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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 1-6697
MIRAGE RESORTS, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEVADA 88-0058016
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
3400 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (702) 791-7111
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK ($.004 PAR VALUE PER SHARE) NEW YORK STOCK EXCHANGE
PACIFIC EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days: YES X NO
----- -----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: X
-----
The aggregate market value of the Registrant's Common Stock
held by non-affiliates (all persons other than executive officers
or directors) of the Registrant on March 27, 1998 (based on the
closing sale price per share on the New York Stock Exchange
Composite Tape on that date) was $3,943,420,236.
The Registrant's Common Stock outstanding at March 27, 1998
was 179,489,247 shares.
Portions of the Registrant's definitive Proxy Statement for
its May 21, 1998 Annual Meeting of Stockholders (which has not
been filed as of the date of this filing) are incorporated by
reference into Part III.
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<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Mirage Resorts, Incorporated (the "Company" or the
"Registrant") was incorporated in Nevada in 1949 as the successor
to a partnership that began business in 1946. The Company,
through wholly owned subsidiaries, owns and operates (i)
The Mirage, a hotel-casino and destination resort on the Las
Vegas Strip, (ii) Treasure Island at The Mirage ("Treasure
Island"), a hotel-casino resort adjacent to The Mirage, (iii)
the Golden Nugget, a hotel-casino in downtown Las Vegas, and
(iv) the Golden Nugget-Laughlin, a hotel-casino in Laughlin,
Nevada. The Company, through a wholly owned subsidiary,
also owns a 50% interest in a joint venture that owns and
operates the Monte Carlo Resort & Casino, which opened June 21,
1996 on the Las Vegas Strip.
The Company, through wholly owned subsidiaries, is also
currently constructing Bellagio, an elegant hotel-casino and
destination resort on the Las Vegas Strip, and Beau Rivage,
a luxurious hotel-casino and beachfront resort in Biloxi,
Mississippi. Bellagio is believed to be the most expensive
resort hotel ever built. When it opens, Beau Rivage will be
the largest hotel-casino in the United States outside of
Nevada.
OPERATING PROPERTIES
The Mirage opened in 1989 and is located on approximately
100 acres shared with Treasure Island near the center of the
Las Vegas Strip. The Mirage is a luxurious, tropically
themed destination resort. The exterior of the resort is
landscaped with palm trees, abundant foliage and more than
four acres of lagoons and other water features centered
around a 54-foot simulated volcano and waterfall. Each
evening, the volcano erupts at regular intervals, sending
blasts of steam and water 40 feet into the air, with flames
which spectacularly illuminate the front of the resort.
Inside the front entrance is an atrium with a tropical
garden and additional water features capped by a 100-foot-
high glass dome. The atrium has an advanced environmental
control system and creative lighting and other special
effects designed to replicate the sights, sounds and
fragrances of the South Seas. Located at the rear of the
hotel, adjacent to the swimming pool area, is a dolphin
habitat with eight Atlantic bottlenose dolphins, and The
Secret Garden of Siegfried & Roy, a $14 million attraction
that allows guests to view the beautiful exotic animals of
Siegfried & Roy, the world-famous illusionists who perform
at The Mirage.
<PAGE>
Treasure Island opened in 1993 adjacent to The Mirage.
Treasure Island is a pirate-themed hotel-casino resort. The
front of Treasure Island, facing the Las Vegas Strip, is an
elaborate pirate village in which full-scale replicas of a
pirate ship and a British frigate regularly engage in a
pyrotechnic and special effects sea battle, culminating with
the sinking of the frigate. The showroom at Treasure Island
features Mystere, a unique choreographic mix of special
effects, comedy and feats of human prowess produced and
performed by the world-famous Cirque du Soleil.
The Golden Nugget, together with its parking facilities,
occupies approximately two and one-half square blocks and is
located approximately five miles north of The Mirage and
Treasure Island in the center of downtown Las Vegas. The
Golden Nugget has received the Mobil Travel Guide's Four
Star Award and the AAA Four Diamond Award for 14 and 21
consecutive years, respectively. It is the largest hotel-
casino and the generally acknowledged leader in the downtown
Las Vegas market and has benefited from the "Fremont Street
Experience," a $70 million entertainment attraction developed
by a coalition of several major downtown Las Vegas hotel-casinos
(including the Golden Nugget) in conjunction with the City of
Las Vegas. This attraction opened in December 1995 and converted
Fremont Street into a four-block-long pedestrian mall, topped
with a 90-foot by 1,400-foot special effects canopy. Within
the canopy are 2.1 million computer-controlled, four-color lights
and a 540,000-watt sound system. The Fremont Street Experience
also includes retail facilities and a 1,432-space parking garage.
The Golden Nugget-Laughlin is located approximately 90
miles south of Las Vegas in Laughlin, Nevada. The hotel-
casino is located on approximately 13 acres with 600 feet of
Colorado River frontage near the center of Laughlin's
tourist district. The Golden Nugget-Laughlin features a
32,000-square foot casino offering 18 table games and
approximately 1,175 slots, 300 hotel rooms (including four
suites), three restaurants, three bars, an entertainment
lounge, a deli, an ice cream parlor and two gift and retail
shops. Other facilities at the Golden Nugget-Laughlin
include a swimming pool, a parking garage with space for
approximately 1,585 vehicles and approximately four and one-
half acres of surface parking for recreational vehicles.
The Company also owns and operates a 78-room motel in
Bullhead City, Arizona, across the Colorado River from Laughlin.
The Company, through a wholly owned subsidiary, is a 50%
partner with Circus Circus Enterprises, Inc. ("Circus") in
Victoria Partners, a joint venture that owns and operates
Monte Carlo. The resort is situated on approximately 46
acres near the center of the Las Vegas Strip. Monte Carlo
has a palatial style reminiscent of the Belle Epoque, the
French Victorian architecture of the late 19th century.
Monte Carlo has amenities such as a microbrewery featuring
live entertainment, a health spa, a beauty salon, a 1,200-
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seat theater featuring the world-renowned magician Lance
Burton, a large pool area and lighted tennis courts. Monte
Carlo will be connected to Bellagio by a monorail.
CURRENT CONSTRUCTION PROJECTS
BELLAGIO
The Company is currently constructing Bellagio on an
approximately 120-acre site at the corner of the Las Vegas
Strip and Flamingo Road. Bellagio is the Company's most
ambitious destination resort to date. This elegant European-
style resort will overlook a picturesque lake inspired by
Lake Como in Northern Italy. Throughout each day the lake's
1,200 fountains will come alive in a choreographed
performance of water, music and lights which will be highly
visible along the Las Vegas Strip. The resort will also
feature a wide variety of casual and gourmet restaurants in
both indoor and outdoor settings (including a branch of
Manhattan's world-famous Le Cirque), upscale retail
boutiques, including those leased to Armani, Chanel, Fred
Leighton, Gucci, Hermes, Prada and Tiffany & Co., and
extensive meeting, convention and banquet space. Cirque du
Soleil is producing an all-new and unique production to be
performed in a specially designed showroom. Bellagio will
be lushly landscaped with classical gardens (both indoors
and outdoors) and European fountains and pools. The resort
is currently expected to cost approximately $1.6 billion
(including land, capitalized interest and preopening costs)
and is scheduled to open in October 1998. Additionally, as
of March 1, 1998, the Company had acquired a collection of
fine art at a cost of approximately $162 million for display
and resale at Bellagio and was renting additional fine art
for display. The Bellagio art collection rivals in quality
the collections of many of the world's leading art galleries
and museums and is expected to be a major draw for the
resort.
BEAU RIVAGE
The Company is constructing Beau Rivage, a luxurious
beachfront resort in Biloxi, Mississippi, on a 23-acre site
where Interstate 110 meets the Gulf Coast. The Gulf Coast is
one of the largest gaming markets in the United States and
Beau Rivage will be the largest hotel-casino in Mississippi,
with 1,780 guest rooms and an approximately 80,000-square foot
casino. Guests arriving at the resort will be greeted by
lush gardens and stately oaks. Beau Rivage will feature
13 restaurants, upscale retail outlets, a full-service spa and
salon, a state-of-the-art convention center, an elegant atrium
lobby, a beautifully landscaped pool area and a 1,550-seat show-
room that will be home to a new production by Cirque du Soleil.
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Beau Rivage is currently expected to be completed in the first
quarter of 1999 at an estimated total cost (including land,
capitalized interest and preopening costs) of approximately $600
million. The Company has also expended an additional $6 million
to acquire several other parcels of land in the Biloxi area
for future development, including approximately 508 acres for
the potential development of a world-class 18-hole golf course.
In addition, the Company is planning the construction of a
deluxe marina at Beau Rivage for sportfishing, Gulf excursions
and other water sports, as well as dockage for private yachts of
up to 125 feet.
As with any major construction project, the Bellagio and
Beau Rivage projects involve many risks, including weather
interference, shortages of materials and labor, work stoppages,
labor disputes, unforeseen engineering, environmental or
geological problems and unanticipated cost increases, any of
which could give rise to delays or cost overruns. Con-
struction, equipment or staffing problems or difficulties
in obtaining any of the requisite licenses, permits, allocations
or authorizations from regulatory authorities could increase
the cost or delay the construction or opening of the facilities
or otherwise affect their design and features. It is possible
that the existing budget and construction plans for either
project may be changed for competitive or other reasons.
Accordingly, there can be no assurance that either project will
be completed within the time periods or budgets which are
currently contemplated.
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The following table sets forth certain data, as of March 1,
1998, regarding the Company's major resorts and certain estimates
regarding the Company's two projects under construction.
<TABLE>
<CAPTION>
Bellagio (a) Beau Rivage (b) The Mirage Treasure Island Golden Nugget Monte Carlo (c)
------------ --------------- --------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Project cost................... $1.6 billion $600 million $862 million(d) $485 million(d) (e) $355 million(d)
Opening date................... Oct. 1998 1st Qtr. 1999 Nov. 1989 Oct. 1993 Aug. 1946 June 1996
Total building square footage.. 4,289,000 2,222,000 3,117,000 2,377,000 1,465,000 2,520,000
Casino
Square footage (including
corridors).................. 151,000 80,000 107,200 83,800 38,000 90,000
Number of gaming tables...... 139 90 122 86 56 95
Number of slots.............. 2,637 2,025 2,220 1,952 1,327 2,156
Hotel
Number of guest rooms (in-
cluding suites and villas).. 3,005 1,780 3,044 2,891 1,907 3,002
Square footage of interior
meeting space.............. 99,400 30,000 73,000 16,000 21,000 22,000
Restaurants
Number of outlets............ 16 13 12 10 6 8
Number of seats.............. 2,878 1,564 2,300 1,744 1,006 2,200
Retail
Square footage............... 76,700 25,500 35,000 16,000 4,350 11,300
Showroom
Number of seats.............. 1,800 1,550 1,503 1,525 350 1,200
</TABLE>
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(a) The estimated Bellagio project cost does not include the cost
of fine art purchased for display and resale at Bellagio.
(b) The estimated Beau Rivage project cost does not include the cost of
land acquired for future development.
(c) Monte Carlo is 50%-owned by the Company.
(d) Includes capital improvements subsequent to opening, but is not
adjusted for inflation or depreciation.
(e) Not meaningful for comparative purposes.
PENDING ACQUISITION OF BOARDWALK HOTEL-CASINO
On December 22, 1997, the Company entered into agreements
(the "Boardwalk Agreements") to acquire Boardwalk Casino,
Inc. ("BCI") and certain related assets at a total cost
(including assumed and acquired debt) of approximately $112
million. BCI owns and operates the Boardwalk, a hotel-
casino situated on approximately eight acres on the Las
Vegas Strip between Monte Carlo and Bellagio. The Boardwalk
includes 653 hotel rooms and 33,000 square feet of casino
space offering 661 slot machines, 20 table games and a full-
service race and sports book. Other amenities at the
Boardwalk include a coffee shop, a buffet, a snack bar, an
entertainment lounge, two bars, a gift shop, two outdoor
swimming pools and 1,125 garage and surface parking spaces.
The hotel is currently operated under a Holiday Inn-
Registered Trademark- franchise license agreement. Upon consum-
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mation of the transactions contemplated by the Boardwalk Agree-
ments and combined with adjacent parcels of land previously
acquired by the Company, the Company will own approximately
12 acres with 817 feet of frontage on the Las Vegas Strip at
a total cost of approximately $140 million.
Consummation of the BCI acquisition is subject to
a number of conditions, including approval by the
stockholders of BCI and the receipt of requisite approvals
from gaming regulatory authorities. Pursuant to the
Boardwalk Agreements, the Company holds proxies covering
approximately 53% of BCI's outstanding shares and has agreed
to vote such shares in favor of the acquisition. If such
approvals are obtained, the acquisition is expected to close
in the second quarter of 1998, whereupon BCI would become a
wholly owned subsidiary of the Company. The Company's
acquisition of BCI, together with adjacent land owned by the
Company (including a portion of the Bellagio site not
required for Bellagio) and land the Company has agreed to
acquire in an exchange with Monte Carlo, would afford the
Company a 42-acre site for potential future development on
the Las Vegas Strip, between and contiguous to Bellagio and
Monte Carlo.
FUTURE EXPANSION
ATLANTIC CITY
The Company and the City of Atlantic City, New Jersey have
entered into an agreement (as amended, the "Redevelopment
Agreement") pursuant to which, on January 8, 1998, the City
conveyed a total of approximately 180 acres (125 acres of
which are developable) in the Marina area of the City (the
"Marina Site") to the Company in exchange for the Company
agreeing to develop a hotel-casino (tentatively named "Le
Jardin") on the Marina Site and undertaking certain other
obligations, including remediation of environmental
contamination on the Marina Site. Under the terms of the
Redevelopment Agreement, construction of the planned resort
is subject to the satisfaction of certain conditions. One
such condition is the construction of certain major road
improvements designed to improve access to the Marina area.
The Company has entered into an agreement (the "Road
Development Agreement") with the New Jersey Department of
Transportation (the "State") and the South Jersey
Transportation Authority ("SJTA") with respect to the
construction and joint funding of the road improvements.
Pursuant to the Road Development Agreement, the Company
agreed to fund $110 million of the estimated $330 million
cost of the road improvement project, with the balance to be
funded by the State ($95 million) and SJTA ($125 million).
The Company's and SJTA's portion of the funding has been
deposited in escrow accounts and is restricted for the road
improvement project. Of the Company's $110 million funding
obligation, $55 million will be satisfied by the Company
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<PAGE>
purchasing special revenue bonds which are repayable,
together with interest, solely from certain future tax
revenues generated by the Company's planned hotel-casino on
the Marina Site. The road improvement project is being
undertaken pursuant to a fixed-price design/build contract.
The contractor commenced the design phase of the project in
October 1997 and expects to complete the project in 2001.
Numerous governmental permits required for the Company's
hotel-casino and the road improvement project have not yet
been received. Additionally, an existing Atlantic City
hotel-casino operator and others have filed various lawsuits
which challenge the validity of the Redevelopment Agreement
and seek to prevent construction of the road improvements,
thereby delaying or preventing the Company from developing
its hotel-casino on the Marina Site. The hotel-casino
project is in the early design stage and a project budget
has not yet been developed. As a result of the foregoing
factors, there can be no assurance that the Company will
construct a hotel-casino in Atlantic City or as to the
timing or cost of construction.
In 1996, the Company entered into agreements with Circus
and Boyd Gaming Corporation ("Boyd") pursuant to which the
Company agreed, subject to a number of conditions, to sell a
portion of the Marina Site to Circus as a casino site and to
form a joint venture with Boyd to develop a third hotel-
casino on the Marina Site (in addition to the Company's
wholly owned hotel-casino and the Circus hotel-casino). In
January 1998, the Company notified Circus and Boyd that
their respective agreements with the Company relating to the
Marina Site had terminated. For information concerning
pending litigation with Circus and Boyd arising from such
terminations, see "Legal Proceedings" in Item 3 on page 24 of
this Form 10-K.
OTHER
The Company regularly evaluates potential expansion and
acquisition opportunities in both the domestic and
international markets. Such opportunities may include the
ownership, management and operation of gaming and other
entertainment facilities in states other than Nevada or
outside of the United States, either alone or with joint
venture partners. Development and operation of any gaming
facility in a new jurisdiction are subject to numerous
contingencies, several of which are outside of the Company's
control and may include the enactment of appropriate gaming
legislation, the issuance of requisite permits, licenses and
approvals, the availability of appropriate financing and the
satisfaction of other conditions. There can be no assurance
that the Company will elect or be able to consummate any
such acquisition or expansion opportunity.
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MARKETING
All of the Company's hotel-casinos operate 24 hours each
day, every day of the year. Management does not consider
the Company's business, taken as a whole, to be particularly
seasonal.
The level of gaming activity at its casinos is the single
largest factor in determining the Company's revenues and
operating income. The Company also receives significant
revenues from lodging, food and beverage, entertainment and
retail operations.
The principal segments of the Nevada gaming market are
tour and travel, leisure travel, high-level wagerers and
conventions (including small meetings and corporate
incentive programs). The Company believes that The Mirage's
hotel occupancy and gaming revenues can be maximized through
a balanced marketing approach aimed at the high end of each
market segment. The marketing strategy for Bellagio and
Beau Rivage will be similar to that for The Mirage. The
Company's marketing strategy for Treasure Island and the
Golden Nugget is aimed at attracting middle- to upper-middle-
income wagerers, largely from the leisure travel and, to a
lesser extent, the tour and travel segments. The Company
believes that the success of its hotel-casinos is also
affected by the level of walk-in customers and, accordingly,
has designed its facilities to maximize their attraction to
guests of other hotels.
The Golden Nugget-Laughlin appeals primarily to patrons
from the middle-income strata of the gaming populace. Many
of the Golden Nugget-Laughlin's customers are retired
individuals who are attracted by lodging, food and beverage
and entertainment prices that are lower than those offered
by the major Las Vegas hotel-casinos. The predominant
portion of the Golden Nugget-Laughlin's casino revenues is
derived from slot machine play.
The Company, through wholly owned subsidiaries, owns
approximately 850 acres of real property located
approximately 10 miles north of The Mirage and Treasure
Island and five miles north of the Golden Nugget. The
Company owns and operates an exclusive world-class golf
course and related facilities known as "Shadow Creek" on
approximately 240 acres of such property. The Company is
currently offering a luxury suite package at its Las Vegas
hotel-casinos which includes golf privileges at Shadow
Creek. In connection with its marketing activities, the
Company also makes the course and related facilities
available for use, by invitation only, by high-level-wagerer
patrons. The Company has contemplated the development of a
second golf course adjacent to Shadow Creek, but has
indefinitely postponed plans for its construction.
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CREDIT
Credit play represents a significant portion of the table
games volume at The Mirage. The Company's other facilities
do not emphasize credit play to the same extent as The
Mirage, although credit is made available.
The Company maintains strict controls over the issuance of
credit and aggressively pursues collection of its customer
receivables. These collection efforts parallel those
procedures commonly followed by most large corporations,
including the mailing of statements and delinquency notices,
personal and other contacts, the use of outside collection
agencies and civil litigation. Nevada gaming debts
evidenced by credit instruments are enforceable under the
laws of Nevada. All other states are required to enforce a
judgment on a gaming debt entered in Nevada pursuant to the
Full Faith and Credit Clause of the United States
Constitution. Gaming debts are not legally enforceable in
some foreign countries, but the United States assets of
foreign debtors may be reached to satisfy judgments entered
in the United States. A significant portion of the
Company's accounts receivable is owed by high-level-wagerer
customers from the Far East. The collectibility of customer
receivables is affected by a number of factors, including
changes in currency exchange rates and economic conditions
in the customers' home countries.
SUPERVISION OF GAMING ACTIVITIES
In connection with the supervision of gaming activities at
its casinos, the Company maintains stringent controls on the
recording of all receipts and disbursements. These audit and
cash controls include: locked cash boxes; personnel
independent of casino operations to perform the daily cash
and coin counts; floor observation of the gaming area;
observation of gaming and certain other areas through the
use of closed-circuit television; computer tabulation of
receipts and disbursements for each of the slot machines and
table games; and timely analysis of discrepancies or
deviations from normal performance.
COMPETITION
The Mirage, Treasure Island and the Golden Nugget compete
with a number of other hotel-casinos in Las Vegas.
Currently, there are approximately 27 major hotel-casinos
located on or near the Las Vegas Strip, 11 major hotel-
casinos located in the downtown area and several major
facilities located elsewhere in the Las Vegas area. As of
March 1, 1998, there were approximately 102,100 hotel and
motel rooms in Las Vegas, compared to approximately 97,300
at December 31, 1996. In addition to Bellagio, there are
currently three major new hotel-casinos under construction
in Las Vegas. All three are scheduled to open in 1999 and
will add a total of approximately 9,700 rooms to the market.
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Another hotel-casino with plans for 2,600 guest rooms and a
projected opening date in 2000 recently obtained significant
financing. Other major hotel-casinos have been proposed,
some of which are likely to be built. Expansion projects at
an existing major Las Vegas Strip hotel-casino are also
under construction and several other expansion projects have
been proposed. Management is unable to determine the extent
to which the increased competition will affect the Company's
future operating results.
Management believes that The Mirage primarily competes
with other large hotel-casinos located on or near the Strip
that offer amenities and marketing programs appealing to the
upper-middle and higher-income strata of the gaming
populace. The Mirage competes on the basis of the elegance
and excitement offered by the facility, the desirability of
its location, the quality of its hotel rooms and
restaurants, its entertainment and special attractions,
customer service, its balanced marketing strategy and
special marketing and promotional programs.
Management believes that Treasure Island primarily
competes with the other large hotel-casinos located on or
near the Strip that offer amenities and marketing programs
that appeal to the middle- to upper-middle-income strata of
the gaming populace. Treasure Island competes on the basis
of the excitement offered by the facility, the desirability
of its location (including its proximity to The Mirage), the
quality of its hotel rooms, the variety, quality and
attractive pricing of its food and beverage outlets, its
unique entertainment offerings, customer service and its
marketing and promotional programs.
Management believes that the Golden Nugget primarily
competes with the large hotel-casinos located on or near the
Strip, particularly those offering amenities and marketing
programs that appeal primarily to the middle- and upper-
middle-income strata of the gaming populace. The Golden
Nugget competes for gaming customers primarily on the basis
of the elegance, intimacy and excitement offered by the
facility, the quality and relative value of its hotel rooms
and restaurants, customer service and its marketing and
promotional programs. The Fremont Street Experience
attraction was developed in order for the downtown Las Vegas
hotel-casinos to compete more effectively with the hotel-
casinos located on the Las Vegas Strip. Management believes
that the competitive pressures of additional guest rooms on
the Strip particularly impacted the downtown market in 1997
and will continue to do so during 1998.
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The Golden Nugget-Laughlin competes with eight nearby
hotel-casinos in Laughlin, as well as with hotel-casinos in
Las Vegas, Jean and Primm, Nevada and casinos on Indian
reservations in Laughlin's regional market, particularly
Southern California and Arizona. In recent years, the
Laughlin market has been adversely affected by increased
competition from the expansion of casino gaming in Las Vegas
and on Indian reservations in Arizona and elsewhere in the
regional market.
The Company's facilities also compete for gaming customers
with hotel-casino operations located in other areas of
Nevada, Atlantic City and other parts of the world, and for
vacationers with non-gaming tourist destinations such as
Hawaii and Florida. The Company's hotel-casinos compete to
a lesser extent with state-sponsored lotteries, off-track
wagering, card parlors, riverboat and Indian gaming
facilities and other forms of legalized gaming in the United
States, as well as with gaming on cruise ships. In recent
years, certain states have legalized, and several other
states have considered legalizing, casino gaming.
Management does not believe that such legalization of casino
gaming in those jurisdictions would have a material adverse
impact on the Company's operations. However, management
believes that the legalization of large-scale land-based
casino gaming in or near certain major metropolitan areas,
particularly in California, could have a material adverse
effect on the Las Vegas market.
EMPLOYEES AND LABOR RELATIONS
As of March 1, 1998, the Company and its subsidiaries had
approximately 14,750 full-time and 2,335 part-time
employees. The Company and unions representing
approximately 7,000 of its Las Vegas employees recently
approved, and the employees ratified, the terms of new
collective bargaining contracts that will expire in May
2002. Management considers its employee relations to be
excellent.
REGULATION AND LICENSING
NEVADA
The ownership and operation of casino gaming facilities in
Nevada are subject to (i) the Nevada Gaming Control Act and the
regulations promulgated thereunder (collectively, the "Nevada
Act") and (ii) various local ordinances and regulations. The
Registrant's Nevada gaming operations are subject to the
licensing and regulatory control of the Nevada Gaming Commission
(the "Nevada Commission"), the Nevada State Gaming Control Board
(the "Nevada Board"), the City of Las Vegas and the Clark County
Liquor and Gaming Licensing Board (the "Clark County Board"). The
Nevada Commission, the Nevada Board, the City of Las Vegas and
the Clark County Board are collectively referred to as the
"Nevada Gaming Authorities."
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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) pro-
viding a source of state and local revenues through taxation
and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Registrant's
gaming operations.
The Registrant's direct and indirect subsidiaries that con-
duct gaming operations are required to be licensed by the Nevada
Gaming Authorities. The gaming licenses require the periodic
payment of fees and taxes and are not transferable. THE MIRAGE
CASINO-HOTEL ("MCH") is registered as an intermediary company and
has been found suitable to own the stock of Treasure Island Corp.
("TI Corp."). MCH has also been licensed to conduct nonrestricted
gaming operations at The Mirage. TI Corp. has been licensed to
conduct nonrestricted gaming operations at Treasure Island.
GNLV, CORP. ("GNLV") has been registered as an intermediary
company and has been found suitable to own the stock of Golden
Nugget Manufacturing Corp. ("GNMC"), its inactive subsidiary
which is licensed as a manufacturer and distributor of gaming
devices. GNLV has also been licensed to conduct nonrestricted
gaming operations at the Golden Nugget. GNL, CORP. ("GNL") has
been licensed to conduct nonrestricted gaming operations at the
Golden Nugget-Laughlin. Bellagio has been registered as an
intermediary company and has been found suitable to own the stock
of MRGS Corp. ("MRGS"), which has been licensed as a 50% general
partner of Victoria Partners. The Registrant is registered by the
Nevada Commission as a publicly traded corporation (a
"Registered Corporation") and has been found suitable to own the
stock of MCH, GNLV, Bellagio and GNL, each of which, together
with TI Corp., MRGS and GNMC, is a corporate licensee (individ-
ually, a "Gaming Subsidiary" and collectively, the "Gaming
Subsidiaries") under the Nevada Act. Victoria Partners has been
licensed to conduct nonrestricted gaming operations at Monte
Carlo and certain subsidiaries of Circus have been registered or
licensed for their ownership of Victoria Partners. The
acquisition of BCI is subject to the prior approval of the Nevada
Gaming Authorities. Upon receipt of such approval, BCI will
become a Gaming Subsidiary.
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As a Registered Corporation, the Registrant is 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 become a
stockholder of, or receive any percentage of profits from, the
Gaming Subsidiaries without first obtaining licenses and
approvals from the Nevada Gaming Authorities. The Registrant and
the Gaming Subsidiaries have obtained from the Nevada Gaming
Authorities the various registrations, findings of suitability,
approvals, permits and licenses required in order to engage in
gaming activities in Nevada.
All gaming devices that are manufactured, sold or distri-
buted for use or play in Nevada, or for distribution outside of
Nevada, must be manufactured by licensed manufacturers and
distributed or sold by licensed distributors. All gaming devices
manufactured for use or play in Nevada must be approved by
the Nevada Commission before distribution or exposure for
play. The approval process for gaming devices includes rigorous
testing by the Nevada Board, a field trial and a determination as
to whether the gaming device meets strict technical standards
that are set forth in the regulations of the Nevada Commission.
Associated equipment must be administratively approved by the
Chairman of the Nevada Board before it is distributed for use in
Nevada.
The Nevada Gaming Authorities may investigate any individual
who has a material relationship to, or material involvement with,
the Registrant or the Gaming Subsidiaries in order to determine
whether such individual is suitable or should be licensed as a
business associate of a gaming licensee. Officers, directors and
certain key employees of the Gaming Subsidiaries must file
applications with the Nevada Gaming Authorities and may be
required to be licensed or found suitable by the Nevada Gaming
Authorities. Officers, directors and key employees of the
Registrant who are actively and directly involved in gaming
activities of the Gaming Subsidiaries may be required to be
licensed or found suitable by the Nevada Gaming Authorities. The
Nevada Gaming Authorities may deny an application for licensing
for any cause which they deem reasonable. A finding of
suitability is comparable to licensing, and both require
submission of detailed personal and financial information
followed by a thorough investigation. The applicant for licensing
or a finding of suitability must pay all the costs of the
investigation. Changes in licensed positions must be reported to
the Nevada Gaming Authorities, and in addition to their authority
to deny an application for a finding of suitability or licensure,
the Nevada Gaming Authorities have jurisdiction to disapprove a
change in a corporate position.
13
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If the Nevada Gaming Authorities were to find an officer,
director or key employee unsuitable for licensing or unsuitable
to continue having a relationship with the Registrant or the
Gaming Subsidiaries, the companies involved would have to sever
all relationships with such person. In addition, the Nevada
Commission may require the Registrant or the Gaming Subsidiaries
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.
The Registrant and the Gaming Subsidiaries are required to
submit detailed financial and operating reports to the Nevada
Commission. Substantially all material loans, leases, sales of
securities and similar financing transactions entered into by the
Gaming Subsidiaries must be reported to or approved by the Nevada
Commission.
If it were determined that the Nevada Act was violated by a
Gaming Subsidiary, the licenses it holds could be limited,
conditioned, suspended or revoked, subject to compliance with
certain statutory and regulatory procedures. In addition, the
Registrant, the Gaming Subsidiaries and the persons involved
could be subject to substantial fines for each separate violation
of the Nevada Act at the discretion of the Nevada Commission.
Further, a supervisor could be appointed by the Nevada Commission
to operate The Mirage, Treasure Island, the Golden Nugget, the
Golden Nugget-Laughlin and Monte Carlo and, under certain
circumstances, earnings generated during the supervisor's
appointment (except for the reasonable rental value of the
casino) could be forfeited to the State of Nevada. Limitation,
conditioning or suspension of the gaming license of a Gaming
Subsidiary or the appointment of a supervisor could (and
revocation of any gaming license would) materially adversely
affect the Registrant's gaming operations.
Any beneficial holder of the Registrant's voting securities,
regardless of the number of shares owned, may be required to file
an application, be investigated and have his suitability as a
beneficial holder of the Registrant's voting securities
determined if the Nevada Commission has reason to believe that
such ownership would be inconsistent with the declared policies
of the State of Nevada. The applicant must pay all costs of
investigation incurred by the Nevada Gaming Authorities in
conducting any such investigation.
The Nevada Act requires any person who acquires more than 5%
of a Registered Corporation's voting securities to report the
acquisition to the Nevada Commission. The Nevada Act requires
that beneficial owners of more than 10% of a Registered
Corporation's voting securities apply to the Nevada Commission
for a finding of suitability within 30 days after the Chairman of
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the Nevada Board mails a written notice requiring such filing.
Under certain circumstances, an "institutional investor," as
defined in the Nevada Act, which acquires more than 10%, but not
more than 15%, of a Registered Corporation's voting securities
may apply to the Nevada Commission for a waiver of such finding
of suitability requirement if such institutional investor holds
the voting securities for investment purposes only. An
institutional investor shall not be deemed to hold voting
securities for investment purposes unless the voting securities
were acquired and are held in the ordinary course of business as
an institutional investor and not for the purpose of causing,
directly or indirectly, the election of a majority of the members
of the board of directors of the Registered Corporation, any
change in the corporate charter, bylaws, management, policies or
operations of the Registered Corporation or any of its gaming
affiliates or any other action which the Nevada Commission finds
to be inconsistent with holding the Registered Corporation'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) such other
activities as the Nevada Commission may determine to be
consistent with such investment intent. The City of Las Vegas
and the Clark County Board have the authority to approve all
persons owning or controlling the stock of any corporation
controlling a gaming licensee. If the beneficial holder of
voting securities who must be found suitable is a corporation,
partnership or trust, it must submit detailed business and
financial information, including a list of beneficial owners. The
applicant is required to pay all costs of 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. The same restrictions apply to a record
owner if the record owner, after request, fails to identify the
beneficial owner. Any stockholder found unsuitable who holds,
directly or indirectly, any beneficial ownership of the voting
securities beyond such period of time as may be prescribed by the
Nevada Commission may be guilty of a criminal offense. The
Registrant is subject to disciplinary action if, after it
receives notice that a person is unsuitable to be a stockholder
or to have any other relationship with the Registrant or the
Gaming Subsidiaries, the Registrant: (i) pays such person any
dividend or interest upon voting securities of the Registrant;
(ii) allows such person to exercise, directly or indirectly, any
voting right conferred through securities held by that person;
(iii) pays remuneration in any form to such person for services
rendered or otherwise; or (iv) fails to pursue all lawful efforts
to require such person to relinquish his voting securities
including, if necessary, the immediate purchase of the voting
securities for cash at fair market value.
15
<PAGE>
The Nevada Commission may, in its discretion, require the
holder of any debt security of a Registered Corporation to file
applications, be investigated and be found suitable to own the
debt security if it has reason to believe that such ownership
would be inconsistent with the declared policies of the State of
Nevada. If the Nevada Commission determines that a person is
unsuitable to own such security, then pursuant to the Nevada Act,
the Registered Corporation can be sanctioned, including the loss
of its approvals, if without the prior approval of the Nevada
Commission, it: (i) pays to the unsuitable person any dividend,
interest or any distribution whatsoever; (ii) recognizes any
voting right by such unsuitable person in connection with such
securities; (iii) pays the unsuitable person remuneration in any
form; or (iv) makes any payment to the unsuitable person by way
of principal, redemption, conversion, exchange, liquidation or
similar transaction.
The Registrant is required to maintain a current stock
ledger in Nevada which may be examined by the Nevada Gaming
Authorities at any time. If any securities are held in trust by
an agent or 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. The Registrant
is also required to render maximum assistance in determining the
identity of the beneficial owner. The Nevada Commission has the
power to require the Registrant's stock certificates to bear
a legend indicating that the securities are subject to the Nevada
Act. To date, the Nevada Commission has not imposed such a
requirement on the Registrant.
The Registrant may not make a public offering of its
securities without the prior approval of the Nevada Commission if
the securities or proceeds therefrom are intended to be used to
construct, acquire or finance gaming facilities in Nevada or to
retire or extend obligations incurred for such purposes. On May
22, 1997, the Nevada Commission granted the Registrant prior
approval to make public offerings for a period of two years,
subject to certain conditions (the "Shelf Approval"). However,
the Shelf Approval may be rescinded for good cause without prior
notice upon the issuance of an interlocutory stop order by the
Chairman of the Nevada Board and must be renewed biannually. The
Shelf Approval also applies to any affiliated company wholly
owned by the Registrant (an "Affiliate") which is a publicly
traded corporation or would become a publicly traded corporation
pursuant to a public offering. The Shelf Approval also includes
approval for the Gaming Subsidiaries to guarantee any security
issued by, or to hypothecate their assets to secure the payment
or performance of any obligations issued by, the Registrant or an
Affiliate in a public offering under the Shelf Approval. The
Shelf Approval does not constitute a finding, recommendation or
approval by the Nevada Commission or the Nevada Board as to the
accuracy or adequacy of the prospectus or the investment merits
of the securities offered. Any representation to the contrary is
unlawful.
16
<PAGE>
Changes in control of the Registrant 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 Corporation must satisfy the Nevada Board and Nevada
Commission with respect to a variety of stringent standards prior
to assuming control of such Registered Corporation. The Nevada
Commission may also require controlling stockholders, officers,
directors and other persons having a material relationship or
involvement with the entity proposing to acquire control to be
investigated and licensed as part of the approval process
relating to the transaction.
The Nevada Legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting
securities and corporate defensive tactics affecting Nevada
corporate gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and
productive corporate gaming. The Nevada Commission has
established a regulatory scheme to ameliorate the potentially
adverse effects of these business practices upon Nevada's gaming
industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming licensees and their
affiliates; (ii) preserve the beneficial aspects of conducting
business in the corporate form; and (iii) promote a neutral
environment for the orderly governance of corporate affairs.
Approvals are, in certain circumstances, required from the Nevada
Commission before the Registered Corporation can make exceptional
repurchases of voting securities above the current market price
thereof and before a corporate acquisition opposed by management
can be consummated. The Nevada Act also requires prior approval
of a plan of recapitalization proposed by the Registered
Corporation's board of directors in response to a tender offer
made directly to the Registered Corporation's stockholders for
the purpose of acquiring control of the Registered Corporation.
License fees and taxes, computed in various ways depending
on the type of gaming or activity involved, are payable to the
State of Nevada and to Clark County and the City of Las Vegas, in
which the Gaming Subsidiaries' respective operations are con-
ducted. Depending upon the particular fee or tax involved, these
fees and taxes are payable monthly, quarterly or annually and
are based upon: (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 is also paid
by casino operations where entertainment is furnished in
connection with the serving of food or refreshments or the
selling of merchandise. Nevada licensees that hold a manu-
facturer's or distributor's license, such as GNMC, also pay
certain fees to the State of Nevada.
17
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Any person who is licensed, required to be licensed,
registered, required to be registered or is under common control
with such persons (collectively, "Licensees"), and who proposes
to become involved in a gaming venture outside of Nevada, is
required to deposit with the Nevada Board, and thereafter
maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation by the Nevada Board of its
participation in such foreign gaming. The revolving fund is
subject to increase or decrease at the discretion of the Nevada
Commission. Thereafter, Licensees are required to comply with
certain reporting requirements imposed by the Nevada Act.
Licensees are also subject to disciplinary action by the Nevada
Commission if they knowingly violate any laws of the foreign
jurisdiction pertaining to the foreign gaming operation, fail to
conduct the foreign gaming operation in accordance with the
standards of honesty and integrity required of Nevada gaming
operations, engage in activities that are harmful to the State of
Nevada or its ability to collect gaming taxes and fees or employ
a person in the 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 at The Mirage, Treasure
Island, the Golden Nugget-Laughlin and Monte Carlo, and the sale
of alcoholic beverages at the Golden Nugget, are subject to
licensing, control and regulation by the Clark County Board and
the City of Las Vegas, respectively. All licenses are revocable
and are not transferable. The agencies involved have full power
to limit, condition, suspend or revoke any such license, and any
such disciplinary action could (and revocation would) have a
material adverse effect on the operations of the Gaming
Subsidiaries.
MISSISSIPPI
The ownership and operation of casino gaming facilities in
Mississippi are subject to the Mississippi Gaming Control Act and
the regulations promulgated thereunder (collectively, the
"Mississippi Act"). The Registrant's Mississippi gaming
operations will be subject to the licensing and regulatory
control of the Mississippi Gaming Commission (the "Mississippi
Commission").
The laws, regulations and supervisory procedures of the
Mississippi Commission are based upon declarations of public
policy which are concerned with, among other things: (i) keeping
gaming free of criminal and corruptive elements and (ii)
maintaining public confidence and trust in gaming by means of
strict regulation of all persons, locations, practices,
associations and activity related to the operation of licensed
gaming establishments and the manufacture or distribution of
gambling devices and equipment. Change in such laws, regulations
and procedures could have an adverse effect on the Registrant's
Mississippi gaming operations.
18
<PAGE>
Beau Rivage Resorts, Inc. ("Beau Rivage Resorts"), the
Registrant's indirect subsidiary that will own and operate Beau
Rivage, is required to be licensed by the Mississippi Commission.
The gaming license requires the periodic payment of fees and
taxes and is not transferable. GNLV is registered as an
intermediary company and has been found suitable to own the stock
of Beau Rivage Resorts. The Registrant is registered by the
Mississippi Commission as a publicly traded corporation (a
"Registered Corporation") and has been found suitable to own the
stock of GNLV under the Mississippi Act.
As a Registered Corporation, the Registrant is required
periodically to submit detailed financial and operating reports
to the Mississippi Commission and furnish any other information
which the Mississippi Commission may require. No person may
become a stockholder of, or receive any percentage of profits
from, Beau Rivage Resorts without first obtaining approval from
the Mississippi Commission. The Registrant, GNLV and Beau Rivage
Resorts have obtained from the Mississippi Commission the various
registrations, findings of suitability and licenses required in
order to engage in gaming activities in Mississippi; however,
Beau Rivage is under construction, and the final approvals to
open the casino must be obtained from the Mississippi Commission
as well as other state and local governmental entities. Although
the Registrant expects to obtain such approvals in due course,
failure to receive such approvals would have a material adverse
effect on the Registrant's Mississippi gaming operations.
All gaming devices that are manufactured, sold or distri-
buted for use or play in Mississippi, or for distribution outside
of Mississippi, must be manufactured by licensed manufacturers
and distributed or sold by licensed distributors. All gaming
devices manufactured for use or play in Mississippi must be
approved by the Mississippi Commission before distribution or
exposure for play. The approval process for gaming devices
includes rigorous testing by the staff of the Mississippi
Commission, a field trial and a determination as to whether the
gaming device meets strict technical standards that are set
forth in the regulations of the Mississippi Commission.
Associated equipment must be administratively approved by the
Executive Director of the Mississippi Commission before it is
distributed for use in Mississippi.
The Mississippi Commission may investigate any individual
who has a material relationship to, or material involvement with,
the Registrant, GNLV or Beau Rivage Resorts in order to determine
whether such individual is suitable or should be licensed as a
business associate of a gaming licensee. Officers, directors and
certain key employees of Beau Rivage Resorts must file
applications with the Mississippi Commission and may be required
to be licensed or found suitable. Officers, directors and key
employees of GNLV and the Registrant who are actively and
directly involved in gaming activities of Beau Rivage Resorts may
be required to be licensed or found suitable by the Mississippi
Commission. The Mississippi Commission may deny an application
19
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for licensing for any cause which it deems reasonable. A finding
of suitability is comparable to licensing, and both require
submission of detailed personal and financial information
followed by a thorough investigation. The applicant for
licensing or a finding of suitability must pay all the costs of
the investigation. Changes in approval positions must be
reported to the Mississippi Commission, and in addition to its
authority to deny an application for a finding of suitability or
licensure, the Mississippi Commission has jurisdiction to
disapprove a change in a corporate position.
If the Mississippi Commission were to find an officer,
director or key employee unsuitable for licensing or unsuitable
to continue having a relationship with the Registrant, GNLV or
Beau Rivage Resorts, the companies involved would have to sever
all relationships with such person. In addition, the Mississippi
Commission may require the Registrant, GNLV or Beau Rivage
Resorts 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 Mississippi.
In addition to the Registrant, GNLV and Beau Rivage Resorts
are required to submit detailed financial and operating reports
to the Mississippi Commission. All material loans, sales of
securities and similar financing transactions entered into by
Beau Rivage Resorts must be reported to or approved by the
Mississippi Commission.
If it were determined that the Mississippi Act was violated
by Beau Rivage Resorts, the license it holds could be limited,
conditioned, suspended or revoked, subject to compliance with
certain statutory and regulatory procedures. In addition, the
Registrant, GNLV, Beau Rivage Resorts and the persons involved
could be subject to substantial fines for each separate violation
of the Mississippi Act at the discretion of the Mississippi
Commission. Limitation, conditioning or suspension of the gaming
license of Beau Rivage Resorts could (and revocation of the
gaming license would) materially adversely affect the
Registrant's Mississippi gaming operations.
Any beneficial holder of the Registrant's voting securities,
regardless of the number of shares owned, may be required to file
an application, be investigated and have his suitability as a
beneficial holder of the Registrant's voting securities
determined if the Mississippi Commission has reason to believe
that such ownership would be inconsistent with the declared
policies of the State of Mississippi. The applicant must pay all
costs of investigation incurred by the Mississippi Commission in
conducting any such investigation.
20
<PAGE>
The Mississippi Act requires any person who acquires more
than 5% of a Registered Corporation's voting securities to report
the acquisition to the Mississippi Commission. The Mississippi
Act requires that beneficial owners of more than 10% of a
Registered Corporation's voting securities apply to the
Mississippi Commission for a finding of suitability within 30
days after the Executive Director of the Mississippi Commission
requests such filing.
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 Mississippi Commission or the Executive Director of the
Mississippi Commission may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after
request, fails to identify the beneficial owner. Any stockholder
found unsuitable who holds, directly or indirectly, any
beneficial ownership of the voting securities beyond such period
of time as may be prescribed by the Mississippi Commission may be
guilty of a criminal offense.
The Mississippi Commission may, in its discretion, require
the holder of any debt security of a Registered Corporation to
file applications, be investigated and be found suitable to own
the debt security if it determines that such requirement is in
the public interest.
The Registrant is required to maintain a current stock
ledger in Mississippi which may be examined by the Mississippi
Commission at any time. If any securities are held in trust by
an agent or nominee, the record holder may be required to
disclose the identity of the beneficial owner to the Mississippi
Commission. A failure to make such disclosure may be grounds for
finding the record holder unsuitable. The Registrant is also
required to render maximum assistance in determining the identity
of the beneficial owner. The Mississippi Commission has the
power to require the Registrant's stock certificates to bear a
legend indicating that the securities are subject to the
Mississippi Act; however, the Mississippi Commission has in the
past routinely waived such requirement.
The Registrant may not make a public offering of its
securities without the prior approval of the Mississippi
Commission if the securities or proceeds therefrom are intended
to be used to construct, acquire or finance gaming facilities in
Mississippi or to retire or extend obligations incurred for such
purposes. On May 29, 1997, the Mississippi Commission granted
the Registrant prior approval to make public offerings for a
period of one year, subject to certain conditions (the
"Mississippi Shelf Approval"). However, the Mississippi Shelf
Approval may be rescinded for good cause without prior notice
upon the issuance of a stop order by the Executive Director of
the Mississippi Commission. The Mississippi Shelf Approval does
not constitute a finding, recommendation or approval by the
Mississippi Commission as to the accuracy or adequacy of the
prospectus or the investment merits of the securities offered.
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<PAGE>
Any representation to the contrary is unlawful. The Registrant
intends to file an application for renewal of the Mississippi
Shelf Approval, which it anticipates will be considered by the
Mississippi Commission in May 1998.
Changes in control of the Registrant 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 Mississippi Commission. Entities seeking to acquire control
of a Registered Corporation must satisfy the Mississippi
Commission with respect to a variety of stringent standards prior
to assuming control of such Registered Corporation. The
Mississippi Commission may also 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.
The Mississippi Legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting
securities and corporate defensive tactics affecting Mississippi
corporate gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and
productive corporate gaming. The Mississippi Commission has
established a regulatory scheme to ameliorate the potentially
adverse effects of these business practices upon Mississippi's
gaming industry and to further Mississippi's policy to: (i)
assure the financial stability of corporate gaming licensees and
their affiliates; (ii) preserve the beneficial aspects of
conducting business in the corporate form; and (iii) promote a
neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required
from the Mississippi Commission before the Registered
Corporation can make exceptional repurchases of voting securities
above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The
Mississippi Act also requires prior approval of a plan of
recapitalization proposed by the Registered Corporation's board
of directors in response to a tender offer made directly to the
Registered Corporation's stockholders for the purpose of
acquiring control of the Registered Corporation.
License fees and taxes, computed in various ways depending
on the type of gaming or activity involved, are payable to the
State of Mississippi, and to the City of Biloxi, where Beau
Rivage Resorts' operations will be conducted. Depending upon
the particular fee or tax involved, these fees and taxes are
payable monthly, quarterly or annually and are based upon:
(i) a percentage of the gross revenues received; (ii) the number
of gaming devices operated; or (iii) the number of table games
operated.
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Any person who is licensed, required to be licensed,
registered, required to be registered or is under common control
with such persons (collectively, "Licensees"), and who proposes
to become involved in a gaming venture outside of Mississippi, is
required to receive the approval of the Mississippi Commission
with respect to foreign gaming activities undertaken after
licensure. Licensees are also subject to disciplinary action by
the Mississippi 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 Mississippi gaming operations, engage in activities that are
harmful to the State of Mississippi or its ability to collect
gaming taxes and fees or employ a person in the foreign operation
who has been denied a license or finding of suitability in
Mississippi on the ground of personal unsuitability.
The sale of alcoholic beverages at Beau Rivage will be sub-
ject to licensing, control and regulation by the Mississippi
State Tax Commission (the "Tax Commission"). All licenses are
revocable and are not transferable. The Tax Commission has full
power to limit, condition, suspend or revoke any such license,
and any such disciplinary action could (and revocation would)
have a material adverse effect on the operations of Beau Rivage
Resorts.
CERTAIN FORWARD-LOOKING STATEMENTS
Certain information included in this Form 10-K and other
materials filed or to be filed by the Company with the Securities
and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the
Company) contains forward-looking statements, within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements include information relating to plans for future
expansion and other business development activities as well as
other capital spending, financing sources and the effects of
regulation (including gaming and tax regulation) and competition.
Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results
in the future and, accordingly, such results may differ from
those expressed in any forward-looking statements made by or on
behalf of the Company. These risks and uncertainties include,
but are not limited to, those relating to development and
construction activities, dependence on existing management,
leverage and debt service (including sensitivity to fluctuations
in interest rates), domestic or international economic
conditions, pending litigation, changes in federal or state tax
laws or the administration of such laws and changes in gaming
laws or regulations (including the legalization of gaming in
certain jurisdictions).
ITEM 2. PROPERTIES
The Mirage and Treasure Island share an approximately 100-
acre site owned by the Company.
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The Golden Nugget occupies approximately seven and one-
half acres. The improvements and approximately 90% of the
underlying land are owned by the Company. The remaining
land is held under three separate ground leases that expire
(giving effect to renewal options) on dates ranging from
2025 to 2046.
The Golden Nugget-Laughlin, including approximately two
acres underlying the motel in Bullhead City, Arizona,
occupies an aggregate of approximately 15-1/2 acres. All of
the property is owned by the Company.
The Bellagio site comprises approximately 120 acres, all
of which is owned by the Company except for one acre held
under a ground lease that expires (giving effect to renewal
options) in 2073.
Monte Carlo occupies approximately 46 acres owned by
Victoria Partners. At March 1, 1998, Monte Carlo was
subject to aggregate encumbrances approximating $99.2
million.
The Company owns approximately 850 contiguous acres of
land in North Las Vegas, including 240 acres occupied by
Shadow Creek.
The Beau Rivage site comprises approximately 23 acres in
Biloxi, Mississippi owned by the Company. The Company also
owns several other parcels of land in the Biloxi area,
including approximately 508 acres for the potential
development of a world-class 18-hole golf course.
The Company owns approximately 180 acres (125 acres of
which are developable) in the Marina area of Atlantic City,
New Jersey. The Company is designing a major new hotel-
casino resort which it currently intends to construct on the
Marina Site.
The Company also owns or leases various other improved and
unimproved property in Las Vegas, Atlantic City and other
locations in the United States and certain foreign
countries. The book value of such property at March 1, 1998
was approximately $121 million.
ITEM 3. LEGAL PROCEEDINGS
On February 2, 1998, Boyd filed a complaint against the
Company in Superior Court for Atlantic County, New Jersey. The
complaint alleges that the Company's January 1998 termination of
the May 29, 1996 joint venture agreement between the Company
and Boyd relating to the development, ownership and operation of
a hotel-casino on the Marina Site was improper. The complaint
alleges, among other counts, breach of contract, breach of
fiduciary duty, breach of implied covenant of good faith and
fair dealing, fraud and concealment, and seeks, among other
relief, unspecified compensatory and punitive damages, specific
performance and imposition of a constructive trust for the
benefit of Boyd.
24
<PAGE>
On February 4, 1998, the Company filed a complaint for
declaratory relief against Circus in District Court for Clark
County, Nevada (the "Nevada Action"). The complaint seeks a
judgment declaring that the May 30, 1996 agreement between the
Company and Circus relating to the sale of a portion of the
Marina Site to Circus is of no further force and effect. On
February 13, 1998, Circus filed a complaint against the Company
in Superior Court for Atlantic County, New Jersey (the "New
Jersey Action"). The complaint alleges that the Company's ter-
mination of the May 30, 1996 agreement between the Company and
Circus was improper. The complaint alleges, among other counts,
breach of contract, breach of fiduciary duty, breach of express
and implied covenants of good faith and fair dealing, fraud and
misrepresentation and unjust enrichment, and seeks, among
other relief, unspecified compensatory and punitive damages,
specific performance and imposition of a constructive trust for
the benefit of Circus. On March 4, 1998, the Company filed a
motion to dismiss or stay the New Jersey Action and Circus filed
a motion to dismiss or stay the Nevada Action.
The Company has been discussing the terms of possible
new agreements with Boyd and Circus relating to the Marina Site
and termination of the existing litigation, but there can be no
assurance that any such agreement will be reached.
On April 26, 1994, a complaint in a class action lawsuit
was filed in the United States District Court for the Middle
District of Florida against 41 manufacturers, distributors and
casino operators of video poker and electronic slot machines,
including the Company. On May 10, 1994, a complaint in a
class action lawsuit alleging substantially identical claims was
filed by another plaintiff in the same court against 48
defendants, including the Company. On September 26, 1995, a
complaint in a class action lawsuit alleging substantially
identical claims was filed by a third plaintiff in the United
States District Court for the District of Nevada against
45 defendants, including the Company. The three cases have
been consolidated in the United States District Court for the
District of Nevada. The consolidated complaint alleges that
the defendants have engaged in a course of fraudulent and
misleading conduct intended to induce persons to play video
poker and electronic slot machines by collectively misrepresent-
ing how the gaming machines operate, as well as the extent to
which there is an opportunity to win. The complaint alleges
violations of the Racketeer Influenced and Corrupt Organizations
Act, as well as claims of common law fraud, unjust enrichment and
negligent misrepresentation, and seeks unspecified compensatory
and punitive damages. In December 1997, the court granted in
part and denied in part the defendants' motions to dismiss the
complaint for failure to state a claim and ordered the
plaintiffs to file an amended complaint, which was filed in
January 1998. The defendants filed an answer to the amended
complaint in February 1998. Management believes that the claims
against the Company are without merit and intends to continue
to defend the case vigorously.
25
<PAGE>
On December 12, 1997, the trustee of the bankruptcy estate
of Ken Mizuno ("Mizuno") filed a complaint against the Company in
the United States Bankruptcy Court for the Central District of
California, which was amended in February 1998. The amended
complaint alleges that Mizuno, a Japanese national and former
casino customer of the Company, repaid various debts to the
Company's casinos prior to the commencement of Mizuno's bank-
ruptcy case in 1992 for which Mizuno was not legally liable and
which were not legally collectible under Japanese law. The
amended complaint alleges that such repayments constituted fraud-
ulent transfers under federal and state law and seeks to require
the Company to pay the value of the transfers, aggregating not
less than $61,418,250, together with interest thereon, to the
bankruptcy trustee. The case is in the early discovery stage.
Management believes that the Company has meritorious defenses to
the claims of the trustee and intends to defend the case
vigorously.
The Company (including its subsidiaries) is also a
defendant in various other lawsuits, most of which relate to
routine matters incidental to its business. Management does not
believe that the outcome of such pending litigation, in the
aggregate, will have a material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is traded on the New York
Stock Exchange and the Pacific Exchange under the symbol MIR.
The following table sets forth, for the calendar quarters indi-
cated, the high and low sale prices of the common stock on the
New York Stock Exchange Composite Tape.
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
First quarter............ $25 7/8 $21 1/8 $24 $16 5/8
Second quarter........... 25 7/8 19 7/8 29 5/8 22
Third quarter............ 30 3/8 23 3/4 27 1/4 18 3/4
Fourth quarter........... 30 1/8 20 1/2 27 1/2 20 3/8
</TABLE>
There were approximately 13,100 record holders of the
Company's common stock as of March 27, 1998.
26
<PAGE>
The Company paid no dividends in 1997 or 1996. Refer to
Exhibit 10(pp) to this Form 10-K, and Note 4 of Notes to
Consolidated Financial Statements referred to in Item 14(a)(1) of
this Form 10-K, for information concerning a covenant contained
in the Company's bank credit agreement restricting the ability
of the Company to pay cash dividends on its common stock prior
to the opening of Bellagio.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------------
1997 1996 (a) 1995 1994 1993 (b)
-------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Gross revenues................. $1,546.0 $1,496.3 $1,453.7 $1,370.9 $1,053.4
Promotional allowances......... (127.4) (128.8) (123.0) (116.7) (100.1)
Net revenues................... 1,418.6 1,367.5 1,330.7 1,254.2 953.3
Operating income............... 326.0 312.7 284.1 237.8 131.7
Income before extraordinary
item (c)..................... 209.8 206.0 169.9 124.7 48.1
Net income..................... 207.6 206.0 163.2 114.3 29.2
Income per share before
extraordinary item (c)
Basic...................... $ 1.17 $ 1.13 $ 0.93 $ 0.69 $ 0.31
Diluted.................... $ 1.09 $ 1.05 $ 0.88 $ 0.66 $ 0.29
Net income per share
Basic...................... $ 1.16 $ 1.13 $ 0.89 $ 0.63 $ 0.19
Diluted.................... $ 1.08 $ 1.05 $ 0.85 $ 0.60 $ 0.18
OTHER DATA
Interest expense, net of
amounts capitalized.......... $ 7.7 $ 6.8 $ 23.2 $ 44.2 $ 63.5
Net cash provided by
operating activities......... 291.3 331.9 327.0 286.8 208.9
Capital expenditures........... 1,058.9 407.3 183.0 71.9 432.4
YEAR-END STATUS
Construction in progress....... $1,261.1 $ 355.9 $ 84.5 $ 25.3 $ 24.7
Total assets................... 3,347.4 2,143.5 1,791.7 1,641.4 1,705.3
Long-term debt, net of
current maturities........... 1,396.7 468.1 248.5 359.6 535.0
Stockholders' equity (d)....... 1,512.5 1,290.9 1,209.3 1,030.9 910.9
Shares outstanding............. 179.4 178.3 183.3 182.0 181.2
</TABLE>
----------
(a) Monte Carlo opened on June 21, 1996.
(b) Treasure Island opened on October 26, 1993.
(c) Before extraordinary losses on early retirements of debt.
(d) The Company paid no dividends during the five-year period
ended December 31, 1997.
27
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company achieved record earnings in 1997. Income
before extraordinary item of $209.8 million ($1.09 per share)
surpassed the previous records of $206.0 million ($1.05 per
share) and $169.9 million ($0.88 per share) attained in 1996
and 1995, respectively.
Net revenues grew by $51.0 million, or 4%, over 1996.
Casino revenues increased 4%, principally due to a 14% increase
in baccarat play at The Mirage combined with a significantly
higher win percentage. This offset slight declines in slot
revenues and activity at table games other than baccarat, which
management attributes to increases in competition. The Company-
wide table games win percentage was 21.5% in 1997, compared with
19.3% in 1996 and 20.2% in 1995. During 1997, the Company
also benefited from an additional $20.3 million earnings
contribution from Monte Carlo, reflecting that resort's first
full year of operation.
The increase in baccarat play during 1997 was achieved
notwithstanding the economic and currency declines in certain
countries in the Far East, which occurred principally in
the second half of 1997. Baccarat is the game of choice of
V.I.P. customers from the Far East. Baccarat revenues are
traditionally volatile, and short-term swings in the level of
play are common. Nevertheless, management expects the level of
baccarat play during 1998 to be significantly lower than in 1997
due to the Far East declines.
Monte Carlo opened on June 21, 1996, and reported gross
revenues of $262.8 million and operating income of $69.1 million
during 1997, its first full year of operation. During slightly
over six months of operation in 1996, the new resort generated
gross revenues of $147.3 million and operating profit, before a
one-time charge for preopening costs of $11.2 million, of
$38.5 million. After deducting net interest expense, this
unconsolidated joint venture contributed $29.6 million to the
Company's pre-tax earnings in 1997, versus $9.3 million ($14.9
million before preopening costs) for the partial year of
operation during 1996.
Siegfried & Roy at The Mirage and Mystere at Treasure
Island continue to be two of the most successful theatrical
productions in history. During 1997, both productions played
to near full capacity, at a combined average ticket price that
was approximately 7% higher than in 1996. Principally due
to the success of these two productions, net entertainment
revenues grew by $3.4 million, or 4%, over 1996. The Company's
other non-casino revenues were down by a combined 1%, resulting
in a slight decline in total net non-casino revenues. In 1997,
net non-casino revenues accounted for 44% of the Company's total
net revenues, excluding Monte Carlo. This compares with 45% in
1996 and 41% in 1995.
28
<PAGE>
The growth in the Company's earnings during 1997 was
achieved despite a significant increase in mid-market competi-
tion. According to the Las Vegas Convention and Visitors
Authority, the number of total available guest room nights in
Las Vegas increased by approximately 11% in 1997 versus 1996,
while total occupied room nights rose by approximately 6%.
As a result, city-wide room occupancy declined to 86.4%,
versus 90.4%.
The Company was less affected during 1997 than much of its
competition. Company-wide standard guest room occupancy
remained high (98.0%, versus 98.8% in 1996 and 98.3% in 1995) and
the average standard room rate at the Company's Las Vegas hotels
rose slightly to $93, compared to $92 in 1996 and $82 in 1995.
However, competition, particularly in the mid-market segment,
remains high. Management anticipates continued pressure on
hotel occupancy and room rates during 1998. The growth in
the number of available guest room nights in 1998, however,
is anticipated to be less than it was in 1997 and less than
it is expected to be in 1999.
Construction disruptions also impacted the Company's
earnings during 1997. At Treasure Island, a luxurious new hotel
lobby was completed in early August, a new retail outlet opened
in September and a new Italian restaurant opened in December.
The Company also completed the refurbishment of 1,382 standard
guest rooms at the Golden Nugget in downtown Las Vegas, resulting
in approximately 3% fewer available room nights at the facility
during 1997 than in 1996. This reduction in available room
inventory and the lower occupancy levels, as partially offset
by slightly higher room rates, resulted in a 2% decline in
Company-wide net room revenues.
During 1996, the Company's net revenues excluding Monte
Carlo grew by $27.5 million over 1995. Non-casino revenues net
of promotional allowances increased by 10%, reflecting growth in
revenue contribution from all departments. Net room revenues
increased by 15% in 1996. A $50 million program was completed
in August 1995 to substantially upgrade the quality of The
Mirage's guest rooms. A smaller guest room refurbishment project
was also completed in 1995 at the Golden Nugget-Las Vegas.
Completion of these two projects resulted in approximately 4%
more available room nights in 1996 than 1995, and the resultant
higher quality of its guest rooms allowed the Company to achieve
a 12% increase in the average standard room rate at its Las Vegas
hotels. The increase in the average room rate, in turn, helped
the Company realize an increase in the gross margin on room
revenues.
29
<PAGE>
Net entertainment revenues in 1996 grew by $6.4 million,
or 8%, over 1995. Similar to 1997, the remarkable success of
Siegfried & Roy and Mystere was the major contributor to this
growth. During 1996, both productions played to near full
capacity, at a combined average ticket price that was 7% higher
than in 1995. The increase in the average ticket price resulted
in an improvement in gross margins and profitability. Net
food and beverage and retail revenues were also solid con-
tributors, increasing 9% and 5%, respectively, over 1995.
The growth in operating results in 1996 was achieved
despite a 7% decline in table games revenues caused by a
reduction in both the level of play and the win percentage for
baccarat. Excluding baccarat, table games revenues in 1996
increased by 3% over 1995. Slot revenues increased by 1% over
1995.
OTHER FACTORS AFFECTING EARNINGS
In response to the increased competitive pressures in the
Las Vegas market and in preparation for the opening of Bellagio,
the Company heightened its marketing and promotional efforts
during 1997. The costs associated with these additional efforts
caused the 8% increase in casino costs and expenses and the
small decline in the operating margin at the Company's wholly
owned facilities.
Following an $8.5 million decline in 1996, the Company's
provision for losses on receivables increased by $4.7 million
during 1997. This increase primarily reflects the growth in
table games revenues and in particular the level of table games
credit play. The decline in 1996 is attributable to favorable
collection experience, as well as a reduction in the level of
table games credit play. The provision for losses on receivables
was approximately 5% of total table games revenues in 1997,
compared with approximately 4% in 1996 and 6% in 1995.
The enhancement projects completed during 1997 at Treasure
Island began in November 1996. The construction had little
impact on operating results during 1996, but general and
administrative expense included a $5.4 million charge related
to the abandonment of property associated with the new construc-
tion. The Company recorded a similar charge of $2.7 million
during 1997 associated with the construction of Melange, a new
gourmet restaurant at The Mirage that opened in August, and a
new employee parking garage that was completed in March 1998.
Various projects resulted in a similar charge of $3.6 million
in 1995.
Corporate expense declined by 8% in 1997, principally due
to a gain associated with the sale of one of the Company's
corporate aircraft. The 12% decline in corporate expense in 1996
primarily relates to a reduction in the Company's expansion
efforts in emerging gaming jurisdictions in order to concentrate
on the construction of Bellagio and Beau Rivage and development
of possible future projects in Atlantic City.
30
<PAGE>
The Company's growing investment in these new projects
also had a significant impact on the components of interest
expense during 1997. Interest cost and interest capitalized more
than doubled in 1997 versus 1996. The impact on interest
cost was less significant in 1996, as the Company was able to
fund much of the early phases of construction from operating cash
flow.
In February 1996, the Company sold its 50% equity interest
in a small casino located near Iguazu Falls, Argentina for $12.5
million in cash. The sale resulted in a pre-tax gain of $8.0
million, which is included in "Other, including interest income"
in 1996.
