawings and
specifications for the improvements to be constructed upon the Resort Casino
Site. Approval of the plans and specifications for construction of improvements
shall be based, among other things, upon conformity with the Conceptual
Development Plan and upon compliance with certain design guidelines.
Plans and specifications for any improvements subsequent to the completion
of the Resort Casino by the Partnership must also be in compliance with the
design guidelines and be submitted to, and approved in writing by, HHP.
Landscaping, irrigation and maintenance of the Resort Casino Site are also
governed by the Declaration. Failure by the Partnership properly to landscape,
irrigate and maintain the Resort Casino Site affords HHP, among other remedies,
the right to place a lien upon the Resort Casino Site in an amount expended by
HHP for curing such failure plus interest from the date of the expenditure.
Generally, any alteration, improvement, screening, fencing, antenna, utility
line, sign, exterior lighting or other item that may be viewed from a
neighboring property is subject to the prior written approval of HHP. The Resort
Casino Site is to be used, developed, maintained and operated only as a resort
style hotel and/or casino, with such ancillary commercial, entertainment and
recreational amenities as are approved by HHP in writing.
The Partnership also has agreed not to sell, lease, transfer, exchange or
otherwise convey or dispose of its interest in the Resort Casino Site to another
investor, builder or developer other than a permitted assignee for a period of
one year following substantial completion of the Resort Casino.
The Resort Casino Site is subject to assessment by the Master Association
in connection with certain portions of Summerlin owned, controlled and
maintained by the Master Association. The Resort Casino Site is also subject to
special assessments pursuant to the terms and provisions of the Master
Declaration. A failure by the Partnership to pay any assessments due the Master
Association shall subject the Resort Casino Site to a continuing lien in the
amount of such assessment(s) together with interest thereon, late charges, costs
and reasonable attorneys' fees.
No breach or violation of the Declaration shall defeat or render invalid
the lien of any mortgage, deed of trust or similar instrument securing a loan
made in good faith and for value with respect to the development or permanent
financing of the Resort Casino Site or any portion thereof, and to the extent
that the combined principal amount of such loan and any superior loans
encumbering the Resort Casino Site does not exceed 70.0% of the improved fair
market value of the Resort Casino Site. The Declaration and all provisions
thereof are binding upon and effective against any subsequent owner of the
Resort Casino Site and their successors and assigns or other occupants of the
Resort Casino Site or portion thereof whose title is acquired by foreclosure,
trustee sale, deed in lieu of foreclosure or otherwise, but such subsequent
owner shall have a reasonable period of time after taking title to cure any
violation thereunder that is reasonably capable of being cured, provided that
such subsequent owner diligently acts to effect such cure.
The term of the Declaration is through August 15, 2056. The Option Parcel
is also subject to the Declaration.
Royalty Agreement and Golf Agreement
The Partnership entered into an August 15, 1996 Royalty Agreement with HHP,
pursuant to which, in consideration of a royalty fee, HHP agreed to provide the
Partnership, among other things: (i) the Right of First Offer; (ii) a priority
for the reservation of a minimum of 50.0%, which may be increased to 75.0% at
the Partnership's option, of the starting times at the TPC Canyons golf course,
subject to certain restrictions contained in a separate agreement; (iii) a
membership in the TPC network of golf courses operated by PGA Tour, Inc. or its
affiliates; (iv) the exclusive right to operate a casino in Summerlin North; and
(v) a license to use the "Summerlin" name.
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As consideration the Partnership agreed to pay HHP a royalty fee beginning
on the earlier of the day the Resort Casino is open to the public, or 18 months
following the first day of construction of the Resort Casino (the "Royalty
Commencement Date"), negotiated to be initially $1.0 million per year,
increasing on the fifth anniversary of the Royalty Commencement Date, and on
each succeeding fifth anniversary by an amount equal to 15.0% of the amount paid
at the end of the preceding five-year period. The royalty fee is to be paid
quarterly in equal installments, with the Partnership receiving a credit against
the royalty fee for amounts paid pursuant to a separate Golf Course Agreement
(the "Golf Reservation Fees") among HHP, Summerlin Corporation and Tournament
Players Club at Summerlin, Inc. The initial amount of the Golf Reservation Fees
will be $500,000. In the event the Partnership elects to increase the tee times
to 75.0%, it will, under the terms of the Golf Agreement and without a credit
under the Royalty Agreement, initially be required to pay an annual fee of
$125,000, which will increase according to an agreed-upon schedule.
In the event the Partnership fails to pay any installment of the royalty
fee when due and such failure is not cured within 30 days notice from HHP, HHP
is granted the right, among others, to terminate the Royalty Agreement and the
Golf Course Agreement.
RESTAURANT LEASE AGREEMENTS
In connection with the operation of the Resort Casino, the Partnership has
executed one lease and plans to enter into at least four additional leases
pursuant to which it will lease space to at least five restaurants (the
"Restaurant Leases"). See "Business -- The Resort Casino -- Food and Beverage."
The following is a description of the Restaurant Leases which the Partnership
has executed or anticipates executing. There is no assurance that the
Partnership will be successful in obtaining the anticipated Restaurant Leases
described herein. Any Restaurant Leases actually executed by the Partnership for
the Resort Casino may differ materially from the anticipated Restaurant Leases
described herein.
The Restaurant Leases require or will require the restaurants to operate
continuously during the term of each lease and provide controls over each
restaurant's use of their respective premises. Base rent is or will be payable
on a monthly basis on the first day of each month. The Restaurant Leases provide
or will provide for additional lease payments based on a percentage of each
restaurant's gross sales in excess of certain amounts. The percentages will
range from 6.5% to 7.5% and the gross sales amounts are expected to range from
approximately $2.0 million to $3.2 million. Each restaurant also is or will be
responsible for utilities used on the premises and other customary costs of
operation including customary insurance. The Restaurant Leases will grant the
Partnership certain termination rights in the event the restaurant fails to meet
certain sales targets. Each Restaurant Lease also will provide that the
restaurant may not operate another similar restaurant within a certain radius
from the Resort Casino.
The Partnership is or will be responsible for constructing the shell
premises and the restaurant generally will be responsible for constructing the
interior alterations for the specific restaurant. The Partnership also is or
will be responsible for maintaining the foundations, bearing walls and roof
structure of each premises and the restaurant will provide all other repairs and
maintenance. One Restaurant Lease for 10,000 square feet obligates the
Partnership to provide construction allowances to such restaurant up to $1.5
million. It is anticipated that another Restaurant Lease for 5,000 square feet
will obligate the Partnership to provide construction allowances to such
restaurant up to $750,000. A third Restaurant Lease for 5,000 square feet may
obligate the Partnership to provide a partial rent credit, in lieu of any
construction allowance, to such restaurant up to $600,000.
The Restaurant Leases also contain or will contain certain customary
covenants and rights by the restaurant in favor of the Partnership, including,
without limitation, the following: (i) a covenant to keep the premises and the
Resort Casino free from all liens and claims of liens arising out of any action
by the restaurant; (ii) a covenant not to assign its lease or sublet the
premises without the Partnership's consent; (iii) a covenant to take certain
customary actions to ensure each respective Restaurant Lease will become
subordinate to all future leases or mortgages which may affect the Resort
Casino; and (iv) the right of the Partnership to inspect the premises of each
restaurant.
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In addition to the other rights and remedies of the Partnership under the
Restaurant Leases, in the event of an uncured default by a restaurant, the
Partnership may elect to (i) terminate the lease and sue the restaurant for
damages pursuant to a formula contained in the lease or (ii) keep the lease in
effect, evict the restaurant from the premises and sue the restaurant for any
damages due to the breach, less any amounts obtained through mitigation.
The following table sets forth certain information with respect to the
proposed individual Restaurant Leases:
<TABLE>
<CAPTION>
RESTAURANT
------------------------------------------------------------------------------
STEAK AND
SEAFOOD ASIAN ASIAN FRENCH ITALIAN
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Initial term........... 10 years 10 years 10 years 10 years 10 years
Renewal option(s)...... 2 for 10 years 2 for 10 years 2 for 10 years 2 for 10 years 2 for 10 years
Approximate size of
premises............. 10,000 sq. ft. 5,000 sq. ft. 2,400 sq. ft. 5,000 sq. ft. 5,000 sq. ft.
</TABLE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material U.S. federal tax consequences of
the acquisition, ownership and disposition of the Notes and the Corporate
Warrants by a holder thereof. This summary only applies to the Notes or the
Corporate Warrants held as capital assets and does not address aspects of U.S.
federal income taxation that may be applicable to holders that are subject to
special tax rules, such as insurance companies, tax-exempt organizations, banks,
or dealers or traders in securities or currencies, holders that will hold a Note
or Corporate Warrant, as part of a position in a "straddle" or as part of a
"hedging," "conversion" or "integrated" transaction for U.S. federal income tax
purposes or that have a "functional currency" other than the U.S. dollar.
Moreover, this summary does not address the U.S. federal income tax treatment of
holders that did not acquire Notes or Corporate Warrants as part of the initial
distribution at their initial issue price. Each prospective purchaser should
consult its tax advisor with respect to the U.S. federal, state, local and
foreign tax consequences of acquiring, holding and disposing of the Notes and
the Corporate Warrants.
This summary is based on the Internal Revenue Code of 1986, as amended,
existing and proposed Treasury Regulations, administrative pronouncements and
judicial decisions, each as available on the date hereof. All of the foregoing
are subject to change (possibly with retroactive effect) or differing
interpretations which could affect the tax consequences described herein.
For purposes of this summary, a "U.S. Holder" is a Holder of Notes or
Corporate Warrants, who for U.S. federal income tax purposes is (i) a citizen or
resident of the United States; (ii) a corporation or partnership organized in or
under the laws of the United States or any State thereof (including the District
of Columbia); (iii) an estate the income of which is subject to U.S. federal
income taxation regardless of its source; (iv) a trust (a) the administration
over which a U.S. court can exercise primary supervision and (b) all of the
substantial decisions of which one or more U.S. persons have the authority to
control; or (v) otherwise subject to U.S. federal income taxation on a net
income basis with respect to the Notes. Notwithstanding the preceding sentence,
to the extent provided in U.S. Treasury Regulations, certain trusts in existence
on August 20, 1996, and treated as United States persons prior to such date,
that elect to continue to be treated as United States persons also will be a
U.S. Holder. A "Non-U.S. Holder" is a holder of Notes or Corporate Warrants
other than a U.S. Holder.
Allocation of the Issue Price Between an Original Note and Corporate Warrant
Based upon the election of all Unit purchasers to acquire Corporate
Warrants, each Unit was comprised of an Original Note and a Corporate Warrant.
The "issue price" of a Unit for U.S. federal income tax purposes was the initial
offering price of a substantial amount of the Units to investors (other than
persons acting in their capacity as underwriters, placement agents or
wholesalers). The issue price has been allocated between the Notes and the
Corporate Warrants based on their respective fair market values at the time of
issuance, and a U.S. Holder's initial tax basis in each will be equal to the
amount so allocated. Based upon its estimate of the fair market value of a
Corporate Warrant, the Company treated $941.30 of the issue price of a
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Unit to the Notes (which amount the Company treated as its "issue price" for
U.S. federal income tax purposes) and $58.70 was allocated to the Warrant. The
Company intends to file information returns with the Internal Revenue Service
(the "IRS") based on such allocation.
The Company's allocation of the issue price is binding on a U.S. Holder for
U.S. federal income tax purposes unless the Holder discloses the use of a
different allocation in its U.S. federal income tax return for the year in which
the Unit was acquired. However, the Company's allocation is not binding on the
IRS, and there can be no assurance that the IRS will not challenge such
allocation.
The Notes
U.S. Holders
Original Issue Discount. In general, the excess of the "stated redemption
price at maturity" of a Note over its "issue price" generally will constitute
original issue discount ("OID") for U.S. federal income tax purposes. The stated
redemption price at maturity of a Note is the sum of all scheduled amounts
payable on the Note (including interest). U.S. Holders of the Notes will be
required to include OID in income for U.S. federal income tax purposes as it
accrues, in accordance with a constant yield method based on a compounding of
interest, before the receipt of cash payments attributable to such income. Under
this method, U.S. Holders generally will be required to include in income
increasingly greater amounts of OID in successive accrual periods.
The Partnership does not intend to treat the possibility of an optional or
provisional redemption or repurchase of the Notes as giving rise to any
additional accrual of OID or recognition of ordinary income upon redemption,
sale or exchange.
Sale, Exchange or Retirement. Subject to the discussion of the Exchange
Offer below, upon the sale, exchange or retirement of a Note, a U.S. Holder will
recognize taxable gain or loss equal to the difference between the amount
realized and such holder's adjusted tax basis. A U.S. Holder's adjusted tax
basis generally will equal the issue price of such Note increased by the amount
of any OID previously included in income by such U.S. Holder with respect to
such Note and decreased by any payment previously made on such Note. Such gain
or loss realized on the sale, exchange or retirement will be capital gain or
loss. In the case of a noncorporate U.S. Holder, the maximum marginal U.S.
federal income tax rate applicable to such gain will be lower than the maximum
marginal U.S. federal income tax rate applicable to ordinary income if such U.S.
Holder's holding period for such Notes exceeds one year and will be further
reduced if such Notes were held for more than 18 months.
Exchange Offer. The exchange of an Original Note for an Exchange Note by a
U.S. Holder pursuant to the Exchange Offer should not constitute a taxable
exchange for U.S. federal income tax purposes. A U.S. Holder should not
recognize any gain or loss upon the receipt of an Exchange Note pursuant to the
Exchange Offer and should be required to continue to include interest on the
Exchange Note in gross income for U.S. federal income tax purposes in the manner
and to the extent described above. A U.S. Holder's holding period for an
Exchange Note should include the holding period for the Original Note exchanged
pursuant to the Exchange Offer, and such holder's adjusted basis in an Exchange
Note should be the same as such holder's adjusted basis in such Original Note.
It is possible that the IRS could assert that the Additional Interest (as
defined) which the Partnership would be obligated to pay if the Exchange Offer
Registration Statement is not filed or declared effective within the time
periods set forth herein (or certain other actions are not taken) (as described
above under "Exchange Offer and Registration Rights") are "contingent payments"
for U.S. federal income tax purposes. If so treated, the Notes would be treated
as contingent payment debt instruments, and certain adverse U.S. federal income
tax consequences could result. However, the U.S. Treasury Regulations issued by
the IRS regarding debt instruments that provide for one or more contingent
payments provide that, for purposes of determining whether a debt instrument is
a contingent debt instrument, remote or incidental contingencies are ignored.
The Partnership believes that the possibility of the payment of Additional
Interest is remote and, accordingly, does not intend to treat the Notes as
contingent payment debt instruments.
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Non-U.S.Holders
Under U.S. federal income tax law, (i) payments of principal of, premium,
if any, and interest on the Notes by the Partnership, General Partner or any
paying agent thereof to any Non-U.S. Holder (other than, (a) a controlled
foreign corporation related to the Partnership or the General Partner (b) a
shareholder owning, actually or constructively, 10% or more of the total
combined voting power of all classes of stock of the General Partner entitled to
vote or a partner who owns 10.0% or more of the capital or profits interests in
the Partnership, or (c) a bank which acquired such Notes in consideration of an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of business) will not be subject to U.S. withholding tax,
provided that valid certifications meeting the requirements of Section
871(h)(2)(B)(ii) or 881(c)(2)(B)(ii) of the Code (as discussed below under
"Backup Withholding Tax and Information Reporting"), are received or an
exemption is otherwise established and subject, however, to the discussion of
backup withholding below, (ii) any gain or income realized by any Non-U.S.
Holder upon the sale or redemption of the Notes will not be subject to U.S.
income or withholding tax, subject to the discussion of backup withholding
below, and unless (x) such gain is effectively connected with the conduct by
such Non-U.S. Holder of a trade or business in the United States or (y) in the
case of any gain realized by an individual Non-U.S. Holder, such holder is
present in the United States for 183 days or more in the taxable year of such
sale, exchange or retirement and certain other conditions are met, and (iii) a
Note that is held by an individual who at the time of death is not a citizen or
resident of the United States will not be subject to U.S. federal estate tax as
a result of such individual's death, provided that such individual is not
actually or constructively a 10.0% (or more) shareholder of the General Partner
or a partner who owns 10.0% or more of the capital or profits interests in the
Partnership and, at the time of such individual's death, payments of interest
with respect to such Notes would not have been effectively connected with the
conduct by such individual of a trade or business in the United States.
The gross amount of payments to a Non-U.S. Holder of interest and OID, if
any, that do not qualify under (a) above and that are not effectively connected
with the conduct by such Non-U.S. Holder of a trade or business within the
United States ("U.S. Trade or Business Income") will be subject to U.S.
withholding tax at the rate of 30.0%, unless a U.S. income tax treaty applies to
reduce or eliminate withholding. U.S. Trade or Business Income will be taxed at
regular U.S. federal income tax rates (rather than the 30.0% gross withholding
tax rate) and, if such Non-U.S. Holder is a foreign corporation, may be subject
to a 30.0% "branch profits tax" unless it qualifies for a lower rate under an
applicable tax treaty. To claim the benefit of a tax treaty or to claim an
exemption from withholding because the income is U.S. Trade or Business Income,
a Non-U.S. Holder must provide a properly executed Form 1001 or 4224 (or such
successor form as the IRS designates), as applicable, prior to payment of
interest.
Classification as Applicable High Yield Discount Obligations
Corporations that issue debt obligations that are classified as applicable
high yield discount obligations (as defined in the Code) and holders thereof are
subject to special rules (the "AHYDO Rules") regarding the deductibility of
interest and reclassification of certain interest as dividends. If a debt
obligation's yield to maturity exceeds the "applicable federal rate" in effect
at the time of their issuance (the "AFR") plus five percentage points, such debt
obligation will be classified as an applicable high yield discount obligation.
In that event, no portion of the OID would be deductible by the issuer until
paid. In addition, a portion of the OID thereon may not be deductible by the
issuer at any time; such portion would be an amount that bears the same ratio to
such OID as (i) the excess of the yield to maturity of such debt obligation over
the AFR plus six percentage points bears to (ii) the yield to maturity. Since
RAS is a co-issuer of the Notes and certain partners of the Partnership (a
co-issuer of the Notes) are corporations, the AHYDO rules will apply to such
corporate partners even though the Partnership is not taxed as a corporation for
U.S. federal income tax purposes.
Corporate Warrants
Purchasers of Corporate Warrants should note that Warrant Co. will be
subject to U.S. federal income tax (and possibly state and local income tax) on
(i) gains recognized from the sale of a Partnership Warrant
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by Warrant Co. and (ii) its distributive share of Partnership income/loss.
Accordingly, amounts available for distribution to holders of Warrant Co. stock
may be reduced.
U.S. Holders
Due to the nominal exercise price of the Corporate Warrants, a holder of a
Corporate Warrant will likely be treated as holding the underlying Common Stock
of Warrant Co. from the date of acquisition of the Corporate Warrants for U.S.
federal income tax purposes.
Under Section 305 of the Code, a U.S. Holder of a Corporate Warrant may be
deemed to have received a constructive distribution of ordinary income from
Warrant Co. in the event of certain adjustments to the number of shares of
Common Stock of Warrant Co. to be issued on exercise of a Corporate Warrant or
the failure to make such an adjustment.
Upon the sale or exchange of a Corporate Warrant, a U.S. Holder generally
will recognize gain or loss equal to the difference, if any, between the amount
realized and the U.S. Holder's tax basis. Any such gain generally will be
capital gain or loss. In the case of a noncorporate U.S. Holder, the maximum
marginal U.S. federal income tax rate applicable to such gain will be lower than
the maximum marginal U.S. federal income tax rate applicable to ordinary income
if such U.S. Holder's holding period for such Corporate Warrant exceeds one year
and will be further reduced if such Corporate Warrants were held for more than
18 months.
Non-U.S. Holders
A holder of Corporate Warrants will likely be treated as holding the
underlying Common Stock of Warrant Co. for U.S. federal income tax purposes and
the Corporate Warrants should constitute a U.S. real property interest for U.S.
federal income tax purposes. Accordingly, certain dispositions of Corporate
Warrants by a Non-U.S. Holder should be subject to tax under the Foreign
Investment in Real Property Tax Act ("FIRPTA") provisions of the Code (which is
collected by withholding) unless certain certification and filing requirements
are satisfied. Any such Non-U.S. Holder should consult with its own tax advisor
regarding the application of the FIRPTA provisions to its particular
circumstances.
An individual holder of a Corporate Warrant who is not a United States
person will be subject to U.S. federal estate tax with respect to his or her
Corporate Warrants.
Common Stock
U.S. Holders
Distributions of cash or property (other than Common Stock of Warrant Co.,
if any, distributed pro rata to all shareholders of Warrant Co., including
holders of Corporate Warrants) will be includible in ordinary income by a U.S.
Holder at the time of receipt, to the extent such distributions are made from
the current or accumulated earnings and profits of Warrant Co. Such dividends
will be earnings and profits of Warrant Co. Such dividends will be eligible for
the dividends received deduction generally allowed to corporate U.S. Holders.
The dividends received deduction is subject to certain limitations, though, and
the benefit of such deduction may be reduced by the corporate alternative
minimum tax. Corporate U.S. Holders should consult their own tax advisors
regarding the availability of, and limitations on, the dividends received
deduction. To the extent, if any, that the amount of any distribution by Warrant
Co. exceeds Warrants Co.'s current and accumulated earnings and profits, it will
be treated first as a tax-free return of the U.S. Holder's tax basis in the
Common Stock of Warrant Co. and thereafter as capital gain.
Non-U.S. Holders
Dividends paid to a Non-U.S. Holder of Common Stock of Warrant Co.
generally will be subject to withholding of U.S. federal income tax at a 30.0%
rate or such lower rate as may be specified by an applicable U.S. income tax
treaty. Currently, dividends paid to an address in a foreign country generally
are presumed to be paid to a resident of such country in determining the
applicability of an income tax treaty for such purposes.
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However, recently-issued U.S. Treasury Regulations would, for dividends paid
after December 31, 1999, require a Non-U.S. Holder to file certain forms to
obtain the benefit of any applicable U.S. income tax treaty. Such forms would
contain such Non-U.S. Holder's name and address and an official statement by the
competent authority in the foreign country (as designated in the applicable U.S.
income tax treaty) attesting to the holder's status as a resident thereof.
Except as may be otherwise provided in an applicable U.S. income tax treaty, a
Non-U.S. Holder will be taxed at ordinary U.S. federal income tax rates (on a
net income basis) on dividends that are effectively connected with the conduct
of a trade or business of such Non-U.S. Holder within the United States and such
dividends will not be subject to the withholding described above. If such
Non-U.S. Holder is a foreign corporation, it may also be subject to a
withholding described above. If such Non-U.S. Holder is a foreign corporation,
it may also be subject to a 30.0% "branch profits tax" unless it qualifies for a
lower rate under an applicable U.S. income tax treaty. To claim the benefit of a
U.S. income tax treaty or to claim an exemption from withholding because the
income is effectively connected with a United States trade or business, a
Non-U.S. Holder must provide a properly executed Form 1001 or 4224 (or such
successor form as the IRS designates), as applicable, prior to payment of
interest.
As discussed above, certain dispositions of Common Stock of Warrant Co. by
a Non-U.S. Holder would be subject to tax under the FIRPTA provisions of the
Code (which is collected by withholding) unless certain certification and filing
requirements are satisfied.
An individual holder of a Corporate Warrant who is not a United States
person will be subject to U.S. federal estate tax with respect to his or her
Corporate Warrant.
U.S. Backup Withholding Tax and Information Reporting
A 31.0% backup withholding tax and information reporting requirements apply
to certain payments of principal of, and premium, if any, and interest and
dividends on, a security and to the proceeds of the sale or redemption of an
obligation, to certain non-corporate U.S. Holders. The payor will be required to
withhold 31.0% of any such payment on a Note, Warrant or share of Common Stock
of Warrant Co. to a U.S. Holder (other than an "exempt recipient," such as a
corporation) if such holder fails to furnish its correct taxpayer identification
number or otherwise fails to comply with, or establish an exemption from, such
backup withholding requirements.
Under current U.S. Treasury Regulations, payments of principal of, interest
on and proceeds from the sale or redemption of a Note by the Issuers or any
paying agent thereof to a Non-U.S. Holder will not be subject to U.S. federal
income tax withholding, backup withholding or information reporting if an
appropriate certification is provided by the beneficial owner or by a financial
institution holding the Note or Warrant on behalf of the beneficial owner in the
ordinary course of its trade or business to the paying agent and the paying
agent does not have actual knowledge that the certificate is false. If provided
by a beneficial owner, the certification must give the name and address of such
owner, state that such owner is not a United States person, or, in the case of
an individual, that such person is neither a citizen or resident of the United
States, and be signed by the owner under penalties of perjury. If provided by a
financial institution, the certification must state that the financial
institution has received from the beneficial owner the certificate set forth in
the preceding sentence, set forth the information contained in such certificate
(and include a copy of such certificate), and be signed by an authorized
representative of the financial institution under penalties of perjury. In
addition, if such principal, interest or dividends are paid to the beneficial
owner of a Note, Warrant or share of Common Stock by a foreign office of a
foreign custodian, foreign nominee or other foreign agent of such beneficial
owner, of if a foreign office of a foreign "broker" (as defined in the
applicable U.S. Treasury Regulations) pays the proceeds of the sale of a Note,
Warrant or share of Common Stock to the seller thereof, backup withholding and
information reporting will not apply to such payment (provided that such
nominee, custodian, agent or broker derives less than 50.0% of its gross income
for certain periods from the conduct of a trade or business in the United States
and is not a "controlled foreign corporation" as to the United States).
Principal and interest and dividends so paid by a foreign office of other
custodians, nominees or agents, or the payment by a foreign office of other
brokers of the proceeds of the sale of a Note, will not be subject to backup
withholding, but will be subject to information reporting unless the custodian,
nominee, agent or broker has documentary evidence in its records that the
beneficial owner is not a United States person for purposes of
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such backup withholding and information reporting requirements and certain
conditions are met, or the beneficial owner otherwise establishes an exemption.
Principal and interest so paid by the United States office of a custodian,
nominee or agent, or the payment of the proceeds of a sale of a Note by the
United States office of a broker, is subject to both backup withholding and
information reporting unless the beneficial owner certifies its non-United
States status under penalties of perjury or otherwise establishes an exemption.
Recently issued U.S. Treasury Regulations (the "Withholding Regulations")
would modify certain of the rules discussed above generally with respect to
payments on the Notes or the Warrants made after December 31, 1999 and provide
alternative methods for establishing an exemption from U.S. withholding tax. In
particular, under the Withholding Regulations, the furnishing of the names of
the beneficial owners of Notes that are not United States persons and a copy of
such beneficial owner's certificate by a financial institution will not be
required where the financial institution is a qualified intermediary ("QI") that
has entered into a withholding agreement with the IRS pursuant to the
Withholding Regulations and that has assumed primary withholding responsibility.
In the case of payments to foreign partnerships (other than payments to foreign
partnerships that qualify as "withholding foreign partnerships" within the
meaning of such U.S. Treasury Regulations and payments to foreign partnerships
that are effectively connected with the conduct of a trade or business in the
United States), the partners of such partnerships will be required to provide
the certification discussed above in order to establish an exemption from
withholding, backup withholding tax and information reporting requirements.
Moreover, a payor may rely on a certification provided by a Non-U.S. Holder only
if such payor does not have actual knowledge or a reason to know that any
information or certification stated in such certificate is unreliable. Further,
if any such payment of principal, premium (if any) or interest with respect to a
Note or Warrant are made to the beneficial owner thereof by the foreign office
of a foreign custodian, foreign nominee or other foreign agent of such
beneficial owner, or the foreign office of a foreign "broker" (as defined in
applicable Treasury Regulations) pays the proceeds of the sale of a Note to the
seller thereof, backup withholding and information reporting will not apply
(provided that such nominee, custodian, agent or broker (i) derives less than
50.0% of its gross income for certain periods from the conduct of a trade or
business in the United States, (ii) is not a "controlled foreign corporation"
within the meaning of Section 957(a) of the Code, (iii) is not a foreign
partnership (x) one or more of the partners of which, at any time during its tax
year, are United States persons (as defined in Treasury Regulations Section
1.1441-1(c)(2)) who, in the aggregate hold more than 50.0% of the income or
capital interest in the partnership and (y) which, at any time during its tax
year, is engaged in the conduct of a trade or business in the United States).
Moreover, such payments of principal, premium (if any) or interest with respect
to a Note so made by the foreign offices of other custodians, nominees or
agents, or the payment by the foreign offices of other brokers of the proceeds
of the sale of a Note or a Warrant will not be subject to backup withholding
(unless the payer has actual knowledge that the payee is a United States
person), but will be subject to information reporting unless the custodian,
nominee, agent or broker has documentary evidence in its records that the
beneficial owner is not a United States person and certain conditions are met,
or the beneficial owner otherwise establishes an exemption.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL
TAX CONSEQUENCES RELATING TO THE OWNERSHIP OF EXCHANGE NOTES OR THE WARRANTS.
PROSPECTIVE PURCHASERS OF EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Original Notes where such Original Notes were acquired
as a result of market-making activities or other trading activities. The Issuers
have each agreed that for a period of 180 days after the Expiration Date, each
will make this Prospectus, as amended or supplemented, available to any
Participating Broker-Dealer for use in
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connection with any such resale. In additional, until , 1998 (90
days after the commencement of the Exchange Offer), all dealers effecting
transactions in the Exchange Notes, whether or not participating in this
distribution, may be required to deliver a prospectus.
The Issuers will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells the
Exchange Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit of any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of Securities Act.
For a period of 180 days after the Expiration Date, the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
pursuant to a Letter of Transmittal.
BOOK-ENTRY, DELIVERY AND FORM
The Exchange Notes initially will be represented by one or more Notes in
registered, global form without interest coupons (collectively, the "Global
Note"). The Global Note will be deposited upon issuance with the Trustee, as
custodian for DTC, in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant as described below. Notes sold to Accredited Investors (as defined
in Rule 501(a)(1), (2), (3), or (7) under the Securities Act) may be represented
by the Global Note, or if such an investor may not hold an interest in the
Global Note, a certificated Note.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Note may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"-- Exchange of Book-Entry Notes for Certificated Notes."
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar of the Notes.
DEPOSITORY PROCEDURES
DTC has advised the Partnership that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Participants through electronic
book-entry changes in accounts of the Participants. The Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and the Indirect Participants.
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DTC also has advised the Partnership that pursuant to procedures
established by it, (i) upon deposit of the Global Note, DTC will credit the
accounts of Participants designed by the Exchange Agent with portions of the
principal amount of the Global Note and (ii) ownership of such interest in the
Global Note will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interest in the Global Note).
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interest in the Global Note to such persons may be limited
to that extent. Because DTC can act only on behalf of Participants, which in
turn act on behalf of Indirect Participants and certain banks, the ability of a
person having beneficial interests in the Global Note to pledge such interests
to person or entities that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests. For certain other restrictions
on the transferability of the Notes, See "-- Exchange of Book-Entry Notes for
Certificated Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTE WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, any premium and interest on the
Global Note registered in the name of DTC or its nominee will be payable to DTC
or its nominee in its capacity as the registered holder under the Indenture.
Under the terms of the Indenture, the Partnership and the Trustee will treat the
persons in whose names the Notes, including the Global Notes, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Partnership, the
Trustee nor any agent of the Partnership or the Trustee has or will have any
responsibility or liability for (i) any aspect or accuracy of DTC's records or
any Participant's or Indirect Participants records relating to our payments made
on account of beneficial ownership interests in the Global Note, or for
maintaining supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global Note, or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants.
DTC has advised the Partnership that its current practice, upon receipt of
any payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security
such as the Global Note as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practices and will not
be the responsibility of DTC, the Trustee or the Partnership. Neither the
Partnership nor the Trustee will be liable for any delay by DTC or any of the
Participants in identifying the beneficial owners of the Notes and the Company
and the Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee as the registered owner of the Notes for
all purposes.
Interest in the Global Note will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and its participants. Transfers between Participants in DTC
will be effected in accordance with DTC's procedures, and will be settled in
same-day funds.
DTC has advised the Partnership that it will take any action permitted to
be taken by a holder of Notes only at the direction of one or more Participants
to whose account will DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if any of the events described under "-- Exchange of Book Entry Notes
for Certificated Notes" occur, DTC reserves the right to exchange the Global
Note for Notes in certificated form, and to distribute such Notes to the
relevant participants.
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The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Partnership believes to be reliable, but
the Partnership takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Note among accountholders in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Partnership, the Trustee
nor any agent of the Partnership or Trustee will have any responsibility for the
performance of DTC, or its respective accountholders, indirect participants or
accountholders of their respective obligations under the rules and procedures
governing their operations.
Exchange of Book-Entry Notes for Certificated Notes
The Global Note is exchangeable for definitive Notes in registered
certificated form if (i) DTC (x) notifies the Partnership that it is unwilling
to continue as depository for the Global Note and the Partnership thereupon
fails to appoint a successor depositary or (y) has ceased to be a clearing
agency registered under the Exchange Act; (ii) the Partnership, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Notes in certificated form or (iii) there shall have occurred and be continuing
a Default or an Event of Default with respect to the Notes. In all cases,
certificated Notes delivered in exchange for the Global Note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary (in accordance with
its customary procedures).
LEGAL MATTERS
The validity of the Exchange Notes will be passed upon for the Issuers by
Baker & Hostetler LLP.
EXPERTS
The audited financial statements of the Issuers, as of December 31, 1997
and 1996 and for the periods then ended, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
GLOSSARY
"144A Offering" means the series of transactions consisting of the offer
and sale of (i) 100,000 Units, each unit consisting of $1,000 in principal
amount of the Original Notes and a Corporate Warrant and (ii) $100.0 million
aggregate principal amount of the Mortgage Notes.
"Account Agent" means First Security Trust Company of Nevada as account
agent under the December 30, 1997 Mortgage Notes Proceeds Agreement by and among
the Issuers, the Administrative Agent and the Account Agent, the December 30,
1997 Subordinated Notes Proceeds Agreement by and among the Issuers, the Trustee
and the Account Agent, and the December 30, 1997 Partnership Funds Agreement by
and among the Issuers and the Account Agent.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Permitted Business; (ii) the Capital Stock
of a Person that becomes a Restricted Subsidiary as a result of the acquisition
of such Capital Stock by the Partnership or a Restricted Subsidiary of the
Partnership; (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary of the Partnership; or (iv)
Permitted Investments of the type and in the amounts described in clause (viii)
of the definition thereof; provided, however, that, in the case of clauses (ii)
and (iii), such Restricted Subsidiary is primarily engaged in a Permitted
Business.
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"Additional Interest" means additional interest which shall become payable
with respect to the Original Notes if the Issuers fail to comply with provisions
for filing a Registration Statement pursuant to the terms of the Registration
Rights Agreement or a Shelf Registration Statement, or if such registration
statements fail to become effective.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date means the
lesser of the amount by which (x) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities, including, without
limitation, the probable liability of such Subsidiary Guarantor with respect to
its contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Subsidiary Guarantees, of such Subsidiary Guarantor at
such date and (y) the present fair salable value of the assets of such
Subsidiary Guarantor at such date exceeds the amount that will be required to
pay the probable liability of such Subsidiary Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date and after giving effect to any collection from any Subsidiary by
such Subsidiary Guarantor in respect of the obligations of such Subsidiary under
the Subsidiary Guarantees), excluding debt in respect of the Subsidiary
Guarantees, as they become absolute and matured.
"Administrative Agent" means National Westminster Bank PLC as
administrative agent pursuant to the Credit Agreement.
"Affiliate" of any specified person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate Transaction" means any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service), with or for the benefit of, any Affiliate of the
Partnership, other than a Wholly-Owned Subsidiary or RAS.
"AFR" means the applicable federal rate in effect at the time of a debt
obligation's issuance.
"Agent's Message" means a message transmitted by DTC to, and received by,
the Exchange Agent and forming a part of the Book-Entry Confirmation, which
states that DTC has received an express acknowledgment from each DTC Participant
tendering through ATOP that such DTC Participants have received a Letter of
Transmittal and agree to be bound by the terms of such Letter of Transmittal,
and that the Issuers may enforce such agreement against such DTC participants.
"Agreement" means the January 1, 1994 Stock Ownership and Cash Profit
Sharing Agreement between each Executive and SCA.
"AHYDO Rules" means applicable high yield discount obligations rules.
"applicable high yield discount obligations" has the meaning ascribed to it
in the Code.
"Architect" means Paul Steelman, Ltd.
"Architect Agreement" means the December 29, 1997 American Institute of
Architects "Standard Form of Agreement between Owner and Architect where the
Construction Manager is NOT a Constructor -- Construction Manager -- Adviser
Edition" between the Partnership and the Architect.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of (or
any other equity interests in) a Restricted Subsidiary (other than directors'
qualifying shares) or of any other property (other than the Right of First Offer
as permitted under "Limitation on Affiliate Transactions") or other assets (each
referred to for the purposes of this definition as a "disposition") by the
Partnership or any of its Restricted Subsidiaries (including any disposition by
means of a merger, consolidation or similar transaction) other than (i) a
disposition by a Restricted Subsidiary to the Partnership or by the Partnership
or a Restricted Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of
inventory in the ordinary course of
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business, (iii) a disposition of obsolete or worn out equipment or equipment
that is no longer useful in the conduct of the business of the Partnership and
its Restricted Subsidiaries and that is disposed of in each case in the ordinary
course of business, (iv) dispositions of property for net proceeds which, when
taken collectively with the net proceeds of any other such dispositions under
this clause (iv) that were consummated since the beginning of the calendar year
in which such disposition is consummated, do not exceed $2.0 million, and (v)
transactions permitted under "Certain Covenants -- Merger and Consolidation"
above. Notwithstanding anything to the contrary contained above, a Restricted
Payment made in compliance with the "Limitation on Restricted Payments" covenant
shall not constitute an Asset Disposition except for purposes of determinations
of the Consolidated Coverage Ratio.
"ATOP" means Automated Tender Offer Program.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
indebtedness, the quotient obtained by dividing (i) the sum of the product of
the numbers of years (rounded upwards to the nearest month) from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption multiplied by the amount of such payment by (ii)
the sum of all such payments.
"Bankruptcy Code" means the United States Bankruptcy Code, as amended.
"bankruptcy provisions" means certain events of bankruptcy, insolvency or
reorganization of the Issuers or a Significant Subsidiary.
"BBER" means the Bureau of Business and Economic Research at the University
of Nevada, Reno.
"Blockage Notice" means written notice from the Representative of the
Designated Senior Indebtedness to the Trustee (with a copy to the Issuers) of
any default with respect to any Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period.
"Book-Entry Confirmation" means the confirmation of a book-entry transfer
into the Exchange Agent's account at DTC.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock (but excluding any debt securities convertible into such equity) and
including, without limitation, if such Person is a partnership or limited
liability company, any partnership or membership interests (whether general or
limited) and any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distribution of assets
of, such partnership or limited liability company.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof, (iii) certificates of deposit, time
deposits and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any commercial bank having
capital and surplus in excess of $500.0 million, (iv) repurchase obligations for
underlying securities of the types described in clauses (ii) and (iii) entered
into with any financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper rated P-I (or higher according to
Moody's) or A-1 or higher (according to S&P) and in each case
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maturing within one year after the date of acquisition, (vi) investment funds
investing 95.0% or more of their assets in securities of the types described in
clauses (i)-(v) above, (vii) readily marketable direct obligations issued by any
state of the United States of America or any political subdivision thereof
having one of the two highest rating categories obtainable from either Moody's
or S&P, and (viii) Indebtedness or preferred stock issued by Persons with a
rating of "A" or higher from S&P or "A2" or higher from Moody's.
"Casino" means the casino which is part of the Resort Casino.
"Change of Control" means (i) any Transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Partnership and its Subsidiaries; (ii) the adoption of a plan relating to the
liquidation or dissolution of the Partnership; (iii) RAS ceasing to be the sole
General Partner of the Partnership; or (iv) the Existing Partners failing to own
in the aggregate, directly or indirectly, at least 50.0% of the General Partner.
"Code" means the Internal Revenue Code of 1986, as amended.
"Colorado Act" means the Colorado Limited Gaming Act of 1991.
"Colorado Director" means the Director of the Colorado Division.
"Colorado Division" means the Division of Gaming within the Colorado
Department of Revenue.
"Colorado Gaming Commission" means the Colorado Limited Gaming Control
Commission.
"Commencement Date" means the date on which the Resort Casino opens for
business.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of Warrant Co.
"Consolidated Cash Flow" for any period means the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest
Expense, (iii) depreciation expense, (iv) amortization expense, and (v) all
other non-cash items reducing Consolidated Net Income (excluding any non-cash
item to the extent it represents an accrual of or reserve for cash disbursements
for any subsequent period prior to the stated maturity of the Notes), including
pre-opening costs that are required by GAAP to be charged as an expense prior to
or upon opening, in each case for such period and determined in accordance with
GAAP. Notwithstanding the foregoing, the income tax expense, depreciation
expense and amortization expense of a Subsidiary of the Partnership shall be
included in Consolidated Cash Flow only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of
the most recent four consecutive fiscal quarters ending prior to the date of
such determination and as to which financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters; provided, however,
that (A) if the Partnership or any of its Restricted Subsidiaries has incurred
any Indebtedness since the beginning of such period and through the date of
determination of the Consolidated Coverage Ratio that remains outstanding or if
the transaction giving rise to the need to calculate Consolidated Coverage Ratio
is an incurrence of Indebtedness, or both, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to (1) such Indebtedness as if such Indebtedness had
been incurred on the first day of such period (provided that if such
Indebtedness is incurred under a revolving credit facility (or similar
arrangement or under any predecessor revolving credit or similar arrangement)
only that portion of such Indebtedness that constitutes the one year projected
average balance of such Indebtedness (as determined in good faith by the General
Partner) shall be deemed outstanding for purposes of this calculation), and (2)
the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period, (B) if since the
beginning of such period any Indebtedness of the Partnership or any of its
Restricted Subsidiaries has been repaid, repurchased, defeased or otherwise
discharged (other than Indebtedness under a revolving credit or similar
arrangement unless such revolving credit Indebtedness has been permanently
repaid and the underlying
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commitment terminated and has not been replaced), Consolidated Interest Expense
for such period shall be calculated after giving pro forma effect thereto as if
such Indebtedness had been repaid, repurchased, defeased or otherwise discharged
on the first day of such period, (C) if since the beginning of such period the
Partnership or any of its Restricted Subsidiaries shall have made any Asset
Disposition or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Asset Disposition, Consolidated Cash Flow for
such period shall be reduced by an amount equal to the Consolidated Cash Flow
(if positive) attributable to the assets which are the subject of such Asset
Disposition for such period or increased by an amount equal to the Consolidated
Cash Flow (if negative) attributable thereto for such period, and Consolidated
Interest Expense for such period shall be (i) reduced by an amount equal to the
Consolidated Interest Expense attributable to any Indebtedness of the
Partnership or any of its Restricted Subsidiaries repaid, repurchased, defeased
or otherwise discharged with respect to the Partnership and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary of the Partnership
is sold, the Consolidated Interest Expense for such period directly attributable
to the Indebtedness of such Restricted Subsidiary to the extent the Partnership
and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale) and (ii) increased by interest income attributable
to the assets which are the subject of such Asset Disposition for such period,
(D) if since the beginning of such period the Partnership or any of its
Restricted Subsidiaries (by merger or otherwise) shall have made an Investment
in any Restricted Subsidiary of the Partnership (or any Person which becomes a
Restricted Subsidiary of the Partnership as a result thereof) or an acquisition
of assets occurring in connection with a transaction causing a calculation to be
made hereunder which constitutes all or substantially all of an operating unit
of a business, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
incurrence of any Indebtedness) as if such Investment or acquisition occurred on
the first day of such period, and (E) if since the beginning of such period any
Person (that subsequently became a Restricted Subsidiary of the Partnership or
was merged with or into the Partnership or any Restricted Subsidiary of the
Partnership since the beginning of such period) shall have made any Asset
Disposition, Investment or acquisition of assets that would have required an
adjustment pursuant to clause (C) or (D) above if made by the Partnership or a
Restricted Subsidiary of the Partnership during such period, Consolidated Cash
Flow and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Asset Disposition, Investment or
acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting officer of the Partnership. If
any Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Partnership and its Restricted Subsidiaries determined in
accordance with GAAP, plus, to the extent not included in such interest expense
(i) interest expense attributable to Capitalized Lease Obligations, (ii)
capitalized interest, (iii) amortization of debt discount, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by the Partnership or any such Restricted Subsidiary
under any Guarantee of Indebtedness or other obligation of any other Person,
(vii) net payments (whether positive or negative) pursuant to Interest Rate
Agreements, (viii) the cash contributions to any employee stock ownership plan
or similar trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than the Partnership) in connection
with Indebtedness incurred by such plan or trust, and (ix) cash and Disqualified
Stock dividends in respect of all Preferred Stock of Subsidiaries and
Disqualified Stock of the Partnership held by Persons other than the Partnership
or a Wholly-Owned Subsidiary and less (a) to the extent included in such
interest expense, the amortization of capitalized debt issuance costs, (b)
interest income and (c) to the extent included in such interest expense, the
amortization of debt original issue discount on the Notes and/or interest
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expense relating to the Notes in excess of the coupon rate recorded to account
for the effective interest rate. Notwithstanding the foregoing, the Consolidated
Interest Expense with respect to any Restricted Subsidiary of the Partnership,
that was not a Wholly-Owned Subsidiary, shall be included only to the extent
(and in the same proportion) that the net income of such Restricted Subsidiary
was included in calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Partnership and its consolidated Subsidiaries determined in
accordance with GAAP; provided, however, that there shall not be included in
such Consolidated Net Income: (i) any net income (loss) of any Person acquired
by the Partnership or any of its Restricted Subsidiaries in a pooling of
interests transaction for any period prior to the date of such acquisition, (ii)
any net income of any Restricted Subsidiary of the Partnership if such
Restricted Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Partnership (other than restrictions
in effect on the Issue Date with respect to a Restricted Subsidiary of the
Partnership and other than restrictions that are created or exist in compliance
with the "Limitation on Restrictions on Distributions from Restricted
Subsidiaries" covenant), (iii) any gain or loss realized upon the sale or other
disposition of any assets of the Partnership or its consolidated Restricted
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which are
not sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital Stock of
any Person, (iv) any extraordinary gain or loss, (v) the cumulative effect of a
change in accounting principles, (vi) the net income of any Person, other than a
Restricted Subsidiary, except to the extent of the lesser of (A) cash dividends
or distributions actually paid to the Partnership or any of its Restricted
Subsidiaries by such Person and (B) the net income of such Person (but in no
event less than zero), and the net loss of such Person (other than an
Unrestricted Subsidiary) shall be included only to the extent of the aggregate
Investment of the Partnership or any of its Restricted Subsidiaries in such
Person, and (vii) any non-cash expenses attributable to grants or exercises of
employee stock options. Notwithstanding the foregoing, for the purpose of the
covenant described under "Certain Covenants -- Limitation on Restricted
Payments" only, there shall be excluded from Consolidated Net Income any
dividends, repayments of loans or advances or other transfers of assets from
Unrestricted Subsidiaries to the Partnership or a Restricted Subsidiary to the
extent such dividends, repayments or transfers increase the amount of Restricted
Payments permitted under such covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Partnership and its consolidated Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Partnership ending prior to the taking of any
action for the purpose of which the determination is being made and for which
financial statements are available (but in no event ending more than 135 days
prior to the taking of such action), as (i) the par or stated value of all
outstanding Capital Stock of the Partnership plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Construction Consultant" means Nevada Construction Services, Inc.
"Construction Contract" means the $133.0 million guaranteed maximum price
construction contract between the Partnership and J.A. Jones.
"Construction Loans" means $100.0 million of loans which may be used to
finance construction of the Resort Casino.
"Construction Management Contract" means the January 13, 1998 Construction
Management Contract between the Partnership and Rider Hunt.
"Continuing Fee" means the continuing fee equal to 1.75% of the Hotels'
gross revenues per month which the Partnership is required to pay to Regent
International.
"Corporate Warrants" means warrants to purchase one share of Common Stock
of Warrant Co.
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"covenant defeasance" means the Issuers' right to terminate their
obligations under most of the covenants and certain other provisions of the
Indenture at any time.
"Coverage Ratio Indebtedness" means any Indebtedness other than (i) ranking
pari passu with or which is expressly subordinate and junior in right of payment
to, the Notes, if no Default or Event of Default shall have occurred and be
continuing at the time of such incurrence or would occur as a consequence of
such incurrence and the Consolidated Coverage Ratio would be equal to at least
2.00 to 1.00; and (ii) Senior Indebtedness if no Default or Event of Default
shall have occurred and be continuing at the time of such incurrence or would
occur as a consequence of such incurrence and the Consolidated Coverage Ratio
would be at least equal to 2.50 to 1.00.
"Credit Agreement" means the December 30, 1997 Credit Agreement among the
Issuers and the Administrative Agent. Without limiting the generality of the
foregoing, the term "Credit Agreement" shall include Interest Rate Agreements
with lenders party to the Credit Agreement, any amendment, amendment and
restatement, renewal, extension, restructuring, supplement or modification to
any Credit Agreement and all refunding, refinancing and replacements of any
Credit Agreement.
"Credit Facilities" means the Mortgage Notes and the Revolving Credit
Facility.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Declaration" means the August 15, 1996 Development Agreement between the
Partnership and HHP.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Depositor" means the Person having deposited Original Notes to be
withdrawn in the Exchange Offer.
"Designated Senior Indebtedness" means the indebtedness evidenced by the
Mortgage Notes and the Revolving Credit Facility.
"Designation" means the designation by the Partnership of any Subsidiary of
the Partnership (other than a Subsidiary of the Partnership which owns Capital
Stock of a Restricted Subsidiary) as an Unrestricted Subsidiary under the
Indenture.
"Designation Amount" means the amount the Partnership would be permitted to
make under the Indenture (assuming the effectiveness of such Designation) which
is equal to the sum of (i) fair market value of the Capital Stock of such
Subsidiary owned by the Partnership and the Restricted Subsidiaries, and (ii)
the aggregate amount of other Investments of the Partnership and the Restricted
Subsidiaries in such Subsidiary.
"Development Fee" means the $3.0 million development fee payable to SCA as
compensation for identifying, financing, planning, designing, developing and
opening the Resort Casino.
"Disbursement Agent" means First Security Trust Company of Nevada as
disbursement agent under the Disbursement Agreement and its successor or
assigns.
"Disbursement Agreement" means the December 31, 1997 Disbursement Agreement
which established conditions to, and the sequencing of funding construction of,
the Resort Casino.
"Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event (other than an event which
would constitute a Change of Control), (i) matures (excluding any maturity as
the result of an optional redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final Stated Maturity of the Notes, or (ii) is convertible into or exchangeable
(unless at the sole option of the issuer thereof) for (a) debt securities or (b)
any Capital Stock referred to in (i) above, in each case at any time prior to
the final Stated Maturity of the Notes.
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"Drawdown" means any of four advances on the Construction Loans of at least
$10.0 million each made after the Issue Date.
"DTC" means Depository Trust Company.
"DTC Participant" means a participant in Depository Trust Company.
"EBITDA" means earnings before income tax, depreciation and amortization.
"EBITDAM" means earnings before interest, income tax, depreciation,
amortization and management fee expense.
"Eligible Institution" means any member firm of a registered national
securities exchange or the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor" institution within the meaning of Rule 17Ad-15
under the Exchange Act.
"Event of Default" means (i) a default in any payment of interest on any
Note when due, continued for 30 days, (ii) a default in the payment of principal
of any Note when due at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise, (iii) the failure by the
Partnership to comply with its obligations under the "Merger and Consolidation"
covenant, (iv) the failure by the Issuers to comply for 30 days after notice
with any of its obligations under the Indenture upon a Change of Control or
under covenants in the Indenture, (v) the failure by the Issuers or any
Subsidiary Guarantor to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Partnership or
any Restricted Subsidiary is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds $5.0 million
and such default shall not have been cured or such acceleration rescinded after
a 10-day period, (vii) the bankruptcy provisions, (viii) the judgment default
provision, (ix) any Subsidiary Guarantee by a Significant Subsidiary ceases to
be in full force and effect (except as contemplated by the terms of the
Indenture) or any Subsidiary Guarantor that is a Significant Subsidiary denies
or disaffirms its obligations under the Indenture or its Subsidiary Guarantee
and such Default continues for 10 days, (x) after the Resort Casino is
completed, revocation, termination, suspension or other cessation of
effectiveness of any Gaming License, which results in the total cessation or
total suspension of gaming operations for a period of more than 90 consecutive
days at the Resort Casino, or (xi) the Resort Casino has not commenced hotel and
gaming operations by October 2, 1999.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto, and the rules and regulations of the
Commission promulgated thereunder.
"Exchange Agent" means United States Trust Company of New York.
"Exchange Notes" means Issuers' Series B 13% Senior Subordinated PIK Notes
due 2007.
"Exchange Offer" means the offer by the Issuers to exchange $1,000
principal amount of their Exchange Notes, registered under the Securities Act,
for each $1,000 principal amount of their Original Notes.
"Executives" mean Brian McMullan, John Tipton, Jim Fonseca and Quinton
Boshoff.
"Exemption" means an exemption granted by the Nevada Commission to the
Nevada Act prohibition making Registered Companies ineligible to apply for or
hold a nonrestricted gaming license to operate a casino.
"Existing Partners" means Tivolino Holding A.G. or any of its wholly-owned
subsidiaries.
"Expiration Date" means , 1998, which is the date on which
Issuers will accept for exchange any and all Original Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on that date.
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"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
"Filing Date" means April 30, 1998.
"foreign broker" has the meaning ascribed to it in the applicable Treasury
Regulations.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the Indenture, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP.
"Gaming Approvals" means licenses and approvals of the Nevada Gaming
Authorities.
"Gaming Authority" means any of the Nevada Commission, the Nevada Board,
the City of Las Vegas, any gaming regulatory body in North Dakota and Colorado,
and any other gaming regulatory body or any agency which has, or may at any time
after the Issue Date have, jurisdiction over the gaming activities of the
Partnership or any of its Affiliates or Subsidiaries or any successor to such
authority.
"Gaming Laws" mean the provisions of the Nevada Gaming Control Act, as
amended from time to time, all regulations of the Nevada Gaming Commission
promulgated thereunder, as amended from time to time, all ordinances, rules and
regulations adopted by the City of Las Vegas, as amended from time to time, and
all other laws, statutes, rules, rulings, order, ordinances, regulations and
other legal requirements of any Gaming Authority.
"Gaming License" means any license, qualification, permit, franchise or
other authorization from any Gaming Authority required on the date of the
Indenture or at any time thereafter to own, operate or otherwise conduct the
gaming business of the Partnership and its Affiliates or Subsidiaries, including
all licenses, findings of suitability and registrations granted under Gaming
Laws.
"General Partner" means RAS, a Nevada corporation, and any of its
successors.
"GISC" means Gambling Impact Study Commission.
"Global Notes" means global certificates representing the Original Notes.
"Golf Reservation Fees" means amounts paid by the Partnership to HHP,
Summerlin Corporation and Tournament Players Club at Summerlin, Inc., pursuant
to a Golf Course Agreement.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantors" means all future direct and indirect Restricted Subsidiaries
of the Partnership having either assets, capital or stockholders' equity in
excess of $10,000.
"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, whether outstanding on the Issue Date or thereafter issued, all
Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the
Partnership and all other Indebtedness of such Subsidiary Guarantor, including
interest and fees thereon, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is
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expressly provided that the obligations of such Subsidiary Guarantor in respect
of such Indebtedness are not superior in right of payment to the obligations of
such Subsidiary Guarantor under the Subsidiary Guarantee; provided, however,
that Guarantor Senior Indebtedness shall not include (1) any obligations of such
Subsidiary Guarantor to the Partnership or any other Subsidiary of the
Partnership or (2) any Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor that is expressly subordinate or junior in right of payment to any
other Indebtedness, Guarantee or obligation of such Subsidiary Guarantor,
including any Guarantor Subordinated Indebtedness and Guarantor Subordinated
Obligations of such Subsidiary Guarantor.
"Guarantor Subordinated Indebtedness" means, with respect to a Subsidiary
Guarantor, the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee and any other Indebtedness of such Subsidiary Guarantor that
specifically provides that such Indebtedness is to rank pari passu in right of
payment with the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee.
"Guarantor Subordinated Obligation" means, with respect to a Subsidiary
Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on
the Issue Date or thereafter incurred) which is expressly subordinate or junior
in right of payment to the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee pursuant to a written agreement.
"incur" means issue, assume, guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Restricted Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary.
"HHC" means Howard Hughes Corporation, a subsidiary of the Rouse
Corporation.
"HHP" means Howard Hughes Properties, Limited Partnership, an Affiliate of
HHC.
"Historical Financial Statements" means the audited financial statement for
the Partnership and RAS for the fiscal year ended December 31, 1997, and the
notes thereto.
"Holder" means a registered owner of the Notes.
"Hotels" means the hotels located at the Resort Casino.
"IGRA" means the Indian Gaming Regulatory Act.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person, (viii)
the amount of all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock or, with respect to any
Restricted Subsidiary of the Partnership, any Preferred Stock of such Restricted
Subsidiary to the extent such obligation arises on or before the Stated Maturity
of the Notes (but excluding, in each case, accrued dividends) with the amount of
Indebtedness represented by such Disqualified Stock or Preferred Stock, as the
case may be, being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase
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price; provided that, for purposes hereof the "maximum fixed repurchase price"
of any Disqualified Stock or Preferred Stock, as the case may be, which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Disqualified Stock or Preferred Stock, as the case may be, as if such
Disqualified Stock or Preferred Stock, as the case may be, were purchased on any
date on which Indebtedness shall be required to be determined pursuant to the
Indenture, and if such price is based on the fair market value of such
Disqualified Stock or Preferred Stock, as the case may be, such fair market
value shall be determined in good faith by the General Partner, and (ix) to the
extent not otherwise included in this definition, obligations under Currency
Agreements and Interest Rate Agreements. Unless specifically set forth above,
the amount of Indebtedness of any Person at any date shall be the outstanding
principal amount of all unconditional obligations as described above, as such
amount would be reflected on a balance sheet prepared in accordance with GAAP,
and the maximum liability of such Person, upon the occurrence of the contingency
giving rise to the obligation, of any contingent obligations described above at
such date.
"Indenture" means the December 31, 1997 Indenture among the Partnership,
RAS and United States Trust Company of New York as trustee.
"Indirect Participants" means other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly.
"Initial Purchaser" means NatWest Capital Markets Limited.
"Interest Payment Date" means each June 15 and December 15 of each year.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For purposes of
the "Limitation on Restricted Payments" covenant, (i) "Investment" shall include
the portion (proportionate to the Partnership's equity interest in a Restricted
Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market
value of the net assets of such Restricted Subsidiary of the Partnership at the
time that such Restricted Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Partnership shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Partnership's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Partnership's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so redesignated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the General Partner and
evidenced by a resolution of the Board of Directors of the General Partner
certified in an Officers' Certificate to the Trustee.
"Issue Date" means December 31, 1997.
"Issuers" means RAS and the Partnership.
"J.A. Jones" means J.A. Jones Construction, a subsidiary of J.A. Jones,
Inc.
"judgment default provision" means any judgment or decree for the payment
of money in excess of $2.0 million (to the extent not covered by insurance)
which is rendered against the Issuers or a Significant Subsidiary and which
judgment or decree shall remain undischarged or unstayed for a period of 60 days
after such judgment becomes final and nonappealable.
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"legal defeasance" means the right of Issuers to terminate all their
obligations under the Notes and the Indenture at any time.
"Letter of Transmittal" means the letter accompanying the Prospectus in
which Issuers offer to exchange $1,000 principal amount of their Exchange Notes,
registered under the Securities Act, for each $1,000 principal amount of their
Original Notes.
"License Agreement" means the December 16, 1997 License Agreement between
the Partnership and Regent International, pursuant to which Regent International
agrees to license to the Partnership the right to flag the Hotels and to use
Regent International's trade name, trademarks and systems in connection with
operations of the Hotels.
"Licensee" means any person licensed, required to be licensed, registered,
or required to be registered by the Nevada Gaming Authorities, or is under
common control with such persons.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Lifescapes" means Lifescapes International.
"Lifestyle Complex" means the lifestyle complex which will link all
components of the Resort Casino development and will include gourmet food and
wine shops, a cigar shop, a beauty salon and other boutique outlets.
"LVCVA" means the Las Vegas Convention and Visitors Authority.
"Maturity Date" means March 31, 2004.
"Moody's" means Moody's Investors Service.
"Mortgage Notes" means up to $100.0 million in principal amount of the
Issuers' First Mortgage Notes issued under the Credit Agreement and any
extensions, revisions, refinancing, restatements or replacements thereof in
whole or in part.
"Mortgage Notes Proceeds Account" means the account into which shall be
deposited the net proceeds of the Mortgage Notes.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets subject to such Asset Disposition) therefrom in each
case net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all federal, state, foreign and local
taxes required to be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (ii) all distributions and other payments required to
be made to any Person owning a beneficial interest in assets subject to sale or
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition, (iii) the deduction of appropriate amounts to be provided by
the seller as a reserve, in accordance with GAAP, against any liabilities
associated with the assets disposed of in such Asset Disposition, provided,
however, that upon any reduction in such reserves (other than to the extent
resulting from payments of the respective reserved liabilities), Net Available
Cash shall be increased by the amount of such reduction to reserves, and
retained by the Partnership or any Restricted Subsidiary of the Partnership
after such Asset Disposition, and (iv) any portion of the purchase price from an
Asset Disposition placed in escrow (whether as a reserve for adjustment of the
purchase price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with such Asset Disposition) provided,
however, that upon the termination of such escrow, Net Available Cash shall be
increased by any portion of funds therein released to the Partnership or any
Restricted Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees,
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discounts or commissions and brokerage, consultant and other fees and costs
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale.
"Net Revenue Fee" means the management fee payable to the General Partner
in an amount not to exceed 3.0% of net revenues.
"Nevada Act" means the Nevada Gaming Control Act and the regulations
promulgated thereunder.
"Nevada Board" means the Nevada State Gaming Control Board.
"Nevada Commission" means the Nevada Gaming Commission.
"Nevada Gaming Authorities" means the City of Las Vegas, the Nevada
Commission and the Nevada Board.
"NIGC" means the National Indian Gaming Commission.
"Non-U.S. Holder" means a holder of Notes or Corporate Warrants other than
a U.S. Holder.
"Notes" means the Original Notes and the Exchange Notes.
"Notes Proceeds Account" means the account maintained with First Security
Trust Company of Nevada into which Issuers deposited the net proceeds of the
Original Notes on the Issue Date.
"Notice of Guaranteed Delivery" means notice by facsimile transmission,
mail or hand delivery) setting forth the name and address of the Holder, the
certificate number(s) of such Original Notes and the principal amount of
Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three NYSE trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof) together with the certificates)
representing the Original Notes (or a confirmation of book-entry transfer of
such Original Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by such Letter of Transmittal will
be deposited by the Eligible Institution with the Exchange Agent.
"NYSE" means New York Stock Exchange, Inc.
"Officer's Certificate" means, in the case of RAS, a certificate signed by
two officers and, in the case of the Partnership, a certificate signed by the
General Partner acting on behalf of the Partnership.
"Opinion of Counsel" means a written opinion, in form and substance
acceptable to the Trustee, from legal counsel who is acceptable to the Trustee.
"OID" means original issue discount, which is the excess of the stated
redemption price at maturity of a Note over its issue price.
"Option Parcel" means the 22.5-acre parcel adjacent to the Resort Casino.
"Original Notes" means the Issuer's $100.0 million principal amount
outstanding 13% Senior Subordinated PIK Notes due 2007.
"Participants" means DTC's participating organizations.
"Participating Broker-Dealer" means a broker-dealer that receives Exchange
Notes for its account pursuant to the Exchange Offer.
"Partnership" means The Resort at Summerlin, Limited Partnership, a Nevada
limited partnership.
"Partnership Agreement" means the Agreement of Limited Partnership, as
amended, of the Partnership.
"Partnership Funds Account" means the Partnership's funds account.
"Partnership Warrants" means warrants to purchase one limited partnership
interest of the Partnership.
"Paying Agent" means United States Trust Company of New York and any of its
successors and assigns.
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"Payment Blockage Period" means the period commencing upon receipt by the
Trustee (with a copy to the Issuers) of a Blockage Notice of any default with
respect to any Designated Senior Indebtedness.
"Permitted Business" means the casino gaming, hotel, retail and spa and
resort business and any activity or business incidental, directly related or
similar thereto, or any business or activity that is a reasonable extension,
development or expansion thereof or ancillary thereto, including any hotel,
entertainment, recreation, convention, trade show, meeting, retail sales or
other activity or business designed to promote, market, support, develop,
construct or enhance the casino gaming, hotel, retail and resort business
operated by the Partnership and Restricted Subsidiaries (including, without
limitation, engaging in transactions with Affiliates and incurring Indebtedness,
providing guarantees or providing other credit support, in each case to the
extent permitted under the Indenture), owning and operating joint ventures to
supply materials or services for the construction or operation of the resort
owned or operated by the Partnership and entering into casino leases or
management agreements for any casino situated on land owned by the Issuers or
owned or operated by the Issuers.
"Permitted Investment" means an Investment by the Partnership or any of its
Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of the Partnership;
provided, however, that the primary business of such Wholly-Owned Subsidiary is
a Permitted Business; (ii) another Person if as a result of such Investment such
other Person becomes a Wholly-Owned Subsidiary of the Partnership or is merged
or consolidated with or into, or transfers or conveys all or substantially all
its assets to, the Partnership or a Wholly-Owned Subsidiary of the Partnership;
provided, however, that in each case such Person's primary business is a
Permitted Business; (iii) Temporary Cash Investments; (iv) receivables owing to
the Partnership or any of its Restricted Subsidiaries, created or acquired in
the ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (v) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business; (vi) loans and advances to employees made in the ordinary course of
business of the Partnership or such Restricted Subsidiary in an aggregate amount
outstanding at any one time not to exceed $250,000 to any one employee or $1.0
million in the aggregate; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Partnership or any of its Restricted Subsidiaries or in satisfaction of
judgments or claims; (viii) a Person engaged in a Permitted Business or a loan
or advance by the Partnership the proceeds of which are used solely to make an
investment in a Person engaged in a Permitted Business or a Guarantee by the
Partnership of Indebtedness of any Person in which such Investment has been made
provided, however, that no Permitted Investments may be made pursuant to this
clause (viii) to the extent the amount thereof would, when taken together with
all other Permitted Investments made pursuant to this clause (viii), exceed $5.0
million in the aggregate (plus, to the extent not previously reinvested, any
return of capital realized on Permitted Investments made pursuant to this clause
(viii), or any release or other cancellation of any Guarantee constituting such
Permitted Investment); (ix) Persons to the extent such Investment is received by
the Partnership or any Restricted Subsidiary as consideration for asset
dispositions effected in compliance with the covenant described under
"Limitations on Sales of Assets and Subsidiary Stock"; (x) prepayments and other
credits to suppliers made in the ordinary course of business of the Partnership
and its Restricted Subsidiaries; and (xi) Investments in connection with
pledges, deposits, payments or performance bonds made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or environmental
obligations.
"Permitted Liens" means: (i) Liens granted by the Partnership and the
Subsidiary Guarantors which secure Senior Indebtedness; (ii) Liens in favor of
the Partnership; (iii) Liens on property of a Person existing at the time such
Person is acquired by or merged into or consolidated with the Partnership or any
Restricted Subsidiary thereof; provided that such Liens were in existence prior
to the contemplation of such acquisition and do not extend to any assets of the
Partnership or its Restricted Subsidiaries other than those acquired in
connection with such merger or consolidation; (iv) Liens to secure the
performance of obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (v)
Liens existing on the Issue Date; (vi) Liens in respect of extensions, renewals,
refundings or refinancing of any Indebtedness secured by the Liens referred to
in clauses (ii), (iii) and (v) above and
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(viii) below; provided that the Liens in connection with such renewal,
extensions, renewals, refundings or refinancing shall be limited to all or part
of the specific property which was subject to the original Lien; (vii) Liens for
taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other
appropriate provisions as shall be required in conformity with GAAP shall have
been made therefor; (viii) any Lien securing purchase money obligations incurred
in compliance with paragraph (b)(ii) of the "Limitation on Indebtedness"
covenant, provided that such Liens do not extend to any property (other than the
property so purchased) owned by the Partnership or its Restricted Subsidiaries
and is not incurred more than 60 days after the incurrence of such Indebtedness
secured by such Lien; (ix) Liens to secure Indebtedness permitted under clause
(ii) of the "Limitation on Indebtedness" covenant, provided that such Liens do
not extend to or cover any property of the Partnership or any of its
Subsidiaries other than the property subject to such financing; and (x) Liens
incurred in the ordinary course of business of the Partnership or any Restricted
Subsidiary thereof with respect to obligations that do not exceed $2.0 million
at any one time outstanding and that (A) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business) and (B) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of the business by the Partnership or such Restricted
Subsidiary.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision hereof or any
other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Project Budget" means the approved budget for the Resort Casino as in
effect from time to time.
"Prospectus" means the final prospectus included in the Issuers'
Registration Statement filed with the Commission, pursuant to which the Issuers
will offer to exchange $1,000 principal amount of their Exchange Notes,
registered under the Securities Act, for each $1,000 principal amount of their
Original Notes.
"Public Equity Offering" means an underwritten primary public offering for
cash by the Partnership of its limited partnership interests, or options,
warrants or rights with respect to its partnership interests pursuant to an
effective registration statement under the Securities Act.
A "Public Market" exists at any time with respect to the Capital Stock of
the Partnership if (a) the Capital Stock of the Partnership is then registered
with the Commission pursuant to Section 12(b) or 12(g) of the Exchange Act and
traded either on a national securities exchange or in the National Association
of Securities Dealers Automated Quotation System, and (b) at least 15.0% of the
total issued and outstanding Capital Stock of the Partnership, as applicable,
has been distributed prior to such time by means of an effective registration
statement under the Securities Act.
"Purchase Agreement" means the December 22, 1997 Purchase Agreement by and
among the Issuers, Warrant Co., and the Initial Purchaser.
"QI" means qualified intermediary.
"RAS" means The Resort at Summerlin, Inc., a Nevada corporation and the
general partner of the Partnership.
"RAS Management Fee" means 3.0% of the total net revenue and 6.0% of
EBITDAM less the top line management fee, not to exceed 10.0% of total net
revenue.
"RAS Owners" means SCA, the Swiss Parent and their respective owners.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively, "refinances," and
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"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of the Indenture or incurred in compliance with the Indenture (including
Indebtedness of the Partnership that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the earlier of (A) the first
anniversary of the Stated Maturity of the Notes and (B) the Stated Maturity of
the Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an
Average Life at the time such Refinancing Indebtedness is incurred that is equal
to or greater than the lesser of (A) the Average Life of the Notes and (B) the
Average Life of the Indebtedness being refinanced, and (iii) the Refinancing
Indebtedness is in an aggregate principal amount (or if issued with original
issue discount, an aggregate issue price) that is equal to (or 101.0% of, in the
case of a refinancing of the Notes in connection with a Change of Control) or
less than the sum of the aggregate principal amount (or if issued with original
issue discount, the aggregate accredited value) then outstanding of the
Indebtedness being refinanced (plus the amount of any premium required to be
paid in connection therewith and reasonable fees and expenses therewith),
provided further, that Refinancing Indebtedness shall not include Indebtedness
of a Subsidiary which refinances Indebtedness of the Partnership.
"Regent International" means Regent Hotels Worldwide, Inc.
"Register" means a registry of the names and addresses of the Holders of
the Notes maintained by the Registrar at the offices of the Registrar.
"Registered Company" means a company registered by the Nevada Commission as
a publicly traded corporation.
"Registrar" means United States Trust Company of New York and any of its
successors or assigns.
"Registration Rights Agreement" means the December 31, 1997 Exchange and
Registration Rights Agreement among the Partnership, RAS, the limited partners
of the Partnership, Warrant Co. and the Initial Purchaser.
"Registration Statement" means the registration statement filed with the
Commission by the Partnership on Form S-4, together with all amendments,
exhibits and schedules thereto.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.
"Resort Casino" means The Resort at Summerlin, a Mediterranean-style luxury
hotel, casino and spa complex which will be constructed, owned and operated by
the Partnership.
"Resort Casino Site" means the 54.5 acre site on which the Resort Casino
will be located.
"Restaurant Leases" means leases which the Partnership plans to enter into
in connection with the operation of the Resort Casino, whereby the Partnership
anticipates leasing space to at least four restaurants.
"Restricted Payment" means limitations under which the Partnership shall
not, and shall not permit any of its Restricted Subsidiaries, directly or
indirectly to (i) declare or pay any dividend or any distribution on or in
respect of its Capital Stock except (A) dividends or distributions payable in
its Capital Stock (other than Disqualified Stock) or in options, warrants or
other rights to purchase such Capital Stock and (B) dividends or distributions
payable to the Partnership or a Restricted Subsidiary which holds any equity
interest in the paying Restricted Subsidiary (and if the Restricted Subsidiary
paying the dividend or making the distribution is not a Wholly-Owned Subsidiary,
to its other holders of Capital Stock on a pro rata basis), (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the
Partnership held by Persons other than a Wholly-Owned Subsidiary of the
Partnership or any Capital Stock of a Restricted Subsidiary of the Partnership
held by any Affiliate of the Partnership, other than a Wholly-Owned Subsidiary
(in either case, other than in exchange for its Capital Stock (other than
Disqualified Stock)), (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations, or (iv) make any
Investment (other than a Permitted Investment) in any Person.
109
<PAGE> 117
"Restricted Subsidiary" means any Subsidiary of the Partnership other than
an Unrestricted Subsidiary.
"Revocation" means the revocation by the Partnership of any Designation of
a Subsidiary as an Unrestricted Subsidiary.
"Revolving Credit Facility" means the up to $10.0 million revolving credit
facility under the Credit Agreement, and any extensions, revisions, refinancing,
restatements or replacements thereof.
"Rider Hunt" means Rider Hunt (NV) L.L.C.
"Rights of First Offer" means the rights of first offer held by the
Partnership granted by HHC with respect to four other potential gaming sites in
Summerlin.
"Royalty Agreement" means the August 15, 1996 agreement between the
Partnership and the HHC Affiliate.
"Royalty Commencement Date" means the earlier of the day the Resort Casino
is open to the public, or 18 months following the first day of construction of
the Resort Casino.
"RSM Fund" means the fund established by Regent International which will
consist of marketing fees, reservation fees and certain other fees designated by
Regent International and paid by the Partnership and other Regent International
Hotels.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Ruling Request" means the written request filed by the Issuers with the
Nevada Board Chairman for a ruling that it is not necessary to submit the
Exchange Offer for prior approval.
"S&P" means Standard & Poor's Corporation.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Partnership or a Restricted Subsidiary
transfers such property to a Person and the Partnership or a Subsidiary leases
it from such Person.
"SCA" means Swiss Casinos of America, Inc., formerly Seven Circle Gaming
Corporation.
"SCR" means Seven Circle Resorts, Inc., a wholly-owned subsidiary of SCA.
"SCRN" means Seven Circle Resorts of Nevada, Inc., a wholly-owned
subsidiary of SCA.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" of the Issuers means all Indebtedness (including any
monetary obligations under or in respect of the Credit Agreement and interest,
whether or not allowable, accruing on Indebtedness incurred pursuant to the
Credit Agreement after the filing of a petition initiating any proceeding under
any bankruptcy, insolvency or similar law) of the Issuers arising under the
Credit Agreement, except to the extent of any such Indebtedness incurred in
violation of the terms of the Indenture.
"Shelf Request" means a request by the Holders of Original Notes to the
Issuers to file a Shelf Registration Statement.
"Shelf Registration Statement" means a shelf registration statement
relating to the offer and sale of the outstanding Original Notes.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Partnership within the meaning of Rule 1-02
under Regulation S-X promulgated by the Commission.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"stated redemption price at maturity" means the sum of all scheduled
amounts payable on the Note (including interest).
110
<PAGE> 118
"Strip" means the Las Vegas Strip.
"Subordination Agreement" means the December 16, 1997, Subordination,
Stabilization and Assumption Agreement between the Partnership and Regent
International.
"Summerlin" means the Summerlin master-planned community, a 22,500-acre
land development of HHC.
"Subordinated Obligations" means, with respect to the Partnership or any
Subsidiary Guarantor, any Indebtedness of the Partnership or such Subsidiary
Guarantor, as the case may be (whether outstanding on the Issue Date or
thereafter incurred) which is expressly subordinate or junior in right of
payment to the Notes or a Subsidiary Guarantor's Subsidiary Guarantee, as the
case may be, in each case pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50.0% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person, or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary shall
refer to a Subsidiary of the Partnership.
"Subsidiary Guarantee" means the Guarantee of the Notes by a Subsidiary
Guarantor.
"Subsidiary Guarantor" means each Subsidiary of the Partnership in
existence on the Issue Date and each Subsidiary (other than Unrestricted
Subsidiaries) created or acquired by the Partnership after the Issue Date.
"Successor Entity" means the resulting, surviving or transferee Person
remaining if the Partnership or Warrant Co. consolidates with or merges with or
into, or conveys, transfers or leases all or substantially all of its assets to,
any Person.
"Swiss Parent" means Tivolino Holding AG.
"Tax Allowance Amount" shall mean, with respect to any Partner (including a
Warrant holder if such Warrant holder is treated as owning an equity interest in
the Partnership for U.S. federal, state or local income tax purposes), for any
calendar quarter, (i) forty percent (40.0%) of the excess of (a) the estimated
taxable income allocable to such Partner arising from its ownership of a
Partnership Interest for the fiscal year through such calendar quarter over (b)
any losses of the Partnership for prior fiscal years and such fiscal year that
are allocable to such Partner that were not previously utilized in the
calculation of Tax Allowance Amounts minus (ii) prior distributions of Tax
Allowance Amounts for such fiscal year, all as determined by the General Partner
in good faith. The amount so determined by the General Partner shall be the Tax
Allowance Amount for such period and shall be final and binding on all Partners.
"Taxes" means all taxes, levies, imposts, duties or other governmental
charges.
"Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or
obligations Guaranteed by the United States of America or any agency thereof,
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital surplus and undivided profits
aggregating in excess of $250.0 million (or the foreign currency equivalent
thereof) and whose long-term debt, or whose parent holding company's long-term
debt, is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act), (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (iv) Investments in commercial paper, maturing not more than 180
days after the date of
111
<PAGE> 119
acquisition, issued by a corporation (other than an Affiliate of the
Partnership) organized and in existence under the laws of the United States of
America or any foreign country recognized by the United States of America with a
rating at the time as of which any investment therein is made of "P-1" (or
higher) according to Moody's or "A-1" (or higher) according to S&P, (v)
Investments in securities with maturities of six months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by S&P or "A" by Moody's, and (vi)
Investments in mutual funds whose investment guidelines restrict such funds'
investments to those satisfying the provisions of clauses (i) through (v) above.
"Tendering Holder" means (i) each DTC Participant that has properly
transmitted (and not properly withdrawn) its acceptance through ATOP and in
respect of which DTC has sent an Agent's Message, (ii) each Holder that has
timely delivered to the Exchange Agent (and not properly withdrawn) a properly
completed and duly executed Letter of Transmittal, and any other documents
required by the Letter of Transmittal, together with certificates) representing
all tendered Original Notes, or (iii) each DTC Participant or Holder that has
complied with the guaranteed delivery procedures set forth herein.
"Term Loans" means term loans which are created by conversion of the
principal amount of Construction Loans outstanding on the Commencement Date.
"TPC" means Tournament Players Club.
"TPC Canyons" means the Tournament Players Club at the Canyons golf course.
"Transfer" means any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Partnership and its Subsidiaries.
"Treasury Regulations" means the Income Tax Regulations promulgated by the
U.S. Department of Treasury under the Code.
"Tribe" means the Standing Rock Sioux Tribe.
"Trustee" means United States Trust Company of New York.
"Units" means 100,000 units sold by the Issuers as part of the 144A
Offering, each Unit consisting of $1,000 in principal amount of the Original
Notes and a Corporate Warrant.
"unmatured interest" means any OID that was not amortized as of any
bankruptcy filing.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Partnership that
at the time of determination shall be designated an Unrestricted Subsidiary by
the General Partner in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The General Partner may designate any Subsidiary of the
Partnership (including any newly acquired or newly formed Subsidiary of the
Partnership) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Partnership or any Restricted Subsidiary of the
Partnership that is not a Subsidiary of the Subsidiary to be so designated;
provided, however, that each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of such designation, and does not thereafter
create, incur, issue, assume, guarantee or otherwise becomes liable with respect
to any Indebtedness other than Non-Recourse Debt and either (A) the Subsidiary
to be so designated has total consolidated assets of $10,000 or less or (B) if
such Subsidiary has consolidated assets greater than $10,000, then such
designation would be permitted under "Limitation on Restricted Payments." The
General Partner may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary subject to the limitations contained in "Limitation on Designations
of Unrestricted Subsidiaries."
"unsuitable person" means a person determined by the Nevada Commission to
be unsuitable to own securities of a Registered Company.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality
112
<PAGE> 120
thereof) for the payment of which the full faith and credit of the United States
of America is pledged and which are not callable or redeemable at the issuer's
option.
"U.S. Holder" means a Holder of Notes or Corporate Warrants, who for U.S.
federal income tax purposes is (i) a citizen or resident of the United States;
(ii) a corporation or partnership organized in or under the laws of the United
States or any State thereof (including the District of Columbia); (iii) an
estate the income of which is subject to U.S. federal income taxation regardless
of its source; (iv) a trust (a) the administration over which a U.S. court can
exercise primary supervision and (b) all of the substantial decisions of which
one or more U.S. persons have the authority to control; or (v) otherwise subject
to U.S. federal income taxation on a net income basis with respect to the Notes.
Notwithstanding the preceding sentence, to the extent provided in U.S. Treasury
Regulations, certain trusts in existence on August 20, 1996, and treated as
United States persons prior to such date, that elect to continue to be treated
as United States persons also will be a U.S. Holder.
"U.S. Trade or Business Income" means .
"Warrant Co." means RAS Warrant Co., a Nevada corporation, an Affiliate of
RAS and the Partnership.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the Partnership,
at least 99.0% of the Capital Stock of which (other than directors' qualifying
shares) is owned by the Partnership or another Wholly-Owned Subsidiary.
"withholding foreign partnerships" has the meaning ascribed to it in the
Treasury Regulations.
"Withholding Regulations" means recently issued applicable Treasury
Regulations.
113
<PAGE> 121
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1997, THE
PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1996,
AND THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1997
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors.............................. F- 2
Audited Financial Statements
The Resort at Summerlin, Inc................................
Balance Sheets......................................... F- 3-F- 4
Statements of Operations............................... F- 5-F- 7
Statements of Changes in Stockholder's Equity.......... F- 8
Statements of Cash Flows............................... F-10-F-12
The Resort at Summerlin, L.P................................
Balance Sheets......................................... F- 3-F- 4
Statements of Operations............................... F- 5-F- 7
Statements of Partnership Interests.................... F- 9
Statements of Cash Flows............................... F-10-F-12
The Resort at Summerlin, Inc. (consolidated)................
Balance Sheets......................................... F- 3-F- 4
Statements of Operations............................... F- 5-F- 7
Statements of Changes in Stockholder's Equity.......... F- 8
Statements of Cash Flows............................... F-10-F-12
Notes to Financial Statements (all entities)................ F-13-F-20
</TABLE>
F-1
<PAGE> 122
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Partners
The Resort at Summerlin, Inc. and
The Resort at Summerlin, L.P.
We have audited the accompanying balance sheets for the companies specified in
the attached table of contents as of December 31, 1997 and 1996, and the related
statements of operations, partnership interests, changes in stockholder's equity
and cash flows for the year ended December 31, 1997, the period from inception
through December 31, 1996, and the period from inception through December 31,
1997. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of the Companies at December 31,
1997 and 1996, and the results of their operations and their cash flows for the
year ended December 31, 1997, the period from inception through December 31,
1996, and the period from inception through December 31, 1997, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Denver, Colorado
March 5, 1998
F-2
<PAGE> 123
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------------------
CONSOLIDATED
RAS INC. RAS L.P. RAS INC.
-------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 3,968 $175,487,660 $175,491,628
Interest receivable............................... -- 24,167 24,167
-------- ------------ ------------
Total current assets................................... 3,968 175,511,827 175,515,795
Property and equipment:
Land.............................................. -- 16,628,459 16,628,459
Construction in progress.......................... -- 3,782,333 3,782,333
Furniture, fixtures and equipment................. -- 573,000 573,000
-------- ------------ ------------
-- 20,983,792 20,983,792
Accumulated depreciation.......................... -- (112,680) (112,680)
-------- ------------ ------------
-- 20,871,112 20,871,112
Restricted cash........................................ -- 12,400,000 12,400,000
Debt issuance costs.................................... -- 12,561,721 12,561,721
Investment in The Resort at Summerlin, L.P............. 668,012 -- --
Licensing costs........................................ -- 50,000 50,000
Preopening costs....................................... -- 4,838,812 4,838,812
-------- ------------ ------------
Total assets........................................... $671,980 $226,233,472 $226,237,440
======== ============ ============
LIABILITIES
Current liabilities
Accounts payable.................................. $ -- $ 158,471 $ 158,471
Accrued expenses.................................. -- 619,373 619,373
Related party payable............................. 1,010 348,459 349,469
-------- ------------ ------------
Total current liabilities.............................. 1,010 1,126,303 1,127,313
Long-term debt, net of discount........................ -- 154,131,067 154,131,067
Warrants redeemable for partnership interests.......... -- 5,869,565 5,869,565
-------- ------------ ------------
Total liabilities...................................... 1,010 161,126,935 161,127,945
Limited partners' interests............................ -- -- 64,438,525
STOCKHOLDER'S EQUITY AND PARTNERSHIP INTERESTS
Common stock, no par value, 2,500 shares authorized, -- 682,500
1,000 shares issued.................................. 682,500
General partner interest............................... -- 675,000 --
Limited partners' interests............................ -- 65,130,283 --
Deficit accumulated during development stage........... (11,530) (698,746) (11,530)
-------- ------------ ------------
Total stockholder's equity and partnership interests... 670,970 65,106,537 670,970
-------- ------------ ------------
Total liabilities, stockholder's equity and partnership
interests............................................ $671,980 $226,233,472 $226,237,440
======== ============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE> 124
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------
CONSOLIDATED
RAS INC. RAS L.P. RAS INC.
-------- ----------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Subscription receivable............................. $ 1,000 $ -- $ 1,000
-------- ----------- -----------
Total current assets..................................... 1,000 -- 1,000
Property and equipment:
Land................................................ -- 16,628,459 16,628,459
Construction in progress............................ -- 526,088 526,088
-------- ----------- -----------
-- 17,154,547 17,154,547
Accumulated depreciation............................ -- -- --
-------- ----------- -----------
-- 17,154,547 17,154,547
Investment in The Resort at Summerlin, L.P............... 499,155 -- --
Option fee............................................... -- 583,900 583,900
Preopening costs......................................... -- 907,534 907,534
-------- ----------- -----------
Total assets............................................. $500,155 $18,645,981 $18,646,981
======== =========== ===========
LIABILITIES
Limited partners' interest............................... $ -- $ -- $18,146,826
STOCKHOLDER'S EQUITY AND PARTNERSHIP INTERESTS
Common stock, no par value, 2,500 shares authorized,
1,000 shares issued.................................... 1,000 -- 1,000
General partner interest................................. -- 500,000 --
Limited partners' interests.............................. 500,000 18,230,439 500,000
Deficit accumulated during development stage............. (845) (84,458) (845)
-------- ----------- -----------
Total stockholder's equity and partnership interests..... 500,155 18,645,981 500,155
-------- ----------- -----------
Total liabilities, stockholder's equity and partnership
interests.............................................. $500,155 $18,645,981 $18,646,981
======== =========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 125
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------
CONSOLIDATED
RAS INC. RAS L.P. RAS INC.
-------- --------- ------------
<S> <C> <C> <C>
Revenues.................................................... $ -- $ -- $ --
Costs and expenses:
Equity in loss of The Resort at Summerlin, L.P. ....... 6,143 -- --
General and administrative............................. 4,542 493,885 498,427
Depreciation and amortization.......................... -- 113,312 113,312
-------- --------- ---------
10,685 607,197 611,739
Other income (expense):
Interest income........................................ -- 41,255 41,255
Interest expense....................................... -- (48,346) (48,346)
-------- --------- ---------
-- (7,091) (7,091)
-------- --------- ---------
Loss before limited partners' interest...................... (10,685) (614,288) (618,830)
Limited partners' interest.................................. -- -- (608,145)
-------- --------- ---------
Net loss.................................................... $(10,685) $(614,288) $ (10,685)
======== ========= =========
</TABLE>
See accompanying notes.
F-5
<PAGE> 126
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION THROUGH
DECEMBER 31, 1996
----------------------------------
CONSOLIDATED
RAS INC. RAS L.P. RAS INC.
-------- -------- ------------
<S> <C> <C> <C>
Revenues.................................................... $ -- $ -- $ --
Costs and expenses:
Equity in loss of The Resort at Summerlin, L.P. ....... 845 -- --
General and administrative............................. -- 84,458 84,458
----- -------- --------
845 84,458 84,458
----- -------- --------
Loss before limited partners' interest...................... (845) (84,458) (84,458)
Limited partners' interest.................................. -- -- (83,613)
----- -------- --------
Net loss.................................................... $(845) $(84,458) $ (845)
===== ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE> 127
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION THROUGH
DECEMBER 31, 1997
-----------------------------------
CONSOLIDATED
RAS INC. RAS L.P. RAS INC.
-------- --------- ------------
<S> <C> <C> <C>
Revenues.................................................... $ -- $ -- $ --
Costs and expenses:
Equity in loss of The Resort at Summerlin, L.P. ....... 6,988 -- --
General and administrative............................. 4,542 578,343 582,885
Depreciation and amortization.......................... -- 113,312 113,312
-------- --------- ---------
11,530 691,655 696,197
Other income (expense):
Interest income........................................ -- 41,255 41,255
Interest expense....................................... -- (48,346) (48,346)
-------- --------- ---------
-- (7,091) (7,091)
-------- --------- ---------
Loss before limited partners' interest...................... (11,530) (698,746) (703,288)
Limited partners' interest.................................. -- -- (691,758)
-------- --------- ---------
Net loss.................................................... $(11,530) $(698,746) $ (11,530)
======== ========= =========
</TABLE>
See accompanying notes.
F-7
<PAGE> 128
THE RESORT AT SUMMERLIN, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
DURING TOTAL
COMMON DEVELOPMENT STOCKHOLDER'S
STOCK STAGE EQUITY
-------- ----------- -------------
<S> <C> <C> <C>
Balance at June 12, 1996 (inception)....................... $ -- $ -- $ --
Capital contributions................................. 501,000 -- 501,000
Net loss.............................................. -- (845) (845)
-------- -------- --------
Balance at December 31, 1996............................... 501,000 (845) 500,155
Capital contributions................................. 181,500 -- 181,500
Net loss.............................................. -- (10,685) (10,685)
-------- -------- --------
Balance at December 31, 1997............................... $682,500 $(11,530) $670,970
======== ======== ========
</TABLE>
See accompanying notes.
F-8
<PAGE> 129
THE RESORT AT SUMMERLIN, L.P.
STATEMENTS OF PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
GENERAL LIMITED DURING TOTAL
PARTNER PARTNERS DEVELOPMENT PARTNERSHIP
INTEREST INTERESTS STAGE INTERESTS
-------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at August 15, 1996 (inception)........ $ -- $ -- $ -- $ --
Capital contributions by partners........ 500,000 18,230,439 -- 18,730,439
Net loss................................. -- -- (84,458) (84,458)
-------- ----------- --------- -----------
Balance at December 31, 1996.................. 500,000 18,230,439 (84,458) 18,645,981
Capital contributions by partners........ 175,000 48,081,046 -- 48,256,046
Distribution of non-cash asset........... -- (1,181,202) -- (1,181,202)
Net loss................................. -- -- (614,288) (614,288)
-------- ----------- --------- -----------
Balance at December 31, 1997.................. $675,000 $65,130,283 $(698,746) $65,106,537
======== =========== ========= ===========
</TABLE>
See accompanying notes.
F-9
<PAGE> 130
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
---------------------------------------
CONSOLIDATED
RAS INC. RAS L.P. RAS INC.
--------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.............................................. $ (10,685) $ (614,288) $ (10,685)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation..................................... -- 112,680 112,680
Amortization of debt discount.................... -- 632 632
Equity in loss of limited partnership............ 6,143 -- --
Limited partners' interest....................... -- -- (608,145)
Changes in operating assets:
Accounts payable............................ 1,010 -- 1,010
Interest receivable......................... -- (24,167) (24,167)
--------- ------------ ------------
Net cash used in operating activities................. (3,532) (525,143) (528,675)
INVESTING ACTIVITIES
Acquisition of property and equipment................. -- (3,829,245) (3,829,245)
Preopening costs...................................... -- (1,637,360) (1,637,360)
Increase in construction and preopening payables...... -- 701,313 701,313
Investment in licensing costs......................... -- (50,000) (50,000)
Investment in option fee.............................. -- (597,312) (597,312)
Investment in The Resort at Summerlin, L.P. .......... (175,000) -- --
--------- ------------ ------------
Net cash used in investing activities................. (175,000) (5,412,604) (5,412,604)
FINANCING ACTIVITIES
Capital contributions................................. 182,500 -- 182,500
Capital contribution from General Partner............. -- 175,000 --
Capital contributions from limited partners........... -- 45,787,128 45,787,128
Issuance of First Mortgage Notes...................... -- 60,000,000 60,000,000
Issuance of Senior Subordinated Notes................. -- 100,000,000 100,000,000
Debt issuance costs................................... -- (12,136,721) (12,136,721)
Increase in restricted cash........................... -- (12,400,000) (12,400,000)
--------- ------------ ------------
Net cash provided by financing activities............. 182,500 181,425,407 181,432,907
--------- ------------ ------------
Net change in cash and cash equivalents............... 3,968 175,487,660 175,491,628
Cash and cash equivalents at beginning of year........ -- -- --
--------- ------------ ------------
Cash and cash equivalents at end of year.............. $ 3,968 $175,487,660 $175,491,628
========= ============ ============
SUPPLEMENTAL INFORMATION
Preopening costs incurred and paid by SCA on behalf of $ -- $ 2,293,918 $ 2,293,918
The Resort at Summerlin, L.P. ......................
Distribution of non-cash asset........................ -- 1,181,202 1,181,202
Accrued debt issuance costs........................... -- 425,000 425,000
</TABLE>
See accompanying notes.
F-10
<PAGE> 131
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1996
------------------------------------------------
CONSOLIDATED
RAS INC. RAS L.P. RAS INC.
------------ --------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.............................................. $ (845) $ (84,458) $ (845)
Adjustments to reconcile net loss to net cash used in
operating activities:
Equity in loss of limited partnership............ 845 -- --
Limited partners' interest....................... -- -- (83,613)
--------- ------------ ------------
Net cash used in operating activities................. -- (84,458) (84,458)
INVESTING ACTIVITIES
Acquisition of property and equipment................. -- (17,154,547) (17,154,547)
Preopening costs...................................... -- (551,016) (551,016)
Investment in option fee.............................. -- (583,900) (583,900)
Investment in The Resort at Summerlin, L.P. .......... (500,000) -- --
--------- ------------ ------------
Net cash used in investing activities................. (500,000) (18,289,463) (18,289,463)
FINANCING ACTIVITIES
Capital contributions................................. 500,000 -- 500,000
Capital contribution from General Partner............. -- 500,000 --
Capital contributions from limited partners........... -- 17,873,921 17,873,921
--------- ------------ ------------
Net cash provided by financing activities............. 500,000 18,373,921 18,373,921
--------- ------------ ------------
Net change in cash and cash equivalents............... -- -- --
Cash and cash equivalents at beginning of period...... -- -- --
--------- ------------ ------------
Cash and cash equivalents at end of period............ $ -- $ -- $ --
========= ============ ============
SUPPLEMENTAL INFORMATION
Preopening costs incurred and paid by SCA on behalf of
The Resort at Summerlin, L.P. ...................... $ -- $ 356,518 $ 356,518
</TABLE>
See accompanying notes.
F-11
<PAGE> 132
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1997
------------------------------------------------
CONSOLIDATED
RAS INC. RAS L.P. RAS INC.
---------- ------------------ --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss........................................... $(11,530) $ (698,746) $ (11,530)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation.................................. -- 112,680 112,680
Amortization of debt discount................. -- 632 632
Equity in loss of limited partnership......... 6,988 -- --
Limited partners' interest.................... -- -- (691,758)
Changes in operating assets and liabilities:
Accounts payable......................... 1,010 -- 1,010
Interest receivable...................... -- (24,167) (24,167)
-------- ---------------- ------------
Net cash used in operating activities.............. (3,532) (609,601) (613,133)
INVESTING ACTIVITIES
Acquisition of property and equipment.............. -- (20,983,792) (20,983,792)
Preopening costs................................... -- (2,188,376) (2,188,376)
Increase in construction and preopening payables... -- 701,313 701,313
Investment in The Resort at Summerlin, L.P. ....... (675,000) -- --
Investment in licensing costs...................... -- (50,000) (50,000)
Investment in option fee........................... -- (1,181,212) (1,181,212)
-------- ---------------- ------------
Net cash used in investing activities.............. (675,000) (23,702,067) (23,702,067)
FINANCING ACTIVITIES
Capital contributions.............................. 682,500 -- 682,500
Capital contribution from General Partner.......... -- 675,000 --
Capital contributions from limited partners........ -- 63,661,049 63,661,049
Issuance of First Mortgage Notes................... -- 60,000,000 60,000,000
Issuance of Senior Subordinated Notes.............. -- 100,000,000 100,000,000
Debt issuance costs................................ -- (12,136,721) (12,136,721)
Increase in restricted cash................... -- (12,400,000) (12,400,000)
-------- ---------------- ------------
Net cash provided by financing activities.......... 682,500 199,799,328 199,806,828
-------- ---------------- ------------
Net change in cash and cash equivalents............ 3,968 175,487,660 175,491,628
Cash and cash equivalents at beginning of period... -- -- --
-------- ---------------- ------------
Cash at end of period.............................. $ 3,968 $ 175,487,660 $175,491,628
======== ================ ============
SUPPLEMENTAL INFORMATION
Preopening costs incurred and paid by SCA on behalf $ -- $ 2,650,436 $ 2,650,436
of The Resort at Summerlin, L.P. ................
Distribution of non-cash asset..................... -- 1,181,202 1,181,202
Accrued debt issuance costs........................ -- 425,000 425,000
</TABLE>
See accompanying notes.
F-12
<PAGE> 133
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Resort at Summerlin, Limited Partnership ("RAS L.P.") is majority owned by
Swiss Casinos of America, Inc., formerly known as Seven Circle Gaming
Corporation ("SCA"). It was formed on August 15, 1996 for the purpose of
acquiring land and developing a casino resort in the Summerlin master planned
community in Las Vegas, Nevada ("Summerlin"). The Resort at Summerlin, Inc.
("RAS Inc.") is a wholly-owned subsidiary of SCA and serves as general partner
of RAS L.P. The ownership percentages in RAS L.P. of RAS Inc., SCA and
unaffiliated investors are 1.00%, 91.26% and 7.74%, respectively. RAS L.P.
allocates earnings and losses to the partners in accordance with these
percentages.
RAS L.P. purchased 54.5 acres of land located in Summerlin on which it is
developing and plans to operate a resort facility (the "Resort"), to include a
casino, hotel, conference center, spa, restaurants, and retail center. The land
is zoned for gaming, and the Las Vegas City Council has granted the special use
permit required to develop the proposed facility.
RAS L.P. and RAS Inc. (collectively the "Companies") are development stage
companies as they are devoting substantially all of their efforts to develop the
Resort. The Companies have no current source of income and do not anticipate any
material amounts until such time as the Resort is operational. The Resort is
expected to open for business in April 1999.
BASIS OF PRESENTATION
As prescribed by Statement of Position 78-9, Accounting for Investments in Real
Estate Ventures, RAS Inc.'s indirect ownership in RAS L.P. through SCA and its
direct 1% general partnership investment constitutes a controlling interest and
is therefore considered a subsidiary requiring consolidation in the financial
statements of RAS Inc. RAS Inc.'s sole business activity at this time is its 1%
general partnership interest in RAS L.P. The consolidated RAS Inc. financial
statements include the following adjusting entries:
- Elimination of RAS Inc.'s investment in RAS L.P.
- Reclassification of the 99% limited partnership interests in RAS L.P. to
minority interest within the balance sheet.
- Allocation of 99% of the net losses of RAS L.P. to the limited partners
and the elimination of RAS Inc. equity interest in the losses of RAS L.P.
CASH AND CASH EQUIVALENTS
Cash equivalents are highly liquid debt instruments with a maturity of three
months or less when purchased. Cash equivalents are carried at cost which
approximates fair value.
RESTRICTED CASH
Restricted cash consists of cash held in escrow for future payment of interest
incurred on the First Mortgage Notes (see Note 2) during the first five quarters
following the opening of the Resort. Use of the escrow cash for each interest
payment is subject to various financial tests. Any unused cash at the end of the
five quarter period must be applied to the outstanding principal balance on the
notes.
CONSTRUCTION IN PROGRESS
Expenditures incurred for the design and construction of the Resort have been
capitalized as construction in progress. These amounts are expected to be
reclassified to buildings upon completion of the facility and will be
depreciated over the useful life of the asset.
F-13
<PAGE> 134
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
DEPRECIATION
Property and equipment are stated at cost and are depreciated on a straight-line
basis over the following estimated useful lives:
<TABLE>
<S> <C>
Buildings................................................... 30 years
3-7 years
Furniture, fixtures and equipment...........................
</TABLE>
DEBT DISCOUNT AND ISSUANCE COSTS
Debt discount and issuance costs are capitalized and amortized to expense based
on the terms of the related debt agreements using the effective interest method
or a method which approximates the effective interest method.
PREOPENING COSTS
Development costs incurred by RAS L.P. are capitalized and will be charged to
expense at the commencement of operations. These costs include legal fees,
personnel, travel, and other costs related to the development of the Resort.
LICENSING COSTS
RAS L.P. capitalizes certain license costs required for the operation of the
casino, hotel and restaurants. These costs will be amortized over the term of
the license (15 years for the hotel license), commencing with the opening of the
Resort.
EXPENDITURES INCURRED BY SCA
SCA incurs various expenditures on behalf of RAS L.P. which are reflected as
contributed capital on the books of RAS L.P. These amounts primarily relate to
salaries and personnel costs of employees who have devoted a portion of their
time to the development of the Resort. During 1997 and 1996, these expenditures
were $2,293,918 and $356,518, respectively. In accordance with the accounting
policies noted above, RAS L.P. capitalized a portion of these costs as
preopening costs and expensed amounts relating to general and administrative
activities.
CAPITALIZATION OF INTEREST
RAS L.P. capitalizes interest costs on amounts expended on capital projects
based upon the weighted average interest costs of borrowings outstanding during
the period of construction. During the year ended December 31, 1997, RAS L.P.
capitalized interest costs of $6,932 as construction in progress.
INCOME TAXES
RAS L.P. is a limited partnership. Accordingly, no provision for federal or
state income taxes was recorded because any taxable income or loss is included
in the income tax returns of the partners.
SCA includes RAS Inc. in its consolidated state and federal tax returns. During
1996 and 1997, RAS Inc. has had minimal operating losses on both a tax and book
basis. However, the utilization of these losses against future earnings is
uncertain and all deferred tax assets will be fully reserved until such time as
the earnings have been realized.
F-14
<PAGE> 135
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and the accompanying
notes. Actual results could differ from those estimates.
2. LONG-TERM DEBT
Long-term debt is comprised of the following:
<TABLE>
<S> <C>
First Mortgage Notes due 2004............................... $ 60,000,000
Senior Subordinated Pay-in-Kind Notes due 2007.............. 100,000,000
Original issue discount................................ (5,868,933)
------------
94,131,067
------------
Total long-term debt........................................ $154,131,067
============
</TABLE>
On December 31, 1997, the Companies issued, as joint and several co-obligors,
$100.0 million of First Mortgage Notes due March 31, 2004 (the "Mortgage Notes")
of which $60.0 million was drawn at closing and $100.0 million of Senior
Subordinated Notes due 2007 (the "Senior Subordinated Notes"). The Mortgage
Notes Credit Agreement (the "Credit Agreement") and the Senior Subordinated
Notes Indenture (the "Indenture") contain various covenants and restrictions as
more fully described below.
MORTGAGE NOTES
Prior to the Resort opening for business, at the option of the Companies,
interest on the Mortgage Notes will accrue at the London Interbank Offered Rate
("LIBOR") for one or three month periods plus 4% or at the Base Rate (higher of
Federal Reserve prime rate or federal funds rate plus one half of 1%) plus 3%.
The interest rate was established at 11.5% on December 31, 1997 and subsequently
adjusted to 9.7% in January 1998. Interest is payable on the last business day
of each calendar quarter for Base Rate tranches and at the end of the applicable
interest period but no less frequently than quarterly for LIBOR tranches.
Subsequent to the opening of the Resort, the percentage above LIBOR or the base
rate reference rates will decrease based on the debt ratios of RAS L.P. The
$40.0 million of unissued notes can be drawn in increments of at least $10.0
million each, on one or more quarter ends from March 31, 1998 through March 31,
1999.
The Mortgage Notes are secured by a first perfected security interest in all
assets comprising the Resort, including all real and personal property, all
intangibles and all furniture, fixtures and equipment, together with title
insurance. In addition, $12.4 million was deposited in an interest escrow
account for the benefit of the Mortgage Note holders, which will support the
interest payment obligations during the five fiscal quarters following the
opening of the Resort (the "Commencement Date"). This amount has been reflected
as restricted cash on the accompanying balance sheet.
F-15
<PAGE> 136
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. LONG-TERM DEBT -- (CONTINUED)
Prior to the conclusion of construction, the Companies anticipate drawing the
full amount of the Mortgage Notes. Scheduled maturities of the Mortgage Notes
will be as follows (in millions):
<TABLE>
<S> <C>
1998........................................................ $ --
1999........................................................ --
2000........................................................ 12.5
2001........................................................ 14.5
2002........................................................ 19.0
Thereafter.................................................. 54.0
------
$100.0
======
</TABLE>
An amount equal to 75% of the first $15.0 million of excess cash flow, as
defined in the Credit Agreement, and 25% of the excess cash flow above $15.0
million is due annually in addition to the above amounts.
The Credit Agreement contains certain covenants including those restricting
additional indebtedness, liens, change of business, sale and purchase of assets,
mergers and consolidations, investments thereafter with affiliates and financial
covenants. At December 31, 1997, management believes the Companies are in
compliance with all covenants.
SENIOR SUBORDINATED NOTES
The Note Issuers have issued 100,000 units consisting of $1,000 principal amount
of 13% Senior Subordinated Notes due December 15, 2007 and an L.P. Warrant,
which can be exchanged for a Corporate Warrant at the purchaser's election. RAS
L.P. issued the L.P. Warrants and RAS Warrant Co. ("Warrant Co.") issued the
Corporate Warrants (both warrants collectively referred to as the "Note
Warrants"). Warrant Co. is a wholly owned subsidiary of SCA and at December 31,
1997, Warrant Co. has one share of common stock outstanding from a total of
100,001 authorized shares (see "Warrants" below). The Senior Subordinated Notes
are unsecured and subordinated in right of payment to all existing and future
senior indebtedness of the Note Issuers, including the Mortgage Notes.
Interest at the rate of 13% per annum of the principal is payable semiannually
beginning in June 1998. The interest is payable either in cash or in additional
Senior Subordinated Notes at the option of RAS L.P. through June 1999, and
thereafter is payable in cash. In addition to the 13% coupon rate on the Senior
Subordinated Notes, RAS L.P. accrues additional interest expense of 7% for a
total of 20% (see "Warrants" below).
On or after December 15, 2002, the Senior Subordinated Notes may be redeemed at
the Companies' option in whole or in part at face value plus accrued and unpaid
interest at the time of redemption. In addition, at any time prior to December
15, 2000, the Companies may redeem up to 35% of the aggregate principal with the
cash proceeds received from one or more public equity offerings at a redemption
price equal to 113% of the principal amount, provided that at least $65.0
million of the original principal amount remains outstanding immediately after
the redemption.
If the Nevada Gaming Commission (the "Commission") or the Nevada State Gaming
Control Board (the "Board") (each a "Nevada Gaming Authority" or together the
"Nevada Gaming Authorities") requires that a holder or beneficial holder of the
Senior Subordinated Notes must be licensed, qualified or found suitable, and if
the holder fails to apply or is not licensed, the Companies have the option to
redeem such Senior Subordinated Notes, at a redemption price as defined in the
Indenture.
By April 30, 1998, the Companies are required to file a registration statement
with respect to an offer to exchange the Senior Subordinated Notes for a series
of subordinated notes with terms substantially identical which will be
registered with the Securities and Exchange Commission.
F-16
<PAGE> 137
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. LONG-TERM DEBT -- (CONTINUED)
The restrictive covenants relating to the Senior Subordinated Notes will limit
the incurrence of additional indebtedness, the payment of dividends on and the
redemption of certain subordinated obligations, investments, sale of assets and
subsidiary stock, transactions with affiliates and consolidations, mergers and
transfers of all or substantially all the assets of the Companies. At December
31, 1997, management believes the Companies are in compliance with all
covenants.
WARRANTS
Each L.P. Warrant will entitle the holder to acquire on or after December 31,
1997 and before the expiration date of December 15, 2007, one L.P. Partnership
Interest representing 0.00008% of the total partnership interest in RAS L.P. at
a price per L.P. Warrant of $0.01, subject to the provisions of the partnership
agreement and adjustments from time to time upon the occurrence of certain
changes in the terms of the partnership interests, distributions, and certain
issuances of options or convertible securities. Holders of L.P. Warrants will
not by virtue of being such holders have any rights as limited partners of RAS
L.P.
Each Corporate Warrant will entitle the holder to acquire, on the exercise date
and prior to December 15, 2007, one share of common stock of Warrant Co. at a
price of $0.01 per share, subject to certain adjustments from time to time upon
the occurrence of certain changes in the Common Stock of Warrant Co. Upon the
exercise of a Corporate Warrant, Warrant Co. will exercise an L.P. Warrant in
RAS L.P. entitling it to the ownership percentage in RAS L.P. discussed above.
Holders of Corporate Warrants will not, by virtue of being such holders, have
any rights as stockholders of Warrant Co. As of December 31, 1997, all warrants
outstanding were Corporate Warrants.
In the event that any existing limited partner proposes to sell or otherwise
transfer at least 15% of the total L.P. Partnership Interests, the holders of
the Note Warrants and L.P. Partnership interests shall have the right to require
such existing limited partner to cause the proposed purchaser to purchase, on
the same terms and conditions, a percentage of the number of Note Warrants and
the L.P. Partnership interests owned by each such holder.
In the event that any existing limited partner proposes to sell or transfer any
L.P. Partnership Interests aggregating 51% or more of the total L.P. Partnership
Interests, the existing Limited Partner shall have the right to require the
holders of the Note Warrants and L.P. Partnership interests to sell on the same
terms and conditions from each of them a percentage of the number of Note
Warrants and L.P. Partnership Interests owned by each such holder.
If RAS L.P. has not completed an initial public equity offering of at least
$50.0 million of gross proceeds with respect to the L.P. Partnership Interests
on or before December 31, 2005, each holder of the Note Warrants will have, for
a 30-day period beginning on April 15, 2006, or if the Mortgage Notes are
prepaid prior to their maturity date, beginning on April 15, 2003, the one-time
right to require RAS L.P. to purchase the Note Warrants at the takeout price,
described below. RAS L.P. will have a one-time right, for a 30-day period
beginning on October 15, 2006, or if the Mortgage Notes are prepaid prior to
their maturity date, beginning on October 15, 2003, to purchase the Note
Warrants on a pro rata basis, for a purchase price equal to the takeout price.
The takeout price is defined as the greater of:
- the value of the Note Warrants as determined by a formula based on eight
times earnings before interest, income taxes, depreciation and
amortization ("EBITDA") for the fiscal year ending December 31, 2005 or
if the Mortgage Notes are prepaid, for the fiscal year ending December
31, 2003; or
- the value of the Note Warrants as determined by a formula based on eight
times the average EBITDA for each of the fiscal years ending December 31,
2003, 2004, and 2005, or if the Mortgage Notes are prepaid, December 31,
2001, 2002, and 2003; or
F-17
<PAGE> 138
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. LONG-TERM DEBT -- (CONTINUED)
- an amount necessary to cause the Senior Subordinated Notes and the Note
Warrants to create a bond equivalent internal rate of return of 20% from
the issue date to the date of purchase.
RAS L.P. records interest expense at a total rate of 20% to account for the put
option. Interest in excess of the stated Senior Subordinated Notes will be
credited to warrant liability and either be settled in the terms above or upon
the exercise of the warrants.
Pursuant to the Nevada Gaming Act, RAS L.P. may not issue an L.P. Partnership
Warrant Interest to Warrant Co. or any holder of a partnership warrant without
the prior approval, licensing and registration of Warrant Co. or such holder as
a limited partner in RAS L.P. by the Nevada Gaming Authorities.
3. LAND PURCHASE AND OPTION AGREEMENT
On May 22, 1996, Seven Circle Resorts, Inc. ("SCR"), an affiliated company,
executed a Purchase and Option Agreement (the "Purchase Agreement") to purchase
approximately 54.5 acres of property ("Sale Parcel") and to secure an option to
acquire approximately 22 additional acres of property ("Option Parcel") in Las
Vegas, Nevada, to construct and operate a resort hotel and casino. SCR assigned
the Purchase Agreement to RAS L.P. on August 15, 1996.
LAND PURCHASE AGREEMENT
On August 15, 1996, RAS L.P. closed on the purchase of the Sale Parcel for
$16,620,000. On January 7, 1998, RAS L.P. commenced grading and construction on
the site having substantially complied with all conditions outlined in the
Purchase Agreement.
OPTION AGREEMENT
On August 15, 1996, RAS L.P. executed an option agreement ("Option Agreement")
paying $583,900 for the right to purchase the Option Parcel. The Option
Agreement is valid until August 15, 2000.
The option purchase price is $5,839,000, plus an increase each anniversary date
equal to inflation for the previous year. On the subsequent anniversary dates of
the Option Agreement, RAS L.P. will be required to pay an additional option fee
equal to 10% of the purchase price then in effect.
The amount of each option fee that exceeds the original option fee of $583,900
will be credited towards the option purchase price at closing. RAS L.P. can
allow the option to lapse by failing to make an annual option fee payment.
On August 8, 1997, RAS L.P. paid and capitalized the second option fee of
$597,312.
On December 27, 1997, RAS L.P. assigned the Option Agreement to SCA through a
preferential distribution. A new company will be established to develop the
option parcel. Any carried interest held by SCA in the Option Parcel development
company and any other economic benefit derived from the Option Parcel will be
shared by the Partners based on their current ownership interests in RAS L.P.
4. COMMITMENTS AND CONTINGENCIES
LICENSING
As a condition of the land Purchase Agreement, RAS L.P., or an affiliate, was
required to obtain a Nevada gaming license prior to the commencement of
construction of the facility (see "Land Purchase Agreement" above). Seven Circle
Resorts of Nevada, Inc. ("SCRN"), an affiliated company, was formed for this
purpose.
Effective September 5, 1997, the Commission granted a distributor's gaming
license to SCRN. The receipt of this gaming license indicates the Board and the
Commission have found SCRN and its key principals suitable.
F-18
<PAGE> 139
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
In order to operate a casino, RAS L.P. will have to obtain a nonrestricted
gaming license, which it intends to apply for during the construction period. In
addition to findings of suitability, the receipt of a nonrestricted gaming
license requires the review by the Board and the Commission of several aspects
of the proposed casino, including the source of funds, location, internal
controls, surveillance systems and operating procedures. The Board and
Commission will also be asked to act upon the suitability and/or license certain
key executives and other investors in the nonrestricted gaming operations.
Because of the common ownership and control shared by SCRN and RAS L.P.,
management believes the granting of SCRN's distributor's license has increased
the likelihood that RAS L.P.'s nonrestricted license application will be
approved.
In the event RAS L.P. does not obtain a nonrestricted gaming license due to the
ownership by one or more of the minority partners, the other partners have the
right to purchase the noncomplying partner's ownership interest, thereby
enabling receipt of the gaming license.
CONSTRUCTION AGREEMENT
RAS L.P. executed a construction contract for the Resort on the basis of the
cost of work plus the fee payable to the general contractor, with a guaranteed
maximum price of $133 million. The construction contract contains liquidated
damage clauses assessable against the general contractor for each day that the
Resort is not completed by the date set for final completion, subject to certain
conditions. Management estimates the effective date for liquidated damages to be
April 23, 1999.
ROYALTY AGREEMENT
RAS L.P. is subject to a royalty agreement under which it will pay a royalty fee
of $1 million in each of the first five years commencing at the earlier of the
opening of the hotel and casino operations or 18 months following commencement
of construction. The royalty agreement and a related golf course agreement will
enable RAS L.P. to use the Summerlin name and will provide RAS L.P. with up to
50% of the tee times on the adjacent Tournament Players Club at the Canyons golf
course. The royalty fee will increase on each fifth anniversary thereafter by an
amount equal to 15% of the annual amount paid in the preceding five-year period.
RAS L.P. has the right to secure up to 75% of the tee times by paying an
additional $125,000 per year.
HOTEL FRANCHISE LICENSE AGREEMENT
On December 16, 1997, RAS L.P. entered into a franchise license agreement. The
agreement gives RAS L.P. the right to operate under the name of the franchisor,
and to use its trade name, trademarks and systems in connection with nongaming
operations.
The term of the license is for 15 years. RAS L.P. has the right to terminate the
agreement effective December 31, 2005 or December 31, 2010 if the franchisor has
not met certain numbers of hotels or guest rooms under contract. The franchisor
will provide access to its central reservation system in order to facilitate
worldwide reservations at the hotel, in addition to providing marketing
services. The franchisor will provide training to the employees with respect to
the reservation and property management system.
RAS L.P. will pay the following fees:
- Fixed fee, currently $200 per room per annum.
- Variable fee of 3% of gross room revenue derived from reservations made
through the central reservation system.
- Continuing fee of 1.75% of the hotel's gross revenues, as defined.
- A marketing fee of 1.5% of the hotel's gross revenues, as defined.
- Certain incidental program costs.
F-19
<PAGE> 140
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
FUTURE DEVELOPMENTS
RAS L.P. has negotiated the right of first offer with the master developer of
Summerlin to develop an additional four designated gaming sites in Summerlin. In
the event that RAS L.P. cannot finance the development of a gaming site under
the Credit Agreement or the Indenture, RAS L.P. has the ability to assign the
rights to SCA or an affiliate.
CASINO LEASE
On August 15, 1996, SCRN and RAS L.P. entered into a lease ("Casino Lease")
whereby SCRN will rent casino space from RAS L.P. beginning on the first day of
operations in the event RAS L.P. has not yet obtained a nonrestricted gaming
license (see "Licensing" above for other remedies available to RAS L.P. in the
event a nonrestricted gaming license is not obtained). The lease provides for
annual rental payments of $2.4 million, prorated monthly. The lease will
terminate upon the earlier of (i) the third anniversary of the commencement date
or (ii) the date upon which RAS L.P. is granted a nonrestricted gaming license.
MANAGEMENT FEES
Under the terms of RAS L.P.'s limited partnership agreement, RAS L.P. is to pay
RAS Inc. a monthly fee equal to 3% of monthly net revenues and 6% of EBITDA as
compensation for management services provided to RAS L.P. This fee cannot exceed
10% of net revenues in any given month and may be restricted by certain
covenants in the Credit Agreement and the Indenture.
5. YEAR 2000 ISSUE (UNAUDITED)
It is possible that some of the Companies' current computer software systems
have time-sensitive software that will recognize a date using "00" as 1900
instead of the year 2000. This could cause a system failure or miscalculations
causing disruptions in operations, including, among other things, the temporary
inability to process transactions or engage in similar normal business
activities. The Companies believe that they will be able to modify or replace
any affected portions of their software in order for their computer systems to
function properly with respect to dates in the year 2000. The Companies believe
any costs for the necessary modifications or replacements will be insignificant
to their operations.
F-20
<PAGE> 141
======================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH AN OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN ANY CHANGE IN THE ISSUERS SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... iv
Notice to Investors..................... iv
Prospectus Summary...................... 1
Risk Factors............................ 14
Use of Proceeds......................... 24
Capitalization.......................... 25
Selected Consolidated Financial Data.... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 28
Business................................ 30
Las Vegas Marketing and Industry........ 37
Regulation and Licensing................ 40
Management.............................. 47
Certain Transactions.................... 50
Ownership of Interests.................. 52
The Exchange Offer...................... 54
Description of the Notes................ 62
Description of Disbursement Agreement... 78
Insurance Requirements.................. 80
Additional Material Agreements.......... 81
Certain U.S. Federal Income Tax
Consequences.......................... 86
Plan of Distribution.................... 91
Book-Entry, Delivery and Form........... 92
Legal Matters........................... 94
Experts................................. 94
Glossary................................ 94
Index to Consolidated Financial
Statements............................ F-1
</TABLE>
UNTIL , 1998 (90 DAYS AFTER THE COMMENCEMENT OF THE EXCHANGE
OFFER), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER
OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
$100,000,000
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
OFFER TO EXCHANGE $1,000
IN PRINCIPAL AMOUNT OF
SERIES B 13% SENIOR SUBORDINATED PIK NOTES DUE 2007 REGISTERED UNDER THE
SECURITIES ACT FOR EACH $1,000 IN PRINCIPAL AMOUNT OF $100.0 MILLION PRINCIPAL
AMOUNT OUTSTANDING 13% SENIOR SUBORDINATED PIK NOTES DUE 2007
THE EXCHANGE AGENT FOR THE
EXCHANGE OFFER IS:
UNITED STATES TRUST COMPANY
OF NEW YORK
-------------------------
PROSPECTUS
-------------------------
, 1998
======================================================
<PAGE> 142
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.7502(1) of the Nevada General Corporation Law allows a Nevada
corporation to indemnify any person made or threatened to be made a party to any
action (except an action by or in the right of the corporation, a "derivative
action"), by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
against expenses including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acts in a good faith manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal proceeding, had no reasonable cause to believe that
his conduct was unlawful. Under Section 78.7502(2), a similar standard of care
applies to derivative actions, except that indemnification is limited solely to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of the action and court approval of the indemnification is required
where the person seeking indemnification has been found liable to the
corporation. In addition, Section 78.751(2) of the Nevada General Corporation
law allows a corporation to advance payment of indemnifiable expenses prior to
final disposition of the proceeding in question upon receipt of an undertaking
by or on behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the corporation. Any discretionary indemnification
made under Subsections 78.7502(1) or (2), may be made upon a determination that
such indemnification is proper in the circumstances as determined by the
stockholders, a majority of the Board of Directors at a meeting at which a
quorum of disinterested directors is present, or by written legal opinion.
Provisions relating to liability and indemnification of officers and
directors of RAS for acts by such officers and directors are contained in
Article IV of the Bylaws of RAS attached hereto as Exhibit 3.4 and incorporated
herein by reference. The Bylaws provide that RAS shall indemnify all directors,
officers, employees and agents of RAS to the fullest extent permitted by the
Nevada General Corporation Law, as amended from time to time. The Bylaws,
consistent with and to the extent allowable under Nevada General Corporation
Law, state, among other things, that upon the determination of the stockholders,
a majority of the Board of Directors at a meeting which a quorum of
disinterested directors is present, or by independent legal counsel written
opinion if a majority vote of a quorum consisting of disinterested directors
cannot be obtained: (1) RAS shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of RAS) by reason of the fact that he
or she is or was a director, officer, employee or agent of RAS or is or was
serving at the request of RAS as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement, actually and reasonably incurred by him or her in connection with
the action , suite or proceeding if he or she acted in good faith and in a
manner which he or she reasonably believe to be in or not opposed to the best
interests of RAS, and with respect to any criminal action nor proceeding, had no
reasonable cause to believed his or her conduct was unlawful; and (2) RAS shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of RAS
to procure a judgment in its favor by reason of the act that he or she is or was
a director, officer, employee or agent to RAS, or is or was serving at the
request of RAS as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorney fees, actually and reasonably
incurred by him or her in connection with the defense or settlement of the
action or suit if he or she acted in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interest of RAS and
except that no indemnification shall be made for any claim, issue or manner as
to which such person has been adjudged by a court of competent jurisdiction,
after exhaustion of all aspects there from, to be liable to RAS or for amounts
paid in settlement to RAS, unless and only to the extent that the court in which
the action or suit was brought or other court of competent jurisdiction
II-1
<PAGE> 143
determines upon application that in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity or such expenses as
the court deems proper.
The Bylaws further provide that RAS shall pay the expenses of officers and
directors as they are incurred and in advance of the final disposition upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by RAS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of RAS pursuant
to the foregoing provisions, or otherwise, RAS has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. See Item 22, "Undertakings."
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<C> <S>
2.1 December 22, 1997 Purchase Agreement.
3.1 Certificate of Limited Partnership of The Resort at
Summerlin, Limited Partnership.
3.2 Agreement of Limited Partnership, as amended, of The Resort
at Summerlin, Limited Partnership.
3.3 Articles of Incorporation of The Resort At Summerlin, Inc.
3.4 Bylaws of The Resort at Summerlin, Inc.
4.1 December 31, 1997 Indenture.
4.2 December 30, 1997 Exchange and Registration Rights
Agreement.
4.3 December 30, 1997 Registration Rights and Limited Partners'
Agreement.
4.4 December 30, 1997 Warrant Agreement for Partnership
Warrants.
4.5 December 30, 1997 Warrant Agreement for Corporate Warrants.
4.6 December 31, 1997 Disbursement Agreement.
4.7 December 31, 1997 Subordinated Notes Proceeds Accounts
Agreement.
4.8 December 31, 1997 Mortgage Notes Proceeds Account Agreement.
4.9 December 31, 1997 Interest Escrow Account Agreement.
4.10 December 31, 1997 Partnership Funds Account Agreement.
4.11 December 31, 1997 Global Note in the original principal
amount of $100.0 million.
4.12 Form of Partnership Warrants.
4.13 Form of Corporate Warrants.
5.1 Opinion of Baker & Hostetler LLP.*
10.1 December 22, 1997 Construction Contract.
10.2 December 16, 1997 License Agreement between RAS and Regent
Hotels Worldwide, Inc.
10.3 December 29, 1997 Architect Agreement between RAS and Paul
Steelman, Ltd.
10.4 August 15, 1996 Development Declaration and Option to
Repurchase between RAS and Howard Hughes Properties, Limited
Partnership.
10.5 August 15, 1996 Royalty Agreement between RAS and Howard
Hughes Properties, Limited Partnership.
10.6 December 22, 1997 Guaranty of Completion of J.A. Jones, Inc.
10.7 December 31, 1997 Credit Agreement.
10.8 December 30, 1997 Subordinated Notes Proceeds Agreement.
10.9 Golf Course Agreement.
</TABLE>
II-2
<PAGE> 144
<TABLE>
<C> <S>
10.10 January 13, 1998 Construction Management Contract.
23.1 Consent of Baker & Hostetler LLP (included in the opinion
filed as Exhibit 5.1 to this Registration Statement).*
23.2 Consent of Ernst & Young LLP.
23.3 Consent of United States Trust Company of New York (included
in Exhibit 25.1 to this Registration Statement).
24.1 Powers of Attorney (included on signature page of the
Registration Statement).
25.1 Statement of Eligibility and Qualification on Form T-1 under
the Trust Indenture Act of 1939 of United States Trust
Company of New York, as Trustee of the Indenture relating to
the 13.0% Senior Subordinated PIK Notes due 2007.
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULES.
None.
ITEM 22. UNDERTAKINGS.
The Registrants hereby undertake:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(4) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or
II-3
<PAGE> 145
in the aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20.0% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement.
Provided, however, that paragraphs (5)(i) and (5)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(5) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(6) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-4
<PAGE> 146
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be filed on its behalf by the
undersigned, thereupon duly authorized, in the City of Las Vegas, State of
Nevada, on April 8, 1998.
THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP
(Registrant)
By: The Resort at Summerlin, Inc.,
a Nevada corporation, its general
partner
By: /s/ BRIAN MCMULLAN
------------------------------------
Brian McMullan
Its: President and Chief Executive
Officer
(Principal Executive Officer)
By: /s/ JOHN TIPTON
------------------------------------
John Tipton
Senior Vice President, Chief
Financial
Officer and General Counsel
(Principal Financial Officer)
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Brian McMullan and John Tipton, and each of them,
with full power to act without the other, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities to sign any or all
amendments to this Registration Statement, including post-effective amendments,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents of any of them, or any substitute or substitutes,
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BRIAN MCMULLAN President/Chief Executive April 8, 1998
- ------------------------------------------------ Officer/Director (Principal Executive
Brian McMullan Officer and Member of the Board of
Directors of The Resort at Summerlin,
Inc., the general partner of The
Resort at Summerlin, Limited
Partnership)
</TABLE>
II-5
<PAGE> 147
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN TIPTON Senior Vice President/Chief Financial April 8, 1998
- ------------------------------------------------ Officer/General Counsel/Director
John Tipton (Principal Financial Officer and
Member of the Board of Directors of
The Resort at Summerlin, Inc., the
general partner of The Resort at
Summerlin, Limited Partnership)
/s/ JEFF SMITH Treasurer, Secretary and Financial April 8, 1998
- ------------------------------------------------ Controller (Principal Accounting
Jeff Smith Officer of The Resort at Summerlin,
Inc., the general partner of The
Resort at Summerlin, Limited
Partnership)
Chairman of the Board of Directors of , 1998
- ------------------------------------------------ The Resort at Summerlin, Inc., the
Hans Jecklin general partner of The Resort at
Summerlin, Limited Partnership
Member of the Board of Directors of , 1998
- ------------------------------------------------ The Resort at Summerlin, Inc., the
Christiane Jecklin general partner of The Resort at
Summerlin, Limited Partnership
/s/ JIM FONSECA Senior Vice President Gaming April 8, 1998
- ------------------------------------------------ Operations/Director of The Resort at
Jim Fonseca Summerlin, Inc., the general partner
of The Resort at Summerlin, Limited
Partnership
/s/ QUINTON BOSHOFF Senior Vice President Slot April 8, 1998
- ------------------------------------------------ Operations/Director of The Resort at
Quinton Boshoff Summerlin, Inc., the general partner
of The Resort at Summerlin, Limited
Partnership
</TABLE>
II-6
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be filed on its behalf by the
undersigned, thereupon duly authorized, in the City of Las Vegas, State of
Nevada, on April 8, 1998.
THE RESORT AT SUMMERLIN, INC.
(Registrant)
By: /s/ BRIAN MCMULLAN
------------------------------------
Brian McMullan
President and Chief Executive
Officer
(Principal Executive Officer)
By: /s/ JOHN TIPTON
------------------------------------
John Tipton
Senior Vice President, Chief
Financial
Officer and General Counsel
(Principal Financial Officer)
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Brian McMullan and John Tipton, and each of them,
with full power to act without the other, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities to sign any or all
amendments to this Registration Statement, including post-effective amendments,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents of any of them, or any substitute or substitutes,
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BRIAN MCMULLAN President/Chief Executive April 8, 1998
- ------------------------------------------------ Officer/Director (Principal Executive
Brian McMullan Officer)
/s/ JOHN TIPTON Senior Vice President/Chief Financial April 8, 1998
- ------------------------------------------------ Officer/General Counsel/Director
John Tipton (Principal Financial Officer)
/s/ JEFF SMITH Treasurer, Secretary and Financial April 8, 1998
- ------------------------------------------------ Controller (Principal Accounting
Jeff Smith Officer)
Chairman of the Board of Directors , 1998
- ------------------------------------------------
Hans Jecklin
Member of the Board of Directors , 1998
- ------------------------------------------------
Christiane Jecklin
/s/ JIM FONSECA Senior Vice President Gaming April 8, 1998
- ------------------------------------------------ Operations/Director
Jim Fonseca
/s/ QUINTON BOSHOFF Senior Vice President Slot April 8, 1998
- ------------------------------------------------ Operations/Director
Quinton Boshoff
</TABLE>
II-7
<PAGE> 1
Exhibit 2.1
$100,000,000
The Resort at Summerlin, Limited Partnership
The Resort at Summerlin, Inc.
RAS Warrant Co.
100,000 Units Representing
$100,000,000 Principal Amount of 13%
Senior Subordinated PIK Notes due 2007
with Warrants to Purchase Limited Partnership Interests
or Warrants to Purchase Common Stock in RAS Warrant Co.
PURCHASE AGREEMENT
December 22, 1997
NatWest Capital Markets Limited
135 Bishopsgate
London, EC2M 3XT
England
Ladies and Gentlemen:
The Resort at Summerlin, Limited Partnership, a Nevada limited
partnership ("RAS"), The Resort at Summerlin, Inc., a Nevada corporation ("RAS,
Inc." and, together with RAS, the "Note Issuers"), and RAS Warrant Co. ("Warrant
Co." and, with the Note Issuers, each an "Issuer" and, collectively, the
"Issuers"), hereby confirm their agreement with you (the "Initial Purchaser"),
as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Issuers propose to issue and sell to the Initial Purchaser
100,000 Units (the "Units") representing $100,000,000 principal amount of 13%
Senior Subordinated PIK Notes due 2007 (the "Notes") with, at the Initial
Purchaser's election, one Warrant (the "Partnership Warrants") each to purchase
one partnership interest in RAS representing a 0.08% partnership interest in the
Partnership (an "LP Partnership Interest") or one Warrant (the "Corporate
Warrants"), each to purchase one share of common stock of Warrant Co., no par
value per share (the "Common Stock"), to be issued upon exercise of the Warrants
(the "Warrant Co. Shares"). The only assets of Warrant Co. will be warrants in
RAS with the same terms as the Partnership Warrants (the "Warrant Co. LP
Warrants" and, together with the Partnership Warrants, the "LP Warrants"). The
LP Warrants are exercisable for 8% of RAS's total partnership interests on a
fully diluted basis. The Units, the Notes, the Partnership Warrants and the
Corporate Warrants are referred to herein collectively as the "Securities". The
Units are to be issued under a Unit Agreement (as defined below), the Notes are
to be issued under an indenture (the "Indenture") to be dated as of
<PAGE> 2
December 30, 1997 by and among the Note Issuers and United States Trust Company
of New York, as trustee (the "Trustee"), the Partnership Warrants are to be
issued under the LP Warrant Agreement (as defined below) and the Corporate
Warrants are to be issued under the Warrant Co. Warrant Agreement (as defined
below).
The Units will be offered and sold to the Initial Purchaser
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Issuers
have prepared a preliminary offering memorandum dated December 9, 1997 (the
"Preliminary Memorandum") and will prepare a final offering memorandum dated
December 22, 1997 (the "Final Memorandum"; the Preliminary Memorandum and the
Final Memorandum each herein being referred to as a "Memorandum") setting forth
or including a description of the terms of the Securities, the LP Partnership
Interests and the Warrant Co. Shares, the terms of the offering of the Units, a
description of the Issuers and any material developments relating to the Issuers
occurring after the date of the most recent historical financial statements
included therein.
The Note Issuers and the Initial Purchaser will enter into a
Registration Rights Agreement (the "Registration Rights Agreement") prior to or
concurrently with the issuance of the Notes. Pursuant to the Registration Rights
Agreement, under the circumstances and the terms set forth therein and subject
to all applicable gaming laws, the Note Issuers will agree to file with the
Securities and Exchange Commission (the "Commission"): (i) a registration
statement on Form S-4 (the "Exchange Offer Registration Statement") relating to
a registered Exchange Offer (as defined in the Registration Rights Agreement)
for the Notes under the Act to offer to the holders of the Notes the opportunity
to exchange their Notes for an issue of Notes substantially identical to the
Notes (except that (a) interest thereon will accrue from the last date on which
interest was paid on the Notes, or if no such interest has been paid, from
December 30, 1997, (b) such Notes will not contain restrictions on transfer, and
(c) such Notes will not contain provisions relating to an increase in their
interest rate under certain circumstances) that would be registered under the
Act (the "Exchange Notes"); or (ii) alternatively, in the event that applicable
interpretations of the Commission do not permit the Note Issuers to effect the
Exchange Offer or do not permit any holder of the Notes to participate in the
Exchange Offer, a shelf registration statement (the "Shelf Registration
Statement") to cover resales of Notes by such holders who satisfy certain
conditions relating thereto, including the provision of information in
connection with the Shelf Registration Statement.
2. Representations and Warranties. Each of the Issuers
represents and warrants to, and agrees with the Initial Purchaser that:
(a) Neither the Preliminary Memorandum as of the date thereof
nor the Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date (as defined
in Section 3 below) contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this Section 2(a) do not apply to statements or omissions made in reliance
upon and in conformity with information
2
<PAGE> 3
relating to the Initial Purchaser furnished to the Issuers in writing by the
Initial Purchaser expressly for use in the Preliminary Memorandum, the Final
Memorandum or any amendment or supplement thereto. The Final Memorandum conforms
in all material respects to the requirements of the Act and the rules and
regulations promulgated thereunder, as if it was a prospectus filed as part of a
registration statement on Form S-1 relating to the Securities.
(b) As of the Closing Date, each of the Issuers will have the
capitalization set forth in the Final Memorandum; all of the outstanding limited
partnership interests of RAS, all of the outstanding shares of capital stock of
RAS, Inc. and all of the outstanding shares of capital stock of Warrant Co. have
been, and as of the Closing Date will be, duly authorized and validly issued,
fully paid and nonassessable and not issued in violation of any preemptive or
similar rights; except as disclosed in the Final Memorandum, there will be no
(i) options, warrants or other rights to purchase from any of the Issuers, (ii)
agreements or other obligations of any of the Issuers to issue or (iii) other
rights to convert any obligation into, or exchange any securities for, shares of
capital stock of or ownership interests in any of the Issuers, as the case may
be, outstanding. None of the Issuers own, directly or indirectly, any capital
stock or any other equity or long-term debt securities or have any equity
interest in any firm, partnership, joint venture, limited liability company or
other entity, except in the case of RAS, Inc., the general partnership interest
in RAS.
(c) Each of the Issuers has been duly incorporated or
organized, is validly existing and is in good standing, as the case may be,
under the laws of its jurisdiction of incorporation or formation, as the case
may be, with all requisite power and authority to own its properties and conduct
its business as now conducted, and as described in the Final Memorandum; each of
the Issuers is duly qualified to do business as a foreign corporation or limited
partnership, as the case may be, in good standing in all other jurisdictions
where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not, individually or in the aggregate, have a material adverse effect on the
general affairs, management, business, condition (financial or otherwise),
prospects or results of operations of the Issuers or be inconsistent with the
financial forecast and assumptions to the financial forecast included in each
Memorandum (any such event, a "Material Adverse Effect").
(d) Each of the Note Issuers has all requisite power and
authority to execute, deliver and perform its obligations under the Notes. The
Notes have been duly and validly authorized by each of the Note Issuers and,
when executed by each of the Note Issuers and authenticated by the Trustee in
accordance with the provisions of the Indenture and, when delivered to the
Initial Purchaser in accordance with the terms of this Agreement, will have been
duly executed, issued and delivered and will constitute valid and legally
binding obligations of each of the Note Issuers, entitled to the benefits of the
Indenture and enforceable against each of the Note Issuers in accordance with
their terms, except that the enforcement thereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and to
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
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<PAGE> 4
(e) Each of the Note Issuers has all requisite power and
authority to execute, deliver and perform its obligations under the Exchange
Notes and the Private Exchange Notes (as defined in the Registration Rights
Agreement). The Exchange Notes and the Private Exchange Notes have been duly and
validly authorized by each of the Note Issuers and, when the Exchange Notes or
the Private Exchange Notes have been duly executed and delivered by each of the
Note Issuers and authenticated by the Trustee in accordance with the terms of
the Registration Rights Agreement and the Indenture, will constitute valid and
legally binding obligations of each of the Note Issuers, entitled to the
benefits of the Indenture, and will be enforceable against each of the Note
Issuers in accordance with their terms, except that the enforcement thereof may
be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and to general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
(f) Each of the Note Issuers has all requisite power and
authority to execute, deliver and perform their obligations under the Indenture.
The Indenture meets the requirements for qualification under the Trust Indenture
Act of 1939, as amended (the "TIA"). The Indenture has been duly and validly
authorized by each of the Note Issuers and, when executed and delivered by each
of the Note Issuers (assuming the due authorization, execution and delivery of
the Indenture by the Trustee), will constitute a valid and legally binding
obligation of each of the Note Issuers, enforceable against each of the Note
Issuers in accordance with its terms, except (i) that the enforcement thereof
may be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and to general principles of equity and the
discretion of the court before which any proceeding therefor may be brought and
(ii) as any rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations.
(g) Each of the Note Issuers has all requisite power and
authority to execute, deliver and perform its obligations under the Registration
Rights Agreement. The Registration Rights Agreement has been duly and validly
authorized by each of the Note Issuers and, when executed and delivered by each
of the Note Issuers, will constitute a valid and binding obligation of each of
the Note Issuers, enforceable against each of the Note Issuers in accordance
with its terms, except (i) that the enforcement thereof may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (ii) as any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(h) RAS has all requisite corporate power and authority to
execute, deliver and perform its obligations under the warrant agreement (the
"LP Warrant Agreement"), dated as of December 30, 1997, among RAS, SCGC and
United States Trust Company of New York, as warrant agent (the "LP Warrant
Agent"). The LP Warrant Agreement has been duly and validly authorized by RAS
and, when executed and delivered by RAS, will constitute a valid and legally
binding obligation of RAS, enforceable against RAS in accordance with its terms,
except (i) that the enforcement thereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors'
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<PAGE> 5
rights generally, and to general principles of equity and the discretion of the
court before which any proceeding therefor may be brought and (ii) as any rights
to indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(i) Each of RAS and Seven Circle Gaming Corporation ("SCGC")
has all requisite corporate power and authority to execute, deliver and perform
its obligations under the Registration Rights and Limited Partners' Agreement
(the "LP Registration Rights Agreement"), dated as of December 30, 1997, among
RAS, SCGC and United States Trust Company of New York. The LP Registration
Rights Agreement has been duly and validly authorized by RAS and SCGC and, when
executed and delivered by RAS and SCGC, will constitute a valid and legally
binding obligation of RAS and SCGC, enforceable against RAS in accordance with
its terms, except (i) that the enforcement thereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and to
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought and (ii) as any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws and
public policy considerations.
(j) Warrant Co. has all requisite corporate power and
authority to execute, deliver and perform its obligations under the warrant
agreement (the "Warrant Co. Warrant Agreement"), dated as of December 30, 1997,
between Warrant Co. and United States Trust Company of New York, as warrant
agent (the "Warrant Co. Warrant Agent"). The Warrant Co. Warrant Agreement has
been duly and validly authorized by Warrant Co. and, when the Warrant Co.
Warrant Agreement has been duly executed and delivered by Warrant Co., will
constitute a valid and legally binding obligation of Warrant Co., enforceable
against Warrant Co. in accordance with its terms, except (i) that the
enforcement thereof may be subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and to general principles of
equity and the discretion of the court before which any proceeding therefor may
be brought and (ii) as any rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public policy considerations.
(k) Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform its obligations under the unit
agreement (the "Unit Agreement"), dated as of December 30, 1997, among each of
the Issuers and United States Trust Company of New York, as unit agent (the
"Unit Agent"). The Unit Agreement has been duly and validly authorized by each
of the Issuers and, when the Unit Agreement has been duly executed and delivered
by each of the Issuers, will constitute a valid and legally binding obligation
of each of the Issuers, enforceable against each of the Issuers in accordance
with its terms, except (i) that the enforcement thereof may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (ii) as any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
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<PAGE> 6
(l) The Units have been duly authorized by each of the Issuers
and, when issued and delivered by each of the Issuers against payment therefor
by the Initial Purchaser in accordance with the terms of this Agreement and the
Unit Agreement, will constitute valid and legally binding obligations of each of
the Issuers, enforceable against each of the Issuers in accordance with their
terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(m) The LP Warrants have been duly authorized by RAS and, when
issued and delivered by RAS in accordance with the terms of this Agreement and
the LP Warrant Agreement, will constitute valid and legally binding obligations
of RAS, enforceable in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(n) The LP Partnership Interests have been duly and validly
authorized and validly reserved for issuance and when issued and paid for upon
exercise of the LP Warrants in accordance with the terms thereof, will be
validly issued and free of preemptive rights.
(o) The Corporate Warrants have been duly authorized by
Warrant Co. and, when issued and delivered by Warrant Co. in accordance with the
terms of this Agreement and the Warrant Co. Warrant Agreement, will constitute
valid and legally binding obligations of Warrant Co., enforceable in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor may
be brought.
(p) The Warrant Shares have been duly and validly authorized
and validly reserved for issuance and when issued and paid for upon exercise of
the Corporate Warrants in accordance with the terms thereof, will be validly
issued, fully paid, nonassessable and free of preemptive rights.
(q) Each of the Issuers has all requisite corporate or
partnership power and authority, as the case may be, to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized and has
been duly executed and delivered by each of the Issuers.
(r) No consent, approval, authorization or order of any
governmental agency or body (including the Nevada Gaming Commission (the "Nevada
Commission") and the Nevada State Gaming Control Board (the "Nevada Board")), or
third party, is required for the due execution, delivery and performance of this
Agreement, the Indenture, the Registration Rights Agreement, the LP Warrant
Agreement, the Warrant Co. Agreement, the LP Registration Rights Agreement and
the Unit Agreement or the issuance and sale by the Issuers of the Units to the
Initial Purchaser or the consummation of the transactions contemplated hereby or
thereby, except,
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<PAGE> 7
as may be required under state securities or "Blue Sky" laws in connection with
the purchase and resale of the Units by the Initial Purchaser, and except those
set forth in Exhibit A hereto and hereinafter referred to collectively as the
"Nevada Gaming Approvals".
(s) None of the Issuers is (i) in violation of its certificate
of incorporation, bylaws, or partnership agreement, as applicable (or similar
organizational document), (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to any of them or any of their
respective properties or assets, or (iii) in breach of or in default under (nor
has any event occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the terms or provisions of
any indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement or
instrument to which any of them is a party or to which any of them or their
respective properties or assets is subject (collectively, "Contracts") except
such violations, breaches or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect.
(t) The execution, delivery and performance by the Issuers, to
the extent they are a party, of this Agreement, the Indenture, the Registration
Rights Agreement, the LP Warrant Agreement, the Warrant Co. Warrant Agreement,
the Unit Agreement and the consummation by the Issuers of the transactions
contemplated hereby and thereby, and the fulfillment of the terms hereof and
thereof, and the retention by the Issuers of NatWest Capital Markets Limited
("NatWest") pursuant to those certain letter agreements (including the
engagement and indemnity letter agreements) dated as of December 5, 1997
(collectively, the "NatWest Engagement Letter") and NatWest's acting as
contemplated hereby and thereby, will not conflict with or constitute or result
in a breach of or a default under (or an event which with notice or passage of
time or both would constitute a default under) or violation of any of (i) the
terms or provisions of any Contract except such conflicts, breaches, defaults or
violations, that would not, individually or in the aggregate, have a Material
Adverse Effect, (ii) the certificates of incorporation, by-laws or partnership
agreement, as applicable (or similar organizational document) of any of the
Issuers, or (iii) any statute, judgment, decree, order, rule or regulation
applicable to any of the Issuers or any of its properties or assets, except to
the extent certain indemnification provisions may be unenforceable as contrary
to public policy and except such conflicts, breaches, defaults or violations
that would not, individually or in the aggregate, have a Material Adverse
Effect.
(u) The audited financial statements of the Note Issuers
included in the Preliminary Memorandum and the Final Memorandum present fairly
in all material respects the financial position, results of operations and cash
flows of such entities at the dates and for the periods to which they relate and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as otherwise stated therein. The summary
financial and statistical data in the Preliminary Memorandum and the Final
Memorandum present fairly in all material respects the information shown therein
and have been prepared and compiled on a basis consistent with the audited
financial statements included therein, except as otherwise stated therein. Ernst
& Young LLP is an independent public accounting firm within the meaning of the
Act and the rules and regulations promulgated thereunder.
(v) The financial forecasted information included in the
Preliminary
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<PAGE> 8
Memorandum and the Final Memorandum is based on good faith estimates and
assumptions believed by the Note Issuers to be reasonable as of the date hereof.
(w) There is not pending or, to the knowledge of any of the
Issuers, threatened any action, suit, proceeding, inquiry or investigation to
which any of the Issuers is a party, or to which the property or assets of any
of the Issuers are subject, before or brought by any court, arbitrator or
governmental agency or body which, if determined adversely to such Issuer would,
individually or in the aggregate, have a Material Adverse Effect or which seeks
to restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Units to be sold hereunder or the consummation of the
other transactions described in the Preliminary Memorandum and the Final
Memorandum.
(x) Except as described in paragraph (x) below, each of the
Issuers owns or possesses adequate licenses or other rights to use all material
patents, trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by it as
described in the Preliminary Memorandum and the Final Memorandum, and none of
the Issuers has received any notice of infringement of or conflict with (or
knows of any such infringement of or conflict with) asserted rights of others
with respect to any patents, trademarks, service marks, trade names, copyrights
or know-how which, if such assertion of infringement or conflict were sustained,
would, individually or in the aggregate, have a Material Adverse Effect.
(y) Each of the Issuers possesses, or will use its best
efforts to obtain, all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals listed on
Schedule 3 (collectively, the "Permits"), which schedule sets forth all Permits
presently required or necessary (i) to own or lease, as the case may be, or to
operate its respective properties, (ii) to commence construction and development
of The Resort at Summerlin (the "Resort Casino"), and (iii) to carry on its
respective businesses as now or proposed to be conducted as set forth in the
Preliminary Memorandum and the Final Memorandum; provided, that, prior to the
opening of the Resort Casino, RAS will be required under the Indenture to apply
for a nonrestricted Nevada gaming license, and a City of Las Vegas gaming
license and RAS, Inc. will be required to be registered and found suitable as an
intermediary company and be licensed as the general partner of RAS; each of the
Issuers has fulfilled and performed all of its obligations with respect to such
Permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit except where such
revocation, termination or impairment would not, individually or in the
aggregate, have a Material Adverse Effect; and none of the Issuers has received
any notice of any proceeding relating to revocation or modification of any such
Permit, except as described in the Final Memorandum and except where such
revocation or modification would not, individually or in the aggregate, have a
Material Adverse Effect.
(z) Since the date of the most recent financial statements
appearing in the Final Memorandum, except as described in the Final Memorandum,
(i) none of the Issuers has incurred any liabilities or obligations, direct or
contingent, or entered into or agreed to enter into any
8
<PAGE> 9
transactions or Contracts (written or oral) not in the ordinary course of
business which liabilities, obligations, transactions or Contracts could,
individually or in the aggregate, be material to the general affairs,
management, business, condition (financial or otherwise), prospects or results
of operations of such Issuer (a "Material Change"), (ii) none of the Issuers has
purchased any of its outstanding equity securities, nor declared, paid or
otherwise made any dividend or distribution of any kind on its equity securities
and (iii) other than as described in the Final Memorandum, there shall not have
been any change in the equity securities or long-term indebtedness of any of the
Issuers which could, individually or in the aggregate, constitute a Material
Change.
(aa) There has not occurred any Material Adverse Change, or,
to the knowledge of any Issuer, any development involving a prospective Material
Adverse Change, in the condition, financial or otherwise, or in the earnings,
business or operations of any of the Issuers, either individually or taken as a
whole, from that set forth in the Final Memorandum.
(bb) Each of the Issuers has filed all necessary federal,
state, local and foreign income and franchise tax returns, and has paid all
taxes shown as due thereon; and, other than tax deficiencies which an Issuer is
contesting in good faith, and for which such Issuer has provided adequate
reserves, there is no tax deficiency that has been asserted against any of the
Issuers.
(cc) The statistical and market-related data included in the
Final Memorandum are based on or derived from sources which are reliable and
believed to be accurate.
(dd) None of the Issuers or any agent acting on their behalf
has taken or will take any action that might cause this Agreement or the sale of
the Securities to violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System, in each case as in effect, or as the same may
hereafter be in effect, on the Closing Date.
(ee) Except as described in the Preliminary Memorandum and the
Final Memorandum, each of the Issuers has good and marketable title to all real
property and good title to all personal property described in the Preliminary
Memorandum and the Final Memorandum as being owned by it and good and marketable
title to any leasehold estate in the real and personal property described in the
Preliminary Memorandum and the Final Memorandum as being leased by it free and
clear of all liens, charges, encumbrances or restrictions, including the 54.5
acre site on which the Resort Casino will be constructed. All Contracts to which
any of the Issuers is a party or by which any of them is bound are valid and
enforceable against such Issuer.
(ff) There are no legal or governmental proceedings involving
or affecting any Issuer or any of their respective properties or assets which
would be required to be described in a prospectus pursuant to the Act that are
not described in the Preliminary Memorandum and the Final Memorandum, nor are
there any material Contracts or other documents which would be required to be
described in a prospectus pursuant to the Act that are not described in the
Preliminary Memorandum and the Final Memorandum.
(gg) Except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect (A) each of the Issuers is
in compliance with and not subject to liability under applicable Environmental
Laws (as defined below), (B) each of the
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<PAGE> 10
Issuers has made all filings and provided all notices required under any
applicable Environmental Law, and has and is in compliance with all Permits
required under any applicable Environmental Laws and each of them is in full
force and effect, (C) there is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the knowledge
of any of the Issuers, threatened against any of the Issuers under any
Environmental Law, (D) no lien, charge, encumbrance or restriction has been
recorded under any Environmental Law with respect to any assets, facility or
property owned, operated, leased or controlled by any of the Issuers, (E) none
of the Issuers has received notice that it has been identified as a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA") or any comparable state law,
(F) no property or facility of any of the Issuers is (i) listed or proposed for
listing on the National Priorities List under CERCLA or is (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information System
List promulgated pursuant to CERCLA, or on any comparable list maintained by any
state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, law
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials, into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(ii) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of hazardous materials, and (iii)
underground and above ground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
(hh) There is no strike, labor dispute, slowdown or work
stoppage with the employees of any of the Issuers which is pending or, to the
knowledge of any of the Issuers, threatened.
(ii) Each of the Issuers carries insurance in such amounts and
covering such risks as is adequate for the conduct of its business and the value
of its properties. None of the Issuers has received notice from any insurer or
agent of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance.
(jj) None of the Issuers has any material liability for any
prohibited transaction (within the meaning of Section 4975(c) of the Code or
Part 4 of Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (or an accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA) or any complete or partial
withdrawal liability (within the meaning of Section 4201 of ERISA) with respect
to any pension, profit sharing or other plan which is subject to ERISA, to which
any of the Issuers makes or ever has made a contribution and in which any
employee of the Issuers is or has ever been a participant. With respect to such
plans, each Issuer is in compliance in all material respects with all applicable
provisions of ERISA.
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(kk) Each of the Issuers (i) makes and keeps accurate books
and records and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability for its
assets, and (C) access to its assets is permitted only in accordance with
management's authorization.
(ll) None of the Issuers will be an "investment company" or
"promoter" or "principal underwriter" for an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
(mm) The Notes, the Exchange Notes, the Indenture, the Units,
the Unit Agreement, the LP Warrant Agreement, the Partnership Warrants, the LP
Partnership Interests, the Warrant Co. Warrant Agreement, the Corporate Warrants
and the Warrant Co. Shares will conform in all material respects to the
descriptions thereof in the Final Memorandum.
(nn) No holder of securities of the any of the Issuers will be
entitled to have such securities registered under the registration statements
required to be filed by the Issuers pursuant to the Registration Rights
Agreement other than as expressly permitted thereby.
(oo) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of each of the Issuers will exceed the sum of its stated
liabilities and identified contingent liabilities; none of the Issuers is, nor
will any of the Issuers be, after giving effect to the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, (a) left with unreasonably small capital with which to
carry on its business as it is currently or proposed to be conducted, (b) unable
to pay its debts (contingent or otherwise) as they mature or otherwise become
due or (c) otherwise insolvent.
(pp) None of the Issuers or any of their respective Affiliates
(as defined in Rule 501(b) of Regulation D under the Act) has directly, or
through any agent, (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any "security" (as defined in the Act) which
is or could be integrated with the sale of the Securities in a manner that would
require the registration under the Act of the Securities or (ii) engaged in any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Securities or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act. None of the Issuers has distributed and none of the Issuers will
distribute any offering material in connection with the offering of the
Securities other than the Final Memorandum and any Preliminary Memorandum. No
securities of the same class as the Securities have been issued and sold by any
of the Issuers within the six-month period immediately prior to the date hereof.
(qq) Assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 8 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial
Purchaser in the manner contemplated by this Agreement to register any of the
Securities under the Act or to qualify the Indenture under the TIA.
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(rr) No securities of any of the Issuers are of the same class
(within the meaning of Rule 144A as promulgated under the Act ("Rule 144A")) as
any of the Securities and listed on a national securities exchange registered
under Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer
quotation system.
(ss) None of the Issuers has taken, nor will any of them take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price of
the any of the Securities.
(tt) None of the Issuers, or any person acting on any of their
behalf (other than the Initial Purchaser) has engaged in any directed selling
efforts (as that term is defined in Regulation S under the Act ("Regulation S"))
with respect to the Securities; the Issuers and their respective Affiliates and
any person acting on any of their behalf (other than the Initial Purchaser or
any Affiliate of the Initial Purchaser) have complied with the offering
restrictions requirement of Regulation S.
(uu) Each of the Preliminary Memorandum and the Final
Memorandum, as of its respective date, contains all of the information that, if
requested by a prospective purchaser of the Notes, would be required to be
provided to such prospective purchaser to Rule 144A(d)(4) under the Act.
(vv) The Units, the Notes, the Partnership Warrants and the
Corporate Warrants satisfy the eligibility requirements of Rule 144A(d)(3) under
the Act.
(ww) None of the Issuers or, to the Issuers' knowledge, any
officer or director purporting to act on behalf of any of the Issuers has at any
time: (i) made any contributions to any candidate for political office, or
failed to disclose fully any such contributions, in violation of law, (ii) made
any payment of funds to, or received or retained any funds from, any state,
federal or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
allowed by applicable law, (iii) violated or is in violation of the Foreign
Corrupt Practices Act of 1977, (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment or (v) engaged in any transactions,
maintained any bank account or used any corporate funds except for transactions,
bank accounts and funds which have been and are reflected in the normally
maintained books and records of the Issuers.
(xx) Except as disclosed in any Memorandum, there are no
material outstanding loans or advances or material guarantees of indebtedness by
any of the Issuers to or for the benefit of any of the officers or directors of
any of the Issuers or any of the members of the families of any of them.
(yy) Neither any of the Issuers nor any affiliate of any of
the Issuers does business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Florida Statutes Section
517.075.
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(zz) None of the Issuers has engaged or retained any person,
other than NatWest, as the Initial Purchaser, or Hunter Capital Group, LLC, to
act as a financial advisor, underwriter or placement agent in connection with
the issuance of the Units and, except for the fees and expenses payable in
connection with the issuance of the Units as described in the Final Memorandum,
no person has the right to receive a financial advisory, underwriting,
placement, finder's or similar fees in connection with, or as a result of, the
issuance of the Units and the purchase of the Units by the Initial Purchaser or
the consummation of the other transactions contemplated hereby.
(aaa) On or prior to the date hereof, RAS has executed the
agreements listed in Section A of Schedule 2 hereto and, on or prior to the
Closing Date, RAS will have executed the agreements listed in Section B of
Schedule 2 hereto (collectively, the "Material Agreements"). RAS has all
requisite power and authority to execute, deliver and perform its obligations
under each of the Material Agreements. The Material Agreements have been, or in
the case of those listed in Section B of Schedule 2, will be by the Closing
Date, duly and validly authorized by RAS, constitute valid and legally binding
obligations of RAS, enforceable against RAS in accordance with their terms,
except that the enforcement hereof may be subject to (i) bankruptcy, insolvency,
reorganization or other similar laws now or hereafter in effect relating the
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
(bbb) Each of the Note Issuers has all requisite power and
authority to execute, deliver and perform its obligations under the Disbursement
Agreement, dated December 30, 1997, among the Note Issuers, National Westminster
Bank PLC, as the administrative agent for the holders of the First Mortgage
Notes due 2004 (the "First Mortgage Notes"), the Trustee and First Security
Trust Company of Nevada, as the disbursement agent (the "Disbursement
Agreement"). The Disbursement Agreement has been duly and validly authorized by
the Note Issuers, and, when executed and delivered by the Note Issuers, will
constitute a valid and legally binding obligation of the Note Issuers,
enforceable against the Note Issuers in accordance with its terms, except (i)
that the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and to general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought and (ii) as any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations.
(ccc) Each of the Note Issuers has all requisite power and
authority to execute and deliver and perform its obligations under the Credit
Agreement relating to the First Mortgage Notes, dated as of December 30, 1997,
among the Note Issuers, the financial institutions listed therein and National
Westminster Bank PLC, as the administrative agent (the "Credit Agreement"). The
Credit Agreement has been duly and validly authorized by the Note Issuers, and,
when executed and delivered by the Note Issuers, will constitute a valid and
legally binding obligation of the Note Issuers, enforceable against the Note
Issuers in accordance with its terms, except (i) that the enforcement hereof may
be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and to general principles of equity and the
discretion of the court
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before which any proceeding therefor may be brought and (ii) as any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(ddd) The statements contained in the Final Memorandum under
the headings "Description of Disbursement Agreement" and "Certain Material
Agreements", insofar as such statements constitute summaries of the Disbursement
Agreement and the Material Agreements, respectively, constitute fair summaries
of such agreements.
(eee) The Note Issuers will prior to the Closing Date
establish an account at First Security Trust Company of Nevada in the name of
"FIRST SECURITY TRUST COMPANY OF NEVADA AS COLLATERAL AGENT FOR THE BENEFIT OF
THE HOLDERS OF THE 13% SENIOR SUBORDINATED PIK NOTES DUE 2007" in which the net
proceeds of the Notes will be deposited (the "Subordinated Notes Proceeds
Account") pursuant to the Subordinated Notes Proceeds Account Agreement, dated
December 30, 1997, among the Note Issuers and First Security Trust Company (the
"Subordinated Notes Proceeds Account Agreement"). Each of the Note Issuers has
all requisite power and authority to execute, deliver and perform its
obligations under the Subordinated Notes Proceeds Account Agreement. The
Subordinated Notes Proceeds Account Agreement has been duly and validly
authorized by the Note Issuers and, when duly executed and delivered by the Note
Issuers, will constitute the valid and legally binding obligation of the Note
Issuers, enforceable against the Note Issuers in accordance with its terms,
except that the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and to general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(fff) The Subordinated Notes Proceeds Account Agreement
creates a legal and valid first priority, fully perfected security interest in
the Subordinated Notes Proceeds Account upon the deposit in such account and the
amounts and securities deposited therein for the benefit of the holders of the
Notes.
Any certificate signed by any officer of any Issuer and
delivered to the Initial Purchaser or to counsel for the Initial Purchaser shall
be deemed a joint and several representation and warranty by each of the Issuers
to the Initial Purchaser as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis
of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Issuers agree to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Issuers the number of Units set forth opposite its name on
Schedule 1 hereto at a price of $970 per Unit. One or more certificates in
definitive form for the Units that the Initial Purchaser has agreed to purchase
hereunder, and in such denomination or denominations and registered in such name
or names as the Initial Purchaser requests upon notice to the Issuers at least
36 hours prior to the Closing Date, shall be delivered by or on behalf of the
Issuers to the Initial Purchaser, against payment by or on behalf of the Initial
Purchaser of the purchase price therefor by wire transfer to such account or
accounts as the Company shall specify prior to the Closing Date, or by such
means as the parties hereto shall
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<PAGE> 15
agree prior to the Closing Date. Such delivery of and payment for the Units
shall be made at the offices of White & Case, 1155 Avenue of the Americas, New
York, New York at 10:00 A.M., New York time, on December 30, 1997, or at such
other place, time or date as the Initial Purchaser, on the one hand, and the
Issuers, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Issuers will
make such certificate or certificates for the Units available for inspection and
packaging by the Initial Purchaser at such place as designated by the Initial
Purchaser at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser
proposes to make an offering of the Units at the price and upon the terms set
forth in the Final Memorandum, as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company. Each of the Issuers covenants and
agrees with the Initial Purchaser that:
(a) Each of the Issuers will not amend or supplement the Final
Memorandum or any amendment or supplement thereto unless the Initial Purchaser
shall previously have been advised and furnished a copy of such amendment or
supplement for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchaser shall have consented (which
consent shall not be unreasonably withheld). Each of the Issuers will promptly,
upon the reasonable request of the Initial Purchaser or counsel for the Initial
Purchaser, make any amendments or supplements to the Preliminary Memorandum or
the Final Memorandum that may be necessary or advisable in connection with the
resale of the Securities by the Initial Purchaser.
(b) Each of the Issuers will cooperate with the Initial
Purchaser in arranging for the qualification of the Securities for offering and
sale under the securities or "Blue Sky" laws of which jurisdictions as the
Initial Purchaser may designate and will continue such qualifications in effect
for as long as may be necessary to complete the resale of the Securities;
provided, however, that in connection therewith, none of the Issuers or any
Subsidiary shall be required to qualify as a foreign corporation, partnership or
limited liability company, or to execute a general consent to service of process
in any jurisdiction or subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchaser of the Securities, any event occurs or
information becomes known as a result of which the Final Memorandum as then
amended or supplemented would, in the judgment of the Issuers or in the
reasonable opinion of their counsel include any untrue statement of a material
fact, or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, or
if for any other reason it is necessary at any time to amend or supplement the
Final Memorandum to comply with applicable law, the Issuers will promptly notify
the Initial Purchaser thereof and will prepare, at the expense of the Issuers,
an amendment or supplement to the Final Memorandum that corrects such statement
or omission or effects such compliance; provided, however, that the Issuers'
respective obligations hereunder shall not be applicable to the extent resale by
the Initial Purchaser may be
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<PAGE> 16
accomplished pursuant to a Registration Statement or Registration Statements (as
defined in the Registration Rights Agreement).
(d) The Issuers will, without charge, provide to the Initial
Purchaser and to counsel for the Initial Purchaser as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or supplement
thereto as the Initial Purchaser may reasonably request.
(e) Each of the Issuers will apply the net proceeds from the
sale of the Securities substantially as set forth under "Use of Proceeds" in the
Final Memorandum.
(f) So long as any of the Notes, Exchange Notes, Units, LP
Warrants or Corporate Warrants are outstanding, each of the Issuers will furnish
to the Initial Purchaser copies of all reports and other communications
(financial or otherwise) furnished by such Issuer to the Trustee, the holders of
the Notes, the Unit Agent, holders of the Units, the LP Warrant Agent, the
holders of the Partnership Warrants, the holders of LP Partnership Interests,
the Warrant Co. Warrant Agent, the holders of the Corporate Warrants and holders
of Warrant Co. Shares and copies of any reports or financial statements
furnished to or filed by any of the Issuers with the Commission or any national
securities exchange on which any class of securities of any of the Issuers may
be listed as soon as so filed or furnished.
(g) Prior to the Closing Date, each of the Issuers will
furnish to the Initial Purchaser, as soon as they have been prepared, a copy of
any unaudited interim financial statements of each of the Issuers for any period
subsequent to the period covered by the most recent financial statements
appearing in the Final Memorandum.
(h) None of the Issuers or any of their Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale of
any of the Securities in a manner which would require the registration under the
Act of any of the Securities.
(i) None of the Issuers will engage in any form of "general
solicitation" or "general advertising" (as those terms are used in Regulation D
under the Act) in connection with the offering of the Units or in any manner
involving a public offering of the Units within the meaning of Section 4(2) of
the Act.
(j) None of the Issuers or their Affiliates nor any person
acting on its or their behalf will engage, in any directed selling efforts (as
that term is defined in Regulation S) with respect to the Units, and will
comply, and will have its Affiliates and each person acting on its or their
behalf comply, with the offering restrictions requirements of Regulation S.
(k) For so long as any of the Securities remain outstanding,
each of the Issuers will make available, upon request, to any seller of such
Securities the information specified in Rule 144A(d)(4) under the Act, unless
such Issuer is then subject to Section 13 or 15(d) of the Exchange Act.
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<PAGE> 17
(l) For a period of 180 days from the date of the Final
Memorandum, the Issuers will not offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a registration statement
for, or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by any of the Issuers (other than the
Notes, the Exchange Notes or the Private Exchange Notes) without the prior
written consent of the Initial Purchaser.
(m) During the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the Initial
Purchaser, each of the Issuers will not, and will not permit any of their
affiliates (as defined in Rule 144 under the Securities Act) to, resell any of
the Securities that have been reacquired by them, except for Securities
purchased by any of the Issuers or any of their affiliates and resold in a
transaction registered under the Securities Act.
(n) In connection with the offering of the Securities, until
the Initial Purchaser shall have notified the Issuers of the completion of the
resale of the Securities, each of the Issuers will not, and will cause their
affiliated purchasers (as defined under the Exchange Act) not to, either alone
or with one or more other persons, bid for or purchase, for any account in which
it or any of its affiliated purchasers has a beneficial interest, any
Securities, or attempt to induce any person to purchase any Securities, and not
to, and to cause its affiliated purchasers not to, make bids or purchase for the
purpose of creating actual, or apparent, active trading in or of raising the
price of the Securities.
(o) None of the Issuers will take any action prior to the
execution and delivery of the Indenture, the Registration Rights Agreement, the
LP Warrant Agreement, the LP Registration Rights Agreement, the Warrant Co.
Warrant Agreement or the Unit Agreement which, if taken after such execution and
delivery, would have violated any of the covenants contained in the Indenture,
the Registration Rights Agreement, the LP Warrant Agreement, the Warrant Co.
Warrant Agreement or the Unit Agreement.
(p) None of the Issuers will take any action prior to Closing
Date which would require the Final Memorandum to be amended or supplemented
pursuant to Section 5(c) unless the Initial Purchaser shall previously have been
advised of such action and as to which the Initial Purchaser shall have
consented (which consent shall not be unreasonably withheld).
(q) Prior to the Closing Date, None of the Issuers or the
Subsidiaries will issue any press release or other communication directly or
indirectly or hold any press conference with respect to any of the Issuers,
their condition, financial or otherwise, or earnings, business affairs or
business prospects (except for routine oral marketing communications in the
ordinary course of business and consistent with the past practices of the
Issuers and of which the Initial Purchaser is notified), without the prior
written consent of the Initial Purchaser, unless in the judgment of the Issuers
and their counsel, after notification to the Initial Purchasers, such press
release or communication is required by law.
(r) The Issuers will use its best efforts to (i) permit the
Units, Notes, the Partnership Warrants and the Corporate Warrants to be
designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating to
trading in the Private Offerings, Resales and Trading through Automated
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<PAGE> 18
Linkages market (the "Portal Market") and (ii) permit the Units, Notes, the
Partnership Warrants and the Corporate Warrants to be eligible for clearance and
settlement through The Depository Trust Company ("DTC").
(s) On the Closing Date, the Note Issuers shall deposit the
net proceeds of the Notes in the Subordinated Notes Proceeds Account.
(t) RAS will submit an application for a non-restricted
license to the Nevada Board within six months after the Closing Date and will
obtain such license prior to the opening of the Resort Casino.
6. Expenses. Each of the Issuers agrees, jointly and
severally, to pay all costs and expenses incident to the performance of their
obligations under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses incident to (i) the printing, word
processing or other production of documents with respect to the transactions
contemplated hereby, including any costs of printing the Preliminary Memorandum
and the Final Memorandum and any amendment or supplement thereto, and any "Blue
Sky" memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchaser of copies of the foregoing documents, (iii) the fees and disbursements
of counsel, accountants and any other experts or advisors retained by any of the
Issuers, (iv) preparation (including printing), issuance and delivery to the
Initial Purchaser of the Units, (v) the qualification of the Securities under
state securities and "Blue Sky" laws, including filing fees and fees and
disbursements of counsel for the Initial Purchaser relating thereto, (vi) the
Issuers' expenses in connection with any meetings with prospective investors in
the Securities, (vii) fees and expenses of the Trustee, the Unit Agent, the LP
Warrant Agent and the Warrant Co. Warrant Agent (including fees and expenses of
counsel), (viii) all expenses and listing fees incurred in connection with the
application for quotation of any of the Securities on the PORTAL Market, (ix)
any fees charged by investment rating agencies for the rating of the Notes, and
(x) all expenses incurred in connection with the application for quotation of
the Securities for book-entry transfer by DTC. If the transactions contemplated
herein are consummated, the Note Issuers agree to reimburse the Initial
Purchaser, on a joint and several basis, for the Initial Purchaser's travel and
out-of-pocket expenses (including fees, disbursements and charges of White &
Case and Schreck Morris, each counsel for the Initial Purchaser, such fees not
to exceed $450,000 less the amount paid to such counsel under the Credit
Agreement). If the sale of the Units provided for herein is not consummated
because any condition to the obligations of the Initial Purchaser set forth in
Section 7 hereof is not satisfied, because this Agreement is terminated or
because of any failure, refusal or inability on the part of any of the Issuers
to perform all obligations and satisfy all conditions on their part to be
performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchaser of their obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), each of the Note Issuers,
jointly and severally, agree to promptly reimburse the Initial Purchaser upon
demand for all out-of-pocket expenses (including all reasonable fees,
disbursements and charges of White & Case and Schreck Morris, each counsel for
the Initial Purchaser) that shall have been incurred by the Initial Purchaser in
connection with the proposed purchase and sale of the Units.
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<PAGE> 19
7. Conditions of the Initial Purchaser's Obligations. The
obligation of the Initial Purchaser to purchase and pay for the Units shall, in
its sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have
received the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of Baker & Hostetler LLP, counsel for the Issuers in form and
substance satisfactory to counsel for the Initial Purchaser, substantially to
the effect that:
(i) Except as set forth in the Final Memorandum to the
knowledge of such counsel, (A) no options, warrants or other rights to
purchase from any of the Issuers shares of capital stock or ownership
interests in any of the Issuers are outstanding, (B) no agreements or
other obligations of any of the Issuers to issue, or other rights to
cause any of the Issuers to convert any obligation into, or exchange
any securities for, shares of capital stock or ownership interests in
the any of the Issuers are outstanding and (C) no holder of securities
of any of the Issuers is entitled to have such securities registered
under a registration statement filed by the Issuers pursuant to the
Registration Rights Agreement.
(ii) Each of the Note Issuers has all requisite corporate or
partnership power and authority, as the case may be, to execute,
deliver and perform its respective obligations under the Indenture, the
Notes, the Exchange Notes and the Private Exchange Notes; the Indenture
is in form sufficient for qualification under the TIA; the Indenture
has been duly and validly authorized by each of the Note Issuers and,
when duly executed and delivered by each of the Note Issuers (assuming
the due authorization, execution and delivery thereof by the Trustee),
will constitute the valid and legally binding obligation of each of the
Note Issuers, enforceable against each of the Note Issuers in
accordance with its terms.
(iii) The Global Note (as such term is defined in the
Indenture) is, and each other Note (if issued in the form attached as
Exhibit A to the Indenture), when issued, will be, in the form
contemplated by the Indenture. The Global Note and each other Note has
been duly and validly authorized by each of the Note Issuers and when
duly executed and delivered by each of the Note Issuers and, in the
case of the Global Note, when paid for by the Initial Purchaser in
accordance with the terms of this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Trustee
and due authentication and delivery of the Notes by the Trustee in
accordance with the Indenture), will constitute the valid and legally
binding obligations of each of the Note Issuers, entitled to the
benefits of the Indenture, and enforceable against each of the Note
Issuers in accordance with their terms.
(iv) The Exchange Notes and the Private Exchange Notes have
been duly and validly authorized by each of the Note Issuers, and when
the Exchange Notes and the Private Exchange Notes have been duly
executed and delivered by each of the Note Issuers in accordance with
the terms of the Registration Rights Agreement and the Indenture
(assuming the due authorization, execution and delivery of the
Indenture by the
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<PAGE> 20
Trustee and due authentication and delivery of the Exchange Notes and
the Private Exchange Notes by the Trustee in accordance with the
Indenture), will constitute the valid and legally binding obligations
of each of the Note Issuers, entitled to the benefits of the Indenture,
and enforceable against each of the Note Issuers in accordance with
their terms.
(v) Each of the Note Issuers has all requisite corporate
or partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and validly
authorized by the Note Issuers and, when duly executed and delivered by
the Note Issuers (assuming due authorization, execution and delivery
thereof by the Initial Purchaser), will constitute the valid and
legally binding obligation of the Note Issuers, enforceable against the
Note Issuers in accordance with its terms. No holder of securities of
any Note Issuer is entitled to have such securities registered under
the registration statement required to be filed pursuant to the
Registration Rights Agreement.
(vi) RAS has the requisite corporate power and authority
to execute, deliver and perform its obligations under the LP Warrant
Agreement and the LP Registration Rights Agreement. Each of the LP
Warrant Agreement and the LP Registration Rights Agreement has been
duly and validly authorized, executed and delivered by RAS and will
constitute a valid and legally binding obligation of RAS, enforceable
against RAS in accordance with its terms.
(vii) Warrant Co. has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Warrant Co. Warrant Agreement. The Warrant Co. Warrant Agreement has
been duly and validly authorized, executed and delivered by Warrant Co.
and will constitute a valid and legally binding obligation of Warrant
Co., enforceable against it in accordance with its terms.
(viii) Each of the Issuers has all requisite corporate or
partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under the Unit Agreement. The Unit
Agreement has been duly and validly authorized, executed and delivered
by each of the Issuers and will constitute a valid and legally binding
obligation of each of the Issuers, enforceable against each of the
Issuers in accordance with its terms.
(ix) The Units have been duly authorized by each of the
Issuers and, when issued and delivered by each of the Issuers against
payment therefor by the Initial Purchaser in accordance with the terms
of this Agreement will constitute valid and binding obligations of each
of the Issuers, enforceable against each of the Issuers in accordance
with their terms, except that the enforcement hereof may be subject to
(i) bankruptcy, insolvency, reorganization or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(x) The LP Warrants have been duly authorized by RAS and
SCGC and, when issued and delivered by RAS and SCGC in accordance with
the terms of this Agreement, will constitute valid and legally binding
obligations of RAS and SCGC, enforceable in
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<PAGE> 21
accordance with their terms, except that the enforcement hereof may be
subject to (i) bankruptcy, insolvency, reorganization or other similar
laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(xi) The LP Partnership Interests have been duly and
validly authorized and validly reserved for issuance, and when issued
and paid for upon exercise of the Partnership Warrants in accordance
with the terms thereof, will be validly issued, fully paid,
nonassessable and free of preemptive rights.
(xii) The Corporate Warrants have been duly authorized by
Warrant Co. and, when issued and delivered by Warrant Co. in accordance
with the terms of this Agreement, will constitute valid and legally
binding obligations of Warrant Co., enforceable in accordance with
their terms, except that the enforcement hereof may be subject to (i)
bankruptcy, insolvency, reorganization or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(xiii) The Warrant Co. Shares have been duly and validly
authorized and validly reserved for issuance, and when issued and paid
for upon exercise of the Corporate Warrants in accordance with the
terms thereof, will be validly issued, fully paid, nonassessable and
free of preemptive rights.
(xiv) Each of the Issuers has all requisite corporate or
partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; this Agreement and the
consummation by each of the Issuers of the transactions contemplated
hereby have been duly and validly authorized by each of the Issuers.
(xv) The Indenture, the Notes (when issued, authorized and
delivered), the Exchange Notes (when issued, authorized and delivered),
the Private Exchange Notes (if and when issued, authorized and
delivered), the Units, the Partnership Warrants, the LP Partnership
Interests, the Corporate Warrants, the Warrant Co. Shares, the Unit
Agreement, the LP Warrant Agreement, the Warrant Co. Warrant Agreement
and the Registration Rights Agreement, will conform in all material
respects to the descriptions thereof contained in the Final Memorandum.
The statements in the Final Memorandum under "Description of Senior
Subordinated Notes", "Exchange Offer; Registration Rights",
"Description of the Units", "Description of LP Warrants", "Description
of Partnership Interests" and "Description of Warrant Co. Common Stock
and the Corporate Warrants" insofar as they describe the provisions of
the documents and instruments therein described, constitute fair
summaries thereof in all material respects.
(xvi) No legal or governmental proceedings are pending or,
to such counsel's knowledge, threatened in Clark County, Nevada, in the
district courts of Nevada or, to such counsel's knowledge which will be
based on a certificate executed by an officer of each of the Issuers,
in any other jurisdiction to which any of the Issuers is a party or to
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which the property or assets of any of the Issuers is subject before or
brought by any court, arbitrator or governmental agency or body which,
if determined adversely to such Issuer, would result, individually or
in the aggregate, in a Material Adverse Effect, or which seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge
the issuance or sale of the Securities to be sold hereunder or the
consummation of the other transactions described in the Final
Memorandum.
(xvii) None of the Issuers is (i) to the knowledge of such
counsel, in violation of its certificate of incorporation, bylaws or
partnership agreement, as applicable (or similar organizational
document) or (ii) to the knowledge of such counsel (without any duty to
investigate and in reliance on a certificate executed by an officer of
each of the Issuers, in breach or violation of any judgment, decree or
order of any court, arbitrator or governmental body, agency or
authority applicable to any of them or any of their respective
properties or assets.
(xviii) The execution and delivery of this Agreement, the
Indenture, the Registration Rights Agreement, the Unit Agreement, the
LP Warrant Agreement, the Warrant Co. Warrant Agreement and the
consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale of the Units to
the Initial Purchaser) will not conflict with or constitute or result
in a breach or a default under (or an event which with notice or
passage of time or both would constitute a default under) or violation
of any of (i) the terms or provisions of any Contract actually known to
such counsel, (ii) the certificate of incorporation, bylaws or
partnership agreement, as applicable (or similar organizational
document) of each of the Issuers, or (iii) (assuming compliance with
all applicable state securities or "Blue Sky" laws and assuming the
accuracy of the representations and warranties of the Initial Purchaser
in Section 8 hereof) any statute, or to the actual knowledge of such
counsel, any judgment, decree, order, rule or regulation which, to such
counsel's knowledge, is normally applicable both to general business
corporations which are not engaged in regulated business activities and
to transactions of the type contemplated by the Final Memorandum. Such
counsel need not express an opinion on any Nevada statutes, rules,
regulations, orders, decrees or judgments.
(xix) To such counsel's actual knowledge, no consent,
approval, authorization or order of any governmental agency or body,
or, to such counsel's actual knowledge, any third party is required for
the due execution, delivery and performance of this Agreement, the
Indenture, the Registration Rights Agreement, the LP Warrant Agreement,
the Warrant Co. Agreement, the LP Registration Rights Agreement and the
Unit Agreement or the issuance and sale by the Issuers of the Units to
the Initial Purchaser or the consummation of the transactions
contemplated hereby or thereby, except as may be required under Blue
Sky laws, as to which such counsel need express no opinion.
(xx) There are no legal or governmental proceedings
involving any of the Issuers as parties or any of their respective
properties or assets which in Clark County, Nevada, in the district
courts of Nevada or, to such counsel's knowledge which will be based on
a certificate executed by an officer of each of the Issuers, in any
other
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jurisdiction would be required to be described in a prospectus pursuant
to the Act that are not described in the Final Memorandum nor are there
any material contracts known to us or other documents known to us which
would be required to be described in a prospectus pursuant to the Act
that are not described in the Final Memorandum.
(xxi) None of the Issuers is, or immediately after the sale
of the Units to be sold hereunder and the application of the proceeds
from such sale (as described in the Final Memorandum under the caption
"Use of Proceeds") will be, an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(xxii) The Units, the Notes, the Partnership Warrants and
the Corporate Warrants satisfy the eligibility requirements of Rule
144A(d)(3) under the Act.
(xxiii) No registration under the Act of the Securities is
required in connection with the sale of the Securities to the Initial
Purchaser as contemplated by this Agreement and the Final Memorandum or
in connection with the initial resale of the Securities by the Initial
Purchaser in accordance with Section 8 of this Agreement, and prior to
the commencement of the Exchange Offer or the effectiveness of the
Shelf Registration Statement (as defined in the Registration Rights
Agreement), the Indenture is not required to be qualified under the
TIA, in each case assuming (i) that the purchasers who buy such
Securities in the initial resale thereof are qualified institutional
buyers as defined in Rule 144A promulgated under the Act ("QIBs")
and/or accredited investors as defined in Rule 501(a) (1), (2), (3) or
(7) promulgated under the Act ("Accredited Investors"), (ii) the
accuracy of the Initial Purchaser's representations in Section 8 hereof
and those of each of the Issuers contained in this Agreement regarding
the absence of a general solicitation in connection with the sale of
such Securities to the Initial Purchaser and the initial resale thereof
and (iii) the due performance by the Initial Purchaser of the
agreements set forth in Section 8 hereof.
(xxiv) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Securities will violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
(xxv) Each of the Note Issuers has all requisite corporate
or partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under the Subordinated Notes
Proceeds Account Agreement. The Subordinated Notes Proceeds Account
Agreement has been duly and validly authorized by the Note Issuers and,
when duly executed and delivered by the Note Issuers, will constitute
the valid and legally binding agreements of the Note Issuers,
enforceable against the Note Issuers in accordance with its terms.
(xxvi) The Subordinated Notes Proceeds Account Agreement
creates a perfected security interest in the Subordinated Notes
Proceeds Account upon the deposit in such account and the amounts and
securities deposited therein for the benefit of the holders of the
Notes.
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(xxvii) Each of the Note Issuers has all requisite corporate
or partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under the Disbursement Agreement.
The Disbursement Agreement has been duly and validly authorized by the
Note Issuers, and, when executed and delivered by the Note Issuers,
will constitute a valid and legally binding obligation of the Note
Issuers, enforceable against the Note Issuers in accordance with its
terms.
(xxviii) RAS has all requisite corporate or partnership power
and authority, as the case may be, to execute, deliver and perform its
obligations under the Material Agreements. The Material Agreements have
been duly and validly authorized by RAS, and constitute valid and
legally binding obligations of RAS, enforceable against RAS in
accordance with their terms.
(xxix) The statements in the Final Memorandum under the
headings "Risk Factors -- Taxation Issuers -- Original Issue Discount
and Double Taxation" and "Certain United States Federal Income Tax
Consequences," to the extent they constitute matters of U.S. Federal
income tax law or legal conclusions with respect thereto, have been
reviewed by such counsel and are correct in all material respects.
(xxx) The statements contained in the Final Memorandum under
the headings "Description of Disbursement Agreement" and "Certain
Material Agreements", insofar as such statements constitute summaries
of the Disbursement Agreement and the Material Agreements,
respectively, constitute fair summaries of such agreements.
At the time the foregoing opinion is delivered, Baker &
Hostetler LLP shall additionally state that it has participated in conferences
with officers and other representatives of each of the Issuers, representatives
of the independent public accountants for the Issuers, representatives of the
Initial Purchaser and counsel for the Initial Purchaser, at which conferences
the contents of the Final Memorandum and related matters were discussed, and,
although it has not independently verified and is not passing upon and assumes
no responsibility for the accuracy, completeness or fairness of the statements
contained in the Final Memorandum, no facts have come to its attention which
lead it to believe that the Final Memorandum, on the date thereof or at the
Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such firm need express no
opinion with respect to the financial statements and related notes thereto and
the other financial data including, but not limited to, the historical financial
data and the forecasted financial data and underlying assumptions and the
statements included in "Risk Factors--Gaming Regulation" or "Regulation and
Licensing" and other statements relating to the permitting or licensing
requirements for the construction, development or operation of the Resort
Casino, included in the Final Memorandum). In rendering such opinions, Baker &
Hostetler LLP shall have received and may rely upon such certificates and other
documents and information as it may reasonably request to pass on such matters.
Such opinion may also be subject to reasonable customary assumptions and
qualifications which are reasonably acceptable to the Initial Purchaser and its
counsel. The opinion of Baker & Hostetler LLP described in this Section shall be
rendered to the Initial Purchaser at the request of Issuers and shall so state
therein. If requested by the
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<PAGE> 25
Trustee, the Unit Agent, the LP Warrant Agent or the Warrant Co. Warrant Agent,
Baker & Hostetler LLP shall allow any or all of such Persons to rely on the
opinion or opinions relevant to each such Person.
(b) On the Closing Date, the Initial Purchaser shall have
received the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of Lionel Sawyer & Collins, Nevada counsel for the Issuers, in form
and substance satisfactory to counsel for the Initial Purchaser, substantially
to the effect that:
(i) Each of the Issuers is duly incorporated or formed,
validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate or partnership power and
authority, as the case may be, to own, lease and operate its properties
and to conduct its business as described in the Final Memorandum.
(ii) Each of the Issuers has the authorized and issued
capitalization set forth in the Final Memorandum. To the actual
knowledge of such counsel, there are no subsidiaries of the Issuers
other than the Subsidiaries set forth on Schedule 2 hereto. All of the
outstanding equity securities of the Issuers have been duly authorized
and validly issued, and, if applicable, fully paid and nonassessable
and not issued in violation of any preemptive or similar rights, and,
to the actual knowledge of such counsel, are not subject to any
security interests, perfected or otherwise, or any other liens,
encumbrances, equities and claims or restrictions on transferability or
voting.
(iii) Except as set forth in the Final Memorandum, to the
actual knowledge of such counsel (A) no options, warrants or other
rights to purchase from any of the Issuers shares of capital stock or
ownership interests in any of the Issuers are outstanding, (B) no
agreements or other obligations of any of the Issuers to issue, no
other rights to cause any of the Issuers to convert any obligation
into, or exchange any securities for, shares of capital stock or
ownership interests in any of the Issuers are outstanding and (C) no
holder of securities of any of the Issuers is entitled to have such
securities registered under a registration statement filed by the
Company pursuant to the Registration Rights Agreement.
(iv) Each of the Note Issuers has all requisite corporate
or partnership power and authority, as the case may be, to execute,
deliver and perform its respective obligations under the Indenture, the
Notes, the Exchange Notes and the Private Exchange Notes; the Indenture
has been duly and validly authorized by each of the Note Issuers.
(v) The Global Note (as such term is defined in the
Indenture) and each other Note has been duly and validly authorized by
each of the Note Issuers.
(vi) The Exchange Notes and the Private Exchange Notes
have been duly and validly authorized by each of the Note Issuers.
(vii) Each of the Note Issuers has all requisite corporate
or partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under the
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<PAGE> 26
Registration Rights Agreement and the LP Registration Rights Agreement.
Each of the Registration Rights Agreement and the LP Registration
Rights Agreement has been duly and validly authorized by the Note
Issuers.
(viii) RAS has all requisite partnership power and authority
to execute, deliver and perform its obligations under the LP Warrant
Agreement. The LP Warrant Agreement has been duly and validly
authorized, executed and delivered by RAS.
(ix) Warrant Co. has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Warrant Co. Warrant Agreement. The Warrant Co. Warrant Agreement has
been duly and validly authorized, executed and delivered by Warrant Co.
(x) Each of the Issuers has all requisite corporate or
partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under the Unit Agreement. The Unit
Agreement has been duly and validly authorized, executed and delivered
by each of the Issuers.
(xi) The Units have been duly authorized by each of the
Issuers.
(xii) The LP Warrants have been duly authorized by RAS.
(xiii) The LP Partnership Interests have been duly and
validly authorized and validly reserved for issuance, and when issued
and paid for upon exercise of the Partnership Warrants in accordance
with the terms thereof, will be validly issued and, if applicable,
fully paid, nonassessable and free of preemptive rights.
(xiv) The Corporate Warrants have been duly authorized by
Warrant Co.
(xv) The Warrant Co. Shares have been duly and validly
authorized and validly reserved for issuance and when issued and paid
for upon exercise of the Corporate Warrants in accordance with the
terms thereof, will be validly issued, fully paid, nonassessable and
free of preemptive rights.
(xvi) Each of the Issuers has all requisite corporate or
partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; this Agreement and the
consummation by each of the Issuers of the transactions contemplated
hereby have been duly and validly authorized by each of the Issuers.
(xvii) The statements in the Final Memorandum under the
headings "Risk Factors -- Gaming Regulation" and "Regulation and
Licensing -- Nevada," to the extent they constitute matters of gaming
laws of the State of Nevada or legal conclusions with respect thereto,
have been reviewed by such counsel and are correct in all material
respects.
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<PAGE> 27
(xviii) To the actual knowledge of such counsel, no legal or
governmental proceedings are pending or threatened to which any of the
Issuers is a party or to which the property or assets of any of the
Issuers is subject before or brought by any court, arbitrator or
governmental agency or body which, if determined adversely to such
Issuer, would result, individually or in the aggregate, in a Material
Adverse Effect, or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(xix) None of the Issuers is (i) in violation of its
articles of incorporation, bylaws or partnership agreement, as
applicable (or similar organizational document) or (ii) to the actual
knowledge of such counsel, in breach or violation of any judgment,
decree or order of any court, arbitrator or governmental body, agency
or authority applicable to any of them or any of their respective
properties or assets.
(xx) The execution and delivery of this Agreement, the
Indenture, the Registration Rights Agreement, the Unit Agreement, the
LP Warrant Agreement, the Warrant Co. Warrant Agreement and the
consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale of the Units to
the Initial Purchaser) will not conflict with or constitute or result
in a breach or a default under (or an event which with notice or
passage of time or both would constitute a default under) or violation
of any of (i) to the actual knowledge of such counsel, the terms or
provisions of any Contract, (ii) the articles of incorporation, bylaws
or partnership agreement, as applicable (or similar organizational
document) of each of the Issuers, or (iii) (assuming compliance with
all applicable state securities or "Blue Sky" laws and assuming the
accuracy of the representations and warranties of the Initial Purchaser
in Section 3 hereof) any statute, rule or regulation, or to the actual
knowledge of such counsel, any judgment, decree or order, which, in
such counsel's experience is normally applicable both to general
business corporations which are not engaged in regulated business
activities and to transactions of the type contemplated by the Final
Memorandum.
(xxi) No consent, approval, authorization or order of any
Nevada governmental agency or body (including the Nevada Commission and
the Nevada Board), or, to the actual knowledge of such counsel, any
third party, is required for the due execution, delivery and
performance of this Agreement, the Indenture, the Registration Rights
Agreement, the LP Warrant Agreement, the Warrant Co. Agreement, the
Unit Agreement or the issuance and sale by the Issuers of the Units to
the Initial Purchaser or the consummation of the transactions
contemplated hereby or thereby, except as may be required under Blue
Sky laws, as to which such counsel expresses no opinion, and except for
the Nevada Gaming Approvals. No consent, approval, authorization or
order of the Nevada Commission or the Nevada Board is required to
construct the Resort Casino. Other than as stated in this opinion
(xxi), such counsel expresses no opinion regarding any consents,
approvals authorizations or orders which may be required to own or
lease, or operate the Issuers' respective properties and businesses.
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(xxii) Each of the Note Issuers has all requisite corporate
or partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under the Disbursement Agreement.
The Disbursement Agreement has been duly and validly authorized by the
Note Issuers.
(xxiii) Each of the Note Issuers has all requisite corporate
or partnership power and authority, as the case may be, to execute,
deliver and perform its obligations under the Material Agreements. The
Material Agreements governed by Nevada law (the "Nevada Material
Agreements") have been duly and validly authorized by RAS. The Nevada
Material Agreements constitute valid and legally binding obligations of
RAS, enforceable against RAS in accordance with their terms, subject to
(i) bankruptcy, insolvency, moratorium, reorganization or other similar
laws now or hereinafter in effect relating the creditors' rights
generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law)
and the discretion of the court before which any proceeding therefor
may be brought, except that certain provisions of the above-referenced
documents may not be enforceable in whole or in part under the laws of
the State of Nevada, but the inclusion of such provisions does not
affect the validity of such documents and such documents contain
adequate provisions for enforcing payment of the monetary obligations
thereunder and for the practical realization of the rights and benefits
afforded thereby, provided such enforcement is conducted in accordance
with the procedures established by the laws of the State of Nevada.
In rendering such opinion, Lionel Sawyer & Collins shall have received
and may rely upon such certificates and other documents and information as it
may reasonably request to pass on such matters. Such opinion may also be subject
to reasonable customary assumptions and qualifications which are acceptable to
the Initial Purchaser and its counsel. The opinion of Lionel Sawyer & Collins
described in this Section shall be rendered to the Initial Purchaser at the
request of Issuers and shall so state therein. If requested by the Trustee, the
Unit Agent, the LP Warrant Agent or the Warrant Co. Warrant Agent, Lionel Sawyer
& Collins shall allow any or all of such Persons to rely on its opinion and
shall expressly so state.
(c) On the Closing Date, the Initial Purchaser shall have
received the opinion, in form and substance satisfactory to the Initial
Purchaser, dated as of the Closing Date and addressed to the Initial Purchaser,
of White & Case, counsel for the Initial Purchaser, with respect to certain
legal matters relating to this Agreement and such other related matters as the
Initial Purchaser may reasonably require. In rendering such opinion, White &
Case shall have received and may rely upon such certificates and other documents
and information as it may reasonably request to pass upon such matters.
(d) On the Closing Date, the Initial Purchaser shall have
received the opinion, in form and substance satisfactory to the Initial
Purchaser, dated as of the Closing Date and addressed to the Initial Purchaser,
of Schreck Morris, Nevada counsel for the Initial Purchaser, with respect to
certain legal matters relating to this Agreement and such other related matters
as the Initial Purchaser may reasonably require. In rendering such opinion,
Schreck Morris shall
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have received and may rely upon such certificates and other documents and
information as it may reasonably request to pass upon such matters.
(e) On the Closing Date, the Initial Purchaser shall have
received the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of Pryor Cashman Sherman & Flynn, counsel to the Trustee, in form and
substance satisfactory for counsel to the Initial Purchaser, dated the Closing
Date, substantially to the effect that:
(i) United States Trust Company of New York is a trust
company validly existing and in good standing under the laws of the
State of New York.
(ii) United States Trust Company of New York has all
requisite corporate power and authority to execute, deliver and perform
its obligations under the Indenture. The Indenture has been duly and
validly authorized by United States Trust Company of New York and will
constitute a valid and legally binding agreement of United States Trust
Company of New York, enforceable against it in accordance with its
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization or other similar laws applicable
to trust companies established in the State of New York now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought (regardless of whether
such enforcement is considered in a proceeding in equity or at law).
(iii) The Units, the Notes, Partnership Warrants and the
Corporate Warrants delivered to the Initial Purchaser on the Closing
Date have been duly authenticated by the Trustee in accordance with the
terms of the Indenture, the LP Warrant Agent in accordance with the
terms of the LP Warrant Agreement and the Warrant Co. Warrant Agent in
accordance with the terms of the Warrant Co. Warrant Agreement,
respectively.
(iv) The execution, delivery and performance by the
Trustee of the Indenture does not and will not require the
authorization, consent or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action in
respect of, any governmental authority or agency regulating the banking
and trust activities of the Trustee.
(f) The Initial Purchaser shall have received from Ernst &
Young LLP comfort letters dated the date hereof and the Closing Date, in form
and substance satisfactory to counsel for the Initial Purchaser.
(g) The Initial Purchaser shall have received a copy of the
research report prepared by Wells Gaming Research for RAS, together with a
written consent from Wells Gaming Research of the inclusion of its name in each
Memorandum.
(h) On the Closing Date, the Initial Purchaser shall have
received the Indenture, the Unit Agreement, the LP Warrant Agreement, the
Warrant Co. Warrant Agreement and the Registration Rights Agreement, duly
authorized, executed and delivered by each of the parties
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<PAGE> 30
thereto, in form and substance satisfactory to counsel for the Initial
Purchaser, and containing such terms and conditions that are usual and customary
in transactions similar to those contemplated hereby and thereby, dated the
Closing Date and each such agreement shall be in full force and effect according
to its terms.
(i) The Initial Purchaser shall have received good standing
certificates for each of the Issuers from the Secretary of State of the State of
Nevada and from each of the respective jurisdictions where each of them is
qualified to do business as a foreign entity, in each case in form and substance
satisfactory to counsel for the Initial Purchaser.
(j) The representations and warranties of each of the Issuers
contained in this Agreement shall be true and correct on and as of the date
hereof and on and as of the Closing Date as if made on and as of the Closing
Date; the statements of each of the Issuers' officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be true and
correct on and as of the date made and on and as of the Closing Date; each of
the Issuers shall have performed all covenants and agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or prior to
the Closing Date; and, except as described in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), subsequent to the
date of the most recent financial statements in such Final Memorandum, there
shall have been no event or development that, individually or in the aggregate,
has or would be reasonably likely to have a Material Adverse Effect.
(k) The sale of the Units, the Notes, the Partnership Warrants
and the Corporate Warrants hereunder shall not be enjoined (temporarily or
permanently) on the Closing Date.
(l) The Notes shall have been approved by the NASD for trading
in the PORTAL Market.
(m) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the Exchange
Act by the Commission or any amendment or proposed amendment thereof by the
Commission which in the judgment of the Initial Purchaser would materially
impair the ability of the Initial Purchaser to purchase, hold or effect resales
of the Securities as contemplated hereby.
(n) There shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of any of the Issuers or
any of the Subsidiaries, taken as a whole, from that set forth in the Final
Memorandum that constitutes a Material Adverse Effect and that makes it, in the
Initial Purchaser's judgment, impracticable to market Units on the terms and in
the manner contemplated in the Final Memorandum.
(o) Subsequent to the date of the most recent financial
statements in the Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), the conduct of the business and operations of
any of the Issuers shall not have been interfered with by strike, fire, flood,
hurricane, accident or other calamity (whether or not insured) or by any court
30
<PAGE> 31
or governmental action, order or decree, and, except as otherwise stated
therein, the properties of any of the Issuers shall not have sustained any loss
or damage (whether or not insured) as a result of any such occurrence, except
any such interference, loss or damage which would not, individually or in the
aggregate, have a Material Adverse Effect.
(p) No securities of any of the Issuers shall have been
downgraded or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
(q) The Initial Purchaser shall have received certificates of
each of the Issuers, dated the Closing Date, signed by, in the case of RAS, Inc.
and Warrant Co., their respective Chairman of the Board, President or any Senior
Vice President and the Chief Financial Officer, and , in the case of RAS, the
Chairman of the Board, President or any Senior Vice President and the Chief
Financial Officer of its general partner, to the effect that:
(i) the representations and warranties of such Issuer
contained in this Agreement are true and correct as of the date hereof
and as of the Closing Date, and such Issuer has performed all covenants
and agreements and satisfied all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing Date;
(ii) at the Closing Date, since the date hereof or since
the date of the most recent financial statements in the Final
Memorandum (exclusive of any amendment or supplement thereto after the
date hereof), no event or events have occurred, no information has
become known nor does any condition exist that, individually or in the
aggregate, would have a Material Adverse Effect;
(iii) the sale of the Units hereunder has not been enjoined
(temporarily or permanently); and
(iv) such other information as the Initial Purchaser may
reasonably request.
(r) The Initial Purchaser shall have received a certificate
from, in the case of RAS, the General Partner, and in the case of each of RAS,
Inc. and Warrant Co., its corporate secretary, dated the Closing Date, attaching
certified copies of (i) all resolutions of the Board of Directors of the General
Partner, RAS, Inc. or Warrant Co., as the case may be, authorizing (a) the
transactions contemplated by this Agreement and (b) the Material Agreements, the
offering of the Securities, the entering into this Agreement, the Indenture, the
Registration Rights Agreements, the Warrant Co. Warrant Agreement, the LP
Warrant Agreement, the Unit Agreement, the Disbursement Agreement and the
Subordinated Notes Proceeds Accounts Agreement and (ii) the certificate of
incorporation, by-laws or partnership agreement of the Issuers, as applicable,
and certifying the names and true signatures of those officers of the Issuers
executing any documents contemplated by this Agreement.
(s) On or prior to the Closing Date, RAS shall have furnished
fully executed copies of the Material Agreements (which, in the case of the
Construction Contract, shall be reasonably acceptable to the Initial Purchaser),
the Disbursement Agreement, the Completion
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Guaranty (as defined herein), the Credit Agreement and the Subordinated Notes
Account Proceeds Agreement to White & Case, as counsel to the Initial Purchaser.
(t) On or prior to the Closing Date, the Note Issuers shall
have established the Subordinated Notes Proceeds Account and have delivered
evidence to the Initial Purchaser of such account opening.
(u) On or prior to the Closing Date, the Note Issuers shall
have established the Mortgage Notes Proceeds Account (as defined in the Final
Memorandum) and shall have delivered evidence to the Initial Purchaser of such
account opening and of the funding of $60 million into such account by financial
institutions party to the Credit Agreement.
(v) On or prior to the Closing Date, the Note Issuers shall
have established the Fund's Account (as defined in the Final Memorandum) and
shall have delivered evidence to the Initial Purchaser of such account opening
and of the funding of $67.5 million as the equity contribution in such account.
(w) The Initial Purchaser shall have received a Letter or
Letters of Representations signed by DTC, covering the Notes.
(x) The Initial Purchaser shall receive copies of each legal
opinion delivered under the Credit Agreement to the financial institutions party
to the Credit Agreement addressed to the Initial Purchaser (or separate reliance
letters stating the Initial Purchaser may rely on such opinions as if they were
addressed to it).
(y) On or prior to the Closing Date, RAS shall have furnished
to the Initial Purchaser a fully executed amendment no. 1 to the Limited
Partnership Agreement, which shall be in form and substance satisfactory to the
Initial Purchaser and shall contemplate the transactions contemplated by this
Agreement and the Final Memorandum.
(z) On or prior to the Closing Date, RAS shall have furnished
to the Initial Purchaser a copy of the officers' certificate delivered to RAS by
J.A. Jones, Inc., as the guarantor under the Completion Guaranty, to be dated on
or prior to the date hereof (the "Completion Guaranty"), which certificate will
include a copy of the resolutions of the guarantor authorizing the execution,
delivery and performance by the guarantor of the Completion Guaranty.
On or before the Closing Date, the Initial Purchaser and
counsel for the Initial Purchaser shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of each of the Issuers as they
shall have heretofore reasonably requested from each of the Issuers.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchaser and counsel for the Initial Purchaser. The
Company and the Subsidiaries shall furnish to the Initial Purchaser such
conformed copies of such documents, opinions, certificates, letters, schedules
and instruments in such quantities as the Initial Purchaser shall reasonably
request.
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8. Offering of Units; Restrictions on Transfer. The Initial
Purchaser (i) has not and will not solicit offers for, or offer or sell, the
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act and (ii) has and
will solicit offers for the Securities only from, and will offer the Securities
only to (A) in the case of offers inside the United States, (x) persons whom the
Initial Purchaser reasonably believes to be QIBs or, if any such person is
buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has represented to the Initial
Purchaser that each such account is a QIB, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, and, in each case,
in transactions under Rule 144A or (y) a limited number of other institutional
investors reasonably believed by the Initial Purchaser to be Accredited
Investors that, prior to their purchase of the Securities, deliver to the
Initial Purchaser a letter containing the representations and agreements set
forth in Exhibit A to the Final Memorandum and (B) in the case of offers outside
the United States, to persons other than U.S. persons ("foreign purchasers,"
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
in purchasing such Securities such persons are deemed to have represented and
agreed as provided under the caption "Transfer Restrictions on Units, Senior
Subordinated Notes, Warrants and LP Partnership Interests" contained in the
Final Memorandum.
The Initial Purchaser represents and warrants that it is a
QIB, with such knowledge and experience in financial and business matters as are
necessary in order to evaluate the merits and risks of an investment in the
Units. The Initial Purchaser agrees to comply with the applicable provisions of
Rule 144A and Regulation S under the Act. The Initial Purchaser hereby
acknowledges that each of the Issuers and, for purposes of the opinions to be
delivered to the Initial Purchaser pursuant to Section 7(a) hereof, counsel to
the Issuers will rely upon the accuracy and truth of the representations
contained in this Section 8 and the Initial Purchaser hereby consents to such
reliance.
9. Indemnification and Contribution. (a) Each of the Issuers
jointly and severally agree to indemnify and hold harmless the Initial Purchaser
and its respective affiliates, directors, officers, agents, representatives,
general partners and employees of such Initial Purchaser or its affiliates, and
each other person, if any, who controls the Initial Purchaser or its affiliates
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
to the full extent lawful against any losses, claims, damages, expenses or
liabilities (or action in respect thereof, including, without, limitation,
shareholder derivative actions and arbitration proceedings) to which the Initial
Purchaser or such other person may become subject under the Act, the Exchange
Act or otherwise, insofar as any such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of
any material fact contained in any Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by any of the Issuers or
based upon written information furnished by or on behalf of any of the
Issuers filed in any jurisdiction in order to qualify the Securities
under the securities or
33
<PAGE> 34
"Blue Sky" laws thereof or filed with any securities association or
securities exchange (each an "Application");
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or
(iii) any material breach of any of the representations and
warranties of any of the Issuers set forth in this Agreement or the
Registration Rights Agreement, and will reimburse, as incurred, the
Initial Purchaser and each such other person for any legal or other
expenses incurred by the Initial Purchaser or such other person in
connection with investigating, defending against or appearing as a
third-party witness in connection with any such loss, claim, damage,
liability or action; provided, however, the Issuers will not be liable
in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any
Memorandum or any amendment or supplement thereto or any Application in
reliance upon and in conformity with written information concerning the
Initial Purchaser furnished to the Issuers by the Initial Purchaser
specifically for use therein. This indemnity agreement will be in
addition to any liabilities or obligations that any of the Issuers may
otherwise have to the indemnified parties, including without limitation
the indemnification obligations of each of the Issuers pursuant to the
NatWest Engagement. The Issuers shall not be liable under this Section
9 for any settlement of any claim or action effected without its prior
consent, which shall not be unreasonably withheld.
(b) The Initial Purchaser agrees to indemnify and hold
harmless each of the Issuers, their respective directors and officers, and each
person, if any, who controls an Issuer within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which any Issuer or any such director, officer or controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any Memorandum or any amendment or
supplement thereto or any Application, or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in any
Memorandum or any amendment or supplement thereto or any Application, or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning the Initial Purchaser, furnished
to any Issuer by the Initial Purchaser specifically for use therein; and subject
to the limitation set forth immediately preceding this clause, will reimburse,
as incurred, any legal or other expenses incurred by any Issuer, or any such
director, officer or controlling person in connection with investigating or
defending against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action in respect thereof. This indemnity
agreement will be in addition to any liability that the Initial Purchaser may
otherwise have to the indemnified parties. The Initial Purchaser shall not be
liable under this Section 9 for any settlement of any claim or action effected
without their written consent, which shall not be unreasonably withheld. None of
the Issuers
34
<PAGE> 35
shall, without the prior written consent of the Initial Purchaser, effect any
settlement or compromise of any pending or threatened proceeding in respect of
which the Initial Purchaser is or could have been a party, or indemnity could
have been sought hereunder by any Initial Purchaser, unless such settlement (A)
includes an unconditional written release of the Initial Purchaser, in form and
substance reasonably satisfactory to the Initial Purchaser, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchaser in the case of
paragraph (a) of this Section 9 or either the Issuers in the case of paragraph
(b) of this Section 9, representing the indemnified parties under such paragraph
(a) or paragraph (b), as the case may be, who are parties to such action or
actions) or (ii) the
35
<PAGE> 36
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the prior written consent of the
indemnifying party (which consent shall not be unreasonably withheld), unless
such indemnified party waived in writing its rights under this Section 9, in
which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to an
indemnified party in respect of any losses, claims, damages or liabilities (or
actions in respect thereof), each indemnifying party, in order to provide for
just and equitable contribution, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect (i) the relative benefits received by the indemnifying party or
parties on the one hand and the indemnified party on the other from the offering
of the Units or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Issuers on the one hand and the Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering (net
of commissions and before deducting expenses) received by the Issuers and the
Subsidiaries bear to the total discounts and commissions received by the Initial
Purchaser. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by one of the Issuers on the one hand, or the
Initial Purchaser on the other, the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission
or alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. Each of the Issuers and the Initial Purchaser
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), the Initial Purchaser shall not be obligated to
make contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by the Initial Purchaser under this
Agreement, less the aggregate amount of any damages that the Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls the Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Initial Purchaser, and each director of an Issuer,
each officer of an Issuer and each person, if any, who controls an Issuer or its
Subsidiaries within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as an Issuer.
36
<PAGE> 37
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of each of
the Issuers, their respective officers and the Initial Purchaser set forth in
this Agreement or made by or on behalf of them pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of any of the Issuers, any of their respective officers or directors,
the Initial Purchaser or any other person referred to in Section 9 hereof and
(ii) delivery of and payment for the Units. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6, 9 and 15
hereof shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchaser by notice to the Issuers given prior to
the Closing Date in the event that any of the Issuers shall have failed, refused
or been unable to perform all of their obligations and satisfy all conditions on
their respective part to be performed or satisfied hereunder at or prior thereto
or, if at or prior to the Closing any of the following shall have occurred:
(i) any of the Issuers shall have sustained any loss or
interference with respect to its businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work
stoppage or any legal or governmental proceeding, which loss or
interference has had, has or could be reasonably likely to have a
Material Adverse Effect, or there shall have been, in the sole judgment
of the Initial Purchaser, any event or development that, individually
or in the aggregate, has or could be reasonably likely to have a
Material Adverse Effect (including without limitation a change in
control of an Issuer or their Subsidiaries), except in each case as
described in the Final Memorandum (exclusive of any amendment or
supplement thereto);
(ii) there shall have occurred any change, or any
development involving a prospective change, in the condition, financial
or otherwise, or in the earnings, business or operations, of any of the
Issuers, from that set forth in the Final Memorandum that is material
and adverse and that makes it, in the Initial Purchaser's judgment,
impracticable to market the Units on the terms and in the manner
contemplated in the Final Memorandum.
(iii) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York
Stock Exchange, the American Stock Exchange or the National Association
of Securities Dealers, Inc. or the setting of minimum prices for
trading on such exchange or market shall have occurred or trading of
any securities of any of the Issuers shall have been suspended on any
exchange or in any over-the-counter market if traded on such exchange
or market;
(iv) a banking moratorium shall have been declared by the
State of Nevada, the State of New York or United States authorities;
(v) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign power, or (B)
an outbreak or escalation of any other insurrection or armed conflict
involving the United States, (C) any material change in the
37
<PAGE> 38
financial markets of the United States or (D) any other national or
international calamity or emergency which, in the case of (A), (B), (C)
or (D) above and in the sole judgment of the Initial Purchaser, makes
it impracticable or inadvisable to proceed with the public offering or
the delivery of the Units as contemplated by the Final Memorandum;
(vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs
that in has a material adverse effect on the financial markets in the
United States, and would, in the sole judgment of the Initial
Purchaser, make it impracticable or inadvisable to market the Units;
(vii) the proposal, enactment, publication, decree, or
other promulgation of any federal or state statute, regulation, rule or
order of any court or other governmental authority which, in the sole
judgment of the Initial Purchaser, would have a Material Adverse
Effect;
(viii) any securities of any of the Issuers shall have been
downgraded or placed on any "watch list" for possible downgrading by
any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Sections 6 and 10 hereof.
12. Information Supplied by the Initial Purchaser. The
statements set forth in the last paragraph on the cover page of the Final
Memorandum, the sixth through eighth paragraphs under the heading "Plan of
Distribution" in the Final Memorandum (to the extent any such statements relate
to the Initial Purchaser) constitute the only information furnished by the
Initial Purchaser to the Issuers for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchaser, shall be mailed or delivered to (i)
NatWest Capital Markets Limited, 135 Bishopgate, London, England, Attention:
Ronan Agnew; with a copy to White & Case, 1155 Avenue of the Americas, New York,
NY 10036, Attention: Timothy B. Goodell, Esq.; if sent to an Issuer, shall be
mailed or delivered to 1160 Town Center Drive, Suite 200, Las Vegas, Nevada
89134 with a copy to Baker & Hostetler LLP, 600 Wilshire Boulevard, Los Angeles,
CA 90017, Attention: Jonathan Hodes.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchaser, each of the Issuers and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions
38
<PAGE> 39
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of each of the Issuers contained in Section 9 of this Agreement shall also be
for the benefit of any person or persons who control the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Initial Purchaser contained in Section 9 of this
Agreement shall also be for the benefit of the directors, partners, managers or
officers of any Issuer and any person or persons who controls an Issuer within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Units, Notes, Partnership Warrants or Corporate Warrants from the
Initial Purchaser will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
39
<PAGE> 40
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between each
of the Issuers and the Initial Purchaser.
Very truly yours,
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
By: RESORT AT SUMMERLIN, INC.,
AS THE GENERAL PARTNER
By /s/ Jeffrey H. Smith
---------------------------------------
Name: Jeffrey H. Smith
Title: Treasurer & Secretary
THE RESORT AT SUMMERLIN, INC.
By /s/ Jeffrey H. Smith
---------------------------------------
Name: Jeffrey H. Smith
Title: Treasurer & Secretary
RAS WARRANT CO.
By /s/ Jeffrey H. Smith
---------------------------------------
Name: Jeffrey H. Smith
Title: Treasurer & Secretary
<PAGE> 41
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
NATWEST CAPITAL MARKETS LIMITED
By: /s/ N. S. Coulbeck
-------------------------------
Name: N. S. Coulbeck
Title: Director
<PAGE> 42
SCHEDULE 1
Initial Purchaser Number of Units
- ----------------- ---------------
NatWest Capital Markets Limited 100,000 Units, evidencing $100,000,000 of
Notes and such number of Corporate Warrants
and Partnership Warrants as may be
designated by NatWest Capital Markets
Limited not exceeding 8% of the total
Partnership interests.
<PAGE> 43
SCHEDULE 2
LIST OF MATERIAL AGREEMENTS
A. Material Agreements to be signed on or prior to the date hereof
1. Construction Contract, dated as of December 22, 1997, between RAS and
J.A. Jones Construction, a North Carolina corporation, as the
contractor (the "Construction Contract").
2. License Agreement, dated December 16, 1997, between RAS and Regent
Hotels Worldwide, Inc., an affiliate of Carlson Hospitality Group (the
"License Agreement").
3. Development Agreement, dated as of August 15, 1996, between RAS and
Howard Hughes Properties, Limited Partnership.
4. Royalty Agreement, dated as of August 15, 1996, between RAS and Howard
Hughes Properties, Limited Partnership.
5. Guaranty of Completion dated as of December 22, 1997, by J.A. Jones,
Inc.
B. Material Agreements to be signed on or prior to the Closing Date
1. Construction Management Agreement between RAS and ___________________,
as the construction manager (the "Construction Management Contract").
2. Architect Agreement between RAS and Paul Steelman Ltd., as the
architect (the "Architect's Contract").
<PAGE> 44
SCHEDULE 3
[PAUL STEELMAN LTD. LETTERHEAD]
December 23, 1997
Mr. Sean McGuinness
Seven Circle Resorts
1160 Town Center Drive
Suite 200
Las Vegas, NV 89134
Re: THE RESORT AT SUMMERLIN (PERMIT STATUS) LAS VEGAS, NV - PROJECT #95255
File #01021 - Architect Correspondence
Dear Sean:
The following information is a summary of the purpose of the required
permits mentioned in our correspondence of 12/23/97 regarding The Resort at
Summerlin:
- Special use permit approved by the City Council
- Amended use permit approved by the City Council
These permits allow Seven Circle Resorts to utilize the property in the
manner submitted and approved. The following is a list of permits that will be
pulled during construction and after plan check approvals and their meanings:
- Dust permit: This permit allows the contractor to move earth and makes
the contractor responsible for the amount of dust generated by this
movement.
- Grading Permit: This permit allows the contractor to move earth and
prepare a site to receive footings and foundations.
- On site sewer, water, and fire (Undergrounds): These permits allow the
contractor to place utilities and "hookup" to existing city and/or county
utilities.
- Swimming pool: This permit verifies that Health Department has approved
of the pool design and allows the building department to issue a building
permit to construct the pool.
- Building: This permit allows the contractor to place foundations, erect
steel, and construct the building in a general sense.
<PAGE> 45
- Mechanical, Electrical, Plumbing: Since each of these disciplines are
individually inspected a separate permit for each discipline is required.
- Fire: This permit verifies that the fire suppression and alarm systems
are approved and may be installed within the building.
- On site improvement (curbs, roads, etc.): These permits allow the
contractor to proceed with the indicated work.
Mr. Sean McGuinness
Seven Circle Resorts
December 23, 1997
Page 2
- --------------------------------------------------------------------------------
If you have any questions or comments kindly call. Thank you.
Sincerely,
PAUL STEELMAN LTD.
/s/ Paul C. Steelman
Paul C. Steelman, R.A.
President
PCS/rb
cc: PSL Project File
Ethan Nelson
<PAGE> 46
EXHIBIT A
NEVADA GAMING APPROVALS
(i) In order to operate the Resort Casino, RAS will be required to
be licensed by the Nevada Gaming Authorities. In connection therewith, RAS, Inc.
will be required to be registered and found suitable as an intermediary company
and licensed as a general partner of RAS by the Nevada Gaming Authorities. Also,
each direct and indirect owner of RAS, Inc. will be required to obtain
applicable licenses and approvals from the Nevada Gaming Authorities. Each of
the Note Issuers, Tivoline Holding AG (the "Swiss Parent") and SCGC, as well as
each of their respective owners, intend to apply for such registrations,
licenses and approvals with the Nevada Gaming Authorities.
(ii) After the effectiveness of the Exchange Offer and at the time
of licensing of RAS, the Issuers will each be required to register with the
Nevada Commission as a publicly traded corporation ("Registered Company"). In
order for RAS to receive a gaming license to operate the Resort Casino as a
Registered Company, it must receive an exemption from the Nevada Commission from
a regulatory provision of the Nevada Act which makes publicly traded
corporations ineligible to apply for or hold a gaming license. RAS intends to
apply for such an exemption in connection with its application for a gaming
license with the Nevada Board and the Nevada Commission.
(iii) After RAS has been issued a gaming license by the Nevada
Gaming Authorities, RAS may not issue an LP Partnership Interest to Warrant Co.
or any holder of a Partnership Warrant without the prior approval, licensing and
registration of Warrant Co. or such holder as a limited partner of RAS by the
Nevada Gaming Authorities.
(iv) With respect to Partnership Warrants, after RAS has been
issued a gaming license by the Nevada Gaming Authorities and unless RAS has been
registered as a Registered Company and been granted certain exemptions by the
Nevada Commission, no holder of a Partnership Warrant may sell, assign,
transfer, pledge or make any other disposition thereof, including, without
limitation, exercise such warrant, without the prior approval of the Nevada
Gaming Authorities. In addition, prior to exercising such Partnership Warrant,
the holder thereof will be required to file applications to be licensed as a
limited partner of RAS.
(v) With respect to the Corporate Warrants, after RAS has been
issued a gaming license by the Nevada Gaming Authorities and unless Warrant Co.
has been registered as a Registered Company and been granted certain exemptions
by the Nevada Commission, no holder of a Corporate Warrant may sell, assign,
transfer, pledge or make any other disposition thereof, including, without
limitation, exercise such warrant, without the prior approval of the Nevada
Gaming Authorities. In addition, prior to exercising such Corporate Warrant, the
holder thereof will be required to file applications to be found suitable as a
stockholder of Warrant Co. Once Warrant Co. is registered as a Registered
Corporation, only persons having beneficial ownership of more than 10% of
Warrant Co.'s voting securities will be required to file such applications.
<PAGE> 47
Exhibit A
Page 2
(vi) Subsequent to the licensing of RAS, if RAS and Warrant Co.
have each been registered as a Registered Company with the Nevada Commission and
each been granted certain exemptions by the Nevada Commission, no prior approval
of the Nevada Commission will be required for a holder to exercise either an LP
Warrant or a Corporate Warrant and become a limited partner or a stockholder of
RAS or Warrant Co., respectively.
(vii) The disposition of collateral consisting of gaming devices,
including slot machines, cashless wagering systems and associated equipment (as
those terms are defined in Nevada Revised Statutes ("NRS") Sections 463.014,
463.0136, 463.0155 and 463.0191) is subject to the requirements of the Nevada
Gaming Laws, including the approval of the Nevada Board, prior to any sale,
removal, disposition or distribution of such devices.
(viii) Any (a) guarantees of the Notes issued by the Note Issuers,
(b) hypothecation of certain assets of the Note Issuers as security for the
Mortgage Notes, and (c) restrictions on the transfer of and agreements not to
encumber, the equity securities of the Note Issuers in respect of the Mortgage
Notes, will require the approval of the Nevada Commission upon the
recommendation of the Nevada Board, at the time RAS is licensed and RAS, Inc. is
registered as an intermediary company and licensed as a general partner of RAS
by the Nevada Commission, for which approvals the Note Issuers will apply, if
applicable. Any restrictions on transfer or agreements not to encumber such
equity securities of the Note Issuers will require the approval of the Nevada
Commission in order to remain effective.
(ix) The Initial Purchaser and any beneficial owner of the Units,
Notes, Exchange Notes, Mortgage Notes or any Warrants are subject to being
called forward at any time by the Nevada Gaming Authorities, in their
discretion, for licensing or a finding of suitability as lenders and/or holders
of equity securities.
(x) The preparation and filing by the Note Issuers of, the
effectiveness, and the sale (as defined in NRS Section 463.1598(2)) of the
Exchange Notes registered pursuant to, the Exchange Offer Registration Statement
covering the exchange of the Notes for Exchange Notes, will require either the
prior approval of the Nevada Commission upon the recommendation of the Nevada
Board, as a public offering, before the Exchange Offer can occur, or an
administrative ruling from the Nevada Board Chairman that is not necessary to
submit the Exchange Offer for such approval.
(xi) The preparation and filing by RAS of, the effectiveness, and
the sale (as defined in NRS Section 463.1598(2)) of the Registrable Securities
(as such term is defined in the LP Registration Rights Agreement) registered
pursuant to a piggy-back registration covering the resale of all of the
Registrable Securities, will require the prior approval of the Nevada Commission
upon the recommendation of the Nevada Board, as a public offering, before any
such sale of such LP Partnership Interests can occur.
<PAGE> 1
EXHIBIT 3.1
STATE OF NEVADA
CERTIFICATE OF LIMITED PARTNERSHIP
IMPORTANT - READ INSTRUCTIONS ATTACHED BEFORE COMPLETING THIS FORM.
--------------------
(THIS CERTIFICATE IS PRESENTED FOR FILING PURSUANT TO CHAPTER 88 OF NRS.)
-MUST BE SUBMITTED IN DUPLICATE-
<TABLE>
TYPE OR PRINT
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Name of Limited Partnership: (Must contain the words Limited Partnership.)
The Resort at Summerlin, Limited Partnership
- -----------------------------------------------------------------------------------------------------------------------------------
2. Street address of records office in Nevada: City and State Zip Code
3800 Howard Hughes Parkway, 14th Floor Las Vegas, NV 89109
- -----------------------------------------------------------------------------------------------------------------------------------
3. Name and street address of Agent for Service of Process:
Name Gordon & Silver, Ltd. ATTN: James S. Mace
Address 3800 Howard Hughes Parkway, 14th Floor
City Las Vegas, NEVADA Zip Code 89109
===================================================================================================================================
4. Name and address of each general partner. (Use continuation sheet if necessary.)
a. The Resort at Summerlin, Inc.
------------------------------------------------------------------------------------------------------------------------------
1512 Larimer St., Ste. 300
b. Denver, CO 80202
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c.
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<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
5. Latest date upon which limited partnership is to dissolve:
July 1, 2050
===================================================================================================================================
6. Any other matters the general partners desire to include in this certificate may be noted on separate pages and
incorporated by reference herein is a part of this certificate.
Number of pages attached: [0]
- -----------------------------------------------------------------------------------------------------------------------------------
7. It is hereby declared that I am (we are) the person(s) who executed this Certificate of Limited Partnership, which
execution may (our) act and deed: (See Instructions.)
<S> <C> <C>
The Resort at Summerlin, Inc.
a Nevada Corporation
By: [SIG] August 15, 1996
----------------------------------------- --------------------------------
General Partner Date General Partner Date
Senior Vice President -------------------------------------------
9. THIS SPACE FOR FILING OFFICE
----------------------------------------- -------------------------------- (Date of Filing.)
General Partner Date General Partner Date
----------------------------------------- -------------------------------- FILED
General Partner Date General Partner Date IN THE OFFICE OF THE SECRETARY OF
STATE OF THE STATE OF NEVADA
<CAPTION>
FORM LP-1-FILING FEE: $75.00 (Approved by Secretary of State.)
<S> <C>
======================================================================================== AUG 15 1996
8. RETURN ACKNOWLEDGEMENT TO: No LP 1344-96
-----------------
NAME GORDON & SILVER, LTD. [SIG]
ADDRESS Attn: James S. Mace DEAN HELLER SECRETARY OF STATE
CITY 3800 Howard Hughes Parkway, 14th Floor
SATE Las Vegas, NV
ZIP CODE 89109
</TABLE>
<PAGE> 2
-----------------------------------
STATE OF NEVADA
Secretary of State
I hereby certify that this is a
true and complete copy of the
document as filed in this
office.
MAR 06 '98
/s/ DEAN HELLER
DEAN HELLER
Secretary of State
By /s/ JACQUELINE CURRY
-----------------------------------
<PAGE> 1
Exhibit 3.2
FIRST AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP OF
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
This First Amendment to Agreement of Limited Partnership (this
"Amendment") of The Resort at Summerlin, Limited Partnership, a Nevada limited
partnership (the "Partnership"), is made and entered into as of December 30,
1997, by and among The Resort at Summerlin, Inc., a Nevada corporation and sole
general partner of the Partnership ("RAS Inc."), with its principal place of
business in Las Vegas, Nevada, and the undersigned Limited Partners (hereinafter
defined). Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Agreement (hereinafter defined).
BACKGROUND INFORMATION
A. Effective August 15, 1996, RAS Inc., as sole general partner of the
Partnership, and Seven Circle Gaming Corporation, a Delaware corporation, as
sole limited partner of the Partnership, entered into an Agreement of Limited
Partnership (the "Agreement") to form the Partnership. The other Limited
Partners who are parties hereto (the "Admitted Partners") were admitted to the
Partnership as of the dates set forth on Schedule 3.1 attached to and made part
hereof pursuant to Acknowledgement of Admission of Limited Partner instruments
executed by each of them and the Partnership.
B. The Partnership plans to construct, own and operate "The Resort at
Summerlin," a Mediterranean-style luxury hotel, casino and spa complex in Las
Vegas, Nevada (the "Resort"). The Partnership has obtained commitments for the
initial financing necessary to construct the Resort (the "Financing") subject,
among other things, to the condition that the amendments set forth herein be
adopted by the Partnership.
C. The Financing consists of $100,000,000 principal amount First Mortgage
Notes due 2004 (the "Mortgage Notes") and $100,000,000 principal amount 13%
Senior Subordinated PIK Notes due 2007 (the "Subordinated PIK Notes") to be
issued jointly and severally by the Partnership and RAS Inc. The Subordinated
PIK Notes will be issued together with an aggregate 100,000 warrants issued by
either or both of the Partnership and RAS Warrant Co., a Nevada corporation,
each such warrant issued by the Partnership (a "Warrant") entitling the holder
thereof to purchase one Limited Partner Interest representing 0.00008% of the
Partnership's total Partnership Interests, on a fully diluted basis as of the
date of issuance of such Warrants.
D. RAS and the Limited Partners now desire to modify and amend the
Agreement in order to satisfy such condition.
STATEMENT OF AGREEMENT
The parties to this Amendment hereby acknowledge the accuracy of the above
Background Information and, in consideration of the covenants and agreements set
forth in this Amendment, the parties agree as follows:
1. INCONSISTENCIES. If any inconsistencies exist between the provisions of
this Amendment and the provisions of the Agreement, then the provisions of this
Amendment shall control and supersede the inconsistent provisions of the
Agreement. Unless otherwise specifically indicated, all references to
<PAGE> 2
sections are to sections of the Agreement and such sections referred to shall
include the effect of the amendments hereunder.
2. AMENDMENTS. The Agreement is hereby amended as follows:
(a) Section 1.1 is amended by deleting Subsection 1.1 (R) in its
entirety and replacing it with the following new Subsection
1.1(R):
"Limited Partners" shall mean the following individuals or
entities in their respective capacities as limited partners of
the Partnership and their respective heirs, successors and
permitted assigns: (i) Seven Circle Gaming Corporation, a
Nevada corporation, Ragan A. Henry, Gustav Mauler and Denise
Mauler, jointly as husband and wife, and Christiana Limited
Partnership, a Nevada limited partnership; and (ii) any
individual or entity who or which acquires a Limited Partner
Interest from the Partnership upon exercise of a Warrant or
otherwise in accordance with Section 2.10 of this Agreement.
(b) Section 1.1 is further amended by deleting Subsection 1.1 (FF)
in its entirety and replacing it with the following new
Subsection 1.1(FF):
"Partnership Interest" shall mean a single partnership
interest, without regard to the percentage interest in the
Partnership it represents, (i) in the capital, income, gains,
losses, deductions, tax credits and distributions of the
Partnership and (ii) in and to all rights of the Partners to
any and all benefits to which the Partners may be entitled as
provided in this Agreement and under applicable law; provided
that each Partnership Interest shall be evidenced by a
certificate pursuant to Section 3.2; provided, further, that
the total Partnership Interests issued and outstanding as of
the date hereof shall be as stated in Section 3.1.
(c) Section 1.1 is further amended by inserting the following new
Subsections 1.1(LL) and 1.1(MM) after Subsection 1.1(KK):
LL: "Tax Allowance Amount" shall mean, with respect to
any Partner (including a Warrant holder if such Warrant holder
is treated as owning an equity interest in the Partnership for
U.S. federal, state or local income tax purposes), for any
calendar quarter, (i) forty percent (40%) of the excess of (a)
the estimated taxable income allocable to such Partner arising
from its ownership of a Partnership Interest for the fiscal
year through such calendar quarter over (b) any losses of the
Partnership for prior fiscal years and such fiscal year that
are allocable to such Partner that were not previously
utilized in the calculation of Tax Allowance Amounts minus
(ii) prior distributions of Tax Allowance Amounts for such
fiscal year received by such Partner, all as determined by the
General Partner in good faith. The amount so determined by the
General Partner shall be the Tax Allowance Amount for such
period and shall be final and binding on all Partners.
2
<PAGE> 3
MM. "Warrants" shall mean warrants issued by the
Partnership which entitle each holder thereof to acquire, upon
the terms and conditions specified in such warrants, a
specified Partnership Interest at the price set forth in such
warrants and shall include, without limitation, the Warrants
referred to in Recital C of the First Amendment to this
Agreement.
(d) Section 2.10 is hereby amended in its entirety by replacing it
with the following new Section 2.10:
2.10 Additional Limited Partners. The General Partner
may, from time to time, admit additional Limited Partners to
the Partnership. Such admission shall include such ministerial
amendments to this Agreement and the Exhibits and Schedules
hereto as the General Partner shall deem appropriate to
properly reflect adjustments caused by such admissions. The
Limited Partners hereby irrevocably consent and agree to the
admission of additional Limited Partners and the issuance of
additional Partnership Interests with respect thereto and any
corresponding adjustments to their relative percentage
interests in the Partnership caused thereby, including,
without limitation, the issuance of Limited Partner Interests
upon the exercise of Warrants. Additionally, the prior
admission of the Admitted Partners as additional Limited
Partners to the Partnership is hereby ratified, confirmed and
approved by the Partners and the General Partner hereby
certifies that the Capital Contributions of the Admitted
Partners set forth on Schedule 3.1 have been received by the
Partnership. Such Admitted Partners shall be treated for all
purposes as Limited Partners retroactively to their original
dates of admission with all terms, rights and obligations as
set forth in this Agreement.