In 1995, the Company retired some of its more expensive
debt prior to its scheduled maturity. Although the retirement
was financially advantageous to the Company, the call premium
and the write-off of the related unamortized debt issuance costs
resulted in an extraordinary charge, net of applicable income tax
benefit, of $6.8 million. The Company recorded a similar charge
of $2.2 million in 1997 associated with amending and increasing
the size of its revolving bank credit facility. There were no
such charges in 1996.
CAPITAL RESOURCES, CAPITAL SPENDING AND LIQUIDITY
Net cash provided by operating activities (as shown in the
Consolidated Statements of Cash Flows) was $291.3 million in
1997, versus $331.9 million in 1996 and $327.0 million in 1995.
Although the Company's operating income grew by over 4% in 1997,
the earnings contribution from Monte Carlo (which was $20.3
million greater in 1997 than in 1996) was not distributed to
the Company. Instead, the joint venture is using Monte Carlo's
cash flow to reduce its outstanding debt. From opening to
December 31, 1997, the joint venture repaid nearly half of Monte
Carlo's approximately $210 million original construction debt.
The Company's operating cash flow in 1997 was also impacted
by a significant increase in receivables, a substantial
portion of which occurred near year-end. The associated
revenues are included in the Company's 1997 operating income;
however, due to the normal timing of collections, a large
portion of the receivables remained outstanding at year-end.
Operating cash flow in both 1997 and 1996 was affected by cash
payments for income taxes that represented a higher percentage
of the Company's tax provision than in 1995. These additional
tax payments are principally due to the normal reversal of
temporary book/tax differences relating to the depreciation of
property and equipment and the exhaustion of the Company's
alternative minimum tax credit in 1996.
The Company's capital spending has increased significantly
with the ongoing construction of Bellagio and Beau Rivage.
Capital expenditures totaled approximately $1.1 billion in
1997, versus $407.3 million in 1996 and $183.0 million in
1995. Including land, capitalized interest and preopening costs,
31
<PAGE>
but excluding fine art acquired for display and resale at
Bellagio, Bellagio is expected to cost approximately $1.6
billion and Beau Rivage is expected to cost approximately $600
million. Of such amounts, the Company had incurred approxi-
mately $906 million associated with Bellagio and $238 million
associated with Beau Rivage at December 31, 1997. Bellagio is
scheduled to open in October 1998 and Beau Rivage is expected
to open in the first quarter of 1999.
Capital expenditures in 1997 and 1996 include $150.4
million and $39.9 million, respectively, associated with the
purchase of works of fine art for display and resale at
Bellagio. During 1997, the Company sold one of such works
costing approximately $3.0 million for $3.3 million in cash.
In January 1998, the Company also sold four works to its
Chairman for a total sale price of approximately $25.6
million. The sale price was equal to the amount paid by the
Company for the works in the fourth quarter of 1997. Pursuant
to the sales agreement and a subsequent amendment, the Company
is renting from its Chairman, on a month-to-month basis, three
of the four purchased works of art, and eight additional works of
fine art purchased by its Chairman from independent third
parties, for public display at the Company's hotel-casinos.
The monthly rental in effect at March 15, 1998 was $406,320,
which equates to an annual rental of approximately 4% of the
art's $121.4 million aggregate purchase price. This is substan-
tially less than the Company's current cost of borrowing.
In January 1998, the City of Atlantic City conveyed to the
Company a total of approximately 180 acres (125 acres of
which are developable) in the Marina area of the City (the
"Marina Site") in exchange for the Company agreeing to
develop a hotel-casino on the Marina Site. The Company has
also agreed to undertake certain other obligations, including
remediation of environmental contamination on the Marina Site.
Additionally, the Company has entered into an agreement with
the New Jersey Department of Transportation and the South Jersey
Transportation Authority ("SJTA") with respect to the
construction and joint funding of road improvements designed
to improve access to the Marina area. The Company agreed to
fund $110 million of the estimated $330 million total cost of
the road improvements, with the balance to be funded by the
other two parties to the agreement. In October 1997, the
contractor commenced the design phase of the road improvement
project, which is being undertaken pursuant to a fixed-price
design/build contract. Also in October, the Company and
SJTA funded their respective $110 million and $125 million
portions of the cost of the road improvements. Such funds
were deposited in escrow accounts and are restricted for the
construction of the road improvement project.
32
<PAGE>
Numerous governmental permits must be received and various
other conditions must be satisfied before construction can
commence on the road improvement project and the Company's
hotel-casino. Accordingly, there can be no assurance that
the Company will construct a hotel-casino in Atlantic City
or as to the timing or cost of construction. The hotel-casino
is in the early design stage and a project budget has not yet
been developed.
On December 22, 1997, the Company entered into agreements
to acquire Boardwalk Casino, Inc. ("BCI") and certain related
assets. This acquisition, combined with adjacent parcels of
land acquired during 1997, will provide the Company with
approximately 12 acres with 817 feet of frontage on the
Las Vegas Strip at a total cost of approximately $140 million.
Of such amount, the Company had expended approximately $75
million at December 31, 1997. The expenditure of most of the
remaining $65 million is expected to occur during the first
half of 1998. The BCI acquisition, together with adjacent
land owned by the Company (including a portion of the Bellagio
site not required for Bellagio) and land the Company has agreed
to acquire in an exchange with Monte Carlo, would afford the
Company a 42-acre site for potential future development on the
Las Vegas Strip, between and contiguous to Bellagio and Monte
Carlo. The design, timing and cost of any such future
development is still highly uncertain.
The Company is funding its capital expenditure requirements
utilizing its operating cash flow, bank credit facility and
commercial paper borrowings and issuances of long-term debt
securities. In March 1997, the availability under the Company's
$1 billion bank credit facility was increased to $1.75
billion and the maturity date was extended from May 1999
to March 2002. The loan agreement governing the bank credit
facility provides that the Company's Leverage Ratio (as defined)
may not exceed 5 to 1 in 1998, except that the maximum
permitted ratio at September 30, 1998 is 5.85 to 1. At December
31, 1997, the Company's Leverage Ratio was 3.37 to 1.
In response to declines in interest rates, as well as to
manage the mix of its fixed and variable rate debt
instruments and lengthen the term of its debt structure,
during the past 12 months the Company has issued $700
million principal amount of the lowest cost fixed-rate debt
in its history. In August 1997, the Company received net
proceeds of approximately $296.1 million from the issuance
of $200 million principal amount of 6 3/4% unsecured notes due
August 2007 and $100 million principal amount of 7 1/4%
unsecured debentures due August 2017. In February 1998, the
Company received net proceeds of approximately $394.7 million
from the issuance of $200 million principal amount of 6 5/8%
unsecured notes due February 2005 and $200 million principal
amount of 6 3/4% unsecured notes due February 2008. The notes
issued in February 1998 were issued pursuant to a shelf
registration statement filed with the Securities and Exchange
Commission in October 1997 that allows the Company to issue a
total of up to $750 million of debt or equity securities or any
combination thereof.
33
<PAGE>
Further reducing the cost of its outstanding borrowings,
on March 15, 1998, the Company used bank credit facility and
commercial paper borrowings to fund the maturity of its $133
million principal amount of zero coupon first mortgage notes and
to redeem all $100 million principal amount of its 9 1/4% senior
subordinated notes. The 9 1/4% notes, scheduled to mature
in March 2003, were redeemed at 104.11% of the principal
amount. Although the redemption was financially advantageous to
the Company, the call premium and the write-off of the
unamortized debt issuance costs resulted in an extraordinary
loss of $3.5 million, net of applicable income tax benefit of
$1.9 million, which will be reflected in the Company's 1998 first
quarter operating results. On March 16, 1998, subsequent to
these two transactions, outstanding bank credit facility and
commercial paper borrowings totaled $655.7 million, leaving
approximately $1.1 billion available.
Management believes that existing cash balances, operating
cash flow and available borrowing capacity will provide the
Company with sufficient resources to meet its existing debt
obligations and foreseeable capital expenditure requirements.
REGULATION AND TAXES
The Company is subject to extensive regulation by the
Nevada and Mississippi gaming authorities and will be subject
to regulation, which may or may not be similar to that in Nevada,
by the appropriate authorities in New Jersey and any other
jurisdiction in which it may conduct gaming activities in the
future. Changes in applicable laws or regulations could have a
significant impact on the Company's operations. Pursuant to
legislation enacted in 1996, a federal commission is in the
process of conducting a two-year study of the gaming industry
in the United States and will report its findings and
recommendations to Congress.
The gaming industry represents a significant source of tax
revenues, particularly to the State of Nevada and its
counties and municipalities. From time to time, various
state and federal legislators and officials have proposed changes
in tax law, or in the administration of such law, affecting the
gaming industry. Proposals in recent years that have not been
enacted included a federal gaming tax and increases in state or
local taxes.
Management believes that the Company's recorded tax
balances are adequate. However, it is not possible to determine
with certainty the likelihood of possible changes in tax law or
in the administration of such law. Such changes, if adopted,
could have a material adverse effect on the Company's operating
results.
34
<PAGE>
MARKET RISK
Market risk is the risk of loss arising from adverse
changes in market rates and prices, such as interest rates,
foreign currency exchange rates and commodity prices. The
Company's primary exposure to market risk is interest rate
risk associated with its long-term debt. To date, the Company
has not invested in derivative- or foreign currency-based
financial instruments. The Company attempts to limit its
exposure to interest rate risk by managing the mix of its long-
term fixed-rate borrowings and short-term borrowings under
its revolving bank credit facility (the "Bank Facility") and
commercial paper program.
The following table provides information about the Company's
long-term debt at March 16, 1998.
<TABLE>
<CAPTION>
Maturity Face Carrying Estimated
Date Amount Value Fair Value
---------- -------- -------- ----------
(Dollars in millions)
<S> <C> <C> <C> <C>
Bank Facility borrowings, at a weighted
average interest rate of approximately Various to
5.82% ................................... May 1998 $ 280.0 $ 280.0 $ 280.0
Commercial paper notes, at a weighted
average effective interest rate of Various to
approximately 5.77%...................... June 1998 380.0 375.7 375.7
6 5/8% notes .............................. Feb. 2005 200.0 199.0 197.9
7 1/4% notes .............................. Oct. 2006 250.0 249.7 256.6
6 3/4% notes .............................. Aug. 2007 200.0 199.1 198.1
6 3/4% notes .............................. Feb. 2008 200.0 198.9 197.4
7 1/4% debentures ......................... Aug. 2017 100.0 99.7 99.1
Other notes, at a weighted average Various to
interest rate of approximately 6.8%...... Sept. 2007 6.2 6.2 6.2
-------- -------- --------
$1,616.2 $1,608.3 $1,611.0
======== ======== ========
</TABLE>
Borrowings under the Bank Facility bear interest, at the
Company's option, at the prime rate or at a specified premium
over the one-, two-, three- or six-month London Interbank Offered
Rate ("LIBOR"). Alternatively, the Company may request interest
rate bids from the participating banks. The Company is required
to pay an additional 0.10% per annum on LIBOR-based borrowings
when its Leverage Ratio exceeds 3.5 to 1. At December 31, 1997,
the Company's Leverage Ratio was 3.37 to 1. It is anticipated
that the Company will be subject to this higher rate for
approximately one year beginning June 1, 1998. The Company's
commercial paper notes are backed by the Bank Facility.
Borrowings under the Bank Facility and commercial paper
program are classified as long-term debt because management
intends to replace such borrowings as they come due and to have
35
<PAGE>
such borrowings outstanding for a period greater than one year.
However, the amount of outstanding borrowings is expected to
fluctuate and may be reduced from time to time. The Bank
Facility matures in March 2002.
RECENTLY ISSUED ACCOUNTING STATEMENTS
In June 1997, the Financial Accounting Standards Board
issued Statements of Financial Accounting Standards No. 130 -
Reporting Comprehensive Income, and No. 131 - Disclosures About
Segments of an Enterprise and Related Information. The Company
will adopt the provisions of these new accounting statements in
1998. Management believes that adoption of these provisions will
not have a material impact on the Company's reported financial
position or results of operations.
YEAR 2000 COMPLIANCE
In the past, many computer software programs were written
using two digits rather than four to define the applicable year.
As a result, date-sensitive computer software may recognize a
date using "00" as the year 1900 rather than the year 2000.
This could result in major system failures or miscalculations,
and is generally referred to as the "Year 2000" problem. A
comprehensive review of the Company's computer systems has been
completed and an extensive program is currently in process to
modify or replace those systems that are not Year 2000 compliant.
Management believes that the Company's systems are compliant or
will be compliant by mid-1999. All maintenance and modification
costs are being expensed as incurred, while the cost of new
software, when material, is being capitalized and amortized over
its expected useful life. The cost of the Year 2000 compliance
program has not been and is not anticipated to be material to
the Company's financial position or results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
There is incorporated by reference the information appearing
under the caption "Market Risk" in Item 7 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Notes to
Consolidated Financial Statements of Mirage Resorts, Incorporated
and Subsidiaries, referred to in Item 14(a)(1) of this Form 10-K,
are included at pages 49 to 69.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
36
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is incorporated by reference the information appearing
under the caption "Directors and Executive Officers" in the
Company's definitive Proxy Statement for its May 21, 1998
Annual Meeting of Stockholders, to be filed with the Securities
and Exchange Commission (the "Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
There is incorporated by reference the information appearing
under the caption "Executive Compensation" in the Proxy
Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
There is incorporated by reference the information appearing
under the caption "Stock Ownership of Major Stockholders and
Management" in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated by reference the information appearing
under the caption "Compensation Committee Interlocks and Insider
Participation" in the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a)(1). FINANCIAL STATEMENTS.
Included in Part II of this Report:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1997 and
1996
Years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
37
<PAGE>
(a)(2). FINANCIAL STATEMENT SCHEDULES.
Included in Part IV of this Report:
Years ended December 31, 1997, 1996 and 1995
Schedule II - Valuation and Qualifying Accounts
Schedules other than that listed above are omitted because
they are not required or are not applicable, or the required
information is shown in the financial statements or notes to the
financial statements.
(a)(3). EXHIBITS.
2(a) Agreement and Plan of Merger, dated December
22, 1997, among Registrant, Mirage Acquisition
Sub, Inc. and BCI (without schedules).
Incorporated by reference to Exhibit 2 to the
Schedule 13D, dated December 29, 1997, filed by
Registrant with respect to BCI (the "Schedule
13D").
2(b) Agreement, dated December 22, 1997, among
Registrant, Diversified Opportunities Group
Ltd., Jacobs Entertainment Nevada, Inc. and
Jeffrey P. Jacobs. Incorporated by reference
to Exhibit 5 to the Schedule 13D.
2(c) Agreement, dated December 22, 1997, between
Registrant and Avis P. Jansen, individually, as
executrix ("Executrix") of the Estate of
Norbert W. Jansen and as trustee ("Trustee")
for the Jansen Family Trust under an Agreement
dated July 14, 1993 (the "Jansen Agreement")
(without exhibits). Incorporated by reference
to Exhibit 3 to the Schedule 13D.
2(d) Agreement of Purchase and Sale and Joint Escrow
Instructions, dated as of December 22, 1997,
between Restaurant Ventures of Nevada, Inc. and
Avis Jansen, as Trustee (without exhibits).
Incorporated by reference to Exhibit 4 to the
Schedule 13D.
3(i)(a) Restated Articles of Incorporation of
Registrant. Incorporated by reference to
Exhibit 3(i) to Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended June
30, 1993.
38
<PAGE>
3(i)(b) Amended and Restated Certificate of Division of
Shares into Smaller Denominations Pursuant to
N.R.S. Section 78.207 of Registrant, filed
October 14, 1993. Incorporated by reference to
Exhibit 2.2 to Amendment No. 3 to Registrant's
Registration Statement on Form 8-A dated
October 19, 1993.
3(i)(c) Certificate of Division of Shares into Smaller
Denominations Pursuant to N.R.S. Section 78.207
of Registrant, filed June 5, 1996.
Incorporated by reference to Exhibit 1 to
Amendment No. 4 to Registrant's Registration
Statement on Form 8-A dated June 18, 1996.
3(ii) Amended and Restated Bylaws of Registrant.
Incorporated by reference to Exhibit 99 to
Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1994.
4(a) Indenture, dated as of October 15, 1996,
between Registrant and Firstar Bank of
Minnesota, N.A., as trustee (the "1996 Shelf
Indenture"). Incorporated by reference to
Exhibit 4.1 to Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended
September 30, 1996 (the "September 1996 Form
10-Q").
4(b) Supplemental Indenture, dated as of October 15,
1996, to the 1996 Shelf Indenture, with respect
to Registrant's 7.25% Senior Notes Due October
15, 2006. Incorporated by reference to Exhibit
4.2 to the September 1996 Form 10-Q.
4(c) Indenture, dated as of August 1, 1997, between
Registrant and First Security Bank, National
Association, as trustee (the "1997 Shelf
Indenture"). Incorporated by reference to
Exhibit 4.1 to Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30,
1997 (the "June 1997 Form 10-Q").
4(d) Supplemental Indenture, dated as of August 1,
1997, to the 1997 Shelf Indenture, with respect
to Registrant's 6.75% Notes Due August 1, 2007
and 7.25% Debentures Due August 1, 2017.
Incorporated by reference to Exhibit 4.2 to the
June 1997 Form 10-Q.
4(e) Indenture, dated as of February 4, 1998,
between Registrant and PNC Bank, National
Association, as trustee (the "1998 Shelf
Indenture").
39
<PAGE>
4(f) Supplemental Indenture, dated as of February 4,
1998, to the 1998 Shelf Indenture, with respect
to Registrant's 6.625% Notes Due February 1,
2005 and 6.75% Notes Due February 1, 2008.
10(a)* Forms of Incentive Stock Option Agreement and
Non-Qualified Stock Option Agreement.
Incorporated by reference to Exhibit 10(b) to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989.
10(b)* 1983 Stock Option and Stock Appreciation Rights
Plan, as amended. Incorporated by reference to
Exhibit 4.3 to the Registration Statement filed
by Registrant on Form S-8 under the Securities
Act of 1933 (No. 33-16037) (the "Form S-8").
10(c)* 1984 Stock Option and Stock Appreciation Rights
Plan, as amended. Incorporated by reference to
Exhibit 4.2 to the Form S-8.
10(d)* 1986 Stock Option and Stock Appreciation Rights
Plan, as amended. Incorporated by reference to
Exhibit 4.1 to the Form S-8.
10(e)* 1992 Stock Option and Stock Appreciation Rights
Plan. Incorporated by reference to Exhibit
10(n) to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31,
1991.
10(f)* 1993 Stock Option and Stock Appreciation Rights
Plan. Incorporated by reference to Exhibit
10(m) to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31,
1992 (the "1992 Form 10-K").
10(g)* Executive Retirement Plan Agreement, dated as
of December 1, 1986, between Registrant and
James E. Pettis. Incorporated by reference
to Exhibit 10(mm) to Registrant's Annual Report
on Form 10-K for the fiscal year ended December
31, 1986.
10(h)* Amended and Restated 1992 Non-Employee Director
Stock Option Plan. Incorporated by reference
to Exhibit 10.4 to Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter
ended June 30, 1996.
10(i) Easement, dated December 28, 1990, from MH,
INC. in favor of Stephen A. Wynn. Incorporated
by reference to Exhibit 10(ll) to Amendment No.
1 to the Registration Statement filed by GNS
FINANCE CORP. and MCH on Form S-1 under the
Securities Act of 1933 (No. 33-38496).
40
<PAGE>
10(j)* Employment Agreement, dated as of August 18,
1992, between Registrant and Frank Visconti.
Incorporated by reference to Exhibit 19.4 to
Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1992.
10(k)* Employment Agreement, dated as of August 16,
1995, between Registrant and James E. Pettis.
Incorporated by reference to Exhibit 10.5 to
Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1995
(the "September 1995 Form 10-Q").
10(l)* Employment Agreement, dated December 16, 1992,
between Registrant and Stephen A. Wynn.
Incorporated by reference to Exhibit 10(zz) to
the 1992 Form 10-K.
10(m) Lease, dated September 4, 1962, and Agreement,
dated March 25, 1975, between the Trustees of
the Fraternal Order of Eagles, Las Vegas Aerie
1213, and Registrant. Incorporated by
reference to Exhibit 10(c) to the Registration
Statement filed by GNLV FINANCE CORP. and GNLV
on Form S-1 under the Securities Act of 1933
(No. 33-5694) (the "GNLV Form S-1").
10(n) Lease Agreement, dated July 1, 1973, and
Amendment to Lease, dated February 27, 1979,
between First National Bank of Nevada, Trustee
under Private Trust No. 87, and Registrant.
Incorporated by reference to Exhibit 10(d) to
the GNLV Form S-1.
10(o) Lease, dated April 30, 1976, between Elizabeth
Properties Trust, Elizabeth Zahn, Trustee, and
Registrant. Incorporated by reference to
Exhibit 10(e) to the GNLV Form S-1.
10(p)* Amended and Restated 1994 Cash Bonus Plan.
Incorporated by reference to Exhibit 10(qq) to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (the "1994
Form 10-K").
10(q) Joint Venture Agreement of Victoria Partners,
dated as of December 9, 1994, among MRGS Corp.,
Gold Strike L.V. and Registrant (without
exhibit) (the "Joint Venture Agreement").
Incorporated by reference to Exhibit 99.1 to
Registrant's Current Report on Form 8-K dated
December 9, 1994 (the "December 1994 Form
8-K").
41
<PAGE>
10(r) Reducing Revolving Loan Agreement, dated as of
December 21, 1994, among Victoria Partners,
each Bank party thereto, The Long-Term Credit
Bank of Japan, Ltd., Los Angeles Agency and
Societe Generale, as Co-Agents, and Bank of
America National Trust and Savings Association,
as Administrative Agent (without schedules or
exhibits) (the "Victoria Partners Loan
Agreement"). Incorporated by reference to
Exhibit 99.2 to Amendment No. 1 to the December
1994 Form 8-K on Form 8-K/A.
10(s) Amendment No. 1 to the Victoria Partners Loan
Agreement, dated as of January 31, 1995.
Incorporated by reference to Exhibit 10(uu) to
the 1994 Form 10-K.
10(t)* 1995 Stock Option and Stock Appreciation Rights
Plan. Incorporated by reference to Exhibit A
to Registrant's definitive Proxy Statement
filed on April 18, 1995 under cover of Schedule
14A.
10(u) Amendment No. 1 to the Joint Venture Agreement,
dated as of April 17, 1995. Incorporated by
reference to Exhibit 10(c) to Registrant's
Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1995 (the "March 1995
Form 10-Q").
10(v) Amended and Restated Lease, dated as of April
26, 1995, between MKB Company and Beau Rivage
(without exhibits). Incorporated by reference
to Exhibit 10(e) to the March 1995 Form 10-Q.
10(w) Amendment No. 2 to the Victoria Partners Loan
Agreement, dated as of June 30, 1995 (without
exhibit). Incorporated by reference to Exhibit
10.1 to Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1995
(the "June 1995 Form 10-Q").
10(x) Amendment No. 3 to the Victoria Partners Loan
Agreement, dated as of July 28, 1995.
Incorporated by reference to Exhibit 10.3 to
the June 1995 Form 10-Q.
10(y) Amendment No. 2 to the Joint Venture Agreement,
dated as of September 25, 1995. Incorporated
by reference to Exhibit 10.4 to the September
1995 Form 10-Q.
42
<PAGE>
10(z)* Employment Agreement, dated as of December 29,
1995, between Registrant and Thomas L. Sheer.
Incorporated by reference to Exhibit 10(bbb) to
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 (the "1995
Form 10-K").
10(aa) Amendment No. 4 to the Victoria Partners Loan
Agreement, dated as of October 16, 1995.
Incorporated by reference to Exhibit 10(a) to
the Quarterly Report on Form 10-Q of Circus
(Commission File No. 1-8570) for the fiscal
quarter ended October 31, 1995.
10(bb)* Executive Medical Reimbursement Plan.
Incorporated by reference to Exhibit 10(hhh) to
the 1995 Form 10-K.
10(cc) Amendment No. 3 to the Joint Venture Agreement,
dated as of February 28, 1996. Incorporated by
reference to Exhibit 10(nnn) to the 1995 Form
10-K.
10(dd) Agreement, dated as of March 7, 1995, between
Atlandia Design and Furnishings, Inc.
("Atlandia") and Marnell Corrao Associates
(without schedules). Incorporated by reference
to Exhibit 10(ooo) to the 1995 Form 10-K.
10(ee) An Agreement Between the City of Atlantic City
and Mirage Resorts, Incorporated for the
Development of the Huron North Redevelopment
Area, dated May 3, 1996 (without exhibits).
Incorporated by reference to Exhibit 10.1 to
Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1996 (the
"March 1996 Form 10-Q").
10(ff) Completion Guaranty by Registrant in favor of
the City of Atlantic City, dated as of May 3,
1996. Incorporated by reference to Exhibit
10.2 to the March 1996 Form 10-Q.
10(gg) Joint Venture Agreement of Stardust A.C., dated
as of May 29, 1996, between MAC, CORP. and
Grand K, Inc. (without exhibit). Incorporated
by reference to Exhibit 10.1 to the Current
Report on Form 8-K of Boyd (Commission File No.
1-12168) dated June 7, 1996.
10(hh) Letter agreement, dated May 30, 1996, between
Registrant and Circus. Incorporated by
reference to Exhibit 10(a) to the Quarterly
Report on Form 10-Q of Circus for the fiscal
quarter ended April 30, 1996 (the "Circus April
1996 Form 10-Q").
43
<PAGE>
10(ii) Amendment No. 4 to the Joint Venture Agreement,
dated as of May 29, 1996. Incorporated by
reference to Exhibit 10(b) to the Circus April
1996 Form 10-Q.
10(jj) Amendment No. 5 to the Victoria Partners Loan
Agreement, dated as of August 1, 1996.
Incorporated by reference to Exhibit 10(a) to
the Quarterly Report on Form 10-Q of Circus for
the fiscal quarter ended July 31, 1996.
10(kk) Road Development Agreement, dated as of January
10, 1997, among Registrant, the State and SJTA
(without schedules or exhibits), and Assignment
and Assumption Agreement, dated as of January
10, 1997, between Registrant and Atlandia.
Incorporated by reference to Exhibit 99 to
Registrant's Current Report on Form 8-K dated
January 10, 1997.
10(ll)* Non-Qualified Deferred Compensation Plan, dated
as of February 1, 1997. Incorporated by
reference to Exhibit 10(ccc) to Registrant's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 (the "1996 Form 10-
K").
10(mm)* Directors' Deferred Fee Plan, dated as of
February 1, 1997. Incorporated by reference to
Exhibit 10(ddd) to the 1996 Form 10-K.
10(nn)* First Amendment to Non-Qualified Deferred
Compensation Plan, dated February 28, 1997.
Incorporated by reference to Exhibit 10(eee) to
the 1996 Form 10-K.
10(oo)* First Amendment to Directors' Deferred Fee
Plan, dated February 28, 1997. Incorporated by
reference to Exhibit 10(fff) to the 1996 Form
10-K.
10(pp) Amended and Restated Loan Agreement, dated as
of March 7, 1997, among Registrant, the Banks
named therein, BancAmerica Securities, Inc.,
CIBC Wood Gundy Securities Corp., J.P. Morgan
Securities Inc. and Societe Generale, as Co-
Arrangers, Bankers Trust Company, The Bank of
New York, The Bank of Nova Scotia, Commerzbank
Aktiengesellschaft, Credit Lyonnais, The Long-
Term Credit Bank of Japan, Ltd., Los Angeles
Agency, PNC Bank, National Association and
44
<PAGE>
Westdeutsche Landesbank Girozentrale, as Co-
Agents, Bank of America National Trust and
Savings Association, as Administrative Agent,
and Morgan Guaranty Trust Company of New York,
as Documentation Agent (without schedules or
exhibits). Incorporated by reference to
Exhibit 10(ggg) to the 1996 Form 10-K.
10(qq) Amendment No. 6 to the Victoria Partners Loan
Agreement, dated as of April 2, 1997.
Incorporated by reference to Exhibit 10(ccc) to
the Annual Report on Form 10-K of Circus for
the fiscal year ended January 31, 1997.
10(rr) Global Express Aircraft Purchase Agreement,
dated June 24, 1997, between Golden Nugget
Aviation Corp. ("GNAC") and Bombardier Inc.
(without schedules or exhibits). Incorporated
by reference to Exhibit 10.2 to the June 1997
Form 10-Q.
10(ss) Issuing and Paying Agency Agreement, dated July
24, 1997, between Registrant and First Trust of
New York, National Association (without
exhibit). Incorporated by reference to Exhibit
10.1 to Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended September 30,
1997 (the "September 1997 Form 10-Q").
10(tt) Form of Series A Commercial Paper Note of
Registrant. Incorporated by reference to
Exhibit 10.2 to the September 1997 Form 10-Q.
10(uu) Commercial Paper Dealer Agreement, dated July
24, 1997, between Registrant and BancAmerica
Securities, Inc. (without exhibits).
Incorporated by reference to Exhibit 10.3 to
the September 1997 Form 10-Q.
10(vv) Commercial Paper Dealer Agreement, dated July
24, 1997, between Registrant and Credit Suisse
First Boston Corporation (without exhibits).
Incorporated by reference to Exhibit 10.4 to
the September 1997 Form 10-Q.
10(ww) Commercial Paper Dealer Agreement, dated July
24, 1997, between Registrant and Morgan Stanley
& Co. Incorporated (without exhibits).
Incorporated by reference to Exhibit 10.5 to
the September 1997 Form 10-Q.
10(xx) Commercial Paper Dealer Agreement, dated July
24, 1997, between Registrant and Goldman, Sachs
& Co. (without exhibits). Incorporated by
reference to Exhibit 10.6 to the September 1997
Form 10-Q.
45
<PAGE>
10(yy) First Amendment to Road Development Agreement,
dated as of July 31, 1997, among the State,
SJTA and Atlandia. Incorporated by reference
to Exhibit 10.7 to the September 1997 Form 10-
Q.
10(zz)* Letter agreement, dated September 16, 1997,
between Registrant and Frank Visconti.
Incorporated by reference to Exhibit 10.8 to
the September 1997 Form 10-Q.
10(aaa) Amendment No. 1 to Amended and Restated Loan
Agreement, dated as of September 19, 1997,
among Registrant, the Banks, Co-Arrangers, Co-
Agents and Documentation Agent referred to
therein, and Bank of America National Trust and
Savings Association, as Administrative Agent.
Incorporated by reference to Exhibit 10.9 to
the September 1997 Form 10-Q.
10(bbb) Second Amendment to Road Development Agreement,
dated as of October 10, 1997, among the State,
SJTA and Atlandia (without schedules or
exhibits). Incorporated by reference to Exhibit
10.10 to the September 1997 Form 10-Q.
10(ccc) Letter agreement, dated March 12, 1998, between
Bellagio and Stephen A. Wynn (with exhibit).
10(ddd) Aircraft Purchase Agreement, dated as of
October 10, 1997, between Ivanhoe Capital
Aviation L.L.C. and GNAC (without exhibits).
Incorporated by reference to Exhibit 10.12 to
the September 1997 Form 10-Q.
10(eee) Design/Build Contract, dated September 8, 1997,
between Atlandia and Yonkers Contracting
Company, Inc./Granite Construction Company, a
Joint Venture (with appendices). Incorporated
by reference to Exhibit 10.13 to the September
1997 Form 10-Q.
10(fff) Escrow Fund Agreement, dated as of October 10,
1997, among CoreStates Bank, N.A., as Escrow
Agent, Atlandia, the State and SJTA (without
schedules). Incorporated by reference to
Exhibit 10.14 to the September 1997 Form 10-Q.
10(ggg) Bond Purchase Agreement, dated October 10,
1997, between Registrant and SJTA (without
exhibit). Incorporated by reference to Exhibit
10.15 to the September 1997 Form 10-Q.
46
<PAGE>
10(hhh) Donation Agreement, dated as of October 10,
1997, between the Casino Reinvestment
Development Authority and MAC, CORP. (without
exhibits). Incorporated by reference to Exhibit
10.16 to the September 1997 Form 10-Q.
10(iii) Aircraft Purchase Agreement, dated as of
October 1, 1997, between Rifton Enterprises,
Inc. and GNAC (without exhibits). Incorporated
by reference to Exhibit 10.17 to the September
1997 Form 10-Q.
10(jjj) Agreement, dated as of July 3, 1996, between
Beau Rivage Construction (a Division of Beau
Rivage Resorts, Inc.) and W.G. Yates & Sons
Construction Co. (without schedules).
10(kkk)* Employment Agreement, dated as of July 16,
1997, between Registrant and Daniel R. Lee
(with exhibits).
10(lll) Agreement of Sale, dated as of November 24,
1997, among MCH, TI Corp. and H-S Las Vegas
Associates (without exhibits).
10(mmm) First Amendment to Jansen Agreement, dated as
of January 30, 1998, between Registrant and
Avis P. Jansen, individually, as Executrix and
as Trustee.
10(nnn) An Amendment to the May 3, 1996 Agreement
between the City of Atlantic City and Mirage
Resorts, Incorporated for the Development of
the Huron North Redevelopment Area, dated
January 8, 1998 (without exhibits).
10(ooo) Letter agreement, dated January 14, 1998,
between Bellagio and Stephen A. Wynn (with
exhibits).
10(ppp)* Second Amendment to Non-Qualified Deferred
Compensation Plan, dated as of February 1,
1998.
10(qqq)* Second Amendment to Directors' Deferred Fee
Plan, dated as of February 1, 1998.
10(rrr)* 1998 Stock Option and Stock Appreciation Rights
Plan.
47
<PAGE>
21 List of subsidiaries of Registrant.
Incorporated by reference to Exhibit 21 to the
1996 Form 10-K.
23 Consent of Arthur Andersen LLP.
27(a) Financial Data Schedule - Year ended December
31, 1997.
27(b) Restated Financial Data Schedule - Year ended
December 31, 1996 and Periods ended March 31,
1997, June 30, 1997 and September 30, 1997.
27(c) Restated Financial Data Schedule - Year ended
December 31, 1995 and Periods ended March 31,
1996, June 30, 1996 and September 30, 1996.
---------------
*Constitutes a management contract or compensatory plan or
arrangement.
(b). REPORTS ON FORM 8-K.
The Company filed no reports on Form 8-K during the
three-month period ended December 31, 1997.
48
<PAGE>
MIRAGE RESORTS, INCORPORATED
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Directors and Stockholders
of Mirage Resorts, Incorporated
We have audited the accompanying consolidated balance sheets
of Mirage Resorts, Incorporated (a Nevada corporation) and
subsidiaries (the "Company") as of December 31, 1997 and 1996,
and the related consolidated statements of income, stockholders'
equity and cash flows for the years ended December 31, 1997, 1996
and 1995. These consolidated financial statements and the
schedule referred to below are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and schedule
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 misstate-
ment. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial state-
ments. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Mirage Resorts, Incorporated and
subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for
the years ended December 31, 1997, 1996 and 1995 in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion
on the basic financial statements taken as a whole. The financial
statement schedule for the years ended December 31, 1997, 1996
and 1995 listed in Item 14(a)(2) is presented for purposes of
complying with the Securities and Exchange Commission's rules and
is not a required part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data
required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
March 16, 1998
49
<PAGE>
<TABLE>
<CAPTION>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
AT DECEMBER 31
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................................... $ 99,337 $ 81,908
Receivables, net of allowance for doubtful accounts of $42,477
and $38,674....................................................... 101,635 70,196
Income tax refund receivable........................................ 9,658 18,239
Inventories......................................................... 29,179 27,554
Deferred income taxes............................................... 16,047 18,784
Prepaid expenses and other.......................................... 45,066 19,602
---------- ----------
Total current assets............................................ 300,922 236,283
Property and equipment, net.......................................... 1,455,125 1,427,018
Construction in progress............................................. 1,261,084 355,864
Other assets, net.................................................... 330,219 124,325
---------- ----------
$3,347,350 $2,143,490
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable.............................................. $ 93,052 $ 88,805
Construction payables............................................... 58,941 31,489
Accrued payroll..................................................... 46,800 41,164
Accrued interest.................................................... 17,809 5,867
Other accrued expenses.............................................. 39,858 50,687
Current maturities of long-term debt................................ 927 453
---------- ----------
Total current liabilities....................................... 257,387 218,465
Long-term debt, net of current maturities............................ 1,396,728 468,140
Other liabilities, including deferred income taxes of $167,415
and $155,076....................................................... 180,751 166,002
---------- ----------
Total liabilities............................................... 1,834,866 852,607
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $0.004: authorized 1,125,000,000 shares;
issued 235,147,650 shares; outstanding 179,421,822 and
178,335,915 shares................................................ 940 940
Additional paid-in capital.......................................... 734,547 725,240
Retained earnings................................................... 1,063,793 856,215
Treasury stock, at cost: 55,725,828 and 56,811,735 shares.......... (286,796) (291,512)
---------- ----------
Total stockholders' equity...................................... 1,512,484 1,290,883
---------- ----------
$3,347,350 $2,143,490
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31
----------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES
Casino................................ $ 784,512 $ 752,914 $ 782,812
Rooms................................. 297,885 303,566 268,734
Food and beverage..................... 218,974 224,430 208,943
Entertainment......................... 97,924 94,361 87,478
Retail................................ 65,703 66,187 63,187
Other................................. 51,450 45,626 42,562
Equity in earnings of Monte Carlo..... 29,601 9,273 -
---------- ---------- ----------
1,546,049 1,496,357 1,453,716
Less - promotional allowances......... (127,498) (128,813) (122,972)
---------- ---------- ----------
1,418,551 1,367,544 1,330,744
---------- ---------- ----------
COSTS AND EXPENSES
Casino................................ 414,482 384,301 387,243
Rooms................................. 88,705 88,602 82,863
Food and beverage..................... 143,069 142,549 136,868
Entertainment......................... 77,377 75,507 73,107
Retail................................ 44,068 43,238 40,728
Other................................. 26,487 24,911 24,119
Provision for losses on receivables... 19,213 14,480 23,024
General and administrative............ 161,960 163,045 156,454
Depreciation and amortization......... 87,956 86,661 86,223
Corporate expense..................... 29,193 31,580 36,028
---------- ---------- ----------
1,092,510 1,054,874 1,046,657
---------- ---------- ----------
OPERATING INCOME........................ 326,041 312,670 284,087
---------- ---------- ----------
OTHER INCOME AND (EXPENSE)
Interest cost......................... (70,350) (31,106) (32,799)
Interest capitalized.................. 62,673 24,281 9,616
Other, including interest income...... 6,715 12,563 4,357
---------- ---------- ----------
(962) 5,738 (18,826)
---------- ---------- ----------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM..................... 325,079 318,408 265,261
Provision for income taxes............ (115,276) (112,363) (95,313)
---------- ---------- ----------
INCOME BEFORE EXTRAORDINARY ITEM........ 209,803 206,045 169,948
Extraordinary item - loss on early
retirements of debt, net of
applicable income tax benefit........ (2,225) - (6,785)
---------- ---------- ----------
NET INCOME.............................. $ 207,578 $ 206,045 $ 163,163
========== ========== ==========
INCOME PER SHARE OF COMMON STOCK
Income before extraordinary item
Basic................................ $ 1.17 $ 1.13 $ 0.93
Diluted.............................. 1.09 1.05 0.88
Net income
Basic................................ $ 1.16 $ 1.13 $ 0.89
Diluted.............................. 1.08 1.05 0.85
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
COMMON STOCK ADDITIONAL
-------------------- PAID-IN
SHARES PAR CAPITAL RETAINED TREASURY
OUTSTANDING VALUE AND OTHER EARNINGS STOCK TOTAL
----------- ----- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1995................... 181,991,276 $ 940 $699,116 $ 487,007 $(156,141) $1,030,922
Exercise of common stock options.......... 1,146,500 - 1,889 - 3,352 5,241
Tax benefit from stock option exercises... - - 4,217 - - 4,217
Repurchases of common stock............... (31,576) - - - (482) (482)
Other..................................... 235,294 - 5,594 - 688 6,282
Net income................................ - - - 163,163 - 163,163
----------- ----- -------- ---------- --------- ----------
BALANCES, DECEMBER 31, 1995................. 183,341,494 940 710,816 650,170 (152,583) 1,209,343
Exercise of common stock options.......... 1,677,550 - 3,418 - 5,297 8,715
Tax benefit from stock option exercises... - - 10,137 - - 10,137
Repurchases of common stock............... (6,683,129) - - - (144,226) (144,226)
Other..................................... - - 869 - - 869
Net income................................ - - - 206,045 - 206,045
----------- ----- -------- ---------- --------- ----------
BALANCES, DECEMBER 31, 1996................. 178,335,915 940 725,240 856,215 (291,512) 1,290,883
Exercise of common stock options.......... 1,136,888 - 369 - 5,842 6,211
Tax benefit from stock option exercises... - - 6,580 - - 6,580
Repurchases of common stock............... (50,981) - - - (1,126) (1,126)
Other..................................... - - 2,358 - - 2,358
Net income................................ - - - 207,578 - 207,578
----------- ----- -------- ---------- --------- ----------
BALANCES, DECEMBER 31, 1997................. 179,421,822 $ 940 $734,547 $1,063,793 $(286,796) $1,512,484
=========== ===== ======== ========== ========= ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31
---------------------------------------
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.............................................................. $ 207,578 $ 206,045 $ 163,163
Adjustments to reconcile net income to net cash provided by
operating activities
Provision for losses on receivables.................................. 19,213 14,480 23,024
Depreciation and amortization of property and equipment,
including amounts reported as corporate expense.................... 97,533 93,319 90,575
Equity in undistributed earnings of Monte Carlo...................... (29,601) (9,273) -
Amortization of debt discount and issuance costs..................... 14,778 14,514 13,172
Loss on early retirements of debt.................................... 3,422 - 10,439
Deferred income taxes................................................ 15,076 30,230 43,568
Changes in components of working capital pertaining to
operating activities
Increase in receivables and other current assets.................. (49,198) (25,834) (42,794)
Increase in trade accounts payable and accrued expenses........... 10,996 16,665 24,284
Other................................................................ 1,546 (8,266) 1,523
----------- --------- ---------
Net cash provided by operating activities...................... 291,343 331,880 326,954
----------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures.................................................... (1,058,900) (407,276) (182,993)
Net (increase) decrease in construction deposits........................ (111,665) (5,970) 1,194
Increase in construction payables....................................... 27,452 27,511 1,447
Proceeds from sales of property and equipment........................... 30,825 5,121 2,763
Preopening costs........................................................ (22,220) (8,665) (1,668)
Joint venture and other investments..................................... (52,990) (23,976) (29,084)
Proceeds from sale of joint venture interest and other investments...... - 30,627 8,249
Other................................................................... (6,309) (741) -
----------- --------- ---------
Net cash used for investing activities......................... (1,193,807) (383,369) (200,092)
----------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in bank credit facility and commercial
paper borrowings....................................................... 612,795 (41,882) 21,882
Proceeds from issuance of notes and debentures.......................... 296,052 247,387 -
Early retirements of public debt........................................ - - (134,180)
Other decreases in debt................................................. (453) (264) (21,985)
Repurchases of common stock............................................. (1,126) (144,226) (482)
Exercise of common stock options, including related income
tax benefit............................................................ 12,791 18,852 9,458
Other................................................................... (166) 5,504 (671)
----------- --------- ---------
Net cash provided by (used for) financing activities........... 919,893 85,371 (125,978)
----------- --------- ---------
CASH AND CASH EQUIVALENTS
Increase for the year................................................... 17,429 33,882 884
Balance, beginning of year.............................................. 81,908 48,026 47,142
----------- --------- ---------
Balance, end of year.................................................... $ 99,337 $ 81,908 $ 48,026
=========== ========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the year for
Interest, net of amounts capitalized................................. $ - $ - $ 13,325
Income taxes, net of refunds......................................... 72,000 93,000 37,000
Noncash investing activities
Contribution of land in exchange for partnership interest............ - - 23,170
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
53
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION. Mirage Resorts, Incorporated (the
"Company"), a Nevada corporation, through wholly owned
subsidiaries, owns and operates some of the most successful
casino-based entertainment resorts in the world. These resorts
include The Mirage and Treasure Island on the Las Vegas Strip,
the Golden Nugget in downtown Las Vegas and the Golden Nugget-
Laughlin in Laughlin, Nevada. The Company is also a 50% partner
in a joint venture that owns and operates the Monte Carlo Resort
& Casino ("Monte Carlo"), which opened June 21, 1996 on the Las
Vegas Strip.
The Company is currently constructing two additional wholly
owned hotel-casino resorts. Bellagio, an elegant 3,005-guest
room luxury resort, is being constructed on approximately 90
acres of a 120-acre site on the Las Vegas Strip. Beau Rivage, a
luxurious 1,780-guest room beachfront resort, is being con-
structed on approximately 23 acres in Biloxi, Mississippi.
Bellagio is scheduled to open in October 1998 and Beau Rivage is
expected to open in the first quarter of 1999.
PRINCIPLES OF CONSOLIDATION. The consolidated financial
statements include the accounts of the Company and its
subsidiaries. All significant intercompany balances and
transactions have been eliminated. Investments in 50% or less
owned entities over which the Company has the ability to exercise
significant influence, including joint ventures such as Monte
Carlo, are accounted for using the equity method.
CASINO REVENUES AND PROMOTIONAL ALLOWANCES. The Company
recognizes as casino revenues the net win from gaming activities,
which is the difference between gaming wins and losses. Revenues
include the estimated retail value of rooms, food and beverage
and other goods and services provided to customers on a
complimentary basis as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Rooms.................... $ 55,153 $ 55,125 $ 52,592
Food and beverage........ 64,575 66,424 63,664
Other.................... 7,770 7,264 6,716
-------- -------- --------
$127,498 $128,813 $122,972
======== ======== ========
</TABLE>
54
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
After being included in gross revenues, such amounts are
then deducted as promotional allowances. The estimated costs
of providing these promotional allowances, totaling $90.2 million
in 1997, $88.3 million in 1996 and $87.2 million in 1995, have
been classified primarily as casino costs and expenses.
CASH AND CASH EQUIVALENTS. The Company classifies as cash
equivalents all highly liquid debt instruments with a maturity of
three months or less when purchased. Cash equivalents are
carried at cost which approximates fair value.
CONCENTRATIONS OF CREDIT RISK. Financial instruments which
potentially subject the Company to concentrations of credit risk
consist principally of short-term investments and receivables.
The Company's short-term investments typically consist of
U.S. Government-backed repurchase agreements with maturities of
30 days or less. Such investments are made with financial
institutions having a high credit quality and the Company limits
the amount of its credit exposure to any one financial
institution. Due to the short-term nature of the instruments,
the Company does not take possession of the securities, which are
instead held in a custodial account.
The Company extends credit to a limited number of casino
patrons, but only following background checks and investigations
of creditworthiness. At December 31, 1997, a substantial portion
of the receivables was due from foreign customers. The
collectibility of these receivables could be affected by future
business or economic trends or other significant events in the
countries in which such customers reside.
The Company maintains an allowance for doubtful accounts to
reduce its receivables to their carrying amount, which
approximates fair value. Management believes that as of December
31, 1997, no significant concentrations of credit risk existed
for which an allowance had not already been determined and
recorded.
INVENTORIES. Inventories are stated at the lower of cost or
market value. Cost is determined by the first-in, first-out and
specific identification methods.
PROPERTY AND EQUIPMENT. Property and equipment are stated
at cost. Depreciation is provided over the estimated useful lives
of the assets using the straight-line method for financial
reporting purposes and accelerated methods for income tax
purposes.
The costs of significant improvements are capitalized. Costs
of normal repairs are charged to expense as incurred. The cost
and accumulated depreciation of property and equipment retired or
otherwise disposed of are eliminated from the respective accounts
and any resulting gain or loss is included in income.
55
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CAPITALIZED INTEREST. Interest cost associated with major
construction projects is capitalized. Since no debt has been
incurred specifically for the Company's current projects,
interest is capitalized on amounts expended on the projects
using the weighted average cost of the Company's outstanding
borrowings. The amount of interest capitalized in any accounting
period cannot exceed the Company's total interest cost in such
period. Capitalization of interest ceases when the project is
substantially complete.
PREOPENING COSTS. Preopening costs, representing primarily
direct personnel and other costs incurred prior to the opening of
a new hotel-casino, are capitalized as incurred and amortized to
expense over the 60-day period following opening of the related
facility. Capitalized preopening costs associated with new hotel-
casinos scheduled to open within one year from the date of the
financial statements are classified as current assets and
included in "Prepaid expenses and other." For new projects
scheduled to open more than one year from the date of the
financial statements, such costs are included in "Other assets,
net."
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.
CORPORATE EXPENSE. Corporate expense represents unallocated
payroll costs, professional fees, costs associated with operating
and maintaining the Company's aircraft and various other expenses
not directly related to operating the Company's hotel-casinos.
Corporate expense includes the costs associated with the
Company's evaluation and pursuit of new gaming opportunities.
Such costs are expensed as incurred until construction of a
project has become relatively certain.
INCOME PER SHARE OF COMMON STOCK. In 1997, the Company
adopted Statement of Financial Accounting Standards No. 128 -
Earnings Per Share ("SFAS 128"). SFAS 128 replaces previously
reported earnings per share with "basic" earnings per share and
"diluted" earnings per share. Basic earnings per share is
computed by dividing reported earnings by the weighted-average
number of common shares outstanding during the period. Diluted
earnings per share reflects the additional dilution for all
potentially dilutive securities such as stock options. Diluted
earnings per share is similar to earnings per share previously
reported by the Company, but includes the potential dilution for
stock options that become exercisable more than five years from
the date of the financial statements. All previously reported
income per share amounts have been restated herein to reflect the
adoption of SFAS 128.
56
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The weighted-average number of common and common equivalent
shares used in the calculation of basic and diluted earnings per
share consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Weighted-average common shares outstanding (used in
the computation of basic earnings per share)............. 178,816,348 182,988,904 182,496,454
Potential dilution from the assumed exercise of common
stock options............................................ 13,719,527 13,694,408 9,834,960
----------- ----------- -----------
Weighted-average common and common equivalent shares
(used in the computation of diluted earnings
per share)............................................... 192,535,875 196,683,312 192,331,414
=========== =========== ===========
</TABLE>
Pursuant to SFAS 128, options having an exercise price
greater than the average market price of the underlying common
stock during the period are excluded from the computation of
diluted earnings per share. Substantially all of the Company's
outstanding stock options were included in the calculations for
the periods presented.
RECLASSIFICATIONS. Certain amounts in the 1996 and 1995
consolidated financial statements have been reclassified to
conform to the 1997 presentation. These reclassifications had no
effect on the Company's net income.
USE OF ESTIMATES. The consolidated financial statements have
been prepared in conformity with generally accepted accounting
principles. Those principles require management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from such estimates.
57
<PAGE>
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
-----------------------
1997 1996
---------- ----------
<S> <C> <C>
Land......................................................... $ 330,015 $ 302,885
Land improvements............................................ 125,523 118,934
Buildings.................................................... 946,464 918,936
Furniture, fixtures and equipment............................ 686,686 638,218
---------- ----------
2,088,688 1,978,973
Less accumulated depreciation................................ (633,563) (551,955)
---------- ----------
$1,455,125 $1,427,018
========== ==========
</TABLE>
NOTE 3 - OTHER ASSETS, NET
Other assets, net consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
-----------------------
1997 1996
---------- ----------
<S> <C> <C>
Construction deposits........................................ $ 114,963 $ 6,249
Joint venture and other investments.......................... 145,355 66,703
Other, net................................................... 69,901 51,373
---------- ----------
$ 330,219 $ 124,325
========== ==========
</TABLE>
58
<PAGE>
NOTE 4 - LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
-----------------------
1997 1996
---------- ----------
<S> <C> <C>
Zero coupon first mortgage notes (effective interest
rate of 11%), repaid March 1998............................ $ 130,074 $ 116,699
9-1/4% senior subordinated notes, redeemed March 1998........ 100,000 100,000
Revolving bank credit facility, at a weighted average
interest rate of 6.22%..................................... 365,000 -
Commercial paper notes, at a weighted average effective
interest rate of 6.03%..................................... 247,795 -
7-1/4% notes, due October 2006, net of unamortized original
issue discount of $299 and $323............................ 249,701 249,677
6-3/4% notes, due August 2007, net of unamortized original
issue discount of $879..................................... 199,121 -
7-1/4% debentures, due August 2017, net of unamortized
original issue discount of $302............................ 99,698 -
Other notes bearing interest at rates between 6% and 12%
at December 31, 1997, maturities to September 2007......... 6,266 2,217
---------- ----------
1,397,655 468,593
Less current maturities...................................... (927) (453)
---------- ----------
$1,396,728 $ 468,140
========== ==========
</TABLE>
59
<PAGE>
NOTE 4 - LONG-TERM DEBT (CONTINUED)
The zero coupon first mortgage notes were issued in March
1988 by GNS FINANCE CORP. ("Finance"), a wholly owned subsidiary
of the Company. The notes were collateralized by first liens on
The Mirage and Treasure Island and guaranteed by The Mirage
operating subsidiary. The notes are shown in the above table at
their accreted value rather than their face amount, as the
holders of the notes were not entitled to the face amount upon
default or other accelerated maturity, but only to the accreted
value. The unamortized debt discount was $2.9 million and $16.3
million at December 31, 1997 and 1996, respectively. The notes
are classified as long-term debt because the Company used its
revolving bank credit facility and commercial paper borrowings
(classified as long-term debt as discussed below) to fund their
March 15, 1998 maturity.
The 9-1/4% senior subordinated notes were issued by Finance
in March 1993 and guaranteed by The Mirage operating subsidiary.
On March 15, 1998, the Company used its revolving bank credit
facility and commercial paper borrowings to redeem the notes at
104.11% of the principal amount. The notes were scheduled to
mature in March 2003. The redemption premium and the write-off
of the unamortized debt issue costs resulted in an extraordinary
loss of $3.5 million, net of applicable income tax benefit of
$1.9 million, which will be reflected in the Company's 1998
first quarter operating results.
On March 7, 1997, the Company's $1 billion revolving bank
credit facility maturing in May 1999 was amended to increase the
total availability to $1.75 billion and extend the maturity to
March 2002 (as so amended, the "Bank Facility"). Under certain
circumstances, the Bank Facility can be increased to $2 billion.
Borrowings under the Bank Facility are uncollateralized and bear
interest, at the Company's option, at the prime rate or at a
specified premium over the one-, two-, three- or six-month London
Interbank Offered Rate ("LIBOR"). The premium is based on the
credit rating of the Company's 7-1/4% notes due October 2006 and
is currently 0.35% per annum. Alternatively, the Company may
request interest rate bids from the participating banks. The
Company incurs an annual commitment fee on the unused portion of
the Bank Facility, which is also based on the credit rating of
the 7-1/4% notes. The commitment fee is currently 0.125% per
annum.
The loan agreement governing the Bank Facility contains a
covenant that the Company will not permit its Leverage Ratio (as
defined) to exceed a specified amount. During 1998, the
Company's Leverage Ratio may not exceed 5 to 1, except that the
maximum permitted ratio at September 30, 1998 is 5.85 to 1. The
Company is required to pay an additional 0.10% per annum on
LIBOR-based borrowings when its Leverage Ratio exceeds 3.5 to 1.
At December 31, 1997, the Company's Leverage Ratio was 3.37 to 1.
The loan agreement also contains a covenant that limits the
60
<PAGE>
NOTE 4 - LONG-TERM DEBT (CONTINUED)
ability of the Company and its subsidiaries, prior to the opening
of Bellagio, to pay dividends on or repurchase the Company's
capital stock, make capital expenditures (other than mainten-
ance capital expenditures and capital expenditures for the
completion of Bellagio and Beau Rivage) and acquisitions or
invest in less-than-majority-owned new business ventures. At
December 31, 1997, the loan agreement limited such expenditures
to an aggregate of approximately $525 million. Such amount
increases by 50% of the Company's consolidated net income
plus 100% of cash proceeds received from any future issuances of
its capital stock. The loan agreement provides that, with
certain limited exceptions, the Company and its subsidiaries
will not further encumber their assets or dispose of their
Core Assets (as defined).
In many respects, the amended Bank Facility is tantamount
to a new facility. As a result, the Company wrote off the
unamortized up-front costs and fees associated with the original
$1 billion facility, resulting in an extraordinary charge of $2.2
million ($0.01 per share basic and diluted), net of applicable
income tax benefit of $1.2 million.
The Company has a commercial paper program that provides for
the issuance, on a revolving basis, of up to $500 million
outstanding principal amount of uncollateralized short-term
notes. The Company is required to maintain credit availability
under the Bank Facility equal to the outstanding principal amount
of commercial paper borrowings.
Bank Facility borrowings and commercial paper notes are
classified as long-term debt because management intends to
replace such borrowings as they come due and to have such
borrowings outstanding for a period greater than one year.
However, the amount of outstanding borrowings is expected to
fluctuate and may be reduced from time to time.
The 7-1/4% notes were issued by the Company in October 1996.
The Company issued the 6-3/4% notes and the 7-1/4% debentures in
August 1997.
On February 4, 1998, the Company issued $200 million princi-
pal amount of 6-5/8% notes due February 1, 2005 and $200 million
principal amount of 6-3/4% notes due February 1, 2008. The notes
were issued pursuant to a shelf registration statement filed with
the Securities and Exchange Commission on October 30, 1997 that
allows the Company to issue a total of up to $750 million of debt
or equity securities or any combination thereof. The net
proceeds from the offering of approximately $394.7 million
(after deducting original issue discount and debt issuance costs)
were used to reduce outstanding Bank Facility and commercial
paper borrowings.
61
<PAGE>
NOTE 4 - LONG-TERM DEBT (CONTINUED)
All of the outstanding notes and debentures issued by the
Company are redeemable, in whole or in part, at the option of the
Company at any time at a redemption price equal to the greater of
(i) 100% of the principal amount or (ii) the sum of the present
values of the remaining scheduled interest and principal payments
discounted to the date of redemption on a semiannual basis at the
Adjusted Treasury Rate (as defined), plus, in either case,
accrued interest to the redemption date.
In 1995, the Company retired, prior to scheduled maturity,
$126.0 million principal amount of 9-7/8% first mortgage notes
issued by a wholly owned subsidiary and associated with The
Mirage and Treasure Island. The retirement resulted in an
extraordinary loss of $6.8 million ($0.04 per share basic and
$0.03 per share diluted), net of applicable income tax benefit of
$3.6 million.
After giving effect to the payment of the zero coupon
first mortgage notes upon maturity as described above, the only
significant debt maturing during the next five years are amounts
borrowed under or backed by the Bank Facility, which matures in
March 2002. Outstanding Bank Facility borrowings and commercial
paper notes backed by the Bank Facility totaled $655.7 million at
March 16, 1998.
The estimated fair value of the Company's long-term debt at
December 31, 1997 was approximately $1,407,000, versus its book
value of $1,397,655. At December 31, 1996, the estimated fair
value of the Company's long-term debt was approximately $485,000,
versus its book value of $468,593. The estimated fair value
amounts were based on quoted market prices on or about December
31, 1997 and 1996 for the Company's debt securities that are
traded. For the debt securities that are not traded, fair value
was based on estimated discounted cash flows using current rates
offered to the Company for debt securities having similar
remaining maturities.
NOTE 5 - INCOME TAXES
The provision for income taxes for financial reporting
purposes consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Income from continuing operations........... $115,276 $112,363 $95,313
Tax benefit from extraordinary losses
on early retirements of debt.............. (1,198) - (3,654)
-------- -------- -------
$114,078 $112,363 $91,659
======== ======== =======
</TABLE>
62
<PAGE>
NOTE 5 - INCOME TAXES (CONTINUED)
The provision for income taxes attributable to income from
continuing operations consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
CURRENT
Federal................................... $ 90,185 $ 82,165 $51,564
State..................................... 15 38 (33)
-------- -------- -------
90,200 82,203 51,531
DEFERRED
Federal................................... 25,076 30,160 43,782
-------- -------- -------
$115,276 $112,363 $95,313
======== ======== =======
</TABLE>
There were no significant differences between the federal
income tax statutory rate and the Company's effective tax rate
for the years ended December 31, 1997, 1996 and 1995.
The Internal Revenue Service has completed examinations of
the Company's federal income tax returns for the years 1991 and
1992 and an examination of the years 1993 and 1994 is currently
in process. A number of adjustments have been proposed but no
settlement has been reached. In the opinion of management, any
tax liability arising from these examinations will not have a
material adverse effect on the Company's financial position or
results of operations.
63
<PAGE>
NOTE 5 - INCOME TAXES (CONTINUED)
The components of the deferred tax liability consisted of
the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1997 1996
-------- --------
<S> <C> <C>
DEFERRED TAX LIABILITIES
Temporary differences related to property
and equipment...................................... $161,129 $146,496
Other temporary differences......................... 18,536 20,968
-------- --------
Gross deferred tax liabilities................... 179,665 167,464
-------- --------
DEFERRED TAX ASSETS
Temporary differences related to receivables........ 13,612 13,536
Accrued vacation pay................................ 5,007 5,117
Other temporary differences......................... 9,678 12,519
-------- --------
Gross deferred tax assets........................ 28,297 31,172
-------- --------
Net deferred tax liabilities..................... $151,368 $136,292
======== ========
</TABLE>
NOTE 6 - EMPLOYEE BENEFIT PLANS
Employees of the Company who are members of various unions
are covered by union-sponsored, collectively bargained, multi-
employer health and welfare and defined benefit pension plans.
The Company recorded an expense of $29.8 million in 1997, $26.5
million in 1996 and $29.8 million in 1995 under such plans.
Sufficient information is not available from the plans' sponsors
to permit the Company to determine its share of unfunded vested
benefits, if any.
The Company has a retirement savings plan under Section
401(k) of the Internal Revenue Code covering its non-union
employees. The plan allows employees to defer, within prescribed
limits, up to 15% of their income on a pre-tax basis through
contributions to the plan. The Company matches, within prescribed
limits, 50% of eligible employees' contributions up to 4% of
their individual earnings. The Company recorded charges for
matching contributions of $4.3 million in 1997, $4.0 million in
1996 and $3.5 million in 1995.
The Company also has deferred compensation and retirement
arrangements with certain of its executives and directors.
Benefits payable under the arrangements represent unfunded and
unsecured liabilities of the Company. The Company recorded total
expense of $0.9 million in 1997, $1.6 million in 1996 and $2.3
million in 1995 for these arrangements. The total liability
for the arrangements at December 31, 1997 and 1996 was $11.7
million and $10.2 million, respectively.
64
<PAGE>
NOTE 7 - COMMITMENTS AND CONTINGENCIES
LEASES. The Company leases real estate and various equipment
under operating lease arrangements. Certain real estate leases
provide for escalation of rent based upon a specified price
index. Future minimum payments for lease commitments in effect
at December 31, 1997 total $37.7 million. Of this amount, $12.1
million is payable during the five-year period subsequent to
December 31, 1997. Aggregate rent expense was $5.6 million in
1997, $4.2 million in 1996 and $3.6 million in 1995.
ENTERTAINMENT SERVICES. The Company has entered into two
agreements for major productions appearing in the showrooms at
The Mirage and Treasure Island. These agreements expire in 2001
and 2004, respectively. Under the terms of the agreements, the
Company is required to pay the producers of the shows a total of
approximately $28 million per year and a percentage of show
revenues in excess of a specified amount or a percentage of show
profits. Such payments are contingent upon the actual
performance of shows and under certain conditions, including
failure of the respective show to achieve specified financial
results, the Company may terminate the agreements without
material financial obligation. The producers are responsible for
paying the talent and most other costs of presenting the shows.
The Company made payments pursuant to the agreements totaling
approximately $51.7 million in 1997, $49.6 million in 1996 and
$46.7 million in 1995.
LITIGATION. The Company is a party to various legal
proceedings, most of which relate to routine matters incidental
to its business. Management does not believe that the outcome of
such proceedings will have a material adverse effect on the
Company's financial position or results of operations.
NOTE 8 - STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
At December 31, 1997, the Company had in effect various
fixed stock option plans under which options are granted to
employees and directors of the Company. Options granted under
the plans typically have an exercise price equal to the market
price of the Company's common stock on the date of grant and a
term of 10 years. Options granted under the plans generally
become exercisable either ratably over, or on a single date,
three to five years from the date of grant. In 1995, a total
of seven million options were granted to certain executives of
the Company that become exercisable approximately 10 years from
the date of grant. Certain of the plans also permit the granting
of stock appreciation rights ("SARs"). At December 31, 1997, no
SARs had been granted under the plans.
65
<PAGE>
NOTE 8 - STOCK OPTIONS AND STOCK APPRECIATION RIGHTS (CONTINUED)
Summarized information for the stock option plans is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------------------
1997 1996 1995
---------------------- ---------------------- ------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
---------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year..................... 34,842,950 $ 9.47 35,490,500 $ 8.99 25,258,668 $ 5.70
Granted....................... 2,872,500 23.00 1,130,000 18.73 11,570,000 15.93
Exercised..................... (1,136,888) 5.46 (1,677,550) 5.19 (1,146,500) 4.57
Terminated.................... - (100,000) 16.31 (191,668) 6.59
---------- ---------- ----------
Outstanding at end of year.... 36,578,562 10.66 34,842,950 9.47 35,490,500 8.99
========== ========== ==========
Options exercisable (i.e.,
vested) at end of year...... 19,218,730 $ 6.44 18,564,450 $ 5.98 18,353,500 $ 5.11
Options and SARs available
for grant at end of year.... 794,668 3,667,168 4,712,168
</TABLE>
<TABLE>
<CAPTION>
The following table summarizes information about stock options outstanding at December 31, 1997:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------------------------------- ---------------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
------------------ ----------- ------------ --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
$ 3.43 to $ 5.98......... 12,182,062 3.9 years $ 4.71 10,157,062 $ 4.75
6.55 to 12.00......... 9,738,000 5.2 7.56 7,783,000 7.06
13.56 to 16.75......... 11,136,000 7.6 16.08 1,264,000 15.93
18.69 to 29.63......... 3,522,500 9.2 22.64 14,668 21.77
---------- ----------
36,578,562 5.9 10.66 19,218,730 6.44
========== ==========
</TABLE>
In 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 123 - Accounting for Stock-
Based Compensation ("SFAS 123"). SFAS 123 provides, among other
things, that companies may elect to account for employee stock
options using a fair value-based method or continue to apply the
intrinsic value-based method prescribed by Accounting Principal
Board Opinion No. 25 ("APB 25").