(e) Section 3.1 is hereby amended in its entirety by replacing it
with the following new Section 3.1:
3.1 Partnership Interests. The dates of admission,
Capital Contributions, Partnership Interests and percentage
interests of the Partners as of December 30, 1997 are as set
forth on Schedule 3.1. The General Partner shall cause
Schedule 3.1 to be modified from time to time to reflect new
Partners, Additional Capital Contributions and the like.
(f) Section 3.2 is hereby amended in its entirety by replacing it
with the following new Section 3.2:
3.2 Partnership Certificates.
3.2.1 Form of Certificates. The Partnership
Interests will be issued in registered form as physical
Partnership Interest certificates (the "Partnership
Certificates") in substantially the form set forth in
Exhibit D attached hereto. Such Partnership Certificates
shall represent such of the outstanding Partnership
Interests as shall be specified therein and each shall
provide that it shall represent the aggregate amount of
outstanding
3
<PAGE> 4
Partnership Interests from time to time endorsed thereon
and that the aggregate amount of outstanding Partnership
Interests represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of
a Partnership Certificate to reflect the amount of any
increase or decrease in the amount of outstanding
Partnership Interests represented thereby shall be made
by the General Partner or its agent in accordance with
instructions given by the holder thereof.
3.2.2 Execution of Partnership Certificates. Each
Partnership Certificate shall be signed on behalf of the
Partnership by its General Partner. If the General
Partner is a corporation, each Partnership Certificate
shall be signed on behalf of the General Partner by such
General Partner's Chairman of the Board, President, Vice
President, Chief Financial Officer, Treasurer, Secretary
or Assistant Secretary. If the General Partner is a
natural person, each Partnership Certificate shall be
signed on behalf of the General Partner by such natural
person. Each such signature upon the Partnership
Certificates may be in the form of a facsimile signature
of the present or any future person authorized to sign
for the General Partner under the terms of this
Agreement and may be imprinted or otherwise reproduced
on the Partnership Certificates and for that purpose the
General Partner may adopt and use the facsimile
signature of any person who shall have been Chairman of
the Board, President, Chief Executive Officer, Chief
Operating Officer, Vice President, Treasurer, Chief
Financial Officer, Secretary or Assistant Secretary,
notwithstanding the fact that at the time the
Partnership Certificates shall be countersigned and
delivered or disposed of he shall have ceased to hold
such position. In case the General Partner (or any
person authorized to sign for the General Partner under
the terms of this Agreement) who shall have signed any
of the Partnership Certificates shall cease to be such
General Partner (or such person authorized to sign for
the General Partner under the terms of this Agreement,
respectively) before the Partnership Certificates so
signed shall have been disposed of by the Partnership,
such Partnership Certificates nevertheless may be
countersigned and delivered or disposed of as though
such General Partner (or such person authorized to sign
for the General Partner under the terms of this Unit
Agreement) had not ceased to be such General Partner (or
such person authorized to sign for the General Partner
under the terms of this Agreement, respectively); and
any Partnership Certificate may be signed on behalf of
the Partnership by any General Partner (or such person
authorized to sign for the General Partner under the
terms of this Agreement) who, at the actual date of the
execution of such Partnership Certificate, shall be a
proper General Partner (or such person properly
authorized to sign for the General Partner under the
terms of this Agreement, respectively) authorized to
sign such Partnership Certificate, although at the date
of the execution of this Agreement any such General
Partner (or such person authorized to sign for the
General Partner under the terms of this Agreement) was
not such General Partner (or such person authorized to
sign for the General Partner under the terms of this
Agreement, respectively).
4
<PAGE> 5
3.2.3 Partnership Interests Register.
(i) The Partnership Interests shall be numbered
and shall be registered on the books of the Partnership
maintained at the principal office of the General
Partner (the "Partnership Interests Register") as they
are issued. The General Partner agrees to make the
Partnership Interests Register available during normal
business hours for inspection by agents and other
representatives of the Nevada State Gaming Control Board
upon request.
(ii) The holders of the Partnership Certificates
registered in the Partnership Interests Register shall
be deemed and treated as the absolute owners thereof
(notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes, and
neither the Partnership nor the General Partner or its
agent shall be affected by any notice to the contrary.
3.2.4 Transfer and Exchange of Partnership Interests.
(i) The General Partner shall from time to time,
subject to the limitations of this Agreement, including
but not limited to Section 3.2.5, register the transfer
of any outstanding Partnership Interest upon the records
to be maintained by it for that purpose, upon surrender
thereof duly endorsed or accompanied (if so required by
it) by a written instrument or instruments of transfer
in form satisfactory to the General Partner, duly
executed by the registered holder or holders thereof or
by the duly appointed legal representative thereof or by
a duly authorized attorney. Subject to the terms of this
Agreement, each Partnership Certificate may be exchanged
for another certificate or certificates entitling the
holder or holders thereof to purchase a like aggregate
amount of Partnership Interests as the certificate or
certificates surrendered then entitle each holder to
purchase. Any holder desiring to exchange a Partnership
Certificate or Certificates shall make such request in
writing delivered to the General Partner, and shall
surrender, duly endorsed or accompanied (if so required
by the General Partner) by a written instrument or
instruments of transfer in form satisfactory to the
General Partner, the Partnership Certificate or
Certificates to be so exchanged.
(ii) Upon registration of transfer, the General
Partner shall countersign and deliver by certified mail
a new Partnership Certificate or Certificates to the
persons entitled thereto. The Partnership Certificates
may be exchanged at the option of the holder thereof,
when surrendered at the office or agency of the
Partnership maintained for such purpose, which initially
will be the office of the General Partner or its agent
for such purpose in Las Vegas, Nevada, for another
Partnership Certificate, or other Partnership
Certificates of different denominations, of like tenor
and representing in the aggregate the right to purchase
a like amount of Partnership Interests.
5
<PAGE> 6
(iii) No service charge shall be made for any
exchange or registration of transfer of Partnership
Certificates, but the Partnership may require payment of
a sum sufficient to cover any stamp or other tax or
other governmental charge that is imposed in connection
with any such exchange or registration of transfer.
(iv) Notwithstanding any other provision of this
Agreement, on and after such time as the Partnership
shall have obtained a nonrestricted gaming license (the
"License") issued by the Nevada Gaming Commission (the
"Nevada Commission"), no holder of a Partnership
Interest may sell, assign, transfer, pledge or make any
other disposition of a Partnership Interest without the
prior approval of the Nevada Commission unless the
Partnership is then registered by the Nevada Commission
as a "publicly traded corporation" (a "Registered
Company"), as that term is defined in the Nevada Gaming
Control Act and the regulations promulgated thereunder
(collectively, the "Nevada Act"), and holds certain
exemptions from the Nevada Commission in connection with
such registration (the "Exemptions"). The General
Partner shall promptly notify each holder of a
Partnership Certificate in writing in each instance upon
the Partnership becoming the holder of the License, a
Registered Company and the holder of the Exemptions.
3.2.5 Registration of Transfers and Exchanges.
(i) Transfer and Exchange of Partnership
Certificates. When Partnership Certificates are
presented to the General Partner or its duly appointed
agent with a request:
(A) to register the transfer of any
Partnership Interests;
or
(B) to exchange such Partnership
Certificates for Partnership Certificates of other
authorized denominations evidencing in the aggregate an
equal number of Partnership Interests, the General
Partner shall register the transfer or make the exchange
as requested if the requirements of this Section 3.2 for
such transactions are met; provided, however, that the
Partnership Certificates presented or surrendered for
registration of transfer or exchange:
(I) shall be duly endorsed or
accompanied by a written instrument of transfer in form
satisfactory to the General Partner or its agent, duly
executed by the holder thereof or his attorney duly
authorized in writing; and
(II) in the case of Partnership
Interests the offer and sale of which have not been
registered under the Securities Act of 1933, as amended
(the "Securities Act"), such Partnership Certificates
shall be accompanied, in the sole discretion of the
General Partner, by the following additional information
and documents, as applicable:
6
<PAGE> 7
(1) if such Partnership Certificates
are being delivered to the General Partner or its agent
by a holder for registration in the name of such holder,
without transfer, a certification from such holder to
that effect (in substantially the form of Exhibit E
hereto); or
(2) if such Partnership Interests are
being transferred in reliance on an exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the form
of Exhibit E hereto or as otherwise required by the
General Partner) and an opinion of counsel reasonably
satisfactory to the General Partner to the effect that
such transfer is in compliance with the Securities Act.
(ii) Legends.
(A) For so long as transfer of a Partnership
Interest is not permitted without registration under the
Securities Act, each Partnership Certificate evidencing
such Partnership Interest (and all Partnership Interests
issued in exchange therefor or substitution thereof)
shall bear a legend substantially to the following
effect:
THE LIMITED PARTNERSHIP INTERESTS IN THE RESORT AT
SUMMERLIN, LIMITED PARTNERSHIP (THE "PARTNERSHIP")
REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER ANY
FEDERAL OR STATE SECURITIES LAWS. NO INTEREST IN THE
PARTNERSHIP MAY BE SOLD, ASSIGNED, TRANSFERRED,
MORTGAGED, ENCUMBERED, HYPOTHECATED OR DISPOSED OF IN
ANY WAY WITHOUT THE CONSENT OF THE GENERAL PARTNER. THE
GENERAL PARTNER OF THE PARTNERSHIP MAY REQUIRE AN
OPINION OF COUNSEL THAT ANY SUCH DISPOSITION COMPLIES
WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
THE SALE OR OTHER TRANSFER OF ANY INTEREST IN THE
PARTNERSHIP IS ALSO SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN THE AGREEMENT OF LIMITED PARTNERSHIP OF THE
PARTNERSHIP.
(B) For so long as the Registration Rights
and Limited Partners' Agreement dated as of December 30,
1997 among the General Partner, the Limited Partners and
holders of Warrants is in effect, each Partnership
Certificate shall bear the following legend:
THE LIMITED PARTNERSHIP INTERESTS REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A REGISTRATION RIGHTS AND
LIMITED PARTNERS' AGREEMENT DATED AS OF DECEMBER 30,
1997, WHICH CONTAINS PROVISIONS REGARDING THE
RESTRICTIONS ON THE TRANSFER AND PROVISIONS REQUIRING
THE MANDATORY TRANSFER OF SUCH PARTNERSHIP INTERESTS AND
OTHER MATTERS. A
7
<PAGE> 8
COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL OFFICE OF THE PARTNERSHIP.
(C) On and after the date of issuance of a
License to the Partnership and until the Partnership has
been registered as a Registered Company and granted the
Exemptions by the Nevada Commission, each Partnership
Certificate evidencing Partnership Interests (and all
Partnership Interests issued in exchange therefor or
substitution thereof) shall bear a legend substantially
to the following effect:
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER
DISPOSITION OF ANY INTEREST IN THE LIMITED PARTNERSHIP
IS VOID UNLESS APPROVED IN ADVANCE BY THE NEVADA GAMING
COMMISSION. IF AT ANY TIME THE NEVADA GAMING COMMISSION
FINDS THAT AN INDIVIDUAL OWNER OF ANY SUCH INTEREST IS
UNSUITABLE TO HOLD THAT INTEREST, THE NEVADA GAMING
COMMISSION SHALL IMMEDIATELY NOTIFY THE LIMITED
PARTNERSHIP OF THAT FACT. THE LIMITED PARTNERSHIP SHALL,
WITHIN TEN DAYS FROM THE DATE THAT IT RECEIVES THE
NOTICE FROM THE NEVADA GAMING COMMISSION, RETURN TO THE
UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS
REFLECTED ON THE BOOKS OF THE LIMITED PARTNERSHIP.
BEGINNING ON THE DATE WHEN THE NEVADA GAMING COMMISSION
SERVES NOTICE OF A DETERMINATION OF UNSUITABILITY,
PURSUANT TO THE PRECEDING SENTENCE, UPON THE LIMITED
PARTNERSHIP, IT IS UNLAWFUL FOR THE UNSUITABLE OWNER:
(A) TO RECEIVE ANY SHARE OF THE PROFITS OR DISTRIBUTIONS
OF ANY CASH OR OTHER PROPERTY OTHER THAN A RETURN OF
CAPITAL AS REQUIRED ABOVE; (B) TO EXERCISE, DIRECTLY OR
THROUGH ANY TRUSTEE OR NOMINEE, ANY VOTING RIGHT
CONFERRED BY SUCH INTEREST; OR (C) TO RECEIVE ANY
REMUNERATION IN ANY FORM FROM THE LIMITED PARTNERSHIP,
FOR SERVICES RENDERED OR OTHERWISE.
ANY LIMITED PARTNER GRANTED DELAYED LICENSING THAT IS
LATER FOUND UNSUITABLE BY THE NEVADA GAMING COMMISSION
SHALL RETURN ALL EVIDENCE OF ANY OWNERSHIP IN THE
LIMITED PARTNERSHIP TO THE LIMITED PARTNERSHIP, AT WHICH
TIME THE LIMITED PARTNERSHIP SHALL REFUND TO THE
UNSUITABLE LIMITED PARTNER NO MORE THAN THE AMOUNT THAT
HE PAID FOR HIS OWNERSHIP INTEREST, AND THE UNSUITABLE
LIMITED PARTNER SHALL NO
8
<PAGE> 9
LONGER HAVE ANY DIRECT OR INDIRECT INTEREST IN THE
LIMITED PARTNERSHIP.
3.2.6 Mutilated or Missing Partnership
Certificates. In case any of the Partnership
Certificates shall be mutilated, lost, stolen or
destroyed, the General Partner or its agent may at its
discretion issue in exchange and substitution for and
upon cancellation of the mutilated Partnership
Certificate, or in lieu of and substitution for the
Partnership Certificate lost, stolen or destroyed, a new
Partnership Certificate of like tenor and representing
an equivalent number of Partnership Interests, but only
upon receipt of evidence satisfactory to the General
Partner or its agent of such loss, theft or destruction
of such Partnership Certificate and indemnity also
satisfactory to the General Partner or its agent.
Applicants for such substitute Partnership Certificates
shall also comply with such other reasonable regulations
and pay such other reasonable charges as the General
Partner or its agent may prescribe.
(g) Section 4.3 is hereby amended by deleting Subsections 4.3L and
4.3N thereof in their entireties and replacing them with the
following:
L. The amendment of this Agreement, other than (i)
amendments pursuant to Section 2.10, (ii) amendments solely
for the purpose of clarification which do not change the
substance hereof, (iii) amendments for the purpose of
substituting Limited Partners, (iv) amendments which, in the
opinion of counsel for the Partnership, are necessary or
appropriate to satisfy requirements of the Code with respect
to partnerships or of any federal or state securities laws or
regulations, each of which may be made by the General Partner
acting alone.
N. The admission of additional General Partners or the
expulsion or involuntary withdrawal or liquidation of a
Partner.
(h) Section 5.1 is hereby amended by adding the following
provision at the end thereof:
Notwithstanding the foregoing, no item of income, gain,
loss or deduction will be allocated to any holder of Warrants
prior to such holder's exercise of such Warrant for a Limited
Partner Interest.
(i) Section 5.2 is hereby amended by adding the following
provision at the end thereof:
No item of capital gain realized by the Partnership
shall be allocated to any holder of Warrants prior to such
holder's exercise of such Warrant for a Limited Partner
Interest.
(j) The Agreement is amended by inserting the following New
Sections 5.8 and 5.9 after the current Section 5.7:
5.8 Distribution of Tax Allowance Amounts. As soon as
reasonably practicable after the end of each calendar
quarter, the General Partner shall determine the Tax
Allowance Amount for every Partner (including a Warrant
holder if
9
<PAGE> 10
such Warrant holder is treated as owning an equity
interest in the Partnership for U.S. federal, state or
local income tax purposes) in respect of such quarter.
Upon such determination, the Partnership shall
distribute each Partner's Tax Allowance Amount to such
Partner provided that such distribution is not
prohibited by any agreement to which the Partnership is
then a party or is otherwise bound. All such
distributions shall have priority over any distributions
pursuant to Section 5.3. To the extent that the
cumulative distributions of Tax Allowance Amounts to a
Partner pursuant to this Section 5.8 for a fiscal year
exceed an amount equal to the cumulative Tax Allowance
Amount calculated with respect to such Partner at the
end of such fiscal year as if no prior distributions of
Tax Allowance Amounts had been made, the excess shall
not be treated as a Tax Allowance Amount and shall
reduce the amount otherwise distributable to such
Partner under Section 5.3.
5.9 Notwithstanding anything to the contrary contained in
this Agreement, no proceeds of any borrowings by the
Partnership, including but not limited to those under
the Mortgage Notes and the Subordinated PIK Notes, shall
be deemed to be part of distributable Cash Flow and the
use or uses of such borrowings under the Credit
Agreement and Subordinated PIK Notes shall be restricted
to the use or uses permitted by the Credit Agreement and
related documents and instruments with respect to the
Mortgage Notes and by the Indenture and related
documents and instruments with respect to the
Subordinated PIK Notes. In furtherance of the foregoing,
the undersigned Partners hereby acknowledge and accept
that the Partnership shall be subject to the terms and
conditions of the borrowings evidenced by the Mortgage
Notes and Subordinated PIK Notes and the other
agreements, documents and instruments related thereto,
including but not limited to the Warrants.
(k) Section 6.7 is amended by inserting the following at the end
of the current Section 6.7:
In addition, the Partnership will make an election under
Section 754 of the Code to adjust the tax basis of the
property of the Partnership under Section 734 or 743 of the
Code with respect to any transfer of a Partnership Interest by
a holder of a Warrant if requested by such holder with respect
to such transfer, provided, however, that the Partnership
shall not be required to make such election if it reasonably
determines that such election would result in material costs
to the Partnership or the Partners (other than out-of-pocket
expenses incurred in connection with making such election).
(l) Section 7.1 is deleted in its entirety and shall be of no
further force and effect.
(m) Section 7.2 is amended by inserting the following at the end
of Subsection 7.2(D):
Notwithstanding the foregoing, any Transfer or purported
Transfer of any Partnership Interest, whether to another
Partner or to a third party, shall be of no effect, and such
transferee shall not become a Partner, if the Partnership
would or may, in the sole determination of the General
Partner, have in the aggregate more
10
<PAGE> 11
than one hundred (100) Partners. For purposes of determining
the number of Partners under this Section 7.2(D), a person
(the "beneficial owner") indirectly owning an interest in the
Partnership through a partnership, grantor trust or S
corporation (as such terms are used in the Code) (the
"flow-through entity") shall be considered a Partner, but only
if (i) substantially all of the value of the beneficial
owner's interest in the flow-through entity is attributable to
the flow-through entity's interest (direct or indirect) in the
Partnership and (ii) in the sole discretion of the General
Partner, a principal purpose of the use of the tiered
arrangement is to permit the Partnership to satisfy such
100-Partner limitation.
(n) Each of Sections 7.3, 7.4 and 7.5 is hereby deleted in its
entirety, and shall be of no further force or effect.
(o) Section 8.1 is hereby deleted in its entirety and shall be of
no further force or effect.
(p) Section 11.3 is hereby deleted in its entirety.
3. SEVERABILITY. Whenever possible, each provision of this Amendment will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Amendment is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Amendment.
4. FULL FORCE AND EFFECT. Except as expressly amended hereby, the
Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof and the parties hereto ratify and agree to
continue to be bound by all terms and provisions of the Agreement as amended
hereby. As used in this Amendment, the terms "Agreement," this "Agreement,"
"herein," "hereafter," "hereto," "hereof," and words of similar import shall,
unless the context otherwise requires, mean or refer to the Agreement.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and such counterparts together will constitute one instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
AND IS FOLLOWED BY A SINGLE SIGNATURE PAGE.]
11
<PAGE> 12
This First Amendment to Agreement of Limited Partnership of The Resort at
Summerlin, Limited Partnership is executed by the undersigned as of the date
first set forth above.
GENERAL PARTNER:
RESORT AT SUMMERLIN, INC., a Nevada
corporation
By:____________________________________
Name:
Its:
LIMITED PARTNERS:
_______________________________________
RAGAN A. HENRY
_______________________________________
GUSTAV MAULER
_______________________________________
DENISE MAULER
CHRISTIANA LIMITED PARTNERSHIP,
a Nevada limited partnership
By: Keepsake, Inc., a Nevada
corporation, general partner
By__________________________
Name:
Its:
SEVEN CIRCLE GAMING
CORPORATION, a Delaware corporation
By__________________________________
Name:
Its:
12
<PAGE> 13
SCHEDULE 3.1
PARTNERS LEDGER AS OF DECEMBER 30, 1997
<TABLE>
<CAPTION>
DATE OF CAPITAL PARTNERSHIP PERCENTAGE
GENERAL PARTNER ADMISSION CONTRIBUTION INTERESTS INTERESTS
--------------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C>
The Resort at Summerlin, Inc. 08/15/96 $ 500,000.00 11,500 1%
LIMITED PARTNERS
----------------
Seven Circle Gaming Corporation 08/15/96 $15,525,628.30 1,046,500 91%
Gustav Mauler and Denise Mauler,
jointly 05/01/97 $ 500,000.00 11,500 1%
Christiana Limited Partnership 05/07/97 $ 2,500,000.00 57,500 5%
Ragan A. Henry 05/07/97 $ 1,000,000.00 23,000 2%
-------------- --------- ---
$20,025,628.30 1,150,000 100%
============== ========= ===
</TABLE>
<PAGE> 14
EXHIBIT D
[FORM OF PARTNERSHIP CERTIFICATE - FACE]
Certificate Number____ Number of Limited Partnership Interests____
Certificate of Limited Partnership Interest
The Resort at Summerlin, Limited Partner
This certifies that _____________________ is the owner of ____ limited
partnership interests of THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP, a limited
partnership formed under the laws of the State of Nevada (the "Partnership"),
and is entitled to all rights and benefits of a limited partner as set forth in
the Agreement of Limited Partnership of the Partnership (the "Partnership
Agreement"), as amended from time to time.
The limited partnership interests evidenced by this Certificate may be
sold, transferred or assigned only in accordance with the terms and conditions
set forth in the Partnership Agreement and only upon surrender of this
Certificate properly endorsed.
IN WITNESS WHEREOF, THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP has
caused this Certificate to be issued this ____ day of _____ , 19__ .
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
By: The Resort at Summerlin, Inc., general partner
By:_________________________________________
Print Name:_________________________________
Its:________________________________________
<PAGE> 15
[FORM OF PARTNERSHIP CERTIFICATE - REVERSE]
THE LIMITED PARTNERSHIP INTERESTS IN THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP (THE "PARTNERSHIP") REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER ANY FEDERAL OR STATE
SECURITIES LAWS. NO INTEREST IN THE PARTNERSHIP MAY BE SOLD, ASSIGNED,
TRANSFERRED, MORTGAGED, ENCUMBERED, HYPOTHECATED OR DISPOSED OF IN ANY WAY
WITHOUT THE CONSENT OF THE GENERAL PARTNER. THE GENERAL PARTNER OF THE
PARTNERSHIP MAY REQUIRE AN OPINION OF COUNSEL THAT ANY SUCH DISPOSITION COMPLIES
WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THE SALE OR OTHER
TRANSFER OF ANY INTEREST IN THE PARTNERSHIP IS ALSO SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN THE AGREEMENT OF LIMITED PARTNERSHIP OF THE
PARTNERSHIP.
[THE LIMITED PARTNERSHIP INTERESTS REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A REGISTRATION RIGHTS AND LIMITED PARTNERS' AGREEMENT DATED AS OF
DECEMBER 30, 1997, WHICH CONTAINS PROVISIONS REGARDING THE RESTRICTIONS ON THE
TRANSFER AND PROVISIONS REQUIRING THE MANDATORY TRANSFER OF SUCH PARTNERSHIP
INTERESTS AND OTHER MATTERS. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE PARTNERSHIP.]
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER DISPOSITION OF ANY
INTEREST IN THE LIMITED PARTNERSHIP IS VOID UNLESS APPROVED IN ADVANCE BY THE
NEVADA GAMING COMMISSION. IF AT ANY TIME THE NEVADA GAMING COMMISSION FINDS THAT
AN INDIVIDUAL OWNER OF ANY SUCH INTEREST IS UNSUITABLE TO HOLD THAT INTEREST,
THE NEVADA GAMING COMMISSION SHALL IMMEDIATELY NOTIFY THE LIMITED PARTNERSHIP OF
THAT FACT. THE LIMITED PARTNERSHIP SHALL, WITHIN TEN DAYS FROM THE DATE THAT IT
RECEIVES THE NOTICE FROM THE NEVADA GAMING COMMISSION, RETURN TO THE UNSUITABLE
OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS REFLECTED ON THE BOOKS OF THE LIMITED
PARTNERSHIP. BEGINNING ON THE DATE WHEN THE NEVADA GAMING COMMISSION SERVES
NOTICE OF A DETERMINATION OF UNSUITABILITY, PURSUANT TO THE PRECEDING SENTENCE,
UPON THE LIMITED PARTNERSHIP, IT IS UNLAWFUL FOR THE UNSUITABLE OWNER: (A) TO
RECEIVE ANY SHARE OF THE PROFITS OR DISTRIBUTIONS OF ANY CASH OR OTHER PROPERTY
OTHER THAN A RETURN OF CAPITAL AS REQUIRED ABOVE; (B) TO EXERCISE, DIRECTLY OR
THROUGH ANY TRUSTEE OR NOMINEE, ANY VOTING RIGHT CONFERRED BY SUCH INTEREST; OR
(C) TO RECEIVE ANY REMUNERATION IN ANY FORM FROM THE LIMITED PARTNERSHIP, FOR
SERVICES RENDERED OR OTHERWISE.
ANY LIMITED PARTNER GRANTED DELAYED LICENSING THAT IS LATER FOUND
UNSUITABLE BY THE NEVADA GAMING COMMISSION SHALL RETURN ALL EVIDENCE OF ANY
OWNERSHIP IN THE LIMITED PARTNERSHIP TO THE LIMITED PARTNERSHIP, AT WHICH TIME
THE LIMITED PARTNERSHIP SHALL REFUND TO THE UNSUITABLE LIMITED PARTNER NO MORE
THAN THE AMOUNT THAT HE PAID FOR HIS OWNERSHIP INTEREST, AND THE UNSUITABLE
LIMITED PARTNER SHALL NO LONGER HAVE ANY DIRECT OR INDIRECT INTEREST IN THE
LIMITED PARTNERSHIP.
<PAGE> 16
EXHIBIT E
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF PARTNERSHIP INTERESTS
Re: Limited Partnership Interests (the "Securities")
of The Resort at Summerlin, Limited Partnership
(the "Partnership")
This Certificate relates to ____________ Securities held in the form
of physical Partnership Certificate by _________________ (the "Transferor").
The Transferor:*
/ / has requested that the General Partner of the Partnership or the
transfer agent for the Partnership by written order to exchange or register the
transfer of Securities evidenced by physical Partnership Certificates.
In connection with such request and in request of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Agreement of Limited Partnership relating to the above captioned
Securities and the restrictions on transfers thereof as provided therein, and
that the transfer of these Securities does not require registration under the
Securities Act of 1933, as amended (the "Act") because*:
/ / Such Security is being acquired for the Transferor's own account,
without transfer.
/ / Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act.
/ / Such Security is being transferred in reliance on Regulation S under
the Act (and fully executed Certificates in the forms of Exhibits E-1 and E-2
hereto, as applicable, accompany this Certificate).
<PAGE> 17
/ / Such Security is being transferred in reliance on Rule 144 under the
Act.
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
-------------------------------------
(INSERT NAME OF TRANSFEROR)
By:
--------------------------------
(Authorized Signature)
Date:
- -----------------------------
*Check applicable box.
2
<PAGE> 18
EXHIBIT E-1
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
[Date]
The Resort at Summerlin, Inc.
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
Re: The Resort at Summerlin, Limited Partnership (the "Partnership")
Limited Partnership Interests (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of Securities of the
Partnership, we confirm that:
1. We have received such information as we deem necessary in order to make
our investment decision.
2. We understand that the limited partnership interests of the Partnership
represented by this Certificate are subject to restrictions on the transfer and
the mandatory transfer of interests and other matters as contained in the
Partnership's Agreement of Limited Partnership, as amended, and in a
Registration Rights and Limited Partners' Agreement dated as of December 30,
1997, and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Securities, we will do so only (A) to the
Partnership or any subsidiary thereof, (B) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to the General Partner
or the transfer agent for the Partnership a signed letter substantially in the
form hereof, (D) outside the United States in accordance with Regulation S under
the Securities Act, (E) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing Securities from us a notice advising such
purchaser that resales of the Securities are restricted as stated herein.
<PAGE> 19
4. We understand that, on any proposed resale of Securities, we will be
required to furnish the General Partner and/or the transfer agent for the
Partnership, such certification, legal opinions and other information as may be
reasonably required to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Securities purchased by
us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Partnership and its transfer agent are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
(Name of Transferor)
By: __________________________
(Authorized Signatory)
2
<PAGE> 20
EXHIBIT E-2
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
[Date]
The Resort at Summerlin, Inc.
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
Re: The Resort at Summerlin, Limited Partnership (the "Partnership")
Limited Partnership Interests (the "Securities")
Dear Sirs:
In connection with our proposed purchase of ___________ of the
Securities, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) neither (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been prearranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions applicable
to the Securities.
<PAGE> 21
You and the Partnership and its transfer agent are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby. Defined terms used
herein without definition have the respective meanings provided in Regulation S.
Very truly yours,
(Name of Transferor)
By: __________________________
(Authorized Signatory)
2
<PAGE> 22
This First Amendment to Agreement of Limited Partnership of The Resort
at Summerlin, Limited Partnership is executed by the undersigned as of the date
first set forth above.
GENERAL PARTNER:
RESORT AT SUMMERLIN, INC., a Nevada
corporation
By: /s/ Brian McMullan
---------------------------------
Name: BRIAN McMULLAN
Its: PRESIDENT
LIMITED PARTNERS:
/s/ Ragan A. Henry
------------------------------------
RAGAN A. HENRY
/s/ Gustav Mauler
------------------------------------
GUSTAV MAULER
/s/ Denise Mauler
------------------------------------
DENISE MAULER
CHRISTIANA LIMITED PARTNERSHIP, a
Nevada limited partnership
By: Keepsake, Inc., a Nevada
corporation, general partner
By: /s/ Paul Steelman
--------------------------
Name: PAUL STEELMAN
Its: PRESIDENT
SEVEN CIRCLE GAMING CORPORATION, a
Delaware corporation
By: /s/ Brian McMullan
---------------------------------
Name: BRIAN McMULLAN
Its: PRESIDENT
12
<PAGE> 23
This First Amendment to Agreement of Limited Partnership of the Resort
at Summerlin, Limited Partnership is executed by the undersigned as of the date
first set forth above.
GENERAL PARTNER:
RESORT AT SUMMERLIN, INC., a Nevada
corporation
By: /s/ Brian McMullan
---------------------------------
Name: BRIAN McMULLAN
Its: PRESIDENT
LIMITED PARTNERS:
/s/ Ragan A. Henry
------------------------------------
RAGAN A. HENRY
/s/ Gustav Mauler
------------------------------------
GUSTAV MAULER
/s/ Denise Mauler
------------------------------------
DENISE MAULER
CHRISTIANA LIMITED PARTNERSHIP, a
Nevada limited partnership
By: Keepsake, Inc., a Nevada
corporation, general partner
By: /s/ Paul Steelman
--------------------------
Name: PAUL STEELMAN
Its: PRESIDENT
SEVEN CIRCLE GAMING CORPORATION, a
Delaware corporation
By: /s/ Brian McMullan
---------------------------------
Name: BRIAN McMULLAN
Its: PRESIDENT
<PAGE> 24
This First Amendment to Agreement of Limited Partnership of the Resort
at Summerlin, Limited Partnership is executed by the undersigned as of the date
first set forth above.
GENERAL PARTNER:
RESORT AT SUMMERLIN, INC., a Nevada
corporation
By: /s/ Brian McMullan
---------------------------------
Name: BRIAN McMULLAN
Its: PRESIDENT
LIMITED PARTNERS:
/s/ Ragan A. Henry
------------------------------------
RAGAN A. HENRY
/s/ Gustav Mauler
------------------------------------
GUSTAV MAULER
/s/ Denise Mauler
------------------------------------
DENISE MAULER
CHRISTIANA LIMITED PARTNERSHIP, a
Nevada limited partnership
By: Keepsake, Inc., a Nevada
corporation, general partner
By: /s/ Paul Steelman
--------------------------
Name: PAUL STEELMAN
Its: PRESIDENT
SEVEN CIRCLE GAMING CORPORATION, a
Delaware corporation
By: /s/ Brian McMullan
---------------------------------
Name: BRIAN McMULLAN
Its: PRESIDENT
<PAGE> 25
This First Amendment to Agreement of Limited Partnership of The Resort at
Summerlin, Limited Partnership is executed by the undersigned as of the date
first set forth above.
GENERAL PARTNER:
RESORT AT SUMMERLIN, INC., a Nevada
corporation
By: /s/ Brian McMullan
-------------------------------
Name: Brian McMullan
Its: President
LIMITED PARTNERS:
/s/ Ragan A. Henry
-----------------------------------
RAGAN A. HENRY
/s/ Gustav Mauler
-----------------------------------
GUSTAV MAULER
/s/ Denise Mauler
-----------------------------------
DENISE MAULER
CHRISTIANA LIMITED PARTNERSHIP,
a Nevada limited partnership
By: Keepsake, Inc., a Nevada
corporation, general partner
By: /s/ Paul Steelman
---------------------------
Name: Paul Steelman
Its: President
SEVEN CIRCLE GAMING
CORPORATION, a Delaware corporation
By: /s/ Brian McMullan
--------------------------------
Name: Brian McMullan
Its: President
12
<PAGE> 26
This First Amendment to Agreement of Limited Partnership of The Resort at
Summerlin, Limited Partnership is executed by the undersigned as of the date
first set forth above.
GENERAL PARTNER:
RESORT AT SUMMERLIN, INC., a Nevada
corporation
By: /s/ Brian McMullan
-------------------------------
Name: Brian McMullan
Its: President
LIMITED PARTNERS:
-----------------------------------
RAGAN A. HENRY
/s/ Gustav Mauler
-----------------------------------
GUSTAV MAULER
/s/ Denise Mauler
-----------------------------------
DENISE MAULER
CHRISTIANA LIMITED PARTNERSHIP,
a Nevada limited partnership
By: Keepsake, Inc., a Nevada
corporation, general partner
By: /s/ Paul Steelman
---------------------------
Name: Paul Steelman
Its: President
SEVEN CIRCLE GAMING
CORPORATION, a Delaware corporation
By: /s/ Brian McMullan
--------------------------------
Name: Brian McMullan
Its: President
<PAGE> 27
This First Amendment to Agreement of Limited Partnership of The Resort at
Summerlin, Limited Partnership is executed by the undersigned as of the date
that set forth above.
GENERAL PARTNER:
RESORT AT SUMMERLIN, INC., a Nevada
corporation
By: /s/ Brian McMullan
-------------------------------
Name: Brian McMullan
Its: President
LIMITED PARTNERS:
-----------------------------------
RAGAN A. HENRY
/s/ Gustav Mauler
-----------------------------------
GUSTAV MAULER
/s/ Denise Mauler
-----------------------------------
DENISE MAULER
CHRISTIANA LIMITED PARTNERSHIP,
a Nevada limited partnership
By: Keepsake, Inc., a Nevada
corporation, general partner
By: /s/ Paul Steelman
---------------------------
Name: Paul Steelman
Its: President
SEVEN CIRCLE GAMING
CORPORATION, a Delaware corporation
By: /s/ Brian McMullan
--------------------------------
Name: Brian McMullan
Its: President
<PAGE> 28
CERTIFICATE OF SECRETARY
OF
THE RESORT AT SUMMERLIN, INC.
I, Jeff Smith, Secretary of The Resort at Summerlin, Inc., a
Nevada corporation ("RAS, Inc."), do hereby certify on behalf of RAS, Inc. as
follows (capitalized terms not otherwise referred herein shall be the same
meaning as in the Purchase Agreement, dated December 22, 1997, among RAS, Inc.,
The Resort at Summerlin, Limited Partnership, RAS Warrant Co., and NatWest
Capital Markets Limited):
1. Attached hereto as Exhibit A is a true and correct copy of
the Certificate of Incorporation of RAS, Inc. as in effect of the date hereof.
2. Attached hereto as Exhibit B is a true and correct copy of
the By-Laws of RAS, Inc. as in effect of the date hereof.
3. The following individuals are elected or appointed officers
of RAS, Inc., each holds the office of RAS, Inc. set forth opposite his name and
the signature written opposite the name and title of each such officer is his
genuine signature.
Name Office Signature
- ---- ------ ---------
Brian McMullan President and
Chief Executive Officer /s/ Brian McMullan
---------------------------
Quinton Boshoff Senior Vice
President Slot Operations /s/ Quinton Boshoff
---------------------------
4. Attached hereto as Exhibit C are true and correct copies of
all resolutions of the Board of Directors of RAS, Inc. authorizing (a) the
transactions contemplated by the Purchase Agreement and (b) the Material
Agreements to which RAS, Inc. is a party, the offering of the Securities, the
entering into the Purchase Agreement, the Indenture, the Registration Rights
Agreements, the Unit Agreement, the Disbursement Agreement and the Subordinated
Notes Proceeds Accounts Agreement.
Dated: December 31, 1997 By:
-------------------------
Jeff Smith, Secretary
1
<PAGE> 29
I, Brian McMullan, President of RAS, Inc., do hereby certify
that Jeff Smith is the duly elected, qualified and acting Secretary of RAS, Inc.
and that the signature of Jeff Smith set forth above is his genuine signature.
Dated: December 31, 1997 By:/s/ Brian McMullan
---------------------------
Brian McMullan
President
2
<PAGE> 30
===============================================================================
THE INTERESTS IN THE PARTNERSHIP REPRESENTED BY THIS AGREEMENT HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER ANY FEDERAL OR STATE
SECURITIES LAWS. NO INTEREST IN THE PARTNERSHIP MAY BE SOLD, ASSIGNED,
TRANSFERRED, MORTGAGED, ENCUMBERED, HYPOTHECATED OR DISPOSED OF IN ANY WAY
WITHOUT THE CONSENT OF THE GENERAL PARTNER. THE GENERAL PARTNER MAY REQUIRE AN
OPINION OF COUNSEL THAT ANY SUCH DISPOSITION COMPLIES WITH ALL APPLICABLE
FEDERAL AND STATE SECURITIES LAWS. THE SALE OR OTHER TRANSFER OF AN INTEREST IN
THE PARTNERSHIP IS ALSO SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THIS
AGREEMENT.
===============================================================================
AGREEMENT OF LIMITED PARTNERSHIP OF
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP (the or this "Agreement") creating
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP, a Nevada limited partnership (the
"Partnership") is entered into by and between THE RESORT AT SUMMERLIN, INC., a
Nevada corporation with its principal place of business in Las Vegas, Nevada,
and the undersigned Limited Partners.
WITNESSETH:
WHEREAS, the undersigned Partners (as herein defined) wish to form a
Nevada limited partnership for the purpose of acquiring certain land in the
State of Nevada and developing, owning and operating the Resort (as herein
defined);
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. DEFINITIONS
1.1 Terms Defined. When used in this Agreement, the following terms shall
have the meanings set forth in this Paragraph 1.1:
A. "Additional Capital Contributions" shall have the meaning set
forth in Paragraph 3.4 of this Agreement.
B. "Affiliate" shall mean a person, entity or organization which,
directly or indirectly, controls, is controlled by, or is under common control
with the person, entity or organization in question. The term "control" as used
in the immediately preceding sentence means, with respect to an entity that is
a corporation, the right to exercise, directly or indirectly, more than fifty
percent (50%) of the voting rights attributable to the shares of such
corporation and, with respect to a person or organization that is not a
corporation, the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such person or
organization.
C. "Budget" shall mean an annual budget, prepared by the General
Partner for each fiscal year of the Partnership and approved as required by
Paragraph 4.3 of this
1
<PAGE> 31
Agreement, which budget shall be comprised of both a capital budget which shall
be an estimate of all capital expenditures to be made during the fiscal year of
the Partnership, and an operating budget which shall be an estimate of all
revenues and expenses of operating the Partnership during the fiscal year.
D. "Capital Account" shall have the meaning set forth in Paragraph 3.3
of this Agreement.
E. "Capital Contribution" shall mean the cash and the fair market value
of services or property other than cash (net of liabilities which the
Partnership assumes or takes the property subject to) contributed to the
capital of the Partnership by the Partners.
F. "Cash Flow" shall mean the net income of the Partnership as
determined in accordance with the method of accounting utilized by the
Partnership pursuant to Paragraph 6.2 of this Agreement, consistently applied
and adjusted as follows:
(1) There shall be added to such net income or loss:
(a) The amount charged for depreciation and any other
deductions not involving a cash expenditure or creating a current account
payable;
(b) The net proceeds received, to the extent not included in
income, by reason of any sale, condemnation or destruction of a part or parts
(but less than all) of the physical structures and facilities or tangible
personal property of the Partnership and not in connection with the dissolution
of the Partnership;
(c) The proceeds of any borrowing by the Partnership;
(d) Cash contributions to the Partnership; and,
(e) The net change in operating assets and liabilities as
included in the Partnership statement of cash flow.
(2) There shall be subtracted from such net income or loss:
(a) The amount of payments made on account of principal upon
mortgages and deeds of trust against any real property or tangible personal
property owned by the Partnership or upon principal of all other loans made to
the Partnership;
(b) Any amounts paid for non-deductible capital expenditures
and any other cash sums expended for items not deducted in determining net
income or loss of the Partnership;
(c) Any change in the cash reserves necessary to retain
sufficient working capital in the Partnership as determined pursuant to
Paragraph 4.3 of this Agreement.
2
<PAGE> 32
G. "Commencement Date" shall mean the first date that the Resort is
open to the public as a resort hotel facility. The parties agree to memorialize
the Commencement Date in a writing signed by each of them.
H. "Conversion Date" shall mean the date on which creditors holding
Convertible Notes contribute the same to the capital of the Partnership in
exchange for Limited Partner Interests in accordance with the Note Purchase
Agreements.
I. "Convertible Notes" shall mean those promissory notes representing
loans in the original aggregate principal amount of Two Million Dollars
($2,000,000) made by the Partnership, as borrower, for which all or part of the
same are convertible into Limited Partner Interests on the Conversion Date.
J. "Curing Partner" shall have the meaning as set forth in Paragraph
3.5 of this Agreement.
K. "Enterprise" shall mean the Partnership acting on its own or in any
other form to operate the Resort and conduct activities and Operations
authorized pursuant to the Partnership Agreement and this Agreement.
L. "Failing Partner" shall have the meaning as set forth in Paragraph
3.5 of this Agreement.
M. "Failure Date" shall have the meaning as set forth in Paragraph 3.5
of this Agreement.
N. "General Partner" shall mean The Resort at Summerlin, Inc., a Nevada
corporation, its permitted successors and assigns, in its capacity as general
partner of the Partnership.
0. "Gross Revenues" shall mean the total revenues, net of
complimentaries, for any period from the conduct of Operations by the
Enterprise.
P. "Internal Revenue Code" shall mean the United States Internal
Revenue Code of 1986, as amended from time to time, and the regulations
thereunder.
Q. "Limited Partner Interests" shall mean Partnership Interests held by
Limited Partners.
R. "Limited Partners" shall mean the following individuals or entities
in their respective capacities as limited partners of the Partnership: those
individuals or entities described in Exhibit "A," attached hereto and made a
part hereof; those individuals or entities admitted as limited partners of the
Partnership on the Conversion Date by reason of their Capital Contributions of
the Convertible Notes; and the respective successors and assigns of each of the
foregoing individuals or entities.
3
<PAGE> 33
S. "Liquidating Event" shall mean the sale, condemnation or exchange of
all or substantially all of the facilities of the Partnership used for the
Resort and the support thereof, or other transactions which, individually or
together with any similar transaction or transactions, result in the disposition
of all or substantially all of the facilities of the Partnership used for the
Resort and the support thereof and occurs in the course of liquidation of the
Partnership or upon and with respect to which event the Partnership is dissolved
and wound up and all payments, including payments on any promissory notes, have
been received.
T. "Loan Documents" shall mean all Notes and Security Agreements and
all agreements, documents and instruments executed or delivered pursuant
thereto, each as amended.
U. "Major Capital Event" shall mean any event (excluding Operations and
a Liquidating Event) arising other than in the ordinary course of the
Partnership's business, including, without limitation, the following:
(1) The sale of less than substantially all of the facilities
of the Partnership used for the Resort and the support thereof;
(2) A condemnation of less than substantially all of the
facilities of the Partnership used for the Resort and the support thereof;
(3) The recovery of damage awards or settlements or insurance
proceeds from the loss of or damage to the facilities of the Partnership used
for the Resort and the support thereof; and,
(4) A borrowing or refinancing of indebtedness in excess of
One Million Dollars ($1,000,000).
V. "Majority Interest" shall mean the Partner or Partners who own more
than fifty percent (50%) of the total Partnership Interests. A "Majority
Interest of the Partners", other than an excluded Partner, shall mean more than
fifty percent (50%) of the Partnership Interests held by the remaining Partners.
W. "Negative Cash Flow" shall mean the amount by which the Cash Flow of
the Partnership for any ninety (90) day period is a negative number.
X. "Net Revenues" shall mean the Gross Revenues less total Operating
Expenses.
Y. "Nevada Gaming Authorities" shall mean the appropriate agencies of
the City of Las Vegas, Nevada, Clark County, Nevada and State of Nevada having
jurisdiction and regulatory control over gaming operations of the Partnership or
the Resort.
Z. "Note(s)" shall mean the promissory note or notes executed by the
Partnership in favor of any lender including, without limitation, the General
Partner and
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evidencing the loans extended and other financing arrangements for the benefit
of the Partnership.
AA. "Note Purchase Agreements" shall mean the loan agreements dated on
or after the date of this Agreement, among the Partnership, Ragan Henry or a
company which he controls, and Paul Steelman or a company which he controls, and
all other documents executed or delivered in connection with the Convertible
Notes.
BB. "Operating Expenses" shall mean expenses of the Enterprise incurred
after the Commencement Date, which expenses are necessary for the operation of
the Enterprise and which include, but are not necessarily limited to, the
following:
(1) The payment of salaries, wages and benefit programs for
employees employed in the Enterprise;
(2) Materials and supplies for the Enterprise;
(3) Utilities;
(4) Routine remodeling, repairs and maintenance of the Resort;
(5) Insurance and bonding;
(6) Advertising and marketing;
(7) Compensation to the General Partner for management of the
Partnership, calculated based on Gross Revenues;
(8) Professional fees;
(9) Security costs;
(10) Reasonable and necessary travel expenses for employees of
the partnership, the Enterprise and of General Partner subject to an approved
budget;
(11) Equipment costing less than the minimum capitalization
amount as determined by the Enterprise;
(12) Trash removal;
(13) Costs of goods sold;
(14) Other expenses designated as Operating Expenses in the
annual budget of the Enterprise;
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(15) Expenses specifically designated as Operating Expenses in
this Agreement and ordinarily considered as such in accordance with generally
accepted accounting principles ("GAAP");
(16) Such other expenses which are determined by an annual
audit to be Operating Expenses; and
(17) Any taxes (other than income taxes) or fees accruing to
any governmental entity.
The term "Operating Expenses" as used herein specifically excludes
interest, depreciation, amortization and income taxes.
CC. "Operations" shall mean all activities arising in the ordinary
course of the Partnership's business which do not constitute a Major Capital
Event or Liquidating Event.
DD. "Partners" shall mean the General Partner and the Limited Partners.
EE. "Partnership" shall mean The Resort at Summerlin, Limited
Partnership, a Nevada limited partnership, the limited partnership governed by
this Agreement.
FF. "Partnership Interest" shall mean the respective interest of each
Partner in the Partnership, expressed as a percentage in the capital, income,
gains, losses, deductions, tax credits and distributions of the Partnership, and
shall include the right of such Partner to any and all benefits to which such
Partner may be entitled as provided in this Agreement and in applicable law,
together with the obligations of such Partner to comply with all terms and
provisions of this Agreement and applicable law.
GG. "Proceeding" shall mean the following:
(1) Any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative brought by any governmental entity;
(2) Any appeal in such an action, suit or proceeding; and,
(3) Any governmental or regulatory inquiry or investigation
that could lead to such an action, suit or proceeding.
HH. "Resort" shall mean that certain resort hotel together with the
commercial, entertainment and recreational project and support facilities
related thereto to be developed by the Partnership.
II. "Security Agreements" shall mean all security agreements,
mortgages, assignments, financing statements and other documents executed on
behalf of the Partnership in favor of any lender including, without limitation,
the General Partner, in order to grant, evidence, maintain and enforce a lien
and security interest in and to all assets of the Partnership,
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real, personal or mixed tangible or intangible, now owned or hereafter acquired
and wherever located, to secure payment of all sums loaned to the Partnership.
JJ. "Start-up Expenses" shall mean all expenses necessary for the
Partnership to prepare for the commencement of the Enterprise Operations and
which are not classified as construction costs, costs for the purchase of
equipment other than office equipment, working capital or Operating Expenses.
Start-up Expenses shall include, but are not limited to, costs to the
Partnership for legal and other professional fees incurred on behalf of the
Enterprise. Also included are necessary salaries, fees, marketing expenses,
training of employees for employment in the Enterprise, supplies, utilities,
travel costs and similar expenses necessary to prepare for the commencement of
the Enterprise incurred prior to the Commencement Date.
KK. "Transfers" shall mean the sale, transfer, conveyance,
assignment, pledge, hypothecation, mortgage or other encumbrance or disposition
of all or any part of a Partnership Interest.
1.2 Number and Gender. Whenever the context requires, references in this
Agreement to the singular number shall include the plural, and the plural
number shall include the singular, and words denoting gender shall include the
masculine, feminine and neuter.
2. FORMATION, NAME, PRINCIPAL PLACE OF BUSINESS, PURPOSE AND TERM
2.1 Formation and Filings. The Partners hereby create and establish a
limited partnership pursuant to Chapter 88 of the Nevada Revised Statutes, as
amended, known as the Nevada Uniform Limited Partnership Act, (the "Act") for
the purposes described herein. The General Partner shall execute, file, record
and publish all certificates, notices, statements and other instruments
required by law for the formation and operation of the Partnership as a limited
partnership in all jurisdictions in which the Partnership conducts business.
2.2 Name. The business of the Partnership shall be conducted under the
name "The Resort at Summerlin, Limited Partnership." The General Partner shall
cause the filing and recording of an appropriate assumed name certificate for
the Partnership in accordance with applicable statutory requirements in such
offices and places as may be required by the laws of the State of Nevada or
other applicable law.
2.3 Principal Place of Business. The principal office and place of
business of the Partnership shall be in Las Vegas, Nevada.
2.4 Purposes. The purposes of the Partnership are as follows:
A. To acquire land in the planned unit development known as Summerlin
("Summerlin") in the City of Las Vegas, State of Nevada, on which to develop
and construct the Resort;
B. To own, lease in whole or in part, manage, maintain and operate
the Resort and support facilities;
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C. To use, lease, rent or license the Resort for such other activities
which are compatible with the Resort;
D. To do any and all other acts and things necessary and incidental to
or convenient to carry on the Partnership business as contemplated under this
Agreement; and
E. To have such other purposes as may be determined by the Partners in
accordance with Article 4 of this Agreement.
2.5 Term. The Partnership shall begin as of the date of this Agreement and
shall continue until July 1, 2050 or until earlier terminated as provided for in
Paragraph 9.1 of this Agreement.
2.6 Ownership. The Partnership Interest of each Partner shall be personal
property for all purposes. All property and interests in property, real or
personal, owned by the Partnership shall be deemed owned by the Partnership as
an entity, and no Partner, individually, shall have any ownership of such
property or interest owned by the Partnership. Each of the Partners irrevocably
waives, during the term of the Partnership and during any period of its
liquidation following any dissolution, any right that it may have to maintain
any action for partition with respect to any of the assets of the Partnership.
2.7 Limits of Partnership. The relationship between and among the parties
hereto or any future Partners shall be limited to the carrying on of the
business of the Partnership in accordance with the terms of this Agreement. Such
relationship shall be construed and deemed to be a limited partnership for the
sole and limited purpose of carrying on such business.
2.8 Powers of Partnership. To accomplish the purposes of the Partnership,
the General Partner, acting on behalf of the Partnership, shall have all powers
and authority and may take such actions as are permitted the General Partner
hereunder.
2.9 No Partner Responsible for Other Partners' Commitments. No Partner nor
the Partnership shall be responsible or liable for any indebtedness or
obligation of any other Partner incurred either before or after the execution of
this Agreement, except those responsibilities, liabilities, debts and
obligations hereafter undertaken or incurred on behalf of the Partnership under
or pursuant to the terms of this Agreement or assumed in writing by the
Partnership, and for which such Partner is liable under the Act and other
applicable law, and each Partner hereby indemnifies and agrees to hold the other
Partners and the Partnership harmless from all such obligations and indebtedness
except as aforesaid. Nothing in this Paragraph 2.9 shall imply any authority of
any Partner to bind the other Partners or the Partnership except as provided in
Paragraphs 2.8 and 2.9 of this Agreement. Notwithstanding anything to the
contrary herein, unless otherwise provided in the Act, no Limited Partner shall
be liable for any of the debts or other obligations of the Partnership.
2.10 Admission of Additional Limited Partners. The Partnership will issue
Convertible Notes in the aggregate amount of Two Million Dollars ($2,000,000) to
persons designated by the General Partner, in return for said persons' making
loans to the Partnership of amounts equal to
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one hundred percent (100%) of the principal amounts of such Convertible Notes.
Under the terms of the Note Purchase Agreements pertaining to said Convertible
Notes, the holders thereof shall be admitted as Limited Partners in the
Partnership on the Conversion Date, whereupon said holders will execute this
Agreement, as in effect on the Conversion Date. The Note Purchase Agreements
shall provide that on the Conversion Date, the holders thereof shall be entitled
to Limited Partner Interests pursuant to a designated schedule, and that any
portion of the principal of the Convertible Notes that is not treated as a
Capital Contribution shall be paid to the holders of the Convertible Notes on
the specified maturity date of the Convertible Notes. The Partners hereby
irrevocably consent and agree to: (a) the issuance of the Convertible Notes to
those holders designated by the General Partner, (b) the issuance of Limited
Partner Interests to said holders on the Conversion Date in accordance with the
schedule(s) contained in the Note Purchase Agreements, (c) the admission of said
holders as Limited Partners effective on the Conversion Date, and (d) the
adjustment of the Partnership Interests to account for said issuance of Limited
Partner Interests. On the Conversion Date, the General Partner shall execute an
acknowledgment of the admission of the holders as Limited Partners, subject to
all of the terms, rights and obligations of this Agreement, and the General
Partner shall immediately forward the acknowledgment to each holder, who shall
then promptly execute the acknowledgment. Notwithstanding the foregoing, any
failure of the General Partner or of any holder to execute the acknowledgment
shall not prevent any such holder from being admitted as a Limited Partner on
the Conversion Date to the extent provided in the Note Purchase Agreements.
Prior to the Conversion Date, the holders shall not be treated as Partners, and
the amounts loaned to the Partnership shall not be treated as Capital
Contributions. On and after the Conversion Date, the holders shall for all
purposes be treated as Limited Partners with all terms,rights and obligations as
set forth in this Agreement.
3. CAPITAL CONTRIBUTIONS AND PARTNERSHIP INTERESTS
3.1 Partnership Interests. The Partnership Interests of each Partner
shall initially be as follows:
General Partner
The Resort at Summerlin, Inc. 1%
Limited Partners
Seven Circle Gaming Corporation 99%
----
100%
3.2 Initial Capital Contributions. The Partners shall make initial
Capital Contributions in cash to the Partnership upon the execution of this
Agreement in the following amounts:
General Partner
The Resort at Summerlin, Inc. $500,000.00
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Limited Partners
Seven Circle Gaming Corporation $15,525,628.30
Total $16,025,628.30
3.3 Capital Accounts. The Partnership shall establish and maintain a
Capital Account for each Partner in accordance with Section 704(b) of the
Internal Revenue Code and Treasury Regulations Section 1.704-1(b)(2)(iv) and
the principles set forth in Exhibit "C" attached hereto and made a part hereof.
3.4 Additional Capital Contributions. Each Partner shall make Additional
Capital Contributions to the Partnership if recommended by the General Partner
and approved pursuant to Paragraph 4.3 of this Agreement. The Additional
Capital Contributions shall be in an amount equal to such Partner's pro rata
share, based on its respective Partnership Interest. Without limiting the
foregoing, upon and after admission to the Partnership on the Conversation
Date, each Limited Partner admitted by having contributed to the capital of the
Partnership such person's interest in the Convertible Notes (a) shall have the
rights and obligations of a Limited Partner as set forth in this Agreement, (b)
shall not have any obligations except as set forth in this Agreement and the
Note Purchase Agreements, and (c) shall not have any obligation to contribute
money or property in excess of its Capital Contribution to the Partnership as
provided in the Note Purchase Agreement, except as such obligation is set forth
in this Agreement.
3.5 Failure to Make Additional Capital Contributions. If any Partner
(herein called the "Failing Partner") shall fail or refuse to make any
Additional Capital Contribution when required, and such failure or refusal
shall have continued for a period of five (5) days following the due date
therefor, then after the expiration of this five (5) day grace period (herein
called the "Failure Date") the other Partners, in proportion to the Partnership
Interests of such Partners who exercise the following election (collectively
the "Curing Partners") may, at their sole discretion do either or any
combination of the following, in addition to any other remedies available at
law:
A. The Curing Partners may loan to the Failing Partner, through an
advance to the Partnership on behalf of the Failing Partner, the amount of the
Failing Partner's required Additional Capital Contribution, in which event the
Failing Partner and its Capital Account shall be credited with such Additional
Capital Contribution. Said loan advance shall bear interest at the lesser of
(i) the rate of interest announced by the Wells Fargo Bank, N.A., from time to
time, as its prime interest rate, plus three percent (3%) per annum; or (ii)
the highest rate permitted by law. Thereafter, all Partnership distributions or
withdrawals attributable to the Failing Partner's Partnership Interest shall be
paid directly to the Curing Partners pro rata until such time as all such loan
amounts so advanced, together with accrued interest thereon, shall have been
repaid in full. Further, the Curing Partners shall have and are hereby granted
a security interest in and a lien upon the Failing Partner's Partnership
Interest to secure the repayment of said loan advances and the accrued interest
thereon and shall have all rights to which a secured party is entitled under
the Nevada Uniform Commercial Code, as amended,
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including, without limitation, the right to have the Failing Partner sign any
documents necessary to perfect a security interest, and the right to foreclose
and to sell the collateral at public or private sale.
B. The Curing Partners may make the Failing Partner's required
Additional Capital Contribution, in which event the Failing Partner's
Partnership Interest shall be reduced and the Curing Partners' Partnership
Interest shall be correspondingly increased so that their Partnership Interests
will be in the same ratio as their Capital Accounts after the Capital Accounts
of the Curing Partners are credited with the Additional Capital Contribution
made by the Curing Partners pursuant to this Paragraph 3.5.
C. At any time there is a dilution of Failing Partner's Partnership
Interest pursuant to Paragraph 3.5 B of this Agreement, such Failing Partner
shall have the option of restoring its Partnership Interest by payment to the
Curing Partners of the Additional Capital Contribution paid by such Curing
Partners on behalf of such Failing Partner plus an amount equal to the interest
that would be due thereon under the provisions of Paragraph 3.5 A of this
Agreement if the Curing Partners had elected to make a loan to the Failing
Partner, provided such payment is made no later than ninety days (90) following
the subject dilution.
3.6 Other Matters Relating to Capital Contributions.
A. Loans by any Partner to the Partnership shall not be considered
contributions to the capital of the Partnership.
B. No Partner shall be required to make any contributions to the
capital of the Partnership except to the extent expressly provided by this
Article 3.
C. Except as provided in this Agreement, no Partner shall be entitled
to withdraw, or to obtain a return of, any part of its contribution to the
capital of the Partnership, or to receive property or assets other than cash in
return thereof (when and if provided hereby), and no Partner shall be liable to
any other Partner for a return of its contributions to the capital of the
Partnership. Any return of such Capital Contribution or Capital Account shall be
made solely from the assets of the Partnership (including the Capital
Contributions of the Partners) and only in accordance with the terms hereof, and
no Partner shall have the right to receive property other than cash except as
may be specifically provided herein.
D. No Partner shall be entitled to priority over any other Partner,
either with respect to a return of its contributions to the capital of the
Partnership, or to allocations of taxable income, gains, losses or credits or to
distributions, except as provided by this Agreement.
E. The Partnership shall first apply contributions of capital to meet
any cost or expense incurred in connection with the formation of the
Partnership, including but not limited to legal, accounting, management, and
development costs, selling commissions, financial advisory and financing fees,
planning and design costs, taxes, and any sums however advanced
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by or on behalf of the General Partner or the Partnership in connection
therewith, and then apply the remainder to working capital of the Partnership.
F. The principal amount of a promissory note which is not readily
traded on an established securities market and which is contributed to the
Partnership by the maker of the note as a Capital Contribution shall not be
included in the Capital Account of any Partner until the Partnership makes a
taxable disposition of the note or until (and to the extent) principal payments
are made on the note, all in accordance with Section 1.704-(1) (b) (2) (iv) (d)
(2) of the Treasury Regulations.
3.7 Deficit Capital Account Balance.
A. A Capital Account may indicate a negative balance resulting from
distributions and allocations made in accordance with this Agreement. Except as
otherwise expressly provided in this Agreement, no Limited Partner shall have
any obligation to the Partnership arising solely from the existence of a
negative balance in its or his Capital Account.
B. Upon liquidation of the Partnership, each General Partner with a
deficit balance in its Capital Account, as determined after taking into account
all Capital Account adjustments (other than those made pursuant to the
requirements of this Paragraph 3.7) for the Partnership taxable year during
which the liquidation occurs, shall have an obligation to restore such deficit
balance and to make a contribution to the capital of the Partnership within
ninety (90) days after the date of such liquidation in an amount equal to its
deficit Capital Account balance which amount shall be paid to the creditors of
the Partnership or distributed to the other Partners in accordance with their
positive Capital Account balances.
3.8 Minimum Capital Account Balance. The General Partner shall maintain a
minimum Capital Account balance of not less than one percent (1%) of the total
positive Capital Account balances of all Partners, except if no Limited Partner
Capital Account has a positive balance, then the General Partner need not
maintain a positive Capital Account balance for purposes of this Paragraph 3.8.
3.9 Loans By General Partner. The General Partner may advance money on a
secured or unsecured basis to the Partnership in its sole discretion. All funds
other than Capital Contributions advanced by the General Partner to satisfy
Partnership debts or obligations, if expressly designated as advances, shall be
considered loans by the General Partner to the Partnership. All such loans,
including those made pursuant to Paragraph 4.4, shall be payable on demand after
one hundred eighty (180) calendar days and shall bear interest at the prime rate
of interest published in the Wall Street Journal on the business day preceding
the date of the loan in question plus two percent (2%) per annum (provided that
the annual interest rate shall not be less than nine percent (9%), nor greater
than the maximum rate of interest chargeable in the State of Nevada).
3.10 Loans By Limited Partners. A Limited Partner may advance money on a
secured or unsecured basis to the Partnership only upon the written request of
the General Partner; provided, however, the General Partner shall notify all
Limited Partners in writing of any
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proposed Limited Partner loan and the terms thereof at least thirty (30) days
prior to closing the loan. All Limited Partners shall have the right to
participate in funding such loan to the Partnership on a pro rata basis
according to the respective Partnership Interests of those Limited Partners
committed to funding such loan. A Limited Partner shall notify the General
Partner in writing within twenty (20) days of the General Partner's delivery of
notice of the proposed loan of its or his commitment to participate, which
commitment shall be irrevocable and binding; otherwise, failure to timely
respond in writing will be deemed election not to participate. Unless otherwise
agreed, the terms of any such loans shall be as set forth in Paragraph 3.9.
4. MANAGEMENT OF THE PARTNERSHIP
4.1 Organization and Meetings of the Partnership. Meetings of the
Partnership may be called by the General Partner at any time and shall be called
upon the written request of the Partners owning a Majority Interest. In either
event, the General Partner shall send a notice to all Partners. The notice shall
state the nature of the business to be transacted and shall be accompanied by a
proxy and sufficient information to permit the Limited Partners to make an
informed judgment. No other business shall be considered without the unanimous
consent of all Partners. The meeting will be held not less than thirty (30) or
more than sixty (60) days from the date of the notice from the General Partner
and shall be at a reasonable time as determined by the General Partner. The
Partners may vote upon any matter by written consent or consent signed by the
requisite portion of the Partners. Notwithstanding the above, there shall be at
least one meeting of the Partnership held the second (2nd) month of each
calendar quarter at a time and place determined by the General Partner and
generally convenient to all of the Partners.
4.2 Rights and Duties of the General Partner. Subject to Paragraph 4.3 of
this Agreement, the General Partner shall have full and complete authority and
discretion in the management and control of the affairs of the Partnership;
shall make all decisions affecting Partnership affairs; and perform, when
appropriate in its judgment, any and all acts customary or incident to the
management of the Partnership business. Without limiting the foregoing powers,
it is hereby agreed that the General Partner, on behalf of and at the cost and
expense of the Partnership may, without the necessity of consent or joinder by
the Limited Partners:
A. Take all actions necessary to apply for, secure and maintain all the
necessary approvals for the acquisition, development, construction and operation
of the Resort.
B. Decide upon and oversee the financing, operation and management of
the Resort within the financial parameters imposed by the Budget. In addition,
it shall have the rights and powers required or appropriate to the financing,
operations and management of the business of the Partnership, including:
(1) Employing or retaining such accountants, attorneys,
managers, agents and other management or service personnel as may from time to
time be necessary to carry on the business of the Partnership; and
(2) Commencing, defending and settling litigation.
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C. The General Partner shall be required to devote only such time to
the performance of its duties and obligation hereunder as it shall, in its
discretion, determine to be necessary or advisable.
4.3 Major Decisions. In addition to any decisions for which this Agreement
expressly requires the approval of the Partners owning a Majority Interest, the
following decisions of the Partnership shall require the approval of Partners
who own at least seventy-five percent (75%) of the total Partnership Interests
("Major Decisions"):
A. An election by the Partnership under Section 6231 of the Internal
Revenue Code to have the tax treatment of the Partnership items determined at
the Partnership level under Section 6221, et seq.:
B. The Transfer by a Partner of all or part of its Partnership
Interest, except as provided for in Articles 3 and 7 of this Agreement;
C. The merger or consolidation of the Partnership with any other
entity, except if such merger or consolidation is taking place for the purpose
of doing a sale of equity or debt for a public offering in which case the
Partners owning a Majority Interest shall agree;
D. Any additional financing or refinancing for which any Partner or the
assets of the Partnership is liable, except for financing provided by or
arranged by the General Partner for the construction of the Resort or for the
Start-up Expenses;
E. The sale or disposition of the Resort or any other structures or
businesses operated in conjunction therewith, except if such sale or disposition
is taking place for the purpose of issuing equity or debt for a public offering
in which case the Partners owning a Majority Interest shall agree;
F. The dissolution and termination of the Partnership or any
Liquidation Event;
G. The amount of cash reserves in excess of those amounts required by
any regulatory agency necessary to retain sufficient working capital in the
Partnership;
H. The approval of the operating plan to be prepared by the General
Partner;
I. The approval of the Budget for each fiscal year to be prepared by
the General Partner;
J. The call for Additional Capital Contributions;
K. The selection of any change in the Partnership's principal place of
business;
L. The amendment of this Agreement;
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M. The execution on behalf of the Partnership of any Loan
Documents in favor of the General Partner; and
N. The admission of additional partners or expulsion or
involuntary withdrawal or liquidation of a Partner.
4.4 Start-Up Expenses. From time to time prior to the Commencement
Date, General Partner has agreed, to arrange for or provide to the Partnership
for use by the Partnership and Enterprise a sum not to exceed One Million Five
Hundred Thousand Dollars ($1,500,000) for necessary Start-up Expenses. Advances
under this Paragraph 4.4 shall be made only upon adequate documentation that an
obligation has been incurred and such obligation is currently due and owing and
after review by General Partner. Any amounts provided for Start-up Expenses
under this Paragraph 4.4 shall be deemed advanced pursuant to, payable under,
secured by and accruing interest from the date of advance and at the rate set
forth in a Note and such other Loan Documents as General Partner may require and
shall be due upon receipt by the Partnership of permanent financing for the
Resort.
4.5 Payment of Costs and Expenses. The Partnership shall be responsible
for paying all costs and expenses of forming and continuing the Partnership,
owning, operating and holding the Resort and conducting the business of the
Partnership, including, without limitation, costs of utilities, costs of
furniture, fixtures, equipment and supplies, insurance premiums, property taxes,
advertising expenses, accounting costs, legal expenses, office supplies and
travel expenses. If, subsequent to the effective date of this Agreement, any
such budgeted costs and expenses are paid by a Partner, or any of its
Affiliates, on behalf of the Partnership, then the Partner (or its Affiliates)
shall be entitled to be reimbursed for such payment so long as such cost or
expense is reasonably necessary and is reasonable in amount.
4.6 Compensation. Within thirty (30) days after the end of each
calendar month of Operations, the General Partner shall calculate and report to
the Partnership the Gross Revenues, Operating Expenses and Net Revenues of the
Partnership for the previous month's operations and the year's operations to
date. The General Partner shall distribute to itself three percent (3%) of the
monthly Gross Revenues and six percent (6%) of the monthly Net Revenues within
said thirty (30) day period as compensation for management of the Partnership.
The maximum amount of compensation payable to the General Partner in any
calendar month, however, shall not exceed ten percent (10%) of the monthly Gross
Revenues.
4.7 Liability. The General Partner and the other Partners shall perform
their duties under this Agreement with ordinary care and prudence and in a
manner reasonable under the circumstances. Neither the General Partner nor any
other Partner shall be liable to the Partnership or the other Partners for any
loss or liability caused by any act authorized hereunder, or by the failure to
do any act, unless such loss or liability arises from that Partner's willful
misconduct, gross negligence or fraud as to the Partnership or the other
Partners. Except as provided by the foregoing, in no event shall a Partner or
the General Partner be liable if, in good faith, it determined that the action
authorized hereunder or lack of action giving rise to the loss
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was in the best interests of the Partnership or if the action or lack of action
giving rise to the loss was based on the advice of legal counsel.
4.8 Indemnification. The Partnership hereby indemnifies and holds
harmless the person or entity who is or was a Partner (and its Affiliates)
against any and all losses, costs, expenses (including reasonable attorney's
fees), penalties, taxes (except personal or corporate income taxes on
Partnership distributions), fines, settlements, damages and judgments resulting
from the fact that the Partner was or is threatened to be named as a defendant
or respondent in a Proceeding because such party was or is a Partner in the
Partnership. However, this indemnification shall in no event be applicable to a
Proceeding in which the Partner has been found liable for willful misconduct,
gross negligence or fraud in the performance of the Partner's duty to the
Partnership or the Partners. In addition, this indemnification shall be limited
to the assets of the Partnership and shall not obligate the individual Partners
in their respective assets outside of the Partnership.
4.9 Power of Attorney. By the execution of this Agreement, or a
counterpart hereof, each Limited Partner does irrevocably constitute and appoint
the General Partner and any successor thereto, with full power of substitution,
as such Partner's true and lawful attorney-in-fact and agent with full power and
authority to act in his name, place and stead in the execution, acknowledgment,
swearing to, delivering, filing and recording of all certificates and other
documents which the General Partner deems necessary or reasonably appropriate:
A. To qualify or continue the Partnership as a limited
partnership in any jurisdiction in which the Partnership conducts business;
B. To reflect a change in the identity of any Partner, or an
amendment of this Agreement made pursuant to Paragraph 11.3 of this Agreement;
C. To effect the conveyance of any Partnership Interest
pursuant to Article 7 of this Agreement or as otherwise permitted or required
herein and to reflect the substitution of a Partner in connection therewith; or
D. To reflect the dissolution and termination of the
Partnership after same has been dissolved and terminated in accordance herewith.
The power of attorney granted herein shall be deemed to be coupled with
an interest, shall be irrevocable, shall survive the death, incompetency or
legal disability of any Limited Partner, and shall be binding on any assignee or
vendee of a Limited Partners' Partnership Interest hereunder, or any portion
thereof, including, without limitation, the distributive rights relating
thereto.
4.10 Transactions with Affiliates. Any Partner or any Affiliate of any
Partner shall have the right to contract or otherwise deal with the Partnership
for the sale of goods or performance of services if:
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A. Compensation paid or promised for such goods or services is
reasonable and is paid only for goods or services actually furnished to the
Partnership;
B. The goods or services to be furnished shall be reasonable
for, and necessary to, the Partnership; and
C. The terms for the furnishing of such goods or services
shall be at least as favorable to the Partnership as would be obtainable in any
arm's length transaction.
D. The parties to this Agreement hereby agree that the terms
and conditions of the Casino Lease between the Partnership and Seven Circle
Resorts of Nevada, Inc., a Nevada corporation, attached hereto as Exhibit "B"
and made a part hereof are in compliance with this Paragraph 4.10.
5. ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocation of Net Income and Net Loss. Net income and net loss for
each fiscal year shall be determined by the General Partner and shall be audited
by the independent accountants of the Partnership in accordance with the method
of accounting and the books and records of the Partnership. Except as otherwise
provided in this Agreement (including Exhibit "C" hereto), items of income,
gain, loss and deduction shall be allocated among the Partners in accordance
with their Partnership Interests.
5.2 Allocation of Capital Gain. Any capital gain realized by the
Partnership with respect to a Major Capital Event or a Liquidating Event shall
be allocated as follows: (a) first, to those Partners having deficit Capital
Account balances (computed after taking into account allocations of net income
and net loss (excluding such gain) for the fiscal year in which such event
occurred and allocations of distributable Cash Flow (excluding cash attributable
to such event)), ratably in proportion to, and to the extent of, such deficit
balances; (b) second, to and among those Limited Partners whose Capital Account
balances are less than the aggregate balance of such Partners' Capital
Contributions, pro rata according to the differences between respective Capital
Accounts and contributions balances, until such differences are eliminated; and
(c) finally, among the Partners so as to produce, as nearly as possible, Capital
Accounts for the Partners that will result in the distributions being made, when
distributed in accordance with positive Capital Account balances, in the manner,
proportion and order of priority set forth in Paragraph 5.3.
5.3 Distribution of Cash Flow. Unless otherwise agreed by the Partners
who own at least seventy-five percent (75%) of the total Partnership Interests,
the Partnership shall distribute Cash Flow, if available, quarterly to the
Partners within thirty (30) days following the end or each quarter.
Notwithstanding the frequency or amounts of distributions, Cash Flow shall be
distributed as follows:
A. First, to repay loans of a Partner or an Affiliate to the
Partnership, other than any long-term secured construction loan.
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B. Thereafter, to the Partners in accordance with their
Partnership Interests.
5.4 Distributions Upon Liquidation of the Partnership. Upon dissolution
of the Partnership, the assets and properties of the Partnership shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom, to the extent sufficient therefor, shall be applied
and distributed in the following order of priority:
(1) To the payment of debts and liabilities of the
Partnership (including amounts owed to Partners or former Partners), with those
debts and liabilities which have been borrowed from, or which are guaranteed by,
a Partner or an Affiliate being paid first;
(2) To set up any reserves which the General Partner
deems reasonably necessary for contingent or unforeseen liabilities or
obligations of the Partnership arising out of or in connection with the business
of the Partnership, with such reserves to be distributed in the manner provided
in (4) below at the expiration of such period as the Partners who own at least
seventy-five percent (75%) of the total Partnership Interests deem advisable;
(3) To the expenses of the liquidation; and
(4) After all Capital Account adjustments for the
Partnership's taxable year in which the liquidation occurs (including, without
limitation, adjustments required under Treasury Regulations Section
1.704-1(b)(2)(iv)(c), relating to distributions in kind), to the Partners in
accordance with each Partner's positive Capital Account balance properly
adjusted under Article 5 to result, to the extent possible, in distributions
being made to the Partners in accordance with their Partnership Interests.
5.5 Liquidation of Partner's Interest. If a Partner's interest in the
Partnership is to be liquidated, liquidating distributions shall be made in
accordance with the positive Capital Account balance of such Partner, as
determined after taking into account all Capital Account adjustments for the
Partnership's taxable year during which such liquidation occurs, by the end of
the taxable year, or if later, within one hundred and eighty (180) days after
the date of such liquidation. Where a Partner's interest is to be liquidated by
a series of distributions, such Partner's interest shall not be considered
liquidated until the final distribution has been made. For purposes of this
Paragraph 5.5, a liquidation of a Partner's interest in the Partnership means
the termination of the Partner's entire interest in the Partnership by means of
a distribution or series of distributions to the Partner by the Partnership, the
determination of which shall be made by the Partners who own at least
seventy-five percent (75%) of the total Partnership Interests.
5.6 Distributions.
A. Prior to a distribution by the Partnership to a Partner,
the Capital Accounts of the Partners shall be adjusted in the manner described
in Exhibit "C."
B. If any assets of the Partnership are distributed to the
Partners in kind, the Partners shall own and hold the same as tenants in common.
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5.7 Additional Tax Allocation Provisions.
A. Notwithstanding anything to the contrary contained herein
or to the extent required by law, items of income, gain, loss and deduction with
respect to property, other than cash, contributed to the Partnership by a
Partner or with respect to an adjustment to the Partners' Capital Accounts to
reflect a revaluation of the Resort, shall be allocated among the Partners so as
to take into account the variation between the basis of the property to the
Partnership and its fair market value at the time of contribution or, in the
case of a revaluation of the Resort, the variation between the basis of the
Resort to the Partnership at its fair market value of the date of revaluation,
as provided in Section 704(c) of the Internal Revenue Code and Regulations
thereunder and Treasury Regulations Section 1.704-1(b)(2)(iv)(g) and as more
fully described in Exhibit "C" attached hereto.
B. As between a Partner who has transferred all or part of its
interest in the Partnership and its transferee, all items of income, gain, loss
and deduction, for any year shall be apportioned on the basis of the number of
days in each such year that each was the holder of such interest (making any
adjustments necessary to comply with the provisions of Section 706(d)(2) of the
Internal Revenue Code), without regard to the results of the Partnership's
operations during the period before and after the date of such Transfer.
However, if both the transferor and transferee consent thereto, and if the
transferor and transferee compensate the Partnership for any additional
accounting costs necessitated by such interim closing of the Partner's books a
special closing of the books shall be had as of the effective date of such
Transfer and the apportionment of items of income, gain, loss and deduction,
shall be made on the basis of actual operating results. In the case of a
Paragraph 3.5 dilution pursuant to Article 3 of this Agreement, a special
closing of the books shall be had as of the effective date of the dilution, and
the apportionment of items of income, gain, loss and deduction shall be made on
the basis of actual operating results before and after such date.
Notwithstanding the above, gain or loss resulting from a Major Capital Event or
Liquidating Event shall be allocated only to those persons who are Partners as
of the date on which such transaction is consummated.
C. If a Transfer of an interest in the Partnership results in
a termination of the Partnership for Federal income tax purposes under Section
708(b)(1)(B) of the Internal Revenue Code (or any successor provision thereto),
a Partner's portion of any constructive liquidating distribution deemed to occur
under Treasury Regulations Section 1.708-1(b)(1)(iv) (or any similar or
successor provision) shall be determined in accordance with the Capital Accounts
of the Partners after taking into account all Capital Account adjustments for
the Partnership's taxable year ending on the date of such deemed termination.
D. Tax Return Adjustments. In the event of an adjustment to
the tax return of the Partnership (including adjustments that result from an
amended return, request for administrative adjustment, or an audit by the
Internal Revenue Service or other taxing authority), the allocations under
Articles 3 and 5 shall be redetermined to take into account such adjustment as
if it had been made at the time of the original allocations. The Partners agree
to report on their respective tax returns such Partnership items on a basis
consistent with the adjustment at the Partnership level.
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6. FISCAL MATTERS
6.1 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
6.2 Books and Records. The General Partner shall keep, or cause to be
kept, at the expense of the Partnership, full and accurate books and records of
all transactions of the Partnership in accordance with generally accepted
accounting principles, consistently applied. All of such books and records
shall, at all times, be maintained at the principal place of business of the
Partnership and the Partners shall have the right to inspect and copy or audit
any of them, at their own expense, during normal business hours provided that
such inspection, copying or auditing may not unreasonably interfere with the
Operations of the Partnership.
6.3 Reports and Statements.
A. Within ninety (90) days after the end of each fiscal year
of the Partnership, the General Partner shall, at the expense of the
Partnership, cause to be delivered to each Partner such financial statements and
such other information as the General Partner believes to be necessary for the
Partners to be advised of the financial status and results of operations of the
Partnership.
B. The General Partner shall report to the Partners any
significant development materially adversely affecting the Partnership, its
business, property or assets, as soon as practicable following the occurrence of
such development.
C. By the fifteenth (15th) day of the second (2nd) calendar
month in each quarter of the fiscal year, the General Partner shall provide to
each Partner an operating statement for the Resort. The operating statements
shall be prepared by the General Partner and shall set forth all revenues and
expenses of the Partnership for the prior quarter of the fiscal year, a
comparison of such revenues and expenses with those provided for in the Budget,
and an explanation of each item which, year to date, varies fifteen percent
(15%) or more from the Budget.
6.4 Audit. Any of the Partners with at least a twenty-four percent
(24%) Partnership Interest shall be entitled to require an audit of the books
and records of the Partnership to be conducted at any time (but not more
frequently than once each calendar year) with any resulting audited financial
statements to be distributed to all the Partners when available. Any such audit
so required shall be conducted at the expense of the Partnership.
6.5 Tax Returns. The General Partner shall cause to be prepared for
delivery to the Partners on or before April 15 of each year or any extensions
granted therefore, at the expense of the Partnership, all Federal and any
required State and local income tax returns for the Partnership for the
preceding fiscal year. In the event of an audit of the Partnership's income tax
returns, the General Partner shall retain, at the expense of the Partnership,
accountants and other professionals to participate in such audit in order to
contest assertions by the auditing agent or agency that may be materially
adverse to the Partnership or the Partners.
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6.6 Bank Accounts. The General Partner, in the name of the Partnership,
shall open and maintain a Partnership bank account or accounts in a bank or
savings and loan association, the deposits of which are insured by an agency of
the United States Government, in which shall be deposited all funds of the
Partnership. There shall be no commingling of the property and assets of the
Partnership with the property and assets of any other party.
6.7 Tax Elections. Subject to Paragraph 4.3 of this Agreement, the
General Partner shall be entitled to determine all Federal income tax elections
available to the Partnership.
7. TRANSFERS OF PARTNERSHIP INTERESTS
7.1 Restrictions on Transfers. No Partnership Interest shall be
transferred without the written consent of the Partners owning at least
seventy-five percent (75%) of the total Partnership Interests, except as
expressly permitted under the terms and provisions of this Article 7. Any
attempted Transfer in contravention of this Article shall be void and shall not
bind or be recognized by the Partnership. In addition, none of the Partners nor
any equity holder thereof, shall be permitted to Transfer any of its or their
interest in the Partnership or transfer any of its or their interest in such
Partner without the prior written approval of the Partners owning at least
seventy-five percent (75%) of the total Partnership Interests owned by the
non-transferring Partners which approval shall not be unreasonably withheld.
Notwithstanding the foregoing, any Partner shall have the right within ninety
(90) days of the date of the execution of this Agreement to Transfer their
entire Partnership Interest to a newly formed entity, provided that such
Transferring Partner shall, legally and beneficially, own one hundred percent
(100%) of the equity of the new entity. In such event, the new entity will be
the substitute Limited Partner.
7.2 Prohibited Transfers.
A. No Transfers of any Partnership Interest in whole or in
part will be permitted if such Transfer, when considered with all other
transfers of Partnership Interests within the previous twelve (12) months, would
cause the termination of the Partnership for federal income tax purposes or
cause the Partnership to be taxed other than as a partnership. Counsel for the
Partnership may give its opinion to the General Partner as to whether or not
such Transfer would cause the termination of the Partnership for federal income
tax purposes and the opinion shall be conclusive and binding upon all Partners.
B. No Partnership Interest or any portion thereof shall be
transferred to a minor or an incompetent person.
C. No Transfer of any Partnership Interest of any Partner
shall be permitted without the prior written consent of the General Partner if
such Transfer requires the consent of a third party under any agreement to which
the Partnership is a party.
D. No Partnership Interest or portion thereof shall be
transferred in violation of, or without first complying with, to the
satisfaction of the Partnership's counsel, all applicable state and federal
securities laws.
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7.3 Right of First Refusal.
A. Unless such Transfer is prohibited by Paragraphs 7.1 or 7.2
of this Agreement, should any Partner receive from a single third party which is
not an Affiliate ("Offeror") a bona fide offer ("Offer") in writing signed by
the Offeror for the purchase of all or a part of such Partner's Partnership
Interest ("Offered Interest"), then the Partner who received such Offer
("Selling Partner") shall, if it wishes to accept the Offer, promptly forward a
true and correct copy thereof to the other Partners ("Non-Selling Partner(s)")
within ten (10) days of the date of the receipt of the Offer. The Offer shall be
sent by certified or registered mail, return receipt requested. The Non-Selling
Partner(s) shall have the exclusive right and option for thirty (30) days
following the receipt of said Offer to purchase all, but not less than all, of
the Offered Interest on the terms and conditions set forth in the Offer. The
Non-Selling Partner(s) shall exercise this option to purchase the Offered
Interest and thereby accept the Offer of the Selling Partner by actual delivery
of a written notice of election to the Selling Partner, within the aforesaid
thirty (30) day period, by sending such written notice of election by certified
or registered mail, return receipt requested, properly stamped and addressed to
the address of the Selling Partner or by hand delivery or said notice with
proper receipt therefor. Each Non-Selling Partner shall be deemed to have
elected to not purchase the Offered Interest if it fails to timely provide
written acceptance.
B. Each Non-Selling Partner who elects to so purchase the
Offered Interest pursuant to the Offer (an "Electing Partner") shall have the
right to purchase that proportion of the Offered Interest which the Partnership
Interest owned by such Electing Partner bears to the total Partnership Interests
owned by all Electing Partners. An Electing Partner shall be obligated to close
no later than ninety (90) days after the date of the Offer. The closing of said
purchase shall take place at the office of the Partnership.
C. If the Non-Selling Partner(s) do not elect to purchase all
of the Offered Interest, the Selling Partner may sell the Offered Interest;
provided, however, that the sale (i) is not prohibited by Paragraph 7.2 of this
Agreement; (ii) shall not be made at a price lower than the price offered to the
Non-Selling Partner(s); (iii) is not made to any person other than the original
Offeror, (iv) is on the same terms and conditions as those specified in the
Offer; and (v) is consummated within ninety (90) days after the lapse of all
options arising in connection with the Offer.
D. If the Offeror, the terms or conditions of the proposed
sale are changed or such Offered Interest has not been sold prior to the lapse
of the aforesaid ninety (90) day period, the Selling Partner must make a new
Offer, pursuant to the procedures in this Paragraph 7.3, to the Non-Selling
Partner(s) prior to selling such Offered Interest.
7.4 Exception for Transfers to Other Partners or Affiliates. Unless a
Transfer is prohibited by Paragraph 7.2 of this Agreement, then notwithstanding
the provisions of Paragraph 7.3 of this Agreement (dealing with Right of First
Refusal), a Partner may transfer all or any part of its Partnership Interest to
an Affiliate of the same Partner or to another Partner, subject to
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the condition that such transferee shall be bound by all the terms and
conditions of this Agreement.
7.5 Involuntary Transfers.
A. If at any time there is an involuntary Transfer of a
Partnership Interest (which shall be defined as any Transfer other than by a
sale for consideration to a bona fide third party or a Transfer pursuant to
Paragraph 7.4 of this Agreement), then the remaining Partners shall have the
right to acquire the Partnership Interest to be transferred based upon the
procedures set forth in Paragraph 7.3 of this Agreement, except that the
purchase price shall be as determined in Subparagraph B of this Paragraph 7.5.
B. The fair market value of the Partnership's assets shall be
determined as follows:
(1) First, by agreement between the disqualified Partner
and the remaining Partners;
(2) If no agreement as to the value can be reached
within the ten (10) business days ("Valuation Period"), the disqualified Partner
and remaining Partners shall each appoint, by written notice to the other, an
appraiser (which appraiser must be an investment banking firm, a nationally
recognized appraisal firm or a nationally recognized accounting firm). If either
party fails to appoint such appraiser within the ten (10) days following the
Valuation Period, then the appraiser who is appointed shall select a second
appraiser who is also an investment banking, appraisal or accounting firm. The
two (2) selected appraisers shall proceed to determine the fair market value of
the Partnership (including a going business concern value); and
(3) If the two (2) appraisers are unable to agree upon a
fair market value, then they shall jointly appoint a third (3rd) appraiser
meeting the required qualifications and the fair market value shall be that
amount upon which any two (2) of the three (3) appraisers agree or if no such
agreement is reached, that fair market value which represents the average of
the two (2) fair market values determined by the appraisers which are
numerically closest to one another, or, if all fair market values are
numerically equidistant, the average of all three (3) such fair market values.
The disqualified Partner and the remaining Partners shall have the
responsibility for paying the appraiser who was, or who should have been
appointed by such Partner, and each shall pay one-half (1/2) of the costs and
expenses of the third appraiser if one is appointed.
All Partners agree to cooperate fully with the appraisers making the
determination of the fair market value of the Partnership's Assets and further
agree to furnish the appraisers such documentation and information covering the
assets of the Partnership being appraised as may be requested by said
appraisers.
7.6 Assumption by Transferee. Any transferee to whom all or any part of
a Partnership Interest may be transferred pursuant to this Agreement shall take
such Partnership
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Interest subject to all of the terms and conditions of this Agreement and shall
not be considered to have title thereto until said transferee shall have
accepted and assumed the terms and conditions of this Agreement by a written
agreement to that effect delivered to the other Partners, at which time such
transferee shall be admitted as a substitute Partner and shall succeed to all
rights of its transferor except as such rights may be otherwise limited by other
provisions of this Agreement. Anything contained in this Paragraph 7.6 to the
contrary notwithstanding, the assumption by the transferee of the Partnership
Interest being transferred shall not relieve the transferor of such Partnership
Interest of its obligations hereunder unless such transferor is released by
written consent of a Majority in Interest of the non-transferring Partners or
the transfer was made pursuant to Paragraph 7.3 of this Agreement.
7.7 Cost of Transfers. The transferor and, if it fails or refuses to do
so, then the transferee, of any Partnership Interest shall reimburse the
Partnership for all costs incurred by the Partnership resulting from any
Transfer.
7.8 Changes in the General Partner. Except as provided herein, the
General Partner shall not withdraw from the Partnership without the prior
consent of the Limited Partners owning at least fifty percent (50%) of the
Partnership Interests held by the Limited Partners. If, upon withdrawal of the
General Partner, there is no General Partner then remaining, no substitute
General Partner may be admitted to the Partnership without the consent of the
Limited Partners owning at least seventy-five percent (75%) of the Partnership
Interests held by the Limited Partners.
8. OWNERSHIP OF A PARTNER
8.1 Restrictions on Stock Ownership. Each corporate Partner agrees to
adopt by an amendment to their respective Articles of Incorporation, by
amendment to their bylaws and by shareholder agreement, and each non corporate
Partner agrees to adopt by an amendment to their respective organizational
documents, as may be required to create a valid and binding obligation on their
shareholders or partners as the case may be that their shares or interests in
the respective companies shall be subject to the requirements set forth in
Article 7 and Article 8 of this Agreement as if such shares or interests were
direct interests in the Partnership, with the exception that such shareholders
or partners shall be free to transfer their shares or interests to currently
existing at the date of this Agreement shareholders or partners in the
respective companies without complying with Paragraph 7.3 of this Agreement
(dealing with the Right of First Refusal).
8.2 Permitted Transfers to Specified Parties. Unless a Transfer is
prohibited by Paragraphs 7.2 A or C of this Agreement, then notwithstanding the
provisions of Paragraphs 7.3 and 8.1 of this Agreement, a shareholder of a
Partner may transfer all or any part of its shares in the Partner to an
Affiliate of such shareholder or Partner, another shareholder in that same
Partner, his spouse, his parents, his children, his grandchildren, his brothers,
his sisters or to a trust for the benefit of any of the aforementioned parties.
A permitted Transfer may be by will, by intestate succession or by inter vivos
transfer. A Transfer pursuant to this Paragraph 8.2
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shall not relieve the original transferor from any of its obligations to the
Partnership under this Agreement.
9. DISSOLUTION
9.1 Dissolution.
A. It is the intention of the Partners that the business of
the Partnership be continued by the Partners, or those remaining, pursuant to
the provisions of this Agreement, notwithstanding the occurrence of any event
which would result in a statutory dissolution of the Partnership pursuant to the
laws of the State of Nevada, and no Partner shall be released or relieved of any
duty or obligation hereunder by reason thereof; provided, however, that the
business of the Partnership shall be terminated, its affairs wound-up and its
property and assets distributed in liquidation on the earlier to occur of:
(1) The expiration of the term of the Partnership;
(2) A determination by all of the Partners that the
business of the Partnership should be terminated;
(3) The liquidating bankruptcy of the Partnership;
(4) Subject to the provisions of Paragraph B below, the
death, incompetency, bankruptcy, insolvency, withdrawal or removal from the
Partnership of any Partner; or
(5) The date upon which a Liquidating Event occurs and
all payments are received.
For purposes of this Agreement, bankruptcy shall be deemed to have occurred
when the party in question files a petition under any section or chapter of the
Federal Bankruptcy Code, as amended, or an order for relief under Title II of
the United States Code Annotated is entered against it, and insolvency shall be
deemed to have occurred when the party in question admits in writing that its
assets are insufficient to pay its liabilities as they mature.
B. Upon the occurrence of any event set forth in Subparagraph
(4) of Paragraph A above, the business of the Partnership shall be continued
pursuant to the provisions of this Agreement if, within a period of ninety (90)
days from the date of such occurrence, all of the Partners other than the
subject bankrupt Partner shall elect in writing that it be so continued. The
former Partner shall retain and be entitled to its share of profits, losses,
distributions and capital associated with the Partner's Partnership Interest.
9.2 Wind-Up of Affairs. As expeditiously as possible following the
occurrence of an event giving rise to a termination of the business of the
Partnership, the General Partner shall wind-up the affairs of the Partnership,
sell its property and assets for cash at the highest price reasonably obtainable
and distribute the proceeds in accordance with Paragraph 5.3 of this
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Agreement in liquidation of the Partnership. In no event shall there be a
distribution of the property and assets of the Partnership in kind, unless the
Partners owning at least seventy-five percent (75%) of the total Partnership
Interests approve such distribution.
10. APPROVAL OF NEVADA GAMING AUTHORITIES
Notwithstanding anything contained in this Agreement to the contrary,
in no event shall the Partnership or any Partner manage, conduct or derive
revenue from any gaming activity at the Resort unless and until the Partnership
and/or such Partner shall receive all requisite licenses and approvals of the
Nevada Gaming Authorities. Furthermore, notwithstanding anything contained in
this Agreement to the contrary, a Partner shall be expelled from the Partnership
in the event that (i) such expulsion is required by any of the Nevada Gaming
Authorities; (ii) if, after the initial receipt by a Partner of any requisite
license, permit or approval from the Nevada Gaming Authorities, the ownership of
the Partnership Interest by such Partner will, as evidenced by written
communications from any of the Nevada Gaming Authorities, in the reasonable
opinion of General Partner, materially preclude or unduly delay the issuance of,
or result in the imposition of unduly burdensome terms and conditions on, or
revocation of, any liquor, gaming, or other license, permit or approval
necessary or appropriate to the proposed, contemplated or actual Operations;
provided, however, that this clause (ii) shall not be applicable if such Partner
shall, within a reasonable period of time after receipt of written notice from
the General Partner specifying in detail the nature of the issues involved
hereunder, remedy the situation to the satisfaction of the applicable Nevada
Gaming Authorities prior to any further adverse action by the Nevada Gaming
Authorities, such remedy may include, without limitation, the Transfer of the
Partnership Interest of such Partner; (iii) in the event the General Partner
determines in its sole and absolute discretion that the Partnership and each
Partner should file an application for a permit, license or approval from the
Nevada Gaming Authorities, the failure to promptly file and diligently prosecute
any such license, permit or approval on the part of any Partner; or (iv) the
failure to obtain any requisite permit or approval based on suitability from the
Nevada Gaming Authorities within eighteen (18) months of the date of filing the
application for such approval, unless an extension of time is granted by a
majority vote of the Partners owning seventy-five percent (75%) or more of the
total Partnership Interests. In the event that a Partner is expelled pursuant to
this Article 10, then such expulsion shall be treated as an involuntary Transfer
of a Partnership Interest in accordance with Paragraph 7.5 of this Agreement.
11. MISCELLANEOUS
11.1 Investment Representation. Each Partner represents and warrants
that it acquired its Partnership Interest hereunder for its own account with no
view to the resale or any other distribution thereof in violation of applicable
Federal or State laws. No Partner shall have any right to require registration
of a Partnership Interest under the Securities Act of 1933, as amended, or any
Federal or State law governing the sale of securities, and each Partner
acknowledges that, in view of the nature of the Partnership and its business,
such registration is neither contemplated nor likely.
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11.2 Dispute Resolution. Any dispute or controversy concerning one or
more Partners and/or the Partnership and which arises out of or relates to this
Agreement shall be settled and determined by binding arbitration in Las Vegas,
Nevada in accordance with the commercial rules of the American Arbitration
Association then in effect, and judgment upon the award rendered by the
arbitrator(s) may be entered in, and specifically enforced by, any court of
competent jurisdiction. The expenses of the arbitration shall be borne equally
by the parties to the arbitration, provided that each party shall pay for and
bear the cost of its own experts, evidence and legal counsel, unless ruled
otherwise by the arbitrator(s). Whenever any action is required to be taken
under this Agreement within a specified period of time and the taking of such
action is materially affected by a matter submitted to arbitration, such period
shall automatically be extended by the number of days plus ten (10) that are
taken for the determination of that matter by the arbitrator(s).
11.3 Amendments. This Agreement may not be amended, altered or modified
except by instrument in writing which is signed by each Partner and to the
extent applicable the shareholders of the Limited Partners.
11.4 Other Activities. Any Partner may engage or possess an interest in
other business ventures of every nature and description, independently or with
others, including, without limitation, the acquisition, construction, ownership,
leasing, operation and management of other projects similar to the Resort;
provided, however, that in the event that the Partnership receives all
requisite licenses and approvals of the Nevada Gaming Authorities to own and
operate a casino gaming facility at the Resort, no such project located within
(i) Summerlin and (ii) a radius of three (3) miles from the Resort may contain
any gaming activity.
11.5 Partition. No Partner shall be entitled to a partition of the
Resort or any other property or assets of the Partnership, notwithstanding any
provision of law to the contrary.
11.6 Notices. Any notice required or permitted to be delivered to any
Partner under the provisions of this Agreement shall be deemed delivered,
whether actually received or not, when deposited in the United States Postal
Service depository, postage prepaid, registered or certified, return receipt
requested, and addressed to the Partner at the address specified on the
signature pages hereof, or such other address as shall be specified by written
notice delivered to the General Partner.
11.7 Provisions Severable. Every provision of this Agreement is
intended to be severable and, if any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity of the remainder of this Agreement.
11.8 Counterparts. This Agreement, and any amendments hereto, may be
executed in counterparts, each of which shall be deemed an original, and such
counterparts shall constitute but one and the same instrument.
11.9 Headings. The headings of the various sections of this Agreement
are intended solely for convenience of reference, and shall not be deemed or
construed to explain, modify or place any construction upon the provisions
hereof.
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11.10 Successors and Assigns. This Agreement and any amendments hereto
shall be binding upon and, to the extent expressly permitted by the provisions
hereof, shall inure to the benefit of the Partners and their respective heirs,
legal representatives, successors and assigns.
11.11 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada and all obligations of one
Partner to another are performable in Nevada.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 15th day of August, 1996. In addition, the individual shareholders of the
Limited Partners have executed this Agreement agreeing to be bound by the terms
and conditions of the specific paragraphs herein by their terms applicable to
such shareholders.
General Partner:
THE RESORT AT SUMMERLIN, INC., a Nevada
corporation
By: /s/ John J. Tipton
____________________________ Address:
Name: John J. Tipton 1512 Larimer St. Suite 300
_______________________ ___________________________
Title: Senior Vice-President Denver, Colo 80202
______________________ ___________________________
Limited Partner:
SEVEN CIRCLE GAMING CORPORATION, a
Delaware corporation
By: /s/ John J. Tipton
____________________________ Address:
Name: John J. Tipton 1512 Larimer St. Suite 300
_______________________ ___________________________
Title: Senior Vice-President Denver, Colo 80202
______________________ ___________________________
28
<PAGE> 58
EXHIBIT "A"
Limited Partners
SEVEN CIRCLE GAMING CORPORATION, A Delaware corporation
29
<PAGE> 59
EXHIBIT "B"
Casino Lease
30
<PAGE> 60
CASINO LEASE
THIS CASINO LEASE (this "Lease") is made and entered into as of
199_, by and between Seven Circle Resorts of Nevada, Inc., a Nevada corporation
("Tenant") and The Resort at Summerlin, Limited Partnership, a Nevada limited
partnership ("Landlord").
PRELIMINARY STATEMENTS
A. Landlord is the owner of the premises known as The Resort at
Summerlin as more particularly described on Exhibit "A" attached hereto and made
a part hereof (the "Resort").
B. Tenant desires to lease from Landlord a portion of the Resort
designated for use as a casino and more particularly described on Exhibit "B"
attached hereto and made a part hereof together with all items of personal
property now or hereinafter installed thereon and owned or leased by Landlord,
including, without limitation (i) all furniture and furnishings; (ii) material
handling, cleaning and engineering equipment; and (iii) associated gaming
equipment, but in all cases excluding any gaming device (as such term is defined
in Nevada Revised Statutes Section 463.0155, as amended) (the "Premises") and
Landlord desires to lease the Premises to Tenant, upon the terms and conditions
contained in this Lease.
1. LEASED PREMISES
Landlord, in consideration of the rent to be paid and the covenants to
be performed by Tenant as set forth herein, does hereby demise and lease the
Premises unto Tenant, and Tenant hereby rents and hires the Premises from
Landlord, subject to the covenants, restrictions and easements of record, the
terms and provisions of certain leases, reciprocal easements and/or operating
agreements now entered into by Landlord with respect to the Resort, the lien of
property taxes and assessments not delinquent, deeds of trust of record and all
other matters of record.
2. TERM
The term of this Lease (the "Term") shall commence on the first day
that the Premises are allowed to open to the public by virtue of receipt of all
of the required permits and licenses by Tenant (the "Commencement Date"). This
Lease shall terminate upon the earlier of (i) the third (3rd) anniversary of the
Commencement Date or (ii) the date upon which Landlord acquires all requisite
licenses and approvals of all state and local governmental authorities (the
"Nevada Gaming Authorities") required to operate the Resort as a gaming casino.
The parties to this Agreement will memorialize the Commencement Date by a
writing executed by each of them.
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3. RENT
3.1. Rent. Tenant shall pay to Landlord a rent of Two Million Four
Hundred Thousand Dollars ($2,400,000) per annum (the "Rent") which shall be paid
in advance in equal consecutive monthly installments of Two Hundred Thousand
Dollars ($200,000) commencing on the Commencement Date and continuing thereafter
on the first day of each calendar month of the Term; provided, however, that if
the Commencement Date shall be a day other than the first day of a calendar
month or if this Lease shall expire on a day other than the last day of a
calendar month, the Rent for any such month shall be prorated on the basis of a
thirty (30) day month. Rent shall be payable without notice or demand and
without any deduction, setoff or abatement, in lawful money of the United States
to Landlord at the address stated herein for notices as set forth in Article 15
below or to such other address or such other persons as Landlord may designate
to Tenant in writing.
3.2. Taxes. Tenant shall pay and discharge when due all taxes, rates,
duties, levies and assessments whatsoever, whether municipal, state, local,
sewer district, fire district or otherwise, levied, imposed, assessed or charged
against the Premises or any part thereof or upon Landlord in respect thereof, or
from time to time levied, imposed, assessed or charged in the future in lieu or
in substitution thereof, or for which Landlord is liable with respect to the
Premises, including those levied, imposed, assessed or charged for education and
local improvements. Tenant shall not be responsible for Landlord's income taxes
to the extent that any such income taxes are not levied in lieu of or in
substitution for, any of the foregoing. Landlord shall be entitled to estimate
the amount payable by Tenant under this Section 3.2. The amounts so estimated
shall be payable by Tenant in equal monthly installments in advance over the
period covered by the estimate and each such installment shall be paid by Tenant
together with the monthly installments of Rent. From time to time, Landlord may
reasonably re-estimate the amount payable under this Section 3.2 and the monthly
installments paid by Tenant hereunder shall be adjusted accordingly. If the Term
shall commence on a day other than at the end of a taxation year, then the
amounts payable by the Tenant under this Section 3.2 shall be adjusted on a per
diem basis having regard to such taxation year. Within sixty (60) days after
receipt of any final assessment of taxes due during the Term, the parties shall
determine if the estimated payments made by Tenant with respect to such taxes
resulted in overpayment or underpayment of the amount due. Any amounts underpaid
shall be immediately paid by Tenant to Landlord, and any amounts overpaid shall
be immediately reimbursed by Landlord to Tenant.
3.3. Business Taxes. Tenant shall pay and discharge when due (i) all
charges, taxes, rates, including local improvement rates, duties, assessments
and license fees that may be levied, rated, charged or assessed against the
fixtures, equipment, installations and improvements to the Premises and any
property on the Premises owned or brought thereon by the Tenant (and any of its
subtenants) and (ii) every tax and license fee (including, without limitation,
gaming taxes and fees) in respect of the business carried on by the Tenant on
the Premises, or in respect of the use or occupancy of the Premises by the
Tenant (and any of its subtenants), whether such taxes, rates, duties, charges,
assessments and license fees are charged by a municipal, parliamentary, school
or other body of competent jurisdiction during the Term. Tenant will indemnify
and save harmless the Landlord against and from all payments and loss, costs,
charges and expenses occasioned by or arising from any and all such charges,
taxes, rates, duties, assessments and
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license fees and any and all taxes which may in the future by levied in lieu
thereof. Tenant shall not appeal any assessment of its interest in the Premises
or any assessment of business taxes without the express written consent of
Landlord, such consent not to be unreasonably withheld or delayed. If Landlord
shall consent to such an appeal and if Landlord shall so request, Tenant shall
at the same time that it is prosecuting its appeal, appeal as agent of Landlord
the assessment of Landlord's interest in the subject matter of such appeal and
Tenant shall bear the costs of such appeal, and shall indemnify and save
Landlord harmless from all such costs.
3.4. Utilities. Tenant shall give notice to the utility companies to
ensure that all accounts for the Premises are opened in the name of Tenant.
Tenant shall pay and discharge all rates and charges whatsoever for electricity,
water, including water pollution and sewer charges, oil, gas, light, heat, air
conditioning, power, telephone and other public or private utilities and
services supplied to or used on or in connection with the Premises, or in
connection with the business or occupation of Tenant thereon (and anyone
claiming by, through or under Tenant). Tenant shall indemnify Landlord and the
Resort from and against the payment of all losses, costs, charges and expenses
in respect thereof.
3.5. Common Area Charges. Tenant shall pay its pro rata share of all
common area charges for the maintenance and upkeep of the common areas, such as
parking lots, security, landscaping and lighting. Such common area charges shall
include, but shall not be limited to, water and sewer charges, utilities and
utility system installation charges, maintenance and repairs, insurance
premiums, taxes and assessments, licenses, permits, management fees, and
reasonable depreciation of equipment used in the operation of the common areas;
provided, however, costs of equipment properly chargeable to capital account and
depreciation of the original cost of constructing the common areas shall be
excluded. Landlord shall be entitled to estimate the amount payable by Tenant
pursuant to this Section 3.5 so long as said amount is based on the ratio of the
square footage of the Premises to the total leasable square footage of the
Resort (which shall be deemed to be the total square footage of the Resort,
including space occupied by Landlord, that, under commercially reasonable terms,
conditions and circumstances, could be leased to a tenant). The amounts so
estimated shall be payable by Tenant in equal monthly installments in advance
over the period covered by the estimate and each such installment shall be paid
by Tenant together with the monthly installments of Rent. From time to time,
Landlord may reasonably re-estimate the amount payable under this Section 3.5
and the monthly installments paid by Tenant hereunder shall be adjusted
accordingly. Tenant shall be directly responsible for any expenses relating to
the use of the common areas by Tenant, its employees, agents and invitees.
Notwithstanding anything contained in this Lease to the contrary, in no event
shall Tenant be required to pay an amount of common area charges per square foot
which is greater than any other occupant of the Resort. Within sixty (60) days
after the end of each accounting year, the parties shall determine if the
estimated common area charges paid by Tenant resulted in overpayment or
underpayment of the amount due. Any amounts underpaid shall be immediately paid
by Tenant to Landlord, and any amounts overpaid shall be immediately reimbursed
by Landlord to Tenant.
3.6. Net Lease. The payments of Rent hereunder shall be absolutely net
to Landlord and Tenant shall pay, and Landlord shall not be liable for, any
costs, expenses, payments or outgoings whatsoever related to the Premises and
Tenant shall indemnify and hold Landlord
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<PAGE> 63
harmless for any such costs, expenses, payments or outgoings, except for
Landlord's financing costs related to the Premises and as otherwise provided in
this Lease. Landlord shall not be responsible to do, perform or arrange anything
for or in connection with the Premises, except as otherwise expressly provided
in this Lease.
4. USE AND STANDARD OF OPERATION
4.1. Use and Standard of Operation.
(a) Except to the extent excused as hereinafter provided,
Tenant shall use the Premises solely for the
operation of a gaming casino (the "Business") in
accordance with all applicable rules and regulations
of the Nevada Gaming Authorities utilizing the name
"The Resort at Summerlin" on a non-exclusive basis or
such other name as may be mutually agreed by Landlord
and Tenant and shall operate the Business in a
first-class high quality manner (the "Operating
Standard"). Except as otherwise specifically set
forth in this Lease, Tenant shall have absolute
control and discretion in the operation of the
Business including, without limitation, the right to
determine the terms of admittance and labor policies
(including wage rates, and the hiring and discharging
of employees.
(b) Notwithstanding anything in this Section 4.1 or
elsewhere contained in this Lease, Tenant shall be
excused from its obligation to operate the Business
in conformity with the Operating Standard to the
extent and whenever Tenant shall be prevented from
compliance with the Operating Standard by events
beyond Tenant's reasonable control as set forth in
Section 16.7 below.
4.2. No Assignment or Subletting. Tenant shall not, without Landlord's
prior written consent, assign or in any manner transfer this Lease or any estate
or interest therein, or lease or sublet the Premises or any part or parts
thereof or any right or privilege appurtenant thereto, or allow anyone to
conduct business at, upon or from the Premises (whether as concessionaire,
franchisee, licensee, permittee, subtenant, department operator or otherwise),
either voluntarily or involuntarily or by operation of law or otherwise. Without
limiting the foregoing, the restrictions of this Section 4.2 shall not apply to
any merger, consolidation or other reorganization of Tenant or of any corporate
entity which directly or indirectly controls Tenant, and any such merger,
consolidation or other reorganization shall not be deemed to be an assignment of
this Lease within the meaning of this Section 4.2.
4.3. Negation of Partnership or Joint Venture. Nothing herein contained
shall constitute or be construed to be or to create a partnership or joint
venture between Landlord and Tenant.
5. OPERATING COVENANTS
Tenant shall be obligated to continuously utilize the full Premises and
operate the Business during the Term. From and after the Commencement Date and
at all times hereafter
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during the Term, Tenant shall cause to be on hand sufficient inventories of
operating supplies and sufficient funds in Tenant's bank accounts to assure the
timely payment of all current liabilities of Tenant and of other operating
expenses and the uninterrupted operation of the Business in accordance with the
Operating Standard and the performance by Tenant of its other obligations
hereunder. On the date hereof Tenant shall have procured, and during the Term
shall continue to maintain, all licenses required by the Nevada Gaming
Authorities and under applicable law for the operation of the Business.
6. REPAIRS AND ALTERATIONS
6.1. Repairs and Maintenance.
(a) Subject to Section 6.1(b), Tenant shall, at all times
during the Term, maintain the Premises in such good
order and condition and make all non-structural
repairs thereto as shall be necessary in accordance
with the Operating Standard, so as to deliver the
Premises to Landlord at the end of the Term in as
good condition as the present, subject however, to
reasonable wear and tear.
(b) Landlord, at its cost, shall perform all necessary
repairs of the following:
(i) the structural parts of the building and
other improvements in which the Premises are
located, which structural parts include the
foundations, bearing and exterior walls
(excluding glass and doors), subflooring and
roof;
(ii) the unexposed electrical, plumbing and
sewage systems, including, without
limitation, those portions of the systems
lying outside the Premises;
(iii) window frames, gutters, drains and
downspouts on the building and other
improvements that are a part of the
Premises; and
(iv) heating, ventilating and air-conditioning
system servicing the Premises, other than
ordinary maintenance.
6.2. Compliance with Legal Requirements. Except as elsewhere herein
limited or excused, Tenant shall, throughout the Term, comply with all
applicable requirements (the "Legal Requirements") under all laws, ordinances,
rules and regulations and orders of any governmental authorities having
jurisdiction over the Premises including, without limitation, all requirements
of the Nevada Gaming Authorities as well as all applicable gaming related laws
and regulations. Tenant may, but only after written approval by Landlord,
contest, by appropriate legal proceedings conducted in good faith, in the name
of Tenant or Landlord, or both, the validity or application of any of the Legal
Requirements. If Landlord shall approve any such contest, Landlord shall execute
and deliver to Tenant all appropriate documents which may be necessary or proper
to permit Tenant to prosecute such contest. Landlord may, by notice to Tenant,
direct
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Tenant to contest, or Landlord may contest directly, any of the Legal
Requirements which Tenant may otherwise desire not to contest.
6.3. Alterations and Additions. Tenant shall not, without
Landlord's prior written consent, make any alterations, improvements or
additions in or about the Premises except for nonstructural work which does not
exceed One Hundred Thousand Dollars ($100,00O) in cost. As a condition to giving
any such consent, Landlord may require Tenant to remove any such alterations,
improvements, or additions at the expiration of the Term, and to restore the
Premises to their prior condition, reasonable wear and tear excepted. If
Landlord so elects, Tenant at its sole cost shall restore the Premises to their
prior condition, reasonable wear and tear excepted, before the last day of the
Term of the Lease.
Before commencing any work relating to the alterations, additions or
improvements affecting the Premises, Tenant shall notify Landlord in writing of
the expected date of the commencement of such work so that Landlord can post and
record the appropriate notices of non-responsibility to protect Landlord from
any mechanic's liens, materialman liens or any other liens. In any event, Tenant
shall pay, when due, all claims for labor and materials furnished to or for
Tenant at or for use in the Premises. Tenant shall not permit any mechanic's
liens or materialmen's liens to be levied against the Premises for any labor or
material furnished to Tenant or claims to have been furnished to Tenant or
Tenant's agents or contractor in connection with work of any character performed
or claimed to have been performed on the Premises by or at the direction of
Tenant; Tenant shall have the right to contest the validity of any such lien if,
immediately on demand by Landlord, Tenant procures and records a lien release
bond meeting the requirements of Landlord and shall provide for the payment of
any sum that the claimant may recover on the claim (together with the costs of
suit, if it is recovered in the action).
Unless Landlord requires their removal as set forth above, all
alterations, improvements or additions which are made on the Premises by Tenant
shall become the property of Landlord and remain upon and be surrendered with
the Premises at the expiration of the Term.
7. INSURANCE
7.1. Hazard Insurance. Tenant shall, at its expense, maintain
during the Term the following hazard insurance:
(a) all risk property insurance, including theft and, if
applicable, broad coverages, boiler or pressure
vessel insurance and machinery insurance, in amounts
reasonably designated by Tenant with approval from
Landlord;
(b) rental income insurance against loss of Tenant's
income from the Premises due to the risks covered by
the insurance referred to in paragraph (a) above, in
an amount not less than all amounts payable by Tenant
under Article 3 of this Lease for a period of six
months from the date of any casualty insured against;
and
(c) insurance against other hazards, excluding earthquake
and flood, in such amounts as Tenant in its
reasonable judgment shall, with the approval of
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Landlord, determine is necessary or desirable for the
protection of the Premises, due regard being given to
the height and type of improvements, their method of
construction, use and occupancy.
7.2. Terms of Hazard Policies. All policies of insurance provided
for in Section 7.1 above shall be subject to the following requirements, to the
extent permitted by all deeds of trust and other security instruments
encumbering the Resort:
(a) any loss under such policies shall be adjusted with
the insurer by Landlord and Tenant;
(b) the policies for such insurance shall provide that
the proceeds thereof shall be paid to Landlord to the
extent of Landlord's interest therein;
(c) each policy shall contain, if obtainable, a statement
that the insurance shall not be invalidated should
any insured waive in writing any or all right of
recovery against any party for loss occurring to the
property described in the insurance policy; and
(d) all policies shall name as insureds Landlord, Tenant
and the holders of deeds of trust encumbering the
Premises, as their interests may appear.
7.3. Liability Insurance. Tenant shall, at its expense, maintain
during the Term the following liability insurance:
(a) comprehensive general liability insurance against
all claims for bodily injury, personal injury or
property damage occurring on or about the Premises,
or in or about the adjoining streets, property or
passageways, or in connection with any operations
incidental to the Premises, including claims arising
from the theft of, or damage to, the property of
guests or other tenants of Landlord and/or Tenant.
The policy or policies for such insurance shall name
as additional insureds Landlord and the beneficiaries
of deeds of trust encumbering the Resort (to the
extent that the respective deeds of trust so
provide). Such insurance shall have a combined single
limit of not less than Five Million Dollars
($5,000,000). At any time during the Term, Landlord
may, however, increase the limits of any insurance
provided for in this paragraph (a) by reasonable
amounts to be agreed upon between Landlord and Tenant
on the ground that such limits do not reasonably
protect the interests of Landlord and Tenant; and
(b) statutory worker's compensation insurance and
employer's liability insurance in the amounts
required by law covering all persons working in or
upon the Premises for whom such coverage is required
by Tenant.
7.4. General Terms of Insurance Policies. All insurance carried by
Tenant shall be subject to the following:
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(a) all such insurance shall be effected under valid and
enforceable policies issued by insurers of recognized
responsibility which are licensed to do business in
Nevada and have been approved in writing by Landlord.
Upon the execution of this Lease, and thereafter not
less than thirty (30) days prior to the expiration
dates of any expiring policies previously issued,
duplicates of the policies or certificates of the
insurers reasonably satisfactory to Landlord shall be
delivered by Tenant to Landlord, except that on a
temporary basis binders in lieu of policies may be
provided;
(b) all policies for such insurance shall contain a
provision or endorsement that such policies are
primary to any insurance obtained directly by
Landlord;
(c) each policy shall contain, if obtainable, a provision
that no act or omission of Tenant shall affect or
limit the obligation of the insurance company to pay
the amount of any loss sustained;
(d) each policy shall contain an agreement by the insurer
that such policy shall not be canceled or amended
without at least thirty (30) days prior written
notice to Landlord;
(e) any such insurance may be effected by a policy or
policies of blanket insurance, provided, however,
that such policy or policies shall furnish protection
equivalent to that provided by separate policies in
the amounts herein required, and any such policy or
policies shall comply with the other provisions of
this Lease in all other respects, except that no such
policy shall be submitted to Landlord less than
thirty (30) days prior to the expiration of any
existing policy. In any such case, it shall not be
necessary to deliver the original of any such blanket
policy to Landlord, but Landlord shall be furnished
with a certified copy or duplicate of such policy
reasonably acceptable to Landlord; and
(f) in the event of any conflict between the requirements
of this Lease and any of the deeds of trust
encumbering the Property, the deeds of trust shall
prevail.
7.5. Insurable Condition. Tenant shall use reasonable efforts so as
not to violate any of the conditions or provisions of any such policy provided
for in this Article or void or make voidable any such policies.
8. WAIVER AND INDEMNIFICATION BY TENANT
As a material part of the consideration for this Lease, Tenant hereby
waives all claims against Landlord for damages to goods, wares, merchandise,
furniture, fixtures and equipment in, upon or about the Premises or the Resort,
and for injuries to or death of any person in, on or about the Premises, from
any cause arising at any time during the Term. In addition, Tenant shall
indemnify and save Landlord harmless, and, at Tenant's expense, defend Landlord,
from
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Restoration within sixty (60) days after the receipt of such
insurance proceeds, or shall fail to complete the same
diligently, Tenant may, but shall not be obligated to,
undertake or complete the Restoration for the account of
Landlord and shall be entitled to be repaid therefor
(including, at Tenant's option, a deduction of such amount
from Rent owed by Tenant to Landlord). In such case, if the
Casualty is an Insured Casualty, the proceeds of insurance
shall be made available to Tenant for this purpose, provided
that Landlord shall have the right to ensure that such
proceeds of insurance shall be applied to the Restoration.
(b) If the cost of Restoring the Damaged Property shall exceed One
Hundred Fifty Thousand Dollars ($150,000), Landlord shall have
an election, exercisable by notice to Tenant ("Notice of
Termination") given within forty-five (45) days after the
occurrence of the Casualty, to terminate this Lease effective
upon the last day of the month (the "Termination Date") in
which month the Notice of Termination shall be given. If
Landlord shall have timely given a Notice of Termination, it
shall have no duty to restore the Damaged Property and, in the
case of an Insured Casualty, all insurance proceeds which
shall be payable to Tenant, shall belong and be paid to
Landlord; in such event this Lease shall terminate on the
Termination Date, with the parties being then relieved from
all obligations hereunder except as to matters theretofore
accrued. In the event that the Landlord shall have failed to
give a Notice of Termination within the aforementioned
forty-five (45) day period then, upon the expiration thereof,
Landlord shall be obligated to restore the Damaged Property
and the provisions of the foregoing paragraph (a) of this
Section 9.2 shall apply to such Restoration.
10. CONDEMNATION
If the Premises or any portion thereof are taken by the power of
eminent domain, or sold by Landlord under the threat of exercise of said power
(all of which is herein referred to as "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever occurs first. If more than twenty percent (20%)
of the floor area of any building on the Land, or more than twenty percent (20%)
of the Land is taken by condemnation, either Landlord or Tenant may terminate
this Lease as of the date the condemning authority takes possession, by notice
in writing of such election within twenty (20) days after Landlord shall have
notified Tenant of such taking or, in the absence of such notice, within twenty
(20) days after the condemning authority shall have taken possession.
If this Lease is not terminated by either Landlord or Tenant as
provided hereinabove, then it shall remain in full force and effect as to the
portion of the Premises remaining, provided that Rent shall be reduced in
proportion to the floor area of the Premises taken as bears to the total floor
area of the Premises.
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All awards for the taking of any part of the Premises or any payment
made under the threat of the exercise of the power of eminent domain shall be
the property of the Landlord.
Each party hereby waives the provisions of law allowing either party to
petition a court to terminate this Lease in the event of a partial taking of the
Premises.
Rent shall be abated or reduced during the period from the date of the
damage or taking until the completion of restoration by Landlord, but all other
obligations of Tenant under this Lease shall remain in full force and effect.
The abatement or reduction of the Rent shall be based on the extent to which the
restoration interferes with Tenant's use of the Premises.
11. DEFAULT
11.1. Events of Default. The occurrence of any one or more of the
following shall constitute a default and breach of this Lease by Tenant:
(a) failure to pay Rent within five (5) days after the
date when due;
(b) any abandonment and vacation of the Premises (failure
to occupy and open the Premises for business to the
general public in accordance with the use provisions
set forth in Section 4.1 above for two (2)
consecutive days shall be deemed an abandonment and
vacation except during the periods described in
Articles 9 or 10 of this Lease);
(c) failure to perform any other provision of this Lease
if the failure to perform is not cured within ten
(10) days after written notice thereof has been given
to Tenant by Landlord; provided, however that if the
default cannot reasonably be cured within said ten
(10) day period, Tenant shall not be in default under
this Lease if Tenant commences to cure the default
within the ten (10) day period and diligently
prosecutes the same to completion;
(d) the revocation or suspension of any license or
approval granted by the Nevada Gaming Authorities; or
(e) the making by Tenant of any general assignment, or
general arrangement for the benefit or creditors;
the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating
to bankruptcy unless the same is dismissed within
sixty (60) days of such filing; the appointment of a
trustee or receiver to take possession of
substantially all of Tenant's assets located at the
Premises or of Tenant's interest in the Lease, where
possession is not restored to Tenant within thirty
(30) days of such appointment; or the attachment,
execution or other judicial seizure of substantially
all of Tenant's assets located at the Premises or of
Tenant's interest in the Lease, where such seizure is
not discharged within thirty (30) days.
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11.2. Landlord's Remedies. If Tenant defaults under this Lease,
Landlord shall have the following remedies which are not exclusive but are
cumulative and in addition to any remedies now or hereafter allowed by law:
(a) With respect to any failure to timely pay Rent,
Landlord shall, in addition to all other remedies,
receive from Tenant each of (i) a general and
administrative fee of ten percent (10%) of the sum
not timely paid, it being understood and agreed that
such payment does not represent a penalty, but
rather both parties' reasonable agreement of the
amount which Landlord should be compensated for its
general and administrative expense and cost in the
event of any late payments hereunder and (ii)
one-thirtieth of one percent (1/30 of 1%) of the
amount due but not timely paid hereunder for each day
that such payment is late.
(b) Landlord can continue this Lease in full force and
effect, and this Lease will continue in effect so
long as Landlord does not terminate Tenant's right to
possession and the Landlord shall have the right to
collect Rent when due. During the period that Tenant
is in default, Landlord can enter the Premises and
relet them, or any part of them, to third parties for
Tenant's account. Tenant shall be liable immediately
to Landlord for all costs Landlord incurs in
reletting the Premises including, without limitation,
brokers' commissions, expenses of remodeling the
Premises required by the reletting and like costs.
Reletting can be for a period shorter or longer than
the remaining Term of this Lease. Tenant shall pay to
Landlord the Rent due under the Lease on the dates
the Rent is due, less the rent Landlord received from
any reletting. No act by Landlord allowed by this
Section 11.2 shall terminate this Lease unless
Landlord notifies Tenant that Landlord elects to
terminate this Lease. After Tenant's default and for
so long as Landlord has not terminated Tenant's right
to possession of the Premises, if Tenant obtains
Landlord's consent as provided in Section 4.2, Tenant
shall have the right to assign or sublet its interest
in the Lease, but Tenant shall not be released from
liability. Landlord's consent to the proposed
assignment or subletting shall be in Landlord's sole
and absolute discretion.
(c) If Landlord elects to relet the Premises as provided
in this Section 11.2, any rent that Landlord receives
from such reletting shall be applied first to the
payment of any indebtedness from Tenant to Landlord
other than the Rent due from Tenant to Landlord;
secondly, to all costs, including maintenance,
incurred by Landlord in such reletting; and third, to
any Rent due and unpaid under this Lease. After
deducting the payments referred to in this Section
11.2, any sum remaining from the rent Landlord
receives from such reletting shall be held by
Landlord and applied in payment of future rent as
rent becomes due under this Lease. In no event shall
Tenant be entitled to any excess rent received by
Landlord. If, on the date Rent is due under this
Lease, and the rent received from reletting is less
than the
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Rent due on that date, Tenant shall pay to Landlord,
in addition to the remaining Rent due, all costs,
including maintenance, that Landlord shall have
incurred in reletting that remain after applying the
rent received from the reletting as provided in this
Section 11.2.
(d) Landlord can, at its option, terminate Tenant's right
to possession of the Premises at any time. No act by
Landlord other than giving written notice to Tenant
shall terminate this Lease. Acts of maintenance,
efforts to relet the Premises or the appointment of a
receiver (subject to all applicable gaming laws) on
Landlord's initiative to protect Landlord's interest
in this Lease shall not constitute a termination of
Tenant's right to possession. In the event of such
termination, Landlord has the right to recover from
Tenant:
(i) the worth at the time of the award, of the
unpaid Rent that had been earned at the time
of the termination of this Lease;
(ii) the worth at the time of the award, of the
amount by which the unpaid Rent that would
have been earned after the date of the
termination of this Lease until the time of
the award exceeds the Rent Mitigation (as
defined below);
(iii) the worth at the time of the award, of the
amount by which the unpaid Rent for the
balance of the term after the time of the
award exceeds the Rent Mitigation; and
(iv) any other amount, including court costs,
necessary to compensate Landlord for all
detriment proximately caused by Tenant's
default.
"The worth at the time of the award" as used in (i)
and (ii) of this Section 11.2 is to be computed by
allowing interest at the maximum rate an individual
is permitted by law to charge. "The worth at the time
of the award" as referred to in (iii) of this
paragraph is to be computed by discounting the amount
at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award, plus one percent
(1%).
"Rent Mitigation" means the amount of the loss of
Rent that Tenant proves could have reasonably been
avoided by reletting of the Premises.
(e) Landlord shall have the additional right (subject to
all applicable gaming laws) to have a receiver
appointed to collect Rent and conduct Tenant's
business. Neither the filing of a petition for the
appointment of a receiver nor the appointment itself
shall constitute an election by Landlord to terminate
this Lease.
(f) Landlord, at any time after Tenant commits a
default, may cure the default at Tenant's cost and
expense. If Landlord at any time by reason of
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Tenant's default, pays any sum or does any act that
requires the payment of any sum, the sum paid by
Landlord shall be due immediately from Tenant to
Landlord at the time the sum is paid, and if paid by
a later date shall bear interest at the maximum rate
an individual is permitted by law to charge from the
date the sum is paid by Landlord until Landlord is
reimbursed by Tenant. The sum, together with interest
thereon, shall be considered additional Rent.
12. ENTRY BY LANDLORD
12.1. Entry for Inspection and Repairs, Etc. Landlord and its
authorized representatives shall have the right to enter upon the Premises at
all reasonable times for the purpose of inspecting or examining the same or,
after notice to Tenant, for the purpose of making any repairs to the
improvements and doing any other work necessary by reason of any failure by
Tenant to make repairs or do other work required of it under this Lease. Nothing
contained in this Lease or otherwise shall create or imply any duty upon the
part of Landlord to make any such inspection or repairs or to do any work in
respect of the improvements or any sidewalks or curbs adjoining the Land, or any
liability or other obligation to Tenant or to third persons for not making or
doing the same carefully or properly, or for not completing the same.
12.2. Entry for Showing. Landlord and its authorized representatives
shall have the right to enter upon the Premises (with the exception of the
casino cage and other areas prohibited for access to the general public by the
Nevada Gaming Authorities), at all reasonable times during usual business
hours for the purpose of showing the same to prospective purchasers or lenders,
holders of deeds of trust of the Premises or any part thereof and, at any time
prior to the expiration of the Term.
12.3. Entry Not an Eviction. No entry by Landlord pursuant to the
provisions of this Article 12 shall constitute or be deemed to be an eviction of
Tenant.
13. ESTOPPEL STATEMENT; ATTORNMENT; SUBORDINATION; SUCCESSORS AND ASSIGNS
13.1. Estoppel. Tenant shall, without charge, at any time and from time
to time, within ten (10) days after receipt by Tenant of written request
therefor from Landlord or from any beneficiary under any deed of trust, deliver,
in recordable form, a duly executed and acknowledged certificate or statement on
a form proscribed by Landlord stating that this Lease is unmodified and in full
force and effect, or in full and effect as modified, and reciting the
modification. The certificate shall further state the amount of Rent, the dates
upon which Rent has been paid in advance and the amount of any security deposit.
The certificate shall also acknowledge that there are not, to Tenant's
knowledge, any uncured defaults on the part of Landlord, or it shall specify
such defaults, if any, which are claimed, and shall state such further matters
(and be from any or all of the guarantors as requested by Landlord) as Landlord
may reasonably request. Failure to deliver such a certificate within the ten
(10) day period shall be conclusive upon Tenant and to the benefit of Landlord
that this Lease is in full force and effect,
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that there are no uncured defaults hereunder and that this Lease has not been
modified except as may be represented by Landlord.
13.2. Attornment. In the event any proceedings are brought for the
foreclosure of, or in the event of the conveyance by deed in lieu of foreclosure
of, or in the event of exercise of the power of sale under, any deed of trust
made by Landlord covering the Premises, or in the event Landlord sells, conveys
or otherwise transfers its interest in the property of which the Premises are a
part, or any portion thereof, this Lease shall remain in full force and effect
and Tenant hereby attorns to, and covenants and agrees to execute an instrument
in writing reasonably satisfactory to the new owner where by Tenant attorns to
such successor in interest and recognizes such successor as the landlord under
this Lease. Payment by or performance of the Lease by any person, firm or
corporation claiming an interest in this Lease or the Premises by, through or
under Tenant without Landlord's consent in writing shall not constitute an
attornment or create any interest in this Lease or the Premises.
13.3. Subordination. Tenant agrees that this Lease shall, at the
request of Landlord, be subordinate to any underlying lease or to any deeds of
trust that are now, or may hereafter be, placed upon the Premises and to any and
all advances to be made thereunder, and to the interest thereon, and all
renewals, replacements and extensions thereof, provided that the lessor under
any such underlying lease or the beneficiaries named in said deeds of trust
shall agree to recognize the interest of Tenant under this Lease in the event of
foreclosure, if Tenant is not then in default. Tenant also agrees that any
underlying lessor or beneficiary may elect to have this lease constitute a prior
lien to its underlying deed of trust, and in the event of such election and upon
notification of such underlying lessor or beneficiary to Tenant to that effect,
this Lease shall be deemed prior in lien to such underlying lease or deed of
trust, whether this Lease is dated prior to or subsequent to the date of such
underlying lease or deed of trust. Tenant agrees that upon the request of
Landlord, or any such beneficiary, Tenant shall execute whatever instruments may
be required to carry out the intent of this Section 13.3.
13.4. Assignment by Landlord. Landlord shall have the right to sell,
hypothecate and convey the Premises or any part thereof or to assign, in whole
or in part, its interest in this Lease, or both, without the consent of Tenant;
provided, however, that any such Assignee shall expressly assume in writing the
obligations of Landlord hereunder from and after the date of such assignment.
13.5. Binding on Successors. The terms, provisions, covenants,
undertakings, agreements, obligations and conditions of this Lease shall be
binding upon and shall inure to the benefit of the successors in interest and
the assigns of the parties hereto with the same effect as if mentioned in each
instance where the party hereto is named or referred to.
14. QUIET ENJOYMENT
Landlord covenants and agrees that Tenant, upon paying the Rent and all
other charges provided for in this Lease and upon observing and keeping all of
the covenants, conditions and provisions of this Lease on its part to be
observed and kept, shall, subject to the terms and provisions of this Lease,
lawfully and quietly hold, occupy and enjoy the Premises during the
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Term of this Lease, without hindrance or molestation by or from anyone claiming
by, through or under Landlord.
15. NOTICES
All notices, demands and requests required under this Lease shall be in
writing and shall be deemed to have been given if served personally, or if sent
by United States registered or certified mail, postage prepaid, return receipt
requested, or by overnight courier, addressed to the addresses set forth below
or such other addresses as either party may designate by notice to the other and
in each case, with a copy to the appropriate parties as set forth below:
To Tenant: Seven Circle Resorts of Nevada, Inc.
1512 Larimer Street, Suite 300
Denver, Colorado 80202
Attn: President
with a copy to: Gordon & Silver, Ltd.
3800 Howard Hughes Pkwy, 14th Fl.
Las Vegas, Nevada 89109
Attn: James S. Mace
To Landlord: The Resort at Summerlin, Limited Partnership
1512 Larimer Street, Suite 300
Denver, Colorado 80202
Attn: General Partner
with a copy to: Baker & Hostetler
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
Attn: Victor L. Wallace II
16. MISCELLANEOUS
16.1. Gaming Authorities. If at any time (i) Tenant or any person
associated in any way with Tenant is denied a license, found unsuitable or is
denied or is otherwise unable to obtain any "Approval" (as defined herein) with
respect to the Premises or the Business by the Nevada Gaming Authorities or any
other governmental agencies outside the State of Nevada with requisite authority
for the regulation of gaming (each of the foregoing is referred to herein as a
"Gaming Authority"), is required by any Gaming Authority to apply for an
Approval and does not apply within any required time limit, as the same may be
extended by such Gaming Authority, withdraws any application for Approval other
than upon a determination by the applicable Gaming Authority that such Approval
is not required, and if the result of the foregoing has or would have an adverse
effect on Landlord or any "Landlord's Affiliate" (as defined herein) or does or
would materially delay obtaining any Approval; or (ii) any Gaming Authority
commences or threatens to commence any suit or proceeding against Landlord or
any Landlord's Affiliate or to terminate or deny any Approval of Landlord or any
Landlord's Affiliate as a result of Tenant or any person associated with Tenant
(all of the foregoing events described in (i) and
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(ii) above are collectively referred to as a "Denial"), then Landlord may
terminate this Lease by written notice to Tenant; provided, however, that if
Landlord exercises its right to terminate this Lease pursuant to this Section
solely as the result of an association of Tenant or any person associated with
Tenant which is the subject of a Denial, this Lease shall not terminate if
Tenant ends such association within thirty (30) days of such notice of
termination or within such longer period of time, if any, as the Gaming
Authority gives for terminating such association. Tenant and all such persons
associated with Tenant shall promptly, and in all events within any time limit
established by law, regulation or by such Gaming Authority, furnish each Gaming
Authority with any information requested by such Gaming Authority and shall
otherwise fully cooperate with all Gaming Authorities. A person shall be deemed
associated with Tenant if that person directly or indirectly owns any equity
interest in Tenant, any equity interest in such person is directly or indirectly
owned by Tenant, any equity interest in such person is directly or indirectly
owned by a person directly or indirectly having any equity interest in Tenant
(all of the foregoing are hereinafter referred to as "Tenant Affiliates"), such
person is employed by Tenant or a Tenant Affiliate, is an officer, director or
agent of Tenant or a Tenant Affiliate, has any contractual relationship with
Tenant or a Tenant Affiliate, furnishes services or property to Tenant or a
Tenant Affiliate or has the power to exercise a significant influence over
Tenant or Tenant Affiliate, Tenant represents to Landlord that neither Tenant
nor, to the best of Tenant's knowledge, any person associated with Tenant, is
unwilling to file all necessary applications to obtain whatever Approvals may be
required of such persons in connection with this Lease. To the best of Tenant's
knowledge, neither Tenant nor any person associated with Tenant has ever engaged
in any conduct or practices which any of the foregoing persons should reasonably
believe would cause such person or entity to be denied any Approval. The term
"Landlord's Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with Landlord or any
officer, director, trustee or general partner of any of such persons or of
Landlord. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such person, whether through the ownership of voting securities
or by agreement or otherwise. "Approval" means any license, finding of
suitability or any other approval or permit by or from the Gaming Authorities.
16.2. No Recordation. Tenant shall not record this Lease without the
prior written consent of Landlord.
16.3. Construction. In all cases the language in all parts of this
Lease shall be construed simply according to its fair meaning and not strictly
for or against Landlord and Tenant.
16.4. Attorney Fees and Expenses. In the event either party shall file
an action or proceeding against the other to enforce any provision or right
hereunder, the prevailing party in such action or proceeding shall be paid by
the other party thereto all reasonable costs and expenses incurred by such
prevailing party in connection with such action or proceeding, expressly
including, but not limited to, reasonable attorney fees. Such costs and
expenses, including attorney fees, shall be included in any judgment or decree
rendered in such action or proceeding.
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16.5. Further Assurances. The parties hereby agree to execute such
other documents and perform such other acts as may be necessary or desirable to
carry out the purposes of this Lease.
16.6. Governing Law. The laws of the State of Nevada shall govern the
validity, construction, performance and effect of this Lease and any action
arising under this Lease may be brought in the courts of the State of Nevada.
16.7. Force Majeure. In the event that either party hereto shall be
delayed or prevented from the performance of its obligations pursuant to this
Lease, by reason of strikes, lock outs, labor troubles, inability to procure
materials, failure of power, or reasons of a similar nature not the fault of the
party delayed in performing such obligations under the terms of this Lease, then
performance of such acts shall be excused for the period of the delay and the
period for the performance of any such act shall be extended for a period
equivalent to the period of such delay. Nothing contained in this Section 16.7
shall excuse Tenant from the prompt payment of Rent and the other obligations of
Tenant pursuant to Article 3 of this Lease and from the continuous operation of
the Business as set forth in Article 5 of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this instrument as
of the day and year first hereinabove set forth.
LANDLORD: Seven Circle Resorts of Nevada, Inc., a
Nevada corporation
By:____________________________________
Its:_______________________________
TENANT: The Resort at Summerlin Limited
Partnership, a Nevada limited partnership
By:____________________________________
Its:_______________________________
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EXHIBIT C
TO AGREEMENT OF LIMITED PARTNERSHIP OF
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
For purposes of interpreting and implementing Articles 3 and 5 of the
Agreement of Limited Partnership of THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
(the "Agreement"), and except as otherwise required under Section 704(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations promulgated thereunder, the following rules shall apply and shall be
treated as part of the terms of the Agreement:
PART A SPECIAL ALLOCATION PROVISIONS.
(1) For purposes of determining the amount of gain or loss to be
allocated pursuant to Articles 3 and 5 of the Agreement, any
basis adjustments permitted pursuant to Section 743 of the Code
shall be disregarded.
(2) Except as otherwise provided in paragraph 5.7B of the Agreement,
Partnership income, gain, loss, deductions, and credits shall be
considered to have been earned and incurred ratably over the
period of the fiscal year of the Partnership and shall be
allocated to the Partners in accordance with the portion of the
year during which the Partners have held their respective
interests.
(3) Notwithstanding any other provision of the Agreement, to the
extent required by law, income, gain, loss, and deduction
attributable to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take into
account any variation between the basis of the property and the
fair market value of the property at the time of contribution in
accordance with the requirements of Section 704(c) of the Code
and the applicable Treasury Regulations promulgated thereunder
as more fully described in Part B hereof.
(4) Notwithstanding any other provision of the Agreement, in the
event the Partnership is entitled to a deduction for interest
imputed under any provision of the Code on any loan or advance
from a Partner (whether such interest is currently deducted,
capitalized, or amortized), such deduction shall be allocated
solely to such Partner.
(5) Notwithstanding any provision of the Agreement to the contrary,
to the extent any payments in the nature of fees made to a
Partner are finally determined by the Internal Revenue Service
to be distributions to a Partner for Federal income tax
purposes, there will be a gross income allocation to such
Partner in the amount of such distribution.
<PAGE> 78
(6)(a) Notwithstanding any provision of the Agreement to the contrary
and subject to the exceptions set forth in Section 1.704-2(f)
(2) - (5) of the Treasury Regulations, if there is a net
decrease in Partnership Minimum Gain during any fiscal year of
the Partnership, each Partner shall be specially allocated items
of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share of
the net decrease in Partnership Minimum Gain determined in
accordance with Section 1.704-2(g)(2) of the Treasury
Regulations. Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Section
1.704-2(f) of the Treasury Regulations. This Paragraph A(6)(a)
is intended to comply with the minimum gain chargeback
requirement in such Section of the Treasury Regulations and
shall be interpreted consistently therewith. To the extent
permitted by such Section of the Treasury Regulations and for
purposes of this Paragraph A(6)(a) only, each Partner's Adjusted
Capital Account Balance shall be determined prior to any other
allocations pursuant to Articles 3 and 5 of the Agreement with
respect to such fiscal year and without regard to any net
decrease in Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Agreement to the contrary,
except Paragraph A(6)(a) of this Exhibit, and subject to the
exceptions set forth in Section 1.704-2(i)(4) of the Treasury
Regulations, if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain during any Partnership fiscal year, each
Partner who has a share of the Partner Nonrecourse Debt Minimum
Gain, determined in accordance with Section 1.704-2(i)(5) of the
Treasury Regulations, shall be specially allocated items of
Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share of
the net decrease in Partner Nonrecourse Debt Minimum Gain,
determined in accordance with Section 1.704-2(i)(5) of the
Treasury Regulations. Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The
items to be so allocated shall be determined in accordance with
Section 1.704-2(i)(4) of the Treasury Regulations. This
Paragraph A(6)(b) is intended to comply with the minimum gain
chargeback requirement in such Section of the Treasury
Regulations and shall be interpreted consistently therewith.
Solely for purposes of this Paragraph A(6)(b), each Partner's
Adjusted Capital Account Balance shall be determined prior to
any other allocations pursuant to Articles 3 and 5 of the
Agreement with respect to such fiscal year, other than
allocations pursuant to A(6)(a) hereof.
Exhibit C: page 2
<PAGE> 79
(7) Notwithstanding any provision of the Agreement to the contrary,
if any Partner does not have an unconditional obligation to
restore a deficit in such Partner's Capital Account in
accordance with the requirements of Treasury Regulations Section
1.704- 1(b)(2)(ii)(b)(3), then, in the event such Partner
unexpectedly receives any adjustments, allocations, or
distributions described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1
(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner
sufficient to eliminate the deficits in such Partner's Adjusted
Capital Account Balance created by such adjustments,
allocations, or distributions as quickly as possible. This
Paragraph A(7) is intended to comply with the Qualified Income
Offset provisions of the aforementioned Treasury Regulations.
(8) No loss shall be allocated to any Partner to the extent that
such allocation would result in a deficit in its Adjusted
Capital Account Balance while any other Partner continues to
have a positive Adjusted Capital Account Balance; in such event
losses shall first be allocated to any Partners with positive
Adjusted Capital Account Balances, and in proportion to such
balances, to the extent necessary to reduce their positive
Adjusted Capital Account Balances to zero. Any excess shall be
allocated to the General Partner.
(9) Any special allocations of items pursuant to this Part A shall
be taken into account in computing subsequent allocations so
that the net amount of any items so allocated and the remaining
profits, losses, and all other items allocated to each Partner
pursuant to Articles 3 and 5 of the Agreement shall, to the
extent possible, be equal to the net amount that would have been
allocated to each such Partner pursuant to the provisions of
Articles 3 and 5 of the Agreement if such special allocations
had not occurred.
(10) Notwithstanding any provision of the Agreement to the contrary,
Nonrecourse Deductions for any fiscal year or other period shall
be specially allocated to the Partners in accordance with their
percentages set forth in Paragraph 3.1 of the Agreement.
(ll) Notwithstanding any provision of the Agreement to the contrary,
any Partner Nonrecourse Deduction for any fiscal year or other
period shall be specially allocated to the Partner who bears the
economic risk of loss with respect to the Partner Nonrecourse
Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Section 1.704-2(i) of the
Treasury Regulations.
Exhibit C: page 3
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PART B CAPITAL ACCOUNT ADJUSTMENTS AND 704(C) TAX ALLOCATIONS.
(1) For purposes of computing the amount of any item of income,
gain, deduction, or loss to be reflected in the Partners'
Capital Accounts, the determination, recognition, and
classification of any such item shall be the same as its
determination, recognition, and classification for Federal
income tax purposes; provided, however, that:
(a) Any deductions for depreciation, cost recovery,
or amortization attributable to a Contributed
Property shall be determined as if the adjusted
basis of such property on the date it was
acquired by the Partnership was equal to the
Agreed Value of such property. Upon an
adjustment to the Carrying Value of any
Partnership property, further deductions for
depreciation, cost recovery, or amortization
attributable to such property shall be
determined as if the adjusted basis of such
property was equal to the Carrying Value of such
property immediately following such adjustment.
(b) Any income, gain, or loss attributable to the
taxable disposition of any property shall be
determined by the Partnership as if the adjusted
basis of such property as of such date of
disposition was equal in amount to the
Partnership's Carrying Value with respect to
such property as of such a date.
(c) If the Partnership's adjusted basis in a
depreciable or cost recovery property is reduced
for Federal income tax purposes pursuant to
Section 50(c)(1) of the Code, the amount of such
reduction shall, solely for purposes hereof, be
deemed to be an additional depreciation or cost
recovery deduction in the year such property is
placed in service and shall be allocated among
the Partners pursuant to Articles 3 and 5 of the
Agreement. Any restoration of such basis
pursuant to Section 50(c)(2) of the Code shall
be allocated in the same manner to the Partners
to whom such deemed deduction was allocated.
(d) The computation of all items of income, gain,
loss and deduction shall be made by the
Partnership and, as to those items described in
Section 705(a)(1)(B) or Section 705(a)(2)(B) of
the Code, without regard to the fact that such
items are not includable in gross income or are
neither currently deductible nor capitalizable
for Federal income tax purposes.
(2) A transferee of a Partner's interest will succeed to the Capital
Account relating to the Partner's interest transferred;
provided, however, that if the Transfer causes a termination of
the Partnership under Section 708(b)(1)(B) of the Code, and
subject to such other treatment as may be required by Treasury
Regulations,
Exhibit C: page 4
<PAGE> 81
the Partnership properties shall be deemed to have been
distributed in liquidation of the Partnership to the Partners
(including the transferee of a Partnership Interest) and
recontributed by such Partners and transferees in reconstitution
of the Partnership. The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the
principles set forth herein. Upon the occurrence of any of the
following events, the Partnership property shall be revalued and
the Partners' Capital Accounts adjusted to reflect the gain (or
loss) that would have been allocated to each Partner if all the
Partnership property had been sold at its fair market value
immediately prior to the occurrence of such event:
(a) The acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for
more than a de minimis Capital Contribution;
(b) The distribution by the Partnership to a Partner
of more than a de minimis amount of property or money in
consideration for an interest in the Partnership; or
(c) The "liquidation" of the Partnership within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations.
The revaluation of the Partnership property referred to in the
immediately preceding sentence shall be made in accordance
with Section 1.704-1(b)(2)(iv)(f) of the Regulations.
(3) Upon an issuance of any additional interests in the Partnership
for cash or Contributed Property, the Capital Accounts of all
Partners (and the Carrying Values of all Partnership properties)
shall, immediately prior to such issuance, be adjusted
(consistent with the provisions hereof) upward or downward to
reflect any unrealized gain or unrealized loss attributable to
each Partnership property (as if such unrealized gain or
unrealized loss had been recognized upon an actual sale of such
property at the fair market value thereof, immediately prior to
such issuance, and had been allocated to the Partners, at such
time, pursuant to Articles 3 and 5 of this Agreement). In
determining such unrealized gain or unrealized loss attributable
to the properties, the fair market value of Partnership
properties shall be determined by the General Partner using such
reasonable methods of valuation as the General Partner may
adopt.
(4) Immediately prior to the distribution of any Partnership
property in liquidation of the Partnership, the Capital Accounts
of all Partners (and the Carrying Values of all Partnership
properties) shall be adjusted (consistent with the provisions
hereof and Section 704 of the Code) upward or downward to
reflect any unrealized gain or unrealized loss attributable to
each Partnership property (as if such unrealized
Exhibit C: page 5
<PAGE> 82
gain or unrealized loss had been recognized upon an actual sale
of each such property, immediately prior to such distribution,
and had been allocated to the Partners, at such time, pursuant
to Articles 3 and 5 of the Agreement). In determining such
unrealized gain or unrealized loss attributable to the
properties, the fair market value of Partnership properties
shall be determined by the General Partner using such reasonable
methods of valuation as the General Partner may adopt.
(5) In accordance with Section 704(c) and the Treasury Regulations
promulgated thereunder, income, gain, loss, and deduction with
respect to any Contributed Property shall, solely for tax
purposes, be allocated among the Partners so as to take account
of any variation between the adjusted basis of such property to
the Partnership for Federal income tax purposes and its Agreed
Value.
(6) In the event the Agreed Value of any Partnership asset is
adjusted as described in Paragraphs B(3) or B(4) above,
subsequent allocations of income, gain, loss and deduction with
respect to such asset shall take account of any variation
between the adjusted basis of such asset for Federal income tax
purposes and its Agreed Value in the same manner as under
Section 704 (c) of the Code and the Treasury Regulations
promulgated thereunder.
(7) Any elections or other decisions relating to any Federal income
tax matters shall be made by the General Partner in any manner
that reasonably reflects the purpose and intention of the
Agreement.
PART C DEFINITIONS.
For the purposes of this Exhibit, the following terms shall have the
meanings indicated unless the context clearly indicates otherwise:
"ADJUSTED CAPITAL ACCOUNT BALANCE" means the balance, if any, in the
Capital Account balance of a Partner as of the end of the relevant
fiscal year of the Partnership, after giving effect to the following:
(a) credit to such Capital Account any amounts the Partner is
obligated to restore, pursuant to the terms of the Agreement or
otherwise or is deemed obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Treasury Regulations; and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5), and (6) of the Treasury
Regulations.
Exhibit C: page 6
<PAGE> 83
"AGREED VALUE" means the fair market Value of Contributed Properties as
agreed to by the contributing Partner and the Partnership, using such
reasonable method of valuation as they may adopt.
"CARRYING VALUE" means:
(a) with respect to Contributed Property, the Agreed Value of such
property reduced (but not below zero) by all amortization,
depreciation, and cost recovery deductions charged to the
Partners' Capital Accounts with respect to such property, as
well as any other charges for sales, retirements, and other
dispositions of assets included in a Contributed Property, as of
the time of determination; and
(b) with respect to any other property, the adjusted basis of such
property for Federal income tax purposes as of the time of
determination. The Carrying Value of any property shall be
adjusted in accordance with the principles set forth herein.
"CONTRIBUTED PROPERTY" means each Partner's interest in property or
other consideration (excluding services and cash) contributed to the
Partnership by such Partner.
"NONRECOURSE DEDUCTIONS" shall have the meaning at forth in Section
1.704-2(b)(1) of the Treasury Regulations. The amount of Nonrecourse
Deductions for a fiscal year of the Partnership equals the excess, if
any, of the net increase, if any, in the amount of Partnership Minimum
Gain during that fiscal year over the aggregate amount of any
distributions during that fiscal year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum
Gain, determined according to the provisions of Section 1.704-2(c) of
the Treasury Regulations.
"NONRECOURSE LIABILITY" shall have the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.
"PARTNER MINIMUM GAIN" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i) of the
Treasury Regulations.
"PARTNER NONRECOURSE DEBT" shall have the meaning set forth in Section
1.704-2(b)(4) of the Treasury Regulations.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect
to each Partner Nonrecourse Debt, determined in accordance with Section
1.704-2(i) of the Treasury Regulations.
Exhibit C: page 7
<PAGE> 84
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Section 1.704-2(i)(1) of the Treasury Regulations. For any Partnership
taxable year, the amount of Partner Nonrecourse Deductions with respect
to a Partner Nonrecourse Debt equals the net increase during the year,
if any, in the amount of Partner Nonrecourse Debt Minimum Gain reduced
(but not below zero) by proceeds of the liability distributed during
the year to the Partner bearing the economic risk of loss for the
liability that are both attributable to the liability and allocable to
an increase in the Partner Nonrecourse Debt Minimum Gain determined
according to the provisions of Section 1.704-2(i)(2) of the Treasury
Regulations.
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set forth in Sections
1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.
For purposes of this Exhibit, all other capitalized terms will have the
same definition as in the Agreement.
This Exhibit is intended to comply with Section 704(b) of the Code and
the Treasury Regulations promulgated thereunder and shall be construed and
interpreted consistently therewith. To the extent that any of the provisions of
this Exhibit are inconsistent (whether now or in the future) with Section 704(b)
of the Code and the Treasury Regulations promulgated thereunder, the provisions
of such Section of the Code and such Treasury Regulations shall control, and all
allocations and Capital Account adjustments made under this Exhibit and the
Agreement shall be made in a manner necessary to comply with Section 704(b) of
the Code and the Treasury Regulations promulgated thereunder.
Exhibit C: page 8
<PAGE> 1
EXHIBIT 3.3
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUN 12 1996
12959-96
ARTICLES OF INCORPORATION
OF
THE RESORT AT SUMMERLIN, INC.
KNOW ALL MEN BY THESE PRESENTS:
That, the undersigned, for the purpose of association to establish a
corporation for the transaction of business and the promotion and conduct of the
objects and purposes hereinafter stated, under the provisions of and subject to
the requirements of the laws of the State of Nevada, does make, record and file
these Articles of Incorporation in writing.
AND DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is:
THE RESORT AT SUMMERLIN, INC.
SECOND: The principal office in the State of Nevada is to be located at
3800 Howard Hughes Parkway, 14th Floor, Las Vegas, Nevada 89109, and the
Resident Agent shall be the law firm of Gordon & Silver, Ltd.. The Corporation
may also maintain an office or offices at such other places within or outside
the State of Nevada, as it may from time to time determine. Corporate business
of every kind and nature may be conducted, and meetings of directors and
stockholders held outside the State of Nevada, the same as in the State of
Nevada.
THIRD: The Corporation may engage in any lawful activity.
FOURTH: This Corporation is authorized to issue only one class of
shares of stock, the total number of which is 2,500 shares, with no par value.
Such stock may be issued by the Corporation from time to time by the Board of
Directors thereof. The shares of stock shall be designated "Common Stock" and
the holders thereof shall be entitled to one (1) vote for each share held by
them.
FIFTH: No Director or Officer of the Corporation shall be liable to
the corporation or its stockholders for any breach of fiduciary duty as Officer
or Director of the Corporation. This provision shall not affect liability for
acts or omissions which involve intentional misconduct, fraud, a knowing
violation of law, or the payment of dividends in violation of Nevada Revised
Statutes ("NRS") ss. 78.300.
SIXTH: The members of the governing board shall be styled Directors,
and the number of Directors shall not be less than one (1) pursuant to the terms
of NRS ss. 78.115.
<PAGE> 2
The names and post office addresses of the first Board of Directors, which shall
consist of six (6) members are as follows:
NAME ADDRESS
Hans R. Jecklin 1512 Larimer Street, #300
Denver, Colorado 80202
Brian McMullan 1512 Larimer Street, #300
Denver, Colorado 80202
John James Assis-Fonseca 1512 Larimer Street, #300
Denver, Colorado 80202
Quinton Boshoff 1512 Larimer Street, #300
Denver, Colorado 80202
John Tipton 1512 Larimer Street, #300
Denver, Colorado 80202
Christiane Jecklin 1512 Larimer Street, #300
Denver, Colorado 80202
The number of Directors of this Corporation may from time to
time be increased or decreased as set forth hereinabove by an amendment to the
By-laws in that regard, and without the necessity of amending these Articles of
Incorporation.
The name and address of the Incorporator is as follows:
NAME ADDRESS
James S. Mace 3800 Howard Hughes Parkway, 14th Floor
Las Vegas, Nevada 89109
SEVENTH: The capital stock of the Corporation, after the amount of the
subscription price has been paid in cash or in kind, shall be and remain
non-assessable and shall not be subject to assessment to pay debts of the
Corporation.
EIGHTH: This Corporation shall have perpetual existence.
NINTH: No holder of any shares of the Corporation shall have any
preemptive right to purchase, subscribe for, or otherwise acquire any shares of
the Corporation of any class now or hereafter authorized, or any securities
exchangeable for or convertible into
<PAGE> 3
such shares, or warrants or other instruments evidencing rights or options to
subscribe for, purchase or otherwise acquire such shares.
EXECUTED this 11th day of June, 1996
/S/ James S. Mace
-------------------------------
James S. Mace
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on June 11, 1996 by James S.
Mace.
/s/ Karen E. Abbott
-----------------------------
Notary Public
[NOTARY PUBLIC
STATE OF NEVADA
SEAL]
<PAGE> 4
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUN 12 1996
12959-96
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
OF
THE RESORT AT SUMMERLIN, INC.
Gordon & Silver, Ltd. hereby accepts appointment as Resident Agent for
the above named corporation.
GORDON & SILVER, LTD.
/s/ James S. Mace
Dated: June 11, 1996 -------------------------------
James S. Mace
<PAGE> 1
EXHIBIT 3.4
BY-LAWS
OF
THE RESORT AT SUMMERLIN, INC., A NEVADA CORPORATION
ARTICLE I: MEETING OF SHAREHOLDERS
SECTION 1. The annual meeting of the shareholders of the corporation
shall be held at 10:00 o'clock a.m. in the offices of the corporation, on a day
in the first four (4) months of each year to be fixed by the Board of Directors,
except that for good and sufficient reason, the meeting may be postponed by the
Board of Directors for any period of time not to exceed sixty (60) days beyond
the fixed date, for the purpose of electing directors of the corporation to
serve during the ensuing year and for the transaction of such other business as
may be brought before the meeting.
At least ten (10) days' written notice specifying and
confirming the date, time and place of the annual meeting of shareholders shall
be mailed (by depositing same in the U.S. mails), addressed to each of the
shareholders of record at the time of issuing the notice (unless a different
record date is specified pursuant to Nevada Revised Statutes ("N.R.S.") ss.
78.350) at his, her or its address last known, as the same appears on the books
of the corporation.
SECTION 2. Special meetings of the shareholders may be held at the
office of the corporation in the State of Nevada, or elsewhere, whenever called
by the President, by the Board of Directors or by vote of, or by an instrument
in writing signed by the holders of at least a majority of the issued and
outstanding shares of capital stock of the corporation. At least ten (10) (but
not more than sixty (60)) days' written notice of such meeting, specifying the
date, time and place of such meeting, and the objects and purposes for calling
the same, shall be deposited in the U.S. mails and addressed to each of the
shareholders of record at the time of issuing the notice (unless a different
record date is specified pursuant to N.R.S. ss. 78.350), at his, her or its
address last known, as the same appears on the books of the corporation.
SECTION 3. If all the shareholders of the corporation shall waive
notice of a meeting, no notice of such meeting shall be required, and whenever
all of the shareholders shall meet in person or by proxy, such meeting shall be
valid for all purposes without call or notice, and at such meeting any corporate
action may be taken.
The written certificate of the officer or officers calling any
meeting setting forth the substance of the notice, the time and place of the
mailing of the same to the several shareholders and the respective addresses to
which the same were mailed shall be prima facie evidence of the manner and fact
of the calling and giving of such notice.
If the address of any shareholder does not appear upon the
books of the corporation, it will be sufficient to address any notice to such
shareholder at the registered office of the corporation.
SECTION 4. All business lawful to be transacted by the shareholders of
the corporation, may be transacted at any special meeting or at any adjournment
thereof. Only such business, however, shall be acted upon at any special meeting
of the shareholders as shall have been referred to in the notice calling such
meeting, but at any shareholders' meeting at which all of the
1
<PAGE> 2
outstanding shares of capital stock of the corporation is represented, either in
person or by proxy, any lawful business may be transacted and such meeting shall
be valid for all purposes.
SECTION 5. At the shareholders' meetings, the holders of a majority
percentage of the entire issued and outstanding capital stock of the corporation
shall constitute a quorum for all purposes of such meetings.
If the holders of the amount of stock necessary to constitute
a quorum shall fail to attend, in person or by proxy, at the time and place
fixed by these By-Laws for any annual meeting, or fixed by a notice as above
provided for a special meeting, a majority in interest of the shareholders
present in person or by proxy may adjourn from time to time without notice other
than by announcement at the meeting until holders of the amount of stock
requisite to constitute a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted as originally called.
SECTION 6. At each meeting of the shareholders, every shareholder shall
be entitled to vote in person or by his or her duly authorized proxy appointed
by instrument in writing subscribed by such shareholder or by his or her duly
authorized attorney. Each shareholder shall have one vote for each share of
outstanding stock registered in his, her or its name on the books of the
corporation, ten (10) days preceding the day of such meeting. The votes for
directors and upon demand by any shareholder, the votes upon any question before
the meeting, shall be by viva voce. Shareholders may participate in a meeting of
shareholders by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other and such participation shall constitute presence in person at the meeting.
At each meeting of the shareholders, a full, true and complete
list, in alphabetical order, of all the shareholders entitled to vote at such
meeting, indicating the number of shares held by each, certified by the
Secretary of the corporation shall be furnished, which list shall be prepared at
least ten (10) days before such meeting and shall be open to the inspection of
the shareholders, their agents or proxies, at the place where such meeting is to
be held, and for ten (10) days prior thereto. Only the persons in whose names
shares of stock are registered on the books of the corporation for ten (10) days
preceding the date of such meeting, as evidenced by the list of shareholders,
shall be entitled to vote at such meeting. Proxies and powers of attorney to
vote must be filed with the Secretary of the corporation before any meeting of
the shareholders or they cannot be used at, or for purposes of, such meeting.
SECTION 7. At each meeting of the shareholders, the polls shall be
opened and closed; the proxies and ballots shall be issued, received and taken
charge of; for the purpose of the meeting all questions regarding the
qualifications of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by two (2) inspectors. Such inspectors shall
be appointed at the meeting by the presiding officer of the meeting.
SECTION 8. At each meeting of the shareholders, the regular order of
business shall be as follows:
a Reading and approval of the Minutes of the previous
meeting or meetings;
2
<PAGE> 3
b Reports of the Board of Directors, President,
Treasurer and Secretary of the corporation in the
order named;
c Reports of Committees;
d Election of Directors;
e Unfinished Business;
f New Business;
g Adjournment.
SECTION 9. Any action which may be taken by the vote of shareholders at
a meeting may be taken without a meeting if authorized by the written consent of
shareholders holding at least a majority of the voting power, except that if any
greater proportion of voting power is required for such an action at a meeting,
then that greater proportion of written consents is required. In no instance
where action is authorized by written consent need a meeting of shareholders be
called or noticed.
ARTICLE II: DIRECTORS AND THEIR MEETINGS
SECTION 1. The Board of Directors of the corporation shall consist of
one (1) to seven (7) persons who shall be chosen by the shareholders annually,
at the annual meeting of the shareholders of the corporation and who shall hold
office for one (1) year and until their successors are elected and qualify. The
number of directors serving on the Board in any given year shall be determined
by the shareholders at the annual meeting of the shareholders of the
corporation.
SECTION 2. When any vacancy occurs among the directors by reason of
death, resignation, disqualification or other cause, the shareholders, at any
regular or special meeting, or at any adjourned meeting thereof, or the
remaining directors, by the affirmative vote of a majority thereof, shall elect
a successor to hold office for the unexpired portion of the term of the director
whose place shall have become vacant and until his or her successor shall have
been elected and shall qualify.
SECTION 3. The election of the members of the Board of Directors shall
take place at the annual meeting of the shareholders of the corporation (or by
written consent of the shareholders in lieu of such annual meeting); provided,
however, that if, for any reason, the directors may be elected at any special
meeting of the shareholders which is called and held for that purpose.
SECTION 4. Meetings of the Board of Directors may be held at the
registered office of the corporation in the State of Nevada, or elsewhere, at
such place or places as the Board of Directors may, from time to time,
determine. Notice of such regular meetings shall be mailed to each director by
the Secretary at least three (3) days previous to the day fixed for such
meetings, but no regular meeting shall be held void or invalid if such notice is
not given, provided the meeting is duly held at the time and place fixed by
these By-Laws for holding such regular meetings.
3
<PAGE> 4
Special meetings of the Board of Directors may be held on the
call of the President or Secretary on at least three (3) days' notice by mail or
telegraph.
Any meeting of the Board, no matter where held, at which all
of the members shall be present, even though without notice or notice of which
shall have been waived by all absentees, provided a quorum shall be present,
shall be valid for all purposes unless otherwise indicated in the notice calling
the meeting or in the waiver of notice.
Any and all business may be transacted by any meeting of the
Board of Directors, either regular or special.
SECTION 3. A majority of the Board of Directors in office shall
constitute a quorum for the transaction of business, but if at any meeting of
the Board there be less than a quorum present, a majority of those present may
adjourn from time to time, until a quorum shall be present and no notice of such
adjournment shall be required. The Board of Directors may prescribe rules not in
conflict with these By-Laws for the conduct of its business; provided, however,
that in the fixing of salaries of the officers of the corporation, the unanimous
action of all of the directors shall be required.
SECTION 4. A director need not be a shareholder of the corporation.
SECTION 5. The directors shall be allowed and paid all necessary
expenses incurred in attending any meeting of the Board, but shall not receive
any compensation for their services as directors until such time as the
corporation is able to declare and pay dividends on its capital stock.
SECTION 6. The Board of Directors shall make a report to the
shareholders at the annual meetings of the shareholders of the condition of the
corporation, and shall at request, furnish each of the shareholders with a true
copy thereof.
The Board of Directors in its discretion may submit any
contract or act for approval or ratification at any meeting of the shareholders
called for the purpose of considering any such contract or act, which, if
approved or ratified by the vote of the holders of a majority of the capital
stock of the corporation represented in person or by proxy, shall be valid and
binding upon the corporation and upon all the shareholders thereof, as if it had
been approved or ratified by every shareholder of the corporation.
SECTION 7. The Board of Directors shall have full control over the
affairs of the corporation, except as otherwise provided by applicable law or by
the Articles of Incorporation of the corporation. The Board may, from time to
time, delegate any of the powers of the Board, in the course of the current
business of the corporation, to any standing or special committee of the Board
of Directors. Each such standing or special committee must include at least one
(1) member of the Board of Directors.
SECTION 8. The regular order of business at meetings of the Board of
Directors shall be as follows:
a Reading and approval of the minutes of the previous
meeting or meetings;
4
<PAGE> 5
b Reports of officers and committeemen;
c Election of officers;
d Unfinished business;
e New business;
f Adjournment.
SECTION 9. Any action required or permitted to be taken at any meeting
of the Board of Directors or of any committee thereof may be taken without a
meeting if a written consent thereto is signed by all the members of the Board
or of such committee. Such written consent shall be filed with the minutes of
proceedings of the Board or committee.
SECTION 10. Members of the Board of Directors, or of any committee
designated by the Board, may participate in a meeting of the Board, or committee
by means of a conference telephone network or a similar communications method by
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section constitutes presence in
person at such meeting.
ARTICLE III: OFFICERS AND THEIR DUTIES
SECTION 1. The Board of Directors shall elect a President, a Secretary
and a Treasurer, to hold office for one (1) year terms, and until their
successors are elected and qualify. The offices of the President, Secretary and
Treasurer may be held by one (1) person.
Any vacancy in any of said offices may be filled by the Board
of Directors.
The Board of Directors may from time to time, by resolution,
appoint such additional Vice Presidents and additional Assistant Secretaries,
Assistant Treasurers and Transfer Agents of the corporation as it may deem
advisable, prescribe their duties and fix their compensation. All such appointed
officers shall be subject to removal at any time by the Board of Directors. All
officers, agents and representatives of the corporation shall be chosen and
appointed in such manner and shall hold their office for such terms as the Board
of Directors may by resolution prescribe, except as otherwise provided herein.
SECTION 2. The President shall be the executive officer of the
corporation and shall have duty of supervision, control and management of the
day-to-day operation of the corporation, subject only to directions from the
Board of Directors with regard to the affairs of the corporation. The President
shall further have the full power to execute any and all documents for and on
behalf of the corporation, other than as specifically limited by the Board of
Directors of the corporation, including, but not limited to, the power to enter
into leases of real property, equipment, furniture and furnishings, to hire and
fire all personnel, to set and establish operational manuals and policies, to
enter into contracts as may be necessary for the day-to-day operations, to
establish lines of credit for the corporation and to establish accounts payable
thereof. The President shall be a member of the Board of Directors and shall be
a member and the Chairman of any Executive Committee of the Board that may be
established. The President shall preside at all meetings of the Board of
Directors
5
<PAGE> 6
and at all meetings of the shareholders and shall sign the Certificates of Stock
issued by the corporation. The President shall perform any and all other duties
as shall be prescribed by the Board of Directors.
SECTION 3. A Vice President shall be vested with all the powers and
shall perform all the duties of the President in his or her absence or inability
to act, including the signing of the Certificates of Stock issued by the
corporation and he or she shall so perform such other duties as shall be
prescribed by the Board of Directors.
SECTION 4. The Treasurer shall have custody of all the funds and
securities of the corporation. When necessary or proper, he or she shall endorse
for collection, on behalf of the corporation, checks, notes and other
obligations; deposit all monies to the credit of the corporation in such bank or
banks or other depository as the Board of Directors may designate; sign all
receipts and vouchers for payments made by the corporation, except as herein
otherwise provided; sign with the President all bills of exchange and promissory
notes of the corporation; have the care and custody of the stocks, bonds,
certificates, vouchers, evidence of debts, securities and such other property
belonging to the corporation as the Board of Directors shall designate; sign all
papers required by law, these By-Laws or the Board of Directors to be signed by
the Treasurer; enter regularly in the books of the corporation (to be kept by
the Treasurer for this purpose) full and accurate accounts of all monies
received and paid by him or her on account of the corporation; at all reasonable
times, exhibit the books of account to any directors of the corporation during
business hours; and perform all acts incident to the position of Treasurer
subject to control of the Board of Directors. Whenever required by the Board of
Directors, the Treasurer shall render a statement of his or her cash account.
The Treasurer shall, if required by the Board of Directors,
give bond to the corporation conditioned for the faithful performance of all his
or her duties as Treasurer in such sum and with such security as shall be
approved by the Board of Directors, with expense of such bond to be borne by the
corporation.
SECTION 5. The Board of Directors may appoint an Assistant Treasurer
who shall have such powers and perform such duties as may be prescribed for him
or her by the Treasurer of the corporation or by the Board of Directors. The
Board of Directors shall require the Assistant Treasurer to give a bond to the
corporation, as conditioned for the faithful performance of his or her duties as
Assistant Treasurer, in such sum and with such security as it shall approve with
the expense of such bond to be borne by the corporation.
SECTION 6. The Secretary shall keep the minutes of all meetings of the
Board of Directors and the minutes of all meetings of the shareholders and of
the Executive Committee (if any) in books provided for that purpose. The
Secretary shall attend to the giving and serving of all notices of the
corporation; may sign with the President or Vice President, in the name of the
corporation, all contracts authorized by the Board of Directors or Executive
Committee; affix the corporate seal of the corporation thereto when so
authorized by the Board of Directors or Executive Committee; have the custody of
the corporate seal of the corporation; affix the corporate seal to all
Certificates of Stock duly issued by the corporation; he or she shall have
charge of Stock Certificate Books, Transfer Books, Stock Ledgers and such other
books and papers as the Board of Directors or the Executive Committee may
direct, all of which shall at all reasonable times be open to the
6
<PAGE> 7
examination of any director upon application at the office of the corporation
during business hours; and in general, perform all duties incident to the office
of Secretary.
SECTION 7. The Board of Directors may appoint an Assistant Secretary
who shall have such powers and perform such duties as may be prescribed by the
Secretary of the corporation or by the Board of Directors.
SECTION 8. Unless otherwise ordered by the Board of Directors, the
President shall have full power and authority on behalf of the corporation to
attend, and to act and to vote at, any meetings of the shareholders of any
corporation in which the corporation may hold stock, and at any such meetings,
shall possess and may exercise any and all rights and powers incident to the
ownership of such stock, and which as the owner thereof, the corporation might
have possessed and exercised if present. The Board of Directors, by resolution,
from time to time, may confer like powers on any person or persons in place of
the President.
ARTICLE IV: INDEMNIFICATION OF CORPORATE AGENTS;
PURCHASE OF LIABILITY INSURANCE
SECTION 1.Indemnification of Agents of the Corporation; Purchase of
Liability Insurance.
(a) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by reason
of the fact that he or she is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorney fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him or her in connection with the action, suit or proceeding if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendre or its equivalent does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and
that, with respect to any criminal action or proceeding, he or she had
reasonable cause to believe that his or her conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorney fees, actually and
reasonably incurred by him or her in connection with the defense or settlement
of the action or suit if he or she acted in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
corporation. However, indemnification shall not be made for any claim, issue or
matter as to which such a person has been
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<PAGE> 8
adjudged by a court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable to the corporation or for amounts paid in settlement to
the corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction determines
upon application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the court
deems proper.
(c) To the extent that a director, officer, employee or agent
of the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsection (a) or (b) or in
defense of any claim, issue or matter therein, he or she shall be indemnified by
the corporation against expenses, including attorney fees, actually and
reasonably incurred by him or her in connection with the defense.
(d) Any indemnification under subsection (a) or (b), unless
ordered by a court or advanced pursuant to subsection (e), shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination shall be made: (i) by the shareholders; (ii) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the action, suit or proceeding; or (iii) if a majority
vote of a quorum consisting of directors who were not parties to the action,
suit or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
(e) The expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by the corporation. The provisions of this subsection (e) do not affect any
rights to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this Article IV (i) does not exclude any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under the Articles of Incorporation, the By-Laws or any
agreement, vote of shareholders or disinterested directors or otherwise, for
either an action in his or her official capacity or an action in another
capacity while holding his or her office, except that indemnification, unless
ordered by a court pursuant to subsection (b) or for the advancement of expenses
made pursuant to subsection (e), shall not be made to or on behalf of any
director or officer if a final adjudication establishes that his or her acts or
omissions involved intentional misconduct, fraud or a knowing violation of the
law and were material to the cause of action and (ii) continues for a person who
has ceased to be a director, officer, employee or agent and inures to the
benefit of the heirs, executors and administrators of such a person.
(g) The corporation may purchase and maintain insurance or
make other financial arrangements on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, for
any liability asserted against him or her and liability and expenses incurred by
him or her in his or
8
<PAGE> 9
her capacity as a director, officer, employee or agent, or arising out of his or
her status as such, whether or not the corporation has the authority to
indemnify him or her against such liability and expenses. The other financial
arrangements made by the corporation may include any now or hereafter permitted
by applicable law.
(h) In the event that the Nevada Revised Statutes shall
hereafter permit or authorize indemnification by the corporation of the
directors, officers, employees or agents of the corporation for any reason or
purpose or in any manner not otherwise provided for in this Article IV, then
such directors, officers, employees and agents shall be entitled to such
indemnification by making written demand therefor upon the corporation. It being
the intention of this Article IV at all times to provide the most comprehensive
indemnification coverage to the corporation's directors, officers, employees and
agents as may now or hereafter be permitted by the Nevada General Corporation
Law.
(i) The foregoing indemnification provisions shall inure to
the benefit of all present and future directors, officers, employees and agents
of the corporation and all persons now or hereafter serving at the request of
the corporation as directors, officers, employees or agents of another
corporation, partnership, joint venture, trust or other enterprise and their
heirs, executors and administrators, and shall be applicable to all acts or
omissions to act of any such persons, whether such acts or omissions to act are
alleged to have or actually occurred prior to or subsequent to the adoption of
this Article IV.
SECTION 2.Vested Rights. Neither the amendment nor repeal of this
Article IV, nor the adoption of any provision of the Articles of Incorporation
or the By-Laws or of any statute inconsistent with this Article IV, shall
adversely affect any right or protection of a director, officer, employee or
agent of the corporation existing at the time of such amendment, repeal or
adoption of such inconsistent provision.
ARTICLE V: CAPITAL STOCK
SECTION 1. The capital stock of the corporation shall be issued in such
manner and at such times and upon such conditions as shall be prescribed by the
Board of Directors.
SECTION 2. Ownership of stock in the corporation shall be evidenced by
Certificates of Stock in such forms as shall be prescribed by the Board of
Directors, shall be under the seal of the corporation and signed by the
President or Vice President and also by the Secretary or by an Assistant
Secretary.
All certificates shall be consecutively numbered. The name of
the person owning the shares represented thereby with the number of such shares
and the date of issue shall be entered on the corporation's books.
No certificate shall be valid unless it is signed by the
President or Vice President and by the Secretary or Assistant Secretary.
All certificates surrendered to the corporation shall be
canceled and no new certificate shall be issued until the former certificate for
the same number of shares shall have been surrendered or canceled.
9
<PAGE> 10
SECTION 3. No transfer of stock shall be valid as against the
corporation except on surrender and cancellation therefor, accompanied by an
assignment or transfer by the owner therefor, made either in person or under
assignment, a new certificate shall be issued therefor.
Whenever any transfer shall be expressed as made for
collateral security and not absolutely, the same shall be expressed in the entry
of said transfer on the books of the corporation.
SECTION 4. The Board of Directors shall have power and authority to
make all such rules and regulations not inconsistent herewith as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of the capital stock of the corporation.
The Board of Directors may appoint a Transfer Agent and/or a
Registrar of Transfers and may require all stock certificates to bear the
signature of such Transfer Agent and/or such Registrar of Transfer.
SECTION 5. The Stock Transfer Books shall be closed for all meetings of
the shareholders for the period of ten (10) days prior to such meetings and
shall be closed for the payment of dividends during such periods as from time to
time may be fixed by the Board of Directors, and during such periods no stock
shall be transferable.
SECTION 6. Any person or persons applying for a Certificate of Stock in
lieu of one alleged to have been lost or destroyed shall make affidavit of
affirmation of that fact and shall deposit with the corporation such affidavit.
Whereupon, at the end of six months after the deposit of said affidavit and upon
such person or persons giving Bond of Indemnity to the corporation with surety
to be approved by the Board of Directors in double the current value of stock
against any damage, loss or inconvenience to the corporation, which may or can
arise in consequence of a new or duplicate certificate being issued in lieu of
the one lost or missing, the Board of Directors may cause to be issued to such
person or persons a new certificate or a duplicate of the certificate so lost or
destroyed. The Board of Directors may, in its discretion, refuse to issue such
new or duplicate certificate save upon the order of a court of law having
jurisdiction in such matter, anything herein to the contrary notwithstanding.
ARTICLE VI: OFFICES AND BOOKS
SECTION 1. The registered office of the corporation shall be at 3800
Howard Hughes Parkway, 14th Floor, Las Vegas, Nevada 89109, and the corporation
may have a registered office in any other state or territory as the Board of
Directors may designate.
SECTION 2. A stock ledger or a duplicate stock ledger, revised
annually, containing the names, alphabetically arranged, of all persons who are
shareholders of the corporation, showing their places of residence, if known,
and the number of shares held by them respectively and a copy of the By-Laws and
Articles of Incorporation (and all amendments thereto) of the corporation
(certified by the Nevada Secretary of State) shall be kept at its registered
office in the County of Clark, State of Nevada, for the inspection of all who
are authorized or have the right to see the same, and for the transfer of stock.
All other books of the corporation shall be kept at such places as may be
prescribed by the Board of Directors.
10
<PAGE> 11
ARTICLE VII: MISCELLANEOUS
SECTION 1. The Board of Directors shall have power to reserve over and
above the capital stock paid in, such an amount in its discretion as it may deem
advisable to fix as a reserve fund, and may, from time to time, declare
dividends from the accumulated profits of the corporation in excess of the
amounts so reserved (if any) and pay the same to the shareholders of the
corporation, and may also, if it deems the same advisable, declare stock
dividends of the unissued capital stock of the corporation.
SECTION 2. Unless otherwise ordered by the Board of Directors, all
agreements and contracts shall be signed by an officer of the corporation.
SECTION 3. All monies of the corporation shall be deposited when and as
received in such bank or banks or other depository as may from time to time be
designated by the Board of Directors and such deposits shall be made in the name
of the corporation.
SECTION 4. No note, draft, acceptance, endorsement or other evidence of
indebtedness shall be valid against the corporation unless the same shall be
signed by an officer of the corporation.
SECTION 5. No loan or advance of money shall be made by the corporation
to any shareholder or officer therein, unless the Board of Directors shall
otherwise authorize.
SECTION 6. No director nor officer of the corporation shall be entitled
to any salary or compensation for any services performed for the corporation,
unless such salary or compensation shall be fixed by resolution of the Board of
Directors.
SECTION 7. The corporation may take, acquire, hold, mortgage, sell or
otherwise deal in stocks, bonds or securities of any other corporation, if and
as often as the Board of Directors shall so elect.
SECTION 8. The Board of Directors shall have the power to authorize and
cause to be executed, mortgages and liens, without limit as to amount upon the
property and franchise of the corporation. Upon the affirmative vote, either in
person or by proxy, of the holders of a majority of the capital stock issued and
outstanding, but only upon such vote, the Board of Directors shall have the
authority to dispose in any manner of all or substantially all assets of this
corporation.
SECTION 9. The corporation shall have a corporate seal, the design
thereof being as follows:
11
<PAGE> 12
ARTICLE VIII: AMENDMENT OF BY-LAWS
Amendments and changes of these By-Laws may be made at any regular or
special meeting of the Board of Directors by a vote of not less than all of the
entire Board, or may be made by a vote of, or a consent in writing, by the
holders of a majority of voting power of the issued and outstanding shares of
capital stock.
KNOW ALL MEN BY THESE PRESENTS: That I, the undersigned, being the
Secretary of the above-named corporation, do hereby acknowledge that the
foregoing By-Laws are the duly adopted By-Laws of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July,
1996.
/S/ Jeffrey H. Smith
-------------------------------
Jeffrey Smith, Secretary
12
<PAGE> 1
EXHIBIT 4.1
================================================================================
-------------------------
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
and
THE RESORT AT SUMMERLIN, INC.
as the Issuers,
THE SUBSIDIARY GUARANTORS
each to become a party hereto pursuant to Article 11 herein
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
$100,000,000
13% SENIOR SUBORDINATED PIK NOTES DUE 2007, SERIES A
13% SENIOR SUBORDINATED PIK NOTES DUE 2007, SERIES B
---------------------------------
--------------------
INDENTURE
Dated as of December 31, 1997
--------------------
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310(a)(1)............................................................. 7.10
(a)(2)............................................................. 7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(a)(5)............................................................. 7.10
(b)................................................................ 7.10
(c)................................................................ N.A.
311(a)................................................................ 7.11
(b)................................................................ 7.11
(c)................................................................ N.A.
312(a)................................................................ 2.05
(b)................................................................ 12.03
(c)................................................................ 12.03
313(a)................................................................ 7.06
(a)(4)............................................................. 4.04; 12.05
(b)(2)............................................................. 7.06
(c)................................................................ 7.06
(d)................................................................ 7.06
314(a)................................................................ 4.03
(b)................................................................ N.A.
(c)(3)............................................................. N.A.
(d)................................................................ N.A.
(e)................................................................ 12.05
(f)................................................................ N.A.
</TABLE>
- -----------------------
* This Cross-Reference Table is not part of the Indenture.
N.A. means not applicable.
(i)
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION
BY REFERENCE.............................................. 1
SECTION 1.01. DEFINITIONS.............................................. 1
SECTION 1.02. OTHER DEFINITIONS........................................ 22
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT.......................................... 23
SECTION 1.04. RULES OF CONSTRUCTION.................................... 24
ARTICLE 2 THE NOTES.............................................................. 24
SECTION 2.01. FORM AND DATING.......................................... 24
SECTION 2.02. EXECUTION AND AUTHENTICATION............................. 25
SECTION 2.03. REGISTRAR AND PAYING AGENT............................... 26
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST...................... 26
SECTION 2.05. NOTEHOLDER LISTS......................................... 27
SECTION 2.06. TRANSFER AND EXCHANGE.................................... 27
SECTION 2.07. REPLACEMENT NOTES........................................ 28
SECTION 2.08. OUTSTANDING NOTES........................................ 28
SECTION 2.09. TREASURY NOTES........................................... 29
SECTION 2.10. TEMPORARY NOTES.......................................... 29
SECTION 2.11. CANCELLATION............................................. 29
SECTION 2.12. DEFAULTED INTEREST....................................... 29
SECTION 2.13. CUSIP NUMBER............................................. 30
SECTION 2.14. DEPOSIT OF MONEYS........................................ 30
SECTION 2.15. RESTRICTIVE LEGENDS...................................... 30
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE.................... 32
SECTION 2.17. SPECIAL TRANSFER PROVISIONS.............................. 34
SECTION 2.18. PERSONS DEEMED OWNERS.................................... 36
SECTION 2.19. ALLOCATION OF PURCHASE PRICE............................. 36
ARTICLE 3 REDEMPTION............................................................. 36
SECTION 3.01. NOTICES TO TRUSTEE....................................... 36
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED........................ 37
SECTION 3.03. NOTICE OF REDEMPTION..................................... 37
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION........................... 38
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.............................. 38
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
SECTION 3.06. NOTES REDEEMED IN PART................................... 39
SECTION 3.07. OPTIONAL REDEMPTION...................................... 39
SECTION 3.08. MANDATORY PURCHASE OR REDEMPTION......................... 40
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF
EXCESS PROCEEDS........................................ 40
ARTICLE 4 COVENANTS.............................................................. 43
SECTION 4.01. PAYMENT OF NOTES......................................... 43
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.......................... 44
SECTION 4.03. SEC REPORTS.............................................. 44
SECTION 4.04. COMPLIANCE CERTIFICATES.................................. 45
SECTION 4.05. TAXES.................................................... 46
SECTION 4.06. STAY, EXTENSION AND USURY LAWS........................... 46
SECTION 4.07. LIMITATION ON RESTRICTED PAYMENTS........................ 46
SECTION 4.08. LIMITATION ON RESTRICTIONS ON
DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES........................................... 49
SECTION 4.09. LIMITATION ON INDEBTEDNESS............................... 50
SECTION 4.10. LIMITATION ON SALES OF ASSETS AND
SUBSIDIARY STOCK....................................... 53
SECTION 4.11. LIMITATION ON AFFILIATE TRANSACTIONS..................... 55
SECTION 4.12. LIMITATION ON LIENS...................................... 56
SECTION 4.13. CORPORATE EXISTENCE...................................... 56
SECTION 4.14. CHANGE OF CONTROL........................................ 57
SECTION 4.15. LIMITATION ON ISSUANCES OF CAPITAL
STOCK OF RESTRICTED SUBSIDIARIES....................... 58
SECTION 4.16. LIMITATION ON REPAYMENT UPON A CHANGE
OF CONTROL............................................. 59
SECTION 4.17. LIMITATION ON SALE/LEASEBACK
TRANSACTIONS........................................... 59
SECTION 4.18. LIMITATION ON DESIGNATIONS OF
UNRESTRICTED SUBSIDIARIES.............................. 59
SECTION 4.19. FURTHER INSTRUMENTS AND ACTS............................. 60
SECTION 4.20. RAS TO CAUSE CERTAIN SUBSIDIARIES TO
BECOME GUARANTORS...................................... 61
SECTION 4.21. LIMITATION ON STATUS AS INVESTMENT
COMPANY................................................ 61
SECTION 4.22. LIMITATION ON LAYERED INDEBTEDNESS....................... 61
SECTION 4.23. LIMITATION ON BUSINESS ACTIVITIES OF RAS................. 61
SECTION 4.24. LIMITATION ON BUSINESS ACTIVITIES OF RAS,
INC.................................................... 61
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE 5 SUCCESSORS................................................................ 62
SECTION 5.01. LIMITATIONS ON MERGER, CONSOLIDATION
OR SALE OF ASSETS......................................... 62
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED........................... 63
ARTICLE 6 DEFAULTS AND REMEDIES..................................................... 63
SECTION 6.01. EVENTS OF DEFAULT........................................... 63
SECTION 6.02. ACCELERATION................................................ 65
SECTION 6.03. OTHER REMEDIES.............................................. 66
SECTION 6.04. WAIVER OF PAST DEFAULTS..................................... 66
SECTION 6.05. CONTROL BY MAJORITY......................................... 66
SECTION 6.06. LIMITATION ON SUITS......................................... 67
SECTION 6.07. RIGHTS OF NOTEHOLDERS TO RECEIVE
PAYMENT................................................... 67
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.................................. 68
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM............................ 68
SECTION 6.10. PRIORITIES.................................................. 69
SECTION 6.11. UNDERTAKING FOR COSTS....................................... 69
ARTICLE 7 TRUSTEE................................................................... 70
SECTION 7.01. DUTIES OF TRUSTEE........................................... 70
SECTION 7.02. RIGHTS OF TRUSTEE........................................... 71
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE................................ 72
SECTION 7.04. TRUSTEE'S DISCLAIMER........................................ 72
SECTION 7.05. NOTICE OF DEFAULTS.......................................... 72
SECTION 7.06. REPORTS BY TRUSTEE TO NOTEHOLDERS........................... 73
SECTION 7.07. COMPENSATION AND INDEMNITY.................................. 73
SECTION 7.08. REPLACEMENT OF TRUSTEE...................................... 74
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC............................ 75
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION............................... 76
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS
AGAINST RAS............................................... 76
ARTICLE 8 DISCHARGE OF INDENTURE.................................................... 76
SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES;
DEFEASANCE................................................ 76
SECTION 8.02. CONDITIONS TO DEFEASANCE.................................... 77
SECTION 8.03. APPLICATION OF TRUST MONEY.................................. 79
SECTION 8.04. REPAYMENT TO THE ISSUERS.................................... 79
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS........................ 79
SECTION 8.06. REINSTATEMENT............................................... 80
</TABLE>
(iv)
<PAGE> 6
<TABLE>
<S> <C>
ARTICLE 9 SUBORDINATION............................................................. 80
SECTION 9.01. AGREEMENT TO SUBORDINATE.................................... 80
SECTION 9.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY........................ 80
SECTION 9.03. DEFAULT ON SENIOR INDEBTEDNESS OR
GUARANTOR SENIOR INDEBTEDNESS............................. 81
SECTION 9.04. ACCELERATION OF PAYMENT OF NOTES............................ 82
SECTION 9.05 WHEN DISTRIBUTION MUST BE PAID OVER......................... 83
SECTION 9.06 SUBROGATION................................................. 83
SECTION 9.07. RELATIVE RIGHTS............................................. 83
SECTION 9.08. SUBORDINATION MAY NOT BE IMPAIRED BY
ISSUERS OR THE SUBSIDIARY GUARANTORS...................... 83
SECTION 9.09. RIGHTS OF TRUSTEE AND PAYING AGENT.......................... 84
SECTION 9.10. DISTRIBUTION OR NOTICE TO
REPRESENTATIVE............................................ 84
SECTION 9.11. ARTICLE 9 NOT TO PREVENT EVENTS OF
DEFAULT OR LIMIT RIGHT TO ACCELERATE...................... 84
SECTION 9.12. TRUST MONEYS NOT SUBORDINATED............................... 84
SECTION 9.13. TRUSTEE ENTITLED TO RELY.................................... 85
SECTION 9.14. TRUSTEE TO EFFECTUATE SUBORDINATION......................... 85
SECTION 9.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF
SENIOR INDEBTEDNESS AND SUBSIDIARY
GUARANTOR SENIOR INDEBTEDNESS............................. 86
SECTION 9.16. RELIANCE BY HOLDERS OF SENIOR
INDEBTEDNESS AND GUARANTOR SENIOR
INDEBTEDNESS ON SUBORDINATION
PROVISIONS................................................ 86
ARTICLE 10 AMENDMENTS...................................................... 86
SECTION 10.01. WITHOUT CONSENT OF NOTEHOLDERS............................. 86
SECTION 10.02. WITH CONSENT OF NOTEHOLDERS................................ 88
SECTION 10.03. COMPLIANCE WITH TRUST INDENTURE ACT........................ 89
SECTION 10.04. REVOCATION AND EFFECT OF CONSENTS.......................... 89
SECTION 10.05. NOTATION ON OR EXCHANGE OF NOTES........................... 90
SECTION 10.06. TRUSTEE TO SIGN AMENDMENTS, ETC............................ 90
ARTICLE 11 SUBSIDIARY GUARANTEE OF NOTES................................... 91
SECTION 11.01. SUBSIDIARY GUARANTEE....................................... 91
SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY
GUARANTEE................................................ 92
SECTION 11.03. SUBSIDIARY GUARANTEE UNCONDITIONAL,
ETC...................................................... 93
</TABLE>
(v)
<PAGE> 7
<TABLE>
<S> <C>
SECTION 11.04. LIMITATION OF SUBSIDIARY GUARANTOR'S
LIABILITY................................................ 94
SECTION 11.05. CONTRIBUTION............................................... 94
SECTION 11.06. RELEASE.................................................... 94
SECTION 11.07. ADDITIONAL SUBSIDIARY GUARANTORS........................... 95
SECTION 11.08. SUBSIDIARY GUARANTORS MAY
CONSOLIDATE, ETC., ON CERTAIN TERMS...................... 95
SECTION 11.09. SUCCESSORS AND ASSIGNS..................................... 96
SECTION 11.10. WAIVER OF STAY, EXTENSION OR USURY
LAWS..................................................... 96
ARTICLE 12 MISCELLANEOUS................................................... 97
SECTION 12.01. TRUST INDENTURE ACT CONTROLS............................... 97
SECTION 12.02. NOTICES.................................................... 97
SECTION 12.03. COMMUNICATION BY NOTEHOLDERS WITH
OTHER NOTEHOLDERS........................................ 98
SECTION 12.04. CERTIFICATE AND OPINION AS TO
CONDITIONS PRECEDENT..................................... 98
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION.................................................. 99
SECTION 12.06. RULES BY TRUSTEE AND AGENTS................................ 99
SECTION 12.07. LEGAL HOLIDAYS............................................. 99
SECTION 12.08. NO RECOURSE AGAINST OTHERS.................................100
SECTION 12.09. DUPLICATE ORIGINALS........................................100
SECTION 12.10. GOVERNING LAW..............................................100
SECTION 12.11. NO ADVERSE INTERPRETATION OF OTHER
AGREEMENTS...............................................100
SECTION 12.12. SUCCESSORS.................................................100
SECTION 12.13. GAMING AUTHORITIES, ETC....................................100
SECTION 12.14. SEVERABILITY...............................................101
SECTION 12.15. COUNTERPART ORIGINALS......................................101
SECTION 12.16. TABLE OF CONTENTS, HEADINGS, ETC...........................101
</TABLE>
EXHIBIT A - FORM OF INITIAL NOTE
EXHIBIT B - FORM OF EXCHANGE NOTE
EXHIBIT C - FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS TO NON-QIB
ACCREDITED INVESTORS
EXHIBIT D - FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS PURSUANT TO
REGULATION S
(vi)
<PAGE> 8
INDENTURE, dated as of December 31, 1997, among The Resort at
Summerlin, Limited Partnership ("RAS"), The Resort at Summerlin, Inc. ("RAS,
Inc." and, together with RAS, the "Issuers"), the subsidiary guarantors, each to
become a party hereto pursuant to Article 11 herein (the "Subsidiary
Guarantors") and United States Trust Company of New York, a banking corporation
organized and existing under the laws of the State of New York, in its capacity
as trustee (the "Trustee").
The Issuers have duly authorized the creation of an issue of
13% Senior Subordinated PIK Notes due 2007, Series A (the "Initial Notes") and
13% Senior Subordinated PIK Notes due 2007, Series B (the "Exchange Notes") and,
to provide therefor, the Issuers have duly authorized the execution and delivery
of this Indenture. All things necessary to make the Notes (as defined), when
duly issued and executed by the Issuers, and authenticated and delivered
hereunder, the valid obligations of the Issuers, and to make this Indenture a
valid and binding agreement of the Issuers, have been done.
The Issuers, the Subsidiary Guarantors and the Trustee agree
as follows for the benefit of each other and for the equal and ratable benefit
of the holders of the Notes:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Permitted Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by RAS or a Restricted Subsidiary of RAS;
(iii) Capital Stock constituting a minority interest in any Person that at such
time is a Restricted Subsidiary of RAS; or (iv) Permitted Investments of the
type and in the amounts described in clause (viii) of the definition thereof;
provided, however, that, in the case of clauses (ii) and (iii), such Restricted
Subsidiary is primarily engaged in a Permitted Business.
"Additional Interest" has the meaning set forth in the
Registration Rights Agreement.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date
shall mean the lesser of the amount by which (x) the fair value of the property
of such Subsidiary
<PAGE> 9
Guarantor exceeds the total amount of liabilities, including, without
limitation, the probable liability of such Subsidiary Guarantor with respect to
its contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Subsidiary Guarantee, of such Subsidiary Guarantor at such
date and (y) the present fair salable value of the assets of such Subsidiary
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Subsidiary Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary by such
Subsidiary Guarantor in respect of the obligations of such Subsidiary under the
Subsidiary Guarantee), excluding debt in respect of the Subsidiary Guarantee, as
they become absolute and matured.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Disposition" means any sale, lease, transfer, issuance
or other disposition (or series of related sales, leases, transfers, issuances
or dispositions that are part of a common plan) of shares of Capital Stock of
(or any other equity interests in) a Restricted Subsidiary (other than
directors' qualifying shares) or of any other property (other then the Right of
First Offer as permitted under Section 4.11) or other assets (each referred to
for the purposes of this definition as a "disposition") by RAS or any of its
Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction) other than (i) a disposition by a
Restricted Subsidiary to RAS or by RAS or a Restricted Subsidiary to a
Wholly-Owned Subsidiary, (ii) a disposition of inventory in the ordinary course
of business, (iii) a disposition of obsolete or worn out equipment or equipment
that is no longer useful in the conduct of the business of RAS and its
Restricted Subsidiaries and that is disposed of in each case in the ordinary
course of business, (iv) dispositions of property for net proceeds which, when
taken collectively with the net proceeds of any other such dispositions under
this clause (iv) that were consummated since the beginning of the calendar year
in which such disposition is consummated, do not exceed $2.0 million, and (v)
transactions permitted under Section 5.01. Notwithstanding anything to the
contrary contained above, a Restricted Payment made in compliance with Section
4.07 shall not constitute an Asset Disposition except for purposes of
determinations of the Consolidated Coverage Ratio.
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"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Notes, compounded annually) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the product of the numbers of years (rounded upwards to the nearest month) from
the date of determination to the dates of each successive scheduled principal
payment of such Indebtedness or redemption multiplied by the amount of such
payment by (ii) the sum of all such payments.
"Bankruptcy Code" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to RAS, the Board of
Directors of the General Partner, and with respect to any other Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person, in each case, duly authorized, with respect to any particular
matter, to exercise the power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person, or in the case of RAS, the General Partner, to have been duly adopted by
the Board of Directors of such Person, or in the case of RAS, the General
Partner, and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock (but excluding any debt securities convertible
into such equity and including, without limitation, if such Person is a
partnership or limited liability company, any partnership or membership
interests (whether general or limited) and any other interest or participation
that confers on a Person the right to receive a share of the profits and losses
of, or distribution of assets of, such partnership or limited liability
company).
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the
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Stated Maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date such lease may be
terminated without penalty.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully Guaranteed or insured by the United
States government or any agency or instrumentality thereof, (iii) certificates
of deposit, time deposits and eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers' acceptances with maturities
not exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus in excess of $500 million, (iv)
repurchase obligations for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated P-1
(or higher according to Moody's) or A-1 or higher (according to S&P) and in each
case maturing within one year after the date of acquisition, (vi) investment
funds investing 95% of their assets in securities of the types described in
clauses (i)-(v) above, (vii) readily marketable direct obligations issued by any
state of the United States of America or any political subdivision thereof
having one of the two highest rating categories obtainable from either Moody's
or S&P and (viii) Indebtedness or Preferred Stock issued by Persons with a
rating of "A" or higher from S&P or "A2" or higher from Moody's.
"Change of Control" means (i) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of RAS and its Subsidiaries; or (ii) the
adoption of a plan relating to the liquidation or dissolution of RAS; (iii) RAS,
Inc. ceases to be the sole general partner of RAS; and/or (iv) the Existing
Partners fail to own in the aggregate, directly or indirectly, at least 50% of
the General Partner.
"Commission" means the U.S. Securities and Exchange Commission
or its successor.
"Consolidated Cash Flow" for any period means the Consolidated
Net Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, and (v) all other non-cash items reducing Consolidated Net Income
(excluding any non-cash item to the extent it represents an accrual of or
reserve for cash disbursements for any subsequent period prior to the stated
maturity of the Notes), including pre-opening costs that are required by GAAP to
be charged as an expense prior to or upon opening, in each case for such period
and determined in accordance with GAAP. Notwithstanding the foregoing, the
income tax expense, depreciation expense and amortization expense of a
Subsidiary of RAS shall be included in Consolidated Cash Flow only to the extent
(and in the same proportion) that the net income of such Subsidiary was included
in calculating Consolidated Net Income.
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"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available to
(ii) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that (A) if RAS or any of its Restricted Subsidiaries has incurred any
Indebtedness since the beginning of such period and through the date of
determination of the Consolidated Coverage Ratio that remains outstanding or if
the transaction giving rise to the need to calculate Consolidated Coverage Ratio
is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to (1) such Indebtedness as if such Indebtedness had
been incurred on the first day of such period (provided that if such
Indebtedness is incurred under a revolving credit facility (or similar
arrangement or under any predecessor revolving credit or similar arrangement)
only that portion of such Indebtedness that constitutes the one year projected
average balance of such Indebtedness (as determined in good faith by the General
Partner) shall be deemed outstanding for purposes of this calculation), and (2)
the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period, (B) if since the
beginning of such period any Indebtedness of RAS or any of its Restricted
Subsidiaries has been repaid, repurchased, defeased or otherwise discharged
(other than Indebtedness under a revolving credit or similar arrangement unless
such revolving credit Indebtedness has been permanently repaid and the
underlying commitment terminated and has not been replaced), Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto as if such Indebtedness had been repaid, repurchased, defeased or
otherwise discharged on the first day of such period, (C) if since the beginning
of such period RAS or any of its Restricted Subsidiaries shall have made any
Asset Disposition or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Asset Disposition, Consolidated Cash Flow for
such period shall be reduced by an amount equal to the Consolidated Cash Flow
(if positive) attributable to the assets which are the subject of such Asset
Disposition for such period or increased by an amount equal to the Consolidated
Cash Flow (if negative) attributable thereto for such period, and Consolidated
Interest Expense for such period shall be (i) reduced by an amount equal to the
Consolidated Interest Expense attributable to any Indebtedness of RAS or any of
its Restricted Subsidiaries repaid, repurchased, defeased or otherwise
discharged with respect to RAS and its continuing Restricted Subsidiaries in
connection with such Asset Disposition for such period (or, if the Capital Stock
of any Restricted Subsidiary of RAS is sold, the Consolidated Interest Expense
for such period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent RAS and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale) and (ii) increased by
interest income attributable to the assets which are the subject of such Asset
Disposition for such period, (D) if since the beginning of such period RAS or
any of its Restricted Subsidiaries (by merger or otherwise) shall have made an
Investment in any Restricted
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Subsidiary of RAS (or any Person which becomes a Restricted Subsidiary of RAS as
a result thereof) or an acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder which constitutes all or
substantially all of an operating unit of a business, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto (including the incurrence of any Indebtedness) as if
such Investment or acquisition occurred on the first day of such period and (E)
if since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary of RAS or was merged with or into RAS or any Restricted
Subsidiary of RAS since the beginning of such period) shall have made any Asset
Disposition, Investment or acquisition of assets that would have required an
adjustment pursuant to clause (C) or (D) above if made by RAS or a Restricted
Subsidiary of RAS during such period, Consolidated Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition, Investment or acquisition occurred
on the first day of such period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting officer of RAS. If any Indebtedness bears a floating rate of interest
and is being given pro forma effect, the interest expense on such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any Interest
Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement
has a remaining term in excess of 12 months).
"Consolidated EBITDAM" means Consolidated Cash Flow plus
management fees paid to the General Partner in connection with its management of
RAS to the extent deducted in calculating Consolidated Net Income.
"Consolidated Interest Expense" means, for any period, the
total interest expense of RAS and its Restricted Subsidiaries determined in
accordance with GAAP, plus, to the extent not included in such interest expense
(i) interest expense attributable to Capitalized Lease Obligations, (ii)
capitalized interest, (iii) amortization of debt discount, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by RAS or any such Restricted Subsidiary under any
Guarantee of Indebtedness or other obligation of any other Person, (vii) net
payments (whether positive or negative) pursuant to Interest Rate Agreements,
(viii) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than RAS) in connection with Indebtedness
incurred by such plan or trust and (ix) cash and Disqualified Stock dividends in
respect of all Preferred Stock of Subsidiaries and Disqualified Stock of RAS
held by Persons other than RAS or a Wholly-Owned Subsidiary and less (a) to the
extent included in such interest
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<PAGE> 14
expense, the amortization of capitalized debt issuance costs, (b) interest
income and (c) to the extent included in such interest expense, the amortization
of debt original issue discount on the Notes and/or interest expense relating to
the Notes in excess of the Coupon rate recorded to account for the effective
interest rate. Notwithstanding the foregoing, the Consolidated Interest Expense
with respect to any Restricted Subsidiary of RAS that was not a Wholly-Owned
Subsidiary shall be included only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Net Income" means, for any period, the
consolidated net income (loss) of RAS and its consolidated Subsidiaries
determined in accordance with GAAP; provided, however, that there shall not be
included in such Consolidated Net Income: (i) any net income (loss) of any
Person acquired by RAS or any of its Restricted Subsidiaries in a pooling of
interests transaction for any period prior to the date of such acquisition, (ii)
any net income of any Restricted Subsidiary of RAS if such Restricted Subsidiary
is subject to restrictions, directly or indirectly, on the payment of dividends
or the making of distributions by such Restricted Subsidiary, directly or
indirectly, to RAS (other than restrictions in effect on the Issue Date with
respect to a Restricted Subsidiary of RAS and other than restrictions that are
created or exist in compliance with Section 4.08), (iii) any gain or loss
realized upon the sale or other disposition of any assets of RAS or its
consolidated Restricted Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which are not sold or otherwise disposed of in the ordinary course
of business and any gain or loss realized upon the sale or other disposition of
any Capital Stock of any Person, (iv) any extraordinary gain or loss, (v) the
cumulative effect of a change in accounting principles, (vi) the net income of
any Person, other than a Restricted Subsidiary, except to the extent of the
lesser of (A) cash dividends or distributions actually paid to RAS or any of its
Restricted Subsidiaries by such Person and (B) the net income of such Person
(but in no event less than zero), and the net loss of such Person (other than an
Unrestricted Subsidiary) shall be included only to the extent of the aggregate
Investment of RAS or any of its Restricted Subsidiaries in such Person and (vii)
any non-cash expenses attributable to grants or exercises of employee stock
options. Notwithstanding the foregoing, for the purpose of Section 4.07 only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to RAS or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a) (3) (D) thereof.
"Consolidated Net Worth" means, the total of the amounts shown
on the balance sheet of RAS and its consolidated Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of RAS ending prior to the taking of any action for
the purpose of which the determination is being made and for which financial
statements are available (but in no event ending more
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than 135 days prior to the taking of such action), as (i) the par or stated
value of all outstanding Capital Stock of RAS plus (ii) paid in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.02 or such other address as to
which the Trustee may give notice to RAS.
"Credit Agreement" means the Credit Agreement, dated as of
December 30, 1997, among inter alia the Issuers and National Westminster Bank
PLC, as administrative agent, relating to the Mortgage Notes and the Revolving
Credit Facility, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, as such credit
agreement and/or related documents may be amended, restated, supplemented,
renewed, replaced or otherwise modified from time to time, whether or not with
the same agent, trustee, representative lenders or holders, and irrespective of
any changes in the terms and conditions thereof. Without limiting the generality
of the foregoing, the term "Credit Agreement" shall include Interest Rate
Agreements with lenders party to the Credit Agreement and shall also include any
amendment, amendment and restatement, renewal, extension, restructuring,
supplement or modification to any Credit Agreement and all refunding,
refinancings and replacements of any Credit Agreement.
"Credit Facilities" means the Mortgage Notes and the Revolving
Credit Facility.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Designated Senior Indebtedness" means (i) the Mortgage Notes
and (ii) the Revolving Credit Facility.
"Disbursement Agreement" means the Disbursement Agreement,
dated as of December 30, 1997, among RAS, RAS, Inc., the Trustee, National
Westminster Bank PC and First Security Trust Company of Nevada.
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"Disbursement Agent" means First Security Trust Company of
Nevada, as disbursement agent under the Disbursement Agreement, and its
successor or assigns.
"Disqualified Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event (other than an event
which would constitute a Change of Control), (i) matures (excluding any maturity
as the result of an optional redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final Stated Maturity of the Notes, or (ii) is convertible into or exchangeable
(unless at the sole option of the issuer thereof) for (a) debt securities or (b)
any Capital Stock referred to in (i) above, in each case at any time prior to
the final Stated Maturity of the Notes.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto, and the rules and
regulations of the Commission promulgated thereunder.
"Exchange Notes" has the meaning set forth in the preamble to
this Indenture.
"Exchange Offer" means the registration by the Issuers under
the Securities Act pursuant to a registration statement of the offer by the
Issuers to each Noteholder of the Initial Notes to exchange all the Initial
Notes held by such Noteholder for the Exchange Notes in an aggregate principal
amount equal to the aggregate principal amount of the Initial Notes held by such
Noteholder, all in accordance with the terms and conditions of the Registration
Rights Agreement.
"Existing Partners" means Tivolino Holding A.G. or any of its
Wholly-Owned Subsidiaries.
"fair market value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the General Partner acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the General Partner delivered to the Trustee.
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"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of this Indenture,
including those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP.
"Gaming Authority" means any of the Nevada Gaming Commission,
the Nevada State Gaming Control Board, the City of Las Vegas, any gaming
regulatory body in North Dakota and Colorado, and any other gaming regulatory
body or any agency which has, or may at any time after the Issue Date have,
jurisdiction over the gaming activities of RAS or any of its Affiliates or
Subsidiaries or any successor to such authority.
"Gaming Laws" means the provisions of the Nevada Gaming
Control Act, as amended from time to time, all regulations of the Nevada Gaming
Commission promulgated thereunder, as amended from time to time, all ordinances,
rules and regulations adopted by the City of Las Vegas, as amended from time to
time, and all other laws, statutes, rules, rulings, orders, ordinances,
regulations and other legal requirements of any Gaming Authority.
"Gaming License" means any license, qualification, permit,
franchise or other authorization from any Gaming Authority required on the date
of this Indenture or at any time thereafter to own, operate or otherwise conduct
the gaming business of RAS and its Affiliates or Subsidiaries, including all
licenses, findings of suitability and registrations granted under Gaming Laws.
"General Partner" means RAS, Inc., a Nevada corporation, as
the general partner of RAS that has the power to direct the management and set
policies of RAS, and any of its successors in such capacity.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
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"Guarantor Senior Indebtedness" means, with respect to a
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
issued, all Guarantees by such Subsidiary Guarantor of Senior Indebtedness of
RAS and all other Indebtedness of such Subsidiary Guarantor, including interest
and fees thereon, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is expressly provided that the
obligations of such Subsidiary Guarantor in respect of such Indebtedness are not
superior in right of payment to the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee; provided, however, that Guarantor Senior
Indebtedness shall not include (1) any obligations of such Subsidiary Guarantor
to RAS or any other Subsidiary of RAS or (2) any Indebtedness, Guarantee or
obligation of such Subsidiary Guarantor that is expressly subordinate or junior
in right of payment to any other Indebtedness, Guarantee or obligation of such
Subsidiary Guarantor, including any Guarantor Subordinated Indebtedness and
Guarantor Subordinated Obligations of such Subsidiary Guarantor.
"Guarantor Subordinated Indebtedness" means, with respect to a
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor
that specifically provides that such Indebtedness is to rank pari passu in right
of payment with the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter incurred) which is expressly
subordinate or junior in right of payment to the obligations of such Subsidiary
Guarantor under the Subsidiary Guarantee pursuant to a written agreement.
"HHC" means the Howard Hughes Properties, Limited Partnership,
a Delaware limited partnership and a subsidiary of the Rouse Corporation.
"incur" means issue, assume, guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto) (other
than obligations with respect to letters of credit securing obligations (other
than obligations described
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<PAGE> 19
in clauses (i), (ii) and (v)) entered into in the ordinary course of business of
such Person to the extent that such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit), (iv) all obligations of such Person
to pay the deferred and unpaid purchase price of property or services (except
trade payables and accrued expenses incurred in the ordinary course of
business), which purchase price is due more than six months after the date of
placing such property in service or taking delivery and title thereto or the
completion of such services, (v) all Capitalized Lease Obligations and all
Attributable Indebtedness of such Person, (vi) all Indebtedness of other Persons
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person, (vii) all Indebtedness of other Persons to the extent
Guaranteed by such Person, (viii) the amount of all obligations of such Person
with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Restricted Subsidiary of RAS, any
Preferred Stock of such Restricted Subsidiary to the extent such obligation
arises on or before the Stated Maturity of the Notes (but excluding, in each
case, accrued dividends) with the amount of Indebtedness represented by such
Disqualified Stock or Preferred Stock, as the case may be, being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price; provided that, for purposes hereof the "maximum fixed
repurchase price" of any Disqualified Stock or Preferred Stock, as the case may
be, which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Stock or Preferred Stock, as the
case may be, as if such Disqualified Stock or Preferred Stock, as the case may
be, were purchased on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture, and if such price is based on the fair
market value of such Disqualified Stock or Preferred Stock, as the case may be,
such fair market value shall be determined in good faith by the General Partner
and (ix) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. Unless specifically set
forth above, the amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional obligations as described
above, as such amount would be reflected on a balance sheet prepared in
accordance with GAAP, and the maximum liability of such Person, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations described above at such date.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Initial Notes" has the meaning set forth in the preamble to
this Indenture.
"Initial Purchaser" means NatWest Capital Markets Limited.
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"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means each June 15 and December 15 of
each year.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts payable on the balance sheet of such
Person) or other extension of credit (including by way of Guarantee or similar
arrangement, but excluding any debt or extension of credit represented by a bank
deposit other than a time deposit) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
For purposes of Section 4.07, (i) "Investment" shall include the portion
(proportionate to RAS's equity interest in a Restricted Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market value of the net
assets of such Restricted Subsidiary of RAS at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary; provided, however, that
upon a redesignation of such Subsidiary as a Restricted Subsidiary, RAS shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (x) RAS's "Investment" in such
Subsidiary at the time of such redesignation less (y) the portion (proportionate
to RAS's equity interest in such Subsidiary) of the fair market value of the net
assets of such Subsidiary at the time that such Subsidiary is so redesignated a
Restricted Subsidiary; and (ii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the General Partner
and evidenced by a Board Resolution.
"Issue Date" means the date on which the Initial Notes are
originally issued.
"Issuers" means RAS and RAS, Inc. until a successor replaces
either of them in accordance with Article 5 hereof and thereafter means, in lieu
of such replaced Person, the successor.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
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"Maturity Date" means December 15, 2007.
"Moody's" means Moody's Investors Service, Inc., or its
successor.
"Mortgage Notes" means up to $100.0 million in principal
amount of the Issuers' First Mortgage Notes issued under the Credit Agreement
and any extensions, revisions, refinancings, restatements or replacements
thereof in whole or in part.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets subject to such Asset
Disposition) therefrom in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all Federal,
state, foreign and local taxes required to be paid or accrued as a liability
under GAAP, as a consequence of such Asset Disposition, (ii) all distributions
and other payments required to be made to any Person owning a beneficial
interest in assets subject to sale or minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Disposition, (iii) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition, provided, however, that upon any reduction in such
reserves (other than to the extent resulting from payments of the respective
reserved liabilities), Net Available Cash shall be increased by the amount of
such reduction to reserves, and retained by RAS or any Restricted Subsidiary of
RAS after such Asset Disposition and (iv) any portion of the purchase price from
an Asset Disposition placed in escrow (whether as a reserve for adjustment of
the purchase price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with such Asset Disposition), provided,
however, that upon the termination of such escrow, Net Available Cash shall be
increased by any portion of funds therein released to RAS or any Restricted
Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
of the Issuers nor any Restricted Subsidiary (a) provides any Guarantee or
credit support of any kind (including any undertaking, guarantee, indemnity,
agreement or instrument that would constitute Indebtedness) or (b) is directly
or indirectly liable (as a guarantor, general partner or otherwise) and (ii) no
default with respect to which (including any rights that the holders
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thereof may have to take enforcement action against an Unrestricted Subsidiary)
would permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of RAS or any Restricted Subsidiary to declare a default under such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its Stated Maturity.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S of the Securities Act.
"Noteholder" or "Holder" means a registered holder of one or
more Notes.
"Note Register" means the register of names and addresses of
the Holders of the Notes maintained by the Registrar.
"Notes" means the Initial Notes, the Additional Notes and the
Exchange Notes treated as a single class of securities, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.
"Notes Proceeds Agreement" means the Subordinated Notes
Proceeds Agreement, dated as of December 30, 1997, among RAS, RAS Inc., the
Trustee and First Security Trust Company of Nevada, as account agent thereunder.
"Obligations" means any principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated
December 22, 1997, pursuant to which the Initial Notes were offered, and any
supplements thereto.
"Officer" means, in the case of RAS, Inc., the Chairman of the
Board, the Vice-Chairman of the Board, the Chief Executive Officer, the Chief
Financial Officer, the President, any Vice-President, the Treasurer or the
Secretary of RAS, Inc., and, in the case of RAS, any of such officers of the
General Partner acting on behalf of RAS.
"Officers' Certificate" shall mean, in the case of RAS, Inc.,
a certificate signed by two Officers and, in the case of RAS, a certificate
signed by two Officers of the General Partner acting on behalf of RAS.
"Opinion of Counsel" means a written opinion, in form and
substance acceptable to the Trustee, from legal counsel who is acceptable to the
Trustee.
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"Permitted Business" means the casino gaming, hotel, retail
and spa and resort business and any activity or business incidental, directly
related or similar thereto, or any business or activity that is a reasonable
extension, development or expansion thereof or ancillary thereto, including any
hotel, entertainment, recreation, convention, trade show, meeting, retail sales
or other activity or business designed to promote, market, support, develop,
construct or enhance the casino gaming, hotel, retail and resort business
operated by RAS and its Restricted Subsidiaries (including, without limitation,
engaging in transactions with Affiliates and incurring Indebtedness, providing
guarantees or providing other credit support, in each case to the extent
permitted under this Indenture), owning and operating joint ventures to supply
materials or services or the construction or operation of the resort owned or
operated by RAS and entering into casino leases or management agreements for any
casino situated on land owned by any Issuer or owned or operated by any Issuer.
"Permitted Investment" means an Investment by RAS or any of
its Restricted Subsidiaries in (i) a Wholly-Owned Subsidiary of RAS; provided,
however, that the primary business of such Wholly-Owned Subsidiary is a
Permitted Business; (ii) another Person if as a result of such Investment such
other Person becomes a Wholly-Owned Subsidiary of RAS or is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, RAS or a Wholly-Owned Subsidiary of RAS; provided, however, that in
each case such Person's primary business is a Permitted Business; (iii)
Temporary Cash Investments; (iv) receivables owing to RAS or any of its
Restricted Subsidiaries, created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; (v)
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans and
advances to employees made in the ordinary course of business of RAS or such
Restricted Subsidiary in an aggregate amount outstanding at any one time not to
exceed $250,000 to any one employee or $1.0 million in the aggregate; (vii)
stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to RAS or any of its Restricted
Subsidiaries or in satisfaction of judgments or claims; (viii) a Person engaged
in a Permitted Business or a loan or advance by RAS the proceeds of which are
used solely to make an investment in a Person engaged in a Permitted Business or
a Guarantee by RAS of Indebtedness of any Person in which such Investment has
been made; provided, however, that no Permitted Investments may be made pursuant
to this clause (viii) to the extent the amount thereof would, when taken
together with all other Permitted Investments made pursuant to this clause
(viii), exceed $5.0 million in the aggregate (plus, to the extent not previously
reinvested, any return of capital realized on Permitted Investments made
pursuant to this clause (viii), or any release or other cancellation of any
Guarantee constituting such Permitted Investment); (ix) Persons to the extent
such Investment is received by RAS or any Restricted Subsidiary as consideration
for asset dispositions effected in compliance with Section 4.10; (x) prepayments
and other credits to suppliers made in the ordinary course
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<PAGE> 24
of business of RAS and its Restricted Subsidiaries; and (xi) Investments in
connection with pledges, deposits, payments or performance bonds made or given
in the ordinary course of business in connection with or to secure statutory,
regulatory or similar obligations, including obligations under health, safety or
environmental obligations.
"Permitted Liens" means: (i) Liens granted by RAS or any
Subsidiary Guarantor which secure Senior Indebtedness; (ii) Liens in favor of
RAS; (iii) Liens on property of a Person existing at the time such Person is
acquired by or merged into or consolidated with RAS or any Restricted Subsidiary
thereof; provided that such Liens were in existence prior to the contemplation
of such acquisition and do not extend to any assets of RAS or its Restricted
Subsidiaries other than those acquired in connection with such merger or
consolidation; (iv) Liens to secure the performance of obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business; (v) Liens existing on the Issue Date; (vi)
Liens in respect of extensions, renewals, refundings or refinancings of any
Indebtedness secured by the Liens referred to in clauses (ii), (iii) and (v)
above and (viii) below; provided that the Liens in connection with such renewal,
extensions, renewals, refundings or refinancing shall be limited to all or part
of the specific property which was subject to the original Lien; (vii) Liens for
taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other
appropriate provisions as shall be required in conformity with GAAP shall have
been made therefor; (viii) any Lien securing purchase money obligations incurred
in compliance with paragraph (b)(ii) of Section 4.09, provided that such Liens
do not extend to any property (other than the property so purchased) owned by
RAS or its Restricted Subsidiaries and is not incurred more than 60 days after
the incurrence of such Indebtedness secured by such Lien; (ix) Liens to secure
Indebtedness permitted under clause (ii) of Section 4.09, provided that such
Liens do not extend to or cover any property of RAS or any of its Subsidiaries
other than the property subject to such financing; and (x) Liens incurred in the
ordinary course of business of RAS or any Restricted Subsidiary thereof with
respect to obligations that do not exceed $2 million at any one time outstanding
and that (A) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary course
of business) and (B) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of the
business of RAS or such Restricted Subsidiary.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision hereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the pay-
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<PAGE> 25
ment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such corporation, over shares of
Capital Stock of any other class of such corporation.
"Public Equity Offering" means an underwritten primary public
offering for cash by RAS of Capital Stock, or options, warrants or rights with
respect to Capital Stock pursuant to an effective registration statement under
the Securities Act.
A "Public Market" exists at any time with respect to the
Capital Stock of RAS if (a) the Capital Stock of RAS is then registered with the
Commission pursuant to Section 12(b) or 12(g) of the Exchange Act and traded
either on a national securities exchange or in the National Association of
Securities Dealers Automated Quotation System and (b) at least 15% of the total
issued and outstanding Capital Stock of RAS has been distributed prior to such
time by means of an effective registration statement under the Securities Act.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"Record Date" means the record dates specified in the Notes,
whether or not a Legal Holiday.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and "refinanced"
shall have a correlative meaning) any Indebtedness existing on the Issue Date or
incurred in compliance with this Indenture (including Indebtedness of RAS that
refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any
Restricted Subsidiary that refinances Indebtedness of another Restricted
Subsidiary) including Indebtedness that refinances Refinancing Indebtedness;
provided, however, that (i) the Refinancing Indebtedness has a Stated Maturity
no earlier than the earlier of (A) the first anniversary of the Stated Maturity
of the Notes and (B) the Stated Maturity of the Indebtedness being refinanced,
(ii) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is incurred that is equal to or greater than the lesser
of (A) the Average Life of the Notes and (B) the Average Life of the
Indebtedness being refinanced and (iii) the Refinancing Indebtedness is in an
aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to (or 101% of, in the case of a
refinancing of the Notes in connection with a Change of Control) or less than
the sum of the aggregate principal amount (or if issued with original issue
discount, the aggregate accreted value) then outstanding of the Indebtedness
being refinanced (plus the amount of any premium required to be paid in
connection therewith and reasonable fees and expenses therewith) provided,
further, that Refinancing Indebt-
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<PAGE> 26
edness shall not include Indebtedness of a Subsidiary which refinances
Indebtedness of RAS.
"Register" means a registry of the names and addresses of the
holders of the Notes maintained by the Register at the offices of the Register.
"Registration Rights Agreement" means the Registration Rights
Agreement dated December 31, 1997 between the Issuers and the Initial Purchaser.
"Regulation S" means Regulation S under the Securities Act.
"Representative" means the trustee, administrative agent or
representative (if any) for an issue of Senior Indebtedness.
"Resort Casino" means The Resort at Summerlin, the resort and
casino to be constructed and developed by RAS in Las Vegas, Nevada.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of RAS other than
an Unrestricted Subsidiary.
"Revolving Credit Facility" means the up to $10.0 million
revolving credit facility under the Credit Agreement, and any extensions,
revisions, refinancings, restatements or replacements thereof.
"S&P" and "Standard and Poor's" means Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies Inc., or any successor
organization thereto.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby RAS or a Restricted Subsidiary
transfers such property to a Person and RAS or a Subsidiary leases it from such
Person.
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<PAGE> 27
"SCGC" means Seven Circle Gaming Corporation, a Delaware
corporation, and its successors.
"SCR" means Seven Circle Resorts, Inc., a Delaware
corporation, and its successors.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor statute or statutes thereto, and the rules and regulations of
the Commission promulgated thereunder.
"Senior Indebtedness" of the Issuers means all Indebtedness
(including any monetary obligations under or in respect of the Credit Agreement
and interest, whether or not allowable, accruing on Indebtedness incurred
pursuant to the Credit Agreement after the filing of a petition initiating any
proceeding under any bankruptcy, insolvency or similar law) of the Issuers
arising under the Credit Agreement, except to the extent of any such
Indebtedness incurred in violation of the terms of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of RAS within the meaning of Rule 1-02 under
Regulation S-X promulgated by the Commission.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision.
"Subordinated Obligations" means with respect to RAS or any
Subsidiary Guarantor, any Indebtedness of RAS or such Subsidiary Guarantor, as
the case may be (whether outstanding on the Issue Date or thereafter incurred),
which is expressly subordinate or junior in right of payment to the Notes or
such Subsidiary Guarantor's Subsidiary Guarantee, as the case may be, in each
case pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity which is not subject to the jurisdiction of
any Gaming Authority of which more than 50% of the total voting power of shares
of Capital Stock or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and one or more
Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.
Unless otherwise specified herein, each reference to a Subsidiary shall refer to
a direct or indirect Subsidiary of RAS.
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"Subsidiary Guarantee" means each of the guarantees of the
respective Subsidiary Guarantors pursuant to Article 11 hereof, and shall
include each guarantee substantially in the form contained in Exhibits A and B
hereto, as such guarantee may be amended, modified or supplemented from time to
time.
"Subsidiary Guarantor" means each Subsidiary of RAS in
existence on the Issue Date and each Subsidiary (other than Unrestricted
Subsidiaries) created or acquired by RAS after the Issue Date that executes a
supplemental indenture pursuant to Section 11.07.
"Tax Allowance Amount" means, with respect to any partner of
RAS (including a warrant holder if such warrant holder is treated as owning an
equity interest in RAS for U.S. federal, state or local income tax purposes),
for any calendar quarter, (i) forty percent (40%) of the excess of (a) the
estimated taxable income allocable to such partner of RAS arising from its
ownership of a partnership interest in RAS for the fiscal year through such
calendar quarter over (b) any losses of RAS for prior fiscal years and such
fiscal year that are allocable to such partner of RAS that were not previously
utilized in the calculation of Tax Allowance Amounts minus (ii) prior
distributions of Tax Allowance Amounts for such fiscal year, all as determined
by the general partner of RAS in good faith. The amount so determined by the
general partner of RAS shall be the Tax Allowance Amount for such period and
shall be final and binding on all partners of RAS.
"Temporary Cash Investments" means any of the following: (i)
any Investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) Investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital surplus and
undivided profits aggregating in excess of $250 million (or the foreign currency
equivalent thereof) and whose long-term debt, or whose parent holding company's
long-term debt, is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act), (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) Investments in commercial paper, maturing not more than
180 days after the date of acquisition, issued by a corporation (other than an
Affiliate of RAS) organized and in existence under the laws of the United States
of America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Moody's or "A-1" (or higher) according to S&P, (v)
Investments in securities with maturities of six months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
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<PAGE> 29
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by S&P or "A" by Moody's and (vi)
Investments in mutual funds whose investment guidelines restrict such funds'
investments to those satisfying the provisions of clauses (i) through (v) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) and the rules and regulations thereunder as in effect on the date
on which this Indenture is qualified under the TIA, except as provided in
Section 9.03 hereof; provided, however, that, in the event the Trust Indenture
Act of 1939 is amended after such date, "TIA" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means United States Trust Company of New York, a
banking corporation organized and existing under the laws of the State of New
York, until a successor replaces it in accordance with Article 7 and thereafter
means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary of RAS that
at the time of determination shall be designated an Unrestricted Subsidiary by
the General Partner in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The General Partner may designate any Subsidiary of RAS
(including any newly acquired or newly formed Subsidiary of RAS) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or owns or holds any Lien on any property
of, RAS or any Restricted Subsidiary of RAS that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that each Subsidiary to be so
designated and each of its Subsidiaries has not at the time of such designation,
and does not thereafter create, incur, issue, assume, Guarantee or otherwise
becomes liable with respect to any Indebtedness other than Non-Recourse Debt and
either (A) the Subsidiary to be so designated has total consolidated assets of
$10,000 or less or (B) if such Subsidiary has consolidated assets greater than
$10,000, then such designation would be permitted under Section 4.07. The
General Partner may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary subject to the limitations contained in Section 4.18.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of
RAS, at least 99% of the Capital Stock of which (other than directors'
qualifying shares) is owned by RAS or another Wholly-Owned Subsidiary.
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SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"actual knowledge"...............................................7.02
"Additional Notes"...............................................2.02
"Affiliate Transaction"..........................................4.11
"Agent Members"..................................................2.16
"Asset Disposition Offer"........................................3.09
"Bankruptcy Law".................................................6.01
"Blockage Notice"................................................9.03
"Change of Control Payment.......................................4.14
"Change of Control Payment Date..................................4.14
"covenant defeasance option".....................................8.01
"Custodian"......................................................6.01
"Declaration"....................................................6.02
"Default Amount".................................................6.02
"Designation"....................................................4.18
"Designation Amount".............................................4.18
"Event of Default"...............................................6.01
"Funding Subsidiary Guarantor"..................................11.05
"Global Note"....................................................2.01
"Guaranteed Obligations"........................................11.01
"judgment default provision".....................................6.01
"legal defeasance option"........................................8.01
"Legal Holiday".................................................11.07
"Net Revenue Fee"................................................4.11
"Notice of Default"..............................................6.01
"Offer Amount"...................................................3.09
"Offer Period"...................................................3.09
"Offshore Physical Notes"........................................2.01
"Paying Agent"...................................................2.03
"Payment"........................................................9.02
"Payment Blockage Period.........................................9.03
"Physical Notes".................................................2.01
"Private Placement Legend".......................................2.15
"Purchase Date"..................................................3.09
"Registrar"......................................................2.03
"Restricted Payment".............................................4.07
"Revocation......................................................4.18
"Right of First Offer"...........................................4.11
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"Successor Entity"...............................................5.01
"Taxes"..........................................................4.05
"U.S. Physical Notes"............................................2.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"obligor" on the Notes means the Issuers, the Subsidiary
Guarantors and any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words
in the plural include the singular; and
(v) provisions apply to successive events and
transactions.
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ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Initial Notes, the notation thereon relating to the
Subsidiary Guarantees and the Trustee's certificate of authentication thereon
shall be substantially in the form of Exhibit A hereto. The Exchange Notes, the
notation thereon relating to the Subsidiary Guarantees and the Trustee's
certificate of authentication thereon shall be substantially in the form of
Exhibit B hereto. The Notes may have notations, legends or endorsements required
by law, stock exchange rule or Depository rule or usage. The Issuers, the
Subsidiary Guarantors and the Trustee shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its authentication.
The terms and provisions contained in the forms of the Notes
and the Subsidiary Guarantees, annexed hereto as Exhibits A and B, shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Issuers, the Subsidiary Guarantors and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global notes in registered
form, in substantially the form set forth in Exhibit A (the "Global Note"),
deposited with the Trustee, as custodian for the Depository, duly executed by
the Issuers and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Note may from time to time be increased
or decreased by adjustments made on the records of the Registrar and the
Trustee, as custodian for the Depository, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "Offshore
Physical Notes"). Notes offered and sold in reliance on any other exemption from
registration under the Securities Act other than as described in the preceding
paragraph shall be issued, and Notes offered and sold in reliance on Rule 144A
may be issued, in the form of permanent certificated Notes in registered form,
in substantially the form set forth in Exhibit A (the "U.S. Physical Notes").
The Offshore Physical Notes and the U.S. Physical Notes are sometimes
collectively herein referred to as the "Physical Notes".
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SECTION 2.02. EXECUTION AND AUTHENTICATION.
(a) Two Officers of RAS, Inc. and an Officer of RAS shall sign
the Notes for the Issuers by manual or facsimile signature. If an Officer whose
signature is on a Note no longer holds that office at the time the Note is
authenticated, the Note shall nevertheless be valid. Each Subsidiary Guarantor
shall execute a Subsidiary Guarantee in the manner set forth in Section 11.02.
(b) A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Note has been authenticated under this Indenture.
(c) The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed $100,000,000,
(ii) Exchange Notes from time to time for issue only in exchange for a like
principal amount of Initial Notes, and (iii) additional Notes issued
("Additional Notes") pursuant to this Indenture as interest on the Notes (not to
exceed $20,794,600 plus the principal amount of any Notes issued in lieu of cash
for Additional Interest due on the Notes pursuant to the Registration Rights
Agreement, in each case upon receipt of a written order of the Issuers signed by
two Officers of each of the Issuers.
(d) The Trustee may appoint an authenticating agent acceptable
to the Issuers to authenticate Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as an Agent to deal with the Issuers or an Affiliate of either Issuer.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
(a) The Issuers shall maintain an office or agency (which
shall be located in the Borough of Manhattan in the City of New York, State of
New York) where (i) Notes may be presented for registration of transfer or for
exchange ("Registrar"), (ii) Notes may be presented for payment ("Paying Agent")
and (iii) notices and demands to or upon the Issuers in respect of the Notes and
this Indenture may be served. The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Issuers may appoint one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent. The Issuers may change any Paying Agent,
Registrar or co-registrar without prior notice to any Noteholder. The Issuers
shall notify the Trustee and the Trustee shall notify the Noteholders of the
name and address of any Agent not a party to this Indenture. The Issuers or any
Subsidiary Guarantor may act as Paying Agent, Registrar or co-registrar. The
Issuers shall enter into an appropriate agency agreement
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with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Issuers shall notify the Trustee of the
name and address of any such Agent. If the Issuers fail to appoint or maintain a
Registrar or Paying Agent, or fail to give the foregoing notice, the Trustee
shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 7.07 hereof.
(b) The Issuers initially appoint the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuers, the Subsidiary Guarantors or any other obligor on
the Notes shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent shall hold in trust for the benefit of the
Noteholders and the Trustee all money held by the Paying Agent for the payment
of principal of, premium, if any, and interest on the Notes, and shall notify
the Trustee of any Default by the Issuers, any of the Subsidiary Guarantors or
any other obligor on the Notes in making any such payment. While any such
Default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Issuers , the Subsidiary Guarantors or any other
obligor on the Notes at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Issuers or a Subsidiary Guarantor) shall have no further
liability for the money delivered to the Trustee. If the Issuers, the Subsidiary
Guarantors or any other obligor on the Notes acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Noteholders
all money held by it as Paying Agent.
SECTION 2.05. NOTEHOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Noteholders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Issuers, the Subsidiary Guarantors or any
other obligor on the Notes shall furnish to the Trustee at least seven Business
Days before each Interest Payment Date and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Noteholders, including the
aggregate principal amount of the Notes held by each thereof, and the Issuers,
the Subsidiary Guarantors or any other obligor on the Notes shall otherwise
comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
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(a) Where Notes are presented to the Registrar or a
co-registrar with a request to register the transfer thereof or exchange them
for an equal principal amount of Notes of other denominations, the Registrar
shall, subject to Section 2.17, register the transfer or make the exchange if
its requirements for such transactions are met; provided, that any Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar and the Trustee duly executed by the Noteholder
thereof or his attorney duly authorized in writing. To permit registrations of
transfer or exchanges, the Issuers shall issue and the Trustee shall
authenticate Notes at the Registrar's request.
(b) Neither the Registrar nor the Issuers shall be required
(i) to issue, to register the transfer of or to exchange Notes during a period
beginning at the opening of business on a Business Day 15 days before the day of
any selection of Notes for redemption under Section 3.02 hereof and ending at
the close of business on the day of selection, (ii) to register the transfer of
or exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (iii) to register the
transfer or exchange of a Note between the Record Date and the next succeeding
Interest Payment Date.
(c) No service charge by the Issuers shall be made for any
registration of a transfer or exchange (except as otherwise expressly permitted
herein), but the Issuers may require payment by the Noteholder of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than such transfer tax or similar governmental
charge payable upon exchanges pursuant to Section 2.10, 3.06 or 10.05 hereof).
(d) Each Holder of the Global Note shall, by acceptance of
such Global Note, agree that transfers of beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Global Note shall be required to be reflected in a book entry.
SECTION 2.07. REPLACEMENT NOTES.
(a) If any mutilated Note is surrendered to the Trustee, or
the Issuers and the Trustee receive evidence to the satisfaction of each thereof
of the destruction, loss or theft of any Note, the Issuers shall issue and the
Trustee, upon receipt by it of the written order of the Issuers signed by two
Officers of each of the Issuers, shall authenticate a replacement Note if the
Trustee's requirements for replacements of Notes are met. If required by the
Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Issuers to protect the
Issuers, the Subsidiary Guarantors, the Trustee, any Agent or any authenticating
agent from any loss
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which any of them may suffer if a Note is replaced. The Issuers and the Trustee
may charge a Noteholder for reasonable out-of-pocket expenses in replacing a
Note.
(b) Every replacement Note is an obligation of the Issuers and
each of the Subsidiary Guarantors.
SECTION 2.08. OUTSTANDING NOTES.
(a) The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by the Issuers or by the
Trustee, those delivered to the Trustee for cancellation and those described in
this Section as not outstanding.
(b) If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
(c) If the principal amount of any Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
(d) Subject to Section 2.09 hereof, a Note does not cease to
be outstanding because an Issuer or an Affiliate of an Issuer or a Subsidiary
Guarantor holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Issuers, the Subsidiary Guarantors, or any of their respective Affiliates
shall be considered as though not outstanding, except that for purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which a Responsible Officer of the
Trustee has actual knowledge are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Issuers may
prepare and the Trustee shall authenticate temporary Notes upon written order of
the Issuers signed by two Officers of each of the Issuers. Temporary Notes shall
be substantially in the form of definitive Notes but may have variations that
the Issuers, the Subsidiary Guarantors and the Trustee consider appropriate for
temporary Notes. Without unreasonable delay, the Issuers shall prepare and the
Trustee, upon receipt of the written order of the Issuers signed by two Officers
of each of the Issuers, shall authenticate definitive Notes in exchange for
temporary
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Notes. Until such exchange, temporary Notes shall be entitled to the same
rights, benefits and privileges under this Indenture as definitive Notes.
SECTION 2.11. CANCELLATION.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee (or its Agent) shall cancel all Notes, if not already cancelled,
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy cancelled Notes (subject to the record retention
requirement of the Exchange Act), and deliver certification of their destruction
to the Issuers, unless by a written order, signed by two Officers of each of the
Issuers, the Issuers shall direct that cancelled Notes be returned to it. The
Issuers may not issue new Notes to replace Notes that it has redeemed or paid or
that have been delivered to the Trustee for cancellation. If an Issuer acquires
any of the Notes, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless or until the
same are surrendered to the Trustee (or its Agent) for cancellation pursuant to
this Section.
SECTION 2.12. DEFAULTED INTEREST.
If the Issuers default in a payment of interest on the Notes,
they shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Noteholders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior to
the payment date, in each case at the rate provided in the Notes and in Section
4.01 hereof. The Issuers shall, with the consent of the Trustee, fix or cause to
be fixed each such special record date and payment date. At least 15 days before
the special record date, the Issuers (or, upon the written request of the
Issuers, the Trustee, in the name of and at the expense of the Issuers) shall
mail to Noteholders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBER.
The Issuers in issuing the Notes may use a "CUSIP" number, and
if so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Noteholders; provided that no representation shall
be deemed to be made by the Trustee as to the correctness or accuracy of the
CUSIP number printed in the notice or on the Notes, and that reliance may be
placed only on the other identification numbers printed on the Notes. The
Issuers shall promptly notify the Trustee of any change in the CUSIP number.
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SECTION 2.14. DEPOSIT OF MONEYS.
Prior to 10:00 a.m. New York City time on each Interest
Payment Date and Maturity Date, the Issuers shall deposit with the Paying Agent
Additional Securities or money in immediately available funds sufficient to make
interest or principal payments, if any, due on such Interest Payment Date or
Maturity Date, as the case may be.
SECTION 2.15. RESTRICTIVE LEGENDS.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the "Private Placement
Legend") unless otherwise agreed by the Issuers and the Noteholder thereof:
THIS NOTE OR ITS PREDECESSORS HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, UNITED STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON, AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT
IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING
INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP OR THE RESORT AT SUMMERLIN, INC. (THE "ISSUERS") OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED QIB
IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN
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INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE, BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUERS), (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (G) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUERS) AND IN EACH CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES
LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
Each Global Note shall also bear the following legend on the
face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY OR A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS
IN
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WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
SECTION 2.16. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE.
(a) The Global Note initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Section 2.15.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Note, and the Depository may be treated by the Issuers, the
Trustee and any agent of the Issuers or the Trustee as the absolute owner of the
Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Issuers, the Trustee or any agent of the Issuers or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers
in whole, but not in part, to the Depository, its successors or their respective
nominees. Interest of beneficial owners in the Global Note may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition, Physical Notes shall
be transferred to all beneficial owners in exchange
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for their beneficial interests in the Global Note if (i) the Depository notifies
the Issuers that it is unwilling or unable to continue as Depository for the
Global Note and a successor depository is not appointed by the Issuers within 90
days of such notice or (ii) an Event of Default has occurred and is continuing
and the Registrar has received a written request from the Depository or the
Trustee to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b) above, the Registrar shall (if one or more Physical Notes are to
be issued) reflect on its books and records the date and a decrease in the
principal amount of the beneficial interest in the Global Note to be
transferred, and the Issuers shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note
to beneficial owners pursuant to paragraph (b), the Global Note shall be deemed
to be surrendered to the Trustee for cancellation, and the Issuers shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Note, an equal aggregate principal amount of Physical Notes of
authorized denominations.
(e) Any Physical Note constituting a Restricted Security
delivered in exchange for an interest in the Global Note pursuant to paragraph
(b) or (c) above shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.17, bear the Private Placement Legend.
(f) The Holder of the Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Noteholder is
entitled to take under this Indenture or the Notes.
SECTION 2.17. SPECIAL TRANSFER PROVISIONS.
(a) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after
December 15, 1999 or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding
Non-U.S.Persons), the proposed transferee
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has delivered to the Registrar a certificate substantially in the form
of Exhibit C hereto or (2) in the case of a transfer to a Non-U.S.
Person, the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar
of (x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the
Registrar's procedures, whereupon (a) the Registrar shall reflect on
its books and records the date and a decrease in the principal amount
of the Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and (b) the
Issuers shall execute and the Trustee shall authenticate and deliver
one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Note constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on the form of Note stating, or has otherwise advised the Issuers
and the Registrar in writing, that the sale has been effected in
compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Issuers and the Registrar in writing, that it
is purchasing the Note for its own account or an account with respect
to which it exercises sole investment discretion and that any such
account is a QIB within the meaning of Rule 144A, and it is aware that
the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Issuers as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in the Global Note, upon receipt by
the Registrar of instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the Global Note in an amount equal
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to the principal amount of the Physical Notes to be transferred, and
the Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of the
transfer, exchange or replacement of Notes not bearing the Private Placement
Legend, the Registrar shall deliver Notes that do not bear the Private Placement
Legend. Upon the registration of the transfer, exchange or replacement of Notes
bearing the Private Placement Legend, the Registrar shall deliver only Notes
that bear the Private Placement Legend unless (i) the circumstance contemplated
by paragraph (a)(i)(x) of this Section 2.17 exists or (ii) there is delivered to
the Registrar an Opinion of Counsel reasonably satisfactory to the Issuers and
the Trustee to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain for at least two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. the Issuers shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
SECTION 2.18. PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of
transfer and subject to Section 2.12, the Issuers, the Trustee, any Paying
Agent, any Registrar and any co-registrar and any Agent of any of the foregoing
shall deem and treat the Person in whose name any Note shall be registered upon
the register of Notes kept by the Registrar as the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
the ownership or other writing thereon made by anyone other than the Issuers,
any Registrar or any co-registrar) for the purpose of receiving payments of
principal of or interest on such Note and for all other purposes; and none of
the Issuers, the Trustee, any Paying Agent, any Registrar or any co-registrar or
any agent of any of the foregoing shall be affected by any notice to the
contrary.
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SECTION 2.19. ALLOCATION OF PURCHASE PRICE.
Based on their estimate of the relative fair market values of
the Notes and the Warrants (as defined in the Offering Memorandum), the Issuers
and the Trustee agree to treat for U.S. federal income tax purposes $941.30 of
each $1,000 of principal amount of Notes as allocable to the Notes (which amount
the Issuers will treat as the issue price of such Notes for U.S. federal income
tax purposes) and $58.70 as allocable to the Warrants.
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ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
(a) If the Issuers elect to redeem Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 60 days (unless a shorter period is acceptable to the Trustee)
prior to a redemption date, an Officers' Certificate setting forth (i) the
Section of this Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Notes to be redeemed, (iv) the
redemption price and accrued and unpaid interest and (v) whether it requests the
Trustee to give notice of such redemption.
(b) If the Issuers are required to make an offer to purchase
Notes pursuant to the provisions of Sections 4.10 or 4.14 hereof, it shall
furnish to the Trustee at least 30 days (or such lesser period as the Trustee
may agree) but not more than 60 days before mailing any offer to purchase
pursuant to such Sections, an Officers' Certificate setting forth (i) the
Section of this Indenture pursuant to which the offer to purchase shall occur,
(ii) the proposed purchase date, (iii) the maximum principal amount of Notes to
be purchased, (iv) the purchase price and accrued and unpaid interest, (v)
whether it requests the Trustee to mail any offer to purchase and (vi) further
setting forth a statement to the effect that (a) RAS or one of its Subsidiaries
has effected an Asset Disposition and the conditions set forth in Section 4.10
have been satisfied or (b) a Change of Control has occurred and the conditions
set forth in Section 4.14 have been satisfied, as applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
(a) If less than all of the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed among the Noteholders on a pro
rata basis, by lot or in accordance with any other method the Trustee considers
fair and appropriate (and in such manner as complies with applicable legal and
stock exchange requirements, if any); provided, however, that if a partial
redemption is made with the proceeds of a Public Equity Offering, selection of
the Notes or portion thereof for redemption shall be made by only the Trustee on
a pro rata basis to the extent practicable, unless such method is otherwise
prohibited. In the event of partial redemption by lot, the particular Notes to
be redeemed shall be selected, unless otherwise provided herein, not less than
45 nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for redemption.
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(b) The Trustee shall promptly notify the Issuers in writing
of the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes may be
redeemed in part in multiples of $1,000 principal amount only. Except as
provided in the preceding sentence, provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
(a) Subject to the provisions of Section 3.09 hereof, at least
30 days but not more than 60 days before a redemption date, the Issuers shall
mail or cause to be mailed a notice of redemption by first class mail, postage
prepaid to each Holder whose Notes are to be redeemed at the last address for
such Holder then shown on the registry books.
The notice shall identify the Notes to be redeemed and shall
state:
(i) the redemption date;
(ii) the redemption price;
(iii) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued;
(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(vi) that, unless the Issuers default in making such
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date;
(vii) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(viii) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
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(b) At the Issuers' request, the Trustee shall give the notice
of redemption in the Issuers' name and at the Issuers' expense; provided,
however, that the Issuers shall have delivered to the Trustee at least 45 days
(unless a shorter period is acceptable to the Trustee) prior to the proposed
redemption date an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become due and payable on the
redemption date at the redemption price plus accrued and unpaid interest, if
any.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
(a) Prior to 10:00 a.m., New York City time, on the redemption
date, the Issuers shall deposit with the Paying Agent (other than RAS or any of
its Subsidiaries) money sufficient to pay the redemption price of and accrued
interest on all Notes to be redeemed on that date. The Paying Agent shall
promptly return to the Issuers any money deposited with the Paying Agent by the
Issuers in excess of the amounts necessary to pay the redemption price of, and
accrued interest on, all Notes to be redeemed.
(b) If the Issuers comply with the provisions of the preceding
paragraph, on and after the redemption date, interest ceases to accrue on the
Notes or the portions of Notes called for redemption whether or not such Notes
are presented for payment, and the only remaining right of the Holders of such
Notes shall be to receive payment of the redemption price upon surrender to
Paying Agent if the Notes are redeemed. If a Note is redeemed on or after a
Record Date but on or prior to the related Interest Payment Date, then any
accrued and unpaid interest shall be paid to the Person in whose name such Note
was registered at the close of business on such record date. If any Note called
for redemption shall not be so paid upon surrender for redemption because of the
failure of the Issuers to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid and, to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after any
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redemption date, interest will cease to accrue on the Notes or part thereof
called for redemption as long as the Issuers have deposited with the Paying
Agent funds in satisfaction of the redemption price pursuant to this Indenture.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as provided in Section 3.07(b), the Issuers may
redeem all or any portion of the Notes at any time on or after December 15,
2002, at a redemption price equal to a percentage of the principal amount
thereof, as set forth in the immediately succeeding sentence, plus accrued and
unpaid interest to the redemption date. The redemption price as a percentage of
the principal amount shall be as follows, if the Notes are redeemed during the
12 month period commencing on December 15 of the years set forth below, plus in
each case, accrued and unpaid interest to the date of redemption (subject to the
right of holders of record on the relevant record date to receive interest on
the relevant Interest Payment Date):
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
2002 106.50%
2003 104.33%
2004 102.17%
2005 and thereafter 100.00%
</TABLE>
(b) At any time, or from time to time, prior to December 15,
2000, the Issuers may, at their option, redeem up to 35% of the aggregate
principal amount of the Notes with the net cash proceeds of one or more Public
Equity Offerings by RAS so long as there is a Public Market at the time of such
redemption (which fact shall be certified to the Trustee in an Officer's
Certificate delivered to the Trustee pursuant to Section 3.01(a)) at a
redemption price equal to 113% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the date of redemption; provided, however,
that after any such redemption at least $65 million of the original principal
amount of the Notes remains outstanding. In order to effect the foregoing
redemption with the proceeds of any Public Equity Offering, the Issuers shall
make such redemption not more than 90 days after the consummation of any such
Public Equity Offering.
SECTION 3.08. MANDATORY PURCHASE OR REDEMPTION.
Except as set forth in Sections 3.10, 4.10 and 4.14, the
Issuers are not required to make mandatory purchases, redemption or sinking fund
payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
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(a) In the event that, pursuant to Section 4.10 hereof, the
Issuers shall commence an offer to all Noteholders to purchase Notes (an "Asset
Disposition Offer"), it shall follow the procedures specified below:
(i) The Asset Disposition Offer shall remain open for a period
of 30 Business Days following its commencement and no longer, except to
the extent that a longer period is required by applicable law (the
"Offer Period"). No later than five Business Days after the termination
of the Offer Period (the "Purchase Date"), the Issuers shall purchase
the principal amount of Notes required to be purchased pursuant to
Section 4.10 hereof (the "Offer Amount") or, if less than the Offer
Amount has been tendered, all Notes tendered in response to the Asset
Disposition Offer.
(ii) If the Purchase Date is on or after a Record Date and on
or before the related Interest Payment Date, any accrued interest shall
be paid to the Person in whose name a Note is registered at the close
of business on such Record Date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Disposition
Offer.
(iii) Upon the commencement of any Asset Disposition Offer,
the Issuers shall send or cause to be sent in accordance with Section
3.03, a notice to each Noteholder. The notice shall contain all
instructions and materials necessary to enable such Holders to tender
Notes pursuant to the Asset Disposition Offer. The notice, which shall
govern the terms of the Asset Disposition Offer, shall state:
(1) that the Asset Disposition Offer is being made
pursuant to this Section 3.09 and Section 4.10 hereof and the
length of time the Asset Disposition Offer shall remain open;
(2) the Offer Amount, the purchase price and the
Purchase Date;
(3) that any Note not tendered or accepted for
payment shall continue to accrue interest;
(4) that any Note accepted for payment pursuant to
the Asset Disposition Offer shall cease to accrue interest
after the Purchase Date;
(5) that Holders electing to have a Note purchased
pursuant to any Asset Disposition Offer shall be required to
surrender the Note, with the form entitled "Option of
Noteholder to Elect Purchase" on the reverse of the Note
completed, to the Issuers, a depositary, if appointed by the
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Issuers, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(6) that Holders shall be entitled to withdraw their
election if the Issuers, depositary or Paying Agent, as the
case may be, receive, not later than the expiration of the
Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have
the Note purchased;
(7) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Issuers
shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the
Issuers so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(8) that Holders whose Notes were purchased only in
part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered.
(iv) On or before the Purchase Date, the Issuers shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Disposition Offer or, if less than the Offer
Amount has been tendered, all Notes or portions thereof tendered, and
deliver to the Trustee an Officers' Certificate stating that such Notes
or portions thereof were accepted for payment by the Issuers in
accordance with the terms of this Section 3.09. The Paying Agent shall
promptly (but in any case not later than five Business Days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal
to the purchase price of the Note tendered by such Holder and accepted
by the Issuers for purchase, and the Issuers shall promptly issue a new
Note, and at the written request of the Issuers the Trustee shall
authenticate and mail or deliver such new Note, to such Holder equal in
principal amount to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the
Issuers to the Holder thereof. The Issuers shall publicly announce the
results of the Asset Disposition Offer on the Purchase Date.
SECTION 3.10. REGULATORY REDEMPTION.
Notwithstanding any other provision hereof, if any Gaming
Authority requires that a Holder or beneficial owner of the Notes must be
licensed, qualified or found suitable under any applicable gaming laws in order
to maintain any gaming license or fran-
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chise of RAS under any applicable gaming laws, and the Holder or beneficial
owner fails to apply for a license, qualification or finding of suitability
within 30 days after being requested to do so by the Gaming Authority (or such
other period that may be required by such Gaming Authority) or if such Holder or
beneficial owner is not so licensed, qualified or found suitable, the Issuers
shall have the right at their option, (i) to require such Holder or beneficial
owner to dispose of such Holder's or beneficial owner's Notes within 30 days of
receipt of such finding by the applicable Gaming Authority (or such other date
as may be required by the applicable Gaming Authority) or (ii) to call for
redemption of the Notes of such Holder or beneficial owner at a redemption price
equal to the lesser of the principal amount thereof or the fair market value
thereof or the price at which such Holder or beneficial owner acquired the
Notes, together with, in either case, accrued and unpaid interest, to the
earlier of the date of redemption or the date of the finding of unsuitability by
such Gaming Authority, which may be less than 30 days following the notice of
redemption if so ordered by such Gaming Authority. In connection with any such
redemption, and except as may be required by a Gaming Authority, the Issuers
shall comply with the procedures contained in the Notes for redemptions of the
Notes. The Issuers are not required to pay or reimburse any Holder or beneficial
owner of the Notes who is required to apply for such license, qualification or
finding of suitability for the costs of such licensure and investigation for
such license, qualification or finding of suitability. Any of such expenses will
be the sole obligation of such Holder or beneficial owner of the Notes.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
(a) The Issuers shall pay the principal of, premium, if any,
and interest on the Notes on the dates and in the manner provided in the Notes
and in this Indenture. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Issuers
or a Subsidiary Guarantor, holds as of 10:00 a.m. New York City time on the due
date money deposited by the Issuers in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. Such Paying Agent shall return to the Issuers, no later than
five Business Days following the date of payment, any money (including accrued
interest paid by the Issuers) that exceeds such amount of principal, premium, if
any, and interest paid on the Notes.
(b) The Issuers shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 2% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful, and
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it shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
(c) Through and including June 15, 1999, on each Interest
Payment Date, the Issuers may, at their option and in their sole discretion, in
lieu of the payment in whole or in part of cash on the Notes, pay interest on
the Notes through the issuance of Additional Notes in an aggregate principal
amount equal to the amount of interest that would be payable with respect to the
Notes, if such interest were paid in cash. After June 15, 1999, the Issuers
shall pay interest on the Securities in cash. The Issuers shall notify the
Trustee in writing of its election to pay interest through the issuance of
Additional Notes not less than 10 nor more than 45 days prior to the record date
for an Interest Payment Date on which Additional Notes will be issued. On each
such Interest Payment Date, the Trustee shall authenticate Additional Notes for
original issuance to each Holder on the relevant record date in the aggregate
principal amount required to pay such interest. Each Additional Note is an
additional obligation of the Issuers and shall be governed by, and entitled to
the benefits of, this Indenture and shall be subject to the terms of this
Indenture and shall be pari passu with and subject to the same terms (including
the rate of interest from time to time payable thereon) as the Notes (except, as
the case may be, with respect to the issuance date and aggregate principal
amount).
From and after June 15, 1999, interest on the Notes will be
payable only in cash. To the extent any cash interest is not paid then, the
amount not so paid will bear interest at the interest rate then applicable to
the Notes plus 2.00%. Interest will be computed on the basis of a 360-day year
comprised of twelve 30 day months.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
(a) The Issuers shall maintain in the Borough of Manhattan, in
the City of New York, an office or agency (which may be an office of the Trustee
or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuers in respect of the Notes and this Indenture may be
served. The Issuers shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
(b) The Issuers may also from time to time designate one or
more other offices or agencies where the Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Issuers of their obligation to
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maintain an office or agency in the Borough of Manhattan, in the City of New
York for such purposes. The Issuers shall give prior written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
(c) The Issuers hereby designate the Corporate Trust Office of
the Trustee as one such office or agency of the Issuers in accordance with
Section 2.03.
SECTION 4.03. SEC REPORTS.
(a) The Issuers shall file with the Trustee and provide to the
Holders of the Notes, within 15 days after they file them with the Commission,
copies of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may by
rules and regulations prescribe) which the Issuers file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. In the event that the
Issuers are not required to file such reports with the Commission pursuant to
the Exchange Act, the Issuers will nevertheless deliver such Exchange Act
information to the Holders of the Notes within 15 days after it would have been
required to file it with the Commission.
SECTION 4.04. COMPLIANCE CERTIFICATES.
(a) The Issuers and each Subsidiary Guarantor shall deliver to
the Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Issuers and their
Subsidiaries or such Subsidiary Guarantor, as the case may be, during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether each has kept, observed, performed
and fulfilled its Obligations under this Indenture, and further stating, as to
each such Officer signing such certificate, that to the best of his or her
knowledge each has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred during such period,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action each is taking or proposes to take with respect
thereto).
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03 above shall be
accompanied by a written statement of (x) the Issuers' independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Issuers have violated any provisions of Article 4, 5 or 6 of this Indenture
insofar as they
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relate to accounting matters or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation and (y) if any Restricted
Subsidiary's or Subsidiary Guarantor's financial statements are not prepared on
a consolidated basis with the Issuers', such Restricted Subsidiary's or
Subsidiary Guarantor's independent public accountants (who shall be a firm of
established national reputation) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
which would lead them to believe that any of the Restricted Subsidiaries or
Subsidiary Guarantors is in Default under this Indenture or, if any such Default
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) Each of the Issuers and each of the Subsidiary Guarantors
shall, so long as any of the Notes are outstanding, deliver to the Trustee,
forthwith upon any Officer becoming aware of (i) any Default or Event of Default
or (ii) any event of default under any material other mortgage, indenture or
instrument to which an Issuer is a party, an Officers' Certificate specifying
such Default, Event of Default or event of default and what action such Issuer
or such Subsidiary Guarantor, as the case may be, is taking or proposes to take
with respect thereto.
(d) The Issuers and each of the Subsidiary Guarantors shall
also comply with TIA Section 314(a)(4).
SECTION 4.05. TAXES.
Each of the Issuers and each of the Subsidiary Guarantors
will, and will cause their Restricted Subsidiaries to, pay and discharge when
due and payable all taxes, levies, imposts, duties or other governmental charges
("Taxes") imposed on its income or profits or on any of its properties, except
such Taxes which are being contested in good faith in appropriate proceedings
and for which adequate reserves have been established in accordance with GAAP.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Issuers and each of the Subsidiary Guarantors
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture (including, but not limited to, the payment of the principal of
or interest on the Notes); and the Issuers and each Subsidiary Guarantor (to the
extent that they may lawfully do so) hereby expressly waive all benefit or
advantage of any
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such law, and covenant that they shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
has been enacted.
SECTION 4.07. LIMITATION ON RESTRICTED PAYMENTS.
(a) RAS shall not, and shall not permit any of its Restricted
Subsidiaries, directly or indirectly, to (i) declare or pay any dividend or make
any distribution on or in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving RAS or any of its
Restricted Subsidiaries) except (A) dividends or distributions payable in its
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock and (B) dividends or distributions payable
to RAS or a Restricted Subsidiary of RAS which holds any equity interest in the
paying Restricted Subsidiary (and if the Restricted Subsidiary paying the
dividend or making the distribution is not a Wholly-Owned Subsidiary, to its
other holders of Capital Stock on a pro rata basis), (ii) purchase, redeem,
retire or otherwise acquire for value any Capital Stock of RAS held by Persons
other than a Wholly-Owned Subsidiary of RAS or any Capital Stock of a Restricted
Subsidiary of RAS held by any Affiliate of RAS, other than a Wholly-Owned
Subsidiary (in either case, other than in exchange for its Capital Stock (other
than Disqualified Stock)), (iii) purchase, repurchase, redeem, defease or
otherwise acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated Obligations or
(iv) make any Investment (other than a Permitted Investment) in any Person (any
such dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment as described in preceding clauses (i)
through (iv) being referred to as a "Restricted Payment"); if at the time the
Partnership or such Restricted Subsidiary makes such Restricted Payment: (1) a
Default shall have occurred and be continuing (or would result therefrom); or
(2) RAS is not able to incur an additional $1.00 of Indebtedness pursuant to
paragraph (a) under Section 4.09; or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments declared or made subsequent to the
Issue Date would exceed the sum of (A) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period) from the first day
of the fiscal quarter beginning on or after the Issue Date to the end of the
most recent fiscal quarter ending prior to the date of such Restricted Payment
as to which financial results are available (but in no event ending more than
135 days prior to the date of such Restricted Payment) (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B) the
aggregate net proceeds received by RAS from the issue or sale of its Capital
Stock (other than Disqualified Stock) or other capital contributions subsequent
to the Issue Date (other than net proceeds received from an issuance or sale of
such Capital Stock to (x) a Subsidiary of RAS, (y) an employee stock ownership
plan or similar trust or (z) management employees of RAS or any Subsidiary of
RAS (other than sales of Capital Stock (other than Disqualified Stock) to
management employees of RAS pursuant to bona fide employee stock option plans of
RAS);
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provided, however, that the value of any non-cash net proceeds shall be as
determined by the General Partner of RAS in good faith, except that in the event
the value of any non-cash net proceeds shall be $2 million or more, the value
shall be as determined in writing by an independent investment banking firm of
nationally recognized standing); (C) the amount by which Indebtedness of RAS is
reduced on RAS's balance sheet upon the conversion or exchange (other than by a
Restricted Subsidiary of RAS) subsequent to the Issue Date of any Indebtedness
of RAS convertible or exchangeable for Capital Stock of RAS (less the amount of
any cash, or other property, distributed by RAS upon such conversion or
exchange); and (D) the amount equal to the net reduction in Investments (other
than Permitted Investments) made after the Issue Date by RAS or any of its
Restricted Subsidiaries in any Person resulting from (i) repurchases or
redemptions of such Investments by such Person, proceeds realized upon the sale
of such Investment to an unaffiliated purchaser, repayments of loans or advances
or other transfers of assets by such Person to RAS or any Restricted Subsidiary
of RAS or (ii) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of "Investment")
not to exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously included in the calculation of the amount of Restricted
Payments; provided, however; that no amount shall be included under this clause
(D) to the extent it is already included in Consolidated Net Income.
(b) The provisions of paragraph (a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of RAS
made by exchange for, or out of the proceeds of the substantially concurrent
sale of, Capital Stock of RAS (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary, an employee stock ownership plan
or similar trust or management employees of RAS or any Subsidiary of RAS);
provided, however, that (A) such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds
from such sale shall be excluded from clause (3) (B) of paragraph (a); (ii) any
purchase or redemption of Subordinated Obligations of RAS made by exchange for,
or out of the proceeds of the substantially concurrent sale of, Subordinated
Obligations of RAS in compliance with the Section 4.09; provided further, that
such purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments; (iii) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under Section 4.10;
provided further, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments; (iv) distributions paid within
60 days after the date of declaration if at such date of declaration such
distributions would have complied with this provision; provided, however, that
such distributions shall be included in the calculation of the amount of
Restricted Payments; (v) transfer of the Right of First Offer to an Affiliate of
SCGC in accordance with Section 4.11; (vi) distributions to the General Partner
or limited partners of RAS as Tax Allowance Amounts which are payable in cash
and made as distributions to all partners; (vii) any redemption or purchase by
the Issuers or any Restricted Subsidiary of Capital Stock or Subordinated
Obligations of either
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of the Issuers required by a Gaming Authority in order to preserve a material
Gaming License; provided, that so long as such efforts do not jeopardize any
material Gaming License, the Issuers or such Restricted Subsidiary shall have
diligently tried to find a third-party purchaser for such Capital Stock or
Subordinated Obligations and no third-party purchaser acceptable to the
applicable Gaming Authority was willing to purchase such Capital Stock or
Subordinated Obligations within a time period acceptable to such Gaming
Authority and (viii) the payment of the subordinated development fee due to SCGC
in an amount not to exceed $3.0 million; provided, however, that in the case of
clauses (i), (ii), (iii), (v) and (viii), no Default or Event of Default shall
have occurred or be continuing at the time of such payment or as a result
thereof.
(c) For purposes of determining compliance with the foregoing
covenant, Restricted Payments may be made with cash or non-cash assets, provided
that any Restricted Payment made other than in cash shall be valued at the fair
market value (determined, subject to the additional requirements of the
immediately succeeding proviso, in good faith by the General Partner) of the
assets so utilized in making such Restricted Payment, provided, however, that
(i) in the case of any Restricted Payment made with Capital Stock or
Indebtedness, such Restricted Payment shall be deemed to be made in an amount
equal to the greater of the fair market value thereof and the liquidation
preference (if any) or principal amount of the Capital Stock or Indebtedness, as
the case may be, so utilized, and (ii) in the case of any Restricted Payment in
an aggregate amount in excess of $2.0 million, a written opinion as to the
fairness of the valuation thereof (as determined by RAS) for purposes of
determining compliance with this Section 4.07 shall be issued by an independent
investment banking firm of national standing.
(d) Not later than the date of making any Restricted Payment,
RAS shall deliver to the Trustee an Officer's Certificate stating that such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon RAS's latest available quarterly financial
statements, and a copy of any required investment banker's opinion.
SECTION 4.08. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES.
RAS shall not, and shall not permit any of its Restricted
Subsidiaries to, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any such Restricted Subsidiary to
(i) pay dividends or make any other distributions on its Capital Stock or pay
any Indebtedness or other obligation owed to RAS, (ii) make any loans or
advances to RAS or (iii) transfer any of its property or assets to RAS, except:
(a) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Issue Date (including the Credit Agreement); (b) any
encumbrance or restriction with respect to such a Restricted Subsidiary pursuant
to an agreement relating to any Indebt-
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edness issued by such Restricted Subsidiary on or prior to the date on which
such Restricted Subsidiary was acquired by RAS and outstanding on such date
(other than Indebtedness incurred in anticipation of, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary of RAS or was acquired by RAS); (c) any
encumbrance or restriction with respect to such a Restricted Subsidiary pursuant
to an agreement evidencing Indebtedness incurred without violation of this
Indenture or effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in clauses (a) or (b) or this clause (c) or contained in
any amendment to an agreement referred to in clauses (a) or (b) or this clause
(c); provided, however, that the encumbrances and restrictions with respect to
Restricted Subsidiaries contained in any of such agreement, refinancing
agreement or amendment, taken as a whole, are no less favorable to the Holders
of the Notes in any material respect, as determined in good faith by the General
Partner, than encumbrances and restrictions with respect to Restricted
Subsidiaries contained in agreements in effect at, or entered into on, the Issue
Date; (d) in the case of clause (iii), any encumbrance or restriction (A) that
restricts in a customary manner the subletting, assignment or transfer of any
property or asset that is a lease, license, conveyance or contract or similar
property or asset, (B) by virtue of any transfer of, agreement to transfer,
option or right with respect to, or Lien on, any property or assets of RAS or
any Restricted Subsidiary not otherwise prohibited by this Indenture, (C) that
is included in a licensing agreement to the extent such restrictions limit the
transfer of the property subject to such licensing agreement or (D) arising or
agreed to in the ordinary course of business and that does not, individually or
in the aggregate, detract from the value of property or assets of RAS or any of
its Subsidiaries in any manner material to RAS or any such Restricted
Subsidiary; (e) in the case of clause (iii) above, restrictions contained in
security agreements, mortgages or similar documents securing Indebtedness of a
Restricted Subsidiary to the extent such restrictions restrict the transfer of
the property subject to such security agreements; (f) in the case of clause
(iii) above, any instrument governing or evidencing Indebtedness of a Person
acquired by RAS or any Restricted Subsidiary of RAS at the time of such
acquisition, which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person so acquired;
provided, however, that such Indebtedness is not incurred in connection with or
in contemplation of such acquisition; (g) any restriction with respect to such a
Restricted Subsidiary imposed pursuant to an agreement entered into for the sale
or disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition; (h)
encumbrances or restrictions imposed by any Gaming Authority; and (i)
encumbrances or restrictions arising or existing by reason of applicable law.
SECTION 4.09. LIMITATION ON INDEBTEDNESS.
(a) RAS shall not, and shall not permit any of its Restricted
Subsidiaries to, incur any Indebtedness; provided, however, that: (i) RAS and
its Restricted Subsidiaries
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may incur Indebtedness ranking pari passu with or which is expressly subordinate
and junior in right of payment to, the Notes, if no Default or Event of Default
shall have occurred and be continuing at the time of such incurrence or would
occur as a consequence of such incurrence and the Consolidated Coverage Ratio
would be equal to at least 2.00 to 1.00; and (ii) RAS and its Restricted
Subsidiaries may incur Senior Indebtedness if no Default or Event of Default
shall have occurred and be continuing at the time of such incurrence or would
occur as a consequence of such incurrence and the Consolidated Coverage Ratio
would be at least equal to 2.50 to 1.00.
(b) Notwithstanding the foregoing paragraph (a), RAS and its
Restricted Subsidiaries may incur the following Indebtedness:
(i) the Indebtedness under the Credit Agreement, in an
aggregate principal amount outstanding at any time not to exceed $100.0
million (less the amount of any repayments of principal of the Mortgage
Notes and any permanent reductions in the amount of available
borrowings under the Revolving Credit Facility as a result of
repayments made thereunder);
(ii) the incurrence by RAS or any of its Restricted
Subsidiaries of Indebtedness (which may include Capital Lease
Obligations, Attributable Indebtedness incurred in connection with a
Sale/Leaseback transaction or purchase money obligations), incurred for
the purpose of financing all or any part of the purchase or lease of
personal property or equipment used in the business of RAS or such
Restricted Subsidiary, in an aggregate principal amount pursuant to
this clause (ii) (including any refinancings thereof pursuant to clause
(iv) below) not to exceed $15.0 million (plus accrued interest thereon
and the amount of reasonable expenses incurred and premium paid in
connection with any refinancing pursuant to clause (iv) below)
outstanding at any time;
(iii) Indebtedness of RAS owing to and held by any
Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by RAS or any Wholly-Owned Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital Stock
or any other event which results in any such Wholly-Owned Subsidiary
ceasing to be a Wholly-Owned Subsidiary or any subsequent transfer of
any such Indebtedness (except to RAS or any Wholly-Owned Subsidiary)
shall be deemed, in each case, to constitute the incurrence of such
Indebtedness by the issuer thereof;
(iv) Indebtedness represented by (a) the Notes, (b) any
Subsidiary Guarantee, and (c) any Refinancing Indebtedness incurred in
respect of any Indebtedness described in this clause (iv) or incurred
pursuant to paragraph (a) above;
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(v) (A) Indebtedness of a Restricted Subsidiary outstanding on
the date on which such Restricted Subsidiary was acquired by RAS (other
than Indebtedness incurred in anticipation of, or to provide all or any
portion of the funds or credit support utilized to consummate the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Subsidiary or was otherwise acquired by
RAS); provided, however, that at the time such Restricted Subsidiary is
acquired by RAS, RAS would have been able to incur $1.00 of additional
Indebtedness pursuant to paragraph (a) above after giving effect to the
incurrence of such Indebtedness pursuant to this clause (v) and (B)
Refinancing Indebtedness incurred by a Restricted Subsidiary in respect
of Indebtedness incurred by such Restricted Subsidiary pursuant to this
clause (v);
(vi) Indebtedness (A) in respect of performance bonds,
bankers' acceptances and surety or appeal bonds provided by RAS or any
of its Restricted Subsidiaries to their customers in the ordinary
course of their business, (B) in respect of performance bonds or
similar obligations of RAS or any of its Restricted Subsidiaries for or
in connection with pledges, deposits or payments made or given in the
ordinary course of business in connection with or to secure statutory,
regulatory or similar obligations, including obligations under health,
safety or environmental obligations and (C) arising from Guarantees to
suppliers, lessors, licensees, contractors, franchises or customers of
obligations (other than Indebtedness) incurred in the ordinary course
of business;
(vii) Indebtedness under Currency Agreements and Interest Rate
Agreements; provided, however, that in the case of Currency Agreements
and Interest Rate Agreements, such Currency Agreements and Interest
Rate Agreements are entered into for bona fide hedging purposes of RAS
or its Restricted Subsidiaries (as determined in good faith by the
General Partner of RAS) and correspond in terms of notional amount,
duration, currencies and interest rates as applicable, to Indebtedness
of RAS or its Restricted Subsidiaries incurred without violation of
this Indenture or to business transactions of RAS or its Restricted
Subsidiaries on customary terms entered into in the ordinary course of
business;
(viii) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations,
or from Guarantees or letters of credits, surety bonds or performance
bonds securing any obligations of RAS or any of its Restricted
Subsidiaries pursuant to such agreements, in each case incurred in
connection with the disposition of any business assets or Restricted
Subsidiary of RAS (other than Guarantees of Indebtedness or other
Obligations incurred by any Person acquiring all or any portion of such
business assets or Restricted Subsidiary of RAS for the purpose of
financing such acquisition) in a principal amount not to exceed the
gross proceeds actually received by RAS or any of its Restricted
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Subsidiaries in connection with such disposition; provided, however,
that the principal amount of any Indebtedness incurred pursuant to this
clause (viii) when taken together with all Indebtedness incurred
pursuant to this clause (viii) and then outstanding, shall not exceed
$2 million;
(ix) Indebtedness consisting of (A) Guarantees by RAS (so long
as RAS could have incurred such Indebtedness directly without violation
of this Indenture) and (B) Guarantees by a Restricted Subsidiary of
Indebtedness incurred by RAS without violation of this Indenture (so
long as such Restricted Subsidiary could have incurred such
Indebtedness directly without violation of this Indenture);
(x) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument issued by
RAS or its Subsidiaries drawn against insufficient funds in the
ordinary course of business in an amount not to exceed $250,000 at any
time, provided that such Indebtedness is extinguished within two
Business Days of its incurrence; and
(xi) Indebtedness (other than Indebtedness described in
clauses (i) --(x)) in a principal amount which, when taken together
with the principal amount of all other Indebtedness incurred pursuant
to this clause (xi) and then outstanding, will not exceed $5 million
(it being understood that any Indebtedness incurred under this clause
(xi) shall cease to be deemed incurred or outstanding for purposes of
this clause (xi) (but shall be deemed to be incurred for purposes of
paragraph (a)) from and after the first date on which RAS or its
Restricted Subsidiaries could have incurred such Indebtedness under the
foregoing paragraph (a) without reliance upon this clause (xi)).
(c) Neither RAS nor any Restricted Subsidiary shall incur any
Indebtedness under paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to refinance any Subordinated Obligations of RAS unless
such Indebtedness shall be subordinated to the Notes to at least the same extent
as such Subordinated Obligations. No Restricted Subsidiary shall incur any
Indebtedness under paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to refinance any Guarantor Subordinated Obligation of
such Subsidiary Guarantor unless such Indebtedness shall be subordinated to the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee to at
least the same extent as such Guarantor Subordinated Obligation.
(d) RAS will not permit any Unrestricted Subsidiary to incur
any Indebtedness other than Non-Recourse Debt.
SECTION 4.10. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
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(a) RAS shall not, and shall not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless (i) RAS or such Restricted
Subsidiary receives consideration at the time of such Asset Disposition at least
equal to the fair market value, as determined in good faith by the General
Partner (including as to the value of all non-cash consideration), of the shares
and assets subject to such Asset Disposition, (ii) at least 80% of the
consideration thereof received by RAS or such Restricted Subsidiary is in the
form of cash or Cash Equivalents and (iii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by RAS (or such Restricted
Subsidiary, as the case may be) (A) first, to the extent RAS or any Restricted
Subsidiary elects (or is required by the terms of any Senior Indebtedness), (x)
to prepay, repay or purchase Senior Indebtedness or (y) to the investment in or
acquisition of Additional Assets within 365 days from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (B) second,
within 365 days from the receipt of such Net Available Cash, to the extent of
the balance of such Net Available Cash after application in accordance with
clause (A), to make an offer to purchase Notes at 101% of their principal amount
plus accrued and unpaid interest, if any, thereon; (C) third, within 90 days
after the later of the application of Net Available Cash in accordance with
clauses (A) and (B) and the date that is one year from the receipt of such Net
Available Cash, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and (B), to prepay, repay or
repurchase Indebtedness (other than Preferred Stock) of a Wholly-Owned
Subsidiary (in each case other than Indebtedness owed to RAS); and (D) fourth,
to the extent of the balance of such Net Available Cash after application in
accordance with clauses (A), (B) and (C), to (w) the investment in or
acquisition of Additional Assets, (x) the making of Temporary Cash Investments,
(y) the prepayment, repayment or purchase of Indebtedness of RAS (other than
Indebtedness owing to any Subsidiary of RAS) or Indebtedness of any Subsidiary
(other than Indebtedness owed to RAS or any Subsidiaries of RAS) or (z) any
other purpose otherwise permitted under this Indenture, in each case within the
later of 45 days after the application of Net Available Cash in accordance with
clauses (A), (B) and (C) or the date that is one year from the receipt of such
Net Available Cash; provided, however, that, in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A), (B), (C) or (D)
above, RAS or such Restricted Subsidiary shall retire such Indebtedness and
shall cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions, RAS and its Restricted Subsidiaries
shall not be required to apply any Net Available Cash in accordance herewith
except to the extent that the aggregate Net Available Cash from all Asset
Dispositions which are not applied in accordance with this Section 4.10 at any
time exceed $5 million. RAS shall not be required to make an offer for Notes
pursuant to Section 3.09 if the Net Available Cash available therefor (after
application of the proceeds as provided in clause (A)) is less than $5 million
for any particular Asset Disposition (which lesser amounts shall be carried
forward for purposes of determining whether an offer is required with respect to
the Net Available Cash from any subsequent Asset Disposition).
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For the purposes of this Section 4.10, the following will be
deemed to be cash: (x) the assumption by the transferee of Senior Indebtedness
of RAS or Senior Indebtedness of any Restricted Subsidiary of RAS and the
release of RAS or such Restricted Subsidiary from all liability on such Senior
Indebtedness in connection with such Asset Disposition (in which case RAS shall,
without further action, be deemed to have applied such assumed Indebtedness in
accordance with clause (A) of the preceding paragraph) and (y) securities
received by RAS or any Restricted Subsidiary of RAS from the transferee that are
promptly (and in any event within 60 days) converted by RAS or such Restricted
Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Notes pursuant to clause (a) (iii) (B), the Issuers will be required
to purchase Notes tendered pursuant to an offer by the Issuers for the Notes at
a purchase price of 101% of their principal amount plus accrued and unpaid
interest, if any, to the purchase date in accordance with the procedures
(including prorating in the event of oversubscription) set forth in Section
3.09. If the aggregate purchase price of the Notes tendered pursuant to the
offer is less than the Net Available Cash allotted to the purchase of the Notes,
the Issuers will apply the remaining Net Available Cash in accordance with
clauses (a) (iii) (C) or (D) above.
(c) The Issuers will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to
Section 3.09. To the extent that the provisions of any securities laws or
regulations conflict with provisions of Section 3.09 and/or this Section 4.10,
the Issuers will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under this Indenture by
virtue thereof.
SECTION 4.11. LIMITATION ON AFFILIATE TRANSACTIONS.
(a) RAS will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or conduct any transaction
or series of related transactions (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with or for the
benefit of any Affiliate of RAS, other than a Wholly-Owned Subsidiary or RAS,
Inc. (an "Affiliate Transaction") unless: (i) the terms of such Affiliate
Transaction are no less favorable to RAS or such Restricted Subsidiary, as the
case may be, than those that could be obtained at the time of such transaction
in arm's-length dealings with a Person who is not such an Affiliate; (ii) in the
event such Affiliate Transaction involves an aggregate amount in excess of $1
million, the terms of such transaction have been approved by a majority of the
members of the Board of Directors of the General Partner and by a majority the
disinterested members of such Board of Directors, if any (and such majority or
majorities, as the case may be, determines that such Affiliate Transaction
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satisfies the criteria in (i) above); and (iii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $2 million, RAS has
received a written opinion from an independent investment banking firm of
nationally recognized standing that such Affiliate Transaction is fair to RAS or
such Restricted Subsidiary, as the case may be, from a financial point of view.
(b) The foregoing paragraph (a) shall not apply to (i) any
Restricted Payment permitted to be made pursuant to Section 4.07, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, or any
stock options and stock ownership plans for the benefit of employees, officers
and directors, consultants and advisors approved by the General Partner, (iii)
loans or advances to employees in the ordinary course of business of RAS or any
of its Restricted Subsidiaries in aggregate amount outstanding not to exceed
$250,000 to any employee or $1.0 million in the aggregate at any time, (iv) any
transaction between Wholly-Owned Subsidiaries, (v) indemnification agreements
with, and the payment of fees and indemnities to, directors, officers and
employees of RAS and its Restricted Subsidiaries, in each case in the ordinary
course of business, (vi) transactions pursuant to agreements in existence on the
Issue Date which are (x) described in the Offering Memorandum or (y) otherwise,
in the aggregate, immaterial to RAS and its Restricted Subsidiaries taken as a
whole, (vii) any employment, non-competition or confidentiality agreements
entered into by RAS or any of its Restricted Subsidiaries with its employees in
the ordinary course of business, (viii) provided that no Default or Event of
Default exists or would occur as a consequence of such payment, payment of the
management fee to the General Partner in an amount not to exceed the sum of (x)
3% of net revenues ("Net Revenue Fee") and (y) 6% of EBITDAM (net of the Net
Revenue Fee), (ix) the issuance of Capital Stock of RAS (other than Disqualified
Stock) and (x) payments to SCR for amounts allocated by SCR to RAS for
compensation (whether deferred or current) of SCR employees providing services
to RAS and related expenses.
In addition, if an opportunity arises to develop further sites
in the Summerlin master planned community as a result of a right of first offer
from HHC or an Affiliate of HHC (each a "Right of First Offer"), and RAS elects
to pursue such opportunity, RAS shall use its reasonable efforts to pursue such
opportunity to develop and finance such site under this Indenture or the Credit
Agreement. If this Indenture or the Credit Agreement, however, restricts RAS's
ability to pursue such opportunity, the foregoing paragraph (a) shall not
prohibit RAS from transferring the Right of First Offer to an Affiliate of SCGC
established by SCGC to pursue such opportunity; provided, that, such Affiliate
is at least 85% owned by SCGC (directly or indirectly) and RAS receives an
interest in such Affiliate equal to the value of the Right of First Offer as
determined in good faith by the Board of Directors of the General Partner.
SECTION 4.12. LIMITATION ON LIENS.
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RAS shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or permit to exist any Liens except for
Permitted Liens.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Issuers shall do or cause to
be done all things necessary to preserve and keep in full force and effect their
corporate or partnership existence, as the case may be, and the corporate,
partnership or other existence of each Subsidiary, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of each Subsidiary and the rights (charter and statutory), licenses and
franchises of the Issuers and their Subsidiaries; provided, however, that the
Issuers shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any Subsidiary, if the Board
of Directors of RAS, Inc. or the General Partner of RAS, as the case may be,
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Issuers and their Subsidiaries, taken as a whole,
and that the loss thereof is not adverse in any material respect to the
Noteholders.
SECTION 4.14. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control each Noteholder
will have the right to require the Issuers to repurchase all or any part of such
Noteholder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Payment") (subject to the right of Noteholders of record
on a relevant Record Date to receive interest due on the relevant Interest
Payment Date).
(b) No earlier than 30 days and no later than 60 days
following a Change of Control the Issuers shall mail a notice to each Noteholder
with a copy to the Trustee stating:
(i) that a Change of Control has occurred and that such
Noteholder has the right to require the Issuers to purchase such
Noteholder's Notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to
the date of purchase (subject to the right of Noteholders of record on
a Record Date to receive interest on the relevant Interest Payment
Date) (the "Change of Control Offer");
(ii) the repurchase date (which shall be no earlier than 70
days nor later than 90 days from the date such notice is mailed) (the
"Change of Control Payment Date"); and
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(iii) the procedures determined by the Issuers, consistent
with this Indenture, that a Noteholder must follow in order to have its
Notes purchased.
If the Credit Facilities are in effect or any amounts are
owing thereunder, at the time of the occurrence of a Change of Control, prior to
the mailing of the notice to the Holders as described in this paragraph, but in
any event within 30 days following the occurrence of such Change of Control, the
Issuers will (i) repay in full all obligations under the Credit Facilities, (ii)
offer to repay in full all obligations under such Credit Facilities and repay
the obligations under such credit facilities of each lender who has accepted
such offer or (iii) obtain the requisite consents under such Credit Facilities
to permit the repurchase of the Notes pursuant to a Change of Control Offer.
The Issuers will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.14. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Indenture, the Issuers will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached their obligations described in this Indenture by virtue thereof.
(c) Noteholders electing to have a Note repurchased will be
required to surrender the Note, with the form entitled "Option of Noteholder to
Elect Purchase" on the reverse of the Note completed, to the Issuers at the
address specified in the notice at least 10 Business Days prior to the
repurchase date. Noteholders will be entitled to withdraw their election if the
Trustee or the Issuers receives, not later than three Business Days prior to the
repurchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Noteholder, the principal amount of the Note which was
delivered for repurchase by the Noteholder and a statement that such Noteholder
is withdrawing his election to have such Note purchased.
(d) On the Change of Control Payment Date, the Issuers will,
to the extent lawful, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Trustee an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Issuers. The Trustee will promptly mail to each Noteholder so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each
Noteholder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. Unless the Issuers
default in the payment for any Notes properly tendered pursuant to the Change of
Control Offer, any Notes accepted for payment pursuant
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to the Change of Control Offer shall cease to accrue interest after the Change
of Control Payment Date.
SECTION 4.15. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES.
RAS will not permit any of its Restricted Subsidiaries to
issue any Capital Stock to any Person (other than to RAS or a Wholly-Owned
Subsidiary of RAS) or permit any Person (other than RAS or a Wholly-Owned
Subsidiary of RAS) to own any Capital Stock of a Restricted Subsidiary of RAS,
if in either case as a result thereof such Restricted Subsidiary would no longer
be a Restricted Subsidiary of RAS; provided, however, that this provision shall
not prohibit (x) RAS or any of its Restricted Subsidiaries from selling, leasing
or otherwise disposing of all of the Capital Stock of any Restricted Subsidiary
or (y) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary
in compliance with this Indenture.
SECTION 4.16. LIMITATION ON REPAYMENT UPON A CHANGE OF CONTROL.
The Issuers will not make an offer to repurchase any
Subordinated Obligations if they are required to do so pursuant to a Change of
Control until at least 60 days after the occurrence of such Change of Control
and shall not purchase any Subordinated Obligations for 30 days following the
time the Issuers are required to make purchases of the Notes under this
Indenture following such Change of Control.
SECTION 4.17. LIMITATION ON SALE/LEASEBACK TRANSACTIONS.
RAS will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, enter into, Guarantee or otherwise become liable
with respect to any Sale/Leaseback Transaction with respect to any property or
assets unless (i) RAS or such Restricted Subsidiary, as the case may be, would
be entitled to pursuant to this Indenture to incur Indebtedness secured by a
Permitted Lien on such property or assets in an amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction, (ii) the Net Cash
Proceeds from such Sale/Leaseback Transaction are at least equal to the fair
market value of the property or assets subject to such Sale/Leaseback
Transaction (such fair market value determined, in the event such property or
assets have a fair market value in excess of $1.0 million, no more than 30 days
prior to the effective date of such Sale/Leaseback Transaction, by the General
Partner as evidenced by a Board Resolution and (iii) the net cash proceeds of
such Sale/Leaseback Transaction are applied in accordance with the provisions of
Section 4.10.
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SECTION 4.18. LIMITATION ON DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES.
RAS may designate any Subsidiary of RAS (other than a
Subsidiary of RAS which owns Capital Stock of a Restricted Subsidiary) as an
"Unrestricted Subsidiary" under this Indenture (a "Designation") only if:
(a) no Default shall have occurred and be continuing at the
time of or after giving effect to such Designation; and
(b) RAS would be permitted under this Indenture to make an
Investment at the time of Designation (assuming the effectiveness of
such Designation) in an amount (the "Designation Amount") equal to the
sum of (i) the fair market value of the Capital Stock of such
Subsidiary owned by RAS and the Restricted Subsidiaries on such date
and (ii) the aggregate amount of other Investments of RAS and the
Restricted Subsidiaries in such Subsidiary on such date; and
(c) RAS would be permitted to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.09 at the time of Designation (assuming the effectiveness of such
Designation).
In the event of any such Designation, RAS shall be deemed to
have made an Investment constituting a Restricted Payment pursuant to Section
4.07 for all purposes of this Indenture in the Designation Amount. RAS shall
not, and shall not permit any Restricted Subsidiary to, at any time (x) provide
direct or indirect credit support for or a guarantee of any Indebtedness of any
Unrestricted Subsidiary (including of any undertaking, agreement or instrument
evidencing such Indebtedness), (y) be directly or indirectly liable for any
Indebtedness of any Unrestricted Subsidiary or (z) be directly or indirectly
liable for any Indebtedness which provides that the holder thereof may (upon
notice, lapse of time or both) declare a default thereon or cause the payment
thereof to be accelerated or payable prior to its final scheduled maturity upon
the occurrence of a default with respect to any Indebtedness of any Unrestricted
Subsidiary (including any right to take enforcement action against such
Unrestricted Subsidiary), except, in the case of clause (x) or (y), to the
extent permitted under Section 4.07.
RAS may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then
constitute a Restricted Subsidiary, if:
(a) no Default shall have occurred and be continuing at the
time of and after giving effect to such Revocation; and
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(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by a Board
Resolution of the General Partner and an Officers' Certificate of each of the
Issuers delivered to the Trustee certifying compliance with the foregoing
provisions.
SECTION 4.19. FURTHER INSTRUMENTS AND ACTS.
The Trustee shall not be bound to ascertain or inquire as to
the performance or observance of any covenants, conditions or agreements on the
part of the Issuers, except as otherwise set forth herein, but the Trustee may
require of the Issuers full information and advice as to the performance of the
covenants, conditions and agreements contained herein, and upon request of the
Trustee, the Issuers will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
SECTION 4.20. RAS TO CAUSE CERTAIN SUBSIDIARIES TO BECOME GUARANTORS.
RAS shall cause all of its future Restricted Subsidiaries
(including any Unrestricted Subsidiary upon being designated a Restricted
Subsidiary) to, jointly and severally, guaranty, irrevocably and
unconditionally, all principal, premium, if any, and interest on the Notes on a
senior subordinated basis. If RAS or any of its Restricted Subsidiaries shall
acquire or create another Restricted Subsidiary after the Issue Date, then such
Restricted Subsidiary shall execute and deliver the documents required by
Section 11.07. Upon execution and delivery of such documents after the Issue
Date, the relevant Subsidiary Guarantor will deliver to the Trustee an Opinion
of Counsel relating to the enforceability and authorization of such Subsidiary
Guarantee in accordance with the terms of this Indenture.
SECTION 4.21. LIMITATION ON STATUS AS INVESTMENT COMPANY.
The Issuers will not, and RAS will not permit any of its
Restricted Subsidiaries to, be required to register as an "investment company"
(as that term is defined in the Investment Company Act of 1940, as amended).
SECTION 4.22. LIMITATION ON LAYERED INDEBTEDNESS.
RAS shall not, directly or indirectly, incur any Indebtedness,
and shall not permit any Subsidiary Guarantor to incur any Indebtedness that is
expressly subordinate in right of payment to any other Indebtedness of RAS or
such Subsidiary Guarantor, as
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applicable, unless such Indebtedness is expressly subordinate in right of
payment to, or ranks pari passu with, the Notes or the Subsidiary Guarantee of
such Subsidiary Guarantor in all respects.
SECTION 4.23. LIMITATION ON BUSINESS ACTIVITIES OF RAS.
RAS shall not, and shall not permit any Restricted Subsidiary
to, engage, directly or indirectly, in any business other than a Permitted
Business.
SECTION 4.24. LIMITATION ON BUSINESS ACTIVITIES OF RAS, INC.
RAS, Inc. shall not engage in any trade or business, and shall
conduct no business activity, other than the incurrence as a joint and several
obligor of Indebtedness of RAS permitted under Section 4.09 and the holding of
the Capital Stock issued by RAS to RAS, Inc. and activities incidental thereto.
RAS, Inc. shall not create, capitalize or otherwise own or acquire any
Subsidiary.
ARTICLE 5
SUCCESSORS
SECTION 5.01. LIMITATIONS ON MERGER, CONSOLIDATION OR SALE OF ASSETS.
RAS shall not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all of its assets to any Person,
unless:
(i) the resulting, surviving or transferee Person (the
"Successor Entity") shall be a corporation, partnership, trust or
limited liability company organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and the Successor Entity (if not RAS) shall expressly assume, by
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of RAS under the Notes
and this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness that becomes an obligation of the
Successor Entity or any Subsidiary of the Successor Entity as a result
of such transaction as having been incurred by the Successor Entity or
such Restricted Subsidiary at the time of such transaction), no Default
or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Entity (A) would have a Consolidated Net Worth equal to
or greater than the
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Consolidated Net Worth of RAS immediately prior to such transaction and
(B) would be able to incur at least an additional $1.00 of Indebtedness
pursuant to paragraph (a) of Section 4.09;
(iv) RAS shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture; and
(v) there has been delivered to the Trustee an Opinion of
Counsel to the effect that Holders of the Notes will not recognize
income, gain or loss for U.S. Federal income tax purposes as a result
of such consolidation, merger, conveyance, transfer or lease and will
be subject to U.S. Federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such
consolidation, merger, conveyance, transfer or lease had not occurred.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
The Successor Entity will succeed to, and be substituted for,
and may exercise every right and power of, RAS under this Indenture, but, in the
case of a lease of all or substantially all its assets, RAS will not be released
from the obligation to pay the principal of and interest on the Notes.
Notwithstanding clauses (ii) and (iii) of Section 5.01, any
Restricted Subsidiary of RAS may consolidate with, merge into or transfer all or
part of its properties and assets to RAS in a transaction that otherwise
complies with Section 5.01.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
(a) An "Event of Default" occurs if:
(i) there is a default in any payment of interest on any
Note when due, continued for 30 days;
(ii) there is a default in the payment of principal of any
Note when due at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise;
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(iii) there is a failure by RAS to comply with its obligations
under Section 5.01 hereof;
(iv) there is a failure by the Issuers to comply for 30 days
after notice with any of its obligations under Article 4 (in each case,
other than a failure to purchase Notes under Section 4.10 or 4.14,
which shall constitute an Event of Default under clause (ii) above, or
the failure to pay interest, principal or premium, if any, on the Notes
under Section 4.01, which shall constitute an Event of Default under
clause (i) or (ii) above);
(v) there is a failure by the Issuers or any Subsidiary
Guarantor to comply for 60 days after notice with its other agreements
contained in this Indenture;
(vi) Indebtedness of RAS or any Restricted Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $5.0 million
and such default shall not have been cured or such acceleration
rescinded after a 10-day period;
(vii) any judgment or decree for the payment of money in
excess of $2.0 million (to the extent not covered by insurance) is
rendered against either of the Issuers or a Significant Subsidiary and
such judgment or decree shall remain undischarged or unstayed for a
period of 60 days after such judgment becomes final and non-appealable;
(viii) any Subsidiary Guarantee by a Significant Subsidiary
ceases to be in full force and effect (except as contemplated by the
terms of this Indenture) or any Subsidiary Guarantor that is a
Significant Subsidiary denies or disaffirms its obligations under this
Indenture or its Subsidiary Guarantee and such Default continues for 10
days;
(ix) either of the Issuers or any of their Significant
Subsidiaries pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
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(D) makes a general assignment for the benefit of its
creditors,
(E) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, or
(F) takes any corporate action to authorize or effect
any of the foregoing; or
(x) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against either of the Issuers or
any of their Significant Subsidiaries in an involuntary case,
(B) appoints a Custodian of either of the Issuers or
any of their Significant Subsidiaries or for all or
substantially all of the property of RAS or any of its
Significant Subsidiaries, or
(C) orders the liquidation of either of the Issuers
or any of their Significant Subsidiaries,
and the order or decree remains unstayed and in effect for 60
consecutive days.
(xi) revocation, termination, suspension or other cessation of
effectiveness of any Gaming License, which results in the total
cessation or total suspension of gaming operations of the Resort Casino
for a period of more than 90 days; or
(xii) the Resort Casino has not commenced hotel and gaming
operations by October 2, 1999.
(b) The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(c) A Default under clause (iv) or (v) of Section 6.01(a)
hereof is not an Event of Default until the Trustee notifies the Issuers or such
Subsidiary Guarantor, as the case may be, or the Holders of 25% in principal
amount of the outstanding Notes notifies the Issuers or such Subsidiary
Guarantor, as the case may be, and the Trustee of the Default and the Issuers or
such Subsidiary Guarantor, as the case may be, do not cure such Default within
the time specified in such clause (iv) or (v) after receipt of the notice. The
written notice must specify the Default, demand that it be remedied and state
that the notice is a "Notice of Default."
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SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default
specified in clause (ix) or (x) of Section 6.01(a) with respect to either of the
Issuers) occurs and is continuing, the Trustee by notice to the Issuers, or the
Holders of not less than 25% in aggregate principal amount of the then
outstanding Notes by notice to the Issuers and the Trustee, may declare (a
"Declaration") the unpaid principal of, and any accrued and unpaid interest on,
all the Notes to be due and payable (the "Default Amount"). Upon any such
Declaration, the Default Amount shall be due and payable immediately. If an
Event of Default specified in clause (ix) or (x) of Section 6.01(a) occurs with
respect to either of the Issuers, the Default Amount shall ipso facto become and
be immediately due and payable without any Declaration or other act on the part
of the Trustee or any Noteholder. The Holders of a majority in aggregate
principal amount of the then outstanding Notes by written notice to the Trustee
and to the Issuers may rescind any Declaration if the rescission would not
conflict with any judgment or decree and if all Events of Default then
continuing (other than any Events of Default with respect to the nonpayment of
principal of or interest on any Note which has become due solely as a result of
such Declaration) have been cured and the Trustee has been paid all amounts due
to it under Section 7.07, and may waive any Default other than a Default with
respect to a covenant or provision that cannot be modified or amended without
the consent of each Noteholder pursuant to Section 9.02 hereof.
SECTION 6.03. OTHER REMEDIES.
(a) If an Event of Default occurs and is continuing, the
Trustee and the Noteholders may pursue any available remedy to collect the
payment of principal, premium, if any, or interest on the Notes or to enforce
the performance of any provision of the Notes or this Indenture.
(b) The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
(c) If an Event of Default occurs and is continuing, the
Trustee shall, subject to Section 7.05, mail to each Noteholder in the manner
and to the extent provided in TIA 313(a) a notice that Noteholders of a majority
in principal amount of the outstanding Notes may direct the Trustee to direct
the Account Agent (as defined in the Notes Proceeds Agreement) to take all
required action under Section 3.02 of the Notes Proceeds Agreement pay to the
Trustee the Collateral (as defined in the Notes Proceeds Agreement) for
distribution pursuant to Section 6.10 hereof.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Noteholders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may, on behalf of
all the Noteholders, waive an existing Default or Event of Default and its
consequences, except a continuing Default or Event of Default in the payment of
the principal, premium, if any, or interest on any Note (other than principal,
premium (if any) or interest which has become due solely as a result of a
Declaration) or a Default or Event of Default that cannot be modified or amended
without the consent of the Holder of each outstanding Note affected. Upon any
such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Noteholders of a majority in principal amount of the Notes
then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Noteholders or that may involve the
Trustee in personal liability. The Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action under this Indenture, the Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
SECTION 6.06. LIMITATION ON SUITS.
(a) Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, a Noteholder may pursue a
remedy with respect to this Indenture or the Notes only if:
(i) the Noteholder has previously given to the Trustee
written notice of a continuing Event of Default;
(ii) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(iii) such Noteholder or Noteholders offer, and, if
requested, provide, to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
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(iv) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested,
the provision of indemnity; and
(v) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee,
in the reasonable opinion of the Trustee, a direction inconsistent with
the request.
(b) A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over another
Noteholder.
SECTION 6.07. RIGHTS OF NOTEHOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Noteholder to receive payment of principal, premium, if any,
interest on the Note, on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Noteholder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a)(i) or (ii)
or an acceleration pursuant to Section 6.02 occurs and is continuing, the
Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Issuers or any Subsidiary Guarantor or any other
obligor on the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid on the Notes and interest on overdue
principal, premium, if any, and, to the extent lawful, interest on overdue
installments of interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including any advances made by the Trustee
and the reasonable compensation, expenses and disbursements of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07) and the Noteholders
allowed in any judicial proceedings relative to the Issuers or any Subsidiary
Guarantor (or any other obligor on the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such
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judicial proceeding is hereby authorized by each Noteholder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Noteholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties which the
Noteholders may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Noteholder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Noteholder thereof, or to authorize the Trustee to vote in respect of the claim
of any Noteholder in any such proceeding.
SECTION 6.10. PRIORITIES.
(a) If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
(i) First: to the Trustee, its agents and attorneys for
amounts due under Section 7.07, including payment of all compensation,
expenses and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;
(ii) Second: if the Noteholders are forced to proceed
against the Issuers directly without the Trustee, to the Noteholders
for their collection costs;
(iii) Third: subject to Article 9, to the Noteholders for
amounts due and unpaid on the Notes for principal, premium, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal,
premium, if any, and interest, respectively; and
(iv) Fourth: to the Issuers or, to the extent the Trustee
collects any amount pursuant to Article 10 hereof from any Subsidiary
Guarantor, to such Subsidiary Guarantor, or to such party as a court of
competent jurisdiction shall direct.
(b) The Trustee may fix a record date and payment date for any
payment to Noteholders. At least 15 calendar days before such record date, the
Issuers shall mail
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to each Holder and the Trustee a notice that states the record date, the payment
date and the amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Noteholder pursuant to Section 6.07 hereof, or a suit by Holders of more than
10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances and in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform only those duties as
are specifically set forth in this Indenture and the duties of the
Trustee shall be determined solely by the express provisions of this
Indenture, the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture, but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to
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the Trustee, the Trustee shall examine the same to determine whether or
not they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liabilities for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
Assets held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of Section 7.01 and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document unless the Trustee has reason to believe such fact or matter is not
true.
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(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee, subject to 7.01(c), shall not be liable for
any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Issuers shall be sufficient if
signed by an Officer of each of the Issuers.
(f) The permissive rights of the Trustee to do certain things
enumerated in this Indenture shall not be construed as a duty and the Trustee
shall not be answerable for other than its negligence or wilful default with
respect to such permissive rights.
(g) Except for an Event of Default of which a Responsible
Officer of the Trustee has "actual knowledge," the Trustee shall not be deemed
to have notice of any Default or Event of Default unless specifically notified
in writing of such event by an Issuer or the Noteholders of not less than 25% in
aggregate principal amount of Notes outstanding; as used herein, the term
"actual knowledge" means the actual fact or statement of knowing, without any
duty to make any investigation with regard thereto.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuers, any
Subsidiary Guarantor or any Affiliate of either the Issuers or of any Subsidiary
Guarantor with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11 hereof.
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SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Notes or
the Subsidiary Guarantees, it shall not be accountable for the Issuers' use of
the proceeds from the Notes or any money paid to the Issuers or upon the
Issuers' direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Notes or the Subsidiary Guarantees or any
other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication. The Trustee shall have
no duty or obligation to create, monitor or maintain any security interest
granted under the Notes Proceeds Agreement or the Disbursement Agreement, or to
monitor or otherwise ensure the performance of any party other than the Trustee
of its duties or obligations under either such agreement.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if a Responsible Offerer of the Trustee has knowledge thereof, the Trustee shall
mail to each Noteholder in the manner and to the extent provided in TIA 313(a) a
notice of the Default or Event of Default within 60 days after it occurs. Except
in the case of a Default or Event of Default in any payment of principal,
premium (if any) or interest on any Note, the Trustee may withhold the notice if
and so long as its Board of Directors, a committee of its Board of Directors or
a committee of its officers in good faith determines that withholding the notice
is in the interest of the Noteholders.
SECTION 7.06. REPORTS BY TRUSTEE TO NOTEHOLDERS.
(a) Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as the Notes remain
outstanding, the Trustee shall mail to the Noteholders a brief report dated as
of such reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months preceding
the reporting date, no report need be transmitted). The Trustee also shall
comply with TIA Section 313(b)(2) and (c).
(b) A copy of each report at the time of its mailing to the
Noteholders shall be filed with the Commission and each stock exchange, if any,
on which the Notes are listed, in accordance with and to the extent required by
TIA Section 313(d). RAS shall promptly notify the Trustee if and when the Notes
are listed on any stock exchange.
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SECTION 7.07. COMPENSATION AND INDEMNITY.
(a) The Issuers and the each of the Subsidiary Guarantors,
jointly and severally, shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder,
including extraordinary services such as default administration. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuers and each of the Subsidiary Guarantors, jointly and
severally, shall reimburse the Trustee upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
(b) The Issuers and each of the Subsidiary Guarantors, jointly
and severally, shall indemnify the Trustee against, and hold the Trustee
harmless from any and all losses, liabilities or expenses incurred by it arising
out of or in connection with the acceptance or administration of its duties
under this Indenture, including the costs and expenses of enforcing this
Indenture against the Issuers (including this Section 7.07) and defending itself
against any claim (whether asserted by RAS, any Holder or any other Person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except as set forth below in subparagraph (d). The Trustee
shall notify the Issuers and each of the Subsidiary Guarantors promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify RAS
or any Subsidiary Guarantor shall not relieve the Issuers or any of the
Subsidiary Guarantors of their Obligations hereunder. The Trustee may have
separate counsel and the Issuers and each of the Subsidiary Guarantors, jointly
and severally, shall pay the reasonable fees and expenses of such counsel.
Neither the Issuers nor any Subsidiary Guarantor need pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
(c) The obligations of the Issuers and each of the Subsidiary
Guarantors under this Section 7.07 shall survive the resignation or removal of
the Trustee and the satisfaction and discharge or termination of this Indenture.
(d) Notwithstanding subparagraphs (a) or (b) above, neither
the Issuers nor any Subsidiary Guarantor need reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own
negligence, bad faith or willful misconduct.
(e) To secure the Issuers' and each of the Subsidiary
Guarantor's payment obligations in this Section, the Trustee shall have a Lien
prior to the Notes on all money or property held or collected by the Trustee,
except that held in trust to pay principal, premium, if any, and interest on
particular Notes. Such Lien shall survive the resigna-
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tion or removal of the Trustee and the satisfaction and discharge or termination
of this Indenture.
(f) When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.01(ix) or (x) hereof occurs, the
expenses and the compensation for such services (including the reasonable fees
and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
(a) A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08 and upon compliance
with the requirements of all applicable Gaming Laws.
(b) The Trustee may resign at any time and be discharged from
the trust hereby created by so notifying the Issuers. The Noteholders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers. The Issuers may remove the
Trustee if:
(i) the Trustee fails to comply with Section 7.10 hereof;
(ii) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(iii) a Custodian, receiver or other public officer takes
charge of the Trustee or its property;
(iv) the Trustee becomes incapable of acting; or
(v) the Trustee is found unsuitable or unqualified by any
Gaming Authority.
(c) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Issuers shall notify each
Noteholder of such event and promptly appoint a successor Trustee. Within one
year after the successor Trustee takes office, the Holders of a majority in
principal amount of the then outstanding Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Issuers.
(d) A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the
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rights, powers and duties of the Trustee under this Indenture. The successor
Trustee shall mail a notice of its succession to each Noteholder. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, provided all sums owing to the Trustee hereunder have been
paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, RAS's
and each of the Subsidiary Guarantor's obligations under Section 7.07 hereof
shall continue for the benefit of the retiring Trustee.
(e) If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuers, any of the Subsidiary Guarantors or the Noteholders of at least 10% in
principal amount of the then outstanding Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) If the Trustee after written request by any Noteholder who
has been a Noteholder for at least six months fails to comply with Section 7.10,
such Noteholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to another corporation,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
(a) There shall at all times be a Trustee hereunder which
shall be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or the District of Columbia
authorized under such laws to exercise corporate trustee power, shall be subject
to supervision or examination by Federal, State, Territorial, or District of
Columbia authority and shall have (or be a part of a holding company with) a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition.
(b) This Indenture shall always have a Trustee who satisfies
the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall
comply with TIA Section 310(b).
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The provisions of TIA Section 310 shall also apply to the Issuers and each of
the Subsidiary Guarantors, as obligor of the Notes.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST RAS.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Issuers and each
of the Subsidiary Guarantors as obligor on the Notes.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE.
(a) When (i) the Issuers deliver to the Trustee all
outstanding Notes (other than Notes replaced pursuant to Section 2.07 hereof)
canceled or for cancellation or (ii) all outstanding Notes have become due and
payable and the Issuers irrevocably deposit with the Trustee funds sufficient to
pay at maturity all outstanding Notes, including interest thereon (other than
Notes replaced pursuant to Section 2.07 hereof), and if in either case RAS pays
all other sums payable hereunder by the Issuers, then this Indenture shall,
subject to Sections 8.01(e) and 8.06 hereof, cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Issuers accompanied by an Officers' Certificate and an Opinion of Counsel
reasonably acceptable to the Trustee and at the cost and expense of RAS.
(b) Subject to Sections 8.01(e), 8.02 and 8.06 hereof, the
Issuers at any time may terminate (i) all its obligations under the Notes and
this Indenture ("legal defeasance option") or (ii) all obligations under
Sections 3.09, 4.04(a), (b) and (c), 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12,
4.15, 4.16, 4.17, 4.18, 4.20, 4.21, 4.22, 4.23, 4.24, 4.25 and 5.01(iii) and (i)
("covenant defeasance option"). The Issuers may exercise their legal defeasance
option notwithstanding their prior exercise of its covenant defeasance option.
(c) If the Issuers exercises its legal defeasance option,
payment of the Notes may not be accelerated because of an Event of Default. If
the Issuers exercises their covenant defeasance option, payment of the Notes may
not be accelerated because of an Event of Default specified in Section
6.01(a)(iv), 6.01(a)(vi), 6.01(a)(ix) or 6.01(a)(x) (but only with respect to
Significant Subsidiaries) or 6.01(a)(vii) or 6.01(a)(viii) hereof, or because of
the failure of the Issuers or the Subsidiary Guarantors to comply with Sections
5.01(iii) or 5.01(iv).
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(d) Upon satisfaction of the conditions set forth herein and
Section 8.02 and upon request of the Issuers, the Trustee shall acknowledge in
writing the discharge of those obligations that the Issuers terminate.
(e) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.01(d), 8.04,
8.05 and 8.06 hereof and the obligations of each Subsidiary Guarantor under
Article 11 in respect thereof shall survive until the Notes have been paid in
full. Thereafter, the Issuers' obligations in Sections 7.07, 8.04, 8.05 and 8.08
hereof and the obligations of each Subsidiary Guarantor under Article 11 in
respect thereof shall survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE.
(a) The Issuers may exercise their legal defeasance option or
their covenant defeasance option only if:
(i) The Issuers irrevocably deposit in trust with the
Trustee money or U.S. Government Obligations in amounts (including
interest, but without consideration of any reinvestment of such
interest) and maturities sufficient, but in the case of the legal
defeasance option only, not more than such amounts (as certified by a
nationally recognized firm of independent public accountants), to pay
and discharge at their Stated Maturity (or such earlier redemption date
as the Issuers shall have specified to the Trustee) the principal of,
premium, if any, interest on all outstanding Notes to maturity or
redemption, as the case may be, and to pay all of the sums payable by
it hereunder; provided, that the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S. Government
Obligations to the payment of said principal, premium, if any, and
interest with respect to the Notes;
(ii) in the case of the legal defeasance option only, 123
days pass after the deposit is made and during the 123 day period no
Default or Event of Default specified in Section 6.01(ix) or (x) hereof
with respect to the Issuers or any Subsidiary Guarantor occurs which is
continuing at the end of the period;
(iii) no Default or Event of Default has occurred and is
continuing on the date of such deposit and after giving effect thereto;
(iv) the deposit does not constitute a default under any
other agreement binding on the Issuers;
(v) the Issuers deliver to the Trustee an Opinion of
Counsel to the effect that the trust resulting from the deposit does
not constitute, or is qualified as,
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a regulated investment company under the Investment Issuers Act of
1940, as amended;
(vi) in the case of the legal defeasance option, the
Issuers shall have delivered to the Trustee an Opinion of Counsel
stating that (x) the Issuers have received from, or there has been
published by, the Internal Revenue Service a ruling, or (y) since the
date of this Indenture there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Noteholders
will not recognize income, gain or loss for U.S. Federal income tax
purposes as a result of such defeasance and will be subject to U.S.
Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance had not
occurred;
(vii) in the case of the covenant defeasance option, the
Issuers shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Noteholders will not recognize income, gain or loss
for Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(viii) The Issuers deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Notes as contemplated
by this Article 8 have been complied with.
(b) In order to have money available on a payment date to pay
principal, premium, if any, or interest on the Notes, the U.S. Government
Obligations deposited pursuant to preceding clause (a) shall be payable as to
principal or interest at least one Business Day before such payment date in such
amounts as shall provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
(c) Before or after a deposit, the Issuers may make
arrangements satisfactory to the Trustee for the redemption of Notes at a future
date in accordance with Article 3 hereof.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to this Article 8. It shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of principal,
premium, if any, and interest on the Notes.
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SECTION 8.04. REPAYMENT TO THE ISSUERS.
(a) The Trustee and the Paying Agent shall promptly pay to the
Issuers upon written request any excess money or securities held by them at any
time; provided, however, that the Trustee shall not pay any such excess to the
Issuers unless the amount remaining on deposit with the Trustee, after giving
effect to such transfer is sufficient to pay principal, premium, if any, and
interest on the outstanding Notes, which amount shall be certified to the
Trustee by independent public accountants.
(b) The Trustee and the Paying Agent shall pay to the Issuers
upon written request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years after the date
upon which such payment shall have become due; provided, however, that the
Issuers shall have either caused notice of such payment to be mailed to each
Noteholder entitled thereto no less than 30 days prior to such repayment or
within such period shall have published such notice in a financial newspaper of
widespread circulation published in the City of New York. After payment to the
Issuers, Noteholders entitled to the money must look to the Issuers and the
Subsidiary Guarantors for payment as general creditors unless an applicable
abandoned property law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS.
The Issuers and the Subsidiary Guarantors, jointly and
severally, shall pay and shall indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with this Article 8 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Issuers' and each of the Subsidiary Guarantor's Obligations
under this Indenture and the Notes and the Subsidiary Guarantees shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article 8 until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with this Article 8;
provided, however, that if the Issuers or any Subsidiary Guarantor have made any
payment of principal of, premium, if any, or interest on any Notes because of
the reinstatement of its Obligations, the Issuers or any of the Subsidiary
Guarantors, as the case may be, shall be subrogated to the rights
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of the Noteholders to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE 9
SUBORDINATION
SECTION 9.01. AGREEMENT TO SUBORDINATE.
The Issuers and each Subsidiary Guarantor agree, and each
Holder by accepting a Note and the related Subsidiary Guarantee agrees, that the
Indebtedness evidenced by the Notes and the related Subsidiary Guarantees is
subordinated in right of payment, to the extent and in the manner provided in
this Article 9, to the prior payment of (i) all Senior Indebtedness in the case
of the Notes and (ii) all Guarantor Senior Indebtedness of each Subsidiary
Guarantor in the case of its obligations under its Subsidiary Guarantee and that
the subordination is for the benefit of and enforceable by the holders of Senior
Indebtedness and such Guarantor Senior Indebtedness. All provisions of this
Article 9 shall be subject to Section 9.12.
SECTION 9.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY.
Upon any payment or distribution of the assets of the Issuers
or any Subsidiary Guarantor to creditors upon a total or partial liquidation or
a total or partial dissolution of the Issuers or such Subsidiary Guarantor or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Issuers or such Subsidiary Guarantor or their respective
properties:
(a) holders of Senior Indebtedness in the case of the Issuers
or holders of Guarantor Senior Indebtedness of such Subsidiary
Guarantor in the case of such Subsidiary Guarantor shall be entitled to
receive payment in full of all Senior Indebtedness in the case of the
Issuers or all such Guarantor Senior Indebtedness in the case of such
Subsidiary Guarantor before Holders shall be entitled to receive any
payment of principal of or interest on or other amounts with respect to
the Notes from the Issuers or such Subsidiary Guarantor, whether
directly by the Issuers or pursuant to the Subsidiary Guarantees; and
(b) until the Senior Indebtedness in the case of the Issuers
or such Guarantor Senior Indebtedness in the case of such Subsidiary
Guarantor is paid in full in cash or cash equivalents, any payment or
distribution to which Holders would be entitled but for this Article 9
shall be made to holders of Senior Indebtedness in the case of payments
or distributions made by the Issuers or the
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holders of such Guarantor Senior Indebtedness in the case of payments
or distributions made by such Subsidiary Guarantor, in each case as
their respective interests may appear.
SECTION 9.03. DEFAULT ON SENIOR INDEBTEDNESS OR GUARANTOR SENIOR
INDEBTEDNESS.
Neither the Issuers nor any Subsidiary Guarantor may pay the
principal of, premium (if any), interest or Additional Interest on the Notes or
make any deposit pursuant to Article 8 or repurchase, redeem or otherwise retire
any Notes, whether directly by the Issuers or by such Subsidiary Guarantor under
its Subsidiary Guarantee (collectively, "pay the Notes") if (i) any Designated
Senior Indebtedness is not paid when due or (ii) any other default on Designated
Senior Indebtedness occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Designated Senior Indebtedness has been paid in full in
cash; provided, however, that the Issuers or such Subsidiary Guarantor may pay
the Notes, whether directly or pursuant to the Subsidiary Guarantee, without
regard to the foregoing if the Issuers or such Subsidiary Guarantor and the
Trustee receive written notice approving such payment from the Representative of
the Designated Senior Indebtedness with respect to which either of the events
set forth in clause (i) or (ii) of this sentence has occurred or is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
neither the Issuers nor any Subsidiary Guarantor may pay the Notes, either
directly or pursuant to the Subsidiary Guarantee for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Issuers of written notice (a "Blockage Notice") of such default from the
Representative of the holders of such Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Issuers from the Person or Persons who gave such Blockage
Notice, (ii) by repayment in full of such Designated Senior Indebtedness or
(iii) because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions of the immediately preceding
sentence, but subject to the provisions of the first sentence of this paragraph
and the provisions of Section 9.02, unless the holders of such Designated Senior
Indebtedness or the Representative of such holders have accelerated the maturity
of such Designated Senior Indebtedness, the Issuers or such Subsidiary Guarantor
may resume payments on the Notes, either directly or pursuant to the Subsidiary
Guarantee, after the end of such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
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such period. In no event, however, may the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any 360 consecutive day period. For purposes of this section, no default
or event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 9.04. ACCELERATION OF PAYMENT OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Issuers or the Trustee shall promptly notify the Representative (if
any) of any issue of Designated Senior Indebtedness which is then outstanding;
provided, however, that the Issuers and the Trustee shall be obligated to notify
such a Representative only if such Representative has delivered or caused to be
delivered an address for the service of such a notice to the Issuers and the
Trustee (and the Issuers and the Trustee shall only be obligated to deliver the
notice to the address so specified). If a notice is required pursuant to the
immediate preceding sentence, neither the Issuers nor any Subsidiary Guarantor
may pay the Notes until five Business Days after the respective Representative
of the Designated Senior Indebtedness receives notice (at the address specified
in the preceding sentence) of such acceleration and, thereafter, may pay the
Notes only if the provisions of this Article 9 otherwise permit payment at that
time.
SECTION 9.05 WHEN DISTRIBUTION MUST BE PAID OVER.
If a distribution is made to Holders that because of this
Article 9 should not have been made to them, the Holders who receive the
distribution shall hold it in trust for holders of Senior Indebtedness and
Guarantor Senior Indebtedness, as the case may be, and promptly pay it over to
them as their respective interests may appear.
SECTION 9.06 SUBROGATION.
After all Senior Indebtedness and Guarantor Senior
Indebtedness is paid in full in cash or cash equivalents and until the Notes are
paid in full, Holders shall be subrogated to the rights of holders of Senior
Indebtedness and Guarantor Senior Indebtedness to receive distributions
applicable to Senior Indebtedness and Guarantor Senior Indebtedness. A
distribution made under this Article 9 to holders of Senior Indebtedness or
Guarantor Senior Indebtedness which otherwise would have been made to Holders is
not, as between the Issuers and Holders, a payment by the Issuers of Senior
Indebtedness or,
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as between a Subsidiary Guarantor and Holders, a payment by such Subsidiary
Guarantor of Guarantor Senior Indebtedness.
SECTION 9.07. RELATIVE RIGHTS.
This Article 9 defines the relative rights of Holders and
holders of Senior Indebtedness and Guarantor Senior Indebtedness. Nothing in
this Indenture shall:
(1) impair, as between the Issuers or the Subsidiary
Guarantors, as the case may be, and Holders, the obligation of the
Issuers or the Subsidiary Guarantors, as the case may be, which is
absolute and unconditional, to pay principal of and interest on the
Notes in accordance with their terms; or
(2) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Indebtedness and Guarantor Senior
Indebtedness to receive distributions otherwise payable to Holders.
SECTION 9.08. SUBORDINATION MAY NOT BE IMPAIRED BY ISSUERS OR THE
SUBSIDIARY GUARANTORS.
No right of any holder of Senior Indebtedness or Guarantor
Senior Indebtedness to enforce the subordination of the Indebtedness evidenced
by the Notes or the related Subsidiary Guarantee shall be impaired by any act or
failure to act by the Issuers or any Subsidiary Guarantor or by the failure of
any of them to comply with this Indenture.
SECTION 9.09. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding Section 9.03, the Trustee or Paying Agent may
continue to make payments on the Notes and shall not be charged with knowledge
of the existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment, a
Responsible Officer of the Trustee receives notice satisfactory to it that
payments may not be made under this Article 9. The Issuers, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness or Guarantor Senior Indebtedness may give the notice; provided,
however, that, if an issue of Senior Indebtedness or Guarantor Senior
Indebtedness has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness or Guarantor Senior Indebtedness with the same rights it
would have if it were not the Trustee. The Registrar and co-registrar and the
Paying Agent may do the same with like rights. The Trustee shall be entitled to
all the rights set forth in this Article 9
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with respect to any Senior Indebtedness or Guarantor Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness or Guarantor Senior Indebtedness; and nothing in this Article 9
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article 9 shall apply to compensation or other payments to the Trustee under or
pursuant to Section 7.07.
SECTION 9.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness or Guarantor Senior Indebtedness, the
distribution may be made and the notice given to their Representative (if any).
SECTION 9.11. ARTICLE 9 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT
TO ACCELERATE.
The failure to make a payment in respect of the Notes, whether
directly or pursuant to the Subsidiary Guarantees, by reason of any provision in
this Article 9 shall not be construed as preventing the occurrence of a Default
or Event of Default. Nothing in this Article 9 shall have any effect on the
right of the Holders or the Trustee to accelerate the maturity of the Notes or
to make a claim for payment under the Subsidiary Guarantees.
SECTION 9.12. TRUST MONEYS NOT SUBORDINATED.
Notwithstanding anything contained herein to the contrary,
payments from money or the proceeds of U.S. Government Obligations deposited in
trust under Article 8 with by the Trustee for the payment of principal of and
interest on the Notes at a time when this Article 9 would not prevent payments
on the Notes shall not be subordinated to the prior payment of any Senior
Indebtedness or Guarantor Senior Indebtedness or subject to the restrictions set
forth in this Article 9, and none of the Holders shall be obligated to pay over
any such amount to the Issuers, any Subsidiary Guarantor, any holder of Senior
Indebtedness of the Issuers, any holder of Guarantor Senior Indebtedness or any
other creditor of the Issuers or any Subsidiary Guarantor.
SECTION 9.13. TRUSTEE ENTITLED TO RELY.
Upon any payment or distribution pursuant to this Article 9,
the Trustee and the Holders shall be entitled to rely (i) upon any order or
decree of a court of competent jurisdiction in which any proceedings of the
nature referred to in Section 9.02 are pending, (ii) upon a certificate of the
liquidating trustee or agent or other Person making such payment or distribution
to the Trustee or to the Holders or (iii) upon the Representatives for the
holders of Senior Indebtedness or Guarantor Senior Indebtedness for the purpose
of ascertaining the Persons entitled to participate in such payment or
distribution, the holders
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of Senior Indebtedness, Guarantor Senior Indebtedness and other Indebtedness of
the Issuers or the Subsidiary Guarantors, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 9. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness or Guarantor Senior Indebtedness to participate in
any payment or distribution pursuant to this Article 9, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness or Guarantor Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Article 9, and, if such evidence is not furnished, the Trustee may
defer any payment to such Person pending judicial determination as to the right
of such Person to receive such payment. The provisions of Sections 7.01 and 7.02
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 9.
SECTION 9.14. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder by accepting a Note authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Holders and the holders
of Senior Indebtedness and Guarantor Senior Indebtedness as provided in this
Article 9 and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 9.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS AND
SUBSIDIARY GUARANTOR SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness or Guarantor Senior Indebtedness and shall
not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders or the Issuers, the Subsidiary Guarantors or any other
Person, money or assets to which any holders of Senior Indebtedness or Guarantor
Senior Indebtedness shall be entitled by virtue of this Article 9 or otherwise.
SECTION 9.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS AND GUARANTOR SENIOR
INDEBTEDNESS ON SUBORDINATION PROVISIONS.
Each Holder by accepting a Note acknowledges and agrees that
the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness or
Guarantor Senior Indebtedness, whether such Senior Indebtedness or Guarantor
Senior Indebtedness was created or acquired before or after the issuance of the
Notes, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness or Guarantor Senior Indebtedness and such holder of Senior
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Indebtedness or Guarantor Senior Indebtedness shall be deemed conclusively to
have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness or Guarantor Senior
Indebtedness.
ARTICLE 10
AMENDMENTS
SECTION 10.01. WITHOUT CONSENT OF NOTEHOLDERS.
(a) Notwithstanding Section 10.02 of this Indenture, the
Issuers, the Subsidiary Guarantors and the Trustee may amend or supplement this
Indenture or the Notes without the consent of any Noteholder:
(i) to cure any ambiguity, omission, defect or
inconsistency; provided, that such amendment or supplement does not, as
evidenced by an Opinion of Counsel delivered to the Trustee, adversely
affect the rights of any Noteholder in any respect;
(ii) to comply with Article 5 hereof;
(iii) to provide for uncertificated Notes in addition to
or in place of certificated Notes (provided, that the uncertificated
Notes are issued in registered form for purposes of Section 163(f) of
the Internal Revenue Code, or in a manner such that the uncertificated
Notes are described in Section 163(f)(2)(B) of the Internal Revenue
Code);
(iv) to add further Guarantees with respect to the Notes
or to secure the Notes with additional collateral;
(v) to add to the covenants of the Issuers for the benefit
of the Noteholders or to surrender any right or power conferred upon
the Issuers or the Guarantors;
(vi) to comply with requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the TIA;
(vii) to make any change that would provide additional
rights or benefits to the Holders of the Notes or that does not, as
evidenced by an Opinion of Counsel delivered to the Trustee, adversely
affect the rights of any Noteholder in any respect; or
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(viii) to evidence or provide for a replacement Trustee
under Section 7.08 hereof;
provided, that the Issuers have delivered to the Trustee an Opinion of Counsel
stating that any such amendment or supplement complies with the provisions of
this Section 10.01.
(b) Upon the request of the Issuers and the Subsidiary
Guarantors accompanied by Board Resolutions of their respective Boards of
Directors authorizing the execution of any such supplemental indenture, and upon
receipt by the Trustee of the documents described in Section 7.02, Section 10.06
and Section 12.04 hereof, the Trustee shall join with the Issuers and the
Subsidiary Guarantors in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into such supplemental indenture which affects
its own rights, duties or immunities under this Indenture or otherwise.
(c) After an amendment or supplement under this Section 10.01
becomes effective, the Issuers shall mail to all Noteholders a notice briefly
describing such amendment or supplement. The failure to give such notice to all
Noteholders, or any defect therein, shall not impair or affect the validity of
an amendment or supplement under this Section.
SECTION 10.02. WITH CONSENT OF NOTEHOLDERS.
(a) Except as provided below in this Section 10.02, the
Issuers and the Trustee may amend or supplement this Indenture or the Notes with
the written consent of the Noteholders of not less than a majority in aggregate
principal amount of the Notes then outstanding (including consents obtained in
connection with a purchase of, or tender offer or exchange offer for the Notes)
and subject to Section 6.04 and 6.07 any existing Default or Event of Default
and its consequences (other than a Default or Event of Default in the payment of
principal premium, if any, or interest, if any, on the Notes except a payment
default resulting from an acceleration of the Notes that has been rescinded) or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a purchase of,
or tender offer or exchange offer for the Notes). However, without the consent
of each Noteholder affected, an amendment, supplement or waiver under this
Section 10.02 may not (with respect to any Notes held by a non-consenting
Holder):
(i) reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;
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(ii) reduce the stated rate of or extend the stated time
for payment of any interest on any Note;
(iii) reduce the principal of or extend the Stated
Maturity of any Note or alter the redemption provisions (including
without limitation Sections 3.07, 3.09, 4.11 and 4.14 hereof) with
respect thereto;
(iv) reduce the premium payable upon the redemption or
repurchase of any Note or change the time at which any Note may be
redeemed in accordance with Section 3.07;
(v) make any Note payable in money other than that stated
in the Note;
(vi) make any change in Section 6.04 or 6.07 hereof or in
this Section 10.02(a);
(vii) waive a Default or Event of Default in the payment
of principal of premium, if any, or interest, if any, on, or redemption
payment with respect to, any Note (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration);
(viii) impair the right of any Holder to receive payment
of principal of and interest on such Holder's Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment
on or with respect to such Holder's Notes;
(ix) make any change in the amendment provisions which
require each Holder's consent or in the waiver provisions; or
(x) release any Subsidiary Guarantor from its Subsidiary
Guaranty, except as provided herein.
(b) Upon the request of the Issuers and the Subsidiary
Guarantors accompanied by Board Resolutions of their respective Boards of
Directors authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Noteholders as aforesaid, and upon receipt by the Trustee of the
documents described in Section 7.02, Section 10.06 and Section 12.04 hereof, the
Trustee shall join with the Issuers and the Subsidiary Guarantors in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
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(c) It shall not be necessary for the consent of the
Noteholders under this Section 10.02 to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
(d) After an amendment, supplement or waiver under this
Section 10.02 becomes effective, the Issuers shall mail to all Noteholders a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
SECTION 10.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall comply with the TIA as then in effect.
SECTION 10.04. REVOCATION AND EFFECT OF CONSENTS.
(a) Until an amendment, supplement or waiver becomes
effective, a consent to it by a Noteholder is a continuing consent by the
Noteholder and every subsequent Noteholder or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Noteholder or subsequent Noteholder
may revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective when approved by
the requisite Holders and executed by the Trustee (or, if otherwise provided in
such waiver, amendment or supplement, in accordance with its terms) and
thereafter binds every Noteholder, unless it makes a change described in any of
clauses (i) through (x) of Section 10.02, in which case, the amendment,
supplement or waiver shall bind only each Holder of a Note who has consented to
it and every subsequent Holder of a Note or portion of a Note that evidences the
same indebtedness as the consenting Holder's Note.
(b) The Issuers may fix a record date for determining which
Noteholders must consent to such amendment, supplement or waiver. If the Issuers
fix a record date, the record date shall be fixed at (i) the later of 30 days
prior to the first solicitation of such consent or the date of the most recent
list of Noteholders furnished to the Trustee prior to such solicitation pursuant
to Section 2.05 hereof, or (ii) such other date as the Issuers shall designate.
If a record date is fixed, then notwithstanding the last sentence of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No consent shall be valid or effective for more than 90 days after such
record date except to the extent that the requisite number of
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consents to the amendment, supplement or waiver have been obtained within such
90-day period or as set forth in the preceding paragraph of this Section 10.04.
SECTION 10.05. NOTATION ON OR EXCHANGE OF NOTES.
(a) Notes authenticated and delivered after the execution of
any supplemental indenture may bear a notation in form approved by the Trustee
as to any matter provided for in such amendment, supplement or waiver on any
Note thereafter authenticated. The Issuers in exchange for all Notes may issue
and the Trustee shall authenticate new Notes that reflect the amendment,
supplement or waiver.
(b) Failure to make the appropriate notation or issue a new
Note shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 10.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment, waiver or supplemental
indenture authorized pursuant to this Article 10 if the amendment, waiver or
supplemental indenture does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not, sign
it. In signing or refusing to sign such amendment, waiver or supplemental
indenture, the Trustee shall be entitled to receive and, subject to Section
7.01, shall be fully protected in relying upon, in addition to the documents
required by Section 7.02 and Section 12.04, an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that such amendment, waiver or
supplemental indenture is authorized or permitted by this Indenture, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Issuers in accordance with its terms.
ARTICLE 11
SUBSIDIARY GUARANTEE OF NOTES
SECTION 11.01. SUBSIDIARY GUARANTEE
(a) Each Subsidiary Guarantor hereby jointly and severally
irrevocably and unconditionally guarantees, as a primary obligor and not a
surety, to each Noteholder of a Note now or hereafter authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the Obligations of the Issuers hereunder or thereunder, (i) the due and punctual
payment of the principal, premium, if any, interest (including post-petition
interest in any proceeding under any Bankruptcy Law whether or not an allowed
claim in such proceeding) on overdue principal, premium, if any, and interest,
if lawful on such
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Note, and (ii) all other monetary Obligations payable by the Issuers under this
Indenture (including under Section 7.07 hereof) and the Notes (all of the
foregoing being hereinafter collectively called the "Guaranteed Obligations"),
when and as the same shall become due and payable, whether by acceleration
thereof, call for redemption or otherwise (including amounts that would become
due but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code), in accordance with the terms of any such Note and of this
Indenture, subject, however, in the case of (i) and (ii) above, to the
limitations set forth in Section 10.04 hereof. Each Subsidiary Guarantor hereby
agrees that its Obligations hereunder shall be absolute and unconditional,
irrespective of, and shall be unaffected by, any failure to enforce the
provisions of any such Note or this Indenture, any waiver, modification or
indulgence granted to the Issuers with respect thereto, the recovery of any
judgment against the Issuers, any action to enforce the same, by the Noteholders
or the Trustee, the recovery of any judgment against the Issuers, any action to
enforce the same, or any other circumstances which may otherwise constitute a
legal or equitable discharge of a surety or guarantor. Each Subsidiary Guarantor
hereby waives diligence, presentment, filing of claims with a court in the event
of a merger or bankruptcy of the Issuers, any right to require a proceeding
first against the Issuers, the benefit of discussion, protest or notice with
respect to any such Note or the Indebtedness evidenced thereby and all demands
whatsoever, and covenants that its Subsidiary Guarantee shall not be discharged
as to any such Note except by payment in full of the principal thereof, premium,
if any, and all accrued interest thereon.
(b) Each Subsidiary Guarantor further agrees that its
Subsidiary Guarantee herein constitutes a guarantee of payment, performance and
compliance when due (and not a guarantee of collection) and waives any right to
require that any resort be had by any Noteholder or the Trustee to any Note held
for payment of the Guaranteed Obligations.
(c) Each Subsidiary Guarantor agrees that it shall not be
entitled to, and hereby irrevocably waives, any right of subrogation in relation
to the Noteholders or the Trustee in respect of any Guaranteed Obligations. Each
Subsidiary Guarantor further agrees that, as between such Subsidiary Guarantor,
on the one hand, and the Noteholders and the Trustee, on the other hand, (x) the
maturity of the Guaranteed Obligations may be accelerated as provided in Article
6 for the purposes of such Subsidiary Guarantor's Subsidiary Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Guaranteed Obligations, and (y) in the event of
any Declaration of acceleration of such Guaranteed Obligations as provided in
Article 6 hereof, such Guaranteed Obligations (whether or not due and payable)
shall forthwith become due and payable by such Subsidiary Guarantor for the
purpose of this Article 10.
(d) Each Subsidiary Guarantor also agrees to pay any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Noteholder in enforcing any rights under this Article 11.
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(e) The Subsidiary Guarantee set forth in this Article 11
shall not be valid or become obligatory for any purpose with respect to a Note
until the certificate of authentication on such Note shall have been signed by
or on behalf of the Trustee.
SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
(a) To evidence each Subsidiary Guarantor's Subsidiary
Guarantee set forth in this Article 11, each Subsidiary Guarantor hereby agrees
that a notation of such Subsidiary Guarantee shall be placed on each Note
authenticated and delivered by the Trustee.
(b) This Indenture shall be executed on behalf of each
Subsidiary Guarantor, and an Officer of each Subsidiary Guarantor shall sign the
notation of the Subsidiary Guarantee on the Notes, by manual or facsimile
signature. If an Officer whose signature is on this Indenture or the notation of
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which the Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless. Each Subsidiary Guarantor
hereby agrees that the Subsidiary Guarantee set forth in Section 11.01 hereof
shall remain in full force and effect notwithstanding any failure to endorse on
each Note a notation of the Subsidiary Guarantee.
(c) The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of each Subsidiary
Guarantor.
SECTION 11.03. SUBSIDIARY GUARANTEE UNCONDITIONAL, ETC.
Upon failure of payment when due of any Guaranteed Obligation
for whatever reason, each Subsidiary Guarantor will be obligated to pay the same
immediately. Each Subsidiary Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of: the
recovery of any judgment against the Issuers or any Subsidiary Guarantor; any
extension, renewal, settlement, compromise, waiver or release in respect of any
obligation of the Issuers under this Indenture or any Note, by operation of law
or otherwise; any modification or amendment of or supplement to this Indenture
or any Note; any change in the corporate existence, structure or ownership of
the Issuers, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Issuers or their assets or any resulting release or
discharge of any obligation of the Issuers contained in this Indenture or any
Note; the existence of any claim, set-off or other rights which any Subsidiary
Guarantor may have at any time against the Issuers, the Trustee, any Noteholder
or any other Person, whether in connection herewith or any unrelated
transactions; provided, that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim; any invalidity or
unenforceability
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relating to or against the Issuers for any reason of this Indenture or any Note,
or any provision of applicable law or regulation purporting to prohibit the
payment by the Issuers of the principal, premium, if any, or interest on any
Note or any other Guaranteed Obligation; or any other act or omission to act or
delay of any kind by the Issuers, the Trustee, any Noteholder or any other
Person or any other circumstance whatsoever which might, but for the provisions
of this paragraph, constitute a legal or equitable discharge of the Subsidiary
Guarantors' obligations hereunder. Each Subsidiary Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Issuers, any right to require a
proceeding first against the Issuers, protest, notice and all demand whatsoever
and covenants that this Subsidiary Guarantee will not be discharged except by
the complete performance of the obligations contained in the Notes, this
Indenture and in this Article 11. Each Subsidiary Guarantor's obligations
hereunder shall remain in full force and effect until this Indenture shall have
terminated and the principal of and interest on the Notes and all other
Guaranteed Obligations shall have been paid in full. If at any time any payment
of the principal of or interest on any Note or any other payment in respect of
any Guaranteed Obligation is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Issuers or otherwise,
each Subsidiary Guarantor's obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time, and this Article 11, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Subsidiary Guarantor irrevocably
waives any and all rights to which it may be entitled, by operation of law or
otherwise, upon making any payment hereunder to be subrogated to the rights of
the payee against the Issuers with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the Issuers in respect thereof.
SECTION 11.04. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY.
Each Subsidiary Guarantor and by its acceptance hereof each
Noteholder hereby confirms that it is the intention of all such parties that the
guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Law, Federal and state fraudulent conveyance laws or other legal principles. To
effectuate the foregoing intention, the Noteholders and each Subsidiary
Guarantor hereby irrevocably agree that the obligations of such Subsidiary
Guarantor under the Subsidiary Guarantee shall be limited to the maximum amount
as will, after giving effect to all other contingent and fixed liabilities of
such Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to Section 11.05 hereof, result in the obligations of such
Subsidiary Guarantor under the Subsidiary Guarantee not constituting such
fraudulent transfer or conveyance under federal or state law.
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SECTION 11.05. CONTRIBUTION.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in
the event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Subsidiary Guarantor") under the Subsidiary Guarantee, such Funding
Subsidiary Guarantor shall be entitled to a contribution from all other
Subsidiary Guarantors in a pro rata amount based on the Adjusted Net Assets of
each Subsidiary Guarantor (including the Funding Subsidiary Guarantor) for all
payments, damages and expenses incurred by that Funding Subsidiary Guarantor in
discharging the Issuers' obligations with respect to the Notes or any other
Subsidiary Guarantor's obligations with respect to the Subsidiary Guarantee.
SECTION 11.06. RELEASE.
Upon the sale or disposition of all of the Equity Interests of
a Subsidiary Guarantor to a Person which is not an Issuer or a Subsidiary of an
Issuer, which is otherwise in compliance with this Indenture, such Subsidiary
Guarantor shall be deemed released from all its obligations under this Indenture
without any further action required on the part of the Trustee or any
Noteholder; provided, however, that any such termination shall occur if and only
to the extent that all Obligations of each Subsidiary Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests which secure, Indebtedness of the Issuers and the other Subsidiary
Guarantors shall also terminate upon such release, sale or transfer; provided
further, that without limiting the foregoing, any proceeds received by the
Issuers or any Subsidiary of the Issuers from such transaction shall be applied
as provided in Section 4.10 and Section 3.09. The Trustee shall execute an
appropriate instrument prepared by the Issuers evidencing such release upon
receipt of a request by the Issuers accompanied by an Officers' Certificate
certifying as to the compliance with this Section 11.06. Any Subsidiary
Guarantor not so released remains liable for the full amount of principal,
premium, if any, and interest on the Notes as provided in this Article 11.
SECTION 11.07. ADDITIONAL SUBSIDIARY GUARANTORS.
Any Person that was not a Subsidiary Guarantor on the date of
this Indenture may become a Subsidiary Guarantor by executing and delivering to
the Trustee (a) a supplemental indenture in form and substance satisfactory to
the Trustee, which subjects such Person to the provisions (including, without
limitation, the representations and warranties in this Article 11 and Article
12) of this Indenture as a Subsidiary Guarantor and (b) an Opinion of Counsel to
the effect that such supplemental indenture has been duly authorized and
executed by such Person and constitutes the legal, valid, binding and
enforceable obligation of such Person (subject to such customary exceptions
concerning creditors' rights and equitable principles as may be acceptable to
the Trustee in its discretion). The Subsidiary
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Guarantee of each Person described in this Section 11.07 shall apply to all
Notes theretofore executed and delivered, notwithstanding any failure of such
Notes to contain a notation of such Subsidiary Guarantee thereon.
SECTION 11.08. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
RAS or another Subsidiary Guarantor that is a Wholly-Owned Subsidiary of RAS or
shall prevent any sale or conveyance of the property of a Subsidiary Guarantor
as an entirety or substantially as an entirety to RAS or another Subsidiary
Guarantor that is a Wholly-Owned Subsidiary of RAS. Upon any such consolidation,
merger, sale or conveyance, the Subsidiary Guarantee given by such Subsidiary
Guarantor shall no longer have any force or effect.
(b) Nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
a Person or Persons other than the RAS or another Subsidiary Guarantor (whether
or not affiliated with the Subsidiary Guarantor), or successive consolidations
or mergers in which a Subsidiary Guarantor or its successor or successors shall
be a party or parties, or shall prevent any sale or conveyance of the property
of a Subsidiary Guarantor as an entirety or substantially as an entirety, to a
Person other than RAS or another Subsidiary Guarantor (whether or not affiliated
with the Subsidiary Guarantor); provided, however, that, subject to Sections
11.06 and 11.08(a), (x) (i) immediately after such transaction, and giving
effect thereto, no Default or Event of Default shall have occurred as a result
of such transaction and be continuing, or (ii) such transaction does not violate
any covenants set forth in this Indenture, and (y) (i) the respective
transaction is treated as an Asset Disposition for purposes of Section 4.10 and
Section 3.09 hereof or (ii) if the surviving Person is not the Subsidiary
Guarantor, each Subsidiary Guarantor hereby covenants and agrees that, upon any
such consolidation, merger, sale or conveyance, the Subsidiary Guarantee set
forth in this Article 11, and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be performed by such
Subsidiary Guarantor, shall be expressly assumed (in the event that the
Subsidiary Guarantor is not the surviving Person in the merger), by supplemental
indenture in form and substance satisfactory to the Trustee, of the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Subsidiary Guarantor, and such successor Person shall
succeed to, and be substituted for, the Subsidiary Guarantor with the same
effect as if it had been named herein as a Subsidiary Guarantor.
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<PAGE> 105
SECTION 11.09. SUCCESSORS AND ASSIGNS.
This Article 11 shall be binding upon each Subsidiary
Guarantor and its successors and assigns and shall inure to the benefit of the
successors and assigns of the Trustee and the Noteholders and, in the event of
any transfer or assignment of rights by any Noteholder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 11.10. WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each Subsidiary Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive each
such Subsidiary Guarantor from performing its Subsidiary Guarantee as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) each such Subsidiary Guarantor hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control. Until such time as
this Indenture becomes qualified under the TIA, the Issuers, the Subsidiary
Guarantors and the Trustee shall be deemed subject to and governed by the TIA as
if this Indenture were so qualified on the date hereof.
SECTION 12.02. NOTICES.
(a) Any notice or communication by the Issuers, any Subsidiary
Guarantor or the Trustee to the other is duly given if in writing and delivered
in person or mailed by first class mail (registered or certified, return receipt
requested), confirmed facsimile transmission or overnight air courier
guaranteeing next day delivery, to the other's address:
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<PAGE> 106
If to the Issuers or any of the Subsidiary Guarantors:
The Resort at Summerlin
1160 Town Center Drive
Suite 200
Las Vegas, NV 89134
Attention: John Tipton
Facsimile No.: (702) 869-7001
If to the Trustee:
United States Trust Issuers of New York
114 West 47th Street
New York, NY 10036
Attention: Corporate Trust Administration
Facsimile No.: (212) 852-1625
(b) the Issuers or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.
(c) All notices and communications (other than those sent to
Noteholders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if by facsimile
transmission; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
(d) Any notice or communication to a Noteholder shall be
mailed by first class mail, postage prepaid, to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders.
(e) If a notice or communication is mailed to any Person in
the manner provided above within the time prescribed, it is duly given, whether
or not the addressee receives it.
(f) If the Issuers mail a notice or communication to
Noteholders, they shall mail a copy to the Trustee and each Agent at the same
time.
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<PAGE> 107
SECTION 12.03. COMMUNICATION BY NOTEHOLDERS WITH OTHER NOTEHOLDERS.
Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Issuers, the Subsidiary Guarantors, the Trustee, the Registrar and
anyone else shall have the protection of TIA Section 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers and/or any of
the Subsidiary Guarantors to the Trustee to take any action under this
Indenture, the Issuers and/or any of the Subsidiary Guarantors, as the case may
be, shall furnish to the Trustee:
(i) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 12.05 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action have
been satisfied (except with regard to an authentication order pursuant
to Section 2.02(c) hereof, which shall require a certificate of two
Officers); and
(ii) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 12.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e), shall comply with the definition of the term "Officers'
Certificate" and shall include:
(i) a statement that the person making such certificate or
opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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<PAGE> 108
(iii) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(iv) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Noteholders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 12.07. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in New York City, or at a place of payment are authorized
or obligated by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue on such payment for the intervening period.
SECTION 12.08. NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee, agent,
manager, stockholder or partner of the Issuers or their predecessors shall have
any liability for any Obligations of the Issuers under the Notes or this
Indenture or for any claim based on, in respect of, or by reason of such
Obligations or their creation. Each Noteholder by accepting a Note waives and
releases all such liability. This waiver and release are part of the
consideration for issuance of the Notes.
SECTION 12.09. DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.
SECTION 12.10. GOVERNING LAW.
This Indenture and the Notes shall be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required thereby.
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<PAGE> 109
SECTION 12.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of any of the Subsidiary Guarantors, the Issuers or their
respective Subsidiaries. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
SECTION 12.12. SUCCESSORS.
All agreements of the Issuers and the Subsidiary Guarantors in
this Indenture and the Notes shall bind their successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 12.13 GAMING AUTHORITIES, ETC.
(a) The Holders hereby acknowledge that (i) RAS may be
required to disclose the identities of the Holders to the Gaming Authorities
upon request; (ii) the Nevada Gaming Commission may in its discretion require
the Holders to file an application, be investigated and be found suitable to
hold the Notes; (iii) the Nevada Gaming Commission may, in its discretion,
require the holder of any debt security of a company registered by the Nevada
Gaming Commission as a publicly traded corporation ("Registered Company") to
file an application, be investigated and be found suitable to own the debt
security of a Registered Company; and (iv) if the Nevada Gaming Commission
determines that a Person is unsuitable to own such security, then pursuant to
the Gaming Laws, the Registered Company can be sanctioned, including the loss of
its approvals, if without the prior approval of the Nevada Gaming Commission,
it: (a) pays to the unsuitable Person any dividend, interest, or any
distribution whatsoever; (b) recognizes any voting right by such unsuitable
Person in connection with such securities; (c) pays the unsuitable Person
remuneration in any form; or (d) makes any payment to the unsuitable person by
way of principal redemption, conversion, exchange, liquidation, or similar
transaction. The Issuers will be required to be registered by the Nevada Gaming
Commission as Registered Companies upon the issuance of the Exchange Notes.
(b) Each Holder hereby agrees (to the extent permitted by law)
that if the Gaming Authorities determine that such Holder as a holder or
beneficial owner of Notes must be found suitable (whether as a result of a
foreclosure of the Casino Property or for any other reason), and if such Holder
either refuses to file an application or is found unsuitable, such Holder shall,
upon request of RAS, dispose of such Holder's Notes within 30 days after receipt
of such request or such earlier date as may be ordered by the Gaming
Authorities; provided that if such Holder does not so dispose of its Notes, then
such Holder will be deemed to have agreed that the provisions described in
Section 12.13(a)(iv) will be applicable to it.
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<PAGE> 110
SECTION 12.14. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 12.15. COUNTERPART ORIGINALS.
This Indenture may be executed in any number of counterparts,
each of which so executed shall be an original, but all of them together
represent the same agreement.
SECTION 12.16. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
SECTION 12.17. EXECUTION OF AGREEMENTS.
The Trustee is hereby authorized and directed to execute and
deliver on the Issue Date each of the Notes Proceeds Agreement and the
Disbursement Agreement, and to perform its duties and obligations, if any,
thereunder.
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<PAGE> 111
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
SIGNATURES
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
By: THE RESORT AT SUMMERLIN,
INC., its General Partner
By /s/ Brian McMullan
---------------------------------
Name: Brian McMullan
Title: President
By /s/ Quinton Boshoff
---------------------------------
Name: Quinton Boshoff
Title: SR VP - Slots
THE RESORT AT SUMMERLIN, INC.
By /s/ Brian McMullan
---------------------------------
Name: Brian McMullan
Title: President
By /s/ Quinton Boshoff
---------------------------------
Name: Quinton Boshoff
Title: SR VP - Slots
-104-
<PAGE> 112
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee
By /s/ Louis P. Young
---------------------------------
Name: Louis P. Young
Title: Vice President
-105-
<PAGE> 113
EXHIBIT A
FORM OF INITIAL NOTE
THIS NOTE OR ITS PREDECESSORS HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, UNITED STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON, AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT
IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING
INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, ON THE DATE OF THE TRANSFER OF THIS SECURITY, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP OR THE RESORT AT SUMMERLIN, INC. (THE "ISSUERS") OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED QIB
IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS. THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
<PAGE> 114
EXHIBIT A
Page 2
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE, BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS),
(F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE ISSUERS) AND IN EACH CASE, IN ACCORDANCE
WITH APPLICABLE SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING RESTRICTIONS.
[Include the following legends only on Global Notes]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY OR A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT,
<PAGE> 115
EXHIBIT A
Page 3
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
[Include the following legend only on Physical Certificates]
THIS NOTE WILL BE CONSIDERED TO HAVE BEEN ISSUED WITH
ORIGINAL ISSUE DISCOUNT ("OID") FOR PURPOSES OF SECTIONS
1271 ET. SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED. THE ISSUE DATE OF THIS NOTE IS DECEMBER 31,
1997. FOR INFORMATION REGARDING THE ISSUE PRICE,
AMOUNT OF OID PER $1,000 OF PRINCIPAL AMOUNT AND YIELD
TO MATURITY FOR PURPOSES OF THE OID RULES, PLEASE
CONTACT JOHN J. TIPTON AT (702) 869-7000.
<PAGE> 116
EXHIBIT A
Page 4
CUSIP No: _________
(Front of Note)
No. 1 $___________
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
13% Senior Subordinated PIK Notes due 2007, Series A
The Resort at Summerlin, Limited Partnership, a Nevada partnership, and The
Resort at Summerlin, Inc., a Nevada Corporation, jointly and severally, promise
to pay to ____________________, or its registered assigns, the principal sum of
$___________, as such amount may be increased or decreased on the records of the
Registrar (as defined in the Indenture referred to herein), on December 15,
2007.
Interest Payment Dates: June 15 and December 15, commencing June 15, 1998.
Record Dates: May 15 and November 15 (whether or not a Business Day).
Additional provisions of this Note are set forth on the other side of this Note.
Dated:
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
By: THE RESORT AT SUMMERLIN, INC.,
its General Partners
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
<PAGE> 117
EXHIBIT A
Page 5
THE RESORT AT SUMMERLIN, INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned Indenture
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
By:
---------------------------------
Authorized Signatory
<PAGE> 118
EXHIBIT A
Page 6
(Reverse of Note)
13% SENIOR SUBORDINATED PIK NOTE DUE 2007, Series A
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. The Resort at Summerlin, Limited Partnership, a
Nevada limited partnership, and The Resort at Summerlin, Inc., a Nevada
corporation (the "Issuers"), jointly and severally, promise to pay interest on
the principal amount of this Note at the rate and in the manner specified below.
The Issuers shall pay, in cash, interest on the principal amount of this Note at
the rate per annum of 13%; provided, however, that through and including June
15, 1999, on each Interest Payment Date, the Issuers may, at their option and in
their sole discretion, in lieu of the payment in whole or in part of interest
due on this Note, pay interest on this Note through the issuance of additional
Notes in an aggregate principal amount equal to the amount of interest that
would be payable with respect to this Note, if such interest were paid in cash.
After June 15, 1999, the Issuers shall pay interest on this Note in cash. The
Issuers shall notify the Trustee in writing of their election to pay interest on
this Note through the issuance of additional Notes not less than 10 nor more
than 45 days prior to the record date for the Interest Payment Date on which
additional Notes will be issued. Additional Notes shall be governed by, and
entitled to the benefits of, the Indenture and shall be subject to the terms of
the Indenture and shall be subject to the same terms (including the rate of
interest from time to time payable thereon) as this Note (except, as the case
may be, with respect to the issuance date and aggregate principal amount). The
Issuers will pay interest semiannually in arrears on June 15 and December 15 of
each year (each an "Interest Payment Date"), commencing June 15, 1998, or if any
such day is not a Business Day on the next succeeding Business Day. Interest
will be computed on the basis of a 360-day year consisting of twelve 30-day
months. Interest shall accrue from the most recent Interest Payment Date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes. To the extent lawful, the Issuers shall pay
interest on overdue principal at the rate of 2% per annum in excess of the then
applicable interest rate on the Notes; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful. The rate of interest payable on this Note shall
be subject to the assessment of additional interest (the "Additional Interest")
as follows:
(i) if the Exchange Offer Registration Statement (as defined
below) or Shelf Registration Statement (as defined below) is not filed within
120 days following the Issue Date or, in the case of the Shelf Registration
Statement, 120 days following a Shelf Request (as defined in the Registration
Rights Agreement), Additional Interest shall accrue on the Notes over and above
the stated interest at a rate of 0.25% per annum for the first 90 days
commencing on the 120th day after the Issue Date or the Shelf Request,
respectively, such
<PAGE> 119
EXHIBIT A
Page 7
Additional Interest rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 30-day period;
(ii) if the Exchange Offer Registration Statement or Shelf
Registration Statement is not declared effective within, in the case of the
Exchange Offer Registration Statement, 180 days following the Issue Date or, in
the case of the Shelf Registration Statement, 180 days following a Shelf
Request, Additional Interest shall accrue on the Notes over and above the stated
interest at a rate of 0.25% per annum for the first 90 days commencing on the
180st day after the Issue Date or the Shelf Request, respectively, such
Additional Interest rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 30-day period; or
(iii) if (A) the Issuers and the Subsidiary Guarantors have
not exchanged all Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to 210 days after the Issue Date or (B) the Exchange
Offer Registration Statement ceases to be effective at any time prior to the
time that the Exchange Offer is consummated or (C) if applicable, the Shelf
Registration Statement has been declared effective and such Shelf Registration
Statement ceases to be effective at any time prior to the second anniversary of
the Issue Date (unless all the Notes have been sold thereunder), then Additional
Interest shall accrue on the Notes over and above the stated interest at a rate
of 0.25% per annum for the first 30 days commencing on (x) the 210th day after
the Issue Date with respect to the Notes validly tendered and not exchanged by
RAS, in the case of (A) above, or (y) the day the Exchange Offer Registration
Statement ceases to be effective or usable for its intended purpose in the case
of (B) above, or (z) the day such Shelf Registration Statement ceases to be
effective in the case of (C) above, such Additional Interest rate increasing by
an additional 0.25% per annum at the beginning of each subsequent 30-day period;
provided, however, that the Additional Interest rate on the Notes under clauses
(i), (ii) and (iii) above may not exceed in the aggregate 2.0% per annum; and
provided further, that (1) upon the filing of the Exchange Offer Registration
Statement or Notes Shelf Registration Statement (in the case of clause (i)
above), (2) upon the effectiveness of the Exchange Offer Registration Statement
or Shelf Registration Statement (in the case of (ii) above), or (3) upon the
exchange of Exchange Notes for all Notes tendered (in the case of clause
(iii)(A) above), or upon the effectiveness of the Exchange Offer Registration
Statement which had ceased to remain effective (in the case of clause (iii)(B)
above), or upon the effectiveness of the Shelf Registration Statement which had
ceased to remain effective (in the case of clause (iii)(C) above), Additional
Interest on the Notes as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue.
"Exchange Offer" shall mean the exchange offer by the Issuers
of Initial Notes for Exchange Notes pursuant to Section 2(a) of the Registration
Rights Agreement.
<PAGE> 120
EXHIBIT A
Page 8
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Offering Memorandum or prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Record Date" shall have the meaning provided on the front of
this Note.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Issuers and the Subsidiary Guarantors pursuant to
the provisions of the Registration Rights Agreement which covers all of the
Initial Notes on an appropriate form under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the Commission, and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Offering Memorandum contained therein, all exhibits
thereto and all material incorporated by reference therein.
2. Method of Payment. The Issuers shall pay interest on the
Notes (except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on the Record Date immediately preceding the
Interest Payment Date, even if such Notes are cancelled after such Record Date
and on or before such Interest Payment Date. Noteholders must surrender Notes to
a Paying Agent to collect principal payments. The Issuers shall pay principal,
premium, if any, and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender") or Additional Notes in accordance with the Indenture. However, the
Issuers may pay principal, premium, if any, and interest by its check payable in
such U.S. Legal Tender. The Issuers may deliver any such interest payment to the
Paying Agent or to a Noteholder at the Noteholder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee will act
as Paying Agent and Registrar. The Issuers may change any Paying Agent,
Registrar or co-registrar without prior notice to any Noteholder. An Issuer or
any Subsidiary Guarantor may act in any such capacity, except that none of RAS,
its Subsidiaries or their Affiliates shall act (i) as Paying Agent in connection
with any redemption, offer to purchase, discharge or defeasance, as otherwise
specified in the Indenture, and (ii) as Paying Agent or Registrar if a Default
or Event of Default has occurred and is continuing.
4. Indenture. The Issuers issued the Notes under an Indenture,
dated as of December 31, 1997 (the "Indenture"), among the Issuers, the
Subsidiary Guarantors and United States Trust Company of New York, as Trustee
(the "Trustee"). The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the TIA as in effect on the
date the Indenture is qualified, except as otherwise provided in the Indenture.
The Notes are subject to all such terms, and Noteholders are
<PAGE> 121
EXHIBIT A
Page 9
referred to the Indenture and the TIA for a statement of such terms. The terms
of the Indenture shall govern any inconsistencies between the Indenture and the
Notes. The Notes are senior Subordinated Obligations of the Issuers limited to
$100,000,000 in aggregate principal amount excluding the Additional Notes.
5.(a) Optional Redemption. Except as indicated in the next
succeeding paragraph, the Notes are not redeemable at the Issuers' option prior
to December 15, 2002. Thereafter, the Notes will be redeemable, at the option of
the Issuers, in whole or in part, at the following redemption prices (expressed
as percentages of the principal amount of the Notes) if the Notes are redeemed
during the 12-month period commencing on December 15 of the years set forth
below, plus accrued interest to the redemption date:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
------ ----------------
<S> <C>
2002 106.50%
2003 104.33%
2004 102.17%
2005 and thereafter 100.00%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. At any time, or
from time to time, on or prior to December 15, 2000, the Issuers may, at their
option, use the Net Cash Proceeds of one or more Public Equity Offerings by RAS
so long as there is a Public Market at the time of such redemption (which fact
shall be certified to the Trustee in an Officer's Certificate delivered to the
Trustee pursuant to Section 3.01(a) of the Indenture), at a redemption price
equal to 113% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided, however, that after any
such redemption at least $65 million of the original principal amount of the
Notes remains outstanding. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Issuers shall make such redemption
not more than 90 days after the consummation of any such Public Equity Offering.
6. Mandatory Redemption. The Notes are not subject to
mandatory redemption or sinking fund payments except as described below.
Notwithstanding any other provision hereof, if any Gaming Authority requires
that a Holder or beneficial owner of the Notes must be licensed, qualified or
found suitable under any applicable Gaming Laws in order to maintain any gaming
license or franchise of RAS under any applicable Gaming Laws, and the Holder or
beneficial owner fails to apply for a license, qualification or finding of
suitability within 30 days after being requested to do so by the Gaming
Authority (or such lesser period that may be required by such Gaming Authority)
or if such Holder or beneficial owner is not so licensed, qualified or found
suitable, the Issuers shall have the right, at their option, (i) to require such
Holder or beneficial owner to dispose of such Holder's or beneficial owner's
Notes within 30 days of receipt of such finding by the
<PAGE> 122
EXHIBIT A
Page 10
applicable Gaming Authority (or such earlier date as may be required by the
applicable Gaming Authority) or (ii) to call for redemption of the Notes of such
Holder or beneficial owner at a redemption price equal to the lesser of the
principal amount thereof or the fair market value thereof or the price at which
such Holder or beneficial owner acquired the Notes, together with, in either
case, accrued and unpaid interest, to the earlier of the date of redemption or,
the date of the finding of unsuitability by such Gaming Authority, which may be
less than 30 days following the notice of redemption if so ordered by such
Gaming Authority. In connection with any such redemption and except as may be
required by a Gaming Authority, the Issuers shall comply with the procedures
contained in the Indenture for redemptions of the Notes. The Issuers are not
required to pay or reimburse any Holder or beneficial owner of the Notes who is
required to apply for such license, qualification or finding of suitability for
the costs of such licensure and investigation for such license, qualification or
finding of suitability. Any of such expenses will be the sole obligation of such
Holder or beneficial owner of the Notes.
7. Repurchase at Option of Noteholder. (a) If there is a
Change of Control, each Holder of Notes will have the right, subject to the
conditions set forth in Section 4.14 of the Indenture, to require the Issuers to
repurchase all or any part of such Holder's Notes at a repurchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant Interest Payment
Date). No earlier than 30 days after and no later than 60 days following a
Change of Control (or if the Notes have been repaid in full at such time), the
Issuers will mail a notice to each Noteholder stating (i) that a Change of
Control has occurred and that such Noteholder has the right to require the
Issuers to repurchase all or any part of such Noteholder's Notes at a repurchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); (ii) the circumstances and relevant facts
regarding such Change of Control (including information with respect to pro
forma historical income, cash flow and capitalization after giving effect to
such Change of Control); (iii) the repurchase date (which will be no earlier
then 70 days nor later than 90 days from the date such notice is mailed); and
(iv) the procedures, determined by the Issuers consistent with the Indenture,
that a Noteholder must follow in order to have its Notes repurchased.
Noteholders that are subject to an offer to repurchase may elect to have such
Notes repurchased by completing the form entitled "Option of Noteholder to Elect
Purchase" appearing below.
(b) The Indenture provides that, after certain Asset
Dispositions, and subject to the further limitations contained therein, the
Issuers will make an offer to purchase certain amounts of the Notes in
accordance with procedures set forth in the Indenture.
<PAGE> 123
EXHIBIT A
Page 11
8. Notice of Redemption. Notice of redemption shall be mailed
at least 30 but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes may be redeemed
in part but only in whole multiples of $1,000, unless all of the Notes held by a
Noteholder are to be redeemed. On and after the redemption date, interest ceases
to accrue on Notes or portions of them called for redemption.
9. Subordination. The Issuers' payment of the principal of and
interest on the Notes is subordinated and subject to the prior payment in full
of the Issuers' Senior Indebtedness as more fully set forth in the Indenture.
Each Holder of Notes by his acceptance hereof covenants and agrees that all
payments of the principal and interest on the Notes by the Issuers shall be
subordinated in accordance with Article 9 of the Indenture and each holder
accepts and agrees to be bound by such provisions.
10. Registration Rights. Pursuant to the Registration Rights
Agreement, and subject to certain terms and conditions stated therein, including
compliance with the requirements of all applicable Gaming Laws, the Issuers will
be obligated to consummate an Exchange Offer pursuant to which the Holders of
the Initial Notes shall have the right to exchange this Note for Exchange Notes,
which have been registered under the Securities Act, in like principal amount
and having terms identical in all material respects to the Initial Note.
11. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Noteholder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not exchange or register the
transfer of any Note or portion of a Note selected for redemption. Also, it need
not exchange or register the transfer of any Notes during a period beginning at
the opening of business on a Business Day 15 days before the day of any
selection of Notes to be redeemed and ending at the close of business on the day
of selection or during the period between a Record Date and the corresponding
Interest Payment Date.
12. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Note, the Trustee, any Agent
and the Issuers shall deem and treat the Person in whose name this Note is
registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Note and for all other
purposes whatsoever, whether or not this Note is overdue, and neither the
Trustee, any Agent nor the Issuers shall be affected by notice to the contrary.
The registered Noteholder shall be treated as its owner for all purposes.
<PAGE> 124
EXHIBIT A
Page 12
13. Amendments and Waivers. Subject to certain exceptions
provided in the Indenture, the Indenture or the Notes may be amended with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes, and any existing Default or Event of Default (except a payment default)
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes. Without the consent of any Noteholder, the
Indenture or the Notes may be amended to, among other things, cure any
ambiguity, defect or inconsistency, to comply with the requirements of the
Commission in order to effect or maintain qualification of the Indenture under
the TIA or to make any change that does not adversely affect the rights of any
Noteholder.
14. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the unpaid principal of, and any accrued
and unpaid interest on, all the Notes to be due and payable immediately;
provided, that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Issuers, all outstanding Notes
shall become due and payable immediately without further action or notice.
Noteholders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Noteholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Issuers must furnish an annual compliance certificate to the
Trustee.
15. Trustee Dealings with the Issuers. The Trustee under the
Indenture, in its individual or any other capacity may make loans to, accept
deposits from, and perform services for the Issuers, the Subsidiary Guarantors
or any Affiliate of the Issuers or the Subsidiary Guarantors, and may otherwise
deal with the Issuers, the Subsidiary Guarantors and their respective Affiliates
as if it were not Trustee.
16. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Issuers and their Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions provided for in the Indenture. The
Issuers must annually report to the Trustee on compliance with such limitations.
<PAGE> 125
EXHIBIT A
Page 13
17. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
18. Subsidiary Guarantee. Each Subsidiary Guarantor has
jointly and severally irrevocably and unconditionally guaranteed the payment of
principal, premium, if any, and interest (including interest on overdue
principal and overdue interest, if lawful) on the Notes; provided, however, each
Subsidiary Guarantor that makes a payment or distribution under a Subsidiary
Guarantee shall be entitled to a contribution from each other Guarantor in a pro
rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor.
19. Defeasance. Subject to certain conditions provided for in
the Indenture, the Issuers at any time may terminate some or all of their
obligations under the Notes and the Indenture if the Issuers deposit with the
Trustee money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Notes to redemption or maturity, as the
case may be.
20. Governing Law. The laws of the State of New York shall
govern this Note and the Indenture, without regard to principles of conflict of
laws.
21. Abbreviations. Customary abbreviations may be used in the
name of a Noteholder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Note Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and have directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Noteholders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
The Issuers will furnish to any Noteholder upon written
request and without charge a copy of the Indenture. Request may be made to:
The Resort at Summerlin
1160 Town Center Drive, Suite 200
Las Vegas, NV 89134
Attn: John Tipton
<PAGE> 126
EXHIBIT A
Page 14
FORM OF NOTATION ON SECURITY
RELATING TO SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE
The Subsidiary Guarantors (as defined in the Indenture (the
"Indenture") referred to in the Note upon which this notation is endorsed and
each hereinafter referred to as a "Subsidiary Guarantor," which term includes
any successor Person under the Indenture) (i) have jointly and severally
irrevocably and unconditionally guaranteed as a primary obligor and not a surety
(such guarantee by each Subsidiary Guarantor being referred to herein as the
"Subsidiary Guarantee"), (a) the due and punctual payment of the principal,
premium, if any, and interest on the Notes, whether at Stated Maturity or
interest payment date, by acceleration, call for redemption or otherwise, (b)
the due and punctual payment of interest on the overdue principal of and
interest, if any, on the Notes, to the extent lawful, (c) the due and punctual
performance of all other monetary Obligations of the Issuers under the Indenture
and the Notes to the Noteholders or the Trustee, all in accordance with the
terms set forth in Article 11 of the Indenture and (d) in case of any extension
of time of payment or renewal of any Notes or any such Obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at Stated Maturity by acceleration or
otherwise and (ii) have agreed to pay any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Trustee or any Noteholders in
enforcing any rights under this Subsidiary Guarantee.
The Obligations of each Subsidiary Guarantor to the Holders of
Notes and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture
are expressly set forth in Article 11 of the Indenture and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee. The
Obligations of each Subsidiary Guarantor to the Holders of the Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are
subordinated, as provided in the Indenture, to Guarantor Senior Indebtedness, as
defined in the Indenture.
No stockholder, officer, director or incorporator, as such,
past, present or future of any Subsidiary Guarantor shall have any liability
under this Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director or incorporator.
This is a continuing Subsidiary Guarantee and, except as
otherwise expressly provided for in Section 11.06 of the Indenture, shall remain
in full force and effect and shall be binding upon the Subsidiary Guarantor and
its successors and assigns until full and final payment of all of the Issuers'
Obligations under the Notes and the Indenture and shall inure to the benefit of
the successors and assigns of the Trustee and the Noteholders and, in the event
of any transfer or assignment of rights by any Noteholder or the Trustee, the
<PAGE> 127
EXHIBIT A
Page 15
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions hereof. This is a Subsidiary Guarantee of payment and not of
collectability.
This Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
THE TERMS OF ARTICLE 11 OF THE INDENTURE ARE
INCORPORATED HEREIN BY REFERENCE.
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
Guarantors:
By
------------------------------------------
Name:
Title:
<PAGE> 128
EXHIBIT A
Page 16
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Note on the books of the Issuers. The agent may
substitute another to act for him.
Date:
-------------
Your Signature:
-----------------------------------------
(Sign exactly as your name appears on the face of this Note)
<PAGE> 129
EXHIBIT A
Page 17
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") covering resales of this Note
(which effectiveness shall not have been suspended or terminated at the date of
the transfer) and (ii) December 30, 1999, the undersigned confirms that it has
not utilized any general solicitation or general advertising in connection with
the transfer and that this Note is being transferred:
Check One
(1) ___ to the Issuers or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) ___ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act; or
(5) ___ pursuant to the exemption from registration provided by Rule 144
under the Securities Act; or
(6) ___ pursuant to an effective registration statement under the Securities
Act; or
(7) ___ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than the
registered Noteholder thereof; provided that if box (3), (4), (5) or (7) is
checked, the Issuers or the Trustee may require, prior to registering any such
transfer of the Notes, in their sole discretion, such legal opinions,
certifications (including an investment letter in the case of box (3) or (4))
and other information as the Trustee or the Issuers have reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
If
<PAGE> 130
EXHIBIT A
Page 18
none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any Person other than the
Noteholder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: Signed:
----------------------- --------------------------------
(Sign exactly as name appears on
the other side of this Note)
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: Signed:
----------------------- --------------------------------
NOTICE: To be executed by an
executive officer
<PAGE> 131
EXHIBIT A
Page 19
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Issuers pursuant to Section 4.10 or Section 4.14 of the
Indenture check the appropriate box:
/ / Section 4.10 / / Section 4.14
If you want to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$
----------------------
Date:
------------------
Your Signature:
-----------------------------------------
(Sign exactly as your name appears on the face of this Note)
<PAGE> 132
EXHIBIT B
FORM OF EXCHANGE NOTE
[Include the following legend only on Global Notes]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE
OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO THE ISSUERS OR THEIR AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE.
[Include the following legend only on Physical Certificates]
THIS NOTE WILL BE CONSIDERED TO HAVE BEEN ISSUED
WITH ORIGINAL ISSUE DISCOUNT ("OID") FOR PURPOSES OF
SECTIONS 1271 ET. SEQ. OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED. THE ISSUE DATE OF THIS NOTE IS
DECEMBER 31, 1997. FOR INFORMATION REGARDING THE
ISSUE PRICE, AMOUNT OF OID PER $1,000 OF PRINCIPAL
AMOUNT AND YIELD TO MATURITY FOR PURPOSES OF THE
<PAGE> 133
EXHIBIT B
Page 2
OID RULES, PLEASE CONTACT JOHN J. TIPTON AT (702) 869-
7000.
<PAGE> 134
EXHIBIT B
Page 3
CUSIP No: __________
(Front of Note)
No. 1 $___________
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
13% Senior Subordinated PIK Note dues 2007, Series B
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP, a Nevada partnership, and THE
RESORT AT SUMMERLIN, INC., a Nevada corporation, jointly and severally, promise
to pay to ____________________________, or its registered assigns, the principal
sum of $___________, as such amount may be increased or decreased on the records
of the Registrar (as defined in the Indenture referred to herein), on December
15, 2007.
Interest Payment Dates: June 15 and December 15, commencing June 15, 1998.
Record Dates: May 15 and November 15 (whether or not a Business Day).
Additional provisions of this Note are set forth on the other side of this Note.
Dated:
THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP
By: THE RESORT AT SUMMERLIN, INC.,
its General Partner
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
THE RESORT AT SUMMERLIN, INC.
By:
---------------------------------
Name:
Title:
By:
---------------------------------
<PAGE> 135
EXHIBIT B
Page 4
Name:
Title:
<PAGE> 136
EXHIBIT B
Page 5
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned Indenture
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:_____________________________
Authorized Signatory
<PAGE> 137
EXHIBIT B
Page 6
(Reverse of Note)
13% SENIOR SUBORDINATED PIK NOTE DUE 2007, SERIES B
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. The Resort at Summerlin, Limited Partnership, a
Nevada limited partnership, and The Resort at Summerlin, Inc., a Nevada
corporation (the "Issuers"), jointly and severally, promise to pay interest on
the principal amount of this Note at the rate and in the manner specified below.
The Issuers shall pay, in cash, interest on the principal amount of this Note at
the rate per annum of 13%; provided, however, that through and including June
15, 1999, on each Interest Payment Date, the Issuers may, at their option and in
their sole discretion, in lieu of the payment in whole or in part of interest
due on this Note, pay interest on this Note through the issuance of additional
Notes in an aggregate principal amount equal to the amount of interest that
would be payable with respect to this Note, if such interest were paid in cash.
After June 15, 1999, the Issuers shall pay interest on this Note in cash. The
Issuers shall notify the Trustee in writing of their election to pay interest on
this Note through the issuance of additional Notes not less than 10 nor more
than 45 days prior to the record date for the Interest Payment Date on which
additional Notes will be issued. Additional Notes shall be governed by, and
entitled to the benefits of, the Indenture and shall be subject to the terms of
the Indenture and shall be subject to the same terms (including the rate of
interest from time to time payable thereon) as this Note (except, as the case
may be, with respect to the issuance date and aggregate principal amount). The
Issuers will pay interest semiannually in arrears on June 15 and December 15 of
each year (each an "Interest Payment Date"), commencing June 15, 1998, or if any
such day is not a Business Day on the next succeeding Business Day. Interest
will be computed on the basis of a 360-day year consisting of twelve 30-day
months. Interest shall accrue from the most recent Interest Payment Date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes. To the extent lawful, the Issuers shall pay
interest on overdue principal at the rate of 2% per annum in excess of the then
applicable interest rate on the Notes; it shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
2. Method of Payment. The Issuers shall pay interest on the
Notes (except defaulted interest) to the Persons who are registered Noteholders
at the close of business on the Record Date immediately preceding the Interest
Payment Date, even if such Notes are cancelled after such Record Date and on or
before such Interest Payment Date. Noteholders must surrender Notes to a Paying
Agent to collect principal payments. The Issuers shall pay principal, premium,
if any, and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts ("U.S. Legal Tender") or
Additional Notes in accordance with the
<PAGE> 138
EXHIBIT B
Page 7
Indenture. However, the Issuers may pay principal and interest by their check
payable in such U.S. Legal Tender. The Issuers may deliver any such interest
payment to the Paying Agent or to a Noteholder at the Noteholder's registered
address.
3. Paying Agent and Registrar. Initially, the Trustee will act
as Paying Agent and Registrar. The Issuers may change any Paying Agent,
Registrar or co-registrar without prior notice to any Noteholder. The Issuers or
any Subsidiary Guarantor may act in any such capacity, except that none of the
Issuers, its Subsidiaries or their Affiliates shall act (i) as Paying Agent in
connection with any redemption, offer to purchase, discharge or defeasance, as
otherwise specified in the Indenture, and (ii) as Paying Agent or Registrar if a
Default or Event of Default has occurred and is continuing.
4. Indenture. The Issuers issued the Notes under an Indenture,
dated as of December 31, 1997 (the "Indenture"), among the Issuers, the
Subsidiary Guarantors and United States Trust Company of New York, as trustee
(the "Trustee"). The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the TIA as in effect on the
date the Indenture is qualified, except as otherwise provided in the Indenture.
The Notes are subject to all such terms, and Noteholders are referred to the
Indenture and the TIA for a statement of such terms. The terms of the Indenture
shall govern any inconsistencies between the Indenture and the Notes. The Notes
are senior Subordinated Obligations of the Issuers limited to $100,000,000 in
aggregate principal amount, except for the Additional Notes.
5. (a) Optional Redemption. Except as indicated in the next
succeeding paragraph, the Notes are not redeemable at the Issuers' option prior
to December 15, 2002. Thereafter, the Notes will be redeemable, at the option of
the Issuers, in whole or in part, at the following redemption prices (expressed
as percentages of the principal amount of the Notes) if the Notes are redeemed
during the 12-month period commencing on December 15 of the years set forth
below, plus accrued interest to the redemption date:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
------ ----------------
<S> <C>
2002.............................................. 106.50%
2003.............................................. 104.33%
2004.............................................. 102.17%
2005 and thereafter............................... 100.00%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. At any time, or
from time to time, on or prior to December 15, 2000, the Issuers may, at their
option, use the Net Cash Proceeds of one or more Public Equity Offerings by RAS
so long as there is a Public Market at the time of such redemption (which fact
shall be certified to the Trustee in an Officer's Certificate delivered to the
Trustee pursuant to Section 3.01(a) of the Indenture), at a redemption price
equal to 113% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided,
<PAGE> 139
EXHIBIT B
Page 8
however, that after any such redemption at least $65 million of the original
principal amount of the Notes remains outstanding. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering, the
Issuers shall make such redemption not more than 90 days after the consummation
of any such Public Equity Offering.
6. Mandatory Redemption. The Notes are not subject to
mandatory redemption or sinking fund payments, except as described below.
Notwithstanding any other provision hereof, if any Gaming Authority requires
that a Holder or beneficial owner of the Notes must be licensed, qualified or
found suitable under any applicable Gaming Laws in order to maintain any gaming
license or franchise of RAS under any applicable Gaming Laws, and the Holder or
beneficial owner fails to apply for a license, qualification or finding of
suitability within 30 days after being requested to do so by the Gaming
Authority (or such lesser period that may be required by such Gaming Authority)
or if such Holder or beneficial owner is not so licensed, qualified or found
suitable, the Issuers shall have the right at their option, (i) to require such
Holder or beneficial owner to dispose of such Holder's or beneficial owner's
Notes within 30 days of receipt of such finding by the applicable Gaming
Authority (or such earlier date as may be required by the applicable Gaming
Authority) or (ii) to call for redemption of the Notes of such Holder or
beneficial owner at a redemption price equal to the lesser of the principal
amount thereof or the fair market value thereof or the price at which such
Holder or beneficial owner acquired the Notes, together with, in either case,
accrued and unpaid interest, to the earlier of the date of redemption or, the
date of the finding of unsuitability by such Gaming Authority, which may be less
than 30 days following the notice of redemption if so ordered by such Gaming
Authority. In connection with any such redemption and except as may be required
by a Gaming Authority, the Issuers shall comply with the procedures contained in
the Indenture for redemptions of the Notes. The Issuers are not required to pay
or reimburse any Holder or beneficial owner of the Notes who is required to
apply for such license, qualification or finding of suitability for the costs of
such licensure and investigation for such license, qualification or finding of
suitability. Any of such expenses will be the sole obligation of such Holder or
beneficial owner of the Notes.
7. Repurchase at Option of Noteholder. (a) If there is a
Change of Control, each Holder of Notes will have the right, subject to the
conditions set forth in Section 4.14 of the Indenture, to require the Issuers to
repurchase all or any part of such Holder's Notes at a repurchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of repurchase (subject to the right of Holders of record on the
relevant Record Date to receive interest due on the relevant Interest Payment
Date). No earlier than 30 days after and no later than 60 days following a
Change of Control (or if the Notes have been repaid in full at such time), the
Issuers will mail a notice to each Noteholder stating (i) that a Change of
Control has occurred and that such Noteholder has the right to require the
Issuers to repurchase all or any part of such Noteholder's Notes at a repurchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); (ii) the circumstances and
<PAGE> 140
EXHIBIT B
Page 9
relevant facts regarding such Change of Control (including information with
respect to pro forma historical income, cash flow and capitalization after
giving effect to such Change of Control; (iii) the repurchase date (which will
be no earlier than 70 days nor later than 90 days from the date such notice is
mailed); and (iv) the procedures, determined by the Issuers consistent with the
Indenture, that a Noteholder must follow in order to have its Notes repurchased.
Noteholders that are subject to an offer to repurchase may elect to have such
Notes repurchased by completing the form entitled "Option of Noteholder to Elect
Purchase" appearing below.
(b) The Indenture provides that, after certain Asset
Dispositions, and subject to the further limitations contained therein, the
Issuers will make an offer to purchase certain amounts of the Notes in
accordance with procedures set forth in the Indenture.
8. Notice of Redemption. Notice of redemption shall be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Noteholder are to be redeemed. On and after the redemption date,
interest ceases to accrue on Notes or portions of them called for redemption.
9. Subordination. The Issuers' payment of the principal of and
interest on the Notes is subordinated and subject to the prior payment in full
of the Issuers' Senior Indebtedness as more fully set forth in the Indenture.
Each Holder of Notes by his acceptance hereof covenants and agrees that all
payments of the principal and interest on the Notes by the Issuers shall be
subordinated in accordance with Article 9 of the Indenture and each holder
accepts and agrees to be bound by such provisions.
10. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Noteholder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not exchange or register the
transfer of any Note or portion of a Note selected for redemption. Also, it need
not exchange or register the transfer of any Notes during a period beginning on
the opening of business on a Business Day 15 days before the day of any
selection of Notes to be redeemed and ending on the close of business on the day
of selection or during the period between a Record Date and the corresponding
Interest Payment Date.
11. Persons Deemed Owners. Prior to due presentment to the
Trustee for registration of the transfer of this Note, the Trustee, any Agent
and the Issuers shall deem and treat the Person in whose name this Note is
registered as its absolute owner for the purpose of receiving payment of
principal of, premium, if any, and interest on this Note and for all other
purposes whatsoever, whether or not this Note is overdue,
<PAGE> 141
EXHIBIT B
Page 10
and neither the Trustee, any Agent nor the Issuers shall be affected by notice
to the contrary. The registered Noteholder shall be treated as its owner for all
purposes.
12. Amendments and Waivers. Subject to certain exceptions
provided in the Indenture, the Indenture or the Notes may be amended with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes, and any existing default or Event of Default (except a payment default)
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes. Without the consent of any Noteholder, the
Indenture or the Notes may be amended to, among other things, cure any
ambiguity, defect or inconsistency, to comply with the requirements of the
Commission in order to effect or maintain qualification of the Indenture under
the TIA Noteholders or to make any change that does not adversely affect the
rights of any Noteholder.
13. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the unpaid principal of, and any accrued
and unpaid interest on, all the Notes to be due and payable immediately;
provided, that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Issuers, all outstanding Notes
shall become due and payable immediately without further action or notice.
Noteholders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Noteholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Issuers must furnish an annual compliance certificate to the
Trustee.
14. Trustee Dealings with the Issuers. The Trustee under the
Indenture, in its individual or any other capacity may make loans to, accept
deposits from, and perform services for the Issuers, the Subsidiary Guarantor or
any Affiliate of the Issuers or the Subsidiary Guarantor, and may otherwise deal
with the Issuers, the Subsidiary Guarantor and their respective Affiliates as if
it were not Trustee.
15. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Issuers and their Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions provided for in the Indenture. The
Issuers must annually report to the Trustee on compliance with such limitations.
<PAGE> 142
EXHIBIT B
Page 11
16. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. Subsidiary Guarantee. Each Subsidiary Guarantor has
jointly and severally irrevocably and unconditionally guaranteed the payment of
principal, premium, if any, and interest (including interest on overdue
principal and overdue interest, if lawful) on the Notes; provided, however, each
Subsidiary Guarantor that makes a payment or distribution under a Subsidiary
Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Guarantor.
18. Defeasance. Subject to certain conditions provided for in
the Indenture, the Issuers at any time may terminate some or all of their
obligations under the Notes and the Indenture if the Issuers deposit with the
Trustee money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Notes to redemption or maturity, as the
case may be.
19. Governing Law. The laws of the State of New York shall
govern this Note and the Indenture, without regard to principles of conflict of
laws.
20. Abbreviations. Customary abbreviations may be used in the
name of a Noteholder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Note Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and have directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Noteholders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
The Issuers will furnish to any Noteholder upon written
request and without charge a copy of the Indenture. Request may be made to:
The Resort at Summerlin
1160 Town Center Drive, Suite 200
Las Vegas, NV 89134
Attn: John Tipton
<PAGE> 143
EXHIBIT B
Page 12
FORM OF NOTATION ON SECURITY
RELATING TO SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE
The Subsidiary Guarantors (as defined in the Indenture (the
"Indenture") referred to in the Note upon which this notation is endorsed and
each hereinafter referred to as a "Subsidiary Guarantor," which term includes
any successor Person under the Indenture) (i) have jointly and severally
irrevocably and unconditionally guaranteed as a primary obligor and not a surety
(such guarantee by each Subsidiary Guarantor being referred to herein as the
"Subsidiary Guarantee"), (a) the due and punctual payment of the principal,
premium, if any, and interest on the Notes, whether at Stated Maturity or
interest payment date, by acceleration, call for redemption or otherwise, (b)
the due and punctual payment of interest on the overdue principal of and
interest, if any, on the Notes, to the extent lawful, (c) the due and punctual
performance of all other monetary Obligations of the Issuers under the Indenture
and the Notes to the Noteholders or the Trustee, all in accordance with the
terms set forth in Article 10 of the Indenture and (d) in case of any extension
of time of payment or renewal of any Notes or any such Obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at Stated Maturity by acceleration or
otherwise and (ii) have agreed to pay any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Trustee or any Noteholders in
enforcing any rights under this Subsidiary Guarantee.
The Obligations of each Subsidiary Guarantor to the Holders of
Notes and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture
are expressly set forth in Article 11 of the Indenture and reference is hereby
made to such Indenture for the precise terms of this Subsidiary Guarantee. The
Obligations of each Subsidiary Guarantor to the Holders of the Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are
subordinated, as provided in the Indenture, to Guarantor Senior Indebtedness, as
defined in the Indenture.
No stockholder, officer, director or incorporator, as such,
past, present or future of any Subsidiary Guarantor shall have any liability
under this Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director or incorporator.
This is a continuing Subsidiary Guarantee and, except as
otherwise expressly provided for in Section 11.06 of the Indenture, shall remain
in full force and effect and shall be binding upon the Subsidiary Guarantor and
its successors and assigns until full and final payment of all of the Issuers'
Obligations under the Notes and the Indenture and shall inure to the benefit of
the successors and assigns of the Trustee and the Noteholders and, in the event
of any transfer or assignment of rights by any Noteholder or the Trustee, the
rights and privileges herein conferred upon that party
<PAGE> 144
EXHIBIT B
Page 13
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof. This is a Subsidiary Guarantee of
payment and not of collectability.
This Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
THE TERMS OF ARTICLE 11 OF THE INDENTURE ARE INCORPORATED
HEREIN BY REFERENCE.
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
Guarantors:
By
-------------------------------
Name:
Title:
<PAGE> 145
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Issuers pursuant to Section 4.10 or Section 4.14 of the
Indenture check the appropriate box:
/ / Section 4.10 / / Section 4.14
If you want to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$----------------------
Date:
------------------
Your Signature:
--------------------------------------------
(Sign exactly as your name appears on the face of this Note)
-15-
<PAGE> 146
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Re: The Resort at Summerlin, Limited Partnership
The Resort at Summerlin, Inc.
13% Senior Subordinated PIK Notes due 2007
Ladies and Gentlemen:
In connection with our proposed purchase of 13% Senior
Subordinated PIK Notes due 2007 (the "Notes") of The Resort at Summerlin,
Limited Partnership and The Resort at Summerlin, Inc. (the "Issuers"), we
confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Notes (as described in paragraph 2 below) and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Notes prior to the date
which is two years after the original issuance of the Notes, we will do so only
(i) to the Issuers or any of its subsidiaries, (ii) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act), (iii) inside the
United States to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to the Trustee (as defined in the Indenture relating to the
Notes), a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes, (iv) outside the United
States in accordance with Rule 904 of Regulation S under the Securities Act, (v)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act (if
<PAGE> 147
EXHIBIT C
Page 2
available), or (vi) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing any of
the Notes from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
3. We are not acquiring the Notes for or on behalf of, and
will not transfer the Notes to, any pension or welfare plan (as defined in
Section 3 of the Employee Retirement Income Security Act of 1974), except as
permitted in the section entitled "Transfer Restrictions" of the Offering
Memorandum.
4. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee and the Issuers such certification,
legal opinions and other information as the Trustee and the Issuers may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or their investment, as the case may be.
6. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Issuers are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By:
----------------------------
Name:
<PAGE> 148
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
---------------, ----
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Re: The Resort at Summerlin, Limited Partnership
The Resort at Summerlin, Inc.
(the "Issuers") 13% Senior
Subordinated PIK Notes due 2007 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_____________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a Person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
<PAGE> 149
EXHIBIT D
Page 2
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You and the Issuers are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------
Authorized Signature
<PAGE> 1
EXHIBIT 4.2
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
dated as of December 30, 1997
by and among
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP,
THE RESORT AT SUMMERLIN, INC.
and
NATWEST CAPITAL MARKETS LIMITED
as the Initial Purchaser
$100,000,000
13% SENIOR SUBORDINATED PIK NOTES DUE 2007
<PAGE> 2
TABLE OF CONTENTS
Page
1. Definitions......................................................... 1
2. Exchange Offer...................................................... 5
3. Shelf Registration.................................................. 9
4. Additional Interest................................................. 10
5. Registration Procedures............................................. 12
6. Registration Expenses............................................... 21
7. Indemnification..................................................... 22
8. Rules 144 and 144A.................................................. 26
9. Underwritten Registrations.......................................... 26
10. Miscellaneous. ..................................................... 26
(a) No Inconsistent Agreements............................ 26
(b) Adjustments Affecting Registrable Notes............... 27
(c) Amendments and Waivers................................ 27
(d) Notices............................................... 27
(e) Successors and Assigns................................ 29
(f) Counterparts.......................................... 29
(g) Headings.............................................. 29
(h) Governing Law......................................... 29
(i) Severability.......................................... 29
(j) Notes Held by the Note Issuers or their Affiliates.... 29
(k) Third Party Beneficiaries............................. 30
-i-
<PAGE> 3
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This Exchange and Registration Rights Agreement (the
"Agreement") is dated as of December 30, 1997, by and among The Resort at
Summerlin, Limited Partnership, a Nevada limited partnership ("RAS" or the
"Partnership"), the Resort at Summerlin, Inc., a Nevada corporation ("RAS, Inc."
and, together with RAS, the "Note Issuers"), and NatWest Capital Markets Limited
(the "Initial Purchaser").
This Agreement is entered into in connection with the Purchase
Agreement, dated December 22, 1997, among the Note Issuers, RAS Warrant Co. and
the Initial Purchaser (the "Purchase Agreement"), which provides for the sale by
the Note Issuers to the Initial Purchaser of $100,000,000 aggregate principal
amount of the Note Issuers' 13% Senior Subordinated PIK Notes due 2007 (the
"Notes"). In order to induce the Initial Purchaser to enter into the Purchase
Agreement, the Note Issuers have agreed to provide the registration rights set
forth in this Agreement for the benefit of the Initial Purchaser and their
direct and indirect transferees. The execution and delivery of this Agreement is
a condition to the obligation of the Initial Purchaser to purchase the Notes
under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: Has the meaning provided in Section 4(a)
hereof.
Advice: Has the meaning provided in the last paragraph of
Section 5 hereof.
Agreement: Has the meaning provided in the first introductory
paragraph hereto.
Applicable Period: Has the meaning provided in Section 2(b)
hereof.
Closing Date: Has the meaning provided in the Purchase
Agreement.
<PAGE> 4
Company: Has the meaning provided in the first introductory
paragraph hereto.
Effectiveness Date: The 180th day after the Issue Date.
Effectiveness Period: Has the meaning provided in Section 3(a)
hereof.
Event Date: Has the meaning provided in Section 4(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: Has the meaning provided in Section 2(a)
hereof.
Exchange Offer: Has the meaning provided in Section 2(a)
hereof.
Exchange Registration Statement: Has the meaning provided in
Section 2(a) hereof.
Filing Date: The 120th day after the Issue Date.
Gaming Authority: Has the meaning provided in the Purchase
Agreement.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: Has the meaning provided in Section 7(c)
hereof.
Indemnifying Person: Has the meaning provided in Section 7(c)
hereof.
Indenture: The Indenture, dated as of December 30, 1997 among
the Note Issuers and U.S. Trust Company of New York, as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
Initial Purchaser: Has the meaning provided in the first
introductory paragraph hereto.
Inspectors: Has the meaning provided in Section 5(o) hereof.
-2-
<PAGE> 5
Issue Date: The date on which the original Notes were sold to
the Initial Purchaser pursuant to the Purchase Agreement.
NASD: Has the meaning provided in Section 5(s) hereof.
Note Issuers: Has the meaning provided in the first
introductory paragraph hereto.
Notes: Has the meaning provided in the second introductory
paragraph hereto.
Participant: Has the meaning provided in Section 7(a) hereof.
Participating Broker-Dealer: Has the meaning provided in
Section 2(b) hereof.
Persons: An individual, trustee, corporation, partnership,
limited liability company, joint stock company, trust, unincorporated
association, union, business association, firm or other legal entity.
Private Exchange: Has the meaning provided in Section 2(b)
hereof.
Private Exchange Notes: Has the meaning provided in Section
2(b) hereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, with respect to the terms of the offering of any portion of the
Registrable Notes covered by such Registration Statement including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchase Agreement: Has the meaning provided in the second
introductory paragraph hereto.
Records: Has the meaning provided in Section 5(o) hereof.
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<PAGE> 6
Registrable Notes: Each Note upon original issuance of the
Notes and at all times subsequent thereto, each Exchange Note as to which
Section 2(c)(v) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto, until in the case of any such Note,
Exchange Note or Private Exchange Note, as the case may be, the earliest to
occur of (i) a Registration Statement (other than, with respect to any Exchange
Note as to which Section 2(c)(v) hereof is applicable, the Exchange Registration
Statement) covering such Note, Exchange Note or Private Exchange Note, as the
case may be, has been declared effective by the SEC and such Note (unless such
Note was not tendered for exchange by the Holder thereof), Exchange Note or
Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement, (ii) such Note, Exchange Note or
Private Exchange Note, as the case may be, is, or may be, sold in compliance
with Rule 144, or (iii) such Note, Exchange Note or Private Exchange Note, as
the case may be, ceases to be outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the
Company, including, but not limited to, the Exchange Registration Statement,
that covers any of the Registrable Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
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Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: Has the meaning provided in Section 2(c) hereof.
Shelf Registration: Has the meaning provided in Section 3(a)
hereof.
Shelf Registration Statement: shall mean a "shelf"
registration statement of the Company and the Guarantors which covers all of the
Registrable Notes on an appropriate form under Rule 415 under the 1933 Act, or
any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee(s): The trustee under the Indenture and, if existent,
the trustee under any indenture governing the Exchange Notes and Private
Exchange Notes (if any).
Underwritten registration or underwritten offering: A
registration in which securities of one or more of the Note Issuers are sold to
an underwriter for reoffering to the public.
2. Exchange Offer
(a) Each of the Note Issuers agrees to file with the SEC no
later than the Filing Date an offer to exchange (the "Exchange Offer") any and
all of the Registrable Notes (other than the Private Exchange Notes, if any) for
a like aggregate principal amount of debt securities of the Note Issuers, which
are identical in all material respects to the Notes (the "Exchange Notes") (and
which are entitled to the benefits of the Indenture or a trust indenture which
is identical in all material respects to the Indenture (other than such changes
to the Indenture or any such identical trust indenture as are necessary to
comply with any requirements of the SEC to effect or maintain the qualification
thereof under the TIA) and which, in either case, has been qualified under the
TIA), except that the Exchange Notes (other than Private Exchange Notes, if any)
shall have been registered pursuant to an effective Registration Statement under
the Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and shall comply with all applicable tender
offer rules and regulations under the Exchange Act. The Note Issuers agree to
use their best efforts
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<PAGE> 8
to (x) cause the Exchange Registration Statement to be declared effective under
the Securities Act no later than the 180th day after the Issue Date; (y) keep
the Exchange Offer open for at least 30 business days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
the Holders; and (z) consummate the Exchange Offer on or prior to the 210th day
following the Issue Date. If after such Exchange Registration Statement is
declared effective by the SEC, the Exchange Offer or the issuance of the
Exchange Notes thereunder is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or court,
including, without limitation, any Gaming Authority, such Exchange Registration
Statement shall be deemed not to have become effective for purposes of this
Agreement until such stop order, injunction or other order or requirement is no
longer in effect. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Notes received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, and that such Holder in not an "affiliate"
of any of the Note Issuers within the meaning of the Securities Act. Upon
consummation of the Exchange Offer in accordance with this Section 2, the Note
Issuers shall have no further obligation to register Registrable Notes (other
than Private Exchange Notes and other than in respect of any Exchange Notes as
to which clause 2(c)(v) hereof applies) pursuant to Section 3 hereof. No
securities other than the Exchange Notes shall be included in the Exchange
Registration Statement.
(b) The Note Issuers shall include within the Prospectus
contained in the Exchange Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchaser, which shall
contain a summary statement of the positions taken or policies made by the Staff
of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or policies have
been publicly disseminated by the staff of the Division of Corporation Finance
of the SEC (the "Staff") or such positions or policies, in the judgment of the
Initial Purchaser, represent the prevailing views of the Staff. Such "Plan of
Distribution" section shall also expressly permit the use of the Prospectus by
all Persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Notes.
Each of the Note Issuers shall use its best efforts to keep
the Exchange Registration Statement effective and to amend and supplement the
Prospectus contained
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<PAGE> 9
therein, in order to permit such Prospectus to be lawfully delivered by any
Participating Broker-Dealer subject to the prospectus delivery requirements of
the Securities Act for such period of time as is necessary to comply with
applicable law in connection with any resale of the Exchange Notes; provided,
however, that such period shall not exceed 180 days after the consummation of
the Exchange Offer (or such longer period if extended pursuant to the last
paragraph of Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial
Purchaser holds any Notes acquired by it and having the status of an unsold
allotment in the initial distribution, the Note Issuers shall, upon the request
of the Initial Purchaser, simultaneously with the delivery of the Exchange Notes
in the Exchange Offer issue and deliver to the Initial Purchaser in exchange
(the "Private Exchange") for such Notes held by the Initial Purchaser a like
principal amount of debt securities of the Note Issuers, that are identical in
all material respects to the Exchange Notes (the "Private Exchange Notes") (and
which are issued pursuant to the same Indenture as the Exchange Notes) except
for the placement of a restrictive legend on such Private Exchange Notes. The
Private Exchange Notes shall if permissible bear the same CUSIP number as the
Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the Issue Date.
In connection with the Exchange Offer, the Note Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York;
(3) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all
applicable laws, rules and regulations, including, without limitation,
all applicable gaming laws.
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<PAGE> 10
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Note Issuers shall:
(1) accept for exchange all Notes tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(2) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder Exchange Notes or Private Exchange Notes, as the case may
be, equal in principal amount to the Notes of such Holder so accepted
for exchange.
The Exchange Notes and the Private Exchange Notes are to be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that (1) the
Exchange Notes shall not be subject to the transfer restrictions set forth in
the Indenture and (2) the Private Exchange Notes shall be subject to the
transfer restrictions set forth in the Indenture. The Indenture or such
indenture shall provide that the Exchange Notes, the Private Exchange Notes and
the Notes shall vote and consent together on all matters as to which they have
the right to vote or consent as one class and that none of the Exchange Notes,
the Private Exchange Notes or the Notes will have the right to vote or consent
as a separate class on any matter.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the Staff of the SEC, or because of any order,
action or decision of any Gaming Authority, the Note Issuers are not permitted
to effect an Exchange Offer, (ii) the Exchange Offer is not consummated within
210 days after the Issue Date, (iii) any holder of Private Exchange Notes so
requests at any time after the consummation of the Private Exchange, or (iv) any
Holder (other than the Initial Purchaser) is not eligible to participate in the
Exchange Offer, then the Note Issuers shall promptly deliver to the Holders and
the Trustee written notice thereof (the "Shelf Notice") to the Trustee and, in
the case of clauses (i) and (ii) above, all Holders, in the case of clause (iii)
above, the Holders of the Private Exchange Notes and, in the case of clause (iv)
above, the affected Holder, and shall file a Shelf Registration pursuant to
Section 3 hereof; provided, however, that in the case of clause (iii) above such
Holders shall pay all reasonable registration expenses of the Note Issuers as
described in Section 6 hereof in connection with such Shelf Registration.
(d) The regulations of the Nevada State Gaming Control Board
("Nevada Board") and the Nevada Gaming Commission ("Nevada Commission")
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<PAGE> 11
provide that any entity which is not an "affiliated company," as such term is
defined in the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, "Nevada Act"), or which is not otherwise subject to
the provisions of the Nevada Act or such regulations, such as each of the Note
Issuers, which plans to make a public offering of securities intending to use
such securities, or the proceeds from the sale thereof for the construction or
operation of gaming facilities in Nevada, or to retire or extend obligations
incurred for such purposes, may apply to the Nevada Commission for prior
approval of such offering. The Nevada Commission may find a applicant unsuitable
based solely on the fact that it did not submit such an application, unless upon
a written request for a ruling, the Nevada Board Chairman has ruled that it is
not necessary to submit an application. The Exchange Offer will qualify as a
public offering. The Note Issuers agree to file a written request (the "Ruling
Request") with the Nevada Board Chairman for a ruling that it is not necessary
to submit the Exchange Offer for prior approval. If the Nevada Board Chairman
rules that approval of the Exchange Offer is required, the Note Issuers agree to
file an application for such approval.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration. The Note Issuers shall as promptly as
reasonably practicable file with the SEC a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Registrable Notes (the "Shelf Registration"). If the Note Issuers shall not
have yet filed an Exchange Registration Statement, each of the Note Issuers
shall use its best efforts to file with the SEC the Shelf Registration on or
prior to the Filing Date. The Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Notes for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Note Issuers shall not
permit any securities other than the Registrable Notes to be included in the
Shelf Registration.
Each of the Note Issuers shall use its best efforts to cause
the Shelf Registration to be declared effective under the Securities Act by the
180th day after the Shelf Request and to keep the Shelf Registration
continuously effective under the Securities Act until the date which is two
years from the Issue Date, subject to extension pursuant to the last paragraph
of Section 5 hereof, or such shorter period ending when all Registrable Notes
covered by the Shelf Registration have been sold in
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<PAGE> 12
the manner set forth and as contemplated in the Shelf Registration or when the
Notes become eligible for registration without volume restrictions, pursuant to
Rule 144 under the Securities Act (the "Effectiveness Period").
(b) Withdrawal of Stop Orders. If the Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), each of the Note Issuers shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof.
(c) Supplements and Amendments. The Note Issuers shall
promptly supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested for such purpose by the Holders of a majority in aggregate principal
amount of the Registrable Notes covered by such Registration Statement or by any
underwriter of such Registrable Notes.
4. Additional Interest
(a) The Note Issuers and the Initial Purchaser agree that the
Holders of Registrable Notes will suffer damages if the Note Issuers fail to
fulfill their obligations under Section 2 or Section 3 hereof and that it would
not be feasible to ascertain the extent of such damages with precision.
Accordingly, the Note Issuers agree to pay, as liquidated damages and as the
sole and exclusive remedy therefor, additional interest on the Notes
("Additional Interest") under the circumstances and to the extent set forth
below:
(i) if the Exchange Offer Registration Statement or Shelf
Registration Statement is not filed within, in the case the Exchange
Offer Registration Statement, 120 days following the Issue Date or, in
the case of the Shelf Registration Statement, 120 days following a
Shelf Request, Additional Interest shall accrue on the Notes over and
above the stated interest at a rate of 0.25% per annum for the first 90
days commencing on the 120th day after the Issue Date or the Shelf
Request, respectively, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 30-day
period;
(ii) if the Exchange Offer Registration Statement or Shelf
Registration Statement is not declared effective within, in the case of
the Exchange Offer Registration Statement, 180 days following the Issue
Date or, in the case of the Shelf Registration Statement, 180 days
following a Shelf Request, Additional
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Interest shall accrue on the Notes over and above the stated interest
at a rate of 0.25% per annum for the first 90 days commencing on the
180th day after the Issue Date or the Shelf Request, respectively, such
Additional Interest rate increasing by an additional 0.25% per annum at
the beginning of each subsequent 30-day period; or
(iii) if (A) the Note Issuers have not exchanged all Notes
validly tendered in accordance with the terms of the Exchange Offer on
or prior to 210 days after the Issue Date or (B) the Exchange Offer
Registration Statement ceases to be effective at any time prior to the
time that the Exchange Offer is consummated or (C) if applicable, the
Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time prior to the
second anniversary of the Issue Date (unless all the Notes have been
sold thereunder), then Additional Interest shall accrue on the Notes
over and above the stated interest at a rate of 0.25% per annum for the
first 30 days commencing on (x) the 210th day after the Issue Date with
respect to the Notes validly tendered and not exchanged by the Note
Issuers, in the case of (A) above, or (y) the day the Exchange Offer
Registration Statement ceases to be effective or usable for its
intended purpose in the case of (B) above, or (z) the day such Shelf
Registration Statement ceases to be effective in the case of (C) above,
such Additional Interest rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 30-day period;
provided, however, that the Additional Interest rate on the Notes under clauses
(i), (ii) or (iii) above, may not exceed in the aggregate 2.0% per annum; and
provided further, that (1) upon the filing of the Exchange Offer Registration
Statement or Shelf Registration Statement (in the case of clause (i) above), (2)
upon the effectiveness of the Exchange Offer Registration Statement or Shelf
Registration Statement (in the case of (ii) above), or (3) upon the exchange of
Exchange Notes for all Notes tendered (in the case of clause (iii)(A) above), or
upon the effectiveness of the Exchange Offer Registration Statement which had
ceased to remain effective (in the case of clause (iii)(B) above), or upon the
effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the case of clause (iii)(C) above), Additional Interest on the
Notes as a result of such clause (or the relevant subclause thereof), as the
case may be, shall cease to accrue.
(b) The Note Issuers shall notify the Trustee within one
business day after each and every date on which an event occurs in respect of
which Additional Interest is required to be paid (an "Event Date"). The Company
shall pay the Additional Interest due on the transfer restricted Notes by
depositing with the paying agent (which shall not be the Company for these
purposes) for the transfer restricted
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<PAGE> 14
Notes, in trust, for the benefit of the holders thereof, prior to 11:00 A.M. on
the next interest payment date specified by the Indenture (or such other
indenture), sums sufficient to pay the Additional Interest then due. Any amounts
of Additional Interest due pursuant to clauses (a)(i), (a)(ii) or (a)(iii) of
this Section 4 will be payable to the Holders of affected Notes in cash
semi-annually on each interest payment date specified by the Indenture (or such
other indenture) to the record holders entitled to receive the interest payment
to be made on such date, commencing with the first such date occurring after any
such Additional Interest commences to accrue. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the affected Registrable Notes of such Holders, multiplied
by a fraction, the numerator of which is the number of days such Additional
Interest rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months and, in the case of a partial
month, the actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Note Issuers shall effect such
registration(s) to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Note Issuers hereunder, the Note Issuers shall:
(a) Prepare and file with the SEC prior to the Filing Date a
Registration Statement or Registration Statements as prescribed by
Sections 2 or 3 hereof, and use their best efforts to cause each such
Registration Statement to become effective and remain effective as
provided herein; provided, however, that, if (1) such filing is
pursuant to Section 3 hereof, or (2) a Prospectus contained in an
Exchange Registration Statement filed pursuant to Section 2 hereof is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Note Issuers shall, if requested
in writing, furnish to and afford the Holders of the Registrable Notes
covered by such Registration Statement or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in
each case at least three business days prior to such filing). The Note
Issuers shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must
be afforded an
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opportunity to review prior to the filing of such document under the
immediately preceding sentence, if the Holders of a majority in
aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the
case may be, their counsel, or the managing underwriters, if any, shall
object thereto in writing, which writing shall set forth a reasonable
basis for such objection.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period or until consummation of
the Exchange Offer, as the case may be; cause the related Prospectus to
be supplemented by any Prospectus supplement required by applicable
law, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act;
and comply with the provisions of the Securities Act and the Exchange
Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale
of any securities being sold by a Participating Broker-Dealer covered
by any such Prospectus; the Note Issuers shall be deemed not to have
used their best efforts to keep a Registration Statement effective
during the Applicable Period if it voluntarily takes any action that
would result in selling Holders of the Registrable Notes covered
thereby or Participating Broker-Dealers seeking to sell Exchange Notes
not being able to sell such Registrable Notes or such Exchange Notes
during that period unless such action is required by applicable law or
unless the Notes Issuers comply with this Agreement, including without
limitation, the provisions of paragraph 5(k) hereof and the last
paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, notify
the selling Holders of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act
(including in such notice a written statement that any Holder may, upon
request, obtain, at the sole expense of the
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<PAGE> 16
Note Issuers, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order suspending
the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time
when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Notes or resales of Exchange
Notes by Participating Broker-Dealers the representations and
warranties of the Note Issuers contained in any agreement (including
any underwriting agreement), contemplated by Section 5(n) hereof cease
to be true and correct, (iv) of the receipt by the Note Issuers of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose, (v) of the happening
of any event, the existence of any condition or any information
becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in or amendments or
supplements to such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, and (vi) of the determination by the Note
Issuers that a post-effective amendment to a Registration Statement
would be appropriate.
(d) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes for sale in any jurisdiction,
and, if any such order is issued, to use its best efforts to obtain the
withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3
hereof and if requested by the managing underwriter or underwriters (if
any), or the Holders of a majority in aggregate principal amount of the
Registrable Notes
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<PAGE> 17
being sold in connection with an underwritten offering, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters (if any), such
Holders, or counsel for any of them reasonably request to be included
therein, (ii) make all required filings of such prospectus supplement
or such post-effective amendment as soon as practicable after the Note
Issuers have received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment, and (iii)
supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, furnish
to each selling Holder of Registrable Notes and to each such
Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, at the sole expense of the Note Issuers,
one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including
financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by reference and all
exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, deliver
to each selling Holder of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their respective counsel, and the
underwriters, if any, at the sole expense of the Note Issuers, as many
copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and
any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section
5, each Note Issuer hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the
case-may be, and the underwriters or agents, if any, and dealers (if
any), in connection with the offering and sale of the Registrable Notes
covered by, or the sale by Participating Broker-Dealers of the Exchange
Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any
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<PAGE> 18
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, to use its best efforts to register or qualify such
Registrable Notes (and to cooperate with selling Holders of Registrable
Notes or each such Participating Broker-Dealer, as the case may be, the
managing underwriter or underwriters, if any, and their respective
counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Notes) for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request in writing; provided, however, that
where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered other than through an underwritten
offering, the Note Issuers agree to cause their counsel to perform Blue
Sky investigations and file registrations and qualifications required
to be filed pursuant to this Section 5(h); keep each such registration
or qualification (or exemption therefrom) effective during the period
such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Exchange Notes held
by Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided, however, that none of the
Note Issuers shall be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with [The Depository Trust
Company]; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use its best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
to enable the Holders thereof or the underwriter or underwriters, if
any, to dispose of such Registrable Notes, except as may be required
solely as a consequence of the nature of a selling Holder's business,
in which case each of the Note Issuers will cooperate
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<PAGE> 19
in all reasonable respects with the filing of such Registration
Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi)
hereof, as promptly as practicable prepare and (subject to Section 5(a)
hereof) file with the SEC, at the sole expense of the Note Issuers, a
supplement or post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Notes being sold thereunder or to the purchasers of the
Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, that this Section 5(k) shall not be deemed to
require the Note Issuers to disclose any information that, in the good
faith opinion of the management of the Note Issuers, is not yet
required to be disclosed and would not be in the best interests of the
Note Issuers to disclose, so long as the Note Issuers comply with all
applicable laws and government regulations and the last paragraph of
this Section 5.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes or Exchange Notes, as the
case may be, in a form eligible for deposit with The Depositary Trust
Company and (ii) provide a CUSIP number for the Registrable Notes or
Exchange Notes, as the case may be.
(m) In connection with any underwritten offering initiated by
the Note Issuers of Registrable Notes pursuant to a Shelf Registration,
enter into an underwriting agreement as is customary in underwritten
offerings of debt securities similar to the Notes and take all such
other actions as are reasonably requested by the managing underwriter
or underwriters in order to facilitate the registration or the
disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to, and covenants with, the
underwriters with respect to the business of the Note Issuers and their
respective subsidiaries and the Registration Statement, Prospectus and
documents, if any,
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<PAGE> 20
incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by Note Issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and
confirm the same in writing if and when requested; (ii) obtain the
written opinion of counsel to the Note Issuers and written updates
thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in
underwritten offerings of debt similar to the Notes and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) obtain "cold comfort" letters and updates thereof
in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters from the independent certified public
accountants of the Note Issuers (and, if necessary, any other
independent certified public accountants of any subsidiary of any of
the Note Issuers or of any business acquired by any of the Note Issuers
for which financial statements and financial data are, or are required
to be, included or incorporated by reference in the Registration
Statement), addressed to each of the underwriters, such letters to be
in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings of
debt similar to the Notes and such other matters as reasonably
requested by the managing underwriter or underwriters; and (iv) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those
set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder.
(n) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, make
available for inspection by any selling Holder of such Registrable
Notes being sold, or each such Participating Broker-Dealer, as the case
may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent
retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and instruments of the Note Issuers and their respective
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<PAGE> 21
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of
the Note Issuers and their respective subsidiaries to make available
for inspection all information reasonably requested by any such
Inspector in connection with such Registration Statement. Records which
any of the Note Issuers determine, in good faith, to be confidential
and any Records which it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in
such Registration Statement, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, (iii) disclosure of such information is, in the opinion
of counsel (a copy of which shall be delivered to the Note Issuers) for
any Inspector, necessary or advisable in connection with any action,
claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon,
relating to, or involving this Agreement, or any transactions
contemplated hereby or arising hereunder, or (iv) the information in
such Records has been made generally available to the public. Each
selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Note Issuers unless and until
such information is generally available to the public. Each selling
Holder of such Registrable Notes and each such Participating
Broker-Dealer will be required to further agree that it will, upon
learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Note Issuers and allow the
Note Issuers to undertake appropriate action to prevent disclosure of
the Records deemed confidential at the Note Issuers' sole expense.
(o) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a) hereof, as the case may
be, to be qualified under the TIA not later than the effective date of
the Exchange Offer or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable
Notes, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
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<PAGE> 22
(p) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any quarterly
period which period is not a fiscal year (or 90 days after the end of
any period which is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Registrable Notes are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day
of the first fiscal quarter of the Note Issuers after the effective
date of a Registration Statement, which statements shall cover said
12-month periods.
(q) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Note Issuers (or to such other Person as directed by the Note Issuers)
in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be, the Note Issuers shall mark, or cause to be marked, on
such Registrable Notes that such Registrable Notes are being cancelled
in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall such Registrable Notes be marked as
paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
(s) Use its best efforts to take all other steps necessary or
advisable to effect the registration of the Registrable Notes covered
by a Registration Statement contemplated hereby.
The Note Issuers may require each seller of Registrable Notes
as to which any Registration Statement is being effected to furnish to the Note
Issuers such information regarding such seller and the distribution of such
Registrable Notes as the Note Issuers may, from time to time, reasonably
request. The Note Issuers may exclude from such Registration Statement the
Registrable Notes of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration is being effected agrees to furnish promptly
to the Note Issuers all information required to be disclosed in order to make
the information previously furnished to the Note Issuers by such seller not
materially misleading.
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<PAGE> 23
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
actual receipt of any notice from the Note Issuers of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi)
hereof, such Holder will forthwith discontinue disposition of such Registrable
Notes or Exchange Notes, as the case may be, covered by such Registration
Statement or Prospectus to be sold by such Holder or Participating
Broker-Dealer, as the case may be, until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or until it is advised in writing (the
"Advice") by the Note Issuers that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Note Issuers shall give any such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Registrable Notes covered by such
Registration Statement or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y)
the Advice. In the event the Note Issuers do not give any such notice within
five business days, each Holder shall return such Registration Statement or
Prospectus to the Note Issuers or destroy all copies of such Registration
Statement or Prospectus; and if so requested by the Note Issuers, shall certify
that all copies of the Registration Statement or Prospectus were destroyed.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Note Issuers shall be borne by the Note
Issuers whether or not the Exchange Offer or a Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the SEC and the NASD in connection with an underwritten
offering and (B) fees and expenses of compliance with state securities or Blue
Sky laws (including, without limitation, reasonable fees and disbursements of
the Note Issuers' counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for
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<PAGE> 24
deposit with The Depository Trust Company and of printing Prospectuses if the
printing of Prospectuses is requested by the managing underwriter or
underwriters, if any, by the Holders of a majority in aggregate principal amount
of the Registrable Notes included in any Registration Statement or sold by any
Participating Broker-Dealer, as the case may be, (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Note Issuers,
(v) fees and disbursements of all independent certified public accountants
referred to in Section 5(n)(iii) hereof (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance by or incident to such performance), (vi) rating agency
fees, if any, and any fees associated with making the Registrable Notes or
Exchange Notes eligible for trading through The Depository Trust Company, (vii)
Securities Act liability insurance, if the Note Issuers desire such insurance,
(viii) fees and expenses of all other Persons retained by the Note Issuers, (ix)
internal expenses of the Note Issuers (including, without limitation, all
salaries and expenses of officers and employees of the Note Issuers performing
legal or accounting duties), (x) the expense of any annual audit, (xi) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange or any inter-dealer quotation system, if
applicable, and (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
(b) The Note Issuers, jointly and severally, shall reimburse
the Holders of the Registrable Notes being registered in a Shelf Registration
for the reasonable fees and disbursements of not more than one counsel chosen in
writing by the Holders of a majority in aggregate principal amount of the
Registrable Notes to be included in such Registration Statement. In addition,
the Note Issuers, jointly and severally, shall reimburse the Initial Purchaser
for 50% (but not more than $50,000) of the reasonable fees and expenses of one
counsel in connection with the Exchange Offer which shall be White & Case, and
shall not be required to pay any other legal expenses of the Initial Purchaser
in connection therewith.
7. Indemnification. (a) Each of the Note Issuers, jointly and
severally, agrees to indemnify and hold harmless each Holder of Registrable
Notes offered pursuant to a Shelf Registration Statement and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the
affiliates, directors, officers, agents, representatives and employees of each
such Person or its affiliates, and each other Person, if any, who controls any
such Person or its affiliates within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant") from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually in-
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<PAGE> 25
curred in connection with any suit, action or proceeding or any claim asserted)
caused by, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement pursuant to
which the offering of such Registrable Notes or Exchange Notes, as the case may
be, is registered (or any amendment thereto) or related Prospectus (or any
amendments or supplements thereto) or any related preliminary prospectus, or
caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Note Issuers will not be
required to indemnify a Participant if (i) such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
furnished to the Note Issuers in writing by or on behalf of such Participant
expressly for use therein or (ii) if such Participant sold to the person
asserting the claim the Registrable Notes or Exchange Notes which are the
subject of such claim and such untrue statement or omission or alleged untrue
statement or omission was contained or made in any preliminary prospectus and
corrected in the Prospectus or any amendment or supplement thereto and the
Prospectus does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact that was the subject matter of
the related proceeding and such Participant failed to deliver or provide a copy
of the Prospectus (as amended or supplemented) to such Person with or prior to
the confirmation of the sale of such Registrable Notes or Exchange Notes sold to
such Person if required by applicable laws, unless such failure to deliver or
provide a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Note Issuers with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Note Issuers, their respective directors and
officers and each Person who controls the Note Issuers within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Note Issuers to each Participant, but
only (i) with reference to information furnished to the Note Issuers in writing
by or on behalf of such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus or (ii) with respect to any untrue statement or representation made
by such Participant in writing to the Note Issuers.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought pursuant
to either of the two preceding paragraphs, such Person (the "Indemnified
Person") shall promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Person") in
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writing, and the Indemnifying Person, shall have the right to retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Person may reasonably designate in such
proceeding and shall pay the reasonable fees and expenses actually incurred by
such counsel related to such proceeding; provided, however, that the failure to
so notify the Indemnifying Person shall not relieve it of any obligation or
liability which it may have hereunder or otherwise (unless and only to the
extent that such failure results in the loss or compromise of any material
rights or defenses by the Indemnifying Person). In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person shall
have failed within a reasonable period of time to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that, unless there exists a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with any
one such proceeding or separate but substantially similar related proceeding in
the same jurisdiction arising out of the same general allegations, be liable for
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such reasonable fees and
expenses shall be reimbursed promptly as they are incurred. Any such separate
firm for the Participants and such control Persons of Participants shall be
designated in writing by Participants who sold a majority in interest of
Registrable Notes and Exchange Notes sold by all such Participants and any such
separate firm for the Note Issuers, their directors, their officers and such
control Persons of the Note Issuers shall be designated in writing by the Note
Issuers. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its prior written consent, but if settled with such
consent or if there be a final non-appealable judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, the Indemnifying Person agrees to indemnify and hold harmless each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party, and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
written release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an
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<PAGE> 27
admission of fault, culpability or failure to act by or on behalf of any
Indemnified Person.
(d) If the indemnification provided for in Sections 7(a) and
7(b) hereof is for any reason unavailable to, or insufficient to hold harmless,
an Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Notes or
(ii) if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the Indemnifying Person or Persons on the one hand and the Indemnified Person or
Persons on the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative fault of the parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Note Issuers on
the one hand or such Participant or such other Indemnified Person, as the case
may be, on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation
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<PAGE> 28
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A. The Note Issuers covenant that they
will file the reports required to be filed by them under the Securities Act and
the Exchange Act and the rules and regulations adopted by the SEC thereunder in
a timely manner in accordance with the requirements of the Securities Act and
the Exchange Act and, if at any time the Note Issuers are not required to file
such reports, they will, upon the request of any Holder of Registrable Notes,
make publicly available annual reports and such information, documents and other
reports of the type specified in Sections 13 and 15(d) of the Exchange Act. The
Note Issuers further covenant for so long as any Registrable Notes remain
outstanding, to make available to any Holder or beneficial owner of Registrable
Notes in connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner the information required
by Rule 144(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations. If any of the Registrable Notes
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Holders of a majority in aggregate
principal amount of such Registrable Notes included in such offering and
reasonably acceptable to the Note Issuers.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous. (a) No Inconsistent Agreements. None of the
Note Issuers have entered, as of the date hereof, and none of the Note Issuers
shall, after the date of this Agreement, enter into any agreement with respect
to any of its securities that is inconsistent with the rights granted to the
Holders of Registrable Notes in this Agreement or otherwise conflicts with the
provisions hereof. None of the Note Issuers have entered and none of the Note
Issuers will enter into any agreement with respect
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<PAGE> 29
to any of its securities which will grant to any Person piggy-back registration
rights with respect to a Registration Statement.
(b) Adjustments Affecting Registrable Notes. None of the Note
Issuers shall, directly or indirectly, take any action with respect to the
Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a registration
undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with the
prior written consent of the Holders of not less than a majority in aggregate
principal amount of the then outstanding Registrable Notes. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Notes may be given by Holders of at least
a majority in aggregate principal amount of the Registrable Notes being sold by
such Holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
1. if to a Holder of the Registrable Notes or any
Participating Broker-Dealer, at the most current address of
such Holder or Participating Broker-Dealer, as the case may
be, set forth on the records of the registrar under the
Indenture, with a copy in like manner to the Initial Purchaser
as follows:
NatWest Capital Markets Limited
135 Bishopsgate
London, EC2M 3XT
United Kingdom
Attention: Roger Hoit
with a copy to:
-27-
<PAGE> 30
White & Case
1155 Avenue of the Americas
New York, NY 10036
Facsimile No: (212) 354-8113
Attention: Timothy B. Goodell
2. if to the Initial Purchaser, at the addresses
specified in Section 10(d)(1);
3. if to a Note Issuer, as follows:
The Resort at Summerlin, Limited Partnership
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
and
The Resort at Summerlin, Inc.
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
with a copy to:
Baker & Hostetler, LLP
[ ]
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address and in the manner specified in such Indenture.
-28-
<PAGE> 31
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto; provided, however, that this Agreement shall not inure to the benefit of
or be binding upon a successor or assign of a Holder unless and to the extent
such successor or assign holds Registerable Notes.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning thereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Note Issuers or their Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registerable Notes is required hereunder, Registerable Notes held by the Note
Issuers or their affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
-29-
<PAGE> 32
(k) Third Party Beneficiaries. Holders of Registerable Notes
and Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
-30-
<PAGE> 33
IN WITNESS WHEREOF, the parties have executed the Agreement as
of the date first written above.
Note Issuers:
THE RESORT AT SUMMERLIN, INC.
By:/s/ Brian McMullan
--------------------------
Name: Brian McMullan
Title: President
THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP
By: THE RESORT AT SUMMERLIN, INC.,
its General Partner
By:/s/ Brian McMullan
--------------------------
Name: Brian McMullan
Title: President
-31-
<PAGE> 34
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written:
NATWEST CAPITAL MARKETS LIMITED
By: /s/ N S Coulbeck
--------------------------
Name: N S Coulbeck
Title: Director
<PAGE> 1
Exhibit 4.3
================================================================================
REGISTRATION RIGHTS AND LIMITED PARTNERS' AGREEMENT
dated as of December 30, 1997
by and among
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP,
THE RESORT AT SUMMERLIN, INC.,
LIMITED PARTNERS OF THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP,
RAS WARRANT CO.
and
NATWEST CAPITAL MARKETS LIMITED
as the Initial Purchaser
================================================================================
<PAGE> 2
THIS REGISTRATION RIGHTS AND LIMITED PARTNERS' AGREEMENT (this
"Agreement") is dated as of December 30, 1997, by and among The Resort at
Summerlin, Limited Partnership, a Nevada limited partnership ("RAS" or the
"Partnership"), the Resort at Summerlin, Inc., a Nevada corporation ("RAS,
Inc."), the Existing Limited Partners (as defined herein), RAS Warrant Co., a
Nevada corporation ("Warrant Co."), and NatWest Capital Markets Limited
("Initial Purchaser").
This Agreement is entered into in connection with the Purchase Agreement,
dated December 22, 1997, among RAS, RAS, Inc., Warrant Co. and the Initial
Purchaser (the "Purchase Agreement"), relating to, among other things, the sale
by RAS to the Initial Purchaser, at the election of the Initial Purchaser, of
either warrants (the "Partnership Warrants") to purchase limited partnership
interests of RAS ("LP Partnership Interests") or warrants (the "Corporate
Warrants") to purchase shares of common stock of Warrant Co. to be issued upon
exercise of the Corporate Warrants. The only assets of Warrant Co. will be
warrants in RAS with the same terms as the Partnership Warrants (the "Warrant
Co. LP Warrants" and, together with the Partnership Warrants, the "Warrants").
In order to induce the Initial Purchaser to enter into the Purchase Agreement,
RAS has agreed to provide to the Holders (as defined herein), among other
things, the registration rights and put rights for LP Partnership Interests set
forth in this Agreement and the Existing Limited Partners have agreed to provide
the Holders, among other things, the tag-along rights for the Warrants and LP
Partnership Interests as set forth herein. In order to induce the Existing
Limited Partners to enter into this Agreement, the Initial Purchaser has agreed
on behalf of the Holders to provide to the Existing Limited Partners, among
other things, the drag-along rights for the Warrants and LP Partnership
Interests as set forth herein. In order to induce RAS to enter into this
Agreement, the Initial Purchaser, on behalf of the Holders of Partnership
Warrants, and Warrant Co., as the Holder of the Warrant Co. LP Warrants, each
has agreed to provide RAS with the call rights for the Warrants and the LP
Partnership Interests as set forth herein. The execution and delivery of this
Agreement is a condition to the obligation of the Initial Purchaser to purchase
either the Partnership Warrants or the Corporate Warrants under the Purchase
Agreement.
The parties hereby agree as follows:
In consideration of the foregoing, the parties hereto agree as follows:
Definitions. As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"Affiliate" means, when used with reference to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, the referenced Person or such other Person, as the
case may be. For the purposes of this definition, "control" (including, with
correlative meanings, the term "controlling," "controlled by," and "under common
control with"), when used with respect to any specified Person, means the power
to direct or cause the direction of management or policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. Neither the Holders nor any of their Affiliates shall be
deemed to be an Affiliate of the Partnership or of any of its Affiliates in
their capacities as such.
"Business Day" shall mean a day that is not a Legal Holiday.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
<PAGE> 3
"Existing Limited Partners" shall mean (i) Seven Circle Gaming
Corporation, a Delaware corporation, Ragan A. Henry, Gustav Mauler and Denise
Mauler, jointly as husband and wife, Christiana Limited Partnership, a Nevada
limited partnership, (ii) the successors, assigns or heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any Person
described in the preceding clause (i), as the case may be, and (iii) a trust the
beneficiaries of which include only natural persons described in (i) and their
respective spouses and lineal descendants.
"Fair Market Value" shall mean the value of any securities as
determined (without any discount for lack of liquidity, the amount of securities
proposed to be sold or the fact that the securities held by any Holder of such
security may represent a minority interest in a private company) by a nationally
recognized investment banking firm selected in good faith by the Partnership for
the determination of such value.
"Gaming Authority" means any of the Nevada Gaming Commission, the
Nevada State Gaming Control Board, the City of Las Vegas, any gaming regulatory
body in North Dakota and Colorado, and any other gaming regulatory body or any
agency which has, or may at any time after the Issue Date have, jurisdiction
over the gaming activities of the Partnership or any of its Affiliates or
subsidiaries or any successor to such authority.
"Gaming Laws" means the provisions of the Nevada Gaming Control Act,
as amended from time to time, all regulations of the Nevada Gaming Commission
promulgated thereunder, as amended from time to time, all ordinances, rules and
regulations adopted by the City of Las Vegas, as amended from time to time, and
all other laws, statutes, rules, rulings, orders, ordinances, regulations and
other legal requirements of any Gaming Authority.
"Holder" shall mean the Initial Purchaser and Warrant Co., for so
long as such entity owns any Warrants, Registrable Securities or LP Warrant
Partnership Interests, and each of their respective successors, assigns and
direct and indirect transferees who become registered owners of Warrants,
Registrable Securities or LP Warrant Partnership Interests.
"Indenture" shall mean the Indenture dated as of December 30, 1997
among the Partnership, RAS, Inc. and United States Trust Company of New York, as
Trustee, as supplemented or amended from time to time in accordance with the
terms thereof.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday, payment
may be made on the next succeeding day that is not a Legal Holiday.
"LP Warrant Partnership Interests" shall mean the LP Partnership
Interests and any other securities issued or issuable upon exercise of the
Warrants.
"Limited Partner" means, collectively, each Holder of LP Warrant
Partnership Interests, each Existing Limited Partner and each Permitted
Transferee.
"Partnership Agreement" means the Agreement of Limited Partnership
of RAS, dated August 15, 1996, by and among RAS, Inc. and the Existing Limited
Partners, as amended by the First
2
<PAGE> 4
Amendment thereto dated as of December 30, 1997, and as the same may be further
amended from time to time.
"Permitted Transferee" shall mean any (i) Limited Partner, (ii) the
Partnership, and (iii) any Affiliate of any Limited Partner or the Partnership
to the extent such Person agrees to be bound by this Agreement.
"Person" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference, if any,
in such Prospectus.
"Registrable Securities" shall mean the LP Warrant Partnership
Interests and any other securities issued or issuable upon exercise of the
Warrants. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when (i) a Registration Statement with
respect to such securities shall have been declared effective under the
Securities Act and such securities shall have been disposed of pursuant to such
Registration Statement, (ii) such securities have been sold to the public
pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or resolution hereafter adopted by the SEC) under the Securities
Act, (iii) such securities shall have been otherwise Transferred by their Holder
and new certificates for such securities not bearing a legend restricting
further Transfer shall have been delivered by the Partnership or its Transfer
Agent and subsequent disposition of such securities shall not require
registration or qualification under the Securities Act or any similar state law
then in force or (iv) such securities shall have ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to the
Partnership's performance of or compliance with this Agreement, including,
without limitation, all SEC and stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees and expenses, fees and
expenses of compliance with securities or blue sky laws (including, without
limitation, reasonable fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities), rating
agency fees, printing expenses, messenger, telephone and delivery expenses, fees
and disbursements of counsel for the Partnership and all independent certified
public accountants, the fees and disbursements of underwriters customarily paid
by issuers or sellers of securities (but not including any underwriting
discounts or commissions or transfer taxes, if any, attributable to the sale of
Registrable Securities by Holders of such Registrable Securities) and other
reasonable out-of-pocket expenses of Holders.
"Registration Statement" shall mean any registration statement of
the Partnership which covers any of the LP Warrant Partnership Interests
pursuant to the provisions of this Agreement and all amendments and supplements
to any such registration statement, including post-effective amendments,
3
<PAGE> 5
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Restricted Security" shall mean any LP Warrant Partnership Interest
which is a "restricted security" within the meaning of Rule 144(a)(3) under the
Securities Act.
"Rule 144" shall mean Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144A
under the Securities Act) or regulation hereafter adopted by the SEC providing
for offers and sales of securities made in compliance therewith resulting in
offers and sales by subsequent holders that are not affiliates of an issuer of
such securities being free of the registration and prospectus delivery
requirements of the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Transfer" shall have the meaning set forth in Section 3.
"Transfer Agent" means any transfer agent or registrar appointed by
the Partnership for the Warrants or LP Partnership Interests.
1. Registration Rights.
2.1 Piggy-Back Registration.
(a) If at any time the Partnership proposes to file a registration
statement under the Securities Act with respect to an offering by the
Partnership for its own account or for the account of any holder of LP
Partnership Interests (other than (i) a registration statement on Form S-8 (or
any substitute form that may be adopted by the SEC) or (ii) a Registration
Statement filed in connection with an offer or offering of securities solely to
the Partnership's existing securityholders, then the Partnership shall give
written notice of such proposed filing to the Holders as soon as practicable
(but in no event less than 20 Business Days before the anticipated filing date),
and such notice shall offer the Holders the opportunity to register such number
of Registrable Securities as each of the Holders may request (which request
shall specify the Registrable Securities intended to be disposed of by such
selling Holder and the intended method of distribution thereof) (a "Piggy-Back
Registration"). The Partnership shall use its reasonable best efforts to cause
the managing underwriter or underwriters of such proposed underwritten offering
to permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Partnership or any other securityholder included therein and
to permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof. Any selling Holder
shall have the right to withdraw its request for inclusion of its Registrable
Securities in any Registration Statement pursuant to this Section 2.1 by giving
written notice to the Partnership of its request to withdraw. The Partnership
may withdraw a Piggy-Back Registration at any time prior to the time it becomes
effective; provided that the Partnership shall give prompt notice thereof to
participating selling Holders. The Partnership will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Section 2.1, and each Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to a
Registration Statement effected pursuant to this Section 2.1.
4
<PAGE> 6
(b) No failure to effect a registration under this Section 2.1 and
to complete the sale of Registrable Securities in connection therewith shall
relieve the Partnership of any other obligation under this Agreement.
2.2 Reduction of Offering.
(a) If the managing underwriter or underwriters of any underwritten
offering described in Section 2.1 have informed, in writing, the selling Holders
of the Registrable Securities requesting inclusion in such offering that it is
their opinion that the total amount of partnership interests (or other equity
securities) which the Partnership, the selling Holders and any other Persons
desiring to participate in such registration intend to include in such offering
is such as to materially and adversely affect the success of such offering,
including the price at which such securities can be sold, then the amount of
partnership interests to be offered for the account of the selling Holders and
all such other Persons (other than the Partnership) participating in such
registration shall be reduced or limited pro rata in proportion to the
respective amounts of partnership interests requested to be registered to the
extent necessary to reduce the total amount of partnership interests requested
to be included in such offering to the amount of partnership interests, if any,
recommended by such managing underwriters; provided, however, that if such
offering is effected for the account of any securityholder of the Partnership
other than the selling Holders, pursuant to the demand registration rights of
any such securityholder, then the amount of partnership interests to be offered
for the account of the Partnership (if any) and the selling Holders (but not
such securityholders who have exercised their demand registration rights) shall
be reduced or limited pro rata in proportion to the respective amounts of
partnership interests requested to be registered to the extent necessary to
reduce the total amount of partnership interests requested to be included in
such offering to the amount of partnership interests, if any, recommended by
such managing underwriters.
(b) If the managing underwriter or underwriters of any underwritten
offering described in Section 2.1 notify the selling Holders requesting
inclusion of Registrable Securities in such offering, that the kind of
securities that the selling Holders, the Partnership and any other Persons
desiring to participate in such registration intend to include in such offering
is such as to materially and adversely affect the success of such offering, (x)
the Registrable Securities to be included in such offering shall be reduced as
described in Subsection 2.2(a) or (y) if a reduction in the Registrable
Securities pursuant to Subsection 2.2(a) would, in the judgment of the managing
underwriter or underwriters, be insufficient to substantially eliminate the
adverse effect that inclusion of the Registrable Securities requested to be
included would have on such offering, such Registrable Securities will be
excluded from such offering.
(c) If, as a result of the proration provisions of this Section 2.2,
any selling Holder shall not be entitled to include all Registrable Securities
in a Piggy-Back Registration that such selling Holder has requested to be
included, such selling Holder may elect to withdraw his request to include
Registrable Securities in such registration; provided, however, that such a
withdrawal shall be irrevocable and, after making such withdrawal, a selling
Holder shall no longer have any right to include Registrable Securities in the
registration as to which such withdrawal was made.
2.3 Registration Procedures. In connection with the obligations of the
Partnership with respect to any Registration Statement pursuant to Section 2.1,
the Partnership shall:
5
<PAGE> 7
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Partnership and (ii) shall comply as to form in all
material respects with the requirements of the applicable form and include
all financial statements required by the SEC to be filed therewith, and
the Partnership shall use its reasonable best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2.1;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period, cause each
Prospectus to be supplemented by any required prospectus supplement and,
as so supplemented, to be filed pursuant to Rule 424 under the Securities
Act;
(c) furnish to each Holder of Registrable Securities and to each
underwriter of an underwritten offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the
Registrable Securities;
(d) use its reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or Blue Sky
laws of such jurisdictions as any Holder shall reasonably request in
writing by the time the applicable Registration Statement is declared
effective by the SEC, and do any and all other acts and things which may
be reasonably necessary or advisable to enable such Holder to consummate
the disposition in each such jurisdiction of such Registrable Securities
owned by such Holder; provided, however, that the Partnership shall not be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Subsection 2.3(d), (ii) file any general consent to
service of process or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject;
(e) notify each Holder of Registrable Securities promptly and, if
requested by such Holder, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any request
by the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii)
of the issuance by the SEC or any state securities authority of any stop
order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties
of the Partnership contained in any underwriting agreement, securities
sales agreement or other similar agreement, if any, relating to the
offering cease to be true and correct in all material respects or if the
Partnership receives any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose and (v)
of the happening of any event during the period a Registration Statement
is effective which makes any statement made in such Registration Statement
or the related Prospectus untrue in any material respect or which requires
the making of any changes in such Registration Statement or Prospectus in
order to make the statements therein not misleading;
6
<PAGE> 8
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(g) furnish to each Holder of Registrable Securities, without
charge, at least one conformed copy of each Registration Statement and any
post-effective amendment thereto (with documents incorporated therein by
reference or exhibits thereto);
(h) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends and registered in such names as the selling Holders
may reasonably request at least two Business Days prior to the closing of
any sale of Registrable Securities;
(i) upon the occurrence of any event contemplated by Subsection
2.3(e)(v) hereof, use reasonable efforts to prepare a supplement or
post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Partnership
shall not be required to amend or supplement a Registration Statement, any
related Prospectus or any document incorporated therein by reference in
the event that, and for so long as, an event occurs and is continuing as a
result of which the Registration Statement, any related Prospectus or any
document incorporated therein by reference as then amended or supplemented
would, in the Partnership's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in light of the
circumstances under which they are made. The Partnership agrees to notify
each Holder to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and each Holder hereby agrees to
suspend use of the Prospectus until the Partnership has amended or
supplemented the Prospectus to correct such misstatement or omission. At
such time as such public disclosure is otherwise made or the Partnership
determines in good faith that such disclosure is not necessary, the
Partnership agrees promptly to notify each Holder of such determination,
to amend or supplement the Prospectus if necessary to correct any untrue
statement or omission therein and to furnish each Holder such numbers of
copies of the Prospectus as so amended or supplemented as each Holder may
reasonably request;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such
document to the Holders and make available for discussion of such document
the representatives of the Partnership as shall be reasonably requested by
the Holders of Registrable Securities;
(k) obtain a CUSIP number for the LP Warrant Partnership Interests;
(l) (i) make reasonably available for inspection by a representative
of, and counsel for, any underwriter participating in any disposition
pursuant to a Registration Statement, all
7
<PAGE> 9
relevant financial and other records, pertinent corporate documents and
properties of the Partnership and (ii) cause the Partnership's officers
and employees to supply all relevant information reasonably requested by
such representative, counsel or any such underwriter in connection with
any such Registration Statement; and
(m) if requested by the Holders in connection with any Registration
Statement, shall use its reasonable best efforts to cause (w) counsel for
the Partnership to deliver an opinion relating to the Registration
Statement and the partnership interests of the Partnership, in customary
form, (x) its general partner to execute and deliver all customary
documents and certificates requested by a representative of the Holders or
any underwriter, as applicable and (y) its independent public accountants
to provide a comfort letter in customary form.
The Partnership may, as a condition to such Holder's participation in any
Registration Statement, require each Holder of Registrable Securities to (i)
furnish to the Partnership such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Partnership may from time to time reasonably request in writing and (ii) agree
in writing to be bound by this Agreement.
2.4 Indemnification and Contribution.
(a) The Partnership agrees to indemnify and hold harmless each Holder of
Registrable Securities offered pursuant to a Registration Statement, the
Affiliates, directors, officers, agents, representatives and employees of each
such Person or its affiliates, and each other Person, if any, who controls any
such Person or its Affiliates within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant") from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which the offering of such Registrable Securities is
registered (or any amendment thereto) or related Prospectus (or any amendments
or supplements thereto) or any related preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Partnership will not be required to
indemnify a Participant if (i) such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information furnished to
the Partnership in writing by or on behalf of such Participant expressly for use
therein or (ii) if such Participant sold to the person asserting the claim the
Registrable Securities which are the subject of such claim and such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any preliminary prospectus and corrected in the Prospectus or any
amendment or supplement thereto and the Prospectus does not contain any other
untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Securities sold to such Person if required by applicable laws,
unless such failure to deliver or provide a copy of the Prospectus (as amended
or supplemented) was a result of noncompliance by the Partnership with Section
2.3 of this Agreement.
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(b) Each Participant agrees, severally and not jointly, to indemnify and
hold harmless the Partnership, its officers and each Person who controls the
Partnership (including RAS, Inc.) within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Partnership to each Participant, but only (i) with
reference to information furnished to the Partnership in writing by or on behalf
of such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary prospectus
or (ii) with respect to any untrue statement or representation made by such
Participant in writing to the Partnership.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, shall have the right to retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may reasonably
designate in such proceeding and shall pay the reasonable fees and expenses
actually incurred by such counsel related to such proceeding; provided, however,
that the failure to so notify the Indemnifying Person shall not relieve it of
any obligation or liability which it may have hereunder or otherwise (unless and
only to the extent that such failure results in the loss or compromise of any
material rights or defenses by the Indemnifying Person). In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person shall
have failed within a reasonable period of time to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that, unless there exists a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with any
one such proceeding or separate but substantially similar related proceeding in
the same jurisdiction arising out of the same general allegations, be liable for
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such reasonable fees and
expenses shall be reimbursed promptly as they are incurred. Any such separate
firm for the Participants and such control Persons of Participants shall be
designated in writing by Participants who sold a majority in interest of
Registrable Securities sold by all such Participants and any such separate firm
for the Partnership, its general partner and their directors, their officers and
such control Persons of the Partnership shall be designated in writing by the
Partnership. The Indemnifying Person shall not be liable for any settlement of
any proceeding effected without its prior written consent, but if settled with
such consent or if there be a final non-appealable judgment for the plaintiff
for which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, the Indemnifying Person agrees to indemnify and hold harmless each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party, and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
written release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of any
Indemnified Person.
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(d) If the indemnification provided for in Subsections 2.4(a) and 2.4(b)
hereof is for any reason unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such Subsections, in lieu of indemnifying such
Indemnified Person thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect (i) the relative benefits received by
the Indemnifying Person or Persons on the one hand and the Indemnified Person or
Persons on the other from the offering of the Warrants or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the Indemnifying
Person or Persons on the one hand and the Indemnified Person or Persons on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Partnership on the one
hand or such Participant or such other Indemnified Person, as the case may be,
on the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Subsection 2.4 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
Subsection shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Subsection 2.4, in no event
shall a Participant be required to contribute any amount in excess of the amount
by which proceeds received by such Participant from sales of Registrable
Securities exceeds the amount of any damages that such Participant has otherwise
been required to pay or has paid by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Subsection
2.4 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
2. Restrictions on Transfer.
3.1 Existing Limited Partners. No Existing Limited Partner shall, directly
or indirectly, sell, assign, give, transfer, exchange, convert, devise,
bequeath, pledge or otherwise dispose of, in any transaction or series of
transactions (each, a "Transfer"), any LP Partnership Interest or the beneficial
ownership thereof or any interest therein except (i) in compliance with Sections
4 or 5, as the case may be, (ii) to a Permitted Transferee (including, without
limitation, to Warrant Co. if such Transfer is solely for the purpose of
exchanging such Transferred LP Warrant Partnership Interest for corresponding
Common Stock in Warrant Co.), (iii) in a bona fide public distribution pursuant
to an effective registration statement under the Securities Act (each Transfer
permitted by clauses (ii) and (iii) being an
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"Exempt Transfer"), or (iv) in compliance with the Gaming Laws. In any event,
each permitted Transfer by an Existing Limited Partner shall be subject to
Section 7.
3.2 Holders of LP Warrant Partnership Interests. No Holder of any LP
Warrant Partnership Interest shall Transfer such LP Warrant Partnership Interest
or the beneficial ownership thereof or any interest therein except in compliance
with the Gaming Laws and Section 7.
3. Tag-Along Rights.
4.1 Transfer by Existing Limited Partners.
(a) In the event of any proposed Transfer of any LP Partnership
Interest by any of the Existing Limited Partners or their respective Permitted
Transferees in a single transaction or a series of related transactions
involving LP Partnership Interests of the Partnership aggregating at least 15%
of the LP Partnership Interests of the Partnership then collectively owned by
the Existing Limited Partners to a Person (such other Person being hereinafter
referred to as the "Proposed Purchaser"), other than pursuant to an Exempt
Transfer, the Holders of Warrants and LP Warrant Partnership Interests (the
"Non-Selling Partners") each shall have the irrevocable and exclusive right, but
not the obligation (the "Tag-Along Right"), to require the purchase from each of
them up to such number of Warrants and/or LP Warrant Partnership Interests
determined in accordance with Section 4.3.
(b) Any Warrants or LP Warrant Partnership Interests purchased from
the Holders pursuant to this Section 4.1 shall be paid for at the same price per
LP Partnership Interest and upon the same terms and conditions of such proposed
Transfer by such Existing Limited Partners; provided that the price per Warrant
payable by the Proposed Purchaser shall equal the price proposed to be paid per
LP Partnership Interest for which such Warrant is exercisable, less the exercise
price of such Warrant.
(c) The Partnership shall give written notice at least 15 days prior
to the date of the proposed Transfer to the Non-Selling Partners stating (i) the
name and address of the Proposed Purchaser, (ii) the proposed amount of
consideration and terms and conditions of payment offered by such Proposed
Purchaser (if the proposed consideration is not cash, the notice shall describe
the terms of the proposed consideration), (iii) the amount of LP Partnership
Interests proposed to be Transferred and (iv) that either the Proposed Purchaser
has been informed of the Tag-Along Right and has agreed to purchase Warrants
and/or LP Warrant Partnership Interests in accordance with the terms hereof or
that the Existing Limited Partners will make such purchase. The Tag-Along Right
may be exercised by any or all of the Non-Selling Partners by giving written
notice to the Partnership and the Person proposing to make such Transfer
("Tag-Along Notice"), within 5 Business Days of receipt of the notice specified
in the preceding sentence, indicating its election to exercise the Tag-Along
Right (the "Participating Holders"). The Tag-Along Notice shall state the amount
of Warrants and/or LP Warrant Partnership Interests that such Participating
Holder proposes to include in such Transfer to the Proposed Purchaser. Failure
by any Non-Selling Partner to give such notice within the 5 Business Days notice
period shall be deemed an election by such Non-Selling Partner not to sell its
Warrants and/or LP Warrant Partnership Interests in connection with that
proposed Transfer. The closing with respect to any sale to a Proposed Purchaser
pursuant to this Section 4.1 shall be held at the time and place specified in
the Tag-Along Notice but in any event within 30 days of the date the Tag-Along
Notice is given; provided that if through the exercise of reasonable efforts the
Existing Limited Partners or Permitted Transferees so proposing to transfer LP
Partnership Interests are unable to cause such transaction to close within 30
days, such period may be extended for such reasonable period of time as may be
necessary to close such
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transaction. Consummation of the sale of Warrants and/or LP Warrant Partnership
Interests by any Existing Limited Partner or Permitted Transferee to a Proposed
Purchaser shall be conditioned upon consummation of the sale by each
Participating Holder to such Proposed Purchaser of the securities subject to the
Tag-Along Right, if any.
4.2 Purchase Obligation of Existing Limited Partners. In the event that
the Proposed Purchaser does not purchase such Warrants and/or LP Warrant
Partnership Interests from the Participating Holders on the same terms and
conditions as purchased from the Existing Limited Partners or such Permitted
Transferees, then the Existing Limited Partners or such Permitted Transferees
making such Transfer shall purchase such securities if the Transfer occurs on
such terms and conditions.
4.3 Determination of Transferred Interests. The number of Warrants and/or
LP Partnership Interests purchased from each Participating Holder and the
Existing Limited Partners and/or such Permitted Transferees shall be determined
by multiplying the aggregate amount of LP Partnership Interests proposed to be
sold by the Existing Limited Partners and/or such Permitted Transferees to the
Proposed Purchaser by a fraction, the numerator of which is the total number of
LP Warrant Partnership Interests (including the number of LP Warrant Partnership
Interests issuable upon exercise of the Warrants) owned by such Participating
Holder or such Existing Limited Partner or Permitted Transferee and the
denominator of which is the total number of LP Partnership Interests (including
the number of LP Warrant Partnership Interests issuable upon exercise of the
Warrants) outstanding. In the event that any Participating Holder shall elect to
sell less than the maximum number of Warrants and/or LP Warrant Partnership
Interests he is entitled to sell pursuant to the provisions of this Section 4
then each other Participating Holder shall have the right to sell additional
Warrants and LP Warrant Partnership Interests, pro rata according to the
respective number of Warrants and LP Warrant Partnership Interests offered for
sale by the Participating Holders.
4.4 Costs of Transfer. The Existing Limited Partners and/or Permitted
Transferees who are parties to a sale to a Proposed Purchaser shall arrange for
payment directly by the Proposed Purchaser to each Participating Holder, upon
delivery of the certificate or certificates representing the Warrants and/or LP
Warrant Partnership Interests duly endorsed for transfer, together with such
other documents as the Proposed Purchaser may reasonably request. The reasonable
costs and expenses incurred by the Existing Limited Partners and/or Permitted
Transferees and Participating Holders in connection with a sale of Warrants
and/or LP Warrant Partnership Interests subject to this Section 4 shall be
allocated pro rata based upon the proceeds from the securities sold by each
Limited Partner to a Proposed Purchaser; provided that the costs and expenses
shall not include the fees and expenses of more than one law firm, which firm
shall be selected by the Existing Limited Partners, unless representation of the
Existing Limited Partners and/or Permitted Transferees and the Participating
Holders by the same counsel, due to actual or potential differing interests
between them, shall create a conflict of interest, in which case the costs and
expenses shall include the reasonable fees and expenses of one additional law
firm designated by Participating Holders proposing to sell a majority of the
Warrants and/or LP Warrant Partnership Interests proposed to be sold by all
Participating Holders.
4.5 Expiration of Tag-Along Right. If at the end of 30 days following the
date on which a Tag-Along Notice was given, or as otherwise extended pursuant to
the provisions of Subsection 4.1, the sale of Warrants and/or LP Warrant
Partnership Interests by the Existing Limited Partners and/or Permitted
Transferees and the sale of the Warrants and/or LP Warrant Partnership Interests
by the Participating Holders have not been completed in accordance with the
terms of the Proposed Purchaser's offer, all certificates representing such
Warrants and LP Warrant Partnership Interests shall be returned
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to the Participating Holders, and all the restrictions on sale, transfer or
assignment contained in this Agreement with respect to LP Partnership Interests
owned by the Existing Limited Partners and Permitted Transferees shall again be
in effect.
4.6 Termination. Tag-Along Rights shall terminate upon the effectiveness
of any registration statement filed with the SEC with respect to LP Partnership
Interests in an initial public offering or subsequent public offering if, after
giving effect to such offering, at least 50% of the LP Partnership Interests on
a fully-diluted basis would be held by non-Affiliates of the Partnership and
without restriction on transfer under the Securities Act.
4. Drag-Along Rights.
5.1 Transfer by Existing Limited Partners.
(a) In the event of any proposed Transfer of any LP Partnership Interests
by any of the Existing Limited Partners or their respective Permitted
Transferees in any single transaction or a series of related transactions
involving LP Partnership Interests, aggregating at least 51% of the total LP
Partnership Interests then outstanding, to a Person (such other Person being
hereinafter referred to as the "Proposed Majority-Interest Purchaser"), other
than pursuant to an Exempt Transfer, such selling Existing Limited Partners
shall have the exclusive and irrevocable right, but not the obligation (the
"Drag-Along Right"), to require each Holder to Transfer to the Proposed
Majority-Interest Purchaser such number of LP Warrant Partnership Interests
(and/or Warrants exercisable for an amount of LP Warrant Partnership Interests)
determined in accordance with Subsection 5.3.
(b) Any Warrants or LP Warrant Partnership Interests purchased from the
Holders pursuant to this Section 5.1 shall be paid for at the same price per LP
Partnership Interest, and upon the same terms and conditions of such proposed
Transfer by such Existing Limited Partners; provided that the price per Warrant
payable by the Proposed Majority Interest Purchaser shall equal the price
proposed to be paid per LP Partnership Interest for which such Warrant is
exercisable, less the exercise price of such Warrant.
(c) The Partnership shall notify, or cause to be notified, each Holder in
writing of each such proposed Transfer at least 15 days prior to the date
thereof. Such notice shall set forth (i) the name of the Proposed
Majority-Interest Purchaser and the number of LP Partnership Interests proposed
to be Transferred, (ii) the name and address of the Proposed Majority-Interest
Purchaser, (iii) the proposed amount of consideration and terms and conditions
of payment offered by such Proposed Majority-Interest Purchaser (if the proposed
consideration is not cash, the notice shall describe the terms of the proposed
consideration) and (iv) that either the Proposed Majority-Interest Purchaser has
been informed of the Drag-Along Right and has agreed to purchase Warrants and/or
LP Warrant Partnership Interests in accordance with the terms hereof or that the
Existing Limited Partners will make such purchase. The closing with respect to
any Transfer to a Proposed Majority-Interest Purchaser pursuant to this Section
5 shall be held at the time and place specified in the Drag-Along Notice but in
any event within 60 days of the date the Drag-Along Notice is given; provided
that if through the exercise of reasonable efforts the Existing Limited Partners
or Permitted Transferees so proposing to transfer LP Partnership Interests are
unable to cause such transaction to close within 60 days, such period may be
extended for such reasonable period of time as may be necessary to close such
transaction. Consummation of the sale of Warrants and/or LP Warrant Partnership
Interests by any Existing Limited Partner or Permitted Transferee to a Proposed
Majority-Interest Purchaser shall be conditioned upon
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consummation of the sale by each Holder to such Proposed Majority-Interest
Purchaser of the securities subject to the Drag-Along Right.
5.2 Purchase Obligation of Existing Limited Partners. In the event that
the Proposed Majority-Interest Purchaser does not purchase Warrants and/or LP
Warrant Partnership Interests from the Holders on the same terms and conditions
as purchased from the Existing Limited Partners, then the Existing Limited
Partners making such Transfer shall purchase such Warrants and/or LP Warrant
Partnership Interests if the Transfer occurs on such terms and conditions.
5.3 Determination of Transferred Interests. The number of Warrants and/or
LP Partnership Interests of each Holder which shall be subject to the Drag-Along
Right shall be equal to the total number of LP Warrant Partnership Interests
(including the number of LP Warrant Partnership Interests issuable upon the
exercise of Warrants) owned by such Holder multiplied by a fraction, the
numerator of which is the number of LP Partnership Interests to be sold by the
Existing Limited Partners to the Proposed Majority-Interest Purchaser and the
denominator of which is the total number of LP Partnership Interests then owned
by the Existing Limited Partners.
5.4 Costs and Expiration of Drag-Along Right. The provisions of Subsection
4.4 and 4.5 shall, with respect to each exercise of the Drag-Along Right by the
Existing Limited Partners, apply with the same effect as if references therein
to Tag-Along Right were references to the Drag-Along Right.
5.5 Termination. Drag-Along rights shall terminate upon the effectiveness
of any registration statement filed with the SEC with respect to LP Partnership
Interests in an initial public offering or subsequent public offering if, after
giving effect to such offering, at least 50% of the LP Partnership Interests on
a fully-diluted basis would be held by Non-Affiliates of the Partnership and
without restriction on transfer under the Securities Act.
5. Put and Call Provisions.
6.1 Holders' Right to Put Warrants. Each Holder of Warrants shall have the
right, but not the obligation (the "Resale Right"), exercisable during the
Resale Period (hereinafter defined), to sell to the Partnership (and the
Partnership, upon exercise of such Resale Right by such Holder, hereby agrees to
purchase), at the Takeout Price (hereinafter defined) per Warrant, all Warrants
then owned by such Holder and on the terms and conditions set forth in this
Section 6.1.
(a) The "Resale Period" shall be a 30-day period commencing on
either (i) April 15, 2003 in the event that a Qualified IPO (hereinafter
defined) has not been successfully completed by the Partnership on or prior to
December 31, 2002 and the $100,000,000 principal amount First Mortgage Notes of
the Partnership and RAS, Inc. due March 31, 2004 (the "First Mortgage Notes")
have been prepaid in full on or prior to December 31, 2002, or (ii) April 15,
2006 in the event that clause (i) shall not have become effective and a
Qualified IPO has not been successfully completed by the Partnership on or
before December 31, 2005.
(b) "Qualified IPO" shall mean the completion of an underwritten
initial public offering pursuant to an effective registration statement under
the Securities Act, covering the offer and sale of LP Partnership Interests for
the account of the Partnership, in which newly issued LP Partnership Interests
are sold and the aggregate gross proceeds to the Partnership, before
underwriting discounts and
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commissions and before expenses is not less than $50,000,000.00.
(c) The "Takeout Price" per Warrant shall be equal to the greater
of:
(i) the product of (A) eight multiplied by the Consolidated
Cash Flow (as defined in the Indenture) for the fiscal year ended
December 31, 2005 (or, if the Resale period is calculated under
Section 6.1(a)(i), December 31, 2003), minus all Indebtedness (as
defined in the Indenture) outstanding on such date and (B) a
fraction, the numerator of which is an amount equal to the number of
LP Partnership Interests to which the Holder of such Warrants would
be entitled assuming such Holder had exercised its Warrants and the
denominator of which is an amount equal to the total number of LP
Partnership Interests then outstanding on a fully diluted basis
(calculated as if all Warrants had been exercised);
(ii) the product of (A) eight multiplied by the average
Consolidated Cash Flow for each of the fiscal years ended December
31, 2003, 2004 and 2005 (or, if the Resale Period is calculated
under Section 6.1(a)(i), December 31, 2001, 2002 and 2003), minus
all Indebtedness outstanding on such dates and (B) a fraction, the
numerator of which is an amount equal to the number of LP
Partnership Interests to which the Holder of such Warrants would be
entitled assuming such Holder had exercised its Warrants and the
denominator of which is an amount equal to the number of LP
Partnership Interests then outstanding on a fully diluted basis
(calculated as if all Warrants had been exercised); and
(iii) the product of (A) the present value on such Put Closing
Date (as hereinafter defined) of (x) the amount that would have been
earned on RAS's and RAS, Inc.'s 13% Senior Subordinated PIK Notes
(the "Notes") issued under the Indenture from the Issue Date (as
defined in the Indenture) to the Put Closing Date had such Notes
borne interest at 20% on a bond equivalent basis during such period
minus (y) the actual cash interest paid on such Notes during such
period (including the cash interest paid on June 15, 2003 or June
15, 2006, as applicable), and (B) a fraction, the numerator of which
is an amount equal to the number of LP Partnership Interests to
which the Holder of such Warrants would be entitled assuming such
Holder had exercised its Warrants and the denominator of which is an
amount equal to the total number of LP Partnership Interests
issuable upon exercise of all Warrants then outstanding (calculated
as if all Warrants then outstanding had been exercised).
(d) If the Partnership successfully completes a Qualified IPO during
the applicable Resale Period prior to any Holder giving notice of the exercise
of such Holder's Resale Right to the Partnership pursuant to Subsection 6.1(e),
then such Holder's Resale Right (but not including Resale Rights for which
notice of exercise shall have been given period thereto) shall thereupon
terminate and become void.
(e) Each Holder of Warrants desiring to exercise Resale Rights shall
do so by giving the Partnership, on or before the last day of the Resale Period,
written notice (which notice shall be irrevocable) of such Holder's intention to
exercise Resale Rights (the "Put Notice") and shall specify in such notice the
number of Warrants to be sold and may specify in such notice a proposed date of
sale. The closing of any sale of Warrants pursuant to exercise of Resale Rights
shall take place at the offices
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of the Partnership on June 15, 2003 if the Resale Period is calculated under
Section 6.1(a)(i) or June 15, 2006 if the Resale Period is calculated under
Section 6.1(a)(ii) (the "Put Closing Date"). On or prior to the Put Closing
Date, the Partnership shall deliver a certified or bank cashier's check to the
Holder of Warrants being repurchased, in an amount equal to the aggregate
Takeout Price for the Warrants being repurchased from such Holder pursuant to
exercise of Resale Rights, or shall transfer such amount by wire transfer of
immediately available funds to any account specified in writing by such Holder
to the Partnership.
6.2 Partnership's Right to Call Warrants. In the event that the Resale
Period occurs pursuant to Subsection 6.1(a) and less than all of the Warrants
have been sold by the Holders pursuant thereto, the Partnership shall have the
one time right, but not the obligation (the "Repurchase Right"), exercisable
during the Repurchase Period (hereinafter defined), to purchase all Warrants
then outstanding from all Holders thereof (and each such Holder, upon exercise
of such Repurchase Right by such the Partnership, hereby agrees to purchase), at
the Takeout Price per Warrant, as determined pursuant to Section 6.1 except such
determination shall be made as of the date of closing such purchase and sale
transaction, and on the terms and conditions set forth in this Section 6.2.
(a) The "Repurchase Period" shall be a 30-day period commencing on
either (i) October 15, 2003 if the Resale Period commenced April 15, 2003 or
(ii) October 15, 2006 if the Resale Period commenced April 15, 2006.
(b) The Partnership shall exercise its Repurchase Right by giving
the Holders of outstanding Warrants, on or before the last day of the Repurchase
Period, written notice (which notice shall be irrevocable) of its intention to
exercise the Repurchase Right (the "Call Notice") and shall specify in such
notice a proposed date of sale. The closing of any purchase and sale of Warrants
pursuant to exercise of the Repurchase Right shall take place at the offices of
the Partnership on a mutually agreed Business Day (the "Call Closing Date")
which shall be not later than 30 days after the date on which the Call Notice is
given to such Holders (whether or not such Call Closing Date is on or after the
last day of the Repurchase Period). On or prior to the Call Closing Date, the
Partnership shall deliver a certified or bank cashier's check to each Holder of
Warrants being repurchased, in an amount equal to the aggregate Takeout Price
for the Warrants being repurchased from such Holder pursuant to exercise of the
Repurchase Right, or shall transfer such amount by wire transfer of immediately
available funds to any account specified in writing by such Holder to the
Partnership.