66
<PAGE>
NOTE 8 - STOCK OPTIONS AND STOCK APPRECIATION RIGHTS (CONTINUED)
Under the fair value-based method prescribed by SFAS 123,
all employee stock option grants are considered compensatory.
Compensation cost is measured at the date of grant based on the
estimated fair value of the options determined using an option
pricing model. The model takes into account the stock price at
the grant date, the exercise price, the expected life of the
option, the volatility of the stock, expected dividends on the
stock and the risk-free interest rate over the expected life of
the option. Under APB 25, generally only stock options that have
intrinsic value at the date of grant are considered compensatory.
Intrinsic value represents the excess, if any, of the market
price of the stock at the grant date over the exercise price of
the options. Under both methods, compensation cost is charged to
earnings over the period the options become exercisable.
As permitted by SFAS 123, the Company accounts for employee
stock options using the intrinsic value-based method.
Accordingly, no material compensation cost has been recognized.
The following table discloses the Company's pro forma net
income and net income per share assuming compensation cost for
employee stock options had been determined using the fair value-
based method prescribed by SFAS 123. The table also discloses
the weighted-average assumptions used in estimating the fair
value of each option grant on the date of grant using the Black-
Scholes option pricing model, and the estimated weighted-average
fair value of the options granted. The model assumes no expected
future dividend payments on the Company's common stock.
67
<PAGE>
NOTE 8 - STOCK OPTIONS AND STOCK APPRECIATION RIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
INCOME BEFORE EXTRAORDINARY ITEM
As reported........................................... $ 209,803 $ 206,045 $ 169,948
Pro forma............................................. 197,290 196,428 166,651
NET INCOME
As reported........................................... $ 207,578 $ 206,045 $ 163,163
Pro forma............................................. 195,065 196,428 159,866
INCOME PER SHARE BEFORE EXTRAORDINARY ITEM
Basic
As reported......................................... $ 1.17 $ 1.13 $ 0.93
Pro forma........................................... 1.10 1.07 0.91
Diluted
As reported......................................... $ 1.09 $ 1.05 $ 0.88
Pro forma........................................... 1.04 1.00 0.87
NET INCOME PER SHARE
Basic
As reported......................................... $ 1.16 $ 1.13 $ 0.89
Pro forma........................................... 1.09 1.07 0.88
Diluted
As reported......................................... $ 1.08 $ 1.05 $ 0.85
Pro forma........................................... 1.03 1.00 0.83
WEIGHTED-AVERAGE ASSUMPTIONS
Expected stock price volatility....................... 35.14% 35.90% 41.29%
Risk-free interest rate............................... 6.49% 5.92% 6.64%
Expected option lives................................. 6.2 years 5.1 years 8.6 years
Estimated fair value of options granted............... $ 11.05 $ 8.65 $ 9.57
WEIGHTED-AVERAGE VESTING PERIOD OF OPTIONS GRANTED...... 5.3 years 3.8 years 7.7 years
</TABLE>
The accounting method prescribed by SFAS 123 is not
applicable to options granted prior to January 1, 1995. Had the
method been applied to options granted in earlier years, compen-
sation cost reflected in the pro forma amounts shown above would
have been higher to the extent the vesting period for such
options extended into 1995 or beyond.
NOTE 9 - CAPITAL STOCK
In July 1994, the Company's Board of Directors approved a
program to repurchase up to 10,000,000 shares of the Company's
common stock from time to time in the open market. At December
31, 1997, 6,737,900 shares had been repurchased pursuant to this
program. The timing and amount of future share repurchases, if
any, will depend on various factors, including market conditions,
available alternative investments and the Company's financial
position.
The Company's articles of incorporation authorize 5,000,000
shares of preferred stock, none of which has been issued.
68
<PAGE>
NOTE 10 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
1997
Gross revenues................................... $394,399 $373,757 $400,631 $377,262 $1,546,049
Promotional allowances........................... (32,360) (29,396) (31,478) (34,264) (127,498)
Net revenues..................................... 362,039 344,361 369,153 342,998 1,418,551
Operating income................................. 90,737 76,837 87,453 71,014 326,041
Interest and other income (expense), net......... (3,017) (1,179) (2,380) 5,614 (962)
Income before extraordinary item................. 56,689 48,901 54,899 49,314 209,803
Extraordinary loss on early retirement of debt... (2,225) - - - (2,225)
Net income....................................... 54,464 48,901 54,899 49,314 207,578
Income per share before extraordinary item
Basic.......................................... .32 .27 .31 .28 1.17
Diluted........................................ .30 .25 .28 .26 1.09
Net income per share
Basic.......................................... .31 .27 .31 .28 1.16
Diluted........................................ .28 .25 .28 .26 1.08
1996
Gross revenues................................... $408,668 $343,183 $370,825 $373,681 $1,496,357
Promotional allowances........................... (34,460) (30,531) (32,273) (31,549) (128,813)
Net revenues..................................... 374,208 312,652 338,552 342,132 1,367,544
Operating income................................. 98,124 59,318 75,975 79,253 312,670
Interest and other income (expense), net......... 4,381 3,745 (990) (1,398) 5,738
Net income....................................... 64,587 40,599 48,736 52,123 206,045
Net income per share
Basic.......................................... .35 .22 .27 .29 1.13
Diluted........................................ .33 .20 .25 .27 1.05
</TABLE>
In the fourth quarter of 1997, the Company recorded a $3.5
million gain related to the sale of a corporate aircraft. The
1997 fourth quarter also includes a $5.3 million increase in
capitalized interest resulting from a cumulative adjustment to
properly reflect the Company's investment-to-date in its new
projects.
In the fourth quarter of 1996, the Company recorded a $7.0
million reduction in its provision for losses on receivables due
to better than expected collection experience. The fourth
quarter of 1996 also includes a $1.2 million gain on the sale of
another corporate aircraft and a $5.4 million abandonment charge
related to construction of a new hotel lobby and Italian
restaurant at Treasure Island.
Because income per share amounts are calculated using the
weighted average number of common and dilutive common equivalent
shares outstanding during each quarter, the sum of the per share
amounts for the four quarters may not equal the total income per
share amounts for the year.
69
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MIRAGE RESORTS, INCORPORATED
By: STEPHEN A. WYNN
------------------------------
Stephen A. Wynn, Chairman of
the Board, President and Chief
Executive Officer
Dated: March 30, 1998
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
---------------------- -------------------------------- --------------
STEPHEN A. WYNN Chairman of the Board, President March 30, 1998
---------------------- and Chief Executive Officer
Stephen A. Wynn (Principal Executive Officer)
DANIEL R. LEE Senior Vice President - Finance March 30, 1998
---------------------- and Development, Chief Financial
Daniel R. Lee Officer and Treasurer (Principal
Financial and Accounting Officer)
ELAINE P. WYNN Director March 30, 1998
----------------------
Elaine P. Wynn
GEORGE J. MASON Director March 30, 1998
----------------------
George J. Mason
MELVIN B. WOLZINGER Director March 30, 1998
----------------------
Melvin B. Wolzinger
RONALD M. POPEIL Director March 30, 1998
----------------------
Ronald M. Popeil
DANIEL B. WAYSON Director March 30, 1998
----------------------
Daniel B. Wayson
RICHARD D. BRONSON Director March 30, 1998
----------------------
Richard D. Bronson
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER DEDUCTIONS AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS (a) (b) OF YEAR
----------- ----------- ---------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
Year Ended December 31, 1997.......... $38,674 $19,213 $ 711 $16,121 $42,477
Year Ended December 31, 1996.......... $47,161 $14,480 $1,447 $24,414 $38,674
Year Ended December 31, 1995.......... $37,937 $23,024 $1,423 $15,223 $47,161
---------------
(a) Recoveries of accounts previously charged off.
(b) Accounts charged off.
</TABLE>
S-1
MIRAGE RESORTS, INCORPORATED, as Issuer,
____________________
INDENTURE
Dated as of
February 4, 1998
PNC BANK, NATIONAL ASSOCIATION
Trustee
Exhibit 4(e)
<PAGE>
CROSS-REFERENCE TABLE*
---------------------
Trust Indenture
Act Section Indenture Section
--------------- -----------------
<TABLE>
<CAPTION>
<S> <C>
310(a)(1)..................................... 7.10
(a)(2)..................................... 7.10
(a)(3)..................................... N.A.
(a)(4)..................................... N.A.
(b)........................................ 7.08; 7.10; 10.02
(c)........................................ N.A.
311(a)........................................ 7.11
(b)........................................ 7.11
(c)........................................ N.A.
312(a)........................................ 2.07
(b)........................................ 10.03
(c)........................................ 10.03
313(a)........................................ 7.06
(b)(1)..................................... N.A.
(b)(2)..................................... 7.06
(c)........................................ 7.06; 10.02
(d)........................................ 7.06
314(a)........................................ 4.02; 10.02
(b)........................................ N.A.
(c)(1)..................................... 10.04
(c)(2)..................................... 10.04
(c)(3)..................................... N.A.
(d)........................................ N.A.
(e)........................................ 10.05
(f)........................................ N.A.
315(a)........................................ 7.01(b)
(b)........................................ 7.05; 10.02
(c)........................................ 7.01(a)
(d)........................................ 7.01(c)
(e)........................................ 6.11
316(a) (last sentence)........................ 2.11
(a)(1)(A).................................. 6.05
(a)(1)(B).................................. 6.04
(a)(2)..................................... N.A.
(b)........................................ 6.07
317(a)(1)..................................... 6.08
(a)(2)..................................... 6.09
(b)........................................ 2.06
318(a)........................................ 10.01
</TABLE>
N.A. means not applicable.
_______________
* This Cross-Reference Table is not part of the Indenture.
<PAGE>
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................................................. 6
Section 1.03. Incorporation by Reference of Trust Indenture Act................. 7
Section 1.04. Rules of Construction............................................. 7
ARTICLE 2 THE SECURITIES.............................................................. 8
Section 2.01. Forms Generally................................................... 8
Section 2.02. Form of Trustee's Certificate of Authentication................... 8
Section 2.03. Amount Unlimited, Issuable in Series.............................. 9
Section 2.04. Execution and Authentication; Denominations; Delivery and Dating.. 12
Section 2.05. Registrar and Paying Agent........................................ 12
Section 2.06. Paying Agent to Hold Money in Trust............................... 14
Section 2.07. Securityholder Lists.............................................. 14
Section 2.08. Transfer and Exchange............................................. 14
Section 2.09. Replacement Securities............................................ 18
Section 2.10. Outstanding Securities............................................ 18
Section 2.11. Treasury Securities............................................... 18
Section 2.12. Temporary Securities.............................................. 19
Section 2.13. Cancellation...................................................... 19
Section 2.14. Defaulted Interest................................................ 19
ARTICLE 3 REDEMPTION AND OFFER TO REPURCHASE.......................................... 19
Section 3.01. Notices to Trustee................................................ 19
Section 3.02. Selection of Securities to Be Redeemed............................ 20
Section 3.03. Notice of Redemption.............................................. 20
Section 3.04. Effect of Notice of Redemption.................................... 21
Section 3.05. Deposit of Redemption Price....................................... 21
Section 3.06. Securities Redeemed in Part....................................... 21
Section 3.07. Redemption Pursuant to Gaming Laws................................ 21
ARTICLE 4 COVENANTS................................................................... 22
Section 4.01. Payment of Securities............................................. 22
Section 4.02. SEC Reports, Financial Reports.................................... 22
Section 4.03. Compliance Certificate............................................ 23
Section 4.04. Stay, Extension and Usury Laws.................................... 23
Section 4.05. Corporate Existence............................................... 24
Section 4.06. Taxes............................................................. 24
Section 4.07. Change in Control................................................. 24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 5 SUCCESSORS................................................................. 26
Section 5.01. When the Company May Merge, etc................................... 26
Section 5.02. Successor Corporation Substituted................................. 26
ARTICLE 6 DEFAULTS AND REMEDIES...................................................... 27
Section 6.01. Events of Default................................................. 27
Section 6.02. Acceleration...................................................... 29
Section 6.03. Other Remedies.................................................... 29
Section 6.04. Waiver of Past Defaults........................................... 30
Section 6.05. Control by Majority............................................... 30
Section 6.06. Limitation on Suits............................................... 30
Section 6.07. Rights of Holders to Receive Payment.............................. 31
Section 6.08. Collection Suit by Trustee........................................ 31
Section 6.09. Trustee May File Proofs of Claim.................................. 31
Section 6.10. Priorities........................................................ 31
Section 6.11. Undertaking for Costs............................................. 32
ARTICLE 7 TRUSTEE.................................................................... 32
Section 7.01. Duties of Trustee................................................. 32
Section 7.02. Rights of Trustee................................................. 33
Section 7.03. Individual Rights of Trustee...................................... 33
Section 7.04. Trustee's Disclaimer.............................................. 34
Section 7.05. Notice of Defaults................................................ 34
Section 7.06. Reports by Trustee to Holders..................................... 34
Section 7.07. Compensation and Indemnity........................................ 34
Section 7.08. Replacement of Trustee............................................ 35
Section 7.09. Successor Trustee by Merger, etc.................................. 37
Section 7.10. Eligibility; Disqualification..................................... 37
Section 7.11. Preferential Collection of Claims Against the Company............. 37
ARTICLE 8 DISCHARGE OF INDENTURE..................................................... 37
Section 8.01. Discharge of Liability on Securities.............................. 37
Section 8.02. Repayment to the Company.......................................... 38
Section 8.03. Option to Effect Defeasance or Covenant Defeasance................ 38
Section 8.04. Defeasance and Discharge.......................................... 38
Section 8.05. Covenant Defeasance............................................... 39
Section 8.06. Conditions to Defeasance or Covenant Defeasance................... 39
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 9 AMENDMENTS................................................................ 40
Section 9.01. Without Consent of Holders....................................... 40
Section 9.02. With Consent of Holders.......................................... 41
Section 9.03. Compliance with Trust Indenture Act.............................. 42
Section 9.04. Revocation and Effect of Consents................................ 42
Section 9.05. Notation on or Exchange of Securities............................ 43
Section 9.06. Trustee Protected................................................ 43
ARTICLE 10 MEETINGS OF SECURITYHOLDERS.............................................. 43
Section 10.01. Purposes for Which Meetings May be Called........................ 43
Section 10.02. Manner of Calling Meetings....................................... 44
Section 10.03. Call of Meetings by Company or Holders........................... 44
Section 10.04. Who May Attend or Vote at Meetings............................... 44
Section 10.05. Regulations by Trustee; Conduct of Meeting; Voting Rights;
Adjournment...................................................... 45
Section 10.06. Voting at the Meeting and Record to be Kept...................... 45
Section 10.07. Exercise of Rights of Trustee or Securityholders Not Hindered
or Delayed by Call of Meeting.................................... 46
ARTICLE 11 MISCELLANEOUS............................................................ 46
Section 11.01. Trust Indenture Act Controls..................................... 46
Section 11.02. Notices.......................................................... 46
Section 11.03. Communication by Holders with Other Holders...................... 47
Section 11.04. Certificate and Opinion as to Conditions Precedent............... 47
Section 11.05. Statements Required in Certificate or Opinion.................... 47
Section 11.06. Rules by Trustee and Agents...................................... 48
Section 11.07. Legal Holidays................................................... 48
Section 11.08. No Recourse Against Others....................................... 48
Section 11.09. Counterparts..................................................... 48
Section 11.10. Governing Law.................................................... 49
Section 11.11. No Adverse Interpretation of Other Agreements.................... 49
Section 11.12. Successors....................................................... 49
Section 11.13. Severability..................................................... 49
Section 11.14. Qualification of Indenture....................................... 49
Section 11.15. Table of Contents, Headings, etc................................. 49
SIGNATURES........................................................................... 50
</TABLE>
iii
<PAGE>
INDENTURE dated as of February 4, 1998 between MIRAGE RESORTS,
INCORPORATED, a Nevada corporation (the "Company"), and PNC BANK,
NATIONAL ASSOCIATION, as trustee (the "Trustee").
-------
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its bonds,
debentures, notes and/or other evidences of indebtedness (herein called the
"Securities"), which may be senior secured, senior unsecured, senior
subordinated or subordinated, to be issued in one or more series as in this
Indenture provided.
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
ratable benefit of the Holders of the Securities or of each series thereof as
follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
- - ------------- ------------
"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" (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.
"AGENT" means any Registrar or Paying Agent.
"ASSETS" means any assets, rights or property of any person.
"AUTHORIZED NEWSPAPER" means a newspaper in the English language or,
at the option of the Company, in an official language of the country of
publication, customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays, and of general circulation in the
place in connection with which the term is used or in the financial community of
such place. Where successive publications are required to be made in Authorized
Newspapers, the successive publications may be made in the same or in different
Authorized Newspapers meeting the foregoing requirements and in each case on any
Business Day.
"BUSINESS DAY" means, except as otherwise specified as contemplated by
Section 2.03, with respect to any Place of Payment or any other particular
location referred to in this Indenture or in the Securities, each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in that Place of Payment or other location are authorized or
obligated by law or executive order to close.
<PAGE>
"BOARD OF DIRECTORS" or "BOARD" means the Board of Directors or any
authorized committee of the Board of Directors of the Company, or a Consolidated
Subsidiary thereof, as the context may indicate.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"CAPITAL STOCK" of any person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock and
any and all forms of partnership interests or other equity interests in a
person, including but not limited to any type of preference stock which for
other purposes may not be treated as equity.
"CHANGE IN CONTROL" means (i) the time the Company first determines
that any person or group, within the meaning of Section 14(d)(2) of the Exchange
Act (other than any person who was at the date hereof an officer or director of
the Company or a group consisting of persons who were at the date hereof
officers or directors of the Company) have acquired direct or indirect
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of 35% or more of the outstanding voting Capital Stock of the Company, unless a
majority of the Continuing Directors approves the acquisition not later than 10
business days after the Company makes the determination, or (ii) the first day
on which a majority of the members of the Board of Directors of the Company are
not Continuing Directors.
"COMPANY REQUEST" OR "COMPANY ORDER" means a written request or order
(i) signed in the name of the Company by its Chairman of the Board, a Vice
Chairman, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary, an Assistant Secretary or any other employee of the
Company named in an Officers' Certificate delivered to the Trustee, and (ii)
delivered to the Trustee.
"CONSOLIDATED SUBSIDIARY" of any specific person means any subsidiary,
all of whose voting Capital Stock (other than the minimum required number of
directors' qualifying shares) are owned by such person and/or by another
Consolidated Subsidiary of such person, and the accounts of which are, or under
generally accepted accounting principles are required to be, consolidated with
the accounts of such person.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of that
Board of Directors on the date hereof, (ii) had been a member of that Board of
Directors for the two years immediately preceding such date of determination or
(iii) was nominated for election or elected to that Board of Directors with the
affirmative vote of the greater of (x) a majority of Continuing Directors who
were members of that Board at the time of such nomination or election or (y) at
least three Continuing Directors.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 11.02 or such other address of which the Trustee
may give notice to the Company.
2
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"CORPORATION" includes corporations, associations, companies and
business trusts.
"DEFAULT" means any event which is, or after notice or passage of time
would be, an Event of Default.
"DEFINITIVE SECURITIES" means any Security in the form established
pursuant to Section 2.01 which is registered on the books of the Registrar.
"DEPOSITARY" means, with respect to the Securities of any series
issuable or issued in whole or in part in global form, the person specified as
contemplated in Section 2.03 as the Depositary with respect to such series of
Securities, until a successor shall have been appointed and become such pursuant
to the applicable provision of this Indenture, and, thereafter, "Depositary"
shall mean or include such successor.
"EQUITY INTERESTS" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING PROPERTIES" means The Mirage, Treasure Island, the Golden
Nugget and the Golden Nugget-Laughlin.
"GAMING AUTHORITY" means any Governmental Authority that holds
regulatory, licensing or permit authority over any gaming or gaming related
activities conducted or proposed to be conducted by the Company or any of its
subsidiaries or any joint venture or other entity in which the Company or any of
its subsidiaries owns an interest, including without limitation the Nevada
Gaming Commission, the Nevada State Gaming Control Board and the Clark County
Liquor and Gaming Licensing Board.
"GAMING LAWS" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations, ordinances,
codes and administrative or judicial precedents pursuant to which any Gaming
Authority possesses regulatory, licensing, or permit authority over gaming or
gaming related activities, including without limitation, the Nevada Gaming
Control Act.
"GAMING LICENSE" means every license, franchise or other authorization
on the date of this Indenture or thereafter required to own, lease, operate or
otherwise conduct gaming or gaming related activities at any property owned or
operated by the Company or any of its subsidiaries or any joint venture or other
entity in which the Company or any of its subsidiaries owns an interest.
"GLOBAL SECURITY" means a Security issued to evidence all or a part of
any series of Securities that is executed by the Company and authenticated and
delivered by the Trustee to a Depositary or pursuant to such Depositary's
instructions, all in accordance with this Indenture
3
<PAGE>
and pursuant to an Officers' Certificate, which shall be registered as to
Principal and interest in the name of such Depositary or its nominee.
"GOLDEN NUGGET" means the real and personal property comprising the
Golden Nugget hotel-casino owned and operated by a wholly-owned subsidiary of
the Company and located at 129 East Fremont Street in Las Vegas, Nevada.
"GOLDEN NUGGET-LAUGHLIN" means the real and personal property
comprising the Golden Nugget hotel-casino owned and operated by a wholly-owned
subsidiary of the Company and located at 2300 South Casino Drive in Laughlin,
Nevada.
"GOVERNMENTAL AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
any federal or state government or any city, county or other political
subdivision thereof or otherwise and whether now or hereafter in existence, or
any officer or official thereof acting in an official capacity, including,
without limitation, any Gaming Authority.
"HOLDER" or "SECURITYHOLDER" means a person in whose name a Security
is registered.
"INDEBTEDNESS" of any person means any indebtedness, contingent or
otherwise, but exclusive of deferred taxes, in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
person or only a portion thereof), or evidenced by bonds, notes, debentures or
similar instruments or reimbursement obligations with respect to letters of
credit, or representing the balance deferred and unpaid of the purchase price of
any property or interest therein (including pursuant to capitalized leases),
except any such balance that constitutes a trade payable, if and to the extent
such indebtedness would appear as a liability upon a balance sheet of such
person prepared on a consolidated basis in accordance with generally accepted
accounting principles, and also includes, to the extent not otherwise included,
the guaranty of any Indebtedness (other than the guaranty of completion of
construction).
"INDENTURE" means this Indenture as amended or supplemented from time
to time.
"MATERIAL SUBSIDIARY" of any person means (i) any subsidiary of such
person which is a "significant subsidiary" within the meaning of Rule 1-02(v) of
Regulation S-X under the Securities Act of 1933, as amended, and the Exchange
Act (as such Regulation is in effect on the date hereof), or (ii) any other
subsidiary of such person which is material to the business, earnings,
prospects, assets or condition, financial or otherwise, of such person and its
subsidiaries taken as a whole.
"THE MIRAGE" means the real and personal property comprising The
Mirage hotel-casino owned and operated by a wholly-owned subsidiary of the
Company and located at 3400 Las Vegas Boulevard South in Las Vegas, Nevada.
4
<PAGE>
"OFFICER" means the Chairman of the Board, any Vice Chairman, the
President, any Vice President, the Chief Financial Officer, the Treasurer, the
Secretary, the Director of Finance, any Assistant Treasurer or any Assistant
Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by any two
Officers, one of whom must be the Chairman of the Board, a Vice Chairman, the
President, the Chief Financial Officer, the Treasurer or a Vice President of the
Company.
"OPINION OF COUNSEL" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides
that an amount less than its Principal Amount is due and payable upon
acceleration after an Event of Default.
"PLACE OF PAYMENT," when used with respect to the Securities of any
series, means the place or places where the Principal of and any interest on the
Securities of that series are payable as specified as contemplated by Section
2.03.
"PREDECESSOR SECURITIES" of any Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.09 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"PRINCIPAL" or "PRINCIPAL AMOUNT" of a Security means the principal of
the Security plus the premium, if any, on the Security.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"SECURITIES CUSTODIAN" means the Trustee in its capacity as custodian
with respect to the Securities in global form, or any successor entity thereto
in such capacity.
"STATED MATURITY," when used with respect to any Security or any
installment of Principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which an amount equal to the Principal of
such Security or an installment of Principal thereof or interest thereon is due
and payable.
"SUBSIDIARY" of any specified person means (i) a corporation, a
majority of whose Capital Stock with voting power under ordinary circumstances
to elect directors is at the time, directly or indirectly, owned by such person
or by such person and a subsidiary or subsidiaries of such person or by a
subsidiary or subsidiaries of such person or (ii) any other person (other than a
corporation) in which such person or such person and a subsidiary or
subsidiaries of such person or a subsidiary or
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<PAGE>
subsidiaries of such person directly or indirectly, at the date of determination
thereof, has at least a majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is first
qualified under the TIA, except as provided in Section 9.03.
"TREASURE ISLAND" means the real and personal property comprising the
Treasure Island hotel-casino owned and operated by a wholly-owned subsidiary of
the Company and located at 3300 Las Vegas Boulevard South in Las Vegas, Nevada.
"TRUSTEE" means the person named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means (i) during any period when a successor Trustee is serving as
Trustee with respect to all of the Securities, such successor Trustee, and (ii)
during any period when a successor Trustee is serving as Trustee with respect to
one or more (but not all) series of Securities, as to each series the successor
serving as Trustee with respect thereto.
"TRUST OFFICER" means the Chairman of the Board, the President or any
other officer of the Trustee assigned by the Trustee to administer its corporate
trust matters.
<TABLE>
<CAPTION>
Section 1.02. Other Definitions.
- - ------------- ------------------
Defined in
Term Section
---- ---------
<S> <C>
"Bankruptcy Law"..................... 6.01
"Change in Control Date"............. 4.07
"Custodian".......................... 6.01
"Defeased Securities"................ 8.03
"Event of Default"................... 6.01
"Legal Holiday"...................... 11.07
"Paying Agent"....................... 2.05
"Qualified Government Obligations"... 8.06
"Registrar".......................... 2.05
"Repurchase Date".................... 4.07
"Repurchase Offer"................... 4.07
"Repurchase Price"................... 4.07
</TABLE>
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:
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<PAGE>
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Securityholder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Securities means the Company and any other obligor
upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction
- - ------------- ---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles;
(3) references to "generally accepted accounting principles"
shall mean generally accepted accounting principles in effect in the United
States of America as of the time when and for the period as to which such
accounting principles are to be applied;
(4) "or" is not exclusive;
(5) words in the singular include the plural, and in the plural
include the singular; and
(6) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
Section 2.01. Forms Generally.
- - ------------- ----------------
The Securities of each series shall be in such form (including global
form) as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
provisions as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required by any Gaming Authority or as may
be
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<PAGE>
required to comply with the rules of any securities exchange or Depositary
therefor or as may, consistent herewith, be determined appropriate by the
Officers executing such Securities, as evidenced by their execution thereof. If
the form of any series of Securities is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of a Company Order signed
by two Officers of the Company for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, provided that
such method is permitted by the rules of any securities exchange on which such
Securities may be listed, all as determined by the Officers executing such
Securities, as evidenced by their execution of such Securities.
The terms and provisions in the Securities shall constitute, and are
hereby expressly made, a part of this Indenture.
Section 2.02. Form of Trustee's Certificate of Authentication.
- - ------------- ------------------------------------------------
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated herein referred
to in the within- mentioned Indenture.
___________________________________
As Trustee
By_________________________________
Authorized Signatory
8
<PAGE>
Section 2.03 Amount Unlimited, Issuable in Series.
- - ------------ -------------------------------------
The aggregate Principal Amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 2.04,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of any series of Securities:
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate Principal Amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.08, 2.09, 2.12 or 9.05 and except for any
Securities which, pursuant to Section 2.04, are deemed never to have been
authenticated and delivered hereunder);
(3) the person to whom any interest on a Security of the series shall
be payable, if other than the person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
record date for such interest;
(4) the date or dates on which the Principal of any Securities of the
series is payable or the method of determination thereof;
(5) the rate or rates (which may be fixed or variable) at which any
Securities of the series shall bear interest, if any, the date or dates
from which any such interest shall accrue, the dates on which any such
interest shall be payable and the record date for any such interest payable
on any such payment date;
(6) any terms applicable to original issue discount, if any (as that
term is defined in the Internal Revenue Code of 1986, as amended, and the
regulations thereunder), including the rate or rates at which such original
issue discount, if any, shall accrue;
(7) the place or places where the Principal of and interest on any
Securities of the series shall be payable;
(8) the period or periods within which, the price or prices at which
and the terms and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other
than by a Board Resolution, the manner in which any election by the Company
to redeem the Securities shall be evidenced;
9
<PAGE>
(9) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which any Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(10) the terms and conditions, if any, upon which the Securities of
the series may or must be converted into other securities of the Company or
exchanged for other securities of the Company or another enterprise;
(11) if other than denomination of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(12) if the amount of Principal of or interest on any Securities of
the series is to be determined with reference to an index, pursuant to a
formula or by another method, the manner in which such amounts shall be
determined and the calculation agent, if any, with respect thereto;
(13) if other than the currency of the United States of America, the
currency, currencies or currency units in which the Principal of or
interest on any Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United States of
America for any purpose;
(14) if the Principal of or interest on any Securities of the series
is to be payable, at the election of the Company or the Holder thereof, in
one or more currencies or currency units other than that or those in which
such Securities are stated to be payable, the currency, currencies or
currency units in which the Principal of or interest on such Securities as
to which such election is made shall be payable, the periods within which
and the terms and conditions upon which such election is to be made and the
amount so payable (or the manner in which such amount shall be determined);
(15) if other than the entire Principal Amount thereof, the portion of
the Principal Amount of any Securities of the series which shall be payable
upon declaration of acceleration of the maturity thereof pursuant to
Section 6.02;
(16) if the Principal Amount payable at the maturity of any Securities
of the series will not be determinable as of any one or more dates prior to
maturity, the amount which shall be deemed to be the Principal Amount of
such Securities as of any such date for any purpose thereunder or
hereunder, including the Principal Amount thereof which shall be due and
payable upon any maturity date other than the Stated Maturity or which
shall be deemed to be outstanding as of any date prior to the Stated
Maturity (or, in any such case, the manner in which such amount deemed to
be the Principal Amount shall be determined);
(17) if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Article 8, and, if other
than by a Board Resolution, the manner in which any election by the Company
to defease such Securities shall be evidenced;
10
<PAGE>
(18) any addition to or change in the Events of Default which applies
to any Securities of the series and any change in the right of the Trustee
or the requisite Holders of such Securities to declare the Principal Amount
thereof due and payable pursuant to Section 6.02;
(19) if applicable, any provisions for securing all or any portion of
the Indebtedness evidenced by the Securities of the series;
(20) if applicable, any provisions relating to the seniority or
subordination of all or any portion of the Indebtedness evidenced by the
Securities of the series to other Indebtedness of the Company, including,
as applicable, other Indebtedness evidenced by Securities;
(21) any addition to or change in the covenants set forth in Article 4
which applies to Securities of the series;
(22) whether the Securities of the series shall be issued in whole or
in part in temporary or permanent form of a Global Security or Securities
and, if so, the initial Depositary with respect to any such temporary or
permanent Global Security or Securities, and if other than as provided in
Section 2.08, whether and the circumstances under which beneficial owners
of interests in any such temporary or permanent Global Security or
Securities may exchange such interests for Securities of such series and of
like tenor of any authorized form and denomination; and
(23) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, but which may modify or
delete any provision of this Indenture with respect to such series,
provided that no such term may modify or delete any provision hereof if
imposed by the TIA, and provided further that any modification or deletion
of the rights, duties or immunities of the Trustee hereunder shall have
been consented to in writing by the Trustee).
If any of the foregoing terms are not available at the time such Board
Resolution is adopted, or such Officers' Certificate or any supplemental
indenture is executed, such resolution, Officers' Certificate or supplemental
indenture may reference the document or documents to be created in which such
terms will be set forth prior to the issuance of such Securities.
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 2.04) set
forth, or determined in the manner provided, in the Officers' Certificate
referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
11
<PAGE>
Section 2.04. Execution and Authentication; Denominations; Delivery and Dating.
- - ------------- -----------------------------------------------------------------
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
Upon a written order of the Company signed by two Officers of the
Company, the Trustee shall authenticate the Securities.
The Securities shall be issuable only in registered form without
coupons and only in minimum denominations of $1,000 and in integral multiples
thereof.
The Company and the Trustee, by their execution and authentication,
respectively, of the Securities, expressly agree to the terms and conditions
stated therein and to be bound thereby.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities 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 Company or
an Affiliate.
Section 2.05. Registrar and Paying Agent.
- - ------------- ---------------------------
The Company shall maintain in the county where the principal corporate
office of the Trustee is located and in such other locations as it shall
determine (i) an office or agency where Securities of a series may be presented
for registration of transfer or for exchange ("Registrar") and (ii) an office or
---------
agency where Securities of that series may be presented for payment ("Paying
------
Agent"). The Registrar for each series of Securities shall keep a register of
- - -----
the Securities of that series and of their transfer and exchange. The Company
may appoint one or more co-registrars and one or more additional paying agents
for each series of Securities. The term "Paying Agent" includes any additional
paying agent. The term "Registrar" includes any co-registrar. The Company may
change any Paying Agent or Registrar upon thirty (30) days' notice to the
Trustee. The Company shall notify the Trustee of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent for any series of
Securities, the Trustee shall act as such. The Company or any of its
subsidiaries may act as Paying Agent or Registrar for any series of Securities.
12
<PAGE>
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
The Company initially appoints the Trustee as Paying Agent, Registrar
and authenticating agent.
The Company shall, if the Securities of any series are listed on the
New York Stock Exchange, designate as authenticating agent, Registrar and Paying
Agent with respect to the Securities of such series a bank or trust company in
good standing, organized under the laws of the United States of America or any
State, doing business in or having a correspondent relationship with a bank or
trust company doing business in the Borough of Manhattan, City of New York,
State of New York, and having a capital and surplus (including subordinated
capital notes and earned surplus) aggregating at least $10,000,000 (except with
respect to Article 8, in which case the Paying Agent (if other than the Trustee)
shall have a capital and surplus (including subordinated capital notes and
earned surplus) aggregating at least $100,000,000). Whenever, pursuant to this
Indenture, the Trustee is obligated, empowered or authorized to perform any act
with respect to the authentication and issuance of the Securities of any series,
or their transfer, other than the authentication and issuance of Securities of
such series upon original issue or in cases of Securities of such series
mutilated, destroyed, lost or stolen, such act may be performed by the
authenticating agent and Registrar for such series, notwithstanding anything in
this Indenture to the contrary. Whenever, pursuant to this Indenture, the
Trustee is obligated, empowered or authorized to perform any act with respect to
payment of the Principal of or interest on the Securities of any series, such
acts may be performed by the Paying Agent for such series, notwithstanding
anything in this Indenture to the contrary.
The Company covenants that whenever necessary to avoid or fill a
vacancy in the office of authenticating agent, Registrar or Paying Agent for any
series of Securities, the Company will appoint a successor authenticating agent,
Registrar or Paying Agent, as the case may be, so that there shall, at all times
that the Securities of such series are listed on the New York Stock Exchange, be
one or more offices or agencies in the Borough of Manhattan, City of New York,
State of New York, acceptable to the New York Stock Exchange, where Securities
of such series may be presented or surrendered for payment and where Securities
of such series may be surrendered for registration of transfer or exchange.
In case, at the time of the appointment of a successor to the
authenticating agent, any of the Securities of a series shall have been
authenticated but not delivered, any such successor may adopt the certificate of
authentication of the original authenticating agent or of any successor to it as
authenticating agent hereunder, and deliver such Securities so authenticated;
and in case at any time any of the Securities of a series shall not have been
authenticated, any successor to the authenticating agent by merger or
consolidation may authenticate such Securities either in the name of its
predecessor hereunder or in the name of the successor authenticating agent; and
in all such cases such certificate shall have the full force which it is
anywhere in the Securities of such series or in this Indenture provided that the
certificate of authentication shall have.
13
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Section 2.06. Paying Agent to Hold Money in Trust.
- - ------------- ------------------------------------
Each Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of Principal of or interest on any series of Securities, and shall
notify the Trustee of any default by the Company 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 Company 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 Company or a subsidiary) shall
have no further liability for the money. If the Company or a subsidiary of the
Company acts as Paying Agent, it shall, on or before each due date of Principal
of or interest on that series of Securities, segregate and hold in a separate
trust fund for the benefit of the Holders of such series all money held by it as
Paying Agent for the benefit of the Holders of such series.
Section 2.07. Securityholder 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
Securityholders. If the Trustee is not the Registrar, the Company and any other
obligor shall furnish to the Trustee on or before each interest payment date and
at such other times as the Trustee may request in writing, but in any event at
least semi-annually, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.
Section 2.08. Transfer and Exchange.
- - ------------- ----------------------
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities of any series are presented to the Registrar with the request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal amount
of Definitive Securities of such series of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Securities presented or surrendered for register of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by the Holder
thereof or by his attorney, duly authorized in writing.
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security of any series may not be
exchanged for a beneficial interest in a Global Security of such series except
upon satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a Definitive Security of any series, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an endorsement on the Global Security of such
series to reflect an increase in the aggregate Principal Amount of the
Securities of such series represented by such Global Security,
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then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate Principal Amount of Securities of such series represented by the
Global Security of such series to be increased accordingly. If no Global
Securities of such series are then outstanding, the Company shall issue and the
Trustee shall authenticate a new Global Security of such series in the
appropriate Principal Amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities of any series or beneficial interests therein
shall be effected through the Depositary with respect to such series, in
accordance with this Indenture and the procedures of such Depositary.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Any person having a beneficial interest in a Global Security
of any series may upon request exchange such beneficial
interest for a Definitive Security of such series. Upon
receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depositary for
such series from such Depositary or its nominee on behalf of
any person having a beneficial interest in a Global Security
of such series (all of which may be submitted by facsimile),
then the Trustee or the Securities Custodian, at the
direction of the Trustee, will cause, in accordance with the
standing instructions and procedures existing between such
Depositary and the Securities Custodian, the aggregate
Principal Amount of the Global Security of such series to be
reduced and, following such reduction, the Company will
execute and, upon receipt of an authentication order in the
form of an Officers' Certificate, the Trustee will
authenticate and deliver to the transferee a Definitive
Security of such series.
(ii) Definitive Securities of any series issued in exchange for a
beneficial interest in a Global Security of such series
pursuant to this Section 2.08(d) shall be registered in such
names and in such authorized denominations as the Depositary
for such series, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive
Securities to the persons in whose names such Securities are
so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.08), a Global Security
of any series may not be transferred as a whole except by the Depositary for
such series to a nominee of such Depositary or by a nominee of such Depositary
to such Depositary or another nominee of such Depositary or by such
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Depositary or any such nominee to a successor Depositary for such series or a
nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of Depositary.
If at any time:
(i) the Depositary for Securities of any series notifies the
Company that such Depositary is unwilling or unable to
continue as Depositary for the Global Securities of such
series and a successor Depositary for the Global Securities
of such series is not appointed by the Company within 90
days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive
Securities of such series under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an
Officers' Certificate requesting the authentication and delivery of
Definitive Securities of such series, will authenticate and deliver
Definitive Securities of such series, in an aggregate Principal Amount
equal to the Principal Amount of the Global Securities of such series,
in exchange for such Global Securities.
(g) Cancellation and/or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security of any series have either been
exchanged for Definitive Securities of such series, redeemed, repurchased or
canceled, such Global Security shall be returned to or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security of any series is exchanged for Definitive Securities of
such series, redeemed, repurchased or canceled, the Principal Amount of
Securities of such series represented by such Global Security shall be reduced
and an endorsement shall be made on such Global Security, by the Trustee or the
Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(h) Obligations with Respect to Transfers and Exchanges of Definitive
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Definitive Securities and Global Securities of any series at
the request of the Registrar for such series.
(ii) No service charge shall be made to a Holder of any series of
Securities for any registration or transfer or exchange, but
the Company may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.12, 3.06, 4.07 and 9.05
hereof).
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(iii) The Registrar for a series of Securities shall not be
required to register the transfer or exchange of any
Definitive Security of such series selected for redemption
in whole or in part, except the unredeemed portion of any
Definitive Security of such series being redeemed in part.
(iv) All Definitive Securities and Global Securities of any
series issued upon any registration of transfer or exchange
of Definitive Securities or Global Securities of such series
shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under the
Indenture, as the Definitive Securities or Global Securities
of such series surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required
(A) to issue, register the transfer of or exchange
Securities of any series during a period beginning at
the opening of business 15 days before the day of any
selection of Securities of such series for redemption
under Section 3.02 and ending at the close of business
on the day of selection, or
(B) to register the transfer of any Security of such series
so selected for redemption in whole or in part, except
the unredeemed portion of any Security of such series
being redeemed in part.
(vi) Prior to due presentment for registration of transfer of any
Security of a series, the Trustee, any Agent and the Company
may deem and treat the person in whose name such Security is
registered as the absolute owner of such Security for the
purpose of receiving payment of Principal of and interest on
such Security and for all other purposes whatsoever, whether
or not such Security is overdue, and neither the Trustee,
any Agent nor the Company shall be affected by notice to the
contrary.
Section 2.09. Replacement Securities.
- - ------------- -----------------------
If the Holder of a Security of any series claims that such Security
has been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security of such series if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be provided which is sufficient in the judgment of both to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss which any of them may suffer if a Security of any series is replaced. The
Company may charge for its expenses in replacing a Security of any series.
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Every replacement Security of any series is an additional obligation
of the Company.
Section 2.10. Outstanding Securities.
- - ------------- -----------------------
The Securities of any series outstanding at any time are all the
Securities of such series authenticated by the Trustee except for those
Securities of such series canceled by it, those Securities of such series
delivered to it for cancellation, those reductions in interest in a Global
Security of such series effected by the Trustee hereunder, and those described
in this Section as not outstanding.
If a Security of any series is replaced pursuant to Section 2.09, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.
A Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
For each series of Original Issue Discount Securities, the Principal
Amount of such Securities that shall be deemed to be outstanding and used to
determine whether the necessary Holders have given any request, demand,
authorization, direction, notice, consent or waiver shall be the Principal
Amount of such Securities that could be declared to be due and payable upon
acceleration upon an Event of Default as of the date of such determination.
When requested by the Trustee, the Company will advise the Trustee in writing of
such amount, showing its computations in reasonable detail.
Section 2.11. Treasury Securities.
- - ------------- --------------------
In determining whether the Holders of the required Principal Amount of
Securities of any series have concurred in any direction, waiver or consent,
Securities of such series owned by the Company or any other obligor or an
Affiliate of the Company or any other obligor shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities of such series which the Trustee knows are so owned shall be so
disregarded.
Section 2.12. Temporary Securities.
- - ------------- ---------------------
Until Definitive Securities of any series are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities of
such series. Temporary Securities of any series shall be substantially in the
form of Definitive Securities of such series but may have variations that the
Company considers appropriate for temporary Securities of such series. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
Definitive Securities of any series in exchange for temporary Securities of such
series.
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Section 2.13. Cancellation.
- - ------------- -------------
The Company at any time may deliver Securities of any series to the
Trustee for cancellation. The Registrar and Paying Agent for any series shall
forward to the Trustee any Securities of such series surrendered to them for
registration of transfer, exchange or payment. The Trustee shall cancel all
Securities of any series surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall dispose of canceled Securities as
the Company directs. The Company may not issue new Securities of any series to
replace Securities of such series that it has paid or that have been delivered
to the Trustee for cancellation.
Section 2.14. Defaulted Interest.
- - ------------- -------------------
If the Company fails to make a payment of interest on the Securities
of any series, it shall pay such defaulted interest plus any interest payable on
the defaulted interest, if any, in any lawful manner. It may pay such defaulted
interest, plus any such interest payable on it, to the persons who are Holders
of such series on a subsequent special record date in each case at the rate
provided in the Securities of such series and Section 4.01 hereof. The Company
shall fix any such record date and payment date. At least 15 days before any
such record date, the Company shall mail to the Holders of the affected series a
notice that states the record date, payment date and amount of such interest to
be paid.
ARTICLE 3
REDEMPTION AND OFFER TO REPURCHASE
Section 3.01. Notices to Trustee.
- - ------------- -------------------
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 2.03 for Securities of such
series) in accordance with this Article. If the Company elects to redeem
Securities of any series, it shall notify the Trustee in writing of the
redemption date and the Principal Amount of the Securities to be redeemed.
The Company shall give each notice provided for in this Section 3.01
at least 40 days before the redemption date (unless a shorter notice period
shall be satisfactory to the Trustee). The Trustee shall have no liability to
any Holder if it deems such shorter notice period satisfactory to it.
Section 3.02. Selection of Securities to Be Redeemed.
- - ------------- ---------------------------------------
Except as provided below, if less than all of the Securities of a
series are to be redeemed, the Trustee shall select the Securities of such
series to be redeemed on a substantially pro rata basis or by lot among the
Holders of the Securities of such series in accordance with a method the Trustee
considers fair and appropriate (in such manner as complies with applicable legal
and stock exchange requirements, if any).
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The amount of Securities shall be calculated as the aggregate
Principal Amount of Securities of such series originally issued hereunder less
the aggregate Principal Amount of any Securities of such series previously
redeemed. The Trustee shall make the selection not more than 60 days and not
less than 30 days before the redemption date from outstanding Securities of such
series not previously called for redemption.
The Trustee shall promptly notify the Company of the Securities or
portions of Securities to be called for redemption. The Trustee may select for
redemption portions of the Principal of Securities that have denominations
larger than $1,000. Securities and portions of them it selects shall be in
amounts of $1,000 or integral multiples of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption.
Section 3.03. Notice of Redemption.
- - ------------- ---------------------
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail by first class mail, postage prepaid a notice of
redemption to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
Principal Amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or
Securities of the same series in Principal Amount equal to the unredeemed
portion will be issued;
(4) the name and address of the Paying Agent for the Securities
being redeemed;
(5) that Securities called for redemption must be surrendered to
the Paying Agent for such Securities to collect the redemption price;
(6) that interest on Securities called for redemption ceases to
accrue on and after the redemption date; and
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
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Section 3.04. Effect of Notice of Redemption.
- - ------------- -------------------------------
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date at the price set forth in the
Security.
Section 3.05. Deposit of Redemption Price.
- - ------------- ----------------------------
Prior to or on the redemption date, the Company shall deposit with the
Paying Agent for the Securities being redeemed (or if the Company or a
subsidiary or an Affiliate of the Company is the Paying Agent for such
Securities, shall segregate and hold in trust) money sufficient to pay the
redemption price of and (except if the redemption date shall be an interest
payment date) accrued interest on, all Securities to be redeemed on that date
other than Securities or portions of Securities called for redemption which
prior thereto have been delivered by the Company to the Trustee for
cancellation. If such money is then held by the Company or a subsidiary or an
Affiliate of the Company in trust and is not required for such purpose, it shall
be discharged from such trust.
Section 3.06. Securities Redeemed in Part.
- - ------------- ----------------------------
Upon surrender of a Security of any series that is redeemed in part,
the Company shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Security of the same series equal in Principal
Amount to the unredeemed portion of the Security surrendered.
Section 3.07. Redemption Pursuant to Gaming Laws.
- - ------------- -----------------------------------
Notwithstanding any other provision of this Article 3, if any Gaming
Authority requires that a Holder or beneficial owner of Securities of a Holder
must be licensed, qualified or found suitable under any Gaming Law, such Holder
or such beneficial owner shall apply for a license, qualification or a finding
of suitability, as the case may be, within the required time period. If such
person fails to apply or become licensed or qualified or is not found suitable
(in each case, a "failure of compliance"), the Company shall have the right, at
its option, (i) to require such Holder or owner to dispose of such Holder's or
owner's Securities within 30 days of receipt of notice of the Company's election
or such earlier date as may be requested or prescribed by such Gaming Authority,
or (ii) to redeem within such 30-day or earlier period requested or prescribed
by such Gaming Authority the Securities of such Holder or owner at a redemption
price equal to the lesser of (A) 100% of the Principal Amount thereof or (B) the
price at which such Holder or owner acquired the Securities, together, in either
case, with accrued interest to the earlier of the redemption date or the date of
the failure of compliance, which may be less than 30 days following the notice
of redemption if so requested or prescribed by such Gaming Authority. The
Company shall notify the Trustee in writing of any such redemption as soon as
practicable. The Company shall not be responsible for any costs or expenses any
such Holder or owner may incur in connection with its application for a license,
qualification or finding of suitability.
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ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.
- - ------------- ----------------------
The Company shall pay the Principal of and interest on the Securities
of each series on the dates and in the manner provided in the Securities of such
series. Principal and interest on any series of Securities shall be considered
paid on the date due if the Paying Agent for such series (other than the Company
or any subsidiary or Affiliate of the Company) holds on that date money in
immediately available funds designated for and sufficient to pay all Principal
and interest then due with respect to such series.
To the extent lawful, the Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on (i) overdue
Principal at the rate borne by the Securities compounded semiannually; and (ii)
overdue installments of interest (without regard to any applicable grace period)
at the same rate, compounded semiannually.
Section 4.02. SEC Reports, Financial Reports.
- - ------------- -------------------------------
The Company shall make available to all of the Holders, upon written
request, 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 SEC may
by rules and regulations prescribe) which the Company is required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
If the Company is not subject to, or for any reason is not complying
with, the requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall make available to all of the Holders all quarterly and annual reports
which the Company would have been required to file with the SEC if it was
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and with respect to annual financial statements only, a
report thereon by the Company's independent accountants.
The Company also shall comply with the provisions of TIA Section
314(a). The Company shall timely (giving effect to applicable extensions)
comply with its reporting and filing obligations under applicable federal
securities laws.
Section 4.03. Compliance Certificate.
- - ------------- -----------------------
(a) The Company shall deliver to the Trustee for each series of
Securities, within four months after the end of each fiscal year of the Company
(which currently is December 31), an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture
22
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applicable to such series, and further stating, as to each such Officer signing
such certificate, that to the best of his knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture applicable to such series and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof applicable to
such series (or, if a Default or Event of Default applicable to such series
shall have occurred, describing all such Defaults or Events of Default of which
he may have knowledge) and that to the best of his knowledge no event has
occurred and remains in existence by reason of which payments on account of the
Principal of or interest, if any, on the Securities of such series are
prohibited, or if such event has occurred, a description of the event. The first
certificate pursuant to this Section 4.03(a) shall be for the fiscal year ending
on December 31 of the calendar year in which Securities of such series are first
issued under this Indenture.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants or to a written policy
adopted by the Company's independent public accountants which has been
previously applied (a copy of which shall be delivered to the Trustee), the
annual financial statements delivered pursuant to Section 4.02 shall be
delivered to the Trustee for each series of Securities accompanied by a written
statement of the Company's independent public accountants (which shall be Arthur
Andersen LLP or another 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 Company
has violated any provisions of Article 4 or 5 of this Indenture applicable to
such series or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that, for purposes hereof, such
accountants shall not be liable directly or indirectly to any person for any
failure to obtain knowledge of any such violation.
(c) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee for each series of Securities outstanding,
forthwith upon becoming aware of (i) any Default, Event of Default or default in
the performance of any covenant, agreement or condition contained in this
Indenture applicable to such series or (ii) any event of default under any other
mortgage, indenture or instrument as that term is used in Section 6.01(4), an
Officers' Certificate specifying such Default, Event of Default or default.
Section 4.04. Stay, Extension and Usury Laws.
- - ------------- -------------------------------
The Company covenants to the Holders of Securities of each series (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, extension or usury law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture
applicable to such series; and the Company (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee for such series, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
Section 4.05. Corporate Existence.
- - ------------- --------------------
Subject to Article 5 hereof, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
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of the Company, if any, in accordance with the respective organizational
documents of each such entity and the rights (charter and statutory), licenses
and franchises of the Company and its subsidiaries; provided, however, that
the Company 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 the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its subsidiaries taken as a whole and that the loss thereof is not adverse
in any material respect to the Holders of any series of Securities.
Section 4.06. Taxes.
- - ------------- ------
The Company shall, and shall cause each of its subsidiaries to, pay
prior to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings or where the failure to
pay would not have a material adverse effect on the Company and its respective
subsidiaries taken as a whole.
Section 4.07. Change in Control.
- - ------------- ------------------
If there is a Change in Control (the time of a Change in Control being
referred to as the "Change in Control Date"), then the Company shall (a)
----------------------
commence, within five business days following the Change in Control Date, an
offer to repurchase (the "Repurchase Offer") all of the then outstanding
----------------
Securities at the Repurchase Price (as defined below) and (b) deposit with the
Paying Agent an amount equal to the aggregate Repurchase Price for all
Securities then outstanding so as to be available for payment to the Holders of
Securities who elect to require the Company to repurchase all or a portion of
their Securities.
The Repurchase Offer for the Securities shall be made at a price of
101% of the Principal Amount, plus accrued interest to the Repurchase Date (as
defined below) (the "Repurchase Price").
----------------
If the Repurchase Date (as defined below) is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Securities pursuant to the
Repurchase Offer.
Notice of any Repurchase Offer shall be mailed by the Company to the
Trustee and the Holders of the Securities at their last registered addresses.
The Repurchase Offer shall remain open from the time of mailing until 10
Business Days thereafter, and no longer, unless a longer period is required by
law or stock exchange rule or unless a majority of the Continuing Directors of
the Company votes in favor of extending such period (the date on which the
Repurchase Offer closes being the "Repurchase Date"). The notice shall contain
---------------
all instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Repurchase Offer. The notice, which shall govern the
terms of the Repurchase Offer, shall state:
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(1) that the Repurchase Offer is being made pursuant to this
Section 4.07 and that Securities will be accepted for payment either (A) in
whole or (B) in part in integral multiples of $1,000;
(2) the Repurchase Price and the Repurchase Date;
(3) that any Security not tendered will continue to accrue
interest;
(4) that any Security accepted for payment pursuant to the
Repurchase Offer shall cease to accrue interest from and after the
Repurchase Date;
(5) that Holders electing to have a Security of any series
purchased pursuant to the Repurchase Offer will be required to surrender
the Security, with such form, if any, as shall be specified in the notice
completed, to the Paying Agent for such series at the address specified in
the notice prior to the close of business on the Repurchase Date;
(6) that Holders of any series will be entitled to withdraw their
election if the Paying Agent for such series receives, not later than three
Business Days before the Repurchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the Principal
Amount of Securities the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Securities purchased;
and
(7) that Holders whose Securities of any series are purchased
only in part will be issued new Securities of the same series equal in
Principal Amount to the unpurchased portion of the Securities surrendered.
On the Repurchase Date, the Company shall, to the extent lawful, (i)
accept for payment Securities of each series or portions thereof tendered
pursuant to the Repurchase Offer and (ii) deliver to the Trustee for such series
the Securities of such series so tendered together with an Officers' Certificate
stating the Securities of such series or portions thereof accepted for payment
by the Company. The Paying Agent for each series of Securities shall promptly
mail or deliver to Holders of Securities of such series so accepted payment in
an amount equal to the Repurchase Price. The Trustee shall promptly
authenticate and mail or deliver to each Holder who tendered a Security of any
series a new Security or Securities of such series equal in Principal Amount to
any untendered portion of the Security surrendered. The Paying Agent for each
series of Securities shall invest funds deposited with it pursuant to this
Section 4.07 for the benefit of, and at the written direction of, the Company to
the Repurchase Date.
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ARTICLE 5
SUCCESSORS
Section 5.01. When the Company May Merge, etc.
- - ------------- --------------------------------
The Company shall not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its Assets to,
any person unless:
(1) the person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such disposition shall have
been made, is a corporation organized and existing under the laws of the
United States, any State thereof or the District of Columbia;
(2) the corporation formed by or surviving any such consolidation
or merger (if other than the Company), or to which such disposition shall
have been made, assumes by supplemental indenture all the obligations of
the Company under the Securities and this Indenture; and
(3) immediately after the transaction no Default or Event of
Default exists.
The Company shall deliver to the Trustee for each series of Securities
prior to the consummation of the proposed transaction an Officers' Certificate
to the foregoing effect and an Opinion of Counsel stating that the proposed
transaction and such supplemental indenture comply with the provisions of this
Indenture applicable to such series.
Section 5.02. Successor Corporation Substituted.
- - ------------- ----------------------------------
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the Assets of the Company in
accordance with Section 5.01, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor person had been named
as the Company herein.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
- - ------------- ------------------
Unless otherwise specified as contemplated by Section 2.03 with
respect to any series of Securities, an "Event of Default" occurs with respect
to each series of Securities individually, if:
26
<PAGE>
(1) the Company defaults in the payment of interest on any Security of
such series when the same becomes due and payable and the Default continues for
30 days after the date due and payable;
(2) the Company defaults in the payment of the Principal of any
Security of such series when the same becomes due and payable at maturity, upon
redemption or otherwise;
(3) the Company fails to comply with any of its other agreements or
covenants in such series of Securities or in this Indenture and applicable to
such series of Securities and the Default continues for the period and after the
notice specified below;
(4) an event of default occurs under any mortgage, indenture (other
than this Indenture) or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness of the Company or any
subsidiary thereof (or the payment of which is guaranteed by the Company or any
subsidiary of the Company), whether such Indebtedness or guarantee now exists or
shall be created hereafter, if (a) such event of default results from the
failure to pay principal of or interest upon maturity on any such Indebtedness,
(b) the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal or
interest thereon upon maturity, aggregates $50,000,000 or more and (c) the
Default continues for the period and after the notice specified below;
(5) a final judgment or final judgments, no longer subject to appeal,
for the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any subsidiary thereof and such remains
undischarged for a period (during which such judgment remains undischarged,
unvacated or unstayed) of 60 days, provided that the aggregate of all such
judgments exceeds $50,000,000 and the Default continues for the period and after
the notice specified below;
(6) the Company, 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,
(D) makes a general assignment for the benefit of its creditors,
or
(E) admits in writing its inability generally to pay its debts as
the same become due;
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
27
<PAGE>
(A) is for relief against the Company or any Material Subsidiary
of the Company in an involuntary case,
(B) appoints a Custodian of the Company for all or substantially
all of the property of the Company or any Material Subsidiary of the
Company, or
(C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 60 days; or
(8) there has occurred a revocation, suspension or involuntary loss of
any Gaming License by the Company or any subsidiary of the Company (after
the same shall have been obtained) which results in the cessation of
operation of the business at the Existing Properties for a period of more
than 90 consecutive days.
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.
A Default under clause (3) (other than a Default under Section 4.05,
4.07 or 5.01, each of which Default shall be an Event of Default without the
notice or passage of time specified in this paragraph) or (5) is not an Event of
Default with respect to a series of Securities until the Trustee or the Holders
of at least 25% in Principal Amount of such series of Securities then
outstanding notify the Company of the Default and the Company does not cure the
Default or cause the Default to be cured within 60 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
A Default under clause (4) is not an Event of Default with respect to
a series of Securities until the Trustee with respect to such series or the
Holders of at least 25% in Principal Amount of such series then outstanding
notify the Company of the Default and the Company has not caused such Default to
be cured or waived or such acceleration to be rescinded or annulled within 10
days after receipt of the notice. The notice must specify the Default, demand
that it be rescinded or annulled and state that the notice is a "Notice of
Default."
In the case of any Event of Default pursuant to the provisions of this
Section 6.01 occurring with respect to a series of Securities by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium which the Company would
have had to pay if the Company then had elected optionally to redeem such series
of Securities, an equivalent premium (or, in the event that the Company would
not be permitted to redeem such series of Securities optionally on such date,
the premium payable on the first date thereafter on which such redemption would
be permissible) shall also become and be immediately due and payable with
respect to such series to the extent permitted by law, anything in this
Indenture applicable to such series or in the Securities of such series
contained to the contrary notwithstanding.
28
<PAGE>
Section 6.02. Acceleration.
- - ------------- -------------
If an Event of Default relating to any series of Securities (other
than an Event of Default specified in clause (6) or (7) of Section 6.01) occurs
and is continuing, the Trustee with respect to such series by notice to the
Company (and if Senior Bank Debt (as defined in any indenture supplemental
hereto) is outstanding, to the representative of the Senior Bank Debt as
specified in such supplemental indenture), or the Holders of at least 25% in
Principal Amount of the then outstanding Securities of such series by notice to
the Company (and to such Trustee if given by the Holders of such series of
Securities), may declare the unpaid Principal (or, in the case of Original Issue
Discount Securities, such lesser amount as may be provided for in such
Securities) of and any accrued interest on all the Securities of such series to
be due and payable. Upon such declaration, the Principal of and interest on
such series shall be due and payable immediately; provided, however, that so
-------- -------
long as any Senior Credit Agreement (as defined in any indenture supplemental
hereto) shall be in force and effect, if an Event of Default with respect to any
series of Securities shall have occurred and be continuing (other than an Event
of Default pursuant to clause (6) or (7) of Section 6.01 with respect to the
Company or any Material Subsidiary), any acceleration pursuant to this Section
6.02 shall not be effective until the earlier of (a) three Business Days
following a notice of acceleration given to the representative of the Senior
Bank Debt (which notice shall be given only after an Event of Default has
occurred) unless such Event of Default is theretofore cured or (b) the
acceleration of any Indebtedness under the Senior Credit Agreement. If an Event
of Default specified in clause (6) or (7) of Section 6.01 occurs with respect to
any series of Securities, such an 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 Holder of such series. The Holders of a majority in
Principal Amount of any series of then outstanding Securities by notice to the
Trustee with respect to such series may rescind an acceleration with respect to
such series and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default with respect to such
series have been cured or waived, except non-payment of Principal of or interest
on such series that has become due solely because of the acceleration.
Section 6.03. Other Remedies.
- - ------------- ---------------
If an Event of Default with respect to any series of Securities occurs
and is continuing, the Trustee with respect to such series may pursue any
available remedy to collect the payment of Principal of or interest on the
Securities of such series or to enforce the performance of any provision of the
Securities of such series or any provision of this Indenture applicable to such
series.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder of a series of Securities in
exercising any right or remedy accruing upon an Event of Default with respect to
such series shall not impair the right or remedy or constitute a waiver of or
acquiescence in such Event of Default. All remedies are cumulative to the
extent permitted by law.
29
<PAGE>
Section 6.04. Waiver of Past Defaults.
- - ------------- ------------------------
Subject to Section 9.02, the Holders of a majority in Principal Amount
of any series of then outstanding Securities by notice to the Trustee may waive
an existing Default or Event of Default with respect to such series of
Securities and its consequences.
Section 6.05. Control by Majority.
- - ------------- --------------------
The Holders of a majority in Principal Amount of any series of then
outstanding Securities 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 with respect to any default under such series of
Securities. However, subject to Section 7.01, the Trustee may refuse to follow
any direction that conflicts with any rule of law or this Indenture, that is
unduly prejudicial to the rights of another Holder of such series of Securities,
or that would involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
- - ------------- --------------------
A Holder of any series of Securities may not pursue a remedy with
respect to this Indenture or any series of Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default with respect to the Securities of that series is
continuing;
(2) the Holders of at least 25% in aggregate Principal Amount of
such series of Securities then outstanding make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the notice, the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
aggregate Principal Amount of such series of Securities then outstanding do
not give the Trustee a direction inconsistent with the request.
A Holder of any series of Securities may not use this Indenture to prejudice the
rights of another Holder of such series of Securities or to obtain a preference
or priority over another Holder.
Section 6.07. Rights of Holders to Receive Payment.
- - ------------- -------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of the Principal of and interest on
such Security, on or after the respective due dates expressed in the Security,
or to bring suit for the enforcement of any such
30
<PAGE>
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
- - ------------- ---------------------------
If an Event of Default specified in Section 6.01(1) or (2) with
respect to Securities of any series occurs and is continuing, the Trustee may
recover judgment as permitted under applicable law in its own name and as
trustee of an express trust against the Company or any other obligor on the
Securities for the whole amount of Principal (or such portion of the Principal
as may be specified as due upon acceleration at that time in the terms of that
series of Securities) and interest remaining unpaid with respect to such series
of Securities and interest on overdue Principal and interest and such further
amount as shall be sufficient to cover the costs and, to the extent lawful,
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
- - ------------- ---------------------------------
The Trustee may 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 and the Securityholders allowed in any judicial proceedings relative to
the Company, its creditors or its property. Nothing contained herein shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Securityholder any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Securityholder
in any such proceeding.
Section 6.10. Priorities.
- - ------------- -----------
Subject to any applicable subordination provisions in any indenture
supplemental hereto, if the Trustee collects any money pursuant to this Article
with respect to any series of Securities, it shall pay out the money in the
following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Securityholders for amounts due and unpaid on such
series of Securities for Principal and interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on such series
of Securities for Principal and interest, respectively;
and
Third: to the Company or any other obligor on such series of
Securities, as their interests may appear, or as a
court of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to
Holders of any series of Securities pursuant to this Section. The Trustee shall
notify the Company in writing reasonably in advance of any such record date and
payment date.