6.3 Subordination of Put and Call Obligations. The obligations of the
Partnership described in Subsections 6.1 and 6.2 shall be subordinate to the
Partnership's obligations under the First Mortgage Notes and related agreements,
the Senior PIK Notes and the Indenture and any additional bank financing so long
as each of the foregoing remains outstanding.
7. Registration of Transfers and Exchanges. When any certificate evidencing any
LP Warrant Partnership Interests (a "Partnership Certificate") is presented to
the General Partner or the Transfer Agent with a request:
(A) to register the transfer of any LP Warrant Partnership
Interests; or
(B) to exchange such Partnership Certificate for Partnership
Certificates of other authorized denominations evidencing in the aggregate an
equal number of LP Warrant Partnership Interests, the General Partner or the
Transfer Agent shall register the transfer or make the exchange as
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requested if the requirements of this Section 7 for such transactions are met;
provided, however, that the Partnership Certificates presented or surrendered
for registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the General Partner or the Transfer
Agent, duly executed by the holder thereof or his attorney duly authorized
in writing; and
(II) in the case of Partnership Interests the offer and sale of
which have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), such Partnership Certificates shall be
accompanied, in the sole discretion of the General Partner, by the
following additional information and documents, as applicable:
(1) if such Partnership Certificates are being delivered to
the General Partner or the Transfer Agent by a holder for
registration in the name of such holder, without transfer, a
certification from such holder to that effect (in
substantially the form of Exhibit B hereto); or
(2) if such LP Warrant Partnership Interests are being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act (a "Qualified
Institutional Buyer")) in accordance with Rule 144A under the
Securities Act, a certificate to that effect (in substantially
the form of Exhibit B hereto); or
(3) if such LP Warrant Partnership Interests are being
transferred to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act (an "Institutional Accredited Investor"))
delivery of a certification to that effect (in substantially
the form of Exhibit B hereto) and a Transferee Certificate for
Institutional Accredited Investors in substantially the form
of Exhibit C hereto; or
(4) if such LP Warrant Partnership Interests are being
transferred in reliance on Regulation S under the Securities
Act ("Regulation S"), delivery of a certification to that
effect (in substantially the form of Exhibit B hereto) and a
Transferee Certificate for Regulation S Transfers in
substantially the form of Exhibit C hereto and an opinion of
counsel reasonably satisfactory to the General Partner to the
effect that such transfer is in compliance with the Securities
Act; or
(5) if such LP Warrant Partnership Interests are being
transferred in reliance on Rule 144 under the Securities Act,
delivery of a certification to that effect (in substantially
the form of Exhibit B hereto) and an opinion of counsel
reasonably satisfactory to the General Partner to the effect
that such transfer is in compliance with the Securities Act;
or
(6) if such LP Warrant Partnership Interests are being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the form of
Exhibit B hereto) and an opinion of counsel reasonably
satisfactory to the
17
<PAGE> 19
General Partner to the effect that such transfer is in
compliance with the Securities Act.
7.1 Legends. The legends set forth in this Section 7.2 shall be affixed to
certificates representing Registrable Securities in addition to any legends
required by the Partnership Agreement and any other applicable agreement.
(i) For so long as transfer of a Registrable Security is not
permitted without registration under the Securities Act, each
certificate evidencing a Registrable Security shall bear a legend
substantially to the following effect:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF
A U.S. PERSON, AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO
IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS
IN EFFECT WITH RESPECT TO SUCH TRANSFER, ON THE DATE OF THE TRANSFER
OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT
(A) TO THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP (THE "ISSUER")
OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QIB IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), AND IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE AMOUNT OF SECURITIES AT THE TIME OF TRANSFER
OF LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE
18
<PAGE> 20
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE, BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER), (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
(G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER) AND IN EACH CASE, IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT
CONTAINS A PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO
REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(ii) For so long as this Agreement shall remain in effect with
respect to any Registrable Security, each certificate evidencing a
Registrable Security shall bear a legend substantially to the
following effect:
THIS SECURITY WAS ISSUED SUBJECT TO THAT CERTAIN REGISTRATION RIGHTS
AND LIMITED PARTNERS' AGREEMENT DATED AS OF DECEMBER 30, 1997 AMONG
THE PARTNERSHIP, CERTAIN LIMITED PARTNERS AND THE INITIAL PURCHASER
REFERRED TO THEREIN, AND IS SUBJECT TO THE RESTRICTIONS SET FORTH
THEREIN.
(iii) Upon any sale or transfer of any Restricted Security
pursuant to Rule 144 or an effective registration statement under
the Securities Act, the Transfer Agent shall permit the holder
thereof to exchange such Restricted Security for a LP Warrant
Partnership Interest that does not bear the legends set forth above
under clauses (i) and (ii) above, and rescind any related
restriction on the transfer of such LP Warrant Partnership Interest.
(iv) On and after the date of issuance of a License to the
Partnership and until the Partnership has been registered as a
Registered Company and granted the Exemptions by the Nevada
Commission, each Warrant Certificate evidencing such Warrant (and
all Warrants issued in exchange therefor or substitution thereof)
shall bear a legend substantially to the following effect:
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER DISPOSITION OF ANY
INTEREST IN THE LIMITED PARTNERSHIP IS VOID UNLESS APPROVED IN
ADVANCE BY THE NEVADA GAMING COMMISSION. IF AT ANY TIME THE NEVADA
GAMING COMMISSION FINDS THAT AN INDIVIDUAL OWNER OF ANY SUCH
INTEREST IS
19
<PAGE> 21
UNSUITABLE TO HOLD THAT INTEREST, THE NEVADA GAMING COMMISSION SHALL
IMMEDIATELY NOTIFY THE LIMITED PARTNERSHIP OF THAT FACT. THE LIMITED
PARTNERSHIP SHALL, WITHIN TEN DAYS FROM THE DATE THAT IT RECEIVES
THE NOTICE FROM THE NEVADA GAMING COMMISSION, RETURN TO THE
UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS REFLECTED ON
THE BOOKS OF THE LIMITED PARTNERSHIP. BEGINNING ON THE DATE WHEN THE
NEVADA GAMING COMMISSION SERVES NOTICE OF A DETERMINATION OF
UNSUITABILITY, PURSUANT TO THE PRECEDING SENTENCE, UPON THE LIMITED
PARTNERSHIP, IT IS UNLAWFUL FOR THE UNSUITABLE OWNER: (A) TO RECEIVE
ANY SHARE OF THE PROFITS OR DISTRIBUTIONS OF ANY CASH OR OTHER
PROPERTY OTHER THAN A RETURN OF CAPITAL AS REQUIRED ABOVE; (B) TO
EXERCISE, DIRECTLY OR THROUGH ANY TRUSTEE OR NOMINEE, ANY VOTING
RIGHT CONFERRED BY SUCH INTEREST; OR (C) TO RECEIVE ANY REMUNERATION
IN ANY FORM FROM THE LIMITED PARTNERSHIP, FOR SERVICES RENDERED OR
OTHERWISE.
(v) On and after the date of issuance of a License to the
Partnership and until the Partnership has been registered as a
Registered Company and granted the Exemptions by the Nevada
Commission, each certificate representing LP Partnership Interests
(and all LP Partnership Interests issued in exchange therefor or
substitution thereof) shall bear a legend substantially to the
following effect:
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER DISPOSITION OF ANY
INTEREST IN THE LIMITED PARTNERSHIP IS VOID UNLESS APPROVED IN
ADVANCE BY THE NEVADA GAMING COMMISSION. IF AT ANY TIME THE NEVADA
GAMING COMMISSION FINDS THAT AN INDIVIDUAL OWNER OF ANY SUCH
INTEREST IS UNSUITABLE TO HOLD THAT INTEREST, THE NEVADA GAMING
COMMISSION SHALL IMMEDIATELY NOTIFY THE LIMITED PARTNERSHIP OF THAT
FACT. THE LIMITED PARTNERSHIP SHALL, WITHIN TEN DAYS FROM THE DATE
THAT IT RECEIVES THE NOTICE FROM THE NEVADA GAMING COMMISSION,
RETURN TO THE UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS
REFLECTED FROM THE NEVADA GAMING COMMISSION, RETURN TO THE
UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS REFLECTED ON
THE BOOKS OF THE LIMITED PARTNERSHIP. BEGINNING ON THE DATE WHEN THE
NEVADA GAMING COMMISSION SERVES NOTICE OF A DETERMINATION OF
UNSUITABILITY, PURSUANT TO THE PRECEDING SENTENCE, UPON THE LIMITED
PARTNERSHIP, IT IS UNLAWFUL FOR THE UNSUITABLE OWNER: (A) TO RECEIVE
ANY SHARE OF THE PROFITS OR DISTRIBUTIONS OF ANY CASH OR OTHER
PROPERTY OTHER THAN A RETURN OF CAPITAL AS REQUIRED ABOVE; (B) TO
EXERCISE, DIRECTLY OR THROUGH ANY TRUSTEE OR NOMINEE, ANY VOTING
RIGHT CONFERRED BY SUCH INTEREST; OR (C) TO RECEIVE ANY
20
<PAGE> 22
REMUNERATION IN ANY FORM FROM THE LIMITED PARTNERSHIP, FOR SERVICES
RENDERED OR OTHERWISE.
ANY LIMITED PARTNER GRANTED DELAYED LICENSING THAT IS LATER FOUND
UNSUITABLE BY THE NEVADA GAMING COMMISSION SHALL RETURN ALL EVIDENCE
OF ANY OWNERSHIP IN THE LIMITED PARTNERSHIP TO THE LIMITED
PARTNERSHIP, AT WHICH TIME THE LIMITED PARTNERSHIP SHALL REFUND TO
THE UNSUITABLE LIMITED PARTNER NO MORE THAN THE AMOUNT THAT HE PAID
FOR HIS OWNERSHIP INTEREST, AND THE UNSUITABLE LIMITED PARTNER SHALL
NO LONGER HAVE ANY DIRECT OR INDIRECT INTEREST IN THE LIMITED
PARTNERSHIP.
7.2 Special Provisions Relating to Gaming Regulations and Warrant Co.
(a) Notwithstanding any other provision of this Agreement, on and
after such time as the Partnership shall have obtained a nonrestricted
gaming license (the "License") issued by the Nevada Gaming Commission (the
"Nevada Commission"), no Holder may sell, assign, transfer, pledge or make
any other disposition of a LP Partnership Interest without the prior
approval of the Nevada Commission unless the Partnership is then
registered by the Nevada Commission as a "publicly traded corporation" (a
"Registered Company"), as that term is defined in the Nevada Gaming
Control Act and the regulations promulgated thereunder, and holds certain
exemptions from the Nevada Commission in connection with such registration
(the "Exemptions"). The Partnership shall promptly notify each Holder in
writing in each instance upon becoming the holder of the License, a
Registered Company and the holder of the Exemptions.
(b) Subject to compliance with the requirements of all applicable
Gaming Laws, upon any Holder's surrender of a LP Partnership Interest for
transfer of such LP Partnership Interest to Warrant Co., such transfer
shall be registered in accordance with this Section 7 and the Holder's LP
Partnership Interest shall be cancelled and a Warrant Co. LP Warrant shall
be issued to Warrant Co. in respect thereof; provided that such Holder and
Warrant Co. certify to the Partnership and its Transfer Agent that such
transfer is solely for the purpose of exchanging a Corporate Warrant
corresponding thereto as contemplated by this Agreement.
(c) Subject to compliance with the requirements of all applicable
Gaming Laws, the Company may issue additional LP Partnership Interests
from time to time to any holder of Common Stock of Warrant Co. upon such
stockholder's delivery to the Partnership of the certificate or
certificates evidencing such LP Partnership Interest, duly endorsed or
accompanied by a written instrument or instruments of transfer to such
stockholder, in form satisfactory to the Partnership duly executed by
Warrant Co.; provided that such stockholder and Warrant Co. shall certify
to the Partnership and its Transfer Agent that such transfer is solely for
the purpose of exchanging the Common Stock of Warrant Co. for the
corresponding LP Partnership Interest then held by Warrant Co. Upon
satisfaction of the foregoing conditions, the Partnership shall cause such
transfer and issuance to be made and duly registered on the books of the
Partnership.
21
<PAGE> 23
8. Miscellaneous.
8.1 No Inconsistent Agreements. The Partnership has not entered and will
not enter, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof. The
Partnership has not entered and it will not enter into any agreement with
respect to any of its securities which will grant to any Person piggy-back
registration rights with respect to a Registration Statement.
8.2 Adjustments Affecting Registrable Securities. The Partnership shall
not, directly or indirectly, take any action with respect to the Registrable
Securities as a class that would adversely affect the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
8.3 Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of the Holders of not less than a majority in aggregate principal amount
of the then outstanding Registrable Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Registrable Securities
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect, impair, limit or compromise the rights
of other Holders of Registrable Securities may be given by Holders of at least a
majority in aggregate principal amount of the Registrable Securities being sold
by such Holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile: if to a Holder of the
Registrable Securities, at the most current address of such Holder set forth on
the records of the registrar under the Indenture; if to the Initial Purchaser,
to NatWest Capital Markets Limited, 135 Bishopsgate, London, EC2M 3XT, United
Kingdom, Attention: Roger Hoit; with a copy to White & Case, 1155 Avenue of the
Americas, New York, NY 10036, Facsimile No: (212) 354-8113, Attention: Timothy
B. Goodell; and if to the Partnership, to The Resort at Summerlin, Limited
Partnership, 1160 Town Center Drive, Suite 200, Las Vegas, Nevada 89134,
Attention: John Tipton. All such notices and communications shall be deemed to
have been duly given: when delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed; one
business day after being timely delivered to a next-day air courier; and when
receipt is acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
8.5 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto;
provided, however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign holds Registerable Securities.
22
<PAGE> 24
8.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
8.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
8.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
8.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
8.10 Registrable Securities Held by the Partnership, RAS, Inc. or their
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Registerable Securities is required hereunder, Registerable
Securities held by the Partnership, RAS, Inc. or their affiliates (as such term
is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
8.11 Third Party Beneficiaries. Holders of Registerable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
AND IS FOLLOWED BY A SINGLE SIGNATURE PAGE.]
23
<PAGE> 25
IN WITNESS WHEREOF, the parties have executed this Registration Rights and
Limited Partners' Agreement as of the date first written above.
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
By: THE RESORT AT SUMMERLIN, INC., General
Partner
By: /s/ Brian McMullan
--------------------------------------
Name: Brian McMullan
Title: President
SEVEN CIRCLE GAMING CORPORATION
By: /s/ Brian McMullan
--------------------------------------
Name: Brian McMullan
Title: President
CHRISTIANA LIMITED PARTNERSHIP,
a Nevada limited partnership
By: KEEPSAKE, INC., a Nevada corporation,
General Partner
By: /s/ Paul Steelman
----------------------------------
Name: Paul Steelman
Title: President
/s/ Ragan A. Henry
-----------------------------------
RAGAN A. HENRY
/s/ Gustav Mauler
-----------------------------------
GUSTAV MAULER
RAS WARRANT CO.
By: /s/ Brian McMullan
--------------------------------------
Name: Brian McMullan
Title: President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written:
NATWEST CAPITAL MARKETS LIMITED
By: /s/ Nan Coulbeck
----------------------------------
Name: N S Coulbeck
Title: Director
<PAGE> 26
EXHIBIT A
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF RESTRICTED SECURITIES
Re: _____________________________________
This Certificate relates to limited partner interests (the "LP
Partnership Interests")(1) held in definitive form by ________ (the
"Transferor"). The Transferor has requested the Transfer Agent by written order
to exchange or register the transfer of LP Partnership Interests. In connection
with such request, the Transferor does hereby certify that Transferor is
familiar with the Registration Rights and Limited Partners' Agreement
("Agreement") relating to the LP Partnership Interests and the restrictions on
transfers thereof as provided in Sections [ ] and [ ] of such Agreement, and
that the transfer of LP Partnership Interests requested hereby does not require
registration under the Securities Act (as defined below) because:(2)
[ ] Such LP Partnership Interests are being acquired for the
Transferor's own account without transfer pursuant to an Exempt
Transfer permitted by the Agreement.
[ ] Such LP Partnership Interests are being transferred pursuant to an
effective registration statement under the Securities Act.
[ ] Such LP Partnership Interests are being transferred in reliance on
and in compliance with an exemption from the registration
requirements of the Securities Act. If required by the Agreement, an
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
______________________________________
[INSERT NAME OF TRANSFEROR]
By: __________________________________
Date: _______________________
________
(1) To be appropriately modified for any other partnership interests.
(2) Check applicable box.
<PAGE> 27
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Limited Partnership Interests (the "Securities")
of The Resort at Summerlin, Limited Partnership
(the "Partnership")
This Certificate relates to ____________ Securities held in the form
of physical Partnership Certificates by _________________ (the "Transferor").
The Transferor:*
/ / has requested that the General Partner of the Partnership or the
Transfer Agent for the Partnership by written order to exchange or register the
transfer of Securities evidenced by physical Partnership Certificates.
In connection with such request and in request of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Agreement of Limited Partnership and Registration Rights and Limited
Partners' Agreement dated as of December 30, 1997, each relating to the above
captioned Securities, and the restrictions on transfers thereof as provided
therein; and that the transfer of these Securities does not require registration
under the Securities Act of 1933, as amended (the "Act") because*:
/ / Such Security is being acquired for the Transferor's own account,
without transfer.
/ / Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act.
/ / Such Security is being transferred in reliance on Regulation S under
the Act.
<PAGE> 28
/ / Such Security is being transferred in reliance on Rule 144 under the
Act.
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
-------------------------------------
(INSERT NAME OF TRANSFEROR)
By:
----------------------------------
(Authorized Signature)
Date:
- -----------------------------
*Check applicable box.
2
<PAGE> 29
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
[Date]
The Resort at Summerlin, Inc.
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
Re: The Resort at Summerlin, Limited Partnership (the "Partnership")
Limited Partnership Interests (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of Securities of the Partnership,
we confirm that:
1. We have received such information as we deem necessary in order to make
our investment decision.
2. We understand that the limited partnership interests of the Partnership
represented by this Certificate are subject to restrictions on the transfer and
the mandatory transfer of interests and other matters, as contained in the
Partnership's Agreement of Limited Partnership, as amended, and in a
Registration Rights and Limited Partners' Agreement dated as of December 30,
1997, and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Securities, we will do so only (A) to the
Partnership or any subsidiary thereof, (B) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to the General Partner
and the transfer agent for the Partnership a signed letter substantially in the
form hereof, (D) outside the United States in accordance with Regulation S under
the Securities Act, (E) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act (if available), or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing Securities from us a notice advising such
purchaser that resales of the Securities are restricted as stated herein.
<PAGE> 30
4. We understand that, on any proposed resale of Securities, we will be
required to furnish the General Partner and/or the transfer agent for the
Partnership, such certification, legal opinions and other information as may be
reasonably required to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Securities purchased by
us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You and the Partnership and its transfer agent are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
(Name of Transferor)
By: __________________________
(Authorized Signatory)
2
<PAGE> 31
EXHIBIT D
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
[Date]
The Resort at Summerlin, Inc.
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
Re: The Resort at Summerlin, Limited Partnership (the "Partnership")
Limited Partnership Interests (the "Securities")
Dear Sirs:
In connection with our proposed purchase of ___________ of the Securities,
we confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) neither (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been prearranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions applicable
to the Securities.
<PAGE> 32
You and the Partnership and its transfer agent are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby. Defined terms used
herein without definition have the respective meanings provided in Regulation S.
Very truly yours,
(Name of Transferor)
By: __________________________
(Authorized Signatory)
4
<PAGE> 1
EXHIBIT 4.4
WARRANT AGREEMENT
DATED AS OF DECEMBER 30, 1997
BETWEEN
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP,
AS ISSUER
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
AS WARRANT AGENT
AND JOINED BY
RAS WARRANT CO.
<PAGE> 2
WARRANT AGREEMENT (the "Agreement"), dated as of December 30, 1997,
between The Resort at Summerlin, Limited Partnership, a Nevada limited
partnership (together with any successors and assigns, the "Partnership"), and
United States Trust Company of New York, a New York banking corporation, as
Warrant Agent (the "Warrant Agent"). RAS Warrant Co., a Nevada corporation
("Warrant Co."), hereby joins in this Agreement with respect to obligations to
the parties to this Agreement and the holders of the Warrants (hereinafter
defined).
WHEREAS, the Partnership proposes, among other things, to issue and
sell pursuant to a Purchase Agreement, dated as of December 22, 1997 (the
"Purchase Agreement"), among the Partnership, The Resort at Summerlin, Inc., a
Nevada corporation, Warrant Co., and NatWest Capital Markets Limited
("NatWest"), as Initial Purchaser, 100,000 Units (the "Units") representing
$100,000,000 principal amount of its 13% Senior Subordinated PIK Notes due 2007
(the "Senior PIK Notes") and, at Initial Purchaser's election, either (i)
warrants (the "Partnership Warrants") to the purchase limited partnership
interests (the "LP Partnership Interests") of the Partnership, or (ii) warrants
(the "Corporate Warrants") to purchase shares of common stock, no par value (the
"Common Stock"), of Warrant Co. (whose sole assets will be Warrant Co. LP
Warrants (as defined herein));
WHEREAS, each Unit will represent $1,000 principal amount of Senior PIK
Notes and, in the case of the Partnership Warrants, one warrant to purchase one
LP Partnership Interest representing 0.00008% of the total partnership interests
of the Partnership outstanding as of the date hereof (each an "LP Warrant
Partnership Interest", including all other partnership interests or other
securities issued or issuable upon exercise of the Warrants (hereinafter
defined)) or, in the case of the Corporate Warrants, one warrant to purchase one
share of Common Stock;
WHEREAS, the Partnership proposes to issue to Warrant Co. warrants (the
"Warrant Co. LP Warrants") for the purchase of LP Partnership Interests with the
same terms as the Partnership Warrants and the number of Warrant Co. LP Warrants
issued shall be equal to the number of all Corporate Warrants issued;
WHEREAS, the Partnership wishes the Warrant Agent to act on behalf of
the Partnership and the Warrant Agent is willing to act in connection with the
issuance, division, transfer, exchange and exercise of Partnership Warrants and
Warrant Co. LP Warrants (collectively, the "Warrants") as provided herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, the Partnership and the Warrant Agent hereby agree as follows:
SECTION 1. Appointment of Warrant Agent. The Partnership hereby
appoints the Warrant Agent to act as agent for the Partnership in accordance
with the instructions hereinafter set forth in this Agreement, and the Warrant
Agent hereby accepts such appointment.
SECTION 2. Warrant Certificates. The Warrants will be initially issued
in registered form as physical Warrant certificates (the "Physical Warrants").
Any certificates (the "Warrant Certificates") evidencing the Physical Warrants
to be delivered pursuant to this Agreement shall be substantially in the form
set forth in Exhibit A attached hereto. Such Warrant Certificates shall
represent such of the outstanding Warrants as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Warrants from time to time endorsed thereon and that the aggregate amount of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate. Any endorsement of a Warrant Certificate to reflect
the amount of any increase or decrease in the amount of outstanding Warrants
represented thereby shall be made by the Warrant Agent in accordance with
instructions given by the holder thereof.
<PAGE> 3
SECTION 3. Execution of Warrant Certificates.
(a) Warrant Certificates shall be signed on behalf of the Partnership
by the general partner of the Partnership. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Partnership may adopt and use the
facsimile signature of any person who shall have been Chairman of the Board,
President, Vice President, Secretary or Assistant Secretary of its general
partner, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he shall have ceased to hold
such office.
(b) In case any officer of the general partner of the Partnership who
shall have signed any of the Warrant Certificates shall cease to be such officer
before the Warrant Certificates so signed shall have been countersigned by the
Warrant Agent, or disposed of by the Partnership, such Warrant Certificates
nevertheless may be countersigned and delivered or disposed of as though such
person had not ceased to be such officer of the general partner of the
Partnership; and any Warrant Certificate may be signed on behalf of the general
partner of the Partnership by any person who, at the actual date of the
execution of such Warrant Certificate, shall be a proper officer of the general
partner of the Partnership to sign such Warrant Certificate, although at the
date of the execution of this Warrant Agreement any such person was not such
officer.
(c) Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
SECTION 4. Registration and Countersignature.
(a) The Warrants shall be numbered and shall be registered on the books
of the Partnership maintained at the principal office of the Warrant Agent in
the Borough of Manhattan, city of New York (the "Warrant Register") as they are
issued. Warrant Agent agrees to make the Warrant Register available during
normal business hours for inspection by agents and other representatives of the
Nevada State Gaming Control Board upon request.
(b) Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board, the
President, Chief Executive Officer, a Vice President, the Treasurer, Chief
Financial Officer or an Assistant Secretary of the general partner of the
Partnership, initially countersign and deliver Warrants entitling the holders
thereof to purchase not more than an aggregate amount of 100,000 LP Partnership
Interests and shall thereafter countersign and deliver Warrants as otherwise
provided in this Agreement.
(c) The Partnership and the Warrant Agent may deem and treat the
registered holders (the "Holders") of the Warrant Certificates as the absolute
owners thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone) for all purposes, and neither the Partnership nor the
Warrant Agent shall be affected by any notice to the contrary.
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<PAGE> 4
SECTION 5. Transfer and Exchange of Warrants.
(a) The Warrant Agent shall from time to time, subject to the
limitations of Section 6, register the transfer of any outstanding Warrant upon
the records to be maintained by it for that purpose, upon surrender thereof duly
endorsed or accompanied (if so required by it) by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, duly executed
by the registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Subject to the terms of
this Agreement, each Warrant Certificate may be exchanged for another
certificate or certificates entitling the Holder or Holders thereof to purchase
a like aggregate amount of LP Partnership Interests as the certificate or
certificates surrendered then entitle each Holder to purchase. Any Holder
desiring to exchange a Warrant Certificate or Certificates shall make such
request in writing delivered to the Warrant Agent, and shall surrender, duly
endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warranty
Agent, the Warrant Certificate or Certificates to be so exchanged.
(b) Upon registration of transfer, the Warrant Agent shall countersign
and deliver by certified mail a new Warrant Certificate or Certificates to the
persons entitled thereto. The Warrant Certificates may be exchanged at the
option of the Holder thereof, when surrendered at the office or agency of the
Partnership maintained for such purpose, which initially will be the corporate
trust office of the Warrant Agent in New York, New York, for another Warrant
Certificate, or other Warrant Certificates of different denominations, of like
tenor and representing in the aggregate the right to purchase a like amount of
LP Partnership Interests.
(c) No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Partnership may require payment of a
sum sufficient to cover any stamp or other tax or other governmental charge that
is imposed in connection with any such exchange or registration of transfer.
(d) Notwithstanding any other provision of this Agreement, on and after
such time as the Partnership shall have obtained a nonrestricted gaming license
(the "License") issued by the Nevada Gaming Commission (the "Nevada
Commission"), no Holder may sell, assign, transfer, pledge or make any other
disposition of a Warrant without the prior approval of the Nevada Commission
unless the Partnership is then registered by the Nevada Commission as a
"publicly traded corporation" (a "Registered Company"), as that term is defined
in the Nevada Gaming Control Act and the regulations promulgated thereunder
(collectively, the "Nevada Act"), and holds certain exemptions from the Nevada
Commission in connection with such registration (the "Exemptions"). The
Partnership shall promptly notify the Warrant Agent and each Holder in writing
in each instance upon becoming the holder of the License, a Registered Company
and the holder of the Exemptions.
(e) Upon any Holder's surrender of a Warrant Certificate for transfer
of such Partnership Warrants to Warrant Co., subject to Section 6, such transfer
shall be registered in accordance with this Section 5 and the Holder's
Partnership Warrant shall be cancelled and a Warrant Co. LP Warrant shall be
issued to Warrant Co. in respect thereof; provided that such Holder and Warrant
Co. certify to the Partnership and the Warrant Agent that such transfer is
solely for the purpose of exchanging a Corporate Warrant corresponding thereto
as contemplated by this Agreement.
(f) Upon Warrant Co.'s surrender of a Warrant Certificate for transfer
to a holder of a Corporate Warrant, subject to Section 6, such transfer shall be
registered in accordance with this Section 5, such Warrant Co. LP Warrant shall
be cancelled and a corresponding Partnership Warrant shall be
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<PAGE> 5
issued to such Corporate Warrant holder in respect thereof; provided that such
Corporate Warrant holder and Warrant Co. certify to the Partnership and Warrant
Agent that such transfer is solely for the purpose of exchanging a Corporate
Warrant corresponding thereto as contemplated by this Agreement.
SECTION 6. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Warrants. When Physical Warrants
are presented to the Warrant Agent with a request:
(i) to register the transfer of the Physical Warrants; or
(ii) to exchange such Physical Warrants for an equal number of
Physical Warrants of other authorized denominations, the Warrant Agent
shall, subject to Section 5, register the transfer or make the exchange
as requested if the requirements under this Agreement as set forth in
this Section 6 for such transactions are met; provided, however, that
the Physical Warrants presented or surrendered for registration of
transfer or exchange;
(I) shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the
Warrant Agent, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(II) in the case of Physical Warrants the offer and
sale of which have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), such Physical
Warrants shall be accompanied, in the sole discretion of the
Partnership, by the following additional information and
documents, as applicable:
(A) if such Physical Warrants are being
delivered to the Warrant Agent by a Holder for
registration in the name of such Holder, without
transfer, a certification from such Holder to that
effect (in substantially the form of Exhibit B
hereto); or
(B) if such Physical Warrants are being
transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act (a
"Qualified Institutional Buyer")) in accordance with
Rule 144A under the Securities Act, a certificate to
that effect (in substantially the form of Exhibit B
hereto); or
(C) if such Physical Warrants are being
transferred to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act (an "Institutional Accredited
Investor")) delivery of a certification to that
effect (in substantially the form of Exhibit B
hereto) and a Transferee Certificate for
Institutional Accredited Investors in substantially
the form of Exhibit C hereto; or
(D) if such Physical Warrants are being
transferred in reliance on Regulation S under the
Securities Act ("Regulation S"), delivery of a
certification to that effect (in substantially the
form of Exhibit B hereto) and a Transferee
Certificate for Regulation S Transfers in
substantially the form of Exhibit D
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<PAGE> 6
hereto and an opinion of counsel reasonably
satisfactory to the Partnership to the effect that
such transfer is in compliance with the Securities
Act; or
(E) if such Physical Warrants are being
transferred in reliance on Rule 144 under the
Securities Act, delivery of a certification to that
effect (in substantially the form of Exhibit B
hereto) and an opinion of counsel reasonably
satisfactory to the Partnership to the effect that
such transfer is in compliance with the Securities
Act; or
(F) if such Physical Warrants are being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the
form of Exhibit B hereto) and an opinion of counsel
reasonably satisfactory to the Partnership to the
effect that such transfer is in compliance with the
Securities Act.
(b) Legends.
(i) For so long as transfer of a Warrant is not
permitted without registration under the Securities Act, each
Warrant Certificate evidencing such Warrant (and all Warrants
issued in exchange therefor or substitution thereof) shall
bear a legend substantially to the following effect:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD
OR PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF OR A BENEFICIAL INTERST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR
(C) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS SECURITY
FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL
NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING
INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE
SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT WITH RESPECT TO SUCH TRANSFER, ON THE DATE OF THE
TRANSFER OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP (THE "ISSUER") OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QIB IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR
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<PAGE> 7
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
WARRANT AGENT), AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE AMOUNT OF SECURITIES AT THE TIME OF TRANSFER OF LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE, BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER), (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR (G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) AND IN EACH CASE,
IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR
AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A PROVISION
REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER
OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THIS WARRANT AND THE LIMITED PARTNER INTERESTS OF THE
PARTNERSHIP INTO WHICH THIS WARRANT IS EXERCISABLE ARE SUBJECT
TO A REGISTRATION RIGHTS AND LIMITED PARTNERS' AGREEMENT DATED
AS OF DECEMBER 30, 1997, WHICH CONTAINS PROVISIONS REGARDING
THE RESTRICTIONS ON THE TRANSFER AND PROVISIONS REQUIRING THE
MANDATORY TRANSFER OF SUCH PARTNERSHIP INTERESTS AND OTHER
MATTERS. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION
AT THE PRINCIPAL OFFICE OF THE PARTNERSHIP.
(ii) On and after the date of issuance of a License
to the Partnership and until the Partnership has been
registered as a Registered Company and granted the Exemptions
by the Nevada Commission, each Warrant Certificate evidencing
such Warrant (and all Warrants issued in exchange therefor or
substitution thereof) shall bear a legend substantially to the
following effect:
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER DISPOSITION
OF ANY INTEREST IN THE LIMITED PARTNERSHIP IS VOID UNLESS
APPROVED IN ADVANCE BY THE NEVADA GAMING COMMISSION. IF AT ANY
TIME THE NEVADA GAMING COMMISSION
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<PAGE> 8
FINDS THAT AN INDIVIDUAL OWNER OF ANY SUCH INTEREST IS
UNSUITABLE TO HOLD THAT INTEREST, THE NEVADA GAMING COMMISSION
SHALL IMMEDIATELY NOTIFY THE LIMITED PARTNERSHIP OF THAT FACT.
THE LIMITED PARTNERSHIP SHALL, WITHIN TEN DAYS FROM THE DATE
THAT IT RECEIVES THE NOTICE FROM THE NEVADA GAMING COMMISSION,
RETURN TO THE UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL
ACCOUNT AS REFLECTED ON THE BOOKS OF THE LIMITED PARTNERSHIP.
BEGINNING ON THE DATE WHEN THE NEVADA GAMING COMMISSION SERVES
NOTICE OF A DETERMINATION OF UNSUITABILITY, PURSUANT TO THE
PRECEDING SENTENCE, UPON THE LIMITED PARTNERSHIP, IT IS
UNLAWFUL FOR THE UNSUITABLE OWNER: (A) TO RECEIVE ANY SHARE OF
THE PROFITS OR DISTRIBUTIONS OF ANY CASH OR OTHER PROPERTY
OTHER THAN A RETURN OF CAPITAL AS REQUIRED ABOVE; (B) TO
EXERCISE, DIRECTLY OR THROUGH ANY WARRANT AGENT OR NOMINEE,
ANY VOTING RIGHT CONFERRED BY SUCH INTEREST; OR (C) TO RECEIVE
ANY REMUNERATION IN ANY FORM FROM THE LIMITED PARTNERSHIP, FOR
SERVICES RENDERED OR OTHERWISE.
(iii) On and after the date of issuance of a License
to the Partnership and until the Partnership has been
registered as a Registered Company and granted the Exemptions
by the Nevada Commission, each certificate representing LP
Partnership Interests (and all LP Partnership Interests issued
in exchange therefor or substitution thereof) shall bear a
legend substantially to the following effect:
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER DISPOSITION
OF ANY INTEREST IN THE LIMITED PARTNERSHIP IS VOID UNLESS
APPROVED IN ADVANCE BY THE NEVADA GAMING COMMISSION. IF AT ANY
TIME THE NEVADA GAMING COMMISSION FINDS THAT AN INDIVIDUAL
OWNER OF ANY SUCH INTEREST IS UNSUITABLE TO HOLD THAT
INTEREST, THE NEVADA GAMING COMMISSION SHALL IMMEDIATELY
NOTIFY THE LIMITED PARTNERSHIP OF THAT FACT. THE LIMITED
PARTNERSHIP SHALL, WITHIN TEN DAYS FROM THE DATE THAT IT
RECEIVES THE NOTICE FROM THE NEVADA GAMING COMMISSION, RETURN
TO THE UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS
REFLECTED FROM THE NEVADA GAMING COMMISSION, RETURN TO THE
UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS
REFLECTED ON THE BOOKS OF THE LIMITED PARTNERSHIP. BEGINNING
ON THE DATE WHEN THE NEVADA GAMING COMMISSION SERVES NOTICE OF
A DETERMINATION OF UNSUITABILITY, PURSUANT TO THE PRECEDING
SENTENCE, UPON THE LIMITED PARTNERSHIP, IT IS UNLAWFUL FOR THE
UNSUITABLE OWNER: (A) TO RECEIVE ANY SHARE OF THE PROFITS OR
DISTRIBUTIONS OF ANY CASH OR OTHER PROPERTY OTHER THAN A
RETURN OF CAPITAL AS REQUIRED ABOVE; (B) TO EXERCISE, DIRECTLY
OR THROUGH ANY WARRANT AGENT OR NOMINEE, ANY VOTING RIGHT
CONFERRED BY SUCH INTEREST; OR (C) TO RECEIVE
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<PAGE> 9
ANY REMUNERATION IN ANY FORM FROM THE LIMITED PARTNERSHIP, FOR
SERVICES RENDERED OR OTHERWISE.
ANY LIMITED PARTNER GRANTED DELAYED LICENSING THAT IS LATER
FOUND UNSUITABLE BY THE NEVADA GAMING COMMISSION SHALL RETURN
ALL EVIDENCE OF ANY OWNERSHIP IN THE LIMITED PARTNERSHIP TO
THE LIMITED PARTNERSHIP, AT WHICH TIME THE LIMITED PARTNERSHIP
SHALL REFUND TO THE UNSUITABLE LIMITED PARTNER NO MORE THAN
THE AMOUNT THAT HE PAID FOR HIS OWNERSHIP INTEREST, AND THE
UNSUITABLE LIMITED PARTNER SHALL NO LONGER HAVE ANY DIRECT OR
INDIRECT INTEREST IN THE LIMITED PARTNERSHIP.
(c) Obligations with Respect to Transfers and Exchanges of
Physical Warrants.
(i) To permit registrations of transfers and
exchanges, the Partnership shall execute, at the Warrant
Agent's request, and the Warrant Agent shall countersign
Physical Warrants.
(ii) All Physical Warrants issued upon any
registration, transfer or exchange of Physical Warrants shall
be the valid obligations of the Partnership, entitled to the
same benefits under this Agreement as the Physical Warrants
surrendered upon the registration of transfer or exchange.
(iv) Prior to due presentment for registration of
transfer of any Warrant, the Warrant Agent and the Partnership
may deem and treat the person in whose name any Warrant is
registered as the absolute owner of such Warrant, and neither
the Warrant Agent nor the Partnership shall be affected by
notice to the contrary.
SECTION 7. Separation of Warrants; Terms of Warrants; Exercise of
Warrants.
(a) The Senior PIK Notes and Warrants will be immediately separated
upon sale by the Initial Purchaser.
(b) Subject to the terms of this Agreement, each Holder shall have the
right, which may be exercised commencing on or after the date of issuance and
until 5:00 p.m., New York City time, on December 15, 2007 (the "Expiration
Date"), to receive from the Partnership upon the exercise of each Warrant the
number of LP Warrant Partnership Interests which the Holder may at the time be
entitled to receive on exercise of such Warrant and payment of the Exercise
Price (as defined) then in effect for such LP Warrant Partnership Interests.
Each Warrant not exercised prior to the Expiration Date shall become void and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease as of such time. No adjustments as to distributions will be made
upon exercise of the Warrants.
(c) The initial price at which one LP Warrant Partnership Interest
shall be purchasable upon exercise of a Warrant (the "Exercise Price") shall be
$.01, subject to adjustment as herein provided, provided, that in no event shall
such Exercise Price be less than $.01 per partnership interest. A Warrant may be
exercised upon surrender at the office or agency of the Partnership maintained
for such purpose, which initially will be the corporate trust office of the
Warrant Agent in New York, New York, of the certificate or certificates
evidencing the Warrant to be exercised with the form of election to purchase on
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<PAGE> 10
the reverse thereof duly filled in and signed, which signature shall be
guaranteed by a participant in a recognized Signature Guarantee Medallion
Program, and upon payment to the Warrant Agent for the account of the
Partnership of the Exercise Price, as adjusted as herein provided, for the LP
Warrant Partnership Interests in respect to which such Warrant is then
exercised. Payment of the Exercise Price shall be made in cash or by certified
or official bank check to the order of the Partnership in immediately available
funds.
(d) Subject to the provisions of Section 6 and such other conditions
precedent to the exercise of the Warrants as may be set forth in this Agreement,
if any, upon such surrender of a Warrant and payment of the Exercise Price in
respect thereof, the Partnership shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Holder and in such name
or names as the Holder may designate a certificate or certificates for the LP
Warrant Partnership Interests issuable upon the exercise of such Warrant
together with cash as provided in Section 13; provided, however, that if any
consolidation, merger or sale of assets is proposed to be effected by the
Partnership as described in Subsection 12(j), or a tender offer or an exchange
offer for LP Partnership Interests shall be made, upon such surrender of
Warrants and payment of the Exercise Price as aforesaid, the Partnership shall,
as soon as practicable, but in any event not later than 2 days, other than a
Saturday or Sunday or a day on which banking institutions in the State of New
York are not open for business ("Business Day"), thereafter, issue and cause to
be delivered the LP Warrant Partnership Interests issuable upon the exercise of
such Warrant in the manner described in this sentence together with cash as
provided in Section 13. Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such LP Warrant Partnership Interest as of the
date of the surrender of such Warrant and payment of the Exercise Price in
respect thereof.
EACH WARRANT SHALL BE EXERCISABLE ONLY IN FULL, AND NOT IN PART.
(e) All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates
shall then be disposed of by the Warrant Agent in a manner consistent with the
Warrant Agent's customary procedure for such disposal and in a manner reasonably
satisfactory to the Partnership. The Warrant Agent shall account promptly to the
Partnership with respect to Warrants exercised and concurrently pay to the
Partnership all monies received by the Warrant Agent for the purchase of the LP
Warrant Partnership Interests through the exercise of such Warrants.
(f) The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the holders
during normal business hours at its office. The Partnership shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement as
the Warrant Agent may request.
(g) Notwithstanding any other provision of this Agreement, on and after
such time as the Partnership has obtained the License, no Warrant may be
exercised without the prior approval of and licensing of the Holder by the
Nevada Commission unless the Partnership is then registered by the Nevada
Commission as a Registered Company and holds the Exemptions.
SECTION 8. Payment of Taxes. The Partnership will pay all documentary
stamp taxes attributable to the initial issuance of LP Warrant Partnership
Interests upon the exercise of Warrants; provided, however, that the Partnership
shall not be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issue of any Warrant Certificates or any
certificates for LP Warrant Partnership Interests in a name other than that of
the registered holder of a Warrant
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<PAGE> 11
Certificate surrendered upon the exercise of a Warrant, and the Partnership
shall not be required to issue or deliver such Warrant Certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Partnership the amount of such tax or shall have established to the
satisfaction of the Partnership that such tax has been paid.
SECTION 9. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Partnership may at its discretion issue and the Warrant Agent may countersign,
in exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Partnership and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity also satisfactory to them. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Partnership or the
Warrant Agent may prescribe.
SECTION 10. Reservation of LP Warrant Partnership Interests.
(a) The Partnership will at all times reserve and keep available, free
from preemptive or other similar rights of partners of the Partnership or
others, the right to issue additional LP Partnership Interests for the purpose
of enabling it to satisfy its obligation to issue LP Warrant Partnership
Interests upon exercise of Warrants up to the maximum number of LP Warrant
Partnership Interests which may then be deliverable upon the exercise of all
outstanding Warrants.
(b) The Partnership or, if appointed, the transfer agent for the LP
Partnership Interests (the "Transfer Agent") and every subsequent transfer agent
for any partnership interests of the Partnership issuable upon the exercise of
any of the rights of purchase aforesaid will be irrevocably authorized and
directed at all times to reserve such amount of LP Partnership Interests,
whether stated as units or otherwise, as shall be required for such purpose. The
Partnership will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any partnership interests of the
Partnership issuable upon the exercise of the rights of purchase represented by
the Warrants. The Warrant Agent is hereby irrevocably authorized to requisition
from time to time from such Transfer Agent any limited partner certificates or
other instruments required to honor outstanding Warrants upon exercise thereof
in accordance with the terms of this Agreement. The Partnership will supply such
Transfer Agent with duly executed certificates or other instruments for such
purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 13. The Partnership will furnish such Transfer
Agent a copy of all notices of adjustments and certificates related thereto
transmitted to each Holder pursuant to Section 14 hereof.
(c) The Partnership covenants that all LP Warrant Partnership Interests
which may be issued upon exercise of Warrants made in accordance with the terms
of this Agreement will, upon payment of the Exercise Price therefor and issue,
be validly authorized and issued, free of preemptive and other similar rights
and free from all taxes, liens, charges and security interests with respect to
the issuance thereof. The Partnership will not enter into any agreements
inconsistent with the rights of Holders hereunder. The Partnership will use its
best efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Partnership to perform its obligations under this Agreement. The Partnership
shall not take any action reasonably within its control, including the hiring of
a broker to solicit exercises, which would render unavailable an exemption from
registration under the Securities Act which might otherwise be available with
respect to the issuance of LP Warrant Partnership Interests upon exercise of any
Warrants.
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<PAGE> 12
SECTION 11. Obtaining Stock Exchange Listings. The Partnership will
from time to time take all actions which may be necessary so that the LP Warrant
Partnership Interests, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges and markets
within the United States of America (including the NASDAQ National Market
System), if any, on which other LP Partnership Interests are then listed. In the
event that, at any time during the period in which the Warrants are exercisable,
the LP Partnership Interests are not listed on any principal securities or
exchanges or markets within the United States of America, the Partnership will
use its reasonable best efforts to permit the LP Warrant Partnership Interests
to be designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating to
trading in the Private Offering, Resales and Trading through Automated Linkages
market.
SECTION 12. Adjustment of Number of LP Warrant Partnership Interests
Issuable. The number of LP Warrant Partnership Interests issuable upon exercise
of a Warrant (the "Exercise Rate") is subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 12. The Exercise
Rate shall initially be one.
(a) Adjustment for Change in Capital. If the Partnership:
(1) makes a distribution on its outstanding LP
Partnership Interests payable in LP Partnership
Interests or other partnership interests of the in
Partnership;
(2) subdivides, combines or reclassifies its outstanding
LP Partnership Interests; and
(3) makes a distribution to all holders of its
outstanding LP Partnership Interests of rights,
warrants or options to purchase LP Partnership
Interests at a price per partnership interest less
than the Current Market Value (as defined in Section
12(d)) at the Time of Determination (as defined
below);
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter exercised
may receive the aggregate amount and kind of partnership interests of the
Partnership which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action; provided, however,
that notwithstanding the foregoing, upon the occurrence of an event described in
any of paragraphs (1) or (3) above, which otherwise would have given rise to an
adjustment, no adjustment shall be made if the Partnership includes the Holders
of Warrants in such distribution pro rata to all LP Partnership Interests issued
and outstanding (after giving effect to the LP Warrant Partnership Interests as
if they were issued and outstanding).
The adjustment shall become effective (the "Time of Determination")
immediately after the record date in the case of a distribution and immediately
after the effective date in the case of a subdivision, combination or
reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it may
receive interests in two or more classes of the partnership interests of the
Partnership, the general partner of the Partnership shall determine the
allocation of the adjusted Exercise Price between such separate classes of
partnership interests of the Partnership. After such allocation, the exercise
privilege and the Exercise Price of each class of partnership interests shall
thereafter be subject to adjustment on terms comparable to those applicable to
LP Partnership Interests in this Subsection 12(a).
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<PAGE> 13
Adjustments pursuant to this Subsection 12(a) shall be made
successively whenever any event listed above shall occur.
(b) Adjustment for Certain Issuances of LP Partnership Interests.
Subject to Subsection 12(a), if the Partnership issues or sells LP Partnership
Interests or distributes any rights, options or warrants to all holders of its
LP Partnership Interests entitling them to purchase LP Partnership Interests, or
securities convertible into or exchangeable for LP Partnership Interests (other
than pursuant to (1) the exercise of the Warrants or issuance of LP Partnership
Interests to Warrant Co. solely to accommodate a holder of Warrant Co.'s common
stock right to receive the corresponding LP Warrant Partnership Interest held by
Warrant Co. in exchange for such common stock, (2) any options, warrants or
rights outstanding as of the date of this Agreement, (3) without limiting any
options, warrants or rights outstanding covered by the immediately preceding
clause (2), any executive management plans and employee option or purchase plans
to the extent that the aggregate amount of LP Partnership Interests (or
securities convertible into or exchangeable or exercisable for LP Partnership
Interests) distributed under all such executive management plans and employee
option and purchase plans does not exceed ten percent (10%) of the Partnership's
partnership interests at any time (of which no options to purchase are currently
outstanding) and (4) any security convertible into, or exchangeable or
exercisable for, LP Partnership Interests as to which the issuance thereof has
previously been the subject of any required adjustment pursuant to this
Agreement and exercisable securities of the Partnership for which the applicable
adjustment has already been made), at a price per partnership interest less than
the Current Market Value at the Time of Determination, the Exercise Rate shall
be adjusted in accordance with the formula:
(0 + N)
-------
E(1) = E x 0 + (N x P)
-------
M
where:
E(1) = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination of any such distribution.
0 = the number of Fully Diluted Partnership Interests
(as defined in Section 12(l)) outstanding on the
Time of Determination for any such issuance, sale
or distribution.
N = the number of additional LP Partnership Interests
issued, sold or issuable upon exercise of such
rights, options or warrants.
P = the price received in the case of any issuance or
sale of LP Partnership Interests or exercise price
per partnership interest of such rights, options or
warrants.
M = the Current Market Value per LP Partnership
Interest on the Time of Determination for any such
issuance, sale or distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of holders of
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<PAGE> 14
partnership interests of the Partnership entitled to receive the rights, options
or warrants. If at the end of the period during which any such rights, options
or warrants are exercisable, not all rights, options or warrants shall have been
exercised, the Warrant shall be immediately readjusted to what it would have
been if "N" in the above formula had been the amount of partnership interests
actually issued.
(c) Adjustment for Other Distribution. Subject to Subsection 12(a), if
the Partnership distributes to all holders of its LP Partnership Interests (i)
any evidences of indebtedness of the Partnership, (ii) any assets of the
Partnership (excluding cash distributions or distributions from current or
retained earnings other than any Extraordinary Cash Distribution), or (iii) any
rights, options or warrants to acquire any of the foregoing or to acquire any
other securities of the Partnership, the Exercise Rate shall be adjusted in
accordance with the formula:
E(1) = E x M
-----
M - F
where:
E(1) = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination of any such distribution.
M = the Current Market Value per LP Partnership
Interest on the record date mentioned below.
F = the fair market value on the record date mentioned
below of the indebtedness, assets, rights, options
or warrants distributable in respect of each LP
Partnership Interest.
Adjustments pursuant to this Subsection 12(c) shall be made
successively whenever any such distribution is made and shall become effective
immediately after the record date for the determination of holders of
partnership interests of the Partnership entitled to receive the distribution.
If an adjustment is made pursuant to clause (iii) above of this Subsection 12(c)
as a result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by amount
of LP Partnership Interests outstanding on the record date. Notwithstanding the
foregoing provisions of this Subsection 12(c), (x) an event which would
otherwise give rise to an adjustment pursuant to this Subsection 12(c) shall not
give rise to such an adjustment if the Partnership includes the holders of the
Warrants in such distribution pro rata to all LP Partnership Interests issued
and outstanding after giving effect to the LP Warrant Partnership Interests as
if they were issued and outstanding and (y) no adjustment shall be made pursuant
to this Subsection 12(c) with respect to cash distributions other than
Extraordinary Cash Distributions.
This Subsection 12(c) does not apply to rights, options or warrants
referred to in Subsection 12(b).
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<PAGE> 15
(d) Merger, Consolidation, Etc. If (x) the Partnership merges or
consolidates with, or sells all or substantially all of its property and assets
to, another person (other than an Affiliate of the Partnership) and
consideration is payable to holders of LP Partnership Interests in exchange for
their LP Partnership Interests in connection with such merger, consolidation or
sale which consists solely of cash, or (y) in the event of a dissolution,
liquidation or winding up of the Partnership, then the holders of Warrants shall
be entitled to receive distributions on the date of such event on an equal basis
with all holders of LP Partnership Interests (or other securities issuable upon
exercise of the Warrants) as if the Warrants had been exercised immediately
prior to such event, less the Exercise Price. Upon receipt of such payment, if
any, the rights of a Holder of a Warrant shall terminate and cease and his or
her Warrants shall expire. In case of any such merger, consolidation or sale of
assets, the surviving or acquiring person and, in the event of any dissolution,
liquidation or winding up of the Partnership, the Partnership shall deposit
promptly with the Warrant Agent the funds, if any, necessary to pay the Holders
of the Warrants. After receipt of such deposit from such person or the
Partnership and after receipt of surrendered Warrant Certificates, the Warrant
Agent shall make payment by delivering a check in such amount as is appropriate
(or, in the case of consideration other than cash, such other consideration as
is appropriate) to such person or persons as it may be directed in writing by
the Holders surrendering such Warrants.
(e) Current Market Value. "Current Market Value" of an LP Partnership
Interest or of any other security (herein collectively referred to as a
"Security") at any date shall be:
(1) if the Security is not registered under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (i) the value of the Security determined in good faith
by the general partner of the Partnership, based on the most
recently completed arm's length transaction between the
Partnership and a person other than an Affiliate of the
Partnership in which such determination is necessary and the
closing of which occurs on such date or shall have occurred
within the six months preceding such date, (ii) if no such
transaction shall have occurred on such date or within such
six-month period, the value of the Security most recently
determined as of a date within the six months preceding such
date by an Independent Financial Expert or (iii) if neither
clause (i) nor (ii) is applicable, the value of the Security
determined as of such date by an Independent Financial Expert,
or
(2) if the Security is registered under the Exchange
Act, the average of the daily market prices for each business
day during the period commencing 15 Business Days before such
date and ending on the date one day prior to such date or, if
the Security has been registered under the Exchange Act for
less than 15 consecutive Business Days before such date, then
the average of the daily market prices for all of the Business
Days before such date for which daily market prices are
available. If the market price is not determinable for at
least 10 Business Days in such period, the Current Market
Value of the Security shall be determined as if the Security
was not registered under the Exchange Act.
The "market price" for any Security on each Business Day means: (A) if
such Security is listed or admitted to trading on any securities exchange, the
closing price, regular way, on such day on the principal exchange on which such
Security is traded, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, (B) if such Security is not then
listed or admitted to trading on any securities exchange, the last reported sale
price on such day, or if there is no such last reported sale price on such day,
the average of the closing bid and the asked prices on such day, as reported by
a
14
<PAGE> 16
reputable quotation source designated by the Partnership, or (C) if neither
clause (A) nor (B) is applicable, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or a
newspaper of general circulation in the Borough of Manhattan, City of New York,
customarily published on each business day, designated by the Partnership. If
there are no such prices on a Business Day, then the market price shall not be
determinable for such Business Day.
"Independent Financial Expert" shall mean (a) NatWest (or any
successor) or (b) another nationally recognized investment banking firm, a
nationally recognized regional investment banking firm or a nationally
recognized accounting firm selected by the Partnership reasonably acceptable to
the Warrant Agent (i) that does not (and whose directors, officers, employees
and Affiliates do not) have a direct or indirect material financial interest in
the Partnership, (ii) that has not been, and, at the time it is called upon to
serve as an Independent Financial Expert under this Agreement is not (and none
of whose directors, officers, employees or Affiliates is) a promoter, director
or officer of the Partnership, (iii) that has not been retained by the
Partnership for any purpose, other than to perform an equity valuation, within
the preceding twelve months, and (iv) that, in the reasonable judgment of the
general partner of the Partnership, is otherwise qualified to serve as an
independent financial advisor. Any such person may receive customary
compensation and indemnification by the Partnership for opinions or services it
provides as an Independent Financial Expert.
"Affiliate" shall mean, with respect to any person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such person. For the purposes of this definition, "control"
when used with respect to any person, means the power to direct the management
and policies of such person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Extraordinary Cash Distribution" means cash distributions with respect
to LP Partnership Interests, the aggregate amount of which in any fiscal year
exceeds the lesser of (i) 15% of the net income of the Partnership for the
fiscal year immediately preceding the payment of such distribution or (ii)
$1,000,000.
(f) When De Minimis Adjustment May Be Deferred. No adjustment in the
Exercise Rate need be made unless the adjustment would require an increase or
decrease of at least .5% in the Exercise Rate. Notwithstanding the foregoing,
any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment, provided that no such adjustment shall be
deferred beyond the date on which a Warrant is exercised. All calculations under
this Section 12 shall be made to the nearest cent or to the nearest 1/100th of a
partnership interest.
(g) When No Adjustment Required. If an adjustment is made upon the
establishment of a record date for a distribution subject to Subsections 12(a),
(b) or (c) and such distribution is subsequently cancelled, the Exercise Rate
then in effect shall be readjusted, effective as of the date when the general
partner of the Partnership determines to cancel such distribution, to that which
would have been in effect if such record date had not been fixed. To the extent
the Warrants become convertible into cash, no adjustment need be made thereafter
as to the amount of cash into which such Warrants are exercisable. Interest will
not accrue on the cash.
(h) Notice of Adjustment. Whenever the Exercise Rate or Exercise Price
is adjusted, the Partnership shall provide the notices required by Section 14
hereof.
15
<PAGE> 17
(i) Voluntary Reduction. The Partnership from time to time may increase
the Exercise Rate by any amount for any period of time (including, without
limitation, permanently) if the period is at least 20 Business Days. An increase
of the Exercise Rate under this Subsection 12(i) (other than a permanent
increase) does not change or adjust the Exercise Rate otherwise in effect for
purposes of Subsections 12(a), 12(b) or 12(c).
(j) When Issuance or Payment May Be Deferred. In any case in which this
Section 12 shall require that an adjustment in the Exercise Rate be made
effective as of a record date for a specified event, the Partnership may elect
to defer until the occurrence of such event (i) issuing to the Holder of any
Warrant exercised after such record date the LP Warrant Partnership Interests
and other partnership interests of the Partnership or other entities, if any,
issuable upon such exercise over and above the LP Warrant Partnership Interests
and other partnership interests of the Partnership or other entities, if any,
issuable upon such exercise on the basis of the Exercise Rate prior to such
adjustment, and (ii) paying to such Holder any amount in cash in lieu of a
fractional interest pursuant to Section 13; provided, however, that the
Partnership shall deliver to the Warrant Agent and shall cause the Warrant
Agent, on behalf of and at the expense of the Partnership, to deliver to such
Holder a due bill or other appropriate instrument evidencing such Holder's right
to receive such additional LP Warrant Partnership Interests and other
partnership interests of the Partnership or other entities and cash upon the
occurrence of the event requiring such adjustment.
(k) Reorganizations. In case of any capital reorganization, other than
the cases referred to in Subsections 12(a), 12(b), 12(c) or 12(d), or the
consolidation or merger of the Partnership with or into another entity (other
than a merger or consolidation in which the Partnership is the continuing entity
and which does not result in any reclassification of the outstanding LP
Partnership Interests into other partnership interests or other securities or
property), or the sale of the property of the Partnership as an entirety or
substantially as an entirety (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
exercise of any Warrant (in lieu of the amount of LP Warrant Partnership
Interests theretofore deliverable), the amount of partnership interests or other
securities or property to which a holder of the amount of LP Warrant Partnership
Interests that would otherwise have been deliverable upon the exercise of such
Warrant would have been entitled upon such Reorganization if such Warrant had
been exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the
general partner of the Partnership, shall be made in the application of the
provisions herein set forth with respect to the rights and interests of Holders
so that the provisions set forth herein shall thereafter be applicable, as
nearly as possible, in relation to any partnership interests or other securities
or property thereafter deliverable upon exercise of Warrants.
The Partnership shall not effect any such Reorganization unless prior
to or simultaneously with the consummation thereof the successor entity (if
other than the Partnership) resulting from such Reorganization or the entity
purchasing or leasing such assets or other appropriate entity shall (i)
expressly assume, by a supplemental Warrant Agreement or other acknowledgment
executed and delivered to the Warrant Agent the obligation to deliver to the
Warrant Agent and to cause the Warrant Agent to deliver to each Holder of
Warrants such partnership interests or other securities or property as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase, and all other obligations and liabilities under this Agreement and
(ii) enter into an agreement providing to the Holders of Warrants rights and
benefits substantially similar to those enjoyed by such Holders under the
Registration Rights and Limited Partners' Agreement of even date herewith.
The provisions of this Subsection 12(k) shall apply to successive
Reorganization transactions.
16
<PAGE> 18
(l) Form of Warrants. Irrespective of any adjustments in the number or
kind of partnership interests or other securities or property purchasable upon
the exercise of the Warrants, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of partnership interests
as are stated in the Warrants initially issuable pursuant to this Agreement.
(m) Miscellaneous. For purposes of this Section 12 the term "Fully
Diluted Partnership Interests" shall mean (i) all LP Partnership Interests
outstanding as of a specified date, and (ii) all LP Partnership Interests into
or for which rights, options, warrants or other securities outstanding as of
such date are exercisable or convertible (other than the Warrants). In the event
that at any time, as a result of an adjustment made pursuant to this Section 12,
the Holders of Warrants shall become entitled to purchase any securities of the
Partnership other than, or in addition to, LP Partnership Interests, thereafter
the number or amount of such other securities so purchasable upon exercise of
each Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
LP Warrant Partnership Interests contained in Subsections 12(a) through 12(l),
inclusive, and the provisions of Sections 7, 8, 10 and 13 with respect to the LP
Warrant Partnership Interests or other LP Partnership Interests shall apply on
like terms to any such other securities.
SECTION 13. Fractional Interests. The Partnership shall not be required
to issue fractional LP Warrant Partnership Interests on the exercise of
Warrants. The number of full LP Partnership Interests which shall be issuable
upon the exercise of a Warrant shall be computed on the basis of the aggregate
number of LP Warrant Partnership Interests purchasable on exercise of the
Warrant so presented. If any fraction of a LP Warrant Partnership Interest
would, except for the provisions of this Section 13, be issuable on the exercise
of any Warrant, the Partnership shall pay an amount in cash equal to the Current
Market Value on the day immediately preceding the date the Warrant is presented
for exercise, multiplied by such fraction.
SECTION 14. Notices to Warrant Holders. Upon any adjustment pursuant to
Section 12 hereof, the Partnership shall give prompt written notice of such
adjustment to the Warrant Agent and shall cause the Warrant Agent, on behalf of
and at the expense of the Partnership, within 10 days after such adjustment, to
mail by first class mail, postage prepaid, to each Holder a notice of such
adjustment(s) and shall deliver to the Warrant Agent a certificate of the
general partner of the Partnership, accompanied by the report thereon by a firm
of independent public accountants selected by the general partner of the
Partnership (who may be the regular accountants for the Partnership), setting
forth in reasonable detail (i) the number of LP Warrant Partnership Interests
purchasable upon the exercise of each Warrant and the Exercise Price of such
Warrant after such adjustment(s), (ii) a brief statement of the facts requiring
such adjustment(s) and (iii) the computation by which such adjustment(s) was
made. Where appropriate, such notice may be given in advance and included as a
part of the notice required under the other provisions of this Section 14.
In case:
(a) the Partnership shall authorize the issuance
to all holders of LP Partnership Interests
rights, options or warrants to subscribe for
or purchase LP Partnership Interests or of
any other subscription rights or warrants;
or
17
<PAGE> 19
(b) the Partnership shall authorize the
distribution to all holders of LP
Partnership Interests of evidences of its
indebtedness or assets; or
(c) of any consolidation or merger to which the
Partnership is a part and for which approval
of any partners of the Partnership is
required, or of the conveyance or transfer
of the properties and assets of the
Partnership substantially as an entirety, or
of any reclassification or change of LP
Partnership Interests (other than as a
result of a subdivision or combination), or
a tender offer or exchange offer for LP
Partnership Interests; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the
Partnership; or
(e) the Partnership proposes to take any action
that would require an adjustment to the
Exercise Rate or the Exercise Price pursuant
to Section 12;
then the Partnership shall give prompt written notice to the Warrant Agent and
shall cause the Warrant Agent, on behalf of and at the expense of the
Partnership to give to each of the registered holders of the Warrant
Certificates at his or its address appearing on the Warrant register, at least
30 days (or 20 days in any case specified in clauses (a) or (b) above) prior to
the applicable record date hereinafter specified, or the date of the event in
the case of events for which there is no record date, by first-class mail,
postage prepaid, a written notice stating (i) the day as of which the holders of
record of LP Partnership Interests to be entitled to receive any rights,
options, warrants or distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer for LP
Partnership Interests, or (iii) the date on which any such consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up is expected
to become effective or consummated, and the date as of which it is expected that
holders of record of LP Partnership Interests shall be entitled to exchange such
LP Partnership Interests for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure by the Partnership or the
Warrant Agent to give such notice or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up, or the
vote upon any action.
The Partnership shall give prompt written notice to the Warrant Agent
and shall cause the Warrant Agent, on behalf of and at the expense of the
Partnership to give to each Holder written notice of any determination to make a
distribution to the holders of LP Partnership Interests of any cash, assets,
debt securities, or any rights or warrants to purchase debt securities, assets
or other securities (other than LP Partnership Interests, or rights, options, or
warrants to purchase LP Partnership Interests) of the Partnership, which notice
shall state the nature and amount of such planned distribution and the record
date therefor, and shall be received by the Holders at least 30 days prior to
such record date therefor.
Nothing contained in this Agreement or in any Warrant Certificate shall
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as limited partners in respect of the meetings of limited
partners of the Partnership or any other matter, or any rights whatsoever as
limited partners of the Partnership.
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<PAGE> 20
SECTION 15. Notices to the Partnership and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by any Holder to or on the Partnership shall be sufficiently given or made when
received at the office of the Partnership expressly designated by the
Partnership as its office for purposes of this Agreement (until the Warrant
Agent is otherwise notified in accordance with this Section 15 by the
Partnership), as follows:
The Resort at Summerlin, Limited Partnership
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
Any notice pursuant to this Agreement to be given by the Partnership or
by any Holder(s) to the Warrant Agent shall be sufficiently given when received
by the Warrant Agent at the address appearing below (until the Partnership is
otherwise notified in accordance with this Section by the Warrant Agent).
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Facsimile: (212) 852-1626
SECTION 16. Supplements and Amendments. The Partnership and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrants in order to cure any ambiguity or to correct
or supplement any provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Partnership and the Warrant
Agent may deem necessary or desirable and which shall not in any way adversely
affect the interests of any Holder of Warrants. No other amendment or
modification of this Agreement or the rights and obligations of the Partnership
or the rights of Holders of Warrants may be made at any time by the Partnership
and the Warrant Agent without the consent of Holders of Warrants representing a
majority in number of the then outstanding Warrants.
SECTION 17. Concerning the Warrant Agent. The Warrant Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Partnership and the Holders, by their
acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant
Certificate shall be taken as statements of the
Partnership, and the Warrant Agent assumes no
responsibility for the correctness of any of the same
except such as describe the Warrant Agent or any
action taken by it. The Warrant Agent assumes no
responsibility with respect to the distribution of
the Warrants except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for and
shall incur no liability to the Partnership or any
Holder for any failure of the Partnership to comply
with the covenants contained in this Agreement or in
the Warrants to be complied with by the Partnership.
(c) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any
duty hereunder either itself (through its employee)
by
19
<PAGE> 21
or through its attorneys or agents (which shall not
include its employees) and shall not be responsible
for the negligence or misconduct of any agent
appointed with due care.
(d) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be counsel for
the Partnership), and the Warrant Agent shall incur
no liability or responsibility to the Partnership or
to any Holder in respect of any action taken,
suffered or omitted by it hereunder in good faith and
in accordance with the opinion or the advice of such
counsel.
(e) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary
or desirable that any fact or matter be proved or
established by the Partnership prior to taking or
suffering any action hereunder, such fact or matter
(unless such evidence in respect thereof be herein
specifically prescribed) may be deemed conclusively
to be proved and established by a certificate signed
by the Chairman of the Board, the President, one of
the Vice Presidents, the Treasurer or the Secretary
of the general partner of the Partnership and
delivered to the Warrant Agent; and such certificate
shall be full authorization to the Warrant Agent for
any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance
upon such certificate.
(f) The Partnership agrees to pay the Warrant Agent
reasonable compensation for all services rendered by
the Warrant Agent in the performance of its duties
under this Agreement, to reimburse the Warrant Agent
for all expenses, taxes and governmental charges and
other charges of any kind and nature incurred by the
Warrant Agent in the performance of its duties under
this Agreement (including, without limitation,
reasonable fees and expenses of counsel), and to
indemnify the Warrant Agent and its agents,
employees, directors, officers and affiliates and
save it and them harmless against any and all
liabilities, losses and expenses, including, without
limitation, judgments, costs and counsel fees, for
anything done or omitted by the Warrant Agent in the
performance of its duties under this Agreement,
except as a result of the Warrant Agent's negligence
or bad faith.
(g) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to
take any other action likely to involve expense
unless the Partnership or one or more Holders shall
furnish the Warrant Agent with reasonable security
and indemnity for any costs and expenses which may be
incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the
Warrant Agent may consider proper, whether with or
without any such security or indemnity. All rights of
action under this Agreement or under any of the
Warrants may be enforced by the Warrant Agent without
the possession of any of the Warrants or the
production thereof at any trial or other proceeding
relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any
recovery of judgment shall be for the ratable benefit
of the Holders, as their respective rights or
interests may appear.
(h) The Warrant Agent and any stockholder, director,
officer or employee ("Related Parties") of the
Warrant Agent may buy, sell or deal in any of the
Warrants or
20
<PAGE> 22
other securities of the Partnership or become
pecuniarily interested in any transactions in which
the Partnership may be interested, or contract with
or lend money to the Partnership or otherwise act as
fully and freely as though it were not Warrant Agent
under this Agreement or such director, officer or
employee. Nothing herein shall preclude the Warrant
Agent or any Related Party from acting in any other
capacity for the Partnership or for any other legal
entity including, without limitation, acting as
Transfer Agent or as a lender to the Partnership or
an affiliate thereof.
(i) The Warrant Agent shall act hereunder solely as
agent, and its duties shall be determined solely by
the provisions thereof. The Warrant Agent shall not
be liable for anything which it may do or refrain
from doing in connection with this Agreement except
for its own negligence or bad faith.
(j) The Warrant Agent will not incur any liability or
responsibility to the Partnership or to any Holder
for any action taken in reliance on any notice,
resolution, waiver, consent, order, certificate or
other paper, document or instrument reasonably
believed by it to be genuine and to have been signed,
sent or presented by the property party or parties.
(k) The Warrant Agent shall not be under any
responsibility in respect of the validity of this
Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant
Agent) or in respect of the validity or execution of
any Warrant (except its countersignature thereof);
nor shall the Warrant Agent by any act hereunder be
deemed to make any representation or warranty as to
the authorization or reservation of any LP Warrant
Partnership Interests (or other stock) to be issued
pursuant to this Agreement or any Warrant, or as to
whether any LP Warrant Partnership Interests (or
other stock) will, when issued, be validly issued,
fully paid and nonassessable, or as to the Exercise
Price or the number or amount of LP Warrant
Partnership Interests or other securities or other
property issuable upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and directed
to accept instructions with respect to the
performance of its duties hereunder from the Chairman
of the Board, the President, any Vice President or
the Secretary of the general partner of the
Partnership, and to apply to such officers for advice
or instructions in connection with its duties, and
shall not be liable for any action taken or suffered
to be taken by it in good faith and without
negligence in accordance with instructions of any
such officer or officers.
SECTION 18. Change of Warrant Agent. The Warrant Agent may resign and
be discharged from its duties under this Agreement by giving to the Partnership
30 days' notice in writing. The Warrant Agent may be removed by like notice to
the Warrant Agent from the Partnership. If the Warrant Agent shall resign or be
removed or shall otherwise be incapable of acting, the Partnership shall appoint
a successor to the Warrant Agent. If the Partnership shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by any Holder (who shall with such notice submit
his Warrant for inspection by the Partnership), then any Holder may apply to any
court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Pending appointment
21
<PAGE> 23
of a successor to the Warrant Agent, either by the Partnership or by such court,
the duties of the Warrant Agent shall be carried out by the Partnership. Any
successor warrant agent, whether appointed by the Partnership or such a court,
shall be a bank or trust company in good standing, incorporated under the laws
of the United States of America or any State thereof or the District of Columbia
and having at the time of its appointment as warrant agent a combined capital
and surplus of at least $50,000,000. After appointment, the successor warrant
agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Warrant Agent without further act or deed;
but the former Warrant Agent shall deliver and transfer to the successor warrant
agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for such purpose. Failure
to file any notice provided for in this Section 18, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Warrant Agent or the appointment of the successor warrant agent, as the
case may be. In the event of such resignation or removal, the Partnership or the
successor warrant agent shall mail by first class mail, postage prepaid, to each
Holder, written notice of such removal or resignation and the name and address
of such successor warrant agent.
SECTION 19. Identity of Transfer Agent. Forthwith upon the appointment
of any Transfer Agent for the LP Partnership Interests, or any other partnership
interests or other securities of the Partnership issuable upon the exercise of
the Warrants, the Partnership shall file with the Warrant Agent a statement
setting forth the name and address of such Transfer Agent.
SECTION 20. Successors. All the covenants and provisions of this
Agreement by and for the benefit of the Partnership, the Warrant Agent or any
holder of Warrants shall bind and inure to the benefit of their respective
successors and assigns hereunder.
SECTION 21. Termination. This Agreement shall terminate on the
Expiration Date. Notwithstanding the foregoing, this Agreement will terminate on
any earlier date if all Warrants have been exercised or redeemed pursuant to
this Agreement.
SECTION 22. Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and shall be governed by and construed in accordance with the
laws of said State, without regard to the conflict of law rules thereof.
SECTION 23. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Partnership,
the Warrant Agent and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Partnership, the
Warrant Agent and the registered holders of the Warrant Certificates.
SECTION 24. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
22
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
By: The Resort at Summerlin, Inc., general partner
By: /s/ Brian McMullen
-------------------------------------------------
Name: Brian McMullen
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Warrant Agent
By: /s/ Louis P. Young
-------------------------------------------------
Name: Louis P. Young
Title: Vice President
JOINDER:
RAS WARRANT CO.
By: /s/ Brian McMullen
-------------------------------------------------
Name: Brian McMullen
Title: President
23
<PAGE> 25
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL
INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON, IS NOT
ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT
WITH RESPECT TO SUCH TRANSFER, ON THE DATE OF THE TRANSFER OF THIS SECURITY
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE RESORT AT
SUMMERLIN, LIMITED PARTNERSHIP (THE "ISSUER") OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QIB IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE WARRANT AGENT), AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE AMOUNT OF SECURITIES AT THE TIME OF TRANSFER OF LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE, BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER), (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (G)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) AND
IN EACH CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
<PAGE> 26
THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING THE WARRANT AGENT TO REFUSE
TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
THIS WARRANT AND THE LIMITED PARTNER INTERESTS OF THE PARTNERSHIP INTO
WHICH THIS WARRANT IS EXERCISABLE ARE SUBJECT TO A REGISTRATION RIGHTS AND
LIMITED PARTNERS' AGREEMENT, DATED AS OF DECEMBER 30, 1997, WHICH CONTAINS
PROVISIONS REGARDING THE RESTRICTIONS ON THE TRANSFER AND PROVISIONS REQUIRING
THE MANDATORY TRANSFER OF SUCH PARTNERSHIP INTERESTS AND OTHER MATTERS. A COPY
OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
PARTNERSHIP.
COMMENCING WITH THE DATE A NONRESTRICTED GAMING LICENSE IS ISSUED TO
THE PARTNERSHIP BY THE NEVADA GAMING COMMISSION AND THEREAFTER UNTIL THE
PARTNERSHIP HAS BEEN REGISTERED AS A REGISTERED COMPANY AND GRANTED THE
EXEMPTIONS BY THE NEVADA GAMING COMMISSION, THE SALE, ASSIGNMENT, TRANSFER,
PLEDGE, OR OTHER DISPOSITION OF ANY INTEREST IN THE LIMITED PARTNERSHIP IS VOID
UNLESS APPROVED IN ADVANCE BY THE NEVADA GAMING COMMISSION. IF AT ANY TIME THE
NEVADA GAMING COMMISSION FINDS THAT AN INDIVIDUAL OWNER OF ANY SUCH INTEREST IS
UNSUITABLE TO HOLD THAT INTEREST, THE NEVADA GAMING COMMISSION SHALL IMMEDIATELY
NOTIFY THE LIMITED PARTNERSHIP OF THAT FACT. THE LIMITED PARTNERSHIP SHALL,
WITHIN TEN DAYS FROM THE DATE THAT IT RECEIVES THE NOTICE FROM THE NEVADA GAMING
COMMISSION, RETURN TO THE UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS
REFLECTED ON THE BOOKS OF THE LIMITED PARTNERSHIP. BEGINNING ON THE DATE WHEN
THE NEVADA GAMING COMMISSION SERVES NOTICE OF A DETERMINATION OF UNSUITABILITY,
PURSUANT TO THE PRECEDING SENTENCE, UPON THE LIMITED PARTNERSHIP, IT IS UNLAWFUL
FOR THE UNSUITABLE OWNER: (A) TO RECEIVE ANY SHARE OF THE PROFITS OR
DISTRIBUTIONS OF ANY CASH OR OTHER PROPERTY OTHER THAN A RETURN OF CAPITAL AS
REQUIRED ABOVE; (B) TO EXERCISE, DIRECTLY OR THROUGH ANY WARRANT AGENT OR
NOMINEE, ANY VOTING RIGHT CONFERRED BY SUCH INTEREST; OR (C) TO RECEIVE ANY
REMUNERATION IN ANY FORM FROM THE LIMITED PARTNERSHIP, FOR SERVICES RENDERED OR
OTHERWISE.
2
<PAGE> 27
EXERCISABLE ON OR AFTER THE DATE OF ISSUANCE
AND ON OR BEFORE DECEMBER 15, 2007
No. _________
Warrant
CUSIP No.:
Warrant Certificate
The Resort at Summerlin, Limited Partnership
This Warrant Certificate certifies that ______________, or registered
assigns, is the registered holder of one Warrant expiring December 15, 2007 (the
"Warrant") to purchase a limited partner interest ("LP Partnership Interest") in
The Resort at Summerlin, Limited Partnership, a Nevada limited partnership (the
"Partnership"). The Warrant initially entitles the holder upon exercise to
receive from the Partnership on or after the date hereof and on or before 5:00
p.m. New York City Time on December 15, 2007, one LP Partnership Interest at the
initial exercise price (the "Exercise Price") of $___ payable in lawful money of
the United States of America upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office or agency of the Warrant Agent, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and the number of LP
Partnership Interests issuable upon exercise of the Warrant are subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
The Warrant may not be exercised after 5:00 p.m., New York City Time,
on December 15, 2007, and to the extent not exercised by such time the Warrant
shall become void.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of New York.
<PAGE> 28
IN WITNESS WHEREOF, The Resort at Summerlin, Limited Partnership has
caused this Warrant Certificate to be signed by its general partner, The Resort
at Summerlin, Inc., by its [ ] and by its [ ].
Dated:
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
BY: THE RESORT AT SUMMERLIN, INC.,
General Partner
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
Countersigned:
United States Trust Company of New York,
as Warrant Agent
By:_____________________________________
Authorized Signature
2
<PAGE> 29
[Form of Warrant Certificate]
[Reverse]
The Warrant evidenced by this Warrant Certificate is part of a duly
authorized issue of Warrants expiring December 15, 2007, entitling the holders
on exercise of each Warrant initially to receive one LP Partnership Interest,
and is issued or to be issued pursuant to a Warrant Agreement dated as of
December 30, 1997 (the "Warrant Agreement"), duly executed and delivered by the
Partnership and United States Trust Company of New York, a banking corporation
organized and existing under the laws of the State of New York, as warrant agent
(the "Warrant Agent"). The Warrant Agreement is hereby incorporated by reference
in and made a part of this Warrant Certificate and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Partnership and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Partnership.
The Warrant may be exercised at any time on or after the date hereof
and on or before December 15, 2007, subject to extension as provided in the
Warrant Agreement. The holder of the Warrant evidenced by this Warrant
Certificate may exercise it by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price in cash at the office of the Warrant
Agent. The Warrant evidenced hereby shall be exercisable only in full, and not
in part. No adjustment shall be made for any distributions on the LP Partnership
Interests issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the LP Partnership Interest issuable upon exercise of the Warrant may,
subject to certain conditions, be adjusted. No fractional LP Partnership
Interests will be issued upon the exercise of Warrants, but the Partnership will
pay the cash value thereof determined as provided in the Warrant Agreement.
3
<PAGE> 30
This Warrant Certificate, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate Warrants to purchase the aggregate number of
LP Partnership Interests to which the surrendered Warrant was entitled.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and representing in the aggregate the right
to purchase a like amount of LP Partnership Interests shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Partnership and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Partnership nor
the Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a limited partner of the Partnership.
4
<PAGE> 31
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____ limited partner
interests in, and herewith tenders payment for such partnership interest to the
order of, The Resort at Summerlin, Limited Partnership in the amount of
$__________ in accordance with the terms hereof. The undersigned requests that a
certificate for such partnership interest be registered in the name of
___________________, whose address is ___________________ ______________________
and that evidence of such partnership interest be delivered to ___________
________, whose address is ____________________________________________________.
Signature:
Date:
Signature Guarantee:
________________________________________
(Signatures must be guarantee by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements will include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
5
<PAGE> 32
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to purchase limited
partnership interests (the "Securities") of
The Resort at Summerlin, Limited Partnership
This Certificate relates to ____________ Securities held in
the form of Physical Warrants by _________________ (the "Transferor").
The Transferor:*
/ / has requested that the Warrant Agent by written order to exchange
or register the transfer of a Physical Warrant or Physical Warrants.
In connection with such request and in request of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Warrant Agreement relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 6 of such Warrant
Agreement, and that the transfer of these Securities does not require
registration under the Securities Act of 1933, as amended (the "Act") because*:
/ / Such Security is being acquired for the Transferor's own account,
without transfer.
/ / Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act.
/ / Such Security is being transferred in reliance on Regulation S
under the Act.
<PAGE> 33
/ / Such Security is being transferred in reliance on Rule 144 under
the Act.
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
___________________________________
(INSERT NAME OF TRANSFEROR)
By: _______________________________
(Authorized Signature)
Date:
_____________________________
*Check applicable box.
2
<PAGE> 34
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
[Date]
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
Re: The Resort at Summerlin, Limited Partnership
(the "Partnership") Warrants to purchase
limited partnership interests (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of Securities of the
Partnership, we confirm that:
1. We have received such information as we deem necessary in order to
make our investment decision.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Warrant
Agreement and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
3. We understand that the limited partner interests of the Partnership
represented by this Certificate are subject to a Registration Rights and Limited
Partners' Agreement dated as of December 30, 1997, which contains provisions
regarding restrictions on the transfer and the mandatory transfer of such
interests and other matters.
4. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Securities, we will do so only (A) to the
Partnership or any subsidiary thereof, (B) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to the Warrant Agent a
signed letter substantially in the form hereof, (D) outside the United States in
accordance with Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available), or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
<PAGE> 35
5. We understand that, on any proposed resale of Securities, we will be
required to furnish the Warrant Agent and the Partnership, such certification,
legal opinions and other information as the Warrant Agent and the Partnership
may reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Securities purchased by
us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Partnership are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
(Name of Transferor)
By: __________________________
(Authorized Signatory)
2
<PAGE> 36
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
[Date]
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
Re: The Resort at Summerlin, Limited Partnership
(the "Partnership") Warrants to purchase
limited partnership interests (the "Securities")
Dear Sirs:
In connection with our proposed purchase of ___________ of the
Securities, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) neither (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been prearranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
<PAGE> 37
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Partnership are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby. Defined terms used herein without definition have
the respective meanings provided in Regulation S.
Very truly yours,
(Name of Transferor)
By: __________________________
(Authorized Signatory)
2
<PAGE> 1
EXHIBIT 4.5
WARRANT AGREEMENT
Dated as of December 30, 1997
Between
RAS WARRANT CO.,
as Issuer
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent
and joined by
SEVEN CIRCLE GAMING CORPORATION
<PAGE> 2
WARRANT AGREEMENT (the "Agreement"), dated as of December 30, 1997,
between RAS Warrant Co., a Nevada corporation (together with any successors and
assigns, the "Company"), and United States Trust Company of New York, a New York
banking corporation, as Warrant Agent (the "Warrant Agent"). Seven Circle Gaming
Corporation, a Nevada corporation ("SCGC"),hereby joins in this Agreement in its
capacity as the initial stockholder of the Company.
WHEREAS, The Resort at Summerlin, Limited Partnership, a Nevada limited
partnership (the "Partnership") proposes, among other things, to issue and sell
pursuant to a Purchase Agreement, dated as of December 22, 1997 (the "Purchase
Agreement"), among the Partnership, the Company and NatWest Capital Markets
Limited ("NatWest"), as Initial Purchaser, 100,000 Units (the "Units")
representing $100,000,000 principal amount of its 13% Senior Subordinated PIK
Notes due 2007 (the "Senior PIK Notes") and, at Initial Purchaser's election,
either (i) warrants (the "Partnership Warrants") to purchase limited partnership
interests (the "LP Partnership Interests") of the Partnership, or (ii) warrants
(the "Warrants") to purchase shares of common stock, without par value (the
"Common Stock" and the shares of Common Stock issuable upon exercise of the
Warrants being referred to herein as the "Warrant Shares"), of the Company;
WHEREAS, each Unit will represent $1,000 principal amount of Senior PIK
Notes and, in the case of the Partnership Warrants, one warrant to purchase one
LP Partnership Interest representing 0.00008% of the total partnership interests
of the Partnership outstanding on the date hereof or, in the case of the
Warrants, one warrant to purchase one share of Common Stock;
WHEREAS, the Partnership proposes to issue to the Company warrants (the
"Company LP Warrants") for the purchase of LP Partnership Interests with the
same terms as the Partnership Warrants in the same number as the number of
Warrants issued by Warrant Co.;
WHEREAS, the Company wishes the Warrant Agent to act on behalf of the
Company and the Warrant Agent is willing to act in connection with the issuance,
division, transfer, exchange and exercise of Warrants as provided herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, the Company and the Warrant Agent hereby agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The Warrants will be initially issued
in registered form as physical Warrant certificates (the "Physical Warrants").
Any certificates (the "Warrant Certificates") evidencing the Physical Warrants
to be delivered pursuant to this Agreement shall be substantially in the form
set forth in Exhibit A attached hereto. Such Warrant Certificates shall
represent such of the outstanding Warrants as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Warrants from time to time endorsed thereon and that the aggregate amount of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate. Any endorsement of a Warrant Certificate to reflect
the amount of any increase or decrease in the amount of outstanding Warrants
represented thereby shall be made by the Warrant Agent in accordance with
instructions given by the Holder thereof.
<PAGE> 3
SECTION 3. Execution of Warrant Certificates.
(a) Warrant Certificates shall be signed on behalf of the
Company by its President and a Vice President. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the present
or any future President or Vice President and may be imprinted or otherwise
reproduced on the Warrant Certificates and for that purpose the Company may
adopt and use the facsimile signature of any person who shall have been
President or Vice President notwithstanding the fact that at the time the
Warrant Certificates shall be countersigned and delivered or disposed of he
shall have ceased to hold such office.
(b) In case any officer of the Company who shall have signed
any of the Warrant Certificates shall cease to be such officer before the
Warrant Certificates so signed shall have been countersigned by the Warrant
Agent, or disposed of by the Company, such Warrant Certificates nevertheless may
be countersigned and delivered or disposed of as though such person had not
ceased to be such officer of the Company; and any Warrant Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, shall be a proper officer of the Company
to sign such Warrant Certificate, although at the date of the execution of this
Warrant Agreement any such person was not such officer.
(c) Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
SECTION 4. Registration and Countersignature.
(a) The Warrants shall be numbered and shall be registered on
the books of the Company maintained at the principal office of the Warrant Agent
in the Borough of Manhattan, city of New York (the "Warrant Register") as they
are issued. Warrant Agent agrees to make the Warrant Register available for
inspection by agents or other representatives of the Nevada State Gaming Control
Board upon request during normal business hours.
(b) Warrant Certificates shall be manually countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned. The Warrant Agent shall, upon written instructions of the
President, a Vice President, or a Secretary or an Assistant Secretary of the
Company, initially countersign and deliver Warrants entitling the holders
thereof to purchase not more than an aggregate of 100,000 Warrant Shares and
shall thereafter countersign and deliver Warrants as otherwise provided in this
Agreement.
(c) The Company and the Warrant Agent may deem and treat the
registered holders (the "Holders") of the Warrant Certificates as the absolute
owners thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone) for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
SECTION 5. Transfer and Exchange of Warrants.
(a) The Warrant Agent shall from time to time, subject to the
limitations of Section 6, register the transfer of any outstanding Warrants upon
the records to be maintained by it for that purpose, upon surrender thereof duly
endorsed or accompanied (if so required by it) by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, duly executed
by the
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<PAGE> 4
registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney.
(b) Subject to the terms of this Agreement, each Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle each Holder to purchase.
Any Holder desiring to exchange a Warrant Certificate or Certificates shall make
such request in writing delivered to the Warrant Agent, and shall surrender,
duly endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent,
the Warrant Certificate or Certificates to be so exchanged. The Warrant
Certificates may be exchanged at the option of the Holder thereof, when
surrendered at the office or agency of the Company maintained for such purpose,
which initially will be the corporate trust office of the Warrant Agent in New
York, New York.
(c) Upon registration of transfer or exchange, the Warrant
Agent shall countersign and deliver by certified mail a new Warrant Certificate
or Certificates to the persons entitled thereto. No service charge shall be made
for any exchange or registration of transfer of Warrant Certificates, but the
Company may require payment of a sum sufficient to cover any stamp or other tax
or other governmental charge that is imposed in connection with any such
exchange or registration of transfer.
(d) Notwithstanding any other provision of this Agreement, on
and after such time as the Company shall have been registered as a holding
company and licensed as a limited partner of the Partnership (the
"Registration") pursuant to the Nevada Act (hereinafter defined) by the Nevada
Gaming Commission (the "Nevada Commission") no Holder may sell, assign,
transfer, pledge or make any other disposition of a Warrant without the prior
approval of and licensure by the Nevada Commission unless the Company is then
registered by the Nevada Commission as a "publicly traded corporation" (a
"Registered Company"), as that term is defined in the Nevada Gaming Control Act
and the regulations promulgated thereunder (collectively, the "Nevada Act"), and
holds such exemptions from the Nevada Commission in connection with such
registration as shall be necessary to relieve Holder of such obligation to
obtain approval and licensure by the Nevada Commission (the "Exemptions"). The
Partnership shall promptly notify the Warrant Agent and each Holder in writing
in each instance in the event that it has (i) obtained the Registration, (ii)
become a Registered Company and (iii) obtained the Exemptions.
SECTION 6. Registration of Transfers and Exchanges (a) Transfer and
Exchange of Physical Warrants. When Physical Warrants are presented to the
Warrant Agent with a request:
(i) to register the transfer of the Physical
Warrants; or
(ii) to exchange such Physical Warrants for an equal
number of Physical Warrants of other authorized denominations or for
Partnership Warrants in the proportionate amount represented by such
Warrant, the Warrant Agent shall, subject to Section 5, register the
transfer or make the exchange as requested if the requirements under
this Agreement as set forth in this Section 6 for such transactions are
met; provided, however, that the Physical Warrants presented or
surrendered for registration of transfer or exchange;
(a) shall be duly endorsed or accompanied by
a written instrument of transfer in form satisfactory to the
Warrant Agent, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
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<PAGE> 5
(b) in the case of Physical Warrants the offer and sale of
which have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), such Physical Warrants shall be accompanied, in the sole
discretion of the Company, by the following additional information and
documents, as applicable:
(1) if such Physical Warrants are being delivered to
the Warrant Agent by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit B hereto); or
(2) if such Physical Warrants are being transferred
to a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act (a "Qualified Institutional Buyer")) in accordance with Rule 144A
under the Securities Act, a certificate to that effect (in substantially the
form of Exhibit B hereto); or
(3) if such Physical Warrants are being transferred
to an institutional "accredited investor" (as defined in Rule 501 (a)(1), (2),
(3) or (7) under the Securities Act (an "Institutional Accredited Investor")),
delivery of a certification to that effect (in substantially the form of Exhibit
B hereto) and a Transferee Certificate for Institutional Accredited Investors in
substantially the form of Exhibit C hereto; or
(4) if such Physical Warrants are being transferred
in reliance on Regulation S under the Securities Act ("Regulation S"), delivery
of a certification to that effect (in substantially the form of Exhibit B
hereto) and a Transferee Certificate for Regulation S Transfers in substantially
the form of Exhibit D hereto and an opinion of counsel reasonably satisfactory
to the Company to the effect that such transfer is in compliance with the
Securities Act; or
(5) if such Physical Warrants are being transferred
in reliance on Rule 144 under the Securities Act, delivery of a certification to
that effect (in substantially the form of Exhibit B hereto) and an opinion of
counsel reasonably satisfactory to the Company to the effect that such transfer
is in compliance with the Securities Act; or
(6) if such Physical Warrants are being transferred
in reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto) and an opinion of counsel reasonably satisfactory to the
Company to the effect that such transfer is in compliance with the Securities
Act.
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<PAGE> 6
(b) Legends.
(i) For so long as transfer of a Warrant is not permitted
without registration under the Securities Act, each Warrant Certificate
evidencing such Warrant (and all Warrants issued in exchange therefor or
substitution thereof) shall bear a legend substantially to the following effect:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER"(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"(AS DEFINED IN RULE 501
(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON, IS
NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON, AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT
IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING
INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, ON THE DATE OF THE TRANSFER OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO RAS WARRANT CO. (THE
"ISSUER") OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE
THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR
TO SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE WARRANT AGENT), AND IF SUCH TRANSFER IS IN RESPECT
OF AN AGGREGATE AMOUNT OF SECURITIES AT THE TIME OF TRANSFER OF LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE, BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER),
(F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (G) IN ACCORDANCE WITH ANOTHER
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<PAGE> 7
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) AND IN EACH
CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902
OF REGULATION S UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT
CONTAINS A PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER
ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(ii) On and after the date of issuance of the Registration to
the Company and until the Company has been registered as a Registered Company
and granted the Exemptions by the Nevada Commission, each Warrant Certificate
evidencing such Warrant (and all Warrants issued in exchange therefor or
substitution thereof) shall bear a legend substantially to the following effect:
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS
SECURITY IS INEFFECTIVE UNLESS APPROVED IN ADVANCE BY THE NEVADA GAMING
COMMISSION. IF AT ANY TIME SUCH COMMISSION FINDS THAT AN OWNER OF THIS
SECURITY IS UNSUITABLE TO CONTINUE TO HAVE AN INVOLVEMENT IN GAMING IN
NEVADA, SUCH OWNER MUST DISPOSE OF SUCH SECURITY AS PROVIDED BY THE
LAWS OF THE STATE OF NEVADA AND THE REGULATIONS OF THE NEVADA GAMING
COMMISSION THEREUNDER. SUCH LAWS AND REGULATIONS RESTRICT THE RIGHT
UNDER CERTAIN CIRCUMSTANCES: (A) TO PAY OR RECEIVE ANY DIVIDEND OR
INTEREST UPON ANY SUCH SECURITY, (B) TO EXERCISE, DIRECTLY OR THROUGH
ANY TRUSTEE OR NOMINEE, ANY VOTING RIGHT CONFERRED BY SUCH SECURITY, OR
(C) TO RECEIVE ANY REMUNERATION IN ANY FORM FROM THE CORPORATION, FOR
SERVICES RENDERED OR OTHERWISE.
(iii) Each certificate representing Warrant Shares (and all
shares of Common Stock issued in exchange therefor or substitution therefor)
shall bear a legend identical to the legend set forth in clauses (i) and (ii)
above.
(c) Obligations with Respect to Transfers and Exchanges of Physical
Warrants.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Warrant Agent's request, and the Warrant Agent
shall countersign Physical Warrants.
(ii) All Physical Warrants issued upon any registration,
transfer or exchange of Physical Warrants shall be the valid obligations of the
Company, entitled to the same benefits under this Agreement as the Physical
Warrants surrendered upon the registration of transfer or exchange.
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<PAGE> 8
(iii) Prior to due presentment for registration of
transfer of any Warrant, the Warrant Agent and the Company may deem and
treat the person in whose name any Warrant is registered as the
absolute owner of such Warrant, and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
SECTION 7. Separation of Warrants; Terms of Warrants; Exercise
of Warrants.
(a) The Senior PIK Notes and Warrants will be immediately
separated upon sale by the Initial Purchaser.
(b) Subject to the terms of this Agreement, each Holder shall
have the right, which may be exercised commencing on or after the date of
issuance and until 5:00 p.m., New York City time, on December 15, 2007 (the
"Expiration Date"), to receive from the Company upon the exercise of each
Warrant the number of fully paid and nonassessable Warrant Shares which the
Holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price (as hereinafter defined) then in effect for such
Warrant Shares. Each Warrant not exercised prior to the Expiration Date shall
become void and all rights thereunder and all rights in respect thereof under
this Agreement shall cease as of such time. No adjustments as to dividends will
be made upon exercise of the Warrants.
(c) The initial price at which one Warrant Share shall be
purchasable upon exercise of a Warrant (the "Exercise Price") shall be $.01,
subject to adjustment, provided, that in no event shall the Exercise Price be
less than $.01 per share. A Warrant may be exercised upon surrender at the
office or agency of the Company maintained for such purpose, which initially
will be the corporate trust office of the Warrant Agent in New York, New York,
of the certificate or certificates evidencing the Warrants to be exercised with
the form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be guaranteed by a participant in a recognized
Signature Guarantee Medallion Program, and upon payment to the Warrant Agent for
the account of the Company of the Exercise Price, as adjusted as herein
provided, for the number of Warrant Shares in respect to which such Warrants are
then exercised. Payment of the aggregate Exercise Price shall be made in cash or
by certified or official bank check to the order of the Company in immediately
available funds.
(d) Subject to the provisions of Section 6 hereof, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the Holder and in such name or names as the Holder may designate a
certificate or certificates for the number of Warrant Shares issuable upon the
exercise of such Warrants together with cash as provided in Section 13;
provided, however, that if any consolidation, merger or lease or sale of assets
is proposed to be effected by the Company as described in Subsection 12(j), or a
tender offer or an exchange offer for shares of Common Stock of the Company
shall be made, upon such surrender of Warrants and payment of the Exercise Price
as aforesaid, the Company shall, as soon as possible, but in any event not later
than two days, other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are not open for business ("Business Day")
thereafter, issue and cause to be delivered the number of Warrant Shares
issuable upon the exercise of such Warrants in the manner described in this
sentence together with cash as provided in Section 13. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price.
EACH WARRANT SHALL BE EXERCISABLE ONLY IN FULL, AND NOT IN PART.
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(e) All Warrant Certificates surrendered upon exercise of
Warrants shall be cancelled by the Warrant Agent. Such cancelled Warrant
Certificates shall then be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure for such disposal and in
a manner reasonably satisfactory to the Company. The Warrant Agent shall account
promptly to the Company with respect to Warrants exercised and concurrently pay
to the Company all monies received by the Warrant Agent for the purchase of the
Warrant Shares through the exercise of such Warrants.
(f) The Warrant Agent shall keep copies of this Agreement and
any notices given or received hereunder available for inspection by the holders
during normal business hours at its office. The Company shall supply the Warrant
Agent from time to time with such numbers of copies of this Agreement as the
Warrant Agent may request.
(g) Notwithstanding any other provision of this Agreement, on
and after such time as the Company has obtained the Registration or the
Partnership has obtained a nonrestricted gaming license issued by the Nevada
Commission, whichever first occurs, no Warrant may be exercised without the
prior approval of or licensure by the Nevada Commission unless the Company is
then registered by the Nevada Commission as a Registered Company and holds the
Exemptions. The Company shall promptly notify the Warrant Agent, in writing of
the date on which the Company has obtained the Registration or the Partnership
has obtained a nonrestricted gaining license issued by the Nevada Commission.
SECTION 8. Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Warrant Shares
upon the exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue of any Warrant Certificates, any certificates for Warrant
Shares in a name other than that of the registered Holder of a Warrant
Certificate surrendered upon the exercise of a Warrant, or the exchange of any
Warrant for a Partnership Warrant or Warrant Shares for Partnership Interests,
and the Company shall not be required to issue or deliver such Warrant
Certificates, Partnership Warrants or Partnership Interests unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
SECTION 9. Mutilated or Missing Warrant Certificates. In case
any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed,
the Company may at its discretion issue and the Warrant Agent may countersign,
in exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity also satisfactory to them. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the Warrant
Agent may prescribe.
SECTION 10. Reservation of Warrant Shares.
(a) The Company will at all times reserve and keep available,
free from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock or is authorized and issued Common Stock held in its treasury, for
the purpose of enabling it to satisfy an obligation to issue
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<PAGE> 10
Warrant Shares upon exercise of Warrants, the maximum number of shares of Common
Stock which may then be deliverable upon the exercise of all outstanding
Warrants.
(b) The Company or, if appointed, the transfer agent for the
Common Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is hereby irrevocably authorized
to requisition from time to time from such Transfer Agent the stock certificates
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. The Company will supply such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 13. The Company
will furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder pursuant to Section 14
hereof.
(c) The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants made in accordance with the terms of this
Agreement will, upon payment of the Exercise Price therefor and issue, be
validly authorized and issued, fully paid, nonassessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issuance thereof. The Company will take no action to increase the
par value of the Common Stock to an amount in excess of the Exercise Price, and
the Company will not enter into any agreements inconsistent with the rights of
Holders hereunder. The Company will use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Agreement. The Company shall not take any action
reasonably within its control, including the hiring of a broker to solicit
exercises, which would render unavailable an exemption from registration under
the Securities Act which might otherwise be available with respect to the
issuance of Warrant Shares upon exercise of any Warrants.
SECTION 11. Certain Provisions Relating to Partnership
Warrants.
(a) The Company may issue additional Warrants from time to
time to any holder of a Partnership Warrant upon such Partnership Warrant
holder's delivery to the Company of the certificate or certificates evidencing
such Partnership Warrant, duly endorsed or accompanied (if so required by the
Warrant Agreement for the Partnership Warrants) by a written instrument or
instruments of transfer to the Company in form satisfactory to the Warrant Agent
for the Partnership Warrants, and duly executed as required by the Partnership
Warrant; provided that such Partnership Warrant holder shall certify to the
Company and the Warrant Agent for the Partnership Warrants that such transfer is
solely in exchange for a Corporate Warrant corresponding to the transferred
Partnership Warrant to be held by the Company. Upon satisfaction of the
foregoing conditions, the Company shall cause such transfer to be registered
with the Warrant Agent for the Partnership Warrants and shall obtain a Company
LP Warrant in exchange therefor.
(b) Upon any Holder's surrender of a Warrant Certificate for
transfer to the Company and request to hold the corresponding Partnership
Interest directly, the Company shall surrender such corresponding Company LP
Warrant to the Partnership for transfer to such Holder and, subject to Section
6, such Warrant transfer shall be registered in accordance with this Section 5
and the Holder's
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<PAGE> 11
Warrant shall be cancelled; provided that such Holder shall certify to the
Company and Warrant Agent and to the Partnership and its warrant agent that such
transfer is solely for the purposes described in this Subsection 11(b).
(c) Upon the Company's receipt of a written request from
Holders of at least 25% of all Warrants outstanding as of the date of the
request, the Company will file a Form 10 pursuant to the Exchange Act with the
Securities and Exchange Commission and exercise its reasonable best efforts to
obtain the Registration and Exemptions, become a Registered Company, and upon
obtaining all of the foregoing, any Holder of Warrants may exercise its Warrants
as provided in Section 7 hereof.
(d) In the event that the Company receives notice of any
rights to which it may be entitled to exercise or obligations it must comply
with pursuant to the Partnership Warrants it holds, including, but not limited
to, such matters in respect of put or call events, registrations of securities
of the Partnership, or transfers of LP Partnership Interests, the Company shall,
on the same day such notice is received, notify each Holder and, if any action
shall be required of the Company as a holder of Partnership Warrants, and it
shall request instructions from each Holder regarding the actions to be taken by
the Company that may affect the pro rata share of Partnership Warrants
corresponding to the Holder's Warrant or Warrants (the "Instructions"). If the
Company does not receive Instructions from any Holder during the time period in
which the Instructions may be implemented, the Company will not act. In the
event the applicable transaction gives rise to any taxes, the Company shall
deduct from any distribution received by the Company the amount of all
applicable taxes to be paid by the Company arising out of or resulting from such
transaction. In any event, the Company shall exercise its rights as a holder of
Partnership Warrants in proportion to the Holders' pro rata interests in the
Common Stock issued or issuable upon exercise of the Warrants.
(e) In the event that the Company receives a distribution
from the Partnership on any LP Partnership Interests held by the Company, the
Company will promptly declare and pay a dividend on its Common Stock in an
amount equal to the distribution received from the Partnership less any amounts
required to enable the Company to pay any taxes imposed on the Company as a
result of such distribution and dividend, as determined by the Company's Board
of Directors in its sole discretion.
(f) Immediately after the due exercise of a Warrant by a
Holder and the payment of the Exercise Price in respect thereof, the Company
shall exercise one Partnership Warrant held by it with the proceeds of the
Exercise Price received by the Company in respect of the Warrant so exercised by
such Holder. A holder of Warrant Shares shall have the right to require the
Company to exchange the Warrant Shares held by such holder for all corresponding
LP Partnership Interests held by the Company by delivering to the Company the
certificate or certificates evidencing the Warrant Shares, duly endorsed or
accompanied by a duly executed written instrument or instruments of transfer in
form acceptable to the Company and a letter of instructions duly executed by
such Holder requesting such exchange. Upon receipt thereof, the Company shall
cause the requisite LP Partnership Interests to be transferred to such Holder
and registered in the transfer records of the Partnership in accordance with the
Partnership's partnership agreement. No service charge shall be imposed on any
Holder in respect of any such exchange of Warrant Shares for LP Partnership
Interests, but the Company may require payment of a sum sufficient to cover any
stamp or other tax or other governmental charge that is imposed in connection
with any such exchange.
SECTION 12. Adjustment of Number of Warrant Shares Issuable.
The number of shares of Common Stock issuable upon the exercise of each Warrant
(the "Exercise Rate") is subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 11. The
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<PAGE> 12
Exercise Rate shall initially be one. Upon the occurrence of any adjustment to
the exercise rate for the Partnership Warrants, the Company shall cause a
corresponding adjustment in the Exercise Rate hereunder.
(a) Adjustment for Change in Capital Stock. If the Company:
(1) pays a dividend or makes a distribution of its Common
Stock in shares of its Common Stock or other capital stock of the
Company other than a distribution related to;
(2) subdivides, combines or reclassifies its outstanding
shares of Common Stock; and
(3) makes a distribution to all holders of its Common Stock of
rights, warrants or options to purchase Common Stock of the Company at
a price per share less than the Current Market Value (as defined in
Section 12(e)) at the Time of Determination (as defined below);
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action; provided, however,
that notwithstanding the foregoing, upon the occurrence of an event described in
any of paragraphs (1) and (3) above, which otherwise would have given rise to an
adjustment, no adjustment shall be made if the Company includes the Holders of
Warrants in such distribution pro rata to the number of shares of Common Stock
issued and outstanding (after giving effect to the Warrant Shares as if they
were issued and outstanding).
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution (the "Time of Determination") and
immediately after the effective date in the case of a subdivision, combination
or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the Board
of Directors of the Company shall determine the allocation of the adjusted
Exercise Price between the classes of capital stock. After such allocation, the
exercise privilege and the Exercise Price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Section.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Certain Issuances of Common Stock. Subject
to Section 12(a), if the Company issues or sells shares of its Common Stock or
distributes any rights, options or warrants to all holders of its Common Stock
entitling them to purchase shares of Common Stock, or securities convertible
into or exchangeable for Common Stock (other than pursuant to the exercise of
the Warrants or issuance of Warrant Shares to a holder of LP Partnership
Interests solely to accommodate such holder's right to elect to hold Warrant
Shares corresponding to such underlying LP Partnership Interest in lieu of
holding such LP Partnership Interest directly), at a price per share less than
the Current Market Value at the Time of Determination, the Exercise Rate shall
be adjusted in accordance with the formula:
(0 + N)
------------
E(1) = E x 0 + (N x P)
-------
M
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<PAGE> 13
where:
E(l) = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination of any such distribution.
0 = the number of Fully Diluted Shares (as defined in
Section 12(l)) outstanding on the Time of
Determination for any such issuance, sale or
distribution.
N = the number of additional shares of Common Stock
issued, sold or issuable upon exercise of such
rights, options or warrants.
P = the price received in the case of any issuance or
sale of Common Stock or exercise price per share of
such rights, options or warrants.
M = the Current Market Value per share of Common Stock on
the Time of Determination for any such issuance, sale
or distribution.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which any
such rights, options or warrants are exercisable, not all rights, options or
warrants shall have been exercised, the Warrant shall be immediately readjusted
to what it would have been if "N" in the above formula had been the number of
shares actually issued.
(c) Adjustments for Other Distribution. Subject to Section
12(a), if the Company distributes to all holders of its Common Stock (i) any
evidences of indebtedness of the Company (ii) any assets of the Company
(excluding cash dividends or other cash distributions or distributions from
current or retained earnings other than any Extraordinary Cash Dividend and
excluding transfers of Partnership Warrants pursuant to Section II hereof), or
(iii) any rights, options or warrants to acquire any of the foregoing or to
acquire any other securities of the Company, the Exercise Rate shall be adjusted
in accordance with the formula:
E(1) = E x M
-----
M - F
where:
E(1) = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination of such distribution.
M = the Current Market Value per share of Common Stock
on the record date mentioned below.
F = the fair market value on the record date mentioned
below of the indebtedness, assets, rights, options or
warrants distributable to one share of Common Stock.
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<PAGE> 14
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to clause (iii) above of this subsection 12(c)
as a result of the issuance of rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date. Notwithstanding
the foregoing, provisions of this Subsection 12(c), (x) an event which would
otherwise give rise to an adjustment pursuant to this Subsection 12(c) shall not
give rise to such an adjustment if the Company includes the holders of the
Warrants in such distribution pro rata to the number of shares of Common Stock
issued and outstanding after giving effect to the Warrant Shares as if they were
issued and outstanding and (y) no adjustment shall be made pursuant to this
Section 12(c) with respect to cash dividends other than Extraordinary Cash
Dividends.
This Subsection 12(c) does not apply to rights, options or
warrants referred to in Subsection 12(b).
(d) Merger, Consolidation, Etc. If (x) the Company merges or
consolidates with, or sells all or substantially all of its property and assets
to, another person (other than an Affiliate of the Company) and consideration is
payable to holders of Common Stock in exchange for their Common Stock in
connection with such merger, consolidation or sale which consists solely of
cash, or (y) in the event of a dissolution, liquidation or winding up of the
Company, then the holders of Warrants shall be entitled to receive
distributions on the date of such event on an equal basis with holders of Common
Stock (or other securities issuable upon exercise of the Warrants) as if the
Warrants had been exercised immediately prior to such event, less the Exercise
Price. Upon receipt of such payment, if any, the rights of a holder shall
terminate and cease and his or her Warrants shall expire. In case of any such
merger, consolidation or sale of assets, the surviving or acquiring person and,
in the event of any dissolution, liquidation or winding of the Company, the
Company shall deposit promptly with the Warrant Agent the funds, if any,
necessary to pay the Holders of the Warrants. After receipt of such deposit from
such person or the Company and after receipt of surrendered Warrant
Certificates, the Warrant Agent shall make payment by delivering a check in such
amount as is appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such person or persons as it may be
directed in writing by the holder surrendering such Warrants.
(e) Current Market Value. "Current Market Value" per share of
Common Stock or of any other security (herein collectively referred to as a
"Security") at any date shall be:
(i) if the Security is not registered under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (a) the value of the Security determined in good faith
by the Board of Directors of the Company and certified in a
board resolution, based on the most recently completed arm's
length transaction between the Company and a person other than
an Affiliate of the Company in which such determination is
necessary and the closing of which occurs on such date or
shall have occurred within the six months preceding such date,
(b) if no such transaction shall have occurred on such date or
within such six-month period, the value of the Security most
recently determined as of a date within the six months
preceding such date by an Independent Financial Expert or (c)
if neither clause (a) nor (b) is applicable, the value of the
Security determined as of such date by an Independent
Financial Expert, or
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<PAGE> 15
(ii) if the Security is registered under the Exchange
Act, the average of the daily market prices for each business
day during the period commencing 15 Business Days before such
date and ending on the date one day prior to such date or, if
the Security has been registered under the Exchange Act for
less than 15 consecutive Business Days before such date, then
the average of the daily market prices for all of the Business
Days before such date for which daily market prices are
available. If the market price is not determinable for at
least 10 Business Days in such period, the Current Market
Value of the Security shall be determined as if the Security
was not registered under the Exchange Act.
The "market price" for any Security on each Business Day
means: (A) if such Security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal exchange
on which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) if such Security is
not then listed or admitted to trading on any securities exchange, the last
reported sale price on such day, or if there is no such last reported sale price
on such day, the average of the closing bid and the asked prices on such day,
as reported by a reputable quotation source designated by the Company, or (C)
if neither clause (A) nor (B) is applicable, the average of the reported high
bid and low asked prices on such day, as reported by a reputable quotation
service, or a newspaper of general circulation in the Borough of Manhattan, City
of New York, customarily published on each Business Day, designated by the
Company. If there are no such prices on a Business Day, then the market price
shall not be determinable for such Business Day.
"Independent Financial Expert" shall mean (a) NatWest (or any
successor) or (b) another nationally recognized investment banking firm, a
nationally recognized regional investment banking firm or a nationally
recognized accounting firm selected by the Company reasonably acceptable to the
Warrant Agent (i) that does not (and whose directors, officers, employees and
Affiliates do not) have a direct or indirect material financial interest in the
Company or the Partnership, (ii) that has not been, and, at the time it is
called upon to serve as an Independent Financial Expert under this Agreement is
not (and none of whose directors, officers, employees or Affiliates is) a
promoter, director or officer of the Company, (iii) that has not been retained
by the Company or the Partnership for any purpose, other than to perform an
equity valuation, within the preceding twelve months, and (iv) that, in the
reasonable judgment of the Board of Directors of the Company (certified by a
board resolution), is otherwise qualified to serve as an independent financial
advisor. Any such person may receive customary compensation and indemnification
by the Company for opinions or services it provides as an Independent Financial
Expert.
"Affiliate" shall mean, with respect to any person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such person. For the purposes of this definition,
"control" when used with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Extraordinary Cash Dividend" means cash dividends with
respect to the Common Stock the aggregate amount of which in any fiscal year
exceeds the lesser of (i) 15% of the net income of the Company for the fiscal
year immediately preceding the payment of such dividend or (ii) $1,000,000.
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<PAGE> 16
(f) When De Minimis Adjustment May Be Deferred. No adjustment
in the Exercise Rate need be made unless the adjustment would require an
increase or decrease of at least .5% in the Exercise Rate. Notwithstanding the
foregoing, any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment, provided that no such adjustment
shall be deferred beyond the date on which a Warrant is exercised. All
calculations under this Section 12 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be.
(g) When No Adjustment Required. If an adjustment is made upon
the establishment of a record date for a distribution subject to Subsections
12(a), 12(b) or 12(c) hereof and such distribution is subsequently cancelled,
the Exercise Rate then in effect shall be readjusted, effective as of the date
when the Board of Directors determines to cancel such distribution, to that
which would have been in effect if such record date had not been fixed. To the
extent the Warrants become convertible into cash, no adjustment need be made
thereafter as to the amount of cash into which such Warrants are exercisable.
Interest will not accrue on the cash.
(h) Notice of Adjustment. Whenever the Exercise Rate or
Exercise Price is adjusted, the Company shall provide the notices required by
Section 14 hereof.
(i) Voluntary Reduction. The Company from time to time may
increase the Exercise Rate by any amount for any period of time (including,
without limitation, permanently) if the period is at least 20 Business Days. An
increase of the Exercise Rate under this Subsection (i) (other than a permanent
increase) does not change or adjust the Exercise Rate otherwise in effect for
purposes of Subsections 12(a), 12(b) or 12(c).
(j) When Issuance or Payment May Be Deferred. In any case in
which this Section 12 shall require that an adjustment in the Exercise Rate be
made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event (i) issuing to the Holder of any
Warrant exercised after such record date the Warrant Shares and other capital
stock of the Company, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Rate prior to such adjustment, and
(ii) paying to such Holder any amount in cash in lieu of a fractional share
pursuant to Section 13; provided, however, that the Company shall deliver to the
Warrant Agent and shall cause the Warrant Agent, on behalf of and at the expense
of the Company, to deliver to such Holder a due bill or other appropriate
instrument evidencing such Holder's right to receive such additional Warrant
Shares, other capital stock and cash upon the occurrence of the event requiring
such adjustment.
(k) Reorganizations. In cash of any capital reorganization,
other than the cases referred to in Subsections 12(a), 12(b), 12(c) or 12(d), or
the consolidation or merger of the Company with or into another corporation
(other than a merger or consolidation in which the Company is the continuing
corporation and which does not result in any reclassification of the outstanding
shares of Common Stock into shares of other stock or other securities or
property), or the sale of the property of the Company as an entirety or
substantially as an entirety (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a duly adopted resolution
certified
15
<PAGE> 17
by the Company's Secretary or Assistant Secretary, shall be made in the
application of the provisions herein set forth with respect to the rights and
interests of Holders so that the provisions set forth herein shall thereafter be
applicable, as nearly as possible, in relation to any shares or other property
thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless
prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation purchasing or leasing such assets or other appropriate
corporation or entity shall expressly assume, by a supplemental Warrant
Agreement or other acknowledgment executed and delivered to the Warrant Agent,
the obligation to deliver to the Warrant Agent and to cause the Warrant Agent to
deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase, and all other obligations and liabilities under this Agreement.
The foregoing provisions of this Subsection 12(k) shall apply
to successive Reorganization transactions.
(l) Form of Warrants. Irrespective of any adjustments in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
(m) Miscellaneous. For purposes of this Section 12, the term
"Fully Diluted Shares" shall mean (i) the shares of Common Stock outstanding as
of a specified date, and (ii) shares of Common Stock into or for which rights,
options, warrants or other securities outstanding as of such date are
exercisable or convertible (other than the Warrants). In the event that at any
time, as a result of an adjustment made pursuant to this Section 12, the Holders
of Warrants shall become entitled to purchase any securities of the Company
other than, or in addition to, shares of Common Stock, thereafter the number or
amount of such other securities so purchasable upon exercise of each Warrant
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in Subsections 12(a) through 12(l) inclusive, and the
provisions of Sections 7, 8, 10 and 13 with respect to the Warrant Shares or the
Common Stock shall apply on like terms to any such other securities.
SECTION 13. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. The number of full
Warrant Shares which shall be issuable upon the exercise of a Warrant shall be
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of the Warrant so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 13, be issuable on the exercise of any
Warrant, the Company shall pay an amount in cash equal to the Current Market
Value on the day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction.
SECTION 14. Notices to Warrant Holders. Upon any adjustment pursuant to
Section 12 hereof, the Company shall give prompt written notice of such
adjustment to the Warrant Agent and shall cause the Warrant Agent, on behalf of
an at the expense of the Company, within 10 days after such adjustment, to mail
by first class mail, postage prepaid, to each Holder a notice of such
adjustment(s) and shall deliver to the Warrant Agent a certificate of the Chief
Financial Officer of the Company, accompanied by the report thereon by a firm of
independent public accountants selected by the Board of Directors of the Company
(who may be the regular accountants for the Company), setting forth in
reasonable detail
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<PAGE> 18
(i) the number of Warrant Shares purchasable upon the exercise of each Warrant
and the Exercise Price of such Warrant after such adjustment(s), (ii) a brief
statement of the facts requiring such adjustment(s) and (iii) the computation by
which such adjustment(s) was made. Where appropriate, such notice may be given
in advance and included as a part of the notice required under the other
provisions of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets; or
(c) of any consolidation or merger to which the Company is a
part and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action that would require
an adjustment to the Exercise Rate or the Exercise Price pursuant to
Section 12;
then the Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each of the registered holders of the Warrant Certificates at his or its
address appearing on the Warrant register, at least 30 days (or 20 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, a written notice
stating (i) the day as of which the holders of record of shares of Common Stock
to be entitled to receive any rights, options, warrants or distribution are to
be determined, or (ii) the initial expiration date set forth in any tender offer
or exchange offer for shares of Common Stock, or (iii) the date on which any
such consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company or
the Warrant Agent to give such notice or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up, or the
vote upon any action.
The Company shall give prompt written notice to the Warrant Agent and
shall cause the Warrant Agent, on behalf of and at the expense of the Company to
give to each Holder written notice of any determination to make a distribution
to the holders of its Common Stock of any cash dividends, assets, debt
securities, preferred stock, or any rights or warrants to purchase debt
securities, preferred stock,
17
<PAGE> 19
assets or other securities (other than Common Stock, or rights, options, or
warrants to purchase Common Stock) of the Company, which notice shall state the
nature and amount of such planned dividend or distribution and the record date
therefor, and shall be received by the Holders at least 30 days prior to such
record date therefor.
Nothing contained in this Agreement or in any Warrant Certificate shall
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as shareholders in respect of the meetings of shareholders or
the election of Directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
SECTION 15. Notices to the Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by any Holder to or on the Company shall be sufficiently given or made when
received at the office of the Company expressly designated by the Company as its
office for purposes of this Agreement (until the Warrant Agent is otherwise
notified in accordance with this Section 15 by the Company), as follows:
RAS Warrant Co.
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
Any notice pursuant to this Agreement to be given by the Company or by
any Holder(s) to the Warrant Agent shall be sufficiently given when received by
the Warrant Agent at the address appearing below (until the Company is otherwise
notified in accordance with this Section 15 by the Warrant Agent).
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Facsimile: (212) 852-1626
SECTION 16. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrants in order to cure any ambiguity or to correct
or supplement any provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the Warrant Agent
may deem necessary or desirable and which shall not in any way adversely affect
the interests of any holder of Warrants.
SECTION 17. Concerning the Warrant Agent. The Warrant Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the Holders, by their acceptance
of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant
Certificate shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or any action taken by it. The Warrant Agent assumes
no responsibility with respect to the distribution of the Warrants except as
herein otherwise provided.
18
<PAGE> 20
(b) The Warrant Agent shall not be responsible for and shall
incur no liability to the Company or any Holder for any failure of the Company
to comply with the covenants contained in this Agreement or in the Warrants to
be complied with by the Company.
(c) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
(through its employees), by or through its attorneys or agents (which shall not
include its employees) and shall not be responsible for the negligence or
misconduct of any agent appointed with due care.
(d) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be counsel for the Company), and the Warrant
Agent shall incur no liability or responsibility to the Company or to any Holder
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinion or the advice of such counsel.
(e) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless such evidence in respect
thereof be herein specifically prescribed) may be deemed conclusively to be
proved and established by a certificate signed by the President, one of the Vice
Presidents, or the Secretary of the Company and delivered to the Warrant Agent;
and such certificate shall be full authorization to the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the performance
of its duties under this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the performance of its duties under this
Agreement (including, without limitation, reasonable fees and expenses of
counsel), and to indemnify the Warrant Agent and its agents, employees,
directors, officers and affiliates and save it and them harmless against any and
all liabilities, losses and expenses, including, without limitation, judgments,
costs and counsel fees, for anything done or omitted by the Warrant Agent in the
performance of its duties under this Agreement, except as a result of the
Warrant Agent's negligence or bad faith.
(g) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more Holders shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable benefit
of the Holders, as their respective rights or interests may appear.
(h) The Warrant Agent and any stockholder, director, officer
or employee ("Related Parties") of the Warrant Agent may buy, sell or deal in
any of the Warrants or other securities of the Company or become pecuniarily
interested in any transactions in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not
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<PAGE> 21
Warrant Agent under this Agreement or such director, officer or employee.
Nothing herein shall preclude the Warrant Agent or any Related Party from acting
in any other capacity for the Company or for any other legal entity including,
without limitation, acting as Transfer Agent or as a lender to the Company or an
affiliate thereof
(i) The Warrant Agent shall act hereunder solely as agent, and
its duties shall be determined solely by the provisions thereof. The Warrant
Agent shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own negligence or bad faith.
(j) The Warrant Agent will not incur any liability or
responsibility to the Company or to any Holder for any action taken in reliance
on any notice, resolution, waiver, consent, order, certificate or other paper,
document or instrument reasonably believed by it to be genuine and to have been
signed, sent or presented by the property party or parties.
(k) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant (except its countersignature thereof); nor
shall the Warrant Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Warrant
Shares (or other stock) to be issued pursuant to this Agreement or any Warrant,
or as to whether any Warrant Shares (or other stock) will, when issued, be
validly issued, fully paid and nonassessable, or as to the Exercise Price or the
number or amount of Warrant Shares or other securities or other property
issuable upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the President, any Vice President or the Secretary of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
shall not be liable for any action taken or suffered to be taken by it in good
faith and without negligence in accordance with instructions of any such officer
or officers.
SECTION 18. Change of Warrant Agent. The Warrant Agent may resign and
be discharged from its duties under this Agreement by giving to the Company 30
days' notice in writing. The Warrant Agent may be removed by like notice to the
Warrant Agent from the Company. If the Warrant Agent shall resign or be removed
or shall otherwise be incapable of acting, the Company shall appoint a successor
to the Warrant Agent. If the Company shall fail to make such appointment within
a period of 30 days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Warrant
Agent or by any Holder (who shall with such notice submit his Warrant for
inspection by the Company), then any Holder may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to the Warrant Agent, either by the Company or by
such court, the duties of the Warrant Agent shall be carried out by the Company.
Any successor warrant agent, whether appointed by the Company or such a court,
shall be a bank or trust company in good standing, incorporated under the laws
of the United States of America or any State thereof or the District of Columbia
and having at the time of its appointment as warrant agent a combined capital
and surplus of at least $50,000,000. After appointment, the successor warrant
agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Warrant Agent without further act or deed;
but the former Warrant Agent shall deliver and transfer to the successor warrant
agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for such purpose. Failure
to file any notice provided for in this Section 18, however, or any defect
20
<PAGE> 22
therein, shall not affect the legality or validity of the resignation or removal
of the Warrant Agent or the appointment of the successor warrant agent, as the
case may be. In the event of such resignation or removal, the Company or the
successor warrant agent shall mail by first class mail, postage prepaid, to each
Holder, written notice of such removal or resignation and the name and address
of such successor warrant agent.
SECTION 19. Identify of Transfer Agent. Forthwith upon the appointment
of any Transfer Agent for the Common Stock, or any other shares of the Company's
capital stock issuable upon the exercise of the Warrants, the Company shall file
with the Warrant Agent a statement setting forth the name and address of such
Transfer Agent.
SECTION 20. Successors. All the covenants and provisions of this
Agreement by and for the benefit of the Company, the Warrant Agent or any holder
of Warrants shall bind and inure to the benefit of their respective successors
and assigns hereunder.
SECTION 21. Termination. This Agreement shall terminate on the
Expiration Date. Notwithstanding the foregoing, this Agreement will terminate on
any earlier date if all Warrants have been exercised or redeemed pursuant to
this Agreement.
SECTION 22. Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and shall be governed by and construed in accordance with the
laws of said State, without regard to the conflict of law rules thereof.
SECTION 23. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered holders of the Warrant Certificates.
SECTION 24. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 25. Undertakings of SCGC. Seven Circle Gaming Corporation, a
Delaware corporation, as the initial sole shareholder of the Company, hereby
undertakes to cause the Company to perform all of its duties and obligations
under this Agreement and to maintain its corporate existence by causing the
Company to take all necessary actions in furtherance thereof, including without
limitation, causing shareholder and directors actions to be taken as
appropriate.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK AND IS FOLLOWED BY A
SINGLE SIGNATURE PAGE.]
21
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and Year first above written.
RAS WARRANT CO.
By: /s/ Brian McMullan
Name: BRIAN MCMULLAN
Title: PRESIDENT
UNITED STATES TRUST COMPANY OF
NEW YORK, as Warrant Agent
By: /s/ Louis P. Young
Name: LOUIS P. YOUNG
Title: VICE PRESIDENT
JOINDER:
SEVEN CIRCLE GAMING CORPORATION
By: /s/ Brian McMullan
Name: BRIAN MCMULLAN
Title: PRESIDENT
22
<PAGE> 24
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY
NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL
INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER"(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"(AS DEFINED IN RULE
501(a)(1), (2),(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON, IS NOT
ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT
WITH RESPECT TO SUCH TRANSFER, ON THE DATE OF THE TRANSFER OF THIS SECURITY
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO RAS WARRANT CO. (THE
"ISSUER") OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QIB IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT), AND IF SUCH TRANSFER IS
IN RESPECT OF AN AGGREGATE AMOUNT OF SECURITIES AT THE TIME OF TRANSFER OF LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE, BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER), (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL ACCEPTABLE
TO THE ISSUER) AND IN EACH CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
<PAGE> 25
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A
PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER OF THIS
SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
COMMENCING WITH THE DATE THE COMPANY IS REGISTERED AS A HOLDING COMPANY
AND LICENSED AS A LIMITED PARTNER OF THE PARTNERSHIP BY THE NEVADA GAMING
COMMISSION, AND THEREAFTER UNTIL THE COMPANY HAS BEEN REGISTERED AS A REGISTERED
COMPANY AND GRANTED THE EXEMPTIONS BY THE NEVADA GAMING COMMISSION, THE SALE,
ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER DISPOSITION OF THIS SECURITY IS VOID
UNLESS APPROVED IN ADVANCE BY THE NEVADA GAMING COMMISSION. IF AT ANY TIME THE
NEVADA GAMING COMMISSION FINDS THAT AN OWNER OF THIS SECURITY IS UNSUITABLE TO
CONTINUE TO HAVE AN INVOLVEMENT IN GAMING IN NEVADA, SUCH OWNER MUST DISPOSE OF
SUCH SECURITY AS PROVIDED BY THE LAWS OF THE STATE OF NEVADA AND THE REGULATIONS
OF THE NEVADA GAMING COMMISSION THEREUNDER. SUCH LAWS AND REGULATIONS RESTRICT
THE RIGHT UNDER CERTAIN CIRCUMSTANCES: (A) TO PAY OR RECEIVE ANY DIVIDEND OR
INTEREST UPON ANY SUCH SECURITY, (B) TO EXERCISE, DIRECTLY OR THROUGH ANY
TRUSTEE OR NOMINEE, ANY VOTING RIGHT CONFERRED BY SUCH SECURITY, OR (C) TO
RECEIVE ANY REMUNERATION IN ANY FORM FROM THE COMPANY, FOR SERVICES RENDERED OR
OTHERWISE.
2
<PAGE> 26
EXERCISABLE ON OR AFTER THE DATE OF ISSUANCE
AND ON OR BEFORE DECEMBER 15, 2007
No. ___________
Warrant
CUSIP No.:
Warrant Certificate
RAS Warrant Co.
This Warrant Certificate certifies that , or registered
assigns, is the registered holder of one Warrant expiring December 15, 2007 (the
"Warrant") to purchase shares of common stock, no par value (the "Common
Stock"), of RAS Warrant Co., a Nevada corporation (the "Company"). The Warrant
initially entitles the holder upon exercise to receive from the Company on or
after the date hereof and on or before 5:00 p.m. New York City Time on December
15, 2007, one fully paid and nonassessable share of Common Stock (each a
"Warrant Share") at the initial exercise price (the "Exercise Price") of $.01
payable in lawful money of the United States of America upon surrender of this
Warrant Certificate and payment of the Exercise Price at the office or agency of
the Warrant Agent, but only subject to the conditions set forth herein and in
the Warrant Agreement referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
The Warrant may not be exercised after 5:00 p.m., New York City Time,
on December 15, 2007, and to the extent not exercised by such time the Warrant
shall become void.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of New York.
3
<PAGE> 27
IN WITNESS WHEREOF, RAS Warrant Co. has caused this Warrant Certificate
to be signed by its President and by its Vice President.
Dated:
RAS WARRANT CO.
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
Countersigned:
United States Trust Company of New York,
as Warrant Agent
By:
-----------------------------------------
Authorized Signature
4
<PAGE> 28
[Form of Warrant Certificate]
[Reverse]
The Warrant evidenced by this Warrant Certificate is part of a duly
authorized issue of Warrants expiring December 15, 2007, entitling the holders
on exercise to receive shares of voting Common Stock of the Company, and is
issued or to be issued pursuant to a Warrant Agreement dated as of December 30,
1997 (the "Warrant Agreement"), duly executed and delivered by the United States
Trust Company of New York, a banking corporation organized and existing under
the laws of the State of New York, as Warrant agent (the "Warrant Agent"). The
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
The Warrant may be exercised at any time on or after the date hereof
and on or before December 15, 2007, subject to extension as provided in the
Warrant Agreement. The holder of the Warrant evidenced by this Warrant
Certificate may exercise it by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price in cash at the office of the Warrant
Agent. The Warrant evidenced hereby shall be exercisable only in full, and not
in part. No adjustment shall be made for any dividends on any shares of Common
Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrants set forth on the face hereof may, subject to
certain conditions, be adjusted. No fractions of a share of Common Stock will be
issued upon the exercise of any Warrant, but the Company will pay the cash value
thereof determined as provided in the Warrant Agreement.
5
<PAGE> 29
This Warrant Certificate, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate Warrants to purchase the aggregate number of
shares of Common Stock to which the surrendered Warrant was entitled.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and representing in the aggregate the right
to purchase a like number of shares of Common Stock shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
6
<PAGE> 30
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____ shares of Common Stock
and herewith tenders payment for such shares to the order of RAS Warrant Co. in
the amount of $_____ in accordance with the terms hereof. The undersigned
requests that a certificate for such shares be registered in the name of
__________, whose address is __________ and that such shares be delivered to
__________, whose address is __________.
Signature:
Date:
Signature Guarantee:
__________________________
(Signatures must be guarantee by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements will include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
7
<PAGE> 31
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to purchase
Common Stock (the "Securities"), of
RAS Warrant Co.
This Certificate relates to __________ Securities held in the form of
Physical Warrants by __________ (the "Transferor").
The Transferor:*
/ / has requested that the Warrant Agent by written order to exchange
or register the transfer of a Physical Warrant or Physical Warrants.
/ / In connection with such request and in request of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Warrant Agreement relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 6 of such Warrant
Agreement, and that the transfer of these Securities does not require
registration under the Securities Act of 1933, as amended (the "Act") because*:
/ / Such Security is being acquired for the Transferor's own account,
without transfer.
/ / Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act.
/ / Such Security is being transferred in reliance on Regulation S
under the Act.
/ / Such Security is being transferred in reliance on Rule 144 under
the Act.
<PAGE> 32
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
___________________________________
(INSERT NAME OF TRANSFEROR)
By:________________________________
(Authorized Signature)
Date:
___________________________________
*Check applicable box.
<PAGE> 33
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
[Date]
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
Re: RAS Warrant Co. (the "Company") Warrants to purchase
Common Stock (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of Securities of the Company,
we confirm that:
1. We have received such information as we deem necessary in order to
make our investment decision.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Warrant
Agreement and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Securities, we will do so only (A) to the
Company or any subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) inside the United States to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to the Warrant Agent a signed
letter substantially in the form hereof, (D) outside the United States in
accordance with Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available), or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
<PAGE> 34
4. We understand that, on any proposed resale of Securities, we will be
required to furnish the Warrant Agent and the Company, such certification, legal
opinions and other information as the Warrant Agent and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
(Name of Transferor)
By: _______________________________
(Authorized Signatory)
<PAGE> 35
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
[Date]
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
Re: RAS Warrant Co. (the "Company") Warrants to purchase
Common Stock (the "Securities")
Dear Sirs:
In connection with our proposed purchase of of the
Securities, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) neither (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither we nor any person acting on
our behalf knows that the transaction has been prearranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
<PAGE> 36
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby. Defined terms used herein without definition have
the respective meanings provided in Regulation S.
Very truly yours,
(Name of Transferor)
By:________________________________
(Authorized Signatory)
<PAGE> 1
EXHIBIT 4.6
DISBURSEMENT AGREEMENT
DISBURSEMENT AGREEMENT (this "Agreement"), dated as of
December 30, 1997, among THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP (the
"Partnership"), THE RESORT AT SUMMERLIN, INC. ("Summerlin, Inc." and together
with the Partnership, the "Borrowers"), UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee (the "Trustee") on behalf of the holders of the Subordinated Notes
referred to below, THE RESORT AT SUMMERLIN, INC., as representative (the
"Representative") of the Partners referred to below, NATIONAL WESTMINSTER BANK
PLC, as Administrative Agent (the "Administrative Agent") under the Credit
Agreement hereinafter defined, FIRST SECURITY TRUST COMPANY OF NEVADA as the
Account Agent under the Mortgage Notes Proceeds Agreement referred to below (the
"MNPA Agent"), FIRST SECURITY TRUST COMPANY OF NEVADA as the Account Agent under
the Subordinated Notes Proceeds Agreement referred to below (the "SNPA Agent"),
FIRST SECURITY TRUST COMPANY OF NEVADA as the Account Agent under the
Partnership Funds Agreement referred to below (the "PFA Agent" and together with
the MNPA Agent and the SNPA Agent, the "Account Agents") and FIRST SECURITY
TRUST COMPANY OF NEVADA as Disbursement Agent (the "Disbursement Agent"). Except
as otherwise defined herein, terms used herein and defined in the Credit
Agreement shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrowers, the lenders (the "Lenders") from time
to time party thereto, Gleacher Natwest, Inc., as Arranging Agent, and the
Administrative Agent have entered into a Credit Agreement, dated as of December
30, 1997, providing for the making of loans as contemplated therein (as modified
or restated and in effect from time to time, the "Credit Agreement);
WHEREAS, all of the proceeds of Construction Loans made under
the Credit Agreement are to be directly deposited in the Mortgage Notes Proceeds
Account established pursuant to the Mortgage Notes Proceeds Agreement, prior to
any disbursement of such amounts to finance Project Costs;
WHEREAS, the Borrowers will issue 13% Senior Subordinated PIK
Notes (the "Subordinated Notes") in an aggregate principal amount of
$100,000,000 on the Closing Date;
<PAGE> 2
WHEREAS, all of the net proceeds of the Subordinated Notes are
to be directly deposited in the Subordinated Notes Proceeds Account established
pursuant to the Subordinated Notes Proceeds Agreement on the Closing Date, prior
to any disbursement of such amounts to finance Project Costs;
WHEREAS, the Partners will, on the Closing Date, deposit
$39,700,152 in immediately available funds in the Partnership Funds Account
established pursuant to the Partnership Funds Agreement to be available to
finance Project Costs and additional funds may thereafter be deposited in such
Account as provided for in the Partnership Funds Agreement;
WHEREAS, subject to and on the terms and conditions specified
in this Agreement the amounts on deposit in the Proceeds Accounts are to be
transferred to the Disbursement Account referred to below to finance Project
Costs when required;
WHEREAS, the amounts in the Proceeds Accounts that are
transferred to the Disbursement Account may be disbursed to or as directed by
the Borrowers (acting jointly through an Authorized Officer of the General
Partner), in each case from time to time upon the satisfaction of the applicable
conditions set forth in this Agreement;
NOW, THEREFORE, it is agreed:
SECTION 1. ESTABLISHMENT OF THE DISBURSEMENT ACCOUNT.
1.01 Establishment of Disbursement Account. The Disbursement
Agent has established in its own name for the benefit of the Lenders an account
(Account No. 702254) (the "Disbursement Account") for purposes of this
Agreement, which Disbursement Account is maintained at the Disbursement Agent's
office located at Las Vegas, Nevada (Wire transfers: First Security Bank of
Nevada, ABA 1224 01668). Subject to the provisions of this Agreement, the
Disbursement Account shall be under the sole dominion and control of the
Disbursement Agent and, except as expressly set forth in this Agreement, the
Disbursement Agent shall have the sole right to cause transfers to be made to,
and/or to make withdrawals from, the Disbursement Account and to exercise all
rights with respect to the Collateral (as defined below) from time to time
therein.
(b) The Disbursement Account will be utilized solely for the
purposes of (x) receiving all transfers ("Transfers") from the Proceeds Accounts
of funds to be disbursed to finance Project Costs and (y) funding disbursements
to finance Project Costs ("Disbursements").
1.02. Investment of Funds Deposited in the Bank Disbursement
Account. So long as any amounts remain in the Disbursement Account, the
-2-
<PAGE> 3
Disbursement Agent will from time to time, at the request of the General
Partner, invest funds on deposit in the Disbursement Account in Cash
Equivalents. All investments made pursuant to this Section 1.02 (and any
instruments evidencing same), and all proceeds thereof, shall be held in the
Disbursement Account as part of the Collateral. All such investments shall be
made in the name of the Disbursement Agent. All risk of loss in respect of
investments made pursuant to this section shall be on the Borrowers.
SECTION 2. PROCEDURES FOR TRANSFERS.
2.01. Transfers. All Transfers will be made from the
respective Proceeds Accounts, in the order provided below, to the Disbursement
Account on each Transfer Date (as defined below) upon receipt by the respective
Account Agent or Agents of written notice (or telephonic notice confirmed in
writing) (together with any notice given by the Disbursement Agent pursuant to
Section 2.05(b) or 2.08, each a "Transfer Notice") from the Disbursement Agent
specifying (x) that the Disbursement Agent has received a disbursement request
(as more fully described below, a "Disbursement Request") executed by an
Authorized Officer of the General Partner satisfying the requirements of Section
2.04 hereof in respect of such Transfer Date and (y) the total aggregate amount
of funds requested pursuant to such Disbursement Request (the "Requested
Amount") and the portion (each an "Account Agent's Portion"), if any, of the
Requested Amount to be transferred from the Proceeds Account held by the
respective Account Agent (i.e., the Requested Amount less the aggregate Account
Agent's Portions for those Account Agents, if any, that, under Section 2.02,
fund such Transfer prior to the respective Account Agent). On each Transfer Date
on which it has received a Transfer Notice, each Account Agent, in the order
specified in Section 2.02, will make a Transfer from its Proceeds Account to the
Disbursement Account equal to its Account Agent's Portion for such Transfer Date
(or, if less, the total amount on deposit in its Proceeds Account).
2.02. Funding Order. All Transfers shall be funded in the
following sequence: (i) first, from the Partnership Funds Account until
exhausted, (ii) second, from the Subordinated Notes Proceeds Account until
exhausted and (iii) third, from the Mortgage Notes Proceeds Account until
exhausted.
2.03. Procedures for Transfers. All Transfers shall be made
only for the purpose of paying Project Costs on a Line Item by Line Item basis
as specified in the Budget. In no event shall the Disbursement Agent be
obligated to request Transfers and/or make Disbursements for any Line Item of
Project Costs in an amount greater than the amount set forth for such Line Item
in the Budget as then in effect, provided that if a Noticed Event of Default (as
defined below) occurs and is continuing the Administrative Agent, acting at the
direction of the Required Lenders, may unilaterally modify the Budget by
increasing or decreasing existing Line Items and/or adding or subtracting Line
Items. The Disbursement Agent shall have no obligation to request any Transfer
or make any Disbursement
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<PAGE> 4
unless all the conditions precedent contained in Section 2.06 are satisfied,
provided, that any such condition may be waived with the consent of the
Administrative Agent, [and, to the extent funds in the Subordinated Notes
Proceeds Account are to be transferred, the Trustee], it being agreed that any
such waiver shall not constitute a waiver of such conditions in respect of
future Transfers and/or Disbursements. In addition, any failure of the
Disbursement Agent to insist upon strict compliance with such conditions shall
not preclude the Disbursement Agent from thereafter insisting on such strict
compliance. Transfers will only be made on the 3rd day of a month (to the extent
occurring prior to the Completion Deadline) and on the Last Drawdown Date (each
such date a "Transfer Date"). Disbursements will only be made to finance Project
Costs when due provided that any amount that remains on deposit in the
Disbursement Account on the 30th day following the Commencement Date will be
returned to the Mortgage Note Proceeds Account unless waived by the
Administrative Agent, in which event such amount will be available to be
thereafter withdrawn from the Disbursement Account and used by the Partnership
for working capital purposes. Transfers and Disbursements will not be made in
respect of any Line Item constituting an unfunded reserve or working capital
earlier than ten Business Days prior to the Commencement Date. To the extent
required to make any Disbursement authorized by this Agreement, the Disbursement
Agent shall, and is hereby authorized to, liquidate Cash Equivalents on deposit
in the Disbursement Account pursuant to its customary practices for liquidating
such securities.
2.04 Disbursement Requests. (a) Each Disbursement Request
shall be in the form of Annex A attached hereto, shall be submitted at least
three Business Days prior to the related Transfer Date, and shall constitute a
representation by the Borrowers to the Disbursement Agent that (i) the work as
described in the Construction Contract (the "Work") for which payment is to be
made from the proceeds of the Transfer has been completed in full compliance
with the Plans and Specifications, and is due to the General Manager or such
other Person as of the date of such Transfer or will be due in the reasonable
judgment of the Borrowers to any of such Persons within 30 days after such
Transfer (with the maximum portion of any Transfer to be used to finance such
future Project Costs not to exceed $3,000,000 in the aggregate unless otherwise
agreed by the Administrative Agent), and (ii) all of the conditions precedent
set forth in this Agreement for the making of such Transfer have been satisfied.
The requesting or making of any Transfer and/or Disbursement by the Disbursement
Agent and/or any Account Agent shall not be deemed an approval or acceptance by
the Disbursement Agent or any Account Agent of any work performed, materials
delivered or of the fabrication of any system or component of the Project.
(b) Disbursements of funds in the Disbursement Account will
only be made for the purposes for which such funds were transferred from the
Proceeds Accounts as specified in the respective Disbursement Request or, if
future Project Costs funded by a Transfer are not actually made when
anticipated, to pay amounts due under the Construction Contract on the next
Transfer Date. Neither
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<PAGE> 5
the Disbursement Agent nor any Account Agent shall have any liability whatsoever
to any Lender, the Trustee, any holder of Subordinated Notes or any other Person
as a result of any Transfer or Disbursement made following the receipt from the
General Partner of a Disbursement Request satisfactory to the Consultant
regardless of any subsequent determination that one or more of the conditions
specified herein to such Transfer or Disbursement were not satisfied.
2.05 Special Transfers. The Disbursement Agent shall have no
obligation to request a Transfer or make a Disbursement to finance materials not
yet incorporated into the Project unless one of the two following provisions is
satisfied:
(i) with respect to building materials and/or components or systems
which have been completed and are not otherwise subject to paragraph (ii) of
this Section 2.05(a), (A) such materials are stored in a secured area and are
protected from theft, vandalism and weather conditions to the reasonable
satisfaction of the Consultant, (B) the Borrowers shall have provided evidence
satisfactory to the Consultant that such materials are owned by the Partnership
and are insured as required by the Credit Agreement, (C) the Borrowers shall
have furnished to the Disbursement Agent a certified detailed inventory of such
stored materials and (D) such stored materials shall be subject to a perfected,
continuing first security interest in favor of the Collateral Agent for the
benefit of the Lenders; and
(ii) with respect to progress payments to a supplier of components or
systems to be used in the Project (A) the Disbursement Agent shall be furnished
with a copy of the purchase order or contract covering such component or system
(and all amendments thereto or modifications thereof), (B) the Partnership's
rights under such purchase orders or contracts shall be subject to a security
interest in favor of the Collateral agent for the benefit of the Lenders and (C)
the Borrowers shall have provided evidence satisfactory to the Consultant that
such components or systems are owned by the Partnership and are insured as
required by the Credit Agreement.
(b) Provided no Event of Default has occurred and is
continuing, the Administrative Agent shall have the right, on any day prior to
the Commencement Date on which interest is payable on the Construction Loans and
all such interest has not been paid by the Borrowers to request in writing that
the Disbursement Agent make a Disbursement, and the Disbursement Agent will make
such Disbursement, from the Disbursement Account in the amount of interest not
so paid to be paid to the Administrative Agent to be applied to such unpaid
interest. To the extent sufficient funds are not on deposit in the Disbursement
Account, the Disbursement Agent will request in writing a Transfer be made on
such date in the amount of the interest shortfall and the respective Account
Agents agree to make any such Transfer, in the order provided in Section 2.02,
to the Disbursement Account to be used to make a Disbursement to fund such
interest shortfall not withstanding whether such date is a Transfer Date.
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<PAGE> 6
2.06 Conditions Precedent. (A) The Disbursement Agent and
Account Agents shall not be obligated to request or make any Transfer and/or to
make any Disbursement unless each of the following conditions shall have been
satisfied:
(I) Accuracy of Representations. All of the representations
and warranties in the Credit Agreement and in the relevant Budget Request shall
be true and correct in all material respects on and as of the date of such
Transfer or Disbursement with the same effect as if made on such date, it being
agreed that the conditions specified in this clause (I) and the following clause
(II) shall be deemed satisfied on the date of each Transfer or Disbursement
unless the Disbursement Agent has received a written notice from the
Administrative Agent or the Required Lenders stating that either or both such
conditions are no longer satisfied.
(II) No Event of Default. No Default or Event of Default shall
have occurred and be continuing on the date of such Transfer or Disbursement.
(III) Required Documentation. The Disbursement Agent shall
have received the following in connection with each Transfer:
(a) a Disbursement Request that is satisfactory to
the Consultant (with the Consultant indicating its satisfaction in
writing);
(b) a written title continuation report and an
endorsement to the Title Policy, in each case satisfactory to the
Collateral Agent indicating that since the preceding Transfer there has
been no change in the state of title (other than Permitted Liens and
such other changes approved by the Collateral Agent), regardless of
whether any such change may affect the priority of the Lien of the
Mortgage, which endorsement shall have the effect of increasing the
coverage of the Title Policy by an amount equal to the Transfer then
being made if such policy (x) does not by its terms provide for such an
increase or (y) has not already been increased to reflect the amount so
transferred;
(c) advice, in each case satisfactory to the
Collateral Agent, from the Title Insurer that a search of the
recorder's office and the [Secretary of State's] office that no leases
of personalty, financing statements or other security interests (other
than those created and perfected by the Credit Documents or otherwise
approved by the Collateral Agent) in any of the personal property
intended to be subjected to the Lien of the Mortgage have been filed
and/or recorded in favor of other parties;
(d) to the extent such information is not furnished
as part of a Disbursement Request, a certification from the General
Manager or the Architect, as appropriate, stating with respect to the
Construction Contract as of the date of such certification: (i) the
amount paid to date
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<PAGE> 7
and the amount owed, whether currently payable or not, as of the date
of the certification; (ii) that the General Manager has been paid in
full (except for any amounts retained by the Borrowers pursuant to the
Construction Contract) for all work and materials theretofore furnished
with respect to the Improvements and/or the Project to the extent such
payments are due (except for the amount to be paid to the General
Contractor out of such Transfer); and (iii) all previous Transfers that
were to be used to make payments to the General Manager were applied
and disbursed in accordance with the Disbursement Request therefor;
(e) waivers of Lien (if not already delivered) from
the Architect and the General Manager, covering all work, labor and
materials previously performed and delivered for which payment has been
made and acceptable to the Consultant;
(f) a complete executed copy of any construction
contracts and all amendments to the Construction Contract, in each case
which have been entered into by or on behalf of the Borrowers since the
preceding Transfer, all of which shall be satisfactory to the
Consultant; and
(g) such additional documentation, data or
information with respect to the Improvements and/or the Project, or in
support of the Disbursement Request, as the Consultant shall reasonably
request.
(B) The initial Transfer from the Subordinated Note Proceeds
Account and/or the Mortgage Notes Proceeds Account will not be made unless each
of the following conditions shall have been satisfied: (i) the Construction
Consultants Certificate referenced in section 4.01 in the Credit Agreement.
(C) The Disbursement Agent will not request a Transfer be made
on or after the Last Drawdown Date (or, if prior thereto, that would reduce the
sum of (i) the aggregate amount on deposit in the Mortgage Notes Proceeds
Account and (ii) the unutilized MN Commitments at such time to less than
$10,000,000), even if the Project shall have been completed, unless and until
each of the following conditions shall have been satisfied:
(a) Consultant's Report. The Disbursement Agent shall have
received advice from the Consultant to the effect that the Project has been
fully completed in accordance with the Plans and Specifications (including any
punch-list items), that all utilities serving the Project have been connected
and are operating and the Project is available for normal use and occupancy.
(b) Final Survey; "As-Built" Plans. The Disbursement Agent
shall have received (a) a final survey showing the completed Improvements, and
(b) final Plans and Specifications and as-built mechanical drawings of
underground site
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<PAGE> 8
work and of interior utility and other building systems, in each case
satisfactory to the Consultant.
(c) Certificates of Occupancy. The Disbursement Agent shall
have received a copy of final certificates of occupancy for all of the space in
the Project to the extent such final certificates of occupancy are a condition
to the lawful use and occupancy of such space in the Project.
2.07 Transfers After an Event of Default. After a Noticed
Event of Default shall have occurred and be continuing, the Disbursement Agent,
acting at the direction of the Administrative Agent will, without a Disbursement
Request having been made therefor, request in writing Transfers to be made (and
the Account Agents will comply with any such requests) whether or not on a
Transfer Date to fund Disbursements directly to the General Manager or any other
Person in payment for Project Costs (which Disbursements the Disbursement Agent
will make on receipt of such Transfers). The Borrowers hereby irrevocably
authorize the Disbursement Agent to make such requests, payments and
applications (and the funding of same by the Account Agents) and no further
authorizations from the Borrowers shall be necessary to permit such Transfers
and Disbursements, and all such Transfers and Disbursements shall be deemed to
have been made pursuant to this Agreement. The Disbursement Agent shall provide
the Borrowers with notice of any Transfer and Disbursement made pursuant to this
section promptly after its occurrence.
-8-
<PAGE> 9
SECTION 3. PLEDGE AND GRANT OF SECURITY INTEREST.
3.01 Pledge and Grant of Security Interest. As collateral
security to secure the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, each Borrower hereby
pledges and assigns to the Disbursement Agent, for the benefit of the Lenders, a
continuing possessory Lien and security interest in all of the right, title and
interest of such Borrower in and to the Disbursement Account, in all funds
deposited therein, in all investments from time to time therein, and in all cash
and non-cash proceeds of any of the foregoing (collectively, the "Collateral"),
from the date of the establishment of the Disbursement Account until the
termination thereof pursuant to the terms hereof. As used herein, "Obligations"
shall mean (i) the principal of and interest on the Loans made under the Credit
Agreement, (ii) all other obligations and indebtedness of each Borrower to the
Lenders now existing or hereafter incurred under, arising out of, or in
connection with the Credit Agreement and the other Credit Documents and the due
performance and compliance by each Borrower with all of the terms, conditions
and agreements contained in the Credit Agreement and the other Credit Documents,
(iii) any and all sums advanced by the Disbursement Agent in order to preserve
the Collateral or to preserve its security interest in the Collateral, (iv) in
the event of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of any Borrower referred to in clauses
(i), (ii) or (iii) above, after an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Disbursement Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs, and (v) all amounts paid by any
Indemnitee (as hereinafter defined) as to which such Indemnitee has the right to
reimbursement under Section 10 hereof.
SECTION 4. REMEDIES UPON A NOTICED EVENT OF DEFAULT;
APPLICATION OF PROCEEDS.
(a) If a Noticed Event of Default shall occur and be
continuing, if and to the extent directed to do so by the Administrative Agent
and notwithstanding any other provision of this Agreement, the Disbursement
Agent shall, subject to any mandatory requirements of applicable law (including
the Gaming Laws) (i) exercise in respect of all of the Collateral in addition to
other rights and remedies provided for herein or otherwise available to it under
applicable law, all of the rights and remedies of a secured party on default
under the Uniform Commercial Code then in effect in the State of New York or
Nevada, (ii) liquidate all Cash Equivalents pursuant to its customary practices
for liquidating such securities and/or (iii) withdraw the Collateral, if any,
from the Disbursement Account and pay the same to the Administrative Agent to be
applied pursuant to Section 7.4 of the Security Agreement executed by the
Partnership. A "Noticed Event of Default" shall mean (i) any Event of Default
arising under
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<PAGE> 10
Section 8.05 of the Credit Agreement with respect to a Borrower and (ii) any
other Event of Default that has been specified as a "Noticed Event of Default"
in a writing from the Administrative Agent to the Borrowers.
(b) It is understood that each of the Borrowers shall remain
jointly and severally liable to the extent of any deficiency between the amount
of the proceeds of the Collateral applied as provided in this Section 4 and the
aggregate amount of the Obligations.
SECTION 5. FURTHER ASSURANCES.
Each Borrower agrees that it will, at any time and from time
to time, at its expense, promptly execute and deliver all further agreements,
instruments and other documents and take all further action that may be
necessary or that the Disbursement Agent or the Administrative Agent may
reasonably request in order to perfect and protect the security interest
purported to be created hereby or otherwise to enable the Disbursement Agent to
exercise and enforce its rights and remedies hereunder.
SECTION 6. TRANSFERS AND OTHER LIENS.
Each Borrower agrees that it will not create or suffer to
exist any Lien upon or with respect to any Collateral except for the security
interest purported to be created hereby.
SECTION 7. ATTORNEY-IN-FACT.
Each Borrower hereby irrevocably appoints, which appointment
shall be coupled with an interest, the Disbursement Agent its attorneys-in-fact,
with full power and authority after the occurrence of and during the continuance
of an Event of Default, in the place and stead of such Borrower and in the name
of such Borrower or otherwise, from time to time in the Disbursement Agent's
discretion to execute any instrument and to take any other action which the
Disbursement Agent may deem necessary or advisable to accomplish the purposes of
this Agreement or to facilitate the assignment or other transfer by the
Disbursement Agent of any or all of its rights hereunder.
SECTION 8. PERFORMANCE BY THE DISBURSEMENT AGENT.
If any Borrower fails to perform any agreement or obligation
contained herein, the Disbursement Agent itself may perform or cause performance
of such agreement or obligation, and the expenses of the Disbursement Agent
incurred in connection therewith shall be payable to the Disbursement Agent by
the Borrowers.
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<PAGE> 11
SECTION 9. RESPONSIBILITY OF THE DISBURSEMENT AGENT AND
ADMINISTRATIVE AGENT.
(a) Neither the Disbursement Agent nor the Administrative
Agent nor any of their respective directors, officers, agents, employees,
affiliates, representatives and agents shall be liable for any failure to invest
or reinvest any cash in the Disbursement Account in accordance herewith or for
any losses incurred by reason of investments made by the Disbursement Agent
pursuant to Section 1.02 hereof. The Disbursement Agent and Administrative Agent
shall act hereunder on the same terms and conditions as are set forth in Annex B
hereto (i.e., Section 10 of the Credit Agreement) (which Annex B is incorporated
by reference herein with each reference therein to (x) "Agent" to include the
Disbursement Agent and Administrative Agent and (y) "Lenders" to include the
Lenders and the holders of the Subordinated Notes, and by accepting the benefits
hereof, each party hereto and each other beneficiary hereof (including all
holders of the Subordinated Notes and all Lenders) shall be deemed to have
agreed to such provisions as so incorporated, and shall hold the Collateral in
accordance with this Agreement and with only such obligations in respect thereof
as herein set forth.
(b) The Disbursement Agent acknowledges and agrees that (i)
all disbursements and releases made pursuant to this Agreement shall be made by
the Disbursement Agent irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, (ii) all
service charges and fees with respect to this Agreement or the Disbursement
Account shall be paid by the Borrowers, (iii) it irrevocably waives and
renounces any pledge, security interest (whether consensual, statutory or
otherwise) or right of offset or compensation that it has or may ever have for
its own benefit with respect to the Disbursement Account, (iv) it shall maintain
appropriate books and records with respect to the Disbursement Account in which
shall be recorded all transactions related thereto including, without
limitation, all disbursements hereunder and any investments made by the
Disbursement Agent and shall permit the Administrative Agent or any of its
agents or representatives to inspect and to make copies of such books and
records, as is reasonable, at the Borrowers' sole cost and expense and (v) it
shall exercise its customary efforts and utilize prudence in performing its
duties hereunder in accordance with the terms of this Agreement.
SECTION 10. INDEMNITY.
10.1. Indemnity. (a) Each Borrower jointly and severally
agrees to indemnify, reimburse and hold the Disbursement Agent, each Account
Agent and, to the extent acting hereunder, the Administrative Agent and their
respective successors, assigns, employees, agents and servants (hereinafter in
this Section 10.1 referred to individually as "Indemnitee," and collectively as
"Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the
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<PAGE> 12
purposes of this Section 10.1 the foregoing are collectively called "expenses")
of whatsoever kind and nature imposed on, asserted against or incurred by any of
the Indemnitees in any way relating to or arising out of this Agreement, or any
other document executed in connection herewith or in any other way connected
with the administration of the transactions contemplated hereby or the
enforcement of any of the terms of, or the preservation of any rights under any
thereof, or in any way relating to or arising out of the use of the Collateral;
provided that no Indemnitee shall be indemnified pursuant to this Section
10.1(a) for expenses to the extent caused by the gross negligence or willful
misconduct of such Indemnitee.
(b) Without limiting the application of Section 10.1(a)
hereof, each Borrower jointly and severally agrees to pay, or reimburse the
Disbursement Agent, for any and all fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Disbursement Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, and all
other fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Disbursement Agent's interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 10.1(a) or (b)
hereof, each Borrower jointly and severally agrees to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by such Borrower in this Agreement or in any
writing contemplated by or made or delivered pursuant to or in connection with
this Agreement.
(d) If and to the extent that the obligations of any Borrower
under this Section 10.1 are unenforceable for any reason, such Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
10.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Borrower contained in this Section 10 shall
continue in full force and effect notwithstanding the full payment of all
Obligations.
SECTION 11. NOTICES, ETC.
Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be deemed
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<PAGE> 13
to have been duly given or made when delivered to the party to which such
notice, request, demand or other communication is required or permitted to be
given or made under this Agreement, addressed as follows:
(a) if to the Partnership or the General Partner, at:
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
(b) if to the Disbursement Agent, at:
First Security Trust of NV
c/o First Security Bank
Trust Dept.
530 Las Vegas Blvd. South
Las Vegas, Nevada 89101
(c) if to the Administrative Agent, at:
175 Water Street
New York, NY 10038
Attention: Robert Karlovitz
(e) if to the Trustee, at:
114 West 47th St.
New York, NY 10036
Attention: Corporate Trust Department
(f) if to each Account Agent, at:
c/o First Security Bank
Trust Dept.
530 Las Vegas Blvd. South
Las Vegas, Nevada 89101
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
SECTION 12. MISCELLANEOUS.
This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the
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<PAGE> 14
State of New York. This Agreement shall be binding upon each of the parties
hereto and their respective successors and assigns and shall inure to the
benefit of and be enforceable by the Disbursement Agent, the Administrative
Agent, the Account Agents, the Trustee and their respective successors and
assigns. The headings in this Agreement are for purposes of reference only and
shall not limit or define the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. Delivery of an executed counterpart of
the signature pages to this Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Agreement. This Agreement
shall become effective on the date on which each of the parties shall have
executed and delivered a copy hereof. In the event that any provision of this
Agreement shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Agreement, which shall
remain binding on all parties hereto.
SECTION 13. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be
changed, waived, modified or varied in any manner whatsoever unless in writing
duly signed by each Borrower and the Administrative Agent, provided that (i) if
any such change, waiver or modification is adverse to the interests of the
Disbursement Agent in its capacity as such, then the consent of the Disbursement
Agent in such capacity shall also be required, and (ii) if any such change,
waiver or modification will adversely affect the interests of the holders of the
Subordinated Notes in a manner different than, and more adverse than, the affect
thereof on the Lenders, then the consent of the Trustee shall be required. Upon
the one time written request of the General Partner there may be appointed a new
Disbursement Agent (the "New Disbursement Agent') that is acceptable to the
Administrative Agent who would replace the original Disbursement Agent; provided
that (I) the New Disbursement Agent (x) concurrently replaces the original
Disbursement Agent as MNPA Agent, SNPA Agent and PFA Agent and (y) executes
documents satisfactory to the Administrative Agent pursuant to which it becomes
party to and bound by this Agreement and each of the Agreements governing the
Proceeds Accounts and (II) the original Disbursement Agent has been paid all
amounts owing it by the Partnership. Upon the effectiveness of such replacement,
the original Disbursement Agent will transfer to the new Disbursement Account
established by the New Disbursement Agent all amounts on deposit in the original
Disbursement Account.
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<PAGE> 15
NATIONAL WESTMINISTER BANK
PLC, as Administrative Agent
By: /s/ Andrew Weinberg
----------------------------
Name: ANDREW WEINBERG
Title: SENIOR VICE PRESIDENT
FIRST SECURITY TRUST COMPANY
OF NEVADA, as MNPA Agent
By:
----------------------------
Name:
Title:
FIRST SECURITY TRUST COMPANY
OF NEVADA, as SNPA Agent
By:
----------------------------
Name:
Title:
FIRST SECURITY TRUST COMPANY
OF NEVADA, as PFA Agent
By:
----------------------------
Name:
Title:
FIRST SECURITY TRUST COMPANY
OF NEVADA, as Disbursement Agent
By:
----------------------------
Name:
Title:
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers or
General Partners, as the case may be, as of the date first above written.
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
By The Resort at Summerlin, Inc.,
its General Partner
By: /s/ illegible
------------------------------------
Name:
Title: SR VP [ILLEGIBLE]
THE RESORT AT SUMMERLIN, INC.
By: /s/ illegible
------------------------------------
Name:
Title: SR VP [ILLEGIBLE]
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: /s/LOUIS P. YOUNG
------------------------------------
Name: LOUIS P. YOUNG
Title: VICE PRESIDENT
THE RESORT AT SUMMERLIN, INC., as
Representative
By: /s/ illegible
------------------------------------
Name:
Title: SR VP [ILLEGIBLE]
<PAGE> 17
NATIONAL WESTMINISTER BANK PLC,
as Administrative Agent
By: /s/ANDREW WEINBERG
------------------------------------
Name: ANDREW WEINBERG
Title: SENIOR VICE PRESIDENT
FIRST SECURITY TRUST COMPANY
OF NEVADA, as MNPA Agent
By: /s/MARK DRESCHLER
------------------------------------
Name: MARK DRESCHLER
Title: PRESIDENT
FIRST SECURITY TRUST COMPANY
OF NEVADA, as SNPA Agent
By: /s/MARK DRESCHLER
------------------------------------
Name: MARK DRESCHLER
Title: PRESIDENT
FIRST SECURITY TRUST COMPANY
OF NEVADA, as PFA Agent
By: /s/MARK DRESCHLER
------------------------------------
Name: MARK DRESCHLER
Title: PRESIDENT
FIRST SECURITY TRUST COMPANY
OF NEVADA, as Disbursement Agent
By: /s/MARK DRESCHLER
------------------------------------
Name: MARK DRESCHLER
Title: PRESIDENT
<PAGE> 18
ANNEX A
DISBURSEMENT REQUEST
[Date]
- -----------------------
as Disbursement Agent
Attention: [ ]
re Disbursement Request for $[ ]
Gentlemen:
Reference is made to the Disbursement Agreement, dated as of
December 30, 1997 (the "Disbursement Agreement"), among THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP (the "Partnership"), THE RESORT AT SUMMERLIN, INC.
("Summerlin, Inc." and together with the Partnership, the "Borrowers"), UNITED
STATES TRUST COMPANY OF NEW YORK, as Trustee, NATIONAL WESTMINSTER BANK PLC, as
Administrative Agent, FIRST SECURITY TRUST COMPANY OF NEVADA as MNPA Agent,
FIRST SECURITY TRUST COMPANY OF NEVADA as SNPA Agent, FIRST SECURITY TRUST
COMPANY OF NEVADA as PFA Agent and FIRST SECURITY TRUST COMPANY OF NEVADA as
Disbursement Agent. Except as otherwise defined herein, terms used herein and
defined in the Disbursement Agreement (or in the Credit Agreement referred to
therein) shall be used herein as so defined.
The Borrowers hereby request that $[ ] (the "Transfer") be
transferred from the applicable Proceeds Accounts into the Disbursement Account
for application by the Borrowers to pay for Project Costs. In connection with
the requested Transfer, the Borrowers hereby represent, warrant and certify as
follows:
1. The amount of the Transfer is no greater than the sum of
(a) the unpaid Work in place and the unpaid cost of materials for the Work
suitably stored on the Real Property on which the Project is located or will be
located (the "Premises") or elsewhere as provided in the Construction Contract
in respect of the Improvements to be constructed on such Real Property, less any
amounts permitted as of this date to be retained under such Construction
Contracts, (b) the following Project Costs not related to Work and materials for
Work that are now due and payable: [specify by Line Item] and (c) other amounts
required to be expended after [applicable Transfer Date] and prior to [next
Transfer Date] for Project Costs, as follows: [specify Line Items and when due].
2. The Work performed as of the date hereof is in accordance
with the Plans and Specifications and the Transfer is appropriate in light of
the percentage of Work completed
<PAGE> 19
ANNEX A
Page 2
and the unpaid cost of stored materials. The undersigned has no reason to
believe that the Commencement Date will not occur on or prior to the Completion
Deadline Date.
3. The Borrowers have not received any notice and have no
knowledge of any Liens or claims of Lien either filed or threatened against the
Premises, except the Liens established pursuant to the Security Documents,
Permitted Liens and other Liens which have been insured by a title endorsement
or discharged by posting appropriate bonds.
4. All sums previously requisitioned pursuant to a
Disbursement Request have been applied for the purposes set forth in the
Disbursement Request or are being applied on [the relevant Transfer Date] to pay
for Work as permitted by Section 2.04(b) of the Disbursement Agreement.
5. The Budget accurately sets forth the anticipated Project
Costs to complete the Project, which in the aggregate are less than or equal to
the sum of (i) amounts on deposit in the Disbursement Account and in the
Proceeds Accounts and (ii) the unutilized MN Commitments under the Credit
Agreement.
6. After giving effect to the proposed uses of the funds to be
transferred to the Disbursement Account, the aggregate amount expended for each
Line Item will not exceed the amount specified for such Line Item in the Budget
as now in effect.
[7. If the Work for which payment is to be made from the
proceeds of the Transfer is for tenant improvement work required to be performed
by the Borrowers under any leases, the relevant tenant(s) has approved such
Work.]
8. On the date hereof, both before and after giving effect to
the application of the proceeds of the Transfer (i) there is no Default or Event
of Default under the Credit Agreement, and (ii) all representations and
warranties contained in the Credit Agreement and the other Credit Documents are
true and correct in all material respects with the same effect as though made on
the date hereof except to the extent that they expressly relate to an earlier
date.
THE RESORT AT SUMMERLIN, INC.,
as General Partner
By:
------------------------------------
Name:
Title:
<PAGE> 20
ANNEX B
THE DISBURSEMENT AGENT
[SECTION 10 OF CREDIT AGREEMENT TO BE INSERTED HERE
<PAGE> 1
Exhibit 4.7
SUBORDINATED NOTES PROCEEDS AGREEMENT
SUBORDINATED NOTES PROCEEDS AGREEMENT (this "Agreement"),
dated as of December 30, 1997, among THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP (the "Partnership"), THE RESORT AT SUMMERLIN, INC. ("Summerlin,
Inc.", and together with the Partnership, the "Assignors"), UNITED STATES TRUST
COMPANY OF NEW YORK, as Trustee under the Indenture referred to below (in such
capacity, the "Trustee") and FIRST SECURITY TRUST COMPANY OF NEVADA as Account
Agent hereunder (in such capacity, the "Account Agent"). Except as otherwise
defined herein, terms used herein and defined in the Indenture, or in the
Disbursement Agreement referred to below, shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Assignors are to issue 13% Senior Subordinated
PIK Notes due 2007 (the "Subordinated Notes') in an initial aggregate principal
amount of $100,000,000 to be governed by an Indenture dated as of December 30,
1997 among the Assignors and the Trustee (as modified and in effect from time to
time, the "Indenture");
WHEREAS, the Assignors, certain lenders from time to time
party thereto, Gleacher Natwest, Inc., as Arranging Agent and the Administrative
Agent have entered into a Credit Agreement, dated as of December 30, 1997 (as
modified or restated and in effect from time to time, the "Credit Agreement");
WHEREAS, all proceeds of Subordinated Notes are required to be
directly deposited into the Subordinated Notes Proceeds Account; and
WHEREAS, the amounts in the Subordinated Notes Proceeds
Account may be disbursed into the Disbursement Account from time to time upon
the satisfaction of the applicable conditions set forth in the Disbursement
Agreement dated as of December 30, 1997 among inter alia the Trustee, the
Account Agent and First Security Trust Company of Nevada, as Disbursement Agent
(as modified or restated and in effect from time to time, the "Disbursement
Agreement");
NOW, THEREFORE, it is agreed:
SECTION 1. ESTABLISHMENT OF SUBORDINATED NOTE PROCEEDS
ACCOUNT; ETC.
1.01. Establishment. The Account Agent has established in its
own name and for the benefit of the holders of the Subordinated Notes (the
"Holders") an account (Account No. 702254B) (the "Subordinated Notes Proceeds
Account") for purposes of this Agreement, which
<PAGE> 2
Subordinated Notes Proceeds Account is maintained at the Account Agent's office
located at Las Vegas, Nevada (Wire instructions: First Security Bank of Nevada
- -- ABA # 1224 01668). Subject to the provisions of this Agreement, the
Subordinated Notes Proceeds Account shall be under the sole dominion and control
of the Account Agent and, except as set forth in Section 3.01 hereof, the
Account Agent shall have the sole right to make withdrawals from the
Subordinated Notes Proceeds Account and to exercise all rights with respect to
the Collateral (as hereinafter defined) from time to time therein.
1.02. Deposits to the Subordinated Notes Proceeds Account. The
Assignors will transfer, in the funds received, all net proceeds of the
Subordinated Notes to the Account Agent for immediate deposit into the
Subordinated Notes Proceeds Account to be held therein until released pursuant
to the provisions of Section 3 below.
1.03. Investment of Funds. So long as any amounts remain in
the Subordinated Notes Proceeds Account, the Account Agent will from time to
time, at the request of the General Partner, invest funds on deposit in the
Subordinated Notes Proceeds Account in Cash Equivalents. All investments made
pursuant to this Section 1.03 (and any instruments evidencing same), and all
proceeds thereof, shall be held in the Subordinated Notes Proceeds Account as
part of the Collateral. All such investments shall be made in the name of the
Account Agent. All risk of loss in respect of investments made pursuant to this
Section 1.03 shall be on the Assignors.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST.
2.01. Pledge and Grant of Security Interest. As collateral
security to secure the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, each Assignor hereby
pledges and assigns to the Account Agent, for the benefit of the Holders, a
continuing possessory Lien and security interest in all of the right, title and
interest of such Assignor in and to the Subordinated Notes Proceeds Account, in
all funds deposited therein, in all investments from time to time therein, and
in all cash and non-cash proceeds of any of the foregoing (collectively, the
"Collateral"), from the date of the establishment of the Subordinated Notes
Proceeds Account until the termination thereof pursuant to the terms hereof. As
used herein, "Obligations" shall mean (i) the principal of, interest on or
premium on the Subordinated Notes, (ii) all other obligations and indebtedness
of each Assignor to the Holders now existing or hereafter incurred under,
arising out of, or in connection with the Indenture and Subordinated Notes, and
the due performance and compliance by each Assignor with all of the terms,
conditions and agreements contained in the Indenture and Subordinated Notes,
(iii) any and all sums advanced by the Account Agent in order to preserve the
Collateral or to preserve its security interest in the Collateral, (iv) in the
event of any proceeding for the collection or enforcement of any indebtedness,
obligations or liabilities of any Assignor referred to in clauses (i), (ii) or
(iii) above, after an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Account Agent of its rights hereunder,
together with reasonable attorneys' fees and court costs and (v) all amounts
paid by any Indemnitee (as hereinafter defined) as to which such Indemnitee has
the right to reimbursement under Section 9 hereof.
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<PAGE> 3
SECTION 3. WITHDRAWALS, APPLICATIONS AND REMEDIES.
3.01. Withdrawals. (a) Upon receipt by the Account Agent of a
Transfer Notice from the Disbursement Agent, the Account Agent shall, on the
Transfer Date or other date specified in the Transfer Notice, withdraw from the
Subordinated Notes Proceeds Account and transfer to the Disbursement Account its
Account Agent's Portion for such date (i.e., the portion, if any, of the
Requested Amount remaining unfunded after giving effect to all withdrawals from
the Partnership Funds Account resulting from such Transfer Notice made pursuant
to the order required by Section 2.02 of the Disbursement Agreement).
(b) To the extent required to make any withdrawal pursuant to
the foregoing clause of this Section 3.01, the Account Agent shall, and is
hereby authorized to, liquidate Cash Equivalents then on deposit in the
Subordinated Notes Proceeds Accounts pursuant to its customary practices for
liquidating such securities.
(c) Collateral may only be withdrawn as provided in clause (a)
of this Section 3.01, Section 3.02 and/or Section 10 and shall remain in the
Subordinated Notes Proceeds Account until so withdrawn. Neither the Account
Agent nor the Trustee shall have any liability whatsoever to any Holder or any
Person as a result of any release of Collateral by transfer to the Disbursement
Account following receipt by the Account Agent of a Transfer Notice regardless
of any subsequent determination that one or more of the conditions specified
herein or in the Disbursement Agreement to such withdrawal were not satisfied.
3.02. Remedies Upon a Noticed Event of Default; Application of
Proceeds. (a) If a Noticed Event of Default (as defined below) shall occur and
be continuing, if and to the extent directed to do so by the Trustee (acting at
the direction of the Holders of a majority in principal amount of the
Subordinated Notes), the Account Agent shall, subject to any mandatory
requirements of applicable law (including the Gaming Laws), (i) exercise in
respect of all of the Collateral in addition to other rights and remedies
provided for herein or otherwise available to it under applicable law, all of
the rights and remedies of a secured party on default under the Uniform
Commercial Code then in effect in the State of New York, (ii) liquidate all Cash
Equivalents in accordance with its customary practices for liquidating such
securities and/or (iii) withdraw the Collateral, if any, from the Subordinated
Notes Proceeds Account and pay the same to the Trustee for application to the
Obligations in accordance with Section 6.10 of the Indenture. As used herein, a
"Noticed Event of Default shall mean (x) an Event of Default under Section
6.01(ix) and (x) of the Indenture (Bankruptcy defaults) with respect to an
Assignor and (y) any other Event of Default that has been specified as a
"Noticed Event of Default" in writing from the Trustee to the Assignors.
(b) Each Assignor shall remain jointly and severally liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral applied as provided in preceding clause (a) and the aggregate amount
of the Obligations.
-3-
<PAGE> 4
SECTION 4. FURTHER ASSURANCES.
Each Assignor agrees that it will, at any time and from time
to time, at its expense, promptly execute and deliver all further agreements,
instruments and other documents and take all further action that may be
necessary or that the Account Agent or the Trustee may reasonably request in
order to perfect and protect the security interest purported to be created
hereby or otherwise to enable the Account Agent to exercise and enforce its
rights and remedies hereunder.
SECTION 5. TRANSFERS AND OTHER LIENS.
Each Assignor agrees that it will not create or suffer to
exist any Lien upon or with respect to any Collateral except for the security
interest purported to be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
Each Assignor hereby irrevocably appoints, which appointment
shall be coupled with an interest, the Account Agent its attorney-in-fact, with
full authority after the occurrence of and during the continuance of an Event of
Default, in the place and stead of such Assignor and in the name of such
Assignor or otherwise, from time to time in the Account Agent's discretion to
execute any instrument and to take any other action which the Account Agent may
deem necessary or advisable to accomplish the purposes of this Agreement or to
facilitate the assignment or other transfer by the Account Agent of any or all
of its rights hereunder.
SECTION 7. PERFORMANCE BY THE ACCOUNT AGENT.
If any Assignor fails to perform any agreement or obligation
contained herein, the Account Agent itself may perform or cause performance of
such agreement or obligation, and the expenses of the Account Agent incurred in
connection therewith shall be payable to the Account Agent by the Assignors.
SECTION 8. RESPONSIBILITY OF THE ACCOUNT AGENT AND TRUSTEE.
(a) Neither the Account Agent nor any of their respective
directors, officers, agents, employees, affiliates, representatives and agents
shall be liable for any failure to invest or reinvest any cash in the
Subordinated Notes Proceeds Account in accordance herewith or for any losses
incurred by reason of investments made by the Account Agent pursuant to Section
1.03 hereof. The Account Agent shall act hereunder on the same terms and
conditions as are set forth in Section 10 of the Credit Agreement (which section
is incorporated herein by reference with each reference therein to "Agent" to
include the Account Agent hereunder and each reference therein to "Lenders" to
include the Holders and by accepting the benefit hereof, the Holders being
deemed to have agreed to such provisions as so incorporated) and shall hold the
Collateral in accordance with this Agreement and with only such obligations in
respect thereof as are expressly set forth in this Agreement.
(b) The Account Agent acknowledges and agrees that (i) all
disbursements and releases made pursuant to this Agreement shall be made by the
Account Agent irrespective of,
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<PAGE> 5
and without deduction for, any counterclaim, defense, recoupment or set-off and
shall be final, (ii) all service charges and fees with respect to this Agreement
or the Subordinated Notes Proceeds Account shall be paid by the Assignors, (iii)
it irrevocably waives and renounces any pledge, security interest (whether
consensual, statutory or otherwise) or right of offset or compensation that it
has or may ever have for its own benefit with respect to the Subordinated Notes
Proceeds Account, (iv) it shall maintain appropriate books and records with
respect to the Subordinated Notes Proceeds Account in which shall be recorded
all transactions related thereto including, without limitation, all
disbursements hereunder and any investments made by the Account Agent and shall
permit the Trustee or any of its agents or representatives to inspect and to
make copies of such books and records, as is reasonable, at the Assignors' sole
cost and expense and (v) it shall exercise its customary efforts and utilize
prudence in performing its duties hereunder in accordance with the terms of this
Agreement.
SECTION 9. INDEMNITY.
9.1. Indemnity. (a) Each Assignor jointly and severally agrees
to indemnify, reimburse and hold the Account Agent and, to the extent acting
hereunder, the Trustee and their respective successors, assigns, employees,
agents and servants (hereinafter in this Section 9.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including reasonable attorneys' fees and expenses and herein collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement or any other document executed in connection herewith or in any other
way connected with the administration of the transactions contemplated hereby or
the enforcement of any of the terms of, or the preservation of any rights under
any thereof, or in any way relating to or arising out of the use of the
Collateral; provided that no Indemnitee shall be indemnified pursuant to this
Section 9.1(a) for expenses to the extent caused by the gross negligence or
willful misconduct of such Indemnitee.
(b) Without limiting the application of Section 9.1(a) hereof,
each Assignor jointly and severally agrees to pay, or reimburse the Account
Agent, for any and all fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Account Agent's Liens on, and security interest in, the Account, including,
without limitation, all fees and taxes in connection with the recording or
filing of instruments and documents in public offices, payment or discharge of
any taxes or Liens upon or in respect of the Collateral and all other fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the Account Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 9.1(a) or (b)
hereof, each Assignor jointly and severally agrees to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by such Assignor in this Agreement or in
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<PAGE> 6
any writing contemplated by or made or delivered pursuant to or in connection
with this Agreement.
(d) If and to the extent that the obligations of any Assignor
under this Section 9.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
9.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Section 9 shall
continue in full force and effect notwithstanding the full payment of all
Obligations.
SECTION 10. TERMINATION; RELEASE.
(a) Upon the Termination Date (as defined below) this
Agreement shall terminate, and the Account Agent will duly assign, transfer and
deliver to the Assignors (without recourse and without any representation or
warranty) the Collateral, if any, that remains in the possession of the Account
Agent and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement together with any monies at the time held by the
Account Agent hereunder. As used in this Agreement, "Termination Date" shall
mean that date, occurring on and after the Commencement Date, which is one
Business Day after the date upon which all of the amounts on deposit in the
Subordinated Notes Proceeds Account have been applied as required by Section
3.01(a).
(b) At any time that the Assignors desire that Collateral be
released as provided in the foregoing Section 10(a), the Assignors shall deliver
to the Account Agent and the Administrative Agent a certificate signed by an
Authorized Officer of the General Partner, stating that the release of the
respective Collateral is permitted pursuant to said Section 10(a). Neither the
Account Agent nor the Administrative Agent shall have any liability whatsoever
to any Lender as a result of any release of Collateral by it as permitted by
this Section 10.
SECTION 11. NOTICES, ETC.
Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be deemed to have been duly given or made when delivered as follows:
(a) if to any Assignor, at:
1160 Town Center Drive
Suite 200
Las Vegas, Nevada
Attention: John Tipton
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<PAGE> 7
(b) if to the Account Agent:
c/o First Security Bank
Trust Dept.
530 Las Vegas Blvd. South
Las Vegas, NV 89101
(c) if to the Trustee:
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
SECTION 12. MISCELLANEOUS.
This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the State of New York. This Agreement shall be binding upon each Assignor and
its successors and assigns and shall inure to the benefit of and be enforceable
by the Account Agent and the Trustee and their successors and assigns. The
headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. Delivery of an executed counterpart of the signature
pages to this Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Agreement. This Agreement shall become
effective on the date on which each of the parties shall have executed and
delivered a copy hereof. In the event that any provision of this Agreement shall
prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement, which shall remain
binding on all parties hereto.
SECTION 13. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be
changed, waived, modified or varied in any manner whatsoever, except pursuant to
a writing signed by all the parties hereto. The Account Agent will be replaced
hereunder by a new Account Agent at such time as such new Account Agent replaces
the Disbursement Agent under and in accordance with Section 13 of the
Disbursement Agreement. Upon the effectiveness of such replacement, the original
Account Agent will transfer to the new Subordinated Notes Proceeds Account
established by the new Account Agent all amounts on deposit in the original
Subordinated Notes Proceeds Account.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized representatives,
as of the date first above written.
THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP, as an Assignor
By:___________________________
its General Partner
By:___________________________
Title:
THE RESORT AT SUMMERLIN, INC.,
as an Assignor
By:___________________________
Title
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Account Agent
By:___________________________
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:___________________________
Title:
-8-
<PAGE> 1
Exhibit 4.8
MORTGAGE NOTES PROCEEDS AGREEMENT
MORTGAGE NOTES PROCEEDS AGREEMENT (this "Agreement"), dated as
of December 30, 1997, among THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP (the
"Partnership"), THE RESORT AT SUMMERLIN, INC. ("Summerlin, Inc.", and together
with the Partnership, the "Assignors"), NATIONAL WESTMINSTER BANK PLC, as
Administrative Agent under the Credit Agreement referred to below (in such
capacity, the "Administrative Agent") and FIRST SECURITY TRUST COMPANY OF NEVADA
as Account Agent hereunder (in such capacity, the "Account Agent"). Except as
otherwise defined herein, terms used herein and defined in the Credit Agreement
(or in the Disbursement Agreement referred to therein) shall be used herein as
so defined.
W I T N E S S E T H :
WHEREAS, the Assignors, the lenders (the "Lenders") from time
to time party thereto, Gleacher Natwest, Inc., as Arranging Agent and the
Administrative Agent have entered into a Credit Agreement, dated as of December
30, 1997 (as modified or restated and in effect from time to time, the "Credit
Agreement");
WHEREAS, all proceeds of Construction Loans are required to be
directly deposited into the Mortgage Notes Proceeds Account;
WHEREAS, the amounts in the Mortgage Notes Proceeds Account
may be disbursed into the Disbursement Account from time to time upon the
satisfaction of the applicable conditions set forth in the Disbursement
Agreement;
NOW, THEREFORE, it is agreed:
SECTION 1. ESTABLISHMENT OF MORTGAGE NOTE PROCEEDS ACCOUNT;
ETC.
1.01. Establishment. The Account Agent has established in its
own name and for the benefit of the Lenders an account (Account No. 702254A)
(the "Mortgage Notes Proceeds Account") for purposes of this Agreement, which
Mortgage Notes Proceeds Account is maintained at the Account Agent's office
located at Las Vegas, Nevada (Wire transfers: First Security Bank of Nevada --
(ABA 1224 01668). Subject to the provisions of this Agreement, the Mortgage
Notes Proceeds Account shall be under the sole dominion and control of the
Account Agent and, except as set forth in Section 3.01 hereof, the Account Agent
shall have the sole right to make withdrawals from the Mortgage Notes Proceeds
Account and to exercise all rights with respect to the Collateral (as
hereinafter defined) from time to time therein.
<PAGE> 2
1.02. Deposits to the Mortgage Notes Proceeds Account. The
Administrative Agent will transfer, in the funds received, all proceeds of
Construction Loans to the Account Agent for immediate deposit into the Mortgage
Notes Proceeds Account to be held therein until released pursuant to the
provisions of Section 3 below.
1.03. Investment of Funds. So long as any amounts remain in
the Mortgage Notes Proceeds Account, the Account Agent will from time to time,
at the request of the General Partner, invest funds on deposit in the Mortgage
Notes Proceeds Account in Cash Equivalents. All investments made pursuant to
this Section 1.03 (and any instruments evidencing same), and all proceeds
thereof, shall be held in the Mortgage Notes Proceeds Account as part of the
Collateral. All such investments shall be made in the name of the Account Agent.
All risk of loss in respect of investments made pursuant to this Section 1.03
shall be on the Assignors.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST.
2.01. Pledge and Grant of Security Interest. As collateral
security to secure the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, each Assignor hereby
pledges and assigns to the Account Agent, for the benefit of the Lenders, a
continuing possessory Lien and security interest in all of the right, title and
interest of such Assignor in and to the Mortgage Notes Proceeds Account, in all
funds deposited therein, in all investments from time to time therein, and in
all cash and non-cash proceeds of any of the foregoing (collectively, the
"Collateral"), from the date of the establishment of the Mortgage Notes Proceeds
Account until the termination thereof pursuant to the terms hereof. As used
herein, "Obligations" shall mean (i) the principal of and interest on Loans made
under the Credit Agreement, (ii) all other obligations and indebtedness of each
Assignor to the Lenders now existing or hereafter incurred under, arising out
of, or in connection with the Credit Agreement and the other Credit Documents
and the due performance and compliance by each Assignor with all of the terms,
conditions and agreements contained in the Credit Agreement and the other Credit
Documents, (iii) any and all sums advanced by the Account Agent in order to
preserve the Collateral or to preserve its security interest in the Collateral,
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of any Assignor referred to in clauses
(i), (ii) or (iii) above, after an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Account Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs and (v) all amounts paid by any
Indemnitee (as hereinafter defined) as to which such Indemnitee has the right to
reimbursement under Section 9 hereof.
SECTION 3. WITHDRAWALS, APPLICATIONS AND REMEDIES.
3.01. Withdrawals. (a) Upon receipt by the Account Agent of a
Transfer Notice from the Disbursement Agent, the Account Agent shall, on the
Transfer Date or other date specified in the Transfer Notice, withdraw from the
Mortgage Notes Proceeds Account and transfer to the Disbursement Account its
Account Agent's Portion for such date (i.e., the portion, if any, of the
Requested Amount remaining unfunded after giving effect to all withdrawals from
the Subordinated Notes Proceeds Accounts and the Partnership Funds Account
resulting from
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<PAGE> 3
such Transfer Notice made pursuant to the order required by Section 2.02 of the
Disbursement Agreement).
(b) On the date which is 30 days after the Commencement Date,
all amounts in the Mortgage Notes Proceeds Account shall be withdrawn by the
Account Agent and transferred to the Administrative Agent to be applied to repay
Loans as provided in Section 3.02(A)(g) of the Credit Agreement.
(c) To the extent required to make any withdrawal pursuant to
the foregoing clauses of this Section 3.01, the Account Agent shall, and is
hereby authorized to, liquidate Cash Equivalents then on deposit in the Mortgage
Notes Proceeds Accounts pursuant to its customary practices for liquidating such
securities.
(d) Collateral may only be withdrawn as provided in clauses
(a) and (b) of this Section 3.01, Section 3.02 and/or Section 10 and shall
remain in the Mortgage Notes Proceeds Account until so withdrawn. Neither the
Account Agent nor the Administrative Agent shall have any liability whatsoever
to any Lender or any Person as a result of any release of Collateral by transfer
to the Disbursement Account following receipt by the Account Agent of a Transfer
Notice regardless of any subsequent determination that one or more of the
conditions specified herein or in the Disbursement Agreement to such withdrawal
were not satisfied.
3.02. Remedies Upon a Noticed Event of Default; Application of
Proceeds. (a) If a Noticed Event of Default (as defined in the Disbursement
Agreement) shall occur and be continuing, if and to the extent directed to do so
by the Administrative Agent (acting at the direction of the Required Lenders),
the Account Agent shall, subject to any mandatory requirements of applicable law
(including the Gaming Laws), (i) exercise in respect of all of the Collateral in
addition to other rights and remedies provided for herein or otherwise available
to it under applicable law, all of the rights and remedies of a secured party on
default under the Uniform Commercial Code then in effect in the State of New
York, (ii) liquidate all Cash Equivalents in accordance with its customary
practices for liquidating such securities and/or (iii) withdraw the Collateral,
if any, from the Mortgage Notes Proceeds Account and pay the same to the
Administrative Agent for application to the Obligations in accordance with
Section 7.4 of the Security Agreement executed by the Partnership.
(b) Each Assignor shall remain jointly and severally liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral applied as provided in preceding clause (a) and the aggregate amount
of the Obligations.
SECTION 4. FURTHER ASSURANCES.
Each Assignor agrees that it will, at any time and from time
to time, at its expense, promptly execute and deliver all further agreements,
instruments and other documents and take all further action that may be
necessary or that the Account Agent or the Administrative Agent may reasonably
request in order to perfect and protect the security interest purported to be
created hereby or otherwise to enable the Account Agent to exercise and enforce
its rights and remedies hereunder.
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<PAGE> 4
SECTION 5. TRANSFERS AND OTHER LIENS.
Each Assignor agrees that it will not create or suffer to
exist any Lien upon or with respect to any Collateral except for the security
interest purported to be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
Each Assignor hereby irrevocably appoints, which appointment
shall be coupled with an interest, the Account Agent its attorney-in-fact, with
full authority after the occurrence of and during the continuance of an Event of
Default, in the place and stead of such Assignor and in the name of such
Assignor or otherwise, from time to time in the Account Agent's discretion to
execute any instrument and to take any other action which the Account Agent may
deem necessary or advisable to accomplish the purposes of this Agreement or to
facilitate the assignment or other transfer by the Account Agent of any or all
of its rights hereunder.
SECTION 7. PERFORMANCE BY THE ACCOUNT AGENT.
If any Assignor fails to perform any agreement or obligation
contained herein, the Account Agent itself may perform or cause performance of
such agreement or obligation, and the expenses of the Account Agent incurred in
connection therewith shall be payable to the Account Agent by the Assignors.
SECTION 8. RESPONSIBILITY OF THE ACCOUNT AGENT AND
ADMINISTRATIVE AGENT.
(a) Neither the Account Agent nor any of their respective
directors, officers, agents, employees, affiliates, representatives and agents
shall be liable for any failure to invest or reinvest any cash in the Mortgage
Notes Proceeds Account in accordance herewith or for any losses incurred by
reason of investments made by the Account Agent pursuant to Section 1.03 hereof.
The Account Agent shall act hereunder on the same terms and conditions as are
set forth in Section 10 of the Credit Agreement (which section is incorporated
herein by reference with each reference therein to "Agent" to include the
Account Agent hereunder and by accepting the benefit hereof, the Lenders being
deemed to have agreed to such provisions as so incorporated) and shall hold the
Collateral in accordance with this Agreement and with only such obligations in
respect thereof as are expressly set forth in this Agreement.
(b) The Account Agent acknowledges and agrees that (i) all
disbursements and releases made pursuant to this Agreement shall be made by the
Account Agent irrespective of, and without deduction for, any counterclaim,
defense, recoupment or set-off and shall be final, (ii) all service charges and
fees with respect to this Agreement or the Mortgage Notes Proceeds Account shall
be paid by the Assignors, (iii) it irrevocably waives and renounces any pledge,
security interest (whether consensual, statutory or otherwise) or right of
offset or compensation that it has or may ever have for its own benefit with
respect to the Mortgage Notes Proceeds Account, (iv) it shall maintain
appropriate books and records with respect to the Mortgage Notes Proceeds
Account in which shall be recorded all transactions related thereto including,
without limitation, all disbursements hereunder and any investments made by the
Account Agent and shall
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<PAGE> 5
permit the Administrative Agent or any of its agents or representatives to
inspect and to make copies of such books and records, as is reasonable, at the
Assignors' sole cost and expense and (v) it shall exercise its customary efforts
and utilize prudence in performing its duties hereunder in accordance with the
terms of this Agreement.
SECTION 9. INDEMNITY.
9.1. Indemnity. (a) Each Assignor jointly and severally agrees
to indemnify, reimburse and hold the Account Agent and, to the extent acting
hereunder, the Administrative Agent and their respective successors, assigns,
employees, agents and servants (hereinafter in this Section 9.1 referred to
individually as "Indemnitee," and collectively as "Indemnitees") harmless from
any and all liabilities, obligations, damages, injuries, penalties, claims,
demands, actions, suits, judgments and any and all costs, expenses or
disbursements (including reasonable attorneys' fees and expenses and herein
collectively called "expenses") of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnitees in any way relating to or
arising out of this Agreement or any other document executed in connection
herewith or in any other way connected with the administration of the
transactions contemplated hereby or the enforcement of any of the terms of, or
the preservation of any rights under any thereof, or in any way relating to or
arising out of the use of the Collateral; provided that no Indemnitee shall be
indemnified pursuant to this Section 9.1(a) for expenses to the extent caused by
the gross negligence or willful misconduct of such Indemnitee.
(b) Without limiting the application of Section 9.1(a) hereof,
each Assignor jointly and severally agrees to pay, or reimburse the Account
Agent, for any and all fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Account Agent's Liens on, and security interest in, the Account, including,
without limitation, all fees and taxes in connection with the recording or
filing of instruments and documents in public offices, payment or discharge of
any taxes or Liens upon or in respect of the Collateral and all other fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the Account Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 9.1(a) or (b)
hereof, each Assignor jointly and severally agrees to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by such Assignor in this Agreement or in any
writing contemplated by or made or delivered pursuant to or in connection with
this Agreement.
(d) If and to the extent that the obligations of any Assignor
under this Section 9.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
9.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute
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<PAGE> 6
Obligations secured by the Collateral. The indemnity obligations of each
Assignor contained in this Section 9 shall continue in full force and effect
notwithstanding the full payment of all Obligations.
SECTION 10. TERMINATION; RELEASE.
(a) Upon the Termination Date (as defined below), this
Agreement shall terminate, and the Account Agent will duly assign, transfer and
deliver to the Assignors (without recourse and without any representation or
warranty) the Collateral, if any, that remains in the possession of the Account
Agent and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement together with any monies at the time held by the
Account Agent hereunder. As used in this Agreement, "Termination Date" shall
mean the earlier of (x) that date upon which all Commitments under the Credit
Agreement have terminated and all Loans and other Obligations have been repaid
in full and (y) that date, occurring after the Commencement Date, which is one
Business Day after the date upon which all of the amounts on deposit in the
Mortgage Notes Proceeds Account have been applied as required by Section
3.01(b).
(b) At any time that the Assignors desire that Collateral be
released as provided in the foregoing Section 10(a), the Assignors shall deliver
to the Account Agent and the Administrative Agent a certificate signed by an
Authorized Officer of the General Partner, stating that the release of the
respective Collateral is permitted pursuant to said Section 10(a). Neither the
Account Agent nor the Administrative Agent shall have any liability whatsoever
to any Lender as a result of any release of Collateral by it as permitted by
this Section 10.
SECTION 11. NOTICES, ETC.
Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be deemed to have been duly given or made when delivered as follows:
(a) if to any Assignor, at:
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
(b) if to the Account Agent:
First Security Trust of NV
c/o First Security Bank
Trust Dept.
530 Las Vegas Blvd. South
Las Vegas, NV 89101
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(c) if to the Administrative Agent:
175 Water Street
New York, NY 10038
Attention: Robert Karlovitz
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
SECTION 12. MISCELLANEOUS.
This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the State of New York. This Agreement shall be binding upon each Assignor and
its successors and assigns and shall inure to the benefit of and be enforceable
by the Account Agent and the Administrative Agent and their successors and
assigns. The headings in this Agreement are for purposes of reference only and
shall not limit or define the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one instrument. Delivery of an executed counterpart of the
signature pages to this Agreement by telecopier shall be effective as delivery
of a manually executed counterpart of this Agreement. This Agreement shall
become effective on the date on which each of the parties shall have executed
and delivered a copy hereof. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement, which shall remain
binding on all parties hereto.
SECTION 13. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be
changed, waived, modified or varied in any manner whatsoever, except pursuant to
a writing signed by all the parties hereto, with the Administrative Agent to act
only at the direction of the Required Lenders or all Lenders, as provided in
Section 11.12 of the Credit Agreement. The Account Agent will be replaced
hereunder by a new Account Agent at such time as such new Account Agent replaces
the Disbursement Agent under and in accordance with Section 13 of the
Disbursement Agreement. Upon the effectiveness of such replacement, the original
Account Agent will transfer to the new Mortgage Notes Proceeds Account
established by the new Account Agent all amounts on deposit in the original
Mortgage Notes Proceeds Account.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized representatives,
as of the date first above written.
THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP, as an Assignor
By:________________________________
its General Partner
By:________________________________
Title:
THE RESORT AT SUMMERLIN, INC.,
as an Assignor
By:________________________________
Title
FIRST SECURITY TRUST COMPANY OF
NEVADA as Account Agent
By:________________________________
Title:
NATIONAL WESTMINSTER BANK PLC,
as Administrative Agent
By:________________________________
Title:
<PAGE> 1
Exhibit 4.9
INTEREST ESCROW AGREEMENT
INTEREST ESCROW AGREEMENT (this "Agreement"), dated as of
December 30, 1997, among THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP (the
"Partnership"), THE RESORT AT SUMMERLIN, INC. ("Summerlin, Inc." and together
with the Partnership, the "Borrowers") and FIRST SECURITY TRUST COMPANY OF
NEVADA as agent for the Lenders referred to below (the "Collateral Agent").
Except as otherwise defined herein, terms used herein and defined in the Credit
Agreement referred to below shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrowers, the lenders (the "Lenders") from time
to time party thereto, Gleacher NatWest Inc., as Arranging Agent and National
Westminster Bank Plc as Administrative Agent (the "Administrative Agent") are
party to a Credit Agreement dated as of December 30, 1997 (as modified or
restated and in effect from time to time, the "Credit Agreement").
WHEREAS, it is a condition to the Lenders making Loans under
the Credit Agreement that this Agreement be executed and delivered by the
parties hereto;
NOW, THEREFORE, it is agreed:
SECTION 1. ESTABLISHMENT OF INTEREST ESCROW ACCOUNT; ETC.
1.01. Establishment. The Collateral Agent has established in
its own name and for the benefit of the Lenders an account (Account No. 702254D)
(the "Interest Escrow Account") for purposes of this Agreement, which Interest
Escrow Account is maintained at the Collateral Agent's office located at Las
Vegas, Nevada (ABA 1224 01668). Subject to the provisions of this Agreement, the
Interest Escrow Account shall be under the sole dominion and control of the
Collateral Agent and, except as set forth in Section 3.01, the Collateral Agent
shall have the sole right to make withdrawals from the Interest Escrow Account
and to exercise all rights with respect to the Collateral (as defined below)
from time to time therein.
1.02. Deposits to the Interest Escrows Account. On the Closing
Date, the Borrowers shall deposit $12.4 million in immediately available funds
in the Interest Escrow Account.
1.03. Investment of Deposited Funds. So long as any amounts
remain in
<PAGE> 2
the Interest Escrow Account, the Collateral Agent will from time to time, at the
request of the General Partner, invest funds on deposit in the Interest Escrow
Account in Cash Equivalents. All investments made pursuant to this Section 1.03
(and any instruments evidencing same), and all proceeds thereof, shall be held
in the Interest Escrow Account as part of the Collateral. All such investments
shall be made in the name of the Collateral Agent. All risk of loss in respect
of investments made pursuant to this Section 1.03 shall be on the Borrowers.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST.
2.01. Pledge and Grant of Security Interest. As collateral
security to secure the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, each Borrower hereby
pledges and assigns to the Collateral Agent, for the benefit of the Lenders, a
continuing possessory Lien and security interest in all of the right, title and
interest of such Borrower in and to the Interest Escrow Account, in all funds
deposited therein, in all investments from time to time therein, and in all cash
and non-cash proceeds of any of the foregoing (collectively, the "Collateral"),
from the date of the establishment of the Interest Escrow Account until the
termination thereof pursuant to the terms hereof. As used herein, "Obligations"
shall mean (i) the principal of and interest on the Loans made under the Credit
Agreement, (ii) all other obligations and indebtedness of each Borrower to the
Lenders now existing or hereafter incurred under, arising out of, or in
connection with the Credit Agreement and the other Credit Documents and the due
performance and compliance by each Borrower with all of the terms, conditions
and agreements contained in the Credit Agreement and the other Credit Documents,
(iii) any and all sums advanced by the Collateral Agent in order to preserve the
Collateral (as hereinafter defined) or to preserve its security interest in the
Collateral, (iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of any Borrower
referred to in clauses (i), (ii) or (iii) above, after an Event of Default shall
have occurred and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Collateral Agent of its rights
hereunder, together with reasonable attorneys' fees and court costs and (v) all
amounts paid by any Indemnitee (as hereinafter defined) as to which such
Indemnitee has the right to reimbursement under Section 9 hereof.
SECTION 3. WITHDRAWALS, APPLICATIONS AND REMEDIES.
3.01. Withdrawals. (a) So long as no Event of Default then
exists, the Borrowers shall have the right to cause the collateral Agent to
withdraw, for application as provided below, funds from the Interest Escrow
Account on each Business Day on which interest ("Interest") is to be paid on the
Term Loans during the first Operating Year (an "Interest Payment Date") the
amount, if any, (the "Interest Shortfall") by which the
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<PAGE> 3
Interest to be paid on such date exceeds the Available Cash (as defined below)
on such date. Such withdrawals will be effected by delivery to the Collateral
Agent, no later than 12:00 (New York time) on the Business Day proceeding an
Interest Payment Date, of a certificate (a "Withdrawal Notice") executed by an
Authorized Officer of the General Partner in the form of Annex A hereto. All
funds so withdrawn shall be made available not later than 12:00 Noon (New York
time) on the Business Day requested for disbursement to the Administrative Agent
for application to pay Interest on the respective Interest Payment Date. As used
herein, "Available Cash" shall mean with respect to each Interest Payment Date
an amount that the Partnership estimates in good faith that it has available to
pay Interest on such date giving effect to the Partnership's revenues and
expenses since the Commencement Date, expenses scheduled to be paid during the
remainder of the First Operating Year, the then projected revenues for the
remainder of such First Operating Year the Partnership's minimum casino bankroll
requirements as determined in accordance with the Gaming Laws and such other
necessary cash balances as determined by the Partnership, all as computed in
reasonable detail in the relevant Withdrawal Notice, which computation shall be
satisfactory to the Administrative Agent as to methodology and factual content.
(b) On the last day of the fifth calendar quarter ending after
the Commencement Date, after giving effect to any withdrawal of funds from the
Interest Escrow Account on such day pursuant to clause (a) above, all amounts in
the Interest Escrow Account shall be withdrawn by the Collateral Agent and
transferred to the Administrative Agent to be promptly applied to repay Loans as
provided in Section 3.02(A)(h) of the Credit Agreement.
(c) To the extent required to make any withdrawal pursuant to
the foregoing clauses of this Section 3.01, the Collateral Agent shall, and is
hereby authorized to, liquidate Cash Equivalents then on deposit in the Interest
Escrow Account pursuant to its customary practices for liquidating such
securities.
(d) Collateral may only be withdrawn as provided in clauses
(a) and (b) of this Section 3.01, Section 3.02 and Section 10 and shall remain
in the Interest Escrow Account until so withdrawn. Neither the Collateral Agent
nor the Administrative Agent shall have any liability whatsoever to any Lenders
as a result of any release of Collateral following the receipt of a Withdrawal
Notice regardless of any subsequent determination that one or more of the
conditions specified herein to such withdrawal were not satisfied.
3.02. Remedies Upon an Event of Default; Application of
Proceeds. (a) If a Noticed Event of Default (as defined in the Disbursement
Agreement) shall occur and be continuing, if and to the extent directed to do so
by the Administrative Agent (acting at the direction of the Required Banks), the
Collateral Agent shall, subject to any mandatory
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<PAGE> 4
requirements of applicable law (including the Gaming Laws), (i) exercise in
respect of all of the Collateral in addition to other rights and remedies
provided for herein or otherwise available to it under applicable law, all of
the rights and remedies of a secured party on default under the Uniform
Commercial Code then in effect in the State of New York or Louisiana, (ii)
liquidate all Cash Equivalents in accordance with its customary practices for
liquidating such securities and/or (iii) withdraw the Collateral, if any, from
the Interest Escrow Account and pay the same to the Administrative Agent for
application to the Obligations in accordance with Section 7.4 of the Security
Agreement executed by the Partnership.
(b) Each Borrower shall remain jointly and severally liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral applied as provided in preceding clause (a) and the aggregate amount
of the Obligations.
SECTION 4. FURTHER ASSURANCES.
Each Borrower agrees that it will, at any time and from time
to time, at its expense, promptly execute and deliver all further agreements,
instruments and other documents and take all further action that may be
necessary or that the Collateral Agent or the Administrative Agent may
reasonably request in order to perfect and protect the security interest
purported to be created hereby or otherwise to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder.
SECTION 5. TRANSFERS AND OTHER LIENS.
Each Borrower agrees that it will not create or suffer to
exist any Lien upon or with respect to any Collateral except for the security
interest purported to be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
Each Borrower hereby irrevocably appoints, which appointment
shall be coupled with an interest, the Collateral Agent its attorney-in-fact,
with full authority after the occurrence of and during the continuance of an
Event of Default, in the place and stead of such Borrower and in the name of
such Borrower or otherwise, from time to time in the Collateral Agent's
discretion to execute any instrument and to take any other action which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement or to facilitate the assignment or other transfer by the
Collateral Agent of any or all of its rights hereunder.
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SECTION 7. PERFORMANCE BY THE COLLATERAL AGENT.
If any Borrower fails to perform any agreement or obligation
contained herein, the Collateral Agent itself may perform or cause performance
of such agreement or obligation, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable to the Collateral Agent by the
Borrowers.
SECTION 8. RESPONSIBILITY OF THE COLLATERAL AGENT AND
ADMINISTRATIVE AGENT.
(a) Neither the Collateral Agent nor any of their respective
directors, officers, agents, employees, affiliates, representatives and agents
shall be liable for any failure to invest or reinvest any cash in the Interest
Escrow Account in accordance herewith or for any losses incurred by reason of
investments made by the Collateral Agent pursuant to Section 1.03 hereof. The
Collateral Agent and the Administrative Agent shall act hereunder on the same
terms and conditions as are set forth in Section 10 of the Credit Agreement
(which section is incorporated herein by reference with each reference therein
to "Agent" to include the Collateral Agent and Administrative Agent hereunder,
and by accepting the benefits hereof the Lenders shall be deemed to have agreed
to such provisions as so incorporated) and shall hold the Collateral in
accordance with this Agreement and with only such obligations in respect thereof
as are expressly set forth in this Agreement.
(b) The Collateral Agent acknowledges and agrees that (i) all
disbursements and releases made pursuant to this Agreement shall be made by the
Collateral Agent irrespective of, and without deduction for, any counterclaim,
defense, recoupment or set-off and shall be final, (ii) all service charges and
fees with respect to this Agreement or the Interest Escrow Account shall be paid
by the Borrowers, (iii) it irrevocably waives and renounces any pledge, security
interest (whether consensual, statutory or otherwise) or right of offset or
compensation that it has or may ever have for its own benefit with respect to
the Interest Escrow Account, (iv) it shall maintain appropriate books and
records with respect to the Interest Escrow Account in which shall be recorded
all transactions related thereto including, without limitation, all
disbursements hereunder and any investments made by the Collateral Agent and
shall permit the Administrative Agent or any of its agents or representatives to
inspect and to make copies of such books and records, as is reasonable, at the
Borrowers' sole cost and expense and (v) it shall exercise its best efforts and
utilize prudence in performing its duties hereunder in accordance with the terms
of this Agreement.
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<PAGE> 6
SECTION 9. INDEMNITY.
9.1. Indemnity. (a) Each Borrower jointly and severally agrees
to indemnify, reimburse and hold the Collateral Agent and, to the extent acting
hereunder, the Administrative Agent and their respective successors, assigns,
employees, agents and servants (herein after in this Section 9.1 referred to
individually as "Indemnitee," and collectively as "Indemnitees") harmless from
any and all liabilities, obligations, damages, injuries, penalties, claims,
demands, actions, suits, judgments and any and all costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 9.1 the foregoing are collectively called "expenses")
of whatsoever kind and nature imposed on, asserted against or incurred by any of
the Indemnitees in any way relating to or arising out of this Agreement or any
other document executed in connection herewith or in any other way connected
with the administration of the transactions contemplated hereby or the
enforcement of any of the terms of, or the preservation of any rights under any
thereof, or in any way relating to or arising out of the use of the Collateral;
provided that no Indemnitee shall be indemnified pursuant to this Section 9.1(a)
for expenses to the extent caused by the gross negligence or willful misconduct
of such Indemnitee.
(b) Without limiting the application of Section 9.1(a) hereof,
each Borrower jointly and severally agrees to pay, or reimburse the Collateral
Agent, for any and all fees, costs and expenses of what ever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral and all
other fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Collateral Agent's interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 9.1(a) or (b)
hereof, each Borrower jointly and severally agrees to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by such Borrower in this Agreement or in any
writing contemplated by or made or delivered pursuant to or in connection with
this Agreement.
(d) If and to the extent that the obligations of any Borrower
under this Section 9.1 are unenforceable for any reason, such Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
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<PAGE> 7
9.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Borrower contained in this Section 9 shall
continue in full force and effect notwithstanding the full payment of all
Obligations.
SECTION 10. TERMINATION; RELEASE.
(a) Upon the Termination Date (as defined below), this
Agreement shall terminate, and the Collateral Agent, at the request and expense
of the Borrowers, will execute and deliver to the Borrowers, a proper instrument
or instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Borrowers (without recourse
and without any representation or warranty) such of the Collateral as may remain
in the possession of the Collateral Agent and has not theretofore been sold or
otherwise applied or released pursuant to this Agreement together with any
monies at the time held by the Collateral Agent hereunder. As used in this
Agreement, "Termination Date" shall mean the earlier of (x) that date upon which
all Commitments have terminated and all Loans and other obligations have been
repaid in full and (y) that date, occurring after the Commencement Date, which
is one Business Day after the date upon which all of the Collateral has been
applied as required by Section 3.01.
(b) At any time that the Borrowers desire that Collateral be
released as provided in the foregoing Section 10(a), the Borrowers shall deliver
to the Collateral Agent and the Administrative Agent a certificate signed by any
Authorized Officer of the General Partner stating that the release of the
respective Collateral is permitted pursuant to said Section 10(a). Neither the
Collateral Agent nor the Administrative Agent shall have any liability
whatsoever to any Lender as a result of any release of Collateral by it as
permitted by this Section 10.
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<PAGE> 8
SECTION 11. NOTICES, ETC.
Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be deemed to have been duly given or made when delivered to the party to which
such notice, request, demand or other communication is required or permitted to
be given or made under this Agreement, addressed as follows:
(a) if to any Borrower, at:
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
Attention: John Tipton
(b) if to the Collateral Agent:
First Security Trust of NV
c/o First Security Bank
Trust Dept.
530 Las Vegas Blvd. South
Las Vegas, NV 89101
(c) if to the Administrative Agent:
175 Water Street
New York, New York 10038
Attention: Robert Karlovitz
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
SECTION 12. MISCELLANEOUS.
This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the State of New York. This Agreement shall be binding upon each Borrower and
its successors and assigns and shall inure to the benefit of and be enforceable
by the Collateral Agent and the Administrative Agent and their successors and
assigns. The headings in this Agreement are for purposes of reference only and
shall not limit or define the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one instrument. Delivery of an executed
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<PAGE> 9
counterpart of the signature pages to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement. This
Agreement shall become effective on the date on which each of the parties shall
have executed and delivered a copy hereof. In the event that any provision of
this Agreement shall prove to be invalid or unenforceable, such provision shall
be deemed to be severable from the other provisions of this Agreement, which
shall remain binding on all parties hereto.
SECTION 13. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be
changed, waived, modified or varied in any manner whatsoever except pursuant to
a writing signed by all the parties hereto, with the Administrative Agent to act
only at the written direction of the Required Lenders or all the Lenders as
provided in Section 11.12 of the Credit Agreement. If the Collateral Agent has
been replaced as Disbursement Agent under and in accordance with Section 13 of
the Disbursement Agreement, if requested by the Borrowers, it will also at such
time be replaced hereunder by the same entity that replaces it as Disbursement
Agent (provided that such entity has became party hereto as Collateral Agent
pursuant to documentation satisfactory to the Administrative Agent) and, in such
case, the original Collateral Agent will transfer to the new Interest Escrow
Account established by the new Collateral Agent all amounts on deposit in the
original Interest Escrow Account.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized representatives
as of the date first above written.
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
By___________________________________________
Title:
THE RESORT AT SUMMERLIN, INC.
By___________________________________________
Title:
FIRST SECURITY TRUST OF NEVADA,
as Collateral Agent
By___________________________________________
Title:
NATIONAL WESTMINSTER BANK PLC,
as Administrative Agent
By___________________________________________
Title:
<PAGE> 11
ANNEX A
FORM OF WITHDRAWAL CERTIFICATE
[Date]
First Security Trust of Nevada, as
Collateral Agent
___________________________________
___________________________________
Attention: _______________________
Re: Request of $________ from
_________________ Account
Gentlemen:
The Resort at Summerlin, Inc. as General Partner (the "General
Partner") and The Resort at Summerlin, Limited Partnership (the "Partnership")
on behalf of itself and the Partnership requests that, in accordance with
Section 3.01(a) of that certain Interest Escrow Agreement, dated ___________ __,
1997, to which you are a party (the "Agreement"; capitalized terms used herein
shall have the meaning afforded them under the Agreement), a disbursement of
$____________ (the "Interest Shortfall") be made from the Interest Escrow
Account and paid over to National Westminster Bank Plc as Administrative Agent
under the Credit Agreement to be applied to pay Interest on _________________.
The "Interest Shortfall" equals the excess of the Interest payable on
____________ over Available Cash as of the date hereof. Set forth on Schedule I
hereto is a detailed computation of Available Cash as of the date hereof. The
Collateral Agent is entitled to rely on this certificate in making the release
of funds.
SUMMERLIN, INC., as General Partner
By___________________________________________
Title:
<PAGE> 1
Exhibit 4.10
PARTNERSHIP FUNDS AGREEMENT
PARTNERSHIP FUNDS AGREEMENT (this "Agreement"), dated as of
December 30, 1997, among THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP (the
"Partnership"), THE RESORT AT SUMMERLIN, INC. ("Summerlin, Inc.", and together
with the Partnership, the "Assignors"), THE RESORT AT SUMMERLIN, INC., as
representative (in such capacity, the "Representative") for the existing and
future partners of the Partnership (the "Partners") and FIRST SECURITY TRUST
COMPANY OF NEVADA as Account Agent hereunder (in such capacity, the "Account
Agent"). Except as otherwise defined herein, terms used herein and defined in
the Credit Agreement referred to below (or in the Disbursement Agreement
referred to therein) shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Assignors, the lenders (the "Lenders") from time
to time party thereto, Gleacher Natwest, Inc., as Arranging Agent and the
Administrative Agent, have entered into a Credit Agreement, dated as of December
30, 1997 (as modified or restated and in effect from time to time, the "Credit
Agreement");
WHEREAS, the Partners are to deposit in the Partnership Funds
Account on the Closing Date $39,700,152 (the "Initial Deposit") and Additional
Amounts (as defined below) are required to be deposited in the Partnership Funds
Account from time to time;
WHEREAS, the amounts in the Partnership Funds Account may be
disbursed into the Disbursement Account, from time to time upon the satisfaction
of the applicable conditions set forth in the Disbursement Agreement;
NOW, THEREFORE, it is agreed:
SECTION 1. ESTABLISHMENT OF PARTNERSHIP FUNDS ACCOUNT; ETC.
1.01. Establishment. The Account Agent has established in its
own name and for the benefit of the Beneficiaries (as defined below) an account
(Account No. 702254C) (the "Partnership Funds Account") for purposes of this
Agreement, which Partnership Funds Account is maintained at the Account Agent's
office located at Las Vegas, Nevada (Wire transfers: First Security Bank of
Nevada -- ABA 1224 01668). Subject to the provisions of this Agreement, the
Partnership Funds Account shall be under the sole dominion and control of the
Account Agent and, except as set forth in Section 3.01 hereof, the Account Agent
shall have the sole right to make withdrawals from the Partnership Funds Account
and to exercise all rights with respect to the Collateral (as hereinafter
defined) from time to time therein. As used herein, "Beneficiaries" shall mean
and include the Partners, the holders of the Subordinated Notes (the "Holders")
and the Lenders as their interests may appear from time to time.
<PAGE> 2
1.02. Deposits to the Partnership Funds Account. On the
Closing Date, the Partners will transfer in immediately available funds the
Initial Deposit to the Account Agent for immediate deposit into the Partnership
Funds Account to be held therein until released pursuant to the provisions of
Section 3 below. On the Business Day following receipt by any Assignor prior to
the Commencement Date of any Additional Amounts, such Assignor shall transfer in
the funds received such Additional Amounts to the Account Agent for immediate
deposit into the Partnership Funds Account to be held therein until released
pursuant to Section 3 below. As used herein, "Additional Amounts" shall mean (x)
liquidated damages paid pursuant to Section ___ of the Construction Contract
and/or (y) any advance deposits and revenues from operations received by any
Assignor.
1.03. Investment of Funds. So long as any amounts remain in
the Partnership Funds Account, the Account Agent will from time to time, at the
request of the General Partner, invest funds on deposit in the Partnership Funds
Account in Cash Equivalents. All investments made pursuant to this Section 1.03
(and any instruments evidencing same), and all proceeds thereof, shall be held
in the Partnership Funds Account as part of the Collateral. All such investments
shall be made in the name of the Account Agent. All risk of loss in respect of
investments made pursuant to this Section 1.03 shall be on the Assignors.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST.
2.01. Pledge and Grant of Security Interest. As collateral
security to secure the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations (and subject to
Section 3.02 below), each Assignor hereby pledges and assigns to the Account
Agent, for the benefit of the Lenders, a continuing possessory Lien and security
interest in all of the right, title and interest of such Assignor in and to the
Partnership Funds Account, in all funds deposited therein, in all investments
from time to time therein, and in all cash and non-cash proceeds of any of the
foregoing (collectively, the "Collateral"), from the date of the establishment
of the Partnership Funds Account until the termination thereof pursuant to the
terms hereof. As used herein, "Obligations" shall mean (i) the principal of,
interest on and premium on (x) the Loans made under the Credit Agreement and (y)
the Subordinated Notes, (ii) all other obligations and indebtedness of each
Assignor to the Lenders and Holders now existing or hereafter incurred under,
arising out of, or in connection with the Credit Agreement, the other Credit
Documents and the Subordinated Notes Documents and the due performance and
compliance by each Assignor with all of the terms, conditions and agreements
contained in the Credit Agreement, the other Credit Documents and the
Subordinated Notes Documents, (iii) any and all sums advanced by the Account
Agent in order to preserve the Collateral or to preserve its security interest
in the Collateral, (iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of any Assignor
referred to in clauses (i), (ii) or (iii) above, after an Event of Default shall
have occurred and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Account Agent of its rights hereunder,
together with reasonable attorneys' fees and court costs and (v) all amounts
paid by any Indemnitee (as hereinafter defined) as to which such Indemnitee has
the right to reimbursement under Section 9 hereof.
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<PAGE> 3
SECTION 3. WITHDRAWALS, APPLICATIONS AND REMEDIES.
3.01. Withdrawals. (a) Upon receipt by the Account Agent of a
Transfer Notice from the Disbursement Agent, the Account Agent shall, on the
Transfer Date or other date specified in the Transfer Notice, withdraw from the
Partnership Funds Account and transfer to the Disbursement Account its Account
Agent's Portion for such date (i.e., the Requested Amount as stated in such
Transfer Notice.
(b) To the extent required to make any withdrawal pursuant to
the foregoing clause of this Section 3.01, the Account Agent shall, and is
hereby authorized to, liquidate Cash Equivalents then on deposit in the
Partnership Funds Accounts pursuant to its customary practices for liquidating
such securities.
(c) Collateral may only be withdrawn as provided in clause (a)
of this Section 3.01, Section 3.02 and/or Section 10 and shall remain in the
Partnership Funds Account until so withdrawn. Neither the Account Agent, the
Representative, the Trustee nor the Administrative Agent shall have any
liability whatsoever to any Lender, Holder or any Person as a result of any
release of Collateral by transfer to the Disbursement Account following receipt
by the Account Agent of a Transfer Notice regardless of any subsequent
determination that one or more of the conditions specified herein or in the
Disbursement Agreement to such withdrawal were not satisfied.
3.02. Remedies Upon a Noticed Event of Default; Application of
Proceeds. (a) If a Noticed Event of Default (as defined in the Disbursement
Agreement) shall occur and be continuing, if and to the extent directed to do so
by the Administrative Agent (acting at the direction of the Required Lenders),
the Account Agent shall, subject to any mandatory requirements of applicable law
(including the Gaming Laws), (i) exercise in respect of all of the Collateral in
addition to other rights and remedies provided for herein or otherwise available
to it under applicable law, all of the rights and remedies of a secured party on
default under the Uniform Commercial Code then in effect in the State of New
York, (ii) liquidate all Cash Equivalents in accordance with its customary
practices for liquidating such securities and/or (iii) withdraw the Collateral,
if any, from the Partnership Funds Account and pay the same to the
Administrative Agent for application to the Obligations in accordance with
Section 7.4 of the Security Agreement executed by the Partnership (which Section
provides that all amounts are to be first applied to the payment of all
Obligations as defined in such Security Agreement (which do not include any
amounts owing in respect of the Subordinated Notes) and the payment over to the
Trustee of any amounts remaining after such satisfaction of the Obligations,
with the Trustee to thereupon apply all amounts so paid to it pursuant to
Section 6.10 of the Indenture).
(b) Each Assignor shall remain jointly and severally liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral applied as provided in preceding clause (a) and the aggregate amount
of the Obligations.
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<PAGE> 4
SECTION 4. FURTHER ASSURANCES.
Each Assignor agrees that it will, at any time and from time
to time, at its expense, promptly execute and deliver all further agreements,
instruments and other documents and take all further action that may be
necessary or that the Account Agent or the Administrative Agent may reasonably
request in order to perfect and protect the security interest purported to be
created hereby or otherwise to enable the Account Agent to exercise and enforce
its rights and remedies hereunder.
SECTION 5. TRANSFERS AND OTHER LIENS.
Each Assignor agrees that it will not create or suffer to
exist any Lien upon or with respect to any Collateral except for the security
interest purported to be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
Each Assignor hereby irrevocably appoints, which appointment
shall be coupled with an interest, the Account Agent its attorney-in-fact, with
full authority after the occurrence of and during the continuance of an Event of
Default, in the place and stead of such Assignor and in the name of such
Assignor or otherwise, from time to time in the Account Agent's discretion to
execute any instrument and to take any other action which the Account Agent may
deem necessary or advisable to accomplish the purposes of this Agreement or to
facilitate the assignment or other transfer by the Account Agent of any or all
of its rights hereunder.
SECTION 7. PERFORMANCE BY THE ACCOUNT AGENT.
If any Assignor fails to perform any agreement or obligation
contained herein, the Account Agent itself may perform or cause performance of
such agreement or obligation, and the expenses of the Account Agent incurred in
connection therewith shall be payable to the Account Agent by the Assignors.
SECTION 8. RESPONSIBILITY OF THE ACCOUNT AGENT AND
ADMINISTRATIVE AGENT.
(a) Neither the Account Agent nor any of their respective
directors, officers, agents, employees, affiliates, representatives and agents
shall be liable for any failure to invest or reinvest any cash in the
Partnership Funds Account in accordance herewith or for any losses incurred by
reason of investments made by the Account Agent pursuant to Section 1.03 hereof.
The Account Agent shall act hereunder on the same terms and conditions as are
set forth in Section 10 of the Credit Agreement (which section is incorporated
herein by reference with each reference therein to "Agent" to include the
Account Agent hereunder and each reference therein to Lenders to include the
Lenders, the Holders and the Partners and by accepting the benefit hereof, the
Lenders, Holders and Partners being deemed to have agreed to such provisions as
so incorporated) and shall hold the Collateral in accordance with this Agreement
and with only such obligations in respect thereof as are expressly set forth in
this Agreement.
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<PAGE> 5
(b) The Account Agent acknowledges and agrees that (i) all
disbursements and releases made pursuant to this Agreement shall be made by the
Account Agent irrespective of, and without deduction for, any counterclaim,
defense, recoupment or set-off and shall be final, (ii) all service charges and
fees with respect to this Agreement or the Partnership Funds Account shall be
paid by the Assignors, (iii) it irrevocably waives and renounces any pledge,
security interest (whether consensual, statutory or otherwise) or right of
offset or compensation that it has or may ever have for its own benefit with
respect to the Partnership Funds Account, (iv) it shall maintain appropriate
books and records with respect to the Partnership Funds Account in which shall
be recorded all transactions related thereto including, without limitation, all
disbursements hereunder and any investments made by the Account Agent and shall
permit the Administrative Agent and Trustee or any of their agents or
representatives to inspect and to make copies of such books and records, as is
reasonable, at the Assignors' sole cost and expense and (v) it shall exercise
its [customary]efforts and utilize prudence in performing its duties hereunder
in accordance with the terms of this Agreement.
SECTION 9. INDEMNITY.
9.1. Indemnity. (a) Each Assignor jointly and severally agrees
to indemnify, reimburse and hold the Account Agent and, to the extent acting
hereunder, the Administrative Agent and the Trustee and their respective
successors, assigns, employees, agents and servants (hereinafter in this Section
9.1 referred to individually as "Indemnitee," and collectively as "Indemnitees")
harmless from any and all liabilities, obligations, damages, injuries,
penalties, claims, demands, actions, suits, judgments and any and all costs,
expenses or disbursements (including reasonable attorneys' fees and expenses and
herein collectively called "expenses") of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnitees in any way relating to or
arising out of this Agreement or any other document executed in connection
herewith or in any other way connected with the administration of the
transactions contemplated hereby or the enforcement of any of the terms of, or
the preservation of any rights under any thereof, or in any way relating to or
arising out of the use of the Collateral; provided that no Indemnitee shall be
indemnified pursuant to this Section 9.1(a) for expenses to the extent caused by
the gross negligence or willful misconduct of such Indemnitee.
(b) Without limiting the application of Section 9.1(a) hereof,
each Assignor jointly and severally agrees to pay, or reimburse the Account
Agent, for any and all fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Account Agent's Liens on, and security interest in, the Account, including,
without limitation, all fees and taxes in connection with the recording or
filing of instruments and documents in public offices, payment or discharge of
any taxes or Liens upon or in respect of the Collateral and all other fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the Account Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 9.1(a) or (b)
hereof, each Assignor jointly and severally agrees to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in
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<PAGE> 6
consequence of or growing out of any misrepresentation by such
Assignor in this Agreement or in any writing contemplated by or made or
delivered pursuant to or in connection with this Agreement.
(d) If and to the extent that the obligations of any Assignor
under this Section 9.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
9.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Section 9 shall
continue in full force and effect notwithstanding the full payment of all
Obligations.
SECTION 10. TERMINATION; RELEASE.
(a) Upon the Termination Date (as defined below) this
Agreement shall terminate, and the Account Agent will duly assign, transfer and
deliver to the Assignors (without recourse and without any representation or
warranty) the Collateral, if any, that remains in the possession of the Account
Agent and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement together with any monies at the time held by the
Collateral Agent hereunder. As used in this Agreement, "Termination Date" shall
mean the earlier of (x) that date upon which all Commitments under the Credit
Agreement have terminated and all Obligations have been repaid in full and (y)
that date, occurring after the Commencement Date, which is one Business Day
after the date upon which all of the amounts on deposit under the Mortgage Notes
Proceeds Agreement have been applied as required by Section 3.01(b) of such
agreement.
(b) At any time that the Assignors desire that Collateral be
released as provided in the foregoing Section 10(a), the Assignors shall deliver
to the Account Agent and the Administrative Agent a certificate signed by an
Authorized Officer of the General Partner, stating that the release of the
respective Collateral is permitted pursuant to said Section 10(a). Neither the
Account Agent nor the Administrative Agent shall have any liability whatsoever
to any Lender as a result of any release of Collateral by it as permitted by
this Section 10.
SECTION 11. NOTICES, ETC.
Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be deemed to have been duly given or made when delivered as follows:
(a) if to any Assignor, at:
1160 Town Center Drive
Suite 200
Las Vegas, Nevada
Attention: John Tipton
<PAGE> 7
(b) if to the Account Agent:
First Security Bank
Trust Dept.
530 Las Vegas Blvd. South
Las Vegas, Nevada 89101
(c) if to the Administrative Agent:
175 Water Street
New York, NY 10038
Attention: Robert Karlovitz
(d) if to the Trustee:
114 West 47th St.
New York, NY 10036
Attention: James D. Nesci
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
SECTION 12. MISCELLANEOUS.
This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the State of New York. This Agreement shall be binding upon each Assignor and
its successors and assigns and shall inure to the benefit of and be enforceable
by the Account Agent, the Administrative Agent and the Trustee and their
successors and assigns. The headings in this Agreement are for purposes of
reference only and shall not limit or define the meaning hereof. This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument. Delivery of an
executed counterpart of the signature pages to this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Agreement. This Agreement shall become effective on the date on which each of
the parties shall have executed and delivered a copy hereof. In the event that
any provision of this Agreement shall prove to be invalid or unenforceable, such
provision shall be deemed to be severable from the other provisions of this
Agreement, which shall remain binding on all parties hereto.
SECTION 13. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be
changed, waived, modified or varied in any manner whatsoever, except pursuant to
a writing signed by all the parties hereto, with the Administrative Agent to act
only at the direction of the Required Lenders or all Lenders, as provided in
Section 11.12 of the Credit Agreement. The Account Agent will be
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<PAGE> 8
replaced hereunder by a new Account Agent at such time as such new Account Agent
replaces the Disbursement Agent under and in accordance with Section 13 of the
Disbursement Agreement. Upon the effectiveness of such replacement, the original
Account Agent will transfer to the new Partnership Funds Account established by
the new Account Agent all amounts on deposit in the original Partnership Funds
Account.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized representatives,
as of the date first above written.
THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP, as an Assignor
By ____________________________________,
its General Partner
By ____________________________________
Title:
THE RESORT AT SUMMERLIN, INC.,
as an Assignor
By:____________________________________
Title:
THE RESORT AT SUMMERLIN, INC.,
as Representative
By:____________________________________
Title:
FIRST SECURITY TRUST COMPANY OF NEVADA
as Account Agent
By:____________________________________
Title:
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<PAGE> 10
Agreed
NATIONAL WESTMINSTER BANK PLC,
as Administrative Agent
By:_______________________________
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK as Trustee
By:_______________________________
Title:
-10-
<PAGE> 1
Exhibit 4.11
RECEIPT
I, Louis P. Young, a Vice President of United States Trust Company of New
York, hereby acknowledge receipt of Global Note No. 1 of The Resort at
Summerlin, Limited Partnership's and The Resort at Summerlin, Inc.'s 13% Senior
Subordinated PIK Notes due 2007, Series A, issued in the name of Cede & Co. in
the amount of $100,000,000, as custodian for Cede & Co.
December 31, 1997 /s/ Louis P. Young
---------------------
Louis P. Young
Vice President
<PAGE> 2
THIS NOTE OR ITS PREDECESSORS HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED, SOLD OR PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED STATES PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
or (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE
ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH TRANSFER, ON THE DATE
OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP OR THE RESORT AT SUMMERLIN,
INC. (THE "ISSUERS") OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO
A QUALIFIED QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE TIME OF
TRANSFER OF LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS.
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE, BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUERS), (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR (G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUERS) AND IN EACH CASE, IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY OR A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY
OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITORY. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUERS OR THEIR AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE> 3
CUSIP No: 761160 AA 8
(Front of Note)
No. 1 $100,000,000
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
13% Senior Subordinated PIK Notes due 2007, Series A
The Resort at Summerlin, Limited Partnership, a Nevada partnership, and The
Resort at Summerlin, Inc., a Nevada corporation, jointly and severally, promise
to pay to Cede & Co., or its registered assigns, the principal sum of
$100,000,000 (ONE HUNDRED MILLION AND 00/100 DOLLARS), as such amount may be
increased or decreased on the records of the Registrar (as defined in the
Indenture referred to herein), on December 15, 2007.
Interest Payment Dates: June 15 and December 15, commencing June 15, 1998.
Record Dates: May 15 and November 15 (whether or not a Business Day).
Additional provisions of this Note are set forth on the other side of this Note.
Dated: December 31, 1997
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
By: THE RESORT AT SUMMERLIN,
INC., its General Partner
By: /s/ illegible
-------------------------------------
By: /s/ illegible
-------------------------------------
THE RESORT AT SUMMERLIN, INC.
By: /s/ illegible
-------------------------------------
By: /s/ illegible
-------------------------------------
2
<PAGE> 4
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned Indenture
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee
By: /s/ Louis P. Young
--------------------------------------
Authorized Signatory
3
<PAGE> 5
(Reverse of Note)
13% SENIOR SUBORDINATED PIK NOTE DUE 2007, Series A
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. Interest. The Resort at Summerlin, limited Partnership, a Nevada
limited partnership , and The Resort at Summerlin, Inc., a Nevada corporation
(the "Issuers"), jointly and severally, promise to pay interest on the principal
amount of this Note at the rate and in the manner specified below. The Issuers
shall pay, in cash, interest on the principal amount of this Note at the rate
per annum of 13%; provided, however, that through and including June 15, 1999,
on each Interest Payment Date, the Issuers may, at their option and in their
sole discretion, in lieu of the payment in whole or in part of interest due on
this Note, pay interest on this Note through the issuance of additional Notes in
an aggregate principal amount equal to the amount of interest that would be
payable with respect to this Note, if such interest were paid in cash. After
June 15, 1999, the Issuers shall pay interest on this Note in cash. The Issuers
shall notify the Trustee in writing of their election to pay interest on this
Note through the issuance of additional Notes not less than 10 nor more than 45
days prior to the record date for the Interest Payment Date on which additional
Notes will be issued. Additional Notes shall be governed by, and entitled to the
benefits of, the Indenture and shall be subject to the terms of the Indenture
and shall be subject to the same terms (including the rate of interest from time
to time payable, thereon) as this Note (except, as the case may be, with respect
to the issuance date and aggregate amount). The Issuers will pay interest
semiannually in arrears on June 15 and December 15 of each year (each an
"Interest Payment Date"), commencing June 15, 1998, or if any such day is not a
Business Day on the next succeeding Business Day. Interest will be computed on
the basis of a 360-day year consisting of twelve 30-day months. Interest shall
accrue from the most recent Interest Payment Date to which interest has been
paid or, if no interest has been paid, from the date of the original issuance of
the Notes. To the extent lawful, the Issuers shall pay interest on overdue
principal at the rate of 2% per annum in excess of the then applicable interest
rate on the Notes; it shall pay interest on overdue installments of interest
(without regard to any Applicable grace periods) at the same rate to the extent
lawful. The rate of interest payable on this Note shall be subject to the
assessment of additional interest (the "Additional Interest") as follows:
(i) if the Exchange Offer Registration Statement (as defined below) or
Shelf Registration Statement (as defined below) is not filed within 120 days
following the Issue Date or, in the case of the Shelf Registration Statement,
120 days following a Shelf Request (as defined in the Registration Rights
Agreement), Additional Interest shall accrue on the Notes over and above the
stated interest at a rate of 0.25% per
4
<PAGE> 6
annum for the first 90 days commencing on the 120th day after the Issue Date or
the Shelf Request, respectively, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 30-day period;
(ii) if the Exchange Offer Registration Statement or Shelf Registration
Statement is not declared effective within, in the case of the Exchange Offer
Registration Statement, 180 days following the Issue Date or, in the case of the
Shelf Registration Statement, 180 days following a Shelf Request, Additional
Interest shall accrue on the Notes over and above the stated interest at a rate
of 0.25% per annum for the first 90 days commencing on the 180st day after the
Issue Date or the Shelf Request, respectively, such Additional Interest rate
increasing by an additional 0.25% per annum at the beginning of each subsequent
30-day period; or
(iii) if (A) the Issuers and the Subsidiary Guarantors have not exchanged
all Notes validly tendered in accordance with the terms of the Exchange Offer on
or prior to 210 days after the Issue Date or (B) the Exchange Offer Registration
Statement ceases to be effective at any time prior to the time that the Exchange
Offer is consummated or (C) if applicable, the Shelf Registration Statement has
been declared effective and such Shelf Registration Statement ceases to be
effective at any time prior to the second anniversary of the Issue Date (unless
all the Notes have been sold thereunder), then Additional Interest shall accrue
on the Notes over and above the stated interest at a rate of 0.25% per annum for
the first 30 days commencing on (x) the 210th day after the Issue Date with
respect to the Notes validly tendered and not exchanged by RAS, in the case of
(A) above, or (y) the day the Exchange Offer Registration Statement ceases to be
effective or usable for its intended purpose in the case of (B) above, or (z)
the day such Shelf Registration Statement ceases to be effective in the case of
(C) above, such Additional Interest rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 30-day period; provided, however, that
the Additional Interest rate on the Notes under clauses (i), (ii) and (iii)
above may not exceed in the aggregate 2.0% per annum; and provided further, that
(1) upon the filing of the Exchange Offer Registration Statement or Notes Shelf
Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or Shelf Registration
Statement (in the case of (ii) above), or (3) upon the exchange of Exchange
Notes for all Notes tendered (in the case of clause (iii)(A) above), or upon the
effectiveness of the Exchange Offer Registration Statement which had ceased to
remain effective (in the case of clause (iii)(B) above), or upon the
effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the case of clause (iii)(C) above), Additional Interest on the
Notes as a result of such clause (or the relevant subclause thereof), as the
case may be, shall cease to accrue.
5
<PAGE> 7
"Exchange Offer" shall mean the exchange offer by the Issuers of Initial
Notes for Exchange Notes pursuant to Section 2(a) of the Registration Rights
Agreement.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form) and all amendments and supplements to such registration statement, in each
case including the Offering Memorandum or prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Record Date" shall have the meaning provided on the front of this Note.
"Shelf Registration Statement" shall mean a "shelf" registration statement
of the Issuers and the Subsidiary Guarantors pursuant to the provisions of the
Registration Rights Agreement which covers all of the Initial Notes on an
appropriate form under Rule 415 under the Securities Act, or any similar rule
that may be adopted by the Commission, and all amendments and supplements to
such registration statement, including post-effective amendments, in each case
including the Offering Memorandum contained therein, all exhibits thereto and
all material incorporated by reference therein.
2. Method of Payment. The Issuers shall pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the Record Date immediately preceding the Interest Payment
Date, even if such Notes are cancelled after such Record Date and on or before
such Interest Payment Date. Noteholders must surrender Notes to a Paying Agent
to collect principal payments. The Issuers shall pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender") or
Additional Notes in accordance with the Indenture. However, the Issuers may pay
principal, premium, if any, and interest by its check payable in such U.S.
Legal Tender. The Issuers may deliver any such interest payment to the Paying
Agent or to a Noteholder at the Noteholder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee will act as Paying
Agent and Registrar. The Issuers may change any Paying Agent, Registrar or
co-registrar without prior notice to any Noteholder. An Issuer or any Subsidiary
Guarantor may act in any such capacity, except that none of RAS, its
Subsidiaries or their Affiliates shall act (i) as Paying Agent in connection
with any redemption, offer to purchase, discharge or defeasance, as otherwise
specified in the Indenture, and (ii) as Paying Agent or Registrar if a Default
or Event of Default has occurred and is continuing.
6
<PAGE> 8
4. Indenture. The Issuers issued the Notes under an Indenture, dated as of
December 30, 1997 (the "Indenture"), among the Issuers, the Subsidiary
Guarantors and United States Trust Company of New York, as Trustee (the
"Trustee"). The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the TIA as in effect on the
date the Indenture is qualified, except as otherwise provided in the Indenture.
The Notes are subject to all such terms, and Noteholders are referred to the
Indenture and the TIA for a statement of such terms. The terms of the Indenture
shall govern any inconsistencies between the Indenture and the Notes. The Notes
are senior Subordinated Obligations of the Issuers limited to $100,000,000 in
aggregate principal amount excluding the Additional Notes.
5.(a) 0ptional Redemption. Except as indicated in the next succeeding
paragraph, the Notes are not redeemable at the Issuers' option prior to December
15, 2002. Thereafter, the Notes will be redeemable, at the option of the
Issuers, in whole or in part, at the following redemption prices (expressed as
percentages of the principal amount of the Notes) if the Notes are redeemed
during the 12-month period commencing on December 15 of the years set forth
below, plus accrued interest to the redemption date:
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
2002 106.50%
2003 104.33%
2004 102.17%
2005 and thereafter 100.00%
</TABLE>
(b) Optional Redemption Upon Equity Offerings. At any time, or from time
to time, on or prior to December 15, 2000, the Issuers may, at their option, use
the Net Cash Proceeds of one or more Public Equity Offerings by RAS so long as
there is a Public Market at the time of such redemption (which fact shall be
certified to the Trustee in an Officer's Certificate delivered to the Trustee
pursuant to Section 3.01(a) of the Indenture), at a redemption price equal to
113% of the principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the date of redemption; provided, however, that after any such
redemption at least $65 million of the original principal amount of the Notes
remains outstanding. In order to effect the foregoing redemption with the
proceeds of any Public Equity Offering, the Issuers shall make such redemption
not more than 90 days after the consummation of any such Public Equity Offering.
6. Mandatory Redemption. The Notes are not subject to mandatory redemption
or sinking fund payments except as described below. Notwithstanding any other
provision hereof, if any Gaming Authority requires that a Holder or beneficial
7
<PAGE> 9
owner of the Notes must be licensed, qualified or found suitable under any
applicable Gaming Laws in order to maintain any gaming license or franchise of
RAS under any applicable Gaming Laws, and the Holder or beneficial owner fails
to apply for a license, qualification or finding of suitability within 30 days
after being requested to do so by the Gaming Authority (or such lesser period
that may be required by such Gaming Authority) or if such Holder or beneficial
owner is not so licensed, qualified or found suitable, the Issuers shall have
the right, at their option, (i) to require such Holder or beneficial owner to
dispose of such Holder's or beneficial owner's Notes within 30 days of receipt
of such finding by the applicable Gaming Authority (or such earlier date as may
be required by the applicable Gaming Authority) or (ii) to call for redemption
of the Notes of such Holder or beneficial owner at a redemption price equal to
the lesser of the principal amount thereof or the fair market value thereof or
the price at which such Holder or beneficial owner acquired the Notes, together
with, in either case, accrued and unpaid interest, to the earlier of the date of
redemption or, the date of the finding of unsuitability by such Gaming
Authority, which may be less than 30 days following the notice of redemption if
so ordered by such Gaming Authority. In connection with any such redemption and
except as may be required by a Gaming Authority, the Issuers shall comply with
the procedures contained in the Indenture for redemptions of the Notes. The
Issuers are not required to pay or reimburse any Holder or beneficial owner of
the Notes who is required to apply for such license, qualification or finding of
suitability for the costs of such licensure and investigation for such license,
qualification or finding of suitability. Any of such expenses will be the sole
obligation of such Holder or beneficial owner of the Notes.
7. Repurchase at Option of Noteholder. (a)If there is a Change of Control,
each Holder of Notes will have the right, subject to the conditions set forth in
Section 4.14 of the Indenture, to require the Issuers to repurchase all or any
part of such Holder's Notes at a repurchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant Interest Payment Date). No earlier
than 30 days after and no later than 60 days following a Change of Control (or
if the Notes have been repaid in full at such time), the Issuers will mail a
notice to each Noteholder stating (i) that a Change of Control has occurred and
that such Noteholder has the right to require the Issuers to repurchase all or
any part of such Noteholder's Notes at a repurchase price in cash equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date); (ii)
the circumstances and relevant facts regarding such Change of Control (including
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control); (iii) the
repurchase date (which will be no earlier then 70 days nor later than 90 days
from the date such notice is mailed); and
8
<PAGE> 10
(iv) the procedures, determined by the Issuers consistent with the Indenture,
that a Noteholder must follow in order to have its Notes repurchased.
Noteholders that are subject to an offer to repurchase may elect to have such
Notes repurchased by completing the form entitled "Option of Noteholder to Elect
Purchase" appearing below.
(b) The Indenture provides that, after certain Asset Dispositions, and
subject to the further limitations contained therein, the Issuers will make an
offer to purchase certain amounts of the Notes in accordance with procedures set
forth in the Indenture.
8. Notice of Redemption. Notice of redemption shall be mailed at least 30
but not more than 60 days before the redemption date to each Holder whose Notes
are to be redeemed at its registered address. Notes may be redeemed in part but
only in whole multiples of $1,000 unless all of the Notes held by a Noteholder
are to be redeemed. On and after the redemption date, interest ceases to accrue
on Notes or portions of them called for redemption.
9. Subordination. The Issuers' payment of the principal of and interest on
the Notes is subordinated and subject to the prior payment in full of the
Issuers' Senior Indebtedness as more fully set forth in the Indenture. Each
Holder of Notes by his acceptance hereof covenants and agrees that all payments
of the principal and interest on the Notes by the Issuers shall be subordinated
in accordance with Article 9 of the Indenture and each holder accepts and agrees
to be bound by such provisions.
10. Registration Rights. Pursuant to the Registration Rights Agreement,
and subject to certain terms and stated therein, including compliance with the
requirements of all Gaming Laws, the Issuers will be obligated to consummate an
Exchange Offer pursuant to which the Holders of the Initial Notes shall have
the right to exchange this Note for Exchange Notes, which have been registered
under the Securities Act, in like principal amount and having terms identical in
all material respects to the Initial Note.
11. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Noteholder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Note or portion of a
Note selected for redemption. Also, it need not exchange or register the
transfer of any Notes during a period beginning at the opening of business on a
Business Day 15 days before the day
9
<PAGE> 11
of any selection of Notes to be redeemed and ending at the close of business on
the day of selection or during the period between a Record Date and the
corresponding Interest Payment Date.
12. Persons Deemed Owners. Prior to due presentment to the Trustee for
registration of the transfer of this Note, the Trustee, any Agent and the
Issuers may deem and treat the Person in whose name this Note is registered as
its absolute owner for the purpose of receiving payment of principal of,
premium, if any, and interest on this Note and for all other purposes
whatsoever, whether or not this Note is overdue, and neither the Trustee, any
Agent nor the Issuers shall be affected by notice to the contrary. The
registered Noteholder shall be treated as its owner for all purposes.
13. Amendments And Waivers. Subject to certain exceptions provided in the
Indenture, the Indenture or the Notes may be amended with the consent of the
Holders of a majority in principal amount of the then outstanding Notes, and any
existing Default or Event of Default (except a payment default) may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Noteholder, the Indenture or the
Notes may be amended to, among other things, cure any ambiguity, defect or
inconsistency, to comply with the requirements of the Commission in order to
effect or maintain qualification of the Indenture under the TIA or to make any
change that does not adversely affect the rights of any Noteholder.
14. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare the unpaid principal of, and any accrued
and unpaid interest on, all the Notes to be due and payable immediately;
provided, that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Issuers, all outstanding Notes
shall become due and payable immediately without further action or notice.
Noteholders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Noteholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Issuers must furnish an annual compliance certificate to the
Trustee.
15. Trustee Dealings with the Issuers. The Trustee under the Indenture, in
its individual or any other capacity may make loans to, accept deposits from,
and perform services for the Issuers, the Subsidiary Guarantors or any Affiliate
of the
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<PAGE> 12
Issuers or the Subsidiary Guarantors, and may otherwise deal with the Issuers,
the Subsidiary Guarantors and their respective Affiliates as if it were not
Trustee.
16. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Issuers and their Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, enter into transactions with Affiliates, create
dividend or other payment restrictions affecting Subsidiaries, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions provided for in the Indenture. The Issuers must
annually report to the Trustee on compliance with such limitations.
17. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
18. Subsidiary Guarantee. Each Subsidiary Guarantor has jointly and
severally irrevocably and unconditionally guaranteed the payment of principal,
premium, if any, and interest (including interest on overdue principal and
overdue interest if lawful) on the Notes; provided, however, each Subsidiary
Guarantor that makes a payment or distribution under a Subsidiary Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Subsidiary Guarantor.
19. Defeasance. Subject to certain conditions provided for in the
Indenture, the Issuers at any time may terminate some or all of their
obligations under the Notes and the Indenture if the Issuers deposit with the
Trustee money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Notes to redemption or maturity, as the
case may be.
20. Governing Law. The laws of the State of New York shall govern this
Note and the Indenture, without regard to principles of conflict of laws.
21. Abbreviations. Customary abbreviations may be used in the name of a
Noteholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Note Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes and have directed the Trustee to use
CUSIP
11
<PAGE> 13
numbers in notices of redemption as a convenience to Noteholders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
The Issuers will furnish to any Noteholder upon written request and
without charge a copy of the Indenture. Request may be made to:
The Resort at Summerlin
1160 Town Center Drive, Suite 200
Las Vegas, NV 89134
Attn: John Tipton
12
<PAGE> 14
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Note on the books of the Issuers. The agent may
substitute another to act for him.
Date:_____________
Your Signature:_____________________________
(Sign exactly as your name appears
on the face of this Note)
13
<PAGE> 15
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of the declaration by the Commission of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) December 30, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
Check One
(1) ___ to the Issuers or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) ___ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) ___ outside the United States to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act; or
(5) ___ pursuant to the exemption from registration provided by Rule
144 under the Securities Act; or
(6) ___ pursuant to an effective registration statement under the
Securities Act; or
(7) ___ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than
the registered Noteholder thereof; provided that if box (3), (4), (5) or (7) is
checked, the Issuers or the Trustee may require, prior to registering any such
transfer of the Notes, in their sole discretion, such legal opinions,
certifications (including an investment letter in the case of box (3) or (4))
and other information as the Trustee or the Issuers have reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
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<PAGE> 16
Securities Act. If none of the foregoing boxes is checked, the Trustee or
Registrar shall not be obligated to register this Note in the name of any Person
other than the Noteholder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.17 of the Indenture
shall have been satisfied.
Dated:_______________________ Signed:_______________________________
(Sign exactly as name appears on the
other side of this Note)
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:_________________ _________________________________________
NOTICE: To be executed by an
executive officer
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<PAGE> 17
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.14 of the Indenture check the
appropriate box:
[ ] Section 4.10 [ ] Section 4.14
If you want to have only part of the Note purchased by the Issuers
pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you
elect to have purchased:
$___________________
Date:_______________
Your Signature:__________________________________
(Sign exactly as your name appears on the face of
this Note)
16
<PAGE> 1
Exhibit 4.12
WARRANT CERTIFICATE FACE
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL
INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON, IS NOT
ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATIONS UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS
IN EFFECT WITH RESPECT TO SUCH TRANSFER, ON THE DATE OF THE TRANSFER OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE RESORT AT
SUMMERLIN, LIMITED PARTNERSHIP (THE "ISSUER") OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QIB IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE WARRANT AGENT), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE, BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER), (F)
PURSUANT TO AN EFFECTIVE REGISTRATION
<PAGE> 2
STATEMENT UNDER THE SECURITIES ACT OR (G) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE ISSUER) AND IN EACH CASE, IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THIS WARRANT AND THE LIMITED PARTNER INTERESTS OF THE PARTNERSHIP INTO
WHICH THIS WARRANT IS EXERCISABLE ARE SUBJECT TO A REGISTRATION RIGHTS AND
LIMITED PARTNERS AGREEMENT, DATED AS OF DECEMBER 30, 1997, WHICH CONTAINS
PROVISIONS REGARDING THE RESTRICTIONS ON THE TRANSFER AND PROVISIONS REQUIRING
THE MANDATORY TRANSFER OF SUCH PARTNERSHIP INTERESTS AND OTHER MATTERS. A COPY
OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
PARTNERSHIP.
COMMENCING WITH THE DATE A NONRESTRICTED GAMING LICENSE IS ISSUED TO
THE PARTNERSHIP BY THE NEVADA GAMING COMMISSION AND THEREAFTER UNTIL THE
PARTNERSHIP HAS BEEN REGISTERED AS A REGISTERED COMPANY AND GRANTED THE
EXEMPTIONS BY THE NEVADA GAMING COMMISSION, THE SALE, ASSIGNMENT, TRANSFER,
PLEDGE, OR OTHER DISPOSITION OF ANY INTEREST IN THE PARTNERSHIP IS VOID UNLESS
APPROVED IN ADVANCE BY THE NEVADA GAMING COMMISSION. IF AT ANY TIME THE NEVADA
GAMING COMMISSION FINDS THAT AN INDIVIDUAL OWNER OR ANY SUCH INTEREST IS
UNSUITABLE TO HOLD THAT INTEREST, THE NEVADA GAMING COMMISSION SHALL IMMEDIATELY
NOTIFY THE LIMITED PARTNERSHIP OF THAT FACT. THE PARTNERSHIP SHALL, WITHIN TEN
DAYS FROM THE DATE THAT IT RECEIVES THE NOTICE FROM THE NEVADA GAMING
COMMISSION, RETURN TO THE UNSUITABLE OWNER THE AMOUNT OF HIS CAPITAL ACCOUNT AS
REFLECTED ON THE BOOKS OF THE PARTNERSHIP
-2-
<PAGE> 3
BEGINNING ON THE DATE WHEN THE NEVADA GAMING COMMISSION SERVES NOTICE OF A
DETERMINATION OF UNSUITABILITY, PURSUANT TO THE PRECEDING SENTENCE, UPON THE
PARTNERSHIP, IT IS UNLAWFUL FOR THE UNSUITABLE OWNER: (A) TO RECEIVE ANY SHARE
OF THE PROFITS OR DISTRIBUTIONS OF ANY CASH OR OTHER PROPERTY OTHER THAN A
RETURN OF CAPITAL AS REQUIRED ABOVE; (B) TO EXERCISE, DIRECTLY OR THROUGH ANY
TRUSTEE OR NOMINEE, ANY VOTING RIGHT CONFERRED BY SUCH INTEREST; OR (C) TO
RECEIVE ANY REMUNERATION IN ANY FORM FROM THE PARTNERSHIP, FOR SERVICES RENDERED
OR OTHERWISE.
-3-
<PAGE> 4
EXERCISABLE ON OR AFTER THE DATE OF ISSUANCE
AND ON OR BEFORE DECEMBER 15, 2007
_______ Warrants
No. 1
Warrant
CUSIP No.:
Warrant Certificate
The Resort at Summerlin, Limited Partnership
This Warrant Certificate certifies that ___________________
___________________ or registered assigns, is the registered holder of
______________ Warrants expiring December 15, 2007 (the "Warrant") to purchase
limited partner interests ("LP Partnership Interest") in The Resort at
Summerlin, Limited Partnership, a Nevada limited partnership (the
"Partnership"). Each Warrant initially entitles the holder upon exercise to
receive from the Partnership on or after the date hereof and on or before 5:00
p.m. New York City Time on December 15, 2007, one LP Partnership Interest at the
initial exercise price (the "Exercise Price") of $0.01 payable in lawful money
of the United States of America upon surrender of this Warrant Certificate and
payment of the Exercise Price at the office or agency of the Warrant Agent, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to herein. The Exercise Price and the number of LP Partnership
Interests issuable upon exercise of each Warrant are subject to adjustment upon
the occurrence of certain events set forth in the Warrant Agreement.
No Warrant may not be exercised after 5:00 p.m., New York City
Time, on December 15, 2007, and to the extent not exercised by such time the
Warrant shall become void.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
-1-
<PAGE> 5
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring December 15, 2007, entitling the
holders on exercise of each Warrant initially to receive one LP Partnership
Interest, and is issued or to be issued pursuant to a Warrant Agreement dated as
of December 30, 1997 (the "Warrant Agreement"), duly executed and delivered by
the Partnership and United States Trust Company of New York, a banking
corporation organized and existing under the laws of the State of New York, as
warrant agent (the "Warrant Agent"). The Warrant Agreement is hereby
incorporated by reference in and made a part of this Warrant Certificate and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the
Partnership and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Partnership.
The Warrants may be exercised at any time on or after the date
hereof and on or before December 15, 2007, subject to extension as provided in
the Warrant Agreement. The holder of the Warrants evidenced by this Warrant
Certificate may exercise any such Warrant by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon properly
completed and executed, together with payment of the Exercise Price only in
full, and not in part. No adjustment shall be made for any distributions on the
LP Partnership Interests issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the any occurrence of
certain events the LP Partnership Interest issuable upon exercise of the Warrant
may, subject to certain conditions, be adjusted. No fractional LP Partnership
Interests will be issued upon the exercise of Warrants, but the Partnership will
pay the cash value thereof determined as provided in the Warrant Agreement.
This Warrant Certificate, when surrendered at the office of
the Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate Warrants to
purchase to purchase the aggregate number of LP Partnership Interests to which
the surrendered Warrant was entitled.
-2-
<PAGE> 6
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate
or Warrant Certificates of like tenor and representing in the aggregate the
right to purchase a like amount of LP Partnership Interests shall be issued to
the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Partnership and the Warrant Agent may deem and treat the
registered holder(s) thereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, of any distribution to
the holder(s) hereof, and for all other purposes, and neither the Partnership
nor the Warrant Agent shall be affected by any notice to the contrary. Neither
the Warrants nor this Warrant Certificate entitles any holder hereof to any
rights of a limited partner of the Partnership.
-3-
<PAGE> 7
IN WITNESS WHEREOF, The Resort at Summerlin, Limited
Partnership has caused this Warrant Certificate to be signed by its general
partner, The Resort at Summerlin, Inc., by its President and by its Vice
President.
Dated: ___________, 1997
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
BY: THE RESORT AT SUMMERLIN,
INC., General Partner
By:
-----------------------
Name:
Title:
By: /s/
------------------------
Name:
Title:
Countersigned:
United States Trust Company of New York,
as Warrant Agent
By:
----------------------
Authorized Signature
-4-
<PAGE> 8
Election to Purchase
(To be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive _________ limited
partner interests in, and herewith tenders payment for such partnership interest
to the order of, The Resort at Summerlin, Limited Partnership in the amount of
$___________ in accordance with the terms hereof. The undersigned requests that
a certificate for such partnership interest be registered in the name of
____________, whose address is _________________________ and that evidence of
such partnership interest be delivered to ___________________________________,
whose address is ______________________________________.
Signature:
Date:
Signature Guarantee:
___________________________________
(Signatures must be guarantee by an
"eligible guarantor institution"
meeting the requirements of the
Registrar, which requirements will
include membership or partnership
in the Securities Transfer Agents
Medallion Program ("STAMP") or such
other "signature guarantee program"
as may be determined by the
Registrar in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as amended.)
-5-
<PAGE> 1
Exhibit 4.13
WARRANT CERTIFICATE FACE
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY
NOT BE OFFERED, SOLD OR PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR A BENEFICIAL
INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON, IS NOT
ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON, AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT
WITH RESPECT TO SUCH TRANSFER, ON THE DATE OF THE TRANSFER OF THIS SECURITY
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO RAS WARRANT CO. (THE
"ISSUER") OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QIB IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT), (D) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE, BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER), (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT
<PAGE> 2
OR (G) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER) AND IN EACH CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT. THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING THE WARRANT AGENT TO
REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
COMMENCING WITH THE DATE THE COMPANY IS REGISTERED AS A HOLDING COMPANY
AND LICENSED AS A LIMITED PARTNER OF THE PARTNERSHIP BY THE NEVADA GAMING
COMMISSION AND THEREAFTER UNTIL THE COMPANY HAS BEEN REGISTERED AS A REGISTERED
COMPANY AND GRANTED THE EXEMPTIONS BY THE NEVADA GAMING COMMISSION, THE SALE,
ASSIGNMENT, TRANSFER, PLEDGE, OR OTHER DISPOSITION OF THIS SECURITY IS VOID
UNLESS APPROVED IN ADVANCE BY THE NEVADA GAMING COMMISSION. IF AT ANY TIME THE
NEVADA GAMING COMMISSION FINDS THAT AN OWNER OF THIS SECURITY IS UNSUITABLE TO
CONTINUE TO HAVE AN INVOLVEMENT IN GAMING IN NEVADA, SUCH OWNER MUST DISPOSE OF
SUCH SECURITY AS PROVIDED BY THE LAWS OF THE STATE OF NEVADA AND THE REGULATIONS
OF THE NEVADA GAMING COMMISSION THEREUNDER. SUCH LAWS AND REGULATIONS RESTRICT
THE RIGHT UNDER CERTAIN CIRCUMSTANCES: (A) TO PAY OR RECEIVE ANY DIVIDEND OR
INTEREST UPON ANY SUCH SECURITY, (B) TO EXERCISE, DIRECTLY OR THROUGH ANY
TRUSTEE OR NOMINEE, ANY VOTING RIGHT CONFERRED BY SUCH SECURITY, OR (C) TO
RECEIVE ANY REMUNERATION IN ANY FORM FROM THE COMPANY, FOR SERVICES RENDERED OR
OTHERWISE.
-2-
<PAGE> 3
EXERCISABLE ON OR AFTER THE DATE OF ISSUANCE
AND ON OR BEFORE DECEMBER 15, 2007
______ Warrants
No. 1
CUSIP No.:
Warrant Certificate
RAS Warrant Co.
This Warrant Certificate certifies that __________________________
______________________, or registered assigns, is the registered holder of ____
________ Warrants expiring December 15, 2007 (the "Warrants") to purchase shares
of common stock, no par value (the "Common Stock"), of RAS Warrant Co., a Nevada
corporation (the "Company"). Each Warrant initially entitles the holder upon
exercise to receive from the Company on or after the date hereof and on or
before 5:00 p.m. New York City Time on December 15, 2007, one fully paid and
nonassessable share of Common Stock (each a "Warrant Share") at the initial
exercise price (the "Exercise Price") of $0.01 payable in lawful money of the
United States of America upon surrender of this Warrant Certificate and payment
of the Exercise Price at the office or agency of the Warrant Agent, but only
subject to the conditions set forth herein and in the Warrant Agreement referred
to herein. The Exercise Price and the number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.
The Warrants may not be exercised after 5:00 p.m., New York City
Time, on December 15, 2007, and to the extent not exercised by such time the
Warrants shall become void.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
<PAGE> 4
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring December 15, 2007, entitling the
holders on exercise to receive shares of voting Common Stock of the Company, and
is issued or to be issued pursuant to a Warrant Agreement dated as of December
15, 1997 (the "Warrant Agreement"), duly executed and delivered by the United
States Trust Company of New York, a banking corporation organized and existing
under the laws of the State of New York, as warrant agent (the "Warrant Agent").
The Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Warrant Agent, the Company and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Warrants. A copy of
the Warrant Agreement may be obtained by the holder hereof upon written request
to the Company.
The Warrants may be exercised at any time on or after the date
hereof and on or before December 15, 2007, subject to extension as provided in
the Warrant Agreement. The holder of the Warrants evidenced by this Warrant
Certificate may exercise such warrants it by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon properly
completed and executed, together with payment of the Exercise Price in cash at
the office of the Warrant Agent. Each Warrant evidenced hereby shall be
exercisable only in full, and not in part. No adjustment shall be made for any
dividends on any shares of Common Stock issuable upon exercise of any Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrants set forth on the face hereof may, subject to
certain conditions, be adjusted. No fractions of a share of Common Stock will be
issued upon the exercise of any Warrant, but the Company will pay the cash value
thereof determined as provided in the Warrant Agreement.
This Warrant Certificate, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate Warrants to
purchase the aggregate number of shares of Common Stock to which the surrendered
Warrants were entitled.
-2-
<PAGE> 5
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and representing in the aggregate the right
to purchase a like number of shares of Common Stock shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
-3-
<PAGE> 6
IN WITNESS WHEREOF, RAS Warrant Co. has caused this
Warrant Certificate to be signed by its President and by its Vice
President.
Dated: ___________, 1997
RAS WARRANT CO.
By:
------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
Countersigned:
United States Trust Company of New York,
as Warrant Agent
By:
-----------------------------------
Authorized Signature
-4-
<PAGE> 7
Election to Purchase
(To be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _________ shares of Common
Stock and herewith tenders payment for such to the order of RAS Warrant Co. in
such shares the amount of $___________ in accordance with the terms hereof. The
undersigned requests that certificate for such shares be registered in the name
of ____________, whose address is _________________________ and that such
shares be delivered to ___________________________________, whose address is
_______________________________________________________________________________
______________________________________________________.
Signature:
Date:
Signature Guarantee:
____________________________________________
(Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements will include membership or
participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended.)
<PAGE> 1
Exhibit 10.1
Standard Form of Agreement Between
Owner and Contractor where the basis of payment is
the Cost of the Work Plus a Fee with or
without a Guaranteed Maximum Price
AIA Document A111 - Electronic Format
- -------------------------------------------------------------------------------
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTATION WITH AN ATTORNEY IS
ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.
The 1987 Edition of AIA Document A201, General Conditions of the Contract for
Construction, is adopted in this document by reference. Do not use with other
general conditions unless this document is modified. This document has been
approved and endorsed by The Associated General Contractors of America.
Copyright 1920, 1925, 1951, 1958, 1961, 1967, 1974, 1978, 1987 by The American
Institute of Architects, 1735 New York Avenue N.W., Washington D.C. 20006-5292.
Reproduction of the material herein or substantial quotation of its provisions
without written permission of the AIA violates the copyright laws of the United
States and will be subject to legal prosecution.
- ------------------------------------------------------------------------------
AGREEMENT
made as of the 22nd day of December in the year of Nineteen Hundred and
Ninety-Seven
BETWEEN the Owner:
(Name and address)
The Resort at Summerlin, Limited Partnership, a Nevada limited partnership, c/o
Seven Circle Resorts, Inc., 1160 Town Center Drive, Suite 200, Las Vegas,
Nevada 89134
and the Contractor:
(Name and address)
J.A. Jones Construction, a North Carolina corporation, 1050 E. Flamingo Road
#E-127, Las Vegas, Nevada 89119
the Project is:
(Name and address)
The Resort at Summerlin - Hotel, Casino & Entertainment Complex, more
particularly described as follows: A luxury Hotel of approximately 600 rooms
and a 49,000 square foot Casino, along with a Convention Center, Parking
Garage, Restaurants, Health Spa, Retail Shops, the entire 54.5 acre site on
which the Complex is to be located, and any related furniture, furnishings, and
equipment as specified pursuant to this Agreement.
the Architect is:
(Name and address)
Paul Steelman Ltd., 3330 West Desert Inn Road, Las Vegas, Nevada 89102
The Construction Manager will be designated by Owner after the execution of
this Agreement.
The Garage Architect is:
Kracor, Inc.
- ------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM - 12/20/1997. AIA License Number 105525,
which expires on 6/30/1998 - Page #1
<PAGE> 2
The Owner and Contractor agree as set forth below.
ARTICLE 1
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, the attached form of
Conditions of the Contract for Construction attached hereto (the "General,
Conditions"), the Drawings, Specifications, and Addenda and Garage
Construction Documents described in Article 16 of this Agreement, and
Modifications issued after execution of this Agreement; these form the
Contract, and are as fully a part of the Contract as if attached to this
Agreement or repeated herein. The Contract represents the entire and
integrated agreement between the parties hereto and supersedes prior
negotiations, representations or agreements, either written or oral. An
enumeration of the Contract Documents, other than Modifications, appears in
Article 16. If anything in the other Contract Documents is inconsistent with
this Agreement, this Agreement shall govern.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract
Documents to be the responsibility of others, or as follows:
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with the Architect
and the Construction Manager and utilize the Contractor's best skill, efforts
and judgment in furthering the interests of the Owner; to furnish efficient
business administration and supervision; to make best efforts to furnish at all
times an adequate supply of workers and materials; and to perform the Work
consistent with the representations and warranties set forth in Paragraph 14.3
and in the most expeditious and economical manner consistent with the
interests of the Owner. The Owner agrees to exercise best efforts to enable the
Contractor to perform the Work by furnishing and approving in a timely way
information required by the Contractor and making payments to the Contractor in
accordance with requirements of the Contract Documents.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract Time of
Subparagraph 4.2 is measured; it shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement, if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed.)
The Contractor shall commence Work no later than January 5, 1998 or the
date of receipt of the Grading Permit such commencement to in all events
include commencement of grading on the site of the Project. The contract
schedule is attached as Exhibit 7.
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner, through the Construction
Manager, in writing not less than five days before commencing the Work to permit
timely filing of mortgages, mechanic's liens and other security interests.
4.2 The Contractor shall achieve Substantial Completion of the entire Work as
defined herein:
(Insert the calendar date or number of calendar days after the date of
commencement. Also insert any requirements for earlier Substantial Completion of
certain portions of the Work, if not stated elsewhere in the Contract
Documents.)
Three hundred and ninety five calendar days (395) from the date of commencement
as set forth in 4.1 The Temporary Certificate of Occupancy shall issue ("Date of
TCO"). Contractor shall achieve substantial completion of all of the Work as
provided in Subparagraph 9.10.1 of the General Conditions, no later than forty
five calendar days from the date of TCO. Final Completion shall occur no later
than thirty calendar days (30) from the date of Substantial Completion. In
addition, Contractor shall have sufficiently completed the Work by one hundred
and eighty calendar days prior to the date of Substantial Completion, to permit
Owner's tenants of the areas designated in the Contract Documents for
restaurants and retail use to enter into possession of that space in order to
perform the work in that space required or permitted by their leases.
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #2.
<PAGE> 3
subject to adjustments of this Contract Time as provided in the contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time.)
4.3 Time is of the essence to the Contract Documents and all obligations
thereunder. The Contractor acknowledges and recognizes that (1) the Owner is
entitled to full and beneficial occupancy and use of the completed Work
following expiration of the Contract Time, and (2) the Owner has entered into,
or will enter into, binding agreements demising part of the premises where Work
is to be completed based upon the Contractor achieving Substantial Completion
of the Work within the Contract Time and (3) the Owner has entered into, or
will enter into, a binding agreement with a licensor for the operation of the
hotel portion of the Work based upon the Contractor achieving Substantial
Completion of the Work within the Contract Time. The Contractor further
acknowledges and agrees that if the Contractor fails to complete substantially,
or cause the Substantial Completion of any portion of the Work within the
Contract Time, the Owner will sustain extensive damages and serious loss as a
result of such failure. The exact amount of such damages is extremely difficult
to ascertain. Therefore, the Owner and the contractor agree as follows in this
Paragraph 4.3:
4.3.1 If the Contractor fails to achieve Substantial completion of the Work
within the Contract Time and as otherwise required by the Contract Documents,
the Owner shall be entitled to retain or recover from the Contractor, as
liquidated damages and not as a penalty, the following per diem amounts
commencing upon the first day following expiration of the contract time and
continuing until the actual Date of Substantial Completion. Such liquidated
damages are hereby agreed to be a reasonable pre-estimate of damages the Owner
will incur as a result of Contractor's failure to achieve Substantial
Completion of the Work within the Contract Time.
(i) If Substantial Completion occurs within the first thirty (30) days
after the Date for Substantial Completion, as adjusted by time extensions
pursuant to the General Conditions, no liquidated damages will be imposed.
(ii) If Substantial Completion occurs between thirty (30) and ninety (90)
days after the Date for Substantial Completion, as adjusted for time extensions
pursuant to the General conditions, the per diem amount shall be thirty
thousand dollars ($30,000).
(iii) If Substantial Completion occurs between ninety-one (91) and one
hundred twenty (120) days after the Date for Substantial Completion, as
adjusted for time extensions pursuant to the General Conditions, the per diem
rate shall be fifty thousand dollars ($50,000).
(iv) If Substantial Completion occurs more than one hundred twenty (120)
days after the Date for Substantial Completion, as adjusted for time extensions
pursuant to the General Conditions, the per diem rate shall be fifty thousand
dollars ($50,000.00).
Notwithstanding the above, if the Owner operates a casino at the project
site after the Date for Substantial Completion and before Substantial
Completion occurs, the per diem amounts listed above following the date the
casino opens shall be reduced by eighty percent (80%).
Notwithstanding anything herein to the contrary, the maximum liability to
Contractor for liquidated damages under this Section 4.3.1 shall be no more
than four million dollars ($4,000,000,00). The imposition of liquidated damages
as provided for herein shall be Owner's sole and exclusive remedy for delay for
failure to achieve Substantial Completion of the Work within the Contract Time,
and shall constitute an agreed to limit of Contractor's liability for such
delay; it being further understood that under no circumstances will Contract be
liable for indirect or consequential damages sustained by Owner due to such
delay.
If Contractor's failure to complete that portion of the Work required to
be completed by one hundred and eighty calendar days prior to the date of
substantial completion in accordance with Section 4.2. The liquidated damages
per diem amount shall be fifteen thousand dollars ($15,000) per day.
4.3.2 The Owner may deduct liquidated damages described in Paragraph 4.3.2 from
any unpaid amounts then or thereafter due the Contractor under this Agreement.
Any liquidated damages not so deducted from any unpaid amounts due the
contractor shall be payable to the Owner at the demand of the Owner, together
with interest thereon from the date of the demand.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
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6/30/1998 - Page #3
<PAGE> 4
ARTICLE 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum consisting of the Cost of the Work
as defined in Article 7 and the Contractor's Fee determined as follows:
(State a lump sum, percentage of Cost of the Work or other provision for
determining the Contractor's Fee, and explain how the Contractor's Fee is to be
adjusted for changes in the Work.)
As limited by the Guaranteed Maximum Price set forth in Paragraph 5.2, the
Contractor shall receive a basic fee, equal to three and eighty-five one
hundredths percent (3.85%) of that portion of the Cost of the Work which is
incurred or paid by the Contractor during performance of the Work (the
"Contractor's Fee"). In the event of changes in the Work, the rate of the
Contractor's Fee shall not be adjusted and shall remain equal to three and
eighty-five one hundredths percent (3.85%) of the Cost of the Work.
Consequently,the total amount earned by the Contractor as the Contractor's Fee
may increase or decrease, depending upon the nature of any changes in the Work,
but the basis of the Contractor's Fee shall always remain three and eighty-five
one hundredths percent (3.85%).
5.2 GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is
guaranteed by the Contractor not to exceed
One Hundred and Thirty three million Dollars
- -----------------------------------------------------------------------
($ 133,000,000 ) The Owner may elect to insure the Project under
---------------------------
either an OCIP pursuant to Article 11 of the Supplementary Conditions to the
General Conditions or standard insurance pursuant to AIA Form A201/CMA. In
either event, the Owner shall Pay the costs of the insurance and the coverages
will be as set forth in Article 11 of the Supplementary Conditions to the
General Conditions, subject to additions and deductions by Change Order as
provided in the Contract Documents. Such maximum sum is referred to in the
Contract Documents as the Guaranteed Maximum Price. Costs which would cause the
Guaranteed Maximum Price to be exceeded shall be paid by the Contractor without
reimbursement by the Owner.
(Insert specific provisions if the Contractor is to participate in any savings.)
The Guaranteed Maximum Price is subject to adjustment pursuant to Exhibit 1,
Section 14.33 and for change orders, authorized in accordance with the
requirements of the Contract Documents. As of the date of final completion, if
(i) the total aggregate sum of the Cost of the Work plus the Contractor's Fee
is less than (ii) the Guaranteed Maximum Price upon final completion of the
Work (such difference equals the Savings), such difference shall be shared by
the Owner and the Contractor as follows: seventy-five percent (75%) of such
Savings shall inure to the benefit of the Owner and the remainder shall be paid
to the Contractor as an additional fee; provided, however, that the Contractor
shall not be entitled to receive any Savings until the date of final payment.
5.2.2 The Guaranteed Maximum Price is based upon the following alternates,
if any, which are described in the Contract Documents and are hereby accepted
by the Owner:
(State the numbers or other identification of accepted alternates, but only if
a Guaranteed Maximum Price is inserted in Subparagraph 5.2.1 If decisions on
other alternates are to be made by the Owner subsequent to the execution of
this Agreement, attach a schedule of such other alternates showing the amount
for each and the date until which that amount is valid.)
5.2.3 The amounts agreed to for unit prices, if any, are as follows:
(State unit prices only if a Guaranteed Maximum Price is inserted in
Subparagraph 5.2.1)
ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Guaranteed Maximum Price on account of changes in
the Work may be determined by any of the methods listed in Subparagraph 7.3.3
of the General Conditions.
6.1.2 In calculating adjustments to subcontracts (except those awarded with
the Owner's prior consent on the basis of cost plus a fee), the terms "cost"
and "fee" as used in Clause 7.3.3.3 of the General Conditions and the terms
"costs" and "a reasonable
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
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6/30/1998 - Page#4
<PAGE> 5
allowance for overhead and profit" as used in Subparagraph 7.3.6 of the General
Conditions shall have the meanings assigned to them in the General Conditions
and shall not be modified by Articles 5, 7 and 8 of this Agreement. Adjustments
to subcontracts awarded with the Owner's prior consent on the basis of cost plus
a fee shall be calculated in accordance with the terms of this Agreement,
unless the Owner has furnished the Contractor with prior written approval of
the form and substance of a subcontract, in which case such adjustments shall
be calculated in accordance with the terms and conditions of that subcontract.
6.1.3 In calculating adjustments to this Contract, the terms "cost" and "costs"
as used in the above-referenced provisions of the General Conditions shall mean
the Cost of the Work as defined in Article 7 of this Agreement and the terms
"fee" and "a reasonable allowance for overhead and profit" shall mean the
Contractor's Fee as defined in Paragraph 5.1 of this Agreement.
6.2 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
6.2.1
6.3 ALL CONTRACTS
6.3.1
ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in good faith and the proper performance of the Work. Such costs
shall be at rates not higher than the standard paid at the place of the Project
except with prior consent of the Owner. The Cost of the Work shall include only
the items set forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site or, with the Owner's
agreement, at off-site workshops.
7.1.1.2 Wages or salaries of the Contractor's supervisory and administrative
personnel with the Owner's agreement.
(If it is intended that the wages or salaries of certain personnel stationed at
the Contractor's principal or other offices shall be included in the Cost of
the Work, identify in Article 14 the personnel to be included and whether for
all or only part of their time.)
7.1.1.3 Wages and salaries of the Contractor's supervisory or administrative
personnel engaged, at factories, workshops or on the road, in expediting the
production or transportation of materials or equipment required for the Work,
but only for that portion of their time required for the Work.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective
bargaining agreements and, for personnel not covered by such agreements,
customary benefits such as sick leave, medical and health benefits, holidays,
vacations and pensions but not merit bonuses, provided such costs are based on
wages and salaries included in the Cost of the Work under Clauses 7.1.1.1
through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to subcontractors in accordance with the
requirements of the subcontracts properly entered into under this Agreement.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.l1.3.1 Costs, including transportation, of materials and equipment
incorporated or to be incorporated in the completed
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #5
<PAGE> 6
construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials, if any, shall be properly
stored at the Project site, or in accordance with the Owner's instructions, and
turned over to the Owner at the completion of the Work or, at the Owner's
option, shall be sold by the Contractor; amounts realized, if any, from such
sales shall be credited to the Owner as a deduction from the Cost of the Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED
ITEMS
7.1.4.1 Costs, including transportation and maintenance, of all materials,
supplies, equipment, temporary facilities and hand tools (not owned by the
workers) consumed in the performance of the Work. Any such items used but not
consumed, which are paid for by the Owner, shall become the property of the
Owner and shall be delivered to the Owner upon completion of the Work in
accordance with instructions furnished by the Owner. If the Owner elects,
however, the Contractor may purchase or otherwise shall sell to unaffiliated
third parties any such items from the Owner at a purchase price equal to the
original cost charged to the Owner, less the reduction in fair market value
resulting directly from use of any such item in connection with the Work or such
other price which is acceptable to the Owner. Upon demand by the Owner, the
Contractor shall furnish the Owner with any information and documentation
necessary to verify the period of time for which such items were used in
connection with the Work.
7.1.4.2 Rental charges for temporary facilities, machinery, equipment, and hand
tools not customarily owned by the construction workers, which are provided by
the Contractor at the site, whether rented from the Contractor or others, and
costs of transportation, installation, minor repairs and replacements,
dismantling and removal thereof. Rates and quantities of equipment rented shall
be subject to the Owner's prior approval.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage and
parcel delivery charges, telephone service at the site and reasonable petty
cash expenses of the site office.
7.1.4.5 That portion of the reasonable travel and subsistence expenses of the
Contractor's personnel incurred while traveling in discharge of duties with the
Work, not to exceed the estimate in the attached Exhibit Number 2 or unless
otherwise approved by the Owner in advance and in writing.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and bonds required by the Contract, as well as any deductables for
said insurance or bonds.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Contractor is required by the Contract
Documents to pay.
7.1.5.4 Fees of testing laboratories incurred by Contractor for tests required
by the Contract Documents, except those related to defective or nonconforming
Work for which reimbursement is excluded by Subparagraph 13.5.3 of the General
Conditions or other provisions of the Contractor Documents and which do not
fall within the scope of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgements
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner's consent; provided, however, that such costs
of legal defenses, judgement and settlements shall not
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON, D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
User Document FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #6
<PAGE> 7
be included in the calculation of the Contractor's Fee or of a Guaranteed
Maximum Price, if any, and provided that such royalties, fees and costs are not
excluded by the last sentence of Subparagraph 3.17.1 of the General Conditions
or other provisions of the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or
negligence.
Insert A:7.1.5.7 The cost of premiums for all bonds and insurance which the
Contractor is required by the Contract Documents to purchase and maintain and
all such additional insurance coverage which the Contractor shall determine are
necessary and which are approved by the Owner. The amount of any deductible
paid by the Contractor under any insurance policy or bond, unless the claim
related to such payment of the deductible is based, in whole or in part, upon
the fault or negligence of, or failure to comply with the Contract Documents
by, the Contractor.
Insert B: 7.1.5.8 The costs reasonably incurred for automated or computer
services for items such as, but not limited to, schedules, accounting records
and reports and engineering logs.
Insert C: 7.1.5.9 Except as provided in this paragraph, legal expenses
incurred in the prosecution or defense of claims in the interest of the Owner,
including defense of claims for extras by Subcontractors, providing that the
Owner is notified of such claim in advance, and afforded the opportunity to
prosecute or defend such claim with its own attorneys. Cost of the Work shall
not include legal expenses incurred in the prosecution or defense of any claim
based upon the fault or negligence of, or failure to comply with the Contract
Documents by, the Contractor.
Insert D: 7.1.5.10 Such other costs as may be allowed by Exhibit Number 2 to
this Agreement. Included in Exhibit Number 2 are the Contractor's estimates of
certain costs that shall be permitted to be part of the Cost of the Work under
this Article 7. Contractor shall not be permitted to include in the Cost of the
Work an amount which exceeds the dollar estimate of any identified cost on
Exhibit Number 2, unless that category is already included in Article 7 or the
Owner consents in advance in writing to such additional amount.
Insert E: 7.1.5.11 The cost for design services necessary for proper execution
and completion of the Garage, whether temporary or permanent and whether or
not incorporated in the Garage.
Insert F: 7.1.5.12 A markup of five percent (5%) over the cost to the Owner for
changes in the work under a Change Order as payment for administrative and
overhead expenses of Contractor.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the
extent approved in advance in writing by the Owner such approval to be
effective must be signed on behalf of the Owner by the President of the Owner's
General Partner.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in case
of an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions to the extent not (1) caused by the
Contractor, a Subcontractor or anyone for whom either is responsible, or (2)
capable of being prevented through timely notice of an unsafe condition to the
Owner.
7.2.2 In repairing or correcting Work damaged or improperly executed by
construction workers in the employ of the Contractor, provided such damage or
improper execution did not result from the fault or negligence of the Contractor
or the Contractor's foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work other than that described in Subparagraph
7.2.2, provided such damage did not result from the fault or negligence of the
Contractor or the Contractor's personnel, and only to the extent that the cost
of such repairs is not
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #7
<PAGE> 8
recoverable by the Contractor from others and the Contractor is not compensated
therefor by insurance or otherwise provided that any absence of collectible
insurance is not due to the Contractor's breach of a contract for insurance.
7.2.4 In correcting defective or nonconforming Work performed or supplied by
a Subcontractor or material supplier and not corrected by them, provided such
defective or nonconforming Work did not result from the fault or neglect of the
Contractor or the Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor or material supplier, and only to the extent that the
cost of correcting the defective or nonconforming Work is not recoverable by
the Contractor from the Subcontractor or material supplier.
7.3 Costs as defined herein shall be actual costs paid by the Contractor,
less all discounts, rebates and salvages which shall be taken by the
Contractor, subject to Article 9 of the Agreement. All payments made by the
Owner pursuant to this Article 7, whether those payments are actually made
before or after the execution of the Contract, are included within the
Guaranteed Maximum Price specified in Paragraph 5.2 above; provided, however,
that in no event shall the Owner be required to reimburse the Contractor for
any portion of the Cost of the Work in excess of $100,000 incurred prior to the
Commencement Date unless the Contractor has received the Owner's written
consent prior to incurring such cost and all amounts previously paid by Owner
for the design and construction of the garage.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel
stationed at the Contractor's principal office and offices other than the site
office, except as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may
be provided in Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other than
the site office.
8.1.3 Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4 The Contractor's capital expenses, including interest on the
Contractor's capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically
provided in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and Paragraph
13.5 of this Agreement, costs due to the fault or negligence of, or failure to
comply with the Contract Documents by, the Contractor, Subcontractors, anyone
directly or indirectly employed by any of them, or for whose acts any of them
may be liable, including but not limited to costs for the correction of
damaged, defective or nonconforming Work, disposal and replacement of materials
and equipment incorrectly ordered or supplied, and making good damage to
property not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be
exceeded.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall
accrue to the Owner if (1) before making the payment, the Contractor included
them in an Application for Payment and received payment therefor from the
Owner, or (2) the Owner has deposited funds with the Contractor with which to
make payments; otherwise, cash discounts shall accrue to the Contractor. Trade
discounts, rebates, refunds and amounts received from sales of surplus
materials and equipment shall accrue to the Owner, and the Contractor shall
make provisions so that they can be secured. The Contractor shall not obtain
for its own benefit any discounts, rebates or refunds in connection with the
Work prior to providing the Owner with seven (7) days prior written notice of
the potential discount, rebate or refund and an opportunity to furnish funds
necessary to obtain such discount, rebate or refund on behalf of the Owner in
accordance with the requirements of this Paragraph 9.1.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM - 12/20/1997. AIA Licensed Number 105525,
which expires on 6/30/1998 - Page #8
<PAGE> 9
9.2 Amounts which accrue to the Owner in accordance with the provisions
of Paragraph 9.1 shall be credited to the Owner as a deduction from the Cost of
the Work.
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily
perform with the Contractor's own personnel shall be performed under
subcontracts or by other appropriate agreements with the Contractor. The
Contractor shall obtain bids from Subcontractors and from suppliers of
materials or equipment fabricated especially for the Work and shall deliver
such bids to the Construction Manager, the Architect, and the Owner. The Owner
will then determine, with the advice of the Contractor and subject to the
reasonable objection of the Architect and the Construction Manager, which bids
will be accepted. The Owner may designate specific persons or entities from
whom the Contractor shall obtain bids; however, if a Guaranteed Maximum Price
has been established, the Owner may not prohibit the Contractor from obtaining
bids from others. The Contractor shall not be required to contract with anyone
to whom the Contractor has reasonable objection.
10.2 If a Guaranteed Maximum Price has been established and a specific
bidder among those whose bids are delivered by the Contractor to the Architect
the Construction Manager and the Owner (1) is recommended to the Owner by the
Contractor; (2) is qualified to perform that portion of the Work; and (3) has
submitted a bid which conforms to the requirements of the Contract Documents
without reservations or exceptions, but the Owner requires that another bid be
accepted; then the Contractor may require that a Change Order be issued to
adjust the Guaranteed Maximum Price by the difference between the bid of the
person or entity recommended to the Owner by the Contractor and the amount of
the subcontract or other agreement actually signed with the person or entity
designated by the Owner.
10.3 Subcontracts or other agreements shall conform to the payment
provisions of Paragraphs 12.7 and 12.8, and shall not be awarded on the basis
of cost plus a fee without the prior consent of the Owner.
ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise
such controls as may be necessary for proper financial management under this
Contract; the accounting and control systems shall be satisfactory to the
Owner. The Owner and the Owner's accountants shall be afforded access to the
Contractor's records, books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
this Contract, and the Contractor shall preserve these for a period of three
years after final payment, or for such longer period as may be required by
law. All records shall be maintained in accordance with generally accepted
accounting procedures, consistently applied. Contractor shall require
Subcontractors retained by the Contractor on a cost-plus basis to retain
records and permit audits as required of the Contractor under this Article 11.
Insert H: 11.2 If any inspection by the Owner of the Contractor's records,
books, correspondence, instructions, drawings, receipts, vouchers, memoranda and
any other data relating to the Contract Documents reveals an overcharge,
including, without limitation, any untimely request for payment as described in
Paragraph 13.3, the Contractor shall pay the Owner upon demand an amount equal
to one hundred percent (100%) of such overcharge, as reimbursement for said
overcharge. If the overcharges exceed five percent (5%) in the aggregate for the
entire contract, the Contractor shall, in addition to paying 100% of the
overcharge, also pay the administrative and actual expenses incurred for the
Final Audit in determining the overcharges. The requirements of this Paragraph
11.2 shall not apply to any portion of an overcharge which is the subject of a
good faith dispute between the Owner and the Contractor.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment, including all supporting
documentation, submitted to the Construction Manager by the Contractor and
Certificates for Payment issued by the Construction Manager and the Architect,
the Owner shall make progress payments on account of the Contract Sum to the
Contractor as provided below and elsewhere in the Contract Documents.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM - 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 - Page #9
<PAGE> 10
12.2 The period covered by each Application for Payment shall be one calender
month ending on the last day of the month, for which the Application for Payment
is received.
12.3 See Subparagraph 9.6.1 of the General Conditions.
12.4 With each Applicant for Payment the Contractor shall submit payrolls,
petty cash accounts, receipted invoices or invoices with check vouchers
attached, and any other evidence required by the Owner, the Construction Manager
or Architect to demonstrate that actual disbursements already made by the
Contractor on account of the Cost of Work equal or exceed the combined aggregate
of the following: (1) progress payments already received by the Contractor; less
(2) that portion of those payments attributable to the Contractor's Fee; plus
(3) payrolls for the period covered by the present Application for Payment; plus
(4)retainage provided in Subparagraph 12.5.4, if any, applicable to prior
progress payments. In addition to the other required items, each Application for
Payment shall be accompanied by the following, in form and substance
satisfactory to the Owner and in compliance with applicable Nevada statutes: a
duly executed and acknowledged Contractor's Sworn Statement showing all
Subcontractors with whom the Contractor has entered into subcontracts, the
amount of each such subcontract, the amount requested for any Subcontractor in
the Application for Payment and the amount to be paid to the Contractor from
such progress payments, together with similar sworn statements from all
Subcontractors, and, when appropriate, from sub-subcontractors.
12.5 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
12.5.1 Each Application for Payment shall be based upon the most recent
schedule of values submitted by the Contractor in accordance with the Contract
Documents. The schedule of values shall allocate the entire Guaranteed Maximum
Price among the various portions of the Work, except that the Contractor's Fee
shall be shown as a single separate item. The schedule of values shall be
prepared in such form and supported by such data to substantiate its accuracy as
the Construction Manager, the Architect and the Owner may require. This
schedule, unless objected to by the Construction Manager the Architect or the
Owner, shall be used as a basis for reviewing the Contractor's Applications for
Payment.
12.5.2 Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the lesser of (1) the percentage of
that portion of the Work which has actually been completed or (2) the
percentage obtained by dividing (a) the expense which has actually been
incurred by the Contractor on account of that portion of the Work for which the
Contractor has made or intends to make actual payment prior to the next
Application for Payment by (b) the share of the Guaranteed Maximum Price
allocated to that portion of the Work in the schedule of values.
12.5.3 Subject to other provisions of the Contract Documents, the amount of
each progress payment shall be computed as follows:
12.5.3.1 Take that portion of the Guaranteed Maximum Price properly
allocable to completed Work as determined by multiplying the percentage
completion of each portion of the work by the share of the Guaranteed Maximum
Price allocated to that portion of the Work in the schedule of values. Pending
final determination of cost to the Owner of changes in the Work, amounts not in
dispute may be included as provided in Subparagraph 7.3.7 of the General
Conditions, even though the Guaranteed Maximum Price has not yet been adjusted
by Change Order.
12.5.3.2 Add that portion of the Guaranteed Maximum Price properly
allocable to materials and equipment delivered and suitably stored at the site
for subsequent incorporation in the Work or, if approved in advance by the
Owner, suitably stored off the site at a location agreed upon in writing.
12.5.3.3 Add the Contractor's Fee. The Contractor's Fee shall be computed
upon the Cost of the Work described in the two preceding Clauses at the rate
stated in Paragraph 5.1 or, if the Contractor's Fee is stated as a fixed sum in
that Paragraph, shall be an amount which bears the same ratio to that fixed-sum
Fee as the Cost of the Work in the two preceding Clauses bears to a reasonable
estimate of the probable Cost of the Work upon its completion.
12.5.3.4 Subtract the aggregate of previous payments made by the Owner.
_______________________________________________________________________________
AIA DOCUMENT A111- OWNER - CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987- THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
N.W., WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S.
copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format A111-1987
User Document : FORM- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998- Page #10
<PAGE> 11
12.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.5.3.6 Subtract amounts, if any, for which the Construction Manager or
the Architect has withheld or nullified a Certificate for Payment as provided
in Paragraph 9.5 of the General Conditions and other amounts, not including
retainage described in Paragraph 12.5.3.3 and Paragraph 12.5.4 properly held by
the Owner at the time of each progress payment.
12.5.4 Additional retainage, if any , shall be as follows:
(If it is intended to retain additional amounts from progress payments to the
Contractor beyond (1) the retainage from the Contractor's Fee provided in Clause
12.5.3.3, (2) the retainage from Subcontractors provided in Paragraph 12.7
below, and (3) the retainage, if any, provided by other provisions of the
Contract, insert provision for such additional retainage here. Such provision,
if made should also describe any arrangement for limiting or reducing the
amount retained after the Work reaches a certain state of completion.
The Owner shall withhold as retainage ten percent (10%) of all Cost of
the Work items included in each Application for Payment (except such items
identified in Section 7.1.5.10) until such time as the Work is fifty percent
(50%) completed, and thereafter, the retainage shall be reduced to five percent
(5%) of all of the Cost of the Work items included in each Application for
Payment thereafter received. The Owner shall have the option, but not the
obligation, to reduce the retainage requirements of this Agreement or release
any portion of the retainage prior to the date specified in the Contract
Documents. Any exercise of this option, however, shall not be a waiver of (1)
any of the Owner's rights to retainage in connection with other payments to the
Contractor or (2) any other right or remedy that the Owner has under the
Contract Documents, at law or in equity. For purposes of this paragraph only,
the Work shall be deemed fifty percent (50%) completed upon (i) request in
writing by the Contractor which request is supported by such data reasonably
required by the Construction Manager, the Architect and the Owner, and (ii)
Owner's consent to such request, which consent will not be unreasonably
withheld.
12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
12.6.1
12.6.2
12.6.2.1
12.6.2.2
12.6.2.3
12.6.2.4
12.6.2.5
12.6.3
12.7 PAYMENTS TO SUBCONTRACTORS. Except with the Owner's prior approval,
payments to Subcontractors included in the Contractor's Applications for
Payment shall not exceed an amount for each Subcontractor calculated as follows:
_______________________________________________________________________________
AIA DOCUMENT AIII - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA- COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C 20006-5292. Unlicensed photocopying violates U.S copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998- Page #11
<PAGE> 12
12.7.1 Take that portion of the Subcontract Sum properly allocable to
completed Work as determined by multiplying the percentage completion of each
portion of the Subcontractor's Work by the share of the total Subcontract Sum
allocated to that portion in the Subcontractor's schedule of values, less
retainage of ten percent (10%) or such other retainage amount as provided in
Subparagraph 12.5.4. Pending final determination of amounts to be paid to the
Subcontractor for changes in the Work, amounts not in dispute may be included
as provided in Subparagraph 7.3.7 of the General Conditions even though the
Subcontract Sum has not yet been adjusted by Change Order.
12.7.2 Add that portion of the Subcontract Sum properly allocable to
materials and equipment delivered and suitably stored at the site for
subsequent incorporation in the Work or, if approved in advance by the Owner,
suitably stored off the site at a location agreed upon in writing, less
retainage of ten percent (10%) or such other retainage amount as provided in
Subparagraph 12.5.4.
12.7.3 Subtract the aggregate of previous payments made by the Contractor to
the Subcontractor.
12.7.4 Subtract amounts, if any, for which the Construction Manager or the
Architect has withheld or nullified a Certificate for Payment by the Owner to
the Contractor for reasons which are the fault of the Subcontractor and other
amounts, not including retainage described in Paragraphs 12.7.1 and 12.7.2,
properly held at the time of each such request for payment.
12.7.5 Add, upon Substantial Completion of the entire Work of the
Contractor, a sum sufficient to increase the total payments to the
Subcontractor to ninety-five percent (95%) of the Subcontract Sum, less
amounts, if any, for incomplete Work and unsettled claims; and, if final
completion of the entire Work is thereafter materially delayed through no fault
of the Subcontractor, add any additional amounts payable on account of Work of
the Subcontractor in accordance with Subparagraph 9.10.3 of the General
Conditions.
(If it is intended, prior to Substantial Completion of the entire Work of the
Contractor, to reduce or limit the retainage from Subcontractors resulting from
the percentages inserted in Subparagraphs 12.7.1 and 12.7.2 above, and this is
not explained elsewhere in the Contract Documents, insert here provisions for
such reduction or limitation.)
The Subcontract Sum is the total amount stipulated in the subcontract to be
paid by the Contractor to the Subcontractor for the Subcontractor's performance
of the subcontract.
12.8 Except with the Owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site.
12.9 In taking action on the Contractor's Applications for Payment, the
Construction Manager and the Architect shall be entitled to rely on the
accuracy and completeness of the information furnished by the Contractor and
shall not be deemed to represent that the Construction Manager or the Architect
has made a detailed examination, audit or arithmetic verification of the
documentation submitted in accordance with Paragraph 12.4 or other supporting
data; that the Construction Manager or the Architect has made exhaustive or
continuous on-site inspections or that the Construction Manager or the
Architect has made examinations to ascertain how or for what purposes the
Contractor has used amounts previously paid on account of the Contract.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor when (1)
the Contract has been fully performed by the Contractor, as provided in
Subparagraph 9.10.1 of the General Conditions, except for the Contractor's
responsibility to correct defective or nonconforming Work, as provided in
Subparagraph 12.2.2 of the General Conditions, and to satisfy other
requirements, if any, which necessarily survive final payment; (2) a final
Application for Payment and a final accounting for the Cost of the Work and all
required supporting documentation have been submitted by the Contractor and
reviewed by the Owner's accountants; and (3) a final Certificate for Payment
has then been issued by the Construction Manager and the Architect; such final
payment shall be made by the Owner not more than 30 days after the issuance of
the Construction Manager's and Architect's final Certificate for Payment, or as
follows:
_______________________________________________________________________________
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA- COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C 20006-5292. Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998--Page #12
<PAGE> 13
13.2 The amount of the final payment shall be calculated as follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the
Contractor's final accounting and the Contractor's Fee; but not more than the
Guaranteed Maximum Price, if any.
13.2.2 Subtract amounts, if any, for which the Construction Manager or the
Architect withholds, in whole or in part, a final Certificate for Payment as
provided in Subparagraph 9.5.1 of the General Conditions or other provisions of
the Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner.
If the aggregate of previous payments made by the Owner exceeds the amount due
the Contractor, the Contractor shall reimburse the difference to the Owner. If
such aggregate, plus the amount requested in the final Application for Payment,
is less than the Guaranteed Maximum Price, the Owner shall pay the Contractor
the appropriate share of Savings if and to the extent required by Paragraph 5.2.
13.3 The Owner's accountants will review and report in writing on the
Contractor's final accounting within 30 days after delivery of the final
accounting to the Construction Manager and the Architect by the Contractor.
Based upon such Cost of the Work as the Owner's accountants report to be
substantiated by the Contractor's final accounting, and provided the other
conditions of Paragraph 13.1 have been met, the Construction Manager and the
Architect will, within seven days after receipt of the written report of the
Owner's accountants, either issue to the Owner a final Certificate for Payment
with a copy to the Contractor, or notify the Contractor and Owner in writing of
the Construction Manager's and the Architect's reasons for withholding a
certificate as provided in Subparagraph 9.5.1 of the General Conditions. The
time periods stated in this Paragraph 13.3 supersede those stated in
Subparagraph 9.4.2 of the General Conditions.
13.4 If the Owner's accountants report the Cost of the Work as
substantiated by the Contractor's final accounting to be less than claimed by
the Contractor, the Contractor shall be entitled to demand arbitration or
litigation in accordance with Paragraphs 4.9 and 4.10 of the General Conditions
of the disputed amount without a further decision of the Architect. Such demand
for arbitration or litigation shall be made by the Contractor within 30 days
after the Contractor's receipt of a copy of the Architect's final Certificate
for Payment; failure to demand arbitration or litigation within this 30-day
period shall result in the substantiated amount reported by the Owner's
accountants becoming binding on the Contractor. Pending a final resolution by
arbitration or litigation, the Owner shall pay the Contractor the amount
certified in the Construction Manager's and Architect's final Certificate for
Payment.
13.5 If, subsequent to final payment and at the Owner's request, the
Contractor incurs costs described in Article 7 and not excluded by Article 8 to
correct defective or nonconforming Work, the Owner shall reimburse the
Contractor such costs and the Contractor's Fee applicable thereto on the same
basis as if such costs had been incurred prior to final payment, but not in
excess of the Guaranteed Maximum Price, if any. If the Contractor has
participated in savings as provided in Paragraph 5.2, the amount of such
savings shall be recalculated and appropriate credit given to the Owner in
determining the net amount to be paid by the Owner to the Contractor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of the
General Conditions or another Contract Document, the reference refers to that
provision as amended or supplemented by other provisions of the Contract
Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from
the date payment is due at the rate stated below, or in the absence thereof, at
the legal rate prevailing from time to time at the place where the Project is
located.
(Insert rate of interest agreed upon, if any.)
Ten Percent (10%) per annum.
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION -AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright
laws and is subject to legal prosecution. This document was electronically
produced with permission of the AIA and can be reproduced without violation
until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #13
<PAGE> 14
14.3 Other provisions:
14.3.1 The Contractor represents and warrants the following to the Owner (in
addition to any other representations and warranties contained in the Contract
Documents) as a material inducement to the Owner to execute this Agreement,
which representations and warranties shall survive the execution and delivery
of this Agreement, any termination of this Agreement and the final completion
of the Work:
(1) the Contractor and its Subcontractors are financially solvent,
able to pay all debts as they mature and possessed of sufficient working
capital to complete the Work and perform all obligations hereunder;
(2) the Contractor is able to furnish the plant, tools, materials,
supplies, equipment and labor required to complete the Work and perform its
obligations hereunder and has sufficient experience and competence to do so;
(3) the Contractor is authorized to do business in the State of
Nevada and is properly licensed by all necessary governmental and public and
quasi-public authorities having jurisdiction over the Contractor and over the
Work and the Project;
(4) the Contractor's execution of this Agreement and performance
thereof is within the Contractor's duly authorized powers; and
(5) the Contractor is a large, sophisticated contractor who
possesses a high level of experience and expertise in the business
administration, construction, construction management and superintendence of
projects of the size, complexity and nature of this particular Project and will
perform the Work with the care, skill and diligence of such a contractor.
14.3.2 The parties acknowledge that Contractor intends to self-perform the
concrete portion of the Work.
14.3.3 Contractor anticipates that, due to circumstances that the Contractor
is currently unaware of, certain subcontract prices may increase. Subject to
Owner's written approval, which shall not be unreasonably withheld, such
increases may increase the Guaranteed Maximum price but only by an amount not
to exceed Five Hundred Thousand Dollars. Such written approval must be signed
on behalf of the Owner by the President of the Owner's General Partner. Such
position is currently held by Mr. Brian McMullan.
14.3.4 See Exhibit 6 attached hereto.
14.3.5 The effectiveness of this Agreement is conditioned upon Owner
obtaining financing for the construction of the Project on terms and conditions
satisfactory to Owner in its sole and absolute discretion no later than January
5, 1998 pursuant to the Private Placement Memorandum dated December 9, 1997.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in
Article 14 of the General Conditions; however, the amount to be paid to the
Contractor under Subparagraph 14.1.2 of the General Conditions shall not exceed
the amount the Contractor would be entitled to receive under Paragraph 15.3
below, plus fifty percent (50%) of the Contractor's unearned fee provided
termination of Contractor is based on reasons other than those set forth in
Paragraph 14.2 of the General Conditions.
15.2 If a Guaranteed Maximum Price is established in Article 5, the
Contract may be terminated by the Owner for cause as provided in Article 14 of
the General Conditions; however, the amount, if any, to be paid to the
Contractor under Subparagraph 14.2.4 of the General Conditions shall not cause
the Guaranteed Maximum Price to be exceeded, nor shall it exceed the amount the
Contractor would be entitled to receive under Paragraph 15.3 below.
15.3 If no Guaranteed Maximum Price is established in Article 5, the
Contract may be terminated by the Owner for cause as
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION -AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright
laws and is subject to legal prosecution. This document was electronically
produced with permission of the AIA and can be reproduced without violation
until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #14
<PAGE> 15
provided in Article 14 of the General Conditions; however, the Owner shall then
pay the Contractor an amount calculated as follows:
15.3.1 Take the Cost of the Work incurred by the Contractor to the date of
termination.
15.3.2 Add the Contractor's Fee computed upon the Cost of the Work to the
date of termination at the rate stated in Paragraph 5.1 or, if the Contractor's
Fee is stated as a fixed sum in that Paragraph, an amount which bears the same
ratio to that fixed-sum Fee as the Cost of the Work at the time of termination
bears to a reasonable estimate of the probable Cost of the Work upon its
completion.
15.3.3 Subtract the aggregate of previous payments made by the Owner. The
Owner shall also pay the Contractor fair compensation, either by purchase or
rental at the election of the Owner, for any equipment owned by the Contractor
which the Owner elects to retain and which is not otherwise included in the
Cost of the Work under Subparagraph 15.3.1. To the extent that the Owner elects
to take legal assignment of subcontracts and purchase orders (including rental
agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 15, execute and deliver all such papers and take
all such steps, including the legal assignment of such subcontracts and other
contractual rights of the Contractor, as the Owner may require for the purpose
of fully vesting in the Owner the rights and benefits of the Contractor under
such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in Article 14 of
the General Conditions; in such case, the Guaranteed Maximum Price, if any,
shall be increased as provided in Subparagraph 14.3.2 of the General Conditions
except that the term "cost of performance of the Contract" in that Subparagraph
shall be understood to mean the Cost of the Work and the term "profit" shall be
understood to mean the Contractor's Fee as described in Paragraphs 5.1 and 6.3
of this Agreement.
Insert I: 15.5 The Contractor shall not be entitled to any portion of Savings
if the Owner terminates this Contract for cause or if the Contractor terminates
this Agreement for any reason prior to final completion.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after
execution of this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Standard Form of Agreement Between
Owner and Contractor, AIA Document A111, 1987 Edition, along with its Exhibits.
16.1.2 The General Conditions are the General Conditions of the Contract for
Construction, Construction Manager - Adviser Edition AIA Document A201/CMa, 1992
Edition, as supplemented, a copy of which is attached hereto.
16.1.3 The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated December 10, 1997, Volume I-A.
16.1.4 The Specifications are those contained in the Project Manual dated as
in Paragraph 16.1.3, Volumes I-A through Volume III and the interior
specifications sent by Architect to Contractor by Transmittal dated on or about
November 19, 1997, a copy of which is attached as Exhibit 4 and the garage
specifications dated December 10, 1997 prepared by Kracor, Inc.
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)
16.1.5 The Drawings identified in the attached Exhibit Number 3 consisting
of three pages entitled "Index Sheet" prepared by Architect and dated 12/10/97
and separately labeled "Lowrise Package" Sheet Number LR, "Lowrise Package"
Sheet Number WA, and "Hotel Package" Sheet Number HR.
(Either list the Drawings here or refer to an exhibit attached to this
Agreement.)
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION -AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright
laws and is subject to legal prosecution. This document was electronically
produced with permission of the AIA and can be reproduced without violation
until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #15
<PAGE> 16
16.1.6 The Addenda, if any, are as follows, including any and all exhibits or
attachments:
<TABLE>
<CAPTION>
NUMBER DATE PAGES
<S> <C> <C>
1 6-19-97 1-5
2 6-26-97 1-7
3 6-30-97 1-9
4 7-03-97 1-6
5 7-17-97 1-6
6 7-24-97 1-8
7 8-05-97 1-6
8 8-29-97 1-18
9 9-16-97 1-3
10 12-18-97
</TABLE>
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in this
Article 16.
16.1.7 Other Documents, if any, forming part of the Contract Documents are
as follows:
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only if intended to be
part of the Contract Documents.)
The Garage Construction Documents are identified in the attached Exhibit
Number 5.
This Agreement is entered into as of the day and year first written above and
is executed in at least four original copies of which one is to be delivered
to the Contractor, one each to the Construction Manager and Architect for use
in the administration of the Contract, and the remainder to the Owner.
OWNER CONTRACTOR
/s/Illegible Signature /s/Illegible Signature
(Signature) (Signature)
SR Vice President, CFO and J.A.Jones Construction
General Counsel Vice President
(Printed name and title) (Printed name and title)
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION -AIA - COPYRIGHT
1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON D.C. 20006-5292. Unlicensed photocopying violates U.S. copyright
laws and is subject to legal prosecution. This document was electronically
produced with permission of the AIA and can be reproduced without violation
until the date of expiration as noted below.
Electronic Format A111-1987
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #16
<PAGE> 17
SIGNATURE PAGE OF STANDARD FORM OF AGREEMENT BETWEEN
OWNER AND CONTRACTOR WHERE THE BASIS OF PAYMENT IS
THE COST OF THE WORK PLUS A FEE WITH OR
WITHOUT A GUARANTEED MAXIMUM PRICE
(AIA DOCUMENT A111)
OWNER:
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP,
a Nevada limited partnership
By: The Resort at Summerlin,, Inc.,
a Nevada corporation
By: /s/ [ILLEGIBLE]
---------------
S.R. Vice President, CFO and General Counsel
CONTRACTOR:
J.A. JONES CONSTRUCTION
a North Carolina corporation
By: /s/ John P. Stephens
--------------------
John P. Stephens
Vice President
Page #17
<PAGE> 18
EXHIBIT 1
<PAGE> 19
EXHIBIT NUMBER 1
December 17, 1997
(a) Contractor and Owner acknowledge that as of the date of execution of
this Contract the Architect has not prepared separate Drawings and
Specifications for the hotel tower which is shown on the site plan that is a
part of the Drawings and which is to be located on the Western portion of the
site (the "Second Hotel Tower"). Architect has, however, completed Drawings and
Specifications for the other hotel tower to be located on the site. Contractor
acknowledges that (i) Contractor is obligated pursuant to this Contract to
construct the Second Hotel Tower to be identical to the other hotel tower to be
located on the site, with the connecting corridor to the Second Hotel Tower to
be constructed in accordance with the Design Development drawings and related
Specifications that are a part of the Contract; and (ii) that Contractor is
obligated pursuant to the Contract to construct the Second Hotel Tower in
accordance with the terms and conditions of the Contract, including the
Guaranteed Maximum Price set forth in Section 5.2.1 of the Agreement.
(b) Contractor and Owner acknowledge, however, that the Owner may elect to
cause the Second Hotel Tower to be constructed by Contractor under the Contract
in accordance with the attacked Second Hotel Narrative dated December 21, 1997,
for an increase in the Guaranteed Maximum Price of not more that Two Million
Five Hundred Thousand Dollars ($2,500,000.00). Owner and Contractor shall
negotiate in good faith to develop final approved Construction Drawings and
Specifications for the Second Hotel Tower and an approved Guaranteed Maximum
Price for the changes not to exceed two million five hundred dollars
($2,500,000). Upon execution of such approval, the Guaranteed Maximum Price in
Article 5.1.2 shall be increased by the amount as set forth in such approval
and the Contract shall remain in full force and effect with no modifications,
except for said increase in the Guaranteed Maximum Price and the Second Hotel
Tower shall be constructed by Contractor pursuant to the Contract in accordance
with the final approved Construction Drawings and Specifications for the Second
Hotel Tower.
(c) Owner and Contractor shall evidence their approval of such final
Construction Drawings and Specifications for the Second Hotel Tower by
execution of a written instrument setting
<PAGE> 20
forth such approval along with the approved Guaranteed Maximum Price. Such
approval to be binding on Owner must be signed by the President of the Owner's
general partner. Such approval form shall not be deemed to be a Change Order
under this Contract or a modification of this Contract.
(d) If such approval has not been executed by Owner and Contractor within
84 days from the date of commencement, 1998, Contractor shall proceed to
construct the Second Hotel Tower in accordance with subdivision (a) of this
Exhibit Number 1.
-2-
<PAGE> 21
ATTACHMENT TO GMP CONTRACT
SECOND HOTEL NARRATIVE
THE RESORT AT SUMMERLIN
DECEMBER 21,1997
(1) General Specifications The second hotel ("Hotel 2") shall be designed and
constructed to provide the identical level of quality, in all aspects including,
but not limited to, the structural frame, the grades of finishes, as specified
in the drawings for the first Hotel ("Hotel 1"), which are attached to and made
a part of the Guaranteed Maximum Price contract between J.A. Jones Construction
Co. and The Resort at Summerlin, L.P. (the "GMP Contract"). This Attachment,
which shall be part of the GMP Contract, serves to set froth the minimum
standards of quality, structure, finishes, design and construction of Hotel 2.
This Attachment shall serve to set forth those areas wherein it is
anticipated that Hotel 2 shall differ from Hotel 1. This Attachment refers to
documents, drawings, terms, words and phrases set forth in the specifications
that form the basis of the GMP Contract. These documents, drawings, terms,
words, and phrases shall have the same meanings herein as utilized in the GMP
Contract. Terms, words and phrases particular to the construction industry and
the trade of architects shall have their common meanings unless otherwise
defined or apparent by their usage herein. Further, all current drawings from
Paul Steelman Ltd. concerning Hotel 2 are attached hereto and made a part of
this Attachment.
Hotel 1 and Hotel 2 shall be basically the same except as set forth
herein. Hotel 2 shall consist of six stories above a partial basement and shall
utilize a similar footprint, a similar post-tensioned concrete structural system
and a similar 33'-0" structural bay. Hotel 2 shall have a two-story restaurant
space on one wing of the first floor. Hotel 2's restaurant space is to be
oriented toward the restaurant in Hotel 1 with each facing the other and
towards the gardens. The pedestrian link to the lifestyle and restaurant
complex form Hotel 2 shall pass to the left of the central elevators in the
same manner set forth in Hotel 1, but shall be modified as set forth in (2)
below.
The intent of the parties is for Hotel 2 to provide a different product,
but to be designed and constructed in such a manner that Hotel 2 provides the
same level of quality as Hotel 1. Hotel 2 will have changes that are decorative
in nature, while maintaining in every manner the standard and quality of Hotel
1. Hotel 2 will have the same structural frame and Hotel 1. In addition, the
same quality grade finishes utilized in Hotel 1 are also to be utilized in
Hotel 2. Further, Hotel 2 shall be designed and constructed so as to meet the
stringent criteria set forth for five-star status and quality in that certain
agreement between Regent Worldwide Hotels and The Resort at Summerlin, L.P.
Finally, Hotel 2 will be designed and constructed to gain the approval of the
Summerlin Design Review Committee and Howard Hughes Corporation.
(2) Lifestyles Center Link The line to the Lifestyles Center from Hotel 2
will be similar to the Casino Link from Hotel 1 in that each is an enclosed,
partially glazed walkways built above a service corridor. Modifications include
the addition of a three-stop hydraulic elevator and an open stair to connect
Hotel 2 to the Lifestyles Center Link. A central feature of the new link will
be a Bridge Pavilion that will span the Upper Pond. The link is at the same
elevation as the restaurant portion of the Lifestyles Center, but will be 5'
below the first floor of Hotel 2.
(3) Terraces Hotel 2's end terraces will be rectangular, as opposed to the
semi-circular terraces in Hotel 1. With this layout, pre-cast concrete planks
will not be necessary for Hotel 2. The terrace will be an extension of the
post-tensioned slab. There is a new semi-circular terrace at the center of
Hotel 2 at the fourth and fifth floors.
(4) Porte-Cochere Hotel 2's porte-cochere will be "bullet" shaped and
supported by eight piers. It will approximately be 100% larger that Hotel 1's
porte-cochere.
Initials [ILLEGIBLE]
-----------
Initials [ILLEGIBLE]
-----------
<PAGE> 22
(5) Decorative Towers Eight, partially engaged, decorative towers will be
added to Hotel 2 as set forth in the attached drawings. Each tower will project
approximately four feet from the face of the building. The floor slabs at these
towers will be extended to support the stucco/EIFS skin.
(6) Articulated Two-Story Base Hotel 2's slabs, as well as the exterior
stucco/EIFS skin at the first, second and third floor slabs, will extend
approximately 18" past those of Hotel 1. However, the glazing at the first
floor of Hotel 2 will not be moved out. Additional framing and stucco/EIFS may
be required at the first floor of Hotel 2 to return the skin to glazing. A GFRC
balustrade will cap this base at the third floor of Hotel 2.
(7) Typical Rooms A soffit/drapery valance with three downlights is added at
the exterior windows of Hotel 2. Hotel 2's communicating doors have been moved
from the interior column assembly to the demising wall adjacent to the entry
door. The bars, previously at the closets in Hotel 1, have been moved for Hotel
2 to the interior column in a side-by-side arrangement. Hotel 2's bathrooms
have been redesigned as set forth above on the attached drawings, but still
maintain the same fixture count and the same grade of finishes.
(8) Basement Hotel 2 will have a similar layout as Hotel 1. Hotel 2's
modifications include the addition of a mechanical vault underneath the south
wing, as well as the possible addition of a 2500 square foot private club,
which for purposes of pricing, shall be deemed "shell only."
(9) First Floor Hotel 2 will have a similar layout as Hotel 1. Hotel 2's
modifications include the addition of a "Library Bar" and a Hotel Shop, each
adjacent to the Lobby. Hotel 2's registration, back-of-house, kitchen and
restaurant organization is largely unchanged from Hotel 1. The private dining
rooms in Hotel 1 will most likely be changed to either a retail or concierge
facility in Hotel 2. Unlike Hotel 1, Hotel 2's restaurant will all be on one
level. Hotel 2's Lobby and Restaurant will have different interior finishes,
but the grade of finish will remain the same as that used for Hotel 1. The
first floor slab will extend approximately 18" as set forth in (6) above.
(10) Second Floor Hotel 2 will have a similar layout to Hotel 1. Hotel 2's
modifications include the 18" slab extension described in (6) and (9) above.
(11) Third Floor Hotel 2 will have a similar layout to Hotel 1. Hotel 2's
modifications include the 18" slab extension described in (6), (9) and (10)
above and the GFRC balustrade described in (6) above.
(12) Fourth Floor Hotel 2 will have a similar layout to Hotel 1. Hotel 2's
modifications include the revised terraces described in (3) above.
(13) Fifth Floor Hotel 2 will have a similar layout to Hotel 1. Hotel 2's
modifications include the revised terraces described in (3) above. In addition,
Hotel 2's "E" suite at the center of the fifth floor will be redesigned and
expanded vertically to include the 6th floor directly above. An internal stair
will be added to provide access within the two level suite.
(14) Sixth Floor Hotel 2's sixth floor will be completely redesigned. A
majority of the keys will be suites. The exterior will consist of a series of
open, stucco/EIFS arches. The exterior wall will be set back approximately 8'
behind the arches, thereby creating a number of covered terraces. The slab at
each terrace will be waterproofed to protect the rooms below on the fifth
floor.
(15) Roof Hotel 2 will have a clay-tiled Mansard roof, similar to Hotel 1.
Hotel 2's modifications include a reduction of the Mansard height to
approximately 10' above the roof slab. Each of the eight decorative towers,
described in (5) above, will be capped by a hip roof. Six parapet gables, two
at the center and two at the center of each wing, will extend past the roof
slab on Hotel 2. Each pair of gables will be joined by a ridged, clay-tiled
roof, front-to-back. The half-conical roof of the end tower of Hotel 1 will be
replaced by a simple GFRC balustrade in Hotel 2.
Initials [ILLEGIBLE]
--------
Initials [ILLEGIBLE]
--------
<PAGE> 23
EXHIBIT 2
<PAGE> 24
PAGE 1 GENERAL CONDITIONS DATE: 16-Dec-97
<TABLE>
<S> <C> <C> <C> <C>
Project: THE RESORT @ SUMMERLIN Estimate No.: N97N012
Location: SUMMERLIN PARKWAY Bids Due: SEPT 23, 1997 Reviewed: ____
Architect: PAUL STERIMAN LTD. Owner: THE RESORT @ SUMMERLIN Checked: ____
</TABLE>
******LOW-RISE & TOWER I******
<TABLE>
<CAPTION>
====================================================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIELD STAFF SALARIES & WAGES
01-10-10 SUPERVISION - ADMINISTRATIVE
Construction Manager 1 10,000.00 5 50,000 0 50,000
SUPERVISION - CONSTRUCTION
Project Manager 1 8,000.00 13 104,000 0 104,000
Superintendents 1 7,500.00 13 97,500 0 97,500
Ass't Superintendents 4 5,000.00 13 260,000 0 260,000
Area Superintendents (2nd s) 3 6,500.00 7 136,500 0 136,500
Craft Superintendents 1 1 0 0 0
Mech & Elect Coord/Supt 1 1 0 0 0
01-10-20 OFFICE MGT & CLERKS
Field Office Manager 1 4,500.00 13 58,500 0 58,500
Accountant & Paymaster 1 1 0 0 0
Timekeepers, Clerks 2 1,500.00 13 39,000 0 39,000
Secretarys & Stenos 1 1,200.00 13 15,600 0 15,600
Secretary/Accountant 1 1 0 0 0
01-10-30 ENGINEERING
Project Engineer 1 6,250.00 13 81,250 0 81,250
Office/Cost Engrs 5 4,200.00 13 260,000 0 260,000
Field Engineers 2 4,750.00 6 57,000 0 57,000
Chief Office Engineer 1 1 0 0 0
Instrument Man 1 1 0 0 0
Rodmen 1 1 0 0 0
Mech & Elect Engrs 1 5,000.00 13 65,000 0 65,000
Draftmen & Clerks 1 1 0 0 0
01-10-40 SAFETY & INDUSTRIAL RELATIONS
Regional Safety Supervisor 1 1 0 0 0
Safety Inspector (IF>20901) 1 5,000.00 13 65,000 0 65,000
Nurse, First Aid Attend. 1 1 0 0 0
Industrial Relations Supv 1 1 0 0 0
01-10-50 QUALITY ASSURANCE
Q.A. Engineers 1 4,500.00 10 45,000 0 45,000
Lab Technicians 1 1 0 0 0
01-10-60 PROCUREMENT - JOB
Purchasing Agent 1 5,000.00 10 50,000 0 50,000
Expeditor 1 1 0 0 0
01-10-70 WAREHOUSING SUPERVISOR
Warehouse Supervisor 1 1 0 0 0
Clerks 1 1 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal Field Staff 1,384,350 0 1,384,350
====================================================================================================================================
</TABLE>
<PAGE> 25
PAGE 2 GENERAL CONDITIONS DATE: 16-Dec-97
<TABLE>
<S> <C> <C> <C> <C>
Project: THE RESORT @ SUMMERLIN Estimate No.: N975012
Location: SUMMERLIN PARKWAY Bids Due: SEPT. 23, 1997 Reviewed: ____
Architect: PAUL STEELMAN LTD. Owner: THE RESORT @ SUMMERLIN Checked: ____
</TABLE>
******LOW-RISE & TOWER I******
<TABLE>
<CAPTION>
====================================================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INDIRECT CONSTRUCTION SERVICES & SUPPORT
01-21-10 CLEANUP
Continuous Cleanup 2 2,800.00 13 72,800 0 72,800
Trash Bin Rent 1 1,500.03 13 0 19,500 19,500
Trash Bin Haul 1 1,500.00 13 0 19,500 19,500
Trash Chutes, Hoppers 1 1 0 0 0
Final Cleanup & Move Out 750,000 0.12 1 0 93,600 93,600
Clean Glass & Metal 1 1 0 0 0
01-22-20 SAFETY CONSTRUCTION
Safety Rail & Barricde-Bldg 15,800 1.00 1.00 1 15,800 15,800 31,600
Sidewalk Barricades 1 1 0 0 0
Sidewalk & Street Rental 1 1 0 0 0
Ladders & Stairs 1 1,000.00 14 0 14,000 14,000
Doors & Landings & Towers 1 1 0 0 0
Rainwear, HardHats, ProtGear 1 500.00 2 0 1,000 1,000
01-23-00 TESTING & CONSULTING
Test Boring, Soil Tests 1 1 0 0 0
Concrete Tests 1 1 0 0 0
Outside Consulting Services 1 1 0 0 0
Survey - Initial & Final 1 138,000.00 1 0 138,000 138,000
CPM Schedule Set-Up 1 IN-HOUSE 1 0 0 0
CPM Schedule Updates 1 IN-HOUSE 1 0 0 0
01-24-00 Warehousing & Handling Matls 1 1 0 0 0
01-25-00 WEATHER PROTECTION
Protection From Elements 1 5,000.00 2 0 10,000 10,000
HVAC for Perm Bldgs-Install 1 1 0 0 0
HVAC Fuel & Operators 1 1 0 0 0
01-27-00 PERSONNEL TRANSPORTATION 1 1 0 0 0
01-30-00 TEMPORARY FACILITIES & UTILITIES
Job Office 1 1,750.00 13 0 22,750 22,750
Owner/Architect's Office 1 1,000.00 13 0 13,000 13,000
Supplement Const for Trails 1 10,000.00 1 0 10,000 10,000
Tool House & Area Shacks 1 2,500.00 1 0 2,500 2,500
Change Houses 1 1 0 0 0
Saw Sheds, etc. 1 1 0 0 0
Warehouses 1 1 0 0 0
Rent, Buildings & Land 1 1 0 0 0
Fab Facilities 1 1 0 0 0
01-32-00 TEMP CONST UTILITIES
Power&Lights, Install-Bldg 1 1 0 0 0
Power&Lights, Install-Securi 1 1 0 0 0
Power&Lights, Install-Cranes 1 1 0 0 0
Power&Lights-Consumption 1 5,500.00 13 0 71,500 71,500
</TABLE>
<PAGE> 26
PAGE 3 GENERAL CONDITIONS DATE 16-Dec-97
<TABLE>
<S> <C> <C> <C>
Project: THE RESORT @ SUMMERLIN Estimate No.: N97N012 Reviewed:
Location: SUMMERLIN PARKWAY Bids Due SEPT 23, 1997 --------
Architect: PAUL STEELMAN LTD Owner: THE RESORT @ SUMMERLIN Checked:
--------
</TABLE>
**********LOW-RISE & TOWER I*********
<TABLE>
<CAPTION>
====================================================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gas Lines & Storage 1 1 0 0 0
Air Lines & Storage 1 1 0 0 0
Water - Installation 1 2,000.00 1 0 2,000 2,000
Water Coolers or Barrels 1 1,000.00 1 0 1,000 1,000
Water - Consumption 1 500.00 13 0 6,500 6,500
Water - Ice & Cups 1 750.00 13 0 9,750 9,750
Water Boys & Janitors 1 975.00 13 12,675 0 12,675
Construction Water 1 1,000,00 13 0 13,000 13,000
HVAC for Temp Bldg 1 1 0 0 0
Sanitary Fac - Installation 1 1 0 0 0
Sanitary Fac - Opr & Supplies 1 100.00 13 0 1,300 1,300
Sanitary Fac - Rental 30 120.00 13 0 46,800 46,800
01-33-00 FIELD OFFICE OPERATION
General Office Supplies 1 360.00 13 0 4,550 4,550
Engineering Supplies 1 1 0 0 0
Batterboards & Layout Matls 1 1 0 0 0
Office Machines 1 2,000.00 1 0 2,000 2,000
Copy Machines 1 525.00 13 0 6,825 6,825
Furniture 1 3,000.00 1 0 3,000 3,000
Telephone Purchase & Instal 1 1,000.00 1 0 1,000 1,000
Telephone Use 1 2,000.00 13 0 26,000 26,000
Telecopy 1 1,500.00 1 0 2,500 1,500
Radio Communications 1 3,000.00 1 0 3,000 3,000
Postage & Fees 1 1,000.00 13 0 13,000 13,000
Computers for Payroll, Actg in Summary 1 0 0 0
Misc Computer Equip 1 1,250.00 13 0 16,250 16,250
Blueprinting & Photostats 1 3,000.00 5 0 15,000 15,000
Extra Plans & Specs 1 750.00 30 0 22,500 22,500
Progress Photos 1 300.00 13 0 3,900 3,900
Job Signs 1 1,000.00 3,000.00 1 1,000 3,000 4,000
Job Related Travel 1 5,000.00 2 0 10,000 10,000
Owner's Rep Equip/Supplies 1 1 0 0 0
01-14-00 SECURITY & FIRE PROTECTION
Security Fence & Gates 5,775 2.75 1 0 15,851 15,851
Guard Services 1 5,500.00 9 0 49,500 49,500
Guards 1 1 0 0 0
Security Traffic Control 1 5,000.00 1 0 0 0
Fire Protection-Risers & Ho 1 1 0 5,000 5,000
Extinguishers/Barrels 1 500.00 16 0 8,000 8,000
01-35-00 TEMP ROADS & HARDSTANDS
Construction 3,650 2.00 2.00 1 7,300 7,300 14,600
Temp Maint & Snow Removal 1 1 0 0 0
Railroad Siding 1 1 0 0 0
01-37-00 MEDICAL
Drug Testing 30 50.00 1 0 1,500 1,500
First Aid Mat'ls & Supplies 1 175.00 13 0 2,275 2,275
</TABLE>
<PAGE> 27
PAGE 4 GENERAL CONDITIONS DATE 16-Dec-97
Project: THE RESORT @ SUMMERLIN Estimate No.: N97N012
Location: SUMMERLIN PARKWAY Bids Due: Sept. 23, 1997
Architect: PAUL STEELMAN LTD. Owner: THE RESORT @ SUMMERLIN
Reviewed:
-----
Checked:
-----
********LOW-RISE & TOWER I********
<TABLE>
<CAPTION>
=================================================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01-38-00 Legal Expense 1 1 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Subtotal Indirect Const Support 109,575 732,481 842,056
=================================================================================================================================
CONSTRUCTION EQUIPMENT
01-42-20 HAULING, TRANSPORTATION
Proj Mgr Auto 1 550.00 13 0 7,150 7,150
Pickups 5 500.00 13 0 32,500 32,500
2 Ton Truck 1 800.00 13 0 10,400 10,400
MISCELLANEOUS
Transits, Levels, Rods, etc 1 2,000.00 3 0 6,000 6,000
Lasers 1 1 0 0 0
EQUIPMENT REPAIRS
Repairs by our Mechanics 1 1 0 0 0
Repairs - Outside 1 1 0 0 0
Fuel, Oil & Grease 1 300.00 91 0 27,300 27,300
Tires 1 1 0 0 0
01-43-00 Small Tools & Expandables 1 25,000.00 1 0 25,000 25,000
- ---------------------------------------------------------------------------------------------------------------------------------
Subtotal Equipment 0 108,350 108,350
=================================================================================================================================
SUMMARY: INDIRECT & GENERAL EXPENSE (Before Taxes, Insurance, etc from below)
Subtotal Field Staff Salaries 1,384,350 0 1,384,350
Subtotal Indirect Const Services 109,575 732,481 842,056
Subtotal Equipment 0 108,350 108,350
- ---------------------------------------------------------------------------------------------------------------------------------
Subtotal Indirect & General Expense 1,493,925 840,831 2,334,756
=================================================================================================================================
01-70-00 INSURANCE, TAXES, FRINGES, PERMITS
Insurance-Builders Risk $-----------@----% 0.00065 0 0
Ins-Vehicle PL & PD INCL W/G.L. W/G.L. W/G.L.
Ins-Perm Equip Install'n $-----------@----% 0 0
Ins-Perm Equip Install'n $-----------@----% 0 0
Ins-Other $-----------@----% 0 0
Ins-Umbrella $ ON SPREADSHEET 0.00200 0 0
Ins-General Liability $ ON SPREADSHEET 0.00380 0 0
01-72-00 P/R TAX, INS. (FICA, SUI, FUI, WC, GL), FRINGES
Indirect Labor Manual $ 109,575 51.00% 55,883 55,883
Indirect Labor-Non Manual $1,384,350 32.00% 442,992 442,992
Fringe Benefits-Parking $----------@-----% 0 0
</TABLE>
<PAGE> 28
PAGE 5 GENERAL CONDITIONS DATE 16-DEC-97
Project: THE RESORT @ SUMMERLIN Estimate No.: N97N012
Location: SUMMERLIN PARKWAY Bids Due: SEPT. 23, 1997 Reviewed:
---
Architect: PAUL STEELMAN LTD. Owner: THE RESORT @ SUMMERLIN Checked:
---
**************LOW-RISE & TOWER 1**************
<TABLE>
========================================================================================================
<CAPTION>
Code Item Quantity Labor Material Time Labor Material Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fringe Benefits-Meals $ @ % 0 0
-------- -----
01-73-00 TAXES, PERMITS & LICENSES
Sales Tax (Direct & Indirec $ 840,831 7.00% 58,858 58,858
State Business & Occup Tax $ @ % 0 0
-------- -----
City Business & Occup Tax $ @ % 500 500
-------- -----
Other Taxes 0 0
Building Permits 0 0
Other Permits 0 0
Licenses 350 350
01-74-00 BANKING & FINANCE COST 0
01-75-00 EMPLOYEE EXPENSE
Relocating Expense 7,500 4 10,000 10,000
Temp Living Expense 2,500 4 10,000 10,000
Executive Travel 300 13 3,900 3,900
----------------------------------
TOTAL Indirect & General Expense 1,992,800 944,439 2,937,240
Safety Bonus (>5MM=5K, 5-20MM=10K, 20-50MM=15K, >50MM=25K) 25,000
----------------------------------
COST Including Indirect & General Expense 1,992,800 944,439 2,962,240
Preconstruction Costs 0
---------
COST Including Indirect & General Expense 2,962,240
=========
01-78-10 ESCALATION
Field Staff Wage Raises 2.75% 38,070
Material 0.00% 0
Overtime 0.00% 0
01-78-20 CONTINGENCY 0% 0
---------
TOTAL AMOUNT 3,000,309
=========
LATE CHANGES (Plus or Minus)
---------
ADJUSTED TOTAL AMOUNT 3,300,309
=========
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
PAGE 1 GENERAL CONDITIONS DATE: 16-Dec-97
<S> <C> <C> <C> <C>
Project: THE RESORT @ SUMMERLIN Estimate No.: N97N012
Location: SUMMERLIN PARKWAY Bide Due: SEPT. 23, 1997 Received:________
Architect: PAUL STZELMAN LTD. Owner: THE RESORT @ SUMMERLIN Checked: ________
</TABLE>
<TABLE>
<CAPTION>
************ TOWER II ************
===================================================================================================================================
CODE ITEM QUANTITY LABOR MATERIAL TIME LABOR MATERIAL TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIELD STAFF SALARIES & WAGES
01-10-10 SUPERVISION-ADMINISTRATION
Construction Manager 1 10,000.00 1 10,000 0 10,000
SUPERVISION-CONSTRUCTION
Project Manager 1 8,000.00 3 24,000 0 24,000
Project Superintendent 1 7,500.00 3 22,500 0 22,500
Ass't Superintendent 1 5,000.00 12 60,000 0 60,000
Area Superintendent (2nd Sh) 1 6,500.00 7 45,500 0 45,500
Craft Superintendents 1 1 0- 0 0
Mech & Elect Coord/Supt 1 1 0 0 0
01-10-20 OFFICE MGT & CLERKS
Field Office Manager 1 4,500.00 3 13,500 0 13,500
Accountant & Paymaster 1 1 0 0 0
Timekeepers, Clerks 1 1,500.00 3 4,500 0 4,500
Secretarys & Stenos 1 1,200.00 3 3,600 0 3,600
Secretary/Accountant 1 1 0 0 0
01-10-30 ENGINEERING
Project Engineer 1 6,250.00 3 18,750 0 18,750
Office/Cost Engrs 1 4,000.00 12 48,000 0 48,000
Field Engineers 1 4,750.00 6 28,500 0 28,500
Chief Office Engineer 1 1 0 0 0
Instrument Men 1 1 0 0 0
Rodmen 1 1 0 0 0
Mach & Elect Engrs 1 5,000.00 2 10,000 0 10,000
Draftsmen & Clerks 1 1 0 0 0
01-10-40 SAFETY & INDUSTRIAL RELATIONS
Regional Safety Supervisor 1 1 0 0 0
Safety Inspector (IF>20404) 1 5,000.00 2 10,000 0 10,000
Nurse, First Aid Attend. 1 1 0 0 0
Industrial Relations Supv 1 1 0 0 0
01-10-50 QUALITY ASSURANCE
Q.A. Engineers 1 4,500.00 2 9,000 0 9,000
Lab Technicians 1 1 0 0 0
01-10-60 PROCUREMENT - JOB
Purchasing Agent 1 5,000.00 2 10,000 0 10,000
Expeditor 1 1 0 0 0
01-10-70 WAREHOUSING SUPERVISOR
Warehouse Supervisor 1 1 0 0 0
Clerks 1 1 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Subtotal Field Staff 317,850 0 317,850
===================================================================================================================================
</TABLE>
<PAGE> 30
PAGE 2 GENERAL CONDITIONS DATE: 16-Dec-97
Project: THE RESORT @ SUMMERLIN Estimate No: N97N012
Location: SUMMERLIN PARKWAY Bids Due: SEPT. 23, 1997
Architect: PAUL STEELMAN LTD. Owner: THE RESORT @ SUMMERLIN
Received ______
Checked ______
<TABLE>
<CAPTION>
TOWER II
=================================================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01-21-00 CLEANUP
Continuous Cleanup 2 2,800.00 12 67,200 0 67,200
Trash Bin Rent 1 1,500.00 12 0 18,000 18,000
Trash Bin Haul 1 1,500.00 12 0 18,000 18,000
Trash Chutes, Hoppers 1 1 0 0 0
Final Cleanup & Move Out 38,000 0.12 1 0 45,600 45,600
Clean Glass & Metal 1 1 0 0 0
01-22-00 SAFETY CONSTRUCTION
Safety Rail & Barricde-Bldg 15,800 1.00 1.00 1 15,800 15,800 31,600
Sidewalk Barricades 1 1 0 0 0
Sidewalk & Street Rental 1 1 0 0 0
Ladders & Stairs 1 1,000.00 4 0 4,000 4,000
Doors & Landings & Towers 1 1 0 0 0
Rainwear, HardHats, ProtGear 1 500.00 1 0 500 500
01-23-00 TESTING & CONSULTING
Test Boring, Soil Tests 1 1 0 0 0
Concrete Tests 1 1 0 0 0
Outside Consulting Services 1 1 0 0 0
Survey - Initial & Final 1 35,000.00 1 0 35,000 35,000
CPM Schedule Set-Up 1 IN-HOUSE 1 0 0 0
CPM Schedule Updates 1 IN-HOUSE 1 0 0 0
01-24-00 Warehousing & Handling Matls 1 1 0 0 0
01-25-00 WEATHER PROTECTION
Protection From Elements 1 5,000.00 1 0 5,000 5,000
HVAC for Perm Bldgs-Install 1 1 0 0 0
HVAC Fuel & Operators 1 1 0 0 0
01-27-00 PERSONNEL TRANSPORTATION 1 1 0 0 0
01-30-00 TEMPORARY FACILITIES & UTILITIES
Job Office 1 1,750.00 2 0 3,500 3,500
Owner/Arhcitect's Office 1 1,000.00 2 0 2,000 2,000
Supplement Const for Traile 1 1 0 0 0
Tool House & Area Shacks 1 1 0 0 0
Change Houses 1 1 0 0 0
Saw Sheds, etc. 1 1 0 0 0
Warehouses 1 1 0 0 0
Rent, Buildings & Land 1 1 0 0 0
Fab Facilities 1 1 0 0 0
01-32-00 TEMP CONST UTILITIES
Power&Lights, Install-Bldg 1 1 0 0 0
Power&Lights, Install-Securi 1 1 0 0 0
Power&Lights, Install-Cranes 1 1 0 0 0
Power&Lights, Consumption 1 5,500.00 3 0 16,500 16,500
</TABLE>
<PAGE> 31
Page 3 GENERAL CONDITIONS Date 16-Dec-97
Project: THE RESORT @ SUMMERLIN Estimate NO.: N97N012
Location: SUMMERLIN PARKWAY Bids Date: SEPT. 23, 1997 Reviewed:_______
Architect: PAUL STEELMAN LTD Owner: THE RESORT @ SUMMERLIN Checked: _______
<TABLE>
<CAPTION>
TOWER II
============================================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gas Lines & Storage 1 1 0 0 0
Air Lines & Storage 1 1 0 0 0
Water - Installation 1 2,000.00 1 0 2,000 2,000
Water Coolers ex Barrels 1 1000.00 1 0 1,000 1,000
Water - Consumption 1 500.00 2 0 1,000 1,000
Water - Ice & Cups 1 750.00 2 0 1,500 1,500
Water Boys & Janitors 1 975.00 2 1,950 0 1,950
Construction Water 1 1,000.00 2 0 2,000 2,000
HVAC for Temp Bldg 1 1 0 0 0
Sanitary Fac - Installation 1 1 0 0 0
Sanitary Fac-Opr & Supplies 1 1 0 0 0
Sanitary Fac - Rental 1 120.00 13 0 12,480 12,480
01-33-00 FIELD OFFICE OPERATION
General Office Supplies 1 350.00 3 0 1,050 1,050
Engineering Supplies 1 1 0 0 0
Batterboards & Layout Matls 1 1 0 0 0
Office Machines 1 2,000.00 1 0 2,000 2,000
Copy Machines 1 525.00 3 0 1,575 1,575
Furniture 1 3,000.00 1 0 3,000 3,000
Telephone Purchase & Instal 1 1,000.00 1 0 1,000 1,000
Telephone Use 1 2,000.00 3 0 6,000 6,000
Telecopy 1 1,500.00 1 0 1,500 1,500
Radio Communications 1 3,000.00 1 0 3,000 3,000
Postage & Fees 1 1,000.00 3 0 3,000 3,000
Computers for Payroll, Actg in Summary 1 0 0 0
Misc Computer Equip 1 1,250.00 3 0 3,750 3,750
Blueprinting & Photostats 1 3,000.00 1 0 3,000 3,000
Extra Plans & Secs 1 750.00 5 0 3,750 3,750
Progress Photos 1 300.00 3 0 900 900
Job Signs 1 500.00 1,000.00 1 500 1,000 1,000
Job Related Travel 1 1,000.00 2 0 2,000 2,000
Owner's Rep Equip/Supplies 1 1 0 0 0
01-34-00 SECURITY & FIRE PROTECTION
Security Fence & Gates 1,500 2.75 1 0 4,125 4,125
Guard Service 1 5,500.00 3 0 16,500 16,500
Guards 1 1 0 0 0
Security Traffic Control 1 5,000.00 1 0 5,000 5,000
Fire Protection-Risers & Ho 1 1 0 0 0
Extinquishers/Barrels 1 500.00 3 0 1,500 1,500
01-35-00 TEMP ROADS & HARDSTANDS
Construction 3,650 2.00 2.00 1 7,300 7,300 14,600
Temp Maint & Snow Removal 1 1 0 0 0
Railroad Siding 1 1 0 0 0
01-37-00 MEDICAL
Drug Testing 3 50.00 1 0 150 150
First Aid Mat'ls & Supplies 1 175.00 3 0 525 525
</TABLE>
<PAGE> 32
PAGE 4 GENERAL CONDITIONS DATE 16-Dec-97
Project: THE RESORT @ SUMMERLIN Estimate No : N97N012 Reviewed:____
Location: SUMMERLIN PARKWAY Bids Due: SEPT. 23, 1997 Checked: ____
Architect: PAUL STEELMAN LTD. Owner: THE RESORT @ SUMMERLIN
*******TOWER II*******
<TABLE>
<CAPTION>
====================================================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
====================================================================================================================================
01-38-00 Legal Expense 1 1 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal Indirect Const Support 92,750 255,705 348,455
====================================================================================================================================
CONSTRUCTION EQUIPMENT
<S> <C> <C> <C> <C> <C> <C>
01-42-20 HAULING, TRANSPORTATION 550.00 3 0 1,650 1,650
Proj Mgr Auto 1 500.00 3 0 1,500 1,500
Pickups 1
2 Ton Truck 1 800.00 3 0 2,400 2,400
MISCELLANEOUS
Transits, Levels,
Rods, etc 1 2,000.00 1 0 2,000 2,000
Lasers 1 1 0 0 0
EQUIPMENT REPAIRS
Repairs by Our Mechanics 1 1 0 0 0
Repairs - Outside 1 1 0 0 0
Fuel, Oil & Grease 1 300.00 9 0 2,700 2,700
Tires 1 1 0 0 0
01-43-00 Small Tools & Expendables 1 7,500.00 1 0 7,500 7,500
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal Equipment 0 17,750 17,750
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SUMMARY: INDIRECT & GENERAL EXPENSE (Before Taxes, Insurances, etc from below)
<S> <C> <C> <C>
Subtotal Field Staff Salaries 317,850 0 317,850
Subtotal Indirect Const Services 92,750 255,705 348,455
Subtotal Equipment 0 17,750 17,750
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal Indirect & General Expense 410,600 273,455 684,055
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
01-70-00 INSURANCE, TAXES, FRINGES, PERMITS
Insurance-Builders Risk $_________@_______% 0.00065 0 0
Ins-Vehicle PL & PD INCL W/G.L. W/G.L. W/G.L.
Ins-Perm Equip Install'n $_________@_______% 0 0
Ins-Perm Equip Install'n $_________@_______% 0 0
Ins-Other $_________@_______% 0 0
Ins-Umbrella $ ON SPREADSHEET 0.00200 0 0
Ins-General Liability $ ON SPREADSHEET 0.00380 0 0
01-72-00 P/R TAX, INS.
(PICA,SUI,FUI,WC,GL), FRINGES
Indirect Labor Manual $ 92,750 51.00% 47,303 47,303
Indirect Labor-Noc Manual $ 317,850 32.00% 101,712 101,712
Fringe Benefits-parking $_________@_______% 0 0
</TABLE>
<PAGE> 33
PAGE 5 GENERAL CONDITIONS DATE: 16-DEC-97
Project: THE RESORT @ SUMMERLIN Estimate No.: N97N012
Location: SUMMERLIN PARKWAY Bids Due: SEPT. 23, 1997 Reviewed: ____
Architect: PAUL STEELMAN LTD. Owner: THE RESORT @ SUMMERLIN Checked: ____
*********TOWER II********
<TABLE>
<CAPTION>
==================================================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fringe Benefits-Meals $_______ @_____% 0 0
01-73-00 TAXES, PERMITS & LICENSES
Sales Tax (Direct & Indirect $273,455 7.00% 19,142 19,142
State Business & Occup Tax $_______@_____% 0 0
City Business & Occup Tax $_______@_____% 500 500
Other Taxes 0 0
Building Permits 0 0
Other Permits 0 0
Licenses 350 350
01-74-00 BANKING & FINANCE COST 0
01-75-00 EMPLOYEE EXPENSE
Relocating Expense 7,500 4 10,000 30,000
Temp Living Expense 2,500 4 10,000 10,000
Executive Travel 300 13 3,900 3,900
--------------------------------------------------
TOTAL Indirect & General Expense 559,615 337,347 896,961
Safety Bonus (>5MM=5K, 5-20MM=10K, 20-50MM=15K, >5CMM=25K) 25,000
--------------------------------------------------
COST Including Indirect & General Expense 559,615 337,347 921,961
Preconstruction Costs 0
-----------------
COST Including Indirect & General Expense 921,961
=================
01-78-10 ESCALATION
Field Staff Wage Raises 3.00% 9,526
Material 0.00% 0
Overtime 5.20% 29,100
01-78-20 CONTINGENCY 0% 0
----------------
TOTAL AMOUNT 960,597
================
LATE CHANGES (Plus or Minus)
----------------
ADJUSTED TOTAL AMOUNT 960,597
================
</TABLE>
<PAGE> 34
PAGE 1 GENERAL CONDITIONS DATE: 16-DEC-97
Project: THE RESORT PRKG STRUCT
Location: LAS VEGAS, NEVADA Bids Due: MARCH 12, 1997 Reviewed:
---
Architect: KRACOR-DESIGN/BUILD Owner: SEVEN CIRCLE RESORTS, INC. Checked:
---
**************PARKING STRUCTURE**************
<TABLE>
==========================================================================================================
<CAPTION>
Code Item Quantity Labor Material Time Labor Material Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIELD STAFF SALARIES & WAGES
01-10-10 SUPERVISION - ADMINISTRATIVE
Construction Manager 1 1 0 0 0
SUPERVISION - CONSTRUCTION
Project Manager/P.E. 1 7,500.00 5 22,500 0 22,500
Superintendent 1 4,500.00 5 22,500 0 22,500
General Superintendent 1 7,500.00 2 15,000 0 15,000
Area Superintendents 1 1 0 0 0
Craft Superintendents 1 1 0 0 0
Mech & Elect Coord/Supt 1 1 0 0 0
01-10-20 OFFICE MGT & CLERKS
Field Office Manager 1 1 0 0 0
Accountanting L.A. 1 1,250.00 5 6,250 0 6,250
Timekeepers, Clerks 1 1 0 0 0
Secretary P.T. 1 1,000.00 5 5,000 0 5,000
Secretary/Accountant 1 1 0 0 0
01-10-30 ENGINEERING
Project Engineer 1 1 0 0 0
Office/Cost Engrs 1 1 0 0 0
Field Engineers 1 1 0 0 0
Chief Office Engineer 1 1 0 0 0
Instrument Men 1 1 0 0 0
Rodmen 1 1 0 0 0
Mech & Elect Engrs 1 1 0 0 0
Draftsmen & Clerks 1 1 0 0 0
01-10-40 SAFETY & INDUSTRIAL RELATIONS
Regional Safety Supervisor 1 1 0 0 0
Safety Inspector (IF>20MM) 1 1 0 0 0
Nurse, First Aid Attend. 1 1 0 0 0
Industrial Relations Supv 1 1 0 0 0
01-10-50 QUALITY ASSURANCE
Q.A. Engineers 1 1 0 0 0
Lab Technicians 1 1 0 0 0
01-10-60 PROCUREMENT - JOB
Purchasing Agent 1 1 0 0 0
Expeditor 1 1 0 0 0
01-10-70 WAREHOUSING SUPERVISOR
Warehouse Supervisor 1 1 0 0 0
Clerks 1 1 0 0 0
- --------------------------------------------------------------------------------------------------------------
Subtotal Field Staff 71,250 0 71,250
==============================================================================================================
</TABLE>
<PAGE> 35
PAGE 2 GENERAL CONDITIONS DATE: 16-Dec-97
Project: THE RESORT PRKG STRUCT
Location: LAS VEGAS, NEVADA Bids Due: MARCH 12, 1997 Reviewed:__
Architect: KRACOR - DESIGN/BUILD Owner: SEVEN CIRCLE RESORTS, INC. Checked:___
*******PARKING STRUCTURE*******
<TABLE>
<CAPTION>
==========================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INDIRECT CONSTRUCTION SERVICES & SUPPORT
01-21-00 CLEANUP
Continuous Cleanup 1 2,800.00 5 14,000 0 14,000
Trash Bin Rent 1 500.00 5 0 2,500 2,500
Trash Bin Haul 1 500.00 5 0 2,500 2,500
Trash Chutes, Hoppers 1 1 0 0 0
Final Cleanup & Move Out 273,600 0.04 1 0 9,576 9,576
Clean Glass & Metal 1 1 0 0 0
01-22-00 SAFETY CONSTRUCTION
Safety Rail & Barricde-Bldg 4,300 1.00 1.00 1 4,300 4,300 8,600
Sidewalk Barricades 1 1 0 0 0
Sidewalk & Street Rental 1 1 0 0 0
Ladders & Stairs 1 1,000.00 1 0 1,000 1,000
Doors & Landings @ Towers 1 1 0 0 0
Rainwear, HardHats, ProtGear 1 125.00 1 0 125 125
01-23-00 TESTING & CONSULTING
Test Boring, Soil Tests 1 1 0 0 0
Concrete Tests 1 1 0 0 0
Outside Consulting Services 1 1 0 0 0
Survey - Initial & Final 1 7,500.00 1 0 7,500 7,500
CPM Schedule Set-Up 1 1 0 0 0
CPM Schedule Updates 1 1 0 0 0
01-24-00 Warehousing & Handling Mtls 1 1 0 0 0
01-25-00 WEATHER PROTECTION
Protection From Elements 1 1 0 0 0
HVAC for Perm Bldgs-Install 1 1 0 0 0
HVAC Fuel & Operators 1 1 0 0 0
01-27-00 PERSONNEL TRANSPORTATION 1 1 0 0 0
01-30-00 TEMPORARY FACILITIES & UTILITIES
Job Offices 1 750.00 5 0 3,750 3,750
Inspector's Office 1 1 0 0 0
Supplement Const for Trails 1 1 0 0 0
Tool House & Area Shacks 1 1,400.00 1 0 1,400 1,400
Change Houses 1 1 0 0 0
Saw Sheds, etc. 1 1 0 0 0
Warehouses 1 1 0 0 0
Rent, Buildings & Land 1 BY SUB 1 0 0 0
Fab Facilities 1 1 0 0 0
01-32-00 TEMP CONST UTILITIES
Power&Lights, Install-Bldg 1 1 0 0 0
Power&Lights, Install-Securi 1 1 0 0 0
Power&Lights, Install-Cranes 1 1 0 0 0
Power&Ligts-Consumption 1 400.00 5 0 2,000 2,000
</TABLE>
<PAGE> 36
PAGE 3 GENERAL CONDITIONS DATE: 16-Dec-97
Project: THE RESORT PRKG STRUCT
Location: LAS VEGAS, NEVADA Bids Due: MARCH 12, 1997 Reviewed: ___
Architect: KRACOR-DESIGN/BUILD Owner: SEVEN CIRCLE RESORTS, INC. Checked: ____
*******PARKING STRUCTURE*******
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Code Item Quantity Labor Material Time Labor Material Total
- --------------------------------------------------------------------------------------------------------
Gas Lines & Storage 1 1 0 0 0
Air Lines & Storage 1 1 0 0 0
Water - Installation 1 BY SUB 0 0 0
Water Coolers or Barrels 1 300.00 1 1 300 300
Water - Consumption 1 235.00 5 0 1,175 1,175
Water - Ice & Cups 1 500.00 5 0 2,500 2,500
Water Boys & Janitors 1 975.00 5 4,875 0 4,875
Construction Water 1 200.00 5 0 1,000 1,000
HVAC for Temp Bldg 1 1 0 0 0
Sanitary Fac - Installation 1 1 0 0 0
Sanitary Fac-Opr & Supplies 1 60.00 5 0 300 300
Sanitary Fac - Rental 2 120.00 5 0 1,200 1,200
01-33-00 FIELD OFFICE OPERATION
General Office Supplies 1 250.00 5 0 1,250 1,250
Engineering Supplies 1 1 0 0 0
Batterboards & Layout Matls 1 1 0 0 0
Office Machines 1 650.00 1 0 650 650
Copy Machines 1 400.00 5 0 2,000 2,000
Furniture 1 1,650.00 1 0 1,650 1,650
Telephone Purchase & Instal 1 800.00 1 0 820 800
Telephone Use 1 875.00 5 0 4,375 4,375
Telecopy 1 750.00 1 0 750 750
Radio Communications 1 2,500.00 1 0 2,500 2,520
Postage & Fees 1 375.00 5 0 1,875 1,875
Computers for Payroll, Actg 1 1,725.00 5 0 8,625 8,625
Misc Computer Equip 1 675.00 5 0 3,375 3,375
Blueprinting & Photostats 1 3,000.00 1 0 3,000 3,000
Extra Plans & Specs 1 250.00 10 0 2,500 2,500
Progress Photos 1 300.00 5 0 1,500 1,500
Job Signs 1 450.00 1,500.00 1 450 1,500 1,950
Job Related Travel 1 1 0 0 0
Owner's Rep Equip/Supplies 1 1 0 0 0
01-34-00 SECURITY & FIRE PROTECTION
Security Fence & Gates 1,600 2.50 1 0 4,000 4,000
Guard Service/Guard Dogs 1 1 0 0 0
Guards 1 1 0 0 0
Security Traffic Control 1 1 0 0 0
Fire Protection-Risers & Ho 1 1 0 0 0
Extinguishers/Barrels 1 350.00 1 0 350 350
01-35-00 TEMP ROADS & HARDSTANDS
Construction 1 1 0 0 0
Temp Maint & Snow Removal 1 1 0 0 0
Railroad Siding 1 1 0 0 0
01-37-00 MEDICAL
Drug Testing 6 50.00 1 0 300 300
First Aid Mat'ls & Supplies 1 175.00 5 0 875 875
</TABLE>
<PAGE> 37
PAGE 4 GENERAL CONDITIONS DATE: 16-DEC-97
Project: THE RESORT PRKG STRUCT
Location: LAS VEGAS, NEVADA Bids Due: MARCH 12, 1997 Reviewed:
---
Architect: KRACOR-DESIGN/BUILD Owner:SEVEN CIRCLE RESORTS, INC. Checked:
---
**************PARKING STRUCTURE**************
<TABLE>
==========================================================================================================
<CAPTION>
Code Item Quantity Labor Material Time Labor Material Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01-38-00 Legal Expense 1 1 0 0 0
- ----------------------------------------------------------------------------------------------------------
Subtotal Indirect Const Support 23,625 83,001 106,626
==========================================================================================================
CONSTRUCTION EQUIPMENT
01-42-20 HAULING, TRANSPORTATION
Proj Mgr Auto 1 550.00 5 0 1,650 1,650
Pickups 1 500.00 7 0 3,500 3,500
2 Ton Truck 1 W/CONC 1 0 0 0
MISCELLANEOUS
Transits,Levels,Rods,etc 1 2,000.00 1 0 2,000 2,000
Lasers 1 1 0 0 0
EQUIPMENT REPAIRS
Repairs by Our mechanics 1 1 0 0 0
Repairs - Outside 1 1 0 0 0
Fuel, Oil & Grease 1 100.00 12 0 3,600 3,600
Tires 1 1 0 0 0
01-43-00 Small Tools & Expendables 1 3,000.00 1 0 3,000 3,000
- ----------------------------------------------------------------------------------------------------------
Subtotal Equipment 0 13,750 13,750
==========================================================================================================
SUMMARY: INDIRECT & GENERAL EXPENSE (Before Taxes, Insurances, etc from below)
Subtotal Field Staff Salaries 71,250 0 71,250
Subtotal Indirect Const Services 23,625 83,001 106,626
Subtotal Equipment 0 13,750 13,750
- ----------------------------------------------------------------------------------------------------------
Subtotal Indirect & General Expense 94,875 96,751 191,626
==========================================================================================================
01-70-00 INSURANCE, TAXES, FRINGES, PERMITS
Insurance-Builders Risk $ @ % 0.00065 0 0
------------ -------
Ins-vehicle PL & PD INCL W/G.L. W/G.L. W/G.L.
Ins-Perm Equip Install'n $ @ % 0 0
------------ -------
Ins-Perm Equip Install'n $ @ % 0 0
------------ -------
Ins-Other $ @ % 0 0
------------ -------
Ins-Umbrella $ ON SPREADSHEET 0.00200 0 0
Ins-General Liability $ ON SPREADSHEET 0.00380 0 0
01-72-00 P/R TAX. INS. (FICA, SUI, FUI, WC, GL), FRINGES
Indirect Labor Manual $ 23,625 51.00% 12.049 12,049
Indirect Labor-Non Manual $ 71,250 42.00% 29,925 29,925
Fringe Benefits-Parking $ @ % 0 0
------------ -------
</TABLE>
<PAGE> 38
PAGE 5 GENERAL CONDITIONS DATE: 16-Dec-97
Project: THE RESORT PRKG STRUCT
Location: LAS VEGAS, NEVADA Bids Due: MARCH 12, 1997 Reviewed:__
Architect: KRACOR - DESIGN/BUILD Owner: SEVEN CIRCLE RESORTS, INC. Checked:___
*******PARKING STRUCTURE*******
<TABLE>
<CAPTION>
==========================================================================================================
Code Item Quantity Labor Material Time Labor Material Total
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fringe Benefits-Meals $ @ % 0 0
01-73-00 TAXES, PERMITS & LICENSES
Sales Tax (Direct & Indirect $48,376 7.50% 3,628 3,628
State Business & Occup Tax $ @ % 0 0
City Business & Occup Tax $ @ % 500 500
Other Taxes 0 0
Building Permits 0 0
Other Permits 0 0
Licenses 350 350
01-74-00 BANKING & FINANCE COST 0
01-75-00 EMPLOYEE & EXPENSE 0
Relocating Expense 1 8,000 8,000 8,000
Temp Living Expense 0 0
Executive Travel 0 0
---------------------------
TOTAL Indirect & General Expense 136,849 109,229 246,078
Safety Bonus (>5MM=5K, 5-20MM=10K, 20-50MM=15K, >50MM=25K) 10,000
---------------------------
COST Including Indirect & General Expense 136,849 109,229 256,078
Preconstruction Costs 0
-------
COST Including Indirect & General Expense 256,078
=======
01-78-10 ESCALATION
Field Staff Wage Raises 0.00% 0
Material 0.00% 0
Overtime 0.00% 0
01-78-20 CONTINGENCY 0% 0
-------
TOTAL AMOUNT 256,078
=======
LATE CHARGES (Plus or Minus)
-------
ADJUSTED TOTAL AMOUNT 256,078
=======
</TABLE>
<PAGE> 39
EXHIBIT 3
<PAGE> 40
Two control sets of construction and specification documents will be initialed
by the parties within 20 days of the date of this Agreement and shall be the
controlling sets for both parties.
<PAGE> 41
EXHIBIT 4
<PAGE> 42
Contractor acknowledges receipt of one set of FF & E specifications, dated
December 10th, 1997.
Two control sets of the interior FF & E specifications will be initialed by the
parties within 20 days of the date of this Agreement and shall be the
controlling sets for both parties.
<PAGE> 43
[PS LOGO]
PAUL STEELMAN LTD.
ARCHITECTURE PLANNING
3330 W. DESERT INN RD. LAS VEGAS, NV 89102
(702) 873-0221 FAX (702) 367-3565
TRANSMITTAL
-----------
DATE: November 19, 1997 ----------------------------
Received By
TO: J.A. Jones Construction
1050 E. Flamingo Road, Ste. E217
Las Vegas, NV 89119
ATTN: Buck Bond
RE: T.M.I. Summerlin PRJ (S): 95255 FILE#: 01023
- --------------------------------------------------------------------------------
DESCRIPTION:
Reproducible Dwgs. Prints X Specifications Samples
- --- --- --- ---
Shop Drawings Clarification Sketches Correspondence
- --- --- ---
Use on Project Other Submittal
- --- ---
- --------------------------------------------------------------------------------
FOR:
(Stamped As:)
Bid Documents Agency Submittal Consultant Coordination
- --- --- ---
Field Clarification Design, Review & Approval Per Your Request
- --- --- ---
X Issued for Construction Permits/Agency Approval Approval
- --- --- ---
Review & Comment Resubmission Your Files
- --- --- ---
Other:
- ---
- --------------------------------------------------------------------------------
SENT VIA:
UPS (Overnight) UPS (Ground) Delivery Service First Class Mail
- --- --- --- ---
UPS (2nd Day Air) Federal Express X Hand Deliver
- --- --- ---
UPS (Saturday) Delta Dash Pick Up
- --- --- ---
- --------------------------------------------------------------------------------
REMARKS:
Mr. Bond:
Attached you will find four boxes containing the specifications from our office
for contractor supplied/contractor installed items. If you have any questions
concerning these finishes, please feel free to contact me directly.
- --------------------------------------------------------------------------------
Automatic CC Files: Stick Set
---
Record Drawer
---
x Job File/Louis DeSantis
---
SENT BY: Darla Real
cc: Ethan Nelson
Clay Markham
Sean Tanner
<PAGE> 44
INTERIOR SPECIFICATIONS
FOR FF & E FINISHES
T.M.I. SUMMERLIN, LAS VEGAS
ISSUED FOR CONTRACT 12-10-97
VOL. 1 SERIES 0-99 BACK OF HOUSE
VOL. 2 SERIES 100 TYPICAL KING OR QUEEN ROOM (SCHEME 1)
SERIES 200 TYPICAL KING OR QUEEN ROOM (SCHEME 2)
SERIES 300 CORRIDOR
SERIES 400 TYPICAL KING OR QUEEN ROOM (SCHEME 3)
SERIES 500 TYPICAL KING OR QUEEN ROOM (SCHEME 4)
SERIES 600 OUTDOOR
VOL. 2A SERIES 700 EXECUTIVE OFFICES
VOL. 3 SERIES 1000 LOBBY, REGISTRATION AND CORRIDORS
SERIES 1100 BUSINESS CENTER & MEETING ROOMS
SERIES 1200 HOTEL RESTAURANT
VOL. 4 SERIES 1300 RESTROOMS
SERIES 1400 BALLROOM & CONFERENCE CENTER
SERIES 1600 RETAIL CORRIDOR
SERIES 1700 BUFFET
SERIES 1900 PUTTERS LOUNGE
VOL. 5 SERIES 2000 CASINO
SERIES 2100 CASINO BAR
SERIES 2200 SPORTS LOUNGE
VOL. 6 SERIES 2300 ENTERTAINMENT LOUNGE
SERIES 2400 HIGH LIMIT SLOTS
SERIES 2500 HIGH LIMIT TABLES
VOL. 7 SERIES 3000 HAIR SALON
SERIES 3100 RETAIL
SERIES 3200 EXERCISE ROOM & SPA
<PAGE> 45
INTERIOR SPECIFICATIONS
FOR FF&E FINISHES
T.M.I. SUMMERLIN, LAS VEGAS
VOL. 8 SERIES 4100 BOARDROOM
SERIES 4200 SUITES C - HANDICAPPED
SERIES 4300 SUITES C1
SERIES 4400 SUITES D
VOL. 9 SERIES 4500 SUITES E
SERIES 4600 SUITES E1 - HOSPITALITY SUITE
SERIES 4700 SUITES F
VOL. 10 SERIES 4800 SUITES G (PRESIDENTIAL)
SERIES 4900 SUITES J
VOL. 11 SERIES 5000 HOTEL 2/CASINO LINK
SERIES 5100 HOTEL 2 LOBBY
<PAGE> 46
EXHIBIT 5
<PAGE> 47
TWO CONTROL SETS OF CONSTRUCTION AND SPECIFICATION DOCUMENTS WILL BE INITIALED
BY THE PARTIES WITHIN 20 DAYS OF THE DATE OF THIS AGREEMENT AND SHALL BE THE
CONTROLLING SETS FOR BOTH PARTIES.
<PAGE> 48
EXHIBIT 6
<PAGE> 49
[LOGO]
GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
CONSTRUCTION MANAGER-ADVISER EDITION
AIA DOCUMENT A201/CMa - ELECTRONIC FORMAT
- ------------------------------------------------------------------------------
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.
Copyright 1975, 1980, copyright 1992 by The American Institute of Architects,
1735 New York Avenue N.W., Washington, D.C. 20006-5292. Reproduction of the
material herein or substantial quotation of its provisions without written
permission of the AIA violates the copyright laws of the United States and will
be subject to legal prosecution.
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TABLE OF ARTICLES
1. GENERAL PROVISIONS
2. OWNER
3. CONTRACTOR
4. ADMINISTRATION OF THE CONTRACT
5. SUBCONTRACTORS
6. CONSTRUCTION BY OWNER OR BY OTHER CONTRACTORS
7. CHANGES IN THE WORK
8. TIME
9. PAYMENTS AND COMPLETION
10. PROTECTION OF PERSONS AND PROPERTY
11. INSURANCE AND BONDS
12. UNCOVERING AND CORRECTION OF WORK
13. MISCELLANEOUS PROVISIONS
14. TERMINATION OR SUSPENSION OF THE CONTRACT
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #1
<PAGE> 50
INDEX
ACCEPTANCE OF NONCONFORMING WORK 9.6.6, 9.9.3, 12.3
Acceptance of Work 9.6.6, 9.8.2, 9.9.3, 9.10.1, 9.10.3
ACCESS TO WORK 3.16, 6.2.1, 12.1
Accident Prevention 4.6.6, 10
Acts and Omissions 3.2.1, 3.2.2, 3.3.2, 3.12.8, 3.18, 4.6.6,
4.6.2, 4.7.9, 8.3.1, 10.1.4, 10.2.5, 13.4.2, 13.7, 14.1
Addenda 1.1.1, 3.11
ADDITIONAL COSTS, CLAIMS FOR 4.7.6, 4.7.7, 4.7.9, 6.1.1, 10.3
Additional Inspections and Testing 4.6.10, 9.8.2, 12.2.1, 13.5
ADDITIONAL TIME, CLAIMS FOR 4.7.6, 4.7.8, 4.7.9, 8.3.2, 10.3
ADMINISTRATION OF THE CONTRACT 3.3.3, 4, 9.4, 9.5
Advertisement or Invitation to Bid 1.1.1
Aesthetic Effect 4.6.20, 4.9.1
ALLOWANCES 3.8
All-risk Insurance 11.3.1.1
APPLICATIONS FOR PAYMENT 4.6.9, 7.3.7, 9.2, 9.3, 9.4, 9.5.1,
9.6.3, 9.8.3, 9.10.1, 9.10.3, 9.10.4, 11.1.3, 14.2.4
Approvals 2.4, 3.3.3, 3.5, 3.10.3, 3.12.4 through 3.12.8,
3.18.3, 4.6.12, 9.3.2, 11.3.1.4, 13.4.2, 13.5
ARBITRATION 4.5, 4.7.4, 4.9,
8.3.1, 10.1.2, 11.3.9, 11.3.10
ARCHITECT 4.1
Architect, and Certificate of Payment 4.6.9
Architect, Definition of 4.1.1
Architect, Extent of Authority 2.4.1, 3.12.6, 4.6.6, 4.7.2,
5.2, 6.3, 7.1.2, 7.2.1, 7.4, 9.2, 9.3.1, 9.4, 9.5, 9.6.3, 9.8.2,
9.8.3, 9.10.1, 9.10.3, 12.1, 12.2.1, 13.5.1, 13.5.2, 14.2.2, 14.2.4
Architect, Limitations of Authority and Responsibility 3.3.3,
3.12.8, 3.12.11, 4.6.5, 4.6.6, 4.6.10, 4.6.12,
4.6.17, 4.6.19, 4.6.20, 4.7.2, 5.2.1, 7.4, 9.6.4
Architect's Additional Services and Expenses 2.4, 9.8.2
11.3.1.1, 12.2.1, 12.2.4, 13.5.2, 13.5.3, 14.2.4
Architect's Administration
of the Contract 4.6, 4.7.6, 4.7.7, 4.8, 9.4, 9.5
Architect's Approvals 2.4.1, 3.5.1, 3.10.3,
3.12.6, 3.12.8, 3.18.3, 4.6.12
Architect's Authority to Reject Work 3.5.1, 4.6.10, 12.1.2, 12.2.1
Architect's Copyright 1.3
Architect's Decisions 4.6.10, 4.6.12, 4.6.18, 4.6.19,
4.6.20, 4.7.2, 4.7.6, 4.8.1, 4.8.4, 4.9, 6.3, 8.1.3,
8.3.1, 9.2, 9.4, 9.5.1, 9.8.2, 9.9.1, 10.1.2, 13.5.2, 14.2.2, 14.2.4
Architect's Inspections 4.6.5, 4.6.16, 4.7.6, 9.4.3,
9.8.2, 9.9.2, 9.10.1, 13.5
Architect's Instructions 4.6.10, 4.6.12, 7.4.1, 9.4.3, 12.1, 13.5.2
Architect's Interpretations 4.6.18, 4.6.19, 4.7.7
Architect's On-Site Observations 4.6.5, 4.6.9, 4.7.6,
9.4.3, 9.5.1, 9.10.1, 13.5
Architect's Project Representative 4.6.17
Architect's Relationship with Contractor 1.1.2, 3.2.1, 3.2.2, 3.3.3,
3.5.1, 3.7.3, 3.11, 3.12.8, 3.12.11, 3.16, 3.18, 4.6.6, 4.6.7, 4.6.10,
4.6.12, 4.6.19, 5.2, 6.2.2, 7.3.4, 9.8.2, 10.1.2, 10.1.4, 10.1.5,
11.3.7, 12.1, 13.5
Architect's Relationship with Construction Manager 1.1.2, 2.4.1,
3.12.6, 3.12.8, 4.6.8, 4.6.10, 4.6.14, 4.6.16, 4.6.18, 6.3.1,
9.7.1, 9.8, 9.9.1, 9.9.2, 9.10.1, 9.10.2, 9.10.3, 12.2.4, 13.5.1,
13.5.2, 13.5.4, 14.2.4
Architect's Relationship with Subcontractors 1.1.2, 4.6.6, 4.6.7,
4.6.10, 5.3.1, 9.6.3, 9.6.4, 11.3.7
Architect's Representations 9.4.3, 9.5.1, 9.10.1
Architect's Site Visits 4.6.5, 4.6.9, 4.6.16, 4.7.6, 9.4.3,
9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5
Asbestos 10.1.2, 10.1.3, 10.1.4
Attorneys' Fees 3.18.1, 9.10.2, 10.1.4
Award of Separate Contracts 6.1.1
AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR
PORTIONS OF THE WORK 5.2
BASIC DEFINITIONS 1.1
Bidding Requirements 1.1.1, 1.1.7, 5.2.1, 11.4.1
BOILER AND MACHINERY INSURANCE 11.3.2
Bonds, Lien 9.10.2
Bonds, Performance, and Payment 7.3.6.4, 9.10.3, 11.3.9, 11.4
Building Permit 2.2.3, 3.7.1
CAPITALIZATION 1.4
Certificate of Substantial Completion 9.8.2
CERTIFICATES FOR PAYMENT 4.6.8, 4.6.9, 9.3.3, 9.4, 9.5, 9.6.1,
9.6.6, 9.7.1, 9.8.3, 9.10.1, 9.10.3, 13.7, 14.1.1.3, 14.2.4
Certificates of Inspection, Testing or Approval 3.12.11, 13.5.4
Certificates of Insurance 9.3.2, 9.10.2, 11.1.3
CHANGE ORDERS 1.1.1, 2.4.1, 3.8.2.4, 3.11.1, 4.6.13, 4.7.3,
5.2.3, 7.1, 7.2, 7.3.2, 8.3.1, 9.3.1.1, 9.10.3, 11.3.1.2,
11.3.4, 11.3.9, 12.1.2
Change Orders, Definition of 7.2.1
Changes 7.1
CHANGES IN THE WORK 3.11, 4.6.13, 4.6.14, 7,
8.3.1, 9.3.1.1, 10.1.3
Claim, Definition of 4.7.1
CLAIMS AND DISPUTES 4.7, 4.8, 4.9, 6.2.5, 8.3.2,
9.3.1.2, 9.3.3, 9.10.4, 10.1.4
CLAIMS AND TIMELY ASSERTION OF CLAIMS 4.9.6
CLAIMS FOR ADDITIONAL COST 4.7.6, 4.7.7, 4.7.9, 6.1.1, 10.3
CLAIMS FOR ADDITIONAL TIME 4.6.9, 4.7.6, 4.7.8, 4.7.9, 8.3.2
CLAIMS FOR CONCEALED OR UNKNOWN CONDITIONS 4.7.6
Claims for Damages 3.18, 4.7.9, 6.1.1, 6.2.5,
8.3.2, 9.5.1.2, 10.1.4
Claims Subject to Arbitration 4.7.2, 4.8.4, 4.6.1
CLEANING UP 3.15, 6.3
COMMENCEMENT OF STATUTORY LIMITATION PERIOD 13.7
Commencement of the Work, Conditions Relating to 2.12, 2.2.1,
- ------------------------------------------------------------------------------
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #2
<PAGE> 51
3.2.1, 3.2.2, 3.7.1, 3.10.1, 3.12.6, 4.7.7, 5.2.1,
6.2.2, 8.1.2, 8.2.2, 9.2, 11.1.3, 11.3.6, 11.4.1
Commencent of the Work, Definition of 8.1.2
Communications, Owner to Architect 2.2.6
Communications, Owner to Construction Manager 2.2.6
Communications Facilitating Contract
Administration 3.9.1 4.6.7, 5.2.1
Completion, Conditions Relating to 3.11, 3.15, 4.6.5
4.6.16, 4.7.2, 9.4.2, 9.8, 9.9.1, 9.10, 11.3.5, 12.2.2, 13.7.1
COMPLETION, PAYMENTS AND 9
COMPLETION, SUBSTANTIAL 4.6.16, 4.7.5.2, 8.1.1,
8.1.3, 8.2.3, 9.8, 9.9.1, 12.2.2, 13.7
Compliance with Laws 1.3, 3.6, 3.7, 3.13, 4.1.1, 10.2.2,
11.1, 11.3, 13.1, 13.5.1, 13.5.2, 13.6, 14.1.1, 14.2.1,3
Concealed or Unknown Conditions 4.7.6
Conditions of the Contract 1.1.1, 1.1.7, 6.1.1
Consent, Written 1.3.1, 3.12.8, 3.14.2, 4.7.4,
4.9.5, 9.3.2, 9.8.2, 9.9.1, 9.10.2, 9.10.3,
10.12, 10.1.3, 11.3.1, 11.3.1.4, 11.3.11, 13.2, 13.4.2
CONSTRUCTION BY OWNER OR BY OTHER
CONTRACTORS 1.1.4, 6
Construction Change Directive, Definition of 7.3.1
CONSTRUCTION CHANGE DIRECTIVES 1.1.1, 4.6.13, 7.1, 7.3, 9.3.1.1
CONSTRUCTION MANAGER 4.2
Construction Manager, and Building Permits 2.2.3
Construction Manager, Claims against 4.7.2
Construction Manager, Communications through 4.6.7
Construction Manager, and Construction Schedule 3.10.1, 3.10.2
Construction Manager, Definition of 4.2.1
Construction Manager, and Documents and Samples at the Site 3.11.1
Construction Manager, Extent of Authority 3.12.6, 3.12.8, 4.3,
4.6.3, 4.6.11, 7.1.2, 7.2.1, 7.3.1, 8.3.1, 9.2.1, 9.3.1, 9.4.1,
9.4.3, 9.8.2, 9.8.3, 9.9.1, 12.1, 12.2.1, 12.2.4, 14.2.2, 14.2.4
Construction Manager, Limitations of Authority
and Responsibility 4.6.6, 4.6.10, 13.4.2
Construction Manager, and Submittals 3.10.3
Construction Manger's Additional Services
and Expenses 12.2.1, 12.2.4
Construction Manager's Administration of the Contract 4.6, 9.4, 9.5
Construction Manager's Approval 2.4.1, 3.10.3
Construction Manager's Authority to Reject Work 4.6.10, 12.2.1
Construction Manager's Decisions 7.3.6, 7.3.7, 7.3.8,
9.3.1, 9.4.1, 9.5.1
Construction Manager's Inspections 4.6.10, 9.4.3, 9.8.2, 9.9.2, 12.1.1
Construction Manager's On-Site Observations 9.5.1
Construction Manager's Relationship with Architect 1.1.2
,4.6.8, 4.6.10, 4.6.11, 4.6.14, 4.6.16, 4.6.18, 6.3.1,
9.2.1, 9.4.2, 9.4.3, 9.6.1, 9.6.3, 9.8.2, 9.8.3, 9.9.1, 9.10.1,
9.10.2, 9.10.3, 11.1.3, 12.2.4, 13.5.1, 13.5.2, 13.5.4, 14.2.2, 14.2.4
Construction Manager's Relationship with Contractor 3.2.1, 3.2.2
3.3.1, 3.3.3, 3.5.1, 3.7.3, 3.10.1, 3.10.2, 3.10.3, 3.11.1, 3.12.5,
3.12.6, 3.12.8, 3.12.9, 3.12.10, 3.12.11, 3.13.2, 3.14.2, 3.15.2,
3.16.1, 3.17.1, 3.18.1, 3.18.3, 4.6.3, 4.6.4, 4.6.6, 4.6.11, 5.2, 6.2.1,
6.2.2, 7.1.2, 7.2.1, 7.3.4, 7.3.6, 7.3.9, 8.3.1, 9.2.1, 9.3.1, 9.4.1,
9.4.2, 9.4.3, 9.7.1, 9.8.2, 9.9.1, 9.1.1, 9.10.2, 9.10.3, 10.1.1,
10.1.2, 10.1.5, 10.2.6, 11.3.7, 12.1, 13.5.1, 13.5.2, 13.5.3, 13.5.4
Construction Manager's Relationship with Owner 2.2.3, 4.6.1,
4.6.2, 10.1.6
Construction Manager's Relationship with Other
Contractors and Owner's
4.6.3
Construction Manager's Relationship with
Subcontractors 4.6.10, 5.3.1, 9.6.3, 9.6.4
Construction Manager's Representations 9.4.3, 9.5.1
Construction Manager's Site Visits 9.4.4, 9.5.1
Construction Schedules, Contractor's 3.10, 4.6.3, 4.6.4
CONTINGENT ASSIGNMENT OF SUBCONTRACTS 5.4
CONTINUING CONTRACT PERFORMANCE 4.7.4
Contract, Definition of 1.1.2
CONTRACT, TERMINATION OR
SUSPENSION OF THE 4.7.7, 5.4.1.1, 14
Contract Administration 3.3.3, 4, 9.4, 9.5
Contract Award and Execution, Conditions Relating to 3.7.1, 3.10,
5.2, 9.2, 11.1.3, 11.3.6, 11.4.1
CONTRACT DOCUMENTS, THE 1.1, 1.2, 7
Contract Documents, Copies Furnished and Use of 1.3, 2.2.5, 5.3
Contract Documents, Definition of 1.1.1
Contract Performance During Arbitration 4.7.4, 4.9.3
Contract Sum 3.8, 4.7.6, 4.7.7, 4.8.4,
5.2.3, 7.2, 7.3, 9.1, 9.7, 11.3.1, 12.2.4, 12.3, 14.2.4
Contact Sum, Definition of 9.1.1
Contract Time 4.7.6, 4.7.8.1, 4.8.4,
7.2.1.3, 7.3, 8.2.1, 8.3.1, 9.7, 12.1.1
Contract Time, Definition of 8.1.1
CONTRACTOR 3
Contractor, Definition of 3.1.1, 6.1.2
Contractor's Bid 1.1.1
CONTRACTOR'S CONSTRUCTION SCHEDULES 3.10
Contractor's Employees 3.3.2, 3.4.2, 3.8.1,
3.9, 3.18, 4.6.6, 4.6.10, 8.1.2, 10.2, 10.3, 11.1.1, 14.2.1.1
CONTRACTOR'S LIABILITY INSURANCE 11.1, 11.3.1.5
Contractor's Relationship with Separate Contractors
and Owner's Forces 3.12.5, 3.14.2, 4.6.3, 4.6.7, 12.2.5
Contractor's Relationship with Subcontractors 1.2.4, 3.3.2, 3.18.1
3.18.2, 5.2, 5.3, 5.4, 9.6.2, 11.3.7, 11.3.8, 14.2.1.2,
Contractor's Relationship with the Architect 1.1.2, 3.2.1, 3.2.2,
3.3.3, 3.5.1, 3.7.3, 3.10.1, 3.10.3, 3.11.1, 3.12.6, 3.12.8,
3.12.9, 3.16.1, 3.18, 4.6.6, 4.6.7, 4.6.10, 4.6.12, 4.6.19, 5.2,
6.2.2, 7.3.4, 9.2, 9.3.1, 9.8.2, 9.10.3, 10.1.2, 10.1.5,
10.2.6, 11.3.7, 12.1, 13.5
Contractor's Relationship with the Contruction Manager 1.1.2,
3.2.1, 3.2.2, 3.3.1, 3.3.3, 3.5.1, 3.7.3, 3.7.4, 3.10.1, 3.10.2,
- ------------------------------------------------------------------------------
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C)1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM - 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 - Page #3
<PAGE> 52
3.10.3, 3.11.1, 3.12.5, 3.12.6, 3.12.8, 3.12.9, 3.12.11,
3.13.2, 3.14.2, 3.15.2, 3.16.1, 3.17.1, 3.18.1, 3.18.3, 4.6.3,
4.6.4, 4.6.6, 5.2, 6.2.1, 6.2.2, 7.1.2, 7.2.1, 7.3.4, 7.3.6, 7.3.9,
8.3.1, 9.2.1, 9.3.1, 9.4.1, 9.4.2, 9.4.3, 9.7.1, 9.8.2, 9.9.1,
9.10.1, 9.10.2, 9.10.3, 10.1.1, 10.1.2, 10.1.5, 10.2.6,
11.3.7, 12.1, 13.5.1, 13.5.2, 13.5.3, 13.5.4
Contractor's Representations 1.2.2, 3.5.1, 3.12.7, 6.2.2, 8.2.1, 9.3.3
Contractor's Responsibility for Those Performing 3.3.2, 3.18, 4.6.6, 10
Contractor's Review of Contract Documents 1.2.2, 3.2, 3.7.3
Contractor's Right to Stop the Work 9.7
Contractor's Right to Terminate the Contract 14.1
Contractor's Submittals 3.10, 3.11, 3.12, 4.6.12, 5.2.1, 5.2.3,
7.3.6, 9.2, 9.3.1, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 11.4.2
Contractor's Superintendent 3.9, 10.2.6
Contractor's Supervision and Construction Procedures 1.2.4, 3.3,
3.4, 4.6.6, 8.2.2, 8.2.3, 10
Contractual Liability Insurance 11.1.1.7, 11.2.1, 11.3.1.5
Coordination and Correlation 1.2.2, 1.2.4, 3.3.1, 3.10, 3.12.7, 6.2.1
Copies Furnished of Drawings and Specifications 1.3, 2.2.5, 3.11
Correction of Work 2.3, 2.4, 3.2.1, 4.6.1, 9.8.2, 9.9.1,
12.1.2, 12.2, 13.7.1.3
Cost, Definition of 7.3.6
Costs 2.4, 3.2.1, 3.7.4, 3.8.2, 3.15.2., 4.7.6, 4.7.7, 4.7.8.1, 5.2.3,
6.1.1, 6.2.3, 6.3.1, 7.3.3.3, 7.3.6, 7.3.7, 9.7, 9.8.2, 9.10.2,
11.3.1.2, 11.3.1.3, 11.3.4, 11.3.9, 12.1, 12.2.1,
12.2.4, 12.2.5, 13.5, 14
CUTTING AND PATCHING 3.14, 6.2.6
Damage to Construction of Owner or Separate
Contractors 3.14.2, 6.2.4, 9.5.1.5, 10.2.1.2,
10.2.5, 10.3, 11.1, 11.3, 12.2.5
Damage to the Work 3.14.2, 9.9.1, 10.2.1.2, 10.2.5, 10.3, 11.3
Damages, Claims for 3.18, 4.6.9, 6.1.1, 6.2.5, 8.3.2, 9.5.1.2, 10.1.4
Damages for Delay 6.1.1., 8.3.3, 9.5.1.6, 9.7
Date of Commencement of the Work, Definition of 8.1.2
Date of Substantial Completion, Definition of 8.1.3
Day, Definition of 8.1.4
Decisions of the Architect 4.6, 4.7, 6.3, 8.1.3, 8.3.1,
9.2, 9.4, 9.5.1, 9.8.2, 9.9.1, 10.1.2, 13.5.2, 14.2.2, 14.2.4
Decisions of the Construction Manager 4.3, 7.3.6, 7.3.7, 7.3.8,
9.3.1, 9.4.1, 9.4.3, 9.5.1
DECISIONS TO WITHHOLD CERTIFICATION 9.5, 9.7, 14.1.1.3
Defective or Nonconforming Work, Acceptance,
Rejection and Correction of 2.3, 2.4, 3.5.1, 4.6.1,
4.6.10, 4.7.5, 9.5, 9.8.2, 9.9.1, 10.2.5, 12, 13.7.1.3
Defective Work, Definition of 3.5.1
Definitions 1.1, 2.1.1, 3.1, 3.5.1, 3.12.1, 3.12.2, 3.12.3,
4.1.1, 4.2.1, 4.7.1, 5.1, 6.1.2, 7.2.1, 7.3.1, 7.3.6, 8.1, 9.1, 9.8.1
DELAYS AND EXTENSIONS OF TIME 4.7.1, 4.7.8.1, 4.7.8.2,
6.1.1, 6.2.3, 7.2.1, 7.3.1.3, 7.3.4,
7.3.5, 7.3.8, 7.3.9, 8.1.1, 8.3, 10.3.1, 14.1.1.4
Disputes 4.7, 4.8, 4.9, 6.2.5, 6.3, 7.3.8, 9.3.1.2
Documents and Samples at the Site 3.11
Drawings, Definition of 1.1.5
Drawings and Specifications, Use and Ownership of 1.1.1, 1.3, 2.2.5, 3.11, 5.3
Duty to Review Contract Documents and Field Conditions 3.2
Effective Date of Insurance 8.2.2, 11.1.2
EMERGENCIES Work 4.7.7, 10.3
Employees, Contractor's 3.3.2, 3.4.2, 3.8.1, 3.9,
3.18.1, 3.18.2, 4.6.6, 4.6.10, 8.1.2, 10.2, 10.3, 11.1.1,
14.2.1.1
Equipment, Labor, Materials and 1.1.3, 1.1.6, 3.4, 3.5.1,
3.8.2, 3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.6.12, 6.2.1,
7.3.6, 9.3.2, 9.3.3, 11.3, 12.2.4, 14.1.2, 14.2.1, 14.2.2
Execution and Progress of the Work 1.2.3, 3.4.1,
3.5.1, 4.6.5, 4.6.6, 4.7.4, 4.7.8, 6.2.2,
7.1.3, 8.2, 8.3, 9.5, 9.9.1, 10.2.3
EXECUTION, CORRELATION AND INTENT of the
Contract Documents 1.2, 3.7.1
Extensions of Time 4.7.1, 4.7.8, 7.2.1.3, 8.3, 10.3.1
Failure of Payment by Contractor 9.5.1.3, 14.2.1.2
Failure of Payment by Owner 4.7.7, 9.7, 14.1.3
Faulty Work (See Defective or Nonconforming Work)
FINAL COMPLETION AND FINAL PAYMENT 4.6.1, 4.6.16,
4.7.2, 4.7.5, 9.10, 11.1.2, 11.1.3, 11.3.5, 12.3.1, 13.7
Financial Arrangements, Owner's 2.2.1
Fire and Extended Coverage Insurance 11.3.1.1, 11.3.5, 11.3.7
GENERAL PROVISIONS 1
GOVERNING LAW 13.1
Guarantees (See Warranty and Warranties)
Hazardous Materials 10.1, 10.2.4
Identification of Contract Documents 1.2.1
Identification of Subcontractors and Suppliers 5.2.1
INDEMNIFICATION 3.17, 3.18, 9.10.2, 10.1.4, 11.3.1.2, 11.3.7
INFORMATION AND SERVICES REQUIRED OF THE OWNER 2.1.2,
2.2, 4.7.4, 6.2.6, 9.3.2, 9.6.1, 9.6.4, 9.8.3, 9.9.2,
9.10.3, 10.1.4, 11.2, 11.3, 13.5.1, 13.5.2
INJURY OR DAMAGE TO PERSON OR PROPERTY 4.7.9
Inspections 3.3.3, 3.3.4, 3.7.1, 4.6.5, 4.6.6, 4.6.16,
4.7.6, 9.4.3, 9.8.2, 9.9.2, 9.10.1, 12.1.1, 13.5
Instructions to Bidders 1.1.1
Instructions to the Contractor 3.8.1, 4.6.13, 5.2.1, 7, 12.1, 13.5.2
Insurance 4.7.9, 6.1.1, 7.3.6.4, 9.3.2, 9.8.2, 9.9.1, 9.10.2, 11
INSURANCE, BOILER AND MACHINERY 11.3.2
INSURANCE, CONTRACTOR'S LIABILITY 11.1, 11.3.1.13
Insurance, Effective Date of 8.2.2, 11.1.2
INSURANCE, LOSS OF USE 11.3.3
INSURANCE, OWNER'S LIABILITY 11.2, 11.3.1.3
INSURANCE, PROPERTY 10.2.5, 11.3
Insurance, Stored Materials 9.3.2, 11.3.1.4
- ------------------------------------------------------------------------------
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #4
<PAGE> 53
INSURANCE AND BONDS 11
Insurance Companies, Consent to Partial Occupancy 9.9.1, 11.3.11
Insurance Companies, Settlement with 11.3.10
Intent of the Contract Documents
1.2.3, 3.12.4, 4.6.10, 4.6.12, 4.6.19, 4.6.20, 7.4
INTEREST 13.6
INTERPRETATION 1.2.5, 1.4, 1.5, 4.1.1, 4.7.1, 5.1, 6.1.2, 8.1.4
Interpretations, Written 4.6.18, 4.6.19, 4.7.7
Joinder and Consolidation of Claims Required 4.9.5
JUDGMENT ON FINAL AWARD 4.9.1, 4.9.4.1, 4.9.7
LABOR AND MATERIALS, Equipment 1.1.3, 1.1.6, 3.4, 3.5.1,
3.8.2, 3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.6.12,
6.2.1, 7.3.6, 9.3.2, 9.3.3, 12.2.4, 14.1.2, 14..2.1, 14.2.2
Labor Disputes 8.3.1
Laws and Regulations 1.3, 3.6, 3.7, 3.13, 4.1.1, 4.9.5, 4.9.7,
9.9.1, 10.2.2, 11.1, 11.3, 13.1, 13.4.1, 13.5.1, 13.5.2, 13.6
Liens 2.1.2, 4.7.2, 4.7.5.1, 8.2.2, 9.3.3, 9.10.2
LIMITATIONS ON CONSOLIDATION OR JOINDER 4.9.5
Limitations, Statutes of 4.9.4.2, 12.2.6, 13.7
Limitations of Authority 3.3.1, 4.6.12, 4.6.17,
5.2.2, 5.2.4, 7.4, 11.3.10
Limitations of Liability 2.3, 3.2.1, 3.5.1, 3.7.3, 3.12.8,
3.12.11, 3.17, 3.18, 4.6.10, 4.6.12, 4.6.19, 6.2.2, 9.4.4, 9.6.4,
9.10.4, 10.1.4, 10.2.5, 11.1.2, 11.2.1, 11.3.7, 13.4.2, 13.5.2
Limitations of Time, General 2.2.1, 2.2.4, 3.2.1, 3.7.3, 3.8.2,
3.10, 3.12.5, 3.15.1, 4.6.1, 4.6.12, 4.6.18, 4.7.2, 4.7.3, 4.7.4,
4.7.6, 4.7.9, 4.6.4.2, 5.2.1, 5.2.3, 6.2.4, 7.3.4, 7.4, 8.2, 9.2,
9.5, 9.6.2, 9.8, 9.10, 11.1.3, 11.3.1, 11.3.2, 11.3.5,
11.3.6, 12.2.1, 12.2.2, 13.5, 13.7, 14.3
Limitations of Time, Specific 2.1.2, 2.2.1, 2.4, 3.10, 3.11,
3.15.1, 4.6.1, 4.6.18, 4.8, 4.9, 5.3, 5.4, 7.3.5, 7.3.9, 8.2,
9.3.1, 9.3.3, 9.4.1, 9.6.1, 9.7, 9.8.2, 9.10.2, 11.1.3, 11.3.6,
11.3.10, 11.3.11, 12.2.2, 12.2.4, 12.2.6, 13.7, 14.1, 14.2.2
LOSS OF USE INSURANCE 11.3.3.
Material Suppliers 1.3.1, 3.12.1, 4.6.7, 4.6.10,
5.2.1, 9.3.1, 9.3.1.2, 9.3.3, 9.4, 9.6.5, 9.10.4
Materials, Hazardous 10.1, 10.2.4
Materials, Labor, Equipment and 1.1.3, 1.1.6, 3.4.1, 3.5.1,
3.8.2, 3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.6.12,
6.2.1, 7.3.6, 9.3.2, 9.3.3, 12.2.4, 14.1.2, 14.2.1, 14.2.2
Means, Methods, Techniques, Sequences and
Procedures of Construction 3.3.1, 4.6.6, 4.6.12, 9.4.3
MINOR CHANGES IN THE WORK 1.1.1, 4.6.13, 4.7.7, 7.1, 7.4
MISCELLANEOUS PROVISIONS 13
Modifications, Definition of 1.1.1
Modifications to the Contract 1.1.1, 1.1.2, 3.7.3,
3.11, 4.1.2, 4.6.1, 5.2.3, 7, 8.3.1, 9.7
MUTUAL RESPONSIBILITY 6.2
NONCONFORMING WORK, ACCEPTANCE OF 12.3
Nonconforming Work, Rejection and Correction of 2.3.1,
4.7.5.2, 9.5.2, 9.8.2, 12, 13.7.1.3
Notice 2.3, 2.4, 3.2.1, 3.2.2, 3.7.3, 3.7.4, 3.9, 3.12.8,
3.12.9, 3.17, 4.7, 4.8.4, 4.9, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1,
9.5.1, 9.7, 9.10, 10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2,
12.2.4, 13.3, 13.5.2, 14,
NOTICE, WRITTEN 2.3, 2.4, 3.9, 3.12.8, 3.12.9.4.7, 4.8.4, 4.9,
5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1, 9.5.1, 9.7, 9.10, 10.1.2,
10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4, 13.3, 13.5.2, 14
Notice of Testing and Inspections 13.5.1, 13.5.2
Notice of Proceed 8.2.2
NOTICES, PERMITS, FEES AND 2.2.3, 3.7, 3.13, 7.3.6.4, 10.2.2
Observations, Architect's On-Site 4.6.5, 4.6.9, 4.6.10, 4.7.6,
9.4.4, 9.5.1, 9.10.1, 12.1.1, 13.5
Observations, Construction Manager's On-Site 9.4.4, 12.1.1
Observations, Contractor's 1.2.2, 3.2.2
Occupancy 9.6.6, 9.8.1, 9.9, 11.3.11
On-Site Inspections by the Architect 4.6.5, 4.6.16, 4.7.6,
9.4.4, 9.8.2, 9.9.2, 9.10.1
On-Site Observations by the Architect 4.6.5, 4.6.9, 4.7.6,
9.4.4, 9.5.1, 9.10.1, 13.5
On-Site Observations by the construction Manager 9.4.4, 9.5.1
Orders, Written 2.3, 3.9, 4.7.7, 7, 8.2.2, 11.3.9, 12.1,
12.2, 13.5.2, 14.3.1
OWNER 2
Owner, Definition of 2.1
OWNER, INFORMATION AND SERVICES
REQUIRED OF THE 2.1.2, 2.2, 4.6.2, 4.6.4, 6, 9,
10.1.4, 10.1.6, 11.2, 11.3, 13.5.1, 14.1.1.5, 14.1.3
Owner's Authority 3.8.1, 5.2.1, 5.2.4, 5.4.1,
7.3.1, 8.2.2, 9.3.1, 9.3.2, 11.4.1, 12.2.4, 13.5.2, 14.2, 14.3.1
Owner's Financial Capability 2.2.1, 14.1.1.5
OWNER'S LIABILITY INSURANCE 11.2
Owner's Loss of Use Insurance 11.3.3
Owner's Relationship with
Subcontractors 1.1.2, 5.2.1, 5.4.1, 9.6.4
OWNER'S RIGHT TO CARRY OUT THE WORK 2.4, 12.2.4, 14.2.2.2
OWNER'S RIGHT TO CLEAN UP 6.3
OWNER'S RIGHT TO PERFORM CONSTRUCTION AND TO
AWARD SEPARATE CONTRACTS 6.1
OWNER'S RIGHT TO STOP THE WORK 2.3, 4.7.7
Owner's Right to Suspend the Work 14.3
Owner's Right to Terminate the Contract 14.2
OWNERSHIP AND USE OF ARCHITECT'S DRAWINGS,
SPECIFICATIONS AND OTHER DOCUMENTS 1.1.1, 1.3,
2.2.5, 5.3
PARTIAL OCCUPANCY OR USE 9.6.6, 9.9, 11.3.11
PATCHING, CUTTING AND 3.14, 6.2.6
PATENTS, ROYALTIES AND 3.17
PAYMENT, APPLICATIONS FOR 4.6.9, 9.2, 9.3, 9.4, 9.5.1, 9.8.3,
9.10.1, 9.10.3, 9.10.4, 14.2.4
PAYMENT, CERTIFICATES FOR 4.6.9, 4.6.16, 9.3.3, 9.4, 9.5,
9.6.1, 9.6.6, 9.7.1, 9.8.3, 9.10.1, 9.10.3, 13.7, 14.1.1.3, 14.2.4
PAYMENT,
FAILURE OF 4.7.7, 9.5.1.3, 9.7, 9.10.2, 14.1.1.3, 14.2.1.2
PAYMENT, FINAL 4.6.1, 4.6.16, 4.7.2, 4.7.5, 9.10, 11.1.2
- ------------------------------------------------------------------------------
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #5
<PAGE> 54
11.13, 11.35, 12.3.1
PAYMENT BOND, PERFORMANCE
BOND AND 7.3.6.4, 9.10.3, 11.3.9, 11.4
PAYMENTS, PROGRESS 4.7.4, 9.3, 9.6, 9.8.3, 9.10.3, 13.6, 14.2.3
PAYMENTS AND COMPLETION 9, 14
Payments to Subcontractors 5.4.2, 9.5.1.3, 9.6.2,
9.6.3, 9.6.4, 11.3.8, 14.2.1.2
PCB 10.1.2, 10.1.3, 10.1.4
Performance Bond and Payment Bond 7.3.6.4, 9.10.3, 11.3.9, 11.4
PERMITS, FEES AND NOTICES 2.2.3, 3.7, 3.13, 7.3.6.4, 10.2.2
PERSONS AND PROPERTY, PROTECTION OF 10
Polychlorinated Biphenyl 10.1.2, 10.1.3, 10.1.4
Product Data, Definition of 3.12.2
PRODUCT DATA AND SAMPLES, SHOP DRAWINGS 3.11, 3.12, 4.2.7
PROGRESS AND COMPLETION 4.6.5, 4.7.4, 8.2
PROGRESS PAYMENTS 4.7.4, 9.3, 9.6, 9.8.3, 9.10.3, 13.6, 14.2.3
PROJECT, Definition of the 1.1.4
PROJECT MANUAL, Definition of the 1.1.7
Project Manuals 2.2.5
Project Representatives 4.6.17
PROPERTY INSURANCE 10.2.5, 11.3
PROTECTION OF PERSONS AND PROPERTY 10
Regulations and Laws 1.3, 3.6, 3.7, 3.13, 4.1.1, 4.9.7
10.2.2, 11.1, 11.3, 13.1, 13.4, 13.5.1, 13.5.2, 13.6, 14
Rejection of Work 3.5.1, 4.6.10, 12.2.
Representations 1.2.2, 3.5.1, 3.12.7, 6.2.2, 8.2.1, 9.3.3,
9.4.3, 9.5.1, 9.8.2, 9.10.1
Representatives 2.1.1, 3.1.1, 3.9, 4.1.1,
4.6.1, 4.6.17, 5.1.1, 5.1.2, 13.2.1
RESOLUTION OF CLAIMS AND DISPUTES 4.8, 4.9
Responsibility for Those Performing the Work 3.3.2, 4.6.6, 6.2., 10
Retainage 9.3.1, 9.6.2, 9.8.3, 9.9.1, 9.10.2, 9.10.3
REVIEW OF CONTRACT DOCUMENTS AND FIELD
CONDITIONS BY CONTRACTOR 1.2.2, 3.2, 3.7.3, 3.12.7
Review of Contractor's Submittals by
Owner, Construction Manager and Architect 3.10.1, 3.10.3,
3.11, 3.12, 4.6.12, 4.6.16, 5.2.1, 5.2.3, 9.2, 9.8.2
Review of Shop Drawings, Product Data
and Samples by Contractor 3.12.5
RIGHTS AND REMEDIES 1.1.2, 2.3, 2.4, 3.5.1, 3.15.2, 4.6.10,
4.7.6, 4.9, 5.3, 6.1, 6.3, 7.3.1, 8.3.1, 9.5.1, 9.7, 10.2.5,
10.3, 12.2.2, 12.2.4, 13.4, 14
ROYALTIES AND PATENTS 3.17
RULES AND NOTICES FOR ARBITRATION 4.9.2
SAFETY OF PERSONS AND PROPERTY 10.2
SAFETY PRECAUTIONS AND PROGRAMS 4.6.6, 4.6.12, 10.1
Samples, Definition of 3.12.3
SAMPLES, SHOP DRAWINGS, PRODUCT
DATA AND 3.11, 3.12, 4.6.12
SAMPLES AT THE SITE, DOCUMENTS AND 3.11
SCHEDULE OF VALUES 9.2, 9.3.1
Schedules, Construction 3.10
Separate Contracts and Contractors 1.1.4
Shop Drawings, Definition of 3.12.1
SHOP DRAWINGS, PRODUCT DATA
AND SAMPLINGS 3.11, 3.12, 4.6.11, 4.6.12, 4.6.15
SITE, USE OF 3.13, 6.1.1, 6.2.1
Site Inspections 1.2.2, 3.3.4, 4.6.5, 4.6.16, 4.7.6, 9.8.2, 9.10.1, 13.5
Site Visits, Architect's 4.6.5, 4.6.9, 4.7.6,
9.4, 9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5
Special Inspections and Testing 4.6.10, 12.2.1, 13.5
SPECIFICATIONS, definition of the 1.1.6
SPECIFICATIONS, THE 1.1.1, 1.1.6, 1.1.7, 1.2.4, 1.3, 3.11
Statute of Limitations 4.9.4.2, 12.2.6, 13.7
Stopping the Work 2.3, 4.7.7, 9.7, 10.1.2, 10.3, 14.1
Stored Materials 6.2.1, 9.3.2, 10.2.1.2, 11.3.1.4, 12.2.4
Subcontractor, Definition of 5.1.1
SUBCONTRACTORS 5
Subcontractors, Work by 1.2.4, 3.3.2, 3.12.1, 4.6.6, 4.6.10, 5.3, 5.4
SUBCONTRACTUAL RELATIONS 5.3, 5.4, 9.3.1.2, 9.6.2,
9.6.3, 9.6.4, 10.2.1, 11.3.7, 11.3.8, 14.1.1, 14.2.1.2, 14.1.3
Submittals 1.3, 3.2.3, 3.10, 3.11, 3.12, 4.6.12, 5.2.1,
5.2.3, 7.3.6, 9.2, 9.3.1, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 11.1.3
SUBROGATION, WAIVERS OF 6.1.1,11.3.5, 11.3.7
SUBSTANTIAL COMPLETION 4.6.16, 8.1.1, 8.1.3,
8.2.3, 9.9.1, 12.2.1, 12.2.2, 13.7
Substantial Completion, Definition of 9.8.1
Substitution of Subcontractors 5.2.3, 5.2.4
Substitution of Architect 4.4
Substitution of Construction Manager 4.4
Substitutions of Materials 3.5.1
Sub-contractor, Definition of 5.1.2
Subsurface Conditions 4.7.6
SUCCESSORS AND ASSIGNS 13.2
SUPERINTENDENT 3.9, 10.2.6
SUPERVISION AND CONSTRUCTION PROCEDURES 1.2.4, 3.3,
3.4, 4.6.6, 4.7.4, 6.2.4, 7.1.3, 7.3.4, 8.2, 8.3.1, 10, 12, 14
Surety 4.8.1, 4.8.4, 5.4.1.2, 9.10.2, 9.10.3, 14.2.2
Surety, Consent of 9.10.2, 9.10.3
Surveys 2.2.2, 3.18.3
SUSPENSION BY THE OWNER FOR CONVENIENCE 14.3
Suspension of the Work 4.7.7, 5.4.2, 14.1.1.4, 14.3
Suspension or Termination of the Contract 4.7.7, 5.4.1.1, 14
TAXES 3.6, 7.3.6.4
TERMINATION BY THE CONTRACTOR 14.1
TERMINATION BY THE OWNER FOR CAUSE 5.4.1.1, 14.2
Termination of the Architect 4.4
Termination of the Construction Manager 4.4
Termination of the Contractor 14.2.2
TERMINATION OR SUSPENSION OF THE CONTRACT 14
TESTS AND INSPECTIONS 3.3.3, 4.6.10, 4.6.16, 9.4.3, 12.2.1, 13.5
TIME 8
TIME, DELAYS AND EXTENSIONS OF 4.7.8, 7.2.1, 8.3
- --------------------------------------------------------------------------------
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C)1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM - 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 - Page #6
<PAGE> 55
Time Limits, Specific 2.1.2, 2.2.1, 2.4, 3.10,
4.6.18, 4.7, 4.8.1, 4.8.3, 4.8.4, 4.9.1, 4.9.4.1, 5.3, 5.4, 7.3.5,
7.3.9, 8.2, 9.2, 9.3.1, 9.3.3, 9.4.1, 9.6.1, 9.7, 9.8.2, 9.10.2,
11.1.3, 11.3.6, 11.3.10, 11.3.11, 12.2.2, 12.2.4, 12.2.6, 13.7, 14
TIME LIMITS ON CLAIMS 4.7.2, 4.7.3, 4.7.6, 4.7.9, 4.8, 4.9
Title to Work 9.3.2, 9.3.3
UNCOVERING AND CORRECTION OF WORK 12
UNCOVERING OF WORK 12.1
Unforeseen Conditions 4.7.6, 8.3.1, 10.1
Unit Prices 7.1.4, 7.3.3.2
Use of Documents 1.1.1, 1.3, 2.2.5, 3.12.7, 5.3
USE OF SITE 3.13, 6.1.1, 6.2.1
VALUES, SCHEDULE OF 9.2, 9.3.1
WAIVER OF CLAIMS: FINAL PAYMENT 4.7.5, 4.9.1, 9.10.3
Waiver of Claims by Architect 13.4.2
Waiver of Claims by Contractor 9.10.4, 11.3.7, 13.4.2
Waiver of Claims by the Owner 4.7.5, 4.9.1, 9.9.3,
9.10.3, 11.3.3, 11.3.5, 11.3.7, 13.4.2
Waiver of Liens 9.10.2
WAIVERS OF SUBROGATION 6.1.1, 11.3.5, 11.3.7
WARRANTY and Warranties 3.5, 4.6.16, 4.7.5
9.3.3, 9.8.2, 9.9.1, 12.2.2, 13.7.1.3
Weather Delays 4.7.8.2
WHEN ARBITRATION MAY BE DEMANDED 4.9.4
Work, Definition of 1.1.3
Written Consent 1.3.1, 3.12.8, 3.14.2, 4.7.4,
4.9.5, 9.3.2, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 10.1.3
11.3.1, 11.3.1.4, 11.3.11, 13.2, 13.4.2
Written Interpretations 4.6.18, 4.6.19, 4.7.7
WRITTEN NOTICE 2.3, 2.4, 3.9, 3.12.8, 3.12.9, 4.7.1, 4.7.6, 4.7.9,
4.8.4, 4.9.4.1, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4, 9.5.1, 9.7,
9.10, 10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4,
13.3, 13.5.2, 14
Written Orders 2.3, 3.9, 4.7.7,
8.2.2, 11.3.9, 12.1, 12.2, 13.5.2, 14.3.1
- ------------------------------------------------------------------------------
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R)(C) 1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, Which Expires on
6/30/1998 -- Page #7
<PAGE> 56
GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
ARTICLE 1
GENERAL PROVISIONS
1.1 BASIC DEFINITIONS
1.1.1 THE CONTRACT DOCUMENTS
The Contract Documents consist of the Agreement between Owner and Contractor
(hereinafter the Agreement), these General Conditions of the Contract for
Construction and the Supplementary Conditions attached hereto, Drawings and
Specifications, listed in Article 16 of the Agreement, Garage Construction
Documents, and other documents listed in the Agreement and Modifications issued
after execution of the Contract. A Modification is (1) a written amendment to
the Contract signed by both parties, (2) a Change Order, or (3) a Construction
Change Directive. Unless specifically enumerated in the Agreement, the Contract
Documents do not include other documents such as bidding requirements
(advertisement or invitation to bid, Instructions to Bidders, sample forms, the
Contractor's bid or portions of addenda relating to bidding requirements). A
written Amendment to the Contract to be binding on Owner must be signed on
behalf of Owner by the President of Owner's General Partner.
1.1.2 THE CONTRACT
The Contract Documents form the Contract for Construction. The Contract
represents the entire and integrated agreement between the parties hereto and
supersedes prior negotiations, representations or agreements, either written or
oral. The Contract may be amended or modified only by a Modification. The
Contract Documents shall not be construed to create a contractual relationship
of any kind (1) between the Architect and Contractor, (2) between the
Construction Manger and Contractor, (3) between the Architect and Construction
Manager, (4) between the Owner and a Subcontractor or Sub-subcontractor or (5)
between any persons or entities other than the Owner and Contractor. The
Construction Manager and Architect shall, however, be entitled to performance
and enforcement of obligations under the contract intended to facilitate
performance of their duties.
1.1.3 THE WORK
The term "Work" means the construction, services, furniture, furnishings and
equipment required by the Contract Documents, whether completed or partially
completed, and includes fabrication, transportation, installation and all other
labor, materials, equipment and services provided or to be provided by the
Contractor to fulfill the Contractor's obligations. The Work may constitute the
whole or a part of the Project.
1.1.4 THE PROJECT
The Project is the total construction of which the Work performed under the
Contract Documents may be the whole or a part and which may include construction
by other Contractors and by the Owner's own forces including persons or entities
under separate contracts not administered by the Construction Manager.
1.1.5 THE DRAWINGS
The Drawings are the graphic and pictorial portions of the Contract Documents,
other than the Garage Construction Documents, wherever located and whenever
issued, showing the design, location and dimensions of the Work, generally
including plans, elevations, sections, details, schedules and diagrams.
1.1.6 THE SPECIFICATIONS
The Specifications are that portion of the Contract Documents, other than the
Garage Construction Documents, consisting of the written requirements for
materials, equipment, construction systems, standards and workmanship for the
Work, and performance of related services.
1.1.7 THE PROJECT MANUAL
The Project Manual is the volume usually assembled for the Work, other than
that portion of the Work relating to the Garage, which may include the bidding
requirements, sample forms, Conditions of the Contract and Specifications.
INSERT A: 1.1.8 GARAGE
Insert B: The term "Garage" means the parking garage to be constructed pursuant
to the Garage Construction Documents.
INSERT C: 1.1.9 GARAGE CONSTRUCTION DOCUMENTS
Insert D: The term "Garage Construction Documents"
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA - [C]1992 THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM--12/20/1997. AIA License Number 105525, which expires
on 6/30/1998--Page #8
<PAGE> 57
means the documents identified as such in Paragraph 16.1.7 of the Agreement.
1.2 EXECUTION, CORRELATION AND INTENT
1.2.1 The Contract Documents shall be signed by the Owner and Contractor as
provided in the Agreement. If either the Owner or Contractor or both do not
sign all the Contract Documents, the Architect shall identify such unsigned
Documents upon request.
1.2.2 The Contractor acknowledges and represents that it has taken the steps
reasonably necessary to ascertain the nature and location of the Work, and that
it has investigated and satisfied itself as to the general and local conditions
which can affect the Work or its costs, including, but not limited to (1)
conditions bearing upon transportation, disposal, handling, and storage of
materials; (2) the availability and cost of labor, materials, water, electric
power, and roads; (3) the character and cost of equipment and facilities needed
preliminary to and during Work performance. The Contractor also acknowledges it
has satisfied itself as to the character, quality, and quantity of surface and
subsurface materials or obstacles to be encountered insofar as this information
is ascertainable from any reasonable visual inspection of the site. Any failure
of the Contractor to take the actions described and acknowledged in this
paragraph will not relieve the Contractor from responsibility for estimating
properly the difficulty and cost of successfully performing the Work, or for
proceeding to successfully perform the Work without additional cost or time to
the Owner.
1.2.3 The intent of the Contract Documents is to include all items necessary
for the proper execution and completion of the Work by the Contractor. The
Contract Documents are complementary, and what is required by one shall be as
binding as if required by all; performance by the Contractor shall be required
only to the extent consistent with the Contract Documents and reasonably
inferable from them as being necessary to produce the intended results. In the
event of conflicts or discrepancies among the Contract Documents,
interpretations will be based on the following priorities: (1) The Agreement
and the Exhibits thereto; (2) These General Conditions of the Contract for
Construction along with the Supplementary Conditions attached hereto; and (3)
Drawings and Specifications and Addenda thereto or, in the case of the Garage,
the Garage Construction Documents. In the case of an inconsistency between
Drawings and Specifications or within either of those Documents not clarified
by addendum, the better quality or greater quantity of Work shall be provided
in accordance with the Architect's interpretation without any increase in the
Contract Sum.
1.2.4 Organization of the Specifications into divisions, sections and articles,
and arrangement of Drawings shall not control the Contractor in dividing the
Work among Subcontractors or in establishing the extent of Work to be performed
by any trade.
1.2.5 Unless otherwise stated in the Contract Documents, words which have
well-known technical or construction industry meanings are used in the Contract
Documents in accordance with such recognized meanings.
1.3 OWNERSHIP AND USE OF ARCHITECT'S DRAWINGS, SPECIFICATIONS AND OTHER
DOCUMENTS
1.3.1 The Drawings, Specifications and other documents prepared by the
Architect are instruments of the Architect's service through which the Work to
be executed by the Contractor is described. The Contractor may retain one
contract record set. Neither the Contractor nor any Subcontractor,
Sub-subcontractor or material or equipment supplier shall own or claim a
copyright in the Drawings, Specifications and other documents prepared by the
Architect, and unless otherwise indicated the Architect shall be deemed the
author of them and will retain all common law, statutory and other reserved
rights, in addition to the copyright. All copies of them, except the
Contractor's record set, shall be returned or suitably accounted for to the
Architect, on request, upon completion of the Work. The Drawings,
Specifications and other documents prepared by the Architect, and copies
thereof furnished to the Contractor, are for use solely with respect to this
Project. They are not to be used by the Contractor or any Subcontractor,
Sub-subcontractor or material or equipment supplier on other projects or for
additions to this Project outside the scope of the Work without the specific
written consent of the Owner and Architect. The Contractor, Subcontractors,
Sub-subcontractors and material or equipment suppliers are granted a limited
license to use and reproduce applicable portions of the Drawings,
Specifications and other documents prepared by the Architect appropriate to and
for use in the execution of their Work under the Contract Documents. All
copies made under this license shall bear the statutory copyright notice, if
any, shown on the Drawings, Specifications and other documents prepared by the
Architect. Submittal or distribution to meet official regulatory requirements
or for other purposes in connection with this Project is not to be construed as
publication in derogation of the Architect's copyright or other reserved rights.
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER - ADVISER EDITION (R) - (C) AIA-1992 THE AMERICAN
INSTITUTE OF ARCHETCTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292
Y WARNING: Unlisenced photocopying vioilates U.S. copyright laws and is subject
to legeal prosecution. This document was electronically produced with permission
of the AIA and can be reproduced without violation until the date of expiration
as noted below.
Electronic Format A201/CMa-1992
User Document FORM--12/20/1997. AIA License Number 105525, which expires on
6/30/1998--Page #9
<PAGE> 58
INSERT E: 1.3.2 The Preliminary Design Documents for the Garage and the Garage
Construction Documents are instruments of service. The Garage Architect and
other providers of professional services shall retain all common law statutory
and other reserved rights, including copyright in those instruments of service
furnished by them. The Preliminary Design Documents for the Garage and the
Garage Construction Documents are furnished for use solely with respect to this
Project. The Owner shall be permitted to retain copies, including reproducible
copies of the Preliminary Design Documents for the Garage and the Garage
Construction Documents for information and reference in connection with the
Project except as provided in this Subparagraph 1.3.2. Notwithstanding, anything
to the contrary in the Contract. Owner shall have the right to utilize the
Preliminary Design Documents for the Garage and the Garage Construction
Documents without paying any compensation in the event Owner expands the
Project, corrects any deficiencies, or makes any renovation or repairs to the
Project. The Preliminary Design Documents for the Garage and the Garage
Construction Documents shall not be used by the Owner or others on other
projects, except by agreement in writing and with appropriate compensation to
the Contractor, unless the Contractor is in default under the Contract or under
any other subsequently executed agreement. If the Contractor defaults in the
Contractor's obligations to the Owner, the Owner shall have the right to use the
Preliminary Design Documents for the Garage and the Garage Construction
Documents furnished by the Architect to the Contractor for the completion of the
Project. Submission or distribution of the Preliminary Design Documents for the
Garage and the Garage Construction Documents to meet official regulatory
requirements or for similar purposes in connection with the Project is not to be
construed as publication in derogation of the rights reserved in this
Subparagraph 1.3.2.
1.4 CAPITALIZATION
1.4.1 Terms capitalized in these General Conditions include those which are (1)
specifically defined, (2) the titles of numbered articles and identified
references to Paragraphs, Subparagraphs and Clauses in the document or (3) the
titles of other documents published by the American Institute of Architects.
1.5 INTERPRETATION
1.5.1 In the interest of brevity the Contract Documents frequently omit
modifying words such as "all" and "any" and articles such as "the" and "an," but
the fact that a modifier or an article is absent from one statement and appears
in another is not intended to affect the interpretation of either statement.
ARTICLE 2
OWNER
2.1 DEFINITION
2.1.1 The Owner is the person or entity identified as such in the Agreement and
is referred to throughout the Contract Documents as if singular in number. The
term "Owner" means the Owner or the Owner's authorized representative.
2.1.2 The Owner upon reasonable written request shall furnish to the Contractor
in writing information which is necessary and relevant for the Contractor to
evaluate, give notice of or enforce mechanic's lien rights. Such information
shall include a correct statement of the record legal title to the property on
which the Project is located, usually referred to as the site, and the Owner's
interest therein at the time of execution of the Agreement and, within five
days after any change, information of such change in title, recorded or
unrecorded.
2.2 INFORMATION AND SERVICES REQUIRED OF THE OWNER
2.2.1 The Owner shall, at the request of the Contractor, prior to execution of
the Agreement and promptly from time to time thereafter, furnish to the
Contractor reasonable evidence that financial arrangements have been made to
fulfill the Owner's obligations under the Contract including, without
limitation, work covered by change orders. [Note: Unless such reasonable
evidence were furnished on request prior to the execution of the Agreement, the
prospective contractor would not be required to execute the Agreement or to
commence the Work.]
2.2.2 The Owner shall furnish surveys describing physical characteristics,
legal limitations and utility locations for the site of the Project, and a legal
description of the site. The surveys and legal information shall include, as
applicable, grades and lines of streets, alleys, pavements, and adjoining
property and structures; adjacent drainage; rights-of-way, restrictions,
easements, encroachments, zoning, deed restrictions, boundaries and contours of
the site; locations, dimensions and necessary data pertaining to existing
buildings, other improvements and trees; and information concerning available
utility services and lines, both public and private, above and below grade,
including inverts and depths. All the information on the survey shall be
referenced to a Project benchmark.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
- - CONSTRUCTION MANAGER-ADVISER EDITION - AIA(R) - (C)1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #10
<PAGE> 59
2.2.3 Except for permits and fees which are the responsibility of the
Contractor under the Contract Documents, the Owner shall secure and pay for
necessary approvals, easements, assessments and charges required for
construction, use or occupancy of permanent structures or for permanent changes
in existing facilities. Unless otherwise provided under the Contract Documents,
the Owner, through the Construction Manager, shall secure and pay for the
building permit.
2.2.4 Information or services under the Owner's control shall be furnished by
the Owner with reasonable promptness to avoid delay in orderly progress of the
Work.
2.2.5 The Contractor will be furnished, free of charge, three (3) copies of
Drawings and Specifications, excluding the Garage Construction Documents.
Additional sets will be furnished at the cost of reproduction, postage and
handling.
2.2.6 The Owner shall forward all communications to the Contractor
through the Construction Manager and shall contemporaneously provide the same
communications to the Architect.
2.2.7 The foregoing are in addition to other duties and responsibilities of
the Owner enumerated herein and especially those in respect to Article 6
(Construction by Owner or by Other Contractors), Article 9 (Payments and
Completion) and Article 11 (Insurance and Bonds).
2.3 OWNER'S RIGHT TO STOP THE WORK
2.3.1 If the Contractor fails to correct Work which is not in accordance
with the requirements of the Contract Documents as required by Paragraph 12.2 or
fails to carry out Work in accordance with the Contract Documents, the Owner,
by written order signed personally or by an agent specifically so empowered by
the Owner in writing, may order the Contractor to stop the Work, or any portion
thereof, until the cause for such order has been eliminated; however, the right
of the Owner to stop the Work shall not give rise to a duty on the part of the
Owner to exercise this right for the benefit of the Contractor or any other
person or entity.
2.4 OWNER'S RIGHT TO CARRY OUT THE WORK
2.4.1 If the Contractor defaults or neglects to carry out the Work in
accordance with the Contract Documents and fails within a seven-day period
after receipt of written notice from the Owner to commence and continue
correction of such default or neglect with diligence and promptness, the Owner
may after such seven-day period give the Contractor a second written notice to
correct such deficiencies within a second seven-day period. If the Contractor
within such second seven-day period after receipt of such second notice fails
to commence and continue to correct any deficiencies, the Owner may, without
prejudice to other remedies the Owner may have, correct such deficiencies. In
such case an appropriate Change Order or Construction Change Order shall be
issued deducting from payments then or thereafter due the Contractor the cost
of correcting such deficiencies, including compensation for the Construction
Manager's and Architect's and their respective consultants' additional services
and expenses made necessary by such default, neglect or failure. Such action by
the Owner and amounts charged to the Contractor are both subject to prior
approval of the Architect, after consultation with the Construction Manager. If
payments then or thereafter due the Contractor are not sufficient to cover such
amounts, the Contractor shall pay the difference to the Owner.
ARTICLE 3
CONTRACTOR
3.1 DEFINITION
3.1.1 The Contractor is the person or entity identified as such in the
Agreement and is referred to throughout this Agreement as if singular in
number. The term "Contractor" means the Contractor or the Contractor's
authorized representative.
3.2 REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY CONTRACTOR
3.2.1 The Contractor shall carefully study and compare the Contract
Documents with each other and with information furnished by the Owner pursuant
to Subparagraph 2.2.2 and shall at once report to the Construction Manager and
Architect errors, inconsistencies or omissions discovered. The Contractor shall
not be liable to the Owner, Construction Manager or Architect for damage
resulting from errors, inconsistencies or omissions in the Contract Documents
unless the Contractor recognized such error, inconsistency or omission and
knowingly failed to report it to the Construction Manager and Architect. If the
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA(R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #11
<PAGE> 60
Contractor performs any construction activity knowing it involves a recognized
error, inconsistency or omission in the Contract Documents without such notice
to the Construction Manager and Architect, the Contractor shall assume
appropriate responsibility for such performance and shall bear the attributable
costs for correction.
3.2.2 The Contractor shall take field measurements and verify field conditions
and shall carefully compare such field measurements and conditions and other
information known to the Contractor with the Contract Documents before
commencing activities. Errors, inconsistencies or omissions discovered shall be
reported to the Construction Manager and Architect at once.
3.2.3 The Contractor shall perform the Work in accordance with the Contract
Documents and submittals approved pursuant to Paragraph 3.12.
3.3 SUPERVISION AND CONSTRUCTION PROCEDURES
3.3.1 The Contractor shall supervise and direct the Work, using the
Contractor's best skill and attention. The Contractor shall be solely
responsible for and have control over construction means, methods, techniques,
sequences and procedures and for coordinating all portions of the Work under
this Contract, subject to overall coordination of the Construction Manager as
provided in Subparagraphs 4.6.3 and 4.6.4.
3.3.2 The Contractor shall be responsible to the Owner for acts and omissions
of the Contractor's employees, Subcontractors and their agents and employees,
and other persons performing portions of the Work under a contract with the
Contractor.
3.3.3 The Contractor shall not be relieved of obligations to perform the Work
in accordance with the Contract Documents either by activities or duties of the
Construction Manager or Architect in their administration of the Contract, or by
tests, inspections or approvals required or performed by persons other than the
Contractor.
3.3.4 The Contractor shall inspect portions of the Project related to the
Contractor's Work in order to determine that such portions are in proper
condition to receive subsequent Work.
3.4 LABOR AND MATERIALS
3.4.1 Unless otherwise provided in the Contract Documents, the Contractor
shall provide and pay for labor, materials, furniture, furnishings, equipment,
tools, construction equipment and machinery, water, heat, utilities,
transportation, and other facilities and services necessary for proper
execution and completion of the Work, whether temporary or permanent and
whether or not incorporated or to be incorporated in the Work.
3.4.2 The Contractor shall enforce strict discipline and good order among the
Contractor's employees and other persons carrying out the Contract. The
Contractor shall not permit employment of unfit persons not skilled in tasks
assigned to them.
3.5 WARRANTY
3.5.1 The Contractor warrants to the Owner, Construction Manager and Architect
that materials, furniture, furnishings and equipment furnished under the
Contract will be of good quality and new unless otherwise required or permitted
by the Contract Documents, that the Work will be free from defects not inherent
in the quality required or permitted, and that the Work will conform with the
requirements of the Contract Documents. Work not conforming to these
requirements, including substitutions not properly approved and authorized, may
be considered defective. The Contractor's warranty excludes remedy for damage
or defect caused by abuse, modifications not executed by the Contractor,
improper or insufficient maintenance, improper operation, or normal wear and
tear under normal usage. If required by the Construction Manager or Architect,
the Contractor shall furnish satisfactory evidence as to the kind and quality of
materials and equipment. The Contractor warrants to the Owner that the Garage
Construction Documents comply with all applicable laws, statutes, ordinances,
codes, orders, rules and regulations.
3.6 TAXES
3.6.1 The Contractor shall pay sales, consumer, use and similar taxes for the
Work or portions thereof provided by the Contractor which are legally enacted
when bids are received or negotiations concluded, whether or not yet effective
or merely scheduled to go into effect.
3.7 PERMITS, FEES AND NOTICES
3.7.1 Unless otherwise provided in the Contract Documents, the Contractor
shall secure and pay for the building permit and the Contractor shall secure
and pay for all other permits and governmental fees, licenses and inspections
necessary for proper execution and completion of the Work. Such fees for
building permits and other permits and governmental fees shall be
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA(R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration
as noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #12
<PAGE> 61
reimbursed to Contractor by Owner in accordance with Article 9 of this
Agreement, and shall be considered part of the cost of the Work for purposes of
Section 7.1.5.3 of the Agreement. The Owner shall secure and pay any fees due
to water and sewer connections, and such fees shall not be considered part of
the cost of the Work pursuant to Section 7 of the Agreement.
3.7.2 The Contractor shall comply with and give notices required by laws,
ordinances, rules and regulations and lawful orders of public authorities
bearing on performance of the Work.
3.7.3 It is not the Contractor's responsibility to ascertain that the Contract
Documents, other than the Garage Construction Documents, are in accordance
with applicable laws, statutes, ordinances, building codes, and rules and
regulations. However, if the Contractor observes that portions of the Contract
Documents are at variance therewith, the Contractor shall promptly notify the
Construction Manager, Architect and Owner in writing, and necessary changes
shall be accomplished by appropriate Modification.
3.7.4 If the Contractor performs Work knowing it to be contrary to laws,
statutes, ordinances, building codes, and rules and regulations without such
notice to the Construction Manager, Architect and Owner, the Contractor shall
assume full responsibility for such Work and shall bear the attributable costs.
3.8 ALLOWANCES
3.8.1 The Contractor shall include in the Contract Sum all allowances stated
in the Contract Documents. Items covered by allowances shall be supplied for
such amounts and by such persons or entities as the Owner may direct, but the
Contractor shall not be required to employ persons or entities against which
the Contractor makes reasonable objection.
3.8.2 Unless otherwise provided in the Contract Documents:
.1 materials and equipment under an allowance shall be selected
promptly by the Owner to avoid delay in the Work;
.2 allowances shall cover the cost to the Contractor of materials and
equipment delivered at the site and all required taxes, less
applicable trade discounts;
.3 Contractor's costs for unloading and handling at the site, labor,
installation costs, overhead, profit and other expenses contemplated
for stated allowance amounts shall be included in the Contract Sum
and not in the allowances;
.4 whenever costs are more than or less than allowances, the Contract
Sum shall be adjusted accordingly by Change Order. The amount of the
Change Order shall reflect (1) the difference between actual costs
and the allowances under Clause 3.8.2.2 and (2) changes in
Contractor's costs under Clause 3.8.2.3.
3.9 SUPERINTENDENT
3.9.1 The Contractor shall employ a competent superintendent and necessary
assistants who shall be in attendance at the Project site during performance of
the Work. The superintendent shall represent the Contractor, and communications
given to the superintendent shall be as binding as if given to the Contractor.
Important communications shall be confirmed in writing. Other communications
shall be similarly confirmed on written request in each case.
3.10 CONTRACTOR'S CONSTRUCTION SCHEDULE
3.10.1 The Contractor, immediately after being awarded the Contract, shall
prepare in consultation with the Owner, the architect and the Construction
Manager and submit for the Owner's, Architect's and Construction Manager's
approval a Contractor's Construction Schedule for the Work. The Construction
Schedule shall not exceed time limits specified in the Contract Documents,
shall be updated and revised at appropriate intervals as required by the
conditions of the Work and Project, shall be related to the entire Project
construction schedule to the extent required by the Contract Documents, shall
provide for expeditious and practicable execution of the Work and shall not be
modified or extended without the prior approval of the Owner in each instance.
The Contractor shall also submit a schedule of values and of the anticipated
amount of each monthly payment that will
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA(R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration
as noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #13
<PAGE> 62
become due the Contractor in accordance with the activities and events of the
Construction Schedule. The receipt of the schedules of values and monthly
payments by the Owner, the Architect or the Construction Manger shall not
constitute acceptance or approval of the Schedules.
3.10.2
3.10.3 The Contractor shall prepare at least monthly and submit for the
Owner's, Architect's and Construction Manager's information a progress report
in a form, in sufficient detail, and of a character approved by the Owner and
the Construction Manager for the Project. The progress report shall specify,
among other things, an estimated percentage of completion (including percentage
of completion of each activity and event shown on the Construction Schedule),
whether the Project is on schedule, and if not, the reasons therefor and the
new schedule, as well as the number of man-days worked for each category of
labor and the projected Work to be completed in the next succeeding month.
Accompanying the progress report shall be an updated current Construction
Schedule, and a listing and the status of all Change Orders, Modifications,
bulletins and other relevant documents.
3.10.4 The Contractor shall conform to the most recent schedules.
Insert F: 3.10.5 The Construction Schedule shall be in a detailed
precedence-style critical path method (CPM) or primavera type format or other
detailed format satisfactory to the Owner and the Architect.
3.11 DOCUMENTS AND SAMPLES AT THE SITE
3.11.1 The Contractor shall maintain at the site for the Owner one record copy
of the Drawings, Specifications, addenda, Garage Construction Documents, Change
Orders and other Modifications, in good order and marked currently to record
changes and selections made during construction, and in addition approved Shop
Drawings, Product Data, Samples and similar required submittals. These shall be
available to the Construction Manager and Architect and shall be delivered to
the Construction Manager for submittal to the Owner upon completion of the Work.
3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES
3.12.1 Shop Drawings are drawings, diagrams, schedules and other data specially
prepared for the Work by the Contractor or a Subcontractor, sub-subcontractor,
manufacturer, supplier or distributor to illustrate some portion of the Work.
3.12.2 Product Data are illustrations, standard schedules, performance charts,
instructions, brochures, diagrams and other information furnished by the
Contractor to illustrate materials or equipment for some portion of the Work.
3.12.3 Samples are physical examples which illustrate materials, equipment or
workmanship and establish standards by which the Work will be judged.
3.12.4 Shop Drawings, Product Data, Samples and similar submittals are not
Contract Documents. The purpose of their submittal is to demonstrate for those
portions of the Work for which submittals are required the way the Contractor
proposes to conform to the information given and the design concept expressed
in the Contract Documents. Review by the Architect is subject to the
limitations of Subparagraph 4.6.12.
3.12.5 The Contractor shall review, approve and submit to the Construction
Manager, in accordance with the schedule and sequence approved by the
Construction Manager, Shop Drawings, Product Data, Samples and similar
submittals required by the Contract Documents. The Contractor shall cooperate
with the Construction Manager in the coordination of the Contractor's Shop
Drawings, Product Data, Samples and similar submittals with related documents
submitted by other Contractors. Submittals made by the Contractor which are not
required by the Contract Documents may be returned without action.
3.12.6 The Contractor shall perform no portion of the Work requiring submittal
and review of Shop Drawings, Product Data, Samples or similar submittals until
the respective submittal has been approved by the Construction Manager and
Architect. Such Work shall be in accordance with approved submittals.
3.12.7 By approving and submitting Shop Drawings, Product Data, Samples and
similar submittals, the Contractor represents that the Contractor has
determined and verified materials, field measurements and field construction
criteria related thereto, or will do so, and has checked and
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER - ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as note below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #14
<PAGE> 63
coordinated the information contained within such submittals with the
requirements of the Work and of the Contract Documents.
3.12.8 The Contractor shall not be relieved of responsibility for deviations
from requirements of the Contract Documents by the Construction Manager's and
Architect's approval of Shop Drawings, Product Data, Samples or similar
submittals unless the Contractor has specifically informed the Construction
Manager and Architect in writing of such deviation at the time of submittal and
the Construction Manager and Architect have given written approval to the
specific deviation. The Contractor shall not be relieved of responsibility for
errors or omissions in Shop Drawings, Product Data, Samples or similar
submittals by the Construction Manager's and Architect's approval thereof.
3.12.9 The Contractor shall direct specific attention, in writing or on
resubmitted Shop Drawings, Product Data, Samples or similar submittals, to
revisions other than those requested by the Construction Manager and Architect
on previous submittals.
3.12.10 Informational submittals upon which the Construction Manager and
Architect are not expected to take responsive action may be so identified in
the Contract Documents.
3.12.11 When professional certification of performance criteria of materials,
systems or equipment is required by the Contract Documents, the Construction
Manager and Architect shall be entitled to rely upon the accuracy and
completeness of such calculations and certifications.
3.13 USE OF SITE
3.13.1 The Contractor shall confine operations at the site to areas permitted
by law, ordinances, permits and the Contract Documents and shall not
unreasonably encumber the site with materials or equipment.
3.13.2 The Contractor shall coordinate the Contractor's operations with, and
secure the approval of, the Construction Manager before using any portion of
the site.
3.14 CUTTING AND PATCHING
3.14.1 The Contractor shall be responsible for cutting, fitting or patching
required to complete the Work or to make its parts fit together properly.
3.14.2 The Contractor shall not damage or endanger a portion of the Work or
fully or partially completed construction of the Owner's own forces or of
separate contractors by cutting, patching, excavating or otherwise altering such
construction. The Contractor shall not cut or otherwise alter such construction
by separate contractors or by the Owner's own forces except with written
consent of the Construction Manager, Owner and such separate contractors; such
consent shall not be unreasonably withheld. The Contractor shall not
unreasonably withhold from the separate contractors or the Owner the
Contractor's consent to cutting or otherwise altering the Work.
13.15 CLEANING UP
13.15.1 The Contractor shall keep the premises and surrounding area free from
accumulation of waste materials or rubbish caused by operations under the
Contract. At completion of the Work the Contractor shall remove from and about
the Project waste materials, rubbish, the Contractor's tools, construction
equipment, machinery and surplus materials.
13.15.2 If the Contractor fails to clean up as provided in the Contract
Documents, the Construction Manager may do so with the Owner's approval and the
cost thereof shall be charged to the Contractor.
3.16 ACCESS TO WORK
3.16.1 The Contractor shall provide the Owner, Construction Manager and
Architect access to the Work in preparation and progress wherever located.
3.17 ROYALTIES AND PATENTS
3.17.1 The Contractor shall pay all royalties and license fees. The Contractor
shall defend suits or claims for infringement of patent rights and shall hold
the Owner, Construction Manager and Architect harmless from loss on account
thereof, but shall not be responsible for such defense or loss when a particular
design, process or product of a particular manufacturer or manufacturers is
required by the Contract Documents, other than the Garage Construction
Documents. However, if the Contractor has reason to believe that the required
design, process or product is an infringement of a patent, the Contractor shall
be responsible for such loss unless such information is promptly furnished to
the Architect. When a required design, process or product that is required by
the Garage Construction Document is an infringement of a patent, the Contractor
shall be responsible for such loss.
3.18 INDEMNIFICATION
3.18.1 To the fullest extent permitted by law, the
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER - ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #15
<PAGE> 64
Contractor shall indemnify and hold harmless the Owner, Construction Manager,
Architect, Construction Manager's and Architect's consultants, and agents and
employees of any of them from and against claims, damages, losses and expenses,
including but not limited to attorneys' fees, arising out of or resulting from
performance of the Work, provided that such claim, damage, loss or expense is
attributable to bodily injury, sickness, disease or death, or to injury to or
destruction of tangible property (other than the Work itself) including loss of
use resulting therefrom, but only to the extent caused in whole or in part by
negligent acts or omissions of the Contractor, a Subcontractor, anyone
directly or indirectly employed by them or anyone for whose acts they may be
liable, regardless of whether or not such claim, damage, loss or expense is
caused in part by a party indemnified hereunder. Provided Owner has made all
payments properly due hereunder, the Contractor shall also defend, release,
indemnify and hold harmless the parties indemnified against and from any
assertion of or claims for mechanics' liens, stop notices and against assertion
of security interests by suppliers of goods, materials or labor. Such
obligation shall not be construed to negate, abridge or reduce other rights or
obligations of indemnity which would otherwise exist as to a party or person
described in this Paragraph 3.18.
3.18.2 In claims against any person or entity indemnified under this Paragraph
3.18 by an employee of the Contractor, a Subcontractor, anyone directly or
indirectly employed by them or anyone for whose acts they may be liable, the
indemnification obligation under this Paragraph 3.18 shall not be limited by a
limitation on amount or type of damages, compensation or benefits payable by or
for the Contractor or a Subcontractor under workers' compensation acts,
disability benefit acts or other employee benefit acts.
3.18.3 the obligations of the Contractor under this Paragraph 3.18 shall not
extend to the liability of the Construction Manager, Architect, their
consultants, and agents and employees of any of them arising out of (1) the
preparation or approval of maps, drawings, opinions, reports, surveys, Change
Orders, designs or specifications, or (2) the giving of or the failure to give
directions or instructions by the Construction Manager, Architect, their
consultants, and agents and employees of any of them provided such giving or
failure to give is the primary cause of the injury or damage.
INSERT G: 3.19 CONSULTANTS
INSERT H: 3.19.1 Throughout the course of construction of the Project,
Contractor may be contacted by certain consultants retained by Owner. These
consultants may request documentation relating to costs of the Work for the
purpose of Modified Accelerated Cost Recovery System depreciation calculations.
The Contractor at the Contractor's expense shall make available cost
documentation and information related to the Work, including but not limited to
the Contractor's applications for payment and all supporting detail, purchase
orders and change orders with supporting detail, applicable unit cost breakdown
plus premium time breakdown and supplier invoices and other related cost
documents.
INSERT I: 3.20 THIRD-PARTY WARRANTIES
INSERT J: 3.20.1 With respect to all of the components of the Work, Contractor
shall obtain for the benefit of the Owner and in the name of the Owner
warranties from suppliers, vendors, fabricators, manufacturers, or other third
parties, all as specified in the Contract Documents. Contractor hereby assigns
to Owner any such rights Contractor may now or hereafter have under any such
warranties.
INSERT K: 3.21 CONTRACTOR'S SERVICES AND RESPONSIBILITIES WITH RESPECT TO THE
GARAGE
INSERT L: 3.21.1 Design services required by the Contract shall be performed by
qualified architects and other design professionals. The contractual
obligations of such professional persons or entities are undertaken and
performed in the interest of and at the expense of the Contractor.
INSERT M: 3.21.2 The agreements between the Contractor and the Garage Architect
and other design professionals identified in this Contract, and any subsequent
modifications, shall be in writing. These agreements, including financial
arrangements with respect to this Project, shall be promptly and fully
disclosed to the Owner upon request.
INSERT N: 3.21.3 Construction budgets for the Garage shall be prepared by
qualified professionals, cost estimators or contractors retained by and acting
in the interest of the Contractor.
INSERT O: 3.21.4 The Contractor shall be responsible to the Owner for acts and
omissions of the Contractor's employees, subcontractors and their agents and
employees, and other persons, including the Garage Architect and other design
professionals, performing any portion of the Contractor's obligations under
this Paragraph 3.21.
INSERT P: 3.21.5 The Contractor's basic services with respect the Garage are
described below.
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosection. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM - 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 - Page #16
<PAGE> 65
Insert Q: .1 The Contractor shall provide a preliminary evaluation of
the Owner's program and project budget requirements each in terms of the other
with respect to construction of the Garage.
Insert R: .2 The Contractor shall visit the site become familiar with
the local conditions and correlate observable conditions with the requirements
of the Owner's program schedule and budget with respect to construction of the
Garage.
Insert S: .3 The Contractor shall review laws applicable to design and
construction of the Garage: correlate such laws with the Owner's program
requirements and advise the Owner if any program requirement may cause a
violation of such laws Necessary changes to the Owner's program shall be
accomplished by appropriate written modification or disclosed as described in
Subparagraph 3.21.5.5.
Insert T: .4 The Contractor shall review with the Owner alternative
approaches to design and construction of the Garage.
Insert U: .5 The Contractor shall submit to the Owner a Proposal,
including the completed Preliminary Design Documents, and a proposed schedule
for completion of the Garage. Preliminary Design Documents shall consist of
preliminary design drawings, outline specifications or other documents
sufficient to establish the size, quality and character of the entire Garage,
its architectural, structural, mechanical and electrical systems, and the
materials and such other elements of the Garage as may be appropriate.
Deviations from the Owner's program shall be disclosed in the Proposal as well
as explanations for said deviations.
Insert V: .6 The Contractor shall consult with the Owner and other
persons or entities not designated in this Contract to define the program
requirements of the Garage and to review the understanding of such
requirements with the Owner.
Insert W: .7 The Contractor shall document the applicable requirements
necessary for the various Garage functions or operations.
Insert X: .8 The contractor shall provide a review and analysis of the
functional and organizational relationships, requirements, and objective for
the Garage.
Insert Y: .9 The Contractor shall set forth a written program of
requirements for the Owner's approval which summarizes the Owner's objectives,
schedule, constraints and criteria.
Insert Z: .10 The Contractor shall provide services at the Owner's
specific request to perform detailed investigations of existing conditions of
facilities or to make measured drawings thereof.
Insert AA: .11 The Contractor shall designate a representative authorized
to act on the Contractor's behalf with respect to the Project.
Insert AB: .12 The Contractor's basic services include the preparation of
the Garage Construction Documents. The Contractor shall submit Garage
Construction Documents for review and approval by the Owner. Garage
Construction Documents may include drawings, specifications, and other
documents and electronic data setting forth in detail the requirements for
construction of the Garage, and shall be consistent with the intent of the
Contractor's Proposal, provide information for the use of those in the building
trades and include documents customarily required for regulatory agency
approvals.
Insert AC: .13 The Contractor with the assistance of the Owner, shall file
documents required to obtain necessary approvals of governmental authorities
having jurisdiction over the Garage.
Insert AD: .14 Unless otherwise provided in the Garage Construction
Documents the Contractor shall provide or cause to be provided and shall pay
for design services necessary for proper execution and completion of the Garage,
whether temporary or permanent and whether or not incorporated or to be
incorporated in the Garage.
ARTICLE 4
ADMINISTRATION OF THE CONTRACT
4.1 ARCHITECT
4.1.1 The Architect is the person lawfully licensed to practice architecture or
an entity lawfully practicing architecture identified as such in the Agreement
and is referred to throughout the Contract Documents as if singular in number.
The term "Architect" means the Architect or the Architect's authorized
representative.
4.2 CONSTRUCTION MANAGER
4.2.1 The Construction Manager is the person or entity identified as such in
the Agreement and is referred to
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA(R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292 - Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM - 12/20/1997. AIA License Number 105525, which expires on
6/30/1996 - Page #17
<PAGE> 66
throughout the Contract Documents as if singular in number. The term
"Construction Manager" means the Construction Manager or the Construction
Manager's authorized representative.
4.3 Duties, responsibilities and limitations of authority of the Construction
Manager and Architect as set forth in the Contract Documents shall not be
restricted, modified or extended without consent of the Owner, Construction
Manager, Architect and Contractor. The Owner's written consent must be signed
on behalf of the Owner by the President of the Owner's General Partner. That
position is currently held by Mr. Brian McMullan
4.4 In case of termination of employment of the Construction Manager or
Architect, the Owner shall appoint a construction manager or architect against
whom the Contractor makes no reasonable objection and whose status under the
Contract Documents shall be that of the former construction manager or
architect, respectively.
4.6 ADMINISTRATION OF THE CONTRACT
4.6.1 The Construction Manager and Architect will provide administration of the
Contract as described in the Contract Documents. The Construction Manager and
Architect will advise and consult with the Owner and will have authority to
act on behalf of the Owner only to the extent provided in the Contract
Documents, unless otherwise modified by written instrument in accordance with
other provisions of the Contract, such modification to be evidenced by a written
instrument signed on behalf of the Owner by the President of Owner's general
partner.
4.6.2 The Construction Manager will determine in general that the Work is being
performed in accordance with the requirements of the Contract Documents, will
keep the Owner informed of the progress of the Work, and will endeavor to guard
the Owner against defects and deficiencies in the Work.
4.6.5 The Architect will visit the site at intervals appropriate to the stage
of construction to become generally familiar with the progress and quality of
the completed Work and to determine in general if the Work is being performed
in a manner indicating that the Work, when completed, will be in accordance
with the Contract Documents. On the basis of on-site observations as an
architect, the Architect will keep the Owner informed of progress of the Work,
and will endeavor to guard the Owner against defects and deficiencies in the
Work. The inspection of the Work consisting of furniture, furnishings, or
equipment by the Owner or the Architect upon delivery shall be for the sole
purpose of identifying furniture, furnishings, or equipment and of verifying
quantities delivered. Such inspections are not final and do not constitute
acceptance of, or taking charge or control over, furniture, furnishings, or
equipment prior to installation and final completion unless the Owner
specifically accepts it in writing. If any previously inspected or accepted Work
is found to be defective or damaged or not in conformance with the Contract
Documents, the Owner may refuse or revoke acceptance.
4.6.6 The Construction Manager, except to the extent required by Subparagraph
4.6.4, and Architect will not have control over or charge of and will not be
responsible for construction means, methods, techniques, sequences or
procedures, or for safety precautions and programs in connection with the Work,
since these are solely the Contractor's responsibility as provided in Paragraph
3.3, and neither will be responsible for the Contractor's failure to carry out
the Work in accordance with the Contract Documents. Neither the Construction
Manager nor the Architect will have control over or charge of or be responsible
for acts or Commissions of the Contractor, Subcontractors, or their agents or
employees, or of any other person performing portions of the Work.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA(R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 - Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM - 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 - Page #18
<PAGE> 67
The Owner and Contractor shall communicate through the Construction Manager, and
shall contemporaneously provide the same communications to the Architect.
Communications by and with the Architect's consultants shall be through the
Architect. Communications by and with Subcontractors and material suppliers
shall be through the Contractor. Communications by and with separate contractors
shall be through the Construction Manager and shall be contemporaneously
provided to the Architect.
4.6.8 The Construction Manager will review and certify all Applications for
Payment by the Contractor, including final payment. After reviewing and
certifying the amounts due the Contractors, the Construction Manager will submit
the Contractor's Application for Payment and Certificate for Payment, to the
Architect.
4.6.9 Based on the Architect's observations and evaluations of the Contractor's
Applications for Payment, and the certifications of the Construction Manager,
the Architect will review and certify the amounts due the Contractors and will
issue Certificates for Payment in such amounts.
4.6.10 The Architect will have authority to reject Work which does not conform
to the Contract Documents, and to require additional inspection or testing, in
accordance with Subparagraphs 13.5.2 and 13.5.3, whether or not such Work is
fabricated, installed or completed, but will take such action only after
notifying the Construction Manager. Subject to review by the Architect, the
Construction Manager will have the authority to reject Work which does not
conform to the Contract Documents. Whenever the Construction Manager considers
it necessary or advisable for implementation of the intent of the Contract
Documents, the Construction Manager will have authority to require additional
inspection or testing of the Work in accordance with Subparagraphs 13.5.2 and
13.5.3, whether or not such Work is fabricated, installed or completed. The
foregoing authority of the Construction Manager will be subject to the
provisions of Subparagraphs 4.6.18 through 4.6.20 inclusive, with respect to
interpretations and decisions of the Architect. However, neither the Architect's
nor the Construction Manager's authority to act under this Subparagraph 4.6.10
nor a decision made by either of them in good faith either to exercise or not to
exercise such authority shall give rise to a duty or responsibility of the
Architect or the Construction Manager to the Contractor, Subcontractors,
material and equipment suppliers, their agents or employees, or other persons
performing any of the Work.
4.6.11 The Construction Manager will receive from the Contractor and review and
approve all Shop Drawings, Product Data and Samples, and transmit to the
Architect those recommended for approval. The Construction Manager's actions
will be taken with such reasonable promptness as to cause no delay in the Work
of the Contractor or in the activities of separate contractors, the Owner, or
the Architect. Review and approval of Shop Drawings, Product Data, or Samples
does not indicate approval of changes in the Contract Sum or Contract Time.
These can be authorized only as provided in Article 7, Changes in the Work.
4.6.12 The Architect will review and approve or take other appropriate action
upon the Contractor's submittals such as Shop Drawings, Product Data and
Samples, but only for the limited purpose of checking for conformance with
information given and the design concept expressed in the Contract Documents.
The Architect's action will be taken with such reasonable promptness, but not to
exceed fourteen (14) calendar days, as to cause no delay in the Work of the
Contractor or in the activities of separate contractors, the Owner, or the
Construction Manager, while allowing sufficient time in the Architect's
professional judgment to permit adequate review. Review of such submittals is
not conducted for the purpose of determining the accuracy and completeness of
other details such as dimensions and quantities, or for substantiating
instructions for installation or performance of equipment or systems, all of
which remain the responsibility of the Contractor as required by the Contract
Documents. The Architect's review of the Contractor's submittals shall not
relieve the Contractor of the obligations under Paragraphs 3.3, 3.5 and 3.12.
The Architect's review shall not constitute approval of safety precautions or,
unless otherwise specifically stated by the Architect, of any construction
means, methods, techniques, sequences or procedures. The Architect's approval of
a specific item shall not indicate approval of an assembly of which the item is
a component. Review and approval of Shop Drawings, Product Date, or Samples does
not indicate approval of changes in the Contract Sum or Contract Time. These can
be authorized only as provided in Article 7, Changes in the Work.
4.6.13 The Construction Manager will prepare Change Orders and Construction
Change Directives for Owner's signature as provided in Paragraphs 7.2.1 and
7.3.1.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 Y
WARNING: Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #19
<PAGE> 68
4.6.14 Following consultation with the Construction Manager, the Architect will
take appropriate action on Change Orders or Construction Change Directives in
accordance with Article 7.
4.6.15 The Construction Manger will maintain at the site for the Owner one
record copy of all Contracts, Drawings, Specifications, addenda, Change Orders
and other Modifications, in good order and marked currently to record all
changes and selections made during construction, and in addition approved Shop
Drawings, Product Data, Samples and similar required submittals. These will be
available to the Architect and the Contractor, and will be delivered to the
Owner upon completion of the Project.
4.6.16 The Construction Manager will assist the Architect in conducting
inspections to determine the dates of Substantial Completion and final
completion, and will receive and forward to the Owner written warranties and
related documents required by the Contract and assembled by the Contractor. The
Construction Manager will forward to the Architect a final Application for
Payment and Certificate for Payment upon compliance with the requirements of
the Contract Documents.
4.6.17 If the Owner and Architect agree, the Architect will provide one or more
project representatives to assist in carrying out the Architect's
responsibilities at the site. The duties, responsibilities and limitations of
authority of such project representatives shall be as set forth in an exhibit
to be incorporated in the Contract Documents.
4.6.18 The Architect will interpret and decide matters concerning performance
under and requirements of the Contract Documents on written request of the
Construction Manager, Owner or Contractor. The Architect's response to such
requests will be made with reasonable promptness and within any time limits
agreed upon. If no agreement is made concerning the time within which
interpretations required of the Architect shall be furnished in compliance with
this Paragraph 4.6, then delay shall not be recognized on account of failure by
the Architect to furnish such interpretations until 15 days after written
request is made for them.
4.6.19 Interpretations and decisions of the Architect will be consistent with
the intent of and reasonably inferable from the Contract Documents and will be
in writing or in the form of drawings. When making such interpretations and
decisions, the Architect will endeavor to secure faithful performance by both
Owner and Contractor, will not show partiality to either and will not be liable
for results of interpretations or decisions so rendered in good faith.
4.6.20 The Architect's decisions on matters relating to aesthetic effect will be
final if consistent with the intent expressed in the Contract Documents.
4.7 CLAIMS AND DISPUTES
4.7.1 DEFINITION. A Claim is a demand or assertion by one of the parties
seeking, as a matter of right, adjustment or interpretation of Contract terms,
payment of money, extension of time or other relief with respect to the terms
of the Contract. The term "Claim" also includes other disputes and matters in
question between the Owner and Contractor arising out of or relating to the
Contract. Claims must be made by written notice. The responsibility to
substantiate Claims shall rest with the party making the Claim.
4.7.2 DECISION OF ARCHITECT. Claims, including those alleging an error or
omission by the Construction Manager or Architect, shall be referred initially
to the Architect for action as provided in Paragraph 4.8. A decision by the
Architect, as provided in Subparagraph 4.8.4., shall be required as a condition
precedent to arbitration or litigation of a Claim between the Contractor and
Owner as to all such matters arising prior to the date final payment is due,
regardless of (1) whether such matters relate to execution and progress of the
Work or (2) the extent to which the Work has been completed. The decision by
the Architect in response to a Claim shall not be a condition precedent to
arbitration or litigation in the event (1) the position of Architect is vacant,
(2) the Architect has not received evidence or has failed to render a decision
within agreed time limits, (3) the Architect has failed to take action required
under Subparagraph 4.8.4 within 30 days after the Claim is made, (4) 45 days
have passed after the Claim has been referred to the Architect or (5) the Claim
relates to a mechanic's lien.
4.7.3 TIME LIMITS ON CLAIMS. Claims by either party must be made within 21 days
after occurrence of the event giving rise to such Claim or within 21 days after
the claimant first recognizes the condition giving rise to the Claim, whichever
is later. Claims must be made by written notice. An additional Claim made after
the initial Claim has been implemented by Change Order will not be considered
unless submitted in a timely manner.
4.7.4 CONTINUING CONTRACT PERFORMANCE. Pending final resolution of a Claim
including litigation
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION-AIA (R) - (C)1992 THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Y WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below. Electronic Format A201/CMa-1992 User Document: FORM -- 12/20/1997.
AIA License Number 105525, which expires on 6/30/1998 -- Page #20
<PAGE> 69
unless otherwise agreed in writing the Contractor shall proceed diligently with
performance of the Contract and the Owner shall continue to make payments in
accordance with the Contract Documents.
4.7.5 WAIVER OF CLAIMS: FINAL PAYMENT. The making of final payment shall
constitute a waiver of Claims by the Owner except those arising from:
.1 liens, Claims, security interests or encumbrances arising out of the
Contract and unsettled;
.2 failure of the Work to comply with the requirements of the Contract
Documents; or
.3 terms of special warranties required by the Contract Documents.
4.7.6 CLAIMS FOR CONCEALED OR UNKNOWN CONDITIONS. If conditions are
encountered at the site which are (1) subsurface or otherwise concealed
physical conditions which differ materially from those indicated in the Contract
Documents or (2) unknown physical conditions of an unusual nature, which differ
materially from those ordinarily found to exist and generally recognized as
inherent in construction activities of the character provided for in the
Contract Documents, then notice by the observing party shall be given to the
other party promptly before conditions are disturbed and in no event later than
21 days after first observance of the conditions. The Architect will promptly
investigate such conditions and, if they differ materially and cause an
increase or decrease in the Contractor's cost of, or time required for,
performance of any part of the Work, will recommend an equitable adjustment in
the Contract Sum or Contract Time, or both. If the Architect determines that
the conditions at the site are not materially different from those indicated in
the Contract Documents and that no change in the terms of the Contract is
justified, the Architect shall so notify the Owner and Contractor in writing,
stating the reasons. Claims by either party in opposition to such determination
must be made within 21 days after the Architect has given notice of the
decision. If the Owner and Contractor cannot agree on an adjustment in the
Contract Sum or Contract Time, the adjustment shall be referred to the
Architect for initial determination, subject to further proceedings pursuant to
Paragraph 4.8.
4.7.7 CLAIMS FOR ADDITIONAL COST. If the Contractor wishes to make Claim for
an increase in the Contract Sum, written notice as provided herein shall be
given before proceeding to execute the Work. Prior notice is not required for
Claims relating to an emergency endangering life or property arising under
Paragraph 10.3. If the Contractor believes additional cost is involved for
reasons including but not limited to (1) a written interpretation from the
Architect, (2) an order by the Owner to stop the Work where the Contractor was
not at fault, (3) failure of payment by the Owner, (4) termination of the
Contract by the Owner, (5) Owner's suspension or (6) other reasonable grounds.
Claim shall be filed in accordance with the procedure established herein.
4.7.8 CLAIMS FOR ADDITIONAL TIME.
4.7.8.1 If the Contractor wishes to make Claim for an increase in the Contract
Time, written notice as provided herein shall be given. The Contractor's Claim
shall include an estimate of cost and of probable effect of delay on progress
of the Work. In the case of a continuing delay only one Claim is necessary.
4.7.8.2 If adverse weather conditions are the basis for a Claim for additional
time, such Claim shall be documented by data substantiating that weather
conditions were abnormal for the period of time and could not have been
reasonably anticipated, and that weather conditions had an adverse effect on
the scheduled construction.
4.7.9 INJURY OR DAMAGE TO PERSON OR PROPERTY. If either party to the Contract
suffers injury or damage to person or property because of an act or omission of
the other party, of any of the other party's employees or agents, or of others
for whose act such party is legally liable, written notice of such injury or
damage, whether or not insured, shall be given to the other party within a
reasonable time not exceeding 21 days after first observance. The notice shall
provide sufficient detail to enable the other party to investigate the matter.
If a Claim for additional cost or time related to this Claim is to be asserted,
it shall be filed as provided in Subparagraphs 4.7.7 or 4.7.8.
4.8 RESOLUTION OF CLAIMS AND DISPUTES
4.8.1 The Architect will review Claims and take one or more of the following
preliminary actions within ten days of receipt of a Claim: (1) request
additional supporting data from the claimant, (2) submit a schedule to the
parties indicating when the Architect experts to take action, (3) reject the
Claim in whole or in part, stating reasons for rejection, (4) recommend
approval of the Claim by the other party or (5) suggest a compromise. The
Architect may also, but is not obligated to, notify the surety, if any, of the
nature and amount of the Claim.
4.8.2 If a Claim has been resolved, the Architect will prepare or obtain
appropriate documentation.
4.8.3 If a Claim has not been resolved, the party making
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISOR EDITION - AIA (R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997.
AIA License Number 105525, which expires on 6/30/1998 -- Page#21
<PAGE> 70
the Claim shall, within ten days after the Architect's preliminary response,
take one or more of the following actions: (1) submit additional supporting
data requested by the Architect, (2) modify the initial Claim or (3) notify the
Architect that the initial Claim stands.
4.8.4 If a Claim has not been resolved after consideration of the foregoing
and of further evidence presented by the parties or requested by the Architect,
the Architect will notify the parties in writing that the Architect's decision
will be made within seven days, which decision shall be final and binding on
the parties but subject to litigation. Upon expiration of such time period, the
Architect will render to the parties the Architect's written decision relative
to the Claim, including any change in the Contract Sum or Contract Time or
both. If there is a surety and there appears to be a possibility of a
Contractor's default, the Architect may, but is not obligated to, notify the
surety and request the surety's assistance in resolving the controversy.
4.9 ARBITRATION
4.9.1 CONTROVERSIES AND CLAIMS SUBJECT TO ARBITRATION.
4.9.2 RULES AND NOTICES FOR ARBITRATION.
4.9.3 CONTRACT PERFORMANCE DURING ARBITRATION.
4.9.4 WHEN ARBITRATION MAY BE DEMANDED.
4.9.4.1
4.9.4.2
4.9.5 LIMITATION ON CONSOLIDATION OR JOINDER.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C)1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #22
<PAGE> 71
4.9.6 CLAIMS AND TIMELY ASSERTION OF CLAIMS.
4.9.7 JUDGMENT ON FINAL AWARD.
INSERT AE: 4.10 LITIGATION
INSERT AF: 4.10.1 CONTROVERSIES AND CLAIMS SUBJECT TO LITIGATION. Any
controversy or Claim arising out of or related to the Contract or the breach
thereof may be the subject of litigation. Such controversies or Claims upon
which the Architect has given notice and rendered a decision as provided in
Subparagraph 4.8.4 and not subject to arbitration shall be subject to
litigation.
INSERT AG: 4.10.2 CONTRACT PERFORMANCE DURING LITIGATION. During litigation,
the Owner and Contractor shall comply with Subparagraph 4.7.4.
INSERT AH: 4.10.3 DECISION FINAL. When a written decision of the Architect
states that (1) the decision is final but subject to litigation and (2) a
demand for litigation of a Claim covered by such decision must be made within
30 days after the date on which the party making the demand receives the final
written decision, then failure to commence litigation within 30 days after
final completion of the Project.
INSERT AL: 4.10.4 WAIVER OF TRIAL BY JURY. OWNER AND CONTRACTOR TO THE
FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO THEREBY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDINGS, INCLUDING WITHOUT LIMITATION, ANY CONTRACT OR TORT
ACTION RELATED TO THIS CONTRACT.
INSERT AJ: INITIALS___________ INITIALS___________
ARTICLE 5
SUBCONTRACTORS
5.1 DEFINITIONS
5.1.1 A Subcontractor is a person or entity who has a direct contract with
the Contractor to perform a portion of the Work at the site. The term
"Subcontractor" is referred to throughout the Contract Documents as if singular
in number and means a Subcontractor or an authorized representative of the
Subcontractor. The term "Subcontractor" does not include a separate contractor
or subcontractors of a separate contractor.