31
<PAGE>
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 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 Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in Principal
Amount of any series of Securities then outstanding.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
- - ------------- ------------------
(a) If an Event of Default has occurred and is continuing with respect
to any series of Securities, the Trustee with respect to such series 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 man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default with respect
to any series of Securities:
(1) the Trustee with respect to such series need perform only
those duties that are specifically set forth in this Indenture and no
others.
(2) 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 certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section.
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.
32
<PAGE>
(3) 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.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(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 Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
- - ------------- ------------------
(a) The Trustee may rely on 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.
(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 in reliance on
such Officers' Certificate or Opinion of Counsel.
(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 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.
Section 7.03. Individual Rights of Trustee.
- - ------------- -----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities of any series and may otherwise deal with the
Company or an Affiliate of the Company 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.
Section 7.04. Trustee's Disclaimer.
- - ------------- ---------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or any statement in the Securities
other than its authentication.
33
<PAGE>
Section 7.05. Notice of Defaults.
- - ------------- -------------------
If a Default or Event of Default with respect to any series of
Securities occurs and is continuing and if it is known to the Trustee with
respect to such series, the Trustee shall mail to the Holders of such series a
notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment on any series of
Securities (including any failure to make any mandatory redemption payment
required hereunder), the Trustee with respect to such series may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of the Holders of
such series.
Section 7.06. Reports by Trustee to Holders.
- - ------------- ------------------------------
Within 60 days after the reporting date stated below, the Trustee with
respect to each series of Securities shall mail, if required by TIA Section 313,
to the Holders of such series a brief report dated as of such reporting date
that complies with TIA Section 313(a). The Trustee with respect to each series
of Securities also shall comply with TIA Section 313(b)(1) and TIA Section
313(b)(2). The Trustee with respect to each series of Securities shall also
transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to Holders of any series of
Securities shall be filed with the SEC and each securities exchange on which the
Securities of such series are listed. The Company shall notify the Trustee with
respect to a series of Securities when the Securities of such series are listed
on any securities exchange.
The reporting date for this Section 7.06 is May 15 of each year. The
first reporting date is May 15 following the calendar year in which Securities
of such series are first issued under this Indenture.
Section 7.07. Compensation and Indemnity.
- - ------------- ---------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable out-of-
pocket expenses incurred by it. Such expenses shall include the reasonable
compensation and out-of-pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel, and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
34
<PAGE>
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee with respect to each series of Securities shall have a lien prior to the
Securities of such series on all money or property held or collected by the
Trustee, except that held in trust to pay Principal and interest on particular
Securities of such series.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
- - ------------- -----------------------
The Trustee with respect to any series of Securities may resign by so
notifying the Company; provided, however, no such resignation shall be effective
until a successor Trustee with respect to such series has accepted its
appointment pursuant to this Section 7.08. The Holders of a majority in
aggregate Principal Amount of the Securities of any series at the time
outstanding may remove the Trustee with respect to the Securities of such series
by so notifying the Trustee and may appoint a successor Trustee. The Company
shall remove the Trustee with respect to any series of Securities if:
(1) such Trustee fails to comply with Section 7.10;
(2) such Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of such Trustee or
its property; or
(4) such Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to the Securities of one or more
series, the Company shall promptly appoint, by resolution of its Board of
Directors, a successor Trustee with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be appointed
with respect to the Securities of one or more or all of such series and that at
any time there shall be only one Trustee with respect to the Securities of any
series).
In the case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company.
Thereupon, the resignation or removal of the retiring Trustee shall become
effective and the successor Trustee shall have all the rights, powers and duties
of the Trustee under this Indenture. The successor Trustee shall mail a notice
of its succession to the Holders of the Securities. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.07.
35
<PAGE>
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees as co-trustees of
the same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates, subject, nevertheless, to its lien, if any,
provided for in Section 7.07. Each successor Trustee shall mail a notice of its
succession to the Holders of Securities of the particular series with respect to
which such successor Trustee has been appointed.
If a successor Trustee with respect to the Securities of any series
does not take office within 30 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the Holders of a majority in
aggregate Principal Amount of the Securities of such series at the time
outstanding may petition any court of competent jurisdiction for the appointment
of a successor Trustee with respect to the Securities of such series.
If the Trustee fails to comply with Section 7.10, any Holder of a
Security of any series for which such Trustee acts in such capacity may petition
any court of competent jurisdiction for the removal of such Trustee and the
appointment of a successor Trustee.
Section 7.09. Successor Trustee by Merger, etc.
- - ------------- ---------------------------------
If the Trustee with respect to Securities of any series consolidates,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation, the successor corporation without any
further act shall be the successor Trustee with respect to the Securities of
such series.
36
<PAGE>
Section 7.10. Eligibility; Disqualification.
- - ------------- ------------------------------
This Indenture shall always have a Trustee with respect to each series
of Securities who satisfies the requirements of TIA Section 310(a)(1). The
Trustee with respect to each series of Securities shall always have a combined
capital and surplus (including subordinated capital notes and earned surplus) of
$25,000,000. The Trustee with respect to each series of Securities is subject
to TIA Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9).
Section 7.11. Preferential Collection of Claims Against the Company.
- - ------------- ------------------------------------------------------
The Trustee with respect to each series of Securities is subject to
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.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Discharge of Liability on Securities.
- - ------------- -------------------------------------
Except as otherwise contemplated by Section 2.03, when (a) the Company
delivers to the Trustee all outstanding Securities or all outstanding Securities
of any series, as the case may be, theretofore authenticated and delivered
(other than (i) Securities or Securities of such series, as the case may be,
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.09, and (ii) Securities or Securities of such series,
as the case may be, for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section 3.05) for
cancellation or (b) all outstanding Securities have become due and payable and
the Company deposits with the Trustee cash sufficient to pay at Stated Maturity
the amount of all Principal of and interest on outstanding Securities or all
outstanding Securities of such series (other than Securities replaced pursuant
to Section 2.09), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Section 7.07,
cease to be of further effect as to all outstanding Securities or all
outstanding Securities of any series, as the case may be. The Trustee shall
join in the execution of a document prepared by the Company acknowledging
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and Opinion of Counsel, each containing
the applicable information specified in Sections 11.04 and 11.05, and at the
cost and expense of the Company.
Section 8.02. Repayment to the Company.
- - ------------- -------------------------
The Trustee and the Paying Agent shall return to the Company on
Company Request any money held by them for the payment of any amount with
respect to the Securities that remains unclaimed for two years; provided,
however, that the Trustee or such Paying Agent,
37
<PAGE>
before being required to make any such return, may at the expense and direction
of the Company cause to be published once in an Authorized Newspaper in each
Place of Payment of or mail to each such Holder notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication or mailing, any unclaimed money then
remaining will be returned to the Company. After return to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another person.
Section 8.03. Option to Effect Defeasance or Covenant Defeasance.
- - ------------- ---------------------------------------------------
Unless otherwise specified as contemplated by Section 2.03 with
respect to Securities of a particular series, the Company, may at its option, by
Board Resolution, at any time, with respect to any series of Securities, elect
to have either Section 8.04 or Section 8.05 be applied to all of the outstanding
Securities of any series (the "Defeased Securities"), upon compliance with the
-------------------
conditions set forth below in this Article 8.
Section 8.04. Defeasance and Discharge.
- - ------------- -------------------------
Upon the Company's exercise under Section 8.03 of the option
applicable to this Section 8.04, the Company shall be deemed to have been
discharged from its obligations with respect to the Defeased Securities on the
date the conditions set forth below are satisfied (hereinafter "defeasance").
For this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the Defeased
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of Sections 2.04, 2.05, 2.06, 2.09,2.12, 2.13, 4.01, 6.06, 6.07, 7.07,
7.08 and 8.02 of this Indenture and to have satisfied all its other obligations
under such series of Securities and this Indenture insofar as such series of
Securities are concerned (and the Trustee, at the expense of the Company, and,
upon written request, shall execute proper instruments acknowledging the same).
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.04 notwithstanding the prior exercise of its option under
Section 8.05 with respect to a series of Securities.
38
<PAGE>
Section 8.05. Covenant Defeasance.
- - ------------- --------------------
Upon the Company's exercise under Section 8.03 of the option
applicable to this Section 8.05, the Company shall be released from its
obligations under Sections 4.02, 4.03, 4.06 and 4.07 and Article 5 and such
other provisions as may be provided as contemplated by Section 2.03 with respect
to Securities of a particular series and with respect to the Defeased Securities
on and after the date the conditions set forth below are satisfied (hereinafter
"covenant defeasance"), and the Defeased Securities shall thereafter be deemed
-------------------
to be not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences, if any, thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Defeased Securities, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section or Article, whether directly or
indirectly, by reason of any reference elsewhere herein to any such Section or
Article or by reason of any reference in any such Section or Article to any
other provisions herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 but,
except as specified above, the remainder of this Indenture and such Defeased
Securities shall be unaffected thereby.
Section 8.06. Conditions to Defeasance or Covenant Defeasance.
- - ------------- ------------------------------------------------
The following shall be the conditions to application of either Section
8.04 or Section 8.05 to a series of outstanding Securities.
(a) The Company shall have irrevocably deposited with the Trustee, in
trust, (i) sufficient funds in the currency or currency unit in which the
Securities of such series are denominated to pay the Principal of and
interest to Stated Maturity (or redemption) on, the Securities of such
series, or (ii) such amount of direct obligations of, or obligations the
principal of and interest on which are fully guaranteed by, the government
which issued the currency in which the Securities of such series are
denominated, and which are not subject to prepayment, redemption or call
("Qualified Government Obligations"), as will, together with the
----------------------------------
predetermined and certain income to accrue thereon without consideration of
any reinvestment thereof, be sufficient to pay when due the Principal of,
and interest to Stated Maturity (or redemption) on, the Securities of such
series, or (iii) any combination of funds in the currency or currency unit
specified in (i) and Qualified Government Obligations, as will, together
with the predetermined and certain income to accrue thereon without
consideration of any reinvestment thereof, be sufficient to pay when due
the Principal of, and interest to Stated Maturity (or redemption) on, the
Securities of such series;
(b) The Company shall (i) have delivered an Opinion of Counsel that
the Holders of the Securities of such series will not recognize income,
gain or loss for United States federal income tax purposes as a result of
such defeasance, and will be subject to tax in the same manner as if no
defeasance and discharge or covenant defeasance, as the case may be, had
occurred or (ii) in the case of an election under Section 8.04 the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date this Indenture was
39
<PAGE>
first executed, 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 Holders of outstanding Securities of
that particular series will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance; and
(c) If applicable, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the funds deposited pursuant to
Section 8.06(a) will not be subject to the rights of the holders of "Senior
Indebtedness" as defined in any indenture supplemental hereto applicable to
the Securities of such series.
ARTICLE 9
AMENDMENTS
Section 9.01. Without Consent of Holders.
- - ------------- ---------------------------
Without the consent of any Holder of Securities, the Company and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of the
Company herein and in the Securities; or
(2) to add to the covenants, agreements and obligations of the
Company for the benefit of the Holders of all of the Securities or any
series thereof, or to surrender any right or power herein conferred upon
the Company; or
(3) to establish the form and/or terms of Securities of any
series as permitted by Sections 2.01 and 2.03, respectively; or
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 7.08; or
(5) to cure any ambiguity, defect or inconsistency; or
(6) to add to, change or eliminate any of the provisions of this
Indenture (which addition, change or elimination may apply to one or more
series of Securities), provided that any such addition, change or
elimination other than those permitted by all or any of clauses (1), (2),
(3), (4), (5), (7), (8), (9), (10) and (11) of this Section 9.01 shall
neither (a) apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit of
such provision nor (b) modify the rights of the Holder of any such Security
with respect to such provision; or
40
<PAGE>
(7) to comply with Article 5; or
(8) to comply with any requirements of the SEC in connection with
the qualification or requalification of this Indenture under the TIA; or
(9) to provide for uncertificated Securities in addition to
certificated Securities; or
(10) to secure the Securities; or
(11) to make any change that does not adversely affect the legal
rights hereunder of any Securityholder.
Section 9.02. With Consent of Holders.
- - ------------- ------------------------
Subject to Section 6.07, the Company and the Trustee with respect to
any series of Securities may amend or supplement this Indenture or such series
of Securities without notice to any Securityholder but with the written consent
of the Holders of at least a majority in Principal Amount of the then
outstanding Securities of each series affected by such amendment or supplement,
with each such series voting as a separate class. The Holders of a majority in
Principal Amount of any series of Securities then outstanding may also waive
compliance in a particular instance by the Company with any provision of this
Indenture with respect to that series or the Securities of that series.
However, without the consent of each Securityholder affected, an
amendment, supplement or waiver under this Section, including a waiver pursuant
to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of interest
on any Security in a manner adverse to the Holders thereof;
(3) reduce the Principal of, or extend the Stated Maturity of any
Security or alter the redemption provisions of any Securities in a manner
adverse to the Holders thereof;
(4) make any Security payable in money other than that stated in
the Security;
(5) make any change in Section 6.04, 6.07 or 9.02 (this
sentence); or
(6) waive a default in the payment of the Principal of, or
interest on, any Security.
41
<PAGE>
To secure a consent of the Holders under this Section it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Holders of Securities of each series
affected thereby a notice briefly describing the amendment, supplement or
waiver.
Section 9.03. Compliance with Trust Indenture Act.
- - ------------- ------------------------------------
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
- - ------------- ----------------------------------
Until an amendment, supplement or waiver becomes effective, a consent
to such amendment, supplement or waiver by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same Indebtedness as the consenting
Holder's Security, even if notation of the consent is not made on any Security.
However, any such Holder or subsequent Holder may revoke the consent as to his
Security or portion of a Security if the Trustee receives notice of revocation
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite Principal Amount of Securities of
each affected series have consented to the amendment, supplement or waiver (or
before such later date as may be required by law or stock exchange rule).
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver permitted by this Indenture. If a record date is fixed,
then notwithstanding the provisions 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, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders after such record date. No
consent of a Holder of a series of Securities shall be valid or effective for
more than 90 days after such record date unless consents from Holders of the
Principal Amount of Securities of such series required hereunder for such
amendment, supplement or waiver to be effective shall have also been given and
not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall
bind every Holder of Securities of an affected series, unless it is of the type
described in any of clauses (1) through (6) of Section 9.02. In such case, the
amendment, supplement or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or a portion of a
Security that evidences the same Indebtedness as the consenting Holder's
Security.
42
<PAGE>
Section 9.05. Notation on or Exchange of Securities.
- - ------------- --------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Section 9.06. Trustee Protected.
- - ------------- ------------------
The Trustee shall sign any indenture supplemental hereto relating to
any amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver does not adversely affects its rights. The
Trustee may request an Opinion of Counsel and an Officers' Certificate, each of
which complies with Sections 11.04 and 11.05, stating that such amendment,
supplement or waiver and the related supplemental indenture are permitted
hereunder and all conditions precedent have been complied with.
ARTICLE 10
MEETINGS OF SECURITYHOLDERS
Section 10.01. Purposes for Which Meetings May be Called.
- - -------------- -----------------------------------------
A meeting of Holders of any series of Securities, either separately or
jointly, may be called at any time and from time to time pursuant to the
provisions of this Article 10 for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to waive or consent to the waiving
of any Default or Event of Default hereunder and its consequences, or to
take any other action authorized to be taken by Securityholders pursuant to
any of the provisions of Article 6;
(b) to remove the Trustee or appoint a successor Trustee pursuant
to the provisions of Article 7;
(c) to consent to an amendment, supplement or waiver pursuant to
the provisions of Section 9.02; or
(d) to take any action (i) authorized to be taken by or on behalf
of the Holders of any specified aggregate Principal Amount of such series
of Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate
in connection with the administration of this Indenture;
in each case without prejudice to the rights of the Company or Holders of
Securities to take such action in writing in lieu of a meeting.
43
<PAGE>
Section 10.02. Manner of Calling Meetings.
- - -------------- --------------------------
Trustee may at any time call a meeting of Holders of any series of
Securities to take any action specified in Section 10.01, to be held at such
time and at such place in the City of Las Vegas, Nevada, as the Trustee shall
determine. Notice of every meeting of Holders of any series of Securities,
setting forth the time and place of such meeting and in general terms the action
or actions proposed to be taken at such meeting, shall be mailed by the Trustee,
first-class postage prepaid, to the Company, and to the Holders of such series
of Securities at their last addresses as they shall appear on the registration
books of the Registrar, not less than 10 nor more than 60 days prior to the date
fixed for the meeting.
Any meeting of Holders of the Securities shall be valid without notice
if (i) with respect to a meeting of any series of Securities, all Holders of
such series of Securities then outstanding are present in person or by proxy, or
if notice is waived before or after the meeting by all Holders of such series of
Securities then outstanding who are not present and (ii) with respect to a
meeting of all Securityholders, all Holders of such Securities then outstanding
are present in person or by proxy or if notice is waived before or after the
meeting by all Holders of such Securities then outstanding who are not present,
and, in each case, if the Company and the Trustee are either present by duly
authorized representative or have, before or after the meeting, waived notice.
Section 10.03. Call of Meetings by Company or Holders.
- - -------------- --------------------------------------
In case at any time the Company, pursuant to resolution of its Board
of Directors or the Holders of not less than 25% in aggregate Principal Amount
of any series of Securities then outstanding, shall have requested the Trustee
to call a meeting of Securityholders of such series, either separately or
jointly, to take any action specified in Section 10.01, by written request
setting forth in reasonable detail the action or actions proposed to be taken at
the meeting, and the Trustee shall not have mailed the notice of such meeting
within 20 days of receipt of such request, then the Company or the Holders of
such series of Securities in the amount above specified may determine the time
and place in the City of Las Vegas, Nevada, or in the Borough of Manhattan, City
of New York, for such meeting and may call such meeting for the purpose of
taking such action, by mailing or causing to be mailed notice thereof as
provided in Section 10.02, or by causing notice thereof to be published at least
once in each of two successive calendar weeks (on any day of the week) in a
newspaper or newspapers printed in the English language, customarily published
at least five days a week and of general circulation in the City of Las Vegas,
Nevada and in the Borough of Manhattan, City of New York, the first such
publication to be not less than 10 nor more than 60 days prior to the date fixed
for the meeting.
Section 10.04. Who May Attend or Vote at Meetings.
- - -------------- ----------------------------------
To be entitled to vote at any meeting of Securityholders, a person
shall (a) be a registered Holder of one or more Securities (or, if the meeting
is of Holders of one or more (but not all) series of Securities, one or more
Securities of such Series), or (b) be a person appointed by an instrument in
writing as proxy for the registered Holder or Holders of Securities (or, if the
meeting is of Holders of one or more (but not all) series of Securities, one or
more Securities of such series). The only persons who shall be entitled to be
44
<PAGE>
present or to speak at any meeting of Securityholders shall be the persons
entitled to vote at such meeting and their counsel and any representative of the
Trustee and its counsel and any representatives of the Company and its counsel.
Section 10.05. Regulations by Trustee; Conduct of Meeting; Voting Rights;
- - -------------- ----------------------------------------------------------
Adjournment.
- - -----------
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Securityholders, in regard to proof of the holding of Securities and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix
a record date and time for determining the Holders of record of Securities
entitled to vote at such meeting, in which case those and only those persons who
are Holders of Securities at the record date and time so fixed, or their
proxies, shall be entitled to vote at such meeting whether or not they shall be
such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 10.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority
in Principal Amount of the Securities represented at the meeting and entitled to
vote.
At any meeting each Securityholder or proxy shall be entitled to one
vote for each $1,000 Principal Amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
- - -------- -------
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the person to vote
on behalf of other Securityholders. At any meeting of Securityholders, the
presence of persons holding or representing any number of Securities shall be
sufficient for a quorum. Any meeting of Securityholders duly called pursuant to
the provisions of Section 10.02 or Section 10.03 may be adjourned from time to
time by vote of the Holders of a majority in aggregate Principal Amount of the
Securities represented at the meeting and entitled to vote, and the meeting may
be held as so adjourned without further notice.
Section 10.06. Voting at the Meeting and Record to be Kept.
- - -------------- -------------------------------------------
The vote upon any resolution submitted to any meeting of
Securityholders shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the Principal Amount of the Securities voted by the ballot. The permanent
chairman of the meeting shall appoint two inspectors of votes, who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by
45
<PAGE>
the secretary of the meeting and there shall be attached to such record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the facts, setting
forth a copy of the notice of the meeting and showing that such notice was
mailed as provided in Section 10.02 or published as provided in Section 10.03.
The record shall be signed and verified by the affidavits of the permanent
chairman and the secretary of the meeting and one of the duplicates shall be
delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.07. Exercise of Rights of Trustee or Security Holders not Hindered
- - -------------- --------------------------------------------------------------
or Delayed by Call of Meeting.
------------------------------
Nothing in this Article 10 contained shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Securityholders or
any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities.
ARTICLE 11
MISCELLANEOUS
Section 11.01. 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.
Section 11.02. Notices.
- - -------------- --------
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first-class
mail to the other's address:
The Company's address is:
Mirage Resorts, Incorporated
3400 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
The Trustee's address is:
PNC Bank, National Association
Corporate Trust Department
Two Tower Center Boulevard, 20th Floor
East Brunswick, New Jersey 08816
46
<PAGE>
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to a Securityholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given when mailed, whether or not the
addressee receives it.
If the Company mails a notice or communication to Securityholders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders with Other Holders.
- - -------------- --------------------------------------------
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
- - -------------- ---------------------------------------------------
Upon any request or application by the Company or any other obligor to
the Trustee to take any action under this Indenture, the Company or any other
obligor, as the case may be, shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 11.05. Statements Required in Certificate or Opinion.
- - -------------- ---------------------------------------------
Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) 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;
47
<PAGE>
(3) 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
complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Section 11.06. Rules by Trustee and Agents.
- - -------------- ----------------------------
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 11.07. Legal Holidays.
- - -------------- ---------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
-------------
institutions in the State of Nevada or New York are not required to be open. 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 for the intervening period on such payment.
Section 11.08. No Recourse Against Others.
- - -------------- ---------------------------
No past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company or any successor corporation shall have
any liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
Section 11.09. Counterparts.
- - -------------- -------------
This Indenture 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.
Section 11.10. Governing Law.
- - -------------- --------------
The internal laws of the State of Nevada shall govern this Indenture
and the Securities, without regard to the conflicts of laws provisions thereof.
Section 11.11. No Adverse Interpretation of Other Agreements.
- - -------------- ----------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
48
<PAGE>
Section 11.12. Successors.
- - -------------- -----------
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 11.13. Severability.
- - -------------- -------------
In case any provision in this Indenture or in the Securities 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 11.14. Qualification of Indenture.
- - -------------- ---------------------------
The Company shall qualify this Indenture under the TIA and shall pay
all costs and expenses (including attorneys' fees for the Company and the
reasonable attorneys' fees for the Trustee) incurred in connection therewith,
including, but not limited to, costs and expenses of qualification of this
Indenture and the Securities and printing this Indenture and the Securities. In
connection with any such qualification of this Indenture under the TIA, the
Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request.
Section 11.15. 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 hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
49
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be executed as of the day and year first above written.
SIGNATURES
Dated: As of February 4, 1998 MIRAGE RESORTS, INCORPORATED
By: STEPHEN A. WYNN
___________________________
Attest: Stephen A. Wynn
Chairman of the Board
BRUCE A. LEVIN
______________________________
Bruce A. Levin, Secretary (SEAL)
By: DANIEL R. LEE
___________________________
Daniel R. Lee
Chief Financial Officer
Dated: As of February 4, 1998 PNC BANK, NATIONAL ASSOCIATION
as Trustee
By: ROBERT FRIER
___________________________
Robert Frier
Vice President
50
============================================================
MIRAGE RESORTS, INCORPORATED, Issuer
AND
PNC BANK, NATIONAL ASSOCIATION, Trustee
$400,000,000
SUPPLEMENTAL INDENTURE
DATED AS OF
FEBRUARY 4, 1998
6.625% NOTES DUE FEBRUARY 1, 2005
6.75% NOTES DUE FEBRUARY 1, 2008
============================================================
Exhibit 4(f)
<PAGE>
THIS SUPPLEMENTAL INDENTURE is dated and entered into
as of February 4, 1998, between Mirage Resorts, Incorporated,
a Nevada corporation (hereinafter sometimes referred to as the
"Company"), and PNC Bank, National Association, a corporation
organized and existing as a national banking association under
the laws of the United States, as trustee (hereinafter sometimes
referred to as the "Trustee").
WITNESSETH THAT:
WHEREAS, the Company filed on October 30, 1997 a
Registration Statement on Form S-3 (the "Shelf Registration
Statement") with the Securities and Exchange Commission with
respect to certain securities of the Company, and the Shelf
Registration Statement was declared effective on November 3, 1997;
WHEREAS, the form of Indenture (the "Indenture")incorporated
in the Shelf Registration Statement by reference to Exhibit 4 to
the Form S-3 Registration Statement of the Company (File No.
333-07261), sets forth certain terms and provisions of certain
debt securities of the Company;
WHEREAS, for its lawful corporate purposes, the Company
desires to create and authorize the series of 6.625% Notes Due
February 1, 2005, in an aggregate principal amount of
$200,000,000 (the "2005 Notes"), and the series of 6.75% Notes
Due February 1, 2008 in an aggregate principal amount of
$200,000,000 (the "2008 Notes") and to provide the terms and
conditions upon which the 2005 Notes and the 2008 Notes are to
be executed, registered, authenticated, issued and delivered;
WHEREAS, the Company has duly authorized the execution
and delivery of this Supplemental Indenture;
WHEREAS, the 2005 Notes and the certificate of
authentication to be borne by the 2005 Notes are to be
substantially in the forms attached hereto as Exhibit A, and
the 2008 Notes and the certificate of authentication to be
borne by the 2008 Notes are to be substantially in the forms
attached hereto as Exhibit B; and
WHEREAS, all acts and things necessary to make the 2005
Notes and the 2008 Notes when executed by the Company and
authenticated and delivered by or on behalf of the Trustee as
in this Supplemental Indenture provided, the valid, binding
and legal obligations of the Company, and to constitute these
presents a valid indenture and agreement according to its terms,
have been done and performed;
NOW, THEREFORE, in order to declare the terms and
conditions upon which the 2005 Notes and the 2008 Notes are
executed, registered, authenticated, issued and delivered, and in
consideration of the premises, of the purchase and acceptance
2
<PAGE>
of such 2005 Notes and such 2008 Notes by the Holders thereof and
of the sum of one dollar to it duly paid by the Trustee at the
execution of these presents, the receipt whereof is hereby
acknowledged, the Company covenants and agrees with the Trustee,
for the equal and proportionate benefit of the respective Holders
from time to time of the 2005 Notes and the 2008 Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
1. Capitalized Terms.
Capitalized terms used herein and not otherwise defined
herein are used with the respective meanings ascribed to such
terms in the Indenture.
2. Effectiveness.
This Supplemental Indenture shall become effective, and shall
bind the parties hereto, upon its execution by the parties hereto.
3. Incorporation of Supplemental Indenture into Indenture.
This Supplemental Indenture is executed by the Company and
the Trustee pursuant to the provisions of Section 9.01 of the
Indenture, and the terms and conditions hereof shall be deemed
to be part of the Indenture for all purposes upon the
effectiveness of this Supplemental Indenture. The Indenture,
as amended and supplemented by this Supplemental Indenture, is
in all respects hereby adopted, ratified and confirmed.
4. Effect of Headings.
The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
5. Governing Law.
The internal laws of the State of Nevada shall govern and be
used to construe this Supplemental Indenture, without regard to
the conflicts of laws provisions thereof.
6. Counterparts.
This Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.
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7. Recitals.
The recitals contained herein shall be taken as the
statements of the Company and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Supplemental Indenture.
ARTICLE TWO
CREATION AND AUTHORIZATION OF SERIES
1. Designation of Series of Securities.
There are hereby created and authorized (i) the series of
Securities entitled "6.625% Notes Due February 1, 2005," which
shall be a closed series limited to $200,000,000 aggregate
Principal Amount (except for 2005 Notes authenticated and
delivered upon registration of transfer of, or in exchange
for, or in lieu of, other 2005 Notes of this series pursuant
to Sections 2.08, 2.09, 2.12 and 3.06 of the Indenture), and
(ii) the series of Securities entitled "6.75% Notes Due
February 1, 2008," which shall be a closed series limited to
$200,000,000 aggregate Principal Amount (except for 2008 Notes
authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other 2008 Notes of this
series pursuant to Sections 2.08, 2.09, 2.12 and 3.06 of the
Indenture). The 2005 Notes and 2008 Notes shall be
substantially in the forms set forth in the fifth recital of
this Supplemental Indenture.
ARTICLE THREE
AMENDMENTS TO PROVISIONS OF INDENTURE
1. Definitions.
Section 1.01 of the Indenture is hereby amended by adding the
following definitions in the appropriate alphabetical order:
"Adjusted Treasury Rate" means, with respect to any redemption
date, the rate per annum equal to the semiannual equivalent yield
to maturity of the Comparable Treasury Issue, assuming a price for
the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date, plus 0.20% with respect to the 2005 Notes and
0.25% with respect to the 2008 Notes.
"Attributable Value" in respect of any sale and leaseback
transaction means, as of the time of determination, the total
obligation (discounted to present value at the average interest
rate of the 2005 Notes and 2008 Notes (weighted in proportion
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to the aggregate principal amount of the 2005 Notes and 2008
Notes originally issued) compounded semiannually) of the lessee
for rental payments (other than amounts required to be paid on
account of property taxes as well as maintenance, repairs,
insurance, water rates and other items which do not constitute
payments for property rights) during the remaining portion of the
base term of the lease included in such sale and leaseback
transaction.
"Comparable Treasury Issue" means, with respect to the
2005 Notes or the 2008 Notes, as the case may be, the United
States Treasury security selected by a Quotation Agent as having
a maturity comparable to the remaining term of such 2005 Notes
or 2008 Notes, as the case may be, to be redeemed that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of
such 2005 Notes or 2008 Notes, as the case may be.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third Business Day
preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by
the Federal Reserve Bank of New York and designated "Composite
3:30 p.m. Quotations for U.S. Government Securities" or (ii) if
such release (or any successor release) is not published or does
not contain such prices on such Business Day, (A) the average of
the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury
Dealer Quotations or (B) if the Company obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all
such Quotations.
"Consolidated Net Tangible Assets" of the Company means the
aggregate amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom (a) all
current liabilities (excluding any Indebtedness for money borrowed
having a maturity of less than 12 months from the date of the most
recent consolidated balance sheet of the Company but which by its
terms is renewable or extendable beyond 12 months from such date
at the option of the borrower) and (b) all goodwill, trade names,
patents, unamortized debt discount and expense and any other like
intangibles, all as set forth on the most recent consolidated
balance sheet of the Company and computed in accordance with
generally accepted accounting principles.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment,
security interest, lien, encumbrance or other security
arrangement of any kind or nature whatsoever on or with respect
to such property or assets (including any conditional sale or
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other title retention agreement having substantially the same
economic effect as any of the foregoing).
"Principal Property" means any real property of the
Company or any of its subsidiaries, and any equipment located
at or comprising a part of any such real property, having a net
book value, as of the date of determination, in excess of the
greater of $25 million and 5% of Consolidated Net Tangible
Assets of the Company.
"Quotation Agent" means one of the Reference Treasury
Dealers appointed by the Company and certified to the Trustee by
the Company.
"Reference Treasury Dealer" means each of Credit Suisse
First Boston Corporation, BancAmerica Robertson Stephens, Bear,
Stearns & Co. Inc., BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and J.P. Morgan
Securities Inc. and their respective successors; provided,
however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer and certify same to
the Trustee; and any other Primary Treasury Dealer selected by
the Company and certified to the Trustee by the Company.
"Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Company and certified to the
Trustee by the Company, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Company by
such Reference Treasury Dealer at 5:00 p.m. on the third Business
Day preceding such redemption date.
2. Redemption and Offer to Purchase.
Section 3.05 of the Indenture is hereby amended and restated
in its entirety as follows:
Section 3.05. Deposit of Redemption Price.
- - ------------ ---------------------------
(a) Prior to or on the redemption date, the
Company shall deposit with the Paying Agent for the 2005 Notes
being redeemed (or if the Company or a subsidiary or an Affiliate
of the Company is the Paying Agent, shall segregate and hold
in trust) money sufficient to pay the redemption price of, and
(except if the redemption date shall be an interest payment date)
accrued interest on, all 2005 Notes to be redeemed on that date
other than 2005 Notes or portions of 2005 Notes called for
redemption which prior thereto have been delivered by the
Company to the Trustee for cancellation. If such money is
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then held by the Company or a subsidiary or an Affiliate of
the Company in trust and is not required for such purpose, it
shall be discharged from such trust.
(b) Prior to or on the redemption date, the
Company shall deposit with the Paying Agent for the 2008 Notes
being redeemed (or if the Company or a subsidiary or an
Affiliate of the Company is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price
of, and (except if the redemption date shall be an interest
payment date) accrued interest on, all 2008 Notes to be redeemed
on that date other than 2008 Notes or portions of 2008 Notes
called for redemption which prior thereto have been delivered by
the Company to the Trustee for cancellation. If such money is
then held by the Company or a subsidiary or an Affiliate of the
Company in trust and is not required for such purpose, it shall
be discharged from such trust.
3. Optional Redemption.
The Indenture is hereby amended by adding a
new Section 3.08 as follows:
Section 3.08. Optional Redemption.
- - ------------ -------------------
(a) The 2005 Notes are redeemable, in whole
or in part, at the option of the Company at any time at a
redemption price equal to the greater of (i) 100% of the
Principal Amount of 2005 Notes so redeemed or (ii) as determined
by a Quotation Agent, the sum of the present values of the
remaining scheduled payments of Principal and interest thereon
discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in each case, accrued
interest thereon to the redemption date.
(b) The 2008 Notes are redeemable, in whole or in
part, at the option of the Company at any time at a redemption
price equal to the greater of (i) 100% of the Principal Amount of
2008 Notes so redeemed or (ii) as determined by a Quotation Agent,
the sum of the present values of the remaining scheduled payments
of Principal and interest thereon discounted to the redemption
date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus, in
each case, accrued interest thereon to the redemption date.
4. Limitation on Liens.
The Indenture is hereby amended by adding a new Section
4.08 as follows:
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Section 4.08. Limitation on Liens.
- - ------------ -------------------
The Company will not, and will not permit any
subsidiary to, create, incur, issue, assume or guarantee any
Indebtedness of the Company or any subsidiary secured by a Lien
upon any Principal Property, or upon shares of capital stock or
evidences of Indebtedness issued by any subsidiary which
owns or leases a Principal Property and which are owned by
the Company or any subsidiary (whether such Principal Property,
shares or evidences of Indebtedness are now owned or are
hereafter acquired by the Company), without making effective
provision to secure all of the 2005 Notes and the 2008 Notes
then outstanding by such Lien, equally and ratably with (or
prior to) any and all other Indebtedness thereby secured, so
long as such Indebtedness shall be so secured.
The foregoing restrictions shall not apply, however,
to: (a) Liens existing on the date of original issuance
of the 2005 Notes and the 2008 Notes; (b) Liens affecting
property of a corporation or other entity existing at the
time it becomes a subsidiary of the Company or at the time
it is merged into or consolidated with the Company or a
subsidiary of the Company; (c) Liens on property existing at
the time of acquisition thereof or incurred to secure payment
of all or a part of the purchase price thereof or to
secure Indebtedness incurred prior to, at the time of, or
within 24 months after the acquisition for the purpose of
financing all or part of the purchase price thereof; (d) Liens
on any property to secure all or part of the cost of
improvements or construction thereon or Indebtedness incurred
to provide funds for such purpose in a principal amount not
exceeding the cost of such improvements or construction;
(e) Liens which secure Indebtedness owing by a subsidiary of
the Company to the Company or to another subsidiary of the
Company; (f) purchase money security Liens on personal property;
(g) Liens to secure Indebtedness of joint ventures in which the
Company or a subsidiary has an interest, to the extent such Liens
are solely on property or assets of, or equity interests in,
such joint ventures; (h) Liens in favor of the United States of
America or any State thereof, or any department, agency or
instrumentality or political subdivision thereof, to secure
partial, progress, advance or other payments; and (i) any
extension, renewal, replacement or refunding of any Lien
referred to in the foregoing clauses (a) through (h), provided,
however, that the aggregate principal amount of Indebtedness
secured thereby and not otherwise authorized by the foregoing
clauses shall not exceed the aggregate principal amount of
Indebtedness, plus any premium or fee payable in connection
with any such extension, renewal, replacement or refunding, so
secured at the time of such extension, renewal, replacement or
refunding.
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Notwithstanding the foregoing, the Company and its
subsidiaries may create, incur, issue, assume or guarantee
Indebtedness secured by Liens without equally and ratably
securing the 2005 Notes and the 2008 Notes then outstanding,
provided, that at the time of such creation, incurrence,
issuance, assumption or guarantee, after giving effect thereto
and to the retirement of any Indebtedness which is concurrently
being retired, the aggregate amount of all outstanding
Indebtedness secured by Liens so incurred (other than those
Liens permitted by the preceding paragraph), together with all
outstanding Attributable Value of all sale and leaseback
transactions permitted by the last paragraph of Section
4.09, does not exceed 15% of the Consolidated Net Tangible
Assets of the Company.
5. Limitation on Sale and Leaseback Transactions.
The Indenture is hereby amended by adding a new
Section 4.09 as follows:
Section 4.09. Limitation on Sale and Leaseback Transactions.
- - ------------ ---------------------------------------------
The Company will not, and will not permit any
subsidiary to, enter into any sale and leaseback transaction
involving any Principal Property unless the Company or such
subsidiary shall apply, or cause to be applied, to the retirement
of its secured debt within 120 days after the effective date of
the sale and leaseback transaction, an amount not less than
the greater of (i) the net proceeds of the sale of the Principal
Property leased pursuant to such arrangement or (ii) the fair
market value of the Principal Property so leased. This
restriction will not apply to a sale and leaseback transaction
involving the taking back of a lease for a period of less than
three years.
Notwithstanding the foregoing, the Company or any
subsidiary may enter into a sale and leaseback transaction,
provided, that at the time of such transaction, after giving
effect thereto, the Attributable Value thereof, together with
all Indebtedness secured by Liens permitted pursuant to Section
4.08 (other than those Liens permitted by the second paragraph
of Section 4.08, and other than the Attributable Value of the
sale and leaseback transactions permitted by the preceding
paragraph) does not exceed 15% of the Consolidated Net Tangible
Assets of the Company.
6. Successor Corporation and Assignment.
Section 5.01 of the Indenture is hereby amended
and restated in its entirety as follows:
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Section 5.01. When the Company May Merge, etc.
- - ------------ --------------------------------
The Company shall not consolidate or merge with or
into, or sell, lease, convey or otherwise dispose of all or
substantially all of its assets to, another person unless:
(1) the person formed by or surviving
any such consolidation or merger (if other than the Company),
or to which such disposition shall have been made, is a
corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia;
(2) the person formed by or surviving
any such consolidation or merger (if other than the Company),
or to which such disposition shall have been made, assumes by
supplemental indenture all of the obligations of the Company
under the 2005 Notes, the 2008 Notes and this Indenture;
(3) immediately after the transaction no
Default or Event of Default exists; and
(4) if, as a result of the transaction,
property of the Company would become subject to a Lien that
would not be permitted under the limitation on Liens contained
in Section 4.08, the Company takes such steps as shall be
necessary to secure the 2005 Notes and the 2008 Notes equally
and ratably with (or prior to) the Indebtedness secured by such
Lien.
The Company shall deliver to the Trustee for the 2005 Notes
and the 2008 Notes prior to the consummation of the proposed
transaction an Officers' Certificate to the foregoing effect and
an Opinion of Counsel stating that the proposed transaction and
such supplemental indenture comply with the provisions of this
Indenture applicable to the 2005 Notes and the 2008 Notes.
7. Events of Default.
Section 6.01 of the Indenture is hereby amended
and restated in its entirety as follows:
Section 6.01. Events of Default.
- - ------------ -----------------
(a) An "Event of Default" occurs with respect
to the 2005 Notes in the event of any one of the following:
(1) failure of the Company to pay (whether or
not prohibited by applicable subordination provisions, if any),
interest for 30 days on, or the Principal when due of, any 2005
Notes;
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(2) failure of the Company to comply with any
of its other agreements or covenants contained in the 2005 Notes
or in this Indenture and applicable to the 2005 Notes, and
continuance of such Default for the period and after the notice
specified below;
(3) failure to pay when due (after applicable
grace periods as provided in any applicable instrument governing
such Indebtedness) the principal of, or acceleration of, any
Indebtedness for money borrowed by the Company having an
aggregate principal amount outstanding equal to at least
$25,000,000, if such Indebtedness is not discharged, or such
acceleration is not annulled, and the Default continues for
the period and after the notice specified below;
(4) entry of final judgments against the Company
or any subsidiary or subsidiaries of the Company which remain
undischarged for a period of 60 days, provided that the aggregate
of all such judgments exceeds $25,000,000 and the Default
continues for the period and after the notice specified below;
(5) the Company, 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,
(D) makes a general assignment for the
benefit of its creditors, or
(E) admits in writing its inability
generally to pay its debts as the same become due;
(6) a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or
any Material Subsidiary of the Company in an involuntary case,
(B) appoints a Custodian of the Company
for all or substantially all of the property of the Company or
any Material Subsidiary of the Company, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 60
days; or
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(7) a revocation, suspension or involuntary
loss of any Gaming License by the Company or a subsidiary of the
Company (after the same shall have been obtained) which results
in the cessation of operation of the business at a Principal
Property for a period of more than 90 consecutive days.
The term "Bankruptcy Law" means any Federal
or State bankruptcy, insolvency, reorganization or other similar
law. The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
A Default under clause (2) (other than a
Default under Section 4.05, 4.07 or 5.01, each of which Default
shall be an Event of Default without the notice or passage of
time specified in this paragraph) is not an Event of Default
until the Trustee or the Holders of at least 25% in Principal
Amount of the 2005 Notes then outstanding notify the Company of
the Default and the Company does not cure the Default or cause
the Default to be cured within 30 days after receipt of the
notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
A Default under clause (3) is not an Event of
Default until the Trustee or the Holders of at least 25% in
Principal Amount of the 2005 Notes then outstanding notify the
Company of the Default and the Company has not caused such
Default to be cured or waived or such acceleration to be
rescinded or annulled within 30 days after receipt of the notice.
The notice must specify the Default, demand that it be rescinded
or annulled and state that the notice is a "Notice of Default."
A Default under clause (4) is not an Event of
Default until the Trustee or the Holders of at least 25% in
Principal Amount of the 2005 Notes then outstanding notify the
Company of the Default and the Company does not cure the Default
or cause the Default to be cured within 60 days after receipt of
the notice. The notice must specify the Default, demand that it
be remedied and state that the notice is a "Notice of Default."
In the case of any Event of Default pursuant to
the provisions of this Section 6.01 occurring with respect to the
2005 Notes by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium which the Company would have
had to pay if the Company then had elected optionally to redeem
the 2005 Notes, an equivalent premium (or, in the event that the
Company would not be permitted to redeem the 2005 Notes optionally
on such date, the premium payable on the first date thereafter on
which such redemption would be permissible) shall also become and
be immediately due and payable with respect to the 2005 Notes to
the extent permitted by law, anything in this Indenture or in the
2005 Notes contained to the contrary notwithstanding.
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The Trustee shall not be deemed to have knowledge
of any Default under this Section 6.01(a) unless either (A) a
Trust Officer of Trustee shall have actual knowledge of such
Default or (B) the Trustee shall have received written notice
thereof from the Company or from the Holders of at least 25% in
principal amount of the 2005 Notes then outstanding.
(b) An "Event of Default" occurs with respect
to the 2008 Notes in the event of any one of the following:
(1) failure of the Company to pay (whether or
not prohibited by applicable subordination provisions, if any),
interest for 30 days on, or the Principal when due of, any 2008
Notes;
(2) failure of the Company to comply with any
of its other agreements or covenants contained in the 2008 Notes
or in this Indenture and applicable to the 2008 Notes, and
continuance of such Default for the period and after the notice
specified below;
(3) failure to pay when due (after applicable
grace periods as provided in any applicable instrument governing
such Indebtedness) the principal of, or acceleration of, any
Indebtedness for money borrowed by the Company having an
aggregate principal amount outstanding equal to at least
$25,000,000, if such Indebtedness is not discharged, or such
acceleration is not annulled, and the Default continues for the
period and after the notice specified below;
(4) entry of final judgments against the
Company or any subsidiary or subsidiaries of the Company which
remain undischarged for a period of 60 days, provided that the
aggregate of all such judgments exceeds $25,000,000 and the
Default continues for the period and after the notice
specified below;
(5) the Company, 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,
(D) makes a general assignment for the
benefit of its creditors, or
(E) admits in writing its inability
generally to pay its debts as the same become due;
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(6) a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or
any Material Subsidiary of the Company in an involuntary case,
(B) appoints a Custodian of the Company
for all or substantially all of the property of the Company or
any Material Subsidiary of the Company, or
(C) orders the liquidation of the Company, and
the order or decree remains unstayed and in effect for 60 days; or
(7) a revocation, suspension or involuntary
loss of any Gaming License by the Company or a subsidiary of the
Company (after the same shall have been obtained) which results
in the cessation of operation of the business at a Principal
Property for a period of more than 90 consecutive days.
The term "Bankruptcy Law" means any Federal or State
bankruptcy, insolvency, reorganization or other similar law.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
A Default under clause (2) (other than a Default
under Section 4.05, 4.07 or 5.01, each of which Default shall be
an Event of Default without the notice or passage of time
specified in this paragraph) is not an Event of Default until
the Trustee or the Holders of at least 25% in Principal Amount of
the 2008 Notes then outstanding notify the Company of the
Default and the Company does not cure the Default or cause the
Default to be cured within 30 days after receipt of the notice.
The notice must specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default."
A Default under clause (3) is not an Event of Default
until the Trustee or the Holders of at least 25% in Principal
Amount of the 2008 Notes then outstanding notify the Company of
the Default and the Company has not caused such Default to be
cured or waived or such acceleration to be rescinded or annulled
within 30 days after receipt of the notice. The notice must
specify the Default, demand that it be rescinded or annulled and
state that the notice is a "Notice of Default."
A Default under clause (4) is not an Event of
Default until the Trustee or the Holders of at least 25% in
Principal Amount of the 2008 Notes then outstanding notify the
Company of the Default and the Company does not cure the Default
or cause the Default to be cured within 60 days after receipt of
the notice. The notice must specify the Default, demand that it
be remedied and state that the notice is a "Notice of Default."
14
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In the case of any Event of Default pursuant to the
provisions of this Section 6.01 occurring with respect to the
2008 Notes by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium which the Company would have
had to pay if the Company then had elected optionally to redeem
the 2008 Notes, an equivalent premium (or, in the event that the
Company would not be permitted to redeem the 2008 Notes
optionally on such date, the premium payable on the first date
thereafter on which such redemption would be permissible) shall
also become and be immediately due and payable with respect to
the 2008 Notes to the extent permitted by law, anything in this
Indenture or in the 2008 Notes contained to the contrary
notwithstanding.
The Trustee shall not be deemed to have knowledge
of any Default under this Section 6.01(b) unless either (A)
a Trust Officer of Trustee shall have actual knowledge of such
Default or (B) the Trustee shall have received written notice
thereof from the Company or from the Holders of at least 25% in
principal amount of the 2008 Notes then outstanding.
IN WITNESS WHEREOF, the Company and the Trustee
have executed this Supplemental Indenture and have caused their
names to be signed hereto by their respective officers thereunto
duly authorized, all as of the day and year first above written.
Dated: As of February 4, 1998 MIRAGE RESORTS, INCORPORATED
STEPHEN A. WYNN
Attest: By:_________________________
Stephen A. Wynn
Chairman of the Board,
BRUCE A. LEVIN President and Chief
___________________________ Executive Officer
Bruce A. Levin
Secretary
DANIEL R. LEE
By:_________________________
Daniel R. Lee
Senior Vice President-
Finance and Development,
Chief Financial Officer
and Treasurer
(SEAL)
Dated: As of February 4, 1998 PNC BANK, NATIONAL ASSOCIATION
ROBERT FRIER
By:___________________________
Name: Robert Frier
Title: Vice President
(SEAL)
15
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EXHIBIT A
CUSIP No.
This Security is a Global Security within the
meaning of the Indenture hereinafter referred to and is
registered in the name of a Depositary or a nominee thereof.
This Security may not be exchanged in whole or in part for a
Security registered, and no transfer of this Security in
whole or in part may be registered, in the name of any person
other than such Depositary or a nominee thereof, except in the
limited circumstances described in the Indenture.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Mirage Resorts, Incorporated, or its
agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in
such other name as is requested by an authorized representative
of DTC (and any payment 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.
MIRAGE RESORTS, INCORPORATED
6.625% Note Due February 1, 2005
No. A-1 $200,000,000
MIRAGE RESORTS, INCORPORATED, a corporation duly
organized and existing under the laws of the State of Nevada
(herein called the "Company," which term includes any successor
to the Company under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or
registered assigns, the Principal sum of Two Hundred Million
Dollars ($200,000,000) on February 1, 2005 and to pay interest
thereon from February 4, 1998 or from the most recent interest
payment date to which interest has been paid or duly provided
for, semiannually in arrears on February 1 and August 1,
in each year, commencing August 1, 1998, at the rate of 6.625%
per annum, until the Principal hereof is paid or made available
for payment. The interest so payable, and punctually paid or
duly provided for, on any interest payment date will, as
provided in such Indenture, be paid to the person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on the regular record date
for such interest, which shall be January 15 or July 15 (whether
or not a Business Day), as the case may be, next preceding
such interest payment date. Any such interest not so
A-1
<PAGE>
punctually paid or duly provided for will forthwith cease to
be payable to the Holder on such regular record date and may
either be paid to the person in whose name this Security (or
one or more Predecessor Securities) is registered at the
close of business on a special record date for the payment of
such defaulted interest to be fixed by the Trustee, notice
whereof shall be mailed to Holders of the Securities not
less than 10 days prior to such special record date, or be
paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice
as may be required by such exchange, all as more fully provided
in said Indenture. Interest on the Securities shall be computed
on the basis of a 360-day year of twelve 30-day months.
Payment of the Principal of (and premium, if any)
and interest on this Security will be made at the office or
agency of the Company maintained for that purpose, in such coin
or currency of the United States of America as at the time
of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address
of the person entitled thereto as such address shall appear in
the register for the Securities.
Reference is hereby made to the further provisions
of this Security set forth on pages A-4 to A-9 following the
signature page hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the pages following
the signature page hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
[Signature Page to Follow]
A-2
<PAGE>
In Witness Whereof, the Company has caused this instrument
to be duly executed.
MIRAGE RESORTS, INCORPORATED
By.........................
Stephen A. Wynn
Chairman of the Board,
President and Chief
Executive Officer
By..........................
Daniel R. Lee
Senior Vice President -
Finance and Development,
Chief Financial Officer
and Treasurer
Attest:
..............................
Bruce A. Levin
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
Dated: PNC BANK, NATIONAL ASSOCIATION
As Trustee
By.............................
____________________________
Authorized Signatory
A-3
<PAGE>
This Security is one of a duly authorized series
of securities of the Company (herein called the "Securities"),
issued under an Indenture, dated as of February 4, 1998, as
amended by a Supplemental Indenture, dated as of February 4,
1998 (as so amended, the "Indenture"), each between the
Company and PNC Bank, National Association, as Trustee (herein
called the "Trustee," which term includes any successor trustee
under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and
delivered. The Securities are subject to, and qualified by, all
of the terms of the Indenture. This Security is one of the
series designated on the face hereof, limited in aggregate
Principal Amount to $200,000,000. The Securities are general
obligations of the Company.
The Securities are subject to redemption upon not
less than 30 days' nor more than 60 days' notice by first
class mail, in whole or in part, at the option of the Company
at any time at a redemption price equal to the greater of (i)
100% of the Principal Amount of the Securities so redeemed or
(ii) as determined by a Quotation Agent, the sum of the present
values of the remaining scheduled payments of principal and
interest thereon discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus,
in each case, accrued interest thereon to the redemption date.
"Adjusted Treasury Rate" means, with respect to
any redemption date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.20%.
"Comparable Treasury Issue" means the United States
Treasury security selected by a Quotation Agent as having a
maturity comparable to the remaining term of the Security to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity
to the remaining term of such Security.
"Comparable Treasury Price" means, with respect to
any redemption date, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third Business Day
preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by
the Federal Reserve, Bank of New York and designated "Composite
3:30 p.m. Quotations for U.S. Government Securities" or (ii) if
A-4
<PAGE>
such release (or any successor release) is not published or does
not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Company obtains fewer
than three such Reference Treasury Dealer Quotations, the average
of all such Quotations.
"Quotation Agent" means one of the Reference Treasury
Dealers appointed by the Company and certified to the Trustee by
the Company.
"Reference Treasury Dealer" means each of Credit
Suisse First Boston Corporation, BancAmerica Robertson Stephens,
Bear, Stearns & Co. Inc., BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation, and J.P. Morgan
Securities Inc. and their respective successors; provided,
however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer and certify same to the Trustee; and any
other Primary Treasury Dealer selected by the Company and
certified to the Trustee by the Company.
"Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption date,
the average, as determined by the Company and certified to the
Trustee by the Company, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Company by such
Treasury Reference Dealer at 5:00 p.m. on the third Business
Day preceding such redemption date.
In the event of redemption of this Security in part only,
a new Security or Securities of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
Notwithstanding any other provision of Article 3 of the
Indenture, if any Gaming Authority requires that a Holder or
beneficial owner of Securities of a Holder must be licensed,
qualified or found suitable under any Gaming Law, such Holder or
such beneficial owner shall apply for a license, qualification or
a finding of suitability, as the case may be, within the required
time period. If such person fails to apply or become licensed or
qualified or is not found suitable (in each case, a "failure of
compliance"), the Company shall have the right, at its option,
(i) to require such Holder or owner to dispose of such Holder's or
owner's Securities within 30 days of receipt of notice of the
Company's election or such earlier date as may be requested or
prescribed by such Gaming Authority, or (ii) to redeem within such
30-day or earlier period requested or prescribed by such Gaming
Authority the Securities of such Holder or owner at a redemption
A-5
<PAGE>
price equal to the lesser of (A)100% of the Principal Amount
thereof or (B) the price at which such Holder or owner acquired
the Securities, together, in either case, with accrued interest
to the earlier of the redemption date or the date of the failure
of compliance, which may be less than 30 days following the
notice of redemption if so requested or prescribed by such Gaming
Authority. The Company shall notify the Trustee in writing of
any such redemption as soon as practicable. The Company shall
not be responsible for any costs or expenses any such Holder or
owner may incur in connection with its application for a license,
qualification or finding of suitability.
If there is a Change in Control (the time of a Change
in Control being referred to as the "Change in Control Date"),
then the Company shall (a) commence, within five Business Days
following the Change in Control Date, an offer to repurchase
(the "Repurchase Offer") all of the outstanding Securities at a
repurchase price (the "Repurchase Price") in cash equal to 101%
of the Principal Amount of the Securities plus accrued interest,
if any, to the Repurchase Date (as defined below) and (b) deposit
with the Paying Agent an amount equal to the aggregate Repurchase
Price for all Securities then outstanding so as to be available
for payment to the Holders of Securities who elect to require the
Company to repurchase all or a portion of their Securities.
If the Repurchase Date is on or after an interest
payment record date and on or before the related interest payment
date, any accrued interest will be paid to the person in whose
name a Security is registered at the close of business on such
record date, and no additional interest will be payable to
Holders who tender Securities pursuant to the Repurchase Offer.
Notice of any Repurchase Offer shall be mailed by the
Company to the Trustee and the Holders of the Securities at their
last registered addresses. The Repurchase Offer shall remain
open from the time of mailing until 10 Business Days thereafter,
and no longer, unless a longer period is required by law or stock
exchange rule or unless a majority of the Continuing Directors of
the Company votes in favor of extending such period (the date on
which the Repurchase Offer closes being the "Repurchase Date").
The notice shall contain all instructions and materials necessary
to enable such Holders to tender Securities pursuant to the
Repurchase Offer. The notice, which shall govern the terms of
the Repurchase Offer, shall state:
(1) that the Repurchase Offer is being made pursuant
to Section 4.07 of the Indenture and that Securities will be
accepted for payment either (A) in whole or (B) in part in
integral multiples of $1,000;
A-6
<PAGE>
(2) the Repurchase Price and the Repurchase Date;
(3) that any Security not tendered will continue to
accrue interest;
(4) that any Security accepted for payment pursuant
to the Repurchase Offer shall cease to accrue interest from and
after the Repurchase Date;
(5) that Holders electing to have a Security purchased
pursuant to the Repurchase Offer will be required to surrender
the Security, with the form entitled "Option to Elect Purchase"
on the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the
Repurchase Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than three
Business Days before the Repurchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the
Holder, the Principal Amount of Securities the Holder delivered
for purchase and a statement that the Holder is withdrawing his
election to have such Securities purchased; and
(7) that Holders whose Securities are purchased only
in part will be issued new Securities equal in Principal Amount
to the unpurchased portion of the Securities surrendered.
On the Repurchase Date, the Company shall, to the
extent lawful, (i) accept for payment Securities or portions
thereof tendered pursuant to the Repurchase Offer; and (ii)
deliver to the Trustee the Securities so tendered, together with
an Officers' Certificate identifying the Securities or portions
thereof so accepted for payment by the Company. The Paying Agent
shall promptly mail or deliver to Holders of the Securities so
accepted payment in an amount equal to the Repurchase Price. The
Trustee shall promptly authenticate and mail or deliver to each
Holder who tendered a Security a new Security or Securities
equal in Principal Amount to any untendered portion of the
Security surrendered. The Paying Agent shall invest funds
deposited with it pursuant to Section 4.07 of the Indenture for
the benefit of, and at the written direction of, the Company to
the Repurchase Date.
"Board of Directors" or "Board" means the Board of
Directors or any authorized committee of the Board of Directors
of the Company, or a Consolidated Subsidiary thereof, as the
context may indicate.
A-7
<PAGE>
"Capital Stock" of any person means any and all shares,
interests, participations or other equivalents (however
designated) of corporate stock and any and all forms of
partnership interests or other equity interests in a person,
including but not limited to any type of preference stock which
for other purposes may not be treated as equity.
"Change in Control" means (i) the time the Company
first determines that any person or group, within the meaning of
Section 14(d)(2) of the Exchange Act (other than any person who
was at the date of the Indenture an officer or director of the
Company or a group consisting of persons who were at the date of
the Indenture officers or directors of the Company) have
acquired direct or indirect beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of 35% or more of
the outstanding voting Capital Stock of the Company, unless a
majority of the Continuing Directors approves the acquisition
not later than 10 business days after the Company makes the
determination, or (ii) the first day on which a majority of
the members of the Board of Directors of the Company are not
Continuing Directors.
"Consolidated Subsidiary" of any specific person
means any subsidiary, all of whose voting Capital Stock (other
than the minimum required number of directors' qualifying shares)
are owned by such person and/or by another Consolidated
Subsidiary of such person, and the accounts of which are, or under
generally accepted accounting principles are required to be,
consolidated with the accounts of such person.
"Continuing Directors" means, as of any date of
determination, any member of the Board of Directors of the
Company who (i) was a member of that Board of Directors on
the date of the Indenture, (ii) had been a member of that
Board of Directors for the two years immediately preceding
such date of determination or (iii) was nominated for election
or elected to that Board of Directors with the affirmative vote
of the greater of (x) a majority of Continuing Directors who
were members of that Board at the time of such nomination or
election or (y) at least three Continuing Directors.
The Indenture contains provisions for defeasance
of the entire Indebtedness of this Security or certain
restrictive covenants with respect to this Security, in each
case upon compliance with certain conditions set forth in
the Indenture.
If an Event of Default with respect to the Securities
shall occur and be continuing, the Principal of the Securities
may be declared due and payable in the manner and with the effect
provided in the Indenture.
A-8
<PAGE>
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders of the Securities under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a
majority in Principal Amount of the Securities at the time
outstanding. The Indenture also contains provisions permitting
the Holders of specified percentages in Principal Amount of the
Securities at the time outstanding, on behalf of the Holders of
all such Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security. The right of
any Holder (or such Holder's duly designated proxy) to
participate in any consent required or sought pursuant to any
provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder)
may be subject to the requirement that such Holder shall have
been the Holder of record of Securities as of a date set by the
Company and identified by the Trustee in a notice furnished to
Holders in accordance with the terms of the Indenture.
As provided in and subject to the provisions of the
Indenture, the Holder of this Security shall not have the right
to institute any proceeding with respect to the Indenture or for
the appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with
respect to the Securities, the Holders of not less than 25% in
Principal Amount of the Securities at the time outstanding shall
have made written request to the Trustee to institute proceedings
in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in Principal Amount of
the Securities at the time outstanding a direction inconsistent
with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and
offer of indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Security for the enforcement of
any payment of Principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the Principal of and any premium and interest on this
Security at the times, place and rate, and in the coin or
currency, herein prescribed.
A-9
<PAGE>
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable in the register for the Securities, upon surrender
of this Security for transfer at the office or agency of the
Company in any place where the Principal of and any premium and
interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Securities of like
tenor, of authorized denominations and for the same aggregate
Principal Amount, will be issued to the designated transferee
or transferees.
The Securities are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Securities are
exchangeable for a like aggregate Principal Amount of Securities
of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such transfer
or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable
in connection therewith.
Prior to due presentment of this Security for
transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the person in whose name this Security
is registered as the owner hereof for all purposes, whether or
not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the
contrary.
No past, present or future director, officer, employee,
stockholder or incorporator, as such, of the Company or any
successor corporation shall have any liability for any
obligations of the Company under the Securities or the Indenture
or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting
a Security waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the
Securities.
A-10
<PAGE>
All terms used in this Security without definition
which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA.
Option to Elect Purchase
The undersigned registered Holder of this Security
hereby irrevocably exercises the option to require the Company to
repurchase this Security or portion thereof (which is $1,000 or an
integral multiple thereof) below designated on the Repurchase Date
and in accordance with the terms set forth in the notice of
Repurchase Offer distributed by the Company in accordance with the
terms of this Security, and directs that payment be made to the
registered Holder hereof unless a different name has been
indicated below. Any amount required to be paid by the
undersigned on account of interest accompanies this Security.
Dated: ________________
Signature(s) must be Holder's Signature:
guaranteed if payment is
to be made other than to
and in the name of the
registered Holder
_________________________
_________________________________ Portion of Security to be
Signature Guarantee repurchased (in integral
multiples of $1,000) if
other than the full
Principal Amount thereof:
Fill in for payment of Repurchase
Price if to be made otherwise than __________________________
to the registered Holder
_________________________________
Name
_________________________________
Address
_________________________________
Please print name and address
(including zip code)
SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER
_________________________________
A-11
<PAGE>
EXHIBIT B
CUSIP No.
This Security is a Global Security within the
meaning of the Indenture hereinafter referred to and is
registered in the name of a Depositary or a nominee thereof.
This Security may not be exchanged in whole or in part for a
Security registered, and no transfer of this Security in
whole or in part may be registered, in the name of any person
other than such Depositary or a nominee thereof, except in the
limited circumstances described in the Indenture.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Mirage Resorts, Incorporated, or its
agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in
such other name as is requested by an authorized representative
of DTC (and any payment 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.
MIRAGE RESORTS, INCORPORATED
6.75% Note Due February 1, 2008
No. B-1 200,000,000
MIRAGE RESORTS, INCORPORATED, a corporation duly
organized and existing under the laws of the State of Nevada
(herein called the "Company," which term includes any successor
to the Company under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or
registered assigns, the Principal sum of Two Hundred Million
Dollars ($200,000,000) on February 1, 2008 and to pay interest
thereon from February 4, 1998 or from the most recent interest
payment date to which interest has been paid or duly provided
for, semiannually in arrears on February 1 and August 1 in each
year, commencing August 1, 1998, at the rate of 6.75% per annum,
until the Principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for,
on any interest payment date will, as provided in such Indenture,
be paid to the person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on
the regular record date for such interest, which shall be January
15 or July 15 (whether or not a Business Day), as the case may be,
next preceding such interest payment date. Any such interest not
so punctually paid or duly provided for will forthwith cease to
be payable to the Holder on such regular record date and may either
be paid to the person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a
B-1
<PAGE>
special record date for the payment of such defaulted interest to
be fixed by the Trustee, notice whereof shall be mailed to Holders
of the Securities not less than 10 days prior to such special
record date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully
provided in said Indenture. Interest on the Securities shall be
computed on the basis of a 360-day year of twelve 30-day months.
Payment of the Principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose, in such coin or currency
of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however,
that at the option of the Company payment of interest may be made
by check mailed to the address of the person entitled thereto as
such address shall appear in the register for the Securities.
Reference is hereby made to the further provisions of
this Security set forth on pages B-4 to B-9 following the
signature page hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the pages following
the signature page hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
[Signature Page to Follow]
In Witness Whereof, the Company has caused this
instrument to be duly executed.
MIRAGE RESORTS, INCORPORATED
By..................................
Stephen A. Wynn
Chairman of the Board, President
and Chief Executive Officer
By..................................
Daniel R. Lee
Senior Vice President - Finance
and Development, Chief Financial
Officer and Treasurer
Attest:
............................
Bruce A. Levin
Secretary
B-2
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
Dated: PNC BANK, NATIONAL
ASSOCIATION
As Trustee
By........................