5.1.2 A Sub-subcontractor is a person or entity who has a direct or
indirect contact with a Subcontractor to perform a portion of the Work at the
site. The term "Sub-contractor" is referred to throughout the Contract
Documents as if singular in number and means a Sub-subcontractor or an
authorized representative of the Sub-subcontractor.
5.2 AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS OF THE WORK
5.2.1 Unless otherwise stated in the Contract Documents or the bidding
requirements, the Contractor, as soon as practicable after award of the
Contract, shall furnish in writing to the Construction Manager for review by
the Owner, Construction Manager and Architect the names of persons or entities
(including those who are to furnish materials or equipment fabricated to a
special design) proposed for each principal portion of the Work. The
construction Manager will promptly reply to the Contractor in writing stating
whether or not the Owner, Construction Manager or Architect, after due
investigation, has reasonable objection to any such proposed person or entity.
Failure of the Construction Manager to reply promptly shall constitute notice
of no reasonable objection.
5.2.2 The Contractor shall not contract with a proposed person or entity to
whom the Owner, Construction Manager or Architect has made reasonable and
timely objection. The Contractor shall not be required to contract with anyone
to whom the Contractor has made reasonable objection.
5.2.3 If the Owner, Construction Manager or Architect has reasonable
objection to a person or entity proposed by the Contractor, the Contractor
shall propose another to whom the Owner, Construction Manager or Architect has
no
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292
Y WARNING; Unlicensed photocopying violates U.S. copyright laws and is a subject
to legal prosecution. This document was electronically produced with permission
of the AIA and can be reproduced without violation until the date of expiration
as noted below.
ELECTRONIC FORMAT A201/CMA-1992
USER DOCUMENT: FORM -- 12/20/1997, AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #23
<PAGE> 72
reasonable objection. The Contract Sum shall be increased or decreased by the
difference in cost occasioned by such change and an appropriate Change Order
shall be issued. However, no increase in the Contract Sum shall be allowed for
such change unless the Contractor has acted promptly and responsively in
submitting names as required.
5.2.4 The Contractor shall not change a Subcontractor, person or entity
previously selected if the Owner, Construction Manager or Architect makes
reasonable objection to such change.
5.3 SUBCONTRACTUAL RELATIONS
5.3.1 By appropriate agreement, written where legally required for validity, the
Contractor shall require each Subcontractor, to the extent of the Work to be
performed by the Subcontractor, to be bound to the Contractor by terms of the
Contract Documents, and to assume toward the Contractor all the obligations and
responsibilities which the Contractor, by these Documents, assumes toward the
Owner, Construction Manager and Architect. Each subcontract agreement shall
preserve and protect the rights of the Owner, Construction Manager and Architect
under the Contract Documents with respect to the Work to be performed by the
Subcontractor so that subcontracting thereof will not prejudice such rights, and
shall allow to the Subcontractor, unless specifically provided otherwise in the
subcontract agreement, the benefit of all rights, remedies and redress against
the Contractor that the Contractor, by the Contract Documents, has against the
Owner. Where appropriate, the Contractor shall require each Subcontractor to
enter into similar agreements with Sub-contractors. The Contractor shall make
available to each proposed Subcontractor, prior to the execution of the
subcontract agreement, copies of the Contract Documents to this the
Subcontractor will be bound, and, upon written request of the Subcontractor,
identify to the Subcontractor terms and conditions of the proposed subcontract
agreement which may be a variance with the Contract Documents. Subcontractors
shall similarly make copies of applicable portions of such documents available
to their respective proposed Sub-subcontractors.
5.4 CONTINGENT ASSIGNMENT OF SUBCONTRACTS
5.4.1 Each subcontract agreement for a portion of the Work is assigned by the
Contractor to the Owner provided that:
.1 assignment is effective only after termination of the Contract by the
Owner for cause pursuant to Paragraph 14.2 and only for those
subcontract agreements which the Owner accepts by notifying the
Subcontractor in writing, and
.2 assignment is subject to the prior rights of the surety, if any,
obligated under bond relating to the Contract.
5.4.2
ARTICLE 6
CONSTRUCTION BY OWNER OR BY
OTHER CONTRACTORS
6.1 OWNER'S RIGHT TO PERFORM
CONSTRUCTION WITH OWN FORCES
AND TO AWARD OTHER CONTRACTS
6.1.1 The Owner reserves the right to perform construction or operations
related to the Project with the Owner's own forces, which include persons or
entities under separate contracts not administered by the Construction Manager.
The Owner further reserves the right to award other contracts in connection
with other portions of the Project or other construction or operations on the
site under Conditions of the Contract identical or substantially similar to
these including those portions related to insurance and waiver of subrogation.
If the Contractor claims that delay or additional cost is involved because of
such action by the Owner, the Contractor shall make such Claim as provided
elsewhere in the Contract Documents.
6.1.2 When the Owner performs construction or operations with the Owner's own
forces including persons or entities under separate contracts not administered
by the Construction Manager, the Owner shall provide for coordination of such
forces with the Work of the Contractor, who shall cooperate with them. The
Contractor shall participate with other separate contractors and the Owner in
reviewing their construction schedules when directed to do so.
6.1.3 Unless otherwise provided in the Contract Documents, when the Owner
performs construction or operations related to the Project with the Owner's own
forces, the Owner shall be deemed to be subject to the same obligations and to
have the same rights which apply to the Contractor under the Conditions of the
Contract, including, without excluding others, those stated in this Article 6
and in Articles 3, 10, 11 and 12.
6.2 MUTUAL RESPONSIBILITY
6.2.1 The contractor shall afford the Owner's own forces,
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292
Y WARNING; Unlicensed photocopying violates U.S. copyright laws and is a subject
to legal prosecution. This document was electronically produced with permission
of the AIA and can be reproduced without violation until the date of expiration
as noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #24
<PAGE> 73
Construction Manager and separate contractors reasonable opportunity for
introduction and storage of their materials and equipment and performance of
their activities, and shall connect and coordinate the Contractor's
construction and operations with theirs as required by the Contract Documents.
6.2.2 If part of the Contractor's Work depends for proper execution or results
upon construction or operations by the Owner's own forces or a separate
contractor, the Contractor shall, prior to proceeding with that portion of the
Work, promptly report to the Construction Manager and Architect apparent
discrepancies or defects in such other construction that would render it
unsuitable for such proper execution and results. Failure of the Contractor so
to report shall constitute an acknowledgement that the Owner's own forces or
separate contractors' completed or partially completed construction is fit and
proper to receive the Contractor's Work, except as to defects not then
reasonably discoverable.
6.2.3 Costs caused by delays or by improperly timed activities or defective
construction shall be borne by the party responsible therefor.
6.2.4 The Contractor shall promptly remedy damage wrongfully caused by the
Contractor to completed construction or partially completed construction or to
property of the Owner or separate contractors as provided in Subparagraph
10.2.5.
6.2.5 Claims and other dispute and matters in question between the Contractor
and a separate contractor shall be subject to the provisions of Paragraph 4.7
provided the separate contractor has reciprocal obligations.
6.2.6 The Owner and each separate contractor shall have the same
responsibilities for cutting and patching as are described for the Contractor in
Paragraph 3.14.
6.3 OWNER'S RIGHT TO CLEAN UP
6.3.1 If a dispute arises among the Contractor, separate contractors and the
Owner as to the responsibility under their respective contracts for maintaining
the premises and surrounding area free from waste materials and rubbish as
described in Paragraph 3.15, the Owner may clean up and allocate the cost among
those responsible as the Construction Manager, in consultation with the
Architect, determines to be just.
ARTICLE 7
CHANGES IN THE WORK
7.1 CHANGES
7.1.1 Changes in the Work may be accomplished after execution of the Contract,
and without invalidating the Contract, by a Change Order, or a Construction
Change Directive, subject to the limitations stated in this Article 7 and
elsewhere in the Contract Documents.
7.1.2 A Change Order shall be based upon agreement among the Owner,
Construction Manager, Architect and Contractor; a Construction Change Directive
requires agreement by the Owner, Construction Manager and Architect and may or
may not be agreed to by the Contractor.
7.1.3 Changes in the Work shall be performed under applicable provisions of
the Contract Documents, and Contractor shall proceed promptly, unless otherwise
provided in the Change Order, or Construction Change Directive.
7.1.4 If unit prices are stated in the Contract Documents or subsequently
agreed upon, and if quantities originally contemplated are so changed in a
proposed Change Order or Construction Change Directive that application of such
unit prices to quantities of Work proposed will cause substantial inequity to
the Owner or Contractor, the applicable unit prices shall be equitably adjusted.
7.2 CHANGE ORDERS
7.2.1 A Change Order is a written instrument prepared by the Construction
Manager and signed on behalf of the Owner by the President of Owner's General
Partner, and by the Construction Manager, Architect and Contractor, stating
their agreement upon all of the following:
.1 a change in the Work;
.2 the amount of the adjustment in the Contract Sum, if any; and
.3 the extent of the adjustment in the Contract Time, if any.
7.2.2 Methods used in determining adjustments to the Contract Sum may include
those listed in Subparagraph 7.3.3.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISOR EDITION - AIA (R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292 Y WARNING;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997.
AIA LICENSE NUMBER 105525, WHICH EXPIRES ON 6/30/1998 -- PAGE #25
<PAGE> 74
INSERT AK: 7.2.3 Subject to Contractor's reasonable exception, which shall be
expressly stated on the face of the Change Order prior to Owner's approval of
the Change Order, agreement on any Change Order shall constitute a final
settlement of all matters relating to the change in the Work which is the
subject of the Change Order, including, but not limited to all direct, indirect
and impact costs and time associated with such change and any and all
adjustments to the Contract Sum and the Construction Schedule and under any and
all cumulative impacts and cardinal changes. In the event Change Order increases
or decreases the Contract Sum. Contractor shall include the Work covered by such
Change Order in Applications for Payment as if such Work,was originally part of
the Contract Documents.
7.3 CONSTRUCTION CHANGE DIRECTIVES
7.3.1 A Construction Change Directive is a written order prepared by the
Construction Manager and signed on behalf of the Owner by the President
of Owner's General Partner, and by the Construction Manager and Architect,
directing a change in the Work and stating a proposed basis for adjustment, if
any, in the Contract Sum or Contract Time, or both. The Owner may by
Construction Change Directive, without invalidating the Contract,order changes
in the Work within the general scope of the Contract consisting of additions,
deletions or other revisions, the Contract Sum and Contract Time being adjusted
accordingly.
7.3.2 A Construction Change Directive shall be used in the absence of total
agreement on the terms of a Change Order.
7.3.3 If the Construction Change Directive provides for an adjustment to
the Contract Sum, the adjustment shall be based on one of the following methods:
.1 mutual acceptance of a lump sum properly itemized and supported by
sufficient substantiating data to permit evaluation;
.2 unit prices stated in the Contract Documents or subsequently agreed
upon;
.3 cost to be determined in a manner agreed upon by the parties and a
mutually acceptable fixed or percentage fee; or
.4 as provided in Subparagraph 7.3.6
7.3.4 Upon receipt of a Construction Change Directive, the Contractor shall
promptly proceed with the change in the Work involved and advise the
Construction Manager and Architect of the Contractor's agreement or disagreement
with the method, if any, provided in the Construction Change Directive for
determining the proposed adjustment in the Contract Sum or Contract Time.
7.3.5 A Construction Change Directive signed by the Contractor indicates the
agreement of the Contractor therewith, including adjustment in Contract Sum and
Contract Time or the method for determining them. Such agreement shall be
effective immediately and shall be recorded as a Change Order.
7.3.6 If the Contractor does not respond promptly or disagrees with the
method for adjustment in the Contract Sum, the method and the adjustment shall
be determined by the Construction Manager on the basis of reasonable
expenditures and savings of those performing the Work attributable to the
change, including, in case of an increase in the Contract Sum, a reasonable
allowance for overhead and profit. In such case, and also under Clause 7.3.3.3,
the Contractor shall keep and present, in such form as the Construction manager
may prescribe, an itemized accounting together with appropriate supporting data.
Unless otherwise provided in the Contract Documents, costs for the purposes of
this Subparagraph 7.3.6 shall be limited to the following:
.1 costs of labor, including social security, old age and unemployment
insurance, fringe benefits required by agreement or custom, and workers
compensation insurance;
.2 costs of materials, supplies and equipment, including cost of
transportation, whether incorporated or consumed;
.3 rental costs of machinery and equipment, exclusive of hand tools,
whether rented from the Contractor or others;
.4 costs of premiums for all bonds and insurance, permit fees, and sales,
use or similar taxes related to the Work, and
.5 additional costs of supervision and field office personnel directly
attributable to the change.
INSERT AL: .6 solely in the case of the Garage Work, fees paid to the Garage
Architect, engineers and other professionals.
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AIA DOCUMENT A20/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER - ADVISER EDITION- AIA (R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHING-TON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #26
<PAGE> 75
7.3.7 Pending final determination of cost to the Owner, amounts not in dispute
may be included in Applications for Payment. The amount of credit to be allowed
by the Contractor to the Owner for a deletion or change which results in a net
decrease in the Contract Sum shall be actual net cost as confirmed by the
Construction Manager. When both additions and credits covering related Work or
substitutions are involved in a change, the allowance for overhead and profit
shall be figured on the basis of net increase, if any, with respect to that
change.
7.3.8 If the Owner and Contractor do not agree with the adjustment in Contract
Time or the method of determining it, the adjustment or the method shall be
referred to the Construction Manager for determination.
7.3.9 When the Owner and Contractor agree with the determination made by the
Construction Manager concerning the adjustments in the Contract Sum and
Contract Time, or otherwise reach agreement upon the adjustments, such
agreement shall be effective immediately issued through the Construction
Manager and shall be recorded by preparation and execution of an appropriate
Change Order.
7.4 MINOR CHANGES IN THE WORK
7.4.1
ARTICLE 8
TIME
8.1 DEFINITIONS
8.1.1 Unless otherwise provided, Contract Time is the period of time,
including authorized adjustments, allotted in the Contract Documents for
Substantial Completion of the Work.
8.1.2 The date of commencement of the work is the date established in the
Agreement. The date shall not be postponed by the failure to act of the
Contractor or of persons or entities for whom the Contractor is responsible.
8.1.3 The date of Substantial Completion is the date certified by the Architect
in accordance with Paragraph 9.8.
8.1.4 The term "day" as used in the Contract Documents shall mean calendar day
unless otherwise specifically defined.
8.2 PROGRESS AND COMPLETION
8.2.1 Time limits stated in the Contract Documents are of the essence of the
Contract. By executing this Agreement the Contractor confirms that the Contract
Time is a reasonable period of time for performing the Work and the time period
set forth in Paragraph 4.2 of the Agreement is a reasonable period to achieve
Final Completion.
8.2.2 The Contractor shall not knowingly, except by agreement or instruction of
the Owner in writing, prematurely commence operations on the site or elsewhere
prior to the effective date of insurance required by Article 11 to be furnished
by the Contractor. The date of commencement of the Work shall not be changed by
the effective date of such insurance. Unless the date of commencement is
established by a notice to proceed given by the Owner, the Contractor shall
notify the Owner in writing not less than five days or other agreed period
before commencing the Work to permit the timely filing of mortgages, mechanic's
liens and other security interests.
8.2.3 The Contractor shall proceed expeditiously with adequate forces and shall
achieve Substantial Completion with the Contract Time and shall achieve Final
Completion by the date set forth in Paragraph 4.2 of the Agreement.
8.3 DELAYS AND EXTENSIONS OF TIME
8.3.1 If the Contractor is delayed at any time in progress of the Work by an
act or neglect of the Owner's own forces, Construction manager, Architect, or
of a separate contractor or an employee of any of them, or by changes ordered
in the Work, or by labor disputes, fire, unusual delay in deliveries,
unavoidable casualties or other causes beyond the Contractor's control, or by
delay authorized by the Owner pending litigation, or by other causes which the
Architect, based on the recommendation of the Construction Manager, determines
may justify delay, then the Contract time shall be extended by Change Order for
such reasonable time as the Architect may determine.
8.3.2 Claims relating to time shall be made in accordance with applicable
provisions of Paragraph 4.7.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISOR EDITION - AIA (R) - (C)1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C. 20006-5292
Y Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
ELECTRONIC FORMAT A201/CMa-1992 USER DOCUMENT: FORM -- 12/20/1997.
AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #27
<PAGE> 76
8.3.3 This Paragraph 8.3 does not preclude recovery of damages for delay by
either party under other provisions of the Contract Documents.
ARTICLE 9
PAYMENTS AND COMPLETION
9.1 CONTRACT SUM
9.1.1 The Contract Sum is stated in the Agreement and, including authorized
adjustments, is the total amount payable by the Owner to the Contractor for
performance of the Work under the Contract Documents.
9.2 SCHEDULE OF VALUES
9.2.1 Before the first Application for Payment, the Contractor shall submit
to the Architect, through the Construction Manager, a schedule of values
allocated to various portions of the Work, prepared in such form and supported
by such data to substantiate its accuracy as the Construction Manager and
Architect may require. This schedule, unless objected to by the Construction
Manager or Architect, shall be used as a basis for reviewing the Contractor's
Applications for Payment.
9.3 APPLICATIONS FOR PAYMENT
9.3.1 Five (5) business days prior to the end of each calendar month, the
Contractor shall submit to the Construction Manager, Architect, and Owner an
itemized Application for Payment for Work completed and projected to be
completed by the end of such calendar month in accordance with the schedule of
values. Such application shall be notarized, if required, and supported by such
data substantiating the Contractor's right to payment as the Owner, Construction
Manager or Architect may require, such copies of requisitions from
Subcontractors and material suppliers, and reflecting retainage if provided for
elsewhere in the contract Documents. Such Application for Payment shall be
certified as correct by Contractor and shall be accompanied by waivers of liens
and other documentation from Subcontractors and suppliers as may be reasonably
required by the Owner. In addition, such Application for Payment shall contain a
certification by the Contractor that there are no claims of mechanics' or
materialmen's liens at the date of such Application for Payment, that the
Contractor has no knowledge of any mechanics' or materialmen's liens with
respect to the Work, that all due and payable bills with respect to the Work
have been paid to date, that there is no known basis for the filing of any
mechanics' or materialmen's liens on the Work, and that waivers from all
Subcontractors and suppliers constitute an effective waiver of lien under the
laws of the jurisdiction in which the Project is located to the extent of
payments that have been made or are to be made concurrently with payment
pursuant to such Application for Payment.
9.3.1.1 Such applications may include requests for payment on account of
charges in the Work which have been properly authorized by Construction Change
Directives but not yet included in Change Orders.
9.3.1.2 Such applications may not include requests for payment of amounts the
Contractor does not intend to pay to a Subcontractor or material supplier
because of a dispute or other reason.
9.3.2 Unless otherwise provided in the Contract Documents, payments shall
be made on account of materials and equipment delivered and suitably stored at
the site for subsequent incorporation in the Work. If approved in advance by
the Owner, payment may similarly be made for materials and equipment suitably
stored off the site at a location agreed upon in writing. Payment for materials
and equipment stored on or off the site shall be conditioned upon compliance by
the Contractor with procedures satisfactory to the Owner to establish the
Owner's title to such materials and equipment or otherwise protect the Owner's
interest, and shall include applicable insurance, storage and transportation to
the site for such materials and equipment stored off the site.
9.3.3 The Contractor warrants that title to all Work covered by an
Application for Payment will pass to the Owner no later than the time of
payment. The Contractor further warrants that upon submittal of an Application
for Payment all Work for which Certificates for Payment have been previously
issued and payments received from the Owner shall, to the best of the
Contractor's knowledge, information and belief, be free and clear of liens,
claims security interests or encumbrances in favor of the contractor,
Subcontractors, material suppliers, or other persons or entities making a claim
by reason of having provided labor, materials and equipment relating to the
Work.
9.4 CERTIFICATED FOR PAYMENT
9.4.1 The Construction Manager will after certifying the amounts due on the
Contractor's Application for Payment forward it to the Architect within
three (3) business days after such certification and after receipt of such
additional or supplemental lien releases as may be reasonably requested by
Contractor.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER - ADVISER EDITION - AIA (R) - (C)1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violated U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reduced without violation until the date of
expiration as noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- Page #28
<PAGE> 77
9.4.2 Within three (3) business days after the Architect's receipt of the
Contractor's Application for Payment, the Construction Manager and Architect
will either issue to the Owner a Certificate for Payment, with a copy to the
Contractor, for such amount as the Construction Manager and Architect determine
is properly due, or notify the Contractor and Owner in writing of the
Construction Manager's and Architect's reason for withholding certification in
whole or in part as provided in Subparagraph 9.5.1. Such notification will be
forwarded to the Contractor by the Construction Manager.
9.4.3 The issuance of a Certificate for Payment will constitute
representations made separately by the Construction Manager and Architect to the
Owner, based on their individual observations at the site and the data
comprising the Application for Payment submitted by the Contractor, that the
Work has progressed to the point indicated and that, to the best of the
Construction Manager's and Architect's knowledge, information and belief,
quality of the Work is in accordance with the Contract Documents. The foregoing
representations are subject to an evaluation of the Work for conformance with
the Contract Documents upon Substantial Completion, to results of subsequent
tests and inspections, to minor deviations from the Contract Documents
correctable prior to completion and to specific qualifications expressed by the
Construction Manager or Architect. The issuance of a Certificate for Payment
will further constitute a representation that the Contractor is entitled to
payment in the amount certified. However, the issuance of a Certificate for
Payment will not be a representation that the Construction Manager or Architect
has (1) made exhaustive or continuous on-site inspections to check the quality
or quantity of the Work, (2) reviewed the Contractor's construction means,
methods, techniques, sequences or procedures, (3) reviewed copies of
requisitions received from Subcontractors and material suppliers and other data
requested by the Owner to substantiate the Contractor's right to payment or (4)
made examination to ascertain how or for what purpose the Contractor has used
money previously paid on account of the Contract Sum.
9.5 DECISIONS TO WITHHOLD CERTIFICATION
9.5.1 The Construction Manager or Architect may decide not to certify
payment and may withhold a Certificate for Payment in whole or in part, to the
extent reasonably necessary to protect the Owner, if in the Construction
Manager's or Architect's opinion the representations to the Owner required by
Subparagraph 9.4.3 cannot be made. If the Construction Manager or Architect is
unable to certify payment in the amount of the Application, the Construction
Manager or Architect will notify the Contractor and Owner as provided in
Subparagraph 9.4.2. If the Contractor, Construction Manager and Architect cannot
agree on a revised amount, the Construction Manager and Architect will promptly
issue a Certificate for Payment for the amount for which the Construction
Manager and Architect are able to make such representations to the Owner. The
Construction Manager or Architect may also decide not to certify payment or,
because of subsequently discovered evidence or subsequent observations, may
nullify the whole or a part of a Certificate for payment previously issued, to
such extent as may be necessary in the Construction Manager's or Architect's
opinion to protect the Owner from loss because of:
.1 defective Work not remedied;
.2 third party claims filed or reasonable evidence indicating
probably filing of such claims;
.3 failure of the Contractor to make payments properly to
Subcontractors or for labor, materials or equipment;
.4 reasonable evidence that the Work cannot be completed for
the unpaid balance of the Contract Sum;
.5 damage to the Owner or another contractor;
.6 reasonable evidence that the Work will not be completed
within the Contract Time, and that the unpaid balance would
not be adequate to cover actual or liquidated damages for
the anticipated delay; or
.7 material failure to carry out the Work in accordance with the Contract
Documents.
9.5.2 When the above reasons for withholding certification are removed,
certification will be made for amounts previously withheld.
9.6 PROGRESS PAYMENTS
9.6.1 The Construction Manager's and Architect's Certificate for Payment shall
be processed and forwarded to the Owner within three (3)
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM - 12/20/1997. AIA License Number 105525, which expires on
6/30/1998 --Page #29
<PAGE> 78
business days after the Architect's receipt of the Contractor's Application for
Payment. Within three (3) business days after receipt of the Construction
Manager's and Architect's Certificate for Payment, the Owner shall, after its
approval of the Certificate for Payment, make payment to the Contractor of the
amount specified in the Certificate for Payment (which shall provide for all
applicable retentions). Such payment by the Owner shall not constitute approval
or acceptance of any item of cost in the Application for Payment. No partial
payment made hereunder shall be, or be construed to be, final acceptance or
approval of that portion of the Work to which such partial payment relates or
relieve the Contractor of any of its obligations hereunder with respect
thereto.
9.6.2 The Contractor shall promptly, and in no event later than three (3)
business days after receipt of payment from the Owner, pay each Subcontractor,
upon receipt of payment from the Owner, out of the amount paid to the Contractor
on account of such Subcontractor's portion of the Work, the amount to which said
Subcontractor is entitled, reflecting percentages actually retained from
payments to the Contractor on account of such Subcontractor's portion of the
Work. The Contractor shall, by appropriate agreement with each Subcontractor,
require each Subcontractor to make payments to Sub-Contractors in similar
manner.
9.6.3 The Construction Manager will, on request, furnish to a Subcontractor, if
practicable, information regarding percentages of completion or amounts applied
for by the Contractor and action taken thereon by the Owner, Construction
Manager and Architect on account of portions of the Work done by such
Subcontractor.
9.6.4 Neither the Owner, Construction Manager nor Architect shall have an
obligation to pay or to see to the payment of money to a Subcontractor except
as may otherwise be required by law.
9.6.5 Payment to the Garage Architect and material suppliers shall be treated
in a manner similar to that provided in Subparagraphs 9.6.2, 9.6.3 and 9.6.4.
9.6.6 A Certificate for Payment, a progress payment, or partial or entire use
or occupancy of the Project by the Owner shall not constitute acceptance of
Work not in accordance with the Contract Documents.
9.7 FAILURE OF PAYMENT
9.7.1 If, through no fault of the Contractor, 1) the Construction Manager and
Architect do not issue a Certificate for Payment within eleven (11) business
days after the Construction Manager's receipt of the Contractor's Application
for Payment or 2) the Owner does not pay the Contractor within five(5) business
days after the date established in the Contract Documents the amount certified
by the Construction Manager and Architect or awarded by arbitration or
litigation, then the Contractor may, upon seven additional days' written notice
to the Owner, Construction Manager and Architect, stop the Work until payment
of the amount owing has been received. The Contract Time shall be extended
appropriately and the Contract Sum shall be increased by the amount of the
Contractor's reasonable costs of shut-down, delay and start-up, which shall be
accomplished as provided in Article 7.
9.8 SUBSTANTIAL COMPLETION
9.8.1 Substantial Completion is the stage in the progress of the Work when the
Work or designated portion thereof is sufficiently complete in accordance with
the Contract Documents so the Owner can occupy or utilize the Work for its
intended use.
9.8.2 When the Contractor considers that the Work, or a portion thereof which
the Owner agrees to accept separately, is substantially complete, the
Contractor and Construction Manager shall jointly prepare and submit to the
Architect a comprehensive list of items to be completed or corrected. The
Contractor shall proceed promptly to complete and correct items on the list.
Failure to include an item on such list does not alter the responsibility of
the Contractor to complete all Work in accordance with the Contract Documents.
Upon receipt of the list, the Architect, assisted by the Construction Manager,
will make an inspection to determine whether the Work or designated portion
thereof is substantially complete. If the Architect's inspection discloses any
item, whether or not included on the list, which is not in accordance with the
requirements of the Contract Documents, the Contractor shall, before issuance
of the Certificate of Substantial Completion, complete or correct such item upon
notification by the Architect. The Contractor shall then submit a request for
another inspection by the Architect, assisted by the Construction Manager, to
determine Substantial Completion. When the Work or designated portion thereof
is substantially complete, the Architect will prepare a Certificate of
Substantial Completion which shall establish the date of Substantial
Completion, shall establish responsibilities of the Owner and Contractor for
security, maintenance, heat, utilities, damage to the Work and insurance, and
shall fix the time within which the Contractor shall finish all items on the
list accompanying the Certificate. Warranties required by the Contract
Documents shall commence on the date of Substantial Completion of the Work or
designated portion thereof unless otherwise provided in the Certificate of
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525, which expires
on 6/30/1998 -- Page #30
<PAGE> 79
Substantial Completion. The Certificate of Substantial
Completion shall be submitted to the Owner and Contractor
for their written acceptance of responsibilities assigned to
them in such Certificate.
9.8.3 Upon Substantial Completion of the Work or
designated portion thereof and upon application by the
Contractor and certification by the Construction Manager
and Archtect, the Owner shall make payment, reflecting
adjustment in retainage, if any, for such Work or portion
thereof as provided in the Contract Documents with the
consent of the surety. The payment shall be sufficient to
increase the total payments to ninety-five percent (95%) of
the Contract Sum, less such amounts as the Architect and
Construction Manager shall determine for incommplete Work
and unsettled claims.
9.9 PARTIAL OCCUPANCY OR USE
9.9.1 The Owner may occupy or use any completed or
partially completed portion of the Work at any stage when
such portion is designated by separate agreement with the
Contractor, provided such occupancy or use is consented to
by the insurer as required under Subparagraph 11.3.11 and
authorized by public authorities having jurisdiction over the
Work. Such partial occupancy or use may commence
whether or not the portion is substantially complete, provided
the Owner and Contractor have accepted in writing the
responsibilities assigned to each of them for payments,
retainage if any, security, maintenance, heat, utilities,
damage to the Work and insurance, and have agreed in
writing concerning the period for correction of the Work and
commencement of warranties required by the Contract
Documents. When the Contractor considers a portion
substantially complete, the Contractor and Construction
Manager shall jointly prepare and submit a list to the
Architect as provided under Subparagraph 9.8.2. Consent of
the Contractor to partial occupancy or use shall not be
unreasonably withheld. The stage of the progress of the
Work shall be determined by written agreement between the
Owner and Contractor or, if no agreement is reached, by
decision of the Architect after consultation with the
Construction Manager.
9.9.2 Immediately prior to such partial occupancy or use,
the Owner, Construction Manager, Contractor and Architect
shall jointly inspect the area to be occupied or portion of the
Work to be used in order to determine and record the
condition of the Work.
9.9.3 Unless otherwise agreed upon, partial occupancy or
use of a portion or portions of the Work shall not constitute
acceptance of Work not complying with the requirements of
the Contract Documents.
9.10 FINAL COMPLETION AND FINAL PAYMENT
9.10.1 Upon completion of the Work, the Contractor shall
forward to the Construction a Manager a written notice that
the Work is ready for final inspection and acceptance and
shall also forward to the Construction Manager a final
Contractor's Application for Payment. Upon receipt, the
Construction Manager will forward the notice and
Application to the Architect who will promptly make such
inspection. When the Architect, based on the
recommendation of the Construction Manager, finds the
Work acceptable under the Contract Documents and the
Contract fully performed, the Construction Manager and
Architect will promptly issue a final Certificate for Payment
stating that to the best of their knowledge, information and
belief, and on the basis of their observations and inspections,
the Work has been completed in accordance with terms and
conditions of the Contract Documents and that the entire
balance found to be due the Contractor and noted in said
final Certificate is due and payable. The Construction
Manager's and Architect's final Certificate for Payment will
constitute a further representation that conditions listed in
Subparagraph 9.10.2 as precedent to the Contractor's being
entitled to final payment have been fulfilled.
9.10.2 Neither final payment nor any remaining retained
percentage shall become due until the Contractor submits to
the Architect through the Construction Manager (1) an
affidavit that payrolls, bills for materials and equipment, and
other indebtedness connected with the Work for which the
Owner or the Owner's property might be responsible or
encumbered (less amounts withheld by Owner) have been
paid or other wise satisfied, (2) a certificate evidencing that
insurance required by the Contract Documents to remain in
force after final payment is currently in effect and will not be
canceled or allowed to expire until at least 30 days' prior
written notice has been given to the Owner, (3) a written
statement that the Contractor knows of no substantial reason
that the insurance will not be renewable to cover the period
required by the Contract Documents, (4) consent of surety, if
any, to final payment and (5), if required by the Owner, other
data establishing payment or satisfaction of obligations, such
as receipts, releases and waivers of liens, claims, security
interests or encumbrances arising out of the Contract, to the
extent and in such form as may be designated by the Owner.
If a Subcontractor refused to furnish a release or waiver
required by the Owner, the Contractor may furnish a bond
satisfactory to the Owner to indemnify the Owner against
such lien or claim. If such lien remains unsatisfied after
payments are made, the Contractor shall refund to the Owner
all money that the Owner may be compelled to pay in
discharging such lien, including all costs and reasonable
attorneys' fees.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHING-TON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This Document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below. Electronic Format A201/CMa-1992
User Document: FORM -12/20/1997.AIA License Number 105525, which expires on
6/30/1998 -- Page #31
<PAGE> 80
9.10.3 If, after Substantial Completion of the Work, final completion thereof
is materially delayed through no fault of the Contractor or by issuance of
Change Orders affecting final completion, and the Construction Manager and
Architect so confirm, the Owner shall, upon application by the Contractor and
certification by the Construction Manager and Architect, and without
terminating the Contract, make payment of the balance due for that portion of
the Work fully completed and accepted. If the remaining balance for Work not
fully completed or corrected is less than retainage stipulated in the Contract
Documents, and if bonds have been furnished, the written consent of surety to
payment of the balance due for that portion of the Work fully completed and
accepted shall be submitted by the Contractor to the Architect through the
Construction Manager prior to certification of such payment. Such payment
shall be made under terms and conditions governing final payment, except that
it shall not constitute a waiver of Claims. The making of final payment shall
constitute a waiver of Claims by the Owner as provided in Subparagraph 4.4.5.
9.10.4 Acceptance of final payment by the Contractor, a Subcontractor or
material supplier shall constitute a waiver of claims by that payee except
those previously made in writing and identified by that payee as unsettled at
the time of final Application for Payment. Such waivers shall be in addition
to the waiver described in Subparagraph 4.7.5.
Insert AM: 9.11 LIQUIDATED DAMAGES
Insert AN: The Contractor shall be liable for and shall pay the Owner the sums
stipulated as liquidated damages for each calendar day of delay until the Work
is Substantially Completed, all in accordance with and as set forth in
Paragraph 4.3 of the Agreement. Contractor and Owner have independently
determined that the damages to be suffered by Owner in the event of such delay
are uncertain and would be extremely difficult to determine and impractical to
ascertain, but that the sums set forth in Paragraph 4.3 of the Agreement are a
reasonable estimate of a fair liquidated compensation.
ARTICLE 10
PROTECTION OF PERSONS AND PROPERTY
10.1 SAFETY PRECAUTIONS AND PROGRAMS
10.1.1 See Supplementary Conditions.
10.1.2 In the event the Contractor encounters on the site material reasonably
believed to be asbestos or polychlorinated biphenyl (PCB) which has not been
rendered harmless, the Contractor shall immediately stop Work in the area
affected and report the condition to the Owner, Construction Manager and
Architect in writing. The Work in the affected area shall not thereafter be
resumed except by written agreement of the Owner and Contractor if in fact the
material is asbestos or polychlorinated biphenyl (PCB) and has not been
rendered harmless. The Work in the affected area shall be resumed in the
absence of asbestos or polychlorinated biphenyl (PCB), or when it has been
rendered harmless, by written agreement of the Owner and Contractor, or in
accordance with final determination by the Architect on litigation has not been
commenced.
10.1.3 The Contractor shall not be required pursuant to Article 7 to perform
without consent any Work relating to asbestos or polychlorinated biphenyl (PCB).
10.1.4 To the fullest extent permitted by law, the Owner shall indemnify and
hold harmless the Contractor, Construction Manager, Architect, their
consultants, and agents and employees of any of them from and against claims,
damages, losses and expenses, including but not limited to attorneys' fees,
arising out of or resulting from performance of the Work in the affected area
if in fact the material is asbestos or polychlorinated biphenyl (PCB) and has
not been rendered harmless, provided that such claim, damage, loss or expense
is attributable to bodily injury, sickness, disease or death, or to injury to
or destruction of tangible property (other than the Work itself) including loss
of use resulting therefrom, but only to the extent caused in whole or in part
by negligent acts or omissions of the Owner, anyone directly or indirectly
employed by the Owner or anyone for whose acts the Owner may be liable,
regardless of whether or not such claim, damage, loss or expense is caused in
part by a party indemnified hereunder. Such obligation shall not be construed
to negate, abridge or reduce other rights or obligations of indemnity which
would otherwise exist as to a party or person described in this Subparagraph
10.1.4.
10.1.5 If reasonable precautions will be inadequate to prevent foreseeable
bodily injury or death to persons resulting from a material or substance
encountered on the site by the Contractor, the Contractor shall, upon
recognizing the condition, immediately stop Work in the affected area and
report the condition to the Owner, Construction Manager and Architect in
writing. The Owner, Contractor,
________________________________________________________________________________
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document:FORM - 12/20/1997.AIA License Number 105525, which expires on
6/30/1998 - Page #32
<PAGE> 81
Construction Manager and Architect shall then proceed in the same manner
described in Subparagraph 10.1.2.
10.1.6 The Owner shall be responsible for obtaining the services of a licensed
laboratory to verify a presence or absence of the material or substance
reported by the Contractor and, in the event such material or substance is
found to be present, to verify that it has been rendered harmless. Unless
otherwise required by the Contract Documents, the Owner shall furnish in
writing to the Contractor, Construction Manager and Architect the names and
qualifications of persons or entities who are to perform tests verifying the
presence or absence of such material or substance or who are to perform the
task of removal or safe containment of such material or substance. The
Contractor, the Construction Manager and the Architect will promptly reply to
the Owner in writing stating whether or not any of them has reasonable
objection to the persons or entities proposed by the Owner. If the Contractor,
Construction Manager or Architect has an objection to a person or entity
proposed by the Owner, the Owner shall propose another to whom the Contractor,
the Construction Manager and the Architect have no reasonable objection.
10.2 SAFETY OF PERSONS AND PROPERTY
10.2.1 See Supplementary Conditions.
.1
.2
.3
.4
10.2.2
10.2.3
10.2.4
10.2.5
10.2.6
10.2.7
10.3 EMERGENCIES
10.3.1
ARTICLE 11
INSURANCE AND BONDS
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AIA DOCUMENT A201/CMa GENERAL CONDITIONS OF THE CONTRACT FOR
CONSTRUCTION-CONSTRUCTION MANAGER-ADVISER EDITION AIA (R). (C)1992 THE
AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W. WASHINGTON D.C.
20006-5292 Y WARNING; Unlicensed photocoping violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A201/CMa-1992
User Document: FORM--12/20/1997. AIA License
Number 105525, which expires on 6/30/1998--Page #33
<PAGE> 82
11.1 CONTRACTOR'S LIABILITY INSURANCE
11.1.1 See Supplementary Conditions.
.1
.2
.3
.4
.5
.6
.7
11.1.2
11.1.3
11.2 OWNER'S LIABILITY INSURANCE
11.2.1
11.3 PROPERTY INSURANCE
11.3.1
11.3.1.1
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER - ADVISER EDITION - AIA (R) - (C)1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE,N.W., WASHINGTON, D.C., 20006-5292
Y WARNING; Unlicensed photocopying violates U.S. copyright laws and is
subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date
of expiration ass noted below.
Electronic Format A201/CMa-1992
User Document: FORM - 12/20/1997. AIA License Number 105525,
which expires on 6/30/1998 -- Page #34
<PAGE> 83
11.3.1.2
11.3.1.3
11.3.1.4
11.3.1.5
11.3.2 BOILER AND MACHINERY INSURANCE.
11.3.3 LOSS OF USE INSURANCE.
11.3.4
11.3.5
11.3.6
11.3.7 WAIVERS OF SUBROGATION.
______________________________________________________________________
AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
- - CONSTRUCTION MANAGER-ADVISOR EDITION - AIA (R)-(C)1992 THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292 Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
User Document: FORM -- 12/20/1997. AIA License Number 105525,
which expires on 6/30/1998 -- Page #35
<PAGE> 84
11.3.8
11.3.9
11.3.10
11.3.11
11.4 PERFORMANCE BOND AND PAYMENT BOND
11.4.1 Except as may be otherwise agreed to in writing between Owner and
Contractor, Contractor shall prior to the Commencement of the Work provide
to Owner bonds covering the faithful performance of, and payment for, all the
Work consisting of labor, parts, or materials for that portion of the Work
consisting of (1) Electrical; (2) Mechanical; (3) Plumbing; (4) Steel; (5)
Concrete, (6) any other portion of the Work in excess of $100,000 provided by a
subcontractor; and (7) as otherwise agreed to by the Contractor and Owner, all
such bonds to be in amounts, form and substance approved by Owner in writing
and issued by companies fully licensed to do business in Nevada and approved by
Owner in writing.
11.4.2 Upon the request of any person or entity appearing to be a potential
beneficiary of bonds covering payment of obligations arising under the
Contract, the Contractor shall promptly furnish a copy of the bonds or shall
permit a copy to be made.
ARTICLE 12
UNCOVERING AND CORRECTION OF WORK
12.1 UNCOVERING OF WORK
12.1.1 If a portion of the Work is covered contrary to the Construction
Manager's or Architect's request or to requirements specifically expressed in
the Contract Documents, it must, if required in writing by either, be uncovered
for their observation and be replaced at the Contractor's expense without
change in the Contract Time or change in the date set for final completion set
forth in Paragraph 4.2 of the Agreement.
12.1.2 If a portion of the Work has been covered which the Construction Manager
or Architect has not specifically requested to observe prior to its being
covered, the Construction Manager or Architect may request to see such Work and
it shall be uncovered by the Contractor. If such Work is in accordance with the
Contract Documents, costs of uncovering and replacement shall, by appropriate
Change Order, be charged to the Owner. If such Work is not in accordance with
the Contract Documents, the Contractor shall pay such costs unless the condition
was caused by the
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISOR EDITION - AIA (R)(C)1992 - THE AMERICAN INSTITUTE
OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C. 20006-5292. Y
WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution. This document was electronically produced with permission of
the AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201/CMa-1992
USER DOCUMENT: FORM --12/20/1997.AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- Page #36
<PAGE> 85
Owner or a separate contractor in which event the Owner shall be responsible
for payment of such costs.
12.2 CORRECTION OF WORK
12.2.1 The Contractor shall promptly correct Work rejected by the
Construction Manager or Architect or failing to conform to the requirements of
the Contract Documents, whether observed before or after Substantial Completion
and whether or not fabricated, installed or completed. The Contractor shall
bear costs of correcting such rejected Work, including additional testing and
inspections and compensation for the Construction Manager's, Architect's and
Garage Architect's services and expenses made necessary thereby.
12.2.2 If, within one year after the date of Substantial Completion of the
Work, or after the date for commencement of warranties established under
Subparagraph 9.9.1, or by terms of an applicable special warranty required by
the Contract Documents, any of the Work is found to be not in accordance with
the requirements of the Contract Documents, the Contractor shall correct it
promptly after receipt of written notice from the Owner to do so unless the
Owner has previously given the Contractor a written acceptance of such
condition. This period of one year shall be extended with respect to portions
of Work first performed after Substantial Completion by the period of time
between Substantial Completion and the actual performance of the Work. This
obligation under this Subparagraph 12.2.2 shall survive acceptance of the Work
under the Contract and termination of the Contract. The Owner shall give such
notice promptly after discovery of the condition.
12.2.3 The Contractor shall remove from the site portions of the Work which
are not in accordance with the requirements of the Contract Documents and are
neither corrected by the Contractor nor accepted by the Owner.
12.2.4 If the Contractor fails to correct nonconforming Work within a
reasonable time, the Owner may correct it in accordance with Paragraph 2.4. If
the Contractor does not proceed with correction of such nonconforming Work
within a reasonable time fixed by written notice from the Architect issued
through the Construction Manager, the Owner may remove it and store the
salvable materials or equipment at the Contractor's expense. If the Contractor
does not pay costs of such removal and storage within ten days after written
notice, the Owner may upon ten additional days' written notice sell such
materials and equipment at auction or at private sale and shall account for the
proceeds thereof, after deducting costs and damages that should have been borne
by the Contractor, including compensation for the Construction Manager's,
Architect's and Garage Architect's services and expenses made necessary
thereby. If such proceeds of sale do not cover costs which the Contractor
should have borne, the Contract Sum shall be reduced by the deficiency. If
payments then or thereafter due the Contractor are not sufficient to cover such
amount, the Contractor shall pay the difference to the Owner.
12.2.5 The Contractor shall bear the cost of correcting destroyed or damaged
construction, whether completed or partially completed, of the Owner or other
Contractors caused by the Contractor's correction or removal of Work which is
not in accordance with the requirements of the Contract Documents.
12.2.6 Nothing contained in this Paragraph 12.2 shall be construed to
establish a period of limitation with respect to any obligations which the
Contractor might have under the Contract Documents including, without
limitation, obligations under this Paragraph 12.2. Establishment of the time
period of one year (or longer, if otherwise specified in the Contract
Documents) as described in Subparagraph 12.2.2 relates only to the specific
obligation of the Contractor to correct the Work, and has no relationship to
the time within which the obligation to comply with the Contract Documents may
be sought to be enforced, nor to the time within which proceedings may be
commenced to establish the Contractor's liability with respect to the
Contractor's breach of its obligations.
12.3 ACCEPTANCE OF NONCONFORMING WORK
12.3.1 If the Owner prefers to accept Work which is not in accordance with
the requirements of the Contract Documents, the Owner may do so instead of
requiring its removal and correction, in which case the Contract Sum will be
reduced as appropriate and equitable. Such adjustment shall be effected whether
or not final payment has been made.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 GOVERNING LAW
13.1.1 The Contract shall be governed by the law of the place where the
Project is located.
13.2 SUCCESSORS AND ASSIGNS
13.2.1 The Owner and Contractor respectively bind
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #37
<PAGE> 86
themselves, their partners, successors, assigns and legal representatives to
the other party hereto and to partners, successors, assigns and legal
representatives of such other party in respect to covenants, agreements and
obligations contained in the Contract Documents. Except as hereinafter
provided, neither party to the Contract shall assign the Contract as a whole
without written consent of the other. Provided lenders agree to pay Contractor
for all sums due and owing, notwithstanding anything to the contrary in this
Agreement, the Owner shall have the right to assign the Contract to a lender
for the purpose of obtaining financing for the construction and/or completion
of the Project and the Contractor agrees to (i) acknowledge and consent in
writing to such assignment, and (ii) acknowledge in writing, where the same is
true, that the Owner is not in breach of the Contract. The Contractor shall,
upon Owner's request, execute any instruments required by any lender to confirm
the foregoing consent and acknowledgement. If either party attempts to make
such an assignment without such consent, that party shall nevertheless remain
legally responsible for all obligations under the Contract.
13.3 WRITTEN NOTICE
13.3.1 Written notice shall be deemed to have been duly served if delivered
in person to the individual or a member of the firm or entity or to an officer
of the corporation for which it was intended, or if delivered at or sent by
registered or certified mail to the last business address known to the party
giving notice.
13.4 RIGHTS AND REMEDIES
13.4.1 Duties and obligations imposed by the Contract Documents and rights
and remedies available thereunder shall be in addition to and not a limitation
of duties, obligations, rights and remedies otherwise imposed or available by
law.
13.4.2 No action or failure to act by the Owner, Construction Manager,
Architect or Contractor shall constitute a waiver of a right or duty afforded
them under the Contract, nor shall such action or failure to act constitute
approval of or acquiescence in a breach thereunder, except as may be
specifically agreed in writing.
13.5 TESTS AND INSPECTIONS
13.5.1 Tests, inspections and approvals of portions of the Work required by
the Contract Documents (including without limitation, the following sections of
the Project Manual and Addenda thereto: Sections 01400, 02200, 02220, 02480,
02511, 02520, 02523, 02665, 02700, 02810, 03100, 03200, 03300, 03386, 03411,
03455, 03522, 04810, 05120, 05210, 05510, 05520, 05810, 06410, 07130, 07185,
07240, 07260, 07320, 07530, 07620, 07815, 07840, 08336, 08410, 08520, 08630,
08800, 08910, 09310, 09330, 09340, 09638, 09720, 09900, 10210, 11400, 14201,
14240, 14245, 14310, 14420, 15010, 15050, 15055, 15173, 15300, 15301, 15411,
15420, 15440, 15486, 15500, 15510, 15545, 15555, 15680, 15710, 15935, 15970,
15980, 15990, 15995, 16113, 16120, 16121, 16321, 16350, 16361, 16390, 16425,
16430, 16450, 16461, 16470, 16577, 16611, 16614, 16622, 16670, 16721, 16950) or
by laws, ordinances, rules, regulations or orders of public authorities having
jurisdiction shall be made at an appropriate time. Unless otherwise provided in
the Contract Documents, the Contractor shall make arrangements for such tests,
inspections and approvals with an independent testing laboratory or entity
acceptable to the Owner, or with the appropriate public authority, and shall
bear all related costs of tests, inspections and approvals. The Contractor
shall give the Construction Manager and Architect timely notice of when and
where tests and inspections are to be made so the Construction Manager and
Architect may observe such procedures. The Owner shall bear costs of tests,
inspections or approvals which do not become requirements until after bids are
received or negotiations concluded.
13.5.2 If the Construction Manager, Architect, Owner or public authorities
having jurisdiction determine that portions of the Work require additional
testing, inspection or approval not included under Subparagraph 13.5.1, the
Construction Manager and Architect will, upon written authorization from the
Owner, instruct the Contractor to make arrangements for such additional
testing, inspection or approval by an entity acceptable to the Owner, and the
Contractor shall give timely notice to the Construction Manager and Architect
of when and where tests and inspections are to be made so the Construction
Manager and Architect may observe such procedures. The Owner shall bear such
costs except as provided in Subparagraph 13.5.3.
13.5.3 If such procedures for testing, inspection or approval under
Subparagraphs 13.5.1 and 13.5.2 reveal failure of the portions of the Work to
comply with requirements established by the Contract Documents, the Contractor
shall bear all costs made necessary by such failure including those of repeated
procedures and compensation for the Construction Manager's and Architect's
services and expenses.
13.5.4 Required certificates of testing, inspection or approval shall,
unless otherwise required by the Contract Documents, be secured by the
Contractor and promptly delivered to the Construction Manager for transmittal
to the Architect.
13.5.5 If the construction Manager or Architect is to
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER - ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws
and is subject to legal prosecution. This document was electronically produced
with permission of the AIA and can be reproduced without violation until the
date of expiration as note below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- Page #38
<PAGE> 87
observe tests, inspections or approvals required by the Contract Documents, the
Construction Manager or Architect will do so promptly and, where practicable,
at the normal place of testing.
13.5.6 Tests or inspections conducted pursuant to the Contract Documents
shall be made promptly to avoid unreasonable delay in the Work.
13.6 INTEREST
13.6.1 Payments due and unpaid under the Contract Documents shall bear
interest from the date payment is due at such rate as the parties may agree
upon in writing or, in the absence thereof, at the legal rate prevailing from
time to time at the place where the Project is located.
13.7 COMMENCEMENT OF STATUTORY LIMITATION PERIOD
13.7.1 As between the Owner and Contractor:
.1 BEFORE SUBSTANTIAL COMPLETION. As to acts or failures to act
occurring prior to the relevant date of Substantial Completion, any
applicable statute of limitations shall commence to run and any
alleged cause of action shall be deemed to have accrued in any and
all events not later than such date of Substantial Completion;
.2 BETWEEN SUBSTANTIAL COMPLETION AND FINAL CERTIFICATE FOR PAYMENT. As
to acts or failures to act occurring subsequent to the relevant date
of Substantial Completion and prior to issuance of the final
Certificate for Payment, any applicable statute of limitations shall
commence to run and any alleged cause of action shall be deemed to
have accrued in any and all events not later than the date of
issuance of the final Certificate for Payment; and
.3 AFTER FINAL CERTIFICATE FOR PAYMENT. As to acts or failures to act
occurring after the relevant date of issuance of the final Certificate
for Payment, any applicable statute of limitations shall commence to
run and any alleged cause of action shall be deemed to have accrued in
any and all events not later than the date of any act or failure to
act by the Contractor pursuant to any warranty provided under
Paragraph 3.5, the date of any correction of the Work or failure to
correct the Work by the Contractor under Paragraph 12.2, or the date
of actual commission of any other act or failure to perform any duty
or obligation by the Contractor or Owner, whichever occurs last.
Insert AO: 13.8 EQUAL OPPORTUNITY
Insert AP: 13.8.1 The Contractor shall maintain policies of employment as
follows:
Insert AQ: 13.8.1.1 The Contractor and the Contractor's Subcontractors shall
not discriminate against an employee or applicant for employment because of
race, religion, color, sex or national origin. The Contractor shall take
affirmative action to insure that applicants are employed, and that employees
are treated during employment, without regard to their race, religion, color,
sex or national origin. Such action shall include, but not be limited to the
following: employment, upgrading, demotion or transfer; recruitment or
recruitment advertising; layoff or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship. The
Contractor agrees to post in conspicuous places, available to employees and
applicants for employment, notices setting forth the policies of
nondiscrimination.
insert AR: 13.8.1.2 The Contractor and the Contractor's Subcontractors shall,
in all solicitations or advertisements for employees placed by them, or on their
behalf, state that all qualified applicants will receive consideration for
employment without regard to race, religion, color, sex or national origin.
Insert AS: 13.9 TERMINATION OF PROFESSIONAL DESIGN SERVICES
Insert AT: 13.9.1 Prior to termination of the services of the Garage
Architect, the Contractor shall identify to the Owner in writing another
architect with respect to whom the Owner has no reasonable objections, who will
provide the services originally to have been provided by the Garage Architect.
Insert AU: 13.10 IMMIGRATION REFORM CONTROL ACT
Insert AV: 13.10.1 All Contractors, Subcontractors and Sub-subcontractors must
adhere to the Immigration Reform Control Act of 1986 and shall maintain I-9
forms regarding all employees. It is not the Owner's obligation to insure
compliance with this law, however, the Owner reserves the right to inspect and
copy the Contractor's records in this regard upon request.
ARTICLE 14
TERMINATION OR SUSPENSION
OF THE CONTRACT
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISOR EDITION - AIA (R) - (C)1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292
Y WARNING; Unlicensed photocopying violates U.S. copyright laws and is subject
to legal prosecution. This document was electronically produced with permission
of the AIA and can be reproduced without violation until the date of expiration
as noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES
ON 6/30/1998 -- PAGE #39
<PAGE> 88
14.1 TERMINATION BY THE CONTRACTOR
14.1.1 The Contract may terminate the Contract if the Work is stopped for a
period of 30 days through no act or fault of the Contractor or a Subcontractor,
Sub-subcontractor or their agents or employees or any other persons performing
portions of the Work under contract with the Contractor, for any of the
following reasons:
.1 issuance of an order of a court or other public authority having
jurisdiction;
.2 an act of government, such as a declaration of national emergency,
making material unavailable;
.3 because the Construction Manager or Architect has not issued a
Certificate for Payment and has not notified the Contractor of the
reason for withholding certification as provided in Subparagraph
9.4.2, or because the Owner has not made payment on a Certificate
for Payment within the time stated in the Contract Documents;
.4 if repeated suspensions, delays or interruptions by the Owner as
described in Paragraph 14.3 constitute in the aggregate more than
100 percent of the total number of days scheduled for completion, or
120 days in any 365-day period, whichever is less; or
.5 the Owner has failed to furnish to the Contractor promptly, upon the
Contractor's request, reasonable evidence as required by Subparagraph
2.2.1.
14.1.2 If one of the above reasons exists, the Contractor may, upon seven
additional days' written notice to the Owner, Construction Manager and
Architect, terminate the Contract and recover from the Owner payment for Work
executed and for proven loss with respect to materials, equipment, tools, and
construction equipment and machinery, including reasonable overhead, profit and
damages.
14.1.3 If the Work is stopped for a period of 60 days through no act or
fault of the Contractor or a Subcontractor or their agents or employees or any
other persons performing portions of the Work under contract with the
Contractor because the Owner has persistently failed to fulfill the Owner's
obligations under the Contract Documents with respect to matters important to
the progress of the Work, the Contractor may, upon seven additional days'
written notice to the Owner, Construction Manager and Architect, terminate the
Contract and recover from the Owner as provided in Subparagraph 14.1.2.
14.2 TERMINATION BY THE OWNER FOR CAUSE
14.2.1 The Owner may terminate the Contract if the Contractor:
.1 persistently or repeatedly refuses or fails to supply enough properly
skilled workers or proper materials;
.2 fails to make payment to Subcontractors for materials or labor in
accordance with the respective agreements between the Contractor and
the Subcontractors;
.3 persistently disregards laws, ordinances, or rules, regulations or
orders of a public authority having jurisdiction; or
.4 otherwise is guilty of substantial breach of a provision of the
Contract Documents.
14.2.2 When any of the above reasons exist, the Owner; may without prejudice
to any other rights or remedies of the Owner and after giving the Contractor
and the Contractor's surety, if any, seven days' written notice, terminate
employment of the Contractor and may, subject to any prior rights of the surety:
.1 take possession of the site and of all materials, equipment, tools,
and construction equipment and machinery thereon owned by the
Contractor;
.2 accept assignment of subcontracts pursuant to Paragraph 5.4; and
.3 finish the Work by whatever reasonable method the Owner may deem
expedient.
14.2.3 When the Owner terminates the Contract for one of the reasons stated
in Subparagraph 14.2.1, the Contractor shall not be entitled to receive further
payment until the Work is finished.
14.2.4
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #40
<PAGE> 89
14.3 SUSPENSION BY THE OWNER FOR CONVENIENCE
14.3.1 The Owner may, without cause, order the Contractor in writing to
suspend, delay or interrupt the Work in whole or in part for such period of
time as the Owner may determine.
14.3.2 An adjustment shall be made for increases in the cost of performance
of the Contract, including profit on the increased cost of performance, caused
by suspension, delay or interruption. No adjustment shall be made to the extent:
.1 that performance is, was or would have been so suspended, delayed or
interrupted by another cause for which the Contractor is responsible;
or
.2 that an equitable adjustment is made or denied under another provision
of this Contract.
14.3.3 Adjustments made in the cost of performance may have a mutually
agreed fixed or percentage fee.
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AIA DOCUMENT A201/CMa - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
CONSTRUCTION MANAGER-ADVISER EDITION - AIA (R) - (C) 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C.,
20006-5292 Y WARNING; Unlicensed photocopying violates U.S. copyright laws and
is subject to legal prosecution. This document was electronically produced with
permission of the AIA and can be reproduced without violation until the date of
expiration as noted below.
ELECTRONIC FORMAT A201/CMa-1992
USER DOCUMENT: FORM -- 12/20/1997. AIA LICENSE NUMBER 105525, WHICH EXPIRES ON
6/30/1998 -- PAGE #41
<PAGE> 90
SUPPLEMENTARY CONDITIONS
The following supplements modify the "General Conditions of the Contract for
Construction, Construction Manager-Adviser Edition" AIA Document A201/CMa,
1992, which is attached to and made a part of that certain Standard Form of
Agreement Between Owner and Contractor where the basis of payment is the Cost
of the Work plus a Fee with or without a Guaranteed Maximum Price dated
December 21, 1997, entered into between The Resort at Summerlin Limited
Partnership, a Nevada limited partnership, as Owner, and J.A. Jones
Construction, as Contractor.
PARAGRAPH 10.1.1
Paragraph 10.1.1 shall be deleted and replaced with the following
language:
10.1.1 The Contractor shall be responsible for initiating,
maintaining, and supervising all safety precautions and programs in
connection with the performance of the Contract.
10.1.1.1 The Contractor shall take all precautions and follow all
procedures for the safety of, and shall provide all protection to
prevent injury to, all persons involved in any way in the Work and all
other persons, including, without limitation, the employees, agents,
guests, visitors, invitees and licensees of the Owner. These
precautions shall include, but in no event be limited to the:
a. Provisions of the Owner's Project Safety Policy/Handbook
described in Paragraph 11
b. Posting of danger signs and personal notification to all
affected persons of the existence of a hazard, of whatever
nature
c. Furnishing and maintaining of necessary traffic control
barricades and flagman services
d. Use or storage of required explosives or other hazardous
materials only under the supervision of qualified personnel
e. Maintenance of adequate quantities of hose and operable fire
extinguishers at the Work site
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10.1.1.2 The Contractor shall set forth in writing its safety precautions
and programs in connection with the Work, which will meet or exceed any and
all applicable laws, ordinances, rules, regulations, and orders of any
public, quasi-public, or other authority relating to the safety of persons
and their protection against injury, specifically including, but in no
event limited to the:
a. Federal Occupational Safety and Health Act of 1970, as amended,
and all rules and regulations now or hereafter in effect pursuant
to said Act
b. All codes, rules, regulations and requirements of the Owner and
its insurance carriers.
In the event of conflicting requirements, the more stringent shall govern.
10.1.1.3 All of the Work, and all equipment, machinery, materials, tools
and like items incorporated or used in the Work, shall be in compliance
with and conform to:
a. All applicable laws, ordinances, rules, regulations, and orders
of any public, quasi-public, or other authority relating to the
safety of persons and their protection against injury,
specifically including, but in no event limited to, the Federal
Occupational Safety and Health Act of 1970, as amended, and all
rules and regulations now or hereafter in effect pursuant to said
Act; and
b. All codes, rules, regulations and requirements of Owner and its
insurance carriers relating thereto.
In the event of conflicting requirements, the more stringent shall govern.
10.1.1.4 The Contractor shall provide a qualified and full-time safety
representative, who shall be assigned exclusively to the Project and whose
full-time responsibility shall be to enforce the Contractor's Safety and
Substance Abuse Programs, to assure compliance with Paragraph 10.1 and to
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prevent accidents. The Contractor shall require any other party performing
any of the Work to designate a responsible supervisory representative to
assist the Contractor's representative in the performance of his or her
duties. In addition, the Contractor shall require any party with more than
40 employees on the Project site to have a designated full-time employee,
who shall be assigned exclusively to the Project and whose exclusive
responsibility shall be to enforce the Contractor's Safety and Substance
Abuse Programs, to assure compliance with Paragraph 10.1 and to prevent
accidents.
10.1.1.5 Should the Contractor fail to provide a safe area for the
performance of the Work or any portion thereof, the Owner shall have the
right, but not the obligation, to suspend Work in the unsafe area. All
costs of any nature resulting from the suspension, by whomsoever incurred,
shall be paid by the Contractor.
10.1.1.6 The Contractor shall provide, or cause to be provided, each
worker performing work on the Work the proper safety equipment for the
duties being performed by that worker and will not permit any worker
performing work on the Work who fails or refuses to use the same.
10.1.1.7 The Contractor shall defend, indemnify, and hold Owner, and its
respective officers, directors, agents, employees, and assigns harmless
from and against any and all liability, public or private, penalties,
contractual or otherwise, losses, damages, costs, attorneys' fees,
expenses, causes of action, claims or judgments resulting either in whole
or in part from any failure of the Contractor or any person or entity
performing any of the Work, to comply with provisions of this Paragraph
10.1, including but not limited to all applicable laws, ordinances, rules,
regulations, and orders of any public, quasi-public, or other authority
relating to the safety of persons and their protection against injury,
specifically including, but in no event limited to, the Federal
Occupational Safety and Health Act of 1970, as amended, and all rules and
regulations now or hereafter in effect pursuant to said Act. The Contractor
shall not be relieved of its responsibilities under this paragraph 10.1
should
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Owner act or fail to act pursuant to any of its rights under this Contract,
nor shall the Owner hereby assume, nor be deemed to have assumed, any
responsibilities otherwise imposed on the Contractor by this Contract, by
virtue of providing the Owner's Safety Policies & Procedures, or any other
manner whatsoever.
10.1.1.8 The Contractor shall not raise as a defense to its obligation to
indemnify under the terms of paragraph 10.1.1.7 any contributing negligence
of any of those indemnified thereunder, it being understood and agreed that
no such contributing negligence shall relieve the Contractor from its
liability to so indemnify nor entitle the Contractor to any contribution,
either directly or indirectly, by those indemnified thereunder.
10.1.1.9 In any and all claims against those indemnified hereunder by any
employee of the Contractor or of any other person or entity performing any
of the Work, anyone directly or indirectly employed by any of them or
anyone for whose acts any of them may be liable, the indemnification
obligation under Paragraph 10.1.1.7 shall not be limited in any way to any
limit on the amount or type of damage, compensation or benefits payable
under any Worker's Compensation Acts, Disability Benefit Acts or other
Employee Benefit Acts.
10.1.1.10 The Contractor agrees to comply with all present and future
applicable laws, ordinances, regulations, stipulations, rules, safety
plans, directives, orders, and requirements (including environmental ones)
of any public body or officer having jurisdiction over entry upon or use of
any sites of the Work or operations hereunder affecting land, water, air,
and the products thereof, which are now or may become applicable to
operations covered by this Contract or arising out of the performance of
such operations. The Contractor shall not, under any circumstances, cause
or allow, in connection with the Work to be performed herein, the
discharge, emission, release, or escape of any hazardous or toxic substance
and/or waste, pollutant, contaminant or other substance including asbestos
or polychlorinated biphenyl (PCB) or other hazardous
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substance including those defined in 42 U.S.C. Section 9601(14)
(hereinafter all called "contaminated media") in violation of laws,
ordinances, orders, rules, regulations, safety plans and requirements of
any governmental authority, and shall pay for all costs and damages
incurred as a result thereof. The Contractor agrees to report to the Owner,
Construction Manager and Architect (and appropriate governmental
authorities if caused or allowed by the Contractor) immediately all
accidents or occurrences resulting in actual or threatened damage to the
Work site or to the environment by contaminated media, including discovery
of accidents or occurrences in which contaminated media is or may be
encountered or which results in contaminated media.
PARAGRAPHS 10.2 THROUGH 10.6
Paragraphs 10.2 through 10.3 shall be deleted and replaced with the
following language:
10.2 PROTECTION OF WORK AND PROPERTY;
RESPONSIBILITY FOR LOSS
10.2.1 The Contractor shall, throughout the performance of the Work,
maintain adequate and continuous protection of all Work and temporary
facilities against loss of damage from whatever cause, shall protect the
property of the Owner and third parties from loss or damage from whatever
cause arising out of the performance of Work and shall comply with the
requirements of the Owner and its insurance carriers and with all
applicable laws, codes, rules and regulations with respect to the
prevention of loss or damage to property as a result of fire or other
hazards.
10.2.2 Until final completion of the Work, the Contractor shall have full
and complete charge and care of and, except as otherwise provided in this
subparagraph, shall bear all risk of loss of, and injury or damage to, the
Work or any portion thereof (specifically including Owner-furnished
supplies, equipment or other items to be utilized in connection with, or
incorporated in, the Work) from any cause whatsoever.
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10.2.3 The Contractor shall rebuild, repair, restore and make good all losses
of, and injuries or damages to, the Work or any portion thereof (specifically
including Owner-supplied, equipment or other items to be utilized in connection
with, or incorporated in, the Work) before final completion of the Work. Such
rebuilding, repair or restoration shall be at the Contractor's sole cost and
expense unless the loss, injury or damage requiring such rebuilding, repair or
restoration:
.1 Is directly due to errors in the Contract Documents which were not
discovered by the Contractor or which the Contractor could not have
discovered through the exercise of due diligence.
.2 Is caused by a hazard against which Owner is required to insure under
the provisions of the Owner Controlled Insurance Program described in
Paragraph 11.1 of this Contract, provided, however, that if the loss,
injury or damage would not have occurred but for the negligent act or
omission of the Contractor, and its Subcontractors or anyone directly
or indirectly employed by any of them or who performs any of the Work
or for whose acts any of them may be liable, the rebuilding, repair or
restoration shall be at the Contractor's cost and expense to the
extent of the deductible in said insurance.
10.3 SURFACE OR SUBSURFACE WATER
10.3.1 Surface or Subsurface water or other fluid shall not be permitted to
accumulate in excavations or under the structures. Should such conditions
develop or be encountered, the water or other fluid shall be controlled and
suitably disposed of by means of temporary pumps, piping, drainage lines and
ditches, dams or other methods approved in writing by the Owner. The proposed
location and coordination of temporary channels and conduits conducting
accumulated water from the site of the Work shall be submitted to the Owner for
its prior written approval. All such work shall be done at the sole expense of
the Contractor.
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10.4 EMERGENCIES
10.4.1 In any emergency affecting the safety of persons or property, or in the
event of a claimed violation of any Federal or State safety or health law or
regulation, arising out of or in any way connected with the Work or its
performance, the Contractor shall act immediately to prevent threatened damage,
injury or loss or to remedy said violation, whichever is applicable, failing
which Owner may immediately take whatever action it deems necessary including,
but not limited to, suspending the Work as provided in Paragraph 14.2 of this
Contract.
10.4.2 Owner may offset any and all costs or expenses of whatever nature,
including attorney's fees, paid or incurred by the Owner in taking such actions
against any sums then or thereafter due to the Contractor. Additional
compensation or extension of the time claimed by the Contractor on account of
an emergency shall be determined as provided in Paragraph 4.3 and Article 7.
10.5 CLEANUP
10.5.1 The Contractor shall at times keep the site of the Work clean and free
from accumulation of waste materials or rubbish (including, without limitation,
hazardous waste), caused by his performance of the Work, and shall continuously
throughout performance of the Work remove and dispose of all such materials
from the site of the Work and the Project.
10.5.2 The Owner may require the Contractor to comply with such standards,
means and methods of cleanup, removal or disposal as the Owner may make known
to the Contractor. In the event the Contractor fails to keep the site of the
Work clean and free from such waste or rubbish, or to comply with such
standards, means and methods, the Owner may take such action upon 24 hours
prior written notice and offset any and all costs or expenses of whatever
nature paid or incurred by the Owner in undertaking such action against any
sums then or thereafter due to the Contractor.
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10.6 OWNER'S STANDARDS
10.6.1 The Owner reserves the right, but assumes no duty, to establish and
enforce standards, and to change the same from time to time, for the protection
of persons and property, with which the Contractor shall comply, and to review
the efficiency of all protective measures taken by the Contractor. The
exercise of or failure to exercise any or all of these acts by the Owner shall
not relieve the Contractor of its duties and responsibilities under this
Contract, and the Owner shall not thereby assume, nor be deemed to have
assumed, such duties or responsibilities of the Contractor.
ARTICLE 11
INSURANCE AND BONDS
PARAGRAPHS 11.1, 11.2 AND 11.3
Paragraphs 11.1, 11.2, and 11.3 shall be deleted and replaced with the
following language:
11.1 OWNER CONTROLLED INSURANCE PROGRAM
11.1.1 As used in this Article 11, the following terms are defined as follows:
OCIP Administrator:
or such other administrator as Owner may select
Insured:
The Owner, Construction Manager, Contractors, Subcontractors and
Sub-subcontractors.
11.1.2 The Owner may or may not arrange for this Project to be insured under an
Owner Controlled Insurance Program (OCIP). If the Owner elects to arrange for
this Project to be insured under the OCIP, then the Owner shall provide
Worker's Compensation Insurance, General Liability Insurance and Builder's Risk
Insurance from the start of Work through final completion of the Work.
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11.1.3 The OCIP will provide insurance coverage for the Owner, Construction
Manager, Contractor, any Subcontractor and any Sub-subcontractor performing
Work at the Project site. Off-site operations shall be covered only if all
operations at such site are necessary and solely dedicated to the Project. It
is the responsibility of the Contractor to notify the OCIP Administrator and
Insurance Underwriter prior to any operations starting at such site to include
coverage for specified off-site operations.
11.1.4 All insurance underwriting payroll, rating or loss history information
requested of the Contractor, Subcontractors or Sub-subcontractors, by the Owner
or the Owner's OCIP Administrator must be provided within five (5) business
days of the request. At all times during the Contract, the Contractor and its
Subcontractors and Sub-subcontractors shall cooperate with the Owner and the
Owner's OCIP Administrator and OCIP insurers. After the Contractor,
Subcontractors and Sub-subcontractors are properly enrolled in the OCIP, the
OCIP Administrator will issue or have issued to the Contractor, Subcontractors
and Sub-subcontractors prior to their commencing Work on the Project site,
Certificates of Insurance evidencing the coverages arranged by the Owner.
11.1.5 The insurance premiums for the OCIP will be paid by the Owner. The
amount for all bid items must be inclusive of these insurance costs. The
Contractor will provide the Owner an estimate (to include policy data, backup
calculations, copies of declarative pages and rate schedules from general
liability, workers' compensation and excess liability insurance policies) of
the Contractor's, the Subcontractors' and the Sub-subcontractors' insurance
costs that the Owner has arranged for in the OCIP. The insurance cost estimate
must include costs for self-insurance programs, self-insured retention and
deductibles and must be a part of the Contractor's bid. The Contractor
represents the accuracy of the information used to calculate the insurance
costs and agrees that the Owner, the OCIP Administrator and/or the OCIP insurer
may audit the Contractor's records and insurance agreements to confirm the
accuracy of the information. The Contractor
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further represents and agrees that the Owner is entitled to and may determine
additional insurance costs involving additional Work on the part of the
Contractor, Subcontractors and Sub-subcontractors.
11.1.6 An Insurance Manual (Manual) is included with the Contract Documents and
is a part of the Contract. The Manual explains the OCIP and contains the forms
to be completed by the Contractor, Subcontractors and Sub-subcontractors. The
completed forms (OCIP-1 and OCIP-2) must be returned with the Contract bid. The
Initial Insurance Credit forms (OCIP-1 and OCIP-2) must include the estimated
insurance costs of the Contractor, the Subcontractors and the Sub-subcontractors
that will be removed from the total bid. The Insurance Manual also contains all
the administrative and claim reporting procedures. The Contractor agrees to and
will require that the Subcontractors and Sub-subcontractors also cooperate with
the OCIP Administrator in providing all the information as required in the
Insurance Manual.
11.1.7 A Project Safety Policy, which is Section 7.0 of the Insurance Manual,
establishes the minimum safety standards for the Project. The Safety
requirements in this Policy are a part of this Contract. The Contractor is
responsible for initiating, maintaining and supervising all safety precautions
and programs in connection with the Work.
11.2 OWNER PROVIDED INSURANCE
11.2.1 THE OWNER'S INSURANCE. Prior to commencement of the Work, the Owner, at
its option and cost, shall secure and, except as otherwise provided herein,
maintain at all times during the performance of this Contract the insurance
specified in Subparagraphs 11.2.2, 11.2.3, 11.2.4, 11.2.5 and 11.2.6 below, with
the Owner, Contractor, Subcontractors and such other persons or interests the
Owner may designate in connection with the performance of the Work as insured
parties and with limits not less than those specified below for each coverage.
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Vendors, suppliers, fabricators, materials dealers, drivers and others who
merely transport, pick-up, deliver or carry materials, personnel, parts or
equipment or any other items or persons to or from the Project site shall not be
included in OCIP.
11.2.2 Workers' Compensation Insurance in compliance with the Workers'
Compensation Laws of the State of Nevada.
Limits
Part One -- Workers' Compensation Statutory
11.2.3 General Liability Insurance (Excluding Automobile and Professional
Liability) in a form providing coverage not less than the standard Commercial
General Liability insurance policy (Insurance Services Office [ISO] Occurrence
Form 1993)
Limits
General Aggregate $4,000,000
Products/Completed
Operations Aggregate $4,000,000
Personal/Advertising
Injury Aggregate $2,000,000
Each Occurrence Limit $2,000,000
Fire Damage Legal
Liability (any 1 fire) $1,000,000
Medical Expense $5,000
Stop Gap Liability
(Employer's Liability) $1,000,000
THIS INSURANCE WILL NOT EXTEND COVERAGE FOR PRODUCTS LIABILITY TO ANY INSURANCE
PARTY, VENDOR, SUPPLIER, MATERIAL DEALER OR OTHERS FOR ANY PRODUCT MANUFACTURED,
ASSEMBLED OR OTHERWISE WORKED ON AWAY FROM THE PROJECT SITE.
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11.2.4 Umbrella (Excess) Liability Insurance with any excess umbrella layers
written on a strict following form basis over the primary umbrella.
Limits
Combined Single Limit $25,000,000
Each Occurrence
Project Aggregate $25,000,000
11.2.5 Builder's Risk Insurance is being negotiated and will be in the amount of
the initial contract sent with subsequent modifications for the entire Work at
the site.
a. Limits
Construction Value of
the Project $ TBD
b. Sublimits
Goods in Transit $ TBD
Off-Site Storage $ TBD
c. Deductibles (Tentative)
One-Site $10,000
Off-Site Storage $10,000
Transit $10,000
If the Owner does not intend to purchase such property insurance required by the
Contract, the Owner shall inform the Contractor in writing. The Contractor may
then secure insurance which will protect the interests of the Contractor,
Subcontractors and Sub-subcontractors in the Work. By appropriate Change Order,
the cost will be charged to the Owner.
11.2.6 If the property insurance requires minimum deductibles and such
deductibles are identified in the Contract Documents, the Contractor shall pay
costs not covered because of such deductibles. If the Owner or insurer increases
the required minimum deductibles above the amounts so identified or if the Owner
elects to purchase this insurance with voluntary deductible amounts, the Owner
shall be responsible for payment of the additional costs not covered.
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because of the increased or voluntary deductibles. If deductibles are not
identified in the Contract Documents, the Owner shall pay costs not covered
because of deductibles.
11.2.7 The Owner assumes no obligations to provide insurance other than that
evidenced by the policies referred to in 11.2:
THE FURNISHING OF SUCH INSURANCE BY THE OWNER SHALL IN NO WAY RELIEVE, OR LIMIT
OR BE CONSTRUED TO RELIEVE, OR LIMIT THE CONTRACTOR, SUBCONTRACTORS OR
SUB-SUBCONTRACTORS OF ANY RESPONSIBILITY OR OBLIGATION WHATSOEVER OTHERWISE
IMPOSED BY THIS CONTRACT.
11.3 ALTERNATIVE INSURANCE
11.3.1 In the event the Owner for any reason elects not to furnish or after
commencement of Work elects not to furnish or to continue to furnish the
insurance as specified in 11.2.2, 11.2.3, 11.2.4 and 11.2.5 and upon thirty (30)
days written notice from the Owner, the Contractor shall secure at the Owner's
cost and maintain such insurance specified in 11.3.2 and 11.3.3 below as may be
required by the Owner and shall cause all Subcontractors and Sub-subcontractors
to do likewise.
11.3.2 In the event the Contractor, Subcontractors or Sub-subcontractors have
been required to secure any insurance specified in 11.3.3 and 11.3.4 below, the
Owner shall no longer be obligated to furnish that part of the insurance
specified in 11.2.2, 11.2.4 or 11.2.5 above. All insurance secured by the
Contractor, Subcontractors or Sub-subcontractors pursuant to the Owner's
requirements under the provisions of 11.3 shall be in policies subject to the
Owner's approval as to form, content, limits of liability, cost and insurance
company.
11.3.3 Worker's Compensation Insurance in Statutory Limits of the Workers'
Compensation Laws of the State of Nevada.
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Limits
Part One - Workers' Compensation Statutory
11.3.4 General Liability Insurance (Excluding Automobile and Professional
Liability) in a form providing coverage not less than the standard Commercial
General Liability insurance policy (Insurance Services Office [ISO] Occurrence
Form 1993).
Limits
General Aggregate $2,000,000
Products/ Completed
Operations Aggregate $2,000,000
Personal/Advertising
Injury Aggregate $1,000,000
Each Occurrence Limit $1,000,000
Fire Damage Legal
Liability (any 1 fire) $1,000,000
Medical Expense $5,000
Stop Gap Liability $1,000,000
11.3.5 Umbrella (Excess) Liability Insurance with any excess umbrella layers
written on a strict following form basis over the primary umbrella.
Limits-Contractor
Combined Single Limit $25,000,000
Each Occurrence
Project Aggregate $25,000,000
Limits-Subcontractor and Sub-subcontractor
Combined Single Limit $10,000,000
Each Occurrence
Project Aggregate $10,000,000
11.3.6 The insurance required in Subparagraph 11.3.5 shall also include Stop
Gap (Employer's Liability) coverage in limits not less than the difference
between the limits specified in Subparagraph 11.3.3 and the limits in
Subparagraph 11.3.5.
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11.3.7 The Owner reserves the right to reduce the required limits of liability
of a Subcontractor or Sub-subcontractor based on the type and scope of Work
performed on-site.
11.4 CONTRACTOR PROVIDED INSURANCE
11.4.1 The Contractor will provide and require the Subcontractors and
Sub-subcontractors to also provide and maintain insurance of the type and in
limits as set forth below. Such insurance shall name the appropriate parties
as insureds and shall be in a form and from insurance companies acceptable to
the Owner. The insurance required by the Owner may be provided in policy or
policies, primary and excess, including the umbrella or catastrophe form. The
limits of liability shall be as stated below, unless prior to start of any
Work, written approval is granted by the Owner for variance from those limits.
11.4.2 Each liability policy required of the Contractor, the Subcontractors or
the Sub-subcontractors will name as additional insureds; the Owner, Architect,
and Construction Manager, their respective parent companies, the subsidiary,
related and affiliated companies of each, and any additional entities as the
Owner may be required to be named pursuant to any lease or contract as it
relates to the Contract. The Additional Insured endorsement, equivalent to
ISO form 2010 11/85 edition date, will state that the coverage provided to the
additional insureds is primary and non-contributing with any other insurance
available to the additional insureds.
11.4.3 Commercial Automobile Liability Insurance in a form providing coverage
not less than the standard commercial Automobile Liability form.
Limits
Combined Single Limit $1,000,000
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11.4.4 Workers' Compensation Insurance for operations AWAY FROM THE PROJECT
SITE of the Contractor and the Subcontractors in Statutory Limits of the
Workers' Compensation Laws of the State of Nevada.
a. Limits-Contractor
Part-One - Workers' Compensation Statutory
b. Limits-Subcontractors
Part One - Workers' Compensation Statutory
11.4.5 Aircraft Liability Insurance on any kind of aircraft used by the
Contractor, any Subcontractor, any Sub-subcontractor or by anyone else on their
behalf. The Contractor shall maintain or cause the operator of any such
aircraft to maintain aircraft public liability insurance including bodily
injury, property damage and passenger liability, as respects any aircraft
owned, used, operated or hired in connection with the Work by the Contractor,
Subcontractor, Sub-subcontractor or anyone else.
Limits
Bodily Injury, Property Damage and Passenger Liability $10,000,000
11.4.6 General Liability Insurance for operations away from the Project site of
the Contractor and Subcontractors and Sub-subcontractors (including products
liability for any product manufactured, assembled or otherwise worked on away
from the Project site) in a form providing coverage not less than the standard
Commercial General Liability Insurance policy ("Occurrence Form").
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a. Limits-Contractor
General Aggregate $4,000,000
Products/Completed
Operations Aggregate $4,000,000
Personal/Advertising
Injury Aggregate $2,000,000
Each Occurrence Limit $2,000,000
Fire Damage Legal
Liability (any 1 fire) $ 100,000
Medical Expense $ 5,000
Stop Gap Liability $1,000,000
b. Limits-Subcontractor
General Aggregate $2,000,000
Products/Completed
Operations Aggregate $2,000,000
Personal/Advertising
Injury Aggregate $1,000,000
Each Occurrence Limit $1,000,000
Fire Damage Legal
Liability (any 1 fire) $ 100,000
Medical Expense $ 5,000
Stop Gap Liability $ 500,000
11.4.7 The Contractor shall require that the Contractor's, Subcontractors' and
Sub-subcontractors' vendors, suppliers, material dealers and others who merely
transport, pick-up, deliver or carry materials, personnel, parts or equipment or
any other items or persons to or from the Project site to maintain the following
insurance:
.1 WORKERS COMPENSATION INSURANCE in statutory limits of the Workers'
Compensation Laws of the State of Nevada covering operations of the party
required to furnish the same performed in connection with the Work at the
Project site.
.2 COMMERCIAL AUTOMOBILE LIABILITY INSURANCE covering all owned, non-owned
and hired automobiles, trucks and trailers of the respective parties
required to provide and maintain this insurance. Such insurance shall
provide coverage not less than the Standard Comprehensive Automobile
Liability
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<PAGE> 107
policy in limits not less than $1,000,000 Combined Single Limit.
.3 GENERAL LIABILITY INSURANCE for all operations (including products
liability for any product manufactured, assembled or otherwise worked on
away from the Project site) in a form providing coverage not less than that
of Standard Commercial General Liability Insurance policy ("Occurrence
Form") for operations of the party required to furnish same, including
hazards of operations (including explosion, collapse and underground
coverage), elevators, independent contractors, products and completed
operations, for two (2) years after Final Completion of the Work and
acceptance by the Architect and the Owner and final payment has been made,
with contractual liability coverage for any contracts related to the Work
and personal injury liability coverage for claims arising out of the Work
for personal injury, bodily injury and property damage in policy or
policies of insurance such that the total available limits combined shall
not be less than $1,000,000 per occurrence, $2,000,000 general aggregate
limit and $2,000,000 aggregate products and completed operations. In
addition, form must include $1,000,000 limit for Stop Gap Liability.
11.5 CONTRACTOR OPERATIONS
11.5.1 Contractor shall not violate or knowingly permit to be violated any
conditions of the policies of insurance provided by the Owner under the terms
of this Article 11. All requirements imposed by the policies referred to as
above upon, and to be performed by Contractor shall likewise be imposed by the
Contractor on, assumed and performed by each of the Subcontractors and
Sub-subcontractors. The Contractor agrees and will require each Subcontractor
and Sub-subcontractor to agree to keep and maintain an accurate and classified
record of its payroll data and information in accordance with the requirements
of the insurance company or companies and to permit its books
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and records to be examined and audited periodically by the insurance company or
companies, the Owner or their respective representatives.
11.5.2 Prior to start of Work, the Contractor shall furnish and cause the
Subcontractors and Sub-subcontractors to furnish to the Owner or its designee,
in a form satisfactory to the Owner, an estimate of labor cost (listed by
Standard Workers' Compensation Insurance classification) to be incurred in
connection with the Work at the Project Site by each Subcontractor and
Sub-subcontractor, and the total price due each Subcontractor and
Sub-subcontractor under its contract. Each insurance policy to be maintained
under Article 11.3 shall name as Additional Insureds the Owner, its
subsidiaries, related and affiliated companies and the officers, directors,
agents, employees and assigns. Contractor shall furnish each bidding and
negotiating Subcontractor, vendor, supplier, material dealer or other party a
copy of this Article 11 Insurance Contract Language and shall make the same
requirement of all with respect to their subcontracting or procurement
procedures.
11.6 NOTICES, COSTS, LOSSES
11.6.1 All policies of insurance the Contractor, Subcontractors,
Sub-subcontractors or the Owner are required under the terms of this Agreement
to secure and maintain shall be endorsed to provide that the insurance company
shall notify the Owner, Contractor, and the Named Insured, at least sixty (60)
days prior to the effective date of any cancellation or modification of such
policies. Prior to the date on which Contractor or any Subcontractor or any
Sub-subcontractor commences performance of its part of the Work, Contractor
shall cause to be furnished to the Owner Certificates of Insurance maintained
by Contractor and each Subcontractor and Sub-subcontractor in connection with
the performance of the Work. As and when the Owner may direct, copies of the
actual insurance policies or
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<PAGE> 109
renewals or replacements thereof shall be submitted to the Owner.
11.6.2 In the event of any failure by Contractor to comply with the
provisions of this Article 11, the Owner may, at its option, on notice to
Contractor, suspend the Contract for Cause until there is full compliance with
this Article 11 or terminate the Contract for cause.
11.6.3 The cost of the insurance specified above to be obtained by the Owner
will be paid for by the Owner, and the Owner shall receive and pay, as the case
may be, all adjustments in such costs, whether by way or dividends or
otherwise. Contractor shall execute such instruments or assignment as may be
necessary to permit the Owner's receipt of such adjustments and shall cause all
Subcontractors and Sub-subcontractors covered by such insurance to do the same.
11.6.4 The cost of any losses sustained because of clauses that specify
deductible amounts in any of the insurance policies furnished by the Owner
shall be paid by the Contractor.
11.6.5 Payments by the insurer for all losses covered under the Builder's
Risk policy as specified in 11.2.5 will be made to the Owner, for the interest
of all parties.
11.7 SUBROGATION AND WAIVER (CONTRACTOR PROVIDED INSURANCE COVERAGES)
11.7.1 The Contractor shall require all policies of insurance that are
related to the Work and are secured and maintained by the Contractor, any
Subcontractor or any Sub-subcontractor to include clauses providing that each
insurance underwriter shall waive all its rights of recovery, under subrogation
or otherwise, against the Owner, the Contractor, separate Contractors, the
Subcontractors and the Sub-subcontractors. The Contractor waives all rights of
recovery against the Owner, separate Contractors, the Subcontractors and the
Sub-subcontractors
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which Contractor may have or acquire because of deductible clauses in or
inadequacy of limits of any policies of insurance that are in any way related
to the Work and that are secured and maintained by the Contractor. The
Contractor shall require the Subcontractors and Sub-subcontractors to waive the
right of recovery (as aforesaid waiver by Contractor) against the Owner,
Contractor, separate Contractors and the Subcontractors and Sub-subcontractors.
11.8 COVERAGES
11.8.1 The coverages referred to above are set forth in full in the
respective policy forms, and the foregoing descriptions of such policies are
not intended to be complete or to alter or amend any provision of the actual
policies and in matters, if any, in which the said description may be
conflicting with such instruments, the provisions of the policies of the
insurance shall govern.
11.9 MISCELLANEOUS
11.9.1 Nothing contained in Article 11 shall relieve the Contractor, the
Subcontractors and the Sub-subcontractors of their respective obligations to
exercise due care in the performance of their duties in connection with the
Work and complete the Work in strict compliance with the Contract.
11.9.2 When separate contracts are awarded in accordance with 11.6.1 above,
an insurance exhibit similar to this Article 11 shall be included. Each
separate contractor and its Subcontractors will be an insured under the
insurance secured and maintained by the Owner in accordance with 11.2.
11.10 CONTRACTORS'S EQUIPMENT INSURANCE
11.10.1 With respect to Contractor's operations, the Contractor, the
Subcontractors and Sub-subcontractors, at their option, shall purchase,
maintain and pay for an equipment floater on all construction trailers,
machinery, tools, equipment and other similar property and any deductible
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shall be for the account of Contractor. The policy shall contain a waiver of
subrogation endorsement. This insurance coverage shall be the sole recovery for
any loss covered by such insurance. In the event the Contractor, any
Subcontractor or any Sub-subcontractor self-insures, they also waive their
right of recovery against Owner, and Contractor shall require all
Subcontractors and Sub-subcontractors to so agree.
11.11 ADDITIONAL INSURANCE COVERAGE
11.11.1 The Contractor agrees for its own account, and further agrees that
all subcontracts shall specify that, if broader coverage than is provided
under this Article 11, or if higher limits are deemed necessary by the
Contractor, the Contractor has either affirmatively elected to self assume the
exposure or purchase additional insurance coverage, the additional cost of such
shall, under no circumstances, be reimbursed directly or indirectly by the
Owner.
11.12 RELEASE AND WAIVER
11.12.1 The Contractor hereby releases, and shall cause the Subcontractors,
Sub-subcontractors and suppliers to release, the Owner, Owner's partners,
parent companies and affiliates of the Owner and any partner, Construction
Manager, Architect and the directors, officers, shareholders, employees and
agents of the above-mentioned parties (the "Released Parties") from any and all
claims or causes of action whatsoever with Contractor and/or such parties might
otherwise possess resulting in or from or in any way connected with any loss
covered or which should have been covered by insurance, including the
deductible portion thereof, maintained and/or required to be maintained by
Contractor and/or the Subcontractors and/or the Sub-subcontractors and/or
suppliers pursuant to the Contract.
11.12.2 This release is further intended to bind Contractor's insurers
providing the insurance coverages stated in 11.3 and 11.4. The Contractor
agrees to inform and obtain permission from its insurers, and further agrees to
require the Subcontractors, Sub-subcontractors and suppliers to inform and
obtain permission from their
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insurers, to release the Released Parties from any and all claims or causes of
action as provided above, so as to effectively waive any subrogation rights of
said insurers.
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EXHIBIT 7
<PAGE> 114
<TABLE>
<CAPTION>
Activity Activity Early
ID Description Start
- -------- ----------- -----
<S> <C> <C>
LOWRISE STRUCTURES
L0105 Release Structural Steel Mill Order 22DEC97*
L0100 Receive Grading Permit 05JAN98*
L0117 Structural Drawing Completion 05JAN98*
L0112 Receive Foundation Permit 19JAN98*
L0110 Receive Building Permit 02FEB98*
L0116 Receive Kitchen Layout Drawings 02MAR98*
L0115 Release Steel for Fabrication 05MAR98
L0120 Structural Steel Erection 16APR98
L0145 Receive FFE layout Drawings 17APR98
L0125 Commence Exterior Finishes 18JUN98
L0130 Commence Interior Finishes 23JUL98
L0142 Lo-Rise-Receive Building T.C.O. 05FEB99*
L0140 Owner Delivery FFE items 08FEB99
L0135 Substantial Completion 02APR99
HOTEL #1
H0100 Receive grading Permit 05JAN98*
H0117 Receive Foundation Permit 19JAN98*
H0110 Receive Building Permit 02FEB98*
H0115 Superstructure Construction 03FEB98
H0135 Receive FFE layout Drawings 04MAR98
H0120 Commence Exterior Finishes 16MAR98
H0125 Commence Interior Finishes 07APR98
H0126 Hotel #1-Receive Building T.C.O. 05FEB99*
H0128 Owner Delivery FFE items 08FEB99
H0130 Substantial Completion 02APR99
HOTEL #2
T0100 Release to utilize Borrow Soils 05JAN98*
T0117 Receive Foundation Permit 30MAR98*
T0110 Receive Building Permit 01MAY98*
T0115 Superstructure Construction 04MAY98
T0140 Receive FFE layout drawings 05MAY98
T0120 Commence Exterior Finishes 15JUN98
T0125 Commence Interior Finishes 13JUL98
T0132 Hotel #2-Receive Building T.C.O. 05MAR99*
T0130 Owner Deliver FFE items 08MAR99
T0135 Substantial Completion 02APR99
PARKING GARAGES
</TABLE>
Project Start 15DEC97 Early Bar
Project Finish 02APR99 Progress Bar
Data Date 22DEC97 Critical Activity
Plot Date 22DEC97
Primavera Systems, Inc.
1998 1999
----------------------------------------------- -----------------------------
D JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL A
Release Structural Steel Mill Order
Receive Grading Permit
Structural Drawing Completion
Receive Foundation Permit
Receive Building Permit
Receive Kitchen Layout Drawings
Release Steel for Fabrication
Structural Steel Erection
Receive FFE layout Drawings
Commence Exterior Finishes
Commence Interior Finishes
Lo-Rise-Receive Building
T.C.O.
Owner Delivery FFE Items
Substantial
Completion
Receive grading Permit
Receive Foundation Permit
Receive Building Permit
Superstructure Construction
Receive FFE layout Drawings
Commence Exterior Finishes
Commence Interior Finishes Hotel #1-Receive Building
T.C.O.
Owner Delivery FFE Items
Substantial
Completion
Release to utilize Borrow Solls (Pad & Basement)
Receive Foundation Permit
Receive Building Permit
Superstructure Construction
Receive FFE layout drawings
Commence Exterior Finishes
Commence Interior Finishes
Hotel #2-Receive
Building T.C.O.
Owner Deliver FFE
Items
Substantial
Completion
Sheet 1 of 2
J.A. Jones Construction
The Resort at Summerlin
Contract Schedule Milestone
<PAGE> 115
<TABLE>
<CAPTION>
ACTIVITY ACTIVITY EARLY 1998 1999
ID DESCRIPTION START D JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL A
<S> <C> <C> <C>
P0000 Planning Design Approval 22DEC97 PLANNING DESIGN APPROVAL
P0100 Submit Drawings to Plan Check 23DEC97* SUBMIT DRAWINGS TO PLAN CHECK
P0110 Receive Structure Permit 29APR98 RECEIVE STRUCTURE PERMIT
P0115 Structure Construction 07MAY98 STRUCTURE CONSTRUCTION
P0120 Substantial Completion 04NOV98 SUBSTANTIAL COMPLETION
- --------------------------------------------------------------------------------------------------------------------------------
SITEWORK
S0000 Finalize Hotel #2 Area Re-Design 22DEC97 FINALIZE HOTEL #2 AREA RE-DESIGN
S0100 Receive Grading Permit 05JAN98* RECEIVE GRADING PERMIT
S0110 Commence Site Utilities 02MAR98 COMMENCE SITE UTILITIES
S0115 Landscape Irrigation at Paving 17MAR98 LANDSCAPE IRRIGATION AT PAVING
S0145 Delivery of Parking lot Trees 17MAR98 DELIVERY OF PARKING LOT TREES
S0120 Commence Parking Area Paving 01APR98 COMMENCE PARKING AREA PAVING
S0135 Commence Waterfeatures 07SEP98* COMMENCE WATERFEATURES
S0125 Commence Site Hardscape 01DEC98* COMMENCE SITE HARDSCAPE
S0130 Landscape Irrigation/Planting 02DEC98 LANDSCAPE IRRIGATION/PLANTING
S0150 Delivery of Landscape Trees 02DEC98 DELIVERY OF LANDSCAPE TREES
S0140 Substantial Completion 02APR99 SUBSTANTIAL COMPLETION
</TABLE>
SHEET 2 OF 2
<PAGE> 116
Rider to the Construction Agreement
Between the Resort at Summerlin
And J.A. Jones Construction dated
December 22, 1997
Notwithstanding anything to the contrary in the agreement between the
Resort at Summerlin ("Owner") and J.A. Jones Construction ("Contractor") dated
December 22, 1997 (the "Contract"), Owner and Contractor agree that this Rider
shall take precedence over anything in the form of Agreement (AIA-A111-1987) or
the General Conditions (AIA-A201-CM-1992) or any exhibits annexed thereto or
incorporated therein by reference, and further agree as follows:
1. The term "Contractor" as set forth in the Contract shall be
modified to and the term "Construction Manager") substituted in its place.
2. The term "Subcontract" as set forth in the Contract shall be
modified to and the terms "Trade Contract" or "Trade Contractor" respectively
shall be substituted in their place.
3. Owner hereby grants to Contractor the authority to act for and
execute all Subcontracts and purchase orders as agent for and on behalf of the
Owner (as a disclosed principal). Contractor shall include in all Subcontracts
(and purchase orders) a provision requiring Subcontractor(s) to acknowledge and
agree that Contractor has executed such documents as agent for and on behalf of
Owner, that Contractor shall be under no obligation to pay the Subcontractor
except and to the extent. Contractor has actually received funds from the Owner
for Subcontractors' work, and that Subcontractor is relying upon the credit of
the Owner and not the credit of the Contractor in executing the Subcontract.
4. In view of the terms set forth in the Contract regarding
Contractor's responsibility for the Substantial Completion, Liquidated Damages,
Guaranteed Maximum Price and Warranty of the Work, in the event the acts,
omissions, defauks or wrongful conduct of the Subcontractor(s) causes any cost,
damage, liability, or expense to Contractor for which Contractor shall be
liable to Owner under the Contract, Owner shall assign such Subcontract, or any
portion thereof, or any cause of action arising thereunder, or execute any
document evidencing Contractor's rights in subrogation, or any other documents
necessary to permit Contractor to pursue recovery from the appropriate
Subcontractor(s) for any such cost, damage, liability or expense. In
furtherance of the foregoing, Contractor shall be a named third party
beneficiary of all Subcontracts, shall be co-obligee on any Subcontractor
payment/performance bonds, and be beneficiary and be any guaranty or warranty
provided by the Subcontractors. Additionally, Contractor shall be entitled to
change orders adjusting the Guaranteed Maximum Price and time extension in
connection with the Work consistent with the Contract (irrespective of the
agency authority delegated by Owner).
<PAGE> 117
5. Promptly after execution of the Contract, Contractor shall
propose and submit to Owner its standard form Trade Contract for Owner's review
and approval (which shall not be unreasonably withheld).
6. Except as set forth herein, all other liabilities and
responsibilities of Owner and Contractor shall remain unchanged by this Rider;
it being that the Contract shall be modified after execution hereof to reflect
the changes described herein, both explicit and implicit.
- ------------------------------- ---------------------------------
The Resort at Summerlin J.A. Jones Construction Inc.
<PAGE> 118
OUTLINE
SPECIFICATIONS
FOR
THE RESORT
AT
SUMMERLIN
PARKING STRUCTURE
LAS VEGAS NEVADA
CONTRACTOR
J.A. JONES CONSTRUCTION
ARCHITECT
KRACOR, INC.
8-26-97
THE RESORT AT SUMMERLIN
PARKING STRUCTURE
- --------------------------------
WALTER J. KRAMER JR.
REGISTERED
No. 2530
8-26-97
ARCHITECT
* STATE OF NEVADA *
- --------------------------------
<PAGE> 119
THE RESORT AT SUMMERLIN - PARKING STRUCTURE
Issue Date 8-6-97
Table of Contents
TC - 1
TABLE OF CONTENTS
SPECIFICATIONS
<TABLE>
<CAPTION> Issue or
Last
Revision
Pages Date
<S> <C> <C>
DIVISION 1 - GENERAL REQUIREMENTS
00700 General Conditions 26 8/6/97
01010 Summary of Work 1 8/6/97
01015 Definitions 2 8/6/97
01060 Regulatory Requirements 1 8/6/97
01070 Abbreviations 3 8/6/97
01090 Reference Standards 1 8/6/97
01200 Project Meetings 3 8/6/97
01300 Submittals 5 8/6/97
01400 Quality Control 5 8/6/97
01410 Testing and Inspection Service 2 8/6/97
01500 Construction Facilities and Temporary Controls 2 8/6/97
01600 Materials and Equipment 3 8/6/97
01700 Contract Closeout 4 8/6/97
01740 Warranties 3 8/6/97
DIVISION 2 - SITEWORK
02020 Existing Conditions 1 8/6/97
02200 Earthwork for Structures 7 8/6/97
02222 Excavation 2 8/6/97
02225 Utility Trenching, Backfilling, & Compation 7 8/6/97
02110 Site Clearing 3 8/25/97
02510 Asphaltic Concrete Paving 10 8/6/97
02514 Portland Cement Concrete Paving 7 8/6/97
02578 Pavement Markings and Bumpers 1 8/25/97
02580 Traffic Control Markings 5 8/6/97
02586 Concrete Curbs, Gutters, and Sidewalks 6 8/6/97
DIVISION 3 - CONCRETE
03100 Forms 4 8/6/97
03200 Reinforcing Steel 3 8/6/97
03300 Concrete 9 8/6/97
03345 Concrete Finishing 4 8/6/97
03350 Site Concrete 10 8/25/97
03410 Structural Precast Concrete 11 8/6/97
</TABLE>
THE RESORT AT SUMMERLIN
PARKING STRUCTURE
TABLE OF CONTENTS
<PAGE> 120
TABLE OF CONTENTS
TC - 2
<TABLE>
<CAPTION>
Issue or
Last
Revision
Pages Date
<S> <C> <C>
DIVISION 4 - MASONRY
04220 Concrete Unit Masonry 4 8/6/97
DIVISION 5 - METALS
05120 Structural Steel 8 8/6/97
05510 Metal Stairs 3 8/6/97
DIVISION 6 - WOODS AND PLASTICS
Not Applicable
DIVISION 7 - THERMAL AND MOISTURE PROTECTION
07710 Membrane Waterproofing 3 8/25/97
07900 Caulking and Sealants 2 8/6/97
DIVISION 8 - DOORS AND WINDOWS
Not Applicable
DIVISION 9 - FINISHES
09900 Painting 12 8/6/97
DIVISION 10 - SPECIALTIES
10200 Louvers and Vents 5 8/25/97
10400 Signage 2 8/25/97
10520 Fire Extinguisher, Cabinets, and Accessories 2 8/25/97
11850 Parking Control Equipment 7 8/26/97
DIVISION 11 - EQUIPMENT
Not Applicable
DIVISION 12 - FURNISHINGS
Not Applicable
</TABLE>
THE RESORT AT SUMMERLIN
PARKING STRUCTURE
TABLE OF CONTENTS
<PAGE> 121
TABLE OF CONTENTS
TC - 3
<TABLE>
<CAPTION>
Issue or
Last
Revision
Pages Date
<S> <C> <C>
DIVISION 13 - SPECIAL CONSTRUCTION
Not Applicable
DIVISION 14 - CONVEYING SYSTEMS
14200 Hydraulic Elevators 11 8/26/97
DIVISION 15 - FIRE PROTECTION
15510 Fire Sprinkler System 5 8/26/97
END OF TABLE OF CONTENTS
</TABLE>
THE RESORT AT SUMMERLIN
PARKING STRUCTURE
TABLE OF CONTENTS
<PAGE> 122
[LOGO]
PAUL STEELMAN LTD.
ARCHITECTURE PLANNING
3330 W. Desert Inn Rd. Las Vegas, NV 89102
(702) 873-0221 FAX (702) 367-3565
THE RESORT AT SUMMERLIN
ISSUED FOR CONTRACT
ADDENDUM #10
DECEMBER 10, 1997
ARCHITECT'S CLARIFICATIONS
The following items shall be included in the Guaranteed Maximum Price:
GENERAL
Site irrigation specification per Summerlin Landscape Design Standard.
Provide exit signs as required by code.
Delete VFD at Chiller #1.
Use stainless steel basin and galvanized construction at cooling towers.
Use vertical stacked fan coil units (four pipe). Eliminate conduit to
Thermostat.
Delete steam system, replace with electric.
Delete waterside heat exchanger.
Use 65% efficient filters at Casino air handlers.
Eliminate pressure relief fans, use auto dampers & relief hoods.
Eliminate plug valves at pumps in Central Plant.
Delete cooling tower bypass & valve.
Use higher kw/ton chillers, eliminate refrigerant recovery system.
Provide adequate smoke/fire damper system.
Provide OSA induced draft fans for fan coils in basement.
Provide adequate branch piping sizes for Fan coil CHS/R, HWS/R.
Provide adequate HVAC and plumbing at Putter's Lounge, Pool Bar and Pool Boy
buildings.
Provide adequate circulating pump sizes for pool heating system.
<PAGE> 123
Provide exhaust fan for boiler room.
Provide correct penthouse sizes for main AHU rooftop OSA.
Provide adequate reheat piping for 2nd floor Health Spa.
Provide reheat boxes for 1st floor Health Spa.
Provide adequate HVAC at Spa Director's Office.
Provide adequate ductwork for Spa Exercise area.
Provide adequate plumbing for Styling Salon.
Provide adequate plumbing at all roof drains.
Provide adequate plumbing at all kitchens.
Provide aluminum feeders.
Substitute Gardco for Beta lighting fixture.
Include putting green.
Include annunciator Panels in three locations: one in each hotel tower and one
in the lowrise. Exact locations to be determined.
Allow for project-wide energy management system to be provided. Novar or equal.
Substitute mesh for guardrail at all fire stairs.
Raise elevation of surface lot adjacent to Garage.
Use MDF moldings in lieu of Poplar moldings throughout.
Provide 4-ply built-up roofing plus adequate insulation in lieu of single ply.
LOWRISE
For insulation substitute R-19 Unfaced batts at exterior walls, Fiberglas sound
batts at soundwalls, 1" rigid insulation at Putter's Lounge, R-30 unfaced batts
at roof of Putter's Lounge, Pool Bar and Pool Boy.
Substitute conduit for cable tray.
Eliminate Skylight at Retail Link.
Eliminate movable glass partitions @ Health Spa terrace.
Add windows at Employee Dining Room.
Add non smoking partition @ EDR. Provide adequate ventilation.
Add windows at Executive offices.
<PAGE> 124
Add TV kiosk @ center of Casino round bar, include millwork and electrical
service.
Upgrade space in Lifestyles Center, Restaurant and other tenant areas to "lease
ready condition". This includes electrical distribution panels, air handlers,
domestic hot water, sanitary, and kitchen steam to accommodate tenant
requirements, empty conduit in the ceiling space. Restaurant hood placement to
be determined. A fire sprinkler grid with turned up heads above all tenant
areas. Rough-ins for public toilets.
Add one fire exiting corridor at lifestyles center as required by code.
Allow for seals at loading dock.
Allow for additional lighting requirements for live trees at Buffet.
HIGHRISE #1
For insulation substitute R-19/R-11 Unfaced batts at exterior walls, Fiberglas
sound batts at soundwalls, R-19 unfaced batts under clay tile roof.
Relocate exterior Highrise stair to interior.
Eliminate fireplaces at Highrise presidential suite (Suite G).
Include adequate waterproofing and scuppers at roof parapets.
Reduce scope of central tower per rendering.
Eliminate conduit for mirror mounted sconce at typical bathroom.
Eliminate pergola roof lighting @ end towers.
Move communicating door from column assembly to foyer demising wall.
Replace "A" room with "B" room as it adjoins all "F" suites.
Add bulkhead/valence at typical room.
Move bar @ typical room to demising wall.
HIGHRISE #2
As per narrative. A boiler room and heat exchangers will be required. Location
to be determined.
<PAGE> 125
PROJECT MANUAL
VOLUME I-A (DOCUMENTS 00 THRU DIVISION 05)
FOR
THE RESORT AT SUMMERLIN
HOTEL, CASINO & ENTERTAINMENT COMPLEX
LAS VEGAS, NEVADA
PROJECT NO. 95255
ISSUED FOR CONTRACT
DECEMBER 10, 1997
OWNER
THE RESORT AT SUMMERLIN, L.P.
THE RESORT AT SUMMERLIN, INC. (GENERAL PARTNER)
3330 West Desert Inn Road, Unit # 5
Las Vegas, NV 89102
ARCHITECT INTERIOR DESIGN
Paul Steelman, Ltd Paul Steelman Interiors
3330 W. Desert Inn Road 3330 W. Desert Inn Road
Las Vegas, NV 89102 Las Vegas, NV 89102
STRUCTURAL ENGINEER ELECTRICAL ENGINEER MECHANICAL ENGINEER
Martin & Peltyn, Inc. Morris Engineering, Inc. AE Associates
1909 South Jones Blvd. 3711 Regulus Drive 444 E. Warm Springs Road
Las Vegas, NV 89102 Las Vegas, NV 89102 Las Vegas, NV 89119
CIVIL ENGINEER LANDSCAPE ARCHITECT CULINARY
Martin & Martin, Inc. Lifescapes International Inc. FSA Design
1909 South Jones Blvd. 4930 Campus Drive 300 Corporate Pointe
Las Vegas, NV 89102 Newport Beach, CA 92660 Culver City, CA 90230
ACOUSTICS WATER FEATURES FIRE/LIFE SAFETY
Pelton Marsh Kinsella STO Design Group, Inc. Rolf Jensen & Associates
1420 W. Mockingbird Ln. 2500 Redhill Ave. 2125 Oak Grove Road
Dallas, TX 75247 Santa Ana, CA 92705 Walnut Creek, CA 94598
<PAGE> 126
TABLE OF CONTENTS
VOLUME I-A - DOCUMENTS 00 AND DIVISION 05
<TABLE>
<CAPTION>
ISSUED: REVISED
<S> <C> <C>
DOCUMENTS 00 - INFORMATION, BIDDING, AND CONTRACT REQUIREMENTS
00100 - BID SOLICITATION 06-04-97 06-26-97
00200 - INSTRUCTIONS TO BIDDERS (AIA DOCUMENT A701) 07-17-97
00300 - INFORMATION AVAILABLE TO BIDDERS
(SUBSURFACE INVESTIGATION REPORT) 06-04-97
00410 - BID FORM 07-17-97 08-29-97
00430 - SUPPLEMENTS TO BID FORM 07-17-97 08-29-97
00431 - SUPPLEMENT A - LIST OF SUBCONTRACTORS 07-17-97 08-29-97
00433 - SUPPLEMENT C - LIST OF ALTERNATIVES 07-17-97 08-29-97
04335 - SUPPLEMENT E - COST BREAKDOWN 07-17-97 08-29-97
OCIP-1 INSURANCE INFORMATION WORKSHEET 07-24-97
OCIP-2 INSURANCE SUMMARY FORM 07-24-97
00500 - AGREEMENT 06-04-97 07-17-97
00700 - GENERAL CONDITIONS 06-04-97 07-17-97
(AIA DOCUMENT A201 AND SUPPLEMENTARY CONDITIONS) 07-17-97 07-24-97
DIVISION 01 - GENERAL REQUIREMENTS
01100 - SUMMARY 06-04-97 07-24-97
01200 - PRICE AND PAYMENT PROCEDURES 05-19-97
01230 - ALTERNATIVES 07-17-97 08-29-97
01300 - ADMINISTRATIVE REQUIREMENTS 05-19-97
01400 - QUALITY REQUIREMENTS 05-19-97
01425 - REFERENCE STANDARDS 06-04-97
01500 - TEMPORARY FACILITIES AND CONTROLS 06-04-97
01600 - PRODUCT REQUIREMENTS 05-19-97
01700 - EXECUTION REQUIREMENTS 05-19-97
01780 - CLOSEOUT SUBMITTALS 05-19-97
DIVISION 02 - SITE CONSTRUCTION
02010 - SUBSURFACE CONDITIONS 06-26-97
02200 - EARTHWORK 06-26-97
02220 - UTILITY TRENCHING, BACKFILL & COMPACTION 06-26-97
02511 - HOT-MIX ASPHALT PAVING 06-26-97
02520 - PORTLAND CEMENT CONCRETE PAVING 06-26-97
02523 - CONCRETE CURBS, GUTTERS, SIDEWALKS & DRIVEWAYS 06-26-97
02528 - EXTRUDED CONCRETE CURBS 06-26-97
02580 - PAVEMENT MARKINGS 06-26-97
02665 - WATER SYSTEMS 06-26-97
02700 - SEWERAGE AND DRAINAGE 06-26-97
DIVISION 03 - CONCRETE
03100 - CONCRETE FORMS AND ACCESSORIES 05-19-97 06-26-97
03200 - CONCRETE REINFORCEMENT 05-19-97 06-26-97
03300 - CAST-IN-PLACE CONCRETE 05-19-97 06-26-97
</TABLE>
THE RESORT AT SUMMERLIN TABLE OF CONTENTS
LAS VEGAS, NEVADA VOLUME I-A
Project No. 95255 Page - 1 December 10, 1997
<PAGE> 127
<TABLE>
<CAPTION>
<S> <C> <C>
03386 - POST-TENSIONED STRUCTURAL CONCRETE 05-19-97 06-26-97
03411 - STRUCTURAL PRECAST CONCRETE 06-26-97
03455 - GLASS FIBER REINFORCED CONCRETE 06-26-97
DIVISION 04 - MASONRY
04810 - UNIT MASONRY ASSEMBLIES 05-19-97
DIVISION 05 - METALS
05120 - STRUCTURAL STEEL 05-19-97 06-26-97
05210 - STEEL JOISTS 05-19-97
05310 - STEEL DECK 05-19-97
05400 - COLD FORMED METAL FRAMING 05-19-97
05500 - METAL FABRICATIONS 05-19-97
05510 - METAL STAIRS 05-19-97
05520 - HANDRAILS AND RAILINGS 05-19-97
05810 - EXPANSION JOINT COVER ASSEMBLIES 05-19-97
END TABLE OF CONTENTS VOLUME I-A
</TABLE>
TABLE OF CONTENTS THE RESORT AT SUMMERLIN
VOLUME I LAS VEGAS, NEVADA
December 10, 1997 Page - 2 Project No. 95255
<PAGE> 128
PROJECT MANUAL
VOLUME I-B (DIVISIONS 06 THRU 14)
FOR
THE RESORT AT SUMMERLIN
HOTEL, CASINO & ENTERTAINMENT COMPLEX
LAS VEGAS, NEVADA
PROJECT NO. 95255
ISSUED FOR CONTRACT
DECEMBER 10, 1997
OWNER
-----
THE RESORT AT SUMMERLIN, L.P.
THE RESORT AT SUMMERLIN, INC. (GENERAL PARTNER)
3330 West Desert Inn Road, Unit #5
Las Vegas, NV 89102
ARCHITECT INTERIOR DESIGN
--------- ---------------
Paul Steelman, Ltd. Paul Steelman Interiors
3330 W. Desert Inn Road 3330 W. Desert Inn Road
Las Vegas, NV 89102 Las Vegas, NV 89102
STRUCTURAL ENGINEER ELECTRICAL ENGINEER MECHANICAL ENGINEER
------------------- ------------------- -------------------
Martin & Peltyn, Inc. Morris Engineering, Inc. AE Associates
1909 South Jones Blvd. 3711 Regulus Drive 444 E. Warm Springs Road
Las Vegas, NV 89102 Las Vegas, NV 89102 Las Vegas, NV 89119
CIVIL ENGINEER LANDSCAPE ARCHITECT CULINARY
-------------- ------------------- --------
Martin & Martin, Inc. Lifescapes International Inc FSA Design
1909 South Jones Blvd. 4930 Campus Drive 300 Corporate Pointe
Las Vegas, NV 89102 Newport Beach, CA 92660 Culver City, CA 90230
ACOUSTICS WATER FEATURES FIRE/LIFE SAFETY
--------- -------------- ----------------
Pelton Marsh Kinsella STO Design Group, Inc. Rolf Jensen & Associates
1420 W. Mockingbird Ln. 2500 Redhill Ave. 2125 Oak Grove Road
Dallas, TX 75247 Santa Ana, CA 92705 Walnut Creek, CA 94598
<PAGE> 129
TABLE OF CONTENTS
VOLUME I-B - DIVISIONS 06 THRU 14
<TABLE>
<CAPTION>
<S> <C> <C>
ISSUED: REVISED:
DIVISION 06 - WOOD AND PLASTICS
06200-FINISH CARPENTRY 05-19-97
06410-CUSTOM CABINETS 05-19-97
06610-GLASS FIBER AND RESIN FABRICATIONS 05-19-97
06620-CAST PLASTIC FABRICATIONS 05-19-97
DIVISION 07 - THERMAL AND MOISTURE PROTECTION
07130-SHEET WATERPROOFING 05-19-97
07185-TRAFFIC MEMBRANE 05-19-97
07212-BOARD AND BATT INSULATION 05-19-97
07240-EXTERIOR INSULATION AND FINISH SYSTEMS 05-19-97
07260-VAPOR RETARDERS 05-19-97
07320-ROOF TILES 05-19-97
07530-ELASTOMERIC MEMBRANE ROOFING 05-19-97 07-17-97
07620-SHEET METAL FLASHING AND TRIM 05-19-97
07724-ROOF HATCHES 05-19-97
07815-SPRAYED-ON FIREPROOFING 05-19-97
07840-FIRESTOPPING 05-19-97
07900-JOINT SEALERS 05-19-97
DIVISION 08 - DOORS AND WINDOWS
08111-STANDARD STEEL DOORS 05-19-97
08112-STANDARD STEEL FRAMES 05-19-97 06-04-97
08211-FLUSH WOOD DOORS 06-04-97 08-29-97
08305-SLIDING GLASS DOORS 05-19-97
08310-ACCESS DOORS AND PANELS 05-19-97
08331-OVERHEAD COILING DOORS 05-19-97
08332-OVERHEAD COILING GRILLES 05-19-97
08336-FIRE DOORS WITH EMERGENCY EGRESS 06-04-97
08351-ACCORDION FOLDING DOORS 05-19-97
08410-METAL-FRAMED STOREFRONTS 05-19-97
08520-ALUMINUM WINDOWS 05-19-97
08630-METAL-FRAMED SKYLIGHTS 08-05-97
08710-FINISH HARDWARE 06-19-97 09-16-97
08800-GLAZING 05-19-97
08830-MIRRORS 05-19-97
08910-METAL-FRAMED CURTAIN WALL 05-19-97
DIVISION 09 - FINISHES
09206-METAL LATH 05-19-97
09220-PORTLAND CEMENT PLASTER 05-19-97
09260-GYPSUM BOARD ASSEMBLIES 05-19-97
09310-CERAMIC TILE 05-19-97
09330-QUARRY TILE 05-19-97
09340-PAVER TILE 05-19-97 06-04-97
</TABLE>
THE RESORT AT SUMMERLIN TABLE OF CONTENTS
LAS VEGAS, NEVADA VOLUME I-B
Project No. 95255 Page - 1 December 10, 1997
<PAGE> 130
<TABLE>
<CAPTION>
<S> <C> <C>
09511-SUSPENDED ACOUSTICAL CEILINGS 05-19-97
09638-DIMENSION STONE - THIN SET TILE 05-19-97 06-04-97
09650-RESILIENT FLOORING 05-19-97
09680-CARPET 05-19-97
09720-WALL COVERING 05-19-97
09774-FIBERGLASS REINFORCED PLASTIC PANELS 05-19-97
09900-PAINTS AND COATINGS 05-19-97 07-17-97
DIVISION 10 - SPECIALTIES
10165-PLASTIC LAMINATE TOILET COMPARTMENTS 05-19-97
10210-WALL LOUVERS 05-19-97
10260-WALL AND CORNER GUARDS 05-19-97
10270-ACCESS FLOORING 08-29-97
10300-FIREPLACES 05-19-97
10500-LOCKERS 08-05-97
10510-WOOD LOCKERS 08-05-97
10523-FIRE EXTINGUISHERS, CABINETS AND ACCESSORIES 05-19-97
10605-WIRE MESH PARTITIONS 05-19-97
10651-OPERABLE PANEL PARTITIONS 08-05-97
10800-TOILET, BATH, AND LAUNDRY ACCESSORIES 05-19-97
DIVISION 11 - EQUIPMENT
11060-STAGE RIGGING SYSTEM 09-23-97
11061-PORTABLE DIMMING EQUIPMENT 09-23-97
11062-PORTABLE STAGE LIGHTING INSTRUMENTS 09-23-97
11063-PERFORMANCE DIMMING SYSTEM 09-23-97
11130-AUDIO/VISUAL SYSTEMS 09-23-97
11132-MATV-TELEVISION DISTRIBUTION SYSTEM 09-23-97
11133-PROJECTION SCREENS 09-23-97
11134-PROJECTOR LIFTS 09-23-97
11161-DOCK LEVELERS 05-19-97
11164-DOCK SEALS AND SHELTERS 05-19-97
11165-DOCK BUMPERS 05-19-97
11400-FOOD SERVICE EQUIPMENT 05-19-97
DIVISION 12 - FURNISHINGS
12486-FLOOR MATS 05-19-97
DIVISION 13 - SPECIAL CONSTRUCTION
13032-SAUNAS 08-29-97
DIVISION 14 - CONVEYING SYSTEMS
14201-PASSENGER ELEVATORS 06-19-97
14240-PASSENGER ELEVATORS - HYDRAULIC 08-05-97
14245-SERVICE AND FREIGHT ELEVATORS HYDRAULIC 08-05-97
14310-ESCALATORS 08-05-97
14420-ACCESSIBILITY LIFTS 08-29-97
</TABLE>
END TABLE OF CONTENTS VOLUME I-B
TABLE OF CONTENTS THE RESORT AT SUMMERLIN
VOLUME I-B LAS VEGAS, NEVADA
December 10, 1997 Page - 2 Project No. 95255
<PAGE> 131
PROJECT MANUAL
VOLUME II (MECHANICAL & ELECTRICAL)
FOR
THE RESORT AT SUMMERLIN
HOTEL, CASINO & ENTERTAINMENT COMPLEX
LAS VEGAS, NEVADA
PROJECT NO. 95255
ISSUED FOR CONTRACT
DECEMBER 10, 1997
OWNER
THE RESORT AT SUMMERLIN, L.P.
THE RESORT AT SUMMERLIN, INC. (GENERAL PARTNER)
3330 West Desert Inn Road, Unit # 5
Las Vegas, NV 89102
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ARCHITECT INTERIOR DESIGN
Paul Steelman, Ltd. Paul Steelman Interiors
3330 W. Desert Inn Road 3330 W. Desert Inn Road
Las Vegas, NV 89102 Las Vegas, NV 89102
STRUCTURAL ENGINEER ELECTRICAL ENGINEER MECHANICAL ENGINEER
Martin & Peltyn, Inc. Morris Engineering, Inc. AE Associates
1909 South Jones Blvd. 3711 Regulus Drive 444 E. Warm Springs Road
Las Vegas, NV 89102 Las Vegas, NV 89102 Las Vegas, NV 89119
CIVIL ENGINEER LANDSCAPE ARCHITECT CULINARY
Martin & Martin, Inc. Lifescapes International Inc. FSA Design
1909 South Jones Blvd. 4930 Campus Drive 300 Corporate Pointe
Las Vegas, NV 89102 Newport Beach, CA 92660 Culver City, CA 90230
ACOUSTICS WATER FEATURES FIRE/LIFE SAFETY
Pelton Marsh Kinsella STO Design Group, Inc. Rolf Jensen & Associates
1420 W. Mockingbird Ln. 2500 Redhill Ave. 2125 Oak Grove Road
Dallas, TX 75247 Santa Ana, CA 92705 Walnut Creek, CA 94598
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TABLE OF CONTENTS
VOLUME II - DIVISIONS 16 AND 16
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DIVISION 15 - MECHANICAL ISSUED: REVISED:
15010-BASIC MECHANICAL REQUIREMENTS 05-19-97
15050-BASIC MECHANICAL MATERIALS AND METHODS 05-19-97
15055-BASIC PIPING MATERIALS AND METHODS 05-19-97
15100-VALVES 05-19-97
15120-PIPING ACCESSORIES 05-19-97
15140-PIPE SUPPORTS AND ANCHORS 05-19-97
15170-MOTORS AND STARTERS 05-19-97
15173-VARIABLE FREQUENCY DRIVES 05-19-97
15190-MECHANICAL IDENTIFICATION 05-19-97
15240-VIBRATION AND SEISMIC CONTROL 05-19-97
15250-MECHANICAL INSULATION 05-19-97
15300-FIRE PROTECTION SYSTEMS 05-19-97
15301-FM-200 FIRE SUPPRESSION SYSTEM WITH 08-29-97
ANALOG DETECTION 05-19-97
15411-WATER DISTRIBUTION PIPING 05-19-97
15420-DRAINAGE AND VENT SYSTEMS 05-19-97
15440-PLUMBING FIXTURES 05-19-97
15450-PLUMBING EQUIPMENT 05-19-97
15465-WATER SOFTENERS 05-19-97
15486-FUEL PIPING SYSTEMS 08-29-97
15500-FIXED INERGEN FIRE SUPPRESSION SYSTEM 05-19-97
15510-HYDRONIC PIPING 05-19-97
15520-STEAM AND CONDENSATE PIPING 05-19-97
15540-PUMPS 05-19-97
15545-CHEMICAL (WATER) TREATMENT SYSTEMS 05-19-97
15555-BOILERS 05-19-97
15575-FLUE SYSTEMS 05-19-97
15670-PACKAGE ROOFTOP UNITS 05-19-97
15680-WATER CHILLERS 05-19-97
15690-HEAT EXCHANGERS 05-19-97
15710-COOLING TOWERS 05-19-97
15785-COMPUTER ROOM AIR CONDITIONING UNITS 05-19-97
15855-AIR HANDLING UNITS WITH COILS 05-19-97
15870-POWER VENTILATORS 05-19-97
15891-METAL DUCTWORK 05-19-97
15910-DUCTWORK ACCESSORIES 05-19-97
15930-VARIABLE VOLUME TERMINALS 05-19-97
15935-AIR INLETS AND OUTLETS 05-19-97
15970-AUTOMATIC TEMPERATURE CONTROLS 05-19-97
15980-AUTOMATIC SMOKE CONTROL PROGRAM 05-19-97
15990-TEST-ADJUST-BALANCE 05-19-97
15995-MECHANICAL SYSTEM COMMISSIONING 05-19-97
DIVISION 16 - ELECTRICAL
16010-BASIC ELECTRICAL REQUIREMENTS 06-04-97
16111-CONDUIT 06-04-97
16112-SURFACE RACEWAYS 06-04-97
16113-UNDERFLOOR DUCTS 06-04-97
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THE RESORT AT SUMMERLIN TABLE OF CONTENTS
LAS VEGAS, NEVADA VOLUME II
Project No. 95255 Page-1 December 10, 1997
<PAGE> 133
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16114-CABLE TRAYS
16117-MANHOLES
16120-WIRE & CABLE
16121-MEDIUM VOLTAGE CABLE & ACCESSORIES
16130-BOXES
16141-WIRING DEVICES
16160-CABINETS & ENCLOSURES
16180-ELECTRICAL CONNECTIONS
16190-SUPPORTING DEVICES
16195-ELECTRICAL IDENTIFICATION
16321-DISTRIBUTION TRANSFORMERS
16350-CIRCUIT BREAKER SWITCHES
16361-AIR INTERRUPTER SWITCHES
16390-PRIMARY GROUNDING
16410-POWER FACTOR CORRECTION
16415-SURGE SUPPRESSORS
16420-SERVICE ENTRANCE
16425-SWITCHBOARDS
16430-METERING
16440-DISCONNECT SWITCHES
16450-SECONDARY GROUNDING
16461-DRY TYPE TRANSFORMERS
16470-PANELBOARDS
16480-MOTOR CONTROLS
16485-CONTACTORS
16495-TRANSFER SWITCH
16510-LIGHTING FIXTURES
16577-OBSTRUCTION LIGHTS
16611-STATIC UNINTERRUPTIBLE POWER SUPPLY
16614-UTILITY PARALLELING EMERGENCY GENERATOR
CONTROL & DISTRIBUTION SYSTEM 06-04-97 08-29-97
16622-PACKAGED ENGINE GENERATOR SYSTEMS
16670-LIGHTING PROTECTION SYSTEMS
16921-MECHANICAL EQUIPMENT CONTROLS
16950-TESTING
END TABLE OF CONTENTS VOLUME II
TABLE OF CONTENTS THE RESORT AT SUMMERLIN
VOLUME II LAS VEGAS, NEVADA
September 23, 1997 Page-2 Project No. 95255
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<PAGE> 134
PROJECT MANUAL
VOLUME III (APPENDIX & ADDENDA)
FOR
THE RESORT AT SUMMERLIN
HOTEL, CASINO & ENTERTAINMENT COMPLEX
LAS VEGAS, NEVADA
PROJECT NO. 95255
ISSUED FOR CONTRACT
DECEMBER 10, 1997
OWNER
THE RESORT AT SUMMERLIN, L.P.
THE RESORT AT SUMMERLIN, INC. (GENERAL PARTNER)
3330 West Desert Inn Road, Unit #5
Las Vegas, NV 89102
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<S> <C> <C>
ARCHITECT INTERIOR DESIGN
Paul Steelman, Ltd. Paul Steelman Interiors
3330 W. Desert Inn Road 3330 W. Desert Inn Road
Las Vegas, NV 89102 Las Vegas, NV 89102
STRUCTURAL ENGINEER ELECTRICAL ENGINEER MECHANICAL ENGINEER
Martin & Peltyn, Inc. Morris Engineering, Inc. AE Associates
1909 South Jones Blvd. 3711 Regulus Drive 444 E. Warm Springs Road
Las Vegas, NV 89102 Las Vegas, NV 89102 Las Vegas, NV 89119
CIVIL ENGINEER LANDSCAPE ARCHITECT CULINARY
Martin & Martin, Inc. Lifescapes International Inc FSA Design
1909 South Jones Blvd. 4930 Campus Drive 300 Corporate Pointe
Las Vegas, NV 89102 Newport Beach, CA 92660 Culver city, CA 90230
ACOUSTICS WATER FEATURES FIRE/LIFE SAFETY
Pelton Marsh Kinsella STO Design Group, Inc. Rolf Jensen & Associates
1420 W. Mockingbird Ln. 2500 Redhill Ave. 2125 Oak Grove Road
Dallas, TX 75247 Santa Ana, CA 92705 Walnut Creek, CA 94598
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<PAGE> 135
TABLE OF CONTENTS
VOLUME III - APPENDIX, APPENDIX II AND ADDENDA
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ISSUED: REVISED:
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APPENDIX
DOOR SCHEDULES:
HOTEL DOOR SCHEDULE 06-04-97 07-03-97
BUFFET LEVEL DOOR SCHEDULE 06-30-97 08-29-97
CASINO LEVEL DOOR SCHEDULE 06-30-97 08-29-97
CASINO BASEMENT DOOR SCHEDULE 06-30-97 08-29-97
HEALTH CLUB 2ND LEVEL DOOR SCHEDULE 06-30-97 08-29-97
HEALTH CLUB 1ST LEVEL DOOR SCHEDULE 06-30-97 08-29-97
HEALTH CLUB BASEMENT DOOR SCHEDULE 06-30-97 08-29-97
LIFESTYLES CENTER DOOR SCHEDULE 06-30-97 08-29-97
LIFESTYLES CENTER BASEMENT DOOR SCHEDULE 06-30-97 08-29-97
SPECIALTY RETAIL 1ST LEVEL DOOR SCHEDULE 06-30-97
CONFERENCE CENTER DOOR SCHEDULE 06-30-97 08-29-97
PUTTERS LOUNGE DOOR SCHEDULE 08-29-97
POOL BOY DOOR SCHEDULE 08-29-97
POOL BAR DOOR SCHEDULE 08-29-97
DOOR TYPES 06-04-97 07-03-97
LANDSCAPE CONSTRUCTION PACKAGE 06-26-97
REQUEST FOR PROPOSAL & BID FORM (WATER FEATURES) 09-16-97
FOOD SERVICE EQUIPMENT:
ATTACHMENT "A" - STANDARD DETAILS 05-19-97
ATTACHMENT "B" - EQUIPMENT SCHEDULE/BID FORM 05-19-97
APPENDIX II
LIGHTING FIXTURE SCHEDULE 06-19-97
SPECIFICATIONS FOR THE DESIGN AND INSTALLATION OF AN
AUTOMATIC FIRE DETECTION AND ALARM SYSTEM 08-01-97 08-29-97
ADDENDA II
ADDENDUM NUMBER 1 06-19-97
ADDENDUM NUMBER 2 06-26-97
ADDENDUM NUMBER 3 06-30-97
ADDENDUM NUMBER 4 07-03-97
ADDENDUM NUMBER 5 07-17-97
ADDENDUM NUMBER 6 07-24-97
ADDENDUM NUMBER 7 08-05-97
ADDENDUM NUMBER 8 08-29-97
ADDENDUM NUMBER 9 09-16-97
ADDENDUM NUMBER 10 12-10-97
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END TABLE OF CONTENTS VOLUME III
THE RESORT AT SUMMERLIN TABLE OF CONTENTS
LAS VEGAS, NEVADA VOLUME III
Project No. 95255 Page - 1 December 10, 1997
<PAGE> 136
SECTION 00910
ADDENDUM NUMBER 10
PARTICULARS
1.01 DATE: December 10, 1997
1.02 PROJECT: The Resort at Summerlin
1.03 PROJECT NUMBER: 95255
1.04 OWNER: The Resort At Summerlin, L.P./ The Resort At Summerlin, Inc.
(General Partner)
1.05 ARCHITECT: Paul Steelman, Ltd.
TO: PROSPECTIVE BIDDERS
2.01 This Addendum forms a part of the Contract Documents and modifies the
Bidding Documents dated June 4, 1997, with amendments and additions
noted below.
2.02 Acknowledge receipt of this Addendum in the space provided in the Bid
Form. Failure to do so may disqualify the Bidder.
CLARIFICATIONS
3.01 NOTE THE FOLLOWING ARCHITECT'S CLARIFICATION:
A. Incorporate The Attached List of Items To Be Included In the
Guaranteed Maximum Price, Issued for Contract, into the contract
Documents.
B. Incorporate The Attached FF & E Matrix, Issued for Contract, into
the Contract Documents.
C. All exterior balusters shall be GFRC.
3.02 ELECTRICAL LIGHTING NOTES:
A. Incorporate The Following Notes into the Contract Documents.
B. GENERAL NOTES
1. The Electrical Contractor shall be responsible for all
Lighting contained on the Electrical, Architectural,
Interior Design, and Lighting sheets in the Contract
Documents.
2. All exit signs throught the project shall be green "LED"
type.
C. CASINO
1. The Service Bar shall have a local wall box dimmer to
control lighting.
D. PUTTER'S LOUNGE
1. All of the portable lighting (i.e. Table Lamp, Floor Lamps,
Etc.) shall be installed on switched outlets.
THE RESORT AT SUMMERLIN ADDENDUM NUMBER 10
LAS VEGAS, NEVADA Section 00910
Project No. 95255 December 10, 1997
Page - 1
<PAGE> 137
CHANGES TO THE PROJECT MANUAL VOLUME I-A AND I-B
4.01 TABLE OF CONTENTS
A. Delete Table of Contents Volume I-A (Documents 00 Thru Division 01)
and I-B (Divisions 02 Thru 14), dated September 23, 1997, in its
entirety and replace with the revised Table of Contents, Volume I-A
(Documents 00 Thru Division 05) and I-B (Divisions 06 Thru 14), dated
December 10, 1997, issued with this Addendum and bound into the
Project Manual Issued For Contract.
4.02 DOCUMENT 00500 - AGREEMENT
A. Delete Document 00500 - Agreement (Includes AIA DOCUMENT A101), dated
July 17, 1997, in its entirety and replace with revised Document
00500 - Agreement (Includes AIA DOCUMENT A111), dated December 10,
1997, issued with this Addendum.
4.03 DOCUMENT 00700 - GENERAL CONDITIONS (INCLUDES AIA DOCUMENT A201 AND
SUPPLEMENTARY CONDITIONS)
A. Delete Document 00700 - General Conditions (Includes AIA DOCUMENT
A201 and SUPPLEMENTARY CONDITIONS), issued July 17, 1997, in its
entirety and replace with revised Document 00700 - General Conditions
(Includes AIA DOCUMENT A201CMa and SUPPLEMENTARY CONDITIONS), dated
December 10, 1997, issued with this Addendum.
4.04 SECTION 07320 - ROOF TILES
A. Delete this Specification Section, dated May 19, 1997, in its
entirety and replace with revised Section 07320 - Roof Tiles, dated
December 10, 1997, issued with this Addendum.
CHANGES TO THE PROJECT MANUAL VOLUME II (MECHANICAL & ELECTRICAL)
5.01 TABLE OF CONTENTS
A. Delete Table of Contents Volume II (Mechanical & Electrical ), dated
September 23, 1997, in its entirety and replace with the revised
Table of Contents, Volume II (Mechanical & Electrical), dated
December 10, 1997, issued with this Addendum and bound into the
Project Manual Issued For Contract.
5.02 SECTION 15500 - FIXED INERGEN FIRE SUPPRESSION SYSTEM
A. Delete this Specification Section, dated August 29, 1997, in its
entirety and replace with revised Section 16614 - Utility Paralleling
Emergency, Generator Control & Distribution Switchgear, dated
December 10, 1997, issued with this Addendum.
CHANGES TO THE PROJECT MANUAL VOLUME III (APPENDIX & ADDENDA)
6.01 TABLE OF CONTENTS
A. Delete Table of Contents Volume III, dated September 23, 1997, in its
entirety and replace with the revised Table of Contents, Volume III,
dated December 10, 1997, issued with this Addendum and bound into the
Project Manual Issued For Contract.
ADDENDUM NUMBER 10 THE RESORT AT SUMMERLIN
Section 00910 LAS VEGAS, NEVADA
December 10, 1997 Project No. 95255
PAGE - 2
<PAGE> 138
6.02 APPENDIX
A. LANDSCAPE CONSTRUCTION PACKAGE
1. Add the attached revised Sections to the Landscape Construction
Package, issued with this Addendum to the Appendix.
6.03 APPENDIX II
A. SPECIFICATIONS FOR THE DESIGN AND INSTALLATION OF AN AUTOMATIC FIRE
DETECTION AND ALARM SYSTEM
1. Delete this Specification, dated 8/29/97, and replace with revised
Specification, dated 12/10/97, issued with this Addendum.
CHANGES TO THE DRAWINGS
7.01 REVISED DRAWINGS
A. THE FOLLOWING DRAWINGS ISSUED WITH THIS ADDENDUM HAVE BEEN REVISE -
REPLACE ALL PREVIOUSLY ISSUED DRAWINGS WITH THESE "ISSUED FOR
CONTRACT" DRAWINGS:
1. Sheets Listed on Index Sheet A010.01 - INDEX SHEET - LOWRISE
PACKAGE, Issued For Contract, 12-10-97.
2. Sheets Listed on Index Sheet A010.01 - INDEX SHEET (CONT) - HOTEL
PACKAGE, Issued For Contract, 12-10-97.
3. Sheets Listed on Index Sheet WA-A003 - INDEX SHEET - PEDESTRIAN
WALKWAY, Issued For Contract, 12-10-97.
END OF ADDENDUM NUMBER 10
THE RESORT AT SUMMERLIN ADDENDUM NUMBER 10
LAS VEGAS, NEVADA Section 00910
Project No. 95255 Page - 3 December 10, 1997
<PAGE> 139
[J.A. JONES CONSTRUCTION LETTERHEAD]
AMENDMENT #AA TO GMP CONTRACT
THE RESORT AT SUMMERLIN
DECEMBER 18, 1997
PROJECT ALLOWANCES:
Entrance Signs, $10,000.
Door Type xx, Drawing A535, $25,000.
Wood Floor at the Stage in The Lounge, $4,500.
Elevator cab millwork for #1 & #2 at the Spa Entry, $20,000.
Total 20,000.
Elevator cab allowance, $7,500 each. Total $105,000.
Windows at the Executive Offices, $10,000.
Window at the Employee Dining Room, $6,500.
VALUE ENGINEERING ITEMS INCORPORATED IN THE GMP:
Millwork:
Use MDF mouldings in lieu of Poplar mouldings in Low Rise, High
Rise, Restaurants and all areas of the project.
Insulation:
High-Rise -- Exterior walls: R-19/R-11 unfaced batts,
Soundwalls: fiberglas sound batts, R-19 unfaced batts under
Clay Tile roof.
Low-Rise -- Exterior walls: R-19 Unfaced batts, Soundwalls:
Fiberglas sound batts, 1" rigid insulation @ Putters Lounge,
R-30 unfaced batts @ roof of Putters Lounge, Pool Bar and
Pool Boy.
Roofing:
Provide 4-ply built-up roofing in lieu of single ply.
<PAGE> 140
ATTACHMENT TO GMP CONTRACT
THE RESORT AT SUMMERLIN
DECEMBER 18, 1997
PAGE -2-
VALUE ENGINEERING ITEMS INCORPORATED IN THE GMP (CONT.):
Mechanical:
Delete VFD at chiller 1.
Cooling towers - s.s. basin & galv. construction.
Use vertical stacked fan coil units (4-pipe system).
Delete waterside heat exchanger.
Use 65% eff. Filters at casino air handlers.
Eliminate pressure relief fans, use auto dampers & relief hoods.
Delete steam system.
Eliminate plug valves at pumps in central plant.
Delete cooling tower bypass & valve.
Use higher kw/ton chillers, eliminate refrigerant recovery system.
Electrical:
Provide Gardco in lieu of Beta lighting fixtures.
Provide aluminum feeders.
**ADDITIONAL VALUE ENGINEERING ITEMS TO BE REVIEWED AND BECOME PART OF THE GMP:
Modifications to linear diffusers.
Combine public and back-of-house fan coils using air handlers.
Alternate lighting fixture package.
Alternate switchgear equipment.
Provide single-line modifications.
** The Owner shall authorize and cause the Architect to revise the Drawings and
Specifications to the extent necessary to reflect the agreed-upon assumptions
and clarifications contained in the attached Amendment #AA. Such revised
Drawings and Specifications shall be furnished to the General Contractor in
accordance with schedules agreed to by the Owner, Architect and General
Contractor. The General Contractor shall promptly notify the Architect and
Owner if such revised Drawings and Specifications are inconsistent with the
agreed-upon assumptions and clarifications.
<PAGE> 141
ATTACHMENT TO GMP CONTRACT
THE RESORT AT SUMMERLIN
DECEMBER 18, 1997
PAGE -3-
Clarifications:
Landscaping is based on Lifescapes International Inc.'s scope of work.
Fountains in the Retail Corridor and Health Club are complete units by
the Owner.
Lanterns in the Retail Corridor are by the Owner.
Etching pattern at the passenger elevators is excluded.
Coffee Shop Room C1-58 pastry display, counter and back counter are
excluded.
Plumbing fixtures are supplied by the Owner. (Hotels only). Guest rooms
& suites.
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Exhibit 10.2
DKK Draft 12-15-97 Clnl
License Agreement
THIS LICENSE AGREEMENT ("Agreement"), is dated and effective the 16th day
of December, 1997, (the "Effective Date"), and is by and between REGENT HOTELS
WORLDWIDE, INC., a Minnesota corporation ("Licensor"), and THE RESORT AT
SUMMERLIN, LIMITED PARTNERSHIP, a Nevada limited partnership ("Licensee"),
DEFINITIONS
Abandon. Conduct of the Licensee, including acts of omission as well as
commission, indicating a willingness, desire or intent to permanently
discontinue operating the Hotel as a System Hotel in accordance with this
Agreement. Any closing of the Hotel for more than one day which is not
authorized by, or contemplated in, this Agreement constitutes Abandonment.
Affiliate. Any Person (other than a natural person) controlled by, controlling
or under common control, either directly or indirectly, with either party.
Casino. The Casino and gaming establishment operated by Licensee on the
Property, set forth on Schedule A, including all real and personal property,
furniture, fixtures, equipment and other business assets used in connection
with the operation thereof.
Conference Center. The conference establishment operated by Licensee on the
Property, including all real and personal property, furniture, furnishings,
fixtures, equipment and other business assets used in connection with the
operation thereof.
Construct or Construction. All activities and plans, specifications, drawings,
scheme boards and other written information with respect to the planning,
design, construction, remodeling, renovation, rebuilding and replacement of,
and additions, alterations, improvements and repairs to, and modernizing and
redecorating the Hotel, including wall coverings, floor coverings, window
treatments, accessories, furniture, furnishings, fixtures, equipment and
operating supplies.
Defined Revenue. Casino Revenues of all kinds and nature including the Casino
Buffet Restaurant, 50% of Banquet Food Revenue and associated service charges
(if any), 50% of Banquet Beverage Revenue and associated service charges (if
any), 50% of conference room charges and audio visual equipment rental fees and
associated service charges (if any), Health Club Revenue not charged to hotel
accounts, Golf Revenues, Lifestyle Complex (Retail, including shops and
restaurants) Sales Revenue, interest, and investment income.
Discretion. In each instance where the word's "at Licensor's discretion" or
similar words are used, they are to be read as "at Licensor's absolute
discretion" and mean that Licensor may exercise its discretion without any
limitation whatsoever.
Equity Interest. Equity Interest means any stock, membership, partnership or
other ownership interest in Licensee. Unless specifically stated otherwise, the
term Equity Interest includes publicly-traded Equity Interests.
<PAGE> 2
General Partner. Any person or entity holding an Equity Interest in Licensee as
a General Partner. As of the date of this Agreement, the sole General Partner
of Licensee is the Resort at Summerlin, Inc.
Gross Revenue. Gross Revenue means all receipts, revenues, income (including
service charges) and proceeds from the sales of every kind received directly or
indirectly from the operation of the Hotel determined in accordance with the
Uniform System. Gross Revenue includes (i) the proceeds of insurance received
by Licensee with respect to use and occupancy or business interruption
insurance, with respect to the Hotel, (ii) forfeited customer deposits that are
not either refunded to the guest or paid to governmental authorities under
escheat laws or unclaimed property acts, and (iii) any amount recovered in any
legal action or proceeding or settlement thereof which arose out of the
operation of the Hotel. Gross Revenue specifically excludes the following:
- All sales, use, excise, V.A.T., gross receipts or other similar tax
imposed by any governmental authority having jurisdiction provided that
(a) the amount of the tax is added to the selling price and is expressly
charged to the guest or customer, and (b) the amount hereof is paid to
the appropriate taxing authority by Licensee.
- Gratuities or service charges collected and paid to employees;
- Credits or refunds to customers;
- Proceeds of loans and proceeds of any refinancing of loans;
- Proceeds of the sale of equity securities by Licensee;
- Proceeds of insurance except for those with respect to use and occupancy
or business interruption insurance;
- Amounts received in settlement for loss, theft or damage to property and
from the sale of property (real and personal) other than sales in the
ordinary course of business;
- Amounts attributable to a different Fiscal Year, under the accrual method
of accounting; and
- Proceeds of condemnation or sales or conveyances made in lieu thereof.
- Defined Revenue
Gross Revenue does not include (i) any imputed amount attributable to rooms
occupied on a complimentary basis or (ii) rooms occupied through frequent flyer
or other programs where, pursuant to any such program, the Hotel receives no
actual compensation whether by cash, credit or otherwise. Not withstanding the
above, (i) any room nights occupied on a complimentary basis in excess of 3% of
the Hotels available room nights in any twelve month period, will be included
in the calculation of Gross Revenue at the Hotel's Average Daily Rate for that
period.
Gross Room Revenue. The total dollar revenue for the rooms department of the
Hotel derived from the rental, use or occupancy of sleeping rooms in the Hotel
as determined in accordance with the Uniform System. Gross Room Revenue does
not include any sales, use, excise, gross receipts or other tax imposed by any
governmental authority having jurisdiction provided that (i) the amount of tax
is added to the selling price and is expressly charged to the customer; and
(ii) the amount thereof is paid to the appropriate taxing authority by Licensee.
2
<PAGE> 3
Health Spa or Health Club. The Health Spa or Club establishment operated by
Licensee on the Property, including all real and personal property, furniture,
furnishings, fixtures, equipment and other business assets used in connection
with the operation thereof.
Hotel. The portion of the Property used in connection with the operation of the
hotel business of Licensee including the Conference Center, but specifically
excluding the Casino and the Lifestyle Complex as set forth on Schedule A, and
all office space dedicated for use by the Casino. The Hotel has, or upon
completion of Construction will have, no fewer than 500 guest rooms.
Image. The overall and evolving perception by Third Parties of System Hotels'
locations, physical appearance, and the service standards and quality of
services experienced by such Third Parties at the System Hotels.
Includes or Including. The use of these or similar phrases is not intended to
limit the listing which follows them. The listings are examples or
illustrations and the phrases should be read as if the words "without
limitation" and "but not limited to" appeared after them unless expressly
stated otherwise.
License. The non-exclusive right granted to Licensee by Licensor pursuant to
this Agreement to operate and market the Hotel using the System and the Marks.
Lifestyle Complex. The portion of the Property set forth on Schedule A which is
operated by Licensee or leased to or operated by Third Parties including all
real and personal property, furniture, furnishings, fixtures, equipment and
other business assets used in connection with the operation thereof.
Limited Partner. Any person or entity holding an Equity Interest in Licensee as
a Limited Partner.
Limited Partnership Interest. An Equity Interest in Licenses owned by a Limited
Partner in Licensee.
Marks. The trademarks, service marks, tradenames, copyrights, insignia,
emblems, slogans, logos, commercial symbols, signs, designs and all other
visual identification by which the System and System Hotels are identified and
publicized.
Opening Date. The date on which the Hotel opens for business as a System Hotel.
Operating Manuals. The manuals containing the System Requirements and other
non-mandatory policies, procedures, instructions, standards, guidelines,
specifications, programs and materials which may be used in operating and
marketing a System Hotel. The Operating Manuals currently consist of the
Standards of Service and Operations Manual, the Standards of Identity,
Communications and Graphics Manual and the Standards for Design and
Construction Manual.
Owner. Licensee.
Parent Corporation. The sole shareholder of the General Partner of Licensee
which, as of the date of this Agreement, is Seven Circle Gaming Corporation.
Person. Any natural person or legal entity, including trustees,
representatives, administrators, heirs, executors, partnerships, corporations,
limited liability companies, trusts, unincorporated organizations and
governmental agencies, departments and branches.
Property. The Property includes the real property and all improvements located
or to be located at "The Resort at Summerlin" at Summerlin Parkway and Rampart
Blvd., in Las Vegas, Nevada. The
<PAGE> 4
improvements include all buildings, facilities, appurtenances, landscaping,
furniture, furnishings, fixtures, equipment and signs and all entry, exit,
garage and parking areas.
Provisions. The terms, covenants, conditions, provisions, rights and
obligations of this Agreement. As applicable to a particular party in the
context used, "compliance with the Provisions", "in accordance with the
Provisions", "pursuant to the Provisions" and similar phrases include both the
performance or failure to perform, or the exercise or failure to exercise
rights, as the context requires.
Publicly-traded Equity Interest. Any Equity Interest which is publicly traded
as that term is commonly understood.
Regent Reservation. A reservation for a guest room in the Hotel which is
processed through the Reservation System and which, although adjusted, is never
canceled through the Reservation System.
Reservation System. The reservation system developed and owned by Licensor's
Affiliate for accepting and transmitting reservations to System Hotels through
various media including toll free numbers, the Global Distribution Systems
under the chain code "RE", Licensor's Internet web sites and other Third Party
services which may be retained from time to time for this purpose.
System. The system developed and owned by Licensor for the operation of System
Hotels and the sale of System Hotel services of a distinctive character to the
public using the "Regent" name and other Marks as a means of identifying a
hotel's affiliation with the System.
System Hotel. A hotel which is entitled to operate using the System and the
Marks pursuant to a written agreement with or through Licensor.
System Requirements. All procedures, instructions, standards, requirements,
specifications and programs, whether contained in the Operating Manuals or
published elsewhere, as Licensor may promulgate from time to time and which are
mandatory in nature so as to comprise the requirements to be followed uniformly
with respect to all System Hotels and the use of the Marks in connection
therewith.
Third Party. Any Person, other than Licensor, Licensee and their respective
Affiliates.
Term. The period between the Effective Date of this Agreement and the
expiration or termination date of this Agreement.
Transfer. The voluntary or compulsory giving to another, directly or indirectly
and by operation of law or otherwise, of all or any part of that which is being
Transferred by any means or device, including an assignment, transfer,
conveyance, security interest, encumbrance, divestiture, sale, disposition,
pledge, foreclosure, levy, attachment, execution, trade, lease, sublease, gift,
bequest, inheritance and delegation.
Transferee. A Third Party to whom a Transfer is proposed to be made or actually
made, as applicable.
Ultimate Parent. The majority shareholder of the Parent Corporation, which as
of the date of this Agreement, is Tivolino Holding A.G.
Uniform System. The "Uniform System of Accounts for Hotels" (Hotel Association
of New York City, Inc.,) as revised periodically, which, as of the date of this
Agreement, is the ninth Revised Edition, 1996. The editions to be applied to
any particular matter are the editions which were in effect at the time the
practices in question occurred. If a practice spans more than one revision,
each such revision will apply to the period of time when the revision was in
effect.
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ACKNOWLEDGMENTS WARRANTIES AND REPRESENTATIONS
Licensee and Licensor acknowledge and agree to the following:
A. Each and every material System Requirement is essential to maintaining the
exceptional quality and customer service associated with the System, and
to enhancing the public acceptance of and demand for the Hotel and System
Hotels as a luxury system of hotels.
B. Licensor, at its discretion, may enter into agreements with Persons for
the operation of other System Hotels, which agreements may contain
provisions which vary materially from this Agreement's Provisions without
any liability or obligation to Licensee whatsoever, provided that the
overall Image of the System is maintained.
C. Because complete uniformity under various market circumstances may not
always be possible or desirable, except as set forth in this Agreement,
Licensor, at its discretion may vary System Requirements for other System
Hotels based upon local conditions, law or other circumstances, provided
the overall Image of the System Hotels is maintained, without any
liability or obligation to Licensee whatsoever.
D. Unless specifically stated otherwise, this Agreement and the relationship
between the parties includes everything with respect to, relating to,
arising out of, in connection with, and pursuant to it, whether or not
such phrases are used. The presence or absence of the phrases does not
expand or limit this frame of reference.
Licensee represents and warrants the following:
E. It has fee title or leasehold title to the Hotel or will acquire same
prior to the Opening Date without any restrictions that would interfere
with its performance in any material respect, subject to all other
restrictions, covenants and conditions covering the Property.
F. It has conducted its own investigation of all of the financial
requirements, the economics, the business and legal risks with respect to
the hotel business in general and of owning and operating a System Hotel
in particular.
G. Licensee is duly authorized to do business and is in good standing as a
Nevada limited partnership and has full power to perform all its
obligations hereunder. Licensee has taken all steps and has made all
filings to the extent required under the laws of Nevada to enable it to
perform all of its obligations hereunder.
Licensor represents and warrants the following:
H. Licensor's Affiliate is the sole owner of the Registered Marks and has
given Licensor the right to use the Marks and to license others to use
them in connection with the operation of luxury hotels.
I. Licensor intends to publicize the Marks to the public in an effort to
maintain them as representative of a system of luxury hotels, and to
further develop the System and the Marks over time and at a significant
cost.
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J. Licensor's objective is to expand the number of System Hotels worldwide by
selecting Persons who will operate hotels as System Hotels in compliance
with System Requirements.
K. Licensor has the cooperate power and authority to enter into this
Agreement. The execution, delivery and performance of this Agreement by
Licensor has been duly authorized by all necessary corporate actions on
the part of Licensor.
Based on these acknowledgments and representations, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Licensor and Licensee agree as follows:
ARTICLE 1
INCORPORATION OF DEFINITIONS, ACKNOWLEDGMENTS AND REPRESENTATIONS
The Definitions, Acknowledgments, Warranties and Representations are material
and are incorporated into this Agreement as if fully set forth in this Article
I.
ARTICLE 2
LICENSE
2.1 Grant. Licensor grants to Licensee and Licensee accepts from Licensor,
the License. The License is applicable only to the Hotel and only for so long
as this Agreement has not expired or has not been terminated.
2.2 Licensed Name. The Hotel will be named and identified only as The Regent
Las Vegas at The Resort at Summerlin or such other name as is mutually
agreeable to Licensee and Licensor. Licensee will use not other name or
trademark with respect to the operation of the Hotel without Licensor's prior
approval which approval may be granted or withheld at Licensor's discretion.
Notwithstanding the foregoing, Licensor recognizes and agrees that commercial
tenants of the Property may operate restaurants, stores or other businesses on
the Property under trademarks or tradenames other than those used by the Hotel.
2.3 Restrictions on License. No part of the Hotel may be offered for sale,
lease or otherwise as condominium or timeshare units without Licensor's prior
approval which approval shall not be unreasonably withheld.
2.4 Reservation of Rights. This License is exclusive solely as to the current
or intended location of the Hotel and does not include any exclusive territory
or protected area surrounding the Hotel. Licensor reserves for itself and its
Affiliates, the absolute right to operate and grant Third Parties the right to
operate System Hotels, and to operate and grant Third Parties the right to
operate hotels under other businesses, brands and systems whether in
competition with the Hotel or not, all at locations as determined at Licensor's
and its Affiliates' discretion. Notwithstanding the above, no other System
Hotels shall be licensed or operated within Clark County, Nevada, during the
term of this Agreement unless such System Hotel or Hotels are licensed to and
operated by Licensee on terms similar to those set forth in this Agreement.
2.5 General Compliance. Whether or not specifically stated in the various
Sections, and subject to Section 31..19, Licensee will comply with the
Provisions and operate the Hotel (i) in strict compliance with System
Requirements (ii) in such a manner as to maintain and enhance the System's
Image, and, (iii) to the
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extent not inconsistent with (i) and (ii), normally accepted business ethics,
and sound business and financial practices.
ARTICLE 3
TERM
3.1 Agreement. The Term commences on the Effective Date set forth on page 1
and expires on December 31st of the year in which the fifteenth (15th)
anniversary of the Opening Date occurs.
3.2 Renewals. Neither Licensee nor Licensor has any right or obligation (i)
to extend or renew the Term, or (ii) to enter into a new license agreement,
whether upon the same or different Provisions or in any respect whatsoever.
3.3 Early Termination. Notwithstanding the provisions of Article 3.1,
Licensee, provided it is otherwise in full compliance with the terms and
provisions of this Agreement, shall have the option to terminate this
Agreement, without payment of a termination fee or damages related to early
termination, said termination to be effective on December 31, 2005 or December
31, 2010, upon, in both cases, the existence of and in compliance with the
following conditions:
(a) Prior written notice received by Licensor given within sixty (60)
days of December 31, 2004, provided that on December 31, 2004,
Licensor does not have at least 20 hotels or 6,000 guestrooms in,
or under contract to become a part of, the System, at least
one-half (1/2) of which must be located in the United States,
Canada, Mexico and the Caribbean, or, prior written notice received
by Licensor given within sixty (60) days of December 31, 2009,
provided that on December 31, 2009, Licensor does not have at least
40 hotels or 12,000 guestrooms in, or under contract to become a
part of, the System, and;
(b) Payment by Licenses of all obligations incurred or accrued under
the Agreement through the effective date of termination; and
(c) Compliance with Licensor's other reasonable requirements related to
termination as set forth in this Agreement, including reaffirming
the survival of Article 31 of this Agreement, agreeing to
reasonable restrictions regarding publication of notice of the
termination to the media and complying with Licensee's obligations
contained in Sections 20.1.1 through 20.1.6.
If the Opening Date does not occur by December 31, 1999, all of the above dates
shall be extended by the number of days that the Opening Date occurs after
December 31, 1999.
Licensor and Licenses shall enter into a written termination agreement which
addresses the obligations of Licensee as provided in (b) and (c) hereof.
Licensee has the further right to terminate this Agreement for any reason if
(i) the development of a hotel on the Property is abandoned by the Licensee, or
(ii) the Opening Date does not occur by June 15, 2000. This right may be
exercised by notice to Licensor given between June 15 and June 30, 2000,
accompanied by a termination fee of $2,000,000 with the termination to be
effective within 30 days of the date of the notice.
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ARTICLE 4
HOTEL DEVELOPMENT AND CONSTRUCTION
4.1 Licensee's Risk. Licensee assumes all risk with respect to the selection
of the Hotel location, the acquisition of the right to possession thereof, and
to the Construction of the Hotel, all on the basis of its own investigation and
efforts. Licensor has no obligation to participate in any of these matters
except as may be necessary to Licensor's decision whether to sign this Agreement
or to determine compliance with System Requirements in deciding whether to allow
the Hotel to open as a System Hotel. Any review of or involvement by Licensor in
this process is for this purpose only and does not constitute a representation,
warranty or guarantee that from a Construction, economic, business or any other
standpoint the Property is suitable as a location for a System Hotel or that the
Hotel is suitable for its intended purpose.
4.2 Professional Services. Licensee will engage only qualified architects,
engineers, contractors and other design and construction professionals with
respect to the Construction and give due consideration to any opinions which
Licensor might express. The interior designer must have significant experience
in the design of international luxury hotels. Licensor acknowledges that the
design and construction professionals listed on Schedule 4.2 attached hereto are
qualified and acceptable to Licensor.
4.3 Cooperation. Licensee will cooperate with Licensor in the exchange of all
reasonably requested information with respect to the Construction and ensure the
cooperation of others under its direction or control with respect to the
exchange of such information and the exercise by Licensor of any of its rights
and obligations. When requested by Licensor, Licensee and such others engaged by
it on the Construction, as Licensor may reasonably request, will attend
Construction meetings to be held at the Property to the extent practicable.
Licensee shall not be required to attend more than two (2) meetings regarding
Construction at a location other than the Property during any twelve (12) month
period.
4.4 Construction. Licensee will Construct the Hotel substantially in
accordance with the conceptual, preliminary and final construction and design
plans and specifications listed on Schedule 4.4 attached hereto (the "Plans"),
together with the System Requirements and Image described in the Operating
Manuals and other reasonable requirements imposed by Licensor in the ordinary
course of business generally consistent with those required of other System
Hotels (collectively, "Construction Requirements") subject to Section 4.6 below.
Licensee will make no material variances from the Construction Requirements
without Licensor's prior approval.
4.5 Licensor's Approval. Licensee will submit to Licensor all information with
respect to the Construction which Licensor, reasonably, deems material to a
determination of whether the Construction will meet or has met the Construction
Requirements in all material respects. Upon receipt of such information,
Licensor will review it with all deliberate speed and advise Licensee as to any
changes in the Construction reasonably needed to meet the Construction
Requirements, in all material respects.
4.6 Commencement of Construction. Licensee will begin the actual Construction
of the Hotel on or before March 1, 1998 ("Construction Commencement Date").
Licensor may not require any changes which would violate any state law,
regulation or ordinance, or any restrictive covenants which apply to the
property or any conditions required by the Howard Hughes Corporation or Howard
Hughes Properties. "Beginning" with respect to this Section 4.6 is determined by
any of the following activities which would normally take place earliest in the
Construction process: site clearing, excavation, demolition or removal of
furniture, fixtures or equipment. Once begun, Licensee will diligently pursue
the Construction to completion no later than the Opening Date.
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4.7 Inspection: Cooperation. Licensee will provide Licensor with access, at
Licensor's expense, to the Hotel during the Construction process at all
reasonable times, upon reasonable prior notice, to determine whether the
Construction is proceeding on schedule and in accordance with the Construction
Requirements, and for any other purpose reasonably related to Licensee's
compliance with the Provisions as set forth in this Agreement.
4.8 Opening the Hotel. Licensee will not open the Hotel to customers and
commence operating it as a System Hotel without Licensor's prior approval as
set forth below. Licensee's opening the Hotel without such approval is an
unauthorized use of the Marks and the System.
4.8.1. Conditions to Opening. Licensor is not obligated to agree to an
Opening Date, nor approve the Hotel to open as a System Hotel unless and
until Licensor has determined, (i) that the Construction has been completed
substantially in accordance with the Construction Requirements, (ii) that
all of the employees needed to provide service in accordance with the
System Requirements are employed and have completed all necessary training,
(iii) that in all material respects the Hotel is ready to accept customers,
presenting them with a complete experience which meets the System
Requirements, and (iv) that License is not in Default of any material
Provisions.
4.8.2 Notice. Licensee will give Licensor a minimum of Ninety (90) days
notice of the date on which Licensee would like the Opening Date to occur
("Anticipated Date"). Licensor will inspect the Hotel at least thirty (30)
days prior to the Anticipated Date. Based on such inspection and on
conditions at that time, or by other means available to Licensor, Licensor,
within two (2) business days of such inspection, will advise Licensee in
writing of any major deficiencies with respect to (i) through (iv) above.
If any deficiencies are not corrected by the Anticipated Date, Licensor may
withhold its approval to open the Hotel on that date.
4.8.3 Opening Date. Licensee must take the necessary measures to
accomplish all of the above so that the Opening Date actually occurs no
later than August 1, 1999 subject to Section 32.14.
4.9 Cost. Licensee is solely responsible for the entire cost of all of the
activities contemplated by this Article 4 with respect to the development and
Construction of the Hotel except for those incurred by Licensor in performing
any inspections or in making any determination that the Hotel is or is not
ready to open as a System Hotel.
4.10 Compliance with Laws. License is solely responsible for obtaining all
necessary permits, licenses and architectural seals, and in all other respects,
complying with the applicable requirements of all governmental authorities
having jurisdiction with respect to the Construction.
4.11 Limitation on Licensor Liability. Licensor is not responsible for
reviewing, inspecting or approving the Construction from the standpoint of the
structural, mechanical and electrical systems, construction means and methods,
or conformance with the applicable requirements of any governmental authority
having jurisdiction, including the Americans With Disabilities Act, nor shall
any such review, inspection or approval be deemed to be for those purposes in
any respect whatsoever. Any inspections, reviews or approvals made or given by
Licensor are solely for the purpose of determining whether Licensee has
complied with the Construction Requirements so that the Hotel may open as a
System Hotel and is exercised primarily with respect to those aspects of the
Construction relating to operational considerations and aesthetics such as
architectural and interior design, landscaping, color schemes, sizes, finishes
and materials. Licensor's agreement to the Opening Date is a permission only,
and not an assurance, representation or warranty (i) of the qualifications,
capabilities, suitability, adequacy or performance of any person involved in
the Construction, or (ii) that all or any part of the Construction or Hotel is
safe, suitable,
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fit or proper for its intended use or purpose, or (iii) that the Construction
has been performed in a workmanlike manner or in compliance with the applicable
requirements of all governmental authorities having jurisdiction. This applies
even though Licensor's inspections, reviews and any approvals may have related
to structural, mechanical, and electrical systems, safety, code compliance or
other matters outside the scope of its right to inspect, review and approve.
Licensor has no liability or obligation whatsoever to Licensee or any Third
Party, including any architect, engineer, contractor, subcontractor or supplier
with respect to or arising out of the Construction or Licensee's activities.
ARTICLE 5
MARKS AND SYSTEM
5.1 Ownership. Licensor owns all right, title and interest in and to the
Marks, the System and the goodwill associated with and symbolized by them, as
they currently exist and as they may be developed in the future. Licensor
represents and warrants that it has all rights, registrations and
authorizations necessary to grant Licensee the rights to lawfully use the Marks
as contemplated by and for the Term of this Agreement. Licensor further
represents that it has no knowledge of any pending or threatened claim, action
or proceeding alleging that the Marks infringe upon the right, title and
interest of any Third Party in and to the Marks or any similar intellectual
property. Licensor shall have no right to the use of the name or trademarks
related to "The Resort at Summerlin" or "Summerlin" without the prior approval
of Licensee and Howard Hughes Corporation and those rights shall remain solely
with Licensee, however Licensor will be allowed to refer to "The Resort at
Summerlin" for normal promotional purposes and description of the location of
The Regent Las Vegas.
5.2 Changes. From time to time and at Licensor's discretion, Licensor may
modify all or any part of the Marks and Systems by way of addition or deletion
or otherwise. Such modifications, when made, become part of the Marks and the
System. Upon receipt of written notice of such modifications, Licensee, as soon
as reasonably practicable, will cease using the "old" Marks and System and
commence using the "new" Marks and System. If such modification results in a
discontinuance of the Marks "Regent" or the logo, and the new Marks and System
are not comparable to the old Marks and System, then Licensee has the option to
require Licensor to reimburse Licensee for Licensee's costs and expenses
incurred in complying with this Provision (e.g. costs of changing signs,
stationary and accessories) or, at its sole discretion, to terminate this
Agreement upon thirty (30) days notice to Licensor without the payment of a
termination fee or damages related to early termination
5.3 Use. Licensee will:
5.3.1 Use the Marks and the System only in accordance with the System
Requirements and discontinue any use of the System or the Marks which does
not comply with the System Requirements within five (5) business days of
notice from Licensor.
5.3.2 Not assert or acquire any ownership or other rights in the Marks,
the System or the goodwill associated with either of them other than the
specific rights granted herein.
5.3.3 Not take any action whatsoever to contest Licensor's proprietary
interest in the Marks, the System or the goodwill associated with either of
them.
5.3.4 Refrain from any acts or omissions which infringe upon or demean the
goodwill or the Image associated with the Marks or the System.
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5.3.5 Other than as provided for in Section 2.2, not use the Marks
in or as a part of its corporate, partnership or other business entity
or trade name.
5.3.6 Not use the Marks or any part thereof in connection with the
establishment of a domain name on the "internet" without Licensor's
prior approval, which approval shall not be unreasonably withheld.
5.4 ADVERSE CLAIMS TO MARKS. Upon receipt of notice from Licensor that
Licensor has made a determination through legal counsel or that there has been
an adjudication by a court of competent jurisdiction that a Third Party's right
to all or any part of the Marks or the System is superior to Licensor's,
Licensee will immediately cease using that part of or all of the Marks or the
System as specified by Licensor.
5.5 DEFENSE OR ENFORCEMENT OF RIGHTS. As soon as Licensee becomes aware of
any claims or complaints with respect to the Marks or System or their
unauthorized use by Third Parties, Licensee will notify Licensor. At its
discretion, Licensor will determine whether to commence any action or defend
any litigation or other proceedings involving the Marks or System. In addition,
Licensee, without compensation for its time, but at Licensor's expense, will
cooperate in all respects with Licensor in prosecuting or defending in such
litigation or proceedings. Except as stated above, Licensor is responsible for
all costs and expenses associated with the commencement and prosecution of any
action or defending any claims related to the Marks and System.
ARTICLE 6
FEES
6.1 INITIAL FEE. As a condition precedent to Licensor's signing this
Agreement, Licensee has paid an Initial Fee of $50,000. Upon such signing, this
Initial Fee becomes non-refundable and inures totally to the benefit of
Licensor (except in the event of a material breach or default by Licensor in
connection with its pre-opening obligations and provisions under this
Agreement).
6.2 CONTINUING FEE. Licensee will pay to the Licensor a Continuing Fee
equal to one and three-fourths percent (1.75%) of the Hotel's Gross Revenues
per month. The Continuing Fee will be paid on or before the twentieth (20th)
day of each month for the preceding month.
6.3 RESERVATION FEE. Licensee will pay Licensor a Reservation Fee equal to
(i) a fixed fee which is currently $200.00 per guest room per year and (ii) a
variable fee of three percent (3%) of the Gross Room Revenue derived from all
Regent Reservations. Beginning January 1st, 2001, and on each January 1st
thereafter, the $200.00 fixed fee may be increased at Licensor's discretion,
but not by more than five percent (5%) for any calendar year. The increase for
any calendar year must be implemented within ninety (90) days of the applicable
January 1st date and must be applicable pro rata to all System Hotels.
6.4 MARKETING FEE. Licensee will pay to Licensor a Marketing Fee equal to
one and one-half percent (1.5%) of the Hotel's Gross Revenue per month. The
Marketing Fee will be paid on or before the twentieth (20th) day of each month
for the preceding month.
6.5 PROGRAM FEES. In addition to the fees set forth in Sections 6.1
through 6.4, Licensee will pay to Licensor all other actual and necessary fees
and charges incurred with respect to participation in System programs and for
services rendered by Licensor for which a fee or charge is imposed to all
System Hotels. Such fees and charges will be uniform to all System Hotels which
become System Hotels after the effective date of this Agreement, subject to the
requirements of all governmental authorities having jurisdiction, and will not
exceed the costs associated with the programs.
<PAGE> 12
6.6 DELINQUENT PAYMENTS. Unless otherwise stated, Licensee will pay all
amounts due to Licensor or its Affiliates within thirty (30) days after
invoice. Amounts not paid when due will bear interest at the lesser of one and
one-half percent (1.5%) per month or the maximum contract rate of interest
permitted by applicable law. In addition to any amounts Licensee might
otherwise be required to pay pursuant to the Provisions, Licensor may also
assess a late payment fee of up to US $100 for each month an amount due remains
delinquent to reimburse Licensor for Licensor's collection and administrative
expenses.
6.7 TAXES. Licensee will reimburse Licensor for any sales, use, excise,
VAT, gross receipts or similar tax (other than income taxes) imposed upon any
fees or other payments made by Licensee to Licensor by any taxing authority
having jurisdiction.
6.8 WITHHOLDING PAYMENTS. Licensee has no right of "offset" and will not
withhold payment, for any reason, of any Continuing Fees, Marketing Fees or any
other payments due Licensor under this Agreement or any other agreement,
subject to a Subordination and Assumption Agreement to be entered into by
Licensor, Licensee and Licensee's lenders on terms and conditions substantially
in accordance with those contained in Exhibit A, and pursuant to which the
Continuing Fee will be subordinated and deferred to the debt service payments
attributable to the Hotel for a period not to exceed fifteen (15) months from
the Opening Date.
ARTICLE 7
REPORTING
7.1 FINANCIAL STATEMENTS. Hotel Financial Statements, for purposes of
this Agreement means a departmental profit and loss statement, and such other
financial information related to the Hotel only, which Licensor deems
reasonably necessary for its own benefit or the benefit of the System, in order
to ensure compliance with the terms of this Agreement. Such Hotel Financial
Statements shall include Gross Room Revenue, Regent Reservation revenue,
average daily room rate and occupancy rate for each period reported.
7.2 DESIGNATED DATA. With respect to both the Hotel and its customers, as
applicable, Designated Data includes information, data and statistics which the
Hotel gathers or is able to gather in the ordinary course of business; on a
historical and current basis, and with respect to the future. Licensor will
identify Designated Data in the Operating Manuals or in other written
communications to the Licensee when Licensor, from time to time, identifies
such as being reasonably necessary for its own benefit or the benefit of the
System.
7.3 REPORTS. Reports are the forms on which certain items or categories
of Designated Data are to be furnished to Licensor by Licensee.
7.4 PREPARATION AND CERTIFICATION. Licensee will prepare and maintain
The Resort at Summerlin Financial Statements so that they accurately reflect
all aspects of the Hotel's operation as a distinct operating department in
accordance with the Uniform System and generally accepted accounting principles
applied on a consistent basis. Monthly Unaudited Departmental Income Statements
for the Hotel must be certified by Licensee's or the Hotel's Controller or
Chief Financial Officer. Annual Hotel Financial Statements, including the Hotel
Department, will be audited as a part of Licensee's audited financial
statements for Licensee's entire business conducted on the Property by a
nationally recognized firm of independent certified public accountants having
experience in the hotel industry.
Reports will be prepared and maintained based on Designated Data or other
business records kept in the ordinary course of business. Licensee will use all
reasonable efforts to obtain Designated Data from customers where the Designated
Data is to be included in a Report. All Reports must be accurate and complete
to the best of Licensee's knowledge, information and belief.
<PAGE> 13
7.5 Format. Licensee will submit Hotel Financial Statements and Reports in the
form and format as may be prescribed by Licensor from time to time and as
generally applicable for all System Hotels, except that if any Nevada regulatory
agency requires such Financial Statements to be reported in a different format,
then Licensee may submit them in such format.
7.6 Delivery and Access. Within fifteen (15) days of the end of each month,
Licensee will submit the Hotel Financial Statements and Reports to Licensor for
the immediately preceding month. Within one hundred twenty (120) days of the end
of the Hotel's and Licensee's fiscal year, Licensor will submit Hotel Financial
Statements and Reports to Licensor covering that fiscal year. Licensee will also
provide Licensor with electronic access at all times to Reports and Designated
Data which may be stored in Harmony, or such other property management systems
used at the Hotel or elsewhere.
7.7 Retention. Licensee will preserve the Hotel Financial Statements, Reports
and Designated Data for not less than three (3) years.
7.8 Sales Tax Receipts. Within ninety (90) days of the end of the Hotel's
fiscal year, Licensee will provide Licensor with copies of the Hotel's sales tax
receipts filed by Licensee.
7.9 Audit. During the Term and for three (3) years afterward, Licensor or its
designated representatives, upon three (3) business days notice to Licensee, may
inspect, copy and audit all information which serves as a basis for the
Financial Statements and Reports related to the Hotel, including information and
statistics on customers, books of account, ledgers, bank statements, tax
returns, work papers, governmental reports, register tapes, and daily reports
(including such as may pertain to any Hotel tenant, management company or
concessionaire) during normal business hours where the records are kept. If an
audit discloses a deficiency in any payments due to Licensor by Licensee,
Licensee will pay the deficiency within ten (10) days of notice of such
deficiency. In addition, if the deficiency is willfull or exceeds five percent
(5%) of the correct amount, Licensee will immediately reimburse Licensor's
entire cost of the audit, including travel, lodging, meals, reasonable
professional fees, salaries and other expenses of the auditing personnel.
7.10 Confidentiality. Licensor acknowledges that the Hotel Financial
Statements and other materials furnished to Licensor pursuant to this Article 7
contain confidential information regarding the Hotel, Licensee and Licensee's
operations. Licensor agrees that it will not release or divulge any confidential
information whatsoever relating to Licensee, the Hotel or Licensee's operations
to any person other than Licensor, its agents, employees, accountants,
independent auditors, on a need to know basis, and to Third Parties in
connection with industry studies or reports so long as the information is
submitted in aggregate with other System Hotels and not separately identified,
without the prior written consent of Licensee, unless compelled to do so by
legal process or subpoena. If Licensor breaches the obligations set forth in
this Section, Licensor consents to the granting of temporary, preliminary or
final injunctions, without Licensee being required to prove actual damages, and
acknowledges that Licensee's remedies at law may be inadequate.
ARTICLE 8
RESERVATION SYSTEM
8.1 Access. Licensor will provide access to the Reservation System on a basis
generally comparable to other System Hotels, which access shall include:
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8.1.1 Acceptance of reservations, and deposit and payment information for
the Hotel through the Reservation System for individual customers and groups who
contact Licensor either directly or through one of Licensor's reservations or
sales offices;
8.1.2 Referral of reservations for the Hotel through other System Hotels;
8.1.3 Acceptance of reservations through the Reservation System by Third
Parties in the travel industry, such as travel agents;
8.1.4 Access to communications network between the Hotel and the
Reservation System; and
8.1.5 Such other reservation and/or such communication services as may be
made available generally by Licensor to other System Hotels.
8.2 Use. Licensee will use the Reservation System only in the manner as may be
prescribed by Licensor from time to time and for the purposes intended herein.
8.3 Exclusivity. Licensee will use only the Reservation System, to the
exclusion of all others (i) with respect to the business of the Hotel and (ii)
for the purpose of making reservations at other System Hotels. Licensee may
establish its own toll free line for taking reservations for customers intending
to stay at the Hotel and Licensee may establish its own web site (or participate
in web sites established by others) on the Internet for the purpose of accepting
reservations for the Hotel. The establishment of a toll free number or web site
shall be at the sole expense of Licensee; however, Gross Revenue shall include
revenues derived from these sources.
8.4 Reservation System Equipment. Licensee has decided to purchase and
install, and thereafter maintain the Fidelio "Opera" Property Management System
Software designed to operate on RS 6000 hardware. Licensee will use its best
efforts to cause the Fidelio company to enable the "Opera" Software to
accommodate certain additional software required by the Licensor which is
intended to facilitate interfacing with the Reservation System, enhance customer
service and accommodate Regent marketing programs. Such additional software
includes: Reservation System interface, Harmony Database Manager and
Communications Manager, Centralized Travel Agency Commission Payment System and
Airline Partner/Guest Tracking System. Modifications to the Fidelio "Opera"
Software, which may be required to accommodate Licensor's current and future
requirements, will be made at Licensee's or Fidelio's expense.
8.5 Improvement and Replacement. Licensor may periodically upgrade all or any
part of the Reservation System or its Harmony system, or discontinue both or
either of them and implement replacement systems. Licensee will immediately
purchase, install and maintain the equipment required by Licensor in connection
therewith. If Licensor requires the implementation of a replacement system (i)
within the first five (5) years of the term of this Agreement, the cost of such
replacement system shall be borne solely by Licensor, or (ii) during the sixth
(6th) through tenth (10th) years of the Term of this Agreement, the cost of such
replacement shall be shared equally by Licensor and Licensee. This Section 8.5
applies to the Harmony system only if Licensee chooses to install Harmony
instead of the "Opera" system referred to in Section 8.4.
8.6 Training. All of Licensee's employees using the Reservation System or
Harmony or any replacement systems will undergo training as Licensor may
reasonably require to enable such employees to operate the systems as Licensor
intends them to be operated.
8.7 Licensor Liability. With regard to the Reservation System, Licensor has no
liability whatsoever to Licensee if the Reservation System or Harmony or their
replacement systems become inoperable or cease to function for any period of
time due to any cause whatsoever other than Licensee's gross negligence or
willfull acts or omissions.
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8.8 Reservations Priority. Licensee will honor and give comparable priority to
reservations made directly to the Hotel with those made through the Reservation
System.
8.9 Software Licenses. Licensee will enter into the applicable software
licenses or other similar agreements for the use of software programs with
respect to Harmony, as may be required by Licensor or Third Parties.
ARTICLE 9
MARKETING ADVERTISING RESERVATIONS AND SALES
9.1 RSM Fund. The Marketing Fees, Reservation Fees and other fees designated
by Licensor and paid by the Hotel will constitute part of a fund ("RSM Fund")
established by Licensor and consisting of similar fees paid by other System
Hotels, current and future.
9.2 Use. With respect to the System, the Marks, System Hotels and the Hotel,
generally, Licensor will use the RSM Fund for (i) promotion and marketing, (ii)
generating business, (iii) developing and conducting training programs, (iv)
providing reservation services and (v) paying the RSM Fund's administrative and
other expenses. Services to be provided pursuant to such uses include:
9.2.1 Consulting generally with Licensee with respect to marketing, public
relations, training, reservations, sales and customer service.
9.2.2 Including System Hotels current and future, in the appropriate
System directories and in other promotional and advertising material and
programs selected by Licensor.
9.2.3 Soliciting business travel, leisure travel, group, incentive and
travel agency business for System Hotels.
9.2.4 Developing and administering marketing, advertising, sales and
promotional programs designed to generate business for System Hotels.
9.2.5 Developing and conducting public relations programs and activities
for the System and System Hotels.
9.2.6 Developing and making available training, motivational and
educational programs and courses with respect to marketing, sales,
advertising, customer service, public relations and training for, among
others, various categories of employees employed at System Hotels, and
holding or conducting meetings periodically with respect to all or any of
such programs and courses, all as determined by Licensor at its discretion.
9.2.7 Organizing, holding and conducting a general business conference
for, among others, certain categories of employees employed at System
Hotels, all at Licensor's discretion, provided that such conferences will
be scheduled at intervals of no less than 12 nor more than 24 months.
9.2.8 Licensor will develop an annual plan regarding its sales and
marketing strategy for the leisure and resort market, and will consult
with, seek advice from and consider input from Licensee in the preparation
of the plan.
9.3 RSM Fund Expenses. Expenses properly chargeable to the RSM Fund include
those with respect to the cost of (i) reservation, marketing and sales personnel
performing the services set forth in Section 9.2, (ii)
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services provided by Third Parties with respect to RSM Fund activities, and
(iii) support services with respect to RSM Fund activities provided by Licensor
including, without limitation, accounting, franchising, human resources, public
relations, research and analysis and purchasing. Where appropriate, expenses
will be allocated proportionate to the time spent on RSM Fund activities or such
other basis as determined by Licensor at its discretion (but without mark-up
from Licensor's actual cost thereof). Costs include those with respect to
production, publication, salaries, benefits, travel, office space, supplies,
furniture, furnishings and equipment and communications.
9.4 Accounting. Licensor will collect, manage and disburse moneys collected
for the RSM Fund and account for them in separate books of account. Licensor
will furnish Licensee with a monthly unaudited and an audited annual statement
of the RSM Fund's receipts and disbursements within thirty (30) days and one
hundred twenty (120) days after the end of the month or Licensor's fiscal year
as applicable. RSM Fund contributions collected in any given year may be spent
or carried forward to another year. The RSM Fund is not a trust or escrow
account and carries no fiduciary responsibility by Licensor. Licensee has no
property rights of any kind with respect to the RSM Fund.
9.5 Loans. Licensor has no obligation under any circumstances to lend money to
the RSM Fund, but may do so at its discretion. In addition, Licensor may borrow
funds for the same purpose from other Third Parties. Any loan made by Licensor
will accrue interest at the prime rate of interest established by Norwest Bank
Minnesota, N. A. at the time the loan is made, subject to quarterly adjustments.
If the loan is made by a Third Party, then the interest rate will be the rate
charged by that Third Party. Any loan made by Licensor does not obligate
Licensor to lend money to the RSM Fund in the future for the same, similar, or
any other purpose. Licensee will have no obligation regarding any loan except
for its obligation to make the fee payments pursuant to Article 6 of this
Agreement.
9.6 Marketing Cooperative. Licensee will participate in and contribute to the
cost of a marketing cooperative or other form of organization consisting of one
or more other System Hotels if and when such cooperative is formed under the
direction of, and on a basis established by, Licensor. The purpose of the
cooperative will be to conduct and administer advertising and promotions with
respect to that group of System Hotels. Licensee must contribute to the
marketing cooperative for specific programs that have been approved by at least
sixty-six percent (66%) of the total rooms in the group, plus one room or on
such other basis as contained in the cooperative's governing documents, or such
other basis as may be determined by the cooperative subsequent to its formation.
9.7 Licensee Advertising
9.7.1 Obligation. Licensee will market, advertise and promote the Hotel
locally and regionally on a basis comparable to that done by other System
Hotels generally and will use only agencies approved by Licensor, which
approval shall not be unreasonably withheld or delayed. Except for Casino
programs or advertising not using the Marks, Licensee will submit all
marketing, advertising, sales, public relations and promotional materials
and programs to Licensor for prior approval, which approval shall not be
unreasonably withheld or delayed. Wherever possible, all such marketing,
advertising and promotion will include all Reservation System toll free
numbers, the System web site information and the RE chain code. If Licensor
fails to respond to a request by Licensee for approval of agencies,
materials or programs within ten (10) business days of Licensor's receipt
thereof, Licensor shall be deemed to have approved the use of such
materials, agencies or programs by Licensee.
9.7.2 Coordination. Licensor and Licensee shall work together to coordinate
Licensor's regional, national and international marketing and advertising
programs with the local programs implemented by Licensee for the Hotel.
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9.8 Program Participation and Changes. Licensor may develop new (and eliminate
or modify existing) marketing, advertising, sales, customer service, public
relations and promotional programs and materials from time to time as it deems
in the best interest of the System. Licensee will participate in all such
programs and use such materials while they are in effect and discontinue
participation or use, as the case may be.
9.9 Third Party Advertising. Licensee will not advertise, permit (where the
ability to exercise reasonable control exists) or expressly authorize any Third
Party to advertise or promote any businesses, services or products in the Hotel
which may have a material negative affect on the System's Image, the Hotel or
one more other System Hotels.
9.10 Customer Referral. Whenever possible, Licensee will refer customers to
other System Hotels and will use every reasonable means to encourage the use of
System Hotels by the public.
9.11 System Promotion. Licensee will display all brochures, promotional and
other materials required by Licensor (and which are consistent with the Image)
with respect to System Hotels in Hotel guest rooms and public areas as
designated by Licensor.
9.12 Other Hotels. Licensee will not promote, market or advertise (nor permit
others to do so) any other hotels, hotel systems or hotel companies on the
Hotel premises, except for those owned or managed by Licensee and those which
appear in publications not materially or specifically produced for that purpose
and over which Licensee has no control of content.
9.13 Promotional Access and Use. Licensor may enter the Hotel at all reasonable
times upon reasonable notice to take photographs and videotapes of the interior
and exterior of the Hotel. Licensor may use them for such purposes as Licensor
deems appropriate including advertising, promotional, training, marketing, and
public relations, without any compensation to Licensee.
ARTICLE 10
SIGNS AND IDENTIFICATION
10.1 Standard. Licensee will install signs and other identification in and about
the Hotel identifying the Hotel as a System Hotel. The signs and other
identification will be such as to get maximum exposure for the Hotel with
respect to the general public using the public streets and highways in and
around the Hotel, and to provide identification, guidance and assistance to
customers in the Hotel, while maintaining the Image of the Hotel, subject to
application zoning and building laws, restrictive covenants, the restrictions
imposed by Howard Hughes Corporation and Howard Hughes Properties and other
legal requirements.
10.2 Approval. The signs and other identification must conform exactly to the
System Requirements in all respects, (subject to applicable zoning and building
laws, restrictive covenants, the restrictions imposed by Howard Hughes
Corporation and Howard Hughes Properties and other legal requirements),
including, without limitation, size, placement and manner of installation, and
must be submitted to Licensor for approval prior to their installation, which
approval shall not be unreasonably withheld. If Licensor fails to respond to a
request by Licensee for approval of a sign or other identification within
fifteen (15) days of Licensor's receipt of such request, Licensor shall be
deemed to have approved the use thereof by Licensee.
10.3 Modification And Replacement. Licensor has the right to revise and
introduce new sign and other identification designs without Licensee's approval
(subject to applicable zoning and building laws, restrictive covenants, the
restrictions imposed by Howard Hughes Corporation and Howard Hughes Properties
and other legal requirements). When this occurs and is communicated to
Licensee, Licensee must either modify or replace the then existing signs and
other identification with the new or revised ones. If any such revision or
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introduction of new sign requirements results in a change or discontinuance of
the name "Regent" or the logo, then Licensor shall reimburse Licensee for its
cost and expenses incurred in complying with this Provision.
ARTICLE II
TRAINING-SEMINARS-CONFERENCES
11.1 Hotel Training. Prior to the Opening Date, the Hotel's general manager and
those other members of the Hotel's staff primarily responsible for sales, front
office, accounting, reservations, human resources, training rooms and food and
beverage ("Executive Committee") must satisfactorily complete Licensor's
"Regent" "brand-specific" orientation and training program at a location within
the continental United States to be determined by Licensor.
11.2 Changes In Management Personnel. Licensee will immediately notify Licensor
of any personnel changes in the Executive Committee. At Licensor's request,
such additions to or replacements of Executive Committee members who have not
attended the orientation and training program must attend and satisfactorily
complete one within six (6) months after the member's date of hire, provided
that Licensor will endeavor to schedule a group session for Licensee's
attendees which will be held no more than once a year.
11.3 Additional Training. The Hotel's general manager and members of the
Executive Committee will attend and satisfactorily complete additional training
at such locations within the continental United States and times as may be
designated by Licensor.
11.4 Expenses. Licensee is responsible for all costs and expenses of employees
working at the Hotel or of other persons designated by Licensee incurred in
connection with their attendance at any of the orientation and training
programs, educational programs and courses, the general business conference,
and other programs and meetings authorized or permitted by the Provisions. Such
costs and expenses include room and board travel, incidentals, and any
reasonable registration, tuition or similar assessments uniformly imposed on
all attendees in comparable categories. Notwithstanding the above:
11.4.1 Orientation, Training and Educational Seminars. When held at the
Hotel, Licensee will provide the necessary guest rooms at fifty percent
(50%) of the Hotel's then prevailing "rack rate" and all other meeting
rooms and facilities at no charge.
11.4.2 General Business Conference. Licensee will pay the registration fee
for the general business conference which covers the Hotel general
manager's pro rata share of the cost of meals, guest speakers and trainers,
media presentations and similar items even if the general manager does not
attend.
11.4.3 Sales Conferences or Meetings. Unless paid out of the RSM Fund, all
costs and expenses for sales conferences or sales meetings will be paid by
Licensee, if Licensee chooses to attend.
11.4.4 Marketing Cooperative Meetings. Unless paid out of the Marketing
Cooperative's funds, all costs and expenses for marketing cooperative
meetings will be paid by Licensee, if Licensee chooses to attend where the
meeting is not a required Cooperative meeting.
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ARTICLE 12
GOODS AND SERVICES
12.1 Offering. Licensee will offer for sale at the Hotel only such goods
and services as prescribed by Licensor so long as those goods or services do
not violate any agreements Licensee has with the Howard Hughes Corporation or
Howard Hughes Properties. Additional goods and services may be offered, but
only with Licensor's prior approval, not to be unreasonably withheld.
12.2 Standards. All goods or services used or offered at the Hotel must
meet published System Requirements or, where the System Requirements are not
applicable, be consistent with the System Image.
12.3 Suppliers. Unless specifically provided otherwise in the Operating
Manuals or this Agreement, Licensee may purchase the goods and services used or
offered at the Hotel from any suppliers provided that the goods and services
meet the System Requirements. Where the System Requirements are not applicable,
the goods and services must be consistent with the System Image. Licensor may
require Licensee to submit samples, specifications and other information with
respect to any goods or services used by Licensee. If Licensee desires to
confirm that any goods or services meet the System Requirements or Image,
Licensee may submit samples, specifications and other relevant information to
Licensor for evaluation and testing.
12.4 Pricing. Licensor has no control over the price of and terms on which
Licensee sells goods and services. Licensee has the right at its sole
discretion to determine room rates and all other revenue generating items,
including all rates, charges, discounts and those given as complimentary;
provided that such right will not be exercised for the purpose of causing
Gross Room Revenue or Gross Revenues to be reduced in order to avoid paying the
Fees as set forth in Article 6.
ARTICLE 13
LICENSEE'S MISCELLANEOUS OBLIGATIONS
13.1 Credit Cards. Licensee may accept and honor any credit, charge,
courtesy or cash cards or other credit devices Licensor in its sole discretion,
deems satisfactory and such others as may be required by Licensee. Licensee
will enter into all necessary credit card arrangements with the appropriate
Third Parties.
13.2 General Business Conference. The Hotel's general manager will attend
the System's general business conference. If the general manager does not
attend, another representative of Licensee must attend.
13.3 Payment of Obligations. Licensee will pay timely all of its
uncontested and liquidated obligations and liabilities as they become due and
payable to all Third Parties.
13.4 Operators of Hotel Facilities. Licensee will not engage any Third
Parties to operate any food and beverage outlet in the Hotel without Licensor's
prior approval, which approval shall not be unreasonably withheld. With respect
to the operation of other Hotel facilities, including health clubs, retail shops
and offices, Licensee will engage or lease to only qualified and experienced
Third Parties and will require these facilities to be operated and maintained in
the same manner as if Licensee were operating them directly pursuant to the
Provisions. This obligation also applies with respect to facilities located in
the complex of which the Hotel is a part and over which Licensee has direct or
indirect control through written agreements or otherwise. The food and beverage
operators and other commercial tenants listed on Schedule 13.4 attached hereto,
are acceptable to and approved by Licensor.
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13.5 Periodic Construction. Licensee will periodically perform such
Construction by way of major alterations, additions and improvements,
modernizing and redecoration, and replacement of the Hotel's furniture,
furnishings, fixtures and equipment to maintain the Hotel's compliance with the
System Requirements and Image. Except for maintenance and repairs in the
ordinary course of business, Licensor will not require such Construction to take
place more often than once every five (5) years. Any such Construction will be
done in compliance with Article 4. Licensor and Licensee will agree to a date by
which any such Construction will be completed, or a reasonable date will be
presumed. During any such Construction, Licensee will use all reasonable means
to minimize inconvenience to Hotel customers including taking appropriate
measures by way of clearly visible and understandable signs or written
information distributed to customers stating (i) the nature of the Construction,
(ii) the date by which it will be completed and (iii) apologizing for any
inconvenience.
13.6 Maintenance. Licensee will keep the Hotel in good order and repair
and in a neat, clean, attractive, safe and sanitary condition.
13.7 Uniforms. Licensee will require its employees to wear and keep their
uniforms or other personal clothing clean and neat while on duty at the Hotel.
13.8 Business Hours. The Hotel will be open for business twenty-four (24)
hours a day seven (7) days a week.
13.9 Personnel. Licensee will hire as the Hotel's General Manager only
persons with qualifications and experience in the management of luxury hotels.
For all other positions, Licensee will hire qualified people who, with the
proper training, will perform their responsibilities consistent with their
peers at other System Hotels. Licensee will employ a sufficient number of
adequately trained and competent personnel as measured by other System Hotels
under reasonably comparable conditions and circumstances.
13.10 Management Company. Licensee will operate the Hotel directly or
through a management company approved by Licensor, which approval will not be
unreasonably withheld. If the management company is an Affiliate of Licensee,
Licensor's approval shall be presumed.
13.11 Level of Service. The employees at the Hotel must provide efficient,
courteous and high-quality service to Hotel customers commensurate with
the scope and levels of service within the System.
13.12 Costs and Taxes. Unless specifically stated otherwise in this
Agreement, all costs, expenses and taxes incurred or assessed with respect to
the Hotel, Licensee's business or Licensee's compliance, with the Provisions
are Licensee's sole responsibility.
ARTICLE 14
OPERATING MANUAL - CONFIDENTIAL INFORMATION
14.1 Right to Use. Licensor will provide Licensee with either ten (10)
actual copies of the Operating Manuals or access through electronic or other
means. Upon the expiration or a termination for any reason, Licensee will
return all copies of the Manuals to Licensor or, at Licensor's request, destroy
them. Licensee will not use the manuals for any purpose other than with respect
to the operation of the Hotel.
14.2 Revisions. Licensor may revise, update, amend, change, modify or
supplement the Operating Manuals at any time but only in a manner consistent
with the Image. In the event of any dispute regarding the manuals, the terms of
the master copy of the manuals maintained by the Licensor will be controlling
in all respects.
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14.3 Maintenance. Licensee will keep its copies of the Operating Manual
current and up to date with contents as made available by Licensor.
14.4 Confidential and Proprietary Information. Confidential and Proprietary
Information includes the Operating Manuals, this Agreement, and all other
Communications (as defined below) to Licensee which are either labeled
confidential, proprietary, trade secret or with a similar designation, or which
are known (or should reasonably be known) by Licensee as not being made
generally available to Third Parties other than to those involved in System
Hotels. Communications may be in writing, oral or electronic form and include
information, knowledge, know-how, drawings, materials, technology, equipment,
marketing plans, strategic plans, methods, procedures, specifications, employee
manuals, policy manuals, techniques, computer programs and systems.
14.5 Ownership. As between Licensor and Licensee, Licensor owns all
Confidential and Proprietary Information. Licensee will make no claim and has
no rights with respect thereto other than those which are expressly authorized
or granted in writing by Licensor.
14.6 Non-Disclosure. Licensee may divulge Confidential and Proprietary
Information only to employees, agents, representatives, attorneys, contractors
and partners who must have access to such information in order to perform their
responsibilities with respect to their employment at the Hotel, and pursuant to
the requirements of all governmental authorities having jurisdiction. Licensee,
at all times during the Term and thereafter, will use all reasonable means to
protect the confidentiality of the Confidential and Proprietary Information and
will not communicate, divulge or use it for the benefit of any Third Party, nor
make any copy, duplication, record, or reproduction available to any
unauthorized Third Party.
ARTICLE 15
INSPECTIONS
15.1 Licensor's Inspection Rights. Licensor may enter the Hotel at all
reasonable times upon reasonable prior notice to determine whether Licensee is
complying with, and that the Hotel is being operated in accordance with, the
Provisions. For this purpose and without limitation, Licensor is entitled to
take photographs and videotapes of the interior and exterior of the Hotel, to
examine and experience representative samples of goods and services sold or used
at the Hotel, to examine and evaluate the quality of the training provided to
employees at the Hotel and to interview the employees. Licensor will provide
Licensee a written report based on each inspection.
15.2 Costs. During no more than two (2) inspections per year, Licensee will
provide a reasonable number of Licensor's employees with lodging, meals and
other necessary incidental services at the Hotel at no charge. When such
inspections are conducted by a Third Party retained by Licensor, Licensee will
pay all reasonable and necessary costs incurred by the Third Party with respect
to the inspection as invoiced to Licensor, including travel, lodging, meal and
professional costs.
ARTICLE 16
LICENSOR'S MISCELLANEOUS SERVICES
16.1 Grand Opening Assistance. At Licensee's request, Licensor will assist
Licensee, at no additional cost to Licensee, with the initial announcements and
events with respect to the signing of this Agreement, its grand opening
ceremony and related public relations and publicity for the pre-opening and
opening of the Hotel.
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16.2 General Consulting. At Licensee's request, and to the extent Licensor
makes such services available, Licensor will consult generally with Licensee,
at no additional cost to Licensee, with respect to areas that are customarily
the subject of hotel operations including marketing, operations, public
relations, training, housekeeping, kitchen and laundry, maintenance, signage,
purchasing, accounting, food and beverage, reservations, sales, security and
loss prevention and administration. In connection with such consulting,
Licensor will visit the Hotel at least once a year to consult with Licensee and
the Hotel staff with respect to these subjects, the use of the System and the
benefits to be derived. During such visits, Licensee will provide Licensor's
employees with lodging, meals and other incidental services at the Hotel at no
charge.
16.3 Project Consulting. At Licensee's request and to the extent Licensor
makes the services available to other System Hotels, Licensor will provide, at
no additional cost to Licensee, more in-depth consulting with respect to
specific areas which are customarily the subject of hotel operations, but on a
cost and expense reimbursement basis mutually agreed to at the time of the
request.
16.4 Purchasing. Licensor will provide, at no additional cost to Licensee,
access to its Affiliates which arrange purchasing programs for System Hotels.
Such programs include various Hotel services, operating supplies, equipment,
signage, furniture, fixtures and furnishings all as determined by the
Affiliates. Licensee is under no obligation to use these programs except those
which are a part of the System Requirements.
16.5 Marketing and Sales Services. Licensor shall (i) include the Hotel in
all local, regional and worldwide tactical promotional and advertising programs
directed at the business, leisure and meetings market, if Licensor reasonably
deems such inclusion is suitable and beneficial to the market in which the
Hotel operates, (ii) include the Hotel in Licensor's worldwide strategic
promotional and advertising programs, (iii) include the Hotel in any other
marketing, advertising and promotional programs which Licensor may offer to
other System Hotels from time to time, (iv) represent and promote the Hotel
through Licensor's worldwide sales offices and (v) include the Hotel in its
strategic promotional program for preferred guests including, without
limitation, the Hotel in all promotional materials distributed to participants
or members in such program.
16.6 Additional Services. From and after the Effective Date of this
Agreement, Licensor shall make available to Licensee, such additional services
as are generally made available to other System Hotels by employees of Licensor
or its Affiliates or by independent contractors engaged by Licensor. The
charges for any such services shall be consistent with charges for such
services to other similarly situated System Hotels.
ARTICLE 17
BUSINESS AND LEGAL RELATIONSHIP - OPERATION AND CONTROL
17.1 Independent Contractor. Licensor and Licensee are each independent
contractors. They do not intend to create any relationship of joint venturers,
partners, agents, servants, employees, fiduciaries or representatives of each
other. Any Provision which may be interpreted to create any such relationship
is hereby disavowed. Licensee will not make any agreements, representations or
warranties in the name of or on behalf of Licensor nor represent that their
relationship is other than that of licensor and licensee.
17.2 Evidence of Relationship. Licensee will hold itself out to the public
and its employees as an independent contractor by, without limitation:
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17.2.1 Clearly identifying itself to third parties as a licensed,
independently owned and operated entity with respect to the ownership and
operation of the Hotel on all checks, stationery, purchase orders,
receipts, promotional materials, envelopes, letterhead, business cards,
invoices and other written materials.
17.2.2 Displaying the Regent Licensee Plaque in the front desk area so as
to be clearly visible to the general public, and a similar notice in each
guest room of the Hotel so as to be clearly visible to the customers using
the rooms.
17.2.3 Maintaining a notice on the employee bulletin board clearly
visible to Hotel employees, identifying the correct name of their employer
and clearly stating that neither Regent Hotels Worldwide, Inc. nor any of
its Affiliates is the employer.
17.3 Licensee's Control. Licensee has the sole right and responsibility for
the manner and means by which the day-to-day operation of the Hotel is
determined and conducted and for achieving Licensee's business objectives.
Subject to any approval, inspection and enforcement rights reserved to
Licensor, this right and responsibility includes the employment, supervision,
setting the conditions of employment and discharge for Licensee's employees at
the Hotel, daily maintenance, safety concerns, and the achievement of
conformity with the System Requirements and Image.
17.4 Licensor's Approval and Enforcement. Licensor's retention and exercise of
the right to approve certain matters, inspect the Hotel and its operation and
enforce Licensor's rights exists only to the extent necessary to protect
Licensor's interest in the System, the Marks, the System's Image and the
goodwill with respect thereto, for the benefit of Licensor and the System.
Neither the retention nor the exercise is for the purpose of establishing any
control, or the duty to take control, over those matters which are clearly
reserved to Licensee, nor shall they be construed to do so.
ARTICLE 18
LICENSOR'S TERMINATION RIGHTS
18.1 Default - No Opportunity to Cure. Each of the following events, without
limitation, constitutes a material Default by Licensee which entitles Licensor
to terminate this Agreement immediately upon notice to Licensee without any
opportunity to cure the Default.
18.1.1 Attempting a termination without first complying with the
Provisions with respect to proper termination, or upon a determination by
a court of competent jurisdiction that Licensee's attempted termination
was wrongful.
18.1.2 Opening the Hotel and commencing operations in violation of Section
4.8.
18.1.3 Licensee is convicted of, or pleads guilty or no contest to, a
felony or other crime that has a material adverse effect on the Hotel or
materially impairs the goodwill associated with the System, the Image and
the Marks.
18.1.4 Filing a petition or pleading under the bankruptcy or insolvency
laws of jurisdiction or such a petition is filed against, and is not
opposed by, Licensee.
18.1.5 Appointment of a permanent or temporary conservator, receiver or
trustee for the Hotel or all or substantially all of Licensee's property
by any court having jurisdiction.
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18.1.6 An assignment for the benefit of creditors or making a written
statement to the effect that Licensee is unable to pay its debts as they
become due.
18.1.7 A levy, execution or attachment is issued against all or part of
the Hotel, or all or substantially all of Licensee's property, and is not
released, stayed or satisfied within 15 days.
18.1.8 A material final judgment against Licensee remains unsatisfied
for sixty (60) days or longer without being discharged, vacated, reversed
or stayed.
18.1.9 Licensee is dissolved.
18.1.10 The foreclosure of any lien or mortgage against the Hotel which is
not dismissed within sixty (60) days, or without security being provided
in an amount and on terms and conditions satisfactory to Licensor.
18.1.11 Ceasing to do business or otherwise Abandoning the Hotel business.
18.1.12 Failure to commence Construction of the Hotel by the Construction
Commencement Date without an extension being granted by Licensor.
18.1.13 Failure to open the Hotel by the Opening Date designated in
Section 4.8 without an extension being granted by Licensor.
18.1.14 The third Default by Licensee within a twelve (12) month period,
provided that in each case, notice of the Default was given, where
required.
18.1.15 Intentionally understating or underreporting Gross Revenue or
Gross Room Revenue.
18.1.16 Failure to cure any Default which materially impairs the goodwill
associated with the Marks within 24 hours of notice of the Default.
18.1.17 Failure to comply with the Provisions with respect to Transfer.
18.2 Default - Opportunity to Cure. Each of the following events, without
limitation, constitutes a material Default by Licensee which entitles Licensor
to terminate this Agreement by notice to Licensee and upon the expiration of
the cure period which, unless stated otherwise, is thirty (30) days from the
date of the notice.
18.2.1 Failure to pay any fees or other amounts owed to Licensor when due
and fails to make the payment within ten (10) days after notice.
18.2.2 Failure to operate the Hotel directly or through a management
company approved by Licensor.
18.2.3 Failure to comply with the Construction Requirements for the Hotel.
18.2.4 Unauthorized use of the Marks or System.
18.2.5 Failure to comply with the System Requirements.
18.2.6 Failure to submit Financial Statements and Reports when due.
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18.2.7 Failure to comply with laws under Sections 4.10 and 3219.
18.2.8 Refusal to allow Licensor to conduct an inspection or audit
as permitted under this Agreement.
18.2.9 Repeated failure to timely pay any of its uncontested
obligations or liabilities due and owing to one or more Third
Parties.
18.2.10 Failure to comply with Sections 8.1, 8.2 and 8.3.
18.2.11 Failure to comply with (i) any other material Provision or
any System Requirement, or (ii) a sufficient number of non-material
Provisions which, collectively, constitute materiality or evidences
a disregard for the System, the Image and the Marks. If Licensee's
breach or non-compliance cannot reasonably be cured within the
thirty (30) day period after notice from Licensor, and if Licensee
has, in good faith, commenced to cure within said thirty (30) day
period, Licensee shall have a reasonable additional period of time
within which to cure provided Licensee is diligently continuing to
cure the Default during such additional time period.
18.2.12 If the Hotel fails an inspection conducted pursuant to
Article 15, Licensor will schedule a second inspection to take
place not less than 90 nor more than 180 days after the date the
inspection report has been delivered to Licensee ("Inspection Cure
Period"). The Inspection Cure Period will be established by
Licensor in a reasonable, good faith manner, with consideration
given to the nature of the failures and Licensee's ability to cure
them. If Licensee fails to correct the conditions which caused the
failure, in all material respects, Licensor may terminate upon
notice without further opportunity to correct the failures.
Futhermore, nothing in this Section 18.2.12 prevents Licensor from
exercising any other termination rights it has under this
Agreement for any Default regardless of whether the Default was
one of the conditions included in determining whether the Hotel
failed an inspection.
18.3 Effective date of Termination. The effective date of termination
is as follows:
18.3.1 With respect to Section 18.1, on the date set forth in the
notice.
18.3.2 With respect to Section 18.2, upon the expiration of the
cure or grace period set forth in the notice without Licensee
having cured the Default.
18.4 Suspension of Services. In addition to any other remedies Licensor
has, Licensor, upon any material Default by Licensee and the expiration of any
applicable grace or cure period, after fourteen (14) days notice to Licensee,
may suspend the services of the Reservation System, expenditures of the RSM Fund
for the Hotel's benefit and any other services Licensor is required to provide,
until the Default is cured, all without any liability to Licensee whatsoever,
other than that arising from Licensor's gross negligence or willful misconduct.
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ARTICLE 19
LICENSEE'S TERMINATION RIGHTS
19.1 Default -- No Opportunity to Cure. Each of the following events, without
limitation, constitutes a material Default by Licensor which entitles
Licensee to terminate this Agreement immediately upon notice to Licensor
without any opportunity to cure the Default.
19.1.1 Attempting a termination without first complying with the
Provisions with respect to proper termination, or upon a determination by
a court of competent jurisdiction that Licensor's attempted termination
was wrongful.
19.1.2 Licensor is convicted of, or pleads guilty or no contest to, a
felony or other crime that has a material adverse affect on the Hotel or
materially impairs the goodwill associated with the System, the Image and
the Marks, or Licensee's gaming license.
19.1.3 Filing a petition or pleading under the bankruptcy or insolvency
laws of jurisdiction or such a petition is filed against, and is not
opposed by, Licensor.
19.1.4 Appointment of a permanent or temporary conservator, receiver or
trustee for all or substantially all of Licensor's property by any court
having jurisdiction.
19.1.5 An assignment for the benefit of creditors or making a written
statement to the effect that Licensor is unable to pay its debts as they
become due.
19.1.6 A levy, execution or attachment is issued against all or
substantially all of Licensor's property, and is not released, stayed or
satisfied within 15 days.
19.1.7 A material judgment against Licensor remains unsatisfied for
sixty (60) days or longer without being discharged, vacated, reversed or
stayed.
19.1.8 Licensor is dissolved.
19.1.9 The foreclosure of any lien or mortgage against all or
substantially all of Licensor's assets which is not dismissed within sixty
(60) days, or without adequate security being provided.
19.1.10 Ceasing to do business.
19.1.11 The third Default by Licensor within a twelve (12) month period,
provided that in each case, notice of the Default was given, where
required.
19.1.12 Failure to comply with the Provisions with respect to Transfers.
19.1.13 Licensor sends Licensee a notice to cease using all or a material
part of the Marks pursuant to Section 5.4 above, or if Licensor otherwise
fails to maintain all rights necessary to grant Licensee the continuing
right to use all or substantially all of the Marks and the System as
provide in this Agreement.
19.2 Default -- Opportunity to Cure. Licensee may terminate this Agreement by
notice to Licensor if Licensor fails to perform any material Provisions, and
such failure continues for a period of thirty (30)) days
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after notice to Licensor setting out the failure in reasonable detail, provided
that if Licensor's breach or failure to perform cannot reasonably be cured
within the thirty (30) day period after notice from Licensee, and if Licensor
has, in good faith, commenced to cure within said thirty (30) day period,
Licensor shall have a reasonable additional period of time within which to cure
provided Licensor is diligently continuing to cure the Default during such
additional time period. The termination is effective upon the date set forth in
the second notice.
ARTICLE 20
CONSEQUENCES OF TERMINATION OR EXPIRATION
20.1 LICENSEE'S OBLIGATIONS. Upon expiration or termination, Licensee will
immediately do the following, without limitation:
20.1.1 Pay all amounts due and owing and submit any missing Reports to
Licensor or its Affiliates.
20.1.2 Cease operating the Hotel as a System Hotel and stop representing
the Hotel to the public or holding it out as a System Hotel or a former
System Hotel.
20.1.3 Cease using, and return or destroy the Operating Manuals as
instructed by Licensor.
20.1.4 Cease using the Marks and return, remove or destroy, as instructed
by Licensor (i) all manuals, brochures, advertising and promotional and all
other printed materials containing the Marks, (ii) all signs, operating
supplies, equipment, and other items containing the Marks, and (iii)
anything else which might result customers continuing to identify the Hotel
as a System Hotel, and also cover anything bearing the Marks or otherwise
identified as being associated with the System which cannot be removed on
the expiration or termination date until it can be removed. Notwithstanding
the above, Licensee, if requested by Licensor, will sell Licensor any
of such items at Licensee's cost.
20.1.5 Cancel any assumed or fictitious name or equivalent registration and
sign a statement acknowledging the termination of, or take the appropriate
steps to terminate, any Registered User or similar Agreement.
20.1.6 Cease using the telephone numbers for the Reservation System for
the Hotel.
20.1.7 If the termination is by reason of Licensee's Default, Licensor and
Licensee agree that damages will be difficult to determine and, as a
result, Licensee will pay to Licensor a lump sum payment as liquidated
damages and not as a penalty, as Licensor's sole and exclusive remedy for
such Default. The payment will be in an amount equal to the average of the
total of the Continuing Fee, Reservation Fee and Marketing Fee payable per
month over the twelve 12 months immediately preceding the month in which
the termination occurs, multiplied by the lesser of the 84 months or the
number of months remaining in the Term ("Calculation Period"). If the Hotel
has not opened as a System Hotel or has been open as a System Hotel for
less than one year at the time of termination, the amount will be equal to
the average of the total of such fees per room for the months open
multiplied by the number of rooms in the Hotel, and multiplying that by the
Calculation Period. The amount calculated will be discounted to the present
value using the prime rate published in the Wall Street Journal for the
last business day of the month immediately preceding the date of
termination.
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20.2 LICENSOR'S RIGHTS. If Licensee fails to comply with Section 20.1 within
ten (10) days of the effective date of termination or expiration of this
Agreement, Licensor may (i) enter the Hotel or other premises of the Licensee
to take the action contemplated by Sections 20.1.4 and 20.1.5 and (ii) notify
the telephone company and all listing agencies that Licensee no longer has the
right to use all telephone numbers and all classified and other directory
listings under the "Regent" name and the Marks.
ARTICLE 21
TRANSFERS GENERALLY
21.1 DOCUMENTS.
21.1.1 No Transfer requiring Licensor's consent or approval pursuant to the
terms of this Agreement will be effective until Licensor receives fully
executed copies of all documents relating to the Transfer and Licensor
either notifies Licensee and the Transferee or (i) that all conditions
imposed on the Transfer have been fulfilled and the Transfer is approved,
or (ii) that Licensor is waiving the requirements for approval.
21.1.2 Within ten (10) days of any Transfer requiring Licensor's approval,
Licensee will notify Licensor of the Transfer and the name of the
Transferee. In addition, as a condition to the Transfer, Licensee will
require the Transferee to enter into an agreement with Licensor
establishing privity of contract with respect to this Agreement.
21.2 OWNERS. Licensee will keep Licensor informed at all times of the identities
and percentage interests of each direct or indirect Owner, legal and beneficial,
of (i) a ten percent (10%) or greater Limited Partnership Interest in Licensee,
and (ii) a twenty percent (20%) or greater Equity Interest in the General
Partner.
21.3 RESTRICTIONS ON TRANSFERS. Licensor has entered into this Agreement based
on negotiations which are specific to the circumstances and relationship
between Licensor and Licensee as well as those which apply generally to all
System Hotels. As a result, the restrictions imposed on any Transfer are
reasonable and necessary to enable Licensor (i) to take the relationship with
any Transferee into account with respect to (a) the decision whether to allow
the Transfer, (b) the decision whether to allow the Transfer of this Agreement
or require the Transferee to sign a new agreement and (c) the terms of any new
license agreement, and (ii) to protect the goodwill associated with the System,
the Marks and the Image for the benefit of Licensor, Licensee and Third Parties
who own and operate System Hotels.
ARTICLE 22
TRANSFERS BY LICENSOR
Licensor may Transfer its interest in this Agreement without Licensee's
approval, provided that such Transferee, in writing or by operation of law,
succeeds to all of Licensor's right, title and interest in and to, and assumes
all of Licensor's obligations under, this Agreement. Licensor will provide
Licensees with written notice of any such Transfer within five (5) business
days after its effective date. The Transferee will be required to fully perform
the Provisions upon any such Transfer.
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ARTICLE 23
TRANSFERS TO FAMILY
Notwithstanding anything in this Agreement to the contrary and specifically any
of the Articles with respect to Transfers, any Limited Partner who is a natural
person, may make any Transfer as part of his or her estate or tax planning to
his or her descendants, family members or trusts for the benefit of family
members, without Licensor's approval, provided that the following conditions
are met:
23.1 Notice. The Transferor must notify Licensor of the occurrence of the
Transfer and the name of the Transferee within five (5) business days after the
Transfer is made.
23.2 No Default. Licensee must not be in Default of any material Provisions of
this Agreement.
23.3 Voidable Transfer. Any Transfer made by a Limited Partner pursuant to this
Article 23 but without compliance with the conditions set forth herein, shall
be voidable by notice from Licensor to Transferor.
ARTICLE 24
TRANSFER OF AGREEMENT BY LICENSEE
Licensee may Transfer this Agreement to any Third Party only in conjunction
with and contingent upon a Transfer of the Hotel permitted under Article 25 or
a Transfer of Equity Interests permitted under Article 26.
ARTICLE 25
TRANSFER OF HOTEL
25.1 No Approval Required. Licensee may Transfer the Hotel (which for purposes
of this Agreement includes a Hotel Management Agreement with an Affiliate
pursuant to which such Affiliate shall assume, undertake and carry out all
management and operational responsibilities with respect to the Hotel) to any
Affiliate of Licensee or to an Affiliate of the Parent Corporation or Ultimate
Parent, without Licensor's prior approval, provided that Licensee shall notify
Licensor of any such Transfer within five (5) business days after the
consummation thereof. Upon receipt of such notice, Licensor, Licensee and the
Transferee shall enter into a written agreement whereby Licensee and Transferee
agree to be jointly and severally liable for the performance of all applicable
Provisions of this Agreement and agreeing that any subsequent Transfers by the
Transferee will be subject to the terms of this Agreement.
25.2 Transfers Requiring Approval. Other than as permitted by Section 25.1,
Licensee may Transfer, voluntarily or involuntarily, the Hotel or substantially
all of the assets of the Hotel (which may include a Transfer of this Agreement)
only with Licensor's prior approval. To obtain such approval, Licensee must
give Licensor sixty (60) days prior written notice of the proposed Transfer
which notice must include an application by the Transferee on the form
prescribed by Licensor. If Licensor fails to respond to a request for approval
under this Section 25.2 within sixty (60) days after Licensee's request,
Licensor's approval shall be deemed to have been given. Any attempt to Transfer
the Hotel by Licensee that is not specifically permitted under this Article is
void and a breach of this Agreement Licensor's unwillingness to approve a
proposed Transfer of the Hotel is deemed to be reasonable only if one or more
of the following conditions are met as of the effective date of the Transfer:
25.2.1 Licensee is not current in the payment of all monetary obligations
owed to Licensor or its Affiliates in connection with this
Agreement or any other material agreement with a Third Party
relating to the Hotel.
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25.2.2 Licensee is in material Default under this Agreement.
25.2.3 The Transferee does not enter into an agreement with, and in
a form satisfactory to, Licensor, whereby Transferee assumes all of
Licensee's obligations to Licensor under this Agreement and in any
other material agreements with Licensor or its Affiliates relating to
the Hotel.
25.2.4 The Transferee is not or will not become the Owner of all
or substantially all of the assets comprising the Hotel.
25.2.5 In Licensor's reasonable, good faith determination, the
Transferee does not meet the standards reasonably established by
Licensor for a new licensee, including financial capacity, or Licensee
fails to provide to Licensor such information as Licensor reasonably
requires to confirm that Transferee meets such standards.
25.2.6 At the time of the proposed Transfer, the Hotel does not
meet or exceed Licensor's requirements with respect to construction
and maintenance.
25.2.7 The Transferee is a competitor of a Licensor.
25.2.8 Any new General Manager or Executive Committee Member to be
engaged by the Transferee does not attend Licensor's orientation and
training program.
25.2.9 Licensee, at the time the request for approval is made, has
not paid a non-refundable transfer fee of $5,000.
25.2.10 Licensee and Licensor have not signed and delivered to each
other a general, mutual release on a form and upon terms and
conditions acceptable to Licensor and both of them.
25.3 Permitted Transfer of Hotel. The Hotel may be transferred by
foreclosure or deed in lieu of foreclosure (which may include a Transfer of
this Agreement) without Licensor's consent. Licensor shall at the request of
any holder or holders of a mortgage or deed of trust against the Hotel, or any
party of parties who intend to make a loan secured by the Hotel, (hereinafter
collectively a "Mortgagee") enter into a non-disturbance and attornment
agreement with any Mortgagee containing terms reasonably satisfactory to such
Mortgagee and Licensor. Such non-disturbance and attornment agreement shall
include provisions requiring that, if the Mortgagee or an affiliate of
Mortgagee acquires title to the Hotel under its security documents, pursuant
to applicable law or under a deed in lieu of foreclosure, the Mortgagee or such
affiliate will assume all of Licensee's obligations under this Agreement
arising from events occurring during the period of time such Mortgagee or
affiliate holds title to the Hotel and that Licensor will continue to perform
its obligations under this Agreement following such Acquisition of title to the
Hotel. Nothing set forth in this Agreement shall require Licensor's consent to
the granting, execution or delivery of any mortgage, deed of trust or security
agreement encumbering the Hotel or this Agreement.
25.4 Release of Licensee. If a Transfer is properly made under Sections
25.2 and 25.3, then Licensee will be released from all obligations under this
Agreement accruing from and after the effective date of the Transfer. This
release does not apply to those obligations that expressly survive the
termination or expiration of this Agreement.
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ARTICLE 26
TRANSFER OF EQUITY INTERESTS
26.1 TRANSFER OF LIMITED PARTNERSHIP INTERESTS. Limited Partners may
Transfer their Limited Partnership Interests, without the prior consent of
Licensor, provided that at the time of any such Transfer, Licensee is not in
material Default under this Agreement and the Transferee of the Limited
Partnership Interests is not a competitor of Licensor.
26.2 TRANSFER OF EQUITY INTERESTS IN GENERAL PARTNER, PARENT CORPORATION OR
ULTIMATE PARENT. Up to fifty percent (50%) of the Equity Interests in General
Partner, Parent Corporation or Ultimate Parent may be transferred to Third
Parties not affiliated with Ultimate Parent without the prior consent of
Licensor provided (i) that Licensee is not in material Default under this
Agreement, (ii) that no such Transfer is to a competitor of Licensor and (iii)
that such Transfer does not result in the General Partner, Parent Corporation or
Ultimate Parent ceasing to be an Affiliate of Licensee.
26.3 APPROVAL REQUIRED. Except as permitted by Section 26.1 or 26.2 above,
no Transfer of any Equity Interest in the General Partner, Parent Corporation
or Ultimate Parent, nor the Transfer of the General Partner's Equity Interest
in Licensee, shall take place unless Licensee gives Licensor sixty (60) days
written notice before the proposed Transfer and the Transfer is permitted under
the conditions set forth below. Any attempt to Transfer not specifically
permitted under this Agreement is void and a breach of this Agreement. If
Licensor fails to respond to a request for consent under this Section 26.3
within sixty (60) days after request, Licensor's consent shall be deemed to
have been given. Licensor's unwillingness to consent to such a Transfer is
deemed to be reasonable only if one or more of the following conditions is met:
26.3.1 Licensee is not current in the payment of all monetary
obligations owed to Licensor or its Affiliates in connection with this
Agreement or any other material agreement with a Third Party relating to
the Hotel.
26.3.2 Licensee is in material Default under this Agreement.
26.3.5 At the time of the Transfer, the Hotel does not meet or exceed
Licensor's requirements with respect to construction and maintenance.
26.3.6 The Transferee is a competitor of Licensor.
26.4 TRANSFER OF EQUITY INTERESTS TO THE PUBLIC. Notwithstanding Section
26.3 above, the General Partner, Parent Corporation and Ultimate Parent shall
each have the right to offer and issue Equity Interests to the public and
Licensee shall have the right to offer and issue Limited Partnership Interests
or other interests and securities to the public, pursuant to a public offering
under federal and state securities laws or the laws of any other governmental
authority having jurisdiction (or their exemptions) without the prior consent
or approval of Licensor, under the following conditions:
26.4.1 Licensee will provide Licensor with a copy of the proposed
offering circular, prospectus or other documents required to be provided
in lieu thereof( ("Prospectus") for Licensor's review and comments
regarding the description of this Agreement and of Licensee's
relationship with Licensor contained therein, at least thirty (30) days
prior to the time that the Prospectus is filed with any state securities
commission, the United States Securities and Exchange Commission or any
other governmental authority having jurisdiction. If Licensor fails to
provide comments to Licensee within
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ten (10) business days after the Prospectus is provided to Licensor,
Licensor shall be deemed to have waived its right to comment thereon.
26.4.2 Any use of the Marks, and any reference to Licensee of this
Agreement must be for reference purposes only, must be submitted to
Licensor for prior approval and must not give the impression that
Licensor endorses, authorized or is participating in the offering in any
way.
26.4.3 Licensee must agree in writing to fully indemnify Licensor with
respect to the offering, other that with respect to liabilities caused
by or related to language required by Licensor to be included in the
Prospectus.
26.4.4 Licensee must not be in Default of any material Provisions of
this Agreement at the time of the offering.
ARTICLE 27
CONDEMNATION
27.1 TERMINATION. Licensee will give Licensor notice of any proposed taking
or sale in lieu thereof by eminent domain in the United States within five (5)
business days after Licensee becomes aware of the possibility. If the Hotel or
a substantial part thereof is taken or sold and this renders it impractical or
impossible for Licensee to continue to operate the Hotel as a System Hotel,
Licensor or Licensee may terminate this Agreement without payment of a
termination fee or damages related to early termination (except as set forth in
Section 27.2), by notice to the other party, given within thirty (30) days of
the taking or sale. If the Hotel is able to continue to operate as a hotel in a
manner substantially similar to that existing prior to a partial taking,
Licensee will perform whatever Construction is reasonably necessary to make it
a System Hotel and bring it into compliance with this Agreement.
27.2 COMPENSATION. To the extent permitted by law and notwithstanding
Section 27.1, Licensee will pursue on Licensor's behalf, a claim for
compensation which includes Licensor's lost Continuing Fee income and pay any
amount so recovered to Licensor. If Licensor is allowed to pursue such a claim
on its own behalf, Licensor will do so and Licensee will not include such a
claim on its own behalf. Licensee will cooperate with Licensor with respect to
either of these efforts.
27.3 NEW LICENSE. If this Agreement is terminated pursuant to Section
27.1, and License was not in Default, Licensor may grant Licensee a License for
a new hotel provided that Licensee file an application with Licensor. Licensor
will review the application in accordance with its then current standards,
criteria and requirements. If the application is approved, Licensor and
Licensee will enter into a new license agreement on Licensor's then current
form which will contain Licensor's then current terms in all respects except
for manually agreed to changes. Licensor will respond to Licensee's application
for such new location within six months of its submittal.
ARTICLE 28
CASUALTY
28.1 TERMINATION OR CONSTRUCTION. If the Hotel suffers minor damage by fire
or other casualty, Licensee will promptly perform whatever Construction is
reasonably necessary to bring the Hotel in compliance with this Agreement. If
the Hotel is destroyed or substantially damaged so that the damage cannot be
repaired within eighteen (18) months of the date the damage occurred, either
Licensee or Licensor, may terminate this Agreement by notice given to the other
within forty-five (45) days of the date of the damage or destruction. Such
termination is without liability for damages related to premature termination.
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If either party elects to terminate, all fees and other amounts due or accrued
through the cessation of operation shall be paid (i) within thirty (30) days
of the date of cessation if the notice is given before the cessation, or (ii)
at the time notice is given if the cessation has already occurred.
28.2 Term. If the Hotel or any portion is closed in order to repair minor
damage, the Term is not affected by such closing.
ARTICLE 29
INSURANCE
29.1 Policy Coverage and Amount. Licensee will maintain (i) commercial general
liability insurance (with products, completed operations and independent
contractors coverage) and comprehensive automobile liability insurance, all on
an occurrence and per location basis with single-limit coverage for personal
and bodily injury and property damage of at least $15,000,000.00 per
occurrence, and (ii) liquor liability/dram shop insurance with limits of not
less than $15,000,000.00 per occurrence. The policies must also provide for the
following:
a) Licensor and its Affiliates designated by Licensor must be named as
additional insureds.
b) Licensor must receive thirty (30) days prior written notice of any
cancellation, non-renewal and material changes.
c) The deductible for any base policy cannot exceed US $25,000.00 and the
deductible on any umbrella policy cannot exceed U.S. $3,000,000.00.
29.2 General Contractor's Liability Insurance. Prior to the start of any
Construction, Licensee will require the general contractor for the initial
construction and any major renovation in excess of $10,000,000 to procure and
maintain commercial general liability insurance (including products, completed
operations and independent contractors coverage) with limits of at least US
$15,000,000.00 naming Licensor and its Affiliates as additional insureds, and
statutory workers' compensation insurance with employer's liability limits of
at least US $500,000.00. For any subsequent construction, Licensee will
exercise reasonable business judgement in determining required insurance
coverage and policy limits.
29.3 Other Insurance. Licensee will also procure and maintain (i) all
insurance required under any lease, mortgage, deed of trust, contract for deed
or any other legal contract with respect to the Hotel, (ii) "all risk" property
insurance on the Hotel with extended coverage and replacement cost
endorsements, (iii) business interruption insurance covering Licensor's fees,
with Licensor named as a loss payee with respect to those fees, and (iv)
statutory workers' compensation insurance with employer's liability limits of
at least US $500,000.00.
29.4 Evidence. Licensee will provide Licensor with original certificates of
insurance acceptable to Licensor evidencing that the policies are in effect at
the earlier of (i) the start of Construction or (ii) the Opening Date, and at
least thirty (30) days prior to the expiration of any policy.
29.5 Qualifications. All insurance companies must have a Best Rating of A-V or
better.
29.6 Licensee's Risk. The policies required are for Licensor's benefit and
protection. Licensor makes no warranty or representation that the policies are
adequate for Licensee's needs whatsoever. Licensee
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assumes all risks in this respect and with respect to any self-insurance
program, and waives all claims against Licensor with respect to these matters
whatsoever.
29.7 Changes. Licensor reserves the right to request reasonable modifications
to the insurance requirements comparable to industry standards for similar
properties in the Clark County, Nevada market.
ARTICLE 30
INDEMNIFICATION
30.1 Indemnification By Licensee. Licensee will indemnify and hold Licensor
harmless from and against all claims, lawsuits, damages, obligations,
liability, actions and judgments alleged by any person or entity against
Licensor arising out of, as a result of or in connection with Licensee's
negligence or the operation of Licensee's Hotel, or any business conducted by
Licensee pursuant to this Agreement. Further, in any such action, Licensee will
indemnify and reimburse Licensor for all costs incurred by Licensor in the
defense of any claim brought against it or in any action in which it is named
as a party including, without limitation, reasonable attorney's fees,
investigation expenses, court costs, deposition expenses, and travel and living
expenses.
Licensee assumes sole and complete responsibility for and will indemnify and
hold harmless Licensor and its Affiliates against and from all payments of
money, including those with respect to fines, penalties, taxes, losses,
damages, costs, expenses (including reasonable attorney fees, investigation
expenses, court costs, deposition expenses, and travel and living expenses)
("Payments") by reason of any claim, cause of action or demand ("Claims")
related in any way to the Construction or operation of the Hotel, any
occurrence at the Hotel or any acts or omissions of Licensee or anyone
associated with Licensee. All such indemnification's survive termination or
expiration of this Agreement. Licensee's indemnification obligation does not
apply to Payments based on Claims which are consequences of Licensor's (i)
negligence or willful misconduct, so long as the Claims are not asserted on
the basis of theories of vicarious liability, including but not limited to
agency, apparent agency or employment or (ii) negligent failure to compel
Licensee's compliance with the Provisions.
30.2 Defense Against Claims. Licensee will defend Licensor against all
Claims, provided that upon notice to Licensee, Licensor may use its own counsel
and may control such defense, but at Licensee's cost.
30.3 Continuation of Obligations. The indemnification and other obligations
contained herein will continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement, with respect
to events occurring prior to such expiration or termination.
30.4 Indemnification by Licensor. Licensor assumes sole and complete
responsibility for and will indemnify and hold harmless Licensee and its
Affiliates against and from all payments of money, including those with respect
to fines, penalties, taxes, losses, damages, costs, expenses (including
reasonable attorney fees, investigation expenses, court costs, deposition
expenses, and travel and living expenses) by reason of any claim, cause of
action or demand caused by Licensor's negligence or willful misconduct.
ARTICLE 31
MISCELLANEOUS
31.1 Severability. All Provisions are severable. Those Provisions which,
pursuant to any applicable law requiring that the law takes precedence over any
agreement between the parties, including Provisions with
34
<PAGE> 35
respect to terminations. Transfers and permissible grounds, cure rights or
minimum periods of notice, are not enforceable are superseded and modified by
such applicable law only to the extent such Provisions are unenforceable.