_________________________
Authorized Signatory
This Security is one of a duly authorized series of
securities of the Company (herein called the "Securities"),
issued under an Indenture, dated as of February 4, 1998, as
amended by a Supplemental Indenture, dated as of February 4, 1998
(as so amended, the "Indenture"), each between the Company and
PNC Bank, National Association, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The
Securities are subject to, and qualified by, all of the terms of
the Indenture. This Security is one of the series designated on
the face hereof, limited in aggregate Principal Amount to
$200,000,000. The Securities are general obligations of the
Company.
The Securities are subject to redemption upon not less
than 30 days' nor more than 60 days' notice by first class mail,
in whole or in part, at the option of the Company at any time at
a redemption price equal to the greater of (i) 100% of the
Principal Amount of the Securities so redeemed or (ii) as
determined by a Quotation Agent, the sum of the present values of
the remaining scheduled payments of principal and interest
thereon discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate, plus, in each case, accrued interest
thereon to the redemption date.
"Adjusted Treasury Rate" means, with respect to any
redemption date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed
B-3
<PAGE>
as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.25%.
"Comparable Treasury Issue" means the United States
Treasury security selected by a Quotation Agent as having a
maturity comparable to the remaining term of the Security to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to
the remaining term of such Security.
"Comparable Treasury Price" means, with respect to
any redemption date, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third Business Day
preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by
the Federal Reserve Bank of New York and designated "Composite
3:30 p.m. Quotations for U.S. Government Securities" or (ii) if
such release (or any successor release) is not published or does
not contain such prices on such Business Day, (A) the average of
the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Company obtains fewer
than three such Reference Treasury Dealer Quotations, the average
of all such Quotations.
"Quotation Agent" means one of the Reference Treasury
Dealers appointed by the Company and certified to the Trustee by
the Company.
"Reference Treasury Dealer" means each of Credit Suisse
First Boston Corporation, BancAmerica Robertson Stephens, Bear,
Stearns & Co. Inc., BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and J.P. Morgan
Securities Inc. and their respective successors; provided,
however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer and certify same to the Trustee; and any
other Primary Treasury Dealer selected by the Company and
certified to the Trustee by the Company.
"Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption
date, the average, as determined by the Company and certified to
the Trustee by the Company, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Company by such
Treasury Reference Dealer at 5:00 p.m. on the third Business Day
preceding such redemption date.
B-4
<PAGE>
In the event of redemption of this Security in part
only, a new Security or Securities of like tenor for the
unredeemed portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
Notwithstanding any other provision of Article 3 of the
Indenture, if any Gaming Authority requires that a Holder or
beneficial owner of Securities of a Holder must be licensed,
qualified or found suitable under any Gaming Law, such Holder or
such beneficial owner shall apply for a license, qualification or
a finding of suitability, as the case may be, within the required
time period. If such person fails to apply or become licensed or
qualified or is not found suitable (in each case, a "failure of
compliance"), the Company shall have the right, at its option,
(i) to require such Holder or owner to dispose of such Holder's
or owner's Securities within 30 days of receipt of notice of the
Company's election or such earlier date as may be requested or
prescribed by such Gaming Authority, or (ii) to redeem within
such 30-day or earlier period requested or prescribed by such
Gaming Authority the Securities of such Holder or owner at a
redemption price equal to the lesser of (A) 100% of the
Principal Amount thereof or (B) the price at which such Holder or
owner acquired the Securities, together, in either case, with
accrued interest to the earlier of the redemption date or the
date of the failure of compliance, which may be less than 30 days
following the notice of redemption if so requested or prescribed
by such Gaming Authority. The Company shall notify the Trustee
in writing of any such redemption as soon as practicable. The
Company shall not be responsible for any costs or expenses any
such Holder or owner may incur in connection with its application
for a license, qualification or finding of suitability.
If there is a Change in Control (the time of a Change
in Control being referred to as the "Change in Control Date"),
then the Company shall (a) commence, within five Business Days
following the Change in Control Date, an offer to repurchase
(the "Repurchase Offer") all of the outstanding Securities at a
repurchase price (the "Repurchase Price") in cash equal to 101%
of the Principal Amount of the Securities plus accrued interest,
if any, to the Repurchase Date (as defined below) and (b) deposit
with the Paying Agent an amount equal to the aggregate Repurchase
Price for all Securities then outstanding so as to be available
for payment to the Holders of Securities who elect to require the
Company to repurchase all or a portion of their Securities.
If the Repurchase Date is on or after an interest
payment record date and on or before the related interest payment
date, any accrued interest will be paid to the person in whose
name a Security is registered at the close of business on such
record date, and no additional interest will be payable to
Holders who tender Securities pursuant to the Repurchase Offer.
B-5
<PAGE>
Notice of any Repurchase Offer shall be mailed by the
Company to the Trustee and the Holders of the Securities at their
last registered addresses. The Repurchase Offer shall remain
open from the time of mailing until 10 Business Days thereafter,
and no longer, unless a longer period is required by law or stock
exchange rule or unless a majority of the Continuing Directors of
the Company votes in favor of extending such period (the date on
which the Repurchase Offer closes being the "Repurchase Date").
The notice shall contain all instructions and materials necessary
to enable such Holders to tender Securities pursuant to the
Repurchase Offer. The notice, which shall govern the terms of
the Repurchase Offer, shall state:
(1) that the Repurchase Offer is being made pursuant to
Section 4.07 of the Indenture and that Securities will be accepted
for payment either (A) in whole or (B) in part in integral
multiples of $1,000;
(2) the Repurchase Price and the Repurchase Date;
(3) that any Security not tendered will continue to
accrue interest;
(4) that any Security accepted for payment pursuant to
the Repurchase Offer shall cease to accrue interest from and
after the Repurchase Date;
(5) that Holders electing to have a Security purchased
pursuant to the Repurchase Offer will be required to surrender
the Security, with the form entitled "Option to Elect Purchase"
on the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the
Repurchase Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than three
Business Days before the Repurchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the
Holder, the Principal Amount of Securities the Holder delivered
for purchase and a statement that the Holder is withdrawing his
election to have such Securities purchased; and
(7) that Holders whose Securities are purchased only in
part will be issued new Securities equal in Principal Amount to
the unpurchased portion of the Securities surrendered.
On the Repurchase Date, the Company shall, to the
extent lawful, (i) accept for payment Securities or portions
thereof tendered pursuant to the Repurchase Offer; and (ii)
deliver to the Trustee the Securities so tendered, together with
an Officers' Certificate identifying the Securities or portions
thereof so accepted for payment by the Company. The Paying
B-6
<PAGE>
Agent shall promptly mail or deliver to Holders of the Securities
so accepted payment in an amount equal to the Repurchase Price.
The Trustee shall promptly authenticate and mail or deliver to
each Holder who tendered a Security a new Security or Securities
equal in Principal Amount to any untendered portion of the
Security surrendered. The Paying Agent shall invest funds
deposited with it pursuant to Section 4.07 of the Indenture for
the benefit of, and at the written direction of, the Company to
the Repurchase Date.
"Board of Directors" or "Board" means the Board of
Directors or any authorized committee of the Board of Directors
of the Company, or a Consolidated Subsidiary thereof, as the
context may indicate.
"Capital Stock" of any person means any and all shares,
interests, participations or other equivalents (however
designated) of corporate stock and any and all forms of
partnership interests or other equity interests in a person,
including but not limited to any type of preference stock which
for other purposes may not be treated as equity.
"Change in Control" means (i) the time the Company
first determines that any person or group, within the meaning of
Section 14(d)(2) of the Exchange Act (other than any person who
was at the date of the Indenture an officer or director of the
Company or a group consisting of persons who were at the date of
the Indenture officers or directors of the Company) have acquired
direct or indirect beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of 35% or more of the
outstanding voting Capital Stock of the Company, unless a
majority of the Continuing Directors approves the acquisition not
later than 10 business days after the Company makes the
determination, or (ii) the first day on which a majority of the
members of the Board of Directors of the Company are not
Continuing Directors.
"Consolidated Subsidiary" of any specific person means
any subsidiary, all of whose voting Capital Stock (other than the
minimum required number of directors' qualifying shares) are
owned by such person and/or by another Consolidated Subsidiary of
such person, and the accounts of which are, or under generally
accepted accounting principles are required to be, consolidated
with the accounts of such person.
"Continuing Directors" means, as of any date of
determination, any member of the Board of Directors of the
Company who (i) was a member of that Board of Directors on the
date of the Indenture, (ii) had been a member of that Board of
Directors for the two years immediately preceding such date of
determination or (iii) was nominated for election or elected
B-7
<PAGE>
to that Board of Directors with the affirmative vote of the
greater of (x) a majority of Continuing Directors who were
members of that Board at the time of such nomination or election
or (y) at least three Continuing Directors.
The Indenture contains provisions for defeasance of
the entire Indebtedness of this Security or certain restrictive
covenants with respect to this Security, in each case upon
compliance with certain conditions set forth in the Indenture.
If an Event of Default with respect to the Securities
shall occur and be continuing, the Principal of the Securities
may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders of the Securities under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a
majority in Principal Amount of the Securities at the time
outstanding. The Indenture also contains provisions permitting
the Holders of specified percentages in Principal Amount of the
Securities at the time outstanding, on behalf of the Holders of
all such Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the transfer hereof
or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
The right of any Holder (or such Holder's duly designated proxy)
to participate in any consent required or sought pursuant to any
provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder)
may be subject to the requirement that such Holder shall have
been the Holder of record of Securities as of a date set by the
Company and identified by the Trustee in a notice furnished to
Holders in accordance with the terms of the Indenture.
As provided in and subject to the provisions of the
Indenture, the Holder of this Security shall not have the right
to institute any proceeding with respect to the Indenture or for
the appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with
respect to the Securities, the Holders of not less than 25% in
Principal Amount of the Securities at the time outstanding shall
have made written request to the Trustee to institute proceedings
in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have
B-8
<PAGE>
received from the Holders of a majority in Principal Amount of
the Securities at the time outstanding a direction inconsistent
with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and
offer of indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Security for the enforcement of
any payment of Principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the Principal of and any premium and interest on this
Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable in the register for the Securities, upon surrender of
this Security for transfer at the office or agency of the Company
in any place where the Principal of and any premium and interest
on this Security are payable, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities of like tenor, of authorized
denominations and for the same aggregate Principal Amount, will
be issued to the designated transferee or transferees.
The Securities are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Securities are
exchangeable for a like aggregate Principal Amount of Securities
of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such transfer
or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable
in connection therewith.
Prior to due presentment of this Security for transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may treat the person in whose name this Security is
registered as the owner hereof for all purposes, whether or not
this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
No past, present or future director, officer, employee,
stockholder or incorporator, as such, of the Company or any
successor corporation shall have any liability for any obligations
of the Company under the Securities or the Indenture or for any
B-9
<PAGE>
claim based on, in respect of or by reason of such obligations or
their creation. Each Securityholder by accepting a Security waives
and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities.
All terms used in this Security without definition which
are defined in the Indenture shall have the meanings assigned to
them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA.
Option to Elect Purchase
The undersigned registered Holder of this Security
hereby irrevocably exercises the option to require the Company to
repurchase this Security or portion thereof (which is $1,000 or
an integral multiple thereof) below designated on the Repurchase
Date and in accordance with the terms set forth in the notice of
Repurchase Offer distributed by the Company in accordance with
the terms of this Security, and directs that payment be made to
the registered Holder hereof unless a different name has been
indicated below. Any amount required to be paid by the
undersigned on account of interest accompanies this Security.
Dated: ________________
Signature(s) must be Holder's Signature:
guaranteed if payment is
to be made other than to
and in the name of the
registered Holder _____________________________
_____________________________ Portion of Security to be
Signature Guarantee repurchased (in integral
multiples of $1,000) if other
than the full Principal
Amount thereof:
Fill in for payment of Repurchase
Price if to be made otherwise _____________________________
than to the registered Holder
_________________________________
Name
_________________________________
Address
_________________________________
Please print name and address
(including zip code)
SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER
_________________________________
B-10
March 12, 1998
Mr. Stephen A. Wynn
Chairman of the Board, President
and Chief Executive Officer
Mirage Resorts, Incorporated
3400 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Dear Steve:
This confirms the agreement this date between Bellagio and
you with respect to the seven works of fine art set forth on
Exhibit `A' hereto (collectively, the "Works"), which you
purchased from an independent party on March 9, 1998 at a
total purchase price of $50,000,000.
1. The January 14, 1998 agreement between Bellagio and you
(the "Original Agreement") is hereby amended to provide that,
effective this date, the Exhibit `B' Art referenced therein which
you are renting to Bellagio shall include the Works.
2. The terms of the rental of the Works shall be the
same as those set forth in the Original Agreement with respect
to the Exhibit `B' Art, except that the annual rental for each
of the Works, payable monthly in advance, shall be the "Annual
Rental," as set forth on Exhibit 'A' hereto.
3. The Exhibit `B' Art (including the Works) shall be
maintained on public display and shall be available for
educational purposes in any hotel-casino operated by any
wholly owned subsidiary of Mirage Resorts, Incorporated in
conformity with the requirements of NRS 361.068(k) and NRS
374 and any regulations promulgated thereunder.
Please sign below to confirm your agreement to the foregoing.
My signature below confirms Bellagio's agreement thereto.
Very truly yours,
BELLAGIO
ROBERT H. BALDWIN
By: __________________________
ROBERT H. BALDWIN
President and Chief
Executive Officer
I hereby agree to the foregoing.
STEPHEN A. WYNN
______________________________
STEPHEN A. WYNN
cc: Bruce A. Levin
Peter C. Walsh
James E. Pettis
Exhibit 10(ccc)
<PAGE>
<TABLE>
<CAPTION>
Exhibit 'A'
Allocated
Purchase Annual
Artist Title Price Rental
- - ------------------- ------------------------- ----------- --------
<S> <C> <C> <C>
Jasper Johns "Highway" 1959 $ 9,322,034 $111,864
Encaustic and collage
on canvas
33-1/2 X 27 inches
Franz Kline "August Day" 1957 2,542,373 30,508
Oil on canvas
92 X 78 inches
Willem DeKooning "Police Gazette" 1955 11,864,407 142,373
Mixed media on canvas
42-7/8 X 39-5/8 inches
Roy Lichtenstein "Torpedo...Los!" 1963 12,711,864 152,542
Oil on canvas
68 X 80 inches
Jackson Pollock "Frieze" 1953-1955 9,322,034 111,864
Oil, enamel and aluminum
paint on canvas
26-1/8 X 85-7/8 inches
Robert Rauschenberg "Small Red Painting" 1954 3,389,831 40,678
Combine painting
27-1/2 X 2 X 4-3/4 inches
Cy Twombly "Untitled" 1961 847,458 10,169
Acrylic, colored crayons
and graphite on canvas
102.4 X 148.1 cms.
</TABLE>
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 3rd day of July in the year of Nineteen Hundred and 96
BETWEEN the Owner:
(Name and address)
BEAU RIVAGE CONSTRUCTION (A Division of BEAU RIVAGE RESORTS, INC.)
3260 South Industrial Road
Las Vegas, Nevada 89109
and the Contractor:
(Name and address)
W.G. YATES & SONS CONSTRUCTION CO.
1 Gully Avenue
Philadelphia, Mississippi 39350
the Project is:
(Name and address)
BEAU RIVAGE-BILOXI
Biloxi, Mississippi
the Architect is:
(Name and address)
PAUL STEELMAN, LTD.
3330 West Desert Inn Road
Las Vegas, Nevada 89102
The Owner and Contractor agree as set forth below.
________________________________________________________________________________
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 premission of the AIA and can be reproduced without violation until the
date of expiration as noted below.
Electronic Format A111-1987
User Document: 731.DOC -- 8/21/1997. AIA License Number 104983, which expires
on 11/1/2997 -- page #1
Exhibit 10(jjj)
<PAGE>
ARTICLE 1
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, Conditions of the
Contract (General, Supplementary and other Conditions), Drawings,
Specifications, Addenda issued prior to execution of this Agreement, other
documents listed in 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 Contract 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, FOR THE GENERAL CONSTRUCTION OF THE BEAU
RIVAGE-BILOXI (ADF/BRC PROJECT #95073), INCLUDING, BUT NOT LIMITED TO, GENERAL
CONDITIONS, SITEWORK, CONCRETE, MASONRY, METALS, WOODS & PLASTICS, THERMAL &
MOISTURE PROTECTION, DOORS & WINDOWS, FINISHES, SPECIALTIES, EQUIPMENT,
FURNISHINGS, SPECIAL CONSTRUCTION, CONVEYING SYSTEMS, MECHANICAL SYSTEMS AND
SPECIALTIES, ELECTRICAL SYSTEMS AND SPECIALTIES, COORDINATION OF CERTAIN OWNER-
PURCHASED AND CONTRACTOR-INSTALLED ITEMS AND COORDINATION OF OWNERS SEPARATE
CONTRACTORS, AND AS DESCRIBED ON THE DRAWINGS AND SPECIFICATIONS REFERENCED IN
THE CONCEPTUAL BUDGET, DATED 20 MAY 1997.
THE OWNER RESERVES THE RIGHT TO ASSIGN ANY PORTION OF THE WORK RELATED TO THE
PROJECT TO OTHERS UNDER SEPARATE CONTRACT.
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 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 in the best
way and 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 in the best way and most expeditious manner 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 DATE OF COMMENCEMENT SHALL BE JULY 3, 1996.
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner 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.
(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.)
THE DATE OF SUBSTANTIAL COMPLETION SHALL BE DETERMINED BY MUTUAL AGREEMENT
BETWEEN THE OWNER AND THE CONTRACTOR PURSUANT TO SCHEDULE H - MILESTONE
SCHEDULE.
________________________________________________________________________________
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: 902.DOC -- 9/10/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #2
<PAGE>
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.)
In view of the incomplete nature of the design information and the cooperative
effort to be undertaken by the Owner and the Contractor to complete the Project
in an efficient manner with all reasonable dispatch. Owner and Contractor agree
that no liquidated damages are specified and no actual damage for delay will be
assessed, unless delays are caused by the sole negligence of the Contractor,
which for purposes of this provision shall include the Contractor's
subcontractors and suppliers.
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.)
The Contractor's Fixed Fee shall be Ten Million One Hundred Twenty Five Thousand
Dollars ($10,125,000.00). The Fixed Fee is not based on a final predetermined
Cost of the Work. Adjustment in the Cost of the Work will not cause an
adjustment in the Fixed Fee.
The Contractor's Fixed Fee shall be paid in monthly installments as agreed upon
between Owner and Contractor. The monthly installments and General Conditions
may be adjusted by the Owner if the Construction Schedule duration is extended
beyond the proposed date for Substantial Completion.
5.2 GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The Contractor will develop a Guaranteed Maximum Price for approval by
the Owner, 30 days after the issuance of the completed Construction 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.)
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.)
NONE
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.)
The Contractor will, in conjunction with the Owner, develop subcontractor unit
prices.
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 adjustmemts 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 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
________________________________________________________________________________
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 AIII-1987
User Document: 902.DOC--9/10/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #3
<PAGE>
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
the Contract Documents except as may be required by the Owner and/or Contractor
for a specific 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 fixed "fee" and "a reasonable allowance for overhead and profit" shall
mean the Contractor's fixed 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 If no specific provision is made in Paragraph 5.1 for adjustment of the
Contractor's Fee in the case of changes in the Work, of if the extent of such
changes is such, in the aggregate, that application of the adjustment provisions
of Paragraph 5.1 will cause substantial inequity to the Owner or Contractor, the
Contractor's Fee shall be equitably adjusted on the basis of the Fee established
for the original Work.
ARTICLE 7
COST TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in 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 when stationed at the site 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 and with the
Owner's agreement.
7.1.1.4 Cost 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, 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
Amounts properly billed by Subcontractors for work which has been approved by
the Contractor and the Owner and which amounts are otherwise to be paid in
accordance with the requirements of the respective Subcontracts.
________________________________________________________________________________
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 the expiration as noted below.
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on 11/1/1997 -- page #4
<PAGE>
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment
incorporated or to be incorporated in the completed 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 handed 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, installation, maintenance, dismantling
and removal of materials, supplies, temporary facilities, machinery, equipment,
and hand tools not customarily owned by the construction workers, which are
provided by the Contractor at the site and fully consumed in the performance of
the Work; and cost less salvage value on such items if not fully consumed,
whether sold to others or retained by the Contractor. Cost for items previously
used by the Contractor shall mean fair market value.
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 and set forth in Schedule "C" -
Equipment Rental Rates.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Cost 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 connected
with the Work. Air travel shall be at the lowest available air fair. All travel
arrangements shall be arranged by the Owner's travel agent when travel is to and
from Las Vegas. The Owner may require the use of the Owner's travel agent for
all other travel. Reimbursement for use of corporate aircraft by William G.
Yates, Jr. between Philadelphia and Biloxi shall be $400/Hr.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and 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 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 Contract 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 judgments
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, judgment and settlements shall not be included in the
calculation of the Contractor's Fee or of a Guaranteed Maximum Price, if any,
and provided that such royalities,
________________________________________________________________________________
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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expires on 11/1/1997 -- Page #5
<PAGE>
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.
7.1.6 OTHER COSTS
7.1.6.1 Any cost not specifically excluded by Article 8 which the Contractor
reasonably incurs in the performance of the work or in the furtherance of the
project, all of which is subject to the approval of the Owner.
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.
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 recoverable by the Contractor from others and the
Contractor is not compensated therefor by insurance or otherwise.
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.
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 or 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 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.
________________________________________________________________________________
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
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<PAGE>
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 unless previously approved by written Change Order.
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,
(2) before making the payment, and the payment is in excess of Five Thousand
Dollars($5,000.00), the Contractor has given the Owner the option of depositing
funds with the Contractor and the Owner has deposited said funds, or (3) 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. Paragraph 9.1 extends to all GMP Subcontractors and
other such work performed on a cost plus basis.
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 Owner. The Owner will then determine, with the advice of the Contractor and
subject to the reasonable objection of the Architect, 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 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
________________________________________________________________________________
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
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Electronic Format AIII-1987
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11/1/1997 -- Page #7
<PAGE>
for a period of three years after final payment, or for such longer period as
may be required by law.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the OWNER AND
Architect by the Contractor and Certificates for Payment issued by the Architect
AND APPROVED BY THE OWNER, the Owner shall make progress payments on account of
the Contract Sum to the Contractor as provided below and elsewhere in the
Contract Documents.
12.2 The period covered by each Application for Payment shall be one
calendar month ending on the last day of the month, or as follows:
12.3 Provided an Application for Payment is received by the OWNER not later
than the SECOND day of a month, the Owner shall make payment to the Contractor
not later than the TWELFTH (12TH) day of the SAME month. If an Application for
Payment is received by the Architect/OWNER after the application date fixed
above, payment shall be made by the Owner not later than TEN (10) days after the
OWNER receives the Application for Payment.
12.4 With each Application 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 to demonstrate
that cash disbursements already made by the Contractor on account of the Cost of
the Work equal or exceed (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.
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 OWNER OR Architect may require. This schedule, unless objected to by the
OWNER OR Architect, 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 percentage of that portion of
the Work which has actually been completed.
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
CONSIDERED BY THE OWNER 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.
________________________________________________________________________________
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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on 11/1/1997 -- Page #8
<PAGE>
12.5.3.3 Add the Contractor's Fee, less retainage as set forth in 12.5.4. 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.
12.5.3.4 Subtract the aggregate of previous payments made by the Owner.
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 Owner or Architect has
withheld or nullified a Certificate for Payment as provided in Paragraph 9.5 of
the General Conditions.
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.)
No retainage shall be held on the Contractor's Fee. Contractor's General
Conditions or Cost of the Work performed by the Contractor's own forces.
Retainage on each Subcontract GMP Contract will be approved by the Owner in
writing.
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 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 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
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with permission of the AIA and can be reproduced without violation until the
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<PAGE>
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%). Pending final determination of amounts to be paid to the
Subcontractor for changes in the Work, amounts not in dispute may be CONSIDERED
BY THE OWNER 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 AND INSURED off the site at a location agreed upon in writing, less
retainage of TEN percent (10%).
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 OWNER OR Architect has withheld
or nullified a Certificate for Payment by the Owner to the Contractor for
reasons which are the fault of the Subcontractor.
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
percent (90%) 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.)
12.7.6 RETAINAGE SHALL NOT EARN INTEREST.
12.7.7 UPON WRITTEN REQUEST BY THE CONTRACTOR, THE OWNER MAY REDUCE OR LIMIT
THE RETAINAGE WITHHELD FROM SUBCONTRACTORS.
12.7.8 THE SUBCONTRACTOR RETAINAGE IDENTIFIED IN PARAGRAPHS 12.7.1, 12.7.2, AND
12.7.5 ABOVE MAY BE ADJUSTED BY MUTUAL AGREEMENT BETWEEN THE OWNER AND THE
CONTRACTOR.
The Subcontractor 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
Architect AND THE OWNER 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 Architect AND THE OWNER 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 Architect AND
THE OWNER has made exhaustive or continuous on-site inspections or that the
Architect AND THE OWNER has made examinations to ascertain how or for what
purposes the Contractor has used amounts previously paid on account of the
Contract. Such examinations, audits and verifications, if required by the Owner,
will be performed by the Owner's accountants acting in the sole interest of the
Owner.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor
________________________________________________________________________________
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA - COPYRIGHT
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Electronic Format A111-1987
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<PAGE>
pursuant to the Terms and Conditions set forth in the Contract Documents.
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.
13.2.2 Subtract amounts, if any, for which the Architect or the Owner
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.
13.3
13.4
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.)
First Interstate Bank of Nevada: Prime Rate of Interest, plus One Percent (1%),
adjusted to a monthly rate and compounded monthly, except for the cost of items
which are in dispute between the Owner and the Contractor. If the Contractor
prevails in any dispute for which the Owner has withheld money, then the
Contractor shall be entitled to, and Owner shall pay interest at the above rate.
________________________________________________________________________________
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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on 11/1/1997 --Page #11
<PAGE>
(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.)
14.3 Other provisions:
14.3.1 Any Documents, Drawings, and/or Specifications presently being prepared
or contemplated by the Architect, the Architect's and/or the Owner's Consultants
shall become a part of the Contract Documents as they are completed and "Issued
for Construction" by the Architect or the Owner, provided that such Documents
are consistent with the Work contemplated by the other Contract Documents
referenced in this Agreement, and the Drawings and Specifications referenced in
the Conceptual Budget, dated 20 May 1997.
14.3.2 The Contractor shall maintain the Owner's site fencing.
14.3.3 The Contractor shall provide all vehicular and pedestrian traffic
control that may be required by any federal, state or local jurisdiction, and
that may be required by the Owner.
14.3.4 The Contractor shall provide dust and erosion control in accordance
with any federal, state or local code, ordinance, regulation, rule or law, and
as may be required by the Owner.
14.3.5 The Owner shall provide site security personnel for the duration of
the Project.
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 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.
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 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 a reasonable portion of the Contractor's Fixed Fee upon the Cost of
the Work to the date of termination at the rate stated in Paragraph 5.1.
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
________________________________________________________________________________
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: 902.DOC -- 9/10/1997. AIA License Number 104983, which
expires on 11/1/1997 -- Page #12
<PAGE>
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.
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 and its Schedules, Exhibits and
other Attachments.
16.1.2 The General Conditions are the General Conditions of the Contract for
Construction, AIA Document A201, 1987 Edition as modified and attached hereto.
16.1.3 The Supplementary and other Conditions of the Contract, are as follows:
DOCUMENT TITLE PAGES
Special Conditions, dated 03 July 1996
16.1.4 The Specifications are as follows:
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)
SECTION TITLE PAGES
Any Specifications presently being prepared or contemplated by the Architect,
the Architect's and/or the Owner's Consultants shall become a part of the
Contract Documents as they are completed and "Issued for Construction", provided
that such Documents are consistent with Work contemplated by the other Contract
Documents referenced in this Agreement, and the Drawings and Specifications
referenced in the Conceptual Budget, dated 20 May 1997.
16.1.5 The Drawings are as follows:
(Either list the Drawings here or refer to an exhibit attached to this
Agreement.)
NUMBER TITLE DATE
Any Drawings presently being prepared or contemplated by the Architect, the
Architect's and/or the Owner's Consultants shall become a part of the Contract
Documents as they are completed and "Issued for Construction", provided that
such Documents are consistent with Work contemplated by the other Contract
Documents referenced in this Agreement, and the Drawings and Specifications
referenced in the Conceptual Budget, dated 20 May 1997.
16.1.6 The Addenda, if any, are as follows:
NUMBER DATE PAGES
NONE.
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
________________________________________________________________________________
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: 902.DOC -- 9/10/1997.AIA License Number 104983, which
expires on 11/1/1997 -- Page #13
<PAGE>
Agreement. They should be listed here only if intended to be part of the
Contract Documents.)
16.1.7.1 Schedule A - Labor Rates Governed by Collective Bargaining Agreements:
16.1.7.2 Schedule B - Salaries and Wages Not Governed by Collective Bargaining
Agreements:
16.1.7.3 Schedule C - Equipment Rental Rates:
16.1.7.4 Schedule D - Conceptual Budget:
16.1.7.5 Schedule E - Additional Costs to be Reimbursed:
16.1.7.6 Schedule F - Costs Not to be Reimbursed:
16.1.7.7 Schedule G - List of Exclusions:
16.1.7.8 Schedule H - Construction Schedule:
16.1.7.9 Schedule I - Guaranteed Maximum Price:
16.1.7.10 Schedule J - Terms and Conditions for GMP Contracts:
16.1.7.11 Schedule K - Organizational Chart:
16.1.7.12 Schedule L - Certificate of Insurance:
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
OWNER CONTRACTOR
/s/ Kenneth R. Wynn /s/ William Yates, Jr.
- - ---------------------------------- -----------------------------------
(Signature) (Signature)
KENNETH R. WYNN, PRESIDENT WILLIAM YATES, JR., 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: 902.DOC -- 9/10/1997. AIA License Number 104983, which
expires on 11/1/1997 -- Page #14
<PAGE>
GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
AIA DOCUMENT A201 - 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 has been approved and endorsed by the Associated General
Contractors of America.
Copyright 1911, 1915, 1918, 1925, 1927, 1951, 1958, 1961, 1963, 1967, 1970,
1976, 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 prosecutions.
________________________________________________________________________________
TABLE OF ARTICLES
<TABLE>
<CAPTION>
<S> <C>
1. GENERAL PROVISIONS 8. TIME
2. OWNER 9. PAYMENTS AND COMPLETION
3. CONTRACTOR 10. PROTECTION OF PERSONS AND PROPERTY
4. ADMINISTRATION OF THE CONTRACT 11. INSURANCE AND BONDS
5. SUBCONTRACTORS 12. UNCOVERING AND CORRECTION OF WORK
6. CONSTRUCTION BY OWNER OR BY 13. MISCELLANEOUS PROVISIONS
SEPARATE CONTRACTORS
7. CHANGES IN THE WORK 14. TERMINATION OR SUSPENSION OF THE
CONTRACT
</TABLE>
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which
expires on 11/1/1997 -- Page #1
<PAGE>
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 4.2.3, 10
Acts and Omissions 3.2.1, 3.2.2, 3.3.2, 3.12.8, 3.18. 4.2.3,
4.3.2, 4.3.9, 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 4.3.6, 4.3.7, 4.3.9, 6.1.1, 10.3
Additional Inspections and Testing 4.2.6, 9.8.2, 12.2.1, 13.5
Additional Time, Claims for 4.3.6, 4.3.8, 4.3.9, 8.3.2
ADMINISTRATION OF THE CONTRACT 3.3.3, 4, 9.4, 9.5
Advertisement or Invitation to Bid 1.1.1
Aesthetic Effect 4.2.13, 4.5.1
Allowances 3.8
All-risk Insurance 11.3.1.1
Applications for Payment 4.2.5, 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, 3.10.2, 3.12.4 through 3.12.8,
3.18.3, 4.2.7, 9.3.2, 11.3.1.4, 13.4.2, 13.5
Arbitration 4.1.4, 4.3.2, 4.3.4, 4.4.4, 4.5, 8.3.1,
10.1.2, 11.3.9, 11.3.10
Architect 4.1
Architect, Definition of 4.1.1
Architect, Extent of Authority 2.4, 3.12.6, 4.2, 4.3.2, 4.3.6, 4.4,
5.2, 6.3, 7.1.2, 7.2.1, 7.3.6, 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, 4.1.2, 4.2.1, 4.2.2, 4.2.3, 4.2.6
4.2.7, 4.2.10, 4.2.12, 4.2.13, 4.3.2, 5.2.1, 7.4, 9.4.2, 9.6.4, 9.6.6
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 4.2, 4.3.6,
4.3.7, 4.4, 9.4, 9.5
Architect's Approvals 2.4, 3.5.1, 3.10.2, 3.12.6,
3.12.8, 3.18.3, 4.2.7
Architect's Authority to Reject Work 3.5.1, 4.2.6, 12.1.2, 12.2.1
Architect's Copyright 1.3
Architect's Decisions 4.2.6, 4.2.7, 4.2.11, 4.2.12, 4.2.13, 4.3.2,
4.3.6, 4.4.1, 4.4.4, 4.5, 6.3, 7.3.6, 7.3.8, 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 4.2.2, 4.2.9, 4.3.6, 9.4.2, 9.8.2,
9.9.2, 9.10.1, 13.5
Architect's Instructions 4.2.6, 4.2.7, 4.2.8, 4.3.7,
7.4.1, 12.1, 13.5.2
Architect's Interpretations 4.2.11, 4.2.12, 4.3.7
Architect's On-site Observations 4.2.2, 4.2.5, 4.3.6, 9.4.2,
9.5.1, 9.10.1, 13.5
Architect's Project Representative 4.2.10
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, 4.2.3,
4.2.4, 4.2.6, 4.2.12, 5.2, 6.2.2, 7.3.4,
9.8.2, 11.3.7, 12.1, 13.5
Architect's Relationship with Subcontractors 1.1.2, 4.2.3, 4.2.4,
4.2.6, 9.6.3, 9.6.4, 11.3.7
Architect's Representations 9.4.2, 9.5.1, 9.10.1
Architect's Site Visits 4.2.2, 4.2.5, 4.2.9, 4.3.6, 9.4.2,
9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5
Asbestos 10.1
Attorney' 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 3.7.1
Capitalization 1.4
Certification of Substantial Completion 9.8.2
Certificates for Payment 4.2.5, 4.2.9, 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, 4.2.8, 4.3.3, 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, 4.2.8, 7, 8.3.1, 9.3.1.1, 10.1.3
Claim, Definition of 4.3.1
Claims and Disputes 4.3, 4.4, 4.5, 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 4.5.6
Claims for Additional Cost 4.3.6, 4.3.7, 4.3.9, 6.1.1, 10.3
Claims for Additional Time 4.3.6, 4.3.8, 4.3.9, 8.3.2
Claims for Concealed or Unknown Conditions 4.3.6
Claims for Damages 3.18, 4.3.9, 6.1.1, 6.2.5, 8.3.2
9.5.1.2, 10.1.4
Claims Subject to Arbitration 4.3.2, 4.4.4, 4.5.1
Cleaning Up 3.15, 6.3
Commencement of Statutory Limitation Period 13.7
Commencement of the Work, Conditions Relating to 2.1.2, 2.2.1,
3.2.1, 3.2.2, 3.7.1, 3.10.1, 3.12.6, 4.3.7, 5.2.1, 6.2.2,
8.1.2, 8.2.2, 9.2, 11.1.3, 11.3.6, 11.4.1
Commencement of the Work, Definition of 8.1.2
Communications Facilitating Contract
Administration 3.9.1, 4.2.4, 5.2.1
Completion, Conditions Relating to 3.11, 3.15, 4.2.2, 4.2.9,
4.3.2, 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 4.2.9, 4.3.5.2, 8.1.1, 8.1.3, 8.2.3, 9.8,
9.9.1, 12.2.2, 13.7
Compliance with Laws1 .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 4.3.6
Conditions of the Contract 1.1.1, 1.1.7, 6.1.1
Consent, Written1. 3.1, 3.12.8, 3.14.2, 4.1.2, 4.3.4, 4.5.5, 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
CONSTRUCTION BY OWNER OR BY
SEPARATE CONTRACTORS 1.1.4, 6
Construction Change Directive, Definition of 7.3.1
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITION OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 - Page #2
<PAGE>
Construction Change Directives 1.1.1,4.2.8,7.1,7.3,9.3.1.1
Construction Schedules, Contractor's 3.10,6.1.3
Contingent Assignment of Subcontracts 5.4
Continuing Contract Performance 4.3.4
Contract, Definition of 1.1.2
CONTRACT, TERMINATION OR SUSPENSION
OF THE 4.3.7,5.4.1.1,14
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 4.3.4,4.5.3
CONTRACT SUM 3.8,4.3.6,4.3.7,4.4.4,5.2.3,6.1.3,
7.2,7.3,9.1,9.7,11.3.1,12.2.4,12.3,14.2.4
CONTRACT SUM, Definition of 9.1
Contract Time 4.3.6,4.3.8,4.4.4,7.2.1.3,7.3,8.2.1,
8.3.1,9.7,12.1.1
Contract Time, DEFINITION OF 8.1.1
CONTRACTOR 3
Contractor, Definition of 3.1,6.1.2
Contractor's Bid 1.1.1
CONTRACTOR'S CONSTRUCTION SCHEDULES 3.10,6.1.3
Contractor's Employees 3.3.2,3.4.2,3.8.1,3.9,3.18,4.2.3,
4.2.6,8.1.2,10.2,10.3,11.1.1,14.2.1.1
CONTRACTOR'S LIABILITY INSURANCE 11.1
Contractor's Relationship with Separate Contractors
and Owner's Forces 2.2.6,3.12.5,3.14.2,4.2.4,6,12.2.5
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,
3.3.3,3.5.1,3.7.3,3.11,3.12.8,3.16,3.18,4.2.3,4.2.4,4.2.6,
4.2.12,5.2,6.2.2,7.3.4,9.8.2,11.3.7,12.1,13.5
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 the Work 3.3.2,
3.18,4.2.3,10
Contractor's Review of Contractor 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 3.10,3.11,3.12,4.2.7.5.2.1,5.2.3,
7.3.6,9.2,9.3.1,9.8.2,9.9.1,9.10.2,9.10.3,
10.1.2,11.4.2,11.4.3
Contractor's Superintendent 3.9,10.2.6
Contractor's Supervision and Construction Procedures 1.2.4,3.3
3.4,4.2.3,8.2.2,8.2.3,10
Contractual Liability Insurance 11.1.1.7,11.2.1
Coordination and Correlation 1.2.2,1.2.4,3.3.1,3.10,3.12.7,
6.1.3,6.2.1
Copies Furnished of Drawings and Specifications 1.3,2.2.5,3.11
Correction of Work 2.3,2.4,4.2.1,9.8.2,9.9.1,
12.1.2,12.2,13.7.1.3
Cost, Definition of 7.3.6,14.3.5
Costs 2.4,3.2.1,3.7.4,3.8.2,3.15.2,4.3.6,4.3.7,4.3.8.1,
5.2.3,6.1.1,6.2.3,6.3,7.3.3.3,7.3.6,7.3.7,9.7,9.8.2,9.10.2,
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 3.18,4.3.9,6.1.1,6.2.5,
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 4.2.6,4.2.7,4.2.11
4.2.12,4.2.13,4.3.2,4.3.6,4.4.1,4.4.4,4.5,6.3,
7.3.6,7.3.8,8.1.3,8.3.1,9.2,9.4,9.5.1,9.8.2,
9.9.1,10.1.2,13.5.2,14.2.2,14.2.4
DECISIONS TO WITHHOLD CERTIFICATION 9.5,9.7,14.1.1.3
Defective or Nonconforming Work, Acceptance,
Rejection and Correction of 2.3,2.4,3.5.1,4.2.1,
4.2.6,4.3.5,9.5.2,9.8.2,9.9.1,10.2.5,12,13.7.1.3
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,
4.1.1,4.3.1,5.1,6.1.2,7.2.1,7.3.1,7.3.6,8.1,9.1,9.8.1
DELAYS AND EXTENSIONS OF TIME 4.3.1,4.3.8.1,4.3.8.2,
6.1.1,6.2.3,7.2.1,7.3.1,7.3.4,7.3.5,7.3.8,
7.3.9,8.1.1,8.3,10.3.1,14.1.1.4
Disputes 4.1.4,4.3,4.4,4.5,6.2.5,6.3,7.3.8,9.3.1.2
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 4.3.7,10.3
Employees, Contractor's 3.3.2,3.4.2,3.8.1,3.9,3.18.1,
3.18.2,4.2.3,4.2.6,8.1.2,10.2,10.3,11.1.1,14.2.1.1
Equipment, Labor, Materials and 1.1.3,1.1.6,3.4,3.5.1
3.8.2,3.12.3,3.12.7,3.12.11.3.13,3.15.1,4.2.7
6.2.1,7.3.6,9.3.2,9.3.3,11.3,12.2.4,14
Execution and Progress of the Work 1.1.3,1.2.3,3.2,3.4.1,
3.5.1,4.2.2,4.2.3,4.3.4,4.3.8,6.2.2,7.1.3,
7.3.9,8.2,8.3,9.5,9.9.1,10.2,14.2,14.3
EXECUTION, CORRELATION AND INTENT OF THE
Contract Documents 1.2,3.7.1
Extensions of Time 4.3.1,4.3.8,7.2.1.3,8.3,10.3.1
Failure of Payment by Contractor 9.5.1.3,14.2.1.2
Failure of Payment by Owner 4.3.7,9.7,14.1.3
Faulty Work (See Defective or Nonconforming Work)
FINAL COMPLETION AND FINAL PAYMENT 4.2.1,4.2.9,4.3.2,
4.3.5,9.10,11.1.2,11.1.3,11.3.5,12.3.1,13.7
Financial Arrangements, Owner's 2.2.1
Fire and Extended Coverage Insurance 11.3
GENERAL PROVISIONS 1
GOVERNING LAW 1.3.1
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
4.3.4,6.1.3,6.1.4,6.2.6,9.3.2,9.6.1,9.6.4,9.8.3,9.9.2,
9.10.3,10.1.4,11.2,11.3,13.5.1,13.5.2
INJURY OR DAMAGE TO PERSON OR PROPERTY 4.3.9
Inspections 3.3.3,3.3.4,3.7.1,4.2.2,
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997, AIA License Number 104983, which expires
on 11/1/1997 -- Page #3
<PAGE>
4.2.6, 4.2.9, 4.3.6, 9.4.2, 9.8.2, 9.9.2, 9.10.1, 13.5
Instructions to Bidders 1.1.1
Instructions to the Contractor 3.8.1, 4.2.8, 5.2.1, 7, 12.1, 13.5.2
Insurance 4.3.9, 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
Insurance, Effective Date of 8.2.2, 11.1.2
INSURANCE, LOSS OF USE 11.3.3
INSURANCE, OWNER'S LIABILITY 11.2
INSURANCE, PROPERTY 10.2.5, 11.3
Insurance, Stored Materials 9.3.2, 11.3.1.4
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,
4.2.6, 4.2.7, 4.2.12, 4.2.13, 7.4
INTEREST 13.6
Interpretation 1.2.5, 1.4, 1.5, 4.1.1, 4.3.1, 5.1, 6.1.2. 8.1.4
Interpretations, Written 4.2.11, 4.2.12, 4.3.7
Joinder and Consolidation of Claims Required 4.5.6
JUDGEMENT ON FINAL AWARD 4.5.1, 4.5.4.1, 4.5.7
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,
4.2.7, 6.2.1, 7.3.6, 9.3.2, 9.3.3, 12.2.4, 14
Labor Disputes 8.31
Laws and Regulations 1.3, 3.6, 3.7, 3.13, 4.1.1, 4.5.5
4.5.7, 9.9.1, 10.2.2, 11.1, 11.3, 13.1, 13.4, 13.5.1, 13.5.2, 13.6
Liens 2.1.2, 4.3.2, 4.3.5.1, 8.2.2, 9.3.3, 9.10.2
LIMITATION ON CONSOLIDATION OR JOINDER 4.5.5
Limitations, Statutes of 4.5.4.2, 12.2.6, 13.7
Limitations of Authority 3.3.1, 4.1.2, 4.2.1,
4.2.3, 4.2.7, 4.2.10, 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, 4.2.6, 4.2.7, 4.2.12, 6.2.2, 9.4.2, 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, 4.2.1, 4.2.7, 4.2.11, 4.3.2,
4.3.3, 4.3.4, 4.3.6, 4.3.9, 4.5.4.2, 5.2.1, 5.2.3, 6.2.4, 7.3.4, 7.4
8.2, 9.5,9.6.2, 9.8, 9.9, 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, 3.7
Limitations of Time, Specific 2.1.2, 2.2.1, 2.4, 3.10, 3.11
3.15.1, 4.2.1, 4.2.11, 4.3, 4.4, 4.5, 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
LOSS OF USE INSURANCE 11.3.3
Material Suppliers 1.3.1, 3.12.1, 4.2.4, 4.2.6, 5.2.1,
9.3.1, 9.3.1.2, 9.3.3, 9.4.2, 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, 3.5.1, 3.8.2,
3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.2.7, 6.2.1,
7.3.6, 9.3.2, 9.3.3, 12.2.4, 14
Means, Methods, Techniques, Sequences and Procedures
of Construction 3.3.1, 4.2.3, 4.2.7, 9.4.2
MINOR CHANGES IN THE WORK 1.1.1, 4.2.8, 4.3.7, 7.1, 7.4
MISCELLANEOUS PROVISIONS 13
Modifications, Definition of 1.1.1
Modification to the Contract 1.1.1, 1.1.2, 3.7.3, 3.11,
4.2.1, 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,
4.3.5, 9.5.2, 9.8.2, 12, 13.7.3
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, 4.3, 4.4.4, 4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1,
9.5.1, 9.6.1, 9.7, 9.10, 10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2,
12.2.4, 13.3, 13.5.1, 13.5.2,14,
NOTICE, WRITTEN 2.3, 2,4, 3.9, 3.12.8, 3.12.9, 4.3,
4.4.4, 4.5, 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 to 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 4.2.2, 4.2.5,
4.3.6, 9.4.2, 9.5.1, 9.10.1, 13.5
Observations, Contractors'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 4.2.2, 4.2.9, 4.3.6,
9.4.2, 9.8.2, 9.9.2, 9.10.1, 13.5
Orders, Written 2.3, 3.9, 4.3.7, 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, 4.3.4, 6, 9, 10.1.4, 11.2, 11.3, 13.5.1, 14.1.1.5, 14.1.3
Owner's Authority 3.8.1, 4.1.3, 4.2.9, 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, 4.3.7
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 4.2.5, 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 4.2.5, 4.2.9, 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
PAYMENT, FAILURE OR 4.3.7, 9.5.1.3, 9.7,
9.10.2, 14.1.1.3, 14.2.1.2
Payment, Final 14.2.1, 4.2.9, 4.3.2, 4.3.5, 9.10, 11.1.2
11.1.3, 11.3.5, 12.3.1
PAYMENT BOND, PERFORMANCE BOND AND 7.3.6.4, 9.10.3,
11.3.9, 11.4
Payments, Progress 4.3.4, 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
- - --------------------------------------------------------------------------------
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/23/1997. AIA License Number 104983, which expires
on 11/1/1997 --Page #4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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 Bipheny 10.1
Product Data, Definition of 3.12.2
Product Data and Samples, Shop Drawings .11, 3.12, 4.2.7
Progress and Completion 4.2.2, 4.3.4, 8.2
Progress Payments 4.3.4, 9.3,
Project, Definition of the
Project Manual, Definition of the 1.1.7
Project Manuals 2.2.5
Project Representatives 4.2.10
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, 4.5.5
4.5.7, 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, 4.2.6, 12.2
Releases of Waivers and Liens
Representations
Representatives 2.1.1, 3.1.1, 3.9, 4.1.1,
RESOLUTION OF CLAIMS AND DISPUTES 4.4, 4.5
Responsibility for Those Performing the Work 3.3.2, 4.2.3, 6.1.3, 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 and
Review of Shop Drawings, Product Data and Samples 3.12.5
RIGHTS AND REMEDIES 1.1.2, 2.3, 2.4, 3.5.1, 3.15.2,
4.2.6, 4.3.6, 4.5, 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 4.5.2
SAFETY OF PERSONS AND PROPERTY 10.2
SAFETY PRECAUTIONS AND PROGRAMS 4.2.3, 4.2.7, 10.1
Samples, Definition of 3.12.3
SAMPLES, SHOP DRAWINGS, PRODUCT DATA AND 3.11, 3.12, 4.2.7
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, 3.14.2, 4.4.4, 4.5.5, 6,
11.3.7, 12.1.2, 12.2.5
Shop Drawings, Definitions of 3.12.1
SHOP DRAWINGS, PRODUCT DATA AND SAMPLES 3.11, 3.12, 4.2.7
SITE, USE OF 3.13, 6.1.1, 6.2.1
Site Inspections 1.2.2, 3.3.4, 4.2.2, 4.2.9,
4.3.6, 9.8.2, 9.10.1, 13.5
Site Visits, Architect's 4.2.2, 4.2.5, 4.2.9, 4.3.6,
9.4.2, 9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5
Special Inspections and Testing 4.2.6, 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 4.5.4.2, 12.2.6, 13.7
Stopping the Work 2.3, 4.3.7, 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, 4.2.3, 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, 14.3.2
Submittals 1.3, 3.2.3, 3.10, 3.11, 3.12, 4.2.7, 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, 11.1.3
SUBROGATION, WAIVERS OF 6.1.1, 11.3.5, 11.3.7
SUBSTANTIAL COMPLETION 4.2.9, 4.3.5.2, 8.1.1, 8.1.3,
8.2.3, 9.8, 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 the Architect 4.1.3
Substitutions of Materials 3.5.1
Sub-subcontractor, Definition of 5.1.2
Subsurface Conditions 4.3.6
SUCCESSORS AND ASSIGNS 13.2
SUPERINTENDENT 3.9, 10.2.6
SUPERVISION AND CONSTRUCTION PROCEDURES 1.2.4, 3.3, 3.4,
2.3, 4.3.4, 6.1.3, 6.2.4, 7.1.3, 7.3.4, 8.2, 8.3.1, 10, 12, 14
Surety 4.4.1, 4.4.4, 5.4.1.2, 9.10.2, 9.10.3, 14.2.2
Surety, Consent of 9.9.1, 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 4.3.7, 5.4.2, 14.1.1.4, 14.3
Suspension or Termination of the Contract 4.3.7, 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 4.1.3
Termination of the Contractor 14.2.2
TERMINATION OR SUSPENSION OF THE CONTRACT 14
TESTS AND INSPECTIONS 3.3.3, 4.2.6, 4.2.9, 9.4.2, 12.2.1, 13.5
TIME 8
TIME, DELAYS AND EXTENSIONS OF 4.3.8, 7.2.1, 8.3
Time Limits, Specific 2.1.2, 2.2.1, 2.4, 3.10, 3.11, 3.15.1,
4.2.1, 4.2.11, 4.3, 4.4, 4.5, 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 4.3.2, 4.3.3, 4.3.6, 4.3.9, 4.4, 4.5
Title or Work 9.3.2, 9.3.3
UNCOVERING AND CORRECTION OF WORK 12
UNCOVERING OF WORK 12.1
Unforeseen Conditions 4.3.6, 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 4.3.5, 4.5.1, 9.10.3
Waiver of Claims by the Architect 13.4.2
Waiver of Claims by the Contractor 9.10.4, 11.3.7, 13.4.2
Waiver of Claims by the Owner 4.3.5, 4.5.1, 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, 4.2.9,
4.3.5.3, 9.3.3, 9.8.2, 9.9.1, 12.2.2, 13.7.1.3
Weather Delays 4.3.8.2
</TABLE>
______________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC - 9/22/1997. AIA License Number 104983, which expires
on 11/11/1997 -- Page #5
<PAGE>
WHEN ARBITRATION MAY BE DEMANDED 4.5.4
WORK, DEFINITION OF 1.1.3
WRITTEN CONSENT 1.3.1, 3.12.8, 3.14.2, 4.1.2, 4.3.4,
4.5.5, 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 4.2.11, 4.2.12, 4.3.7
WRITTEN NOTICE 2.3, 2.4, 3.9, 3.12.8, 3.12.9, 4.3, 4.4.4,
4.5, 5.2.1, 5.3, 4.5.1.1, 8.2.2, 9.4.1, 9.5.1, 9.7, 9.10, 10.12,
10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4, 13.3, 13.5.2,
WRITTEN ORDERS 14.2.3, 3.9, 4.3.7,
7,8.2.2, 11.3.9, 12.1, 12.2, 13.5.2, 14.3.1
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC - 9/22/1997. AIA License Number 104983, which expires on
11/1/1997 - PAGE #6
<PAGE>
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), Conditions of the Contract (General, Supplementary
and other Conditions), Drawings, Specifications, addenda issued prior to
execution of the Contract, 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,
(3) a Construction Change Directive or (4) a written order for a minor change in
the Work issued by the Architect. Unless specifically enumerated in the
Agreement, the Contract Documents 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).
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 Owner and
a Subcontractor or Sub-subcontractor or (3) between any persons or entities
other than the Owner and Contractor. The Architect shall, however, be entitled
to performance and enforcement of obligations under the Contract intended to
facilitate performance of the Architect's duties.
1.1.3 THE WORK
The term "Work" means the construction and services required by the Contract
Documents, whether completed or partially completed, and includes 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 the Owner or by separate contractors. THE NAME OF THE PROJECT IS "BEAU
RIVAGE -BILOXI" AND THE OWNERS PROJECT NUMBER IS "ADF/BRC PROJECT #95073".
1.15 THE DRAWINGS
The Drawings are the graphic and pictorial portions of the Contract 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 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 which may
include the bidding requirements, sample forms, Conditions of the Contract and
Specifications.
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 Execution of the Contract by the Contractor is a representation that
the Contractor has visited the site, become familiar with local conditions under
which the Work is to be performed and correlated personal observations with
requirements of the Contract Documents.
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.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION-
FOURTEENTH EDITION -AIA- COPYRIGHT 1987 - 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 A201-1987
USER DOCUMENT: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #7
<PAGE>
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-
contractor 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. The Contractor, Subcontractors, Sub-
contractors 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.
1.3.2 All Drawings, Specifications and copies thereof furnished by the
Architect are and shall remain the property of the Owner. These documents are to
be used by the Contractor only with respect to this Project and are not to be
used by the Contractor on any other Project unless authorized by the Owner.
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._ The
Owner's authorized representative is designated as William R. Smith, Project
Director. Owner reserves right to modify the Owner's authorized representative
at any time.
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.
2.2 INFORMATION AND SERVICES REQUIRED OF THE OWNER
The Owner and Contractor agree that the Owner represents to the
Contractor that the Owner has made the financial arrangements necessary to
fulfill the Owner's obligations under the Contract. At the request of the
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
USER DOCUMENT: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #8
<PAGE>
CONTRACTOR, THE OWNER SHALL PROVIDE A WRITTEN STATEMENT FROM GOLDEN NUGGET,
INC., GUARANTEEING THE OWNER'S FINANCIAL OBLIGATIONS.
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.
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.
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 Unless otherwise provided in the Contract Documents, the Contractor
will be furnished, free of charge, such copies of Drawings and Project Manuals
as are reasonably necessary for execution of the Work.
2.2.6 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 Separate Contractors), Article 9 (Payment and
Completion) and Article 11 (Insurance and Bonds).
2.3 OWNER'S RIGHT TO STOP THE WORK
2.3.1 If, AFTER THE OWNER HAS PROVIDED WRITTEN NOTICE, 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 persistently 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, except to
the extent required by Subparagraph 6.1.3.
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 seven-days 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 SEVEN (7)
DAYS FOLLOWING RECEIPT BY THE CONTRACTOR OF AN ADDITIONAL WRITTEN NOTICE, AND
WITHOUT PREJUDICE TO ANY OTHER REMEDY HE MAY HAVE, correct such deficiencies.
In such case an appropriate Change Order shall be issued deducting from
payments then or thereafter due the Contractor the cost of correcting such
deficiencies, including compensation for the Architect's additional services
and expenses made necessary by such default, neglect or failure. 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 the Contract Documents 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 OF THE GENERAL CONDITIONS and shall at once report to the
Architect AND OWNER errors, inconsistencies or omissions discovered. The
Contractor shall not be liable to the Owner 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 Architect AND OWNER. If the Contractor performs any
construction activity knowing it
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #9
<PAGE>
involves a recognized error, inconsistency or omission in the Contract Documents
without such notice to the Architect AND OWNER, the Contractor shall assume
appropriate responsibility for such performance and shall bear an appropriate
amount of 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 Architect AND OWNER 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 the
Contract, unless Contract Documents give other specific instructions concerning
these matters.
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 WHEN SUCH ACTS OR OMISSIONS ARE RELATED TO THE WORK.
3.3.3 The Contractor shall not be relieved of obligations to performing the
Work in accordance with the Contract Documents either by activities or duties of
the Architect in the Architect's 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 be responsible for inspection of portions of Work
already performed under this Contract 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, 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 WORK. The
Contractor shall not permit employment of unfit persons or persons not skilled
in tasks assigned to them. AFTER CONSULTING WITH THE CONTRACTOR, THE OWNER SHALL
RESERVE THE RIGHT TO REMOVE ANY EMPLOYEE OF THE CONTRACTOR, HIS SUBCONTRACTORS,
OR THEIR AGENTS FROM THE PROJECT IF THE OWNER, IN HIS REASONABLE DISCRETION,
DETERMINES THAT THE PRESENCE OF SUCH PERSON OR PERSONS IS NOT IN THE BEST
INTEREST OF THE PERFORMANCE OF THE WORK OR PROJECT.
3.4.3 AFTER THE AGREEMENT HAS BEEN EXECUTED, THE OWNER AND THE ARCHITECT
WILL CONSIDER A FORMAL REQUEST FOR THE SUBSTITUTION OF PRODUCTS AS SET FORTH IN
THE SPECIFICATIONS.
3.5 WARRANTY
3.5.1 The Contractor warrants to the Owner and Architect that materials 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, HIS SUBCONTRACTORS, HIS MATERIALMEN AND SUPPLIERS, improper or
insufficient maintenance, improper operation, or normal wear and tear under
normal usage. If required BY THE OWNER OR THE Architect, the Contractor shall
furnish satisfactory evidence as to the kind and quality of materials and
equipment.
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.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which
expires on 11/1/1997 -- Page #10
<PAGE>
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 other permits and governmental
fees, licenses and inspections necessary for proper execution and completion of
the Work which are customarily secured after execution of the Contract and which
are legally required when bids are received or negotiations concluded.
3.7.2 The Contractor shall comply with and give notices required by laws,
ordinances, rules, 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 Con-
tract 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 Con-
tractor shall promptly notify the 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 Architect and Owner, the Contractor shall assume full
responsibility for such Work and shall bear the attributable costs.
3.8 ALLOWANCES
3.8.1
3.8.2
1.
2.
3.
4.
5. Allowances shall include the cost of all work which will be
increased or decreased based on actual cost. Cost for General Conditions
and fee are included elsewhere in the Conceptual Budget.
3.9 SUPERINTENDENT
3.9.1 The Contractor shall employ a competent superintendent and necessary
assistants who shall be in full time attendance at the Project site during
performance of the Work. The Senior Project Manager shall represent the
Contractor, and communications given to the Senior Project Manager 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
SCHEDULES
3.10.1 The Contractor, promptly after being awarded the Contract, shall
prepare and submit for the Owner's and Architect's information a detailed
Contractor's construction schedule for the Work. The schedule shall not exceed
time limits current under the Contract Documents, nor modify the date of
Substantial Completion, and shall be revised at appropriate intervals as
required by the conditions of the Work and Project, shall be related to the
entire Project to the extent required by the Contract Documents, and shall
provide for expeditious and practicable execution of the Work.
3.10.2 The Contractor shall prepare and keep current, for the Architect's
approval, a schedule of submittals which is coordinated with the Contractor's
construction schedule and allows the Architect reasonable time to review
submittals.
3.10.3 The Contractor shall conform to the most recent schedules.
3.10.4 The Contractor and his Subcontractors, suppliers and
manufacturers shall schedule materials, deliveries and installations to conform
with the Contractor's Construction Schedule.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
USER DOCUMENT: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #11
<PAGE>
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, 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 Architect and shall be delivered to the Architect 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 4.2.7. OF THE GENERAL CONDITIONS. THE CONTRACTOR SHALL SUBMIT SHOP
DRAWINGS, PRODUCT DATA, SAMPLES AND SIMILAR SUBMITTALS OF SUFFICIENT QUANTITY AS
THE ARCHITECT MAY SPECIFY OR DIRECT. IN THE EVENT ADDITIONAL QUANTITIES OR
SUBMITTALS ARE REQUIRED FOR APPROPRIATE REVIEW AND APPROVAL BY THE ARCHITECT AND
THE OWNER, THE CONTRACTOR SHALL COMPLY WITH ALL REASONABLE REQUESTS FOR SAME.
3.12.5 The Contractor shall review, approve and submit to the Architect Shop
Drawings, Product Data, Samples and similar submittals required by the Contract
Documents with reasonable promptness and in such sequence as to cause no delay
in the Work or in the activities of the Owner or of separate 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 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 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 Architect's approval of Shop
Drawings, Product Data, Samples or similar submittals unless the Contractor has
specifically informed the Architect in writing of such deviation at the time of
submittal and the Architect has given written approval to the specific
deviation. The ARCHITECT WILL NOT APPROVE DEVIATION FROM THE REQUIREMENTS OF THE
CONTRACT DOCUMENTS UNTIL: (A) THE CONTRACTOR HAS PROVIDED COMPARATIVE
INFORMATION INCLUDING PERFORMANCE DATA AND (B) THE CONTRACTOR HAS CONFIRMED
EFFECTS TO COST AND SCHEDULE, IF ANY. IF COST OR SCHEDULE IS EFFECTED, THE
ARCHITECT OR OWNER MAY DISAPPROVE SUCH DEVIATION. The Contractor shall not be
relieved of responsibility for errors or omissions in Shop Drawings, Product
Data, Samples or similar submittals by the 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 Architect on previous submittals.
3.12.10 Informational submittals upon which the Architect is 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 Architect shall
be entitled to rely upon the accuracy and completeness of such calculations and
certifications.
3.12.12 SHOP DRAWINGS AND SAMPLES SHALL BE DATED AND MARKED WITH THE
NAME OF THE OWNER, THE PROJECT, THE ARCHITECT, THE CONTRACTOR, ORIGINATING
SUBCONTRACTOR, MANUFACTURER OR SUPPLIER AND SEPARATE DETAILING SERVICE. SHOP
DRAWINGS SHALL COMPLETELY IDENTIFY
________________________________________________________________________________
AIA DOCUMENT A201- GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION-
FOURTEENTH EDITION - AIA - COPYRIGHT 1987- 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997-- Page #12
<PAGE>
MATERIAL AS TO ITEM, FINISH, AND/OR MATERIAL DESIGNATIONS AS SHOWN ON THE
DRAWINGS OR IN THE SPECIFICATIONS AND THE SPECIFICATION SECTION AND LOCATIONS AT
WHICH MATERIALS OR EQUIPMENT ARE TO BE INSTALLED. REPRODUCTIONS OF CONTRACT
DOCUMENTS ARE ACCEPTABLE AS SHOP DRAWINGS ONLY WHEN SPECIFICALLY AUTHORIZED IN
WRITING BY THE ARCHITECT.
3.12.13 SUBMISSION OF SHOP DRAWINGS AND SAMPLES SHALL BE ACCOMPANIED
BY A TRANSMITTAL LETTER CONTAINING THE PROJECT NAME, CONTRACTOR'S NAME, NUMBER
OF DRAWINGS AND SAMPLES, TITLES AND OTHER PERTINENT DATA; AND A LETTER FROM THE
MATERIAL MANUFACTURER AGREEING TO THE GUARANTEE CLAUSES OF THE SPECIFICATIONS.
3.12.14 SUBMIT ONE (1) REPRODUCIBLE TRANSPARENCY AND THREE (3) SETS OF
PRINTS, UNLESS OTHERWISE SPECIFIED BY THE ARCHITECT, OF EACH SHOP DRAWING
INCLUDING FABRICATION, ERECTION, LAY-OUT AND SETTING DRAWINGS AND SUCH OTHER
DRAWINGS AS REQUIRED UNDER THE VARIOUS SECTIONS OF THE SPECIFICATIONS UNTIL A
FINAL REVIEW IS OBTAINED. SUBMIT EIGHT (8) COPIES OF THE MANUFACTURER'S
DESCRIPTIVE DATA, INCLUDING CATALOG SHEETS FOR MATERIALS, EQUIPMENT AND
FIXTURES, SHOWING DIMENSIONS, PERFORMANCE CHARACTERISTICS AND CAPACITIES,
WIRING DIAGRAMS AND CONTROLS, SCHEDULES AND OTHER PERTINENT INFORMATION.
WHERE PRINTED MATERIALS DESCRIBE MORE THAN ONE PRODUCT OR MODEL, CLEARLY
IDENTIFY WHICH IS TO BE FURNISHED.
3.12.15 THE CONTRACTOR IS RESPONSIBLE FOR OBTAINING AND DISTRIBUTING
PRINTS OF SHOP DRAWINGS TO HIS SUBCONTRACTORS AND MATERIAL SUPPLIERS. PRINTS OF
REVIEWED SHOP DRAWINGS SHALL BE MADE FROM TRANSPARENCIES RETURNED BY THE
ARCHITECT. ONE SET OF APPROVED SHOP DRAWINGS MUST BE KEPT AT THE JOB SITE FIELD
OFFICE AT ALL TIMES BY THE CONTRACTOR.