31.2 Waiver. The failure, refusal or neglect of one party to require the other
party to comply with any Provision does not constitute a waiver by the former
of its right to require full compliance with the same Provision in the future
or with any other Provisions regardless of the acceptance of payments by the
party seeking compliance.
31.3 Governing Law. Notwithstanding any laws with respect to choice of law
under which any other law might be applicable, this Agreement and the
relationship between the parties will be governed by the laws of the state of
Nevada.
31.4 Venue And Jurisdiction. Except for injunctive relief sought by Licensor,
which may be brought in a court of proper jurisdiction in the state where (i)
Licensee resides or has its principle place of business, or (ii) the Hotel is
located, all claims, disputes or controversies whatsoever, arising out of or
related to this Agreement in any way must be commenced, filed and litigated
before a court of proper jurisdiction located in Clark County, Nevada and each
party agrees and submits to personal jurisdictions in the State of Nevada.
31.5 Costs And Enforcement. In any litigation, arbitration or other proceeding
or defense of this Agreement, the prevailing party in such matter shall be
entitled to recover reasonable attorneys fees, costs and expenses.
31.6 Waiver of Punitive Damages. Licensee and Licensor agree to waive, to the
fullest extent permitted by law, the right to or claim for any punitive or
exemplary damages against the other.
31.7 Binding Agreement. This Agreement is binding upon the parties and their
respective Transferees.
31.8 Entire Agreement. This Agreement and the attached Schedules constitute
the entire agreement between the parties with respect to the subject matter and
supersedes and terminates all prior agreements, either oral or in writing, with
respect to the franchise relationship. Any representations, inducements,
promises or agreements between the parties not contained in this Agreement or
not in writing signed by the Licensor and the Licensee are not be enforceable.
31.9 Changes. Oral changes to this Agreement, including those by way of
modification, addition, rescission, release, amendment, waiver or otherwise, are
not valid or enforceable. Changes may be made only by a written agreement
signed by a duly authorized officer of each party.
31.10 Headings; Terms. The headings of the Articles are for convenience only
and do not define, limit or construe the contents of such Articles. The
singular usage includes the plural, the masculine usage includes the neuter and
the feminine, and the neuter usage includes the masculine and the feminine.
31.11 Notices. Any Notices required or permitted shall be in writing and may
be delivered personally or by fax or reliable expedited delivery companies
including Federal Express and DHL. Notices by fax are deemed delivered and
received upon transmission provided that the original is delivered personally
or sent by expedited delivery within 48 hours of the transmission by fax.
Notices by expedited delivery shall be deemed delivered and received on the
second day immediately succeeding the date on which the notice was given to the
expedited delivery company. Information for Notices is as follows:
35
<PAGE> 36
To Licensor: To Licensee
Regent Hotels Worldwide, Inc. The Resort at Summerlin, Limited
Attn: Robert S. Berkwitz Partnership
c/o Legal Department ATTN: Mr. John Tipton
12755 Highway 55 1160 Town Center Drive
Plymouth, MN 55441-8249 Suite 200
Facsimile: 612/513-8543 Las Vegas, NV 89134
Facsimile: 702/869-7001
Copy to:
Victor Wallace, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, CO 80203-1264
Facsimile: 303/861-7805
31.12 Approvals. Whenever the approval, consent or authorization of either
party is required, such approval, unless specifically stated otherwise, must be
in writing and not be unreasonably withheld or delayed. Licensor's consent,
authorization or approval of any matter is a permission only and not a
representation, warranty or assurance.
31.13 Execution. Two (2) copies of this Agreement shall be signed, each of
which, when signed, is an original and which, together, constitute one and the
same instrument.
31.14 Force Majeur. Performance by either party of the Provisions may be
suspended for the duration of any of the following if it renders such party
incapable of performing in whole or in part: strikes, fire, flood, war, civil
disorders, act of government authority or any other cause beyond the control
of such party. If such condition continues in existence for longer than six
months, either party may terminate this Agreement by written notice to the
other party, without payment of a termination fee or damages related to early
termination.
31.15 Actions by Others. Where Licensee is prohibited by this Agreement from
directly taking any action, or where action by Licensee would constitute a
Default, Licensee agrees that it will not encourage, authorize or permit any
other person or entity, directly or indirectly or under its direct or indirect
control to take such action.
31.16 Performance Through Others. Licensor may perform all of its obligations
directly or through its Affiliates or Third Party consultants. If performed
through its Affiliates, Licensor is still directly responsible and liable to
Licensee for the obligations so performed and Licensee's obligations with
respect to such matters shall still run directly to Licensor.
31.17 Joint And Several Liability. If Licensee consists of more than one
individual, then the liability of all such individuals signing this Agreement
will be deemed to be joint and several.
31.18 Survival. All Provisions which, as a matter of logic or otherwise, need
to survive the expiration or termination in order to achieve an intended
result, shall be considered to survive despite the absence of specific survival
language with respect to each of them.
31.19 Compliance with Laws. Notwithstanding any Provision to the contrary,
Licensee's performance is subject to, and Licensee will comply with all
restrictions, covenants and conditions covering the Property and all
applicable requirements of all governmental authorities having jurisdiction
over Licensee or the Hotel.
36
<PAGE> 37
31.20 Non-exclusivity of Remedies. The remedies provide for are not exclusive
and either party is free to pursue such other remedies available at law or in
equity including seeking declaratory or injunctive relief.
IN WITNESS WHEREOF, Licensor and Licensee have respectively signed this
Agreement effective as of the day and year first above written.
REGENT HOTELS WORLDWIDE, INC., THE RESORT AT SUMMERLIN, LIMITED
a Minnesota corporation PARTNERSHIP
a Nevada limited partnership
By: PAUL J. HANLEY By: JOHN J. TIPTON
--------------------------------- -----------------------------------
Print Name: Paul J. Hanley Print Name: John J. Tipton
--------------------------- -----------------------
Its: President Its: SR VP, CEO and Special Counsel
---------------------------------- to Resort at Summerlin, Inc.
General Partner
Date: 12/16/97 -----------------------------
---------------------------------
Date: 12/16/97
----------------------------
37
<PAGE> 38
SCHEDULES
---------
4.2 Design and Construction Service Providers
- Architect
Paul Steelman and Associates
3300 W. Desert Inn Road
Las Vegas, Nevada
- Interior Designer
Paul Steelman and Associates
3300 W. Desert Inn Road
Las Vegas, Nevada
- General Contractor
J.A. Jones Construction Co.
1050 E. Flamingo Road, E-127
Las Vegas, Nevada
- Purchasing Company
To be advised
4.4 Project Plans
- Architectural Drawings
- Layouts of Guestrooms, Restaurants, Lounges, Public Areas,
Meeting/Banquet Facilities, Front Drive/Hotel Entry, Lobbies
- Furniture Plans
- Schedule of Interior Finishes
- Schedule of FF&E Specifications
38
<PAGE> 39
13.4 Other Operators of Hotel Facilities
- Restaurants
- Nick's Fish Market (HARMAN-Nickolas
Restaurant Group)
- Hamada of Japan
- Others to be advised
- Other Retail Spaces
- Lamonts (Gift Shop Operation)
- A/V Provider
- (To Be Advised)
39
<PAGE> 40
SCHEDULE A
[MAP]
Hotel
Lifestyle Complex,
Restaurants & Retail
Conference Center
Casino/Buffett
Parking Garage
Hotel
Health Spa
Retail
THE RESORT AT SUMMERLIN
PRELIMINARY LANDSCAPE PLAN
<PAGE> 1
Exhibit 10.3
STANDARD FORM OF AGREEMENT BETWEEN OWNER AND ARCHITECT
WHERE THE CONSTRUCTION MANAGER IS NOT A CONTRACTOR -
CONSTRUCTION MANAGER - ADVISER EDITION
AIA DOCUMENT B141/CMa - ELECTRONIC FORMAT
- -------------------------------------------------------------------------------
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.
This document is intended to be used in conjunction with the 1992 editions of
AIA Documents B801/CMa, A101/CMa and A201/CMa.
Copyright 1975, 1980, 1992 by the American Institute of Architects, 1735 New
York Avenue, N.W. Washington D.C. 20006-5292. Reproduction of the material
herein or substantial quotation of its provisions without the written
permission of the AIA violates the copyright laws of the United States and
will subject the violator to legal prosecution.
- -------------------------------------------------------------------------------
AGREEMENT
made as of December 1997
(In words, indicate day, month and year.)
BETWEEN the Owner:
(Name and address)
The Resort at Summerlin Limited Partnership, a Nevada limited partnership
3330 West Desert Inn Road, Unit #5
Las Vegas, Nevada 89102
and the Architect:
(Name and address)
Paul Steelman, Ltd.
3330 West Desert Inn Road
Las Vegas, Nevada 89102
for the following Project:
(Include detailed description of Project, location, address and scope.)
The Resort at Summerlin - Hotel, Casino & Entertainment Complex more
particularly described as follows: A luxury Hotel of approximately 300 rooms
and an additional 300 rooms as described in the attached Exhibit A, and a
47,000 square foot Casino, along with a Convention Center, Parking Garage,
Restaurants, Health Spa, Retail Shops, the entire 54.5 acre site on which the
Complex is to be located, and related furniture, furnishings, and equipment.
The Construction Manager will be designated by Owner after the execution of
this Agreement.
(Name and address)
The Owner and Architect agree as set forth below.
- -------------------------------------------------------------------------------
AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION
MANAGER-ADVISER EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 THE AMERICAN
INSTITUTE OF ARCHITECTS, 1725 NEW YORK AVENUE N.W., WASHINGTON, D.C.
20006-5292; Unlicensed photocopying violates U.S. copyright laws and is subject
to legal prosecution.
Electronic Format B141/CMa-1992
User Document. FORM - 12/29/1997. AIA License Number 105525,
which expires on 6/30/1998 - Page #1
<PAGE> 2
TERMS AND CONDITIONS OF AGREEMENT BETWEEN OWNER AND ARCHITECT
ARTICLE 1
ARCHITECT'S RESPONSIBILITIES
1.1 ARCHITECT'S SERVICES
1.1.1 The Architect's services consist of those services performed by the
Architect. Architect's employees and Architect's consultants as enumerated in
Articles 2 and 3 of this Agreement and any other services included in Article
12.
1.1.2 The Architect's services shall be provided in conjunction with the
services of a Construction Manager as described in the edition of AIA Document
B801/CMa, Standard Form of Agreement Between Owner and Construction Manager,
current as of the date of this Agreement.
1.1.3 Architect shall exercise a high degree of care and diligence in the
rendition of all services under this Agreement in accordance with the highest
professional standards prevailing in the state of Nevada, and all of the
Architect's services under this Agreement shall be performed as expeditiously
as is consistent with said standards. The Architect shall submit for the
Owner's approval and the Construction Manager's information a schedule for the
performance of the Architect's services which may be adjusted as the Project
proceeds, and shall include allowances for periods of time required for the
Owner's and Construction Manager's review and for approval of submissions by
authorities having jurisdiction over the Project. Time limits established by
this schedule approved by the Owner shall not, except for reasonable cause be
exceeded by the Architect or Owner. Any adjustment to the schedule shall be
void and of no force and effect until such adjustments are agreed to in writing
by Owner. Such agreements shall only be binding on Owner if signed by the
president of the general partner of Owner. Such position is currently held by
Mr. Brian McMullan. Mr. McMullan may delegate this authority, or the authority
to sign any other agreement or approval which is expressly required by this
Agreement to be signed by the president of Owner's general partner, in writing
to another officer of Owner's general partner, and Architect may rely on such
delegation.
1.1.4
ARTICLE 2
SCOPE OF ARCHITECT'S BASIC SERVICES
2.1 DEFINITION
2.1.1 The Architect's Basic Services consist of those described in Paragraphs
2.2 through 2.6 and any other services identified in Article 12 as part of
Basic Services, and include, without limitation, normal structural, mechanical
and electrical engineering services.
2.2 SCHEMATIC DESIGN PHASE
2.2.1 The Architect shall review the program, schedule and construction
budget furnished by the Owner to ascertain the requirements of the Project and
shall arrive at a mutual understanding of such requirements with the Owner.
2.2.2 The Architect shall review with the Owner and Construction Manager
proposed site use and improvements; selection of materials, building systems
and equipment, and methods of Project delivery.
2.2.3 The Architect shall review with the Owner and Construction Manager
alternative approaches to design and construction of the Project.
2.2.4 Based on the mutually agreed-upon program, schedule and construction
budget requirements, the Architect shall prepare, for approval by the Owner,
Schematic Design Documents consisting of drawings and other documents
illustrating the scale and relationship of Project components.
INSERT A: The Schematic Design Documents shall comply with all applicable
laws, statutes, ordinances, codes, orders, rules and regulations.
2.2.5 At intervals appropriate to the progress of the Schematic Design Phase
and mutually agreeable to the Owner, Construction Manager and Architect, the
Architect shall provide schematic design studies for the Owner's review and the
Construction Manager's information.
2.2.6
- --------------------------------------------------------------------------------
AIA DOCUMENT B141/CMa -- OWNER-ARCHITECT AGREEMENT -- CONSTRUCTION MANAGER-
ADVISER EDITION -- 1992 EDITION -- AIA -- COPYRIGHT 1992 -- THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C. 20006-5292;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution.
Electronic Format B141/CMa-1992
User Document FORM -- 12/29/1997, AIA License Number 105525, which expires on
6/30/1998 -- Page #2
<PAGE> 3
2.2.7 Upon completion of the Schematic Design Phase, the Architect shall
provide drawings, outline specifications and other documents for the Owner's
approval and the Construction Manager's information.
2.3 DESIGN DEVELOPMENT PHASE
2.3.1 Based on the approved Schematic Design Documents and any adjustments
authorized by the Owner in the program, schedule or construction budget, the
Architect shall prepare Design Development Documents for the Construction
Manager's review and the Owner's approval. The Design Development Documents
shall be based upon data and estimates prepared by the Construction Manager and
shall consist of drawings and other documents that establish and describe the
size and character of the Project as to architectural, structural, mechanical
and electrical systems, materials and such other elements as may be appropriate.
Insert B: The Design Development Documents shall comply with all applicable
laws, statues, ordinances, codes, orders, rules and regulations.
2.3.2 At intervals mutually agreeable to the Owner,Construction Manager and
Architect, the Architect shall provide drawings and other documents which
depict the current status of design development for the Owner's review and the
Construction Manager's information.
2.3.3 Upon completion of the Design Development Phase, the Architect shall
provide drawings, outline specifications and other documents for the Owner's
approval and the Construction Manager's information.
2.4 CONSTRUCTION DOCUMENTS PHASE
2.4.1 Based on the approved Design Development Documents and any further
adjustments authorized by the Owner in the scope or quality of the project or in
the construction budget, the Architect, estimates prepared by the Construction
Manager, shall prepare, for approval by the Owner, Construction Documents
consisting of Drawings and specifications setting forth in detail the
requirements for the construction of the Project.
Insert C: The Construction Documents shall comply with all applicable laws,
statutes, ordinances, codes, rules and regulations.
2.4.2 At intervals mutually agreeable to the Owner, Construction Manager
and Architect, the Architect shall provide Drawings and Specifications for the
Owner's and the Construction Manager's review.
2.4.3 Upon completion of the Construction Documents Phase, the Architect
shall provide Construction Documents for the Owner's approval and the
Construction Manager's information.
2.4.4 The Architect shall in consultation with the Owner prepare the
necessary bidding information, and bidding forms and documents, and shall
assist in the preparation of the Contract for construction as defined below.
The Architect shall assist the Owner in issuing bidding documents to bidders
and conducting prebid conferences with prospective bidders. The Architect, with
the assistance of the Owner, shall respond to questions from bidders, and shall
issue addenda.
2.4.5 The Architect shall assist the Owner and Construction Manager in
connection with the Owner's responsibility for filing documents required for
the approval of governmental authorities having jurisdiction over the Project.
2.5 BIDDING OR NEGOTIATION PHASE
2.5.1 The Architect, following the Owner's approval of the Construction
Documents and of the Construction Manager's latest estimate of Construction
Cost, shall assist the Owner in obtaining bids or negotiated proposals and
assist in preparing contracts for construction.
2.6 CONSTRUCTION PHASE - ADMINISTRATION OF THE CONSTRUCTION CONTRACT
2.6.1 The Architect's responsibility to provide Basic Services for the
Construction Phase under this Agreement commences with the award of the
Contract for Construction and terminates upon the issuance to the Owner of the
final Project Certificate for Payment and the Owner's written acceptance of the
completed Project.
2.6.2 The Architect shall provide administration, as set forth below, of
all contracts relating to the Project, including, without limitation, the
Contract for Construction in cooperation with the Construction Manager as set
forth including the edition of AIA Document A201/CMa, General Conditions of the
Contract
- ---------------------------------------------------------------------------
AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION
MANAGER-ADVISER EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C. 2006-5292;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution.
Electronic Format B151/CMa-1992
User Document: FORM - 12/39/1997. AIA License Number 105525, which expires on
8/30/1998 - Page #3
<PAGE> 4
for Construction. Construction Manager-Advisor Edition-current as of the date
of this Agreement, with such supplementary conditions or modifications as the
Owner may require (which Contract is referred to in this Agreement as the
"Contract for Construction").
2.6.3 Duties, responsibilities and limitations of authority of the Architect
shall not be restricted, modified or extended without written agreement of the
Owner and Architect, which agreement must be signed on behalf of Owner by the
president of Owner's general partner.
2.6.4 The Architect shall advise and consult with the Owner during the
Construction Phase, and until final payment for the Project is due. The
Architect shall have no authority to act on behalf of the Owner written
instrument.
2.6.5 The Architect shall visit the site at intervals appropriate to the stage
of construction or as otherwise agreed by the Owner and Architect in writing to
become familiar in detail with the progress and quality of the Work completed
and to determine in detail if the Work is proceeding in accordance with all the
requirements of the Contract Documents and all applicable laws, statutes,
ordinances, codes, rules, regulations, orders and decrees. However, the
Architect shall not be required to make exhaustive or continuous on-site
inspections to check the quality or quantity of the Work. On the basis of
on-site observations as an architect, the Architect shall keep the Owner
informed of the progress and quality of the Work, and shall endeavor to guard
the Owner against defects and deficiencies in the Work. (More extensive site
representation may be agreed to as an Additional Service, as described in
Paragraph 3.2.)
Insert D: Any defective Designs, Drawings, or Specifications furnished by the
Architect will be promptly corrected by Architect at no cost to the Owner. and
the Architect will promptly reimburse the Owner for all damages, if any,
resulting from the use of such defective Designs, Drawings, or Specifications.
The Owner's approval, acceptance, use of or payment for all or any part of the
Architect's services hereunder or of the Project itself shall in no way alter
the Architect's obligations or the Owner's rights hereunder.
2.6.6 The Architect shall not have control over or charge of and shall not be
responsible for construction means, methods, techniques, sequences or
procedures, or for safety precautions and programs in connection with the Work,
since these are the Contractors' responsibility under the Contracts for
Construction. The Architect shall not be responsible for the Contractors'
schedules or failure to carry out the Work in accordance with the Contract
Documents. The Architect shall not be responsible for the performance by the
Construction Manager of the services required by the Construction Manager's
agreement with the Owner. The Architect shall not have control over or charge of
acts or omissions of the Contractors, Subcontractors, or their agents or
employees, or of any other persons performing services or portions of the Work.
2.6.7 The Architect shall at all times have access to the Work wherever it is
in preparation or progress.
2.6.8
Insert E: Notwithstanding anything to the contrary in this Agreement, the Owner
may communicate with Contractors directly, and may communicate directly with
Architect's consultants. At the Owner's request, the Architect agrees to
communicate on behalf of the Owner with the Contractor, the Architect's
consultants, or the Construction Manager.
2.6.9 Based on the Architect's observations at the site of the Work and
evaluations of each Application for Payment, the Architect shall review and
certify the appropriate amounts due the Contractors within three (3) business
days after receipt of any Application for Payment, and shall, from time to time
upon the request of Owner, issue to Owner and/or Owner's lender any other
documents, certificates, instruments and information reasonably requested by
Owner or Owner's lender. Architect's duties and responsibilities under this
subparagraph shall be in strict compliance with the Architect's duties under
Paragraphs 9.4, 9.5 and subparagraph 9.6.1 of the General Conditions of the
Contract for Construction.
2.6.9.1 The Architect's certification for payment shall constitute a
representation to the Owner, based on the Architect's observations at the site
as provided in Subparagraph 2.6.5, on the recommendations of the Construction
Manager and on the data comprising any Applications for Payment, that, to the
best
- -------------------------------------------------------------------------------
AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION
MANAGER-ADVISER EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C.
20006-5292; Unlicensed photocopying violates U.S. copyright laws and is subject
to legal prosecution.
Electronic Format B141/CMa-1992
User Document: FORM - 12/29/1997. AIA License Number 105525,
which expires on 6/30/1998 - Page #4
<PAGE> 5
of the Architect's knowledge, information and belief, the Work has progressed to
the point indicated and the quality of the Work is in accordance with the
Contract Documents. The foregoing representations are subject to Substantial
Completion, to results, minor deviations from the Contract Documents correctable
prior to completion. The issuance of a Certificate for Payment shall further
constitute a Architect's representation that the Contractor is entitled to
payment in the amount certified.
2.6.9.2 The issuance of a Certificate for Payment shall not be a representation
that the Architect has (1) reviewed construction means, methods, techniques,
sequences or procedures, from Subcontractors or (2) ascertained how or for what
purpose the Contractor has used money previously paid on account of the Contract
Sum under the Construction Contract.
2.6.10 The Architect shall have authority, after notification to the
Construction Manager, to reject Work which does not conform to the Contract
Documents. Whenever the Architect considers it necessary or advisable for
implementation of the intent of the Contract Documents, the Architect will have
the responsibility and authority, upon written authorization from the Owner, to
require additional inspection or testing of the Work in accordance with the
provisions of the Contract Documents, whether or not such Work is fabricated,
installed or completed provided, however, the Architect must obtain the Owner's
prior written approval of any such special inspections or testing. However,
neither this authority of the Architect nor a decision made in good faith either
to exercise or not to exercise such authority shall give rise to a duty or
responsibility of the Architect to the Construction Manager, Contractors,
Subcontractors, material and equipment suppliers, their agents or employees or
other persons performing portions of the Work.
2.6.11 The Architect shall review and approve or take other appropriate action
upon Contractors' submittals such as Shop Drawings, Product Data and Samples,
for the purpose of (1) compliance with applicable laws, statutes, ordinances,
codes, orders, rules, and regulations; and (2) determining whether or not the
Work, when completed, will be in compliance with the requirements of the
Contract Documents. The Architect's action shall be taken in accordance with the
schedule submitted to Owner pursuant to Subparagraph 1.1.3 hereof so as to
cause no delay in the Contractors' Work or in construction by the Owner's own
forces, while allowing sufficient time in the Architect's professional judgment
to permit adequate review. Review of such submittals is not conducted for the
purpose of determining the accuracy and completeness of other details such as
dimensions and quantities or for substantiating instructions for installation or
performance of equipment or systems designed by the Contractors, all of which
remain the responsibility of the Contractors to the extent required by the
Contract Documents. The Architect's review shall not constitute approval of
safety precautions or, unless otherwise specifically stated by the Architect, of
construction means, methods, techniques, sequences or procedures. The
Architect's approval of a specific item shall not indicate approval of an
assembly of which the item is a component. When professional certification of
performance characteristics of materials, systems or equipment is required by
the Contract Documents, the Architect shall be entitled to rely upon such
certification to establish that the materials, systems or equipment will meet
the performance criteria required by the Contract Documents.
2.6.12 The Architect shall review and sign or take other appropriate action on
Change Orders and Construction Change Directives prepared by the Construction
Manager for the Owner's approval and execution in accordance with the Contract
Documents, such Owner's approval to be evidenced by a written approval signed by
the President of Owner's general partner.
2.6.13 The Architect may authorize minor changes in Work not involving an
adjustment in a Contract Sum or an extension of a Contract Time which are not
inconsistent with the intent of the Contract Documents. Such changes shall be
effected by written order issued through the Construction Manager.
2.6.14 The Architect, assisted by the Construction Manager, shall conduct
inspections to determine the date or dates of Substantial Completion and the
date of final completion. The Architect shall forward to the Owner warranties
and similar submittals required by the Contract Documents which have been
received from the Construction Manager. The Architect shall issue a final
Project Certificate for Payment upon compliance with the requirements of the
Contract Documents.
2.6.15 The Architect shall interpret and provide recommendations concerning
performance of the Owner and Contractor under the requirements of the Contract
Documents on written request of either the Owner
AIA DOCUMENT 8141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION MANAGER-ADVISER
EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C. 20006-5292.: Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
Electronic Format B141/CMa-1992
User Document: FORM - 12/29/1997. AIA License Number 105525,
which expires on 6/30/1998 - Page #5
<PAGE> 6
or Contractor. The Architect's response to such requests shall be made with
reasonable promptness but no later than five (5) days as provided in the
Contract for Construction, and
2.6.16 Interpretations and recommendations of the Architect shall be consistent
with the intent of and reasonably inferable from the Contract Documents and
shall be in writing or in the form of drawings. When making such
interpretations, the Architect shall endeavor to secure faithful performance by
both Owner and Contractors, shall not show partiality to either, and shall not
be liable for results of interpretations or recommendations so rendered in good
faith and in the absence of negligence.
2.6.17
2.6.18 The Architect shall render written recommendations within a reasonable
time on all claims, disputes or other matters in question between the Owner and
Contractors relating to the execution or progress of the Work as provided in
the Contract Documents.
2.6.19 The Architect's recommendations on claims, disputes or other matters,
including those in question between the Owner and Contractors, shall be subject
to litigation as provided in this Agreement and in the Contract Documents.
Insert F: 2.6.20 The Architect shall provide the Owner with ten (10) sets of
reproducible prints showing all significant changes to the Working Drawings
during the Construction Phase and shall also provide Owner with ten (10) sets
of reproducible as-built Drawings for the Owner's file.
ARTICLE 3
ADDITIONAL SERVICES
3.1 GENERAL
3.1.1 The services described in this Article 3 are not included in Basic
Services unless so identified in Article 12, and they shall be paid for by the
Owner as provided in this Agreement, in addition to the compensation for Basic
Services. The services described under Paragraphs 3.2, 3.3 and 3.4 shall only
be provided if authorized in advance in writing by Owner, such authorization to
be signed by the President of Owner's general partner under are required,
Insert G: Notwithstanding anything to the contrary in this Agreement, Owner
shall not be responsible to pay and the Architect shall not be entitled to
receive compensation for any Additional Service if such services were required
due to the fault of the Architect or the Architect's failure to perform in
accordance with the terms of this Agreement.
3.2 PROJECT REPRESENTATION BEYOND BASIC SERVICES
3.2.1 If more extensive representation at the site than is described in
Subparagraph 2.6.5 is required, the Architect shall provide one or more Project
Representatives to assist in carrying out such additional on-site
responsibilities.
3.2.2 Project Representatives shall be selected, employed and directed by the
Architect, and the Architect shall be compensated therefor as agreed by the
Owner and Architect. The duties, responsibilities and limitations of authority
of Project Representatives shall be as described in the edition of AIA Document
B352 current as of the date of this Agreement, unless otherwise agreed.
3.2.3 Through the observations by such Project Representatives, the Architect
shall endeavor to provide further protection for the Owner against defects and
deficiencies in the Work, but the furnishing of such project representation
shall not modify the rights, responsibilities or obligations of the Architect
as described elsewhere in this Agreement.
3.3 CONTINGENT ADDITIONAL SERVICES
3.3.1 Making revisions in Drawings, Specifications, or other documents when
such major revisions are:
.1 inconsistent with approvals or instructions previously given by the Owner,
including revisions made necessary by adjustments in the Owner's program
or Project budget;
.2
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AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION MANAGER-ADVISER
1992 EDITION - AIA -- COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS,
1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
Electronic Format B141/CMa-1992
User Document: FORM - 12/29/1997. AIA License Number 105525, which expires on
6/30/1998 - Page #6
<PAGE> 7
.3 required by the enactment or revision of codes, laws or
regulations subsequent to the preparation of such documents; or
.4 due to changes required as a result of the Owner's failure to
render decisions in a timely manner.
3.3.2 Providing services required because of significant changes in the
Project including, but not limited to, changes in size, quality, complexity,
the Owner's or Construction Manager's schedule, or the method of bidding or
negotiating and contracting for construction, except for services required
under Subparagraph 5.2.3.
3.3.3 Preparing Drawings, Specifications, and other documentation and
supporting data, evaluating Contractor's proposals, and providing other
services in connection with Change Orders and Construction Change Directives
unless such services are the result of Architect's failure to perform services
in accordance with this Agreement.
3.3.4 Providing services in connection with evaluating substitutions proposed
by Contractors and making subsequent revisions to Drawings, Specifications and
other documentation resulting therefrom, unless such proposals by Contractor
are the result of Architect's failure to perform services in accordance with
this Agreement.
3.3.5 Providing consultation concerning replacement of Work damaged by fire or
other cause during construction, and furnishing services required in connection
with the replacement of such Work.
3.3.6 Providing services made necessary by the termination or default of the
Construction Manager or a Contractor, by major defects or deficiencies in the
Work of a Contractor, or by failure of performance of either the Owner or a
Contractor under a Contract for Construction.
3.3.7
3.3.8 Providing services in connection with a public hearing, arbitration
proceeding or legal proceeding except where the Architect is party thereto.
3.3.9
3.4 OPTIONAL ADDITIONAL SERVICES
3.4.1
3.4.2 Providing financial feasibility or other special studies.
3.4.3 Providing planning surveys, site evaluations or comparative studies of
prospective sites.
3.4.4 Providing special surveys, environmental studies and submissions
required for approval of governmental authorities or others having jurisdiction
over the Project.
3.4.5 Providing services relative to future facilities, systems and equipment.
3.4.6
3.4.7
3.4.8
3.4.9 Providing services in connection with the work of separate consultants
retained by the Owner.
3.4.10
3.4.11 Providing detailed quantity surveys or inventories of material and
equipment.
3.4.12 Providing analyses of owning and operating costs.
3.4.13
3.4.14
3.4.15 Making investigations, inventories of materials or equipment, or
valuations and detailed appraisals of existing facilities.
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AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION MANAGER-ADVISER
EDITION - AIA COPYRIGHT 1992 -- THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW
YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292; Unlicensed photocopying
violates U.S. copyright laws and is subject to legal prosecution.
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<PAGE> 8
3.4.16 Preparing a set of reproducible record drawings showing significant
changes in the Work made during construction based on marked-up prints, drawings
and other data furnished by Contractors.
3.4.17 Providing assistance in the utilization of equipment or systems such as
testing, adjusting and balancing, preparation of operation and maintenance
manuals, training personnel for operation and maintenance, and consultation
during operation.
3.4.18 Providing services after completion of the Construction Phase.
3.4.19
3.4.20 Providing any other services not otherwise included in this Agreement or
not customarily furnished in accordance with generally accepted architectural
practice.
ARTICLE 4
OWNER'S RESPONSIBILITIES
4.1 The Owner shall consult with the Architect regarding requirements for the
Project, including the Owner's contemplated objectives, schedule, constraints
and criteria, including space requirements and relationships, flexibility,
expandability, special equipment, systems, and site requirements.
4.2 The Owner shall consult with the Architect in order to establish and update
an overall budget for the Project based on consultation with the Construction
Manager and the Architect, which shall include the Construction Cost, the
Owner's other costs and reasonable contingencies related to all of these costs.
4.3
4.4 The Owner shall designate a representative authorized to act on the Owner's
behalf with respect to the Project. The Owner has currently designated Mr. Brian
McMullan. The Owner or such authorized representative shall render decisions in
a timely manner pertaining to documents submitted by the Architect in order to
avoid unreasonable delay in the orderly and sequential progress of the
Architect's services.
4.5 The Owner shall retain a construction manager to administer the Project.
The Construction Manager's services, duties and responsibilities will be as
described in the edition of AIA Document B801/CMa, Standard Form of Agreement
Between Owner and Construction Manager, current as of the date of this
Agreement. The Terms and Conditions of the Agreement between Owner and
Construction Manager shall be furnished to the Architect and shall not be
modified without written consent of the Architect, which consent shall not be
unreasonably withheld. The Architect shall not be responsible for actions taken
by the Construction Manager.
4.6 The Owner shall furnish surveys describing physical characteristics, legal
limitations and utility locations for the site of the Project, and a written
legal description of the site. The surveys and legal information shall include,
as applicable, grades and lines of streets, alleys, pavements and adjoining
property and structures; adjacent drainage; rights-of-way, restrictions,
easements, encroachments, zoning, deed restrictions, boundaries and contours of
the site; locations, dimensions and necessary data pertaining to existing
buildings, other improvements and trees; and information concerning available
utility services and lines, both public and private, above and below grade,
including inverts and depths. All the information on the survey shall be
referenced to a Project benchmark.
4.7 The Owner shall furnish the services of geotechnical engineers when such
services are requested by the Architect. Such services may include but are not
limited to test borings, test pits, determinations of soil bearing values,
percolation tests, evaluations of hazardous materials, and ground corrosion and
resistivity tests, including necessary operations for anticipating subsoil
conditions, with reports and appropriate professional recommendations. Owner
shall reimburse the Architect for expenses incurred by Architect for services
described in this paragraph.
4.7.1 The Owner shall furnish the services of other consultants when such
services are reasonably required by the scope of the Project and are requested
by the Architect provided that Owner shall retain such consultants only if such
consultants are not retained by the Architect as a part of the Basic Services
hereunder.
4.8 The Owner shall furnish structural, mechanical, chemical, air and water
pollution tests, tests for hazardous materials, and other laboratory and
environmental tests, inspections and reports required by law or the Contract
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AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION MANAGER-ADVISER
EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecutions.
Electronic Format B141/CMa-1992
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6/30/1998 -- Page #8
<PAGE> 9
Documents. Owner shall reimburse the Architect for expenses incurred by
Architect for services described in this paragraph.
4.9 The Owner shall furnish all legal, accounting, and insurance
counseling services as may be necessary at any time for the Project, including
auditing services the Owner may require to verify the Contractor's Application
for Payment or to ascertain how or for what purposes the Contractor has used the
money paid by or on behalf of the Owner.
4.10 The services, information, surveys and reports required by Paragraphs
4.6 through 4.9 shall be furnished at the Owner's expense, and the Architect
shall be entitled to rely upon the accuracy and completeness thereof.
4.11 Prompt written notice shall be given by the Owner to the Architect
and Construction Manager if the Owner becomes aware of any fault or defect in
the Project or nonconformance with the Contract Documents.
4.12 The proposed language of certificates or certifications requested of
the Architect or Architect's consultants shall be submitted to the Architect
for review and approval at least 7 days prior to execution. The Owner shall not
request certifications that would require knowledge or services beyond the
scope of this Agreement.
4.13 The Owner shall furnish the required information and services and
shall render approvals and decisions as expeditiously as necessary for the
orderly progress of the Architect's services and Work of the Contractors.
4.14 The Owner shall furnish the Architect copies of written
communications with the Construction Manager and Contractors.
ARTICLE 5
CONSTRUCTION COST
5.1 DEFINITION
5.1.1 The Construction Cost shall be the total cost or estimated cost to
the Owner of all elements of the Project designed or specified by the
Architect.
5.1.2 The Construction Cost shall include the cost at current market rates
of labor and materials furnished by the Owner and equipment designed,
specified, selected or specially provided for by the Architect, plus a
reasonable allowance for the Contractors' overhead and profit. In addition, a
reasonable allowance for contingencies shall be included for market conditions
at the time of bidding and for changes in the Work during construction.
Construction Cost shall also include the compensation of the Construction
Manager and Construction Manager's consultants.
5.1.3 Construction Cost does not include the compensation of the Architect
and Architect's consultants, the costs of the land, rights-of-way, financing or
other costs which are the responsibility of the Owner as provided in Paragraphs
4.1 through 4.4 and 4.6 through 4.14.
5.2 RESPONSIBILITY FOR CONSTRUCTION COST
5.2.1 The Architect's review of the Owner's Project budget and of
preliminary estimates of Construction Cost or detailed estimates of
Construction Cost prepared by the Construction Manager is solely for the
Architect's guidance in the Architect's preparation of the Construction
Documents. Accordingly, the Architect cannot and does not warrant the accuracy
of the estimates of the Construction Manager, or warrant or represent that bids
or negotiated prices will not vary from the Owner's Project budget or from any
estimate of Construction Cost or evaluation reviewed by the Architect.
5.2.2 No fixed limit of Construction Cost shall be established as a
condition of this Agreement.
5.2.3 In the event that the Construction Manager's estimate or the lowest
bona fide bid or negotiated proposal received by the Owner exceeds the Owner's
budget for reasons other than those described in Paragraph 3.3, the
modification of Contract Documents shall be the limit of the Architect's
responsibility. The Architect shall be entitled to compensation in accordance
with this Agreement for all services performed whether or not the Construction
Phase is commenced.
ARTICLE 6
USE OF ARCHITECT'S DRAWINGS,
SPECIFICATIONS AND OTHER DOCUMENTS
6.1 The Drawings, Specifications and other documents prepared by the
Architect for this Project are instruments of the Architect's service for use
solely with respect to this Project and, unless otherwise provided, the
Architect shall be deemed the author of these documents and shall retain all
common law, statutory and other reserved rights, including the copyright. The
Owner shall be permitted to retain copies, including reproducible copies, of
the Architect's Drawings, Specifications and other documents for information
and reference in connection with the Owner's use and occupancy
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AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION
MANAGER-ADVISER EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C.
20006-5292; Unlicensed photocopying violates U.S. copyright laws and is subject
to legal prosecution.
Electronic Format B141/CMA-1992
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6/30/1998 -- Page #9
<PAGE> 10
of the Project. The Architect's Drawings, Specifications or other documents
shall not be used by the Owner or Architect or others on other projects, for
additions to this Project or for completion of this Project by others, unless
the Architect is adjudged to be in default under this Agreement, except by
agreement in writing and with appropriate compensation to the Architect.
6.2 Submission or distribution of documents to meet official regulatory
requirements or for similar purposes in connection with the Project is not to
be construed as publication in derogation of the Architect's reserved rights.
ARTICLE 7
ARBITRATION
7.1
7.2
7.3
7.4
INSERT H: 7.5 LITIGATION
INSERT I: 7.5.1 Any controversy or Claim arising out of or related to this
Agreement, or the breach thereof, may be the subject of litigation.
INSERT J: 7.5.2 Except as otherwise provided in this Agreement, the Owner and
the Architect shall proceed diligently with the performance of this Agreement
and Owner shall continue to make payment in accordance with this Agreement
during litigation.
INSERT K: 7.5.3 WAIVER OF TRIAL BY JURY, OWNER AND ARCHITECT, TO THE FULLEST
EXTENT THAT THEY MAY LAWFULLY DO SO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING WITHOUT LIMITATION ANY TORT ACTION, BROUGHT BY ANY PARTY
TO THIS AGREEMENT WITH RESPECT TO THIS AGREEMENT.
INSERT L: /s/ JM
INSERT M: Initials Initials
ARTICLE 8
TERMINATION SUSPENSION OR ABANDONMENT
8.1 This Agreement may be terminated by either party upon not less than seven
days written notice should the other party fail substantially to perform in
accordance with the terms of this Agreement through no fault of the party
initiating the termination.
8.2 If the Project is suspended by the Owner for more than 30 consecutive
days, the Architect shall be compensated for services performed prior to notice
of such suspension. When the Project is resumed, the Architect's compensation
shall be equitably adjusted to provide for expenses incurred in the
interruption and resumption of the Architect's services.
8.3 This Agreement may be terminated by the Owner upon not less than seven
days' written notice to the Architect in the event that the Project is
permanently abandoned. If the Project is abandoned by the Owner for more than
90 consecutive days, the Architect may terminate this Agreement by giving
written notice.
8.4 Failure of the Owner to make payments to the Architect in accordance with
this Agreement shall be considered substantial nonperformance and cause for
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AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION
MANAGER-ADVISER EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C.
20006-5292; Unlicensed photocopying violates U.S. copyright laws and is subject
to legal prosecution.
Electronic Format B141/CMa-1992
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which expires on 6/30/1998 - Page #10
<PAGE> 11
termination.
8.5 If the Owner fails to make payment when due the Architect for services and
expenses, the Architect may, upon seven days' written notice to the Owner,
suspend performance of services under this Agreement. Unless payment in full is
received by the Architect within seven days of the date of the notice, the
suspension shall take effect without further notice. In the event of a
suspension of services, the Architect shall have no liability to the Owner for
delay or damage caused the Owner because of such suspension of services.
8.6 In the event of termination not the fault of the Architect, the Architect
shall be compensated for services performed prior to termination, together with
Reimbursable Expenses then due Paragraph 8.7.
8.7
.1
.2
.3
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 Unless otherwise provided, this Agreement shall be governed by the law of
the place where the Project is located.
9.2 Except as otherwise specified in this Agreement, terms in this Agreement
shall have the same meaning as those in the Contract for Construction.
9.3
9.4 The Owner and Architect waive all rights against each other and against the
Construction Manager, Contractors, and the consultants, agents and employees of
any of them for damages, but only to the extent covered by property insurance
during construction, except such rights as they may have to the proceeds of
such insurance as set forth in the edition of AIA Document A201/CMa, General
Conditions of the Contract for Construction, Construction Manager-Adviser
Edition, current as of the date of this Agreement. The Owner and Architect each
shall require similar waivers from their Construction Manager, Contractors,
consultants, agents, and persons or entities awarded separate contracts
administered under the Owner's own forces.
9.5 The Owner and Architect, respectively, bind themselves, their partners,
successors, assigns and legal representatives to the other party to this
Agreement and to the partners, successors, assigns and legal representatives of
such other party with respect to all covenants of this Agreement. Neither Owner
nor Architect shall assign this Agreement without the written consent of the
other, provided,however, that Owner may assign this Agreement as security for
any loan obtained in connection with the construction of the Project.
9.6 This Agreement represents the entire and integrated agreement between the
Owner and Architect and supersedes all prior negotiations, representations or
agreements, either written or oral. This Agreement may be amended only by
written instrument signed by both Owner and Architect, and any such amendment
must be signed on behalf of Owner by the president of Owner's general partner.
The parties hereby waive the benefit of any provision of law which provides
that a contract shall be interpreted against the party who prepared the
contract.
9.7 Nothing contained in the Agreement shall create a contractual relationship
with or a cause of action in favor of a third party against either the Owner or
Architect.
9.8 Unless otherwise provided in this Agreement, the Architect and Architect's
consultants shall have no responsibility for the discovery, presence, handling,
removal or disposal of or exposure of persons to hazardous materials
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AIA DOCUMENT D141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION
MANAGER-ADVISER EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C.
20006-5292. Unlicensed photocopying violates U.S. copyright laws and is subject
to legal prosecution.
Electronic Format B141/CMa-1992
User Document: FORM - 12/29/1997. AIA License Number 105525, which expires on
6/30/1998 - Page #11
<PAGE> 12
in any form at the Project site, including but not limited to asbestos,
asbestos products, polychlorinated biphenyl (PCB) or other toxic substances.
9.9 The Architect shall have the right upon the prior written consent of the
Owner to include representations of the design of the Project, including
photographs of the exterior and interior, among the Architect's promotional and
professional materials. The Architect's materials shall not include the Owner's
confidential or proprietary information if the Owner has previously advised the
Architect in writing of the specific information considered by the Owner to be
confidential or proprietary. The Owner shall provide professional credit for
the Architect on the construction sign and in the promotional materials for the
Project.
ARTICLE 10
PAYMENTS TO THE ARCHITECT
10.1 DIRECT PERSONNEL EXPENSE
10.1.1 Direct Personnel Expense is defined as the direct salaries of the
Architect's personnel engaged on the Project and the portion of the cost of
their mandatory and customary contributions and benefits related thereto, such
as employment taxes and other statutory employee benefits, insurance, sick
leave, holidays, vacations, pensions and similar contributions and benefits.
10.2 REIMBURSABLE EXPENSES
10.2.1 Reimbursable Expenses are in addition to compensation for Basic and
Additional Services and include expenses incurred by the Architect and
Architect's employees and consultants in the interest of the Project, as
identified in the following Clauses.
10.2.1.1 Expense of transportation in connection with the Project; expenses in
connection with authorized out-of-town travel; long-distance communications;
and fees paid for securing approval of authorities having jurisdiction over the
Project.
10.2.1.2 Expense of reproductions, postage, express deliveries, electronic
facsimile transmissions and handling of Drawings, Specifications and other
documents.
10.2.1.3
10.2.1.4 Expense of renderings, models and mock-ups requested by the Owner.
10.2.1.5 Expense of any sales, use, occupation or similar taxes applicable to
this Agreement, additional insurance coverage or limits, including professional
liability insurance, requested by the Owner in excess of that normally carried
by the Architect and Architect's consultants.
10.2.1.6 Expense associated with the use of outside computers when authorized
in advance in writing by the Owner.
Insert N: 10.2.1.7 Such other expenses incurred in connection with the Project
when specifically authorized in advance in writing by the Owner.
10.3 PAYMENTS ON ACCOUNT OF BASIC SERVICES
10.3.1 Subject to the provisions of Subparagraph 11.2.2 hereof, the Owner
shall make payments to the Architect within thirty (30) days after the Owner's
receipt and approval of (i) the Architect's detailed monthly statement and (ii)
such lien waivers and releases as Owner may reasonably request.
10.3.2
10.3.3 extent that the time initially established
10.3.4
10.4 PAYMENTS ON ACCOUNT OF ADDITIONAL SERVICES AND REIMBURSABLE EXPENSES
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AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION
MANAGER-ADVISER EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C. 20006-5292;
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution.
Electronic Format B141/CMa-1992
User Document: FORM - 12/29/1997. AIA License Number 105525, which expires on
6/30/1998 -- Page #12
<PAGE> 13
10.4.1 Payments on account of the Architect's Additional Services and for
Reimbursable Expenses shall be made in accordance with Paragraph 10.3.
10.5 PAYMENTS WITHHELD
10.5.1 Unless the Architect has not properly performed the services required in
accordance with the terms of this Agreement, no deductions shall be made from
the Architect's compensation on account of penalty, liquidated damages or other
sums withheld from payments to Contractors, or on account of the cost of
changes in the Work.
10.6 ARCHITECT'S ACCOUNTING RECORDS
10.6.1 Records of Architect's expenses and hours pertaining to this Project
shall be kept by Architect in accordance with generally accepted accounting
principles, which principles shall be consistently applied. Said records, shall
be available to the Owner or its authorized representative for inspection and
copying during regular business hours for three (3) years after the date of the
final Certificate of Payments.
ARTICLE 11
BASIS OF COMPENSATION
The Owner shall compensate the Architect as follows:
11.1 AN INITIAL PAY
11.2 BASIC COMPENSATION
11.2.1 FOR BASIC SERVICES, as described in Article 2, and any other services
included in Article 12 as part of Basic Services, Basic Compensation shall be
computed as follows:
(Insert basis of compensation, including stipulated sums, multiples or
percentages, and identify phases to which particular methods of compensation
apply, if necessary.)
The Basic Compensation for Basic Services shall be the sum of $1,142,000.
Architect acknowledges that as of December 19, 1997, Architect has been paid as
Basic Compensation the sum of $1,175,391.94. In addition, Architect, as part of
Basic Services, may obtain the assistance of the following consultants with the
compensation for each such consultant not to exceed the amounts listed for each
such consultant which Interiors/Graphics/Lighting
<TABLE>
<CAPTION>
<S> <C>
Civil Engineer Consultantm 143,000
Structural Engineer Consultant 385,000
Electrical Engineer Consultant 180,000
Mechanical Engineer Consultant 280,000
Kitchen Consultant 155,000
Landscaping Consultant 365,000
Cost Consultant 135,000
Pool/Pond Water Consultant 100,000
Theatre/Audio/Surveillance 150,000
Interiors/Graphics/Lighting 750,000
Other Consultants 100,000
</TABLE>
11.2.1.1 Monies allocated for a specific consultant, as set forth above, but
not expended shall not be used for, or paid to, other consultants or the
Architect.
11.2.1.2 As set forth above, Architect acknowledges that as of ,1997,
Architect has been paid $ as Basic Compensation, and the balance of
Architect's Basic Compensation shall be paid as follows:
11.2.1.3 Architect acknowledges that as of the date of this Agreement the
consultants, set forth above, have been paid the following listed amounts:
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AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION
MANAGER-ADVISER EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN
INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C.
20006-5292; Unlicensed photocopying violates U.S. copyright laws and is subject
to legal prosecution.
Electronic Format B141/CMa-1992
User Document: FORM -- 12/29/1997. AIA License Number 105525,
which expires on 6/3/0/1998 -- Page #13
<PAGE> 14
Civil Engineer Consultant 126,300
Structural Engineer Consultant 327,250
Electrical Engineer Consultant 137,700
Mechanical Engineer Consultant 224,000
Kitchen Consultant 139,500
Landscaping Consultant 282,000
Cost Consultant 135,000
Pool/Pond Water Consultant 72,292.50
Theatre/Audio/Surveillance Consultant 112,226.45
Interiors/Graphics/Lighting Consultant included in Architect's
Compensation to date
Other Consultants 13,107.50
The balance of the consultants' compensation shall be paid as follows:
11.2.2 Where compensation is based on a stipulated sum or percentage of
Construction Cost, progress payments for Basic Services in each phase shall
total the following percentages of the total Basic Compensation payable:
(Insert additional phases as appropriate)
Schematic Design Phase: 20 percent ( %)
Design Development Phase: 28 percent ( %)
Construction Documents Phase: 48 percent ( %)
Bidding or Negotiation Phase: 2 percent ( %)
Construction Phase: 10 percent ( %)
----------------------------------------------------------------------
Total Basic Compensation one hundred percent (100%)
11.3 COMPENSATION FOR ADDITIONAL SERVICES
11.3.1 FOR PROJECT REPRESENTATION BEYOND BASIC SERVICES, as described in
Paragraph 3.2, compensation shall be computed as follows:
See attached Exhibit A.
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11.3.2 FOR ADDITIONAL SERVICES OF THE ARCHITECT, as described in Articles 3
and 12, other than (1) Additional Project Representation, as described in
Paragraph 3.2 and (2) services included in Article 12 as part of Basic
Services, but excluding services of consultants, compensation shall be computed
as follows:
(Insert basis of compensation, including rates and/or multiples of Direct
Personnel Expenses for Principals and employees, and identify Principals and
classify employees, if required. Identify specific services to which particular
methods of compensation apply, if necessary.)
See attached Exhibit A.
- -----------------------
11.3.3 FOR ADDITIONAL SERVICES OF CONSULTANTS, including additional
structural, mechanical and electrical engineering services.
(Identify specific types of consultants in Article 12. if required.)
See attached Exhibit A.
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11.4 REIMBURSABLE EXPENSES
11.4.1 REIMBURSABLE EXPENSES, as described in Paragraph 10.2, and any other
items included in Article 12 as Reimbursable Expenses, shall include the
expenses incurred by the Architect, the Architect's employees and consultants
in the interest of the Project. Architect acknowledges that as of the date of
this Agreement, Owner has paid the sum of $312,242.35 as Reimbursable Expenses.
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AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION MANAGER-ADVISER
EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecutions.
Electronic Format B141/CMa-1992
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<PAGE> 15
11.5 ADDITIONAL PROVISIONS
11.5.1
11.5.2 Payments are due and payable thirty (30) days from the date of the
Architect's invoice. Amounts unpaid sixty (60) days after the invoice date shall
bear interest at the rate entered below, or in the absence thereof at the legal
rate prevailing from time to time at the principal place of business of the
Architect. (Insert rate of interest agreed upon.)
ten percent (10%)
(_______ laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Architect's principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Specific legal advice
should be obtained with respect to deletions or modifications, and also
regarding requirements such as written disclosures or waivers.)
11.5.3
ARTICLE 12
OTHER CONDITIONS OR SERVICES
(Insert descriptions of other services, identify Additional Services included
within Base Compensation, and insert modifications to the payment and
compensation terms included in this Agreement.)
12.1 The Agreement is executed on , 1997, notwithstanding the
fact that the Architect is completing the Construction Documents Phase to
confirm the parties' agreement in connection with the performance of
architectural services.
12.2 Notwithstanding anything to the contrary in this Agreement, it is
understood and agreed that the Owner shall have the right to assign this
Agreement and the Drawings and Specifications, if required, to an institutional
lender for the purpose of obtaining financing for the construction and/or
completion of the Project, and the Architect agrees to (i) acknowledge and
consent in writing to such assignment, and (ii) acknowledge in writing, where
same is true, that the Owner is in good standing pursuant to this Agreement. The
Architect shall upon Owner's request, execute any instruments required by any
lender to Owner to confirm the foregoing consent and acknowledgements.
12.3 Architect agrees that it shall assign Ethan Nelson as its Project
Manager for this Project, and that the Project Manager will devote as much of
his time as necessary to the Project as may be appropriate to and consistent
with full and timely performance of this Agreement by the Architect. Architect
agrees that Ethan Nelson shall not be removed from his responsibilities on this
Project without the written consent of the Owner, except in the event of his
death, disability or departure from the employ of Architect. In the event,
however, that Ethan Nelson should become unavailable to serve as Project Manager
any subsequent Project Manager selected by Architect for this Project must be
approved by Owner.
12.4 The Architect's Basic Services shall be further defined to include:
12.4.1 Preparing documents for alternate, separate or sequential bids or
providing services in connection with bidding, negotiation or construction prior
to completion of the Construction Documents Phase.
12.4.2 Providing interior design and other similar services required for or
in connection with the selection, procurement or installation of furniture,
furnishings and related equipment.
12.4.3 Preparing space plans for retail space, except for retail space leased
to tenants.
12.4.4 Providing the services of geotechnical engineers when required. Such
services may include but are not limited to test borings, test pits,
determinations of soil bearing values, percolation tests, ground corrosion and
resistivity tests, including necessary operations for anticipating subsoil
conditions, with reports and appropriate professional recommendations.
- ---------------------------------------------------------------------------
AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION MANAGER-ADVISER
EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C. 20006-5292.; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
Electronic Format B141/CMa-1992
<PAGE> 16
12.4.5 Providing the services of the following consultants through final
completion of the Project: (1) Civil Engineer, (2) Kitchen, (3) Landscaping,
(4) Cost Consultant,(5) Pool and Pond Water, (6) Theatre, Audio and
Surveillance, (7) Interiors, Graphics and Lighting, and (8) Other Consultant
services not listed up to a maximum amount of $100,000.
12.4.6 Providing any other engineering services necessary to produce a
complete and accurate act of Construction Documents, as described in Paragraph
2.4.
12.4.7 Assisting Owner in preparing a Control Set of Construction Documents
which shall include the Specifications identified in Paragraph 16.1.4 of the
Construction Contract (form A111). Drawings identified in Paragraph 16.1.5 of
the Construction Contract, the Addenda identified in Paragraph 16.1.6 of the
Construction Contract, and other documents identified in Paragraph 16.1.7 of
the Construction Contract.
12.4.8 Providing analyses of the Owner's needs and programming the
requirements of the Project.
12.4.9 Providing services to investigate existing conditions or facilities
or to make measured drawings thereof.
12.4.10 Providing services to verify the accuracy of drawings or other
information furnished by the Owner.
12.4.11 Providing detailed estimates of Construction Cost.
12.4.12 Providing coordination of construction performed by separate
contractors or by Owner's own forces and coordination of services required in
connection with construction performed and equipment supplied by the Owner.
This Agreement entered into as of the day and year first written above.
OWNER ARCHITECT
/s/ BRIAN MCMULLAN /s/ PAUL STEELMAN
- ------------------------------------ ------------------------------------
(Signature) (Signature)
Brian McMullan Paul Steelman
President President
(Printed name and title) (Printed name and title)
- ---------------------------------------------------------------------------
AIA DOCUMENT B141/CMa - OWNER-ARCHITECT AGREEMENT - CONSTRUCTION MANAGER-ADVISER
EDITION - 1992 EDITION - AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON, D.C. 20006-5292.; Unlicensed
photocopying violates U.S. copyright laws and is subject to legal prosecution.
Electronic Format B141/CMa-1992
User Document: FORM -- 12/29/1997. AIA License Number 105525,
which expires on 6/30/1998 -- Page #16
<PAGE> 17
SIGNATURE PAGE OF STANDARD FORM OF AGREEMENT BETWEEN ARCHITECT AND
CONTRACTOR WHERE THE CONSTRUCTION MANAGER IS NOT A CONSTRUCTOR --
CONSTRUCTION MANAGER
(AIA DOCUMENT B141/CMa)
OWNER:
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP,
a Nevada limited partnership
By: The Resort at Summerlin, Inc.,
a Nevada corporation
By: /s/ Brian McMullan
--------------------------
Its: President
-------------------------
ARCHITECT:
PAUL STEELMAN, LTD
By: /s/ Paul Steelman
--------------------------
Its: President
-------------------------
<PAGE> 18
EXHIBIT A
THE RESORT AT SUMMERLIN
HOTEL TOWER TWO
The second hotel is six (6) stories above a partial basement and contains 300
rooms. Also included is a pedestrian link to the Lifestyles Center.
The scope of work is similar to the first hotel tower and will include the
following:
Architecture/Interiors/Lighting/Graphics 465,500.00
Structural 95,000.00
Civil 24,500.00
Mechanical 33,000.00
Electrical 30,000.00
Kitchen 32,500.00
Audio/Visual 23,500.00
Landscape 65,000.00
Water Feature 10,000.00
Fire/Life Safety 21,000.00
- ------------------------------------------------------------
TOTAL SECOND HOTEL TOWER $800,000.00
<PAGE> 1
Exhibit 10.4
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
Howard Hughes Properties, Limited Partnership
1645 Village Center Circle, Suite 200
Las Vegas, Nevada 89134
Attention: Jeffrey S. Green
- --------------------------------------------------------------------------------
(Space above line for Recorder's use)
DEVELOPMENT DECLARATION AND
OPTION TO REPURCHASE
THIS DEVELOPMENT DECLARATION AND OPTION TO REPURCHASE ("DECLARATION"), made
this 15th day of August 1996, by HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP,
a Delaware limited partnership ("Declarant") and THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP, a Nevada limited partnership ("RASLP"), is made with
reference to the following facts:
R E C I T A L S
A. Concurrently with the original Recordation of this Declaration, RASLP
is acquiring from Declarant the real property described on Attachment "A"
attached hereto as the Sale Parcel situated in Clark County, Nevada pursuant to
that certain Agreement for the Purchase and Sale of Real Property between HHP
and Seven Circle Resorts, Inc., a Delaware corporation, dated May 22, 1996, as
amended, (the "Purchase Agreement"), which was thereafter assigned by Seven
Circle Resorts, Inc. to RASLP by that certain Assignment of Rights Under
Agreement for the Purchase and Sale of Real Property, dated as of August 6,
1996.
B. Declarant has also granted RASLP an option to acquire the real
property separately described on Attachment "A" as the Option Parcel pursuant
to that certain Agreement of Option to Purchase Real Property between the
parties hereto dated August 15, 1996.
C. The Sale Parcel, and the Option Parcel if acquired by RASLP, is or are
collectively referred to herein as the "Subject Property."
D. The Subject Property is to be used for the construction, development
and operation of a resort style hotel with a nonrestricted gaming casino and
commercial, entertainment and recreational amenities.
E. In connection with such acquisition, RASLP has represented to
Declarant that it is acquiring the Subject Property to develop the same in
accordance with certain covenants, conditions, rights, restrictions and
limitations more particularly set forth below (for convenience herein,
collectively referred to as the "Restrictions"), and Declarant is selling the
Subject Property to RASLP on the basis of RASLP's
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<PAGE> 2
continuing compliance with such Restrictions. RASLP acknowledges, (i) the
original purchase price paid by RASLP for the Subject Property reflects the
limitations on use referred to above; (ii) the price charged by Declarant for
the Subject Property would have been substantially higher had the Subject
Property been sold unencumbered by the Restrictions for any use permitted under
applicable zoning ordinances in effect from time to time.
F. But for such representations by RASLP, and RASLP's unique skill,
expertise and suitability in development of the Subject Property and
construction and operation of a resort hotel and casino, Declarant would not
have sold the Subject Property to RASLP; instead, Declarant either would have
sold the Subject Property to another party willing to conform to the
Restrictions or would have retained the Subject Property itself for development
in a manner consistent with its long-range master planning program and thereby
retained the benefits of ownership, including future appreciation in the value
of the Subject Property.
G. Declarant is the master developer of Summerlin, a mixed use master
planned community situated in both the City of Las Vegas and unincorporated
Clark County, Nevada. Among the distinguishing characteristics of Summerlin are
the clear delineation of land use areas throughout Summerlin, together with the
strict exercise of architectural and occupancy controls over individual
construction projects, so as to ensure the harmonious growth and development of
Summerlin and the maximization of the value of Declarant's remaining land
holdings. It is vitally important to Declarant that the intensity of
development in Summerlin be limited on those parcels of property (including the
Subject Property) that Declarant from time to time elects to sell to third
parties. Should the development limitations imposed by Declarant be exceeded,
Summerlin and its planned development could be negatively impacted. Such
conditions could in turn adversely affect the ability of Declarant to develop
its remaining affected land holdings within Summerlin, including without
limitation the "Benefitted Property" as defined below.
H. This Declaration is made in order to promote the purposes set forth
in these Recitals, and the parties intend that the Restrictions, and all other
declarations supplemental hereto, will be understood and construed in
furtherance of said purposes.
A G R E E M E N T
ARTICLE 1. DEFINITIONS
Unless the context otherwise specified or requires, the terms defined in
this Article 1 shall, as used in this Declaration, have the meanings herein set
forth:
1.1 BENEFITTED PROPERTY means all the real property described on
Attachment "B" hereto. Declarant shall have the right, by a duly Recorded
amendment to this Declaration, to unilaterally add to, subtract from, or
substitute for the Benefitted Property any real property owned by Declarant and
the term "Benefitted Property," as used herein, shall refer to such added,
reduced, or substituted real property, effective upon the Recordation of such
amendment; provided, however, that any such amendment shall not have a material
adverse effect on the Subject Property or RASLP's interest therein.
1.2 CONSTRUCTION COMMENCEMENT means the first date on which RASLP shall
have performed all of the following:
(i) RASLP has submitted the Development Plan for the Initial Project
to Declarant and Declarant has approved the drawings and specifications
with or without conditions to such approval.
PAGE 2
<PAGE> 3
(ii) RASLP has entered into bona fide contract(s) with one or
more general contractors for the construction of the Initial Project.
(iii) RASLP has obtained a building permit from the City of Las
Vegas for the construction of the Initial Project.
(iv) RASLP has obtained a written commitment for construction
financing for the Initial Project.
(v) RASLP has substantially commenced grading of the Sale Parcel
in accordance with a Declarant approved grading plan.
(vi) RASLP or one of the following three entities: (i) Seven
Circle Resorts of Nevada, Inc., (ii) Seven Circle Gaming Corporation,
or (iii) Seven Circle Resorts, Inc., has obtained (a) a distributor's
gaming license pursuant to NRS Chapter 463 which can be converted to a
nonrestricted gaming license pursuant to NRS Chapter 463 prior to the
opening of the hotel and casino operation or, (b) a nonrestricted
gaming license with respect to the Sale Parcel.
The parties acknowledge that the Construction Commencement Deadline will be
extended by one day for each day Declarant exceeds the allowed time to review
plans and specifications pursuant to Section 1.3 of this Declaration.
1.3 CONSTRUCTION COMMENCEMENT DEADLINE means the date by which
Construction Commencement must occur pursuant to Section 6.2, which date shall
be the one year anniversary of the date of Recordation of this Declaration;
provided, the Construction Commencement Deadline shall be extended as follows:
(a) If Declarant fails to notify RASLP of its approval, disapproval or
request for clarification or further information within fourteen days after
RASLP has submitted the Development Plan to Declarant, then the
Construction Commencement Deadline shall be extended by one day for each
day that passes in excess of fourteen days from the date of submission
until such approval, disapproval or request for clarification or further
information.
(b) If Declarant fails to notify RASLP of its approval, disapproval or
request for clarification or further information within fourteen days after
RASLP has submitted the grading plan to Declarant, then the Construction
Commencement Deadline shall be extended by one day for each day that passes
in excess of fourteen days from the date of submission until such approval,
disapproval or request for clarification or further information.
(c) If Declarant is in default of the terms and conditions of this
Declaration or the Purchase Agreement, then the Construction Commencement
Deadline shall be extended by one day for each day that such default
remains uncured.
1.4 DECLARANT means Howard Hughes Properties, Limited Partnership, a
Delaware limited partnership and, to the extent provided in Section 8.1 of this
Declaration, its successors and assigns.
1.5 DECLARATION means this Development Declaration and Option to
Repurchase, as it may from time to time be amended or supplemented.
1.6 DEED OF TRUST means a mortgage as well as a deed of trust.
1.7 DESIGN GUIDELINES means (a) the Summerlin Design Guidelines for
Non-Residential Applications dated April 1, 1995, as amended, (b) The Canyons
Village Design Criteria dated March 15, 1996, (c) the Summerlin Development
Standards, dated November 18, 1992, (d) the Summerlin
PAGE 3
<PAGE> 4
Improvement Standards, dated August 1988, and approved by the City of Las Vegas
on October 12, 1988, and (e)the Summerlin Landscape Improvement Standards, and
any and all other design criteria, development standards and improvement
standards adopted by Declarant for the buildings and other improvements, as they
may from time to time be amended, modified or supplemented; provided, however,
that any such amendment, modification or supplement shall not materially
increase the burden of RASLP with respect to the Subject Property. The Design
Guidelines are incorporated herein by this reference. To the extent HHP
modifies any of the Design Guidelines applicable to Summerlin North in a manner
that affects commercial development in Summerlin North generally RASLP shall be
entitled to the benefit of such modifications but only subject to any new
conditions or restrictions which pertain to such modification.
1.8 IMPROVEMENT-IMPROVEMENTS shall include buildings, outbuildings,
roads, driveways, parking areas, fences, screening walls and barriers, retaining
walls, stairs, decks, water lines, sewers, electrical and gas distribution
facilities, hedges, windbreaks, plantings, planted trees and shrubs, poles,
Signs, loading areas, and all other structures, installations, and landscaping
of every type and kind, whether above or below the land surface.
1.9 IMPROVEMENT MAINTENANCE STANDARDS means the standards for the
maintenance and repair of the exterior of the buildings and other improvements
on the Subject Property prepared by Declarant. Such Improvement Maintenance
Standards are hereby incorporated herein and made a part hereof.
1.10 MASTER ASSOCIATION means the Summerlin Community Association, a
Nevada non-profit corporation created pursuant to the Master Declaration.
1.11 MASTER DECLARATION means that certain Master Declaration of
Covenants, Conditions, Restrictions and Reservation of Easements for Summerlin
Community Association contained in instrument No. 01274, Recorded on September
25, 1990, in Book 900925, Official Records of the County, as amended.
1.12 MORTGAGE means a Deed of Trust as well as a mortgage.
1.13 MORTGAGEE means a beneficiary under, or holder of, a Deed of Trust as
well as a mortgagee under a mortgage.
1.14 OCCUPANT means a lessee or licensee of an Owner, or any other Person
other than an Owner in lawful possession of any portion of the Subject Property
with the permission of the Owner.
1.15 OPTION PARCEL means the real property described on Attachment "A" and
identified as the Option Parcel.
1.16 OWNER means RASLP and its successors as the Record owner of fee
simple title to any portion of the Subject Property, excluding any Person who
holds such interest as security for the payment of an obligation, but including
contract sellers and any Mortgagee or other security holder in actual
possession of any portion of the Subject Property.
1.17 INITIAL PROJECT CONCEPTUAL PLAN means the development plan for the
Initial Project attached hereto as Attachment "C" which has been prepared by
Owner and approved by Declarant.
1.18 PERSON means a natural individual, a corporation or any other entity
with the legal right to hold title to real property.
1.19 PURCHASE AGREEMENT means that certain Agreement for the Purchase and
Sale of Real Property between Declarant and Seven Circle Resorts, Inc., a
Delaware corporation, dated May 22, 1996, as amended, which was thereafter
assigned by Seven Circle Resorts, Inc. to RASLP by that certain
PAGE 4
<PAGE> 5
Assignment of Rights Under Agreement for the Purchase and Sale of Real
Property, dated as of August 6, 1996.
1.20 RECORD-RECORDED-RECORDATION means, with respect to any document, the
recordation of said document in the Office of County Recorder of the County
Recorder of Clark County, Nevada.
1.21 RESTRICTIONS means each and every covenant, condition, restriction,
reservation or limitation contained in this Declaration.
1.22 SALE PARCEL means the real property described on Attachment "A" and
identified as the Sale Parcel.
1.23 SIGN means any structure, device, or contrivance, electric or
nonelectric, upon or within which any poster, bill, bulletin, printing,
lettering, painting, device, or other advertising of any kind whatsoever is
used, placed, posted, tacked, nailed, pasted, or otherwise fastened or affixed;
provided, however, the term "Sign" as used herein shall not refer to any such
structure, device or contrivance located entirely within an enclosed building
and not visible to persons outside of such building.
1.24 STREET-STREETS means any street, highway, road, or thoroughfare within
or adjacent to the Subject Property and shown on any Recorded subdivision or
parcel map, or record of survey, whether designated thereon as street,
boulevard, place, drive, road, court, terrace, way, lane, circle, or otherwise.
1.25 SUBJECT PROPERTY means the real property described on Attachment "A"
as the Sale Parcel and includes the Option Parcel if annexed to this
Declaration pursuant to the terms of Section 2.3, together with all of the real
property hereafter made subject to this Declaration.
1.26 SUMMERLIN means all of the real property described on Attachment "D"
hereto.
1.27 SUMMERLIN NORTH means all of the real property described on Attachment
"E" hereto.
1.28 VISIBLE FROM NEIGHBORING PROPERTY means, with respect to any given
object on the Subject Property, that such object is or would be visible to a
person six (6) feet tall, standing on any adjacent property or any other
property (other than the Subject Property) at an elevation no greater than the
elevation of the base of the object being viewed.
ARTICLE 2. SUBJECT PROPERTY
2.1 GENERAL DECLARATION. Declarant hereby declares that all of that real
property located in the City of Las Vegas, County of Clark, State of Nevada,
more particularly described in Attachment "A" and referred to herein as the
"Sale Parcel," is, and shall be, conveyed, hypothecated, encumbered, leased,
occupied, built upon or otherwise used, improved, or transferred in whole or in
part, subject to this Declaration. All of the covenants, conditions, and
Restrictions set forth herein are declared and agreed to be in furtherance of a
general plan for the subdivision, improvement, and sale of said real property
and are established for the purpose of enhancing and protecting the value,
desirability, and attractiveness of the Subject Property and every part thereof.
All of said covenants, conditions, and Restrictions shall run with all of the
Subject Property for all purposes and shall be binding upon and inure to the
benefit of Declarant and its successors in interest as set forth in this
Declaration.
2.2 UNIFORM ACT DOES NOT APPLY. Pursuant to NRS 116.1207, the Nevada
Uniform Common Interest Ownership Act does not apply to the Subject Property.
2.3 NOTICE OF ANNEXATION. The Option Parcel shall be annexed to the Subject
Property encumbered by this Declaration upon Recordation of a Notice of
Annexation in the form of Attachment "C" to the Option Agreement, duly executed
and acknowledged by Declarant.
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ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
3.1 [INTENTIONALLY OMITTED]
3.2 COMPLIANCE WITH CONCEPTUAL DEVELOPMENT PLAN. No Owner shall construct,
or attempt to construct, any Improvement on the Subject Property or any one
subdivided or parcelized lot thereon, unless such Improvement is in compliance
with all criteria for, and restrictions and limitations applicable to, such
building set forth in the Conceptual Development Plan for the Initial Project or
Expansion Project, as the case may be, and such Improvement is expressly
approved by Declarant as provided herein, which approval may be granted or
withheld by Declarant as provided herein.
3.3 APPROVAL OF DEVELOPMENT PLAN REQUIRED. No Improvement shall be erected,
placed, altered, maintained, or permitted to remain on any portion of the
Subject Property by any Owner or Occupant until final drawings and
specifications for the Initial Project (in the case of Improvements on the Sale
Parcel) and for the Expansion Project (in the case of any Improvements on the
Option Parcel) shall have been submitted to and approved in writing by
Declarant. The drawings and specifications for the Initial Project and for the
Expansion Project, respectively, are referred to herein as the "Development
Plans." Each Development Plan shall be submitted in duplicate over the
authorized signature of the Owner of the Subject Property or the authorized
agent thereof. Each Development Plan shall be in such form and shall contain
such information as may be required by the Declarant but shall in any event
include the following:
(a) A site plan of the Sale Parcel or Option Parcel (as the case may be)
showing the nature, grading scheme, kind, shape, composition, and location
of all structures with respect to such Parcel (including proposed front,
rear, and side setback lines), and the number and location of all parking
spaces and driveways on the Sale Parcel;
(b) A landscaping plan for the appropriate Parcel;
(c) A plan for the location of Signs and lighting; and
(d) A building elevation plan showing dimensions, materials, and exterior
color scheme in no less detail than required by the appropriate
governmental authority for the issuance of a building permit. Material
changes in approved plans must be similarly submitted to and approved by
Declarant.
Following Declarant's approval of a Development Plan for any proposed
Improvement as set forth above, Owner shall not materially or substantially
change or materially or substantially deviate from such drawings and
specifications without the prior written consent of Declarant except for change
orders executed during construction which do not alter the scope or exterior
appearance of any Improvements. Declarant agrees to approve or disapprove any
drawings and specifications properly submitted within fourteen (14) days of
submission; provided, if Declarant determines in good faith that it requires
clarification of any submission or additional information in order to complete
its review, Declarant shall request such clarification or additional information
within such fourteen (14) day period and Owner's submission shall not be deemed
complete and proper until such clarification or additional information has been
submitted. If Declarant fails to notify RASLP of its approval, disapproval or
request for clarification or further information within fourteen days (14) after
RASLP has submitted a Development Plan to Declarant, then the Construction
Commencement Deadline shall be extended as provided in Section 1.3.
3.4 BASIS FOR APPROVAL. Approval of a Development Plan shall be based,
among other things, upon conformity with the Conceptual Development Plan for the
Initial Project or Expansion Project, as the case may be, and upon compliance
with the Design Guidelines, including adequacy of site dimensions, adequacy of
structural design, conformity and harmony of external design with neighboring
structures,
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effect of location and use of proposed improvements upon neighboring property
in the vicinity of the Subject Property, proper facing of main elevations with
respect to nearby Streets, adequacy of screening of mechanical,
air-conditioning, or other roof-top installations, and conformity of the
drawings and specifications to the purpose and general plan and intent of this
Declaration. No plans will be approved that do not provide for the underground
installation of power, electrical, telephone, and other utility lines from the
property line to buildings.
Declarant shall not arbitrarily or unreasonably withhold its approval of any
drawings and specifications. Except as otherwise provide in this Declaration,
Declarant shall have the right to disapprove any drawings and specifications
submitted hereunder on any reasonable grounds including, but not limited to,
the following:
(a) Failure to comply with any of the Restrictions set forth in this
Declaration;
(b) Failure to include information in such drawings and specifications as
may have been reasonably requested by Declarant;
(c) Objection to the exterior design, the appearance of materials, or
materials employed in any proposed structure; provided, however, that any
such objection shall not be made with respect to an exterior design, the
appearance of materials or materials (i) employed in any similar commercial
building currently existing in Summerlin, or (ii) which are specifically
authorized by the Design Guidelines for use in such a commercial building.
(d) Objection on the ground of incompatibility of any proposed structure
or use with existing structures or uses upon other property in the vicinity
of the Subject Property;
(e) Objection to the location of any proposed structure with reference to
other property in the vicinity;
(f) Objection to the grading or landscaping plan for the Subject Property;
(g) Objection to the color scheme, finish, proportions, style of
architecture, height, bulk, or appropriateness of any structure;
(h) Objection to the number or size of parking spaces, or to the design of
the parking area;
(i) Adequacy of site dimensions;
(j) Conformity and harmony of external design with existing and planned
neighboring structures;
(k) Proper site orientation with respect to nearby Streets; and
(l) Conformity of the Plans to the purpose, general scheme of improvement
and development and intent of the Design Guidelines and this Declaration.
Notwithstanding the foregoing, HHP shall not have the right to disapprove any
element of the Development Plan on account of a design feature which has been
specifically addressed in the Conceptual Development Plan for the Initial
Project, Expansion Project or any expansion or other modification of either of
them, as the case may be, and approved by HHP.
3.5 APPROVAL OF ALTERATIONS SUBSEQUENT TO COMPLETION OF PROJECT. Except
for the interior of any completely enclosed structure, no new construction,
alteration, grading, addition, excavation, modification, decoration,
redecoration, reconstruction or removal of the improvements shall be commenced
or maintained by Owner until drawings and specifications consistent with the
Design Guidelines have been
PAGE 7
<PAGE> 8
submitted to, and approved in writing by, Declarant. Declarant may deny approval
of drawings and specifications submitted for its approval if it deems that the
construction, alterations, or additions contemplated thereby in the locations
indicated (A) will not comply with the Design Guidelines or (B) are inconsistent
with the Initial Project Conceptual Plan.
3.6 NO WAIVER OF FUTURE APPROVALS. Declarant's approval of any proposals
or drawings and specifications for any work done or proposed or approval in
connection with any other matter requiring the approval and consent of Declarant
shall not be deemed to constitute a waiver of any right to withhold approval or
consent as to any similar proposals, drawings and specifications, or matters
subsequently or additionally submitted for approval or consent. Such approval
shall not constitute or be deemed a waiver of any requirement contained in this
Declaration which relates to the conditions upon such construction, or the
manner in which such construction shall be performed.
3.7 APPROVAL. Declarant may approve drawings and specifications as
submitted, or as altered or amended, or it may grant its approval to the same
subject to specific conditions. Upon approval or conditional approval by
Declarant of any drawings and specifications submitted, a copy of such drawings
and specifications, together with any conditions, shall be deposited for
permanent record with Declarant, and a copy of such drawings and specifications,
bearing such approval together with any conditions, shall be returned to the
applicant submitting the same.
3.8 DECLARANT NOT LIABLE. Declarant shall not be liable for damage, loss,
or prejudice suffered or claimed by any Person on account of:
(a) The approval or disapproval of any plans, drawings, and
specifications, whether or not in any way defective; or
(b) The construction of any improvement, or performance of any work,
whether or not pursuant to approved plans, drawings, and specifications.
Declarant's approval of proposals or drawings and specifications shall not
constitute a representation, warranty or guarantee, whether express or implied,
that such proposals or drawings and specifications comply with good engineering
design or with zoning or building ordinances, or other governmental regulations
or restrictions. By approving such proposals or drawings and specifications
Declarant does not assume any liability or responsibility therefor, or for any
defect in the structure constructed from such proposals or plans and
specifications. Notwithstanding the foregoing, Declarant shall be liable for
damages incurred by Owner, but not in any event in excess of Five Hundred
Thousand Dollars ($500,000), if Declarant unreasonably withholds or delays its
consent to plans, drawings, or specifications and such failure causes actual
out-of-pocket losses to Owner.
3.9 CONSTRUCTION WITHOUT APPROVAL. If any improvement shall be erected,
placed, or maintained upon the Subject Property, or any new use commenced upon
the Subject Property, other than in accordance with the approval by the
Declarant pursuant to the provisions of this Article 3, such alteration,
erection, placement, maintenance, or use shall be deemed to have been undertaken
in violation of this Declaration, and upon written notice from Declarant, any
such improvement so altered, erected, placed, maintained, or used upon any
portion of the Subject Property in violation of this Declaration shall be
removed or altered so as to conform to this Declaration, and any such use shall
cease or be amended so as to conform to this Declaration.
ARTICLE 4. DEVELOPMENT AND MAINTENANCE STANDARDS
4.1 CONDITION OF SUBJECT PROPERTY. The Owner or Occupant of the Subject
Property shall at all times keep it and the buildings, improvements, and
appurtenances thereon in a safe, clean, and wholesome condition and comply, at
its own expense, in all respects with all applicable governmental safety
ordinances, regulations, requirements, and directives, and the Owner or Occupant
shall at regular
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and frequent intervals remove at its own expense any rubbish of any character
whatsoever that may accumulate upon the Subject Property.
4.2 Landscaping and Irrigation.
(a) Every portion of the Subject Property shall be landscaped and
irrigated as described in the Design Guidelines and in accordance with a
Development Plan submitted to and approved by the Declarant. Such
landscaping and irrigation shall thereafter be kept and maintained in
accordance with this Declaration, the Design Guidelines and the Improvement
Maintenance Standards.
(b) Landscaping and irrigation systems, as approved by the Declarant,
shall be completed within sixty (60) days after occupancy unless a written
extension of time has been granted by the Declarant.
(c) Landscaping and irrigation equipment, supplies and above-surface
pipes and installations shall be screened as required by the Design
Guidelines, except as otherwise permitted in writing by the Declarant.
(d) All planting and irrigation installations shall be maintained in a
neat and orderly fashion. If the Declarant determines that any portion of
the Subject Property is not being properly maintained, corrective work
shall be accomplished within thirty (30) days after receipt of notice from
the Declarant of any directions with regard to maintenance or such later
date if the corrective work cannot be reasonably accomplished within such
thirty (30) day period provided that Owner promptly commences such
corrective work and diligently prosecutes the same to completion.
(e) The following criteria shall be deemed minimum landscape maintenance
standards:
(i) All planting areas shall be kept reasonably free of leaves and
debris;
(ii) Lawns and ground cover shall be mowed and/or trimmed regularly;
(iii) All plantings shall be kept in a healthy and growing condition.
Any dead or damaged plant material resulting from improper maintenance
or any other reason shall be replaced with like plant material,
provided any change from the original approved plant material shall
require approval from the Declarant. Fertilization, cultivation,
weeding, spraying, trimming and pruning shall be performed as part of
a regular maintenance program;
(iv) Stakes, guys and ties on trees shall be checked regularly to
ensure the correct function of each. Ties shall be adjusted regularly
to avoid creating abrasions or girding of trunks or stems;
(v) Damage to plantings caused by vandalism, automobiles or acts
of nature shall be corrected within thirty (30) days after occurrence
to the condition similar to what such plantings were in immediately
before the damage occurred. All types and sizes of plantings shall be
approved by the Declarant; and
(vi) Irrigation and drainage systems shall be kept in proper working
condition. Adjustment, replacement of malfunctioning parts and
cleaning of systems shall be performed as part of a regular
maintenance program.
If, in Declarant's reasonable opinion, the required landscaping is not
maintained in a sightly and well-kept condition in accordance with the
Summerlin Landscape Improvement Standards, Declarant shall be entitled to the
remedies set forth in Section 4.4 and Article 7.
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4.3 Maintenance of Grounds.
Owner shall be responsible for the maintenance and repair of all parking areas,
driveways, walkways, and landscaping on the Subject Property in accordance with
the Improvement Maintenance Standards. Such maintenance and repair shall
include, without limitation:
(a) Maintenance of all parking areas, driveways, and walkways in a clean
and safe condition, including the paving and repairing or resurfacing of
such areas when necessary with the type of material originally installed
thereon or such substitute therefor as shall, in all respects, be equal
thereto in quality, appearance, and durability; the removal of debris and
waste material and the washing and sweeping of paved areas; the painting
and repainting of striping markers and directional signals as required; and
(b) Cleaning, maintenance, and relamping of any external lighting
fixtures, except such fixtures as may be the property of any public utility
or government body.
4.4 Remedies for Failure to Maintain and Repair.
(a) Remedies. If any Owner shall fail to perform the maintenance and
repair required by this Declaration, then Declarant, after fifteen days
prior written notice to such delinquent Owner, shall have the right, but
not the obligation, to perform such maintenance and repair and to charge
the delinquent Owner with costs of such work, together with interest
thereon at the rate of twelve percent (12%) per annum from the date of
performance of such work to the date of reimbursement of Declarant by
Owner; provided, however, that in the event that such maintenance and
repair cannot reasonably be accomplished within such fifteen (15) day
period. Owner shall have a reasonable time period thereafter to perform
such maintenance and repair provided that Owner commences the same within
the fifteen (15) day period and diligently prosecutes the maintenance and
repair to completion. If the delinquent Owner shall fail to reimburse
Declarant for all such costs reasonably incurred within ten (10) days after
demand therefor, Declarant may, at any time within ninety (90) days after
such advance, file for Record in the Office of the County Recorder of Clark
County, Nevada, a claim of lien signed by Declarant for the amount of such
charge together with interest thereon; provided, Declarant shall give the
Owner ten (10) days advance notice and opportunity to cure prior to filing
such claim of lien. The lien created by this Section shall be effective to
establish a lien against the interest of the delinquent Owner in the
Subject Property together with interest at twelve percent (12%) per annum
on the amount of such advance from the date thereof, in addition to
Recording fees, cost of title search obtained in connection with such lien
or the foreclosure thereof, and court costs and reasonable attorney's fees
that may be incurred in the enforcement of such a lien.
(b) Foreclosure of Lien. Subject to the provisions of Section 10.5, such
a lien, when so established against the Subject Property described in said
claim, shall be prior or superior to any right, title, interest, lien, or
claim that may be or may have been acquired in or attached to the real
property interests subject to the lien subsequent to the time of filing
such claim for Record. Such lien shall be for the benefit of Declarant and
may be enforced and foreclosed in a like manner as a real estate mortgage
is foreclosed in the state of Nevada.
(c) Cure. If a default for which a notice of claim of lien was filed is
cured, Declarant shall file or Record a rescission of such notice, upon
payment by the defaulting Owner of the costs of preparing and filing or
Recording such rescission, and other reasonable costs, interest, or fees
that have been incurred.
(d) Nonexclusive Remedy. The foregoing lien and the rights to foreclose
thereunder shall be in addition to, and not in substitution for, all other
rights and remedies that any party may have hereunder and by law, including
any suit to recover a money judgment for unpaid assessments.
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4.5 Refuse Collection Areas. All outdoor refuse collection areas shall be
visually screened so as not to be Visible from Neighboring Property or Streets.
No refuse collection area shall be permitted between a Street and the front of
a building.
4.6 Utility Lines and Antennas. No sewer, drainage, or utility lines or
wires or other devices for the communication or transmission of electric
current, power, or signals, including telephone, television, microwave, or radio
signals, shall be constructed, placed, or maintained anywhere in or upon any
portion of the Subject Property other than within buildings or structures,
unless the same shall be contained in conduits or cables constructed, placed, or
maintained underground or concealed in or under buildings or other structures.
No antenna, satellite dish or other device for the transmission or reception of
telephone, television, microwave, or radio signals shall be placed on any
portion of the Subject Property unless (a) such antenna, satellite dish or other
device shall be so located that it is not Visible from Neighboring Property, or
(b) the consent of Declarant shall first be obtained. Nothing contained herein
shall be deemed to forbid the erection or use of temporary power or telephone
facilities incidental to the construction or repair of buildings on the Subject
Property.
4.7 Mechanical Equipment. All mechanical equipment, utility meters,
storage tanks, air-conditioning equipment, and similar items shall be screened
with landscaping or attractive architectural features integrated into the
structure itself.
4.8 Signs. No Sign shall be permitted on the Subject Property unless
approved by Declarant in writing. No Sign shall be approved other than
identification Signs, informational and vehicular control signals. Signs
identifying the building or the business of the Owner and temporary development
Signs. All such Signs, displays, identifications, and monuments shall be only
of such size, design and color as shall have been specifically submitted to and
approved by the Declarant in writing prior to the erection or installation of
said Sign, display, identification, or monument. Notwithstanding anything
contained in this Section 4.8 to the contrary, Declarant agrees that it shall
consent to the erection or installation of a Sign which is visible from both
Rampart Boulevard and Summerlin Parkway provided that it has been approved by
Declarant as set forth in this Section 4.8.
4.9 Fences. No fences or walls shall be permitted on any portion of the
Subject Property unless such fence or wall is necessary for security or
screening purposes. The Declarant reserves the right to approve the location
and design of all fences, and no fence shall be constructed without a letter of
approval from the Declarant.
4.10 Exterior Lighting. All exterior lighting, including the location,
design, type and size thereof, is subject to the written approval of the
Declarant and shall conform to the Design Guidelines. Exterior lighting shall
be adequately controlled to prevent glare and undesirable illumination of other
properties adjacent to the Subject Property.
4.11 Parking Areas. Off-Street parking as required in the Design Criteria
to accommodate the parking needs of the Owner or Occupant and the employees and
visitors thereof shall be provided by the Owner. The intent of this provision
is to eliminate the need for any on-Street parking; provided, however, that
nothing herein shall be deemed to prohibit on-Street parking of public
transportation vehicles.
4.12 Construction Regulations and Restrictions.
(a) No mechanical equipment, apparatus or antennae shall be placed above
the roof line (which shall be measured by the roof curb or parapet) of any
building, except within an enclosure or behind opaque screening which has
been approved in writing the Declarant, unless an exemption has been
specifically approved in writing by the Declarant.
(b) All building exteriors shall be maintained at all times in a neat,
orderly and weatherproof manner, including, without limitation, periodic
painting if painting is customary with respect to the exterior construction
materials employed for such building. The periodic painting shall be the
same
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color originally approved by the Declarant. Any change in color shall
require the approval of the Declarant.
(c) All hardscape, including but not limited to paved areas, parking
lots, sidewalks, curbs and gutters shall be maintained at all times in a
neat, orderly and weatherproof manner.
ARTICLE 5. REGULATION OF OPERATIONS AND USES
5.1 Permitted Uses. The Subject Property shall be used, developed,
maintained and operated only as a resort style hotel and/or casino, with such
ancillary commercial, entertainment and recreational amenities as are approved
by Declarant in writing.
5.2 Prohibited Uses. Without limiting the generality of Section 5.1, the
following operations and uses shall not be permitted on any property subject to
this Declaration:
(a) Residential use of any type excluding a hotel, time share, and the
management of either of such uses:
(b) Trailer courts or recreation vehicle campgrounds;
(c) Junk yards, wrecking yards, or recycling facilities;
(d) Mining, drilling for, or removing oil, gas, or other hydrocarbon
substances;
(e) Refining of petroleum or of its products;
(f) Commercial excavation of building or construction materials, provided
that this prohibition shall not be construed to prohibit any excavation
necessary in the course of approved construction; or
(g) Dumping, disposal, incineration, or reduction of garbage, sewage, or
other refuse.
5.3 Nuisances. No nuisance shall be permitted to exist or operate upon
any portion of the Subject Property so as to be offensive or detrimental to any
adjacent property or to its Occupants. Without limiting the foregoing, the
violation of any of the following provisions shall be deemed a "nuisance":
(a) No use, excluding reasonable construction and maintenance activity,
of the Subject Property that emits dust, sweepings, dirt, or cinders into
the atmosphere, or discharges liquid, solid wastes, or other matter into
any stream, river, or other waterway that, in the opinion of Declarant, may
adversely affect the health, safety, comfort of, or intended use of their
property by Persons within the area shall be permitted. No waste nor any
substance or materials of any kind shall be discharged into any public
sewer serving the Subject Property or any part thereof in violation of any
regulation of any public body having jurisdiction over such public sewer;
(b) Except as related to the standard and customary operation of a
hotel/casino and related uses, no escape or discharge of any fumes, odors,
gases, vapors, steam, acids, or other substance into the atmosphere, which
discharge, in the opinion of Declarant, may be detrimental to the health,
safety or welfare of any Person or may interfere with the comfort of
Persons within the area or may be harmful to property or vegetation shall
be permitted;
(c) Any operation producing intense glare or heat, atomic,
electromagnetic, microwave, ultrasonic, laser, or other radiation shall be
performed only within an enclosed or screened area and then only in such
manner that the glare, heat, or radiation emitted will not be discernible
from any point exterior to the Subject Property;
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(d) Buildings and other structures shall be constructed and machinery and
equipment installed and insulated on the Subject Property so that the
ground vibration inherently and recurrently generated is not perceptible
without instruments at any point exterior to the Subject Property.
(e) No rubbish, trash, waste, residue, brush, weeds or undergrowth or
debris of any kind or character shall ever be placed or permitted to
accumulate upon the Subject Property or any portion thereof, so as to
render said premises a fire hazard, unsanitary, unsightly, offensive, or
detrimental to any Person or activity on any other adjacent property or on
any Street.
(f) No building or other Improvement shall be permitted to fall into
disrepair and all buildings and other Improvements shall at all times be
kept in good condition and repair (including, without limitation, free of
the presence of wood-destroying pests and organisms) and adequately painted
or otherwise finished. Any and all exterior repairs, redecorations,
modifications or additions shall be made in accordance with, and shall be
subject to, this Declaration and the Design Guidelines and all applicable
statutes, ordinances and governmental regulations, and shall be approved in
writing by the Declarant.
(g) No condition shall be permitted to exist upon the Subject Property
which shall induce, breed or harbor infectious plant diseases or noxious
insects.
(h) No Owner or Occupant shall in any way alter the natural or established
drainage of water over the Subject Property from adjoining or other
property, nor shall any Owner or Occupant in any way interfere with the
natural or established drainage of water from the Subject Property so as to
cause or permit water to drain onto, over or under any adjoining or other
property except in accordance with a drainage, plan approved by Declarant.
If it is necessary to change the natural or established drainage flow over
the Subject Property, then the Owner or Occupant of the Subject Property
shall adequately provide for proper drainage and such changes shall be
approved in writing by the Declarant. For the purposes hereof, "natural"
drainage is defined as the drainage which would naturally occur at the time
the overall approved grading plan of the Subject Property has been
completed by Declarant. For the purposes hereof, "established" drainage is
defined as the drainage which occurred or which would occur at the time the
overall grading of the Subject Property, including the finish grading of
the Subject Property, was completed.
(i) No adverse environmental condition shall be permitted to exist on the
Subject Property, nor shall any toxic or hazardous wastes be permitted to
be generated, treated, stored, disposed of, or otherwise deposited in or on
or allowed to emanate from the Subject Property or any portion of the
Subject Property, including, without limitation, the surface waters and
subsurface waters thereof; provided, however, that hazardous substances may
be stored or used so long as such storage and use is conducted in
compliance with all applicable laws, statutes, ordinances, rules and
regulations of any local, County, State or federal governmental body.
(j) No Owner or Occupant shall permit anything to be done or kept on the
Subject Property that violates any law, statute, rule or regulation of any
City, County, State or federal governmental or public body.
5.4 SUBDIVISION. No Owner shall affect any change or amendment to any
parcel or final map covering the Subject Property or Record any further parcel
or final map of the Subject Property or any portion thereof of facilities
thereon, pursuant to Nevada Revised Statutes, or any similar statute hereafter
enacted, and any local ordinances adopted pursuant thereto, nor shall an Owner
file any applications with any governmental agency with respect to any of the
foregoing matters, unless expressly approved by Declarant.
5.5 ZONING. Owner shall not use or develop or attempt to use or develop
the Subject Property or any portion thereof for any purpose other than those
purposes expressly allowed under the zoning ordinances of the City of Las
Vegas. All development within the Subject Property shall be subject to all
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such zoning ordinances and regulations applicable to, and in effect at the time
of, such development, except where more restrictive requirements are imposed by
this Declaration or the Design Guidelines. Development and ownership of the
Subject Property shall further be subject, as applicable, to future land use
and environmental matters affecting the Subject Property. Owner shall not
change or attempt any change in zoning, or obtain or apply for a zoning
variance or exception or other similar approval with respect to the use or
development of the Subject Property or any portion thereof not expressly
allowed under such existing zoning, unless expressly approved by Declarant in
writing.
5.6 MINERAL EXPLORATION. No portion of the Subject Property shall be used
in any manner to explore for or to remove any water, steam, heat, oil, gas or
other hydrocarbons, gravel, earth, or any earth substances or other minerals of
any kind, provided, however, that this shall not prevent the excavation of earth
in connection with the grading or construction of improvements within the
Subject Property. No tools or equipment and no derrick or other structure
designed for use in boring for water, steam, heat, oil, gas or other
subterranean minerals or other substances, or designed for use in any mining
operation or exploration, shall be erected or placed upon or adjacent to the
Subject Property.
5.7 COVENANT TO HOLD PROPERTY. RASLP hereby agrees and covenants not to
sell, lease, transfer, exchange or otherwise convey or dispose of its interest
in the Subject Property to another investor, builder or developer other than a
permitted assignee for a period of one (1) year following substantial
completion of the Initial Project.
ARTICLE 6. DECLARANT'S PURCHASE OPTION
6.1 OPTION TO REPURCHASE SUBJECT PROPERTY. In consideration of Declarant's
sale of the Subject Property and the other agreements of Declarant contained in
the Purchase Agreement, Owner hereby grants to Declarant the exclusive and
irrevocable right and option to purchase the Subject Property (the "Purchase
Option") on the terms and conditions set forth in this Article 6.
6.2 EXERCISE OF PURCHASE OPTION. Declarant shall have the right to
exercise the Purchase Option in the event the Construction Commencement has not
occurred by the Construction Commencement Deadline by giving written notice of
the exercise by Declarant of the Purchase Option within ninety (90) days after
the Construction Commencement Deadline. In the event Declarant exercises the
Purchase Option, then Owner shall be obligated to sell and Declarant shall be
obligated to purchase the Subject Property pursuant to the terms of this
Article 6 unless Owner takes the following actions:
(a) Owner notifies Declarant in writing no later than three (3) days after
Declarant has exercised the Purchase Option that Owner intends to achieve
Construction Commencement within ninety (90) days of Declarant's exercise
of the Purchase Option; and
(b) Owner actually achieves Construction Commencement within such 90 day
period.
6.3 TITLE CONDITION. Upon Declarant's repurchase, the Subject Property
shall be subject only to
(a) Current taxes not yet delinquent;
(b) Matters affecting title which exist as of the date of Recordation of
this Declaration, or which are created, made, assumed, consented to or
requested by Declarant, its successors or assigns; and
(c) Noninterfering easements for utilities used in connection with the
buildings and other Improvements constructed on the Subject Property.
In the event any other matters or encumbrances exist or otherwise affect title,
Declarant shall have the right to deduct from the purchase price at the close
of escrow an amount, to be reasonably determined by
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Declarant, as sufficient to discharge such matters or to reimburse Declarant for
any costs or expenses to be incurred by Declarant in connection with such
matters.
6.4 OPTION EXPIRATION AND QUITCLAIM. In the event Construction
Commencement is achieved by the Construction Commencement Deadline or if
Declarant has not exercised the Purchase Option within ninety (90) days after
the Construction Commencement Deadline, the Purchase Option shall expire and
Owner shall be free to sell the Subject Property without complying with the
Development Plan.
6.5 REPURCHASE PRICE. Declarant's purchase price for the Subject
Property (the "Repurchase Price") upon its exercise of the Purchase Option
provided above, shall be:
(a) $14,620,000 if the Subject Property does not include the Option
Parcel, less all advances made by Declarant to restore the title to
the condition described in Section 6.3 above, to the extent not
reimbursed to Declarant by Owner.
(b) $20,459,000 if the Subject Property does include the Option
Parcel, less all advances made by Declarant to restore the title to
the condition described in Section 6.3 above, to the extent not
reimbursed to Declarant by Owner.
6.6 REPURCHASE ESCROW TERMS. Within five (5) days after Declarant's
exercise of the Purchase Option as provided above or as soon thereafter as
possible, an escrow shall be established at Nevada Title Company or another
escrow company selected by Declarant and satisfactory to Owner to consummate the
purchase as specified herein, which escrow shall have a time limit of thirty
(30) days. Said escrow shall be subject only to approval by Declarant of a then
current preliminary title report. Any exceptions shown thereon created after the
date hereof, and disapproved by written notice to Owner through escrow, shall be
removed by Owner at its sole expense at or prior to Closing. Owner and Declarant
shall each pay one-half of the escrow fees; Owner shall pay for documentary tax
stamps, for Recording the deed, and for an ALTA extended coverage owner's policy
of title insurance in the amount of the Repurchase Price showing title to the
Subject Property vested in Declarant or its assigns free and clear of all liens,
encumbrances or other title exceptions other than those set forth in Section
6.3. Any other costs or expenses shall be allocated between the parties in the
manner customary in Clark County, Nevada.
6.7 OTHER DEFAULTS. Should Owner at any time prior to expiration of
the Purchase Option commit any act of bankruptcy, or be adjudicated a bankrupt
or insolvent, whether voluntarily or involuntarily, or transfer the Subject
Property or any portion thereof by operation of law under legal process pursuant
to receivership or bankruptcy, or make an assignment for benefit of creditors,
then Declarant in its sole discretion may, in addition to any other rights or
remedies available to it, exercise this Purchase Option at any time prior to
expiration of the Purchase Option, in the manner provided for herein.
6.8 BINDING EFFECT. This Purchase Option shall be binding upon and
shall inure to the benefit of the respective successors in interest to the
parties hereto.
6.9 DECLARANT'S REMEDIES. In the event Declarant exercises the
Purchase Option provided herein and Owner shall fail or refuse to reconvey the
Subject Property in accordance with the terms of this Declaration, Declarant
shall be entitled to pursue any remedy available to it at law or equity,
including the right to seek specific performance of Owner's obligations
hereunder.
ARTICLE 7. ENFORCEMENT
7.1 ENFORCEMENT. Declarant alone (subject to Declarant's right to
assign pursuant to Section 8.1) shall have the right to enforce, by proceedings
at law or in equity, all Restrictions, covenants, and reservations, now or
hereafter imposed by the provisions of this Declaration or any amendment
thereto, including the right to prevent the violation of any such Restrictions,
covenants, or reservations, and the right to recover damages or other amounts
due for such violation. The Owner of the Subject Property shall
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be primarily liable and the Occupant, if any, secondarily liable for the
violation or breach of any covenant, condition, or Restriction herein contained.
7.2 RIGHTS ARE CUMULATIVE. All rights, options, and remedies of
Declarant under this Declaration are cumulative, and no one of them shall be
exclusive of any other, and Declarant shall have the right to pursue any one or
all of such rights, options, and remedies or any other remedy or relief which
may be provided by law or in equity, whether or not stated in this Declaration.
7.3 REMEDIES. In the event of any breach, violation or failure to
perform or satisfy any of the Restrictions, Declarant at its sole option and
discretion may enforce any one or more of the following remedies or any other
rights or remedies to which Declarant may be entitled by law or equity, whether
or not set forth herein:
(a) ABATEMENT. Following thirty (30) days written notice to the Owner
or Occupant in question except in exigent circumstances, Declarant
shall have the right, privilege, and license to enter upon the Subject
Property where said violation or breach exists without further legal
process to the maximum extent permitted by law, and to summarily abate
and remove, or abate or remove, at the expense of the Owner or
Occupant thereof, any improvement, structure, thing, or condition that
may be or exist thereon contrary to the intent and meaning of the
provisions hereof; provided, however, that in the event that any such
violation or breach cannot reasonably be accomplished within such
thirty (30) day period, Owner or Occupant in question shall have a
reasonable time period thereafter to cure provided that such cure is
commenced within the thirty (30) day period and thereafter diligently
prosecuted to completion. No such entry by Declarant or its agents
shall be deemed a trespass, and neither Declarant nor its agents shall
be subject to liability to the Owner or Occupant of the Subject
Property for such entry and any action taken to remedy or remove a
violation. Any costs or expenses paid or incurred by Declarant in
abating such nuisance or prosecuting any such remedy (including all
reasonable attorneys' fees and costs of collection), together with
interest thereon at the maximum contract rate permitted by law then in
effect, shall be a charge against the Subject Property, shall be a
continuing lien thereon until paid if Declarant Records a notice of
same within ninety (90) days after any such advance with the Office of
the County Recorder of Clark County, Nevada, and shall also be the
personal obligation of Owner or other Person who was owner of the
Subject Property when such charges became due and who committed such
breach or violation. The lien provided for in this Section shall not
be valid as against a bona fide purchaser or Mortgagee for value of
the Subject Property in question unless a suit to enforce said lien
shall have been filed in a court of Record in Clark County, Nevada,
prior to the Recordation of the deed or mortgage conveying or
encumbering the Subject Property in question to such purchaser or
Mortgagee, respectively.
(b) DAMAGES. Declarant may bring a suit for damages for any
compensable breach of or noncompliance with any of the Restrictions,
or declaratory relief to determine the enforceability of any of the
Restrictions.
(c) EQUITY. It is recognized that a particular or ongoing violation
by Owner of one or more of the foregoing Restrictions may cause
Declarant to suffer material injury or damage not compensable in money
(including, but not limited to irreparable effects on the type and
quality of development on the Benefitted Property or portions
thereof), and that Declarant shall be entitled to bring an action in
equity or otherwise for specific performance to enforce compliance
with the Restrictions or an injunction to enjoin the continuance of
any such breach or violation thereof, whether or not Declarant
exercises any other remedy set forth herein.
7.4 RIGHT OF ENTRY. During reasonable hours and upon reasonable
notice and subject to reasonable security requirements and applicable Nevada
gaming laws and regulations, Declarant, or its agents, shall have the right to
enter upon and inspect any portion of the Subject Property and the improvements
thereon covered by this Declaration for the purpose of ascertaining whether or
not the
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provisions of the Declarant have been or are being complied with, and neither
Declarant nor its agents shall be deemed to have committed a trespass or other
wrongful act by reason of such entry or inspection.
7.5 DEEMED TO CONSTITUTE A NUISANCE. The result of every act or omission
whereby any covenant, condition, or Restriction herein contained is violated in
whole or in part is hereby declared to be and to constitute a nuisance, and
every remedy allowed by law or in equity against an Owner or Occupant either
public or private shall be applicable against every such result and may be
exercised by Declarant.
7.6 ATTORNEY'S FEES. In any legal or equitable proceeding for the
enforcement of this Declaration or any provision hereof, whether it be an
action for damages, declaratory relief, or injunctive relief, or any other
action, the losing party or parties shall pay the attorney's fees of the
prevailing party or parties, in such reasonable amount as shall be fixed by the
court in such proceedings or in a separate action brought for that purpose. The
prevailing party shall be entitled to said attorney's fees and costs even
though said proceeding is settled prior to judgment.
7.7 FAILURE TO ENFORCE IS NO WAIVER. The failure of Declarant to enforce
any requirement, Restriction, or standard herein contained shall in no event be
deemed to be a waiver of the right to do so thereafter or in other cases nor of
the right to enforce any other Restriction.
7.8 GENERAL PURPOSE AND CONSTRUCTIVE NOTICE. The Restrictions shall run
and pass with each and every portion of the Subject Property and be binding
upon Owner, its successors and assigns, and shall benefit the Benefitted
Property and be enforceable solely by Declarant notwithstanding any transfers
of the Benefitted Property or any portion thereof by Declarant. Every Person
who now or hereafter owns or acquires any right, title or interest in or to any
portion of the Subject Property is and shall be conclusively deemed to have
consented and agreed to every Restriction, provision, covenant, condition,
right and limitation contained herein, whether or not any reference to this
Declaration is contained in the instrument by which such Person acquired an
interest in the Subject Property.
ARTICLE 8. ASSIGNMENT
8.1 ASSIGNMENT. Any and all of the rights, powers, and reservations of
Declarant herein contained may be assigned to any Person that will assume the
duties of Declarant pertaining to the particular rights, powers and
reservations assigned, and upon any such Person evidencing its consent in
writing to accept such assignment and assume such duties, he or it shall, to
the extent of such assignment, have the same rights and powers and be subject
to the same obligations and duties as are given to and assumed by Declarant
herein provided that Declarant shall, at least ten (10) days prior to such
assignment becoming effective, deliver notice to Owner. Any assignment or
appointment made under this Article 8 shall be in reasonable form and shall be
Recorded.
Without limiting the generality of the preceding paragraph, Declarant
shall have the right in its sole discretion to assign all or part of its rights
under this Declaration to the Master Association. In the event of such an
assignment, the Master Association shall have the right to enforce those rights
assigned to the Master Association by Declarant against Owner, its successor
and assigns.
ARTICLE 9. MASTER ASSOCIATION
9.1 MASTER ASSOCIATION ASSESSMENTS. Each Owner of the Subject Property,
by acceptance of a deed thereto (whether or not it shall be so expressed in
such deed) is hereby deemed (a) to acknowledge and agree that certain portions
of Summerlin, including but not limited to the Improvements thereon or
hereafter constructed thereon, while owned, controlled and maintained by the
Master Association, benefit the Subject Property and (b) in consideration of
such benefit, to covenant and agree to pay an assessment (hereinafter, the
"Master Association Assessment") to the Master Association as provided for in
this Article 9. The Master Association will assess the Subject Property at a
rate determined by multiplying (i) the number of acres (rounded to the nearest
one tenth (1/10) of an acre) comprising the Subject Property, by (ii) five (5)
times the amount of the Master Association's Common Assessment against
Page 17
<PAGE> 18
residential lots as the same shall be fixed from time to time. Therefore, by way
of example only, if the Subject Property is 54.51 acres and the Master
Association's Common Assessments against residential lots is $25 per month, the
assessment to the Subject Property will be $6,812.50 per month ($25 x 5 x 54.50)
until such time as any such assumption changes. Any maintenance, repairs or
replacements within any portion of the "Association Property" (as such term is
used in the Master Declaration) arising out of or caused by the willful or
negligent act of any Owner or its invitee shall be cause for a Special
Assessment, as that term is used in the Master Declaration and not as used
herein, by the Master Association against such Owner and the Subject Property.
All Master Association Assessments due the Master Association together with
interest thereon, late charges, costs and reasonable attorneys' fees for the
collection thereof as provided for in the Master Declaration, shall be a charge
and continuing lien in favor of the Master Association upon the Subject Property
against which each such Master Association Assessments is made. The Master
Association shall have the same rights and remedies against the Owner as it has
against the "Owners" (as defined in the Master Declaration) in enforcing the
provisions of the Master Declaration including without limitation the provisions
of, Section 6.6 and Sections 6.11 through 6.15, inclusive, of the Master
Declaration. Master Association Assessments shall be paid to the Master
Association. Notwithstanding any payment of any Master Association Assessments
to the Master Association by any Owner in accordance with the provisions of this
Article 9, nothing in this Article 9 shall be deemed or construed to grant to
any Owner any membership, voting or other rights in the Master Association or
its property. All of the provisions of the Master Declaration referred to in, or
necessary to effect the intent of, this Article 9 are incorporated herein by
this reference. Notwithstanding any provision of this Declaration to the
contrary, the terms of this Article 9 may not be amended, altered, suspended, or
superseded without the express written consent of the Master Association which
consent shall be acknowledged in a Recorded document.
ARTICLE 10. MISCELLANEOUS
10.1 CONSTRUCTIVE NOTICE AND ACCEPTANCE. Every Person who now or hereafter
owns, occupies, or acquires any right, title, or interest in or to any portion
of the Subject Property is and shall be conclusively deemed to have consented
and agreed to every covenant, condition, and Restriction contained herein,
whether or not any reference to this Declaration is contained in the instrument
by which such Person acquired an interest in the Subject Property.
10.2 WAIVER. Neither Declarant nor its successors or assigns shall be
liable to any Owner or Occupant of the Subject Property by reason of any
mistake in judgment, negligence, nonfeasance, action, or inaction or for the
enforcement or failure to enforce any provision of this Declaration. Every
Owner or Occupant of any of said property by acquiring its interest therein
agrees that it will not bring any action or suit against Declarant to recover
any such damages or to seek equitable relief because of same.
10.3 DECLARANT'S RIGHT TO TERMINATE DECLARATION. Upon the acquisition of
all or portions of the Subject Property by Declarant by or through any
operation of law or instrument of transfer, Declarant shall have the right in
its sole discretion to terminate this Declaration and release such portions or
all of the Subject Property from the covenants and Restrictions of this
Declaration, by executing and Recording an instrument to such effect, in which
event the covenants and Restrictions shall be forever terminated and
extinguished.
10.4 RUNS WITH LAND. The covenants, Restrictions, and reservations of this
Declaration shall run with and bind the Subject Property and shall inure to the
benefit of and be enforceable by Declarant and its successors and assigns for a
term of sixty (60) years from the date this Declaration is Recorded, unless
terminated earlier in accordance with the terms of Section 10.3 above. As used
in the preceding sentence, the term "successors and assigns" shall mean and
refer to both (a) Declarant's successors and assigns as provided in Section
8.1, and (b) Declarant's successors and assigns as to all or substantially all
of Declarant's assets or by merger, consolidation, or other corporate
reorganization.
10.5 RIGHTS OF MORTGAGEES. No breach or violation of the Restrictions shall
defeat or render invalid the lien of any Mortgage, Deed of Trust or similar
instrument securing a loan made in good faith
Page 18
<PAGE> 19
and for value with respect to the development or permanent financing of the
Subject Property or any portion thereof, and to the extent that the combined
principal amount of such loan and any superior loans encumbering the Subject
Property does not exceed seventy percent (70%) of the improved fair market value
of the Subject Property. However, this Declaration and all provisions hereof
shall be binding upon and effective against any subsequent Owner and its
successors and assigns or other Occupant of the Subject Property or portion
thereof whose title is acquired by foreclosure, trustee's sale, deed in lieu of
foreclosure or otherwise, but such subsequent Owner shall have a reasonable
period of time after taking title to cure any violation hereunder that is
reasonably capable of being cured, provided that such subsequent Owner
diligently acts to effect such cure.
10.6 CAPTIONS. The captions of Articles and Sections herein are used for
convenience only and are not intended to be a part of this Declaration or in
other way to define, limit, or describe the scope and intent of the particular
Article or Section to which they refer.
10.7 EFFECT OF INVALIDATION. If any provision of this Declaration is held
to be invalid by any court, the invalidity of such provision shall not affect
the validity of the remaining provisions hereof.
10.8 AMENDMENTS. Except as provided in this Declaration concerning the
addition of or substitution for other real property as the Benefitted Property,
or concerning the assignment by Declarant of its rights under this Declaration,
this Declaration may only be amended by a writing executed by Declarant and
the Record owner of the Subject Property which shall be Recorded against the
Subject Property.
10.9 FORCE MAJEURE. The time period for the performance of any
non-monetary obligation under this Agreement shall be extended for any period
that such performance is delayed or becomes impossible due to any Act of God,
war, civil insurrection, riot, earthquake, fire, weather, sickness, accident,
epidemic, act of government or government regulation, general or sympathetic
strike or lockout, unavailability of labor or materials, or any other cause
beyond the control of a party to this Agreement including, without limitation,
delays occasioned by the investigation of Owner (or one of the following three
entities: (i) Seven Circle Resorts of Nevada, Inc., (ii) Seven Circle Gaming
Corporation, or (iii) Seven Circle Resorts, Inc.) by the State Gaming Control
Board provided that Owner is cooperating with such investigation.
10.10 CONSTRUCTION. Whenever the consent of a party to this Agreement is
required pursuant to this Agreement or any related agreement, such consent
shall, in all cases, not be unreasonably withheld or delayed.
10.11 COUNTERPARTS. This Agreement may be executed in several counterparts
and all so executed shall constitute one Agreement, binding on all the parties
hereto even though all the parties are not signatories to the original or the
same counterpart.
DECLARANT RASLP
HOWARD HUGHES PROPERTIES, LIMITED THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP, a Delaware limited PARTNERSHIP, a Nevada limited
partnership partnership
By its sole general partner: THE HOWARD By its general partner: The Resort
HUGHES CORPORATION, a Delaware at Summerlin, Inc., a Nevada
corporation corporation
By: /s/ John A. Kilduff By: /s/ John J. Tipton
------------------------------------ ----------------------------------
Name: John A. Kilduff Name: John J. Tipton
---------------------------------- --------------------------------
Title: Executive Vice President Title: Senior Vice President
--------------------------------- -------------------------------
Page 19
<PAGE> 20
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on August 6, 1996 by John A. Kilduff
as Executive Vice President of THE HOWARD HUGHES CORPORATION.
/s/ Peggy L. Chandler
-------------------------------------
Notary Public
[NOTARY SEAL] Notary Public-State of Nevada
COUNTY OF CLARK
PEGGY L. CHANDLER
My Commission Expires
May 25, 1998
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on August 15th, 1996 by
John J. Tipton as Senior Vice President of THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP.
/s/ Vicki Lynn Thomas
-------------------------------------
Notary Public
[NOTARY SEAL] VICKI LYNN THOMAS
Notary Public-State of Nevada
[illegible] in Clark County
My Appointment Expires [illegible]
Page 20
<PAGE> 21
ATTACHMENT "A"
TO DEVELOPMENT DECLARATION
AND OPTION TO REPURCHASE
DESCRIPTION OF SALE PARCEL AND OPTION PARCEL
SALE PARCEL
ALL OF PARCEL 1 AS SHOWN BY MAP THEREOF ON FILE IN FILE 82, PAGE 64 OF PARCEL
MAPS IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA LYING WITHIN
THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 29, TOWNSHIP 20, SOUTH, RANGE 60
EAST, M.D.M., CITY OF LAS VEGAS, CLARK COUNTY, NEVADA.
OPTION PARCEL
ALL OF PARCEL 2 AS SHOWN BY MAP THEREOF ON FILE IN FILE 82, PAGE 64 OF PARCEL
MAPS IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA LYING WITHIN
THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 29 AND THE SOUTHEAST QUARTER (SE 1/4)
OF SECTION 30, TOWNSHIP 20 SOUTH, RANGE 60 EAST, M.D.M., CITY OF LAS VEGAS,
CLARK COUNTY, NEVADA.
<PAGE> 22
ATTACHMENT "B"
TO DEVELOPMENT DECLARATION
AND OPTION TO REPURCHASE
DESCRIPTION OF BENEFITTED PROPERTY
That parcel of land situated in the County of Clark, State of Nevada, described
as portions of particular Townships and Ranges of M.D.B. & M., as follows:
Township 20 South, Range 60 East, M.D.M.
All of Sections 16, 17, 18, 19, 20 and 30;
AND
The West 1/2 of Section 29;
AND
All of Section 21, except the North 1,000.00 feet of the East 1/2
Northeast 1/4 Northeast 1/4 of said Section 21.
Township 20 South, Range 59 East, M.D.M.
All of Sections 13, 14, 15, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31,
32, 33, 34, 35 and 36;
AND
The South 1/2 of Section 16;
AND
The Southeast 1/4 of Section 17;
AND
The South 1/2 of Section 19;
AND
The South 1/2 and the Northeast 1/4 of Section 20.
Township 21 South, Range 59 East, M.D.M.
All of Sections 1, 2, 5, 7, 8, 9 and 12;
AND
The East 1/2 Southeast 1/4 of Section 6 and the Northeast 1/4 of
Section 6;
AND
The North 1/2 of North 1/2 of Section 3;
AND
The West 1/2 of Section 4 and the North 1/2 Northeast 1/4 of Section 4;
AND
The Northeast 1/4 Northwest 1/4 of Section 18 and the North 1/2
Northeast 1/4 of said Section 18;
AND
The North 1/2 North 1/2 of Section 17;
AND
The North 1/2 Northwest 1/4 of Section 16;
AND
The North 1/2 North 1/2 of Section 13;
AND
The North 1/2 North 1/2 of Section 14;
<PAGE> 23
ATTACHMENT "B"
TOGETHER WITH AND INCLUDING:
Those certain portions of Township 21 South, Range 59 East, M.D.M., of said
County of Clark, State of Nevada, more particularly described as follows:
The East 1/2 and the East 1/2 West 1/2 and the East 1/2 West 1/2 West 1/2
and the West 1/2 Southwest 1/4 Southwest 1/4 and the Northwest 1/4
Northwest 1/4 Northwest 1/4 of Section 11;
AND
All of Sections 23 and 24;
AND
All of Section 25, except the West 1/2 Southwest 1/4 Southwest 1/4 and also
excepting the Southwest 1/4 Northwest 1/4 Southwest 1/4 of said Section 25;
AND
The North 1/2 Northeast 1/4 and the North 1/2 South 1/2 Northeast 1/4 and
the East 1/2 Northeast 1/4 Northwest 1/4 of Section 36;
AND
All of Section 13, except the North 1/2 North 1/2 of said Section 13;
AND
All of Section 14, except the North 1/2 North 1/2 of said Section 14.
EXCEPTING FROM THE ABOVE DESCRIBED PARCEL OF LAND those certain portions of
land more particularly described as follows:
Parcel 2 (containing 682.117 acres) shown on Page 83 of File 52 of Parcel
Maps of Clark County Nevada Records;
AND
Parcel 1 (containing 1,050.058 acres) and Parcel 4 (containing 353.340
acres) as shown on Page 09 of File 54 of Parcel Maps of Clark County
Nevada Records;
AND
Parcel 2 (containing 303.947 acres) shown on Page 09 of File 54 of Parcel
Maps of Clark County Nevada Records;
AND
Parcel 1 (containing 487.136 acres) and Parcel 2 (containing 22.934 acres)
and Parcel 3 (containing 18.65 acres) as shown on Page 82 of File 54 of
Parcel Maps of Clark County Nevada Records;
AND
Parcel 1 (containing 488.428 acres) shown on Page 28 of File 63 of Parcel
Maps of Clark County Nevada Records;
AND
Parcel 1 (containing 29.686 acres) shown on Page 30 of File 62 of Parcel
Maps of Clark County Nevada Records;
AND
Parcel 3 (containing 502.091 acres) shown on Page 57 of File 78 of Parcel
Maps of Clark County Nevada Records;
AND
Parcel 2 (containing 10.813 acres) shown on Page 9 of File 73 of Parcel
Maps of Clark County Nevada Records;
AND
Parcel 1 (containing 44.768 acres) shown on Page 94 of File 76 of Parcel
Maps of Clark County Nevada Records;
AND
Page 23
<PAGE> 24
ATTACHMENT "B"
Parcel 2 (containing 14.545 acres) shown on Page 01 of File 82 of Parcel
Maps of Clark County Nevada Records;
AND
Parcel 1 (containing 5.230 acres) shown on Page 59 of File 73 of Parcel
Maps of Clark County Nevada Records;
AND
Parcel 1 (containing 585.577 acres) and Parcel 3 (containing 18.315 acres)
shown on Page 14 of File 74 of Parcel Maps of Clark County Nevada Records.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part of
Summerlin Village 1 North subdivision (containing 388.411 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon the
"AMENDED PLAT OF SUMMERLIN VILLAGE 1 NORTH," as recorded in Book 045 of Plats,
Page 0010, in the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 8 subdivision (containing 197.476 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon "THE
CROSSING AT SUMMERLIN VILLAGE 8 UNIT NO.1-PHASE 3", on file in Book 63 of Plats,
Page 92, in the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 8 subdivision (containing 114.344 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon "THE
CROSSING AT SUMMERLIN VILLAGE 8 UNIT NO. 2", on file in Book 64 of Plats, Page
67, in the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 8 subdivision (containing 150.153 acres more or less) situated
in the City of Las Vegas, Clark County, Nevada; as shown upon "THE CROSSING AT
SUMMERLIN VILLAGE 8 UNIT NO. 3", on file in Book 69 of Plats, Page 99, in the
Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 8 subdivision (containing 94.754 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon "THE
CROSSING AT SUMMERLIN VILLAGE 8 UNIT NO. 1-PHASE 2", on file in Book 59 of
Plats, Page 73, in the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 8 subdivision (containing 10.631 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon "THE
CROSSING AT SUMMERLIN VILLAGE 8 UNIT NO. 1-PHASE 1", on file in Book 58 of
Plats, Page 84, in the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 1 South subdivision (containing 11.577 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon
"SUMMERLIN VILLAGE 1-PARCEL 10", on file in Book 48 of Plats, Page 39, in the
Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 1 South subdivision (containing 37.921 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon
"SUMMERLIN VILLAGE 1 SOUTH-UNIT NO. 1", on file in Book 48 of Plats, Page 42, in
the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 1 South subdivision (containing 117.333 acres more or less)
situated in the City of Las Vegas,
Page 24
<PAGE> 25
ATTACHMENT "B"
Clark County, Nevada; as shown upon "SUMMERLIN VILLAGE 1 SOUTH-UNIT NO. 2", on
file in Book 49 of Plats, Page 96, in the Office of the County Recorder, Clark
County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 1 South subdivision (containing 98.790 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon
"SUMMERLIN VILLAGE 1 SOUTH-UNIT NO. 3", on file in Book 50 of Plats, Page 33,
in the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 1 South subdivision (containing 21.157 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon
"SUMMERLIN VILLAGE 1 SOUTH PARCEL 1", on file in Book 51 of Plats, Page 26, in
the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 1 South subdivision (containing 40.994 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon
"SUMMERLIN VILLAGE 1 SOUTH-UNIT NO. 5", on file in Book 51 of Plats, Page 29,
in the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 1 South subdivision (containing 45.815 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon
"SUMMERLIN VILLAGE 1 SOUTH-UNIT NO. 4", on file in Book 51 of Plats, Page 86,
in the Office of the County Recorder, Clark County, Nevada.
FURTHER EXCEPTING FROM SAID PARCEL OF LAND; all of that land being a part
Summerlin Village 1 South subdivision (containing 318.072 acres more or less)
situated in the City of Las Vegas, Clark County, Nevada; as shown upon
"SUMMERLIN VILLAGE 1 SOUTH-UNIT NO. 6", on file in Book 54 of Plats, Page 44,
in the Office of the County Recorder, Clark County, Nevada.
<PAGE> 26
ATTACHMENT "C"
TO DEVELOPMENT DECLARATION
AND OPTION TO REPURCHASE
INITIAL PROJECT CONCEPTUAL DEVELOPMENT PLAN
<PAGE> 27
[The Resort at Summerlin Photo]
<PAGE> 28
[Landscape Site Plan Photo]
<PAGE> 29
[Exterior View At Porte Cochere Photo]
<PAGE> 30
[Club and Lounge Photo]
<PAGE> 31
[Guest Room Photo]
<PAGE> 32
[Restaurant Pavilion/Shops Photo]
<PAGE> 33
[Photo Omitted]
<PAGE> 34
[Exterior Finishes Photo]
<PAGE> 35
[Exterior Finishes Photo]
<PAGE> 36
[Casino Lobby Photo]
<PAGE> 37
[Interior Casino Photo]
<PAGE> 38
[Showroom/Lounge Photo]
<PAGE> 39
[Health Club Lobby Photo]
<PAGE> 40
[The Lifestyle Center Photo]
<PAGE> 41
[Buffet Photo]
<PAGE> 42
[Hotel Lobby Photo]
<PAGE> 43
[Mini Suite Photo]
<PAGE> 44
ATTACHMENT "D"
TO DEVELOPMENT DECLARATION
AND OPTION TO REPURCHASE
DESCRIPTION OF SUMMERLIN
That parcel of land situated in the County of Clark, State of Nevada, described
as portions of particular Townships and Ranges of M.D.B.& M., as follows:
Township 20 South, Range 60 East, M.D.M.
All of Sections 19 and 30;
AND
The West 1/2 of Section 29;
TOGETHER WITH AND INCLUDING
Those certain portions of Sections 17, 18, 20 and 21, as shown in File 54 of
Parcel Maps, at Page 82.
Official Records, Clark County, Nevada.
Township 20 South, Range 59 East, M.D.M.
All of Sections 15, 21, 22, 25, 26, 27, 28, 29, 33, 34, 35 and 36;
AND
The South 1/2 of Section 16;
AND
The Southeast 1/4 of Section 17;
AND
The South 1/2 and the Northeast 1/4 of Section 20;
TOGETHER WITH AND INCLUDING
That portion of Section 13, being a part of Parcel 4 as shown in File 54 of
Parcel Maps, at Page 82, Official Records, Clark County, Nevada;
AND
That portion of Section 13, being a part of Parcel 4 as shown by an Amended
Plat in File 78 of Parcel Maps, at Page 57, Official Records, Clark County,
Nevada;
AND
That portion of Section 14, being a part of Parcel 2 and Parcel 4 as shown by
an Amended Plat in File 78 of Parcel Maps, at Page 57, Official Records, Clark
County, Nevada;
AND
All of Sections 23 and 24, except Parcel 3 as shown by an Amended Plat in File
78 of Parcel Maps, at Page 57, Official Records, Clark County, Nevada;
AND
That portion of Section 32, being Parcel 3 as shown in File 58 of Parcel Maps,
at Page 27, Official Records, Clark County, Nevada.
EXCEPTING FROM THE ABOVE DESCRIBED PARCEL OF LAND those certain portions of
land more particularly described as follows:
Township 21 South, Range 59 East, M.D.M.
All of Sections 1, 2, 12, 13, 14, 23, and 24;
AND
The North 1/2 of the North 1/2 of Section 3;
AND
The North 1/2 of the Northeast 1/4 of Section 4;
AND
Page 27
<PAGE> 45
ATTACHMENT "D"
The East 1/2, and the East 1/2 of the West 1/2, and the East 1/2 of the West 1/2
of the West 1/2, and the West 1/2 of the Southwest 1/4 of the Southwest 1/4, and
the Northwest 1/4 of the Northwest 1/4 of the Northwest 1/4 of Section 11;
AND
All of Section 25, except the West 1/2 of the Southwest 1/4 of the Southwest
1/4, and also excepting the Southwest 1/4 of the Northwest 1/4 of the Southwest
1/4 of said Section 25;
AND
The North 1/2 of the Northeast 1/4, and the North 1/2 of the South 1/2 of the
Northeast 1/4, and the East 1/2 of the Northeast 1/4 of the Northwest 1/4 of
Section 36;
TOGETHER WITH AND INCLUDING
That portion of Section 4, being Parcel 4 as shown in File 58 of Parcel Maps,
at Page 27, Official Records, Clark County, Nevada.
Page 28
<PAGE> 46
ATTACHMENT "E"
TO DEVELOPMENT DECLARATION
AND OPTION TO REPURCHASE
DESCRIPTION OF SUMMERLIN NORTH
That parcel of land situated in the County of Clark, State of Nevada, described
as portions of particular Townships and Ranges of M.D.M.& M., as follows:
Township 20 South, Range 60 East, M.D.M.
All of Sections 19 and 30;
AND
The West 1/2 of Section 29;
TOGETHER WITH AND INCLUDING:
Those certain portions of Sections 17, 18, 20 and 21, as shown in File 54
of Parcel Maps, at Page 82, Official Records, Clark County, Nevada.
Township 20 South, Range 59 East, M.D.M.
That portion of Section 13, being a part of Parcel 4 as shown in File 54 of
Parcel Maps, at Page 82, Official Records, Clark County, Nevada; AND All of
Section 24, except Parcel 3 as shown by an Amended Plat in File 78 of
Parcel Maps, at Page 57, Official Records, Clark County, Nevada; AND Those
certain portions of Sections 26 and 35, being a part of Parcels 1, 3 and 4
as shown in File 84 of Parcel Maps, at Page 70, Official Records, Clark
County, Nevada; AND
That portion of Section 23, being a part of Parcel 1 as shown in File 84 of
Parcel Maps, at Page 70, Official Records, Clark County, Nevada, excepting
that portion lying North of the proposed centerline of Summerlin Parkway.
CLARK COUNTY, NEVADA
JUDITH A. VANDEVER, RECORDER
RECORDED AT REQUEST OF:
HOWARD HUGHES PROPERTIES LIMITED
08-15-96 11:41 ESP 29
BOOK: 960815 INST: 01189
FEE: 35.00 RPTT: .00
OP DECLARATION
CONFORMED COPY HAS NOT BEEN COMPARED TO THE ORIGINAL
<PAGE> 47
AMENDMENT NO. 1 TO DEVELOPMENT DECLARATION
AND OPTION TO REPURCHASE
THIS AMENDMENT NO. 1 TO DEVELOPMENT DECLARATION AND OPTION TO REPURCHASE
(this "Amendment") is dated for reference purposes only as of May ___, 1997 and
is made by and between Howard Hughes Properties, Limited Partnership, a Delaware
limited partnership ("Declarant") and The Resort at Summerlin, Limited
Partnership, a Nevada limited partnership ("RASLP").
PRELIMINARY STATEMENTS
A. Declarant and RASLP are parties to that certain Development Declaration
and Option to Repurchase dated as of August 15, 1996 (the "Development
Declaration"). Capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Development Declaration.
B. Declarant and RASLP desire to amend and modify the Construction
Commencement Deadline as set forth in the Development Declaration.
AGREEMENT
In consideration of the foregoing and intending to be legally bound,
Declarant and RASLP hereby agree that the Development Declaration shall be
amended as follows:
1. Section 1.3 of the Development Declaration shall be amended to delete
the reference to "the one year anniversary of the date of Recordation of this
Declaration" and to insert "October 15, 1997" in lieu thereof.
2. All other terms and conditions of the Development Declaration shall
remain unchanged.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
date set forth above.
DECLARANT: RASLP:
Howard Hughes Properties, Limited The Resort at Summerlin, Limited
Partnership, a Delaware limited Partnership, a Nevada limited
partnership partnership
By: The Howard Hughes Corporation, a By: The Resort at Summerlin, Inc., a
Delaware corporation, its sole Nevada corporation, its general
general partner partner
By: /s/ John A. Kilduff By: /s/ John J. Tipton
____________________________ ____________________________
John A. Kilduff, Executive John J. Tipton, Senior Vice
Vice President President
1
<PAGE> 48
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on May 13, 1997 by John A.
Kilduff as Executive Vice President of The Howard Hughes Corporation, a
Delaware corporation, the sole general partner of Howard Hughes Properties,
Limited Partnership, a Delaware limited partnership.
[seal] OFFICIAL SEAL
E.F. STAFFORD /s/ E.F. Stafford
NOTARY PUBLIC -- NEVADA -------------------------
PRINCIPAL OFFICE IN
CLARK COUNTY
No. 96-4045-1 My Comm. Exp. Aug. 1, 2000
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
This instrument was acknowledged before me on May 16, 1997 by John J.
Tipton, as Senior Vice President of The Resort at Summerlin, Inc., a Nevada
corporation, the general partner of The Resort at Summerlin, Limited
Partnership, a Nevada limited partnership.
/s/ Sheila M. Waid
-----------------------------
Commission Expires: 1/11/2000
[Notary Public Seal]
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AMENDMENT NO. 2 TO DEVELOPMENT DECLARATION
AND OPTION TO REPURCHASE
THIS AMENDMENT NO. 2 TO DEVELOPMENT, DECLARATION AND OPTION TO REPURCHASE
(this "Amendment") is dated for reference purposes only as of December __, 1997
and is made by and between Howard Hughes Properties, Limited Partnership, a
Delaware limited partnership ("Declarant") and The Resort at Summerlin, Limited
Partnership, a Nevada limited partnership ("RASLP").
PRELIMINARY STATEMENTS
A. Declarant and RASLP are parties to that certain Development
Declaration and Option to Repurchase dated as of August 15, 1996 as modified by
that certain Amendment No. 1 to Development Declaration and Option to
Repurchase dated as of May 19, 1997 (collectively, the "Development
Declaration"). Capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Development Declaration.
B. Declarant and RASLP desire to amend and modify the Construction
Commencement Deadline as set forth in the Development Declaration.
AGREEMENT
In consideration of the foregoing and intending to be legally bound,
Declarant and RASLP hereby agree that the Development Declaration shall be
amended as follows:
1. Section 1.3 of the Development Declaration shall be amended to delete
the reference to "October 15, 1997" and to insert "February 28, 1998" in lieu
thereof.
2. All other terms and conditions of the Development Declaration shall
remain unchanged.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
date set forth above.
DECLARANT: RASLP:
Howard Hughes Properties, Limited The Resort at Summerlin, Limited
Partnership, a Delaware limited Partnership, a Nevada limited
partnership partnership
By: The Howard Hughes Corporation, a By: The Resort at Summerlin, Inc.,
Delaware corporation, its sole a Nevada corporation, its
general partner general partner
By: /s/ John A Kilduff By:
------------------------------- ------------------------------
John A. Kilduff, Executive Vice John J. Tipton, Senior Vice
President President
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STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on December 4, 1997 by John A.
Kilduff as Executive Vice President of The Howard Hughes Corporation, a
Delaware corporation, the sole general partner of Howard Hughes Properties,
Limited Partnership, a Delaware limited partnership.
[SEAL] OFFICIAL SEAL /s/ E.F. Stafford
E.F. STAFFORD ----------------------------------
NOTARY PUBLIC - NEVADA
PRINCIPAL OFFICE IN
CLARK COUNTY
No. 96-4045-1 My Comm. Exp. Aug. 1, 2000
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on December __, 1997 by John J.
Tipton, as Senior Vice President of The Resort at Summerlin, Inc., a Nevada
corporation, the general partner of The Resort at Summerlin, Limited
Partnership, a Nevada limited partnership.
----------------------------------
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Exhibit 10.5
ROYALTY AGREEMENT
This Royalty Agreement ("Agreement"), dated as of August 15, 1996, is
between HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP, a Delaware limited
partnership ("HHP"), and THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP, a Nevada
limited partnership ("RASLP").
R E C I T A L S
A. This Agreement is an obligation of RASLP, its successors and assigns
in favor of HHP, its successors and assigns.
B. This Agreement touches and concerns the real property (the "Property")
described on Attachment "A" attached hereto and by this reference incorporated
herein and runs with the Property binding on the successors in title of RASLP
for the benefit of HHP, its successors and assigns.
C. This Agreement is made by RASLP in consideration of (i) HHP granting
RASLP a right of first offer on future casino gaming opportunities in the
Planned Community and HHP granting RASLP the exclusive right to operate a hotel
casino in Summerlin North as provided in the Agreement for the Purchase and Sale
of Real Property between HHP and Seven Circle Resorts, Inc., a Delaware
corporation, dated May 22, 1996, as amended, (the "Purchase Agreement"), which
was thereafter assigned by Seven Circle Resorts, Inc. to RASLP by that certain
Assignment of Rights Under Agreement for the Purchase and Sale of Real Property,
dated as of August 6, 1996, (ii) HHP causing RASLP to have priority for the
reservation of a minimum of 50% of the starting times at the TPC at The Canyons
resort golf course at Summerlin, (the "TPC at The Canyons"), (iii) HHP causing
RASLP to have membership in the Tournament Player's Club network of golf courses
operated by PGA Tour, Inc. (hereafter, "PGA Tour") or its affiliates, (iv) HHP
cooperating with RASLP in the coordination of marketing efforts, (vi) HHP, at
the request of RASLP, acting as liaison between RASLP and the Summerlin Planned
Community, the homeowner associations at the Summerlin Planned Community, and
the City of Las Vegas, Nevada, and (vii) the grant of license to use the
"Summerlin" name as provided in the Trademark, Service Mark Licensing Agreement
(the "Service Mark Licensing Agreement") dated as of August 15, 1996, between
HHP and RASLP.
D. RASLP and HHP agree that all of the foregoing enhance the value of
business operations to be conducted on the Property.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein, RASLP and HHP hereby agree as follows:
ARTICLE 1. DEFINITIONS AND INTERPRETATIONS
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, the following terms shall have the
following respective meanings:
1.1 Agreed Rate means a fluctuating rate per annum equal to the reference
rate of Bank of America National Trust and Savings Association. In the event
Bank of America National Trust and Savings Association should cease to exist or
to announce a reference rate of interest for any reason, the party to whom
payment is owed shall select the reference rate of interest of another financial
institution of similar stature that is reasonably acceptable to the other party.
1.2 Business Day means any day not a Saturday, Sunday or legal holiday
under the laws of the State of Nevada or any other day on which banking
institutions are authorized by law to close in such State.
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1.3 Construction Commencement means the first date on which RASLP shall
have performed all of the following:
(i) RASLP has submitted the Development Plan (as defined in the
Development Declaration) for the Initial Project to HHP and HHP has
approved the drawings and specifications with or without conditions to
such approval.
(ii) RASLP has entered into bona fide contract(s) with one or more
general contractors for the construction of the Initial Project.
(iii) RASLP has obtained a building permit from the City of Las Vegas
for the construction of the Initial Project.
(iv) RASLP has obtained a written commitment for construction
financing for the Initial Project.
(v) RASLP has substantially commenced grading of the Property in
accordance with an HHP approved grading plan.
(vi) RASLP or one of the following three entities: (i) Seven Circle
Resorts of Nevada, Inc., (ii) Seven Circle Gaming Corporation, or
(iii) Seven Circle Resorts, Inc. has obtained (A) a distributor's
gaming license pursuant to NRS Chapter 463 which can be converted to a
nonrestricted gaming license prior to the opening of the Initial
Project, or (B) a nonrestricted gaming license pursuant to NRS Chapter
463 with respect of the Property.
1.4 Declaration means the Development Declaration and Option to
Repurchase, between HHP and RASLP, dated August 15, 1996.
1.5 Golf Course Agreement means that certain Agreement between HHP,
Summerlin Corporation and TPC at Summerlin, Inc., dated July 10, 1996.
1.6 Governmental Authority means (i) any foreign governmental authority,
the United States of America, any State of the United States or any political
subdivision, agency or instrumentality of any of the foregoing and (ii) when
used with reference to any Person, any agency, department, commission, board,
bureau, court or other tribunal having jurisdiction over such Person.
1.7 Hotel and Casino Operation Commencement Date means the first day upon
which a hotel or a casino is open for business to the general public on the
Property.
1.8 Initial Project means the hotel and casino to be constructed on the
Property.
1.9 Legal Requirement means any and all (i) applicable laws (statutory and
administrative), ordinances, rules and regulations; (ii) judgments, orders,
injunctions and decrees; (iii) contracts with governmental authorities relating
to compliance with the items described in (i) or (ii) above; and (iv) permits
issued by governmental authorities.
1.10 Material Adverse Effect means, relative to any occurrence of whatever
nature (including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding), and after taking into account actual
insurance coverage and effective indemnification with respect to such occurrence
but only if the insurer or indemnitor (as the case may be) has not denied
coverage or liability (as the case may be), a Material Adverse Effect on (i) the
financial condition of RASLP, (ii) RASLP's ability to perform its obligations
under this Agreement in all material respects, (iii) RASLP's ability to carry
out and complete the Business Plan in all material respects, (iv) the value or
marketability of the Initial Project, (v) the validity, legality, enforceability
of this Agreement or (vi) the ability of HHP to exercise or enforce any of its
rights and remedies under this Agreement in all material respects.
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1.11 Nevada Gaming Authorities means the Nevada State Gaming Control
Board and the Nevada State Gaming Commission.
1.12 Officer's Certificate means a certificate signed by the
president, the chief financial officer or the chief accounting officer of RASLP
or any entity that is a successor or assign to RASLP.
1.13 Person means an individual, estate, corporation, joint venture,
trust, unincorporated organization, association, Governmental Authority or
other entity.
1.14 Planned Community means the real property of HHP in the City of
Las Vegas and unincorporated portions of Clark County, Nevada described on
Attachment "B" containing, among other things, the Property.
1.15 Property means the parcels of land located in the City of Las
Vegas, Nevada, described in Attachment "A".
1.16 Quarter means a calendar quarter beginning on January 1, April
1, July 1, or September 1, of each year during the Term of this Agreement.
1.17 Royalty Commencement Date means the earlier of (i) the Hotel and
Casino Operation Commencement Date, or (ii) 18 months following Construction
Commencement.
ARTICLE 2 CREATION, GRANT, ASSIGNMENT AND PAYMENT OF ROYALTY
2.1 Royalty Agreement. In consideration of the exclusivity
provisions of this Agreement, the right to use the name "Summerlin" pursuant to
the Service Mark Licensing Agreement, marketing coordination, and other good
and valuable consideration, RASLP hereby agrees to pay on a quarterly basis, a
fee (the "Royalty Fee") in accordance with, and subject to, the terms of this
Agreement. The Royalty Fee will be paid in consideration of (i) HHP granting
RASLP a right of first offer on future casino gaming opportunities in the
Planned Community pursuant to Section 13.2 of the Purchase Agreement other than
Summerlin North, in which RASLP has the exclusive right to operate a casino
pursuant to Section 13.3 of the Purchase Agreement, (ii) HHP causing RASLP to
have priority for the reservation of a minimum of 50% of the starting times at
the TPC at The Canyons, (iii) HHP causing RASLP to have membership in the
Tournament Player's Club network of golf courses operated by PGA Tour or its
affiliates, (iv) HHP cooperating with RASLP in the coordination of marketing
efforts, (v) HHP granting RASLP the exclusive right to operate a hotel casino
in Summerlin North as provided in Section 13.3 of the Purchase Agreement, (vii)
HHP, at the request of RASLP, acting as liaison between RASLP and the Summerlin
Planned Community, the homeowner associations at the Summerlin Planned
Community, and the City of Las Vegas, Nevada. RASLP acknowledges that HHP has
certain fiduciary obligations to the homeowners associations referred to above
and RASLP agrees that nothing in this paragraph is intended nor shall it be
construed as in any way affecting or limiting the obligations of HHP (or HHP's
employees acting on behalf of such associations) to act in the best interests
of the associations and the members thereof, and (viii) the grant of license to
use the "Summerlin" name as provided in the Service Mark Licensing Agreement
dated as of August 15, 1996 between HHP and RASLP. RASLP shall receive a credit
against the Royalty Fee for amounts paid pursuant to Section 2.1 and only
Section 2.1 of the Golf Course Agreement by or on behalf of the Resort Operator
(as defined in the Golf Course Agreement).
2.2 Commencement. The Royalty Fee will be payable with respect to
every year during the term of this Agreement beginning on the Royalty
Commencement Date.
2.3 Amount of Royalty. The Royalty Fee shall initially be
$1,000,000 per year increasing on the fifth anniversary of the Royalty
Commencement Date and each successive fifth anniversary of the Royalty
Commencement Date thereafter by an amount equal to 15% of the amount paid at
the end of the preceding five year period. Therefore, by way of example, the
Royalty Fee will be $1,000,000 in each of
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years 1 through 5; $1,150,000 in each of years 6 through 10; $1,322,500 in each
of years 11 through 15 and so on.
2.4 Royalty Fee Payments. With the exception of the component of
the Royalty Fee credited to RASLP due to payments made pursuant to Section 2.1
of the Golf Course Agreement, Royalty Fee payments will be made quarterly in
equal installments commencing the last day of the Quarter in which the Royalty
Commencement Date occurs but in no event sooner than forty-five (45) days
following the Royalty Commencement Date and on the last day of each Quarter
thereafter, with the first such payment being prorated for the number of days
in the initial Quarter before and after the Royalty Commencement Date.
2.5 Termination of Golf Course Agreement. If the TPC at Summerlin,
Inc. terminates the Golf Course Agreement through no fault of RASLP and RASLP
no longer has a right to control a minimum of 50% of the tee times and receive
the other benefits from the TPC at Summerlin, Inc. contemplated herein, then
the Royalty Fee shall be reduced to 50% of the amount payable prior to such
termination; provided the Royalty Fee shall thereafter be subject to increase in
accordance with Section 2.3
2.6 Payments Due on Holidays. Whenever any amount payable hereunder
shall be due on a day which is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day.
2.7 Default Rate. Any amount not paid as and when due hereunder
shall, to the extent permitted by applicable law, bear interest at the Agreed
Rate plus seven percent (7%) per annum from the date due until the date paid.
2.8 Royalty to Run with the Property. The Royalty Fee touches and
concerns the Property and shall run with the Property for a term of ninety-nine
(99) years, binding on the successors in title of RASLP for the benefit of HHP,
its successors and assigns. There shall never be a prepayment or a liquidation
of the obligation of RASLP to pay HHP the Royalty Fee.
2.9 Default in Payment of Royalty. In the event RASLP shall fail to
pay any installment of the Royalty Fee when due and such failure is not cured
within 30 days of notice from HHP, HHP shall have the right, in addition to any
other remedy available under this Agreement or at law or equity, to terminate
this Agreement, the Option Agreement and the Assignment and Assumption of the
Golf Course Agreement and all obligations thereunder.
2.10 Default by HHP. In the event that (i) HHP shall default in its
obligations under Section 13.2 or 13.3 of the Purchase Agreement or the Service
Mark Licensing Agreement, and such default is not cured within the applicable
cure periods provided in such agreements, and (ii) HHP is thereafter relieved
of its obligations under such provisions, then the Royalty Fee shall be reduced
to 50% of the amount payable prior to such default; provided the Royalty Fee
shall thereafter be subject to increase in accordance with Section 2.3.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
RASLP represents and warrants that to the best of its knowledge:
3.1 Organization, Qualification, Authorization, Etc. RASLP (i) is a
corporation duly formed and existing in good standing under the laws of the
State of Delaware, (ii) has the power to own the Property and to develop and,
own and operate the Initial Project, to consummate the transactions
contemplated by this Agreement and (iii) is authorized to do business and is in
good standing in the State of Nevada.
3.2 Validity. The execution, delivery and performance by RASLP of
this Agreement have been duly authorized by all necessary corporate action on
the part of RASLP. This Agreement constitutes a legal, valid and binding
obligation of RASLP, enforceable in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other laws of
general application relating
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to the enforcement of creditors' rights or by equitable principles (regardless
of whether enforcement is considered in a court of law or a proceeding in
equity).
3.3 No Material Adverse Effect. There is no fact peculiar to RASLP or the
Initial Project which has had a Material Adverse Effect or which RASLP
reasonably believes will have a Material Adverse Effect in the foreseeable
future.
3.4 Compliance with Legal Requirements, Other Instruments, etc. The
execution, delivery and performance of this Agreement by RASLP will not result
in a violation of or constitute a default under any provision of its corporate
charter, articles of incorporation or bylaws or of any agreement, contract,
lease, permit or other document or instrument to which RASLP is a party or by
which RASLP or the Property is bound. The execution, delivery and performance
of this Agreement by RASLP will not result in a violation of any applicable
Legal Requirement.
3.5 Litigation, etc. On the date hereof, there is no action, suit,
investigation or proceeding pending or, to the knowledge of RASLP, threatened
against or affecting RASLP which would materially affect the Initial Project.
No action, suit, investigation or proceeding is pending or, to the knowledge of
RASLP, threatened against or affecting RASLP or the Initial Project which could
reasonably be expected to have a Material Adverse Effect.
3.6 Governmental Consents, etc. RASLP is not required to obtain any
consent, approval or authorization of, or to make any registration, declaration
or filing with, any Governmental Authority as a condition precedent to (i) the
valid execution and delivery by it of this Agreement or (ii) the valid
performance by it of this Agreement other than those contemplated by, or
required to be obtained or made in the performance of any covenant contained
in, this Agreement and except as may be required by the Nevada Gaming
Authorities. Within ten (10) days after the date hereof, RASLP covenants and
agrees to seek any required consent, approval or authorization from the Nevada
Gaming Authorities and diligently pursue such approval, consent or
authorization. RASLP shall cooperate with HHP in order to avoid any consent,
approval or authorization requirement which may be imposed on HHP. HHP will
cooperate with RASLP in order to facilitate any consent, approval or
authorization in favor of RASLP.
ARTICLE 4. INDEMNITY
4.1 RASLP agrees to indemnify and hold harmless HHP and each of its
partners, employees and agents (collectively, the "Indemnitees") from and
against any and all actions, causes of action, suits, judgments, citations,
directives, demands, assessments, penalties, losses, liabilities, damages and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements (including, without limitation, the reasonable fees and
disbursements of counsel for the Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not any of the
indemnitees shall be designated a party thereto) (collectively, the
"Indemnified Liabilities"), incurred, suffered, sustained or required to be
paid by the Indemnitees or any of them as a result of, or arising out of, or
relating to:
(i) any breach of any representation of warranty or RASLP contained
herein,
(ii) the nonfulfillment by RASLP of, or its failure to perform, any
of its covenants or agreements contained herein, or
(iii) the exercise, protection or enforcement by HHP of any of its
rights, remedies, powers or privileges under this Agreement;
PROVIDED, HOWEVER, that (A) RASLP shall not be liable under the foregoing
indemnity in respect of any Indemnified Liabilities resulting from the gross
negligence, bad faith or willful misconduct of any Indemnitee and (B) each
Indemnitee shall promptly notify RASLP in writing if such Indemnitee becomes
aware of any facts which might reasonably be expected to result in a claim
against RASLP under the foregoing indemnity and shall cooperate (including,
without limitation, by providing access to books, records
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and personnel) with RASLP and its counsel in defending and contesting such
claim, it being understood and agreed that neither the failure of HHP to so
notify RASLP with respect to any such matter nor the failure of HHP to so
cooperate with RASLP and its counsel shall relieve RASLP of its obligation
hereunder to indemnify the Indemnitees with respect to any Indemnified
Liabilities unless, and then only to the extent that, such failure has had a
Material Adverse Effect on the ability of RASLP or its counsel to effectively
defend against or contest such Indemnified Liabilities. For purposes of
subclause (B) above, HHP shall not be deemed to have become aware of any fact
unless such fact is actually known to any officer or director of any general
partner of HHP, any Person controlling HHP or an employee or agent of any of
them.
4.2 HHP agrees to indemnify and hold harmless RASLP and each of its
partners, employees and agents (collectively, the "Indemnitees") from and
against any and all actions, causes of action, suits, judgments, citations,
directives, demands, assessments, penalties, losses, liabilities, damages and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements (including, without limitation, the reasonable fees and
disbursements of counsel for the Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not any of the
Indemnitees shall be designated a party thereto) (collectively, the
"Indemnified Liabilities"), incurred, suffered, sustained or required to be
paid by the Indemnitees or any of them as a result of, or arising out of, or
relating to:
(i) any breach of any representation or warranty of HHP contained
herein,
(ii) the nonfulfillment by HHP of, or its failure to perform, any of
its covenants or agreements contained herein.
(iii) the exercise, protection or enforcement by RASLP of any of its
rights, remedies, powers or privileges under this Agreement, or
(iv) payments due under Section 2.1 of the Golf Course Agreement
until the opening of the Initial Project in the event of a
failure of the Initial Project to open on or before December 31,
1998 due to a delay occasioned by HHP provided HHP's obligation
under this subsection (iv) shall be limited to the prorata
portion of such payments due in proportion to the number of days
by which HHP has delayed the opening of the Initial Project. By
way of example, if the Initial Project opens on January 30, 1999
(i.e., thirty (30) days delayed), and HHP has caused ten (10)
days of delay, HHP's obligation under this subsection (iv) shall
be limited to one-third of the payments due pursuant to Section
2.1;
PROVIDED, HOWEVER, that (A) HHP shall not be liable under the foregoing
indemnity in respect of any Indemnified Liabilities resulting from the gross
negligence, bad faith or willful misconduct of any Indemnitee and (B) each
Indemnitee shall promptly notify HHP in writing if such Indemnitee becomes
aware of any facts which might reasonably be expected to result in a claim
against HHP under the foregoing indemnity and shall cooperate (including,
without limitation, by providing access to books, records and personnel) with
HHP and its counsel in defending and contesting such claim, it being understood
and agreed that neither the failure of RASLP to so notify HHP with respect to
any such matter nor the failure of RASLP to so cooperate with HHP and its
counsel shall relieve HHP of its obligation hereunder to indemnify the
Indemnitees with respect to any Indemnified Liabilities unless, and then only
to the extent that, such failure has had a Material Adverse Effect on the
ability of HHP or its counsel to effectively defend against or contest such
Indemnified Liabilities. For purposes of subclause of (B) above, RASLP shall
not be deemed to have become aware of any fact unless such fact is actually
known to any officer or director of any general partner of RASLP, any Person
controlling RASLP or an employee or agent of any of them.
4.3 To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding Sections 4.1 and 4.2 may be unenforceable
because it is violative of any law or public policy, the indemnifying party
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law and public policy to the payment and satisfaction of its
indemnification obligations. The
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obligations of each party to this Agreement under this Article 4 shall survive
the termination this Agreement.
ARTICLE 5. MISCELLANEOUS
5.1 Time. Time is of the essence in this Agreement and all of the terms,
covenants and conditions hereof.
5.2 Governing Law. The laws of the State of Nevada shall govern the
validity, construction, performance and effect of this Agreement.
5.3 Integration. This Agreement contains the entire agreement between
the parties and cannot be changed or terminated orally.
5.4 Severability. If any term, provision, covenant or condition of this
Agreement, or any application thereof, should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, all provisions, covenants
and conditions of this Agreement, and all applications thereof, not held
invalid, void or unenforceable, shall continue in full force and effect and
shall in no way be affected, impaired or invalidated thereby.
5.5 Successors and Assigns. The terms, provisions, covenants and
conditions of this Agreement shall apply to, bind and inure to the benefit of,
the heirs, executors, administrators, legal representatives, successors and
assigns of the parties.
5.6 Captions. The captions appearing at the commencement of the
Articles, Sections and paragraphs hereof are descriptive only and for
convenience in reference to this Agreement and in no way whatsoever define,
limit or describe the scope or intent of this Agreement, nor in any way affect
this Agreement.
5.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an executed original and all of which together shall
constitute one and the same instrument.
5.8 Attorneys' Fees. In the event of litigation, the prevailing party
shall be entitled to recover its reasonable attorneys' fees and costs, whether
or not the litigation is prosecuted to judgment.
5.9 Further Assurances. The parties hereto shall take any actions
necessary on or after the date hereof which may be required to effectuate the
terms of this Agreement.
5.10 Notices. All notices or other communications between HHP and RASLP
required or permitted hereunder shall be in writing and personally delivered or
sent by certified United States mail, return receipt requested, postage
prepaid, to the following address (until a notice of change thereof shall
have been delivered as provided in this Section 5.10):
If to HHP: HOWARD HUGHES PROPERTIES,
LIMITED PARTNERSHIP
3800 Howard Hughes Parkway, Suite 1700
Las Vegas, Nevada 89109
Attn: General Counsel
If to RASLP: THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
1512 Larimer Street, Suite 300
Denver, Colorado 80202
Attention: Mr. John J. Tipton, Esq.
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With a copy to: BAKER & HOSTETLER
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
Attention: Victor L. Wallace, II
and a copy to: GORDON & SILVER, LTD.
3800 Howard Hughes Parkway, 14th Floor
Las Vegas, Nevada 89109
Attention: Jeffrey A. Silver
if to Escrow Holder: NEVADA TITLE COMPANY
3320 West Sahara Avenue, Suite 200
Las Vegas, Nevada 89102
Attention: Roger Waite
5.11 No Corporate, Joint Venture or Agency Intended. Neither the
execution, delivery or performance of this Agreement nor the creation,
transfer, assignment or existence of the Royalty Fee nor the consummation of
any of the transactions contemplated hereby is intended, nor will the same be
deemed or construed, to create a fiduciary relationship, corporate, joint
venture, agency or common interest in profits or income between RASLP and HHP
or to create an equity in HHP or to make HHP in any way responsible for the
debts or losses of RASLP, including those attributable to the Initial Project.
RASLP and HHP hereby disclaim any sharing of liabilities, losses or expenses
relating to the matters covered hereby.
5.12 Term. The term of this Agreement (the "Term") shall commence upon
mutual execution and shall continue for a period of ninety-nine (99) years
thereafter unless sooner terminated in accordance with Sections 2.9 or 2.10
above.
5.13 Force Majeure. The time period for the performance of any
non-monetary obligation under this Agreement shall be extended for any period
that such performance is delayed or becomes impossible due to any Act of God,
war, civil insurrection, riot, earthquake, fire, weather, sickness, accident,
epidemic, act of government or government regulation, general or sympathetic
strike or lockout, unavailability of labor or materials, or any other cause
beyond the control of a party to this Agreement including, without limitation,
delays occasioned by the investigation of RASLP or one of the following three
entities: (i) Seven Circle Resorts of Nevada, Inc., (ii) Seven Circle Gaming
Corporation, or (iii) Seven Circle Resorts, Inc. by the State Gaming Control
Board provided that RASLP is cooperating with such investigation.
5.14 Undertaking of HHP. HHP undertakes and agrees to cause the Golf
Course Agreement to be modified prior to the contemplated assignment of the
Golf Course Agreement to RASLP to revise the description of the Resort Parcel
(as defined in the Golf Course Agreement) to include the Property.
5.15 Construction. Whenever the consent of a party to this Agreement is
required pursuant to this Agreement or any related agreement, such consent
shall, in all cases, not be unreasonably withheld or delayed.
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5.16 Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HHP: RASLP:
HOWARD HUGHES, PROPERTIES, LIMITED THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP, a Delaware limited partnership PARTNERSHIP, a Nevada limited
partnership
By its sole general partner, By its general partner, The
THE HOWARD HUGHES CORPORATION, Resort at Summerlin, Inc., a
a Delaware corporation Nevada corporation
By: /s/ John A. Kilduff By: /s/ John J. Typton
- -------------------------------- ------------------------------
Name: John A. Kilduff Name: John J. Typton
- -------------------------------- ------------------------------
Title: Executive Vice President Title: Senior Vice-President
- -------------------------------- ------------------------------
<PAGE> 10
ATTACHMENT "A"
ATTACHMENT "A"
TO ROYALTY AGREEMENT
DESCRIPTION OF THE "PROPERTY"
SALE PARCEL
ALL OF PARCEL 1 AS SHOWN BY MAP THEREOF ON FILE IN FILE 82, PAGE 64 OF PARCEL
MAPS IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA LYING WITHIN
THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 29, TOWNSHIP 20 SOUTH, RANGE 60 EAST,
M.D.M. CITY OF LAS VEGAS, CLARK COUNTY, NEVADA.
OPTION PARCEL
ALL OF PARCEL 2 AS SHOWN BY MAP THEREOF ON FILE IN FILE 82, PAGE 64 OF PARCEL
MAPS IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA LYING WITHIN
THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 29 AND THE SOUTHEAST QUARTER (SE 1/4)
OF SECTION 30, TOWNSHIP 20 SOUTH, RANGE 60 EAST, M.D.M., CITY OF LAS VEGAS,
CLARK COUNTY, NEVADA.
<PAGE> 11
ATTACHMENT "B"
ATTACHMENT "B"
TO ROYALTY AGREEMENT
DESCRIPTION OF THE PLANNED COMMUNITY
That parcel of land situated in the County of Clark, State of Nevada, described
as portions of particular Townships and Ranges of M.D.B.& M., as follows:
Township 20 South, Range 60 East, M.D.M.
All of Sections 19 and 30;
AND
The West 1/2 of Section 29;
TOGETHER WITH AND INCLUDING
Those certain portions of Sections 17, 18, 20 and 21, as shown in File 54 of
Parcel Maps, at page 82, Official Records, Clark County, Nevada
Township 20 South, Range 59 East, M.D.M.
All of Sections 15, 21, 22, 25, 26, 27, 28, 29, 33, 34, 35 and 36;
AND
The South 1/2 of Section 16;
AND
The Southeast 1/4 of Section 17;
AND
The South 1/2 and the Northeast 1/4 of Section 20;
TOGETHER WITH AND INCLUDING
That portion of Section 13, being a part of Parcel 4 as shown in File 54 of
Parcel Maps, at Page 82, Official Records, Clark County, Nevada;
AND
That portion of Section 13, being a part of Parcel 4 as shown by an Amended
Plat in File 78 of Parcel Maps, at Page 57, Official Records, Clark County,
Nevada;
AND
That portion of Section 14, being a part of Parcel 2 and Parcel 4 as shown by
an Amended Plat in File 78 of Parcel Maps, at Page 57, Official Records, Clark
County, Nevada;
AND
All of Sections 23 and 24, except Parcel 3 as shown by an Amended Plat in File
78 of Parcel Maps, at Page 57, Official Records, Clark County, Nevada;
AND
That portion of Section 32, being Parcel 3 as shown in File 58 of Parcel Maps,
at Page 27, Official Records, Clark County, Nevada.
EXCEPTING FROM THE ABOVE DESCRIBED PARCEL OF LAND those certain portions of
land more particularly described as follows:
Township 21 South, Range 59 East, M.D.M.
All of Sections 1, 2, 12, 13, 14, 23 and 24;
AND
The North 1/2 of the North 1/2 of Section 3;
AND
The North 1/2 of the Northeast 1/4 of Section 4;
Page 11
<PAGE> 12
AND
The East 1/2, and the East 1/2 of the West 1/2, and the East 1/2 of the West
1/2 of the West 1/2, and the West 1/2 of the Southwest 1/4 of the Southwest
1/4, and the Northwest 1/4 of the Northwest 1/4 of the Northwest 1/4 of Section
11;
AND
All of Section 25, except the West 1/2 of the Southwest 1/4 of the Southwest
1/4, and also excepting the Southwest 1/4 of the Northwest 1/4 of the Southwest
1/4 of said Section 25;
AND
The North 1/2 of the Northeast 1/4, and the North 1/2 of the South 1/2 of the
Northeast 1/4, and the East 1/2 of the Northeast 1/4 of the Northwest 1/4 of
Section 36;
TOGETHER WITH AND INCLUDING
That portion of Section 4, being Parcel 4 as shown in File 58 of Parcel Maps,
at Page 27, Official Records, Clark County, Nevada.
Page 12
<PAGE> 1
Exhibit 10.6
GUARANTY OF COMPLETION
FOR VALUE RECEIVED, this GUARANTY OF COMPLETION (this "Guaranty") is
entered into this 22nd day of December, 1997 by J.A. Jones, Inc., a Delaware
corporation ("Guarantor") in favor of (i) the lenders to a certain Credit
Agreement dated as of ___ of December ____, 1997, including Glaicher Natwest,
Inc., as Arranging Agent, National Westminster Bank PLC as Administrative Agent
(collectively "Lenders"), and (ii) the Resort at Summerlin L.P., a Nevada
Limited Partnership (the "Owner").
WHEREAS, Owner has entered into a Guaranteed Maximum Price Construction
Management Contract dated as of December 22, 1997 (the "Construction Management
Contract") pursuant to which J.A. Jones Construction, a North Carolina
Corporation (the "Construction Manager") has agreed to act as agent for the
Owner and to provide certain construction services on behalf of Owner with
respect to the construction of the Resort at Summerlin (the "Project") located
in Las Vegas, Nevada; and
WHEREAS, Guarantor is executing this Guaranty to induce Owner to retain
Construction Manager to construct the Project in accordance with the
Construction Management Contract and to induce the Lenders to make various loans
to Owner to finance said Project; and
WHEREAS, Owner agrees to use the proceeds obtained from Lenders (together
with contributed equity) to finance the construction of the Project including
Owner's monetary and non-monetary obligations to Construction Manager pursuant
to the Construction Management Contract; and
WHEREAS, Guarantor is executing this Guaranty in reliance upon Lenders
providing financing for the benefit of the Project in a sum not less than two
hundred million dollars ($200,000,000) and Owner contributing equity for the
benefit of the Project in a sum not less than sixty seven million dollars
($67,000,000).
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Guarantor hereby agrees as follows:
1. The Guarantor hereby binds itself, its successors and assigns to
the Owner and Lenders for the performance and completion of the Construction
Management Contract, which is incorporated herein by reference.
2. If the Construction Manager performs and completes the
Construction Management Contract, the Guarantor shall have no obligation under
this Guaranty, except to participate in conferences as provided in Subparagraph
3.1.
3. If there is no Owner Default, the Guarantor's obligation under
this Guaranty shall arise after:
<PAGE> 2
3.1 The Owner has notified the Construction Manager (at the address
set forth in the Construction Management Contract) and the Guarantor at its
address set forth below that the Owner is considering declaring a Construction
Manager Default and has requested and attempted to arrange a conference with
the Construction Manager and the Guarantor to be held not later than fifteen
days after receipt of such notice to discuss methods of performing the
Construction Management Contract. If the Owner, the Construction Manager and the
Guarantor agree, the Construction Manager shall be allowed a reasonable time to
perform the Construction Management Contract, but such an agreement shall not
waive the Owner's right, if any, subsequently to declare a Construction Manager
Default; and
3.2 The Owner has declared a Construction Manager Default and
formally terminated the Construction Manager's right to complete the Contract
in accordance with the terms of the Construction Management Contract. Such
Construction Manager Default shall not be declared earlier than twenty days
after the Construction Manager and the Guarantor have received notice as
provided in Subparagraph 3.1; and
3.3 The Owner has agreed to pay the Balance of the Contract Price to
the Guarantor in accordance with the terms of the Construction Management
Contract.
4. When the Owner has satisfied the conditions of Paragraph 3, the
Guarantor shall promptly and at the Guarantor's cost and expense take one of the
following actions:
4.1 Arrange for the Construction Manager, with consent of the Owner,
to perform and complete the Construction Management Contract; or
4.2 Undertake to perform and complete the Construction Management
Control itself, through its agents or through independent contractors; or
4.3 Obtain bids or negotiated proposals from qualified contractors
acceptable to Owner for a contract for performance and completion of the
Construction Management Contract, arrange for a contract to be prepared for
execution by the Owner and the contractor selected with the Owner's concurrence
to be secured with performance and payment bonds executed by a qualified
surety, and pay to the Owner the amount of damages (if any) as described in
Paragraph 6 in excess of the Balance of the Contract Price incurred by the
Owner resulting from the Construction Manager's default; or
4.4 Waive its right to perform and complete, arrange for completion,
or obtain a new contractor and with reasonable promptness under the
circumstances:
.1 After investigation, determine the amount for which it may
be liable to the Owner and, as soon as practicable after the
amount is determined, tender payment therefor to the Owner; or
2
<PAGE> 3
.2 Deny liability in whole or in part and notify the Owner
citing reasons therefor.
5. If the Guarantor does not proceed as provided in Paragraph 4 with
reasonable promptness, the Guarantor shall be deemed to be in default on this
Guaranty fifteen days after receipt of an additional written notice from the
Owner to the Guarantor demanding that the Guarantor perform its obligations
under this Guaranty, and the Owner shall be entitled to enforce any remedy
available to the Owner. If the Guarantor proceeds as provided in Subparagraph
4.4, and the Owner refuses the payment tendered or the Guarantor has denied
liability, in whole or in part, without further notice the Owner shall be
entitled to enforce any remedy available to the Owner.
6. After the Owner has terminated the Construction Manager's right to
complete the Construction Management Contract, and if the Guarantor elects to
act under Subparagraph 4.1, 4.2, or 4.3 above, then the responsibilities of the
Guarantor to the Owner shall not be greater than those of the Construction
Manager under the Construction Management Contract, and the responsibilities of
the Owner to the Guarantor shall not be greater than those of the Owner under
the Construction Management Contract. Subject to commitment by the Owner of the
Balance of the Contract Price to mitigation of costs and damages on the
Construction Management Contract, the Guarantor is obligated without duplication
for the liabilities of the Construction Manager under the Construction
Management Contract including:
6.1 The responsibilities of the Construction Manager for
correction of defective work and completion of the Construction Management
Contract:
6.2 Subject to the limitations of the Construction Manager
Contract, additional legal, design, professional and delay costs resulting from
the Construction Manager's Default, and resulting from the actions or failure of
the Guarantor under Paragraph 4; and
6.3 Liquidated damages, caused by delayed performance or
non-performance of the Construction Manager to the extent provided for in the
Construction Management Contract.
7. The Guarantor shall not be liable to the Owner or others for
obligations of the Construction Manager that are unrelated to the Construction
Management Contract, and the Balance of the Contract Price shall not be reduced
or set off on account of any such unrelated obligations. No right of action
shall accrue on this Guaranty to any person or entity other than the Owner,
Lenders or their heirs, executors, administrators or successors.
8. The Guarantor hereby waives notice of any change, including
changes of time, to the Construction Management Contract or to related
subcontractors, purchase orders and other obligations, provided any such changes
or changes of time were approved with the prior written consent of Lenders.
3
<PAGE> 4
9. Any proceeding, legal or equitable, under this Guaranty may be
instituted in any court of competent jurisdiction in the location in which the
work or part of the work is located and shall be instituted within two years
after the Construction Manager Default or within two years after the
Construction Manager ceased working or within two years after the Guarantor
refuses or fails to perform its obligations under this Guaranty, whichever
occurs first. Except to the extent set forth herein, any non-jurisdictional
defense which would be available to Construction Manager shall be available to
Guarantor in any action or proceeding by Owner or Lenders.
10. Notice to the Guarantor shall be mailed or delivered to the
address shown on the signature page. Notice on the Owner and the Construction
Manager shall be mailed or delivered to the addresses shown on the Construction
Management Contract. Notice to the Lenders shall be mailed or delivered as
follows: Gleicher Natwest, Inc., 660 Madison Avenue, 19th Floor, New York, New
York, 10021, Attention: Roger Holt and National Westminster Bank PLC, 175 Water
Street, New York, New York, 10038, Attention: Ronan Agnew.
11. Assignment to Lenders.
11.1 Guarantor recognizes and agrees that the Construction
Management Contract may be assigned to the Lenders as provided for in the
Construction Management Contract provided Lenders agree to pay Construction
Manager all sums then due and owing and, in the event thereof, Guarantor hereby
consents to such assignment and agrees that the terms of this Guaranty shall
not be modified or impaired by any such assignment as Lenders are, and shall be,
express beneficiaries of this Guaranty.
12. Definitions.
12.1 Balance of the Contract Price: The total amount payable by
the Owner to the Construction Manager under the Construction Management Contract
after the proper adjustments have been made, including allowance to the
Construction Manager of any amounts received or to be received by the Owner in
settlement of insurance or other claims for damages to which the Construction
Manager is entitled, reduced by all valid and proper payments made to or on
behalf of the Construction Manager under the Construction Management Contract.
12.2 Construction Management Contract: The agreement between the
Owner and the Construction Manager, including all Contract Documents and changes
thereto.
12.3 Construction Manager Default: Failure of the Construction
Manager, which has neither been remedied nor waived, to perform or otherwise to
comply with the terms of the Construction Management Contract.
4
<PAGE> 5
12.4 Owner Default: Failure of the Owner, which has neither been
remedied nor waived, to pay the Construction Manager as required by the
Construction Management Contract or to perform and complete or comply with the
other terms thereof.
GUARANTOR
J.A. JONES, INC.
a Delaware Corporation
/s/ James A. Bowden
-------------------------------
Name and Title: James A. Bowden
Sr. V.P. & CFO
Address: J.A. Jones Drive, Charlotte, NC
22 Dec 1997
<PAGE> 1
EXHIBIT 10.7
================================================================================
CREDIT AGREEMENT
among
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
VARIOUS LENDING INSTITUTIONS,
GLEACHER NATWEST, INC.
AS ARRANGING AGENT,
and
NATIONAL WESTMINSTER BANK PLC,
AS ADMINISTRATIVE AGENT
------------------------------------
Dated as of December 30, 1997
------------------------------------
$100,000,000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Amount and Terms of Credit............................................ 1
1.01 Commitment.......................................................... 1
1.02 Minimum Borrowing Amounts, etc...................................... 2
1.03 Notice of Borrowing, etc............................................ 2
1.04 Disbursement of Funds............................................... 3
1.05 Notes............................................................... 3
1.06 Conversions......................................................... 4
1.07 Pro Rata Borrowings................................................. 5
1.08 Interest............................................................ 5
1.09 Interest Periods.................................................... 6
1.10 Increased Costs, Illegality, etc.................................... 7
1.11 Compensation........................................................ 10
1.12 Change of Lending Office............................................ 10
1.13 Replacement of Lenders.............................................. 10
1.14 Joint and Several................................................... 11
SECTION 2. Fees; Commitments..................................................... 11
2.01 Fees................................................................ 11
2.02 Voluntary Reduction of Commitments.................................. 12
2.03 Mandatory Adjustments of Commitments, etc........................... 12
SECTION 3. Payments.............................................................. 13
3.01 Voluntary Prepayments............................................... 13
3.02 Mandatory Prepayments............................................... 13
3.03 Method and Place of Payment......................................... 16
3.04 Net Payments........................................................ 16
SECTION 4. Conditions Precedent.................................................. 18
4.01 Conditions Precedent to Closing Date................................ 18
4.02 Conditions Precedent to All Loans................................... 25
SECTION 5. Representations, Warranties and Agreements............................ 26
5.01 Status.............................................................. 26
5.02 Power and Authority................................................. 26
5.03 No Violation........................................................ 26
5.04 Litigation.......................................................... 26
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
5.05 Use of Proceeds; Margin Regulations................................. 27
5.06 Governmental Approvals.............................................. 27
5.07 Investment Company Act.............................................. 27
5.08 Project Documents................................................... 27
5.09 True and Complete Disclosure........................................ 27
5.10 Financial Statements................................................ 28
5.11 Security Interests.................................................. 29
5.12 Representations and Warranties in Project Documents................. 29
5.13 Tax Returns and Payments............................................ 29
5.14 Compliance with ERISA............................................... 29
5.15 Subsidiaries........................................................ 30
5.16 Intellectual Property............................................... 30
5.17 Environmental Matters............................................... 30
5.18 Properties.......................................................... 31
5.19 Labor Relations..................................................... 31
5.20 Compliance with Statutes, etc....................................... 32
5.21 Access; Utilities................................................... 32
SECTION 6. Affirmative Covenants................................................. 33
6.01 Information Covenants............................................. 33
6.02 Books, Records and Inspections...................................... 35
6.03 Insurance........................................................... 36
6.04 Payment of Taxes.................................................... 37
6.05 Corporate Franchises................................................ 37
6.06 Compliance with Statutes, etc....................................... 37
6.07 Good Repair......................................................... 38
6.08 End of Fiscal Years; Fiscal Quarters................................ 38
6.09 Additional Security; Further Assurances............................. 38
6.10 ERISA............................................................... 39
6.11 Compliance with Environmental Laws.................................. 40
6.12 Construction of Improvements, etc................................... 40
SECTION 7. Negative Covenants.................................................... 42
7.01 Changes in Business................................................. 42
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc.............. 42
7.03 Liens............................................................... 43
7.04 Indebtedness........................................................ 45
7.05 Capital Expenditures................................................ 45
7.06 Advances, Investments and Loans..................................... 45
7.07 Creation of Subsidiaries............................................ 46
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.08 Prepayments of Indebtedness, etc.................................... 46
7.09 Dividends, etc...................................................... 47
7.10 Transactions with Affiliates........................................ 48
7.11 Interest Coverage Ratio............................................. 48
7.12 Leverage Ratio...................................................... 49
7.13 Fixed Charge Coverage Ratio......................................... 49
7.14 Limitation on Issuance of Stock..................................... 49
SECTION 8. Events of Default..................................................... 49
8.01 Payments............................................................ 50
8.02 Representations, etc................................................ 50
8.03 Covenants........................................................... 50
8.04 Default Under Other Agreements...................................... 50
8.05 Bankruptcy, etc..................................................... 50
8.06 ERISA............................................................... 51
8.07 Security Documents.................................................. 51
8.08 Subsidiary Guaranty................................................. 51
8.09 Judgments........................................................... 52
8.10 Project Documents................................................... 52
8.11 Gaming Authority.................................................... 52
8.12 Commencement Date................................................... 52
SECTION 9. Definitions........................................................... 53
SECTION 10. The Administrative Agent............................................. 76
10.01 Appointment........................................................ 76
10.02 Nature of Duties................................................... 76
10.03 Lack of Reliance on the Agents..................................... 77
10.04 Certain Rights of the Agents....................................... 77
10.05 Reliance........................................................... 77
10.06 Indemnification.................................................... 78
10.07 The Agents in Their Individual Capacities.......................... 78
10.08 Holders............................................................ 78
10.09 Resignation by an Agent............................................ 78
SECTION 11. Miscellaneous........................................................ 79
11.01 Payment of Expenses, etc........................................... 79
11.02 Right of Setoff.................................................... 80
11.03 Notices............................................................ 80
11.04 Benefit of Agreement............................................... 81
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
11.05 No Waiver; Remedies Cumulative..................................... 83
11.06 Payments Pro Rata.................................................. 83
11.07 Calculations; Computations......................................... 84
11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial........................................................ 84
11.09 Counterparts....................................................... 85
11.10 Effectiveness...................................................... 85
11.11 Headings Descriptive............................................... 85
11.12 Amendment or Waiver................................................ 85
11.13 Survival........................................................... 86
11.14 Domicile of Loans.................................................. 86
11.15 Confidentiality.................................................... 86
11.16 Lender Register.................................................... 86
11.17 Gaming Authorities, etc............................................ 87
</TABLE>
ANNEX I -- Commitments
ANNEX II -- Lenders and Agents Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Existing Investments
ANNEX X -- Litigation
EXHIBIT A-1 -- Form of Notice of Construction Loans
EXHIBIT A-2 -- Form of Notice of Term Conversion
EXHIBIT A-3 -- Form of Notice of Revolving Loans
EXHIBIT B-1 -- Form of First Mortgage Note
EXHIBIT B-2 -- Form of Revolving Note
EXHIBIT C -- Form of Section 3.04 Certificate
EXHIBIT D-1 -- Form of Opinion of Lionel Sawyer & Collins
EXHIBIT D-2 -- Form of Opinion of White & Case
EXHIBIT D-3 -- Form of Opinion of Schreck and Morris
EXHIBIT E -- Form of Officer's Certificate
EXHIBIT F-1 -- Form of Disbursement Agreement
EXHIBIT F-2 -- Form of Mortgage Notes Proceeds Agreement
EXHIBIT F-3 -- Form of Interest Escrow Agreement
(iv)
<PAGE> 6
EXHIBIT F-4 -- Form of CC Continuation Agreement
EXHIBIT G -- Form of Subsidiary Guaranty
EXHIBIT H -- Form of Pledge Agreement
EXHIBIT I -- Form of Security Agreement
EXHIBIT J -- Form of Consent Letter
EXHIBIT K -- Form of Assignment Agreement
(v)
<PAGE> 7
CREDIT AGREEMENT, dated as of December 30, 1997, among THE RESORT AT
SUMMERLIN, LIMITED PARTNERSHIP, a Nevada limited partnership, THE RESORT AT
SUMMERLIN, INC., a Nevada corporation, the lenders from time to time party
hereto (each, a "Lender" and, collectively, the "Lenders"), GLEACHER NATWEST,
INC., as Arranging Agent (the "Arranging Agent"), and NATIONAL WESTMINSTER BANK
PLC, as Administrative Agent (the "Administrative Agent" and together with the
Arranging Agent, collectively, the "Agents"). Unless otherwise defined herein,
all capitalized terms used herein and defined in Section 10 are used herein as
so defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set forth,
the Lenders are willing to make available to the Borrowers the credit facilities
provided for herein; and
NOW, THEREFORE, IT IS AGREED:
1. Amount and Terms of Credit
1.01 Commitment. Subject to and upon the terms and conditions
herein set forth:
(a) Each MN Lender severally agrees to make a loan (each a
"Construction Loan" and, collectively, the "Construction Loans") to the
Borrowers on one or more Drawdown Dates, which Construction Loans (i)
except as hereinafter provided, may, at the option of the Borrower, be
incurred and maintained as, and/or converted into, Base Rate Loans or
LIBOR Loans, provided that all Construction Loans made pursuant to the
same Borrowing shall, unless otherwise specifically provided herein,
consist entirely of Loans of the same Type, (ii) shall not exceed in
aggregate outstanding principal amount for any MN Lender after giving
effect to any incurrence of Construction Loans the MN Commitment of such
Lender then in effect and (iii) shall not exceed in aggregate principal
amount for all Construction Loans made by all Lenders on any Drawdown Date
the Drawdown Amount for such date. Each Lender with an MN Commitment-A
shall make a Construction Loan or Loans on the Closing Date in the full
amount of its MN Commitment-A, while each Lender with an MN Commitment-B
will only make Construction Loans under such MN Commitment-B on Drawdown
Dates occurring after the Closing Date. Once repaid, Construction Loans
may not be reborrowed.
<PAGE> 8
(b) All the Construction Loans of each MN Lender outstanding on
the Conversion Date shall be converted into a term loan or loans (each a
"Term Loan" and, collectively, the "Term Loans"), which Term Loans may,
except as hereinafter provided, be maintained as, and/or converted into,
Base Rate Loans or LIBOR Loans, provided that (i) the Interest Periods
applicable to Construction Loans that are LIBOR Loans on the Conversion
Date shall continue in effect for the Term Loans resulting from the
conversion thereof until the stated expiration of such Interest Periods
and (ii) all Term Loans made pursuant to the same Borrowing shall, unless
specifically provided herein, consist entirely of Loans of the same Type.
Once repaid, Term Loans may not be reborrowed.
(c) The RC Lender is to make revolving loans (each a "Revolving
Loan" and, collectively, the "Revolving Loans") to the Borrowers from time
to time on and after the Conversion Date and prior to the Final Maturity
Date, which Revolving Loans (i) except as hereinafter provided, may, at
the option of the Borrowers, be incurred and maintained as, and/or
converted into, Base Rate Loans or LIBOR Loans, provided that all
Revolving Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Revolving Loans of the same Type,
(ii) may be repaid and reborrowed in accordance with the provisions hereof
and (iii) shall not exceed in principal amount at the time of incurrence
thereof the RC Commitment at such time.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount for such
Borrowing. More than one Borrowing may be incurred on any day, provided that at
no time shall there be outstanding more than four Borrowings of LIBOR Loans.
1.03 Notice of Borrowing, etc. (a) At least three Business Days
(one Business Day in the case of the Closing Date) prior to each Drawdown Date
on which the Borrowers desire to incur Construction Loans, the Borrowers shall
give the Administrative Agent at its Notice Office a written notice in the form
of Exhibit A-1 hereto (each a "Notice of Construction Loans"), which notice must
be accompanied by a Consultant's Confirmation.
(a) At least three Business Days prior to the Conversion Date, the
Administrative Agent shall have received a written notice of confirmation in the
form of Exhibit A-2 hereto (the "Notice of Term Conversion") executed by the
Borrowers with respect to the conversion of Construction Loans into Term Loans
to be made on the Conversion Date.
-2-
<PAGE> 9
(b) Whenever the Borrowers desire to incur Revolving Loans, they
shall give the Administrative Agent at its Notice Office at least three Business
Days' prior written notice in the form of Exhibit A-3 hereof (each a "Notice of
Revolving Loans").
(c) Each Notice of Borrowing given pursuant to this Section 1.03
shall be irrevocable.
(d) Without in any way limiting the obligation of the Borrowers to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the
Administrative Agent in good faith to be from an Authorized Officer of each of
the Borrowers. In each such case, the Borrowers hereby waive the right to
dispute the Administrative Agent's record of the terms of such telephonic
notice.
1.04 Disbursement of Funds. (a) No later than 12:00 noon (New York
time) on the Drawdown Date specified in a Notice of Construction Loans, each
Lender will make available its share (as described in Section 1.07) of the
Construction Loans to be made on such date in the manner provided below. All
such amounts shall be made available to the Administrative Agent in U.S. dollars
and immediately available funds at the Payment Office and the Administrative
Agent promptly will deposit in the Mortgage Notes Proceeds Account the aggregate
of the amounts so made available in the type of funds received.
(a) No later than 12:00 Noon (New York time), on the date
specified in each Notice of Revolving Loans, the RC Lender will make available
the Revolving Loans requested to be made on such date to the Administrative
Agent in U.S. dollars and immediately available funds at the Payment Office and
the Administrative Agent promptly will deposit in the Borrowers' account at the
Payment Office the amount so made available by the RC Lender in the type of
funds received.
(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights,
which the Borrowers may have against any Lender as a result of any default by
such Lender hereunder.
1.05 Notes. (a) The Borrowers' obligation to pay the principal of,
and interest on, the Loans made to it by each Lender shall be evidenced (i) if
Construction Loans and/or Term Loans, by a promissory note substantially in the
form of Exhibit B-1 with blanks appropriately completed in conformity herewith
(each, a "First Mortgage Note" and, collectively, the "First Mortgage Notes")
and (ii)
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<PAGE> 10
if Revolving Loans, by a promissory note substantially in the form of Exhibit
B-2 with blanks appropriately completed in conformity herewith (each, a
"Revolving Note" and, collectively, the "Revolving Notes").
(a) The First Mortgage Note issued to an MN Lender shall (i) be
executed by the Borrowers, (ii) be payable to the order of such MN Lender and be
dated the Closing Date, (iii) be in a stated principal amount equal to the MN
Commitment of such Lender (or in the case of a new First Mortgage Note issued
after the Conversion Date, the Term Loans evidenced thereby at the time of
issuance) and be payable in the principal amount of the Construction Loans or
Term Loans evidenced thereby, (iv) mature on the Final Maturity Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and LIBOR Loans, as the case may be, evidenced thereby, (vi) be
subject to mandatory repayment as provided in Section 3.02 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(b) The Revolving Note issued to the RC Lender shall (i) be
executed by the Borrowers, (ii) be payable to the order of the RC Lender and be
dated the Conversion Date, (iii) be in a stated principal amount equal to the RC
Commitment and be payable in the principal amount of the Revolving Loans
evidenced thereby, (iv) mature on the Final Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base Rate
Loans and LIBOR Loans, as the case may be, evidenced thereby, (vi) be subject to
mandatory repayment as provided in Section 3.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(c) Each Lender will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrowers' obligations in respect of the
Loans made and not repaid.
1.06 Conversions. The Borrowers shall have the option to convert on
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans owing pursuant
to a single Facility into a Borrowing or Borrowings pursuant to such Facility of
another Type of Loan, provided that (i) no partial conversion of a Borrowing of
LIBOR Loans shall reduce the outstanding principal amount of the LIBOR Loans
made pursuant to such Borrowing to less than the Minimum Borrowing Amount
applicable thereto, (ii) Base Rate Loans may not be converted into LIBOR Loans
if a Default under Section 8.01 or an Event of Default is then in existence and
the Administrative Agent or the Required Lenders shall have determined in its or
their sole discretion not to permit such conversion and (iii) Borrowings of
LIBOR Loans resulting from this Section
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1.06 shall be limited in number as provided in Section 1.02. Each such
conversion shall be effected by the Borrowers giving the Administrative Agent at
its Notice Office, prior to 12:00 Noon (New York time), at least three Business
Days' (or two Business Days', in the case of a conversion into Base Rate Loans)
prior written notice (or telephonic notice promptly confirmed in writing) (each,
a "Notice of Conversion") specifying the Loans to be so converted, the Type of
Loans to be converted into and, if to be converted into a Borrowing of LIBOR
Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Lender prompt notice of any such proposed
conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. (a) Each Lender will fund its MN
Commitment-A in full on the Closing Date. All Construction Loans made after the
Closing Date shall be made by each Lender pro rata on the basis of its
respective MN Commitment-B. All Revolving Loans shall be made by the RC Lender.
It is understood that no Lender shall be responsible for any default by any
other Lender in its obligation to make Loans hereunder and that each Lender
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fulfill its commitments
hereunder.
(b) If after giving effect to all Construction Loans made on the
Last Drawdown Date the B Lenders have remaining unutilized MN Commitments
(before any reduction thereto is effected pursuant to Section 2.03(c))
aggregating at least $1,000,000, then each B Lender will purchase from each A
Lender an assignment of such A Lender's Construction Loans in such principal
amount as will result in the percentage obtained by dividing the principal of
the Construction Loans of an MN Lender by its MN Commitment being the same for
each MN Lender. Such assignments will be effected pursuant to Section 11.04 but
without any processing fee being paid to the Administrative Lender.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(a) The unpaid principal amount of each LIBOR Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus LIBOR.
(b) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the Base Rate Margin plus 2.0%, provided that each
LIBOR Loan shall bear
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<PAGE> 12
interest after maturity (whether by acceleration or otherwise) until the end of
the Interest Period applicable to it at such maturity at a rate per annum equal
to 2.0% in excess of the rate of interest applicable thereto at such maturity.
In addition, the Applicable Margin for all Loans not covered by the preceding
sentence shall increase by 2% during each period when any of the covenants
specified in Section 7.11 to 7.14 are defaulted (i.e., commencing on the first
day of any such default and continuing until the last day of the first quarter
thereafter on which all of the covenants specified in Sections 7.11 through 7.13
are satisfied (or if earlier on the date on which common equity contributions
have been made to the Partnership that cure all the aforesaid defaults on a pro
forma basis)).
(c) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect of
each LIBOR Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, on any prepayment or conversion under Section
1.06 (other than the prepayment or conversion of any Base Rate Loan) (on the
amount prepaid or converted), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(d) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(e) The Administrative Agent, upon determining the interest rate
for any Borrowing of LIBOR Loans for any Interest Period, shall promptly notify
the Borrowers and the Lenders thereof.
1.09 Interest Periods. (a) At the time the Borrowers give a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of LIBOR Loans (in the case of the initial Interest Period
applicable thereto) or prior to 12:00 Noon (New York time) on the third Business
Day prior to the expiration of an Interest Period applicable to a Borrowing of
LIBOR Loans, they shall have the right to elect by giving the Administrative
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, three or, if after the Conversion Date,
six month period. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of LIBOR Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
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<PAGE> 13
occurring thereafter in respect of such Borrowing shall commence on the
day on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period with respect to a Borrowing of Revolving
Loans may be elected that would extend beyond the Final Maturity Date;
(v) no Interest Period with respect to any Borrowing of Term Loans
may be elected that would extend beyond any date upon which a Scheduled
Repayment is required to be made if, after giving effect to the selection
of such Interest Period, the aggregate principal amount of Term Loans
maintained as LIBOR Loans with Interest Periods ending after such date
would exceed the aggregate principal amount of Term Loans permitted to be
outstanding after such Scheduled Repayment; and
(vi) no Interest Period may be elected if a Default under Section
9.01 or an Event of Default is then in existence and the Administrative
Agent or the Required Lenders shall have determined in its or their sole
discretion not to permit such election.
(b) If upon the expiration of any Interest Period, the Borrowers
are not permitted to elect a new Interest Period to be applicable to the
respective Borrowing of LIBOR Loans, or in the case of Revolving Loans, have
failed to elect a new Interest Period to be applicable to the respective
Borrowing of LIBOR Loans, the Borrowers shall be deemed to have elected to
convert such Borrowing into a Borrowing of Base Rate Loans effective as of the
expiration date of such current Interest Period. If upon the expiration of any
Interest Period in respect of Construction Loans or Term Loans, the Borrowers
have failed to elect a new Interest Period to be applicable to the respective
Borrowing of LIBOR Loans as provided above, the Borrowers shall be deemed to
have elected a new Interest Period of one month for such Borrowing, effective as
of the expiration date of such expiring Interest Period.
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<PAGE> 14
1.010 Increased Costs, Illegality, etc. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):
(i) on any date for determining LIBOR for any Interest Period
that, by reason of any changes arising after the date of this Agreement
affecting the interbank Eurodollar market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the basis provided
for in the definition of LIBOR; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any LIBOR Loans (other than any increased cost or reduction in the amount
received or receivable resulting from the imposition of or a change in the
rate of taxes or similar charges) because of (x) any change since the
Closing Date in any applicable law, governmental rule, regulation,
guideline or order (or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to,
a change in official reserve requirements, but in any event excluding
reserves payable pursuant to Section 1.10(c)) and/or (y) other
circumstances affecting the interbank Eurodollar market; or
(iii) at any time, that the making or continuance of any LIBOR Loan
has become unlawful by compliance by such Lender in good faith with any
law, governmental rule, regulation, guideline (or would conflict with any
such governmental rule, regulation, guideline or order not having the
force of law but with which such Lender customarily complies even though
the failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the Closing
Date which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on such date and (y) within ten Business
Days of the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrowers and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders). Thereafter (x) in the case of clause (i) above,
LIBOR Loans shall no longer be available until such time as the Administrative
Agent notifies the Borrowers and the Lenders that the circumstances giving rise
to such notice by the Administrative Agent no longer exist, and any Notice of
Revolving Loans or Notice of Conversion given by the Borrowers with respect to
LIBOR Loans which have not yet been incurred shall be
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<PAGE> 15
deemed rescinded by the Borrowers (and any Notice of Construction Loans given in
respect of LIBOR Loans shall be deemed to have been given in respect of Base
Rate Loans), (y) in the case of clause (ii) above, the Borrowers shall pay to
such Lender, upon written demand therefor, such additional amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as shall be
required to compensate such Lender for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the additional amounts owed
to such Lender, showing the basis for the calculation thereof, submitted to the
Borrowers by such Lender shall, absent manifest error, be final and conclusive
and binding upon all parties hereto) and (z) in the case of clause (iii) above,
the Borrowers shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.
(b) At any time that any LIBOR Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrowers may (and
in the case of a LIBOR Loan affected pursuant to Section 1.10(a)(iii), the
Borrowers shall) either (i) if the affected LIBOR Loan is then being made
pursuant to a Notice of Revolving Loans, cancel said Loans by giving the
Administrative Agent telephonic notice (confirmed promptly in writing) thereof
on the same date that the Borrowers were notified by a Lender pursuant to
Section 1.10(a)(ii) or (iii), or (ii) convert each such LIBOR Loan into a Base
Rate Loan, provided that if more than one Lender is affected at any time, then
all affected Lenders must be treated the same pursuant to this Section 1.10(b).
(c) If any Lender shall have determined that after the Closing
Date, the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Lender or any corporation controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's or such
corporation's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender or such other
corporation could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's or such other corporation's
policies with respect to capital adequacy), then from time to time, within 15
days after demand by such Lender (with a copy to the Administrative Agent), the
Borrowers shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such other corporation for such reduction. Each
Lender, upon determining in good faith that any additional amounts will be
payable pursuant to this Section 1.10(c), will give prompt written notice
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<PAGE> 16
thereof to the Borrowers, which notice shall set forth the basis of the
calculation of such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrowers' obligations to pay
additional amounts pursuant to this Section 1.10(c) upon the subsequent receipt
of such notice.
(d) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Lender more than 180 days after such Lender obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the additional
costs of the type described in such Section, such Lender shall not be entitled
to compensation under Section 1.10, 2.06 or 4.04 for any amounts incurred or
accruing prior to the giving of such notice to the Borrowers.
1.011 Compensation. The Borrowers shall compensate each Lender, upon
its written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Lender
to fund its LIBOR Loans but excluding in any event the loss of anticipated
profits) which such Lender may sustain: (i) if for any reason (other than a
default by such Lender or the Administrative Agent) a Borrowing of LIBOR Loans
does not occur on a date specified therefor in a Notice of Borrowing or Notice
of Conversion (whether or not withdrawn by the Borrowers or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any prepayment, repayment or conversion of
any of its LIBOR Loans occurs on a date which is not the last day of an Interest
Period applicable thereto; (iii) if any prepayment of any of its LIBOR Loans is
not made on any date specified in a notice of prepayment given by the Borrowers;
or (iv) as a consequence of (x) any other default by the Borrowers to repay
LIBOR Loans when required by the terms of this Agreement or (y) an election made
pursuant to Section 1.10(b).
1.012 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), or 3.04 with respect to such Lender, it will, if requested by
the Borrowers, use reasonable efforts (subject to overall policy considerations
of such Lender) to designate another lending office for any Loans affected by
such event, provided that such designation is made on such terms that such
Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrowers or the right of any
Lender provided in Section 1.10 or 3.04.
1.013 Replacement of Lenders. (x) Upon the occurrence of any event
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giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
or Section 3.04 with respect to any Lender which results in such Lender charging
to the Borrowers increased costs in excess of those being generally charged by
the other Lenders, (y) if a Lender becomes a Defaulting Lender or a Disqualified
Lender and/or (z) in the case of a refusal by a Lender to consent to a proposed
change, waiver, discharge or termination with respect to this Agreement which
has been approved by the Required Lenders, the Borrowers shall have the right,
if no Default under Section 8.01 or Event of Default then exists, to replace
such Lender (the "Replaced Lender") with one or more other Eligible Transferees,
none of whom shall constitute a Defaulting Lender or a Disqualified Lender at
the time of such replacement (collectively, the "Replacement Lender") reasonably
acceptable to the Administrative Agent provided that (i) at the time of any
replacement pursuant to this Section 1.13, the Replacement Lender shall enter
into one or more Assignment Agreements pursuant to Section 11.04(b) (and with
all fees payable pursuant to said Section 11.04(b) to be paid by the Replacement
Lender) pursuant to which the Replacement Lender shall acquire all of the MN
Commitments, RC Commitment and outstanding Loans of, the Replaced Lender and, in
connection therewith, shall pay to (x) the Replaced Lender in respect thereof
the sum of (A) an amount equal to the principal of, and all accrued interest on,
all outstanding Loans of the Replaced Lender and (B) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Lender pursuant to
Section 3.01, and (ii) all obligations of the Borrowers owing to the Replaced
Lender (other than those specifically described in clause (i) above in respect
of which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Lender concurrently with such
replacement. Upon the execution of the respective Assignment Agreements, the
payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Lender, delivery to the Replacement Lender of the
appropriate Note or Notes executed by the Borrowers, the Replacement Lender
shall become a Lender hereunder and the Replaced Lender shall cease to
constitute a Lender hereunder, except with respect to indemnification provisions
applicable to the Replaced Lender under this Agreement, which shall survive as
to such Replaced Lender.
1.014 Joint and Several. All Loans shall be incurred by the
Borrowers on a joint and several basis, and obligations of the Borrowers
hereunder to pay any moneys shall constitute the joint and several obligations
of the Borrowers.
2. Fees; Commitments
2.01 Fees. (a) The Borrowers will pay to the Administrative Agent a
commitment fee (the "MN Commitment Fee") for the account of each MN Lender that
is a Non-Defaulting Lender for the period from and including the Closing Date
to, but not including, the Last Drawdown Date (or if earlier the date upon which
the Total MN Commitment has been terminated), computed at a per annum rate equal
to
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<PAGE> 18
0.50% multiplied by the average daily unutilized MN Commitment of such
Lender. Such MN Commitment Fees shall be due and payable in arrears on the last
Business Day of each March, June, September and December and on the Last
Drawdown Date (or if earlier the date upon which the Total MN Commitment is
terminated).
(a) The Borrowers will pay to the Administrative Agent a commitment fee (the "RC
Commitment Fee"), for the account of the RC Lender for the period from and
including the Conversion Date to, but not including, the Final Maturity Date,
computed at a per annum rate equal to 0.50% multiplied by the average daily
unutilized RC Commitment. Such RC Commitment Fees shall be due and payable in
arrears on the last Business Day of each March, June, September and December of
each year and on the date upon which the RC Commitment is terminated.
(b) The Borrowers will pay to the Administrative Agent for the pro
rata account of the MN Lenders at such time a prepayment fee (the "Prepayment
Fee") (x) on any prepayment of Construction Loans in an amount equal to 2% of
the aggregate principal of Construction Loans so repaid and (y) on any
prepayment of Term Loans prior to the second anniversary of the Conversion Date
in an amount equal to 2% of the aggregate principal of Term Loans so repaid.
(c) The Borrowers will pay to (x) each Agent on the Closing Date,
for its own account and/or for distribution to the Lenders, such fees as
heretofore agreed by the Borrowers and the Agents and (y) the Administrative
Agent from time to time when and as due, for its own account, such other fees as
agreed to between the Borrower and the Administrative Agent.
(d) All computations of Fees shall be made in accordance with
Section 11.07(b).
2.02 Voluntary Reduction of Commitments. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Administrative Agent at its Notice Office (which notice shall be promptly
transmitted by the Administrative Agent to each of the Lenders), the Borrowers
shall have the right (x) at a time when it desires to concurrently prepay all of
the outstanding Construction Loans pursuant to Section 3.01, to terminate in
full the Total MN Commitment and (y) without premium or penalty, to terminate or
partially reduce the unutilized RC Commitment, provided that any partial
reduction of the RC Commitment pursuant to this Section 3.02 shall be in the
amount of at least $1,000,000.
2.03 Mandatory Adjustments of Commitments, etc. (a) The Total MN
Commitment shall terminate in its entirety on the Expiration Date unless the
Closing Date has occurred on or before such date.
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<PAGE> 19
(a) The MN Commitment of each Lender shall be reduced on the date
any prepayment of principal of Construction Loans of such Lender is made
pursuant to Sections 3.02(A)(c), (d) or (f) in an amount equal to such
repayment.
(b) The MN Commitment of each Lender shall (i) be reduced on the
Last Drawdown Date in an aggregate amount, if any, equal to the unutilized MN
Commitment of such Lender on such date after giving effect to any incurrence of
Construction Loans on such date and (ii) terminate in its entirety on the
Conversion Date.
(c) The RC Commitment shall terminate in its entirety on the Final
Maturity Date.
(d) The Total MN Commitment (if prior to the Conversion Date) and
the RC Commitment (if on or after the Conversion Date) shall terminate on the
date a Change of Control occurs.
3. Payments.
3.01 Voluntary Prepayments. The Borrowers shall have the right to
prepay (A) Construction Loans on any Business Day upon three Business Days'
prior written notice to the Administrative Agent (which notice shall be promptly
transmitted by the Administrative Agent to each of the Lenders) provided that
all outstanding Construction Loans are repaid at such time, the Total MN
Commitment is terminated effective at such time and the Prepayment Fee resulting
from such prepayment as provided in Section 2.01(c) is paid and (B) Term Loans
and/or Revolving Loans on the following terms and conditions: (i) the Borrowers
shall give the Administrative Agent at the Payment Office at least three
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) of their intent to prepay the Loans, whether such Loans are Term Loans
or Revolving Loans, the amount of such prepayment and (in the case of LIBOR
Loans) the specific Borrowing(s) pursuant to which made (which notice shall
promptly be transmitted by the Administrative Agent to each of the Lenders);
(ii) each partial prepayment shall be in an aggregate principal amount of at
least (x) $500,000, in the case of Revolving Loans and (y) $1,000,000, in the
case of Term Loans, provided that no partial prepayment of LIBOR Loans shall
reduce the aggregate principal amount of the Loans outstanding pursuant to a
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans; (iv) each prepayment of
Term Loans prior to the second anniversary of the Conversion Date shall be
accompanied by the payment of the Prepayment Fee required by Section 2.01(c);
and (v) each prepayment
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<PAGE> 20
of Term Loans pursuant to this Section 3.01 shall reduce the remaining Scheduled
Repayments of the Term Loans [on a pro rata basis (based upon the then remaining
principal amount of each such Scheduled Repayment)].
3.02 Mandatory Prepayments
(A) Requirements:
(a) (i) If on any date the sum of the aggregate outstanding
principal amount of Revolving Loans exceeds the RC Commitment as then in
effect, the Borrowers shall repay on such date the principal of Revolving
Loans in an aggregate amount equal to such excess.
(b) On each date set forth below, the Borrowers shall be required
to repay the principal amount of Term Loans set forth opposite such date
(each such repayment, as the same may be reduced as provided in Sections
4.01 and 4.02(B), a "Scheduled Repayment"):
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
March 31, 2000 $5,000,000
June 30, 2000 $2,500,000
September 30, 2000 $2,500,000
December 31, 2000 $2,500,000
March 31, 2001 $2,500,000
June 30, 2001 $4,000,000
September 30, 2001 $4,000,000
December 31, 2001 $4,000,000
March 31, 2002 $4,000,000
June 30, 2002 $5,000,000
September 30, 2002 $5,000,000
December 31, 2002 $5,000,000
March 31, 2003 $5,000,000
June 30, 2003 $6,000,000
September 30, 2003 $6,000,000
December 31, 2003 $6,000,000
Final Maturity Date $31,000,000
</TABLE>
(c) On the Business Day following the date of receipt thereof by
any Credit Party of the Cash Proceeds from any Asset Sale, an amount equal
to 100% of the Net Cash Proceeds from such Asset Sale shall be applied as
a mandatory repayment of principal of the then outstanding Construction
Loans or Term Loans, whichever may be then outstanding, provided that the
Net Cash Proceeds from any Asset Sale shall not be required to be used to
so repay
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<PAGE> 21
Loans to the extent the Borrowers elect, as hereinafter provided, to cause
such Net Cash Proceeds to be reinvested in Reinvestment Assets (a
"Reinvestment Election"). The Borrowers may exercise a Reinvestment
Election with respect to an Asset Sale if (x) no Event of Default exists
and (y) the Borrowers deliver a Reinvestment Notice to the Administrative
Agent on or prior to the Business Day following the date of the
consummation of the respective Asset Sale, with such Reinvestment Election
being effective with respect to the Net Cash Proceeds of such Asset Sale
equal to the Anticipated Reinvestment Amount specified in such
Reinvestment Notice.
(d) On the date following the date of receipt thereof by a
Borrower, an amount equal to 100% of the proceeds (net of underwriting
discounts and commissions and other reasonable fees and costs associated
therewith) of any sale or issuance of its equity or of any equity
contribution (other than (x) equity issued as provided in Section 4.01(q)
and (y) equity issued by the Partnership to Partners to the extent the
proceeds thereof are utilized to complete the Project) shall be applied as
a mandatory repayment of principal of the Construction Loans or Term
Loans, whichever may be then outstanding.
(e) On each date which is 90 days after the last day of each
fiscal year of the Partnership (commencing with the fiscal year ended
December 31, 1999), 75% of the first $15,000,000 of Excess Cash Flow for
such fiscal year plus 25% of any Excess Cash Flow for such fiscal year in
excess of $15,000,000 shall be applied as a mandatory repayment of
principal of the then outstanding Term Loans.
(f) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment
Amount, if any, for such Reinvestment Election shall be applied as a
mandatory repayment of principal amount of the Construction Loans or Term
Loans, whichever may be then outstanding.
(g) On the date which is 30 days after the Commencement Date, all
amounts, if any, remaining on deposit in the Mortgage Notes Proceeds
Account shall be applied as a mandatory repayment of principal of the then
outstanding Term Loans (provided that if such deposited amount is less
than $500,000 then such amount shall so be applied to repay principal of
then outstanding Revolving Loans (without reducing the RC Commitments).
(h) On the Interest Escrow Termination Date, all amounts then on
deposit in the Interest Escrow Account shall be applied to repay principal
of the then outstanding Term Loans.
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(i) All outstanding Revolving Loans shall be repaid in full on the
earlier of (x) the date on which a Change of Control occurs and (y) Final
Maturity Date.
(j) All Construction Loans or Term Loans, whichever may be then
outstanding, will be repaid in full on the date on which a Change of
Control exists.
(B) Application:
(k) Each mandatory repayment of Term Loans required to be made
pursuant to Section 3.02(A)(c), (d), (e), (f), (g) and (h) shall be
applied to reduce the then remaining Scheduled Repayments on a pro rata
basis (based upon the then remaining Scheduled Repayments).
(l) With respect to each prepayment of Loans required by Section
3.02, the Borrowers may designate the Types of Loans which are to be
prepaid and the specific Borrowing(s) pursuant to which made, provided
that (i) if any prepayment of LIBOR Loans made pursuant to a single
Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount for such
Borrowing, such Borrowing shall be immediately converted into Base Rate
Loans; and (ii) each prepayment of any Loans made pursuant to a Borrowing
shall be applied pro rata among such Loans. In the absence of a
designation by the Borrowers as described in the preceding sentence, the
Administrative Agent shall, subject to the above, make such designation in
its sole discretion with a view, but no obligation, to minimize breakage
costs owing under Section 1.11.
3.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its pro rata share) account of
the Lenders entitled thereto, not later than 1:00 P.M. (New York time) on the
date when due and shall be made in immediately available funds and in lawful
money of the United States of America at the Payment Office, it being understood
that written notice by the Borrowers to the Administrative Agent to make a
payment from the funds in the Borrowers' account at the Payment Office shall
constitute the making of such payment to the extent of such funds held in such
account. Any payments under this Agreement which are made later than 1:00 P.M.
(New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
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3.04 Net Payments. (a) All payments made by the Borrowers hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 3.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction (or by any political subdivision or
taxing authority thereof or therein) with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Lender pursuant to the laws
of the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Lender is located (or any
subdivision or taxing authority thereof or therein)) and all interest, penalties
or similar liabilities with respect to such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrowers
agree to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note. If any
amounts are payable in respect of Taxes pursuant to the preceding sentence, the
Borrowers agree to reimburse each Lender, upon the written request of such
Lender, for taxes imposed on or measured by the net income or net profits of
such Lender pursuant to the laws of the jurisdiction in which such Lender is
organized or in which the principal office or applicable lending office of such
Lender is located (or of any subdivision or taxing authority therein or thereof)
and for any withholding of taxes as such Lender shall determine are payable by,
or withheld from, such Lender in respect of such amounts so paid to or on behalf
of such Lender pursuant to the preceding sentence and in respect of any amounts
paid to or on behalf of such Lender pursuant to this sentence. The Borrowers
will furnish to the Administrative Agent within 45 days after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Borrowers. The Borrowers agree to
indemnify and hold harmless each Lender, and reimburse such Lender upon its
written request, for the amount of any Taxes so levied or imposed and paid by
such Lender.
(a) Each Lender that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to deliver to the Borrowers and the Administrative Agent on or prior to
the Closing Date, or in the case of a Lender that is an assignee or transferee
of an interest under this Agreement pursuant to Section 1.13 or 11.04 (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Lender, (i) two accurate and complete
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original signed copies of Internal Revenue Service Form 4224 or 1001 (or
successor forms) certifying to such Lender's entitlement to a complete exemption
from United States withholding tax with respect to payments to be made under
this Agreement and under any Note or (ii) if the Lender is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit C (any such certificate, a
"Section 3.04 Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Lender's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each such Lender agrees that, from time to time
after the Closing Date, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect, it
will deliver to the Borrowers and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001,
or Form W-8 and a Section 3.04 Certificate, as the case may be, and such other
forms as may be required in order to confirm or establish the entitlement of
such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Borrowers and the Administrative Agent of its
inability to deliver any such Form or Certificate in which case such Lender
shall not be required to deliver any such Form or Certificate pursuant to this
Section 3.04(b). Notwithstanding anything to the contrary contained in Section
3.04(a), but subject to Section 12.04(b) and the immediately succeeding
sentence, (x) the Borrowers shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or similar taxes imposed by the
United States from interest, fees or other amounts payable hereunder for the
account of any Lender which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes to
the extent that such Lender has not provided to the Borrowers Internal Revenue
Service Forms that establish a complete exemption from such deduction or
withholding and (y) the Borrowers shall not be obligated pursuant to Section
3.04(a) hereof to gross-up payments to be made to any such Lender in respect of
income or similar taxes imposed by the United States if (I) such Lender has not
provided to the Borrowers the Internal Revenue Service Forms required to be
provided to the Borrowers pursuant to this Section 3.04(b) or (II) in the case
of a payment, other than interest, to a Lender described in clause (ii) of the
last sentence of this Section 3.04(b) above, to the extent that such Forms do
not establish a complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 3.04 and except as set forth in Section 11.04(b), the
Borrowers agree to pay additional amounts and to indemnify each Lender in the
manner set forth in Section 3.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes
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after the Closing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of such Taxes.
4. Conditions Precedent
4.01 Conditions Precedent to Closing Date. This Agreement shall
become effective on the date (the "Closing Date") on which all the following
conditions have first been satisfied:
(a) Effectiveness; Notes. On or prior to the Initial Borrowing
Date, (i) this Agreement shall have been effective as provided in Section 11.10
and (ii) there shall have been delivered to the Administrative Agent for the
account of each MN Lender a First Mortgage Note executed by the Borrowers, in
the amount, maturity and as otherwise provided herein.
(b) Opinions of Counsel. On the Closing Date, the Administrative
Agent shall have received opinions, addressed to each Agent and each of the
Lenders and dated the Closing Date, from (i) Lionel Sawyer & Collins, special
counsel to the Borrowers, which opinion shall cover the matters set forth in
Exhibit D-1 hereto, (ii) White & Case, special counsel to the Administrative
Agent, which opinion shall cover the matters set forth in Exhibit D-2 hereto and
(iii) Schreck & Morris, special Nevada counsel to the Lenders, which opinion
shall cover the matters set forth in Exhibit D-3 and, in each case, such other
matters incident to the transactions contemplated herein as the Administrative
Agent may reasonably request and all of which opinions shall be in form and
substance satisfactory to the Administrative Agent.
(c) Proceedings. (I) The Administrative Agent shall have received
a certificate, dated the Closing Date, signed by an Authorized Officer of the
General Partner in the form of Exhibit E with appropriate insertions and
deletions, together with (x) copies of the certificate of incorporation, by-laws
or equivalent organizational documents of each Borrower, (y) the resolutions or
authorizations of each Borrower referred to in such certificate and all of the
foregoing shall be satisfactory to the Administrative Agent and (z) a statement
that all of the applicable conditions set forth in Sections 4.01(q) and 4.02
exist as of such date.
(II) On the Closing Date, all corporate, partnership and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement shall be satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent shall have
received all information and copies of all certificates, documents and papers,
including good standing certificates and any other records of corporate and
partnership proceedings
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and governmental approvals, if any, which the Administrative Agent may have
requested in connection therewith, such documents and papers, where appropriate,
to be certified by proper corporate or governmental authorities.
(d) Adverse Change, etc. Since December 15, 1997, nothing shall
have occurred (and neither any Lender nor the Administrative Agent shall have
become aware of any facts or conditions not previously known) which the
Administrative Agent or the Required Lenders shall determine has had, or is
reasonably likely to have, (i) a Material Adverse Effect or (ii) a material
adverse effect on the rights or remedies of the Lenders or the Administrative
Agent hereunder or under any other Credit Document, or on the ability of the
Credit Parties to perform their obligations to the Lenders and the
Administrative Agent.
(e) Litigation. On the Closing Date, there shall be no actions,
suits or proceedings pending or notified to the Borrowers in writing (a) with
respect to this Agreement or any other Credit Document or (b) which the
Administrative Agent or the Required Lenders shall reasonably determine has had,
or is reasonably likely to have, (i) a Material Adverse Effect or (ii) a
material adverse effect on the rights or remedies of the Lenders or the
Administrative Agent hereunder or under any other Credit Document or on the
ability of the Credit Parties to perform their obligations to the Lenders and
the Administrative Agent.
(f) Contracts; etc. On or prior to the Closing Date, there shall
have been made available to the Administrative Agent true and correct copies of:
(i) the Construction Contract, the CC Continuation Agreement, the
HHC Agreements and the Completion Guaranty;
(ii) all material architectural contracts (including the Architect
Contract) and Plans and Specifications (which will only be made available
to the Consultant) for the construction of the Project (which Plans and
Specifications shall be prepared in accordance with industry standards by
the Architect), as well as all material engineering and other analyses
prepared and contracts not otherwise specified in this Section 4.01(f)
(including maintenance, management, leasing and service contracts) entered
into with respect thereto;
(iii) a detailed budget for the development and construction of the
Project (as the same may be amended in accordance with the terms hereof
(the "Budget"), prepared by the Borrowers and satisfactory to the
Administrative Agent setting forth on a line by line basis the total
Project Costs anticipated to be incurred in connection with the completion
of the Project (which shall not exceed $267.5 million);
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(iv) a commercially reasonable timetable for the completion of the
Project (as the same may be amended in accordance with the terms hereof,
the "Timetable"), which shall show, on a monthly basis, the anticipated
progress of the work;
(v) the Regent License and Subordination Agreement;
(vi) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of the
most recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each Plan
that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans," as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements, with or for the
benefit of current or former employees of any Borrower or any ERISA
Affiliate (provided that the foregoing shall apply in the case of any
multiemployer plan, as defined in 4001(a)(3) of ERISA, only to the extent
that any document described therein is in the possession of a Borrower or
any ERISA Affiliate or reasonably available thereto from the sponsor or
trustee of any such plan);
(vii) any collective bargaining agreements or any other similar
agreement or arrangements covering the employees of either Borrower;
(viii) all agreements entered into by any Borrower governing the
terms and relative rights of its capital stock or partnership interests;
(ix) any agreement with respect to the management of any Borrower;
(x) any material employment agreements entered into by any
Borrower;
(xi) any tax sharing, tax allocation and other similar agreements
entered into by any Borrower; and
(xii) all other material contracts to which any Borrower is party;
all of which shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall be in full force and effect on the Closing Date.
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(g) Consultant Certificate. The Administrative Agent shall have
received a certificate dated the Closing Date and in form and substance
satisfactory to the Administrative Agent from the Consultant to the effect that
in its opinion (x) all construction permits necessary to construct the Project
have been obtained or should be obtainable in due course and (y) the Project is
reasonably capable of construction in accordance with the Budget, the Timetable
and the Plans and Specifications, provided that, at the election of the
Borrowers, this certificate will not have to be delivered on or prior to the
Closing Date but may be delivered subsequent thereto provided that no transfer
of funds from the Mortgage Notes Proceeds Account or the Subordinated Notes
Proceeds Account to the Disbursement Account shall be made until and unless such
certificate has been delivered to the Administrative Agent.
(h) Environmental Reports. The Administrative Agent shall have
received a "Phase I" environmental report with respect to the Project in form
and substance satisfactory to, and prepared by a qualified independent expert
satisfactory to, the Administrative Agent.
(i) FIRREA Appraisal. The Administrative Agent shall have received
an appraisal of the Project satisfying all the requirements of FIRREA and
prepared by an independent qualified appraiser selected by the Administrative
Agent that reflects to the Administrative Agent's satisfaction an as-built fair
market value for the Project of not less than the total Project Costs specified
in the Budget as in effect on the Closing Date, provided that, at the election
of the Borrowers, this appraisal will not have to be delivered on or prior to
the Closing Date but may be delivered subsequent thereto provided that no
transfer of funds from the Mortgage Notes Proceeds Account to the Disbursement
Account shall be made until and unless such certificate has been delivered to
the Administrative Agent.
(j) Fee Subordination. SCGC shall have authorized, executed and
delivered an agreement subordinating the $3 million development fees owed it by
the Partnership so that such fees will be reduced dollar for dollar to the
extent the total Project Costs on the Commencement Date (including such fees)
exceed $267.5 million (as the same may be modified, amended or supplemented from
time to time in accordance with the terms thereof and hereof, the "Subordinated
Fees Agreement"), which shall be in form and substance satisfactory to the
Administrative Agent.
(k) Account Agreements. (I) The Borrowers, the Administrative
Agent, the Subordinated Notes Trustee and First Security as Disbursement Agent
shall have executed and delivered a disbursement agreement substantially in form
of Exhibit F-1 (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "Disbursement Agreement")
establishing the conditions for the disbursement of funds to complete the
Project.
(II) The Borrowers, the Administrative Agent and First Security
shall
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have executed and delivered a proceeds agreement substantially in the form of
Exhibit F-2 (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "Mortgage Notes Proceeds
Agreement") establishing the account (the "Mortgage Notes Proceeds Account")
into which the proceeds of all Construction Loans shall be deposited.
(III) The Borrowers, the Administrative Agent and First Security
shall have executed and delivered an escrow agreement substantially in the form
of Exhibit F-3 (as modified, amended and supplemented from time to time in
accordance with the terms thereof and hereof, the "Interest Escrow Agreement"),
and on the Closing Date the Borrowers shall have deposited in the Interest
Escrow Account $12.4 million.
(l) Subsidiary Guaranty. Each Subsidiary of the Partnership, if
any, shall have duly authorized, executed and delivered a Subsidiary Guaranty in
the form of Exhibit G hereto (as modified, amended or supplemented from time to
time in accordance with the terms hereof and thereof, the "Subsidiary
Guaranty"), and the Subsidiary Guaranty shall be in full force and effect.
(m) Security Documents. (I) Each Credit Party shall have each duly
authorized, executed and delivered a Pledge Agreement in the form of Exhibit H
(as modified, amended or supplemented from time to time in accordance with the
terms thereof and hereof, the "Pledge Agreement") and shall have delivered to
the Collateral Agent, as pledgee thereunder, all of the certificates
representing the Pledged Securities referred to therein, endorsed in blank or
accompanied by executed and undated stock powers, and the Pledge Agreement shall
be in full force and effect.
(II) Each Credit Party shall have each duly authorized, executed
and delivered a Security Agreement substantially in the form of Exhibit I (as
modified, supplemented or amended from time to time, the "Security Agreement")
covering all of such Credit Party's present and future Security Agreement
Collateral, in each case together with:
(i) executed copies of Financing Statements (Form UCC-1) in
appropriate form for filing under the UCC of each jurisdiction as may be
necessary to perfect the security interests purported to be created by the
Security Agreement;
(ii) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of recent date listing all effective
financing statements that name any Credit Party as debtor and that are
filed in the jurisdictions referred to in clause (i), together with copies
of such financing statements (none of which shall cover the Collateral
except (x) those with respect to which appropriate termination statements
executed by the
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secured lender thereunder have been filed or delivered to the
Administrative Agent and (y) to the extent evidencing Permitted Liens);
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by the Security Agreement; and
(iv) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the Security
Agreement have been taken;
and the Security Agreement shall be in full force and effect.
(III) The Collateral Agent shall have received:
(v) a fully executed original of a deed of trust in form and
substance satisfactory to the Collateral Agent (as modified, supplemented
or amended from time to time, the "Mortgage"), which Mortgage shall cover
the Partnership's estates in all of the Project Property and which
Mortgage promptly following the Effective Date shall be recorded in Clark
County, Nevada to effectively create a valid and enforceable first
priority mortgage Lien (subject only to Permitted Encumbrances) on the
Project Property in favor of the Collateral Agent;
(vi) a fully executed original of a collateral assignment of leases
and rents in form and substance satisfactory to the Collateral Agent (as
modified, supplemented or amended from time to time, the "Assignment of
Leases and Rents"), which Assignment of Leases and Rents shall cover each
of the Project Properties, and which Assignment of Leases and Rents shall
be recorded in Clark County, Nevada to effectively create a valid and
enforceable first priority lien (subject only to Permitted Encumbrances)
on the Collateral described therein in favor of the Collateral Agent;
(vii) a mortgagee title insurance policy (or binding commitment to
issue such title insurance policy) issued by title insurers reasonably
satisfactory to the Collateral Agent (the "Mortgage Policy") in amounts
reasonably satisfactory to the Collateral Agent and assuring the
Collateral Agent that the Mortgage is a valid and enforceable first
priority mortgage Lien on the Project Property, free and clear of all
defects and encumbrances except Permitted Encumbrances, and the Mortgage
Policy shall be in form and substance reasonably satisfactory to the
Collateral Agent and (A) shall include an endorsement for future advances
under this Agreement, the Notes and the Mortgage, and for such other
matters that the Collateral
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<PAGE> 31
Agent in its discretion may reasonably request, (B) shall not include an
exception for mechanics' liens, and (C) shall provide for affirmative
insurance and such reinsurance (including direct access agreements) as the
Collateral Agent in its discretion may reasonably request; and
(viii) a survey in form and substance satisfactory to the Collateral
Agent of the Project Property, dated a recent date and certified in a
manner acceptable to the Collateral Agent by a licensed professional
surveyor satisfactory to the Administrative Agent.
(n) Insurance Policies. On the Closing Date, the Collateral Agent
shall have received evidence of insurance complying with the requirements of
Section 6.03 for the business and properties of the Borrowers, in form and
substance satisfactory to the Administrative Agent and, with respect to all
casualty insurance, naming the Collateral Agent as an additional insured and/or
loss payee, and stating that such insurance shall not be cancelled or revised
without at least 30 days' prior written notice by the insurer to the Collateral
Agent.
(o) Consent Letter. On the Closing Date, the Administrative Agent
shall have received a letter from CT Corporation System, substantially in the
form of Exhibit J hereto, indicating its consent to its appointment by each
Credit Party as its agent to receive service of process.
(p) Fees. On the Closing Date, the Borrowers shall have paid to
the Agents and the Lenders all Fees and expenses agreed upon by such parties to
be paid on or prior to such date.
(q) Capitalization. (I) On or prior to the Closing Date, the
Partners at such time shall have made permanent equity investments in the
Partnership (including the amount on deposit on the Closing Date in the
Partnership Funds Account) in cash of at least $67.5 million.
(II) On the Closing Date, the Borrowers shall have issued the
Subordinated Notes for gross cash proceeds of $100 million and shall have
deposited the net cash proceeds of such issuance into the Subordinated Notes
Proceeds Account.
(III) On the Closing Date, the Borrowers shall have delivered to the
Administrative Agent certified copies of the Partnership Funds Agreement, the
Subordinated Notes Proceeds Agreement and the Subordinated Notes Documents, all
of which shall be in full force and effect and in form and substance
satisfactory to the Administrative Agent.
4.02 Conditions Precedent to All Loans. The obligation of each
Lender to make any Loans (including on the Closing Date) is subject, at the time
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of the making of such Loans, to the satisfaction of the following conditions:
(a) Notice of Borrowing. The Administrative Agent shall have
received a Notice of Borrowing meeting the requirements of Section 1.03
(accompanied by a Consultant's Confirmation in the case of the incurrence of
Construction Loans).
(b) No Default; Representations and Warranties. At the time of the
making of such Loans and also after giving effect thereto, (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties made
by any Credit Party contained herein or in the other Credit Documents shall be
true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, except to the extent that such representations and warranties
expressly relate to an earlier date.
The acceptance of the benefits of each incurrence of Loans shall constitute a
representation and warranty by the Borrowers to the Agents and each of the
Lenders that all of the applicable conditions specified in Section 4.01 (in the
case of Loans incurred on the Closing Date) and/or 4.02, as the case may be,
exist as of that time. All of the certificates, legal opinions and other
documents and papers referred to in Section 4.01, unless otherwise specified,
shall be delivered to the Administrative Agent at its Notice Office for the
account of each of the Lenders and, except for the Notes, in sufficient
counterparts for each of the Lenders and shall be satisfactory in form and
substance to the Administrative Agent.
5. Representations, Warranties and Agreements. In order to induce
the Lenders to enter into this Agreement and to make Loans hereunder, the
Borrowers make the following representations and warranties to, and agreements
with, the Lenders, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans:
5.01 Status. Each of the Credit Parties (I) is a duly organized and
validly existing corporation or limited partnership, as the case may be, in good
standing under the laws of the jurisdiction of its organization (in the case of
each corporate Credit Party) and has the power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (ii) has duly qualified and is authorized to do business
and is in good standing in all jurisdictions where it is required to be so
qualified and where the failure to be so qualified would have a Material Adverse
Effect.
5.02 Power and Authority. Each Credit Party has the power and
authority to execute, deliver and carry out the terms and provisions of the
Credit Documents to which it is a party and has taken all necessary action to
authorize the execution, delivery and performance of the Credit Documents to
which it is a party.
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Each Credit Party has duly executed and delivered each Credit Document to which
it is a party and each such Credit Document constitutes the legal, valid and
binding obligation of such Person enforceable in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally, and subject to
the effect of general principles of equity (regardless of whether considered in
a proceeding in equity or at law).
5.03 No Violation. Neither the execution, delivery and performance
by any Credit Party of the Credit Documents to which it is a party nor
compliance with the terms and provisions thereof (i) will contravene any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or (other than
pursuant to the Security Documents) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or assets
of any Credit Party pursuant to the terms of any indenture, mortgage, deed of
trust, agreement or other instrument to which such Credit Party is a party or by
which it or any of its property or assets are bound or to which it may be
subject or (iii) will violate any provision of the certificate of incorporation,
by-laws or equivalent organizational documents of any Credit Party.
5.04 Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of either Borrower, threatened with respect to any Credit
Party that are reasonably likely to have (i) a Material Adverse Effect or (ii) a
material adverse effect on the rights or remedies of the Lenders or on the
ability of the Credit Parties to perform their obligations to them under the
other Credit Documents.
5.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
Construction Loans shall be utilized to finance Project Costs.
(a) The proceeds of all Revolving Loans may be used for the
working capital purposes of the Borrowers.
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
and no part of the proceeds of any Loan will be used to purchase or carry any
Margin Stock or to extend credit for the purpose of purchasing or carrying any
Margin Stock.
5.06 Governmental Approvals. Except for filings and recordings in
connection with the Security Documents, no order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any
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subdivision thereof (including, without limitation, any Gaming Authority), is
required to authorize or is required in connection with (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
5.07 Investment Company Act. No Credit Party is an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
5.08 Project Documents. Each Project Document is in full force and
effect and no material breach has occurred and is continuing under any thereof.
5.09 True and Complete Disclosure. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of the
Credit Parties in writing to the Agents for purposes of or in connection with
this Agreement or any transaction contemplated herein is, and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of
any such Person in writing to any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided. The projections and pro
forma financial information contained in such materials are based on good faith
estimates and assumptions believed by the Borrowers to be reasonable at the time
made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results. There is no fact known to the Borrowers which would have a Material
Adverse Effect and which has not been disclosed herein or in such other
documents, certificates and statements furnished to the Lenders for use in
connection with the transactions contemplated hereby.
5.010 Financial Statements. (a) (i) The audited balance sheet of
each Borrower at December 31, 1996 and the related statements of operations,
partnership interests, shareholder equity and cash flows, which were examined
and reported on by Ernst & Young LLP, (ii) the unaudited balance sheet of each
Borrower and the related statements of operations, partnership interests,
shareholder equity and cash flows as of September 30, 1997, certified by the
chief financial officer of the Borrower and (iii) the audited consolidated
statements of financial position of SCGC at December 31, 1996 and the related
consolidated statements of operations, shareholders equity and cash flows for
the fiscal year then ended, which were examined and reported on by Ernst & Young
LLP, copies of all of which have heretofore been furnished to each Lender,
present fairly in all material respects the financial position of each Borrower
or SCGC, as the case may be, at the dates of said statements and, in the case of
the
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SCGC statements the results for the periods covered thereby, in accordance with
GAAP, except to the extent provided in the notes to said financial statements
and, in the case of the September 30, 1997 financial statements, subject to
normal and recurring year-end audit adjustment. All such financial statements
have been prepared in accordance with GAAP and practices consistently applied
except to the extent provided in the notes to said financial statements. Nothing
has occurred since December 31, 1996 that has had or is reasonably likely to
have a Material Adverse Effect.
(a) Except as reflected in the financial statements and the notes
thereto described in Section 5.10(a) or fully disclosed in the Offering
Memorandum, there were as of the Closing Date no liabilities or obligations with
respect to either Borrower of a nature (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to the Borrowers taken as a whole, except as incurred in the
ordinary course of business consistent with past practices subsequent to
December 31, 1996, and as incurred hereunder and under the Subordinated Notes on
such date.
(b) On and as of the Closing Date, (i) the forecasted financial
information set forth in the Offering Memorandum (the "Financial Projections")
were prepared based upon the assumptions concerning various industry trends
described therein for the periods presented and (ii) the Financial Projections
were based on good faith and reasonable assumptions and estimates; provided that
no assurance can be given that the projected results will be realized or with
respect to the ability of the Partnership to achieve the projected results, and
while the Financial Projections are necessarily presented with numerical
specificity, the actual results achieved during the periods presented in all
likelihood will differ from the projected results and such differences may be
material.
(c) On and as of the Closing Date, the Budget, the Timetable, and
the Plans and Specifications were based on commercially reasonable assumptions
and estimates.
(d) The Budget, the Timetable and the Plans and Specifications are
realistic and the Borrowers reasonably expect that the same can be adhered to in
achieving the Commencement Date on or before the Completion Deadline.
5.011 Security Interests. On and after the Closing Date and after
giving effect to the filings described in the following sentence, each of the
Security Documents creates, as security for the Obligations purported to be
secured thereby, a valid and enforceable perfected security interest in and Lien
on all of the Collateral subject thereto, superior to and prior to the rights of
all third Persons and subject to no other Liens (other than Permitted Liens
relating thereto), in favor of the Collateral Agent for the benefit of the
Lenders. No filings or recordings are required in order to
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perfect the security interests created under any Security Document except for
filings or recordings required in connection with any such Security Document
(other than the Pledge Agreement and any Account Agreement) which shall have
been made upon or prior to (or are the subject of arrangements, satisfactory to
the Administrative Agent, for filing on or promptly after the date of) the
execution and delivery thereof.
5.012 Representations and Warranties in Project Documents. All
representations and warranties of the Borrowers set forth in the Project
Documents, and to the knowledge of the Borrowers all representations and
warranties of all other parties set forth in the Project Documents, were true
and correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Closing Date as if such representations and warranties were made on and
as of such date.