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. THE CONTRACTOR SHALL
COORDINATE THE USE OF THE SITE WITH THAT OF THE OWNER AND OTHER CONTRACTORS, AND
SHALL NOT UNREASONABLY ENCUMBER OR RESTRICT THE SITE FROM USE BY OTHER
CONTRACTORS.
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 or separate contractors
by cutting, patching or otherwise altering such construction, or by excavation.
The Contractor shall not cut or otherwise alter such construction by the Owner
or a separate contractor except with written consent of the Owner. Such consent
shall not be unreasonably withheld. The Contractor shall not unreasonably
withhold from the Owner or a separate contractor the Contractor's consent to
cutting or otherwise altering the Work.
3.15 CLEANING UP
3.15.1 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 IN ACCORDANCE WITH, BUT NOT LIMITED
TO THE FOLLOWING:
3.15.1.1 WASTE AND RUBBISH SHALL BE ACCUMULATED IN TRASH BINS AND SHALL BE
REMOVED FROM THE SITE AS THE BINS ARE FILLED AND AS REQUIRED BY THE OWNER:
3.15.1.2 TOOLS, EQUIPMENT AND SURPLUS MATERIALS SHALL BE REMOVED FROM
THE SITE AT THE COMPLETION OF EACH PORTION OF THE WORK; AND
3.15.1.3 ALL WASTE, RUBBISH, TOOLS, EQUIPMENT AND SURPLUS MATERIALS
SHALL BE REMOVED FROM THE SITE AT COMPLETION OF THE PROJECT.
3.15.2 AFTER FIVE(5) DAYS' PRIOR WRITTEN NOTICE BY THE OWNER, IF the Contractor
fails to clean up as provided in the Contract Documents, OR IF THE CONTRACTOR
FAILS TO ADEQUATELY RESPOND TO SUCH WRITTEN NOTICE, the Owner may do so and the
cost thereof shall be charged to the Contractor.
3.16 ACCESS TO WORK
3.16.1 The Contractor shall provide the Owner 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 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
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 repoduced without violation until the date of expiration as noted
below.
Electronic Format A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 - Page #13
<PAGE>
manufacturers is required by the Contract 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.
3.18 INDEMNIFICATION
3.18.1 To the fullest extent permitted by law, the Contractor shall indemnify
and hold harmless the Owner, BEAU RIVAGE CONSTRUCTION, A DIVISION OF BEAU RIVAGE
RESORTS, INC.; MIRAGE RESORTS, INCORPORATED; GNLV CORP.; GOLDEN NUGGET BILOXI,
INC.; BUNGALOW, INC.; BEAU RIVAGE RESORTS, INC.; ATLANDIA DESIGN AND
FURNISHINGS, INC., and ALL OF THEIR agents and employees (HEREINAFTER
COLLECTIVELY "INDEMNITEES") from and against claims, damages, losses and
expenses, including but not limited to attorneys' fees AND COURT COSTS, arising
out of or resulting from performance of the Work, provided that such claim,
damage, loss or expense (1) 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, AND (2) IS CAUSED BY ANY
negligent acts or omissions of the Contractor, its Subcontractors, anyone
directly or indirectly employed by them, or anyone for whose acts THE CONTRACTOR
MAY OTHERWISE BE LEGALLY LIABLE. THIS AGREEMENT TO INDEMNIFY AND HOLD THE
INDEMNITEES HARMLESS SHALL APPLY EXCEPT TO THE EXTENT THAT SUCH CLAIM, DAMAGE,
LOSS OR EXPENSE IS ATTRIBUTABLE TO THE NEGLIGENT OR WILLFUL ACT OR OMISSION OF
ANY OF THE INDEMNITEES OR ANYONE DIRECTLY OR INDIRECTLY EMPLOYED BY ANY OF THEM
OR ANYONE FOR WHOSE ACTS ANY OF THE INDEMNITEES MAY BE LEGALLY LIABLE. EXCEPT AS
PROVIDED HEREIN, SUCH obligation shall not be construed to negate, abridge, or
OTHERWISE reduce ANY other rights or obligations of indemnity which would
otherwise exist as to a party or person described in this Paragraph 3.18. THIS
INDEMNIFICATION SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THE AGREEMENT.
3.18.2 TO THE FULLEST EXTENT PERMITTED BY LAW, THE OWNER, BEAU RIVAGE
CONSTRUCTION, A DIVISION OF BEAU RIVAGE RESORTS, INC.; MIRAGE RESORTS,
INCORPORATED; GNLV CORP.; GOLDEN NUGGET BILOXI, INC; BUNGALOW, INC.; BEAU RIVAGE
RESORTS, INC.; ATLANDIA DESIGN AND FURNISHINGS, INC., SHALL INDEMNIFY AND HOLD
HARMLESS THE CONTRACTOR, ITS SUBCONTRACTORS AND ALL OF THEIR AGENTS AND
EMPLOYEES (HEREINAFTER COLLECTIVELY "INDEMNITEES") FROM AND AGAINST ALL CLAIMS,
DAMAGES, LOSSES AND EXPENSES, INCLUDING, BUT NOT LIMITED TO, ATTORNEYS' FEES AND
COURT COSTS, WHICH ARISE OUT OF OR RESULT FROM, THE PERFORMANCE OF THE WORK OR
WHICH ARE ALLEGED TO HAVE OCCURRED DURING THE OWNER'S OCCUPATION OR USE OF THE
COMPLETED PROJECT, PROVIDED THAT ANY SUCH CLAIM, DAMAGE, LOSS OR EXPENSE (1) 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; AND (2) IS CAUSED BY ANY NEGLIGENT ACT OR OMISSION OF
THE OWNER, BEAU RIVAGE CONSTRUCTION, A DIVISION OF BEAU RIVAGE RESORTS, INC.;
MIRAGE RESORTS, INCORPORATED; GNLV CORP.; GOLDEN NUGGET BILOXI, INC.; BUNGALOW
INC.; BEAU RIVAGE RESORTS, INC.; ATLANDIA DESIGN & FURNISHINGS, INC., OR ANYONE
DIRECTLY OR INDIRECTLY EMPLOYED BY ANY OF THEM OR ANYONE FOR WHOSE ACTS THE
OWNER, BEAU RIVAGE CONSTRUCTION, A DIVISION OF BEAU RIVAGE RESORTS, INC;
MIRAGE RESORTS, INCORPORATED; GNLV CORP.; GOLDEN NUGGET BILOXI, INC.; BUNGALOW,
INC.; BEAU RIVAGE RESORTS, INC.; ATLANDIA DESIGN AND FURNISHINGS, INC., MAY
OTHERWISE BE LEGALLY LIABLE. THIS AGREEMENT TO INDEMNIFY AND HOLD THE
INDEMNITEES HARMLESS SHALL APPLY EXCEPT TO THE EXTENT THAT SUCH CLAIM, DAMAGE,
LOSS OR EXPENSE IS ATTRIBUTABLE TO THE NEGLIGENT OR WILLFUL ACT OR OMISSION OF
ANY OF INDEMNITEES OR ANYONE DIRECTLY OR INDIRECTLY EMPLOYED BY ANY OF THEM OR
ANYONE FOR WHOSE ACTS ANY OF THE INDEMNITEES MAY BE LEGALLY LIABLE. EXCEPT AS
PROVIDED HEREIN, SUCH OBLIGATION SHALL NOT BE CONSTRUED TO NEGATE, ABRIDGE OR
OTHERWISE REDUCE ANY OTHER RIGHT OR OBLIGATION OF INDEMNITY WHICH WOULD
OTHERWISE EXIST AS TO ANY PARTY OR PERSON DESCRIBED IN THIS PARAGRAPH 3.18. THIS
INDEMNIFICATION SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THE AGREEMENT.
3.18.3 The obligations of the Contractor under this Paragraph 3.18 shall not
extend to the liability of the Architect, the Architect's 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 Architect, the Architect's 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.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #14
<PAGE>
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. THE TERM "ARCHITECT" MAY ALSO MEAN THE OWNER'S OTHER CONSULTANTS
SUCH AS THE INTERIOR DESIGNER, LIGHTING DESIGNER, LANDSCAPE ARCHITECT AND
OTHERS.
4.1.2 Duties, responsibilities and limitations of authority of the Architect as
set forth in the Contract Documents shall not be restricted, modified or
extended without written consent of the Owner, AND Contractor. Consent shall not
be unreasonably withheld.
4.1.3 In case of termination of employment of the Architect, the Owner AFTER
CONSULTATION WITH THE CONTRACTOR, shall appoint an architect against whom the
Contractor makes no reasonable objection and whose status under the Contract
Documents shall be that of the former architect.
4.1.4 Disputes arising under Subparagraphs 4.1.2 and 4.1.3 ABOVE SHALL BE
DECIDED BY ANY REMEDIES AVAILABLE TO EITHER PARTY AT LAW OR EQUITY.
4.2 ARCHITECT'S ADMINISTRATION OF THE CONTRACT
4.2.1 The Architect MAY BE AN OWNER'S REPRESENTATIVE (1) DURING CONSTRUCTION,
(2) UNTIL FINAL PAYMENT IS DUE AND (3) WITH THE OWNER'S CONCURRENCE, FROM TIME
TO TIME DURING THE CORRECTION PERIOD DESCRIBED IN PARAGRAPH 12.2. The Architect
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.
4.2.2 The Architect will visit THIS site at intervals appropriate to the stage
of construction to become generally familiar with the progress and quality of
the completed PORTIONS OF THE 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. However, the Architect will not be
required to make exhaustive or continuous on-site inspections to check quality
or quantity of the Work. ARCHITECT SHALL PROVIDE FULL TIME ON-SITE
REPRESENTATION. 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 OF THE
CONTRACTOR.
4.2.3 The 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. The Architect will not be responsible for the Contractor's failure to carry
out the Work in accordance with the Contract Documents. The Architect will not
have control over or charge of and will not be responsible for acts or omissions
of the Contractor, Subcontractors, or their agents or employees, or of any other
persons performing portions of the Work.
4.2.4 COMMUNICATIONS FACILITATING CONTRACT ADMINISTRATION. Except as otherwise
provided in the Contract Documents or when direct communications have been
specially authorized, the Owner and Contractor shall endeavor to communicate
through 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 Owner. THIS PARAGRAPH SHALL NOT DELETE
OR ABRIDGE THE OWNER'S RIGHT TO COMMUNICATE DIRECTLY WITH THE CONTRACTOR, HIS
SUBCONTRACTORS AND THE ARCHITECT'S CONSULTANTS WHEN THE OWNER DEEMS IT
APPROPRIATE, NOR SHALL THIS PARAGRAPH DELETE OR ABRIDGE THE CONTRACTOR'S RIGHT
TO COMMUNICATE DIRECTLY WITH THE OWNER, THE OWNER'S SEPARATE CONTRACTORS AND THE
ARCHITECT.
4.2.5 Based on the Architect's observations and evaluations of the
Contractor's Applications for Payment, the Architect will review and certify the
amounts due the Contractor and will issue Certificates for Payment in such
amounts FOR APPROVAL BY THE OWNER.
4.2.6 The Architect will have authority to reject Work which does not conform
to the Contract Documents. Whenever the Architect considers it necessary or
advisable
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.Doc -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #15
<PAGE>
for implementation of the intent of the Contract Documents, the Architect 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. 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 Contractor, Subcontractors, material and equipment suppliers,
their agents or employees, or other persons performing portions of the Work.
4.2.7 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 as to cause
no delay in the Work or in the activities of the Owner, Contractor or separate
contractors, 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.
4.2.8 The Architect or the Owner will prepare Change Orders and Construction
Change Directives, and may authorize minor changes in the Work as provided in
Paragraph 7.4.
4.2.9 The Architect will conduct inspections to determine the date or dates
of Substantial Completion and the date of final completion, will receive and
forward to the Owner for the Owner's review and records written warranties and
related documents required by the Contract and assembled by the Contractor, and
will issue a final Certificate for Payment subject to the Owner's approval, upon
compliance with the requirements of the Contract Documents.
4.2.10 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.
4.2.11 The Architect will interpret and render opinions concerning
performance under and requirements of the Contract Documents on written request
of either the 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
4.2, then delay shall not be recognized on account of failure by the Architect
to furnish such interpretations until ten (10) working days after written
request is made for them.
4.2.12 Interpretations and opinions 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.
4.2.13 The Architect's decisions on matters relating to aesthetic effect will
be final if consistent with the intent expressed in the Contract Documents and
consistent with the Owner's directives.
4.3 CLAIMS AND DISPUTES
4.3.1 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.
4.3.2 DECISION OF ARCHITECT. Claims, including those alleging an error or
omission by the Architect, shall be referred initially to the Owner and the
Architect for action as provided in Paragraph 4.4.
- - --------------------------------------------------------------------------------
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC--9/22/1997. AIA Number 104983, which expires on
11/1/1997 -- Page #16
<PAGE>
4.3.3 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.
4.3.4 CONTINUING CONTRACT PERFORMANCE. Pending final resolution of a Claim,
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.
4.3.5 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.
4.3.6 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 and the Owner
for initial determination, subject to further proceedings pursuant to Paragraph
4.4.
4.3.7 CLAIMS FOR ADDITIONAL COST. If the Contractor wishes to make Claim for
an increase in the Contract Sum, the Contractor shall give the Owner and the
Architect written notice thereof within 21 working days after knowledge of the
event giving rise to such claim. This notice shall be given by the Contractor
before proceeding to execute the Work, except in an emergency endangering life
or property in which case the Contractor shall proceed in accordance with
Paragraph 10.3. If the Owner and the Contractor cannot agree on the amount of
the adjustment in the Contract Sum, it shall be determined as herein specified.
Any change in the Contract Sum resulting from such claim shall be authorized by
Change Order.
4.3.8 CLAIMS FOR ADDITIONAL TIME
4.3.8.1 If the Contractor wishes to make Claim for all increase in the Contract
Time, written notice as provided herein shall be given. The Contractor's Claim
shall include a detailed estimate of cost to the extent available and of
probable effect of delay on progress of the Work. In the case of a continuing
delay only one Claim is necessary.
4.3.8.2 If adverse weather conditions are the basis for a Claim for additional
time, such Claim shall be documented by
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #17
<PAGE>
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.
4.3.9 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 acts 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 4.3.7 or 4.3.8.
4.4 RESOLUTION OF CLAIMS AND DISPUTES
4.4.1 The Architect and/or the Owner 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 and/or the Owner expects 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 and/or the Owner may also, but is not obligated to,
notify the surety, if any, of the nature and amount of the Claim.
4.4.2 If a Claim has been resolved, the Architect and/or the Owner will
prepare or obtain appropriate documentation.
4.4.3 If a Claim has not been resolved, the party making the Claim shall,
within ten days after the Architect's and/or the Owner's response, take one or
more of the following actions: (1) submit additional supporting data requested
by the Architect and/or the Owner, (2) modify the initial Claim or (3) notify
the Architect and/or the Owner that the initial Claim stands.
4.4.4 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
and/or the Owner, the Architect and/or the Owner will notify the parties in
writing that the Architect's and/or the Owner's decision will be made within
seven days. Upon expiration of such time period, the Architect and/or the Owner
will render to the parties the Architect's and/or the Owner'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 and/or the Owner may, but is not obligated
to, notify the surety and request the surety's assistance in resolving the
controversy.
4.5 ARBITRATION
4.5.1 CONTROVERSIES AND CLAIMS SUBJECT TO ARBITRATION. All claims, disputes
and other matters in question between the Contractor and the Owner arising out
of, or relating to, the Contract Documents or the breach thereof except
controversies or Claims relating to aesthetic effect and except those waived as
provided for in Subparagraph 4.3.5. shall be decided by any remedies available
to either party at law or equity. The prevailing party in any such action shall
be entitled to full reimbursement of its attorneys' fees and costs.
4.5.2 RULES AND NOTICES FOR ARBITRATION.
4.5.3 CONTACT PERFORMANCE DURING ARBITRATION.
4.5.4 WHEN ARBITRATION MAY BE DEMANDED.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #18
<PAGE>
4.5.4.1
4.5.4.2
4.5.5 LIMITATION ON CONSOLIDATION OR JOINDER.
4.5.6 CLAIMS AND TIMELY ASSERTION OF CLAIMS.
4.57 JUDGEMENT ON FINAL AWARD.
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 "Sub-
contractor" 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
contract with a Subcontractor to perform a portion of the Work at the site. The
term "Sub-subcontractor" 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.
5.1.3 Any subdivision or affiliate of the Contractor may bid as a
subcontractor, with the Owner's approval. The Contractor shall fully disclose to
the Owner such subdivision or affiliate prior to bid.
5.2 AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS OF THE WORK
5.2.1 Unless otherwise required by the Contract Documents or the bidding
documents, the Contractor, as soon as practicable after award of the Contract,
shall furnish in writing to the Owner and the 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. Upon
receipt, the Owner or the Architect shall advise the Contractor of any
reasonable objection to any such proposed persons or entities performing work on
the Project.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION-
FOURTEENTH EDITION - AIA COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #19
<PAGE>
5.2.1.1 THE CONTRACTOR SHALL OBTAIN, AS PART OF THE BIDDING DOCUMENTS AND
REQUIREMENTS TO SUBCONTRACTORS, THE SUBCONTRACTOR'S ALLOWANCES FOR OVERHEAD
AND PROFIT CAUSED BY ADDED, DELETED OR MODIFIED WORK. THE ALLOWANCES SHALL BE NO
GREATER THAN THOSE STIPULATED IN PARAGRAPH 7.2.1. OF THESE GENERAL CONDITIONS,
UNLESS APPROVED BY THE OWNER.
5.2.2 The Contractor shall not contract with a proposed person or entity to
whom the Owner 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 or Architect has reasonable objection to a person or
entity proposed by the Contractor, the Contractor shall propose another to whom
the Owner or Architect has no 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 be change a Subcontractor, person or entity
previously selected if the Owner 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 and Architect. Each subcontract agreement shall preserve and protect the
rights of the Owner 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. Where appropriate, the Contractor shall require
each Subcontractor to enter into similar agreements with Sub-subcontractors. The
Contractor shall make available to each proposed Subcontractor, prior to the
execution of the subcontract agreement, copies of the Contract Documents to
which the Subcontractor will be bound. 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 If the Work has been suspended for more than 30 days, the
Subcontractor's compensation shall be equitably adjusted.
ARTICLE 6
CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS
6.1 OWNERS RIGHT TO PERFORM CONSTRUCTION AND TO AWARD SEPARATE CONTRACTS
6.1.1 The Owner reserves the right to perform construction or operations
related to the Project with the Owner's own forces, and to award separate
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 separate contracts are awarded for different portions of the
Project or other construction or operations on
________________________________________________________________________________
AIA DOCUMENT A201- GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA Licensed Number 104983, which expires
on 11/1/1997 -- Page #20
<PAGE>
the site, the term "Contractor" in the Contract Documents in each case shall
mean the Contractor who executes each separate Owner-Contractor Agreement.
6.1.3 The CONTRACTOR shall provide for coordination of the activities of the
Owner's SEPARATE CONTRACTORS AS IT PERTAINS TO THE CONTRACTOR'S PORTION OF THE
WORK AND THE INTEGRATION OF THE CONTRACTOR'S WORK WITH OTHERS. The Contractor
shall participate with THE OWNER AND other separate contractors in reviewing THE
construction schedules. The Contractor AND THE OWNER shall make any revisions to
the construction schedule deemed necessary after a joint review and mutual
agreement. The construction schedules shall then constitute the schedules to be
used by the Contractor, separate contractors and the Owner until subsequently
revised.
6.1.4 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 Article 3, this
Article 6 and Articles 10, 11 and 12.
6.1.5 THE CONTRACTOR SHALL PROVIDE USE OF ELEVATORS AS MAY BE NECESSARY TO
PERFORM THE WORK OF SEPARATE CONTRACTORS AND FF & E INSTALLATION. ALL SUCH WORK
SHALL BE COORDINATED WITH CONTRACTOR, OWNER. ANY DAMAGE CAUSED BY SEPARATE
CONTRACTORS SHALL BE RESPONSIBILITY OF SUCH CONTRACTOR.
6.2 MUTUAL RESPONSIBILITY
6.2.1 The Contractor shall afford the Owner 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 or a separate contractor, the
Contractor shall, prior to proceeding with that portion of the Work, promptly
report to the OWNER AND THE 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
acknowledgment that the Owner's 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 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 disputes and matters in question between the Contractor
and a separate contractor shall be subject to the provisions of Paragraph 4.3
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 Architect OWNER 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 Change Order, Construction Change
Directive or order for a minor change in the Work, 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, Contractor
and Architect; a Construction Change Directive requires agreement by the Owner
and Architect and may or may not be agreed to by the Contractor; an order for a
minor change in the Work may be issued by the Architect alone.
7.1.3 Changes in the Work shall be performed under applicable provisions of the
Contract Documents, and the
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #21
<PAGE>
Contractor shall proceed promptly, unless otherwise provided in the Change
Order, Construction Change Directive or order for a minor change in the Work.
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 Architect and
signed by the Owner, Contractor and Architect, 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;
.3 the extent of the adjustment in the Contract Time, if any; and
.4 The Subcontractor's allowance for overhead (no greater than 10%)
and profit (no greater than 5%). The percentage of profit shall not be
calculated on top of the percentage of overhead. The percentage of overhead
shall not be computed as a mark-up above the sales taxes, bond costs, and
insurance costs (excluding burden) that may have been involved in the Change
Order. This paragraph does not apply to certain early awarded subcontractors
which have been approved by the Owner.
.5 The Contractor's General Conditions will be increased by 3% of the
cost of the Change Order.
.6 The Contractor's Fee will be increased by 3% of the cost of the
Work up to the Contractor's Fixed Fee as set forth in Paragraph 5.1 of the
Standard Form of Agreement between Owner and Contractor.
7.2.2 Methods used in determining adjustments to the Contract Sum may include
those listed in Subparagraph 7.3.3.
7.2.3 A Change Proposal is a written instrument prepared by the Contractor,
submitted to the Owner and the Architect for a Change in the Work, requesting
a Change Order. A Change Proposal may be the result of:
7.2.3.1 The Owner and/or the Architect requesting a change in the Work by
issuing to the Contractor a Request for Proposal (R.F.P.) or;
7.2.3.2 The Contractor notifying the Owner and the Architect of a
pending Change in the Work.
7.2.4 A Change Proposal, when approved by the Owner, shall be
incorporated into a Change Order.
7.2.5 If the Owner and the Contractor are not in total agreement on the
content and conditions of the Change Proposal and the Owner requests the
Change in the Work to commence, the Owner and the Architect shall issue a
Construction Change Directive pursuant to the provisions of Paragraph 7.3 below.
7.3 CONSTRUCTION CHANGE DIRECTIVES
7.3.1 A Construction Change Directive is a written order prepared by the
Architect or Owner and signed by the Owner, 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 or a Change Proposal.
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 Owner and
the Architect of the Contractor's agreement or disagreement with the method,
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC--9/23/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #22
<PAGE>
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 Owner on the basis of reasonable costs 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 Owner 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'
or workmen's 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 directly related to the Work;
.5 additional costs of supervision and field office personnel directly
attributable to the change; and
.6 costs of subcontracts attributable to the change.
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. 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
7.3.9 When the Owner and Contractor agree concerning the adjustments in the
Contract Sum and Contract Time, or otherwise reach agreement upon the
adjustments, such agreement shall be effective immediately and shall be recorded
by preparation and execution of an appropriate Change Order.
7.4 MINOR CHANGES IN THE WORK
7.4.1 The Architect will have authority to order minor changes in the Work not
involving adjustment in the Contract Sum or extension of the Contract Time and
not inconsistent with the intent of the Contract Documents. Such changes shall
be effected by written order and shall be binding on the Owner and Contractor.
The Contractor shall carry out such written orders promptly. Written Order is
defined as: Request for Information (RFI) and any other form of written
communication submitted by the Architect.
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.
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AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #23
<PAGE>
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 the Agreement the Contractor confirms that the Contract
Time is a reasonable period for performing the Work.
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 within the Contract Time.
8.3 DELAYS AND EXTENSIONS OF TIME
8.3.1 If the Contractor is delayed at any time in progress of the Work by any
act or neglect of the Owner or Architect, or by any employee of either, or by
any separate contractor employed by the Owner, 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 any other
cause which may justify the delay, then the Contract Time shall be extended by
Change Order for such reasonable time as the Owner and Contractor may determine.
No extension of Contract Time shall be permitted under the term of this
Subparagraph for a work slowdown, stoppage or similar event arising from any
labor dispute or disagreement unrelated to the Work and delay in deliveries to
the extent such delays are within control of the Contractor.
8.3.2 Claims relating to time shall be made in accordance with applicable
provisions of Paragraph 4.3.
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 and the Owner a schedule of values allocated in the
Owner-Contractor Agreement to various portions of the Work, prepared in such
form and supported by such data to substantiate its accuracy as the Architect
and the Owner may require. This schedule, unless objected to by the Owner, shall
be used as a basis for reviewing the Contractor's Applications for Payment. The
Schedule of Values shall be prepared on A.I.A. Document G702. Application and
Certificate for Payment, and A.I.A. Document G703, Continuation Sheet, and shall
be modified and expanded from time to time.
9.3 APPLICATIONS FOR PAYMENT
9.3.1 At least ten days before the date established for each progress payment,
the Contractor shall submit to the Architect and the Owner an itemized
Application for Payment for operations completed in accordance with the schedule
of values. Such application shall be notarized, and supported by data
substantiating the Contractor's right to payment.
9.3.1.1 Such applications may include requests for payment on account of changes
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.
9.3.1.3 The form of Application for Payment shall be A.I.A. Document G702.
Application and
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AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires on
11/1/1997 -- Page #24
<PAGE>
CERTIFICATE FOR PAYMENT: SUPPORTED BY A.I.A. DOCUMENT G703. CONTINUATION SHEET.
9.3.1.4 ALL SUBCONTRACTOR REQUESTS FOR PAYMENT SHALL BE MADE ON FORMS
SPECIFIED IN SUBPARAGRAPH 9.3.1.3.
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 that 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 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. EACH APPLICATION FOR PAYMENT SHALL INCLUDE A.I.A. DOCUMENT G706-A.
AFFIDAVIT OF RELEASE OF LIENS, AND A.I.A. DOCUMENT G706, AFFIDAVIT OF PAYMENT OF
DEBTS AND CLAIMS, FROM THE CONTRACTOR, ITS SUBCONTRACTORS, OR AS MAY BE REQUIRED
BY THE OWNER.
9.4 CERTIFICATES FOR PAYMENT
9.4.1 The Architect will, within five (5) days after receipt of the
Contractor's Application for Payment, either issue to the Owner a Certificate
for Payment, with a copy to the Contractor, for such amount as the Architect
recommends is properly due, or notify the Contractor and Owner in writing of the
Architect's reasons for withholding a certificate as provided in Subparagraph
9.5.1. UPON COMPLETION OF THE ARCHITECT'S REVIEW OF THE CONTRACTOR'S APPLICATION
FOR PAYMENT, THE ARCHITECT SHALL IMMEDIATELY FORWARD TO THE OWNER HIS
RECOMMENDATION BY SUBMISSION OF A CERTIFICATE FOR PAYMENT.
9.4.2 The issuance of a Certificate for Payment will constitute a
representation by the Architect to the Owner, based on the Architect's
observations at the site and the data comprising the Application for Payment,
that the Work has progressed to the point indicated and that, to the best of the
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 Architect. The issuance of a
Certificate for Payment will further constitute a representation that the
Contractor is entitled to payment in the amount certified IN THE OPINION OF THE
ARCHITECT. However, the issuance of a Certificate for Payment will not be a
representation that the Architect has (1) made exhaustive or continuous on-site
inspections to check the quality or quantity of the Work, (2) reviewed
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 Architect OR THE OWNER 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 EITHER THE OWNER'S OR the Architect's
opinion the representations to the Owner required by Subparagraph 9.4.2 cannot
be made. If the Architect is unable to certify payment in the amount of the
Application, the Architect will notify the Contractor and Owner as provided in
Subparagraph 9.4.1. If the Contractor AND THE OWNER and Architect cannot agree
on a revised amount, the Architect will promptly issue a Certificate for Payment
for the amount for which the Architect is able to make such representations to
the Owner. The Architect OR THE OWNER 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 Architect's opinion to protect the Owner
from loss because of:
.1 defective Work not remedied;
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #25
<PAGE>
.2 third party claims filed or reasonable evidence indicating probable
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 A SEPERATE contractor CAUSED BY THE 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 persistent 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 After the Architect has issued a Certificate for Payment, AND SUBJECT
TO THE OWNER'S APPROVAL, the Owner shall make payment in the manner and within
the time provided in the Contract Documents.
9.6.2 The Contractor shall promptly 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, IN THE CONTRACTOR'S SUBCONTRACT AGREEMENT. The Contractor shall, by
appropriate agreement with each Subcontractor, require each Subcontractor to
make payments to Sub-subcontractors in similar manner.
9.6.3 The OWNER MAY, on request AND AT HIS DISCRETION, furnish to ANY
Subcontractor, if practicable, information regarding percentages of completion
ON THE amounts applied for by the Contractor and action taken thereon by the
Architect and Owner on account of portions of the Work done by such
Subcontractor.
9.6.4 Neither the Owner 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 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 the Architect does not issue a Certificate for Payment, through no
fault of the Contractor, within FIVE (5) days after receipt of the Contractor's
Application for Payment, or if the Owner does not pay the Contractor within
THREE (3) days after the date established in the Contract Documents the amount
certified by the Architect, then the Contractor may, upon ONE (1) additional
days' written notice to the Owner and Architect, stop the Work until payment of
the amount owing has been received. The Contract SUM SHALL BE INCREASED BY THE
AMOUNT OF THE CONTRACTOR'S REASONABLE COSTS OF SHUTDOWN, DELAY AND START-UP,
WHICH SHALL BE EFFECTED BY APPROPRIATE CHANGE ORDER, AND THE CONTRACT TIME SHALL
BE EXTENDED BY THE AMOUNT OF TIME THE CONTRACTOR IS DELAYED.
9.8 SUBSTANTIAL COMPLETION
9.8.1 Substantial Completion SHALL BE DEFINED AS: A) TOTAL COMPLETION OF THE
WORK IN ACCORDANCE WITH THE CONTRACT DOCUMENTS, EXCEPT FOR MINOR PUNCH LIST
ITEMS, WHICH SHALL NOT EFFECT THE OWNER'S BENEFICIAL USE AND; B) CERTIFICATE OF
OCCUPANCY FOR THE PROJECT ISSUED BY THE CITY OF BILOXI. CERTAIN PORTIONS OR
COMPONENTS OF THE WORK MAY BE COMPLETED BY THE CONTRACTOR FOR OWNER BENEFICIAL
USE. WHEN SUCH PORTIONS OR COMPONENTS OF THE WORK ARE OCCUPIED BY THE OWNER,
THEN THE WARRANTY PERIOD SHALL BEGIN FOR SUCH PORTION OR COMPONENT OF THE WORK.
9.8.2 When the Contractor considers that the Work, or a
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA COPYRIGHT 1987 - 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 A201-1987
User Documents: 922.DOC - 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #26
<PAGE>
portion thereof which the Owner agrees to accept separately, is substantially
complete, the Contractor shall prepare and submit to the Architect AND OWNER 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
Contractor's list, the Architect AND THE OWNER will make an inspection to
determine whether the Work or designated portion thereof is substantially
complete. If the Architect's inspection AND/OR THE OWNER'S INSPECTION discloses
any item, whether or not included on the Contractor's 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 AND THE OWNER 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 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 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 Architect AND
APPROVAL BY THE OWNER, the Owner shall make payment, reflecting adjustment in
retainage, if any, for such Work or portion thereof as provided in the Contract
Documents.
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 APPLICABLE PORTIONS OF ARTICLE 11
- - - INSURANCE AND BONDS 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 shall
prepare and submit a list to the Architect AND THE OWNER 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 AND THE OWNER.
9.9.2 Immediately prior to such partial occupancy or use, the Owner, 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 receipt of written notice that the Work is ready for final
inspection and acceptance and upon receipt of a final Application for Payment,
the Architect will promptly make such inspection and, when the Architect finds
the Work acceptable under the Contract Documents and the Contract fully
performed, the Architect will promptly issue a final Certificate for Payment FOR
APPROVAL BY THE OWNER stating that to the best of the Architect's knowledge,
information and belief, and on the basis of the Architect's 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 IN THE
ARCHITECT'S OPINION. The Architect's final Certificate for Payment will
constitute a further representation OF THE ARCHITECT'S OPINION 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 FINAL PAYMENT SHALL NOT become due until the Contractor submits to the
Architect (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 WILL BE
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 --Page #27
<PAGE>
PAID AS FOLLOWS: (I) WITH RESPECT TO PREVIOUS APPLICATIONS FOR PAYMENT FOR WHICH
THE CONTRACTOR HAS BEEN PAID IN FULL SUCH INDEBTEDNESS HAS BEEN PAID OR
OTHERWISE SATISFIED AND (II) WITH RESPECT TO THE APPLICATION FOR FINAL PAYMENT
OR OTHER APPLICATIONS FOR PAYMENT FOR WHICH THE CONTRACTOR HAS NOT RECEIVED FULL
PAYMENT, SUCH INDEBTEDNESS WILL BE PAID ONLY AS A CONDITION PRECEDENT, PROMPTLY
AFTER THE CONTRACTOR'S ACTUAL RECEIPT OF FULL PAYMENT FROM THE OWNER."0
SUBMITTED ON A.I.A. DOCUMENT G706. CONTRACTOR'S AFFIDAVIT OF PAYMENT OF DEBTS
AND CLAIMS. (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 cancelled or allowed to expire until at least SIXTY (60) 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) ALL
RECORDS, TRANSPARENCIES AND PRINTS SPECIFIED TO BE PREPARED AND MAINTAINED BY
THE VARIOUS SUBCONTRACTORS REQUIRED BY THE CONTRACT DOCUMENTS. (5) ALL
MANUFACTURERS' OPERATION MANUALS, SERVICE MANUALS, SCHEDULE, ETC., REQUIRED BY
THE CONTRACT DOCUMENTS (6) ALL WRITTEN GUARANTEES AND WARRANTIES REQUIRED BY THE
CONTRACT DOCUMENTS. (7) consent of surety, if any, to final payment and (8)
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, INCLUDING SUBMISSION OF A COMPLETED
A.I.A. DOCUMENT G706A, CONTRACTOR'S AFFIDAVIT OF RELEASE OF LIENS AND to the
extent and in such form as may be designated by the Owner. If a Subcontractor
refuses 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. 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.
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 Architect so confirms, the
Owner shall, upon application by the Contractor and certification by the
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 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 4.3.5. FINAL PAYMENT
SHALL BE PAID BY THE OWNER TO THE CONTRACTOR UPON FINAL COMPLETION OF THE WORK
AND A CERTIFICATE OF PAYMENT ISSUED BY THE ARCHITECT AND APPROVED BY THE OWNER.
PAYMENT TERMS WILL BE CONSISTENT WITH 12.3 OF THIS AGREEMENT.
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 4.3.5.
9.11.1 NOTHING IN THE AGREEMENT OR OTHER CONTRACT DOCUMENTS IS
INTENDED NOR MAY BE CONSTRUED TO WAIVE, ABRIDGE, OR ADVERSELY AFFECT
CONTRACTOR'S RIGHT TO MAKE THE CONTRACTOR'S ACTUAL RECEIPT OF PAYMENT FROM THE
OWNER A CONDITION PRECEDENT TO THE CONTRACTOR'S PAYMENT (WHETHER PROGRESS, FINAL
OR ANY OTHER PAYMENT) TO SUBCONTRACTORS, SUPPLIERS OR OTHER CONTRACTEES. IF THE
CONTRACTOR OR ITS CONTRACTEES ARE REQUIRED TO SUBMIT AFFIDAVITS OF PAYMENT,
WAIVERS OF RIGHTS, RELEASES OF CLAIMS OR THE LIKE, SUCH REQUIREMENTS WILL NOT BE
DEEMED EFFECTIVE AS TO UNPAID CONTRACT BALANCES AND RETAINAGE UNTIL SAME ARE
ACTUALLY RECEIVED BY THE CONTRACTOR FROM THE OWNER.
ARTICLE 10
PROTECTION OF PERSONS AND PROPERTY
10.1 SAFETY PRECAUTIONS AND PROGRAMS
10.1.1 The Contractor shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with WORK, AND
COOPERATE FULLY WITH THOSE PROGRAMS THAT MAY BE REASONABLY REQUIRED BY THE OWNER
OR OWNER'S INSURANCE CARRIERS OR UNDERWRITERS.
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 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
- - --------------------------------------------------------------------------------
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997.AIA License Number 104983, which expires
on 11/1/1997 -- Page #28
<PAGE>
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.
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, Architect, 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 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 or indemnity which would otherwise exist as to a party or person
described in this Subparagraph 10.1.4.
10.2 SAFETY OF PERSONS AND PROPERTY
10.2.1 The Contractor shall take reasonable precautions for safety of, and
shall provide reasonable protection to prevent damage, injury or loss to:
.1 employees on the Work and other persons who may be affected thereby;
.2 the Work and materials and equipment to be incorporated therein, whether
in storage on or off the site, under care, custody or control of the
Contractor or the Contractor's Subcontractors or Sub-subcontractors; and
.3 other property at the site or adjacent thereto, such as trees, shrubs,
lawns, walks, pavements, roadways, structures and utilities not
designated for removal, relocation or replacement in the course of
construction.
10.2.2 The Contractor shall give notices and comply with applicable laws,
ordinances, rules, regulations and lawful orders of public authorities bearing
on safety of persons or property or their protection from damage, injury or
loss.
10.2.3 The Contractor shall erect and maintain, as required by existing
conditions and performance of the Contract, reasonable safeguards for safety and
protection, including posting danger signs and other warnings against hazards,
promulgating safety regulations and notifying owners and users of adjacent sites
and utilities.
10.2.4 When use or storage of explosives or other hazardous materials or
equipment or unusual methods are necessary for execution of the Work, the
Contractor shall exercise utmost care and carry on such activities under
supervision of properly qualified personnel.
10.2.5 The Contractor shall promptly remedy damage and loss (other than damage
or loss insured under property insurance required by the Contract Documents) to
property referred to in Clauses 10.2.1.2 and 10.2.1.3 caused in whole or in part
by the Contractor, a Subcontractor, a Sub-subcontractor, or anyone directly or
indirectly employed by any of them, or by anyone for whose acts they may be
liable and for which the Contractor is responsible under Clauses 10.2.1.2 and
10.2.1.3, except damage or loss attributable to acts or omissions of the Owner
or Architect or anyone directly or indirectly employed by either of them, or by
anyone for whose acts either of them may be liable, and not attributable to the
fault or negligence of the Contractor. The foregoing obligations of the
Contractor are in addition to the Contractor's obligations under Paragraph 3.18.
10.2.6 The Contractor shall designate a responsible member of the Contractor's
organization at the site whose duty shall be the prevention of accidents. This
person shall be the Contractor's superintendent unless otherwise designated by
the Contractor in writing to the Owner and Architect.
10.2.7 The Contractor shall not load or permit any part of the construction or
site to be loaded so as to endanger its safety.
10.3 EMERGENCIES
10.3.1 In an emergency affecting safety of persons or property, the Contractor
shall act, at the Contractor's discretion, to prevent threatened damage, injury
or loss. Additional compensation or extension of time claimed by the Contractor
on account of an emergency shall be determined as provided in Paragraph 4.3 and
Article 7.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document:922.DOC -- 9/22/1997. AIA License Number 104983, which
expires on 11/1/1997 - Page #29
<PAGE>
ARTICLE 11
INSURANCE AND BONDS
11.1 CONTRACTOR'S LIABILITY INSURANCE
11.1.1 The Contractor shall purchase from and maintain in a company or
companies lawfully authorized to do business in the jurisdiction in which the
Project is located such insurance as will protect the Contractor from claims set
forth below which may arise out of or result from the Contractor's operations
under the Contract and for which the Contractor may be legally liable, whether
such operations be by the Contractor or by a Subcontractor or by anyone directly
or indirectly employed by any of them, or by anyone for whose acts any of them
may be liable. All insurance coverage must be provided by an insurance company
with a Best's Rating of AIX, such insurance company shall provide policies with
insurance coverage at not less than the limits set forth below, and such
policies shall be primary to any policy which the owner separately maintains.:
.1
11.1.1.1 WORKERS' COMPENSATION AND OCCUPATIONAL DISEASE INSURANCE
in accordance with applicable law or laws as follows:
* Statutory Coverage
* Employers Liability - $500,000 Each Accident
* Disease/Policy Limit - $500,000
* Disease/Each Employee - $500,000
* U.S. Longshoremen and Harbor Workers Act if applicable
* Maritime, including travel, maintenance and cure with a limit of
$5,000,000, if applicable. (This limit may be any combination of primary and
excess.)
* Employer's Liability Stop Gap coverage, if applicable.
.2
11.1.1.2 GENERAL LIABILITY INSURANCE LIMIT:
$2,000,000 General Aggregate
$1,000,000 Products/Completed Operations Aggregate
$1,000,000 Personal and Advertising Injury
$1,000,000 Each Occurrence
$100,000 Fire Damage
$10,000 Medical Expense
Coverage shall include the following extensions:
1.) Coverage shall include underground property damage, explosion and collapse;
2.) Watercraft exclusion shall be deleted;
3.) Aircraft exclusion shall be deleted; (separate insurance acceptable with a
$10,000,000 limit and the same extensions in coverage.
4.) Broad form contractual liability insurance coverage applicable to the
Contractor's obligations under Paragraph 3.18;
5.) Subrogation rights shall be waived against the owner;
6.) A separate General Aggregate limit shall apply for this Project;
7.) Beau Rivage Construction, a division of Beau Rivage Resorts, Inc.; Mirage
Resorts, Inc.; GNLV Corp.; Golden Nugget Biloxi, Inc.; Beau Rivage Resorts,
Inc,; Atlandia Design & Furnishings, Inc.; and its employees, subsidiaries
and consultants shall be included and named as additional insureds;
8.) Contractor's coverage shall be primary;
9.) Products/Completed Operations coverage, including coverage for the
additional insureds, shall continue for a minimum of three (3) years after
completion of the Project and issuance of Final Payment;
10.) Personal Injury Liability including Contractual Coverage;
11.) Broad Form Property Damage; and
12.) "Claims Made" coverage is not acceptable.
.3
11.1.1.3 AUTOMOBILE LIABILITY INSURANCE
Limit: $1,000,000 Combine Single Limit
Coverage shall include the following extensions:
1.) All owned, non-owned and hired automobiles;
2.) Beau Rivage Construction, a division of Beau Rivage Resorts, Inc.;
Mirage Resorts, Inc.; GNLV Corp.; Golden Nugget Biloxi, Inc.; Beau Rivage
Resorts, Inc,; Atlandia Design & Furnishings, Inc.; and its employees,
subsidiaries and consultants shall be included and named as additional
insureds;
3.) Subrogation rights shall be waived against the Owner as respects both
liability and physical damage; and
4.) Contractor's coverage shall be primary.
.4
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which
expires on 11/1/1997 - Page #30
<PAGE>
11.1.1.4 UMBRELLA INSURANCE
LIMIT: $10,000,000 EACH OCCURRENCE
LIMIT: $10,000,000 AGGREGATE
COVERAGE SHALL INCLUDE THE FOLLOWING EXTENSIONS:
1.) BEAU RIVAGE CONSTRUCTION, A DIVISION OF BEAU RIVAGE RESORTS, INC.; MIRAGE
RESORTS, INC.; GNLV CORP.; GOLDEN NUGGET BILOXI, INC.; BEAU RIVAGE RESORTS,
INC.; ATLANDIA DESIGN & FURNISHINGS, INC.; AND ITS EMPLOYEES, SUBSIDIARIES AND
CONSULTANTS SHALL BE INCLUDED AND NAMED AS ADDITIONAL INSUREDS;
2.) A SEPARATE GENERAL AGGREGATE SHALL APPLY FOR THIS PROJECT;
3.) COVERAGE SHALL BE AT LEAST AS BROAD AS THE PRIMARY GENERAL LIABILITY AND
AUTOMOBILE LIABILITY COVERAGE IDENTIFIED IN SUBPARAGRAPHS 11.1.1.2 AND 11.1.1.3;
4.) THE POLICY, OR POLICIES, SHALL CONTAIN "EFFECTIVE" AND "EXPIRATION" DATES
WHICH ARE CONCURRENT WITH THE DATES OF THE PRIMARY OR UNDERLYING COVERAGES;
5.) "CLAIMS MADE" COVERAGE IS NOT ACCEPTABLE; AND
6.) CONTRACTOR'S COVERAGE SHALL BE PRIMARY.
.5
.6
.7
11.1.1.5 POLLUTION INSURANCE:
CONTRACTOR SHALL PROCURE AND MAINTAIN FOR THE DURATION OF THE CONTRACT POLLUTION
LIABILITY INSURANCE AGAINST CLAIMS FOR INJURES TO PERSONS OR DAMAGES TO PROPERTY
WHICH MAY ARISE FROM OR IN CONNECTION WITH THE PERFORMANCE OF THE WORK HEREUNDER
BY THE CONTRACTOR, HIS AGENTS, REPRESENTATIVES, EMPLOYEES OR SUBCONTRACTORS.
COVERAGE SHALL BE AT LEAST AS BROAD AS:
.1 CONTRACTORS POLLUTION LIABILITY WITH COVERAGE FOR:
A) BODILY INJURY, SICKNESS, DISEASE, MENTAL ANGUISH OR SHOCK SUSTAINED BY
ANY PERSON, INCLUDING DEATH;
B) PROPERTY DAMAGE INCLUDING PHYSICAL INJURY TO OR DESTRUCTION OF TANGIBLE
PROPERTY INCLUDING THE RESULTING LOSS OF USE THEREOF, CLEAN UP COSTS, AND THE
LOSS OF USE OF TANGIBLE PROPERTY THAT HAS NOT BEEN PHYSICALLY INJURED OR
DESTROYED;
C) DEFENSE INCLUDING COSTS, CHARGES AND EXPENSES INCURRED IN THE
INVESTIGATION, ADJUSTMENT OR DEFENSE OF CLAIMS FOR SUCH COMPENSATORY DAMAGES.
FOR LOSSES CAUSED BY POLLUTION CONDITIONS THAT ARISE FROM THE OPERATIONS OF THE
CONTRACTOR DESCRIBED UNDER THE SCOPE OF SERVICES OF THIS CONTRACT.
CONTRACTOR AGREES TO NAME OWNER AS AN ADDITIONAL INSURED AND TO FURNISH
INSURANCE CERTIFICATES, SHOWING THE CONTRACTOR'S COMPLIANCE WITH THIS SECTION.
THE CONTRACTOR ALSO AGREES TO NOTIFY OWNER THIRTY (30) DAYS IN ADVANCE OF ANY
CANCELLATION OR CHANGE TO INSURANCE COVERAGES SHOWN ON THE CERTIFICATE.
.2 POLLUTION AND LEGAL LIABILITY:
IF THE SCOPE OF SERVICES IN THIS CONTRACT REQUIRES THE DISPOSAL OF ANY HAZARDOUS
OR NON-HAZARDOUS MATERIALS OFF THE JOB SITE, THE DISPOSAL SITE OPERATOR MUST
FURNISH A CERTIFICATE OF INSURANCE FOR POLLUTION LEGAL LIABILITY WITH COVERAGE
FOR:
A) BODILY INJURY, SICKNESS, DISEASES, MENTAL ANGUISH OR SHOCK SUSTAINED BY
ANY PERSON, INCLUDING DEATH;
B) PROPERTY DAMAGE INCLUDING PHYSICAL INJURY TO OR DESTRUCTION OF TANGIBLE
PROPERTY THAT HAS NOT BEEN PHYSICALLY INJURED OR DESTROYED;
C) DEFENSE INCLUDING COSTS, CHARGES AND EXPENSES INCURRED IN THE
INVESTIGATION, ADJUSTMENT OR DEFENSE OF CLAIMS FOR SUCH COMPENSATORY DAMAGES.
FOR LOSSES THAT ARISE FROM THE INSURED FACILITY THAT IS ACCEPTING THE WASTE
UNDER THIS CONTRACT.
COVERAGE SHALL APPLY TO SUDDEN AND NON-SUDDEN POLLUTION CONDITIONS INCLUDING
THE DISCHARGE, DISPERSAL, RELEASE OR OTHER IRRITANTS, CONTAMINANTS OR
POLLUTANTS INTO OR UPON LAND, THE ATMOSPHERE OR ANY WATERCOURSE OR BODY OF
WATER, WHICH RESULTS IN BODILY INJURY OR PROPERTY DAMAGE.
MINIMUM LIMITS OF INSURANCE:
CONTRACTOR SHALL MAINTAIN LIMITS NO LESS THAN:
1) CONTRACTORS POLLUTION LIABILITY: $6,000,000 PER LOSS/$8,000,000 ANNUAL
AGGREGATE.
2) POLLUTION LEGAL LIABILITY: $3,000,000 PER LOSS/$6,000,000 ANNUAL
AGGREGATE.
DEDUCTIBLE AND SELF-INSURED RETENTIONS:
ANY DEDUCTIBLES OR SELF-INSURED RETENTION MUST BE DECLARED TO AND APPROVED BY
OWNER. AT THE OPTION OF OWNER,
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA COPYRIGHT 1987 - 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 expirations as noted below.
Electronic format A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #31
<PAGE>
either: the insurer shall reduce to a maximum of $50,000 or eliminate such
deductibles or self-insured retentions as respects Owner, its officials and
employees or the Contractor shall procure a bond guaranteeing payment of losses
and related investigations, claim administration and defense expenses within the
deductible or self-insured retention amount. Any self-insured retention or
deductible amount on the policy shall not reduce the amount of collectible
limits of liability.
Other Insurance Provisions:
The contractors pollution liability policy will contain, or be endorsed to
contain, the following provisions:
1) Owner, its subsidiaries, officials and employees are to be covered as
additional insureds as respects liability arising out of activities performed by
or on behalf of the Contractors. The coverage shall contain no special
limitations on the scope of protection afforded to Owner, its subsidiaries,
officials and employees.
2) For any claims related to this project, the Contractor's Insurance
coverage shall be primary Insurance as respects Owner, its subsidiaries,
officials and employees. Any insurance or self-insurance maintained by Owner,
its subsidiaries, officials and employees shall be excess of the Contractor's
Insurance and shall not contribute with it.
3) The Contractor's Insurance shall apply separately to each insured
against whom claim is made or suit is brought, except with respect to the limits
of the Insurer's liability.
4) Each insurance policy required by this clause shall be endorsed to state
that coverage shall not be suspended, voided, cancelled by either party, reduced
in coverage or in limits except after thirty (30) days' prior written notice by
certified mail, return receipt requested has been given to Owner.
5) If any of the aforementioned insurance policies are written on a claim
made basis the contractor warrants that continuous coverage will be maintained
or an extended discovery period will be exercised for a period of two years
beginning from the time the work under this contract is completed.
Acceptability of Insurers:
Insurance is to be placed with insurers with a current A.M. Best's rating of no
less than AB IX, unless otherwise approved by Owner.
Verification of Coverage
Contractor shall furnish Owner with copies of the original endorsements
effecting the coverage required by this specification. A certificate of
Insurance is also required. The certificates are to be signed by a person
authorized by that insurer to bind coverage on its behalf. All certificates are
to be issued to the Owner. As an alternative to Owner's forms, the Contractor's
insurer may provide complete certified copies of all required insurance
policies, including endorsement affecting the coverage required by these
specifications.
Subcontractors:
Contractor shall include all subcontractors as insureds under its policies or
shall furnish separate certificates and endorsements for each subcontractor. All
coverages for subcontractors shall be subject to all of the requirements stated
herein. Contractor may on a case-by-case basis, waive or or allow reduced
insurance limits on subcontractor insurance requirements provided Contractor
insurance is in full force and effect.
Warranty:
Contractor warrants that it is aware of and understands the hazards which are
presented to persons, property, and the environment in the performing of
transportations, storage, remediation and disposal services as described within
the scope of services of this contract. It will transport, store, remediate and
dispose of such materials in full compliance with all applicable governmental
laws, regulations and orders. If the scope of services requires off-site storage
or disposal, the selected storage and disposal facilities described in the work
plan are to be appropriately licensed and permitted to store and dispose of the
waste, materials or hazardous substances detailed within the work plan. In the
event the storage or disposal facility loses its permitted status hereafter
during the terms of this Agreement, Contractor will promptly notify Owner of
such loss.
Indemnification:
To the fullest extend permitted by law, the Contractor shall indemnify, defend
and hold harmless the Owner, its officer, directors and employees from and
against any and all claims, damages, losses and expenses, including but not
limited to fees and charges of attorneys and court and arbitration costs,
arising out of or resulting from the negligent acts, negligent omissions,
willful misconduct, or reckless misconduct of the Contractor, subcontractor, any
directly or indirectly employed by them or anyone for whose acts they may be
liable. Without limiting the generality of the foregoing, the above
indemnification provision extends to Environmental Impact Claims.
"Environmental Impact Claim" is defined as claims, suits,
- - --------------------------------------------------------------------------------
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEEN EDITION - AIA COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS,
1935 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 A201-1987
User Document 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #32
<PAGE>
judgments, costs, losses, expenses, (including attorney's fees) which arise out
of, are related to, or are based on the actual or threatened dispersal,
discharge, escape, release or saturation of chemicals, liquids, gasses or any
other material, irritant, contaminant or pollutant in or into the atmosphere, or
on, onto, upon, in or into the surface or subsurface (a) soils, (b) water or
water course, (c) objects, or (d) any tangible or intangible matter, whether
sudden or not.
11.1.2 The insurance required by Subparagraph 11.1.1 shall be written for
not less than limits of liability specified in this Paragraph 11.1 or required
by law, whichever coverage is greater. Coverages, written on an occurrence
basis, and shall be maintained without interruption from date of commencement of
the Work until date of final payment and termination of any coverage required to
be maintained after final payment.
11.1.3 Until completion and final acceptance of the Work, the Contractor and
all subcontractors shall furnish to the Owner, Certificates of Insurance on
Accord Form 25-S (1/95), confirming language. A sample Certificate of Insurance
shall be provided from the Owner upon request, confirming coverages as required
under Section 11.1.1. It is agreed that this insurance will not be cancelled,
materially changed, or non-renewed without at least sixty (60) days prior notice
(except for non-payment, which shall be ten (10) days), via Certified Mail and
Return Receipt Request, to all certificate holders.
All Certificates including all coverages and limits identified in Paragraph 11.1
shall be forwarded to:
Mirage Resorts, Incorporated
3260 South Industrial Road
Las Vegas, NV 89109
Attention: Linda Young, Insurance Coordinator
11.2 OWNER'S LIABILITY INSURANCE
11.2.1 The Owner shall be responsible for purchasing and maintaining the
Owner's usual liability insurance. Optionally, the Owner may purchase and
maintain other insurance for self-protection against claims which may arise from
operations under the Contract. The Contractor shall not be responsible for
purchasing and maintaining this optional Owner's liability insurance.
11.3 PROPERTY INSURANCE
11.3.1 The Owner shall purchase and maintain "Builders-Risk" Insurance at the
Project Site, including all materials, equipment and supplies which are to
become a permanent part of the construction and awaiting erection at the site or
until completion of such erection. Coverage shall be provided on a replacement
cost basis. All covered losses will be subject to a deductible of Five Thousand
Dollars ($5,000.00) for each occurrence, which shall be the responsibility of
the Contractor, if, the Contractor is at fault. The Owner shall name the
Contractor as "Additional Insured" on the "Builders-Risk" Insurance. The Owner's
Builders-Risk" policy excludes Property Insurance insuring against the perils of
fire and extended coverage and "All Risk" physical damage, including theft,
vandalism and malicious mischief covering the equipment, tools, temporary
structures and interests of the Contractor and Subcontractors. The Contractor
and its Subcontractors shall purchase and maintain Property Insurance on an
"All-Risk" basis for all work stored off-site or in transit, and shall be
responsible for all deductibles for such insurance.
11.3.1.1 The Owner's "Builder's Risk" insurance shall be on an all-risk policy
form and shall insure
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #33
<PAGE>
against the perils of fire and extended coverage and physical loss or damage
including, without duplication of coverage, theft, vandalism, malicious
mischief, collapse, false-work, temporary buildings and debris removal including
demolition occasioned by enforcement of any applicable legal requirements, and
shall cover reasonable compensation for Architect's services and expenses
required as a result of such insured loss. Coverage for other perils shall not
be required unless otherwise provided in the Contract Documents.
11.3.1.2 If the Owner does not intend to purchase such property insurance
required by the Contract and with all of the coverages in the amount described
above, the Owner shall so inform the Contractor in writing prior to commencement
of the Work. The Contractor may then effect insurance which will protect the
interests of the Contractor, Subcontractors and Sub-subcontractors in the Work,
and by appropriate Change Order the cost thereof shall be charged to the Owner.
If the Contractor is damaged by the failure or neglect of the Owner to purchase
or maintain insurance as described above, without so notifying the Contractor,
then the Owner shall bear all reasonable costs properly attributable thereto.
11.3.1.3 If the Owner's "Builder's Risk" 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 because of such increased or voluntary deductibles. If
deductibles are not identified in the Contract Documents, the Owner shall pay
costs not covered because of deductibles.
11.3.1.4
11.3.2 BOILER AND MACHINERY INSURANCE. The Owner shall purchase and maintain
boiler and machinery insurance required by the Contract Documents or by law,
which shall specifically cover such insured objects during installation and
until final acceptance by the Owner; this insurance shall include interests of
the Owner, Contractor, Subcontractors and Sub-subcontractors in the Work, and
the Owner and Contractor shall be named insureds.
11.3.3 LOSS OF USE INSURANCE. The Owner, at the Owner's option, may purchase
and maintain such insurance as will insure the Owner against loss of use of the
Owner's property due to fire or other hazards, however caused. The Owner waives
all rights of action against the Contractor for loss of use of the Owner's
property, including consequential losses due to fire or other hazards however
caused.
11.3.4 If the Contractor requests in writing that insurance for risks other
than those described herein or for other special hazards be included in the
Owner's "Builder's Risk" insurance policy furnished by the Owner, the Owner
shall, if possible, include such insurance, and the cost there of shall be
charged to the Contractor by appropriate Change Order.
11.3.5
11.3.6 Before an exposure to loss may occur, the Owner shall file with the
Contractor a copy of each policy that includes insurance coverages required by
this Paragraph 11.3. Each policy shall contain all generally applicable
conditions, definitions, exclusions and endorsements related to this Project.
Each policy shall contain a provision that the policy will not be cancelled or
allowed to expire until at least sixty (60) days' prior written notice has been
given to the Contractor.
11.3.7 WAIVERS OF SUBROGATION. The Owner and Contractor waive all rights
against (1) each other and any of their subcontractors, sub-subcontractors,
agents and employees, each of the other, and (2) the Architect, Architect's
consultants, separate contractors described in Article 6, if any, and of their
subcontractors, sub-subcontractors, agents and employees, for damages caused by
fire or other perils to the extent covered by property insurance obtained
pursuant to this Paragraph 11.3 or other property insurance applicable to the
Work, except such rights as they have to proceeds of such insurance held by the
Owner as fiduciary. The Owner or Contractor, as appropriate, shall require of
the Architect, Architect's consultants, separate contractors described in
Article 6, if any, and the subcontractors, sub-subcontractors, agents and
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS,
1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 2006-5292.. 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 A201-1987
User Document: 922.DOC -- 9 /22/1997. AIA License Number 104983, which
expires on 11/1/1997 -- Page #34
<PAGE>
employees of any of them, by appropriate agreements, written where legally
required for validity, similar waivers each in favor of other parties enumerated
herein. The policies shall provide such waivers of subrogation by endorsement or
otherwise. A waiver of subrogation shall be effective as to a person or entity
even though that person or entity would otherwise have a duty of
indemnification, contractual or otherwise, did not pay the insurance premium
directly or indirectly, and whether or not the person or entity had an insurable
interest in the property damaged.
11.3.8 A loss insured under Owner's property insurance shall be adjusted by
the Owner as fiduciary and made payable to the Owner as fiduciary for the
insureds, as their interests may appear, subject to requirements of any
applicable mortgagee clause and of Subparagraph 11.3.10. The Contractor shall
pay Subcontractors their just shares of insurance proceeds received by the
Contractor, and by appropriate agreements, written where legally required for
validity, shall require Subcontractors to make payments to their Sub-
subcontractors in similar manner.
11.3.9
11.3.10 AS IT RELATES TO INSURANCE CLAIMS UNDER PARAGRAPH 11.3, THE OWNER AS
FIDUCIARY SHALL HAVE POWER TO ADJUST AND SETTLE A LOSS WITH INSURERS UNLESS ONE
OF THE PARTIES IN INTEREST SHALL OBJECT IN WRITING WITHIN FIVE (5) DAYS AFTER
OCCURRENCE OF LOSS TO THE OWNER'S EXERCISE OF THIS POWER.
11.3.11 Partial occupancy or use in accordance with Paragraph 9.9 shall not
commence until the insurance company or companies providing THE OWNER'S
"BUILDER'S RISK" insurance have consented to such partial occupancy or use by
endorsement or otherwise. The Owner and the Contractor shall take reasonable
steps to obtain consent of the insurance company or companies and shall, without
mutual written consent, take no action with respect to partial occupancy or use
that would cause cancellation, lapse or reduction of insurance.
11.3.12 THE CARRYING OF THE ABOVE OWNER PROVIDED "BUILDER'S RISK" INSURANCE
SHALL IN NO WAY BE INTERPRETED AS RELIEVING THE CONTRACTOR OF ANY RESPONSIBILITY
OR LIABILITY UNDER THE CONTRACT.
11.3.13 IN THE EVENT THE CONTRACTOR FAILS OR NEGLECTS TO PROVIDE THE REQUIRED
INSURANCE PURSUANT TO PARAGRAPH 11.1, THE OWNER SHALL HAVE THE RIGHT, BUT NOT
THE DUTY, TO PROVIDE SUCH INSURANCE. THE OWNER SHALL HAVE THE RIGHT TO DEDUCT
THE COSTS OF SUCH INSURANCE FROM ANY MONIES THAT MAY BE DUE, OR MAY BECOME DUE,
TO THE CONTRACTOR.
11.3.14 ANY POLICIES EFFECTED BY THE CONTRACTOR OR SUBCONTRACTOR ON THEIR OWN
AND/OR RENTED EQUIPMENT AND MATERIALS FOR USE ON THE PROJECT, SHALL CONTAIN A
PROVISION REQUIRING THE INSURANCE CARRIERS TO WAIVE THEIR RIGHTS OF SUBROGATION
AGAINST BEAU RIVAGE CONSTRUCTION, A DIVISION OF BEAU RIVAGE RESORTS, INC.;
MIRAGE RESORTS, INC.; GNLV CORP.; GOLDEN NUGGET BILOXI, INC.; BEAU RIVAGE
RESORTS, INC.; ATLANDIA DESIGN & FURNISHINGS, INC.; ITS EMPLOYEES,
SUBSIDIARIES AND
CONSULTANTS.
11.4 PERFORMANCE BOND AND PAYMENT BOND
11.4.1 The Owner shall have the right to require the Contractor to furnish
bonds covering faithful performance of the Contract and payment of obligations
arising thereunder as stipulated in bidding requirements or specifically
required in the Contract Documents on the date of execution of the Contract. THE
SUBCONTRACTOR(S) SHALL PROVIDE SUCH BONDS AS MAY BE ACCEPTABLE TO THE OWNER AND
THE CONTRACTOR.
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.
11.5 EFFECTIVE DATE
11.5.1 THE PROVISIONS OF THIS ARTICLE 11 - INSURANCE AND BONDS SHALL BE
EFFECTIVE APRIL, 1996.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #35
<PAGE>
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 Architect's request
or to requirements specifically expressed in the Contract Documents, it must, if
required in writing by the Architect, be uncovered for the Architect's
observation and be replaced at the Contractor's expense without change in the
Contract Time.
12.1.2 If a portion of the Work has been covered which the Architect has not
specifically requested to observe prior to its being covered, the 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 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 UPON THE OWNER OR THE ARCHITECT PROVIDING WRITTEN NOTICE TO THE
CONTRACTOR, THE Contractor shall promptly correct Work SHOWN TO BE DEFECTIVE OR
WHICH FAILS to conform to the Contract Documents, whether observed before or
after Substantial Completion and whether or not fabricated, installed or
completed. The Contractor shall bear all costs of correcting such rejected Work,
including additional testing and inspections and compensation for the
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 designated portion thereof, 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, AFTER WRITTEN NOTICE IS PROVIDED BY THE OWNER, 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, 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 (10) days after written notice,
the Owner may upon ten (10) 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 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 separate
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 other obligations which the
Contractor might have under the Contract Documents. Establishment of the time
period of one year as described in Subpargraph 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 obligations other than specifically to correct the Work.
12.3 ACCEPTANCE OF NONCOMFORMING WORK
12.3.1 If the Owner prefers to accept Work which is not in
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #36
<PAGE>
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, (GOLDEN NUGGET INC,) and Contractor EACH BINDS HIMSELF, HIS
partners, successors, assigns and legal representatives to the other party
hereto and to THE partners, successors, assigns and legal representatives of
such other party WITH respect to ALL covenants, agreements and obligations
contained in the Contract Documents. Neither party to the Contract shall assign
the Contract OR SUBLET IT as a whole, EXCEPT THAT THE OWNER SHALL HAVE THE RIGHT
TO ASSIGN THE CONTRACT TO ANY AFFILIATED COMPANY WITHOUT THE WRITTEN CONSENT OF
THE CONTRACTOR, PROVIDED THE OWNER REMAINS LIABLE FOR PAYMENT TO THE CONTRACTOR.