5.013 Tax Returns and Payments. Each Credit Party (other than the
Partnership which at all times has been a partnership for all income tax
purposes) has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, except for
those contested in good faith and adequately disclosed and fully provided for on
the financial statements of the Borrowers in accordance with generally accepted
accounting principles. Each Credit Party has at all times paid, or has provided
adequate reserves (in the good faith judgment of the management of such Credit
Party) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to date
except such taxes or charges which are being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
5.014 Compliance with ERISA. No Credit Party nor any ERISA Affiliate
maintains, contributes to or is required to contribute to any Multiemployer
Plan. Except to the extent that all events and obligations described in the
following sentence of this Section 5.14 would not in the aggregate have a
Material Adverse Effect, each Plan (and each related trust, insurance contract
or fund) is in substantial compliance with its terms and with all applicable
laws, including, without limitation, ERISA and the Code; no Credit Party nor any
ERISA Affiliate has incurred or reasonably expects to incur, and to the
Borrowers' knowledge, no condition exists which presents a material risk to any
Credit Party or any ERISA Affiliate of incurring, any liability, nor has a Lien
been imposed against the assets of any Credit Party or any ERISA Affiliate, on
account of a Plan or Multiemployer Plan under the Code or ERISA; each Plan (and
each related trust, if any) which is intended to be qualified under Section
401(a) of the Code has received, or will in due course receive, a determination
letter from the Internal Revenue Service to the effect that it meets the
requirements of Sections 401(a) and 501(a) of the Code; no Reportable Event has
occurred; no Plan has an Unfunded Current Liability; no Plan which is subject to
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Section 412 of the Code or Section 302 of ERISA has an accumulated funding
deficiency, within the meaning of such sections of the Code or ERISA, or has
applied for or received a waiver of an accumulated funding deficiency or an
extension of any amortization period, within the meaning of Section 412 of the
Code or Section 303 or 304 of ERISA; no proceedings have been instituted to
terminate or appoint a trustee to administer any Plan which is subject to the
Title IV of ERISA; no action, suit, proceeding, hearing or audit or, to the
knowledge of either Borrower, no investigation with respect to the
administration, operation or the investment of assets of any Plan (other than
routine claims for benefits) is pending, or to the knowledge of either Borrower
is, expected or threatened. No Credit Party maintains or contributes to (i) any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) the obligations with respect to which a
consequence of any termination or other extraordinary event (other than benefits
in the ordinary course) is reasonably likely to have a Material Adverse Effect
or (ii) any Plan, the obligations with respect to which are reasonably likely to
have a Material Adverse Effect.
5.015 Subsidiaries. On and as of the Closing Date neither Borrower
has any Subsidiary.
5.016 Intellectual Property. The Credit Parties have obtained all
material patents, trademarks, service marks, trade names, copyrights, licenses
(other than Gaming Licenses) and other rights, free from burdensome
restrictions, that are necessary for the operation of their businesses taken as
a whole as presently conducted and as proposed to be conducted.
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5.017 Environmental Matters. (a) Each Credit Party is in compliance
with all applicable Environmental Laws governing its business the failure to
comply with which is reasonably likely to have a Material Adverse Effect, and no
Credit Party is liable for any penalties, fines or forfeitures for failure to
comply with any of the foregoing which is reasonably likely to have a Material
Adverse Effect. All licenses, permits, registrations or approvals required to
operate the Project under any Environmental Law shall have been secured prior to
when required, and the Credit Parties are in substantial compliance therewith,
except such licenses, permits, registrations or approvals the failure to secure
which or to comply with which is not reasonably likely to have a Material
Adverse Effect. No Credit Party is in any respect in noncompliance with, breach
of or default under any applicable writ, order judgment, injunction, or decree
to which such Credit Party is a party or which would affect the ability of such
Credit Party to operate any Real Property and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both,
would constitute noncompliance, breach of or default thereunder, except in each
such case, such noncompliance, breaches or defaults as are not reasonably likely
to, in the aggregate, have a Material Adverse Effect. There are no Environmental
Claims pending or, to the knowledge of the Borrowers, threatened, which are
reasonably likely to have a Material Adverse Effect. There are no facts,
circumstances, conditions or occurrences on any Real Property at any time owned
or operated by any Credit Party or, to the knowledge of the Borrowers, on any
property adjacent to any such Real Property that could reasonably be expected
(i) to form the basis of a material Environmental Claim against any Credit Party
or any currently owned or operated Real Property of any Credit Party, or (ii) to
cause such currently owned or operated Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law, except in each such case, such
Environmental Claims or restrictions that individually, or in the aggregate, are
not reasonably likely to have a Material Adverse Effect.
(a) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property owned
or operated by a Credit Party or (ii) released on or from any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
5.018 Properties. Each Credit Party has good and marketable fee
title to, or a validly subsisting leasehold interest in, all properties owned or
leased by it, including all Real Property reflected in the balance sheets
referred to in Section 5.10(b), free and clear of all Liens, other than (i) as
referred to in the consolidated balance sheet or in the notes thereto or (ii)
otherwise permitted by Section 7.03. Annex V contains a true and complete list
of each Real Property owned or leased by the Borrowers as of the Closing Date
and the type of interest therein held by the Borrowers.
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5.019 Labor Relations. No Credit Party is engaged in any unfair
labor practice that could reasonably be expected to have a Material Adverse
Effect. There is (i) no unfair labor practice complaint pending against any
Credit Party or threatened against any of them, before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against any Credit Party
or threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against any Credit Party or threatened against any Credit Party
and (iii) no union representation question existing with respect to the
employees of any Credit Party and no union organizing activities are taking
place, except with respect to any matter specified in clause (i), (ii) or (iii)
above, either individually or in the aggregate, such as is not reasonably likely
to have a Material Adverse Effect.
5.020 Compliance with Statutes, etc. (a) Each Credit Party is in
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by and all applicable Permits issued by, all
governmental bodies, in respect of the conduct of its business, the ownership of
its property and the construction and operation of the Project, except such
non-compliance as is not likely to, individually or in the aggregate, have a
Material Adverse Effect.
(a) All necessary governmental and third party approvals and
Permits (other than approvals and Permits as are immaterial to the construction
or operation of the Project) required to be obtained by the date upon which this
representation is being made or deemed made in connection with the ownership,
lease, construction and operation of the Project or any facilities or services
ancillary thereto and the other transactions contemplated by the Credit
Documents have been obtained and remain in full force and effect, and all
applicable waiting periods shall have expired without any action being taken by
any competent authority which restrains, prevents or imposes materially adverse
conditions upon the completion of the Project or the consummation of the
transactions contemplated by this Agreement and the Project Documents.
Additionally, there does not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified (i) challenging the legality, validity or
enforceability of any such Permit or the legality or validity of the process
pursuant to which such Permit was issued or (ii) prohibiting or imposing
materially adverse conditions.
5.021 Access; Utilities. (a) All roads necessary for the
construction of the Project exist and all roads necessary for the operation of
the Project either exist or will exist prior to the commencement date of such
operations.
(a) All utilities services and facilities necessary for the
construction of the Project (including, without limitation, water supply, storm
and sanitary sewer
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facilities, gas, electrical and telephone facilities) will be available without
impediment or delay when required and all utility services necessary for the
operation of the Project will be available at or within the boundaries thereof
when needed.
(b) The Partnership possesses (or will possess when necessary with
respect to each phase of the Project) all rights and interests in property
(including, without limitation, all rights of ingress and egress) and all
material rights or contracts necessary for the construction, installation,
completion, operation and maintenance of the Project as contemplated by this
Agreement and the Project Documents.
6. Affirmative Covenants. The Borrowers hereby covenant and agree
that for so long as this Agreement is in effect and until the Commitments have
terminated, no Notes are outstanding and the Loans, together with interest, Fees
and all other Obligations incurred hereunder, are paid in full:
6.01 Information Covenants. The Borrowers will furnish to the
Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available and in any
event within 90 days after the close of each fiscal year of the Partnership, the
consolidated balance sheet of the Partnership, as at the end of such fiscal year
and the related consolidated statements of income, retained earnings and cash
flow for such fiscal year, in each case setting forth comparative figures for
the preceding fiscal year, examined by Ernst & Young LLP or such other
independent certified public accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit and as to the status of
the Partnership or any of its Subsidiaries as a going concern, together with a
certificate of such accounting firm stating that in the course of its regular
audit of the business of the Partnership and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of any Default or Event of Default
which has occurred and is continuing or, if in the opinion of such accounting
firm such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(b) Quarterly Financial Statements. As soon as available and in
any event within 45 days after the close of each fiscal quarter in each fiscal
year, the consolidated balance sheet of the Partnership and its Subsidiaries as
at the end of such quarter and the related consolidated statements of income,
retained earnings and cash flow for such quarter and for the elapsed portion of
the fiscal year ended with the last day of such quarter, and in each case
setting forth comparative figures for the corresponding periods in the prior
fiscal year and in the budget delivered in respect of the current fiscal year,
all of which shall be certified by the chief financial officer or controller of
the Partnership, subject to changes resulting from audit and normal yearend
audit adjustments.
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(c) Monthly Reports. As soon as practicable, and in any event
within 45 days, after the end of each month the consolidated balance sheet of
the Partnership and its Subsidiaries, as at the end of such month, and the
related consolidated statements of income and cash flow for such month and for
the elapsed portion of the fiscal year ended with the last day of such month,
setting forth comparative figures for the corresponding periods in the prior
fiscal year and in the budget delivered in respect of the current fiscal year,
all of which shall be certified by the chief financial officer or controller of
the Partnership subject to changes resulting from audit and normal year-end
audit adjustments.
(d) Budgets; etc. Not more than 30 days after the commencement of
each fiscal year, a consolidated budget of the Project in reasonable detail for
such fiscal year. In addition, there shall be delivered, together with each
delivery of financial information pursuant to clause (c) above prior to the
Commencement Date, an update to the Budget giving effect to Project Costs
actually incurred.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 6.01(a), (b) and (c), a
certificate of the General Partner to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate (x) in the case of the certificate
delivered pursuant to Sections 6.01(a) and (b), shall set forth the calculations
required to establish whether the Borrowers were in compliance with the
provisions of Sections 7.11 through 7.13, as at the end of such fiscal year or
quarter, as the case may be, and shall set forth the Leverage Ratio as of the
end of such year or quarter, and (y) in the case of the certificate delivered
pursuant to Section 6.01(a) for each fiscal year commencing with the fiscal year
ending December 31, 1999, shall set forth the amount of the Excess Cash Flow for
the fiscal year then ended.
(f) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after any officer of either Borrower obtains
knowledge thereof, notice of (x) the occurrence of any event which constitutes,
or is reasonably likely to become, a Default or Event of Default which notice
shall specify the nature thereof, the period of existence thereof and what
action the Borrowers propose to take with respect thereto and (y) the
commencement of or any materially adverse development in any litigation or
governmental proceeding pending against any Credit Party which is likely to have
a Material Adverse Effect or is likely to have a material adverse effect on the
ability of the Credit Parties to perform their obligations hereunder or under
any other Credit Document.
(g) Management Letters, etc. As soon as available and in any event
within 120 days after the end of each fiscal year, a copy of each "management
letter" and internal control or similar memoranda submitted to the Partnership
by its
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independent accountants in connection with the annual audit made by it of the
books of the Partnership.
(h) Environmental Matters. Promptly after obtaining knowledge of
any of the following (but only to the extent that any of the following is
reasonably likely to (x) have a Material Adverse Effect, either individually or
in the aggregate, or (y) result in a remedial cost to the Credit Parties in
excess of $500,000, written notice of:
(i) any pending or threatened in writing Environmental Claim
against any Credit Party or any Real Property owned or operated by any
Credit Party;
(ii) any condition or occurrence on any Real Property owned or
operated by any Credit Party that (x) results in noncompliance by any
Credit Party with any applicable Environmental Law or (y) could reasonably
be anticipated to form the basis of an Environmental Claim against any
Credit Party or any such Real Property;
(iii) any condition or occurrence on any Real Property owned or
operated by any Credit Party that could reasonably be anticipated to cause
such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by any Credit Party of its interest in
such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated by any Credit Party.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Credit Parties' response or proposed response thereto. In addition, the
Borrowers agree to provide the Lenders with copies of all material
communications by any Credit Party with any Person, government or governmental
agency relating to any of the matters set forth in clauses (I)-(iv) above, and
such detailed reports, if any, relating to any of the matters set forth in
clauses (I)-(iv) above as may reasonably be requested by the Administrative
Agent or the Required Lenders.
(i) Other Information. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by any Credit Party,
(ii) copies of all financial statements, proxy statements, notices and reports
as any Credit Party shall send generally to analysts and the holders of the
Subordinated Notes in their
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capacity as such holders (to the extent not theretofore delivered to the Lenders
pursuant to this Agreement) and with reasonable promptness, such other
information or documents (financial or otherwise) as the Administrative Agent on
its own behalf or on behalf of the Required Lenders may reasonably request from
time to time. In addition, the Partnership will provide to the Consultant all
material notices, reports and requests it receives under the Construction
Contract.
6.02 Books, Records and Inspections. (a) The Borrowers will, and
will cause the other Credit Parties to, permit, upon reasonable notice to the
General Partner specifying that the provisions of this Section 6.02 are being
exercised, officers and designated representatives of the Administrative Agent
or the Required Lenders to (at the Borrowers' expense) visit and inspect any of
the properties or assets of the Credit Parties in whomsoever's possession, and
to examine (and at the Borrowers' expense copy extracts from) the books of
account of the Credit Parties and discuss the affairs, finances and accounts of
the Credit Parties with, and be advised as to the same by, its and their
officers and independent accountants (the Borrowers hereby authorizing such
accountants to comply with the foregoing), all at such reasonable times and
intervals and to such reasonable extent as the Administrative Agent or the
Required Lenders may desire, it being understood and agreed that so long as no
Event of Default is then in existence, only one representative of each Lender
shall be permitted to participate at the Borrowers' expense in any such
visitation, inspection and/or examination pursuant to this clause (a).
(a) The Borrowers shall cooperate (and shall use their best
efforts to cause the General Manager to cooperate) with the Administrative Agent
in arranging for inspections from time to time by the Administrative Agent or
any representative of the Administrative Agent of the progress of construction
of the Project. In the course of such inspections, each of the Administrative
Agent and any representatives of the Administrative Agent shall be entitled to
inspect the Project Property, including, without limitation, (i) the
Improvements, (ii) all materials to be used in the construction of the
Improvements, (iii) all plans and shop drawings which are or may be kept at the
construction site, (iv) any contracts, bills of sale, statements, receipts or
vouchers in connection with the Improvements whether or not kept at the
construction site, (v) all work done, labor performed, materials furnished in
and about the Project Property, (vi) all books, contracts and records of the
Borrowers' agents and other entities as may be contractually bound to the
Borrowers to provide such records with respect to the construction of the
Improvements whether or not kept at the construction site, and (vii) any other
documents relating to the construction of the Improvements whether or not kept
at the construction site. In addition to the foregoing, the Borrowers shall use
reasonable efforts to insure that representatives of the Administrative Agent
shall be entitled to inspect (i) all books, contracts and records of the General
Manager and the Borrowers with respect to the Project (whether or not re-
lated to the construction thereof) and (ii) any other document of the General
Manager and the Borrowers relating to the Improvements whether or not re-
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lated to the construction thereof and whether or not kept at the construction
site. The Borrowers will cooperate and instruct the General Manager and all
material subcontractors to cooperate with the Administrative Agent and any
representatives of the Administrative Agent so that they may perform their
respective responsibilities hereunder and to comply with the Administrative
Agent's requirements.
6.03 Insurance. (a) The Borrowers will, and cause the other Credit
Parties to, (i) maintain insurance on all its property in at least such amounts
and against at least such risks as is consistent and in accordance with industry
practice including physical damage insurance on all real and personal property
on an all risk basis (including the perils of flood and earthquake), covering
the repair and replacement costs of all such property and consequential loss
coverage for business interruption and extra expense and (ii) furnish to each
Lender, upon written request, full information as to the insurance carried. In
addition to the requirements of the immediately preceding sentence, the
Borrowers will at all times cause insurance of the types described in Annex VII
to be maintained (with the same scope of coverage as that described in Annex
VII) at levels which are at least as great as the respective amount described
opposite the respective type of insurance on Annex VII under the column headed
"Minimum Amount Required to be Maintained".
(a) All policies (including Mortgage Policies) or certificates (or
certified copies thereof) with respect to insurance (i) shall be endorsed to the
Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee or
as an additional insured), (ii) shall state that such insurance policies shall
not be cancelled without 30 days' prior written notice thereof by the respective
insurer to the Collateral Agent, (iii) shall provide that the respective
insurers irrevocably waive any and all rights of subrogation with respect to the
Collateral Agent and the Lenders, (iv) shall contain the standard
non-contributory mortgagee clause endorsement in favor of the Collateral Agent
with respect to hazard insurance coverage, (v) shall, except in the case of
public liability insurance and workers' compensation insurance, provide that any
losses shall be payable notwithstanding (A) any act or neglect of any Credit
Party, (B) the occupation or use of the properties for purposes more hazardous
than those permitted by the terms of the respective policy, (C) any foreclosure
or other proceeding relating to the insured properties or (D) any change in the
title to or ownership or possession of the insured properties and (vi) shall be
deposited with the Collateral Agent.
(b) If the Borrowers shall fail to maintain all insurance in
accordance with this Section 6.03, or shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Administrative Agent and/or
the Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and the Borrowers jointly and severally agree to
reimburse the Administrative Agent or the Collateral Agent, as the case may be,
for all costs and expenses of procuring such
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insurance.
6.04 Payment of Taxes. The Borrowers will pay and discharge, and
will cause each other Credit Party to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien or charge upon any properties of the Credit Parties, provided that no
Credit Party shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if (x) it
has maintained adequate reserves (in the good faith judgment of the General
Partner) with respect thereto in accordance with GAAP and (y) if in respect of
any Real Property, such Real Property is not subject to forfeiture as a result
thereof.
6.05 Corporate Franchises. The Borrowers will do, and will cause
each other Credit Party to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights,
franchises and authority, provided that any transaction permitted by Section
7.02 will not constitute a breach of this Section 6.05.
6.06 Compliance with Statutes, etc. The Borrowers will, and will
cause each other Credit Party to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign (including, without limitation, all
Gaming Authorities), in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not have a
Material Adverse Effect or would not have a material adverse effect on the
ability of the Credit Parties to perform their obligations under the Credit
Documents.
6.07 Good Repair. The Borrowers will, and will cause each other
Credit Party to, ensure that their properties and equipment used or useful in
its business in whomsoever's possession they may be, are kept in good repair,
working order and condition, normal wear and tear excepted, and that from time
to time there are made in such properties and equipment all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.
6.08 End of Fiscal Years; Fiscal Quarters. The Borrowers will, for
financial reporting purposes, cause (i) each of their, and each Subsidiary's,
fiscal years to end on December 31 of each year and (ii) each of their, and each
Subsidiary's, fiscal quarters to end on March 31, June 30, September 30 and
December 31 of each year.
6.09 Additional Security; Further Assurances. (a) The Borrowers
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will, and will cause each other Credit Party to, grant to the Collateral Agent
security interests and mortgages in material properties acquired by any of them
after the Closing Date that are not subject to the Security Documents at the
time in effect as may be requested from time to time by the Administrative Agent
(collectively, the "Additional Mortgages"). All such security interests and
mortgages shall be granted pursuant to documentation reasonably satisfactory in
form and substance to the Administrative Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as are permitted by Section 7.03. The
Additional Mortgages or instruments related thereto shall have been duly
recorded or filed in such manner and in such places as are required by law to
establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Mortgages and all taxes,
fees and other charges payable in connection therewith shall have been paid in
full.
(a) The Borrowers will, and will cause each other Credit Party to,
at the expense of the Borrowers, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, the
Borrowers shall cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance and other related documents as may be requested by the
Administrative Agent to assure itself that this Section 6.09 has been complied
with.
(b) The Borrowers agree that each action required above by this
Section 6.09 shall be completed as soon as possible, but in no event later than
30 days after such action is requested to be taken by the Administrative Agent
or the Collateral Agent, provided that in no event shall the Borrowers be
required to take any action, other than using their reasonable commercial
efforts without any material expenditure, to obtain consents from third parties
with respect to their compliance with this Section 6.09.
6.010 ERISA. As soon as possible and, in any event, within fifteen
days after the chief financial officer or chief executive officer of the General
Partner knows or has reason to know of the occurrence of any of the following
events (but in each case, only to the extent that it is reasonably likely that
the liability of the Credit Parties attributable to such event will be at least
$500,000), the Borrowers will deliver to each of the Lenders a certificate of
the Borrowers setting forth in reasonable detail as to such occurrence and the
action, if any, that the Credit Parties or ERISA Affiliates are required or
propose to take, together with any notices required or proposed to be given to
or filed with or by any Credit Party, ERISA Affiliate, the PBGC, a Plan or
Multiemployer Plan participant, the Plan or the Multiemployer Plan
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administrator with respect thereto: that a Reportable Event has occurred; that
an accumulated funding deficiency, within the meaning of Section 412 of the Code
or Section 302 of ERISA, has been incurred or an application may reasonably be
expected to be or has been made for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code or Section 303 or 304
of ERISA with respect to a Plan or Multiemployer Plan; that any contribution
required to be made by any Credit Party or any ERISA Affiliate with respect to a
Plan or Multiemployer Plan that is subject to the funding requirements of
Section 412 of the Code or Section 302 of ERISA has not been timely made; that a
Plan or Multiemployer Plan has been or may reasonably be expected to be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; or that some action has been taken or proceedings have been instituted
which would be reasonably likely to cause any such termination, reorganization,
partition or declaration or result in the filing of any such application; that a
Plan has an Unfunded Current Liability; that proceedings may reasonably be
expected to be or have been instituted to appoint a trustee to administer a Plan
which is subject to Title IV of ERISA; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a
Multiemployer Plan; that any Credit Party or any ERISA Affiliate will or may
reasonably be expected to incur any liability to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan or Multiemployer Plan
under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or
502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B
of the Code; or that any Credit Party has incurred or is reasonably likely to
incur any liability as a consequence of any termination or other extraordinary
event (other than benefits in the ordinary course) in connection with any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan or Multiemployer Plan. Upon the
request of the Administrative Agent, the Borrowers will deliver to each of the
Lenders a complete copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) most recently required to be filed
with the Internal Revenue Service. In addition to any certificates or notices
delivered to the Lenders pursuant to the first sentence hereof, copies of any
material notices received by any Credit Party, or any ERISA Affiliate (i) from
any government agency with respect to any Plan or (ii) received from any
government agency or Plan administrator or sponsor or trustee with respect to
any Multiemployer Plan shall be delivered to the Lenders as soon as practicable,
but in no event later than 20 days, after such request is received.
6.011 Compliance with Environmental Laws. (i) The Borrowers will
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comply, and will cause each other Credit Party to comply, with all Environmental
Laws applicable to the ownership, lease or use of all Real Property now or
hereafter owned, leased or operated by any Credit Party, will promptly pay or
cause to be paid all costs and expenses incurred in connection with such
compliance, and will keep or cause to be kept all such Real Property free and
clear of any Liens imposed pursuant to such Environmental Laws and (ii) no
Credit Party will generate, use, treat, store, release or dispose of, or permit
the generation, use, treatment, storage, release or disposal of Hazardous
Materials on any Real Property now or hereafter owned, leased or operated by any
Credit Party, or transport or permit the transportation of Hazardous Materials
to or from any such Real Property, except to the extent that the failure to
comply with the requirements specified in clause (i) or (ii) above, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. If required to do so under any applicable directive or
order of any governmental agency, the Borrowers agree to undertake, and cause
each other Credit Party to undertake, any clean up, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from any Real
Property owned, leased or operated by any Credit Party in accordance with, in
all material respects, the requirements of all applicable Environmental Laws and
in accordance with, in all material respects, such orders and directives of all
governmental authorities, except to the extent that the Credit Parties are
contesting such order or directive in good faith and by appropriate proceedings
and for which adequate reserves have been established to the extent required by
GAAP.
6.012 Construction of Improvements, etc. (a) The Borrowers will
cause the Commencement Date to occur on or before the Completion Deadline and
will meet any earlier construction deadlines contained in any of the Permits
and, in connection therewith will cause the construction and equipping of the
Improvements to be prosecuted with diligence and continuity in substantial
accordance with the Budget, Timetable and the Plans and Specifications.
(a) The Borrowers will only amend the Plans and Specifications to
the extent such amendment is commercially reasonable and does not materially
affect the design, structure, size or quality of the Improvements. The Borrowers
will submit to the Administrative Agent any such amendment in writing and
identify therein with particularity the proposed amendment to the Plans and
Specifications, together with a certificate of an Authorized Officer of the
General Partner that (i) such amendment is commercially reasonable and does not
materially affect the design, structure, size or quality of the Improvements,
and (ii) immediately following such amendment (x) the Plans and Specifications
will continue to provide for construction of Improvements which are
substantially consistent with the Budget and Timetable, and (y) the Plans and
Specifications will continue to call for construction which will permit the
Commencement Date to occur on or prior to the Completion Deadline. To the extent
any amendment to the Plans and Specifications is not commercially reasonable or
materially affects the design, structure, size or quality of the Improvements,
the
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Borrowers shall obtain the prior written consent of the Required Lenders before
proceeding with such amendment.
(b) The Borrowers will only amend the Budget for the purposes of
increasing or decreasing, to the extent such amendment is commercially
reasonable, the amounts allocated for Line Items or adding or deleting Line
Items. The Borrowers will submit to the Administrative Agent any such amendment
in writing and identify therein with particularity the Line Item(s) to be
increased, decreased, added or deleted and the amounts of the Line Item(s) as
changed, together with a certification of an Authorized Officer of the General
Partner that (i) the change identified in such amendment is commercially
reasonable and (ii) immediately following such amendment (x) the Budget will
continue to provide for construction of Improvements which are substantially
consistent with the Timetable and the Plans and Specifications and which will
permit the Commencement Date to occur on or prior to the Completion Deadline,
and (y) the remaining Project Costs to achieve the Commencement Date on or prior
to the Completion Deadline will not exceed, when added to all expended Project
Costs, $267.5 million plus any additional cash equity theretofore contributed to
the Partnership by the Partners after the Closing Date for construction
purposes.
(c) The Borrowers will only amend the Timetable to the extent such
amendment is commercially reasonable. The Borrowers will submit to the
Administrative Agent such amendment in writing and identify with particularity
therein the dates and times to be changed, together with a certificate of an
Authorized Officer of the General Partner that (i) the change identified in such
amendment is commercially reasonable, and (ii) immediately following such
amendment the Timetable will continue to provide for a schedule and manner of
construction which is substantially consistent with the Budget and the Plans and
Specifications and which will permit the Commencement Date to occur on or prior
to the Completion Deadline.
(d) The Borrowers will within 60 days following the Closing Date
enter into a Construction Manager Agreement reasonably satisfactory to the
Administrative Agent provided that the Borrowers' obligations under this Section
6.12(e) may be waived by the Administrative Agent for good reason.
7. Negative Covenants. The Borrowers hereby covenant and agree
that for so long as this Agreement is in effect and until the Commitments have
terminated, no Notes are outstanding and the Loans, together with interest, Fees
and all other Obligations incurred hereunder, are paid in full:
7.01 Changes in Business. (a) The Partnership will not, and will
not permit any of its Subsidiaries, to engage in any business other than (x)
prior to the Commencement Date, the construction and development of the Project
and (y) on and after the Commencement Date, the ownership and operation of the
Project and the
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related activities described in the Offering Memorandum.
(a) The General Partner will engage in no business or activity
other than in its capacity as general partner of the Partnership in connection
with the business of the Partnership permitted by clause (a) above.
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Borrowers will not, and will not permit any other Credit Party to, wind up,
liquidate or dissolve its affairs, or enter into any transaction of merger or
consolidation, or sell or otherwise dispose of all or any part of its property
or assets (other than obsolete equipment or excess equipment in the ordinary
course of business) or purchase, lease or otherwise acquire all or any part of
the property or assets of any Person (other than purchases or other acquisitions
of inventory, leases, materials and equipment in the ordinary course of
business) or agree to do any of the foregoing at any future time, except that
the following shall be permitted:
(a) any Subsidiary Guarantor may be merged or consolidated with or
into, or be liquidated into, the Partnership (so long as the Partnership
is the surviving entity) or another Subsidiary Guarantor, or all or any
part of the business, properties and assets of a Subsidiary Guarantor may
be conveyed, leased, sold or transferred to the Partnership or any
Subsidiary Guarantor;
(b) Project Costs may be incurred in connection with the
construction of the Project provided that the same are provided for in the
Budget;
(c) after the Commencement Date, Consolidated Capital Expenditures
will be permitted to the extent within the limitations set forth in
Section 7.05 hereof;
(d) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 7.06;
(e) the Partnership may lease (as lessee) personal property in the
ordinary course of business (so long as such lease does not create a
Capitalized Lease Obligation not otherwise permitted by Section 7.04(d));
(f) licenses or sublicenses by the Partnership of intellectual
property in the ordinary course of business, provided that such licenses
or sublicenses shall not interfere with the business of the Credit
Parties;
(g) to the extent it has not done so prior to the Closing Date,
the Partnership may transfer its rights under the HHC Option Agreement to
SCGC for nominal consideration to the extent otherwise permitted to do so
by the terms thereof;
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(h) the Partnership may transfer its rights under the HHC
Agreements of first offer on four future resort casino sites in the
Summerlin community to a limited partnership or limited liability company
at least 85% controlled by SCGC (directly or indirectly) for an arms
length (as determined in good faith by the Board of Directors of the
General Partner) minority limited partnership or member interest therein
provided that such transferee remains so owned and does not further
transfer any of the rights it obtains from the Partnership;
(i) the Partnership may enter into leases as lessor of restaurant
and other concessionary space at the Project in accordance with customary
commercial practice and on commercially reasonable terms; and
(j) other sales or dispositions of assets provided that (v) no
Event of Default is then in existence, (w) the aggregate fair market value
for all properties the subject of such sales and dispositions shall not
exceed $1,000,000 in any fiscal year of the Partnership, (x) the
consideration for each such sale shall be in an amount in cash at least
equal to the fair market value thereof, (y) the Net Cash Proceeds of any
such sale are applied to repay the Loans to the extent required by Section
3.02(A)(c) and (z) the sale or disposition of the capital stock of any
Subsidiary of the Partnership shall be prohibited unless it is for all of
the outstanding capital stock of such Subsidiary.
7.03 Liens. The Borrowers will not, and will not permit any other
Credit Party to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property, revenues or assets of any kind (real or personal,
tangible or intangible) of any Credit Party whether now owned or hereafter
acquired, except:
(a) Liens securing payment of the Obligations granted pursuant to
any Credit Document;
(b) Liens on equipment securing Indebtedness incurred to finance
the purchase of such equipment and/or to refinance such equipment, in each
case to the extent such Indebtedness is permitted by Section 7.04(d);
(c) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;
(d) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or
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being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;
(e) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits (excluding any Liens under
ERISA), or to secure performance of tenders, statutory obligations, leases
and contracts (other than for borrowed money) entered into in the ordinary
course of business or to secure obligations on surety or appeal bonds;
(f) judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies;
(g) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrowers or their Subsidiaries;
(h) Liens arising out of leases or subleases granted by the
Partnership as permitted by Section 7.02(i) or otherwise in the ordinary
course of business of the Partnership; and
(i) Liens on the amounts deposited in the Subordinated Notes
Proceeds Account securing the Subordinated Notes, which Liens shall
terminate in respect of any amount transferred from such account to the
Disbursement Account at the time of any such transfer.
7.04 Indebtedness. The Borrowers will not, and will not permit any
other Credit Party to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Indebtedness owing by (i) any Subsidiary Guarantor to another
Subsidiary Guarantor or the Partnership and/or (ii) the Partnership to any
Subsidiary Guarantor;
(c) Indebtedness (x) of the Borrowers evidenced by the
Subordinated Notes, in an aggregate principal amount at any time
outstanding not to exceed
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$100,000,000 plus the principal amount of Subordinated Notes issued to
satisfy interest due on the Subordinated Notes and (y) of the Subsidiary
Guarantors evidenced by the Subordinated Guaranties;
(d) Capitalized Lease Obligations of the Partnership and other
Indebtedness secured by Liens permitted by Section 7.03(b), provided that
the aggregate Indebtedness permitted by this clause (d) shall not exceed
$15,000,000 at any time outstanding;
(e) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade
terms in connection with purchases of goods and services, but excluding
all Indebtedness incurred through the borrowing of money and all
Contingent Obligations); and
(f) additional unsecured Indebtedness of the Partnership not
exceeding $5,000,000 at any time outstanding.
7.05 Capital Expenditures. On and after all Project Costs have been
expended, the Borrowers will not, and will not permit any other Credit Party to,
incur Consolidated Capital Expenditures provided that the Partnership may make
Consolidated Capital Expenditures of up to $8,000,000 in its fiscal year ending
December 31, 1999, $10 million in its next fiscal year and $12 million in each
subsequent fiscal year.
7.06 Advances, Investments and Loans. The Borrowers will not, and
will not permit any other Credit Party to, lend money or credit or make advances
to any Person, or purchase or acquire any stock, obligations or securities of,
or any other interest in, or make any capital contribution to any Person,
except:
(a) each Credit Party may invest in cash and Cash Equivalents;
(b) the Partnership and any Subsidiary may provide casino credit
at the Casino Property not exceeding $10,000,000 at any time outstanding
and/or acquire and hold accounts, chattel paper (as defined in the UCC)
and note receivables owing to them, in each case, if created or acquired
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;
(c) the intercompany Indebtedness described in Section 7.04(b)
shall be permitted;
(d) the Borrowers and each Subsidiary Guarantor may acquire and
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own investments (including stock, securities and/or debt obligations)
received in settlement of debts created in the ordinary course of business
or in satisfaction of judgments;
(e) the Partnership may make capital contributions of cash, Cash
Equivalents and other assets in Subsidiary Guarantors and the General
Partner may make capital contributions of any such type in the
Partnership; and;
(f) loans and advances to officers, directors and employees so
long as the aggregate principal of all such loans and advances does not
exceed $750,000 at any time outstanding.
7.07 Creation of Subsidiaries. The Borrowers will not, and will not
permit any other Credit Party to, create or acquire any other Subsidiary other
than a direct Wholly-Owned Subsidiary of the Partnership that is not a Gaming
Company and that executes a counterpart of the Subsidiary Guaranty, Pledge
Agreement and Security Agreement. Each new Subsidiary Guarantor created as
permitted by this Section 7.07 shall execute and deliver, or cause to be
executed, all other relevant documentation of the type described in Section 4 as
such new Subsidiary Guarantor would have had to deliver if such new Subsidiary
were a Credit Party on the Initial Borrowing Date.
7.08 Prepayments of Indebtedness, etc. The Borrowers will not, and
will not permit any other Credit Party to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due or paying interest in cash when interest may be satisfied by
issuance of additional Subordinated Notes) or exchange of the Subordinated
Notes;
(b) amend or modify, or permit the amendment or modification of,
any provisions of any Subordinated Note Documents; and/or
(c) amend, modify or change in any manner adverse to the interests
of the Lenders the certificate of incorporation (including, without
limitation, by the filing of any certificate of designation), bylaws or
equivalent organizational document of any Credit Party or any agreement
entered into by a Borrower with respect to its capital stock or
partnership interests, or (except as otherwise specifically permitted by
this Agreement and with change orders not in excess of $100,000 under the
Construction Contract to be permitted) any Project Document or enter into
any new agreement in any manner adverse to the interests of the Lenders
with respect to the capital stock or partnership interests
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of either Borrower.
7.09 Dividends, etc. (a) The Borrowers will not, and will not
permit any other Credit Party to, declare or pay any dividends or distributions
(other than dividends or distributions payable solely in capital stock or
partnership interests of such Person) or return any capital to, its stockholders
or partners or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders or partners as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for a consideration, any
shares of any class of its capital stock or partnership interests now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares or partnership interests), or set aside
any funds for any of the foregoing purposes, or permit any other Credit Party to
purchase or otherwise acquire for consideration any shares of any class of the
capital stock or partnership interests of a Borrower, as the case may be, now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued by such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that:
(i) any Subsidiary of the Partnership may pay dividends to the
Partnership;
(ii) Summerlin, Inc. may pay dividends with the proceeds of the
management fees it is paid by the Partnership as permitted by Section 7.10
(viii); and
(iii) if no Event of Default exists, the Partnership may make
distributions to the Partners as Tax Allowance Amounts which are paid in
cash and made as distributions to all Partners.
(b) The Borrowers will not, and will not permit any other Credit
Party to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Partnership, (b) make loans or advances to the
Partnership or (c) transfer any of its properties or assets to the Partnership
or (B) the ability of any Credit Party to create, incur, assume or suffer to
exist any Lien upon its property or assets to secure the Obligations or (C) the
ability of any Credit Party to amend any Credit Document, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents and the Subordinated Note Documents; (ii) applicable
law; (iii) customary non-assignment provisions entered into in the ordinary
course of business and consistent with past practices; (iv) any restriction or
encumbrance with respect to a Subsidiary imposed pursuant to an agreement which
has been entered into for the sale or disposition of all or substantially all of
the capital stock or assets of such
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Subsidiary, so long as such sale or disposition is permitted under this
Agreement; and (v) Liens permitted under Section 7.03 and any documents or
instruments governing the terms of any Indebtedness or other obligations secured
by any such Liens, provided that such prohibitions or restrictions apply only to
the assets subject to such Liens.
7.010 Transactions with Affiliates. The Borrowers will not, and will
not permit any other Credit Party to, enter into, or cause, suffer or permit to
exist any arrangement or contract with, any of its other Affiliates unless such
arrangement or contract is on fair and reasonable terms, is an arrangement or
contract of the kind which would be entered into by a prudent Person in the
position of such Credit Party with a Person which is not one of its Affiliates
and, if the amount of the proposed transaction involves more than $1,000,000 is
approved by a majority of the independent directors of the General Partner, if
any, provided that the following shall be permitted: (i) Dividends permitted by
Section 7.09; (ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, or any stock options and stock ownership plans for the
benefit of employees, officers and directors, consultants and advisors approved
by the General Partner, (iii) the loans or advances to employees permitted by
Section 7.06(f); (iv) any transaction between Subsidiary Guarantors; (v)
indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Partnership and its Subsidiaries, in
each case in the ordinary course of business, (vi) transactions pursuant to
agreements in existence on the Closing Date which are (x) described in the
Offering Memorandum or (y) otherwise, in the aggregate, immaterial to the
Partnership and its Subsidiaries taken as whole; (vii) employment,
non-competition or confidentiality agreements entered into by the Partnership or
any of its Subsidiaries with its employees in the ordinary course of business,
(viii) so long as no Default or Event of Default exists, any payment of the
management fee to the General Partner in an amount not to exceed 3% of net
revenues ("Net Revenue Fee") plus 6% of consolidated net income before interest,
taxes, depreciation, amortization and management fees (net of the Net Revenue
Fee), (ix) the issuance of partnership interests in the Partnership, (x)
payments to SCRI for amounts allocated by SCRI to the Partnership for
compensation (whether deferred or current) of SCRI employees providing services
to the Partnership and related expenses; and (xi) the payment of the development
fee owing to SCGC on the Commencement Date and after giving effect to the
Subordinated Fees Agreement.
7.011 Interest Coverage Ratio. The Borrowers will not permit the
ratio of (i) Adjusted EBITDA to (ii) Consolidated Cash Interest Expense for any
Test Period ending at the end of any fiscal quarter of the Partnership set forth
below, to be less than the ratio set forth opposite such fiscal quarter:
Fiscal Quarter Ratio
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June 30, 1999 through
December 31, 2000 2.00:1.0
March 31, 2001 through
December 31, 2001 2.25:1.0
Thereafter 2.50:1.0
7.012 Leverage Ratio. The Borrowers will not permit the Leverage
Ratio to exceed, as of the end of any fiscal quarter of the Partnership set
forth below, the ratio set forth opposite such fiscal quarter:
Fiscal Quarter Ratio
June 30, 1999 6.00:1.0
September 30, 1999 6.00:1.0
December 31, 1999 5.75:1.0
March 31, 2000 5.75:1.0
June 30, 2000 5.75:1.0
September 30, 2000 5.50:1.0
December 31, 2000 5.50:1.0
March 31, 2001 5.25:1.0
June 30, 2001 5.00:1.0
September 30, 2001 4.75:1.0
December 31, 2001 4.50:1.0
Thereafter 4.25:1.0
7.013 Fixed Charge Coverage Ratio. The Borrowers will not permit the
ratio of (i) Consolidated EBITDA less Consolidated Capital Expenditures to (ii)
Consolidated Fixed Charges for any Test Period to be less than the 1.10:1.0.
7.014 Limitation on Issuance of Stock. The Partnership will not
permit any of its Subsidiaries, directly or indirectly, to issue, sell, assign,
pledge or otherwise encumber or dispose of any shares of its capital stock or
other securities (or warrants, rights or options to acquire shares or other
equity securities), except, to the extent permitted by Section 7.06, or to
qualify directors if required by applicable law.
8. Events of Default Upon the occurrence of any of the following
specified events (each, an "Event of Default"):
8.01 Payments. The Borrowers shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for three or more Business Days, in the payment when due of any
interest on the Loans or any Fees or any other amounts owing hereunder or under
any other Credit Document; or
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8.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any statement or certificate delivered, or required to be delivered, by it
pursuant hereto or thereto shall prove to be untrue in any material respect on
the date as of which made or deemed made; or
8.03 Covenants. (a) The Borrowers shall default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.09 or 7, or (b) any Credit Party default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 8.01, 8.02 or clause (a) of this Section 8.03) contained in this
Agreement or any other Credit Document and such default shall continue
unremedied for a period of at least 30 days after notice to the defaulting party
by the Administrative Agent or the Required Lenders;
8.04 Default Under Other Agreements. (a) Any Credit Party shall (i)
default in any payment with respect to any Indebtedness (other than the
Obligations) beyond the period of grace, if any, applicable thereto or (ii)
default in the observance or performance of any agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause any such Indebtedness to become due
prior to its stated maturity; or (b) any such Indebtedness of a Credit Party
shall be declared to be due and payable, provided that it shall not constitute
an Event of Default pursuant to this Section 8.04 unless the aggregate principal
amount of all Indebtedness referred to in clauses (a) and (b) above exceeds
$1,000,000 at any one time; or
8.05 Bankruptcy, etc. Any Credit Party shall commence a voluntary
case concerning itself under Title 11 of the United States Code entitled
"Bankruptcy", as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against any Credit Party
and the petition is not controverted within 10 days, or is not dismissed within
60 days, after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of any Credit Party; or any Credit Party commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to or any Credit Party;
or there is commenced against any Credit Party any such proceeding which remains
undismissed for a period of 60 days; or any Credit Party is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; any Credit Party suffers any appointment of any
custodian or
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the like for it or any substantial part of its property to continue undischarged
or unstayed for a period of 60 days; or any Credit Party makes a general
assignment for the benefit of creditors; or any corporate action is taken by any
Credit Party for the purpose of effecting any of the foregoing; or
8.06 ERISA. (a) Any Plan or Multiemployer Plan shall fail to
satisfy the minimum funding standard required for any plan year or part thereof
under Section 412 of the Code or Section 302 of ERISA or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code or Section 303 or 304 of ERISA, a Reportable Event shall
have occurred, any Plan which is subject to Title IV of ERISA shall have had or
is likely to have a trustee appointed to administer such Plan, any Plan or
Multiemployer Plan which is subject to Title IV of ERISA is, shall have been or
is likely to be terminated or to be the subject of termination proceedings under
ERISA, any Plan shall have an Unfunded Current Liability, a contribution
required to be made by any Credit Party, or an ERISA Affiliate with respect to a
Plan or Multiemployer Plan that is subject to the funding requirements of
Section 412 of the Code or Section 302 of ERISA has not been timely made, any
Credit Party or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971
or 4975 of the Code or on account of a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code, or any Credit Party has incurred or is likely to incur liabilities
pursuant to one or more employee welfare benefit plans (as defined in Section
3(1) of ERISA) that provide benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or Plans or
Multiemployer Plans; (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) such lien, security interest or
liability, individually, and/or in the aggregate, in the reasonable opinion of
the Required Lenders, could reasonably be expected to have, a Material Adverse
Effect; or
8.07 Security Documents. (a) Any Security Document shall cease to
be in full force and effect, or shall cease to give the Collateral Agent the
Liens or any of the material rights, powers and privileges purported to be
created thereby in favor of the Collateral Agent (including as a result of the
applicable Gaming Authorities failing to approve same in connection with the
issuance to the Partnership of a Gaming License), or (b) any Credit Party shall
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to any such Security Document;
or
8.08 Subsidiary Guaranty. The Subsidiary Guaranty or any provision
thereof shall cease to be in full force and effect, or any Subsidiary Guarantor
or any Person acting by or on behalf of such Subsidiary Guarantor shall deny or
disaffirm
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such Subsidiary Guarantor's obligations under the Subsidiary Guaranty; or
8.09 Judgments. One or more judgments or decrees shall be entered
against any Credit Party involving a liability of $2,000,000 or more in the
aggregate for all such judgments and decrees for the Credit Parties (not paid or
to the extent not covered by insurance) and any such judgments or decrees shall
not have been vacated, discharged or stayed or bonded pending appeal within 60
days from the entry thereof; or
8.010 Project Documents. There shall occur and be continuing (i) a
default or an event of default by any Credit Party under any of the Project
Documents or (ii) any event or condition which could, either immediately or with
the giving of notice or lapse of time or both, enable any party to any Project
Document other than the Credit Parties to terminate or suspend its obligations
under such Project Document or (iii) a breach by any Credit Party of any term,
covenant or agreement contained in any Project Document or if, in any such case,
in the determination of the Required Lenders, such default, event of default,
event, condition or breach could reasonably be expected to have a Material
Adverse Effect on the completion of the Project, and remains uncured for 30 days
after the occurrence thereof; or
8.011 Gaming Authority. Any Gaming Authority having jurisdiction
over Project shall, after granting a Gaming License, revoke, not renew or
suspend same for more than 60 days (provided that action shall have been
commenced by the Partnership to cause any such action to be rescinded within 15
days of the occurrence thereof), or any such Gaming Authority shall have
appointed a conservator, supervisor or trustee to oversee any of the operations
of the Partnership; or the Partnership shall have been denied a material Gaming
License by the applicable Gaming Authority; or
8.012 Commencement Date The Commencement Date has not occurred by
Completion Deadline:
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Lenders, by written notice to the Borrowers, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against any Subsidiary
Guarantor or any Borrower, except as otherwise specifically provided for in this
Agreement (provided that, if an Event of Default specified in Section 8.05 shall
occur with respect to any Borrower, the result which would occur upon the giving
of written notice by the Administrative Agent as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such notice): (i)
declare the Total Commitment terminated, whereupon the
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Commitment of each Lender shall forthwith terminate immediately and any
commitment fee shall forthwith become due and payable without any other notice
of any kind; (ii) declare the principal of and any accrued interest in respect
of all Loans and all obligations owing hereunder (including Unpaid Drawings) and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and (iii) subject to compliance with
applicable Gaming Laws, enforce, as Collateral Agent (or direct the Collateral
Agent to enforce), any or all of the Liens and security interests created
pursuant to the Security Documents.
9. Definitions. As used herein, the following terms shall have
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include in the singular number the plural and in
the plural the singular:
"A Lender" shall mean each MN Lender to the extent it has an MN
Commitment-A.
"Account Agreements" shall mean and include the Disbursement
Agreement, the Mortgage Notes Proceeds Agreement and the Partnership Funds
Agreement.
"Additional Mortgages" shall have the meaning provided in Section
6.09.
"Adjusted Cash Flow" for any fiscal year shall mean Consolidated Net
Income for such fiscal year (after provision for taxes and for the payment of
Tax Allowance Amounts) plus the amount of all net non-cash charges (including,
without limitation, depreciation, deferred tax expense, non-cash interest
expense, amortization and other non-cash charges) that were deducted in arriving
at Consolidated Net Income for such fiscal year, minus the amount of all
non-cash gains and gains from sales of assets (other than sales of inventory and
equipment in the normal course of business) that were added in arriving at
Consolidated Net Income for such fiscal year.
"Adjusted EBITDA" shall mean for any period (i) Consolidated EBITDA
for such period plus (ii) the amount, if any, on deposit in the Interest Escrow
Account on the last day of such period.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 10.09.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers
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of such Person), controlled by, or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agents" shall have the meaning provided in the first paragraph of
this Agreement.
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time further modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrowers in connection therewith as the amount of the Net Cash Proceeds
from the related Asset Sale that the Borrowers intend to use to purchase,
construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean (i) in the case of
Construction Loans 3.00%; and (ii) in the case of Term Loans and Revolving
Loans, 2.75% less (in the case of this clause (ii) only) the Margin Reduction
Discount, if any.
"Applicable Eurodollar Margin" shall mean (i) in the case of
Construction Loans, 4.00% and (ii) in the case of Terms Loans and Revolving
Loans, 3.75% less (in the case of this clause (ii) only) the Margin Reduction
Discount, if any.
"Architect" shall mean Paul Steelman, Ltd.
"Architect Contract" shall mean the contract between the Partnership
and the Architect, as in effect on the Closing Date and as the same may be
subsequently amended, modified or supplemented pursuant to the terms thereof and
hereof.
"Arranging Agent" shall mean Gleacher NatWest, Inc.
"Asset Sale" shall mean and include (x) the sale, transfer or other
disposition by any Credit Party to any Person other than a Credit Party of any
asset of a Credit Party (other than (i) sales, transfers or other dispositions
in the ordinary course of business of obsolete or excess equipment and (ii) any
other sale that generates in the aggregate less than $500,000 of proceeds) and
(y) the receipt by the Credit Parties of casualty insurance and/or condemnation
proceeds in excess of
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$500,000 that do not reimburse the Credit Parties for costs already expended and
are not to be promptly utilized to repair or replace the asset damaged or
condemned.
"Assignment Agreement" shall mean the Assignment Agreement in the
form of Exhibit K (appropriately completed).
"Assignment of Leases and Rents" shall have the meaning provided in
Section 4.01(m)(III)(ii).
"Authorized Officer" shall mean (x) in respect of the Partnership,
the General Partner acting through an Authorized Officer of the General Partner
and (y) with respect to the General Partner, any senior officer of the General
Partner designated as such in writing to the Administrative Agent by the General
Partner, in each case to the extent acceptable to the Administrative Agent.
"B Lender" shall mean each MN Lender to the extent it has an MN
Commitment-B.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Base Rate" shall mean the higher of (i) the Prime Lending Rate and
(ii) the Federal Funds Effective Rate plus 1/2 of 1%.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrowers" shall mean the Partnership and Summerlin, Inc.
"Borrowing" shall mean the incurrence of one Type of Loan pursuant
to a single Facility by the Borrowers from all of the Lenders having Commitments
with respect to such Facility on a pro rata basis on a given date (or resulting
from conversions on a given date), having in the case of LIBOR Loans the same
Interest Period; provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of LIBOR Loans.
"Budget" shall have the meaning provided in Section 4.01(f)(iii).
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, LIBOR Loans, any day which is a Business
Day described in clause (i) and which is also a day for trading by and between
banks in U.S. dollar deposits in the interbank
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Eurodollar market.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Partnership or any of its Subsidiaries in each case taken
at the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Lender or
(y) any bank (or the parent company of such bank) whose short-term commercial
paper rating from Standard & Poor's Ratings Services, a division of McGraw-Hill,
Inc. ("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an "Approved Lender"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Lender or Approved
Lender or by the parent company of any Lender or Approved Lender and commercial
paper issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including insurance proceeds and any cash received by
way of deferred payment pursuant to a note receivable issued in connection with
such Asset Sale, other than the portion of such deferred payment constituting
interest, but only as and when so received) received by a Borrower and/or any
Subsidiary from such Asset Sale.
"Casino Property" shall mean the gaming casino that is to be part of
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the Project, as more fully described in the Offering Memorandum.
"CC Continuation Agreement" shall mean a Continuation Agreement
substantially in the form of Exhibit F-4 hereto as the same may be amended,
modified or supplemented pursuant to the provisions thereof.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq.
"CERCLIS" means the Comprehensive Environmental Response
Compensation Liability Information System List.
"Change of Control" shall mean (i) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Partnership and its Subsidiaries; (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Partnership; (iii) Summerlin, Inc. ceases to be the sole general partner of the
Partnership with full rights of management; (iv) Summerlin, Inc. ceases to be
wholly-owned, directly or indirectly, by SCGC; or (v) SCGC and its affiliates
cease to own at least 51% of the limited partnership interests in the
Partnership.
"Closing Date" shall have the meaning provided in Section 4.01.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Closing Date
and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Lenders.
"Commencement Date" shall mean the date on which the Casino Property
and the Hotel Properties comprising the Project commence full business as a
gaming casino and hotels.
"Commitment" shall mean, with respect to each Lender, such Lender's
MN Commitment and RC Commitment.
"Completion Deadline" shall mean July 2, 1999.
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"Completion Guaranty" shall mean the guaranty issued by J.A. Jones
Inc. of the General Manager's obligations under the Construction Contract, as in
effect on the Closing Date and as the same may be subsequently amended, modified
or supplemented pursuant to the terms thereof and hereof.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all cash expenditures (including in all events all amounts expended
or capitalized under Capital Leases but excluding any amount representing
capitalized interest and Project Costs) by the Partnership and its Subsidiaries
during that period that, in conformity with GAAP, are or are required to be
included in the property, plant or equipment reflected in the consolidated
balance sheet of the Partnership and its Subsidiaries.
"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense for such period less any portion thereof not
required to be paid in cash on a current basis.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at
any time, the current liabilities of such Person and its Subsidiaries determined
on a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" shall mean, as of any date of determination, the
average during the fiscal quarter ended on such date of (x) the aggregate stated
balance sheet amount of all Indebtedness of the Partnership and its Subsidiaries
on a consolidated basis as determined in accordance with GAAP plus (y) any
Indebtedness for borrowed money of any other Person as to which the Partnership
and/or any of its Subsidiaries has created a guarantee or other Contingent
Obligation.
"Consolidated EBIT" shall mean, for any period, (A) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization or
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary losses less (B) the
amount for such period of gains on sales of assets (excluding sales in the
ordinary course of business) and other extraordinary gains, all as determined on
a consolidated basis in accordance with GAAP.
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"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense and
(iii) amortization expense, all as determined on a consolidated basis in
accordance with GAAP. Consolidated EBITDA for any Test Period ending on or prior
to the fourth fiscal quarter end following the Commencement Date shall mean
Consolidated EBITDA for such Test Period (as determined without regard to this
proviso) that is annualized.
"Consolidated Fixed Charges" shall mean for any Test Period, the
sum, without duplication, of the amount for such period of (i) Consolidated Cash
Interest Expense, (ii) Tax Allowance Amounts paid by the Partnership and (iii)
scheduled principal payments on Consolidated Debt, all as determined for the
Partnership and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"Consolidated Interest Expense" shall mean, for any period, (i)
total interest expense (including that attributable to Capital Leases in
accordance with GAAP) of the Partnership and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of the Partnership and its
Subsidiaries, including, without limitation, all the interest on Loans and on
all the Subordinated Notes; all commitment fees owed with respect to
Indebtedness for borrowed money; commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; and net costs under Interest Rate Agreements.
"Consolidated Net Income" shall mean for any period, the net income
(or loss) of the Partnership and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP, provided that there shall be excluded from the calculation thereof
(without duplication) (i) the income (or loss) of any Person (other than
Subsidiaries of the Partnership) in which any other Person (other than the
Partnership or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Partnership or any of its Subsidiaries by such Person during such period, (ii)
the income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary of the Partnership or is merged into or consolidated with the
Partnership or any of its Subsidiaries or that Person's assets are acquired by
the Partnership or any of its Subsidiaries and (iii) the income of any
Subsidiary of the Partnership to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.
"Construction Contract" shall mean the contract between the
Partnership and the General Manager for the construction of the Project on a
cost of
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work plus fee basis, subject to a guaranteed maximum price of $133 million and
with liquidated damages payable by the General Manager if the Commencement Date
does not occur by the dates set forth therein, as in effect on the Closing Date
and as the same may be subsequently amended, modified or supplemented pursuant
to the terms thereof and hereof.
"Construction Management Contract" shall mean a contract that
provides for substantially the services described under the term "Construction
Management Contract" in the Offering Memorandum, as delivered to the
Administrative Agent in compliance with Section 6.12 and as the same may be
subsequently amended, modified or supplemented pursuant to the terms thereof and
hereof.
"Construction Loans" shall have the meaning provided in Section
1.01(a).
"Consultant" shall mean Nevada Construction Services, Inc.
"Consultant's Confirmation" shall mean a written confirmation from
the Consultant accompanying each Notice of Construction Loans that confirms that
the principal amount of Construction Loans requested in such Notice does not
exceed an amount equal to (x) the sum of Project Costs that have to be paid as
of the date of such Notice plus the aggregate Project Costs that are reasonably
expected to become payable prior to the next following quarter end less (y) the
aggregate principal amount then on deposit in the Proceeds Accounts.
"Contingent Obligations" shall mean as to any Person any obligation
of such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided that the term
Contingent Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability
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in respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Conversion Date" shall mean the Commencement Date provided that
same has occurred on or prior to the Completion Deadline.
"Credit Documents" shall mean this Agreement, the Notes, the
Security Documents and the Subsidiary Guaranty.
"Credit Party" shall mean the Borrowers and the Subsidiary
Guarantors.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.
"Disbursement Account" shall have the meaning provided in the
Disbursement Agreement.
"Disbursement Agreement" shall have the meaning provided in Section
4.01(k)(I).
"Disqualified Lender" shall mean any Lender who has been determined
by a Gaming Authority in compliance with the authorized practices and procedures
of such Gaming Authority not to meet the applicable suitability standards under
the Gaming Laws for holding Loans.
"Dividends" shall have the meaning provided in Section 7.09.
"Drawdown Amount" shall mean for any Drawdown Date the aggregate
principal amount of Construction Loans to be made on such date as specified
pursuant to Section 1.03(a), which amount shall not be less than $10 million.
"Drawdown Date" shall mean (x) the Closing Date and (y) each of
March 31, 1998, June 30, 1998, September 30, 1998, December 31, 1998 and March
31, 1999.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other institutional "accredited investor" as defined in
Regulation D of the Securities Act.
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"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrowers or any Subsidiary solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 7401 et seq.;
the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act,
42 U.S.C. Section 3808 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section
2701 et seq. and any applicable state and local or foreign counterparts or
equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect as of
the Closing Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with any Credit Party would be deemed to be a "single
employer" (i) within the meaning of Sections 414(b), (c), (m) and (o) of the
Code or (ii) as a result of any Credit Party being or having been a general
partner of such person.
"Event of Default" shall have the meaning provided in Section 8.
"Excess Cash Flow" shall mean, for any fiscal year, the remainder of
(i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y) the decrease,
if any, in Working Capital from the first day to the last day of such fiscal
year, and (z)
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to the extent not included in (x) above, the aggregate amount received by the
Borrowers and their Subsidiaries during such fiscal year on account of business
interruption insurance minus (ii) the sum of (x) the amount of Consolidated
Capital Expenditures (except to the extent financed through the incurrence of
Indebtedness) made during such fiscal year and (y) the increase, if any, in
Working Capital from the first day to the last day of such fiscal year and (z)
any scheduled repayments or prepayments of the principal amount of Term Loans
and/or other Indebtedness during such fiscal year.
"Expiration Date" shall mean January 31, 1998.
"Facility" shall mean any of the credit facilities established under
this Agreement, i.e., the MN Facility or the Revolving Facility.
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 2.01.
"Final Maturity Date" shall mean March 31, 2004.
"First Mortgage Notes" shall have the meaning provided in Section
1.05(a).
"First Security" shall mean First Security Trust Company of Nevada.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 7, including defined terms as used therein, are subject (to the
extent provided therein) to Section 11.07(a).
"Gaming Authority" shall mean any of the Nevada Gaming Commission,
the Nevada State Gaming Control Board, the Clark County Liquor and Gaming
Licensing Board, the City of Las Vegas and any other gaming regulatory body or
any agency which has, or may at any time after the Closing Date have,
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jurisdiction over the gaming activities of the Partnership or any of its
Subsidiaries or any successor to such authority.
"Gaming Company" shall mean any person that is subject to the
jurisdiction of any Gaming Authority or that possesses any Gaming Licenses.
"Gaming Laws" shall mean the provisions of the Nevada Gaming Control
Act, as amended from time to time, all regulations of the Nevada Gaming
Commission promulgated thereunder, as amended from time to time, all ordinances,
rules and regulations adopted by the City of Las Vegas, as amended from time to
time, and all other laws, statutes, rules, rulings, order, ordinances,
regulations and other legal requirements of any Gaming Authority.
"Gaming License" shall mean any license, qualification, permit,
franchise or other authorization from any Gaming Authority required to own,
operate or otherwise conduct the gaming business of the Partnership and its
Subsidiaries, including all licenses, findings of suitability and registrations
granted under Gaming Laws.
"General Manager" shall mean J.A. Jones.
"General Partner" shall mean Summerlin, Inc.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"HHC Agreements" shall mean (i) the Development Declaration and
Option to Repurchase dated as of August 15, 1996, (ii) a Royalty Agreement dated
as of August 15, 1996, (iii) the Golf Course Agreement dated as of July 10, 1996
and (iv) an Agreement of Option to Purchase Real Estate (the "HHC Option
Agreement") in each case between the Partnership and Howard Hughes Corporation
and/or affiliates thereof, as in effect on the Closing Date and as any of the
foregoing may be subsequently amended, modified or supplemented in accordance
with the terms thereof and hereof.
"HHC Option Agreement" shall have the meaning provided in the
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definition of HHC Agreements.
"Hotel Properties" shall mean the two hotels that are to be part of
the Project, as more fully described in the Offering Memorandum.
"Improvements" shall mean the hotels, casino and parking spaces to
be constructed on the Project Property in substantial accordance with the Plans,
with all landscaping and other off and on site work related thereto.
"Indebtedness" of any Person shall mean, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be recorded as a
liability on the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, provided that Indebtedness shall not include trade payables and accrued
expenses, in each case arising in the ordinary course of business.
"Interest Escrow Account" shall mean the escrow account the subject
of the Interest Escrow Agreement.
"Interest Escrow Agreement" shall have the meaning provided in
Section 4.01(k)(III).
"Interest Escrow Termination Date" shall mean the last day of the
fifth calendar quarter ending after the Commencement Date.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, any interest rate cap agreement, any interest rate collar agreement
or other similar agreement or arrangement designed to protect the Borrower
against fluctuations in interest rates.
"J.A. Jones" shall mean J.A. Jones Construction, a North Carolina
corporation.
"Last Drawdown Date" shall mean March 31, 1999.
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"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph of
this Agreement.
"Lender Default" shall mean (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any incurrence of
Construction Loans or Revolving Loans, as the case may be, or (ii) a Lender
having notified the Administrative Agent and/or the Borrowers that it does not
intend to comply with the obligations under Section 1.01(a) or (c), as the case
may be, in each case for any reason, including or as a result of the appointment
of a receiver or conservator with respect to such Lender at the direction or
request of any regulatory agency or authority.
"Lender Register" shall have the meaning provided in Section 11.16.
"Leverage Ratio" shall mean, at any date of determination, the ratio
of Consolidated Debt on such date to Consolidated EBITDA for the Test Period
ending on such date (or most recently ended).
"Liability Parties" shall mean and include the Credit Parties and
each other Person who directly or indirectly is providing credit support for the
Loans and/or the Project.
"LIBOR" shall mean with respect to each Interest Period for a LIBOR
Loan, the offered quotation to first-class banks in the interbank Eurodollar
market by the Administrative Agent for dollar deposits of amounts in same day
funds comparable to the outstanding principal amount of the LIBOR Loan of the
Administrative Agent for which an interest rate is then being determined with
maturities comparable to the Interest Period to be applicable to such LIBOR
Loan, determined as of 10:00 A.M. (London time) on the date which is two
Business Days prior to the commencement of such Interest Period.
"LIBOR Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
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"Line Items" shall mean the line items in the Budget as in effect
from time to time.
"Loans" shall mean the Construction Loans, the Term Loans and the
Revolving Loans.
"Margin Reduction Discount" shall mean zero, provided that the
Margin Reduction Discount shall be increased to .25%, .50%, .75% or 1.00%, as
the case may be, as specified in clauses (i), (ii), (iii) or (iv) below, at any
time after the Commencement Date, when, and for so long as, the ratio set forth
in such clause has been satisfied as at the end of the then Relevant Test
Period:
(i) the Margin Reduction Discount shall be .25% in the event that
as at the end of the Relevant Test Period the Leverage Ratio is greater
than or equal to 4.0 to 1 but less than 4.5 to 1;
(ii) the Margin Reduction Discount shall be .50% in the event that
as of the end of the Relevant Test Period the Leverage Ratio is greater
than or equal to 3.5 to 1 but less than 4.0 to 1;
(iii) the Margin Reduction Discount shall be .75% in the event that
as at the end of the Relevant Test Period the Leverage Ratio is greater
than or equal to 3.0 to 1 but less than 3.5 to 1.0; and
(iv) the Margin Reduction Discount shall be 1.00% in the event that
as at the end of the Relevant Test Period the Leverage Ratio is less than
3.0 to 1.
The Leverage Ratio shall be determined for the Relevant Test Period, by delivery
of an officer's certificate of the General Partner to the Lenders pursuant to
Section 6.01(e), which certificate shall set forth the calculation of the
Leverage Ratio. The Margin Reduction Discount so determined shall apply, except
as set forth below, from the date on which such officer's certificate is
delivered to the Administrative Agent to the earlier of (x) the date on which
the next certificate is delivered to the Administrative Agent pursuant to
Section 6.01(e) and (y) the 45th day following the end of the fiscal quarter in
which such first certificate was delivered to the Administrative Agent (or 90
days if such fiscal quarter was the last fiscal quarter of a fiscal year).
Notwithstanding anything to the contrary contained above, the Margin Reduction
Discount shall be zero (y) if no officer's certificate has been delivered to the
Lenders pursuant to Section 6.01(e) which sets forth the Leverage Ratio for the
Relevant Test Period or the financial statements upon which any such
calculations are based have not been delivered, until such a certificate and/or
financial statements are delivered and (z) at all times when there shall exist a
Default under Section 8.01 or an Event of Default. It is understood and agreed
that the Margin Reduction Discount as
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provided above shall in no event be cumulative and only the Margin Reduction
Discount available pursuant to either clause (i), (ii), (iii) or (iv), if any,
contained in this definition shall be applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
the business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of the Credit Parties taken as a whole.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans,
$1,000,000 and (ii) for Construction Loans and Term Loans, $2,500,000.
"MN Commitment" shall mean, at any time, with respect to each
Lender, the amount, if any, set forth opposite such Lender's name on Annex I
hereto directly below the column entitled "MN Commitment" as the same may be
terminated pursuant to Section 2.03, with an "MN Commitment-A" and an "MN
Commitment-B" to be portions of an MN Commitment so designated on Annex I.
"MN Commitment Fee" shall have the meaning provided in Section
2.01(a).
"MN Facility" shall mean the Facility evidenced by the Total MN
Commitment.
"MN Lender" shall mean (x) prior to the Conversion Date, each Lender
with a MN Commitment and (y) on and after the Conversion Date, each Lender with
Term Loans outstanding.
"Mortgage" shall have the meaning provided in Section 4.01(m)(iii).
"Mortgage Notes Proceeds Account" and "Mortgage Notes Proceeds
Agreement" shall have the meanings provided in Section 4.01(k)(II).
"Mortgage Policy" shall have the meaning provided in Section
4.01(m)(III).
"NatWest" shall mean National Westminster Bank Plc.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale (including payment of
principal, premium and interest of Indebtedness secured by the assets the
subject of the Asset Sale and required to be, and which is, repaid under the
terms thereof as a result of such Asset Sale), and incremental taxes paid or
payable as a result thereof.
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"Note" shall mean and include each First Mortgage Note and each
Revolving Note.
"Notice of Borrowing" shall mean and include a Notice of
Construction Loans, a Notice of Term Conversion and a Notice of Revolving Loans.
"Notice of Construction Loans" shall have the meaning provided in
Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice of Revolving Loans" shall have the meaning provided in
Section 1.03(c).
"Notice of Term Conversion" shall have the meaning provided in
Section 1.03(b).
"Notice Office" shall mean the office of the Administrative Agent at
175 Water Street, New York, New York or such other office as the Administrative
Agent may designate to the Borrowers from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent, the Arranging Agent, the Collateral Agent or any
Lender pursuant to the terms of this Agreement or any other Credit Document.
"Offering Memorandum" shall mean the Offering Memorandum dated
December 22, 1997 relating to the Subordinated Notes and the Notes, as in effect
on the Closing Date.
"Partners" shall mean at any time, the General Partner and the
limited partners of the Partnership at such time, which shall include SCGC.
"Partnership" shall mean The Resort at Summerlin, Limited
Partnership, a Nevada limited partnership.
"Partnership Funds Account" shall mean the deposit account referred
to in, and governed by, the Partnership Funds Agreement.
"Partnership Funds Agreement" shall mean the agreement among the
Borrowers, Summerlin, Inc. as Representative for the Partners in existence on
the Closing Date and First Security as Account Agent in respect of the funds
deposited in
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the Partnership Funds Account, in the form delivered to the Administrative Agent
pursuant to Section 4.01(q)(III) and as the same may be subsequently amended,
modified or supplemented in accordance with the terms thereof and hereof.
"Payment Office" shall mean the office of the Administrative Agent
at 175 Water Street, New York, New York or such other office as the
Administrative Agent may designate to the Borrowers from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permits" shall mean any and all actions, approvals, certificates,
consents, waivers, exemptions, variances, franchises, orders, permits,
authorizations, rights or licenses of or from any governmental authority or
agency.
"Permitted Business" shall mean the business of developing and
constructing, or after the Construction Completion Date operating and managing,
the Project and businesses reasonably incidental thereto.
"Permitted Encumbrances" shall mean, with respect to the Project
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Administrative Agent.
"Permitted Liens" shall mean Liens described in Section 7.03.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) any Credit Party, or an ERISA Affiliate, and each
such plan for the five year period immediately following the latest date on
which a Credit Party or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Plans and Specifications" shall mean the plans and specifications
prepared in accordance with industry standards by or on behalf of the
Partnership by a licensed reputable engineering or architectural firm, as
applicable, for the renovation, construction and/or equipping, as the case may
be, of the Project in a first class manner consistent with the description of
the Project set forth in the Offering Memorandum, as the same may be amended in
accordance with the terms hereof. The Plans and Specifications shall include,
but not be limited to, architectural,
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structural, mechanical and electrical plans and specifications, together with
all plan revisions and addenda to the specifications.
"Pledge Agreement" shall have the meaning provided in Section
4.01(m)(I).
"Pledged Securities" shall mean all the Pledged Securities as
defined in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean, at any time, the bank prime loan
rate published by the Board of Governors of the Federal Reserve System in
Federal Reserve Statistical Release H.15(519) entitled "Selected Interest Rates"
on such day (or if not a Business Day, on the last preceding Business Day) or,
if no such rate is published, the prime lending rate or base rate as announced
from time to time by the Administrative Agent (or by a New York money market
bank selected by the Administrative Agent).
"Proceeds Accounts" shall mean the Partnership Funds Account, the
Subordinated Notes Proceeds Account and the Mortgage Notes Proceeds Account.
"Project" shall mean the hotel, casino, spa complex, conference
center and related complex to be known as The Resort at Summerlin, as more fully
described in the Offering Memorandum.
"Project Costs" shall mean the amounts required to construct the
Project, which shall include all Line Items in the Budget (including
Construction Completion Reserves and Contingencies) as in effect from time to
time.
"Project Documents" shall mean the Subordinated Fees Agreement, the
Disbursement Agreement, the Partnership Funds Agreement, the Subordinated Notes
Proceeds Agreement, the Mortgage Notes, the Construction Contract, the
Construction Management Contract, the HHC Agreements, the Completion Guaranty,
the Architect Contract, the Budget, the Regent License and Subordination
Agreement, the Timetable and the Plans.
"Project Property" shall mean the Real Property on which the Project
is to be located.
"RC Commitment" shall mean the lesser of $10,000,000 and the excess,
if any, of $100,000,000 over the aggregate outstanding principal amount of
Construction Loans converted into Term Loans pursuant to Section 1.01(b), as the
same may be (x) reduced or terminated pursuant to Section 2.02, 2.03 or 8 or (y)
adjusted as a result of assignments pursuant to Section 1.13 and/or 11.04;
provided that if no Construction Loans are converted into Term Loans on the
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Conversion Date pursuant to Section 1.01(b) the RC Commitment shall be zero.
"RC Commitment Fee" shall have the meaning provided in Section
2.01(b).
"RC Lender" shall mean such financial institution as is appointed by
the Borrowers prior to the Commencement Date with the consent of the
Administrative Agent and the agreement of such institution to make Revolving
Loans hereunder.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Regent License and Subordination Agreement" shall mean (i) the
License Agreement between the Partnership and Regent Hotels Worldwide, Inc. and
(ii) the Subordination, Stabilization and Assumption Agreement relating to
certain fees payable under such License Agreement, in each case as in effect on
the Closing Date and as the same may be subsequently amended, modified or
supplemented in accordance with the terms thereof and hereof.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrowers and their Subsidiaries as described in Section 7.01.
"Reinvestment Election" shall have the meaning provided in Section
3.02(A)(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the General Partner stating that the Borrowers, in good
faith, intend and expect to use all or a specified portion of the Net Cash
Proceeds of an Asset Sale to purchase, construct or otherwise acquire
Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
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Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrowers and their Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Administrative Agent, on behalf of the Required Lenders, shall have delivered a
written termination notice to the Borrowers, provided that such notice may only
be given while an Event of Default exists, (ii) the date occurring 350 days (or
175 days to the extent in respect of Designated Proceeds) after such
Reinvestment Election and (iii) the date on which the Borrowers shall have
determined not to, or shall have otherwise ceased to, proceed with the purchase,
construction or other acquisition of Reinvestment Assets with the related
Anticipated Reinvestment Amount.
"Release" means any spilling, leaking, pumping, pouring emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
any Hazardous Material or pollutant or contaminant into the environment
(including the abandonment or discarding of barrels, containers, and other
closed receptacles containing any Hazardous Material or pollutant or
contaminant).
"Relevant Test Period" shall mean, at any time, the Test Period
ending on the last day of the then most recently ended fiscal quarter of the
Partnership with respect to which an officer's certificate has been delivered to
the Lenders pursuant to Section 6.01(e).
"Required Lenders" shall mean Lenders (other than any Defaulting
Lenders or Disqualified Lenders) whose outstanding MN Commitments (if prior to
the Conversion Date) or (on and after the Conversion Date), Term Loans and RC
Commitment (or, if after the RC Commitment has been terminated, Revolving Loans)
constitute greater than 50% of (x) the MN Commitments of Non-Defaulting Lenders
that are not Disqualified Lenders or (y) the Term Loans and RC Commitment (or,
if after the RC Commitment has been terminated, the Revolving Loans) of
Non-Defaulting Lenders that are not Disqualified Lenders.
"Revolving Facility" shall mean the facility evidenced by the RC
Commitment.
"Revolving Loan" shall have the meaning provided in Section 1.01(c).
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"SCGC" shall mean Seven Circle Gaming Corporation, a Delaware
corporation.
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"SCRI" shall mean Seven Circle Resorts, Inc., a Wholly Owned
Subsidiary of SCGC.
"Scheduled Repayment" shall have the meaning provided in Section
3.02(A)(b).
"SEC" shall have the meaning provided in Section 6.01(i).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Section 3.04 Certificate" shall have the meaning provided in
Section 3.04(b)(ii).
"Security Agreement" shall have the meaning provided in Section
4.01(m)(II).
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the relevant Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement, the Mortgage, the Assignment of Leases and Rents, the Account
Agreements, the Interest Escrow Agreement and the CC Continuation Agreement.
"Subordinated Fees Agreement" shall have the meaning provided in
Section 4.01(j).
"Subordinated Guaranties" shall mean the unsecured guaranty or
guaranties by the Subsidiary Guarantors of the Subordinated Notes.
"Subordinated Notes" shall mean the 13% Senior Subordinated PIK
Notes due 2007 issued by the Borrowers and shall include the subordinated notes
with substantially identical terms and provisions issued in exchange therefor as
contemplated by the Offering Memorandum (the "Exchange Subordinated Notes").
"Subordinated Notes Documents" shall mean and include each of the
documents, instruments (including the Subordinated Notes) and other agreements
entered into by the Borrowers (including, without limitation, the Subordinated
Notes Indenture) relating to the issuance by the Borrowers of the Subordinated
Notes, as in effect on the Closing Date and as the same may be supplemented,
amended or modified from time to time in accordance with the terms hereof and
thereof.
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"Subordinated Notes Indenture" shall mean the Indenture, dated as of
December 30, 1997, between the Borrowers and United States Trust Company of New
York as trustee thereunder, with respect to the Subordinated Notes.
"Subordinated Notes Proceeds Account" shall mean the deposit account
referred to in, and governed in, the Subordinated Notes Proceeds Agreement.
"Subordinated Notes Proceeds Agreement" shall mean the Agreement
among the Borrowers, the Subordinated Notes Trustee and First Security in the
form delivered to the Administrative Agent pursuant to Section 4.01(q)(III) and
as the same may be subsequently amended, modified or supplemented in accordance
with the terms thereof and hereof.
"Subordinated Notes Trustee" shall mean United States Trust Company
of New York as trustee under the Subordinated Notes Indenture.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Partnership.
"Subsidiary Guarantor" shall mean each Subsidiary of the Partnership
that has executed and delivered a counterpart of the Subsidiary Guaranty.
"Subsidiary Guaranty" shall have the meaning provided in Section
4.01(l).
"Summerlin, Inc." shall mean The Resort at Summerlin, Inc., a Nevada
corporation.
"Tax Allowance Amount" shall mean, with respect to any Partner, for
any calendar quarter, (i) 40% of the excess of (a) the estimated taxable income
allocable to such Partner arising from its ownership of a partnership interest
in the Partnership for the fiscal year through such calendar quarter over (b)
any losses of the Partnership for prior fiscal years and such fiscal year that
are allocable to such Partner that were not previously utilized in the
calculation of Tax Allowance Amounts minus (ii) prior distributions of Tax
Allowance Amounts for such fiscal year, all as determined by the General Partner
in good faith.
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"Taxes" shall have the meaning provided in Section 3.04(a).
"Term Loan" shall have the meaning provided in Section 1.01(b).
"Test Period" shall mean (i) the period (taken as one accounting
period) commencing on the Commencement Date and ending on the next following
fiscal quarter end, (ii) the period (taken as one accounting period) commencing
on the Commencement Date and ending on the second following fiscal quarter end,
(iii) the period (taken as one accounting period) commencing on the Commencement
Date and ending on the third following fiscal quarter end, (iv) the period
(taken as one accounting period) commencing on the Commencement Date and ending
on the fourth following fiscal quarter end and (v) for any determination
thereafter, the four consecutive fiscal quarters of the Partnership (taken as
one accounting period) ending on the date of such determination.
"Timetable" shall have the meaning provided in Section 4.01(f)(iv).
"Total MN Commitment" shall mean the sum of the MN Commitments of
each of the Lenders.
"Transaction Documents" shall mean the Credit Documents, the
Subordinated Notes Documents and the Project Documents.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or LIBOR Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Voting Stock" shall mean, with respect to any corporation, the
outstanding stock of all classes (or equivalent interests) which ordinarily, in
the absence of contingencies, entitles holders thereof to vote for the election
of directors (or Persons performing similar functions) of such corporation, even
though the right so to vote has been suspended by the happening of such a
contingency.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in
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such Subsidiary, other than directors' qualifying shares, is owned directly or
indirectly by such Person.
"Working Capital" shall mean the excess of Consolidated Current
Assets over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.
10. The Administrative Agent.
10.01 Appointment. The Lenders hereby designate NatWest as
Administrative Agent (for purposes of this Section 10, the terms "Administrative
Agent" shall include NatWest in its capacity as Collateral Agent pursuant to the
Security Documents) and Gleacher NatWest, Inc. as Arranging Agent to act as
specified herein and in the other Credit Documents. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, each Agent to take such action on
its behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of such Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agents
may perform any of their duties hereunder by or through their respective
officers, directors, agents, employees or affiliates.
10.02 Nature of Duties. No Agent shall have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. No Agent or any of its respective officers, directors,
agents, employees or affiliates shall be liable for any action taken or omitted
by them hereunder or under any other Credit Document or in connection herewith
or therewith, unless caused by their gross negligence or willful misconduct. The
duties of each Agent shall be mechanical and administrative in nature; no Agent
shall have by reason of this Agreement or any other Credit Document a fiduciary
relationship in respect of any Lender or the holder of any Note; and nothing in
this Agreement or any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon either Agent any obligations in
respect of this Agreement or any other Credit Document except as expressly set
forth herein or therein with respect to such Agent.
10.03 Lack of Reliance on the Agents. Independently and without
reliance upon either Agent, each Lender and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the
Liability Parties in
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connection with the making and the continuance of the Loans and the taking or
not taking of any action in connection herewith and (ii) its own appraisal of
the creditworthiness of the Liability Parties and, except as expressly provided
in this Agreement, no Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender or the holder of any
Note with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter. No Agent shall be responsible to any Lender or the holder of any
Note for any recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document or the financial condition of any
Liability Party or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition of any
Liability Party or the existence or possible existence of any Default or Event
of Default.
10.04 Certain Rights of the Agents. If the Administrative Agent
shall request instructions from the Required Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Credit Document, the Administrative Agent shall be entitled to refrain from such
act or taking such action unless and until such Agent shall have received
instructions from the Required Lenders; and the Administrative Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, neither any Lender nor the holder of any Note shall have any right of
action whatsoever against the Administrative Agent as a result of the
Administrative Agent acting or refraining from acting hereunder or under any
other Credit Document in accordance with the instructions of the Required
Lenders.
10.05 Reliance. Each Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype, facsimile or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that such Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon advice of counsel
selected by such Agent.
10.06 Indemnification. To the extent an Agent is not reimbursed and
indemnified by the Borrowers, the Lenders will reimburse and indemnify such
Agent, in proportion to their respective Loans and commitments, for and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or
nature which may be imposed on, asserted against or incurred by such Agent in
performing its respective duties hereunder or under any other Credit Document,
in any way relating to or arising out
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of this Agreement or any other Credit Document provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the gross negligence or willful misconduct of such Agent.
10.07 The Agents in Their Individual Capacities. With respect to its
obligation to make Loans under this Agreement, each Agent shall have the rights
and powers specified herein for a "Lender" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Lenders," "Required Lenders," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include the Agents in
their individual capacities. Each Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with any
Credit Party or any Affiliate of any Credit Party as if they were not performing
the duties specified herein, and may accept fees and other consideration from
the Borrowers or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.
10.08 Holders. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
10.09 Resignation by an Agent (a) The Administrative Agent may
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Borrowers and the Lenders. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below.
(a) Upon any such notice of resignation, the Required Lenders
shall appoint a successor Administrative Agent hereunder or thereunder who shall
be a commercial bank or trust company reasonably acceptable to the Borrowers.
(b) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, subject to compliance with
applicable Gaming Laws, the Administrative Agent, with the consent of the
Borrowers, shall then appoint a successor Administrative Agent who shall serve
as Administrative Agent hereunder or thereunder until such time, if any, as the
Lenders appoint a successor Administrative Agent as provided above.
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(c) Subject to clause (e) below, if no successor Administrative
Agent has been appointed pursuant to clause (b) or (c) above by the 20th
Business Day after the date such notice of resignation was given by the
Administrative Agent, the Administrative Agent's resignation shall become
effective and the Required Lenders shall thereafter perform all the duties of
the Administrative Agent hereunder and/or under any other Credit Document until
such time, if any, as the Lenders appoint a successor Administrative Agent as
provided above.
(d) Notwithstanding anything to the contrary in this Section
10.09, to the extent required by applicable Gaming Laws, the incumbent
Administrative Agent shall remain the Collateral Agent for the Lenders with
respect to any Collateral for which a lienholder must be qualified under such
Gaming Laws until the new Administrative Agent can be so qualified (but the
incumbent Administrative Agent shall be entitled to the indemnities and other
protections provided to the Administrative Agent hereunder in such capacity).
(e) The Arranging Agent shall have no duties or responsibilities
hereunder or under the other Credit Documents.
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11. Miscellaneous.
11.01 Payment of Expenses, etc. The Borrowers agree to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agents in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of White & Case and Schreck and Morris) and of the Agents and each
of the Lenders in connection with the enforcement of the Credit Documents and
the documents and instruments referred to therein (including, without
limitation, the reasonable fees and disbursements of counsel for each Agent and
for each of the Lenders); (ii) pay and hold each of the Agents and Lenders
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes; and (iii) indemnify each Agent and each Lender, its
officers, directors, employees, representatives and agents from and hold each of
them harmless against any and all losses, liabilities, claims, damages or
expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of, (a) an investigation, litigation or other
proceeding (whether or not an Agent or any Lender is a party thereto and whether
or not any such investigation, litigation or other proceeding is between or
among an Agent, any Lender, any Credit Party or any third Person or otherwise)
related to the entering into and/or performance of any Document or the use of
the proceeds of any Loans hereunder or the consummation of any transactions
contemplated in any Credit Document, and (b) any such investigation, litigation
or other proceeding relating to the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of any
Credit Party or any Real Property owned or operated by them, or the actual or
alleged presence or release of Hazardous Materials on, under or from any Real
Property at any time owned or operated by any of the Credit Parties, and in each
case including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified).
11.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Lender
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(including, without limitation, by branches and agencies of such Lender wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Lender
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of such Credit Party purchased
by such Lender pursuant to Section 11.06(b), and all other claims of any nature
or description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Lender shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
11.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier, facsimile or cable communication) and
mailed, telegraphed, telexed, telecopied, faxed, cabled or delivered, if to a
Credit Party, at the address specified opposite its signature below or in the
other relevant Credit Documents, as the case may be; if to any Lender or Agent,
at its address specified for such Lender or Agent on Annex II hereto; or, at
such other address as shall be designated by any party in a written notice to
the other parties hereto. All such notices and communications shall be mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, and
shall be effective when received.
11.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, provided that the Borrowers may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Lenders. Each Lender may at any time grant participations in any
of its rights hereunder or under any of the Notes to another financial
institution, provided that (x) in the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that the participant shall be entitled to the benefits of
Sections 1.10, and 3.04 of this Agreement to the extent that such Lender would
be entitled to such benefits if the participation had not been entered into or
sold and (y) no Lender shall transfer, grant or assign any participation under
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such amendment
or waiver would (i) extend the final scheduled maturity of any Note in which
such participant is participating (it being understood that any waiver of the
application of any prepayment or the method of any application of any prepayment
to, the amortization of the Term Loans shall not constitute an extension of the
final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest
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rates), or reduce the principal amount thereof, or increase such participant's
participating interest in any commitment over the amount thereof then in effect
(it being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in any commitments, or a mandatory prepayment, shall not
constitute a change in the terms of any commitment), (ii) release all or
substantially all of the Collateral or (iii) consent to the assignment or
transfer by any Credit Party of any of its rights and obligations under this
Agreement or any other Credit Document.
(a) Notwithstanding the foregoing, (x) any Lender may assign all
or a portion of its outstanding Construction Loans or Term Loans and/or (if
prior to the Conversion Date) its MN Commitment or (in the case of the RC
Lender) all of its RC Commitment and its rights and obligations hereunder to
another Lender (or an Affiliate of such assigning Lender), and (y) with the
consent of the Borrowers and the Administrative Agent (which consents shall not
be unreasonably withheld), any Lender may assign all or a portion of its
outstanding Construction Loans or Term Loans and/or (if prior to the Conversion
Date) its MN Commitment or (in the case of the RC Lender) all of its RC
Commitment and its rights and obligations hereunder to one or more Eligible
Transferees (including one or more Lenders). No assignment pursuant to the
immediately preceding sentence by a Lender (or by Lenders which are Affiliates
of each other) shall to the extent such assignment represents an assignment to
an institution other than one or more Lenders hereunder (or to an Affiliate of
an assigning Lender), be in an aggregate amount less than $2,500,000 unless the
entire Loans and Commitments of the assigning Lender (or group of Lenders which
are Affiliates) is so assigned. If any Lender so sells or assigns all or a part
of its rights hereunder or under the Notes, any reference in this Agreement or
the Notes to such assigning Lender shall thereafter refer to such Lender and to
the respective assignee to the extent of their respective interests and the
respective assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would if it were
such assigning Lender. Each assignment pursuant to this Section 11.04(b) shall
be effected by the assigning Lender and the assignee Lender executing an
Assignment Agreement (appropriately completed). At the time of any such
assignment, (i) either the assigning or the assignee Lender shall pay to the
Administrative Agent a nonrefundable assignment fee of $3,500, (ii) if prior to
the Conversion Date, Annex I shall be deemed to be amended to reflect the MN
Commitment of the respective assignee (which shall result in a direct reduction
to the MN Commitments of the assigning Lender) and of the other Lenders, and
(iii) the Borrowers will issue new Notes to the respective assignee and to the
assigning Lender in conformity with the requirements of Section 1.05. To the
extent of any assignment pursuant to this Section 11.04(b) to a Person which is
not already a Lender hereunder and which is not a United States Person (as such
term is defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes, the respective assignee Lender shall provide to the Borrowers and the
Administrative Agent the appropriate Internal Revenue Service Forms (and, if
applicable, a Section 3.04 Certificate) described in Section 3.04(b). To the
extent that an assignment of all or any portion of
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a Lender's Commitments and related outstanding Obligations pursuant to this
Section 11.04(b) would, at the time of such assignment, result in increased
costs under Section 1.10, or 3.04 from those being charged by the respective
assigning bank prior to such assignment, then the Borrowers shall not be
obligated to pay such increased costs (although the Borrowers shall be obligated
to pay any other increased costs of the type described above resulting from the
changes specified in said Section 1.10 or 3.04 after the date of the respective
assignment). Each Lender and the Borrowers agree to execute such documents
(including without limitation amendments to this Agreement and the other Credit
Documents) as shall be necessary to effect the foregoing. Nothing in this clause
(b) shall prevent or prohibit any Lender (without having to obtain the consent
of the Borrowers and/or the Administrative Agent) from pledging all or any
portion of its Notes or Loans to secure obligations of such Lender, including
any pledge or assignments to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank.
(b) Notwithstanding any other provisions of this Section 11.04, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrowers to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State or
would require any prior approval, qualification or other authorization from any
Gaming Authority.
(c) Each Lender initially party to this Agreement hereby
represents, and each Person that became a Lender pursuant to an assignment
permitted by this Section 11.04 will, upon its becoming party to this Agreement,
represent that it is an Eligible Transferee which makes or acquires loans in the
ordinary course of its business and that it will make or acquire loans for its
own account in the ordinary course of such business, provided that subject to
the preceding clauses (a) and (b), the disposition of any promissory notes or
other evidences of or interests in Indebtedness held by such Lender shall at all
times be within its exclusive control.
11.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of any Agent or any Lender in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and either Agent or any Lender shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which either Agent or any
Lender would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Agents or the Lenders to any other or further action in any circumstances
without notice or demand.
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11.06 Payments Pro Rata. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of any Credit Party
in respect of any Obligations of such Credit Party hereunder, it shall
distribute such payment to the Lenders (other than any Lender that has expressly
waived its right to receive its pro rata share thereof) pro rata based upon
their respective shares, if any, of the Obligations with respect to which such
payment was received.
(a) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the respective Credit Party to such Lenders in such amount as
shall result in a proportional participation by all of the Lenders in such
amount, provided that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
11.07 Calculations; Computations. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrowers to the Lenders), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 7, including definitions used therein, [shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the SCGC December 31, 1996 historical
financial statements delivered to the Lenders pursuant to Section 5.10(a)] and
(y) that if at any time the computations determining compliance with Section 7
utilize accounting principles different from those utilized in the financial
statements furnished to the Lenders, such financial statements shall be
accompanied by reconciliation work-sheets.
(a) All computations of interest and Fees hereunder shall be made
on the actual number of days elapsed over a year of 360 days.
11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial. (a) This Agreement and the other Credit Documents and the rights and
obligations of the parties hereunder and thereunder shall be construed in
accordance
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with and be governed by the law of the State of New York (subject as applicable
to the Gaming Laws). Any legal action or proceeding with respect to this
Agreement or any other Credit Document may be brought in the courts of the State
of New York or of the United States for the Southern District of New York, and,
by execution and delivery of this Agreement, each Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Borrower further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it, to the extent located
outside New York City, or by hand, to the extent located within New York City,
at its address for notices pursuant to Section 11.03, such service to become
effective 30 days after such mailing. Each Borrower hereby irrevocably
designates appoints and empowers CT Corporation System, with offices on the date
hereof located at 1633 Broadway, New York, New York 10019, as its agent for
service of process in respect of any such action or proceeding. Nothing herein
shall affect the right of any Agent or any Lender to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against a Borrower in any other jurisdiction.
(a) Each Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(b) Each of the parties to this Agreement hereby irrevocably
waives all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
11.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrowers and the
Administrative Agent.
11.010 Effectiveness. This Agreement shall become effective on the
date on which, each Borrower, each Agent and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent at its Notice Office or, in the
case of the Lenders and the Agents, shall have given to the Administrative Agent
telephonic (confirmed in writing), written telex or facsimile transmission
notice (actually received) at such
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<PAGE> 95
office that the same has been signed and mailed to it.
11.011 Headings Descriptive. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
11.012 Amendment or Waiver. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrowers and the Required Lenders, provided that no
such change, waiver, discharge or termination shall, without the consent of each
Lender (other than a Defaulting Lender or a Disqualified Lender) directly
affected thereby, (i) extend the Final Maturity Date (it being understood that
any waiver of any prepayment of, or the method of application of any prepayment
to the amortization of, the Loans shall not constitute any such extension), or
reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any postdefault increase in interest
rates) or Fees, or increase the commitment of any Lender over the amount thereof
then in effect (it being understood that a waiver of any Default or Event of
Default or of a mandatory reduction in any commitments shall not constitute a
change in the terms of any commitment of any Lender), (ii) amend, modify or
waive any provision of this Section 11.12, (iii) reduce the percentage specified
in, or (except to give effect to any additional facilities hereunder) otherwise
modify, the definition of Required Lenders, (iv) consent to the assignment or
transfer by any Borrower of any of its rights and obligations under this
Agreement or (v) release all or substantially all of the Collateral. No
provision of Section 10 may be amended without the consent of the Agents.
11.013 Survival. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 3.04, 10.06 or 11.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
11.014 Domicile of Loans. Each Lender may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or affiliate of
such Lender, provided that the Borrowers shall not be responsible for costs
arising under Section 1.10 or 3.04 resulting from any such transfer (other than
a transfer pursuant to Section 1.12 or 1.13) to the extent not otherwise
applicable to such Lender prior to such transfer.
11.015 Confidentiality. Subject to Section 11.04, the Lenders shall
hold all nonpublic information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrowers in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure to its Affiliates, employees, auditors, advisors or counsel or as
reasonably
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<PAGE> 96
required by any bona fide transferee or participant in connection with the
contemplated transfer of any Loans or participation therein (so long as such
transferee or participant agrees to be bound by the provisions of this Section
11.15) or as required or requested by any governmental agency or representative
thereof or pursuant to legal process, provided that, unless specifically
prohibited by applicable law or court order, each Lender shall notify the
Borrowers of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Lender by such governmental agency) for disclosure of any such
nonpublic information prior to disclosure of such information, and provided
further that in no event shall any Lender be obligated or required to return any
materials furnished by any Borrower or any Subsidiary.
11.016 Lender Register. The Borrowers hereby designate the
Administrative Agent to serve as their agent, solely for purposes of this
Section 11.16, to maintain a register (the "Lender Register") on which it will
record the name and address of each Lender, the commitments from time to time of
each of the Lenders, the Loans made by each of the Lenders and each repayment in
respect of the principal amount of the Loans of each Lender. Failure to make any
such recordation, or any error in such recordation, shall not affect the
Borrowers' obligations in respect of such Loans. With respect to any Lender, the
transfer of the Commitments of such Lender and the rights to the principal of,
and interest on, any Loan shall not be effective until such transfer is recorded
on the Lender Register maintained by the Administrative Agent with respect to
ownership of such commitments and Loans and prior to such recordation all
amounts owing to the transferor with respect to such commitments and Loans shall
remain owing to the transferor. The registration of assignment or transfer of
all or part of any commitments and Loans shall be recorded by the Administrative
Agent on the Lender Register only upon the acceptance by the Administrative
Agent of a properly executed and delivered Assignment Agreement pursuant to
Section 11.04(b). The Borrowers agree to indemnify the Administrative Agent from
and against any and all losses, claims, damages and liabilities of whatsoever
nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties under this Section 11.16 other
than those resulting from the Administrative Agent's willful misconduct or gross
negligence. The Administrative Agent agrees to permit any authorized
representative of any Gaming Authority to inspect at any time during normal
business hours, or to be provided with, a copy of the Lender Register.
11.017 Gaming Authorities, etc (a) The Agents and each Lender agree
to cooperate with all Gaming Authorities in connection with the administration
of their regulatory jurisdiction over the Borrowers, including, without
limitation, the providing of such documents or other information as may be
required to be provided to any such Gaming Authority relating to the Agents, any
Lender or any Borrower, or to the Credit Documents (subject to any regulatory
restriction binding upon any such
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<PAGE> 97
Agent or Lender). Notwithstanding any other provision of this Agreement, the
Borrowers expressly authorize each Agent and Lender to cooperate with any Gaming
Authority as described above.
(b) Nothing in this Agreement or in any of the Credit Documents
shall be construed at any time to constitute a pledge of any shares of common
stock of Summerlin, Inc. or of any equity interests in the Partnership, any
restriction on the transfer of any shares of common stock of Summerlin, Inc., or
any agreement not to encumber any shares of common stock of Summerlin, Inc.
(c) The Lenders hereby acknowledge that (i) the Borrowers may be
required to disclose the identities of the Lenders to the Gaming Authorities
upon request; (ii) the Nevada Gaming Commission may in its discretion require
the Lenders to file an application, be investigated and be found suitable to
hold the Loans; (iii) the Nevada Gaming Commission may, in its discretion,
require the holder of any debt security of a company registered by the Nevada
Gaming Commission as a publicly traded corporation ("Registered Company") to
file an application, be investigated and be found suitable to own the debt
security of a Registered Company; and (iv) if the Nevada Gaming Commission
determines that a person is unsuitable to own such security, then pursuant to
the Nevada Gaming Control Act and the regulations promulgated thereunder, the
Registered Company can be sanctioned, including the loss of its approvals, if
without the prior approval of the Nevada Gaming Commission, it: (a) pays to the
unsuitable person any dividend, interest, or any distribution whatsoever; (b)
recognizes any voting right by such unsuitable person in connection with such
securities; (c) pays the unsuitable person remuneration in any form; or (d)
makes any payment to the unsuitable person by way of principal redemption,
conversion, exchange, liquidation, or similar transaction. The Borrowers will be
required to be registered by the Nevada Commission as Registered Companies upon
the issuance of the Exchange Subordinated Notes.
(d) Each Lender hereby agrees (to the extent permitted by law)
that if the Gaming Authorities determine that such Lender as a holder or
beneficial owner of Loans must be found suitable (whether as a result of a
foreclosure of the Casino Property or for any other reason), and if such Lender
either refuses to file an application or is found unsuitable, such Lender shall,
upon request of the Borrowers, dispose of such Lender's Loans and Commitments
within 30 days after receipt of such request or such earlier date as may be
ordered by the Gaming Authorities, provided that if such Lender does not so
dispose of its Loans and Commitments, then such Lender will be deemed to have
agreed that the provisions described in Section 11.17(c)(iv) will be applicable
to it. To the extent consented to by the Required Lenders, the Borrowers will
have the right to prepay all the Loans of a Disqualified Lender (without
prepaying any other Loans).
(e) To the extent any covenant restriction in this Agreement is
required
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<PAGE> 98
to be eliminated or modified in order for the Borrowers to obtain or maintain
any Gaming License, the Lenders will in good faith consider changing this
Agreement to provide for such elimination or modification, provided that the
Lenders have no obligation to agree to any thereof and notwithstanding any
provision of any such Gaming License a breach by the Borrowers of any such
affected covenant shall, unless otherwise agreed by the Required Lenders,
constitute a Default or Event of Default, as the case may be, hereunder
entitling the Lenders to exercise the remedies provided for in Section 8.
* * *
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<PAGE> 99
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
By: The Resort at Summerlin, Inc.,
its General Partner
By__________________________________________
Name:
Title:
THE RESORT AT SUMMERLIN, INC.
By__________________________________________
Name:
Title:
NATIONAL WESTMINSTER BANK PLC,
Individually and as Administrative Agent
By__________________________________________
Name:
Title:
<PAGE> 100
GLEACHER NATWEST, INC.,
as Arranging Agent
By__________________________________________
Name:
Title:
<PAGE> 101
ANNEX I
COMMITMENTS
(PRIVATE) Lender MN MN MN
Commitment Commitment-A Commitment-B
National Westminster
Bank PLC $100,000,000 $60,000,000 $40,000,000
<PAGE> 102
ANNEX II
LENDERS AND AGENTS ADDRESSES
National Westminster 175 Water Street
Bank Plc New York, New York 10038
Attention: Robert Karlovitz
Tel. No.: 212-602-4800
Fax No.: 212-602-4638
Gleacher NatWest, Inc. 660 Madison Avenue, 19th Floor
New York, New York 10021
Attention: Geoff Benson
Tel. No.: 212-418-4503
Fax No.: 212-418-4599
<PAGE> 1
EXHIBIT 10.8
SUBORDINATED NOTES PROCEEDS AGREEMENT
SUBORDINATED NOTES PROCEEDS AGREEMENT (this "Agreement"), dated as of
December 30, 1997, among THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP (the
"Partnership"), THE RESORT AT SUMMERLIN, INC. ("Summerlin, Inc.", and together
with the Partnership, the "Assignors"), UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee under the Indenture referred to below (in such capacity, the
"Trustee") and FIRST SECURITY TRUST COMPANY OF NEVADA as Account Agent hereunder
(in such capacity, the "Account Agent"). Except as otherwise defined herein,
terms used herein and defined in the Indenture, or in the Disbursement Agreement
referred to below, shall be used herein as so defined.
WITNESSETH:
WHEREAS, the Assignors are to issue 13% Senior Subordinated PIK Notes
due 2007 (the "Subordinated Notes") in an initial aggregate principal amount of
$100,000,000 to be governed by an Indenture dated as of December 30, 1997 among
the Assignors and the Trustee (as modified and in effect from time to time, the
"Indenture");
WHEREAS, the Assignors, certain lenders from time to time party
thereto, Gleacher Natwest, Inc., as Arranging Agent and the Administrative Agent
have entered into a Credit Agreement, dated as of December 30, 1997 (as modified
or restated and in effect from time to time, the "Credit Agreement");
WHEREAS, all proceeds of Subordinated Notes are required to be directly
deposited into the Subordinated Notes Proceeds Account; and
WHEREAS, the amounts in the Subordinated Notes Proceeds Account may be
disbursed into the Disbursement Account from time to time upon the satisfaction
of the applicable conditions set forth in the Disbursement Agreement dated as of
December 30, 1997 among inter alia the Trustee, the Account Agent and First
Security Trust Company of Nevada, as Disbursement Agent (as modified or restated
and in effect from time to time, the "Disbursement Agreement");
NOW, THEREFORE, it is agreed:
SECTION 1. ESTABLISHMENT OF SUBORDINATED NOTE PROCEEDS ACCOUNT; ETC.
1.0 1. Establishment. The Account Agent has established in its own name
and for the benefit of the holders of the Subordinated Notes (the "Holders") an
account (Account No. 702254B) (the "Subordinated Notes Proceeds Account") for
purposes of this Agreement, which Subordinated Notes Proceeds Account is
maintained at the Account Agent's office located at Las
<PAGE> 2
Vegas, Nevada (Wire instructions: First Security Bank of Nevada - ABA # 1224
01668). Subject to the provisions of this Agreement, the Subordinated Notes
Proceeds Account shall be under the sole dominion and control of the Account
Agent and, except as set forth in Section 3.01 hereof, the Account Agent shall
have the sole right to make withdrawals from the Subordinated Notes Proceeds
Account and to exercise all rights with respect to the Collateral (as
hereinafter defined) from time to time therein.
1.02. Deposits to the Subordinated Notes Proceeds Account. The
Assignors will transfer, in the funds received, all net proceeds of the
Subordinated Notes to the Account Agent for immediate deposit into the
Subordinated Notes Proceeds Account to be held therein until released pursuant
to the provisions of Section 3 below.
1.03. Investment of Funds. So long as any amounts remain in the
Subordinated Notes Proceeds Account, the Account Agent will from time to time,
at the request of the General Partner, invest funds on deposit in the
Subordinated Notes Proceeds Account in Cash Equivalents. All investments made
pursuant to this Section 1.03 (and any instruments evidencing same), and all
proceeds thereof, shall be held in the Subordinated Notes Proceeds Account as
part of the Collateral. All such investments shall be made in the name of the
Account Agent. All risk of loss in respect of investments made pursuant to this
Section 1.03 shall be on the Assignors.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST.
2.01. Pledge and Grant of Security Interest. As collateral security to
secure the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations, each Assignor hereby pledges and
assigns to the Account Agent, for the benefit of the Holders, a continuing
possessory Lien and security interest in all of the right, title and interest of
such Assignor in and to the Subordinated Notes Proceeds Account, in all funds
deposited therein, in all investments from time to time therein, and in all cash
and non-cash proceeds of any of the foregoing (collectively, the "Collateral"),
from the date of the establishment of the Subordinated Notes Proceeds Account
until the termination thereof pursuant to the terms hereof. As used herein,
"Obligations" shall mean (i) the principal of, interest on or premium on the
Subordinated Notes, (ii) all other obligations and indebtedness of each Assignor
to the Holders now existing or hereafter incurred under, arising out of, or in
connection with the Indenture and Subordinated Notes, and the due performance
and compliance by each Assignor with all of the terms, conditions and agreements
contained in the Indenture and Subordinated Notes, (iii) any and all sums
advanced by the Account Agent in order to preserve the Collateral or to preserve
its security interest in the Collateral, (iv) in the event of any proceeding for
the collection or enforcement of any indebtedness, obligations or liabilities of
any Assignor referred to in clauses (i), (ii) or (iii) above, after an Event of
Default (as defined in the Indenture) shall have occurred and be continuing, the
reasonable expenses of retaking, holding, preparing for sale or lease, selling
or otherwise disposing of or realizing on the Collateral, or of any exercise by
the Account Agent of its rights hereunder, together with reasonable attorneys'
fees and court costs and (v) all amounts paid by any Indemnitee (as hereinafter
defined) as to which such Indemnitee has the right to reimbursement under
Section 9 hereof.
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<PAGE> 3
SECTION 3. WITHDRAWALS, APPLICATIONS AND REMEDIES.
3.01. Withdrawals. (a) Upon receipt by the Account Agent of a Transfer
Notice from the Disbursement Agent, the Account Agent shall, on the Transfer
Date or other date specified in the Transfer Notice, withdraw from the
Subordinated Notes Proceeds Account and transfer to the Disbursement Account its
Account Agent's Portion for such date (i.e., the portion, if any, of the
Requested Amount remaining unfunded after giving effect to all withdrawals from
the Partnership Funds Account resulting from such Transfer Notice made pursuant
to the order required by Section 2.02 of the Disbursement Agreement).
(b) To the extent required to make any withdrawal pursuant to the
foregoing clause of this Section 3.01, the Account Agent shall, and is hereby
authorized to, liquidate Cash Equivalents then on deposit in the Subordinated
Notes Proceeds Accounts pursuant to its customary practices for liquidating such
securities.
(c) Collateral may only be withdrawn as provided in clause (a) of this
Section 3.01, Section 3.02 and/or Section 10 and shall remain in the
Subordinated Notes Proceeds Account until so withdrawn. Neither the Account
Agent nor the Trustee shall have any liability whatsoever to any Holder or any
Person as a result of any release of Collateral by transfer to the Disbursement
Account following receipt by the Account Agent of a Transfer Notice regardless
of any subsequent determination that one or more of the conditions specified
herein or in the Disbursement Agreement to such withdrawal were not satisfied.
3.02. Remedies Upon a Noticed Event of Default; Application of
Proceeds. (a) If a Noticed Event of Default (as defined below) shall occur and
be continuing, if and to the extent directed to do so by the Trustee (acting at
the direction of the Holders of a majority in principal amount of the
Subordinated Notes), the Account Agent shall, subject to any mandatory
requirements of applicable law (including the Gaming Laws), (i) exercise in
respect of all of the Collateral in addition to other rights and remedies
provided for herein or otherwise available to it under applicable law, all of
the rights and remedies of a secured party on default under the Uniform
Commercial Code then in effect in the State of New York, (ii) liquidate all Cash
Equivalents in accordance with its customary practices for liquidating such
securities and/or (iii) withdraw the Collateral, if any, from the Subordinated
Notes Proceeds Account and pay the same to the Trustee for application to the
Obligations in accordance with Section 6.10 of the Indenture. As used herein,
a "Noticed Event of Default shall mean (x) an Event of Default under Section
6.01(ix) and (x) of the Indenture (Bankruptcy defaults) with respect to an
Assignor and (y) any other Event of Default that has been specified as a
"Noticed Event of Default" in writing from the Trustee to the Assignors.
(b) Each Assignor shall remain jointly and severally liable to the
extent of any deficiency between the amount of the proceeds of the Collateral
applied as provided in preceding clause (a) and the aggregate amount of the
Obligations.
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<PAGE> 4
SECTION 4. FURTHER ASSURANCES.
Each Assignor agrees that it will, at any time and from time to time,
at its expense, promptly execute and deliver all further agreements, instruments
and other documents and take all further action that may be necessary or that
the Account Agent or the Trustee may reasonably request in order to perfect and
protect the security interest purported to be created hereby or otherwise to
enable the Account Agent to exercise and enforce its rights and remedies
hereunder.
SECTION 5. TRANSFERS AND OTHER LIENS.
Each Assignor agrees that it will not create or suffer to exist any
Lien upon or with respect to any Collateral except for the security interest
purported to be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
Each Assignor hereby irrevocably appoints, which appointment shall be
coupled with an interest, the Account Agent its attorney-in-fact, with full
authority after the occurrence of and during the continuance of an Event of
Default, in the place and stead of such Assignor and in the name of such
Assignor or otherwise, from time to time in the Account Agent's discretion to
execute any instrument and to take any other action which the Account Agent may
deem necessary or advisable to accomplish the purposes of this Agreement or to
facilitate the assignment or other transfer by the Account Agent of any or all
of its rights hereunder.
SECTION 7. PERFORMANCE BY THE ACCOUNT AGENT.
If any Assignor fails to perform any agreement or obligation contained
herein, the Account Agent itself may perform or cause performance of such
agreement or obligation, and the expenses of the Account Agent incurred in
connection therewith shall be payable to the Account Agent by the Assignors.
SECTION 8. RESPONSIBILITY OF THE ACCOUNT AGENT AND TRUSTEE.
(a) Neither the Account Agent nor any of their respective directors,
officers, agents, employees, affiliates, representatives and agents shall be
liable for any failure to invest or reinvest any cash in the Subordinated Notes
Proceeds Account in accordance herewith or for any losses incurred by reason of
investments made by the Account Agent pursuant to Section 1.03 hereof. The
Account Agent shall act hereunder on the same terms and conditions as are set
forth in Section 10 of the Credit Agreement (which section is incorporated
herein by reference with each reference therein to "Agent" to include the
Account Agent hereunder and each reference therein to "Lenders" to include the
Holders and by accepting the benefit hereof, the Holders being deemed to have
agreed to such provisions as so incorporated) and shall hold the Collateral in
accordance with this Agreement and with only such obligations in respect thereof
as are expressly set forth in this Agreement.
(b) The Account Agent acknowledges and agrees that (i) all
disbursements and releases made pursuant to this Agreement shall be made by the
Account Agent irrespective of,
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<PAGE> 5
and without deduction for, any counterclaim, defense, recoupment or set-off and
shall be final, (ii) all service charges and fees with respect to this Agreement
or the Subordinated Notes Proceeds Account shall be paid by the Assignors, (iii)
it irrevocably waives and renounces any pledge, security interest (whether
consensual, statutory or otherwise) or right of offset or compensation that it
has or may ever have for its own benefit with respect to the Subordinated Notes
Proceeds Account, (iv) it shall maintain appropriate books and records with
respect to the Subordinated Notes Proceeds Account in which shall be recorded
all transactions related thereto including, without limitation, all
disbursements hereunder and any investments made by the Account Agent and shall
permit the Trustee or any of its agents or representatives to inspect and to
make copies of such books and records, as is reasonable, at the Assignors' sole
cost and expense and (v) it shall exercise its customary efforts and utilize
prudence in performing its duties hereunder in accordance with the terms of this
Agreement.
SECTION 9. INDEMNITY
9.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Account Agent and, to the extent acting
hereunder, the Trustee and their respective successors, assigns, employees,
agents and servants (hereinafter in this Section 9.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including reasonable attorneys' fees and expenses and herein collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement or any other document executed in connection herewith or in any other
way connected with the administration of the transactions contemplated hereby or
the enforcement of any of the terms of, or the preservation of any rights under
any thereof, or in any way relating to or arising out of the use of the
Collateral; provided that no Indemnitee shall be indemnified pursuant to this
Section 9.1(a) for expenses to the extent caused by the gross negligence or
willful misconduct of such Indemnitee.
(b) Without limiting the application of Section 9.1(a) hereof, each
Assignor jointly and severally agrees to pay, or reimburse the Account Agent,
for any and all fees, costs and expenses of whatever kind or nature incurred in
connection with the creation, preservation or protection of the Account Agent's
Liens on, and security interest in, the Account, including, without limitation,
all fees and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon or
in respect of the Collateral and all other fees, costs and expenses in
connection with protecting, maintaining or preserving the Collateral and the
Account Agent's interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.
(c) Without limiting the application of Section 9.1(a) or (b) hereof,
each Assignor jointly and severally agrees to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses which
such Indemnitee may suffer, expend or incur in consequence of or growing out of
any misrepresentation by such Assignor in this Agreement or in
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<PAGE> 6
any writing contemplated by or made or delivered pursuant to or in connection
with this Agreement.
(d) If and to the extent that the obligations of any Assignor under
this Section 9.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
9.2. Indemnity Obligations Secured by Collateral; Survival. Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Section 9 shall
continue in full force and effect notwithstanding the full payment of all
Obligations.
SECTION 10. TERMINATION; RELEASE.
(a) Upon the Termination Date (as defined below) this Agreement shall
terminate, and the Account Agent will duly assign, transfer and deliver to the
Assignors (without recourse and without any representation or warranty) the
Collateral, if any, that remains in the possession of the Account Agent and has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement together with any monies at the time held by the Account Agent
hereunder. As used in this Agreement, "Termination Date" shall mean that date,
occurring on and after the Commencement Date, which is one Business Day after
the date upon which all of the amounts on deposit in the Subordinated Notes
Proceeds Account have been applied as required by Section 3.01(a).
(b) At any time that the Assignors desire that Collateral be released
as provided in the foregoing Section 10(a), the Assignors shall deliver to the
Account Agent and the Administrative Agent a certificate signed by an Authorized
Officer of the General Partner, stating that the release of the respective
Collateral is permitted pursuant to said Section 10(a). Neither the Account
Agent nor the Administrative Agent shall have any liability whatsoever to any
Lender as a result of any release of Collateral by it as permitted by this
Section 10.
SECTION 11. NOTICES, ETC.
Except as otherwise specified herein, all notices, requests, demands or
other communications to or upon the respective parties hereto shall be deemed to
have been duly given or made when delivered as follows:
(a) if to any Assignor, at:
1160 Town Center Drive
Suite 200
Las Vegas, Nevada
Attention: John Tipton
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<PAGE> 7
(b) if to the Account Agent:
c/o First Security Bank
Trust Dept.
530 Las Vegas Blvd. South
Las Vegas, NV 89101
(c) if to the Trustee:
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
SECTION 12. MISCELLANEOUS.
This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the law of the State of
New York. This Agreement shall be binding upon each Assignor and its successors
and assigns and shall inure to the benefit of and be enforceable by the Account
Agent and the Trustee and their successors and assigns. The headings in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument. Delivery of an executed counterpart of the signature pages to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement. This Agreement shall become effective on the date
on which each of the parties shall have executed and delivered a copy hereof. In
the event that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement, which shall remain binding on all parties hereto.
SECTION 13. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever, except pursuant to a
writing signed by all the parties hereto. The Account Agent will be replaced
hereunder by a new Account Agent at such time as such new Account Agent replaces
the Disbursement Agent under and in accordance with Section 13 of the
Disbursement Agreement. Upon the effectiveness of such replacement, the original
Account Agent will transfer to the new Subordinated Notes Proceeds Account
established by the new Account Agent all amounts on deposit in the original
Subordinated Notes Proceeds Account.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized representatives, as of the date
first above written.
THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP, as an Assignor
By:
-----------------------------------
its GENERAL Partner
By: (ILLEGIBLE)
-----------------------------------
Title: SR VP-SLOTS
THE RESORT AT SUMMERLIN, INC.,
as an Assignor
By: (ILLEGIBLE)
-----------------------------------
Title: SR VP-SLOTS
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Account Agent
By:
-----------------------------------
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By: (ILLEGIBLE)
-----------------------------------
Title: VICE PRESIDENT
-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized representatives, as of the date
first above written.
THE RESORT AT SUMMERLIN, LIMITED
PARTNERSHIP, as an Assignor
By:
-----------------------------------
its General Partner
By:
-----------------------------------
Title:
THE RESORT AT SUMMERLIN, INC.,
as an Assignor
By: (ILLEGIBLE)
-----------------------------------
Title
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Account Agent
By: [ILLEGIBLE]
-----------------------------------
TITLE: PRESIDENT
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
-----------------------------------
Title:
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers or General Partners, as
the case may be, as of the date first above written.
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
By The Resort at Summerlin, Inc.,
its General Partner
By: (ILLEGIBLE)
-----------------------------------
Name: (ILLEGIBLE)
Title: SR VP-SLOTS
THE RESORT AT SUMMERLIN, INC.
By: (ILLEGIBLE)
-----------------------------------
Name:
Title: SR VP-SLOTS
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
-----------------------------------
Name:
Title:
THE RESORT AT SUMMERLIN, INC., as
Representative
By: (ILLEGIBLE)
-----------------------------------
Name:
Title: SR VP-SLOTS
<PAGE> 11
NATIONAL WESTMINISTER BANK PLC,
as Administrative Agent
By: /s/ ANDREW WEINBERG
-----------------------------------
Name: ANDREW WEINBERG
Title: SENIOR VICE PRESIDENT
FIRST SECURITY TRUST COMPANY OF NEVADA,
as MNPA Agent
By:
-----------------------------------
Name:
Title:
FIRST SECURITY TRUST COMPANY OF NEVADA,
as SNPA Agent
By:
-----------------------------------
Name:
Title:
FIRST SECURITY TRUST COMPANY OF NEVADA,
as PFA Agent
By:
-----------------------------------
Name:
Title:
FIRST SECURITY TRUST COMPANY OF NEVADA,
as Disbursement Agent
By:
-----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.9
GOLF COURSE AGREEMENT
This Golf Course Agreement is made as of the 10th day of July, 1996 by
and between Howard Hughes Properties, Limited Partnership, a Delaware limited
partnership ("HHP"), Summerlin Corporation, a Delaware corporation and
Tournament Players Club at Summerlin, Inc., a Nevada corporation ("TPC").
RECITALS
A. HHP is constructing an eighteen hole championship golf course
which is commonly referred to as "The TPC at The Canyons" golf course (the
"Canyons Golf Course"). The Canyons Golf Course is located on the real
property described on Attachment "A" hereto (the "Golf Course Property").
B. Upon completion of the Canyons Golf Course, TPC will be the
operator of the Canyons Golf Course pursuant to the terms of that certain
Operating Agreement dated April 27, 1989 by and between TPC and Summa
International Corporation ("SIC") as predecessor in interest to Summerlin
Corporation.
C. HHP also owns and TPC operates an existing eighteen hole
championship golf course in the vicinity of the Canyons Golf Course commonly
known as the "TPC at Summerlin" (the "Stadium Course") which is the home course
of the Las Vegas Invitational PGA TOUR tournament (the "LVI").
D. TPC is an indirect wholly owned subsidiary of PGA TOUR, Inc.,
a Maryland corporation ("PGA TOUR").
E. HHP intends to sell the property immediately adjacent to the
Golf Course Property which is described on Attachment "B" hereto (the "Resort
Parcel") to a third party for development by such third party in compliance
with a general plan of development acceptable to HHP.
F. The development on the Resort Parcel is intended to consist of
a resort style hotel and gaming casino (the "Resort"). The third party
operator to whom HHP sells the Resort Parcel is hereinafter referred to as the
"Resort Operator".
G. HHP desires that the Resort Operator have the right to select
preferred starting times and other preferential accommodations at the Canyons
Golf Course in connection with the operation and marketing of the Resort
consistent with the terms of this Agreement and that such right run with the
land to the benefit of the Resort Operator.
H. TPC has the right to acquire the Golf Course Property and the
Canyons Golf Course pursuant to the terms of that certain Basic Agreement dated
April 27,1989 by and between TPC and Summa International Corporation and that
certain Option Agreement dated __________ by and between TPC and Summa
International Corporation.
AGREEMENT
ARTICLE 1. PREFERRED STARTING TIMES
1.1 Except as otherwise provided in this Agreement, TPC agrees
that Resort Operator will have the right to select and market a portion of the
starting times at the Canyons Golf Course as follows:
(a) For purposes of this Agreement all unreserved starting times
for play at the Canyons Golf Course will be deemed to be in one of two
"pools": the "Resort Pool" and the "Common Pool."
(i) Resort Operator shall have the exclusive right to
reserve any starting time in the Resort Pool at any time in
the manner provided below.
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(ii) Resort Operator may also reserve any starting time in
the Common Pool in the same manner and subject to the same
terms and conditions which apply, from time to time, to
members of the general public. TPC shall have the right to
reserve starting times in the Common Pool to any persons
including members of the general public upon such terms and
conditions as TPC may establish in its discretion from time to
time. TPC shall notify Resort Operator of any modification in
such terms and conditions applicable to the general public
before they take effect
(b) Resort Operator will reserve starting times by "Booking" (as
hereinafter defined) such times with TPC. Booking will be
accomplished by delivering a written notice (a "Booking Notice") to
the TPC Golf Coordinator (hereinafter defined) on a form that is
reasonably acceptable to Resort Operator and TPC. "Booking" shall
mean identifying a starting time by date and time of play and
specifying on the Booking Notice that such starting time is being
reserved by Resort Operator in one of the following three ways:
(i) Outing. Resort Operator may, at any time, Book any
starting time in the Resort Pool for a golf outing. A "golf
outing" shall mean a group of 16 or more players commencing
play in consecutive starting times.
(ii) Specific Group. Resort Operator may also, at any
time, Book any starting time in the Resort Pool for a specific
group of two to four persons by identifying at least one
person in the group by name.
(iii) Guaranty. Resort Operator may also, at any time,
Book any starting time in the Resort Pool for one to four
persons who are not yet identified as provided in subsection
(b)(ii) and are not part of a golf outing as provided in
subsection (b)(i); provided, Resort Operator shall in such
case guaranty payment of green fees and cart fees for such
starting time.
(c) The number of starting times available in the Resort Pool will
initially be as provided in subsection (c)(i) below and such number
will diminish as they are Booked by Resort Operator pursuant to this
Agreement or as the day of play approaches as follows:
(i) With respect to any day that is at least 180 days
prior to the day Resort Operator delivers a Booking Notice,
50% of all starting times (or 75% if Resort Operator has
exercised the option under Section 2.2) will be in the Resort
Pool and 50% will be in the Common Pool. If there are an odd
number of starting times available on such day the number in
the Common Pool will be one less than the number in the Resort
Pool. TPC will not reserve any starting times for any party
other than Resort Operator more than 180 days in advance of
the day of play except as provided in Section 1.10..
(ii) One-half (50%) of the starting times in the Resort
Pool that have not been Booked at least 90 days in advance of
the day of play will be transferred from the Resort Pool to
the Common Pool. All starting times then remaining in the
Resort Pool may be Booked by Resort Operator as provided in
subsection 1.1(b).
(iii) One-half (50%) of the starting times in the Resort
Pool that have not been Booked at least 45 days in advance of
the day of play will be transferred from the Resort Pool to
the Common Pool.
(iv) All starting times in the Resort Pool that have not
been Booked at least 14 days in advance of the day of play
will be transferred from the Resort Pool to the Common Pool.
(v) Whenever there are an odd number of starting times in
the Resort Pool on a day that Resort Pool times are to be
transferred pursuant to (ii), (iii) or (iv) above, the number
transferred to the Common Pool will be one less than the
number left in the Resort Pool.
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<PAGE> 3
1.2 The foregoing right to reserve starting times will commence
upon and is contingent upon the opening of the Resort.
1.3 Resort Operator will be responsible for all starting times
previously Booked by Resort Operator pursuant to subsections 1.1 (b)(i) and
(b)(ii) and canceled less than seven days in advance of the date of play if not
otherwise filled; provided, TPC will use all commercially reasonable efforts to
fill such vacated starting times. Resort Operator will pay the green fees and
cart fees for such starting times within 30 days of invoice from TPC.
1.4 All green fees and cart fees will be determined solely by the
TPC. The fees charged to Resort Operator's guests will be the same as those
charged non-guests (other than the rates charged to Summerlin residents and
members of the TPC network and PGA TOUR member professionals). Any discounts
or special fee arrangements made available to members of the general public
will also be made available to guests of the Resort on substantially the same
terms and conditions.
1.5 TPC shall determine the number of rounds of play at the
Canyons Golf Course in its sole discretion. The parties acknowledge that
capacity of the course, in order to maintain a quality golf experience, is
estimated to be approximately 50,000 rounds, depending on weather conditions.
In addition, the parties acknowledge that a decrease in the availability of
water as a result of governmental restrictions could limit play on the Canyons
Golf Course.
1.6 TPC will have the right to enter into bill-back arrangements
with other hotels for starting times in the Common Pool.
1.7 TPC will have the right to promote and to market daily fee
play of Common Pool starting times in its discretion.
1.8 TPC and Resort Operator shall each designate to the other,
from time to time, an individual responsible for coordination of reservations
pursuant to this Agreement. The person designated by TPC (the "TPC Golf
Coordinator") will have principal responsibility for ensuring compliance by TPC
with the terms of this Agreement. The person designated by Resort Operator (the
"Resort Operator Golf Coordinator") will be responsible for coordinating with
the TPC Golf Coordinator and will be the only person authorized to deliver
Booking Notices; provided that an alternate person may from time to time be
designated by Resort Operator to act in the absence of the Resort Operator Golf
Coordinator.
1.9 Resort Operator will use all reasonable efforts to fill out a
foursome by grouping together any twosomes or threesomes with other twosomes or
unaccompanied players. TPC acknowledges, however, that certain guests of the
Resort may object to playing with strangers and it may not always be possible
to combine such guests with others to fill out foresomes. TPC may, subject to
Resort Operator's consent, fill out foresomes by combining Resort guests with
other players. If Resort Operator does not consent to TPC filling out a party
or unaccompanied player to make a foursome, Resort Operator will be responsible
for the fees that would otherwise be payable for the remaining unused spots in
the foresome.
1.10 The foregoing rights shall be subject to TPC's right to
schedule golf outings (a "TPC Outing") on the Canyons Golf Course as follows:
(a) a TPC Outing shall mean a group of not less than 72 players
with a shotgun start prior to 8 a.m. or after 1 p.m.
(b) TPC will advise Resort Operator of the TPC Outing at least 210
days prior to the day of play.
(c) TPC Outings shall not be scheduled in the months of February,
March, April, May, September, October, or November.
(d) there will be not more than six (6) TPC Outings in any
calendar year without Resort Operator's consent.
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<PAGE> 4
(e) any remaining times available on the day of a TPC Outing will
be placed in the Resort Pool and will be subject to Resort Operator's
Booking rights as set forth in Section 1.1; subject, however, to
transfer to the Common Pool in accordance with subsections 1.1 (c)
(ii), (iii) and (iv).
(f) any starting times that would have been in the Resort Pool and
available for Resort Operator's use but for the effect of this Section
1.10 will be added to the Resort Pool on another day of Resort
Operator's choice in order that the total annual number of Resort Poll
starting times shall not be diminished as a result of TPC Outings.
ARTICLE 2. RESERVATION FEE. In consideration of the preferred
starting times and other preferential accommodations at the Canyons Golf
Course, Resort Operator will pay to TPC a fee (the "Reservation Fee") as
follows:
2.1 The Reservation Fee will initially be $ 500,000 per year
payable in equal quarterly installments due on the first day of each calendar
quarter during the term of this Agreement commencing on the earlier of (a) the
opening of the Resort or (b) December 31, 1998 (the "Fee Commencement Date").
The Reservation Fee shall be prorated for any partial quarter in which the Fee
Commencement Date occurs. The Reservation Fee will increase on the fifth
anniversary of the Fee Commencement Date and each successive fifth anniversary
of the Fee Commencement Date thereafter by an amount equal to 15% of the amount
paid in the preceding five year period. Therefore, by way of example, the
Reservation Fee will be $ 500,000 in each of years 1 through 5; $ 575,000 in
each of years 6 through 10; $ 661,250 in each of years 11 through 15; and so
on: subject, however to the terms of Section 2.2.
2.2 Resort Operator will have the option to increase the number of
preferred starting times by written notice to TPC. Subject to the terms of
Section 2.3 below, following exercise of such option, the number of starting
times initially in the Resort Pool under subsection 1. 1 (c)(i) will increase
to 75%. Upon exercise of such option, the annual Reservation Fee will increase
by $125,000 (the "Fee Adjustment") if the option is exercised prior to the
fifth anniversary of the Fee Commencement Date. The amount of the Fee
Adjustment will increase on the fifth anniversary of the Fee Commencement Date
and each successive fifth anniversary of the Fee Commencement Date thereafter
by an amount equal to 15% of the amount of the Fee Adjustment in the preceding
five year period. The increased number of starting times and the increased
Reservation Fee will become effective ninety (90) days after exercise of such
option by Resort Operator. The automatic increases in the Reservation Fee
referred to in Section 2.1 shall thereafter be based on the Reservation Fee in
effect following exercise of the option.
2.3 The increased availability of starting times pursuant to
Section 2.2 will be subject to reduction for any reservations made by the TPC
relating to this 25% of the starting times prior to exercise of such option.
The increased Reservation Fee shall also be reduced proportionately.
2.4 The obligation of Resort Operator to pay the Reservation Fee
is not in any way contingent on Resort Operator's exercise of its right to
reserve starting times.
ARTICLE 3. CASINO MARKETING. In any promotion or advertising by
Resort Operator of its relationship with the TPC, (i) no reference will be made
that the TPC is associated with a casino or with gambling, (ii) the name and
description of the Resort will contain no reference to gambling or the
operation of a casino, and (iii) there shall be no use of any PGA TOUR member
professional player's name or likeness without the player's written consent. TPC
will have right to review all marketing and promotional materials that refer to
the TPC in order to ensure compliance with the terms of this Article 3.
ARTICLE 4. PGA TOUR TOURNAMENTS.
4.1 TPC anticipates that a PGA TOUR sanctioned senior tournament
(the "Senior Tournament") will be held at the Canyons Golf Course once each
year. During the ten (10) day period ending on and including the day following
the Senior Tournament (typically a Monday), the Canyons Golf Course will not be
available to Resort Operator's guests. TPC may impose other additional
reasonable play restrictions in weeks leading up to the Senior Tournament.
Resort Operator will have an opportunity to become a sponsor of the
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<PAGE> 5
Senior Tournament subject to such charges and limitations as determined by PGA
TOUR and provided (i) there is not an existing sponsor of the Senior
Tournament, and (ii) there shall be no mention of gambling in connection with
such sponsorship without TPC's consent. Resort Operator will be notified of
the date of the Senior Tournament for the upcoming year as soon as the schedule
is finalized by the PGA TOUR. The Canyons Golf Course will also be closed from
time to time for normal agronomic considerations such as overseeding and routine
maintenance as required.
4.2 Resort Operator acknowledges that there will be routine
"set-up" and "tear-down" activities customary to professional golf tournaments
approximately 6 weeks before and 2 weeks after each Senior Tournament; provided,
TPC will use all reasonable efforts to minimize the impact of such activities
on normal play of the Canyons Golf Course.
4.3 Resort Operator agrees to make available up to 150 rooms at
the Resort during the Senior Tournament for participants and officials and
other persons designated by the PGA TOUR who are connected to the operation of
the Senior Tournament. PGA TOUR will notify Resort Operator of the number and
dates for rooms at least thirty (30) days in advance of the Senior Tournament
and will guaranty all reservations. Rooms will be offered at the Resort's
"casino rate" in effect ninety (90) days prior to the Senior Tournament.
4.4 TPC anticipates that the LVI or another PGA TOUR sanctioned
tournament will be held at the Stadium Course once each year, typically in
October (the "Stadium Course Tournament"). Notwithstanding the terms of Article
2 hereof, TPC reserves the right to priority access to 50% of the starting
times on the Canyons Golf Course for the ten (10) day period ending on and
including the day following the Stadium Course Tournament (typically a Monday).
Any starting times that would have been in the Resort Pool and available for
Resort Operator's use but for the effect of this Section 4.4 will be added to
the Resort Pool on another day of Resort Operator's choice in order that the
total annual number of Resort Poll starting times shall not be diminished as a
result of Stadium Course Tournaments.
ARTICLE 5. GOLF OPERATION.
5.1 Resort Operator may arrange group play subject to the
following terms:
(a) A "group" is defined as 16 or more players commencing play in
consecutive starting times.
(b) Shotgun starts will be limited to groups of 72 players or
more. Shotgun starting times must be set prior to 8 a.m. or after 1
p.m. in peak season, which shall be deemed to be February 1 through
June 1 and September 1 through December 1. All shotgun starting times
will be determined at the discretion of the TPC. All persons
participating in a shotgun start will pay the golf fee then in effect
as well as a surcharge of $10 (with an annual escalator based on the
CPI) per player. Such surcharge will cover the additional costs
incurred by the TPC for providing a shotgun start.
5.2 The Resort Operator, at its option, may also purchase
additional golf tournament services from the TPC such as scorecard
preparations, scoring assistance, long drive and closest to the pin
competitions.
5.3 The TPC will provide bag storage for guests of Resort
Operator. The fee will be charged at a flat rate per day or such other method
as agreed to by TPC and Resort Operator. The Resort Operator or the player
will be responsible for transportation of clubs to the Canyons Golf Course.
5.4 Resort Operator will receive at no cost to Resort Operator a
network membership with both accompanied and unaccompanied guest privileges to
other clubs in the TPC Network. This will allow Resort Operator to entertain
meeting planners and other tour group decision makers at TPCs around the
country pursuant to applicable club bylaws and rules and regulations and rules
then in effect for access to TPC Network Facilities.
5.5 TPC will use its best efforts to cause PGA TOUR to provide the
following at no cost to Resort Operator:
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<PAGE> 6
(a) a 15 to 20 minute video prepared by PGA TOUR Productions of a
quality similar to the Best Set of Clubs video.
(b) access to mailings for TPC members and PGA TOUR Partners (so
long as such program is in existence). Although PGA TOUR will not
share its mailing lists, TPC will use its best efforts to cause PGA
TOUR to include Resort Operator's materials in an annual special
mailing with Resort Operator responsible for any additional costs.
(c) promotional exposure in ON TOUR magazine (so long as it is
published) and television exposure on "Inside the PGA TOUR" (so long
as it is televised).
ARTICLE 6. AGREEMENT RUNS WITH THE LAND
6.1 This Agreement touches and concerns the real property
described herein as the Golf Course Property and the Resort Parcel and runs
with the land binding on the successors in title of the Golf Course Property
and for the benefit of the owners of the Resort Parcel and their respective
successors and assigns.
6.2 The parties agree to record a memorandum of this Agreement in
the form of Attachment "C" hereto. In the event this Agreement is terminated
for any reason the parties agree to record a memorandum of termination.
ARTICLE 7. DEFAULT AND REMEDIES
7.1 Resort Operator's Default. The Resort Operator shall be in
default under this Agreement upon the happening of any of the following events
or conditions ("Events of Default"):
(a) Failure of Resort Operator to make any payment required by
this Agreement when due. In such event, TPC shall deliver to Resort
Operator a notice of default and Resort Operator shall have ten days
to cure such default, except, however, no notice of default and no
opportunity to cure shall be required if during any six month period
TPC has already sent one notice to Resort Operator concerning
nonpayment or late payment under this Agreement.
(b) Failure of Resort Operator to perform any other obligation
contained in this Agreement within ten days after notice from TPC
specifying the nature of the default or, if the default cannot be
cured within ten days, failure within such time to commence and
pursue curative action with reasonable diligence.
(c) Any representation, warranty, certification or statement made
or furnished to TPC herein or in any other document by or on behalf of
Resort Operator proves to have been untrue in any material respect
when made or furnished.
(d) The commencement by Resort Operator of a voluntary case under
the federal bankruptcy laws or under other federal or state law
relating to insolvency or debtor's relief; the entry of a decree or
order for relief against Resort Operator in an involuntary case under
the federal bankruptcy laws or under any other applicable federal or
state law relating to insolvency or debtor's relief; the appointment or
the consent by Resort Operator to the appointment of a receiver,
trustee, or custodian of Resort Operator or of any of Resort
Operator's property; an assignment for the benefit of creditors by
Resort Operator or Resort Operator's failure generally to pay its
debts as such debts become due.
(e) The making or suffering by Resort Operator of a fraudulent
transfer under applicable federal or state law; concealment by Resort
Operator of any of its property from creditors; the making or
suffering by Resort Operator of a preference within the meaning of the
federal bankruptcy law; or the imposition of a lien through legal
proceedings or distraint upon any of the property of Resort Operator.
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<PAGE> 7
7.2 TPC's Default. The TPC shall be in default under this
Agreement upon the happening of any of the following events or conditions
("Events of Default"):
(a) TPC fails in a material way to honor the Resort Operator's
request for reservation of starting times in accordance with the terms
of Article 1. In the event of any such failure, Resort Operator shall
deliver to TPC a notice of default specifying the particulars of such
default such as the times and guests involved in such failures. TPC
shall not be deemed to be in default if no subsequent failure occurs
at any time during the three month period following such notice to
TPC.
(b) Failure of TPC to maintain the Canyons Golf Course as a first
class eighteen hole championship golf course. In the event of any
such failure, Resort Operator shall deliver to TPC a notice of default
specifying the particulars of such failure to maintain and TPC shall
have ten days to cure such default.
7.3 TPC's Remedies.
(a) Nonpayment of the Reservation Fee. When any Event of Default
in payment of the Reservation Fee by the Resort Operator has occurred,
and is continuing, TPC may, as its sole and exclusive remedy, declare
this Agreement to be in default and terminate this Agreement and the
term hereof upon written notice to Resort Operator and proceed by
appropriate action to recover all amounts then due and payable by
Resort Operator to TPC hereunder and the costs and expenses incurred
by TPC arising from such Event of Default including, without
limitation, reasonable attorneys' fees and expenses. The foregoing
remedy is intended and agreed to be the exclusive remedy in law or in
equity available to TPC for the breach by Resort Operator of the
obligation to pay the Reservation Fee and TPC shall have no other
remedy against Resort Operator for such default.
(b) Other Default. When any Event of Default other than payment of
the Reservation Fee by the Resort Operator has occurred, and is
continuing, TPC may pursue any remedy available to it at law or in
equity.
7.4 Resort Operator's Remedies. When any Event of Default by the
TPC has occurred, and is continuing, Resort Operator may, at is option and
without further notice, declare this Agreement to be in default and exercise
either (but not both) of the following remedies:
(a) Terminate this Agreement and the term hereof upon written
notice to TPC and proceed by appropriate action to recover all amounts
then payable by TPC to Resort Operator hereunder and costs and
expenses incurred by Resort Operator arising from such Event of
Default including, without limitation, reasonable attorneys' fees and
expenses.
(b) Proceed by appropriate action either at law or in equity to
enforce performance by TPC of the applicable covenants of this
Agreement, to recover damages and expenses for breach thereof, and
costs and expenses incurred by TPC arising from such Event of Default
including, without limitation, reasonable attorneys' fees and
expenses.
The foregoing remedies are intended and agreed to be the exclusive remedies in
law or in equity available to Resort Operator for the breach of this Agreement
by TPC and Resort Operator shall have no other remedy against TPC; provided,
Resort Operator may bring successive actions for specific performance and
petition any court for other additional equitable relief in the event of
repeated breach of this Agreement by TPC.
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ARTICLE 8. MISCELLANEOUS PROVISIONS
8.1 Notices. All notices or other communications between HHP and
TPC required or permitted hereunder shall be in writing and personally
delivered or sent by certified United States mail, return receipt requested,
postage prepaid, to the following address (until a notice of change thereof
shall have been delivered as provided in this Section):
If to HHP:
HOWARD HUGHES PROPERTIES,
LIMITED PARTNERSHIP
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attention: General Counsel
If to TPC:
TPC AT SUMMERLIN, INC.
1700 Village Center Circle
Las Vegas, Nevada 89134
With a copy to:
PGA TOUR, INC.
112 TPC Boulevard
Ponte Vedra Beach, Florida 32082
Attention: Jim Triola
A notice shall be effective on the date of personal delivery if personally
delivered before 5:00 p.m., otherwise on the day following personal delivery,
or two (2) business days following the date the notice is postmarked, if
mailed.
8.2 Time of the Essence. Time is of the essence in this Agreement
and each and every term and provision hereof.
8.3 Governing Law. This Agreement shall be construed, interpreted
and governed by the laws of the State of Nevada.
8.4 Further Assurances: Survival. Each party will, whenever and
as often as it shall be requested to do so by the other party, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all such further conveyances, assignments, approvals, consents and any
and all other documents and do any and all other acts as may be necessary to
carry out the intent and purpose of this Agreement.
8.5 Entire Agreement Amendments. This Agreement, together with the
other written agreements referred to herein, is intended by the parties to be
the final expression of their agreement with respect to the subject matter
hereof, and is intended as the complete and exclusive statement of the terms of
the agreement between the parties. As such, this Agreement supersedes any and
all prior understandings between the parties, whether oral or written. Any
amendments to this Agreement shall be in writing and shall be signed by both
parties hereto.
8.6 No Waiver. A waiver by either party hereto of a breach of any
of the covenants or agreements hereof to be performed by the other party shall
not be construed as a waiver of any succeeding breach of the same or other
covenants, agreements, restrictions or conditions hereof.
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8.7 Assignment. Neither TPC nor HHP shall assign any of its rights
or delegate any of its obligations hereunder without the prior written consent
of the other party hereto, provided, HHP shall have the right to assign its
interest hereunder without the consent of TPC to any entity under the control
of or under common control with HHP and provided further that HHP shall have
the right to assign all obligations hereunder to the Resort Operator. In the
event the Resort Operator shall assume all obligations of HHP hereunder, HHP
shall be relieved of any further obligation to TPC. Notwithstanding such
assignment and assumption, HHP shall retain the right to enforce the
obligations of TPC hereunder.
8.8 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and permitted assigns.
8.9 Headings; Exhibits; Cross References. The headings and
captions used in this Agreement are for convenience and ease of reference only
and shall not be used to construe, interpret, expand or limit the terms of this
Agreement. All exhibits attached to this Agreement and the Recitals at the front
of this Agreement are incorporated herein by the references thereto contained
herein. All references in this Agreement to Sections and Exhibits shall be to
Sections and Exhibits of or to this Agreement, unless otherwise specified.
8.10 Severability. In the event that any phrase, clause, sentence,
paragraph, section, article or other portion of this Agreement shall become
illegal, null or void, or against public policy, for any reason, or shall be
held by any court of competent jurisdiction to be illegal, null or void, or
against public policy, the remaining portions of this Agreement shall not be
affected thereby and shall remain in force and effect to the full extent
permitted by law.
8.11 Performance of Acts on Business Days. Unless specifically
stated to the contrary, all references to days herein shall be deemed to refer
to calendar days. In the event that the final date for payment of any amount
or performance of any act hereunder falls on a Saturday, Sunday or holiday,
such payment may be made or act performed on the next succeeding business day.
8.12 No Third Party Beneficiaries. This Agreement is intended for
the exclusive benefit of HHP and TPC and their respective permitted assigns
and is not intended and shall not be construed as conferring any benefit on any
third party or the general public.
8.13 Survival. Termination shall not affect the rights or
obligations of either party which arise prior to the termination.
8.14 Arbitration. If at any time during the term of this Agreement
any dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered
by the arbiter may be entered in any court having jurisdiction thereof.
8.15 Attorney Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in
any appeal therefrom, it is agreed that the prevailing party shall be entitled
to reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
8.16 Presumption. This Agreement or any section thereof shall not
be construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party.
8.17 Computation of Time. In computing any period of time pursuant
to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall be included, unless it is a
Saturday, Sunday or a legal holiday, in which event the period shall begin to
run on the next day which is not a Saturday, Sunday or a legal holiday, in
which event the period shall run until the end of the next day thereafter which
is not a Saturday, Sunday or legal holiday.
9
<PAGE> 10
8.18 Titles and Captions. All article, section and paragraph title
or captions contained in this Agreement are for convenience only and shall not
be deemed part of the context nor affect the interpretation of this Agreement.
8.19 Pronouns and Plurals. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the Person or Persons may require.
8.20 Further Action. The parties hereto shall execute and deliver
all documents, provide all information and take or forbear from all such action
as may be necessary or appropriate to achieve the purposes of this Agreement.
8.21 Good Faith, Cooperation and Due Diligence. The parties hereto
covenant, warrant and represent to each other good faith, complete cooperation,
due diligence and honesty in fact in the performance of all obligations of the
parties pursuant to this Agreement. All promises and covenants are mutual and
dependent.
10
<PAGE> 11
8.22 Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
8.23 Term. The term of this Agreement shall commence upon full
execution hereof by all parties and will terminate on the ninety-ninth
anniversary thereof.
<TABLE>
<S> <C>
HHP: TPC:
HOWARD HUGHES PROPERTIES, LIMITED TOURNAMENT PLAYERS CLUB AT
PARTNERSHIP, a Delaware limited partnership SUMMERLIN, INC., a Nevada corporation
By: THE HOWARD HUGHES CORPORATION, a By: [SIG]
Delaware corporation, its sole general partner -----------------------------------
Title: President
By: [SIG] -------------------------------------
-------------------------------
Title: Sr. VP
----------------------------
SUMMERLIN CORPORATION:
SUMMERLIN CORPORATION, a Delaware
corporation
By: [SIG]
-------------------------------
Title: VP & Treasurer
----------------------------
</TABLE>
11
<PAGE> 12
ATTACHMENT "A"
TO GOLF COURSE AGREEMENT
DESCRIPTION OF GOLF COURSE PROPERTY
LOT 2 OF BLOCK A, LOT 4 OF BLOCK B, AND LOT 7 OF BLOCK B AS SHOWN BY MAP
THEREOF ON FILE IN BOOK 71, PAGE 13 OF PLATS IN THE CLARK COUNTY RECORDER'S
OFFICE, CLARK COUNTY, NEVADA, LYING WITHIN SECTION 25, TOWNSHIP 20 SOUTH, RANGE
59 EAST, AND WITHIN SECTIONS 29 AND 30, TOWNSHIP 20 SOUTH, RANGE 60 EAST,
M.D.M., CITY OF LAS VEGAS, CLARK COUNTY, NEVADA.
12
<PAGE> 13
ATTACHMENT "B"
TO GOLF COURSE AGREEMENT
DESCRIPTION OF RESORT PARCEL
ALL OF PARCEL 1 AS SHOWN BY MAP THEREOF ON FILE IN FILE 82, PAGE 64 OF PARCEL
MAPS IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA LYING WITHIN
THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 29, TOWNSHIP 20 SOUTH, RANGE 60 EAST,
M.D.M., CITY OF LAS VEGAS, CLARK COUNTY, NEVADA.
TOGETHER WITH
ALL OF PARCEL 2 AS SHOWN BY MAP THEREOF ON FILE IN FILE 82, PAGE 64 OF PARCEL
MAPS IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA LYING WITHIN
THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 29 AND THE SOUTHEAST QUARTER (SE 1/4)
OF SECTION 30, TOWNSHIP 20 SOUTH, RANGE 60 EAST, M.D.M., CITY OF LAS VEGAS,
CLARK COUNTY, NEVADA.
13
<PAGE> 14
ATTACHMENT "C"
TO GOLF COURSE AGREEMENT
MEMORANDUM OF AGREEMENT
The real property described on Schedule "A" attached hereto (the "Golf
Course Property") and commonly known as the "TPC at the Canyons" golf course is
subject to the terms of that certain Golf Course Agreement dated as of the _____
day of __________, 1996 by and between Howard Hughes Properties, Limited
Partnership, a Delaware limited partnership ("HHP"), Summerlin Corporation, a
Delaware corporation and Tournament Players Club at Summerlin, Inc., a Nevada
corporation ("TPC"). The Golf Course Agreement touches and concerns the Golf
Course Property for the benefit of the owners of the real property described on
Schedule "B" attached hereto and their respective successors and assigns.
HOWARD HUGHES PROPERTIES, LIMITED
PARTNERSHIP, a Delaware limited partnership
By: THE HOWARD HUGHES CORPORATION, a
Delaware corporation, its sole general partner
By:
-------------------------------------------
Title:
----------------------------------------
14
<PAGE> 15
SCHEDULE "A"
DESCRIPTION OF GOLF COURSE PROPERTY
LOT 2 OF BLOCK A, LOT 4 OF BLOCK B, AND LOT 7 OF BLOCK B AS SHOWN BY MAP
THEREOF ON FILE IN BOOK 71, PAGE 13 OF PLATS IN THE CLARK COUNTY RECORDER'S
OFFICE, CLARK COUNTY, NEVADA, LYING WITHIN SECTION 25, TOWNSHIP 20 SOUTH, RANGE
59 EAST, AND WITHIN SECTIONS 29 AND 30, TOWNSHIP 20 SOUTH, RANGE 60 EAST,
M.D.M., CITY OF LAS VEGAS, CLARK COUNTY, NEVADA.
15
<PAGE> 16
SCHEDULE "B"
DESCRIPTION OF RESORT PARCEL
ALL OF PARCEL 1 AS SHOWN BY MAP THEREOF ON FILE IN FILE 82, PAGE 64 OF PARCEL
MAPS IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA LYING WITHIN
THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 29, TOWNSHIP 20 SOUTH, RANGE 60 EAST,
M.D.M., CITY OF LAS VEGAS, CLARK COUNTY, NEVADA.
TOGETHER WITH
ALL OF PARCEL 2 AS SHOWN BY MAP THEREOF ON FILE IN FILE 82, PAGE 64 OF PARCEL
MAPS IN THE CLARK COUNTY RECORDER'S OFFICE, CLARK COUNTY, NEVADA LYING WITHIN
THE SOUTHWEST QUARTER (SW 1/4) OF SECTION 29 AND THE SOUTHEAST QUARTER (SE 1/4)
OF SECTION 30, TOWNSHIP 20 SOUTH, RANGE 60 EAST, M.D.M., CITY OF LAS VEGAS,
CLARK COUNTY, NEVADA.
16
<PAGE> 17
ASSIGNMENT OF RIGHTS UNDER GOLF COURSE AGREEMENT
This Assignment of Rights under Golf Course Agreement (this
"Assignment") is made as of August 15, 1996.
R E C I T A L S
A. Reference is made to that certain Golf Course Agreement (the
"Agreement") between Howard Hughes Properties, Limited Partnership, a Delaware
limited partnership ("HHP") Summerlin Corporation, a Delaware corporation and
Tournament Players Club at Summerlin, Inc., a Nevada corporation ("TPC") dated
as of July 10, 1996.
B. HHP and Summerlin Corporation are hereinafter referred to
collectively as "Assignors."
C. Assignors desire to assign all of their right, title and
interest in and to the Agreement to The Resort at Summerlin, Limited
Partnership, a Nevada, limited partnership ("Assignee") which is the "Resort
Operator" as such term is used in the Golf Course Agreement.
D. Assignee desires to accept the foregoing assignment and to
assume, for the benefit of TPC, all of the duties, covenants and obligations of
Assignors arising from and after the date of this Assignment.
E. TPC has agreed to consent to said assignment, on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the foregoing facts, and in
consideration of the covenants hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignors, Assignee and TPC agree as follows:
AGREEMENT
1 Assignment. Assignors hereby assign, transfer and set over to
Assignee all of Assignors' right, title and interest in and to the Agreement.
2. Acceptance. Assignee hereby accepts the foregoing assignment,
and hereby specifically agrees, represents and warrants, for the use and benefit
of TPC, that it has assumed all of the duties, covenants and obligations of
Assignors under the Agreement arising from and after the date of this
Assignment.
3. TPC's Consent. TPC does hereby consent to the foregoing
assignment and acceptance, and does hereby release Assignors from their
respective duties, covenants and obligations under the Agreement.
Page 1
<PAGE> 18
4. HHP's Continuing Rights. Notwithstanding such assignment and
assumption, HHP hereby retains the right to enforce the obligations of TPC
under the Agreement.
5. Counterparts. This Assignment may be executed in several
counterparts and all so executed shall constitute one Assignment, binding on
all the parties hereto even though all the parties are not signatories to the
original or the some counterpart.
IN WITNESS WHEREOF, the undersigned have affixed their signatures
hereto as of the 15th day of August, 1996.
ASSIGNEE: ASSIGNORS:
- --------- ----------
THE RESORT AT SUMMERLIN, LIMITED HOWARD HUGHES PROPERTIES,
PARTNERSHIP, a Nevada limited LIMITED PARTNERSHIP HUGHES
partnership PROPERTIES, LIMITED PARTNERSHIP, a
Delaware limited partnership
By its general partner: The Resort at
Summerlin, Inc., a Nevada corporation By its general partner: THE HOWARD
HUGHES CORPORATION, a Delaware
corporation
By: [SIG]
-----------------------------------
Title: Senior Vice President By: [SIG]
-------------------------------- ------------------------------
Title: Executive Vice President
---------------------------
TPC:
- ----
TOURNAMENT PLAYERS CLUB AT SUMMERLIN CORPORATION, a Delaware
SUMMERLIN INC., a Nevada corporation corporation
By: [SIG] By: [SIG]
----------------------------------- ------------------------------
Title: President Title: Senior Vice President
-------------------------------- ---------------------------
ESCROW HOLDER hereby acknowledges receipt of this Assignment of Rights
Under Agreement for the Purchase and Sale of Real Property and agrees to act in
accordance with any amendments contained herein.
NEVADA TITLE COMPANY, a Nevada
corporation
By: [SIG]
-----------------------------
Title: Escrow Officer
--------------------------
Page 2
<PAGE> 1
EXHIBIT 10.10
STANDARD FORM OF AGREEMENT BETWEEN OWNER AND
PROJECT CONSTRUCTION MANAGEMENT CONSULTANT WHERE THE PROJECT CONSTRUCTION
MANAGER-MANAGEMENT CONSULTANT IS NOT A CONSTRUCTOR
AIA DOCUMENT B801/CMa - ELECTRONIC FORMAT
- --------------------------------------------------------------------------------
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION, AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.
This document is intended to be used in conjunction with the 1992 editions of
AIA Documents B141/CMa, A101/CMa and A201/CMa.
Copyright 1973, 1980, copyright 1992 by The American Institute of Architects,
1735 New York Avenue, N.W., Washington, D.C., 20006-5292. Reproduction of the
material herein or substantial quotation of its provisions without written
permission of the AIA violates the copyright laws of the United States and will
subject the violator to legal prosecution.
- --------------------------------------------------------------------------------
AGREEMENT
made effective as of the 13th day of January in the year of nineteen hundred
ninety-eight.
(In words, indicate day, month and year)
BETWEEN the Owner:
(Name and address)
The Resort at Summerlin, Limited Partnership, a Nevada limited partnership, c/o
Seven Circle Resorts, Inc., 1160 Town Center Drive, Suite 200, Las Vegas,
Nevada 89134
and the Project Construction Management Consultant ("Construction Consultant"):
(Name and address)
Rider Hunt (NV) L.L.C., 2530 Paseo Del Prado, Building C, Suite 301, Las Vegas,
NV 89102
for the following Project:
(Include detailed description of Project, location, address and scope.)
The Resort at Summerlin - Hotel Casino & Entertainment Complex, more
particularly described as follows: A luxury Hotel of approximately 600 rooms
and a 49,000 square foot Casino, along with a Convention Center, Parking
Garage, Restaurants, Health Spa, Retail Shops, the entire 54.5 acre site on
which the Complex is to be located, and related furniture, furnishings, and
equipment. The Hotel consists of two towers, the second tower not being
significantly different than the first tower.
The Architect is:
(Name and address)
Paul Steelman Ltd., 3330 West Desert Inn Road, Las Vegas, Nevada 89102
The Construction Manager is:
J.A. Jones Construction Co., a North Carolina corporation, 1050 E. Flamingo
Road #E-127, Las Vegas, Nevada 89119
The Owner and Construction Consultant agree as set forth below.
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998.
AIA License Number 105525, which expires on 6/30/1998 - Page #1
<PAGE> 2
Terms and Conditions of Agreement Between
Owner and Project Construction Management Consultant
ARTICLE 1
CONSTRUCTION CONSULTANT'S
RESPONSIBILITIES
1.1 CONSTRUCTION CONSULTANT'S SERVICES
1.1.1 The Construction Consultant's services consist of those services
performed by the Construction Consultant, Construction Consultant's employees
and Construction Consultant's consultants as enumerated in Articles 2 and 3 of
this Agreement and any other services included in Article 14.
1.1.2 The Construction Consultant's services shall be provided in
conjunction with the services of (i) an Architect as described in the edition
of AIA Document B141/CMa, Standard Form of Agreement Between Owner and
Architect, Construction Manager-Adviser Edition, current as of the date of this
Agreement as modified ("Architect Contract"); and (ii) the Construction Manager
as described in the edition of AIA Document A111, Standard Form of Agreement
Between Owner and Construction Manager, current as of the date of this
Agreement, as modified ("Construction Contract").
1.1.3 The Construction Consultant shall provide sufficient organization,
personnel and management to carry out the requirements of this Agreement in an
expeditious and economical manner consistent with the interests of the Owner.
1.1.4 The services covered by this Agreement are subject to the time
limitations contained in Subparagraph 13.5.1.
ARTICLE 2
SCOPE OF CONSTRUCTION CONSULTANT'S
BASIC SERVICES
2.1 DEFINITION
2.1.1 The Construction Consultant's Basic Services consist of those
described in Paragraphs 2.2 and 2.3 and any other services identified in
Article 14 as part of Basic Services.
2.2 PRE-CONSTRUCTION PHASE
2.2.1
2.2.2
2.2.3
2.2.4
2.2.5
2.2.6
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998.
AIA License Number 105525, which expires on 6/30/1998 - Page #2
<PAGE> 3
2.2.7
2.2.8
2.2.9
2.2.10
2.2.11
2.2.12
2.2.13
2.2.14
2.2.15
2.2.16
2.2.17
2.2.18
2.2.19
2.2.20
2.2.21
2.3 CONSTRUCTION PHASE -
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C. 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM--3/16/1998. AIA License Number 105525, which expires on
6/30/1998--Page #3
<PAGE> 4
ADMINISTRATION OF THE
CONSTRUCTION CONTRACT
2.3.1 The Construction Phase will commence with the award of the initial
Construction Contract or purchase order and, together with the Construction
Consultant's obligation to provide Basic Services under this Agreement, will end
on the later of Owner's written acceptance of the completed Project or
acceptance of a final account for the completed Project.
2.3.2
2.3.3
2.3.4
2.3.5
2.3.6
2.3.7
2.3.8
2.3.9 The Construction Consultant shall develop cash flow reports and forecasts
for the Project and advise the Owner and Architect as to variances between
actual and budgeted or estimated costs.
2.3.10 The Construction Consultant shall maintain accounting records on
authorized Work performed under unit costs, additional Work performed on the
basis of actual costs of labor and materials, and other Work requiring
accounting records.
2.3.11 The Construction Consultant shall develop and implement procedures for
the review and processing of applications by Construction Manager for progress
and final payments in strict compliance with Paragraphs 9.3, 9.4, 9.5 and 9.6.1
of the General Conditions of the Construction Contract and this Agreement.
2.3.11.1 Based on the Construction Consultant's observations and evaluations of
the Construction Manager's Application for Payment, the Construction Consultant
shall review and prepare a valuation of the appropriate amounts due the
Construction Managers.
2.3.11.2
2.3.11.3
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C. 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM--3/16/1998. AIA License Number 105525, which expires on
6/30/1998--Page #4
<PAGE> 5
2.3.11.4
2.3.12
2.3.13 The Construction Consultant, in consultation with the owner and
Architect, may reject Work which does not conform to the requirements of the
Contract Documents, upon written direction of Owner.
2.3.14
2.3.15 With respect to the Construction Manager's own Work, the Construction
Consultant shall not have control over or charge of and shall not be responsible
for construction means, methods, techniques, sequences or procedures, or for
safety precautions and programs in connection with the Work of the Construction
Managers, since these are solely the Construction Manager's responsibility under
the Contract for Construction. The Construction Consultant shall not be
responsible for a Construction Manager's failure to carry out the Work in
accordance with the respective Contract Documents. The Construction Consultant
shall not have control over or charge of acts or omissions of the Construction
Managers, Subcontractors, or their agents or employees, or any other persons
performing portions of the Work not directly employed by the Construction
Consultant.
2.3.16
2.3.17 Upon direction of the Owner, the Construction Consultant shall review
requests for changes, assist in negotiating Construction Manager's proposals,
submit recommendations to the Architect and Owner, and, if they are accepted,
assist in the preparation of Change Orders and Construction Change Directives
for Owner's signature as provided in Paragraphs 7.2.1 and 7.3.1 of the General
Conditions.
2.3.18 The Construction Consultant shall assist the Architect in the review,
evaluation and documentation of Claims.
2.3.19
2.3.20
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C. 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM--3/16/1998. AIA License Number 105525, which expires on
6/30/1998--Page #5
<PAGE> 6
2.3.21
2.3.22
2.3.23
2.3.24
2.3.25
2.3.26
2.3.27
2.3.28 Duties, responsibilities and limitations of authority of the
Construction Consultant as set forth in the Contract Documents shall not be
restricted, modified or extended without prior written consent of the Owner.
ARTICLE 3
ADDITIONAL SERVICES
3.1 GENERAL
3.1.1 The services described in this Article 3 are not included in Basic
Services unless so identified in Article 14, and they shall be paid for by the
Owner as provided in this Agreement, in addition to the compensation for Basic
Services. The Optional Additional Services described under Paragraph 3.3 shall
only be provided if authorized or confirmed in writing by the Owner. If
services described under Contingent Additional Services in Paragraph 3.2 are
required due to circumstances beyond the Construction Consultant's control, the
Construction Consultant shall notify the Owner prior to commencing such
services. If the Owner deems that such services described under Paragraph 3.2
are not required, the Owner shall give prompt written notice to the
Construction Consultant. If the Owner indicates in writing that all or part of
such Contingent Additional Services are not required, the Construction
Consultant shall have no obligation to provide those services.
3.2 CONTINGENT ADDITIONAL SERVICES
3.2.1 Providing services required because of significant changes in the Project
including, but not limited to, changes in size, quality, complexity or the
Owner's schedule.
3.2.2 Providing consultation concerning replacement of Work damaged by fire or
other cause during construction, and furnishing services required in connection
with the
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525, which expires
on 6/30/1998 - Page #6
<PAGE> 7
replacement of such Work.
3.2.3 Providing services made necessary by the termination or default of the
Architect or a Construction Manager, by major defects or deficiencies in the
Work of a Construction Manager, or by failure of performance of either the
Owner or Contractor under a Contract for Construction.
3.2.4
3.2.5 Providing services in connection with a public hearing, arbitration
proceeding or legal proceeding except where the Construction Consultant is party
thereto.
3.3 OPTIONAL ADDITIONAL SERVICES
3.3.1 Providing services relative to future facilities, systems and equipment.
3.3.2 Providing services to investigate existing conditions or facilities or to
provide measured drawings thereof.
3.3.3 Providing services to verify the accuracy of drawings or other
information furnished by the Owner.
3.3.4 Providing services required for or in connection with the Owner's
selection, procurement or installation of furniture, furnishings and related
equipment.
3.3.5
3.3.6
ARTICLE 4
OWNER'S RESPONSIBILITIES
4.1 The Owner shall provide full information regarding requirements for the
Project, including a program which shall set forth the Owner's objectives,
schedule, constraints and criteria, including space requirements and
relationships, flexibility, expandability, special equipment, systems, and site
requirements.
4.2 The Owner shall establish and update an overall budget for the Project
based on consultation with the Construction Consultant and Architect, which
shall include the Construction Cost, the Owner's other costs and reasonable
contingencies related to all of these costs.
4.3 If requested by the Construction Consultant, the Owner shall furnish
evidence that financial arrangements have been made to fulfill the Owner's
obligations under this Agreement.
4.4 The Owner shall designate a representative authorized to act on the Owner's
behalf with respect to the Project. The Owner, or such authorized
representative, shall render decisions in a timely manner pertaining to
documents submitted by the Construction Consultant in order to avoid
unreasonable delay in the orderly and sequential progress of the Construction
Consultant's services.
4.5 The Owner shall retain an architect whose services, duties and
responsibilities are described in the edition of AIA Document B141/Cma,
Standard Form of Agreement Between Owner and Architect, Construction
Consultant-Adviser Edition, current as of the date of this Agreement, as
modified. The Construction Consultant shall not be responsible for actions taken
by the Architect.
4.6 The Owner shall furnish structural, mechanical, chemical, air and water
pollution tests, tests for hazardous materials, and other laboratory and
environmental tests, inspections and reports required by law or the Contract
Documents.
4.7 The Owner shall furnish all legal, accounting and insurance counseling
services as may be necessary at any time for the Project, including auditing
services the Owner may require to verify the Construction Manager's
Applications for Payment or to ascertain how or for what purposes the
Construction Managers have used the money paid by or on behalf of the Owner.
4.8 The Owner shall furnish the Construction Consultant with a reasonable
quantity of Construction Documents.
4.9 The services, information and reports required by Paragraphs 4.5 through
4.8 shall be furnished at the Owner's expense, and the Construction Consultant
shall be entitled to rely upon the accuracy and completeness thereof.
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525, which expires
on 6/30/1998 - Page #7
<PAGE> 8
4.10 Prompt written notice shall be given by the Owner to the Construction
Consultant and Architect if the Owner becomes aware of any fault or defect in
the Project or nonconformance with the Contract Documents.
4.11 The Owner reserves the right to perform construction and operations
related to the Project with the Owner's own forces, and to award contracts in
connection with the Project which are not part of the Construction Consultant's
responsibilities under this Agreement. The Construction Consultant shall notify
the Owner if any such independent action will interfere with the Construction
Consultant's ability to perform the Construction Consultant's responsibilities
under this Agreement.
4.12 Information or services under the Owner's control shall be furnished
by the Owner with reasonable promptness to avoid delay in the orderly progress
of the Construction Consultant's services and the progress of the Work.
ARTICLE 5
CONSTRUCTION COST
5.1 DEFINITION
5.1.1 The Construction Cost shall be the total cost or estimated cost to
the Owner of all elements of the Project designed or specified by the Architect.
5.1.2 Construction Cost shall also include the compensation of the
Construction Consultant and Construction Consultant's consultants.
5.1.3 Construction Cost does not include the compensation of the Architect
and Architect's consultants, costs of the land, rights-of-way, financing or
other costs which are the responsibility of the Owner as provided in Article 4.
5.2 RESPONSIBILITY FOR CONSTRUCTION COST
5.2.1 Evaluations of the Owner's Project budget, preliminary estimates of
Construction Cost and detailed estimates of Construction Cost prepared by the
Construction Consultant represent the Construction Consultant's best judgment
as a person or entity familiar with the construction industry. It is
recognized, however, that neither the Construction Consultant nor the Owner has
control over the cost of labor, materials or equipment, over Construction
Managers' and subcontractor's methods of determining bid prices, or over
competitive bidding, market or negotiating conditions. Accordingly, the
Construction Consultant cannot and does not warrant or represent that bids or
negotiated prices will not vary from the Project budget proposed, established
or approved by the Owner, or from any cost estimate or evaluation prepared by
the Construction Consultant.
5.2.2
5.2.3
- -------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525,
which expires on 6/30/1998 - Page #8
<PAGE> 9
5.2.4
.1
.2
.3
.4
5.2.5
ARTICLE 6
CONSTRUCTION SUPPORT ACTIVITIES
6.1 Construction support activities, if provided by the Construction
Consultant, shall be governed by separate contractual agreements unless
otherwise provided in Article 14.
6.2 Reimbursable expenses listed in Article 14 for construction support
activities may be subject to trade discounts, rebates, and refunds which shall
accrue to the Owner, and the Construction Consultant shall make provisions so
that they can be secured.
ARTICLE 7
OWNERSHIP AND USE OF
ARCHITECT'S DRAWINGS, SPECIFICATIONS
AND OTHER DOCUMENTS
7.1 The Drawings, Specifications and other documents prepared by the Architect
are instruments of the Architect's service through which the Work to be executed
by the Construction Managers is described. The Construction Consultant may
retain one record set. The Construction Consultant shall not own or claim a
copyright in the Drawings, Specifications and other documents prepared by the
Architect, and unless otherwise indicated the Architect shall be deemed the
author of them and will retain all common law, statutory and other reserved
rights, in addition to the copyright. All copies of them, except the
Construction Consultant's record set, shall be returned or suitably accounted
for to the Architect, on request, upon completion of the Project. The Drawings,
Specifications and other documents prepared by the Architect, and copies thereof
furnished to the Construction Consultant, are for use solely with respect to
this Project. They are not to be used by the Construction Consultant on other
projects or for additions to this Project outside the scope of the Work without
the specific written consent of the Owner and Architect. The Construction
Consultant is granted a limited license to use and reproduce applicable portions
of the Drawings, Specifications and other documents prepared by the Architect
appropriate to and for use in the performance of the Construction Consultant's
services under this Agreement.
All copies made under this license shall bear the statutory copyright notice,
if any, shown on the Drawings, Specifications and other documents prepared by
the Architect. Submittal or distribution to meet official regulatory
requirements or for other purposes in connection with this Project is not to be
construed as publication in derogation of the Architect's copyright or other
reserved rights.
ARTICLE 8
ARBITRATION
8.1
8.2
8.3
- -------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525,
which expires on 6/30/1998 - Page #9
<PAGE> 10
8.4
8.5 LITIGATION
8.5.1 Any controversy or claim arising out of or related to this or the breach
thereof may be the subject of litigation.
8.5.2 WAIVER OF TRIAL BY JURY OWNER AND CONSTRUCTION CONSULTANT TO THE FULLEST
EXTENT THAT THEY MAY LAWFULLY DO SO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDINGS INCLUDING WITHOUT LIMITATION, ANY CONTRACT OR TORT ACTION RELATED TO
THIS CONTRACT.
Insert D: INITIALS __________ INITIALS __________
ARTICLE 9
TERMINATION, SUSPENSION OR
ABANDONMENT
9.1 This Agreement may be terminated by either party upon not less than seven
days' written notice should the other party fail substantially to perform in
accordance with the terms of this Agreement through no fault of the party
initiating the termination.
9.2 If the Project is suspended by the Owner for more than 30 consecutive
days, the Construction Consultant shall be compensated for services performed
prior to notice of such suspension. When the Project is resumed, the
Construction Consultant's compensation shall be equitably adjusted to provide
for expenses incurred in the interruption and resumption of the Construction
Consultant's services.
9.3 This Agreement may be terminated by the Owner upon not less than seven
days' written notice to the Construction Consultant in the event that the
Project is permanently abandoned. If the Project is abandoned by the Owner for
more than 90 consecutive days, the Construction Consultant may terminate this
Agreement by giving written notice.
9.4 Failure of the Owner to make payments to the Construction Consultant in
accordance with this Agreement shall be considered substantial nonperformance
and cause for termination.
9.5 If the Owner fails to make payment when due the Construction Consultant
for services and expenses, the Construction Consultant may, upon seven days'
written notice to the Owner, suspend performance of services under this
Agreement. Unless payment in full is received by the Construction Consultant
within seven days of the date of the notice, the suspension shall take effect
without further notice. In the event of a suspension of services, the
Construction Consultant shall have no liability to the Owner for delay or
damage caused to the Owner because of such suspension of services.
9.6 In the event of termination not the fault of the Construction Consultant,
the Construction Consultant shall be compensated for services performed prior
to termination, together with Reimbursable Expenses then due and all
Termination Expenses as defined in Paragraph 9.7.
9.7 Termination Expenses are the lesser of those reasonable costs directly
attributable to termination for which the Construction Consultant is not
otherwise compensated, or $10,000.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Unless otherwise provided, this Agreement shall be governed by the law of
the place where the Project is located.
10.2 Terms in this Agreement shall have the same meaning as those in the
edition of AIA Document A201/CMa, General Conditions of the Contract for
Construction, Construction Manager-Adviser Edition, current as of the date of
this Agreement, as modified, except as otherwise defined herein.
10.3 Causes of action between the parties to this Agreement pertaining to
acts or failures to act shall be
- -------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525,
which expires on 6/30/1998 - Page #10
<PAGE> 11
deemed to have accrued and the applicable statutes of limitations shall
commence to run not later than either the date of Substantial Completion for
acts or failures to act occurring prior to Substantial Completion, or the date
of issuance of the final Project Certificate for Payment for acts or failures
to act occurring after Substantial Completion.
10.4
10.5 The Owner and Construction Consultant, respectively, bind themselves, their
partners, successors, assigns and legal representatives to the other party to
this Agreement and to the partners, successors, assigns and legal
representatives of such other party with respect to all covenants of this
Agreement. Except as hereinafter provided, neither Owner nor Construction
Consultant shall assign this Agreement without the written consent of the
other. Notwithstanding anything to the contrary in this Agreement, the Owner
shall have the right to assign this Agreement to a lender for the purpose of
obtaining financing for the construction and/or completion of the Project and
the Construction Consultant agrees to (i) acknowledge and consent in writing to
such assignment, and (ii) acknowledge in writing, where the same is true, that
the Owner is not in breach of this Agreement. The Construction Consultant
shall, upon Owner's request, execute any instruments required by any lender to
confirm the foregoing consent and acknowledgment.
10.6 This Agreement represents the entire and integrated agreement between the
Owner and Construction Consultant and supersedes all prior negotiations,
representations or agreements, either written or oral. This Agreement may be
amended only by written instrument signed by both Owner and Construction
Consultant.
10.7 Nothing contained in this Agreement shall create a contractual
relationship with or a cause of action in favor of a third party against either
the Owner or Construction Consultant.
10.8 Unless otherwise provided in this Agreement, the Construction Consultant
and the Construction Consultant's consultants shall have no responsibility for
the discovery, presence, handling, removal or disposal of or exposure of
persons to hazardous materials in any form at the Project site, including but
not limited to asbestos, asbestos products, polychlorinated biphenyl (PCB) or
other toxic substances.
ARTICLE 11
INSURANCE
11.1 CONSTRUCTION CONSULTANT'S LIABILITY INSURANCE
11.1.1 SEE SUPPLEMENTARY CONDITIONS.
.1
.2
.3
.4
.5
.6
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525, which expires on
6/30/1998 - Page #11
<PAGE> 12
11.1.2
ARTICLE 12
PAYMENTS TO THE CONSTRUCTION CONSULTANT
12.1 DIRECT PERSONNEL EXPENSE
12.1.1
12.2 REIMBURSABLE EXPENSES
12.2.1 Reimbursable Expense are in addition to compensation for Basic and
Additional Services and include expenses incurred by the Construction
Consultant and Construction Consultant's employees and consultants in the
interest of the Project, as identified in the following Clauses.
12.2.1.1 Reasonable expense of transportation in connection with the Project,
reasonable expenses in connection with authorized out-of-town travel;
long-distance communications; and fees paid for securing approval of
authorities having jurisdiction over the Project.
12.2.1.2 Expense of reproductions, postage, express deliveries, electronic
facsimile transmissions.
12.2.1.3 If authorized in writing in advance by the Owner, expense of overtime
work requiring higher than regular rates.
12.2.1.4 Expense of additional insurance coverage or limits requested by the
Owner in excess of that normally carried by the Construction Consultant.
12.3 PAYMENTS ON ACCOUNT OF BASIC SERVICES
12.3.1
12.3.2 Payments for Basic Services shall be made monthly on the basis set
forth in Subparagraph 13.2.1.
12.3.3 If and to the extent that the time initially established in
Subparagraph 13.5.1 of this Agreement is exceeded or extended through no fault
of the Construction Consultant, compensation for any services rendered during
the additional period of time shall be computed in the manner set forth in
Subparagraph 13.2.1.
12.3.4
12.4 PAYMENTS ON ACCOUNT OF ADDITIONAL SERVICES AND REIMBURSABLE EXPENSES
12.4.1 Payments on account of the Construction Consultant's Additional
Services and for Reimbursable Expenses shall be made monthly upon presentation
of the Construction Consultant's statement of services rendered or expenses
incurred as provided in 13.3.1.
12.5 PAYMENTS WITHHELD
12.5.1 No deductions shall be made from the Construction Consultant's
compensation on account of penalty, liquidated damages or other sums withheld
from payments to Construction Managers, or on account of the cost of changes in
Work other than those for which the Construction Consultant has been found to
be liable.
12.6 CONSTRUCTION CONSULTANT ACCOUNTING RECORDS
12.6.1 Records of Reimbursable Expenses and expenses pertaining to
Additional Services and services performed on the basis of a multiple of Direct
Personnel Expense shall be available to the Owner or the Owner's authorized
representative at mutually convenient times.
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525, which expires on
6/30/1998 - Page #12
<PAGE> 13
ARTICLE 13
BASIS OF COMPENSATION
The Owner shall compensate the Construction Consultant as follows:
13.1
13.2 BASIC COMPENSATION
13.2.1 FOR BASIC SERVICES, as described in Article 2, and any other services
included in Article 14 as part of Basic Services, Basic Compensation shall be
computed as follows:
Twenty thousand dollars ($20,000) per month payable in arrears. Construction
Consultant agrees to invoice such amount on a monthly basis commencing thirty
(30) days after the later of the date of this Agreement or the day on which
Construction Consultant first commences its services as provided in this
Agreement. Compensation for a fraction of the first or last month under this
Agreement shall be computed at a daily rate of $666.67 based upon a 30-day
month.
(Insert basis of compensation, including stipulated sums, multiples or
percentages.)
(Insert basis of compensation, including stipulated sums, multiples or
percentages.)
13.3 COMPENSATION FOR ADDITIONAL SERVICES
13.3.1 FOR ADDITIONAL SERVICES OF THE CONSTRUCTION CONSULTANT, as described
in Article 3, and any other services included in Article 14 as Additional
Services, compensation shall be computed as follows:
(Insert basis of compensation, including rates and/or multiples of Direct
Personnel Expense for Principals and employees, and identify Principals and
classify employees, if required. Identify specific services to which particular
methods of compensation apply, if necessary.)
An hourly basis at the following rates:
<TABLE>
<S> <C>
Principal $137.50/hour
Manager/Resident Manager $115.00/hour
Senior Quantity Surveyor/Estimator $ 95.00/hour
Quantity Surveyor/Estimator $ 85.00/hour
Technical Assistant $ 50.00/hour
</TABLE>
13.4 REIMBURSABLE EXPENSES
13.4.1 FOR REIMBURSABLE EXPENSES, as described in Paragraph 12.2, and any
other items included in Article 14 as Reimbursable Expenses, actual expenses
incurred by the Construction Consultant and the Construction Consultant's
employees and consultants in the interest of the Project.
13.5 ADDITIONAL PROVISIONS
13.5.1 IF THE BASIC SERVICES covered by this Agreement have not been
completed within eighteen (18) months of the date hereof, through no fault of
the Construction Consultant, extension of the Construction Consultant's
services beyond that time shall be compensated as provided in Subparagraph
13.2.1.
13.5.2 Payments are due and payable thirty (30) days from the date of the
Construction Consultant's invoice. Amounts unpaid thirty (30) days after the
invoice date shall bear interest at the rate entered below, or in the absence
thereof at the legal rate prevailing from time to time at the principal place
of business of the Construction Consultant.
(Insert rate of interest agreed upon.)
Twelve percent (12%) per annum.
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998.
AIA License Number 105525, which expires on 6/30/1998 - Page #13
<PAGE> 14
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Construction Manager's principal places of business, the location of the
Project and elsewhere may affect the validity of this provision. Specific legal
advice should be obtained with respect to deletions or modifications, and also
regarding requirements such as written disclosures or waivers.)
13.5.3
13.5.4 Where authorization or approval is required of the Owner by this
Agreement, such authorization or approval must be in writing and signed by the
President of the Owner's General Partner who is presently Mr. Brian McMullan.
Mr. McMullan may delegate this authorization in writing to another officer of
Owner's General Partner, and Construction Consultant may rely on such
delegation.
13.5.5 The parties are aware of the "Rider to the Construction Agreement
Between the Resort at Summerlin and J.A. Jones Construction dated December 22,
1997" which modifies the designation of certain parties identified in the
Construction Contract. The parties herein understand and acknowledge that the
following terms in the Construction Contract are intended to and shall refer to
the corresponding terms used in this Agreement. By way of example only, where
the Construction Contract refers to the "Project Construction Consultant," such
reference means and refers to the same party who is identified as the Project
Construction Management Consultant (or "Construction Consultant") in this
Agreement.
(a) "Project Construction Manager" in the Construction Contract refers to
the same party identified in this Agreement as the Construction Consultant;
(b) "Trade Contractor(s)" in the Construction Contract refers to the same
party(ies) identified in this Agreement as the Subcontractor(s);
(c) "Trade Contract(s)" in the Construction Contract refers to the same
contracts identified in this Agreement as the Subcontract(s);
13.5.6 Copyright in all Feasibility Studies, Estimates, Reports and Schedules
of Construction Quantities prepared by Rider Hunt (NV) L.L.C. will remain the
property of Rider Hunt (LA) L.L.C. and these documents shall not be used on any
project not specifically covered by this appointment.
13.5.7 In the event of any action or proceeding between the parties, their
heirs, successors or assigns to interpret this Agreement or enforce any
provision or right hereunder, the prevailing party shall be entitled to recover
all costs and expenses (including, but not limited to, attorneys' and
accountants' fees, and other experts) incurred which amounts shall be included
as part of the judgment or award rendered in such action or proceeding.
ARTICLE 14
OTHER CONDITIONS OR SERVICES
(Insert description of other services, identify Additional Services included
within Basic Compensation and modifications to the payment and compensation
terms included in this Agreement.)
Basic Services shall include the following:
14.0.1 Construction Consultant shall provide Owner with a loose-leaf copy
and two (2) bound copies of all reports required to be prepared by Construction
Consultant under this Agreement.
14.0.2 Construction Consultant shall provide services for retail space,
except for retail space leased to tenants.
14.1 LIMITS ON INSURANCE
(Insert the specific dollar amounts for the appropriate insurance limits of
liability.)
This Agreement entered into as of the day and year first written above.
OWNER
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525, which expires on
6/30/1998 - Page #14
<PAGE> 15
CONSTRUCTION CONSULTANT
- ----------------------------------- ---------------------------------------
(Signature) (Signature)
Signatures on next page]
- -----------------------------------
(Printed name and title)
(Printed name and title)
- --------------------------------------------------------------------------------
AIA DOCUMENT B801/CMa - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1992 EDITION -
AIA - COPYRIGHT 1992 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK
AVENUE, N.W., WASHINGTON, D.C., 20006-5292. Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced with permission of the AIA and can be reproduced
without violation until the date of expiration as noted below.
Electronic Format B801/CMa-1992
User Document: FORM - 3/16/1998. AIA License Number 105525, which expires
on -- Page 15
6/30/1998
<PAGE> 16
SIGNATURE PAGE OF STANDARD FORM OF AGREEMENT
BETWEEN OWNER AND CONSTRUCTION CONSULTANT WHERE
THE CONSTRUCTION CONSULTANT IS NOT A CONSTRUCTOR
(AIA DOCUMENT B801/CMa)
OWNER:
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP,
a Nevada limited partnership
By: The Resort at Summerlin, Inc.
a Nevada corporation
By:
----------------------------------
Its: President
---------------------------------
CONSTRUCTION CONSULTANT:
RIDER HUNT (NV) L.L.C.
By:
---------------------------------------
Its: Principal
--------------------------------------
Page #16
<PAGE> 17
SUPPLEMENTARY CONDITIONS
The following supplements modify the "Standard Form of Agreement Between
Owner and Project Construction Management Consultant where the Project
Construction Management Consultant is NOT a Constructor," AIA Document B801/CMa,
1992, entered into between The Resort at Summerlin Limited Partnership, a Nevada
limited partnership, as Owner, and Rider Hunt (NV) L.L.C., a
, as Construction Consultant.
ARTICLE 11
INSURANCE
Article 11 shall be deleted and replaced with the following language:
11.1 OWNER CONTROLLED INSURANCE PROGRAM
11.1.1 As used in this Article 11, the following terms are defined as
follows:
OCIP Administrator:
or such other administrator as Owner may select
Insured:
The Owner, Construction Consultant, Contractors, Subcontractors and
Sub-subcontractors.
11.1.2 The Owner may or may not arrange for this Project to be insured
under an Owner Controlled Insurance Program (OCIP). If the Owner elects to
arrange for this Project to be insured under the OCIP, then the Owner shall
provide Worker's Compensation Insurance, General Liability Insurance and
Builder's Risk Insurance from the start of Work through final completion of
the Work.
11.1.3 The OCIP will provide insurance coverage for the Owner,
Construction Consultant, Contractor, any Subcontractor and any
Sub-subcontractor performing Work at the Project site. Off-site operations
shall be covered only if all operations at such site are necessary and
solely dedicated to the Project. It is the
Initials
------------------------------
Initials
------------------------------
<PAGE> 18
responsibility of the Construction Consultant to notify the OCIP
Administrator and Insurance Underwriter prior to any operations starting
at such site to include coverage for specified off-site operations.
11.1.4 All insurance underwriting payroll, ratings or loss history
information requested of the Construction Consultant by the Owner or the
Owner's OCIP Administrator must be provided within five (5) business days
of the request. At all times during this Agreement, the Construction
Consultant shall cooperate with the Owner and the Owner's OCIP
Administrator and OCIP insurers. After the Construction Consultant is
properly enrolled in the OCIP, the OCIP Administrator will issue or have
issued to the Construction Consultant prior to its commencing Work on the
Project site, Certificates of Insurance evidencing the coverages arranged
by the Owner.
11.1.5 The insurance premiums for the OCIP will be paid by the Owner. The
Construction Consultant will provide the Owner an estimate (to include
policy data, backup calculations, copies of declarative pages and rate
schedules from general liability, workers' compensation and excess
liability insurance policies) of the Construction Consultant's insurance
costs that the Owner has arranged for in the OCIP. The insurance cost
estimate must include costs for self-insurance programs and self-insured
retention and deductibles. The Construction Consultant represents the
accuracy of the information used to calculate the insurance costs and
agrees that the Owner, the OCIP Administrator, and/or the OCIP insurer may
audit the Construction Consultant's records and insurance agreements to
confirm the accuracy of the information. The Construction Consultant
further represents and agrees that the Owner is entitled to and may
determine additional insurance costs involving additional Work on the part
of the Construction Consultant.
11.1.6 An Insurance Manual (Manual) is included with the Contract
Documents and is a part of this Agreement. The Manual explains the OCIP
and contains the forms to be completed by the Construction Consultant. The
completed forms (OCIP-1 and OCIP-2) must be returned before this
Initials
-----------------------------
Initials
-----------------------------
-2-
<PAGE> 19
Agreement is executed. The Initial Insurance Credit forms (OCIP-1 and
OCIP-2) must include the estimated insurance costs of the Construction
Consultant. The Insurance Manual also contains all the administrative and
claim reporting procedures.
11.2 OWNER PROVIDED INSURANCE
11.2.1 THE OWNER'S INSURANCE. Prior to commencement of the Work, the
Owner, at its option and cost, shall secure and, except as otherwise
provided herein, maintain at all times during the performance of this
Agreement the insurance specified in Subparagraphs 11.2.2, 11.2.3, 11.2.4,
11.2.5 and 11.2.6 below, with the Owner, Construction Consultant,
Contractor, Subcontractors and such other persons or interests the Owner
may designate in connection with the performance of the Work as insured
parties and with limits not less than those specified below for each
coverage.
VENDORS, SUPPLIERS, FABRICATORS, MATERIALS DEALERS, DRIVERS AND OTHERS WHO
MERELY TRANSPORT, PICK-UP, DELIVER OR CARRY MATERIALS, PERSONNEL, PARTS OR
EQUIPMENT OR ANY OTHER ITEMS OR PERSONS TO OR FROM THE PROJECT SITE SHALL
NOT BE INCLUDED IN OCIP.
11.2.2 Workers' Compensation Insurance in compliance with the Workers'
Compensation Laws of the State of Nevada.
Limits
Part One - Workers' Compensation Statutory
11.2.3 General Liability Insurance (Excluding Automobile and
Professional Liability) in a form providing coverage not less than the
standard Commercial General Liability insurance policy
Initials _________
Initials ________
-3-
<PAGE> 20
(Insurance Services Office [ISO] Occurrence Form 1993)
<TABLE>
<CAPTION>
Limits
<S> <C>
General Aggregate $4,000,000
Products/Completed
Operations Aggregate $4,000,000
Personal/Advertising
Injury Aggregate $2,000,000
Each Occurrence Limit $2,000,000
Fire Damage Legal
Liability (any 1 fire) $1,000,000
Medical Expense $ 5,000
Stop Gap Liability
(Employer's Liability) $1,000,000
</TABLE>
THIS INSURANCE WILL NOT EXTEND COVERAGE FOR PRODUCTS LIABILITY TO ANY INSURANCE
PARTY, VENDOR, SUPPLIER, MATERIAL DEALER OR OTHERS FOR ANY PRODUCT
MANUFACTURED, ASSEMBLED OR OTHERWISE WORKED ON AWAY FROM THE PROJECT SITE.
11.2.4 Umbrella (Excess) Liability Insurance with any excess umbrella layers
written on a strict following form basis over the primary umbrella.
<TABLE>
<CAPTION>
Limits
<S> <C>
Combined Single Limit $25,000,000
Each Occurrence
Project Aggregate $25,000,000
</TABLE>
11.2.5 Builder's Risk Insurance is being negotiated and will be in the
amount of the initial contract sent with subsequent modifications for the
entire Work at the site.
<TABLE>
<CAPTION>
<S> <C>
a. Limits
Construction Value of
the Project $ TBD
b. Sublimits
Goods in Transit $ TBD
Off-Site Storage $ TBD
</TABLE>
Initials
------
Initials
------
-4-
<PAGE> 21
<TABLE>
<CAPTION>
<S> <C>
c. Deductibles (Tentative)
On-Site $10,000
Off-Site Storage $10,000
Transit $10,000
</TABLE>
If the Owner does not intend to purchase such property insurance required by
the Contract, the Owner shall inform the Contractor in writing. The Contractor
may then secure insurance which will protect the interests of the Contractor,
Subcontractors and Sub-subcontractors in the Work.
11.2.6 If the property insurance requires minimum deductibles and such
deductibles are identified in the Contract Documents, the Construction
Consultant shall pay costs not covered because of such deductibles. If the
Owner or insurer increases the required minimum deductibles above the amounts
so identified or if the Owner elects to purchase this insurance with voluntary
deductible amounts, the Owner shall be responsible for payment of the
additional costs not covered because of the increased or voluntary deductibles.
If deductibles are not identified in the Contract Documents, the Owner shall
pay costs not covered because of deductibles.
11.2.7 The Owner assumes no obligations to provide insurance other than that
evidenced by the policies referred to in 11.2;
THE FURNISHING OF SUCH INSURANCE BY THE OWNER SHALL IN NO WAY RELIEVE, OR LIMIT
OR BE CONSTRUED TO RELIEVE, OR LIMIT THE CONSTRUCTION CONSULTANT OF ANY
RESPONSIBILITY OR OBLIGATION WHATSOEVER OTHERWISE IMPOSED BY THIS AGREEMENT.
11.3 ALTERNATIVE INSURANCE
11.3.1 In the event the Owner for any reason elects not to furnish or after
commencement of Work elects not to furnish or to continue to furnish the
insurance as specified in 11.2.2, 11.2.3, 11.2.4 and 11.2.5 and upon thirty
(30) days written notice from the Owner, the Construction Consultant shall
secure at the Owner's cost and maintain such insurance specified in 11.3.2 and
11.3.3 below a may be required by the Owner.
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-5-
<PAGE> 22
11.3.2 In the event the Construction Consultant has been required to secure
any insurance specified in 11.3.3 and 11.3.4 below, the Owner shall no longer
be obligated to furnish that part of the insurance specified in 11.2.2, 11.2.4
or 11.2.5 above. All insurance secured by the Construction Consultant pursuant
to the Owner's requirements under the provisions of 11.3 shall be in policies
subject to the Owner's approval as to form, content, limits of liability, cost
and insurance company.
11.3.3 Worker's Compensation Insurance in Statutory Limits of the Worker's
Compensation Laws of the State of Nevada.
Limits
Part One - Workers' Compensation Statutory
11.3.4 General Liability Insurance (Excluding Automobile and Professional
Liability) in a form providing coverage not less than the standard Commercial
General Liability insurance policy (Insurance Services Office [ISO] Occurrence
Form 1993).
<TABLE>
<CAPTION>
Limits
<S> <C>
General Aggregate $2,000,000
Products/Completed Operations Aggregate $2,000,000
Personal/Advertising Injury Aggregate $1,000,000
Each Occurrence Limit $1,000,000
Fire Damage Legal Liability (any 1 fire) $1,000,000
Medical Expense $5,000
Stop Gap Liability $1,000,000
</TABLE>
11.3.5 Umbrella (Excess) Liability Insurance with any excess umbrella layers
written on a strict following form basis over the primary umbrella.
<TABLE>
<CAPTION>
Limits-Contractor
<S> <C>
Combined Single Limit $25,000,000
Each Occurrence
</TABLE>
Initials ____________
Initials ____________
-6-
<PAGE> 23
<TABLE>
<CAPTION>
<S> <C>
Project Aggregate $25,000,000
Limits-Subcontractor and Sub-subcontractor
Combined Single Limit $10,000,000
Each Occurrence
Project Aggregate $10,000,000
</TABLE>
11.3.6 The insurance required in Subparagraph 11.3.5 shall also include Stop
Gap (Employer's Liability) coverage in limits not less than the difference
between the limits specified in Subparagraph 11.3.3 and the limits in
Subparagraph 11.3.5.
11.4 CONSTRUCTION CONSULTANT PROVIDED INSURANCE
11.4.1 The Construction Consultant will provide and maintain insurance of
the type and in limits as set forth below. Such insurance shall name the
appropriate parties as insureds and shall be in a form and from insurance
companies acceptable to the Owner. The insurance required by the Owner may be
provided in policy or policies, primary and excess, including the umbrella or
catastrophe form. The limits of liability shall be as stated below, unless
prior to start of any Work, written approval is granted by the Owner for
variance from those limits.
11.4.2 Each liability policy required of the Construction Consultant will
name as additional insureds: the Owner, Owner's Representative, their
respective parent companies, the subsidiary, related and affiliated companies
of each, and any additional entities as the Owner may be required to be named
pursuant to any lease or contract as it relates to this Agreement. The
Additional Insured endorsement, equivalent to ISO form 2010 11/85 edition date,
will state that the coverage provided to the additional insureds is primary
and non-contributing with any other insurance available to the additional
insureds.
11.4.3 Commercial Automobile Liability Insurance in a form providing
coverage not less
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----------------
-7-
<PAGE> 24
than the standard Commercial Automobile Liability form.
<TABLE>
<CAPTION>
Limits
<S> <C>
Combined Single Limit $1,000,000
</TABLE>
11.4.4 Workers' Compensation Insurance for operations AWAY FROM THE PROJECT
SITE of the Construction Consultant in Statutory Limits of the Workers'
Compensation Laws of the State of Nevada.
a. Limits-Construction Consultant
Part One--Workers' Compensation Statutory
11.4.6 General Liability Insurance for operations away from the Project site
of the Construction Consultant (including products liability for any product
manufactured, assembled or otherwise worked on away from the Project site) in a
form providing coverage not less than the standard Commercial General Liability
Insurance policy ("Occurrence Form").
Initials
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-8-
<PAGE> 25
a. Limits
<TABLE>
<CAPTION>
<S> <C>
General Aggregate $2,000,000
Products/Completed
Operations Aggregate $2,000,000
Personal/Advertising
Injury Aggregate $1,000,000
Each Occurrence Limit $1,000,000
Fire Damage Legal
Liability (any 1 fire) $1,000,000
Medical Expense $ 5,000
Stop Gap Liability $1,000,000
</TABLE>
11.5 CONSTRUCTION CONSULTANT OPERATIONS
11.5.1 Construction Consultant shall not violate or knowingly permit to be
violated any conditions of the policies of insurance provided by the Owner
under the terms of this Article 11. The Construction Consultant agrees to keep
and maintain an accurate and classified record of its payroll data and
information in accordance with the requirements of the insurance company or
companies and to permit its books and records to be examined and audited
periodically by the insurance company or companies, the Owner or their
respective representatives.
11.6 NOTICES, COSTS, LOSSES
11.6.1 All policies of insurance the Construction Consultant or the Owner
are required under the terms of this Agreement to secure and maintain shall be
endorsed to provide that the insurance company shall notify the Owner,
Construction Consultant, and the Named Insured, at least sixty (60) days prior
to the effective date of any cancellation or modification of such policies.
Prior to the date on which Construction Consultant commences performance of its
part of the Work, Construction Consultant shall cause to be furnished to the
Owner Certificates of Insurance maintained by Construction Consultant in
connection with the performance of the Work. As and when the Owner may direct,
copies of the actual insurance policies or renewals or replacements thereof
shall be submitted to the Owner.
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-9-
<PAGE> 26
11.6.2 In the event of any failure by Construction Consultant to comply with
the provisions of this Article 11, the Owner may, at its option, on notice to
Construction Consultant, suspend this Agreement for Cause until there is full
compliance with this Article 11 or terminate this Agreement for Cause.
11.6.3 The cost of the insurance specified above to be obtained by the Owner
will be paid for by the Owner, and the Owner shall receive and pay, as the case
may be, all adjustments in such costs, whether by way of dividends or
otherwise. Construction Consultant shall execute such instruments or assignment
as may be necessary to permit the Owner's receipt of such adjustments.
11.6.4 The cost of any losses sustained because of clauses that specify
deductible amounts in any of the insurance policies furnished by the Owner
shall be paid by the Construction Consultant.
11.6.5 Payments by the insurer for all losses covered under the Builder's
Risk policy as specified in 11.2.5 will be made to the Owner, for the interest
of all parties.
11.7 SUBROGATION AND WAIVER (CONSTRUCTION CONSULTANT PROVIDED INSURANCE
COVERAGES)
11.7.1 The Construction Consultant shall require all policies of insurance
that are related to the Work and are secured and maintained by the Construction
Consultant to include clauses providing that each insurance underwriter shall
waive all its rights of recovery, under subrogation or otherwise, against the
Owner, the Construction Consultant, the Contractor, separate Contractors, the
Subcontractors and the Sub-subcontractors. The Construction Consultant waives
all rights of recovery against the Owner, the Contractor, separate Contractors,
the Subcontractors and the Sub-subcontractors which Construction Consultant may
have or acquire because of deductible clauses in or inadequacy of limits of any
policies of
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----------------
-10-
<PAGE> 27
insurance that are in any way related to the Work and that are secured and
maintained by the Construction Consultant.
11.8 COVERAGES
11.8.1 The coverages referred to above are set forth in full in the
respective policy forms, and the foregoing descriptions of such policies are
not intended to be complete or to alter or amend any provision of the actual
policies and in matters, if any, in which the said description may be
conflicting with such instruments, the provisions of the policies of the
insurance shall govern.
11.9 MISCELLANEOUS
11.9.1 Nothing contained in Article 11 shall relieve the Construction
Consultant of its obligations to exercise due care in the performance of its
duties in connection with the Work and complete the Work in strict compliance
with this Agreement.
11.10 CONSTRUCTION CONSULTANT'S EQUIPMENT INSURANCE
11.10.1 With respect to Construction Consultant's operations, the
Construction Consultant, at its option, shall purchase, maintain and pay for an
equipment floater on all construction trailers, machinery, tools, equipment and
other similar property and any deductible shall be for the account of
Construction Consultant. The policy shall contain a waiver of subrogation
endorsement. This insurance coverage shall be the sole recovery for any loss
covered by such insurance. In the event the Construction Consultant
self-insures, it also waives its right of recovery against Owner.
11.11 ADDITIONAL INSURANCE COVERAGE
11.11.1 The Construction Consultant agrees for its own account that if
broader coverage than is provided under this Article 11, or if higher limits
are deemed necessary by the Construction Consultant, that Construction
Consultant has either affirmatively elected to self assume the
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<PAGE> 28
exposure or purchase additional insurance coverage, the additional cost of such
shall, under no circumstances, be reimbursed directly or indirectly by the
Owner.
11.12 RELEASE AND WAIVER
11.12.1 The Construction Consultant hereby releases the Owner, Owner's
partners, parent companies and affiliates of the Owner and any partner,
Contractor, Subcontractors, Sub-subcontractors, Architect and the directors,
officers, shareholders, employees and agents of the above-mentioned parties
(the "Released Parties") from any and all claims or causes of action whatsoever
which Construction Consultant and/or such parties might otherwise possess
resulting in or from or in any way connected with any loss covered or which
should have been covered by insurance, including the deductible portion
thereof, maintained and/or required to be maintained by Construction Consultant
pursuant to this Agreement.
11.12.2 This release is further intended to bind Construction Consultant's
insurers providing the insurance coverages stated in 11.3 and 11.4. The
Construction Consultant agrees to inform and obtain permission from its
insurers to release the Released Parties from any and all claims or causes of
action as provided above, so as to effectively waive any subrogation rights
of said insurers.
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-12-
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Summary Selected
Consolidated Financial Data", "Selected Consolidated Financial Data" and
"Experts" and to the use of our report dated March 5, 1998, in the Registration
Statement (Form S-4) and related Prospectus of The Resort at Summerlin, Limited
Partnership and The Resort at Summerlin, Inc. for the registration of
$100,000,000 Series B 13% Senior Subordinated PIK Notes due 2007.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Denver, Colorado
April 8, 1998
<PAGE> 1
EXHIBIT 25.1
FORM T-1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ____
-------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
</TABLE>
-------------------
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
(Exact name of obligors as specified in its charter)
<TABLE>
<S> <C>
Nevada
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1160 Town Center Drive
Suite 200
Las Vegas, Nevada 89134
(Address of principal executive offices) (Zip Code)
</TABLE>
-------------------
Series B 13% Senior Subordinated PIK Notes due 2007
(Title of the indenture securities)
===============================================================================
<PAGE> 2
- 2 -
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
The Resort at Summerlin, Limited Partnership, The Resort at Summerlin,
Inc. currently is not in default under any of its outstanding securities
for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14
and 15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by the
State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE> 3
- 3 -
16. LIST OF EXHIBITS
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b)
of the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of April 2, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
----------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 3rd day
of April, 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ LOUIS P. YOUNG
--------------------------------------
Louis P. Young
Vice President
<PAGE> 4
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of
1939, as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
-----------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE> 5
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
DECEMBER 31, 1997
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
- ------
Cash and Due from Banks $ 80,246
Short-Term Investments 386,006
Securities, Available for Sale 661,596
Loans 1,774,551
Less: Allowance for Credit Losses 16,202
----------
Net Loans 1,758,349
Premises and Equipment 61,477
Other Assets 124,499
----------
TOTAL ASSETS $3,072,173
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 686,507
Interest Bearing 1,773,254
----------
Total Deposits 2,459,761
Short-Term Credit Facilities 295,342
Accounts Payable and Accrued Liabilities 149,775
----------
TOTAL LIABILITIES $2,904,878
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 100,235
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,524
----------
TOTAL STOCKHOLDER'S EQUITY 167,295
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,072,173
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory
authority and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
February 9, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001058872
<NAME> THE RESORT AT SUMMERLIN, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 175,491,628
<SECURITIES> 0
<RECEIVABLES> 24,167
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 175,515,795
<PP&E> 20,983,792
<DEPRECIATION> 112,680
<TOTAL-ASSETS> 226,237,440
<CURRENT-LIABILITIES> 1,127,313
<BONDS> 160,000,632
0
0
<COMMON> 682,500
<OTHER-SE> (11,530)
<TOTAL-LIABILITY-AND-EQUITY> 226,237,440
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 611,739
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,346
<INCOME-PRETAX> (10,685)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,685)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,685)
<EPS-PRIMARY> (10.69)
<EPS-DILUTED> (10.69)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001058870
<NAME> THE RESORT AT SUMMERLIN L P
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 175,487,660
<SECURITIES> 0
<RECEIVABLES> 24,167
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 175,511,827
<PP&E> 20,983,792
<DEPRECIATION> 112,680
<TOTAL-ASSETS> 226,233,472
<CURRENT-LIABILITIES> 1,126,303
<BONDS> 160,000,632
0
0
<COMMON> 0
<OTHER-SE> 65,106,537
<TOTAL-LIABILITY-AND-EQUITY> 226,233,472
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 607,197
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,346
<INCOME-PRETAX> (614,288)
<INCOME-TAX> 0
<INCOME-CONTINUING> (614,288)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (614,288)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
1160 Town Center Drive, Suite 200
Las Vegas Nevada, 89124
Offer to Exchange its 13% Exchange Senior Subordinated PIK Notes due 2007,
Series B ("New Notes"), which have not been registered under the Securities Act,
for any and all of its outstanding 13% Senior Subordinated PIK Notes due 2007,
Series A ("Old Notes"), pursuant to the Prospectus dated___________________,
1998.
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
____________________, 1998 OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE
OFFER MAY BE EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
THE EXPIRATION DATE.
To:
UNITED STATES TRUST COMPANY OF NEW YORK, Exchange Agent
Facsimile Transmission:
Confirm by telephone to:
----------
By Mail/ Hand Delivery/ Overnight Deliver:
The United States Trust Company of New York
----------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL, INCLUDING THE
INSTRUCTIONS TO THIS LETTER, CAREFULLY BEFORE COMPLETING ANY BOX BELOW.
<PAGE> 2
List below the Old Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, the certificate number(s) and
aggregate principal of Old Notes should be listed on a separate signed schedule
affixed hereto.
DESCRIPTION OF OLD NOTES TENDERED
<TABLE>
<CAPTION>
Name(s) and Address(es) of Registered (1) (2) (3) (4)
Holder(s), Exactly As Name(s) Appear(s) Certificate Aggregate Principal Aggregate Principal Aggregate Principal
on Old Note Certificates (Please fill if Number(s) of of Old Notes Amount of Old Notes Amount of Old Notes
in blank) Old Notes Represented by Tendered ** Tendered in Exchange for
* Certificate Certificated New Notes ***
<S> <C> <C> <C> <C>
Totals:
</TABLE>
* Need not be completed if Old Notes are being tendered by book-entry transfer
in accordance with DTC's ATOP procedures for transfer.
** Unless otherwise indicated in this column, the aggregate principal amount
represented by all Certificates identified in Column 1 or delivered to the
Exchange Agent shall be deemed tendered.
*** Unless otherwise indicated, the holder will be deemed to have tendered the
aggregate principal amount of Old Notes in exchange for a beneficial interest in
one or more fully registered global certificates, which will be deposited with,
or on behalf of, The Depository Trust Company ("DTC") and registered in the name
of its nominee.
2
<PAGE> 3
The undersigned acknowledges that he, she or it has received and
reviewed the Prospectus, dated ___________________, 1998 (the "Prospectus"), of
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP, a Nevada limited partnership
("RAS") and the RESORT AT SUMMERLIN, INC., a Nevada corporation ("RAS, Inc." and
together with RAS, the "Note Issuers"), and this Letter of Transmittal (the
"Letter of Transmittal"), which together constitute the Issuers' offer (the
"Exchange Offer") to exchange its 13% Senior Subordinated PIK Notes due 2007,
Series B (the "New Notes"), for an equal principal amount of its 13% Senior
Subordinated PIK Notes due 2007, Series A (the "Old Notes"). The New Notes and
the Old Notes are collectively referred to as the "Notes." Capitalized terms
used but not defined herein have the meanings ascribed to them in the
Prospectus.
The undersigned has completed the appropriate boxes above and below and
signed this Letter of Transmittal to indicate the action the undersigned desires
to take with respect to the Exchange Offer.
This Letter of Transmittal is to be used by holders of Old Notes to accept the
Exchange Offer if: (i) tender of Old Notes is to be made according to the
Automated Tender Offer Program ("ATOP") of the Depository Trust Company ("DTC"),
for which the transaction is eligible, pursuant to the procedures set forth in
the Prospectus under the caption "Exchange Offer--Procedure for Tendering Old
Notes Held Through DTC"; (ii) certificates representing Old Notes are to be
physically delivered to the Exchange Agent herewith by such holders, pursuant to
the procedures set forth in the Prospectus under the caption "Exchange
Offer--Procedure for Tendering Old Notes Held by Holder"; or (iii) tender of Old
Notes is to be made according to the guaranteed delivery procedures set forth in
the Prospectus under the caption "Exchange Offer--Guaranteed Delivery
Procedures."
NOTWITHSTANDING THE FOREGOING, VALID ACCEPTANCE OF THE TERMS OF THE EXCHANGE
OFFER MAY BE EFFECTED BY A PARTICIPANT IN DTC (A "DTC PARTICIPANT") TENDERING
OLD NOTES THROUGH ATOP WHERE THE EXCHANGE AGENT RECEIVES AN AGENT'S MESSAGE (AS
DEFINED IN THE PROSPECTUS) PRIOR TO THE EXPIRATION DATE. ACCORDINGLY, SUCH DTC
PARTICIPANT MUST ELECTRONICALLY TRANSMIT ITS ACCEPTANCE TO DTC THOUGH ATOP, AND
THEN DTC WILL EDIT AND VERIFY THE ACCEPTANCE, EXECUTE A BOOK-ENTRY DELIVERY TO
THE EXCHANGE AGENT'S ACCOUNT AT DTC AND SEND AN AGENT'S MESSAGE TO THE EXCHANGE
AGENT FOR ITS ACCEPTANCE. BY TENDERING THROUGH ATOP, DTC PARTICIPANTS WILL
EXPRESSLY ACKNOWLEDGE RECEIPT OF THIS LETTER OF TRANSMITTAL AND AGREE TO BE
BOUND BY ITS TERMS AND THE NOTE ISSUERS WILL BE ABLE TO ENFORCE SUCH AGREEMENT
AGAINST SUCH DTC PARTICIPANTS.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
DTC Participants who wish to cause their Old Notes to be tendered, but
who cannot transmit their acceptances through ATOP prior to the Expiration Date,
may effect a tender in accordance with the guaranteed delivery procedures set
forth in the Prospectus under the caption "Exchange Offer--Guaranteed Delivery
Procedure--Unregistered Old Senior Subordinated Notes Held Through DTC." Holders
who wish to tender their Old Notes but (i) whose Old Notes are not immediately
available and will not be available for tendering prior to the Expiration Date,
or (ii) who cannot deliver their Old Notes, the Letter of Transmittal, or any
other required documents to the Exchange Agent prior to the Expiration Date, may
effect a tender in accordance with the guaranteed delivery procedures set forth
in the Prospectus under the caption "Exchange Offer--Guaranteed Delivery
Procedure--Old Notes Held by Holders."
The undersigned must complete the appropriate boxes above and below and
sign this Letter of Transmittal to indicate the action the undersigned desires
to take with respect to the Exchange Offer.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED TO THE EXCHANGE AGENT
IN EXCHANGE FOR CERTIFICATED NEW NOTES.
Unless the undersigned (i) has completed item (4) in the box entitled
"Description of Old Notes Tendered" and (ii) has
3
<PAGE> 4
checked the box above, the undersigned will be deemed to have tendered Old Notes
in exchange for a beneficial interest in one or more fully registered global
certificates, which will be deposited with, or on behalf of, DTC and registered
in the name of its nominee. Beneficial interests in such registered global
certificates will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. See "Book--Entry;
Delivery and Form" as set forth in the Prospectus.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
_______________________________________________________________________
The Depository Trust Company Account Number
_______________________________________________________
Transaction Code Number
__________________________________________________________________________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
____________________________________________________________________
Window Ticket Number (if any):
____________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery:
_____________________________________________________
Name of Eligible Institution that Guaranteed Delivery:
___________________________________________________
If delivered by book-entry transfer:
___________________________________________________________________
Account Number ______________________ Transaction Code Number
_____________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to conditions of the Exchange Offer, the
undersigned hereby tenders to the Note Issuers the Old Notes indicated above.
Subject to, and effective upon, the acceptance for exchange of the Old Notes
tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Exchange Agent, as agent of the Note Issuers, all right, title
and interest in and to such Old Notes as are being tendered hereby, and
irrevocably constitutes and appoints the Exchange Agent as the agent and
attorney-in-fact of the undersigned to cause the Old Notes tendered hereby to be
transferred and exchanged.
4
<PAGE> 5
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, sell, assign and transfer the Old
Notes tendered hereby and to acquire the New Notes issuable upon the exchange of
such tendered Old Notes, and that the Exchange Agent, as agent of the Note
Issuers, will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim when the same are accepted by the Exchange Agent, as agent of the Note
Issuers. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Note Issuers or the Exchange Agent to be necessary or
desirable to complete the exchange, sale, assignment and transfer of the Old
Notes tendered hereby.
The undersigned also acknowledges that this Exchange Offer is being
made in reliance on the interpretation of the staff of the Securities and
Exchange Commission (the "SEC"), as set forth in Exxon Capital Holdings
Corporation (available May 13, 1988) or similar no-action letters issued to
parties. Based on such interpretation of the staff of the SEC set forth in such
no-action letters, the Note Issuers believe that the New Notes issued in
exchange for the Old Notes pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by a holder thereof (other than any (i)
a broker-dealer who purchases such New Notes from the Note Issuers to resell
pursuant to Rule 144A or any other available exemption under the Securities Act,
or (ii) a person that is an "affiliate" of the Note Issuers within the meaning
of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"))
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that (i) such New Notes are acquired in the
ordinary course of such holder's business, (ii) at the time of the commencement
of the Exchange Offer such holder has no arrangement with any person to
participate in a distribution of the New Notes and (iii) such holder is not
engaged in, and does not intend to engage, in a distribution of the New Notes.
By tendering Old Notes in exchange for New Notes, each holder will represent to
the Note Issuers that: (i) it is not such an affiliate of the Note Issuers, (ii)
any New Notes to be received by it will be acquired in the ordinary course of
business and (iii) at the time of the commencement of the Exchange Offer it had
no arrangement with any person to participate in a distribution of the New
Notes. If the undersigned is not a broker-dealer or is a broker-dealer but will
not receive New Notes for its own account in exchange for Old Notes, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of New Notes.
If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes, where such Old Notes were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Nevertheless a broker-dealer may be deemed to be an underwriter under the
Securities Act notwithstanding such disclaimer. The SEC has taken the position
that such broker-dealers may fulfill their prospectus delivery requirements with
respect to the New Notes (other than a resale of New Notes received in exchange
for an unsold allotment from the original sale of the Old Notes) with the
Prospectus. The Prospectus, as it may be amended or supplemented from time to
time, may be used by such broker-dealers for a period of time, starting on the
Expiration Date and ending on the close of business 180 days after the date the
Registration Statement relating to the Exchange Offer has become effective. The
Note Issuers have agreed that for such period of time, it will make the
Prospectus (as it may be amended or supplemented) available to each
broker-dealer which, with the Note Issuers' prior written consent, makes a
market in the Old Notes and receives New Notes pursuant to the Exchange Offer
(each a "Participating Broker-Dealer") for use in connection with any resale of
such New Notes. By acceptance of the Exchange Offer, each broker-dealer that
receives New Notes pursuant to the Exchange Offer hereby acknowledges and agrees
to notify the Note Issuers prior to using the Prospectus in connection with the
sale or transfer of New Notes and that, upon receipt of notice from the Note
Issuers of the happening of any event which makes any statement in the
Prospectus untrue in any material respect or which requires the making of any
changes in the Prospectus in order to make the statements therein not
misleading, such broker-dealer will suspend use of the Prospectus until (i) the
Note Issuers have amended or supplemented the Prospectus to correct such
misstatement or omission and (ii) either the Note Issuers have furnished copies
of the amended or supplemented Prospectus to such broker-dealer or, if the Note
Issuers have not otherwise agreed to furnish such copies and declines to do so
after such broker-dealer so requests, such broker-dealer has obtained a copy of
such amended or supplemented Prospectus as filed with the SEC. The Note Issuers
agree to deliver such notice and such amended or supplemented Prospectus
promptly to any Participating Broker-Dealer that has so notified the Note
Issuers. Except as described above, the Prospectus may not be used for or in
connection with an offer to resell, a resale or any other retransfer of New
Notes.
5
<PAGE> 6
The undersigned represents that (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of such holder's
business, (ii) such holder has no arrangements with any person to participate in
the distribution of such New Notes or, if such holder intends to participate in
the Exchange Offer for the purpose of distributing the New Notes, such holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable and (iii) (x) such holder is not (a) a
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes that were acquired as a result of market-making activities or other
trading activities, or (b) an "affiliate," as defined in Rule 405 under the
Securities Act, of the Note Issuers or (y) if such holder is such a
broker-dealer or an affiliate, such holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
All authority conferred or agreed to be conferred in this Letter of
Transmittal and every obligation of the undersigned hereunder shall be binding
upon the successors, assigns, heirs, executors, administrators, trustees in
bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned. This
tender may be withdrawn only in accordance with the procedures set forth in the
instructions contained in this Letter of Transmittal.
The undersigned understands that tenders of the Old Notes pursuant to
any one of the procedures described under "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Note Issuers in accordance
with the terms and subject to the conditions of the Exchange Offer.
The undersigned understands that if its Old Notes are accepted for
exchange, interest on the New Notes will accumulate from the last interest
payment date on which interest was paid on the Old Notes surrendered in exchange
thereof, or if no interest has been paid, from the original date of issuance of
the Old Notes.
The undersigned recognizes that unless the holder of Old Notes (i)
completes item (4) of the Box entitled "Description of Old Notes Tendered" above
and (ii) checks the box entitled "Check here if tendered Old Notes are being
delivered to the Exchange Agent in exchange for certificated New Notes" above,
such holder, when tendering such Old Notes, will be deemed to have tendered such
Old Notes in exchange for a beneficial interest in one or more fully registered
global certificates, which will be deposited with, or on behalf of, DTC and
registered in the name of its nominee. Beneficial interests in such registered
global certificates will be shown on, and transfers thereof will be effected
only through, records maintained by DTC and its participants. See "Book--Entry;
Delivery and Form" in the Prospectus.
The undersigned recognizes that, under certain circumstances set forth
in the Prospectus under "The Exchange Offer--Conditions," the Note Issuers may
not be required to accept for exchange any of the Old Notes tendered. Old Notes
not accepted for exchange or withdrawn will be returned to the undersigned at
the address set forth below unless otherwise indicated under "Special Delivery
Instructions" below.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptability of any tender will be determined by the Note Issuers,
in its sole discretion, and such determination will be final and binding. Unless
waived by the Note Issuers, irregularities and defects must be cured by the
Expiration Date. The Note Issuers shall not be obligated to give notice of any
defects or irregularities in tenders and shall not incur any liability for
failure to give any such notice.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby requests that the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) be issued in the name of the undersigned. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" below, the
undersigned hereby requests that the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not exchanged) be sent to
the undersigned at the address shown above in the box entitled "Description of
Old Notes Tendered."
6
<PAGE> 7
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
NOTES TENDERED" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED
THE OLD NOTES AS SET FORTH IN SUCH BOX(ES) ABOVE.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
X ______________________________________ ___________________________
X ______________________________________ ___________________________
SIGNATURE(S) OF OWNER(S) DATE
Area Code and Telephone Number
___________________________________________________________________
If a holder is tendering any Old Notes, this Letter of Transmittal must be
signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Old Notes or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title below. See Instruction 3.
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:
________________________________________________________________________________
(AUTHORIZED SIGNATURE)
________________________________________________________________________________
(TITLE)
________________________________________________________________________________
(NAME OF FIRM)
Dated: _________________________________________________________________________
7
<PAGE> 8
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if New Notes (and, if applicable, substitute certificates
representing Old Notes for any Old Notes not exchanged) are to be issued in the
name of and sent to someone other than the person or persons whose signatures)
appear(s) on this Letter of Transmittal above.
Issue New Notes to:
Name(s):
________________________________________________________________________________
(PLEASE TYPE OR PRINT)
________________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
8
<PAGE> 9
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
are to be sent to someone other than the person or persons whose signatures
appear(s) on this Letter of Transmittal above or to such person or persons at an
address other than shown in the box entitled "Description of Old Notes Tendered"
on this Letter of Transmittal above.
Mail New Notes to:
Name(s): _______________________________________________________________________
(PLEASE TYPE OR PRINT)
________________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
IMPORTANT: EITHER (1) (A) THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF)
TOGETHER WITH CERTIFICATES REPRESENTING OLD NOTES OR (B) A BOOK-ENTRY
CONFIRMATION INCLUDING BY MEANS OF AN AGENT'S MESSAGE, MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE
TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS, OR (2) THE TENDERING HOLDER MUST
COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES SET FORTH HEREIN. BY TENDERING
THROUGH ATOP, DTC PARTICIPANTS WILL EXPRESSLY ACKNOWLEDGE RECEIPT OF THIS LETTER
OF TRANSMITTAL AND AGREE TO BE BOUND BY ITS TERMS AND THE ISSUER WILL BE ABLE TO
ENFORCE SUCH AGREEMENT AGAINST SUCH DTC PARTICIPANTS.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
9
<PAGE> 10
SUBSTITUTE Form W-9, Department of the Treasury, Internal Revenue Service
Payor's Request for Taxpayor Identification Number (TIN) Certification
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: _____________________________________________________
<TABLE>
<S> <C>
PART 1--Taxpayer Identification Number Social Security Number
Enter your taxpayer identification number in the appropriate box. or Employee
For most individuals, this is your social security number. If you Identification Number
do not have a number, see how to obtain a "TIN" in the enclosed
Guidelines.
</TABLE>
NOTE: If the account is in more than one name, see the chart on page 2 of the
enclosed Guidelines to determine what number to give.
PART II--
FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING (See enclosed Guidelines)
PART III--Y
Check box if awaiting TIN
Certification--Under the penalties of perjury, I certify that: (1) The number
shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and (2) I am not subject to backup withholding
either because I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to
report all interest or the IRS has notified me that I am no longer subject to
backup withholding.
SIGNATURE______________________________________________________
DATE____________________________________________________________
CERTIFICATION GUIDELINES--You must cross out Item (2) of the above certification
if you have been notified by the IRS that you are subject to backup withholding
because of underreporting of interest on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2).
10
<PAGE> 11
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification
Number has not been issued to me, and that I mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, thirty-one percent (31%)
of all payments made to me on account of the New Notes shall be retained until I
provide a Taxpayer Identification Number to the payer and that, if I do not
provide my Taxpayer Identification Number within sixty (60) days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and thirty-one percent (31%) of all reportable payments made to me thereafter
will be withheld and remitted to the Internal Revenue Service until I provide a
Taxpayer Identification Number.
Signature _________________________________________________ Date
_____________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF THIRTY-ONE PERCENT (31%) OF ANY PAYMENTS MADE
TO YOU ON ACCOUNT OF THE NEW NOTES. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURE. This Letter of Transmittal is to be completed by holders of
Old Notes to accept the Exchange Offer if: (i) tender of Old Notes is to be made
by DTC Participants through ATOP, for which the transaction is eligible,
pursuant to the procedures set forth in the Prospectus under the caption
"Exchange Offer--Old Notes Held Through DTC"; (ii) certificates representing Old
Notes are to be physically delivered to the Exchange Agent herewith by such
holders, pursuant to the procedures set forth in the Prospectus under the
caption "Exchange Offer--Old Notes Held by Holders"; or (iii) tender of Old
Notes is to be made according to the guaranteed delivery procedures set forth in
the Prospectus under the caption "Exchange Offer--Guaranteed Delivery
Procedures." Notwithstanding the foregoing, valid acceptance of the terms of the
Exchange Offer may be effected by a DTC Participant tendering Old Notes through
ATOP where the Exchange Agent receives an Agent's Message prior to the
Expiration Date. Accordingly, such DTC Participant must electronically transmit
its acceptance to DTC through ATOP, and then DTC will edit and verify the
acceptance, execute a book-entry delivery to the Exchange Agent's account at DTC
and send an Agent's Message to the Exchange Agent for its acceptance. By
tendering through ATOP, DTC Participants will expressly acknowledge receipt of
this Letter of Transmittal and agree to be bound by its terms and the Note
Issuers will be able to enforce such agreement against such DTC Participants.
In order to validly tender Old Notes pursuant the Exchange Offer,
either (i) (A) this Letter of Transmittal, or a facsimile hereof, together with
certificates representing Old Notes or (B) a Book-Entry Confirmation, including
by means of an Agent's Message, of the transfer into the Exchange Agent's
account at DTC of all Old Notes delivered electronically must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date, together with all other required documents, or
(ii) the tendering holder must comply with the guaranteed delivery procedures
set forth below. Delivery of documents to DTC does not constitute delivery to
the Exchange Agent.
If a holder or DTC Participant desires to tender Old Notes pursuant to
the Exchange Offer and time will not permit this Letter of Transmittal,
certificates representing such Old Notes and all other required documents to
reach
11
<PAGE> 12
the Exchange Agent, or the procedures for book-entry transfer, including those
with respect to tenders through ATOP, cannot be completed, prior to the
Expiration Date, such holder or DTC Participant, as the case may be, must tender
such Old Notes pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "Exchange Offer--Guaranteed Delivery Procedures."
Pursuant to such procedures (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Note Issuers,
must be received by the Exchange Agent either by hand delivery, mail, facsimile
transmission or overnight courier, prior to the Expiration Date; and (iii)
within three NYSE trading days after the date of the execution of the Notice of
Guaranteed Delivery, (A) holders must deliver to the Exchange Agent a properly
completed and duly executed Letter of Transmittal, as well as the certificates
representing all tendered Old Notes in proper form for transfer, and all other
documents required by the Letter of Transmittal or (B) DTC Participants must
effect a Book-Entry Confirmation, including through ATOP by means of an Agent's
Message, of the transfer of such Old Notes into the Exchange Agent's account at
DTC as set forth in the Prospectus.
The method of delivery of this Letter of Transmittal, the shares of Old
Notes and all other required documents, including delivery through DTC and any
acceptance or Agent's Message transmitted through ATOP, is at the option and
risk of the tendering holder. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. In all cases,
sufficient time should be allowed for such documents to reach the Exchange Agent
prior to the Expiration Date. Except as otherwise provided in this instruction
1, delivery will be deemed made only when actually received by the Exchange
Agent.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders, by execution of this Letter of Transmittal (or a facsimile
hereof), waive any right to receive any notice of the acceptance of their Old
Notes for exchange.
See "The Exchange Offer" in the Prospectus.
2. WITHDRAWALS. Tenders of Old Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. For a withdrawal of a
tender of Old Notes to be effective, a letter, telex, telegram or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth above prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal by a DTC Participant must contain
the name and number of the DTC Participant, the aggregate principal amount of
Old Notes to which such withdrawal relates and the signature of the DTC
Participant. Any such notice of withdrawal by a holder of Old Notes must (i)
specify the name of the person who tendered the Old Notes to be withdrawn, (ii)
contain a description of the Old Notes to be withdrawn (including the
certificate number or numbers and aggregate liquidation preference of such Old
Notes) and (iii) be signed by the holder of such Old Notes in the same manner as
the original signature on this Letter of Transmittal (including any required
signature guarantees), or be accompanied by (x) documents of transfer in a form
acceptable to the Note Issuers, in its sole discretion and (y) a properly
completed irrevocable proxy that authorized such person to effect such
revocation on behalf of such holder. Any Old Notes so withdrawn will be deemed
not to have been validly tendered for exchange for purposes of the Exchange
Offer. Any Old Notes which have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender, or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following the procedures described above at any time on or prior
to 5:00 p.m., New York City time, on the Expiration Date.
See "The Exchange Offer--Withdrawals of Tenders" in the Prospectus.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered holder of the Old Notes tendered hereby, the signature must
correspond exactly with the name as written on the face of the certificates
without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
12
<PAGE> 13
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Old Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should indicate when signing, and unless waived by the
Note Issuers, proper evidence satisfactory to the Note Issuers of their
authority so to act must be submitted.
The signatures on this Letter of Transmittal or a notice of withdrawal,
as the case may be, must be guaranteed unless the Old Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the Old
Notes who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in this Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that the signatures in this
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office or correspondent in the United States, or an "eligible
institution" within the meaning of Rule 17Ad-15 of the Securities Exchange Act
of 1934, as amended (each an "Eligible Institution"). If Old Notes are
registered in the name of a person other than the signer of this Letter of
Transmittal, the Old Notes surrendered for exchange must be endorsed by, or be
accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by the Note Issuers in its sole discretion, duly
executed by the registered holder with the signature thereon guaranteed by an
Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Old
Notes should indicate in the applicable box the name and address to which New
Notes issued pursuant to the Exchange Offer are to be issued or sent, if
different from the name or address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. If no such instructions are given, any New Notes will be issued in
the name of, and delivered to, the name or address of the person signing this
Letter of Transmittal and any Old Notes not accepted for exchange will be
returned to the name or address of the person signing this Letter of
Transmittal.
5. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under
the federal income tax laws, payments that may be made by the Note Issuers on
account of New Notes issued pursuant to the Exchange Offer may be subject to
backup withholding at the rate of 31%. In order to avoid such backup
withholding, each tendering holder should complete and sign the Substitute Form
W-9 included in this Letter of Transmittal and either (a) provide the correct
taxpayer identification number ("TIN") and certify, under penalties of perjury,
that the TIN provided is correct and that (i) the holder has not been notified
by the Internal Revenue Service (the "IRS") that the holder is subject to backup
withholding as a result of failure to report all interest or (ii) the IRS has
notified the holder that the holder is no longer subject to backup withholding;
or (b) provide an adequate basis for exemption. If the tendering holder has not
been issued a TIN and has applied for one, or intends to apply for one in the
near future, such holder should write "Applied For" in the space provided for
the TIN in Part I of the Substitute Form W-9, sign and date the Substitute Form
W-9 and sign the Certificate of Payee Awaiting Taxpayer Identification Number.
If "Applied For" is written in Part I, the Note Issuers (or the Trustee with
respect to the New Notes or a broker or custodian) may still withhold 31% of the
amount of any payments made on account of the New Notes until the holder
furnishes the Note Issuers or the Trustee with respect to the New Notes, broker
or custodian with its TIN. In general, if a holder is an individual, the
taxpayer identification number is the Social Security number of such individual.
If the Exchange Agent or the Note Issuers are not provided with the correct TIN,
the holder may be subject to a $50 penalty imposed by the IRS. Certain holders
(including, among others, all corporations and certain foreign individuals) are
not subject to these backup withholding and reporting requirements. In order for
a foreign individual to qualify as an exempt recipient, such holder must submit
a statement (generally, IRS Form W-8), signed under penalties of perjury,
attesting to that individual's exempt status. Such statements can be obtained
from the Exchange Agent. For further information concerning backup withholding
and instructions for completing the Substitute Form W-9 (including how to obtain
a taxpayer identification number if you do not have one and how to complete the
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Substitute Form W-9 if Old Notes are registered in more than one name), consult
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Old Notes to be deemed invalidly tendered, but may require the Note Issuers or
the Trustee with respect to the New Notes, broker or custodian to withhold 31%
of the amount of any payments made on account of the New Notes. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the IRS.
6. TRANSFER TAXES. The Note Issuers will pay all transfer taxes, if
any, applicable to the transfer of Old Notes to it or its order pursuant to the
Exchange Offer. If, however, New Notes and/or substitute Old Notes not exchanged
are to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the transfer of Old Notes to the Note Issuers or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other person) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS. The Note Issuers reserve the absolute right to
waive satisfaction of any or all conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of their Old Notes for exchange. Neither the Note Issuers nor
any other person is obligated to give notice of defects or irregularities in any
tender, nor shall any of them incur any liability for failure to give any such
notice.
9. INADEQUATE SPACE. If the space provided herein is inadequate, the
aggregate principal amount of Old Notes being tendered and the certificate
number or numbers (if available) should be listed on a separate schedule
attached hereto and separately signed by all parties required to sign this
Letter of Transmittal.
10. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose
Old Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated above for further instructions.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to
the procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number indicated above.
All tendered Old Notes, executed Letters of Transmittal and other
related documents should be directed to the Exchange Agent. Requests for
assistance and additional copies of the Prospectus, the Letter of Transmittal
and other related documents should be directed to the Exchange Agent.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
By Facsimile:
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(For Eligible Institutions Only)
By Telephone:
By Registered or Certified Mail:
By Hand or Overnight Delivery
15
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
13% SENIOR SUBORDINATED PIK NOTES DUE 2007
This form or a form substantially similar hereto must be used by a holder of the
13% Senior Subordinated PIK Notes due 2007, Series A (the "Old Notes") of THE
RESORT AT SUMMERLIN, LIMITED PARTNERSHIP, a Nevada limited partnership ("RAS"),
and THE RESORT AT SUMMERLIN, INC., a Nevada corporation ("RAS, Inc." and
together with RAS, the "Note Issuers"), that wishes to tender Old Notes to the
Exchange Agent pursuant to the guaranteed delivery procedures described in "The
Exchange Offer--Guaranteed Delivery Procedures" of the Prospectus dated
___________, 1998 (the "Prospectus") and in Instruction 1 to the accompanying
Letter of Transmittal. Any holder that wishes to tender Old Notes pursuant to
such guaranteed delivery procedures must ensure that the Exchange Agent receives
this Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on
the Expiration Date of the Exchange Offer. Capitalized terms not defined herein
have the meaning ascribed to them in the Prospectus or the Letter of
Transmittal.
To: United States Trust Company of New York, Exchange Agent
By Registered or Certified Mail:
By Hand or Overnight Delivery:
By Facsimile:
For Information Call:
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
Please read the accompanying instructions carefully.
Ladies and Gentlemen:
The undersigned hereby tenders to the Note Issuers, upon the terms and
subject to conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 1 of the Letter of Transmittal. The
undersigned hereby tenders the Old Notes listed below:
CERTIFICATE NUMBER(S) (IF AGGREGATE PRINCIPAL AMOUNT AGGREGATE PRINCIPAL
KNOWN) OF OLD NOTES OR REPRESENTED BY CERTIFICATES AMOUNT TENDERED
ACCOUNT NUMBER AT THE
BOOK-ENTRY FACILITY
<PAGE> 2
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
SIGN HERE
Name of Registered or Acting Holder:
- ------------------------------------------------------------------------------
Signature(s):
-----------------------------------------------------------------
Name(s) (please print):
- ------------------------------------------------------------------------------
Address:
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Telephone Number:
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Date:
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GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Associates of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Old Notes tendered hereby
in proper form for transfer (or confirmation of the book-entry transfers of
such Old Notes into the Exchange Agent's account at the book-entry transfer
facility described in the Prospectus under the caption "The Exchange
Offer--Procedures for Tendering" and in the Letter of Transmittal) and any
other required documents, within three New York Stock Exchange trading days
after the date of execution of the Notice of Guaranteed Delivery.
SIGN HERE
Name of firm:
----------------------------------------------------------------
Authorized Signature:
- ------------------------------------------------------------------------------
Name (please print):
----------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE> 3
Telephone Number:
-------------------------------------------------------------
Date:
-------------------------------------------------------------------------
DO NOT SEND NOTES WITH THIS FORM. ACTUAL SURRENDER OF NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED
LETTER OF TRANSMITTAL.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by
the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. The method of delivery of this Notice of
Guaranteed Delivery and any other required documents to the Exchange Agent is at
the election and risk of the holder and the delivery will be deemed made only
when actually received by the Exchange Agent. If delivery is by mail,
registered or certified mail properly insured, with return receipt requested,
is recommended. In all cases sufficient time should be allowed to assure
timely delivery. For a description of the guaranteed delivery procedure, see
Instruction 1 of the Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant
of the book-entry transfer facility whose name appears on a security position
listing as the owner of Old Notes, the signature must correspond with the name
shown on the security position listing as the owner of the Old Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Old Notes listed or a participant of the book-entry
transfer facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate powers of attorney to transfer securities, signed as the name of
the registered holder(s) appears on the Old Notes or signed as the name of the
participant shown on the book-entry transfer facility's security position
listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing.
3. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