THE CONTRACTOR SHALL NOT ASSIGN ANY MONIES DUE OR TO BECOME DUE TO HIM
HEREUNDER, WITHOUT THE PREVIOUS WRITTEN CONSENT OF THE OWNER EXCEPT FOR LINES OF
CREDIT WITH THE COMPANIES LENDERS NECESSARY FOR CORPORATE PURPOSES.
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.
13.3.2 THE WRITTEN NOTICE REFERRED TO HEREIN SHALL BE SENT TO THE OWNER AT:
BEAU RIVAGE CONSTRUCTION
A DIVISION OF BEAU RIVAGE RESORTS, INC.
3260 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA 89109
ATTN: KENNETH R. WYNN, PRESIDENT
AND SHALL BE SENT TO THE CONTRACTOR AT:
W. G. YATES & SONS CONSTRUCTION CO.
1 GULLY AVENUE
PHILADELPHIA, MISSISSIPPI 39350
ATTENTION: BILL YATES, PRESIDENT
W. G. YATES & SONS CONSTRUCTION CO.
916 BEACH BOULEVARD
BILOXI, MISSISSIPPI 39530
ATTENTION: E. M. JOHNSON, VICE PRESIDENT
AND SHALL BE SENT TO THE ARCHITECT AT:
PAUL STEELMAN, LTD.
3330 WEST DESERT INN ROAD
LAS VEGAS, NV 89102
ATTENTION: PAUL STEELMAN, ARCHITECT
RETURN RECEIPT REQUESTED, OR HAND-DELIVERED.
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, 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 or by laws, ordinances, rules, regulations or orders of
public authorities having jurisdiction shall be made at an appropriate time.
Unless otherwise provided, 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
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922 DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #37
<PAGE>
bear all related costs of tests, inspections and approvals. The Contractor shall
give the Architect timely notice of when and where tests and inspections are to
be made so the 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 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 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
Architect of when and where tests and inspections are to be made so the
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 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 Architect.
13.5.5 If the Architect is to observe tests, inspections or approvals
required by the Contract Documents, the 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 AS PROVIDED UNDER THE TERMS AND CONDITIONS OF THE OWNER-CONTRACTOR
AGREEMENT.
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.
ARTICLE 14
TERMINATION OR SUSPENSION OF THE CONTRACT
14.1 TERMINATION BY THE CONTRACTOR
14.1.1 The Contractor may terminate the Contract if the Work is stopped for
a period of SIXTY (60) 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;
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 - Page #38
<PAGE>
.2 an act of government, such as a declaration of national emergency,
making material unavailable;
.3 because the Architect has not issued a Certificate for Payment and has
not notified the Contractor of the reason for withholding
certification as provided in Subparagraph 9.4.1, or because the Owner
has not made payment on a Certificate for Payment within the time
pursuant to 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 exits, the Contractor may, upon seven
additional days' written notice to the Owner 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 and the 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 fail 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, (10) 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 If the unpaid balance of the Contract Sum exceeds costs of finishing
the Work, including compensation for the Architect's additional services made
necessary thereby, such excess shall reduce the Contract Sum. If such costs
exceed the unpaid balance, the Contractor shall pay the difference to the Owner.
The amount to be paid to the Contractor or Owner, shall be certified by the
Architect in the manner provided for in the Contract Documents, and this
obligation shall survive the termination of the Contract. Provisions in this
Paragraph shall not apply if the Owner assigns this Agreement to a non-
affiliated entity of either the Owner of an affiliate of the Owner.
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
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #39
<PAGE>
in part for such period of time as the Owner may determine.
14.3.2 An adjustment may 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.
________________________________________________________________________________
AIA DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - 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 A201-1987
User Document: 922.DOC -- 9/22/1997. AIA License Number 104983, which expires
on 11/1/1997 -- Page #40
<PAGE>
SPECIAL CONDITIONS
OF
AGREEMENT BETWEEN OWNER AND CONTRACTOR
The following Special Conditions are a part of the Contract Documents and shall
apply to the General Conditions (A.I.A. Documents A201, Fourteenth Edition,
1987), and all other sections of the work, including, but not limited to, the
Contract Drawings and Specifications. If any conflict in terms or conditions
arises out of, or as a result of, these Special Conditions, then these Special
Conditions shall supersede and take precedent over all other terms and
conditions.
1. PERMITS, FEES AND NOTICES
1.1 Unless otherwise provided in the Contract Documents, the Owner shall
pay for all permits, fees and notices necessary for the proper execution and
completion of the Work which are legally required, such as Building Permits. The
Owner reserves the right to pay for all Permits, Fees, Plan Review Fees, Utility
Connection Fees, etc., either directly to the entity requesting such Fee, or to
the Contractor. If the Contractor pays for such Fee on the Owner's behalf, the
Contractor shall be paid for such fee within ten(10) calendar days after Notice
to the Owner of such payment, the Owner shall reimburse the Contractor at actual
cost and shall exclude the Contractor's Fee.
1.2 Notification of Public Utilities: The Contractor shall notify all
--------------------------------
public utilities prior to commencement of work which may effect such public
utilities. If available, copies of written permission by public utilities to
commence work shall be transmitted to the Owner's Representative prior to
commencement of such work.
1.3 Special Notice after Substantial Completion:
-------------------------------------------
1.3.1 The Contractor shall schedule his work such that the Owner's business
operations are not interrupted to the extent reasonably possible. Submit a
schedule of construction operations to the Owner's Representative for review and
acceptance prior to starting work.
1.3.2 The Contractor must perform his work in a quiet and courtesy fashion
with respect to the Guest and Owner's employees to the extent reasonably
possible.
1.3.3 Power outages, mechanical shut-down and so forth shall be approved by
the Owner's Representative prior to starting work.
1.3.4 All Life/Safety systems requiring shutdowns or tie-ins, in accordance
with the above clause, shall be coordinated with the Owner's Representative and
shall be performed at such a time to minimize any effect on the safety, health
and welfare of the building occupants to the extent reasonably possible. At the
conclusion of each work day, all Life/Safety Systems shall be energized, tested
and returned to an operative mode.
1.3.5 No ceilings or walls are permitted to remain "open" or "uncovered"
after the normal work day without approval from the Owner's Representative.
2. TEMPORARY CONSTRUCTION
2.1 Fencing:
-------
2.1.1 The Contractor shall be responsible for construction of temporary
fencing.
Beau Rivage - Biloxi Page 1 of 6
3 July 1996
<PAGE>
SPECIAL CONDITIONS
2.1.2 The fence shall be neat and shall be continuously well maintained for
the duration of the construction period.
2.1.3 The Owner retained security company, in conjunction with the
Contractor, shall ensure that gates are secured at the end of each day's
operations. Deliver three (3) sets of keys to the Owner's Representative.
2.2 Access to the Work Area after Substantial Completion: Access to the
----------------------------------------------------
Project work area by construction personnel shall be by the most reasonable
inconspicuous route available, in order that the Public and the Owner's
personnel are not inconvenienced. Access shall be arranged prior to the
commencement of the work with the Owner's Representative, unless shown
otherwise. Access to restricted and/or limited access areas required by the work
shall be coordinated with the Owner's Representative.
2.2 Toilet Facilities
-----------------
2.3.1 Toilet facilities shall be provided by the Contractor within the
Construction area.
2.3.2 The Project's permanent toilet facilities are not to be used by
construction personnel at any time during construction.
2.4 Telephones:
----------
2.4.1 The Contractor shall install his own telephone system for construction
use. The Project's permanent telephone equipment and systems shall not be used
by construction personnel except in the case of an emergency or a direct project
related call by the Contractor's supervising personnel. This provision does not
apply to Subcontractors.
2.5 Eating Privileges
-----------------
2.5.1 All construction personnel shall be permitted to eat in any area
within the construction area as designated by the Contractor's Construction
Superintendent.
2.5.2 During the installation of FF&E, construction personnel are not
permitted to eat where finish materials are in place nor use tables and chairs
or other furniture that are part of the Project.
3. REFERENCE STANDARDS
3.1 Specifications and Manufactures Instruction:
3.1.1 When not covered in the Drawings or Specifications, the Contractor
shall follow the manufacturer's installation or maintenance directions in
performing the Work. The Contractor shall ensure that copies are provided to
affected subcontractors or sub-subcontractors.
4.1 TAKE-OFFS
When requested by the Owner, the Contractor shall provide take-offs, including
dimensions, quantities, square footages, volumes and counts, of all Owner-
furnished, Contractor-installed items within a reasonable period of time. The
above take-offs shall include, but not be limited to, wallcoverings, floor
coverings, lamps, architectural light fixtures or any other Owner-supplied,
Contractor-installed items. Fabric quantities for pre-maufactured furniture
items will not be supplied by the Contractor, except where such fabric is a part
of millwork being procured and installed by the Contractor or a subcontractor to
the Contractor.
Beau Rivage - Biloxi Page 2 of 6
3 July 1996
<PAGE>
SPECIAL CONDITIONS
5. DRAWINGS, SPECIFICATIONS AND MEASUREMENTS
5.1.1 The Contractor shall follow dimensions shown on the Construction
Documents. Dimensions indicated on documents shall take precedence over scale
measurements, and large scale details shall take precedence over small scale
general drawings. Documents of a later date shall take precedence over documents
of an earlier date.
5.1.2 The Contractor shall verify dimensions shown on drawings before laying
out work.
5.1.3 The Contract Documents are meant to be read as a whole, but in the event
a conflict cannot be removed, the Contract Documents will take the following
order of precedence:
1. Agreement between Owner and Contractor
2. Exhibits
3. Supplementary Conditions
4. General Conditions of the Contract
5. Specifications
6. Drawings
5.1.4 In the interest of moving forward with progress at the site, the
Contractor may use in-progress Drawings and Specifications until such time as
the completed Construction Documents ("Issued for Construction") have been
issued by the Architect. After such issuance, the Contractor shall ensure that
all work is performed in accordance with completed Documents.
5.1.5 Do not use the official set stamped by the Building Department for
routine construction purposes. The Contractor shall maintain the stamped set for
the primary use of the Building Inspector and maintain same at the project site
in good condition for the duration of the construction period.
5.2 Tolerances
5.2.1 Certain Tolerances are listed in the Specification and on the Drawings.
These tolerances are the maximum variation allowed on the Project. When
tolerances are not identified in the Specifications or on the Drawings, the
maximum tolerances allowed shall be determined by the most recognized published
industry standard.
5.2.2 The Contractor through it's Subcontractors shall review the tolerance
limits established for each trade as they relate to the work on the Project.
When the Contractor becomes aware of tolerance limits which are in conflict with
those limits established for other adjoining work, the Architect shall be
notified in writing before proceeding.
5.2.3 All materials such as granite and marble, acoustic tile, ceramic tile,
vinyl tile and so forth, are to meet flush with adjacent pieces of the same
material, unless otherwise shown on the drawings or required by the
specifications.
6. WARRANTY
6.1 All warranties shall commence as set forth in the General Conditions.
Beau Rivage - Biloxi Page 3 of 6
3 July 1996
<PAGE>
SPECIAL CONDITIONS
6.2 The Contractor shall deliver all operating manuals to the Owner thirty
(30) days prior to Substantial Completion or during the Contractor's training
period whichever is sooner.
6.3 The Contractor shall furnish to the Owner printed manufacturer's
warranties complete with expiration dates of such warranties thirty (30) days
after Substantial Completion.
7. TRADE NAMES/PROJECT SIGNS
7.1 No trade name or other identification shall appear on any completed work
where it will be seen by the public except as specifically approved, in writing,
by the Owner in advance.
7.2 The Contractor and its Subcontractors are strictly prohibited from
installing, erecting, hanging or otherwise displaying any company, product or
advertising signs on the job-site without the review of such signage by the
Owner and the Owner's written approval.
8. CUTTING AND PATCHING
8.1 The Contractor shall cut walls and floors carefully, and neatly repair
them in an acceptable manner. Contractor shall consult the Architect in cases
where cutting into a structural portion of the building is required so that
satisfactory reinforcement may be provided.
8.2 Access Doors and Frames: Access doors and frames shall be flush with the
material in which it occurs, unless otherwise specified. Access doors and frames
shall be provided upon prior written approval of the Architect. Each trade
providing access doors and frames shall verify their work against the
Construction Drawings. Access doors in walls, partitions or ceilings shall bear
UL fire-rated labels of same fire rating. If access doors and frames are
required to be exposed to view, they shall be chrome, brass, stainless steel, or
other finish to match other finishes in the spaces in which they are to be
installed, unless otherwise specified. Submit an "Access Door and Frame" shop
drawing to the Architect for approval for door prior to placement in the field.
A compose "Access Door and Frame" Shop drawing must be submitted for all
plumbing, fire protection, HVAC, electrical and all other associated trades.
8.3 Acoustical Requirements: Certain partition, floor and ceiling assemblies
are required to have sound absorption and sound transmission loss
characteristics as required in the Specification sections or as indicated on the
Construction Drawings. Each Contractor shall coordinate his work in constructing
these assemblies and that of other contractors whose work adjoins, connects to,
or penetrates these assemblies to assure that such work does not reduce the
required acoustical characteristics of the assemblies. If the Contractor becomes
aware of work which reduces the acoustical characteristics of the assembly, the
Contractor should notify the Architect before proceeding with the Work.
9. OFF-SITE STORAGE
The Owner will give consideration to requests for payment for materials
and equipment stored off-site on a case-by-case basis, subject to the following:
9.1 The Contractor shall give the Owner at least fourteen (14) days prior
written notice of the Contractor's initial submission for payment of off-site
stored materials and equipment. Such notice shall include a written narrative
outlining the details for off-site storage. Such written request must be sent
prior to the first Payment Application submission.
Beau Rivage - Biloxi Page 4 of 6
3 July 1996
<PAGE>
SPECIAL CONDITIONS
9.2 If approved by the Owner, the Contractor shall submit the following:
(1) Schedule of Values outlining the value of all requested off-site
------------------
stored materials and/or equipment. Include additional cost detail as
required to tie the Schedule of Values into the listing of all stored
material.
(2) Contractor's Inspection Affidavit certifying that he has visited
---------------------------------
the location where the materials or equipment is stored, that he has
verified the quantity, that the materials or equipment are safely
stored and that the materials or equipment are segregated and are
clearly identified as being property of the Owner. Attach a complete
listing of all stored materials and/or equipment.
(3) Bill of Sale containing all materials or equipment for which
------------
payment is requested. Submit evidence that the materials or equipment
has been or will be fully paid for by the Contractor so that clear
transfer of title can be made to the Owner.
(4) Insurance Certificate for all stored material or equipment and
---------------------
related transit, including a loss-payable clause endorsement to the
Subcontractor's insurance policy providing payment to the Contractor
and Owner in the event of loss of the specified stored materials or
equipment.
(5) Contractor's Affidavit of Release of Lien for all stored
------------------------------------------
material and/or equipment.
(6) Executed Subcontractor or Purchase Order between the Contractor
----------------------------------------
and Subcontractor/Vendor for all stored material and/or equipment.
(7) Photographs of all stored material and/or equipment.
-----------
(8) Other reasonable documentation as may be required by the Owner to
------------------------------
establish the Owner's title to such material and/or equipment, or to
otherwise protect the Owner's interest.
9.3 If the documentation presented does not satisfy the requirements outlined
in 9.2, the request for payment may be denied.
9.4 Each subsequent Payment Application shall include all the requirements
outlined in 9.2 above. In addition, a written summary shall be included to
identify previously paid materials, dollar value and materials which have been
delivered to site since the last Payment Application, balance of materials
remaining off-site.
10. OWNER-FURNISHED MATERIALS
10.1 All Owner-furnished Contractor-installed materials shall be obtained by the
Contractor at the Owner's designated Warehouse. The Owner shall advise the
Contractor of the location of such Warehouse. All pick-ups shall be scheduled in
advance with Owner's Representative and Warehouse Manager at least two(2) days
prior to the actual receipt to the extent reasonably possible.
10.2 The Contractor shall register, in writing, his drivers with the Owner's
Representative and Warehouse Manager. Drivers shall not be changed without
written notification to the Owner's Representative and Warehouse Manager.
Page 5 of 6
Beau Rivage - Biloxi
3 July 1996
<PAGE>
SPECIAL CONDITIONS
10.3 Owner shall reserve the right to have certain Owner furnished materials
shipped directly to the Project site to facilitate ease of installation,
provided that such delivery shall not impede the overall progress of the Work.
10.4 The Contractor shall provide the Owner with access and use of all means of
vertical transportation, including exterior hoists and temporary elevators, to
facilitate the timely and efficient installation of Owner-furnished/ Owner-
installed materials. The Contractor shall provide the Owner with dedicated use
of certain elevators (with operators) to install FF & E. The Owner will advise
the Contractor, in writing, of times and duration prior to installation of FF&E.
11. MEETINGS
11.1 Construction meetings shall be held at such times and places as the Owner,
Architect or the Contractor may designate. Meeting Minutes shall be prepared and
issued by the Contractor as may be required.
11.2 Owner shall have the right to attend all meetings between the Contractor,
his Subcontractors, the Architect and others concerning the Project.
12. PUNCH LIST WORK
12.1 Access to the Project for the purpose of completing Punch List Work after
Substantial Completion shall be approved by the Owner's Representative. All
Punch List Work must be performed when the Project area is not open to the
public and when such work does not interrupt the Owner's operations to the
extent reasonably possible. Exceptions must be specifically approved in writing
by the Owner's Representative.
13. BENEFICIAL USE AND OCCUPANCY BY THE OWNER
13.1 The Owner reserves the right, at his option and convenience, to occupy or
otherwise make use of all or any part of the Project premises at any time prior
to completion. Beneficial Use and Occupancy prior to the Date of Substantial
Completion shall be subject to the following conditions:
(1) The Owner will use his best efforts to prevent his occupancy from
interfering with the prosecution of the Contractor's remaining Work.
(2) The Contractor will not be required to repair (at its expense)
damages caused by the Owner's occupancy.
13.2 The Contractor shall coordinate with the Owner to permit partial occupancy
of any area to expedite installation of furniture, fixtures, floor coverings,
equipment, or training of Owner's affiliate's personnel so as to insure a smooth
and timely opening to the General Public.
-END-
Page 6 of 6
Beau Rivage - Biloxi
3 July 1996
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as
of July 16, 1997 (the "Effective Date"), by and between
Mirage Resorts, Incorporated, a Nevada corporation
("Employer"), and Daniel R. Lee ("Employee").
1. Employer hereby employs Employee as its Chief Financial
Officer. Employee shall be the principal financial and
accounting officer of Employer and shall report to, and
perform such executive, supervisory, managerial or
administrative duties as may be specified from time to time
by, the Chief Executive Officer of Employer. Employee shall
devote his full business time and best efforts to the
performance of his duties hereunder. Employee's office and
primary place of business shall be in Las Vegas, Nevada.
Employee acknowledges that he will be required to
periodically travel outside Las Vegas, Nevada in performing
his duties hereunder.
2. The term of this Agreement shall commence on the
Effective Date and terminate on February 24, 2005 (the
"Employment Period").
3. Employee shall receive an annual gross salary of
$600,000, such raises or bonuses as Employer's Board of
Directors or Bonus Committee may determine in its sole
discretion and reimbursement for all reasonable business
expenses incurred by Employee in performing his duties
hereunder. Employee shall be provided with coverage under
Employer's executive medical plan, paid vacation and such
other benefits as Employer from time to time makes available
to its senior executives of similar status. During the term
of this Agreement, Employer shall maintain in effect
directors' and officers' liability insurance coverage in
such amounts as Employer's Board of Directors considers
adequate.
Employer and Employee shall execute and deliver a
1995 Non-Qualified Stock Option Agreement, in the
form attached as Exhibit A to this Agreement, which
reflects the revised terms and provisions governing
the one million (1,000,000) non-qualified stock
options (the "April 1997 Options") granted to
Employee on April 28, 1997. On the Effective Date,
Employee shall be granted two hundred thousand
(200,000) additional non-qualified stock options (the
"Additional Options") pursuant to and in accordance
with Employer's 1995 Stock Option and Stock
Appreciation Rights Plan, at the same exercise price
as the April 1997 Options. The Additional Options
Exhibit 10(kkk)
<PAGE>
shall become exercisable in full on February 24,
2005. The Additional Options shall be governed by
the form of 1995 Non-Qualified Stock Option Agreement
attached as Exhibit B to this Agreement. The April
1997 Options and Additional Options are collectively
referred to herein as the "Options." Employee
acknowledges and agrees that notwithstanding the
terms of the Options, the Options do not confer any
right to continue in the employ of Employer hereunder
or interfere in any way with Employer's right to
terminate his employment pursuant to any of the
provisions hereof. After an Option becomes
exercisable pursuant to its stated terms or upon
acceleration, Employer shall take no action to
prevent Employee from exercising such Option in
accordance with the terms of the applicable Stock
Option Agreement, and Employer hereby releases any
right it might otherwise have to do so (by way of
setoff, counterclaim or otherwise), regardless of any
claims which Employer might have or assert against
Employee, whether or not such claims relate to or
arise out of Employee's breach of this Agreement or
any other agreement or relationship between Employer
and Employee. Employer is expressly reserving any
such claims.
If at any time Employer's Board of Directors or Stock
Option Committee (or any successor thereto) takes
action to reduce the exercise prices of outstanding
stock options held by a majority of participants in
Employer's stock option plans to a price less than
the stated exercise price of the Options, the
exercise price of the then-outstanding Options shall
similarly and concurrently be reduced. If at any
time Employer's Board of Directors or Stock Option
Committee (or any successor thereto) takes action to
accelerate the exercise dates of outstanding stock
options held by a majority of senior officers of
Employer and its subsidiaries upon the occurrence of
any event, the exercise dates of the Options shall
similarly and concurrently be accelerated.
4. Employee acknowledges and agrees that the laws of
Nevada and other jurisdictions in which Employer or its
affiliates may propose to engage, or engage, in business
activities during the term hereof may require that Employee
be investigated for suitability and licensing. Employee
shall fully cooperate with the appropriate governmental
authorities in order that Employer and he may obtain all
certificates, permits and licenses required in connection
with his employment hereunder or otherwise desired by
Employer during the term hereof. Employee further
acknowledges and agrees that in the event he fails to so
2
<PAGE>
cooperate or he or Employer, for any reason attributable to
Employee, fails to obtain, within the time specified by the
Nevada Gaming Commission and all other governmental
authorities having jurisdiction, or thereafter maintain, in
good standing and in full force and effect, during the term
hereof, all required certificates, permits and licenses in
connection with his employment hereunder or Employer's
desired activities, or Employee commits any criminal or
other improper act which could result in the suspension or
revocation of any such certificate, permit or license, such
shall constitute good cause for Employer to terminate this
Agreement as provided in Paragraph 7 hereof.
5. Employee covenants and agrees that during the stated
Employment Period, Employee shall not directly or indirectly
be employed by, engage in, participate in, consult for or
otherwise be connected in any way (other than as a wholly
passive investor) with any individual, firm, corporation or
other entity primarily engaged in the gaming, entertainment
or hospitality industry. The restriction on Employee's
activities set forth in the immediately preceding sentence
shall survive until the end of the stated Employment Period,
except that it shall not apply following termination of this
Agreement as provided in Paragraph 7(a) or 8 hereof or
following a Change of Control (as defined in Paragraph 6
hereof), and except that such restriction shall not apply
after two years following termination of this Agreement as
provided in Paragraph 7(b) hereof. Employee acknowledges
and agrees that the restrictions on his activities set forth
in this Paragraph 5 are reasonable, that Employee has been
adequately compensated under this Agreement for the future
financial hardship that compliance with such provisions
might otherwise have created and that Employee has available
other suitable employment opportunities which eliminate the
need for employment which would violate such provisions. In
addition to all other rights and remedies provided to
Employer hereunder, if Employee breaches any of the
obligations contained in this Paragraph 5, Employer shall
have the right to terminate this Agreement, but any such
termination shall in no event be deemed an election of
remedies and Employer expressly reserves all other legal and
equitable remedies. Employee further covenants and agrees
that he shall not at any time during the term of this
Agreement or thereafter, without Employer's prior written
consent, disclose to other individuals or entities any trade
secrets or other confidential information concerning
Employer or its affiliates, including without limitation,
Employer's customers, its casino, hotel or marketing
practices, procedures or management policies or its non-
public financial information, or utilize any such trade
secrets or confidential information in any way or
communicate with or contact any such customers, other than
in connection with his employment hereunder. Employee
hereby confirms that such trade secrets and confidential
3
<PAGE>
information constitute Employer's exclusive property, that
all of the restrictions on his activities contained in this
Agreement are required for Employer's reasonable protection
and that in the event of any breach of this Paragraph by
him, Employer will be entitled, if it so elects, to
institute and prosecute proceedings at law or in equity to
obtain damages with respect to such breach, to enforce the
specific performance of this Paragraph or to enjoin Employee
from engaging in any activity in violation hereof.
6. Employee shall have the option to terminate this
Agreement, effective thirty (30) days after written notice
to Employer, at any time following a Change of Control of
Employer. As used in this Agreement, a "Change of Control"
shall be deemed to have occurred if (i) Stephen A. Wynn, his
wife, members of their immediate family, trusts established
for the benefit of any of the foregoing or the estate of
Stephen A. Wynn or his wife, collectively, cease to own
beneficially at least 3% of the outstanding voting
securities of Employer, (ii) the offices of both Chairman of
the Board and Chief Executive Officer of Employer are held
by any person or persons other than Stephen A. Wynn, Elaine
P. Wynn, Robert H. Baldwin, Barry A. Shier, Marc D. Schorr,
Bruce A. Levin or Kenneth R. Wynn or (iii) Employer takes
action that results in a substantial diminution of
Employee's duties, general authority or prestige as they
exist on the date of this Agreement ("Substantial Diminution
of Duties"). A Change of Control shall not be considered a
breach of this Agreement by Employer.
7. This Agreement may be terminated by Employer at any
time during the Employment Period for good cause and upon
any such termination, Employer shall have no further
liability or obligation whatsoever to Employee hereunder
except with respect to any salary earned by Employee and not
paid by Employer prior to the date of termination and
Employee's right to the Options
that are exercisable on the date of termination. "Good
cause" shall mean and be limited to:
(a) Employee's death or disability, which is hereby
defined to mean his incapacity for medical reasons
certified to by a licensed physician designated by
Employer which precludes the substantial performance
of his duties hereunder for a substantially
consecutive period of four (4) months or more; and
(b) Employee's dishonesty in his relationship with
Employer, willful or habitual insubordination or
failure to substantially perform his duties, the
occurrence of an event specified in the last sentence
4
<PAGE>
of Paragraph 4 hereof, or any other material breach
of this Agreement by Employee, any or all of which,
if curable, is not cured by Employee within a
reasonable time after written notice thereof from
Employer.
8. If Employer terminates Employee's employment hereunder
in violation of the terms of this Agreement, or if Employee
resigns as a result of a material breach of this Agreement
by Employer which, if curable, is not cured by Employer
within a reasonable time after written notice thereof from
Employee, Employee shall be entitled to receive all amounts
which would have been payable hereunder through the end of
the stated Employment Period (but Employee shall have the
duty to mitigate damages, it being understood that Employee
shall not be required to accept employment that would
represent a Substantial Diminution of Duties or require
Employee to relocate outside of the continental United
States), and, notwithstanding the terms of the Stock Option
Agreements governing the Options, all then-unexercisable
Options shall become exercisable on the date of termination
of Employee's employment and shall remain exercisable for
one (1) year thereafter.
9. Employee represents and warrants to Employer that
Employee is not a party or otherwise subject to any
agreement or restriction which would be breached or violated
by Employee's execution of this Agreement or his employment
hereunder.
10. If any provision hereof is held to be unenforceable or
invalid for any reason whatsoever, such fact shall not
affect the remaining provisions hereof. If any of the
provisions hereof which impose restrictions on Employee are,
with respect to such restrictions, determined by a final
judgment of any court of competent jurisdiction to be
unenforceable or invalid because of the geographic scope or
time duration of such restrictions, such provisions shall be
deemed retroactively modified to provide for the maximum
geographic scope and time duration which would make such
provisions enforceable and valid. However, no such
retroactive modification shall affect any of Employer's
rights hereunder arising out of the breach of any such
restrictive provisions, including without limitation,
Employer's right to terminate this Agreement.
5
<PAGE>
11. No failure or delay on the part of Employer or Employee
in exercising any right, power or remedy hereunder shall
operate as a waiver thereof nor shall any single or partial
exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
12. No amendment, modification, termination or waiver of
any provision of this Agreement nor consent to any departure
by Employee or Employer therefrom shall in any event be
effective unless the same shall be in writing and signed by
a duly authorized officer of Employer or by Employee, as the
case may be. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose
for which given.
13. This Agreement (including the Exhibits hereto) sets
forth the entire agreement of the parties with respect to
the subject matter hereof and supersedes any and all prior
negotiations, agreements or understandings, whether oral or
written.
14. This Agreement shall be controlled, construed and
enforced in accordance with the laws of Nevada. Any legal
action relating to or arising out of this Agreement shall be
instituted and maintained exclusively in state or federal
court in Clark County, Nevada, and the parties hereby
consent to the exclusive jurisdiction of such courts.
15. Any and all notices required or permitted to be given
hereunder shall be in writing and sent by personal delivery
or registered or certified mail to Employee's last known
residence (as reflected in Employee's personnel file), in
the case of Employee, or to Employer's principal office in
Las Vegas, Nevada, in the case of Employer.
IN WITNESS WHEREOF, Employer and Employee have entered into
this Agreement in Las Vegas, Nevada, as of the Effective
Date first above written.
MIRAGE RESORTS, INCORPORATED
Stephen A. Wynn
By:_________________________
STEPHEN A. WYNN
Chairman of the Board
Daniel R. Lee
____________________________
DANIEL R. LEE
6
<PAGE>
MIRAGE RESORTS, INCORPORATED
1995 NON-QUALIFIED STOCK OPTION AGREEMENT
This Agreement is entered into as of April 28, 1997
(the "Effective Date"), by and between Mirage Resorts,
Incorporated ("MRI") and Daniel R. Lee ("Grantee"), pursuant
to MRI's 1995 Stock Option and Stock Appreciation Rights
Plan (the "Plan").
1. MRI hereby grants to Grantee a Non-Qualified
Option to purchase 1,000,000 shares (the "Shares") of MRI's
$.004 par value common stock (the "Common Stock") at a price
of $20.375 per share (the "Options").
2. The term of the Options shall be for a period of
10 years, commencing on the Effective Date, except as
otherwise expressly provided below with respect to the
earlier termination of the Options.
3. The Options may be exercised only as follows:
(a) Except as provided in Paragraph 6 hereof, no
portion of the Options may be exercised prior to
February 24, 2000, at which time Options as to
200,000 Shares may be exercised;
(b) Commencing on February 24, 2001, Options as
to an additional 200,000 Shares may be exercised;
(c) Commencing on February 24, 2002, Options as
to an additional 200,000 Shares may be exercised;
(d) Commencing on February 24, 2003, Options as
to an additional 200,000 Shares may be exercised;
(e) Commencing on February 24, 2004, the balance
of the Options may be exercised;
(f) The Options may not be exercised as to less
than 1,000 Shares at any one time unless they are
exercised with respect to all of the Shares then
subject to exercise; and
(g) Except as otherwise expressly provided herein, the
Options may be exercised at any time or from time
to time during their term as to any part or all of
the Shares subject thereto.
EXHIBIT A
<PAGE>
Notice of any exercise of the Options shall be in
writing and delivered in person or by registered or certified
mail to MRI at its principal office at 3400 Las Vegas Boulevard
South, Las Vegas, NV 89109. Such notice shall state the
number of Shares with respect to which the Options are being
exercised and shall be accompanied by full payment for all
Shares being purchased, which may consist of cash or the
delivery of shares of Common Stock, to be valued for such
purpose at the Fair Market Value of such shares as of the
close of business on the day prior to exercise. MRI shall
deliver to Grantee a certificate or certificates evidencing
such Shares as soon as practicable after such notice and
payment is received. MRI's Board of Directors or any
Committee appointed pursuant to the Plan may waive any
limitations upon exercise contained herein.
4. The Options shall not be assignable or
transferable by Grantee by operation of law or otherwise
except by will or the laws of descent and distribution,
shall not be subject to execution, attachment or similar
process and during Grantee's lifetime, may only be exercised
by Grantee or, in the event of his incapacity, his guardian
or legal representative.
5. Except as provided in Paragraph 6 hereof, in the
event of the termination of Grantee's employment or other
Relationship with MRI or any subsidiary or affiliated
corporation of MRI, the Options shall terminate as to any
Shares which were not subject to exercise as of the date of
termination. With respect to Shares subject to exercise as
of the date of termination, Grantee may exercise the Options
as to such Shares only within the three-month period
following the date of termination (unless the Options shall
expire sooner by their terms), and following the expiration
of such three-month period, the Options shall terminate
unless Grantee has been rehired or re-engaged and is
employed or engaged on the date when the Options would
otherwise have terminated. A leave of absence approved in
writing by MRI's Board of Directors or the Committee shall
not be deemed termination of Grantee's employment or other
Relationship, but Grantee may not exercise any Options
during such leave of absence except during the first three
months thereof. Nothing in this Agreement shall confer upon
Grantee any rights except as specifically provided herein or
any right to continue any Relationship with or to remain in
the employ of MRI or any subsidiary or affiliated
corporation of MRI or interfere with MRI's or any such other
corporation's right to terminate his employment or other
Relationship at any time for any reason.
6. (a) Except as provided in subparagraph 6(b)
hereof, if Grantee shall die or suffer a Permanent
Disability while employed by or during the period of any
other Relationship with MRI or any subsidiary or affiliated
corporation of MRI, the Options may be exercised (to the
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<PAGE>
extent otherwise exercisable hereunder as of the date of
death or termination of employment or other Relationship) by
Grantee or Grantee's Successor at any time within one year
after the date of death or termination of employment or
other Relationship due to Permanent Disability (unless the
Options shall expire sooner by their terms), but the Options
shall terminate in all events following the expiration of
such one-year period.
(b) Notwithstanding subparagraph 6(a) hereof, if
Grantee shall die, or Grantee's employment or other
Relationship with MRI or any subsidiary or affiliated
corporation of MRI shall terminate as a result of a
Permanent Disability, or disability as defined in any
employment agreement to which Grantee is a party, before
February 24, 2004, Grantee or Grantee's Successor may
exercise, in addition to the Options (if any) which had
previously become exercisable pursuant to Paragraph 3 hereof
(the "Previously Exercisable Options"), Options as to that
number of Shares (the "Accelerated Options") equal to the
product of 1,000,000 times a fraction, the numerator of
which shall be the number of calendar days elapsed between
February 24, 1997 and the date of Grantee's death or
termination of employment or other Relationship, and the
denominator of which shall be 2,920, less the number of
Previously Exercisable Options. The Accelerated Options may
be exercised by Grantee or Grantee's Successor only within
the three-month period following the date of Grantee's death
or termination of employment or other Relationship, and
shall terminate at the end of such three-month period.
(c) For purposes of this Paragraph 6, "Permanent
Disability" shall mean that Grantee is unable to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months. MRI's Board of Directors or the Committee may
require such proof of Permanent Disability as it, in its
sole judgment, deems necessary or appropriate.
7. If, after the date hereof, MRI shall effect or
become a party to any stock dividend, stock split,
recapitalization, merger, consolidation, reorganization or
similar event affecting its outstanding shares, the Shares
subject to the Options and the purchase price thereof shall
be proportionately and equitably adjusted in the customary
manner without change in the total consideration payable
upon exercise of the Options or any portion thereof
consistent with the provisions of the Plan, and MRI and
Grantee shall each have the other rights and obligations
specified in the Plan upon the occurrence of any such event.
Adjustments and determinations under this Paragraph 7 shall
be made by the Board of Directors of MRI or the Committee,
whose decisions shall be final, binding and conclusive.
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<PAGE>
8. Grantee shall not have any of the rights of a
stockholder of MRI until certificates evidencing Shares
purchased hereunder are properly delivered to him.
Notwithstanding any provision to the contrary contained
herein, the exercise of all or any portion of the Options
and the delivery of certificates for Shares hereunder shall
be subject to the condition that if at any time MRI shall
determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or the
listing, registration or qualification of any Shares
otherwise deliverable upon such exercise upon any securities
exchange or under any state or federal law, or the consent
or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, such
exercise or the delivery of Shares hereunder, then in any
such event, such exercise and delivery shall not be
effective or made until such withholding, listing,
registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not
acceptable to MRI.
9. This Agreement has been entered into pursuant to
the Plan and is subject in all particulars to the terms,
conditions and definitions set forth in the Plan, all of
which are incorporated herein by this reference and made a
part hereof. In the event of any conflict or inconsistency
between any of the provisions of this Agreement and the
Plan, the provisions of the Plan shall govern and control.
10. This Agreement shall be controlled, construed and
enforced in accordance with the laws of Nevada.
IN WITNESS WHEREOF, the parties have signed this
Agreement as of the Effective Date specified herein.
MIRAGE RESORTS, INCORPORATED
STEPHEN A. WYNN
By:_________________________
Stephen A. Wynn
Chairman of the Board
DANIEL R. LEE
__________________________
DANIEL R. LEE
4
<PAGE>
MIRAGE RESORTS, INCORPORATED
1995 NON-QUALIFIED STOCK OPTION AGREEMENT
This Agreement is entered into as of July 16, 1997 (the
"Effective Date"), by and between Mirage Resorts,
Incorporated ("MRI") and Daniel R. Lee ("Grantee"), pursuant
to MRI's 1995 Stock Option and Stock Appreciation Rights
Plan (the "Plan").
1. MRI hereby grants to Grantee a Non-Qualified
Option to purchase 200,000 shares (the "Shares") of MRI's
$.004 par value common stock (the "Common Stock") at a price
of $20.375 per share (the "Options").
2. The term of the Options shall be for a period of
10 years, commencing on the Effective Date, except as
otherwise expressly provided below with respect to the
earlier termination of the Options.
3. The Options may be exercised only as follows:
(a) Except as provided in Paragraph 6 hereof, no
portion of the Options may be exercised prior to
February 24, 2005 (the "Vesting Date").
(b) The Options may not be exercised as to less
than 1,000 Shares at any one time unless they are
exercised with respect to all of the Shares then
subject to exercise; and
(c) Except as otherwise expressly provided herein,
the Options may be exercised at any time or from
time to time during their term as to any part or
all of the Shares subject thereto.
Notice of any exercise of the Options shall be in
writing and delivered in person or by registered or certified mail
to MRI at its principal office at 3400 Las Vegas Boulevard South,
Las Vegas, NV 89109. Such notice shall state the number of Shares
with respect to which the Options are being exercised and shall be
accompanied by full payment for all Shares being purchased, which
may consist of cash or the delivery of shares of Common Stock, to
be valued for such purpose at the Fair Market Value of such shares
as of the close of business on the day prior to exercise. MRI
shall deliver to Grantee a certificate or certificates evidencing
such Shares as soon as practicable after such notice and payment
is received. MRI's Board of Directors or any Committee appointed
pursuant to the Plan may waive any limitations upon exercise
contained herein.
EXHIBIT B
<PAGE>
4. The Options shall not be assignable or transferable by
Grantee by operation of law or otherwise except by will or the
laws of descent and distribution, shall not be subject to execution,
attachment or similar process and during Grantee's lifetime, may
only be exercised by Grantee or, in the event of his incapacity,
his guardian or legal representative.
5. Except as provided in Paragraph 6 hereof, in the
event of the termination of Grantee's employment or other
Relationship with MRI or any subsidiary or affiliated
corporation of MRI, the Options shall terminate as to any
Shares which were not subject to exercise as of the date of
termination. With respect to Shares subject to exercise as
of the date of termination, Grantee may exercise the Options
as to such Shares only within the three-month period
following the date of termination (unless the Options shall
expire sooner by their terms), and following the expiration
of such three-month period, the Options shall terminate
unless Grantee has been rehired or re-engaged and is
employed or engaged on the date when the Options would
otherwise have terminated. A leave of absence approved in
writing by MRI's Board of Directors or the Committee shall
not be deemed termination of Grantee's employment or other
Relationship, but Grantee may not exercise any Options
during such leave of absence except during the first three
months thereof. Nothing in this Agreement shall confer upon
Grantee any rights except as specifically provided herein or
any right to continue any Relationship with or to remain in
the employ of MRI or any subsidiary or affiliated
corporation of MRI or interfere with MRI's or any such other
corporation's right to terminate his employment or other
Relationship at any time for any reason.
6. Except as provided in the following sentence, if
Grantee shall die or suffer a Permanent Disability while
employed by or during the period of any other Relationship
with MRI or any subsidiary or affiliated corporation of MRI,
the Options may be exercised (to the extent otherwise
exercisable hereunder as of the date of death or termination
of employment or other Relationship) by Grantee or Grantee's
Successor at any time within one year after the date of
death or termination of employment or other Relationship due
to Permanent Disability (unless the Options shall expire
sooner by their terms), but the Options shall terminate in
all events following the expiration of such one-year period.
Notwithstanding the immediately preceding sentence, if
Grantee shall die, or Grantee's employment or other
Relationship with MRI or any subsidiary or affiliated
corporation of MRI shall terminate as a result of a
Permanent Disability, or disability as defined in any
employment agreement to which Grantee is a party, prior to
the Vesting Date, Grantee or Grantee's Successor may
exercise Options as to that number of Shares (the
"Accelerated Options") equal to the product of 200,000 times
a fraction, the numerator of which shall be the number of
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<PAGE>
calendar days elapsed between February 24, 1997 and the date
of Grantee's death or termination of employment or other
Relationship, and the denominator of which shall be 2,920.
The Accelerated Options may be exercised by Grantee or
Grantee's Successor only within the three-month period
following the date of Grantee's death or termination of
employment or other Relationship, and shall terminate at the
end of such three-month period. For purposes of this
Paragraph 6, "Permanent Disability" shall mean that Grantee
is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous
period of not less than 12 months. MRI's Board of Directors
or the Committee may require such proof of Permanent
Disability as it, in its sole judgment, deems necessary or
appropriate.
7. If, after the date hereof, MRI shall effect or
become a party to any stock dividend, stock split,
recapitalization, merger, consolidation, reorganization or
similar event affecting its outstanding shares, the Shares
subject to the Options and the purchase price thereof shall
be proportionately and equitably adjusted in the customary
manner without change in the total consideration payable
upon exercise of the Options or any portion thereof
consistent with the provisions of the Plan, and MRI and
Grantee shall each have the other rights and obligations
specified in the Plan upon the occurrence of any such event.
Adjustments and determinations under this Paragraph 7 shall
be made by the Board of Directors of MRI or the Committee,
whose decisions shall be final, binding and conclusive.
8. Grantee shall not have any of the rights of a
stockholder of MRI until certificates evidencing Shares
purchased hereunder are properly delivered to him.
Notwithstanding any provision to the contrary contained
herein, the exercise of all or any portion of the Options
and the delivery of certificates for Shares hereunder shall
be subject to the condition that if at any time MRI shall
determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or the
listing, registration or qualification of any Shares
otherwise deliverable upon such exercise upon any securities
exchange or under any state or federal law, or the consent
or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, such
exercise or the delivery of Shares hereunder, then in any
such event, such exercise and delivery shall not be
effective or made until such withholding, listing,
registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not
acceptable to MRI.
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<PAGE>
9. This Agreement has been entered into pursuant to
the Plan and is subject in all particulars to the terms,
conditions and definitions set forth in the Plan, all of
which are incorporated herein by this reference and made a
part hereof. In the event of any conflict or inconsistency
between any of the provisions of this Agreement and the
Plan, the provisions of the Plan shall govern and control.
10. This Agreement shall be controlled, construed and
enforced in accordance with the laws of Nevada.
IN WITNESS WHEREOF, the parties have signed this
Agreement as of the Effective Date specified herein.
MIRAGE RESORTS, INCORPORATED
STEPHEN A. WYNN
By:__________________________
Stephen A. Wynn
Chairman of the Board
DANIEL R. LEE
___________________________
DANIEL R. LEE
4
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (hereinafter referred to as
"this Agreement"), made as of this 24th day of November, 1997
(the "Effective Date"), by and between THE MIRAGE CASINO-HOTEL, a
Nevada corporation (the "Mirage"), TREASURE ISLAND CORP., a
Nevada corporation ("Treasure Island"), tenants in common (Mirage
and Treasure Island being hereinafter collectively referred to as
"Seller") and H-S LAS VEGAS ASSOCIATES, a general partnership
consisting of TRIZECHAHN CENTERS, INC., a California corporation
(formerly known as Ernest W. Hahn, Inc.) and HOWARD HUGHES
PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership,
as general partners ("Buyer");
STATEMENT OF BACKGROUND AND PURPOSE
Buyer is the owner, developer and operator of Fashion
Show Mall, a regional shopping center (the "Mall") located in Las
Vegas, Nevada. Seller owns a parcel of land more particularly
described in Exhibit A attached hereto (the "Property") which is
adjacent to the Mall but separated by a private road known as
Fashion Show Drive.
The State of Nevada (the "State") through the Nevada
Department of Transportation ("NDOT") is currently in the process
of constructing a highway project (the "Highway Project") known
as the I-15/Spring Mountain Road Interchange Project which will
affect portions of the Property and the Mall.
Seller and the State have previously entered into a
certain Public Highway Agreement, dated April 8, 1996, as amended
Exhibit 10(lll)
<PAGE>
by Public Highway Agreement dated March 31, 1997 (such original
Public Highway Agreement as amended being referred to herein as
the "Public Highway Agreement") providing for certain land
conveyances and other matters affecting the Property in
connection with the Highway Project.
Buyer wishes to purchase the Property from Seller to
use the Property in connection with the expansion of the Mall
(the "Mall Expansion"). In order to accomplish the Mall
Expansion in a manner satisfactory to the State and Buyer, the
State and Buyer have agreed to make certain changes in the
alignment of various road systems located on the Property and the
Mall Property as affected by the Highway Project.
Seller, Buyer and the State wish to have the State
proceed with certain aspects of the construction of the Highway
Project prior to the conveyance of the Property from Seller to
Buyer and Seller has agreed to grant to the State certain
construction easements as hereinafter set forth.
As part of the sale of the Property, Buyer has agreed
to accept an assignment and assumption of all Seller's rights and
obligations under the Public Highway Agreement as the same relate
to the Property, as more specifically set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the mutual
covenants and agreements of the parties hereto, as are
hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby
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acknowledged by each party hereto, the parties hereto do hereby
covenant and agree as follows:
Section 1. Purchase and Sale of Property: Seller
hereby agrees to sell to Buyer and Buyer hereby agrees to
purchase from Seller, upon the terms and subject to the
conditions which are hereinafter set forth, a certain tract of
land in Clark County, Nevada, containing 16.2 acres,
which parcel of land is legally described in
Exhibit A attached hereto. Said tract of
land, together with any and all improvements
thereon, outbuildings and fixtures, and any
and all rights, alleys, ways, waters,
easements, rights of way, privileges,
appurtenances and advantages, to the same
belonging or in any way appertaining,
including, but not limited to, easements and
rights to offsite storm water retention/
detention and appurtenances located on
adjacent property to be retained by Seller
(all of the foregoing real property,
improvements and appurtenances being
hereinafter together called "the Property").
The Property shall not include the light poles,
fixtures, equipment and fencing currently attached to the
Property which shall be removed by Seller as provided in Section
7.2 below.
Section 2. Survey: Seller has previously delivered to
Buyer a survey acceptable to Buyer which Survey conclusively
establishes the acreage of the Property as 16.2 acres.
Section 3. Purchase Price: Buyer shall pay to Seller
as the purchase price for the Property (hereinafter referred to
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<PAGE>
as the "Purchase Price"), an amount equal to Twenty-Four Million
Three Hundred Thousand Dollars ($24,300,000).
3.1. Payment of Purchase Price: At the Closing, Buyer
shall deliver to Nevada Title Company ("Escrow Agent") the entire
Purchase Price, less the Deposit, in cash or other immediately
available funds.
3.2. Earnest Money Deposit:
3.2.1. Earnest Money Deposit. Within one (1) business
day following the Effective Date, Buyer shall deposit with Escrow
Agent an earnest money deposit of Two Hundred Fifty Thousand
Dollars ($250,000.00) (the "Deposit"). The Deposit shall be
invested in an interest-bearing account reasonably acceptable to
Buyer and Seller and all interest earned thereon shall become
part of the Deposit. The Deposit shall be applied to the
Purchase Price at the Closing.
Section 4. Closing, Title and Possession:
4.1. Closing: Escrow will close for the Property (the
"Closing") on March 31, 1998 (the "Closing Date") unless Buyer
elects to terminate pursuant to Section 5.1.2. or the parties
agree to extend the Closing Date pursuant to Section 4.6 below.
In no event shall Closing occur later than December 31, 1998
("Outside Closing Date").
The Closing shall take place at ten o'clock a.m., in
the offices of Nevada Title Company in Las Vegas, Nevada or at
such other time and place as Buyer and Seller may agree upon in
writing. The Closing shall be conducted by the Escrow Agent and
4
<PAGE>
shall follow customary procedures in the escrowing of funds and
documents, recording of documents and disbursement of funds to
Seller and other parties. At Buyer's option, a pre-closing
conference shall be held two business days preceding the Closing
Date at which time all documents will be executed and delivered
in escrow to the Escrow Agent so that funding by Buyer, updating
of the title report, recording of the deed, release of the
documents from escrow, and disbursement of funds to Seller and
other parties in accordance with the provisions of this Agreement
are the only events occurring on the Closing Date.
4.2. Title: Seller has delivered to Buyer a
preliminary title report dated February 18, 1997, referenced as
No. 97-02-0637 RMG for the Property prepared by Nevada Title
Company (the "Title Company"). Buyer acknowledges receipt of the
title report and agrees that the title exceptions disclosed in
Schedule B of the title report and listed on Exhibit C hereto
(the "Approved Exceptions") are acceptable to Buyer. At the
Closing, Seller shall convey to Buyer, or its designee or
designees, good and marketable title to the Property in fee
simple, by grant, bargain and sale deed. Title to the Property
to be conveyed to Buyer shall be free and clear of all liens,
encumbrances, easements, covenants, reservations, restrictions,
encroachments and defects of title of any nature, excepting only
the Approved Exceptions ("Clear Title"). At the Closing Seller
shall deliver to Buyer, at Seller's sole expense, a CLTA owner's
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<PAGE>
policy of title insurance issued by the Title Company showing
Clear Title and in an amount not less than the Purchase Price.
The parties acknowledge that the Property is subject to
a Lease dated August 8, 1990 between the Mirage and Donrey
Outdoor Advertising Co. (the "Billboard Lease"). At Closing,
Seller shall deliver to Buyer an estoppel certificate from Donrey
Outdoor Advertising Co. ("Donrey") pursuant to which Donrey shall
acknowledge Buyer's right to terminate the Billboard Lease as
provided in Paragraph 3 of the Addendum to Lease dated May 8,
1997.
At the Closing, Seller shall execute such form of
"GAP", possession, and "no-lien" affidavits as shall be
reasonably acceptable to the Title Company for purposes of
deleting the related "standard exceptions" to the policy of title
insurance, and an affidavit in form reasonably acceptable to
Seller that Seller is not a "foreign person" as defined in
Section 1445 of the Internal Revenue Code, and such other
documents, certificates and instruments as are reasonably
necessary to effectuate the transfer to Buyer of all of Seller's
right, title and interest in the Property and all land use
permits, environmental permits and development rights associated
with the Property. Seller hereby agrees that, for so long as
this Agreement remains in effect except as set forth in Section
7.3, Seller shall not further encumber or permit or suffer to be
further encumbered the title to any or all of the Property by any
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<PAGE>
lien, easement of record or in fact, without obtaining the
Buyer's prior, express written consent thereto.
Seller at its expense shall take all actions, if
necessary, needed to convey Clear Title to the Property to Buyer
in accordance with and without violating any applicable state,
local or other statute, ordinance or regulation governing the
subdivision of land, and, if necessary for conveyancing, the
Property shall constitute a separate subdivided lot for purposes
thereof; however, if the Buyer designates that the Seller convey
separate parcels to separate designees of the Buyer (e.g. certain
portions to the Buyer and other portions to department store
operators or others), the Buyer at its expense shall be
responsible for additional costs resulting from multiple
conveyances, including, without limitation, any platting,
subdivision, or other governmental approvals as may be required
in connection with such separate conveyances, provided that the
Seller shall cooperate in good faith with the Buyer in satisfying
any such platting, subdivision and other governmental approvals.
In the event Seller is unable to convey Clear Title to the
Property in all respects as provided in this Subsection 4.2,
Buyer shall have the option of: (i) taking such title as Seller
can give without abatement in the Purchase Price except for the
amount of any lien or encumbrance which solely encumbers the
Property, and the costs for the satisfaction thereof; or (ii)
requiring Seller to cure any such defect at Seller's cost and
expense within a reasonable period of time following notice from
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Buyer to Seller of such defect (provided that Seller shall
commence such cure within twenty (20) days following Buyer's
notice to Seller and shall thereafter diligently pursue such cure
to completion). If Buyer makes an election under clause (ii)
above and Seller in good faith is unable to cure the defect
within a reasonable period of time, then as Buyer's sole remedy,
Buyer shall have the right to rescind this Agreement and to
receive the immediate return of the Deposit.
4.3. Possession and Burden of Risk: At the Closing, Seller
shall deliver to Buyer possession of the Property, free of any and
all tenancies and other rights to its use or occupancy, except for
the Approved Exceptions. Until the Closing, Seller shall bear
the risk of any damage to or destruction of any improvements on
the Property.
4.4. Closing Costs, Taxes and Adjustments:
4.4.1. Closing Costs: At Closing, Buyer will pay (i)
the fees for recording the deed and (ii) one-half (1/2) of the
escrow fee,(collectively, "Buyer's Closing Costs"). Seller will
pay (i) the premium for the owner's title policy, (ii) the real
property transfer tax imposed on the deed pursuant to NRS chapter
375, and (iii) one-half (1/2) of the escrow fee ("Seller's Closing
Costs").
4.4.2. Real Estate Taxes and Special Assessments: Real
estate taxes and any assessments on the Property which have been
approved by Buyer, which are due and payable for the year in
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<PAGE>
which the Closing occurs, shall be prorated between Seller and
Buyer to the Closing Date.
Seller represents that it has no knowledge of any new
public improvement project from any governmental assessing
authority, the costs of which project may be assessed against the
Property.
The provisions of this Section 4.4.2 shall survive
Closing.
4.4.3. No Further Adjustments: Except as provided in
Subsections 4.4.1 and 4.4.2 there shall be no adjustment or
proration of costs or expenses related to the Property.
4.5. Additional Documents. At Closing, Buyer and
Seller shall also execute the Assignment Agreement as described
in Section 7.1 hereof and the Limited License and Right of Entry
Agreement described in Section 7.2 hereof.
4.6. Construction of Garage. Seller and Buyer
acknowledge that Seller intends to proceed with the construction
of a parking garage (the "Garage") to provide parking spaces for
Seller to replace the surface level parking spaces currently
located on the Property. If the Garage is not completed by the
Closing Date but Buyer requires immediate possession of the
Property to begin construction or to fulfil any contractual
obligation, then the Closing shall occur on the Closing Date, but
Buyer shall negotiate in good faith with Seller to provide
parking spaces for Seller's use either on the Property or on
other property owned by Buyer. If the Garage is not completed by
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<PAGE>
the Closing Date but Buyer does not require immediate possession
of the Property, then the Closing Date shall be extended until
the earlier of (i) the completion of the Garage or (ii) the date
Buyer requires possession of the Property. Seller shall not be
obligated to pay Buyer for the use of such spaces other than for
Buyer's out-of-pocket costs incurred in providing such spaces.
Seller's right to use any such spaces shall continue until the
Garage is completed.
Section 5. Conditions Precedent to Closing.
5.1. Conditions Precedent: Buyer's obligation
hereunder to complete the Closing shall be conditioned upon the
satisfaction, in a manner acceptable to Buyer in Buyer's sole and
absolute discretion, or the Buyer's written waiver, of each of
the conditions hereinafter set forth (the "Conditions Precedent")
within the time periods hereinafter set forth.
5.1.1. NDOT Agreements. Buyer and NDOT intend,
simultaneously with the execution of this Agreement to enter into
an agreement (the "NDOT Agreement"), providing for a revised
realignment of Fashion Show Drive as shown on Exhibit "B",
attached hereto. It shall be a condition to Buyer's obligation
to close that NDOT not be in material default under the NDOT
Agreement.
5.1.2. Feasibility Analysis.
(a) Pursuant to that certain letter of intent dated
February 3, 1997 between Seller and Buyer (the "Letter of
Intent") Buyer has begun a feasibility analysis of the Property.
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Buyer shall have the right to continue to enter upon the Property
and to perform such soil and engineering tests, feasibility
studies, and other physical examination of the Property as Buyer
shall deem necessary to determine if the Property is physically
suitable for Buyer's intended Mall Expansion. Buyer shall have
the right to continue its feasibility analysis until 90 days
after the Effective Date. Buyer shall have the right to
terminate this Agreement if, on or before (same date as above)
Buyer delivers written notice (the "Termination Notice") to
Seller of its intention to terminate the Agreement. Buyer may
only deliver the Termination Notice if Buyer discovers any
conditions with respect to the Property which, in Buyer's sole
and absolute judgment, would materially adversely affect the
development or financing of the Property in connection with the
expansion of Mall Expansion. If Buyer delivers the Termination
Notice on or before (same date as above), then this Agreement
shall be automatically terminated and the Deposit shall be
returned to Buyer. Notwithstanding the foregoing, Buyer
acknowledges that it has completed its environmental analysis of
the Property and has determined that the Property is acceptable
with regard to the presence of any hazardous or toxic materials.
(b) Buyer shall coordinate the entry of its agents or
employees onto the Property with Seller's representatives. Prior
to any such entry by Buyer, its agents or employees on the
Property, Buyer will provide Seller with a certificate of Buyer's
liability insurance policy designating Seller as an additional
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insured, and such certificate will evidence coverage in the
amount of $2,000,000 to protect Seller against any loss, damage,
or injury which may occur as a result of Buyer's use of the
Property. Buyer hereby agrees to indemnify, defend and hold
Seller, its officers, directors, employees, agents and
affiliates, and the Property free and harmless from and against
all liens, demands, liabilities, causes of action, judgments,
costs, claims, damages, suits, losses, and expenses of any
nature, kind or description, or any combination thereof,
including attorneys' fees as they are incurred, arising from such
activities of Buyer, its agents and employees, upon the Property,
and from all mechanic's, materialmen's and other liens resulting
from any such conduct. Notwithstanding anything in this
Agreement to the contrary, Buyer's obligations under this
Subsection (b) shall survive the termination of or Closing under
this Agreement.
5.1.3. Representations; No Changed Conditions: At
Closing, receipt by Buyer of evidence satisfactory to Buyer
(e.g. certificates from Seller) that Seller's representations and
warranties set forth in this Agreement remain true and correct;
and receipt of evidence satisfactory to Buyer that there have
been no changes in facts or circumstances (e.g., a change with
respect to title, physical characteristics or zoning) which would
render any Condition Precedent unfulfilled as of the Closing Date
(it being the intent hereof that all Conditions Precedent shall
remain satisfied as of the Closing Date).
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5.2. Satisfaction of Conditions Precedent: Buyer
(and, where applicable, Seller) shall proceed in good faith with
reasonable diligence to satisfy the Conditions Precedent. To the
extent prudent and practicable, Buyer further shall notify Seller
periodically as and when Conditions Precedent have been met.
All costs of satisfying the Conditions Precedent shall,
unless otherwise specified herein, be borne solely by Buyer;
provided, however, Seller shall render such cooperation and
assistance, without payment of money, as Buyer shall reasonably
request in connection with satisfaction of the Conditions
Precedent.
Section 6. Representations:
6.1. Representations of Seller: To induce Buyer to
enter into this Agreement, Seller hereby represents and warrants
to Buyer, each of which representations and warranties shall
survive the Closing, that, on the date hereof and on the Closing
Date:
6.1.1. Title: The title to the Property is held in
fee simple by Seller and is subject to no tenancy or occupancy
which will remain in effect at or after Closing except as
expressly provided for herein.
6.1.2. Condemnation: Except for the matters disclosed
in the Public Highway Agreement Seller has no actual knowledge
of, and has not received any actual formal or informal notice of,
any threatened or pending condemnation proceeding or other
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litigation relating to or otherwise affecting all or any part of
the Property.
6.1.3. Waste Disposal on the Property: Seller has not
used, or permitted to be used, Hazardous Materials on, from or
affecting the Property in any manner which violates federal,
state or local law, ordinances, rules, regulations or policies
governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production, or disposal of
Hazardous Materials, nor (to the best of Seller's knowledge) have
any Hazardous Materials been disposed of by Seller on the
Property. As used herein, the term "Hazardous Materials" means
(i) any substance defined as a "hazardous substance" under the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. 9601 et seq., as amended, (ii) petroleum,
petroleum products, natural gas, natural gas liquids, liquefied
natural gas, and synthetic gas and (iii) any other substance or
material deemed to be hazardous, dangerous, toxic, or a pollutant
under any federal, state or local law, code, ordinance or
regulation.
6.1.4. No Contractual Obligations: Other than the
Public Highway Agreement, the Billboard Lease and this Agreement,
there are no other options, contracts, agreements or
understandings presently existing for the sale of all or a
portion of the Property. There are no outstanding contracts for
the performance of any work upon or with respect to the Property,
and Seller will not enter into any contracts or agreements which
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could give rise to any mechanic's or materialmen's liens against
the Property or any portion thereof, without Buyer's prior
written consent, such consent not to be unreasonably withheld or
delayed. At Closing Seller shall execute and deliver such
affidavits or other instruments as the Title Company may
customarily require to insure that title at Closing is not
subject to any mechanic's or materialmen's claims (or to the
right of any person to obtain the same on account of work done or
materials supplied before Closing) or to the lien of any judgment
obtained against Seller.
6.1.5. Persons Constituting "Seller": The entities
described herein as constituting "Seller" are all of the persons
or entities having any legal or beneficial ownership interest in
the Property.
6.2. Mutual Representations: To induce each other to
enter into this Agreement, each party hereto hereby represents to
the other that it has been duly authorized and empowered to enter
into this Agreement and to perform fully its obligations
hereunder, that this Agreement constitutes a valid, binding and
enforceable obligation of such party and, except as provided
herein, no further approvals are required to be obtained from any
court, governmental agency or other third party in order for the
obligations of such party to be fully effective.
6.3. Continuation of Representations: At the Closing,
Buyer and Seller each shall be deemed to have represented and
warranted to the other that its respective representations and
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warranties are true and accurate as of the Closing, which
representations and warranties, as well as the respective rights
and obligations of such parties under the provisions of this
Section, shall survive the Closing.
Section 7. Additional Agreements:
7.1. At the Closing, Buyer and Seller shall enter into
an Assignment Agreement in the form of Exhibit D attached hereto
relating to the assignment to Buyer of Seller's right, title and
interest in the Public Highway Agreement.
7.2. At the Closing, Buyer and Seller shall enter into
a Limited License and Right of Entry Agreement in the form
attached hereto as Exhibit E which shall permit Seller to enter
onto the Property after the Closing to remove light poles,
fixtures, equipment and fencing which is currently located on the
Property.
7.3. Grant of Temporary Easements: Seller and Buyer
agree that NDOT may proceed with construction of the Highway
Project on portions of the Property and other property owned by
Seller prior to the Closing. Such construction shall include,
without limitation, the following described work, all of which is
shown on the plan attached hereto as Exhibit B.
(i) The construction of a temporary bypass for
Spring Mountain Road.
(ii) The widening of the north edge of
Industrial Road including the relocation of
utility lines within the road right-of-way.
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(iii) The construction of Fashion Show Lane
between Industrial Road to connect with Dio
Drive at existing Fashion Show Drive.
Seller hereby agrees, without additional cost or
expense to NDOT or Buyer, to grant to NDOT and/or such parties as
NDOT shall designate, such temporary construction easements,
rights of entry or other agreements as NDOT shall reasonably
request in order to perform the foregoing construction. Buyer
agrees that it shall take title to the Property subject to any
such easements or agreements.
7.4. Confidentiality: Buyer shall maintain
confidential and secret and shall not divulge, disclose or use,
any information obtained or created by Buyer as a result of its
investigations on the Property or of the books and records of
Seller to the extent such information is not generally known to
the public except in connection with Buyer's evaluation of the
property, Buyer's efforts to finance Mall Expansion, Buyer's
discussions with governmental officials for purposes of
completing due diligence, and except to employees, agents and
consultants of Buyer actively involved with Buyer in the
development of expansion of Mall Expansion and who agree to the
foregoing confidentiality provisions. In the event either Buyer
or Seller terminates this Agreement, or upon the Closing Buyer
shall promptly deliver to Seller, at no cost to Seller, all
tangible forms of any information provided to Buyer by Seller
regarding Seller's business or the Property.
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Section 8. Condemnation: If before the Closing any of
the Property is taken by condemnation or the exercise of any
power of eminent domain, or if any formal notice of such a
condemnation is issued to Seller, other than the transactions
contemplated under Section 5.1.1 hereof, Seller shall promptly
notify Buyer thereof; and if, in Buyer's reasonable
determination, such a condemnation would adversely affect the
development of the Mall in any material respect, Buyer may, not
later than the tenth (10th) day after receiving such notice,
terminate this Agreement by giving Seller written notice thereof,
in which event the Deposit shall be returned to Buyer and the
parties hereto shall thereafter have no liability to each other
hereunder, other than Buyer's liability, if any, accrued under
the provisions of Sections 5.1.2 and 7.4, which shall survive
such termination. If Seller gives such notice to Buyer and Buyer
does not terminate this Agreement, (a) the Purchase Price shall
not be reduced, but at the Closing Seller shall (i) pay to Buyer
any award made for such condemnation which is received by Seller
before the Closing, and (ii) assign to Buyer all of Seller's
right, title and interest in and to any award made for such
condemnation after the Closing, and (b) Buyer may after the
Closing receive all of the proceeds of such condemnation and
contest, in Seller's and/or Buyer's names, the validity of such
condemnation and/or the amount of the proceeds offered or awarded
therein, and (c) so long as this Agreement remains in effect
Buyer shall have the right to participate in any such
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<PAGE>
condemnation proceeding, and the Seller shall not enter into any
agreement settling such condemnation proceeding without Buyer's
prior written consent, which shall not be unreasonably withheld
or delayed.
Section 9. Default:
9.1. Buyer's Default: If Buyer shall default in the
performance of its obligation to pay the Purchase Price at the
Closing hereunder, Seller shall be entitled, as its sole and
exclusive remedy on account of such default, after such
declaration of default, to terminate this Agreement and retain
the Deposit as liquidated damages, and upon such termination, the
parties shall thereafter have no further obligation to each other
hereunder, except for the Buyer's liability, if any, accrued
under the provisions of Sections 5.1.2 and 7.4, which shall
survive such termination. The parties hereto hereby agree that
in the event of such a default by the Buyer, the actual damages
thereby incurred by the Seller would be difficult to measure, and
that the Seller's retention of the Deposit would in such
circumstances represent reasonable compensation to the Seller on
account thereof.
9.2. Seller's Default: If Seller shall default in the
performance of its obligation to convey the Property to Buyer at
the Closing hereunder, the Buyer shall be entitled after such
declaration of default to (i) seek specific performance and/or
other injunctive relief, or (ii) terminate this Agreement, in
which event the Deposit shall immediately be returned to the
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Buyer, whereupon this Agreement shall automatically terminate and
the parties hereto shall thereafter have no further obligation
hereunder, except for the Buyer's liability, if any, under the
provisions of Sections 5.1.2 and Section 7.4, which shall survive
such termination. Notwithstanding the foregoing, in the event
the Seller defaults in its obligation to convey the Property at
Closing or commits a default hereunder intentionally or in bad
faith, and Buyer elects to terminate the Agreement as provided in
(ii) above, Buyer shall be entitled to receive liquidated damages
from Seller in the amount of $250,000.
9.3. Notice and Opportunity to Cure: Anything
contained in the foregoing provisions of this Section to the
contrary notwithstanding, no party hereto shall be entitled to
exercise any right or remedy hereunder, or at law or in equity,
on account of any default by any other party hereto (other than a
failure by such party to complete the Closing in accordance with
the provisions of this Agreement) unless it gives the defaulting
party written notice of its intention to take such action at
least ten (10) business days prior thereto, and unless during
such period the defaulting party has not (i) cured such default,
or (ii) (if such default is not a failure to pay money and is not
reasonably capable of being cured within such period) commenced
curing such default, and thereafter diligently proceeded to
complete such cure.
Section 10. Notices: Any notice, demand, consent,
approval, request or other communication or document to be
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provided hereunder to a party hereto (i) shall be in writing;
(ii) shall be (a) sent as certified or registered mail in the
United States mails, postage prepaid, return receipt requested,
or by overnight courier, to the address of such person which is
set forth below or to such other address in the United States of
America as such person may designate from time to time by notice
to the other, or (b) given by hand or other actual delivery to
such person.
If to Seller: Treasure Island Corp.
3300 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: Mark W. Russell, Esq.
If to Buyer: H-S Las Vegas Associates
c/o The Rouse Company
10275 Little Patuxent Parkway
Columbia, MD 21044
Attention: Bruce I. Rothschild
and to: H-S Las Vegas Associates
c/o TrizecHahn Centers, Inc.
4350 LaJolla Village Drive
Suite 400
San Diego, CA 92122-1233
Attn: Douglas L. Hageman
Senior Vice-President and
General Counsel
Section 11. Brokerage Commissions: Each party
warrants and represents to the other that no broker, finder or
other intermediary hired or employed by it is entitled to a
commission, finder's fee or other compensation based upon the
transaction contemplated hereby and each party (the "Indemnitor")
shall indemnify and hold harmless the other party from and
against any and all liens, demands, liabilities, causes of
action, judgments, costs, claims, damages, suits, losses and
21
<PAGE>
expenses, or any combination thereof, including attorneys' fees,
of any nature, kind or description, caused by or arising out of
the claim of any broker, finder or other intermediary alleging to
have been employed or hired by the Indemnitor, to a commission,
finder's fee or other compensation based upon the transactions
contemplated hereby.
Section 12. Miscellaneous:
12.1. Effectiveness and Effective Date: This
Agreement shall become effective on and only on its execution and
delivery by each person named herein as a party hereto. The
Effective Date of this Agreement shall be the last date as of
which both parties have fully executed this Agreement.
12.2. Complete Understanding: This Agreement
represents the complete understanding between the parties hereto
as to the subject matter hereof, and supersedes all prior written
or oral negotiations, representations, guaranties, warranties,
promises, statements or agreements between the parties hereto as
to the Property, the condition thereof or any other matter
whatsoever, made or furnished by any real estate broker, agent,
employee or other person representing or purporting to represent
any party hereto. Without limiting the generality of the
foregoing, the parties hereto agree that this Agreement
supersedes the Letter of Intent and that the Letter of Intent is
of no further force and effect whatsoever.
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<PAGEE>
12.3. Amendment: This Agreement may be amended by and
only by an instrument, in writing, executed and delivered by each
person named herein as a party hereto.
12.4. Waiver: No party hereto shall be deemed to have
waived the exercise of any right which it holds hereunder unless
such waiver is made expressly and in writing (and no delay or
omission by any party hereto in exercising any such right shall
be deemed a waiver of its future exercise). No such waiver made
as to any instance involving the exercise of any such right shall
be deemed a waiver as to any other such instance, or any other
such right.
12.5. Applicable Law: This Agreement shall be given
effect and construed by application of the law of the State of
Nevada.
12.6. Headings: The headings of the Sections,
subsections, paragraphs and subparagraphs hereof are provided
herein only for convenience of reference and shall not be
considered in construing their contents.
12.7. Assigns: This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and
assigns in interest hereunder.
12.8. Severability: No determination by any court,
governmental or administrative entity or otherwise that any
provision of this Agreement or any amendment hereof is invalid or
unenforceable in any instance shall affect the validity or
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enforceability of (a) any other such provision, or (b) such
provision in any circumstance not controlled by such
determination. Each such provision shall be valid and
enforceable to the fullest extent allowed by, and shall be
construed wherever possible as being consistent with, applicable
law.
12.9. Time of Essence: Time is of the essence of this
Agreement.
12.10. Disclaimer of Partnership Status: Nothing in
the provisions of this Agreement shall be deemed in any way to
create between the parties hereto any relationship of
partnership, joint venture or association, and the parties hereto
hereby disclaim the existence of any such relationship.
12.11. Foreign Investment in Real Property Tax Act of
1980: An affidavit in the form attached hereto as Exhibit D
shall be executed by Seller and shall be provided to Buyer at the
Closing.
12.12. Assignment: Buyer may assign its interest in
this Agreement at any time hereafter only with the consent of
Seller, which consent shall not be unreasonably withheld, to a
corporation, partnership, joint venture or other entity which
directly or indirectly is controlled by The Rouse Company and/or
TrizecHahn Centers, Inc. ("Affiliate"), and, if such Affiliate
shall assume all of the obligations of Buyer hereunder by an
agreement in form and substance reasonably satisfactory to
Seller, upon such assignment and assumption Buyer shall be
24
<PAGE>
released from its obligations hereunder. Seller shall not assign
its interest in this Agreement.
IN WITNESS WHEREOF, each party hereto has executed this
Agreement or caused it to be executed on its behalf by its duly
authorized representatives, as of the day and year first above
written.
WITNESS or ATTEST: SELLER:
THE MIRAGE CASINO-HOTEL
SHARON THOMAS By: CHRIS NORDLING
TREASURE ISLAND CORP.
BECKY QUINN By: JOHN STRZEMP
BUYER:
H-S LAS VEGAS ASSOCIATES
By: TRIZECHAHN CENTERS, INC.,
General Partner
KACY TROPE By: DOUGLAS L. HAGEMAN
Senior Vice President and
General Counsel
By: WAYNE FINLEY
Sr. Vice President,
Development
By: HOWARD HUGHES PROPERTIES
LIMITED PARTNERSHIP,
General Partner
BRUCE I. ROTHSCHILD By: THE HOWARD
HUGHES CORPORATION,
General Partner
By: JEFFREY H. DONAHUE
Vice-President
25
FIRST AMENDMENT TO JANSEN AGREEMENT
This amendment (the "Amendment") to that certain
Agreement (the "Agreement") dated December 22, 1997 between
Mirage Resorts, Incorporated, a Nevada corporation
("Parent"), and Avis P. Jansen, a Nevada resident, individually,
as executrix of the Estate of Norbert W. Jansen, and as Trustee
for the Jansen Family Trust (the "Trust") under an Agreement
dated July 14, 1993 (in all such capacities, "Seller"), is
entered into as of this 30th day of January, 1998 between Parent
and Seller with reference to the following fact:
A. The Trust, rather than Jansen, is the record and
beneficial owner of 600 shares of Series A 6% Non-Voting
Cumulative Preferred Shares of the Company.
In consideration of the foregoing premise, Parent and
Seller hereby agree to amend the Agreement as follows:
1. The first sentence of Recital B of the
Agreement shall be deleted in its entirety and shall be
replaced by the following:
"The Trust is the owner of 600 shares (the "Preferred
Stock") of Series A 6% Non-Voting Cumulative Preferred
Shares (the "Preferred Shares") of the Company."
2. The second sentence of Section 4.1 of the
Agreement shall be deleted in its entirety and shall be
replaced by the following:
"On the date hereof, the Trust is the record and
beneficial owner of the Preferred Stock, and, on the date
hereof, such Preferred Stock constitutes all of the
Preferred Stock owned of record or beneficially by Seller."
IN WITNESS WHEREOF, the parties hereto have duly executed
this Amendment as of the date first above set forth.
PARENT: SELLER:
MIRAGE RESORTS, INCORPORATED AVIS P. JANSEN
a Nevada corporation _____________________________
Avis P. Jansen, a Nevada
resident, Individually, as
By: DANIEL R. LEE executrix of the Estate
_______________________ of Norbert W. Jansen, and as
Daniel R. Lee Trustee for the Jansen
Chief Financial Officer Family Trust under an
Agreement dated July 14, 1993
Exhibit 10(mmm)
AN AMENDMENT TO THE MAY 3, 1996 AGREEMENT
BETWEEN
THE CITY OF ATLANTIC CITY
AND
MIRAGE RESORTS, INCORPORATED
FOR THE DEVELOPMENT OF THE
HURON NORTH REDEVELOPMENT AREA
1. INITIAL RECITALS
THIS AMENDMENT (this "Amendment") known as "AN AMENDMENT TO
THE MAY 3, 1996 AGREEMENT BETWEEN THE CITY OF ATLANTIC CITY AND
MIRAGE RESORTS, INCORPORATED FOR THE DEVELOPMENT OF THE HURON
NORTH REDEVELOPMENT AREA" IS MADE THIS 8th DAY OF
January, 1998 by and between the City of Atlantic City
(the "City") and MAC, CORP. (the "Redeveloper"), in consideration
of the provisions set forth hereinafter and the mutual promises
contained therein.
WHEREAS, pursuant to Ordinance No. 14 of 1996 adopted
by the City Council of the City of Atlantic City (the "City
Council"), the City entered into a certain agreement known as "An
Agreement Between the City of Atlantic City and Mirage Resorts,
Incorporated for the Development of the Huron North Redevelopment
Area" (the "Agreement"), which Agreement was executed on May 3,
1996; and
WHEREAS, the Redeveloper is the successor by assignment, in
accordance with Section 5.6 of the Agreement, to the rights of
Mirage Resorts, Incorporated in and to the Agreement; and
EXHIBIT 10(nnn)
<PAGE>
WHEREAS, Section 10.5.3 of the Agreement provides that any
amendment to the Agreement must be in writing and specifically
recite that it is being entered into by and between the City and
the Redeveloper with the specific intention to modify the terms
of the Agreement; and
WHEREAS, pursuant to Section 2(4) of Ordinance No. 14 of
1996, the City has designated property known and designated as
Lot 30 in Block 200 on the Tax Map of the City of Atlantic City
as shown on Exhibit A attached hereto an made a part hereof (the
"Vornado Site") as the Relocation Parcel; and
WHEREAS, the acquisition by the City of the Vornado Site for
the City Facilities is for a valid public use; and
WHEREAS, pursuant to Resolution No. 627 of 1996, the City
has obtained a preliminary appraisal of the Vornado Site which
provides that the fair market value of the Vornado Site is
approximately Three Million One Hundred Thousand Dollars
($3,100,000.00); and
WHEREAS, the Redeveloper is desirous of having the City
convey the Project Parcels to the Redeveloper in advance of the
Relocation; and
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<PAGE>
WHEREAS, it would be in the best interest of the City to
accelerate the conveyance of the Project Parcels; and
WHEREAS, in the event of a conveyance of the Project Parcels
to the Redeveloper in advance of the Relocation, the City is
desirous of obtaining a limited nonexclusive license from the
Redeveloper to occupy the lands and improvements located on Lot
18 in Block RP 3; Lot 1 in Block RP 14 and Lot 1 in Block RP 15
on the Tax Map of the City as more fully described in Exhibit B
attached hereto and made a part hereof (the "City Facilities
Lots") in order to operate the City Facilities, subject to and in
accordance with the License Agreement (as hereinafter defined);
and
WHEREAS, the public interest of the City will be served by
obtaining such limited nonexclusive license from the Redeveloper;
and
WHEREAS, in Bryant vs. City of Atlantic City, filed in or
about May, 1996 in the Superior Court of New Jersey, Law
Division, Atlantic County (the "Court") under Docket No. ATL-L-
1535-96 ("Bryant"), the Court entered a judgment (the "Judgment")
which (1) dismissed with prejudice each and every count of the
amended complaint filed by the plaintiffs in Bryant and (2)
modified two (2) Sections of the Agreement; and
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<PAGE>
WHEREAS, in light of the foregoing recitals, the City and
the Redeveloper are desirous of entering into this Amendment to
amend various Sections of the Agreement; and
WHEREAS, the City and the Redeveloper acknowledge that the
mutual promises contained in this Amendment are good and valuable
consideration for the binding execution of this Amendment;
IT IS ON THE DATE STATED ABOVE AGREED BY AND BETWEEN THE
CITY AND THE REDEVELOPER AS FOLLOWS:
2. INCORPORATION OF RECITALS
2.0 Incorporation of Recitals. The recitals set forth in
Section 1 of this Amendment are hereby incorporated by reference
and are considered part of this Amendment.
3. DEFINITIONS
3.0 Governing Definitions. The defined words, phrases and terms
in the Agreement shall have their same respective meaning in this
Amendment unless the context clearly indicates otherwise.
4. ENVIRONMENTAL ISSUES
4.0 Remediation Costs Contingency. Pursuant to the Judgment,
Section 4.3 of the Agreement is hereby amended to provide that
the Redeveloper shall have an implied duty of good faith and fair
dealing with respect to its determination whether the costs of
remediation (referred to in the last sentence of Section 4.3 of
the Agreement) are unreasonable.
"4.1 Hold Harmless Provision. Section 4.5 of the Agreement
is hereby amended to provide that the City's hold harmless and
4
<PAGE>
indemnification obligations set forth in Section 4.5 of the
Agreement shall remain in place with respect to the City
Facilities Lots (notwithstanding the passage of title thereto) so
long as either the License Agreement is in effect or the City has
failed to vacate the City Facilities Lots. Notwithstanding the
foregoing, in the event an appellate court in the Bryant case, or
any other court with competent jurisdiction, voids the Agreement
or this Amendment or otherwise requires a reconveyance of the
Project Parcels from the Redeveloper to the City or if the City
exercises its right pursuant to the terms of the Agreement to
have the Project Parcels revert to the City (each, a
"Reconveyance"), then in such event (1) the City shall indemnify
and hold the Redeveloper harmless from all environmental
obligations which result from environmental conditions at the
Project Parcels except to the extent attributable to the acts of
the Redeveloper, (2) the Redeveloper's obligation to indemnify
and hold harmless the City set forth in Section 4.5 of the
Agreement shall terminate and (3) the Redeveloper shall reassign
the rights under the insurance policies (assigned by the City to
the Redeveloper pursuant to Section 4.5 of the Agreement) to the
City except that such reassignment shall not include any claims
made by the Redeveloper with respect to such insurance policies.
The terms of this Section 4.5 shall survive the Closing.
5. DEVELOPMENT OF THE PROJECT
5.0 Closing Date. Section 5.1.2 of the Agreement is hereby
deleted and of no force and effect and in its place the
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Redeveloper and the City (the "Parties" or "Parties") agree to
substitute the following provision:
"5.1.2 Closing Date. Notwithstanding anything to the contrary
in the Agreement or this Amendment, the Project Parcels as
identified in Section 5.1.1 shall be conveyed by the City to the
Redeveloper on the date which is one (1) business day following
the date City Ordinance No. 75 of 1997 (the "Ordinance")
approving this Amendment becomes effective pursuant to the terms
of Section 6 of the Ordinance (the "Closing Date"). The Closing
Date may be extended with the consent of the Parties. The
Redeveloper shall not be required to proceed with the Project or
the Closing if it is unable to obtain ALTA title insurance in an
amount equal to the full cost of the Project, without any
exceptions, exclusions or conditions which are not acceptable to
the Redeveloper."
5.1 Authorization to Convey. Section 5.1.2.1 of the Agreement
is hereby deleted and of no force and effect and in its place the
Parties agree to substitute the following provision:
"5.1.2.1 Authorization to Convey. The City agrees that in
adopting and executing this Amendment, it will simultaneously
adopt an ordinance authorizing and directing the Mayor of the
City of Atlantic City, or some other duly designated official of
the City, to execute and deliver to the Redeveloper on the
Closing Date (i) a deed conveying the Project Parcels in the form
attached hereto as Exhibit C and made a part hereof and (ii) any
and all other documents and instruments in accordance with terms
of the Agreement and this Amendment including, without
6
<PAGE>
limitation, (1) an assignment of the City's right, title and
interest in and to the City's lease on portions of the Project
Parcels with R.C. Maxwell Company (the "Maxwell Lease") and (2)
an assignment of the City's right, title and interest in and to
the City's lease on a portion of the Project Parcels with Marina
Associates ("Harrah's") (the "Harrah's Lease") provided that:
(A) The Redeveloper shall pay the City all rent (the
"Harrah's Rent") actually received by the Redeveloper
from Harrah's pursuant to paragraphs 2 and 4 of the
Harrah's Lease until such time as the Harrah's Lease is
terminated, provided that in the event that the average
assessed value of the Project Parcels for the year 1998
exceeds Ten Dollars ($10.00) per square foot (such
excess property taxes resulting from an assessment in
excess of Ten Dollars ($10.00) per square foot are
hereinafter referred to as the "Excess Taxes"), then
the Redeveloper shall, commencing at the time the City
establishes the 1998 assessment of the Project Parcels,
have the right to withhold and retain as the
Redeveloper's own monies a portion of the Harrah's Rent
equal to the amount of the Excess Taxes.
(B) The City shall retain and have the sole obligation
to Harrah's to pay Harrah's the unamortized cost of the
Infrastructure and Site Improvements, if any, pursuant
to the terms and conditions of paragraphs 19, 20 and 22
of the Harrah's Lease and the City shall indemnify and
hold the Redeveloper harmless from such obligations;
7
<PAGE>
(C) The City shall assess the land covered by the
Harrah's Lease for taxes and shall bill Harrah's for
such taxes pursuant to the terms of paragraph 22 of the
Harrah's Lease and the Redeveloper shall have no
obligation in connection therewith during the term of
the Harrah's Lease; and
(D) The Redeveloper represents in good faith that it
does not currently expect to terminate the Harrah's
Lease prior to December 31, 1998. Notwithstanding the
foregoing, the Redeveloper may terminate the Harrah's
Lease pursuant to its terms at any time provided that
(1) the Redeveloper determines in good faith in its
sole discretion that the termination of the Harrah's
Lease is necessary or beneficial to the Redeveloper for
the purpose of the development of the Project or the
Site or (2) the Redeveloper otherwise determines in
good faith in its sole discretion to terminate the
Harrah's Lease.
The City shall not terminate either the Maxwell Lease or the
Harrah's Lease prior to the Closing without the prior written
consent of the Redeveloper. All rent and other charges paid to
the City under the Maxwell Lease shall be prorated as of the
Closing Date and credited against any monies to be paid to the
City at the Closing in accordance with the terms and conditions
of Section 6 herein."
8
<PAGE>
5.2 Limited Nonexclusive License to Occupy the City Facilities
Lots. Section 5 of the Agreement is hereby amended to add the
following provision:
"5.2.1.2 Limited Nonexclusive License to Occupy the City
Facilities Lots. The Redeveloper grants the City a limited
nonexclusive, nonassignable license (the "License") to occupy the
City Facilities Lots subject to easements, restrictions, and
agreements of record, the Maxwell Lease and the terms and
conditions set forth in that certain license agreement (the
"License Agreement") attached hereto as Exhibit "D" and made a
part hereof."
5.3. Reconveyance of the Project Parcels. Pursuant to the
Judgment, in the event that the Redeveloper desires to sell,
lease or otherwise transfer the Project Parcels or the Project or
any part thereof prior to completion of construction of the
Project, the Redeveloper shall first obtain the written consent
of the City; and in the event the Redeveloper so requests the
written consent of the City, the City shall act reasonably under
the circumstances and shall not unreasonably withhold its
consent.
6. RELOCATION OF THE CITY FACILITIES
6.0 Relocation of the City's Facilities. Sections 6.1 through
6.6, inclusive, of the Agreement are hereby deleted and of no
force and effect and in their place the Parties agree to
substitute the following provisions:
"6.1 Relocation. The City and the Redeveloper acknowledge that
in order to proceed with the development of the Site, the
9
<PAGE>
Redeveloper may utilize the City Facilities Lots. The City
agrees that it will be responsible to relocate the City
Facilities to another location within the City ("Relocation" or
"the Relocation"). Accordingly the Parties agree that upon the
signing of this Amendment, the City will promptly acquire the
Vornado Site exercising its powers of eminent domain, if
necessary, and will promptly improve and relocate the City
Facilities to the Vornado Site, with the understanding that all
costs in connection therewith shall be paid for by the City
incurring indebtedness and issuing bonds as authorized by
Ordinance No. 76 of 1997 (the "Bond Ordinance") and if
necessary, such other funding sources in accordance with the law.
6.2 Assistance from City. [Intentionally Omitted]
6.3 Configuration. [Intentionally Omitted]
6.4 Redeveloper's Rights Prior to Relocation. [Intentionally
Omitted]
6.5 Cost of Relocation. [Intentionally Omitted]
6.6 Other Limitation. [Intentionally Omitted]"
7. REDEVELOPER'S PAYMENTS
7.0 Redeveloper's Payments. The Agreement is hereby amended to
add the following provisions:
"11.0 Redeveloper's Payments.
(i) The City acknowledges that on December 3, 1997,
the Redeveloper has escrowed the sum of Seven Hundred
Fifty Thousand Dollars ($750,000) (the "Escrow Fund")
with PNC Bank. The Escrow Fund shall be for the
purpose of providing the City with the necessary
downpayment for the Bond Ordinance in accordance with
10
<PAGE>
the Local Bond Law. In the event that the Closing
occurs on the Closing Date, the Escrow Fund shall be
immediately paid to the City. In the event that the
Closing does not occur on the Closing Date, the Escrow
Fund shall be immediately paid to the Redeveloper;
(ii) In the event that the Closing occurs on the
Closing Date, the Redeveloper shall, on the Closing
Date, pay the City the additional sum of Three Million
Seven Hundred Fifty Thousand Dollars ($3,750,000);
(iii) In the event that (A) the Closing occurs on the
Closing Date and (B) the City vacates the City
Facilities Lot on or before June 1, 1999 in accordance
with the terms of the License, the Redeveloper shall
pay the City the additional sum of Three Million Seven
Hundred Fifty Thousand Dollars ($3,750,000) on each of
the following dates: December 1, 1999, December 1,
2000 and December 1, 2001;
(iv) The Redeveloper's obligation to pay the City the
amounts set forth in this Section are subject to all
conditions and provisions set forth in the Agreement
and this Amendment;
(v) The City and the Redeveloper acknowledge and agree
that the Planning Escrow Account (the "Planning Escrow
Account") established by the Redeveloper pursuant to
the requirements of the RFQ contains One Million
Dollars ($1,000,000) plus interest, which Planning
Escrow Account is on deposit at PNC Bank, in account
11
<PAGE>
number 81-0288-5758. The City and the Redeveloper
acknowledge and agree that Seven Hundred Fifty Thousand
Dollars ($750,000) of the Planning Escrow Account has
been set aside as and shall constitute the Escrow Fund
to be withdrawn from the Planning Escrow Account and
paid pursuant to the terms of Section 6.7(i) herein.
The City and the Redeveloper agree that the Planning
Escrow Account, less the Escrow Fund, shall be
withdrawn in its entirety and paid to the Redeveloper
on the Closing Date. The City and the Redeveloper
agree to take all necessary actions and execute and
deliver all necessary instruments and documents in
order to accomplish the terms and conditions of this
Section; and
(vi) In the event of a Reconveyance (1) the Redeveloper
shall not be required to make any further payments to
the City pursuant to the terms of this Section and (2)
any monies theretofore paid to the City pursuant to the
terms of this Section (the "Relocation Payments") plus
interest thereon at the New Jersey Court Rule-
established judgment interest rate (as same may be
changed from time to time) commencing from the date of
each respective payment of the Relocation Payments (the
"Relocation Payments Plus Interest") shall be paid by
the City to the Redeveloper at the time of, and in the
event, the City, at a later date, transfers, by
conveyance, lease or otherwise, all or any portion of
12
<PAGE>
the Project Parcels to another person or entity
(following the reversion or the reconveyance of title
to all or a portion of the Project Parcels to the
City). The Relocation Payments Plus Interest shall be
secured by a first purchase money mortgage which shall
be executed and delivered by the City to the
Redeveloper on the date of such reversion or
reconveyance of title to all or a portion of the
Project Parcels to the City. The City shall require
that the transferee of an interest in and to all or a
portion of the Project Parcels shall pay monies to the
City as consideration for such transfer in an amount
not less than the Relocation Payments Plus Interest.
Accordingly, no certification of funds pursuant to the
Local Budget Law is necessary in connection with the
City's obligation, if any, to pay the Relocation
Payments Plus Interest to the Redeveloper as the monies
constituting the Relocation Payments Plus Interest
shall be paid to the City by person(s) and/or
entity(ies) other than the City."
8. MISCELLANEOUS
8.0 Ratification of All Other Terms and Conditions of the
Agreement. Except to the extent inconsistent with the terms and
conditions of this Amendment, all remaining terms and conditions
of the Agreement are hereby ratified and confirmed and are agreed
to be in full force and effect.
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment
effective as of the date appearing on the first page hereof.
ATTEST: THE CITY OF ATLANTIC CITY
ROSEMARY ADAMS JAMES WHELAN
____________________ By:________________________
Assist. City Clerk
Title Mayor
Approved as to form:
DANIEL A. COREY
_______________________________
DANIEL A. COREY, City Solicitor
ATTEST: MAC, CORP.
SUSAN M. WALKER BRUCE A. LEVIN
____________________ By:_______________________
Title VP/Asst. Secretary
14
BELLAGIO
Robert H. Baldwin
President
January 14, 1998
Mr. Stephen A. Wynn
Chairman of the Board, President
And Chief Executive Officer
Mirage Resorts, Incorporated
3400 Las Vegas Boulevard, South
Las Vegas, NV 89109
Dear Steve:
This confirms our agreement this date with respect to the
art described in Exhibits A and B attached hereto (the
"Exhibit `A' Art" and "Exhibit `B' Art").
1. Bellagio hereby sells the Exhibit `A' Art to you and
you hereby purchase the Exhibit `A' Art from Bellagio for
$25,562,812.45;
2. Bellagio hereby rents the Exhibit `A' Art, excluding
Picasso's "Seated Woman", and the Exhibit `B' Art for
exhibition in any casino-hotels operated, directly or
indirectly, by Bellagio or any of Mirage Resorts,
Incorporated's other wholly owned subsidiaries. The annual
rental, payable monthly in advance, shall be a percentage
equal to a floating rate of thirty-day Libor plus thirty
basis points per year (the "Percentage") of the aggregate
purchase price of the Exhibit `A' Art and the Exhibit `B'
Art as noted on such Exhibits being rented hereunder.
Either Bellagio or you may terminate the rental as to one or
more of the Exhibit `A' Art or Exhibit `B' Art on thirty
(30) days' notice. In any such event, the rental thereafter
payable hereunder, shall be proportionately reduced to equal
the Percentage of the purchase price of the art thereafter
to be rented by Bellagio hereunder.
Bellagio shall be responsible for insuring and maintaining
the security of all of the art it is renting hereunder, as
well as for any sales and personal property taxes applicable
to its rental.
P.O. BOX 7700, LAS VEGAS, NEVADA 89177-7700
Exhibit 10(ooo)
<PAGE>
Mr. Stephen A. Wynn
January 14, 1998
Page 2
Please sign below to confirm your agreement to all of the
foregoing. My signature below confirms Bellagio's agreement
thereto.
Very truly yours,
Bellagio
By: Robert H. Baldwin
____________________________
ROBERT H. BALDWIN
President and Chief Executive Officer
I hereby agree to all of the foregoing.
Stephen A. Wynn
_____________________
STEPHEN A. WYNN
cc: Peter Walsh
Jim Pettis
<PAGE>
ART
PURCHASE
ARTIST TITLE DATE PRICE
Edgar Degas "Dancer, Taking 16 October 97 $12,000,000
her Bow"
1878
Pastel on paper
33-1/2 by 27 in.
Alberto "Pointing Man" 5 December 97 $7,350,000
Giacometti 1947
Bronze
Height: 70-1/2 in.
Henri Matisse "Still Life (with 10 December 1997 $4,562,812.45
Vase of Anemones,
Lemons and
Pineapple)"
Oil on canvas
32- 3/8 by
39-3/4 in.
Pablo Picasso "Seated Woman" 25 October 1997 $1,650,000
1956
Oil on canvas
76 by 51-1/8 in.
TOTAL $25,562,812.45
EXHIBIT 'A'
<PAGE>
ART
PURCHASE
ARTIST TITLE DATE PRICE
Vincent VanGogh Woman in a Blue 19 December 1997
Dress $47,500,000
TOTAL $47,500,000
EXHIBIT 'B'
Second Amendment to Mirage Resorts, Incorporated
Non-Qualified Deferred Compensation Plan
WHEREAS, Mirage Resorts, Incorporated maintains a Non-
Qualified Deferred Compensation Plan effective as of
February 1, 1997, as amended by a First Amendment thereto
effective as of February 20, 1997 (as so amended, the
"Deferred Compensation Plan"); and
WHEREAS, the Board of Directors desires to amend the terms
of the Deferred Compensation Plan in certain respects as
permitted by Section 8.4 of the Deferred Compensation Plan,
without affecting in any manner the investment of amounts in
Participants' 1997 Plan Year Subaccounts; and
WHEREAS, due to the delay resulting from implementation of
the changes reflected herein, to date no Participant has
elected or has been given the opportunity to elect to
participate in the Deferred Compensation Plan for the 1998
Plan Year;
NOW, THEREFORE, it is declared as follows:
1. Amended Definitions. The following definitions in
Section 1 of the Deferred Compensation Plan are amended to
read as follows:
"Election Date" shall mean (i) with respect to the
first Plan Year, except as provided in clause (ii) of this
definition, February 21, 1997; (ii) with respect to the
first Plan Year, March 31, 1997, but only for Eligible
Employees who did not elect to defer compensation on or
before February 21, 1997; (iii) with respect to the 1998
Plan Year, February 20, 1998; and (iv) with respect to
each subsequent Plan Year, December 1 of the immediately
preceding Plan Year.
"Plan Year" shall mean, with respect a Participant,
that period beginning on the first day of the Participant's
first pay period that begins on or after January 1, and
ending on the last day of the Participant's pay period that
ends on or includes the following December 31; provided,
however, that (i) the first Plan Year shall be a short
year beginning on the first day of the Participant's first
pay period that begins on or after
February 21, 1997 (if such employee elected on or before
such date), or that begins after March 31, 1997 (if such
employee did not elect to defer compensation on or before
February 21, 1997, but did so elect on or before March 31,
1997), and in each case ending on the last day of the
Participant's pay period that ends on or includes December
31, 1997 and (ii) the 1998 Plan Year shall be a short year
EXHIBIT 10(ppp)
<PAGE>
beginning on the first day of the Participant's first pay
period that begins after February 20, 1998, and ending on
the last day of the Participant's pay period that ends on
or includes December 31, 1998.
2. Amendment to Section 4.2. Section 4.2 of the
Deferred Compensation Plan is amended to read in its
entirety as follows:
4.2 Percentage to be Deferred. For the initial
Plan Year, an Eligible Employee may elect to defer
any percentage of Salary not exceeding 25 percent
and any percentage of Bonus not exceeding 15
percent. For the 1998 Plan Year, an Eligible
Employee may elect to defer any percentage of
Salary not exceeding 20 percent and any percentage
of Bonus not exceeding 15 percent. For each
subsequent Plan Year, an Eligible Employee may
elect to defer any percentage of Salary not
exceeding 15 percent and any percentage of Bonus
not exceeding 15 percent. The percentage
designated by the Participant shall apply to each
payment of Salary and Bonus subject to the
election.
3. Amendment to Section 4.4. Section 4.4 of the
Deferred Compensation Plan is amended to read in its
entirety as follows:
4.4 Investment Elections. Each Participant may specify
that all of the Compensation to be deferred for any Plan
Year shall be deemed to be invested in one (and only one) of
the following options (the "Participant Options"):
4.4.1 Fixed Rate. A fixed rate of seven percent
per annum, compounded monthly (the "Fixed Rate
Option").
4.4.2 401(k) Investments. The average rate of
return, calculated daily, of those investments to
which the Participant's salary deferrals in
Mirage Resorts, Incorporated's Retirement Savings
Voluntary Participation Plan adopted pursuant to
Section 401(k) of the Code (the "401(k) Plan") are
from time to time allocated, weighted in the same
percentage as the Participant's salary deferrals
in the 401(k) Plan (the "401(k) Plan Option").
At such time or times as the Participant changes
his or her investment election as among the 401(k)
Plan Investments with respect to the Participant's
salary deferrals in the 401(k) Plan (in the manner
provided in the 401(k) Plan), the Participant
shall be deemed concurrently to have changed the
Participant's investment election as among the
2
<PAGE>
401(k) Plan Investments with respect to the 401(k)
Plan Option for each Plan Year Subaccount in the
same manner.
If a Participant fails to elect a Participant
Option for the deferred Compensation for any Plan
Year, or if a Participant is not or ceases to be a
participant in the 401(k) Plan and has not made an
election as among the 401(k) Plan Investments for
any Plan Year, he or she shall be deemed to have
elected the Fixed Rate Option with respect to the
deferred Compensation for such Plan Year. If a
Participant is not or ceases to be a participant
in the 401(k) Plan, and the Participant has
elected or wishes to elect the 401(k) Plan Option
for the deferred Compensation for any Plan Year,
he or she shall file with the Committee an
election, on a form provided by the Committee,
designating the manner in which the Participant's
deferred Compensation for such Plan Year is to be
allocated as among the 401(k) Plan Investments.
On or prior to the twentieth day of any calendar
month, the Participant may change such designation
as among the 401(k) Plan Investments, in 10%
increments, by filing a new election on a form
provided by the Committee. Such change shall be
effective as of the first day of the following
calendar month. The Participant Option elected
for any part of the Compensation deferred by a
Participant shall also apply to amounts credited
as earnings on that part of the Compensation
deferred.
4. Amendment to Section 4.5. Section 4.5 of the
Deferred Compensation Plan is amended to read in its
entirety as follows:
4.5 Change of Investment Election. On or prior
to the twentieth day of any calendar month , a
Participant may change the designation of the
Participant Options, as between the Fixed Rate
Option and the 401(k) Plan Option, with respect to
all (but not less than all) of the amount of any
one or more Plan Year Subaccounts of the
Participant by filing with the Committee an
election on a form provided by the Committee.
Such change shall be effective as of the first day
of the following calendar month. A Participant
may change his or her investment election as among
the 401(k) Plan Investments as provided in Section
4.4.2.
3
<PAGE>
5. Addition of Section 4.7. A new Section 4.7 is
added to the Deferred Compensation Plan as follows:
4.7 1997 Plan Year Subaccount. Notwithstanding
any other provision of this Plan, amounts in a
Participant's 1997 Plan Year Subaccount shall
continue to be invested in accordance with the
Participant's investment election in effect on
December 1, 1997, and such investment election may
not be changed thereafter.
6. Other Capitalized Terms. Except as otherwise
expressly provided, all capitalized terms used herein shall
have the meaning assigned to such terms in the Deferred
Compensation Plan.
7. Confirmation. In all other respects, the terms of
the Deferred Compensation Plan are hereby confirmed and
shall remain in full force and effect.
IN WITNESS WHEREOF, Mirage Resorts, Incorporated has
caused this document to be executed by its duly authorized
officer effective as of February 1, 1998.
MIRAGE RESORTS, INCORPORATED
DANIEL R. LEE
_____________________________
By: Daniel R. Lee
Title: Chief Financial
Officer
4
Second Amendment to Mirage Resorts, Incorporated
Directors' Deferred Fee Plan
WHEREAS, Mirage Resorts, Incorporated maintains a Directors'
Deferred Fee Plan effective as of February 1, 1997, as
amended by a First Amendment thereto effective as of
February 28, 1997 (as so amended, the "Deferred Fee Plan");
and
WHEREAS, the Board of Directors desires to amend the terms
of the Deferred Fee Plan in certain respects as permitted
by Section 8.4 of the Deferred Fee Plan, without affecting
in any manner the investment of amounts in Participants'
1997 Plan Year Subaccounts; and
WHEREAS, due to the delay resulting from implementation of
the changes reflected herein, to date no Participant has
elected or has been given the opportunity to elect to
participate in the Deferred Fee Plan for the1998 Plan Year;
NOW, THEREFORE, it is declared as follows:
1. Amended Definitions. The following definitions in
Section 1 of the Deferred Fee Plan are amended to read as
follows:
"Election Date" shall mean (i) with respect to the
first Plan Year, except as provided in clause (ii) of this
definition, February 21, 1997; (ii) with respect to the
first Plan Year, March 31, 1997, but only for Directors who
did not elect to defer fees on or before February 21, 1997;
(iii) with respect to the 1998 Plan Year, February 20,
1998; and (iv) with respect to each subsequent Plan Year,
December 1 of the immediately preceding Plan Year.
"Plan Year" shall mean a calendar year; provided,
however, that (i) the first Plan Year shall be a short
year beginning, with respect to each Director, on March 1,
1997 (if such Director elected to defer fees on or before
February 21, 1997), or on April 1, 1997 (if such Director
did not elect to defer fees on or before February 21, 1997,
but did so elect on or before March 31, 1997), and in each
case ending on December 31, 1997 and (ii) the 1998 Plan Year
shall be a short year beginning on March 1, 1998 and ending
on December 31, 1998.
2. Amendment to Section 4.2. Section 4.2 of the
Deferred Fee Plan is amended to read in its entirety as
follows:
EXHIBIT 10(qqq)
<PAGE>
4.2 Percentage to be Deferred. For the initial
Plan Year, a Director may elect to defer any
percentage of Compensation not exceeding 25
percent. For the 1998 Plan Year, a Director may
elect to defer any percentage of Compensation not
exceeding 20 percent. For each subsequent Plan
Year, a Director may elect to defer any percentage
of Compensation not exceeding 15 percent.
3. Amendment to Section 4.4. Section 4.4 of the
Deferred Fee Plan is amended to read in its entirety as
follows:
4.4 Investment Elections. Each Participant may specify
that all of the Compensation to be deferred for any Plan
Year shall be deemed to be invested in one (and only one) of
the following options (the "Participant Options"):
4.4.1 Fixed Rate. A fixed rate of seven percent
per annum, compounded monthly (the "Fixed Rate
Option").
4.4.2 401(k) Investments. The average rate of
return, calculated daily, of those investments
selected by the Participant from among the
investments to which participants in Mirage
Resorts, Incorporated's Retirement Savings
Voluntary Participation Plan adopted pursuant to
Section 401(k) of the Code (the "401(k) Plan")
from time to time are permitted to allocate
salary deferrals (the "401(k) Plan Option").
If a Participant fails to elect a Participant
Option for the deferred Compensation for any Plan
Year, or if a Participant has not made an election
as among the 401(k) Plan Investments for any Plan
Year, he or she shall be deemed to have elected
the Fixed Rate Option with respect to the deferred
Compensation for such Plan Year. If a Participant
wishes to elect the 401(k) Plan Option for the
deferred Compensation for any Plan Year, he or she
shall file with the Committee an election, on a
form provided by the Committee, designating the
manner in which the Participant's deferred
Compensation for such Plan Year is to be allocated
as among the 401(k) Plan Investments. On or prior
to the twentieth day of any calendar month, the
Participant may change such designation as among
the 401(k) Plan Investments, in 10% increments, by
filing a new election on a form provided by the
Committee. Such change shall be effective as of
the first day of the following calendar month.
The Participant Option elected for any part of the
Compensation deferred by a Participant shall also
apply to amounts credited as earnings on that part
of the Compensation deferred.
2
<PAGE>
4. Amendment to Section 4.5. Section 4.5 of the
Deferred Fee Plan is amended to read in its entirety as
follows:
4.5 Change of Investment Election. On or prior
to the twentieth day of any calendar month , a
Participant may change the designation of the
Participant Options, as between the Fixed Rate
Option and the 401(k) Plan Option, with respect to
all (but not less than all) of the amount of any
one or more Plan Year Subaccounts of the
Participant by filing with the Committee an
election on a form provided by the Committee.
Such change shall be effective as of the first day
of the following calendar month. A Participant
may change his or her investment election as among
the 401(k) Plan Investments as provided in Section
4.4.2.
5. Addition of Section 4.7. A new Section 4.7 is
added to the Deferred Fee Plan as follows:
4.7 1997 Plan Year Subaccount. Notwithstanding
any other provision of this Plan, amounts in a
Participant's 1997 Plan Year Subaccount shall
continue to be invested in accordance with the
Participant's investment election in effect on
December 1, 1997, and such investment election may
not be changed thereafter.
6. Other Capitalized Terms. Except as otherwise
expressly provided, all capitalized terms used herein shall
have the meaning assigned to such terms in the Deferred Fee
Plan.
7. Confirmation. In all other respects, the terms of
the Deferred Fee Plan are hereby confirmed and shall remain
in full force and effect.
3
<PAGE>
IN WITNESS WHEREOF, Mirage Resorts,
Incorporated has caused this document to be executed by its
duly authorized officer effective as of February 1, 1998.
MIRAGE RESORTS, INCORPORATED
DANIEL R. LEE
_____________________________
By: Daniel R. Lee
Title: Chief Financial
Officer
4
MIRAGE RESORTS, INCORPORATED
1998 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
1. Purpose.
This 1998 Stock Option and Stock Appreciation Rights
Plan (the "Plan") is intended to advance the interests of
Mirage Resorts, Incorporated (the "Company"), its
stockholders and its Subsidiaries by encouraging and
enabling selected officers, directors, employees,
independent contractors and agents, upon whose judgment,
initiative and effort the Company is largely dependent for
the successful conduct of its business, to acquire and
retain a proprietary interest in the Company by ownership of
its stock through the exercise of stock options and to
acquire certain benefits of equity participation in the
Company through the grant of stock appreciation rights.
2. Definitions.
(a) "Board" means the Board of Directors of the
Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the committee of the Board
administering the Plan or the Board if a Committee has not
been appointed and unless the context otherwise requires.
(d) "Common Stock" means the Company's common stock,
$.004 par value.
(e) "Date of Grant" means the date on which an Option
or SAR is granted under the Plan.
(f) "Effective Date" means the Effective Date of the
Plan as specified in Paragraph 12.
(g) "Fair Market Value" of the Common Stock on any day
shall be deemed to be (i) if the Common Stock is traded on a
national securities exchange, the closing price (or, if no
reported sale takes place on such day, the mean of the
reported bid and asked prices) of the Common Stock on such
day on the principal such exchange, or, if the stock is
included on the composite tape, the composite tape, or (ii)
if the Common Stock is traded in the over-the-counter market
and not on any national securities exchange, the mean
between the closing bid and asked prices (or, if no closing
prices are reported, the mean between the high bid and low
asked prices) on such day as reported by the National
Association of Securities Dealers Automated Quotation
System, or, if not so reported, by a generally accepted
reporting service. In each case, the Committee's
determination of Fair Market Value shall be conclusive.
Exhibit 10(rrr)
<PAGE>
(h) "Incentive Option" means an option granted under
the Plan which is designated as an incentive stock option
and which is intended to qualify as such within the meaning
of Section 422 of the Code.
(i) "Non-Qualified Option" means an option granted
under the Plan which is designated as a non-qualified stock
option and which is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
(j) "Option" means any stock option granted under the
Plan.
(k) "Optionee" means a person to whom an Option or an
SAR, which has not expired or terminated, has been granted
under the Plan.
(l) "Option Price" means the exercise price of an
Option or the base price of an SAR.
(m) "Parent Corporation" shall have the meaning set forth
in Section 424(e) of the Code.
(n) "Permanent Disability" shall have the meaning set
forth in Subparagraph 6(h).
(o) "Relationship" means that the Optionee is or has agreed
to become an officer, director, employee, independent contractor
or agent of the Company or any of its Subsidiaries.
(p) "Reorganization" shall have the meaning set forth in
Subparagraph 7(c).
(q) "Reorganization Agreement" shall have the meaning set
forth in Subparagraph 7(c)(i).
(r) "SAR" means a stock appreciation right granted under
the Plan.
(s) "Spread" means, with respect to each SAR, an amount
equal to the excess, if any, of the Fair Market Value of the
Common Stock on the date of exercise over the Option Price.
(t) "Subsidiary" means a corporation or other entity, a
majority of the voting power in which is owned directly or
indirectly by the Company; provided, however, that with respect
to Incentive Options it has the meaning set forth in Section
424(f) of the Code.
2
<PAGE>
(u) "Successor" means the legal representative of the
estate of a deceased Optionee or the person or persons who
acquire the right to exercise an Option by bequest or
inheritance or by reason of the death of the Optionee.
3. Administration of the Plan.
The Plan shall be administered by the Board or by a
Committee, consisting solely of two or more directors,
appointed by the Board to administer the Plan. The Board
may from time to time remove members from the Committee,
fill all vacancies in the Committee, however caused, and may
select one of the members of the Committee as its Chairman.
The Committee shall hold its meetings at such times and
places as it may determine, shall keep minutes of its
meetings and shall adopt, amend and revoke such rules or
procedures as it may deem proper; provided, however, that it
may take action only upon the agreement of a majority of the
whole Committee. Any action which the Committee shall take
through a written instrument signed by a majority of its
members shall be as effective as though it had been taken at
a meeting duly called and held. The Committee shall report
all actions taken by it to the Board.
The Committee shall have full and final authority in
its discretion, subject to the provisions of the Plan, to
grant Options and SARs, to determine the number of shares
and the Option Price with respect to each Option and SAR,
the individuals to whom and the time or times at which
Options and SARs shall be granted, to determine the terms
and provisions of the respective agreements covering Options
and SARs, which need not be identical (including, but
without limitation, terms covering the payment of the Option
Price with respect to Options), to construe and interpret
the Plan and to make all other determinations and take all
other actions deemed necessary or advisable for the proper
administration of the Plan. All such actions and
determinations shall be conclusively binding for all
purposes and upon all persons.
4. Common Stock Subject to Options and SARs.
The aggregate number of shares of Common Stock subject
to Options and SARs which may be granted under the Plan
shall not exceed 5,000,000. The aggregate number of shares
of Common Stock subject to Options and SARs which may be
granted under the Plan to any single participant shall not
exceed 2,000,000. The shares of Common Stock to be issued
upon the exercise of Options or SARs, to the extent
exercised for shares of the Common Stock, may be authorized
but unissued shares, shares issued and reacquired by the
3
<PAGE>
Company or shares purchased by the Company on the open
market. In the event any Option or SAR shall, for any
reason, terminate or expire or be surrendered without having
been exercised in full, such Option or SAR shall again be
available for grant under the Plan.
5. Participants.
Non-Qualified Options or SARs may be granted under the
Plan to any person who is or who agrees to become an
officer, director, employee, independent contractor or agent
of the Company or any of its Subsidiaries. Incentive
Options may be granted under the Plan to any person who is
an employee of the Company or any of its Subsidiaries. An
employee may be granted Non-Qualified Options or Incentive
Options or both under the Plan; provided, however, that
the grant of Non-Qualified Options and Incentive Options to
an Optionee shall be the grant of separate Options and each
Non-Qualified Option and each Incentive Option shall be
specifically designated as such in accordance with
applicable provisions of Treasury regulations.
6. Terms and Conditions of Options and SARs.
Each Option or SAR granted under the Plan shall be
evidenced by an agreement executed by the Company and the
Optionee and shall contain such terms and be in such form as
the Committee may from time to time approve, subject to the
following limitations and conditions:
(a) Option Price. The Option Price per share
with respect to each Non-Qualified Option and SAR shall
be determined by the Committee and shall in no instance
be less than either (i) the par value or (ii) 50% of
the Fair Market Value of a share of Common Stock on the
Date of Grant. The Option Price per share with respect
to each Incentive Option shall be determined by the
Committee and shall in no instance be less than either
(i) the par value or (ii) 100% of the Fair Market
Value of a share of Common Stock on the Date of Grant;
provided, however, that if at the time an Incentive
Option is granted the Optionee owns or would be
considered to own by reason of Section 424(d) of the
Code more than 10% of the total combined voting power
of all classes of stock of the Company or any
Subsidiary or Parent Corporation of the Company, the
Option Price of the shares covered by such Incentive
Option shall not be less than 110% of the Fair Market
Value of a share of Common Stock on the Date of Grant.
(b) Period of Option or SAR. The expiration date
of each Option and SAR shall be fixed by the Committee
but, notwithstanding any provision of the Plan to the
contrary, the expiration date of any Option or SAR
shall not be more than 10 years from the Date of Grant;
provided, however, that if at the time an Incentive
Option is granted the Optionee owns or would be
4
<PAGE>
considered to own by reason of Section 424(d) of the
Code more than 10% of the total combined voting power
of all classes of stock of the Company or any
Subsidiary or Parent Corporation of the Company, such
Incentive Option shall expire not more than five years
from the Date of Grant. An Option or SAR may terminate
before its expiration date, as provided in
Subparagraphs 6(g), 6(h), 7(b) and 7(c).
(c) Vesting of Stockholder Rights. Neither an
Optionee nor his Successor shall, by virtue thereof,
have any of the rights of a stockholder of the Company
until the certificates evidencing the shares purchased
are properly delivered to such Optionee or his
Successor.
(d) Exercise. Each Option and SAR shall be
exercisable in whole or in part from time to
time over a period commencing on the Date of Grant and
ending upon its expiration or termination; provided,
however, the Committee may, by the provisions of any
agreement, limit the extent to which such Option or SAR
is exercisable during such period or periods of time.
No Option or SAR granted under the Plan shall be
exercisable in whole or in part prior to the date of
stockholder approval of the Plan.
Payment of the exercise price of an Option may be
made in any combination of cash and Common Stock,
including (unless the Committee provides otherwise) the
automatic application of shares of Common Stock
received upon exercise of an Option to satisfy the
exercise price for additional Options. Where payment
is made in Common Stock, such stock shall be valued at
the Fair Market Value of such shares.
Each SAR shall be exercisable for cash, for shares
of Common Stock or for either, in the discretion of the
Optionee.
Upon exercise of an SAR, the Optionee shall be
entitled to receive, within 10 days after exercise,
either (i) a cash payment equal to the Spread, if any,
with respect to such exercised SAR, or (ii) a number of
whole shares of Common Stock equal to (A) the Spread
with respect to such exercised SAR, divided by (B) the
Fair Market Value of a share of Common Stock as of the
date of exercise, plus an amount of cash representing
the Fair Market Value of any fractional share. In the
event than an SAR has not been exercised prior to its
expiration, and the SAR shall then be exercisable, if
such SAR has a positive Spread it shall be
automatically exercised for cash on such expiration
date.
5
<PAGE>
(e) Limitation on Grant of Incentive Options.
The aggregate fair market value (determined as of the
time the option is granted) of stock with respect to
which incentive stock options are exercisable for the
first time by an option holder in any calendar year
(under the Plan and all other plans of the Company or
any Parent Corporation or Subsidiary of the Company)
shall not exceed $100,000.
(f) Non-Transferability of Options and SARs. No
Option or SAR shall be transferable or assignable by an
Optionee, otherwise than by will or the laws of descent
and distribution, and each Option and SAR shall be
exercisable during the Optionee's lifetime only by him.
No Option or SAR shall be pledged or hypothecated in
any way nor shall it be subject to execution,
attachment or similar process.
(g) Termination. Except as the Committee may
expressly determine otherwise, upon termination of an
Optionee's Relationship with the Company or with any of
its Subsidiaries, for any reason other than death or
Permanent Disability (as defined in Subparagraph 6(h)),
the Optionee's Options and SARs shall terminate three
months after the date of such termination of
Relationship, unless such Optionee has resumed or
initiated a Relationship with the Company or with any
of its Subsidiaries and has a Relationship on such
date. During such three-month period, the Optionee
may exercise an Option or SAR granted to him to the
extent such Option or SAR was exercisable on the date
of termination of his Relationship and provided that
such Option or SAR has not expired or otherwise
terminated. In the event that an SAR has not been
exercised prior to its termination or earlier
expiration date, and the SAR shall then be exercisable,
if such SAR has a positive Spread it shall be
automatically exercised for cash on its termination or
earlier expiration date.
A leave of absence approved in writing by the
Committee shall not be deemed a termination of
Relationship for purposes of this Paragraph 6, but no
Option or SAR may be exercised during any such leave of
absence, except during the first three months thereof.
The granting of an Option or SAR to an Optionee does
not alter in any way the Company's or any Subsidiary's
right to terminate such person's Relationship at any
time for any reason, nor does it confer upon such
person any rights or privileges except as specifically
provided for in the Plan.
6
<PAGE>
For purposes of this Paragraph 6, termination of
an Optionee's Relationship shall be deemed to occur on
the earliest of: (i) the effective date of termination
set forth in a written notice from the Company or the
Optionee; (ii) the date an Optionee ceases to render
the services which he was employed or engaged to render
to the Company or Subsidiary, and representing the
basis of the Relationship, and assuming no other
services are being rendered which would represent the
basis of a new Relationship (but shall not include any
leave of absence approved by the Committee or any
temporary absence or vacation approved by the
Optionee's supervisor); or (iii) the date an Optionee
retires or completes his employment or engagement with
the Company or any Subsidiary, or in accordance with
the normal retirement policies of the Company or any
Subsidiary.
(h) Death or Permanent Disability of Optionee.
Except as the Committee may expressly determine
otherwise, if an Optionee dies or suffers a Permanent
Disability while in a Relationship with the Company or
any of its Subsidiaries, the Optionee's Options and
SARs shall terminate one year after the date of the
Optionee's death or termination of Relationship due to
Permanent Disability unless by its terms the Option or
SAR shall expire before such date, and shall only be
exercisable to the extent exercisable on the date of
death or termination of Relationship. In the event
that an SAR has not been exercised prior to its
termination or earlier expiration date, and the SAR
shall then be exercisable, if such SAR has a positive
Spread it shall be automatically exercised for cash on
its termination or earlier expiration date.
For purposes of this Paragraph 6, "Permanent
Disability" shall mean that the Optionee is unable to
engage in any substantial gainful activity by reason of
any medically determinable physical or mental
impairment which can be expected to result in death or
which has lasted or can be expected to last for a
continuous period of not less than 12 months. The
Committee may require such proof of Permanent
Disability as it, in its sole judgment, deems necessary
or appropriate.
7
<PAGE>
7. Adjustments.
(a) In the event that the outstanding shares of
Common Stock are hereafter increased or deceased or changed
into or exchanged for a different number or kind of shares
or other securities of the Company, by reason of a
recapitalization, reclassification, stock split-up,
combination of shares or dividend or any other distribution
payable in capital stock, the Committee shall make appropriate
adjustment in the number and kind of Options and SARs that may
be granted under the Plan. In addition, the Committee shall
make appropriate adjustment in the number and kind of
outstanding Options and SARs to the end that the proportionate
interest of the holder of the Options and SARs shall be
maintained as before the occurrence of such event. Such
adjustment shall be made without change in the total price
applicable to the unexercised portion of outstanding Options
and SARs and with a corresponding adjustment in the Option
Price per share with respect to the Options and SARs.
(b) In the event of the dissolution or liquidation of
the Company:
(i) any Option granted under the Plan shall terminate as
of a date to be fixed by the Committee, provided that not
less than 30 days' written notice of the date so fixed shall
be given to each Optionee and each such Optionee shall have
the right during such period (unless such Option shall have
previously expired) to exercise any Option, including any
Option that would not otherwise be exercisable by reason of
an insufficient lapse of time; and
(ii) any SAR granted under the Plan shall terminate (and,
if not previously exercised, shall be automatically exercised
for cash on the date of such termination) 30 days after
stockholder approval of the dissolution or liquidation and
each Optionee shall have the right during such period (unless
such SAR shall have previously expired) to exercise any SAR,
including any SAR that would not otherwise be exercisable by
reason of an insufficient lapse of time.
(c) In the event of a Reorganization (as defined below) in
which the Company is not the surviving or acquiring company, or in
which the Company is or becomes a subsidiary of another company
after the effective date of the Reorganization, then:
(i) if there is no plan or agreement respecting the
Reorganization ("Reorganization Agreement") or if the
Reorganization Agreement does not specifically provide for
the change, conversion or exchange of the outstanding Options
and SARs for options or stock appreciation rights of another
corporation, then exercise and termination provisions
equivalent to those of Subparagraph 7(b) shall apply; or
8
<PAGE>
(ii) if there is a Reorganization Agreement and if the
Reorganization Agreement specifically provides for the change,
conversion or exchange of the outstanding Options and SARs for
options and stock appreciation rights of another corporation,
then the Committee shall adjust the outstanding unexercised
Options and SARs (and shall adjust the Options and SARs
remaining under the Plan which have not yet been granted if
the Reorganization Agreement makes specific provision for such
an adjustment) in a manner consistent with the applicable
provisions of the Reorganization Agreement.
The term "Reorganization" as used in this Subparagraph 7(c)
shall mean any statutory merger, statutory consolidation, sale
of all or substantially all of the assets of the Company or a sale
of the Common Stock pursuant to which the Company is or becomes a
subsidiary of another company after the effective date of the
Reorganization.
(d) Adjustments and determinations under this Section 7
shall be made by the Committee, whose decisions as to such
adjustments or determinations shall be final, binding and
conclusive.
8. Restrictions on Issuing Shares.
The exercise of each Option and SAR shall be subject to
the condition that if at any time the Company shall determine
in its discretion that the satisfaction of withholding tax or
other withholding liabilities, or the listing, registration or
qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any state or
federal law, or the consent or approval of any regulatory body,
is necessary or desirable as a condition of, or in connection
with, such exercise or the delivery or purchase of shares, then
such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent or approval shall
have been effected or obtained free of any condition not
acceptable to the Company.
9. Use of Proceeds.
The proceeds received by the Company from the issuance of
its Common Stock pursuant to the exercise of Options granted
under the Plan, if in the form of cash, shall be added to the
Company's general funds and used for general
corporate purposes.
10. Amendment, Suspension and Termination of the Plan.
The Board may at any time suspend or terminate the Plan or
may amend it from time to time in such respects as the Board may
deem advisable in order that the Options and SARs granted under
the Plan may conform to any changes in the law or in any other
9
<PAGE>
respect which the Board may deem to be in the best interests of
the Company; provided, however, that without approval by the
stockholders of the Company representing a majority of the shares
represented and voting on the matter, no such amendment shall
(a) except as specified in Paragraph 7, increase the maximum
number of shares of Common Stock subject to Options and SARs
which may be granted under the Plan, (b) change the provisions
of Subparagraph 6(a) relating to the establishment of the Option
Price, (c) change the provisions of Subparagraph 6(b) relating
to the expiration date of each Option and SAR, (d) change the
provisions of the second sentence of this Paragraph 10 relating
to the term of the Plan or (e) effect any other change that,
pursuant to any applicable law, regulation or stock exchange
rule, may not be effected without stockholder approval. Unless
the Plan shall previously have been terminated by the Board or
as provided in Paragraph 12, the Plan shall terminate 10 years
after the Effective Date. No Option or SAR may be granted during
any suspension or after the termination of the Plan. No
amendment, suspension or termination of the Plan shall, without
an Optionee's written consent, alter or impair in a manner
unfavorable to such Optionee any of the rights or obligations
under any Option or SAR previously granted to such Optionee
under the Plan.
11. Amendment of Grants.
The Committee shall have the authority to amend any grant
to include any provision which, at the time of such amendment,
is authorized under the terms of the Plan; however, no
outstanding award may be revoked or altered in a manner
unfavorable to the Optionee without the written consent of the
Optionee.
12. Effective Date of the Plan and Stockholder Approval.
The Effective Date of the Plan shall be February 24, 1998,
the date of its adoption by the Board, subject however to its
approval by the stockholders of the Company representing a
majority of the shares represented and voting on the matter at
the next stockholders' meeting. Options and SARs may be
granted under the Plan from and after the Effective Date,
subject to such approval.
13. Options and SARs Granted Prior to Amendments to the Plan.
Options and SARS granted pursuant to the Plan shall be
governed exclusively by the terms of the Plan as they existed
on the Date of Grant, without giving effect to amendments
adopted subsequent to the Date of Grant, unless specifically
provided otherwise in such amendments or in the applicable
agreement.
10
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated March 16, 1998,
included in this Form 10-K, into Mirage Resorts, Incorporated's
previously filed registration statements on Form S-8 (File No.
33-16037), on Form S-8 (File No. 33-48394), on Form S-8 (File No.
33-63804), on Form S-8 (File No. 33-60183), on Form S-3 (File No.
33-65317) and on Form S-3 (File No. 333-39029).
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
March 27, 1998
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 AND THE
RELATED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31,
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ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES.
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<S> <C>
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<COMMON> 940
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<TABLE> <S> <C>
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<LEGEND>
THE FOLLOWING SCHEDULE IS BEING FILED TO RESTATE THE REGISTRANT'S PRE-
VIOUSLY REPORTED EARNINGS PER SHARE AMOUNTS IN CONNECTION WITH THE ADOPTION
OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128 -EARNINGS PER SHARE.
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</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
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<PP&E> 2,334,837 2,518,701 2,785,963 3,025,619
<DEPRECIATION> 551,955 574,265 594,623 616,938
<TOTAL-ASSETS> 2,143,490 2,293,947 2,583,554 2,901,168
<CURRENT-LIABILITIES> 218,465 202,780 193,728 227,184
<BONDS> 468,140 570,668 823,544 1,036,340
0 0 0 0
0 0 0 0
<COMMON> 940 940 940 940
<OTHER-SE> 1,289,943 1,347,517 1,400,054 1,458,206
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<TOTAL-COSTS> 759,108 200,223 394,481 597,259
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<LOSS-PROVISION> 14,480 2,695 7,284 12,441
<INTEREST-EXPENSE> 6,825 3,161 5,704 9,299
<INCOME-PRETAX> 318,408 87,720 163,378 248,451
<INCOME-TAX> 112,363 31,031 57,788 87,962
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<EXTRAORDINARY> 0 (2,225) (2,225) (2,225)
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<EPS-DILUTED> 1.05 .28 .54 .82
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SCHEDULE IS BEING FILED TO RESTATE THE REGISTRANT'S PRE-
VIOUSLY REPORTED EARNINGS PER SHARE AMOUNTS IN CONNECTION WITH THE ADOPTION
OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128 -EARNINGS PER SHARE.
IN ADDITION, CERTAIN AMOUNTS HAVE BEEN RECLASSIFIED TO CONFORM WITH THE
PRESENTATION IN THE DECEMBER 31, 1997 FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
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<PERIOD-TYPE> YEAR 3-MOS 6-MOS 9-MOS
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<PP&E> 1,959,632 2,008,646 2,062,261 2,166,296
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<TOTAL-ASSETS> 1,791,713 1,816,044 1,841,319 1,963,789
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<SALES> 208,466 0 0 0
<TOTAL-REVENUES> 1,330,744 374,208 686,860 1,025,412
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<TOTAL-COSTS> 744,928 202,209 385,940 574,855
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<INTEREST-EXPENSE> 23,183 2,696 3,292 4,388
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<CHANGES> 0 0 0 0
<NET-INCOME> 163,163 64,587 105,186 153,922
<EPS-PRIMARY> .89 .35 .57 .84
<EPS-DILUTED> .85 .33 .53 .78
</TABLE>
