UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-13760
RIO HOTEL & CASINO, INC.
(Exact name of registrant as specified in its charter)
NEVADA 95-3671082
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3700 West Flamingo Road, Las Vegas, Nevada 89103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (702) 252-7733
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH
TITLE OF EACH CLASS EXCHANGE ON
WHICH REGISTERED
NOT APPLICABLE NOT APPLICABLE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of class)
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 voting stock held by non-
affiliates of the registrant as of February 28, 1995, based on
the closing price as reported on the Nasdaq National Market of
$12 3/8 per share, was approximately $188,736,768.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of February 28, 1995.
Common Stock, $.01 par value 21,265,746
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this Report is
incorporated by reference from the Rio Hotel & Casino, Inc. Proxy
Statement to be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Report.
PART I
ITEM 1. BUSINESS
Rio Hotel & Casino, Inc. ("RHCI" or the "Company") owns and
operates the country's only all-suite hotel-casino, the Rio Suite
Hotel & Casino (the "Rio") in Las Vegas, Nevada. The Rio, which
opened in January 1990, is a 21-story hotel containing 1,410
suites, 89,000 square feet of casino space, ten restaurants and
food outlets and other related amenities. The Rio is situated on
a 45-acre elevated site near the Las Vegas Strip and adjacent to
a major exit from Interstate 15, the freeway linking Las Vegas
with Southern California. The Company markets to the middle to
upper-middle income segments of gaming customers, both local
residents and Las Vegas visitors. The Rio utilizes a colorful
Brazilian carnival and rain forest theme to enhance its
customers' gaming and resort experience.
The Rio was designed to permit multiple expansions in
accordance with a conceptual master plan and received zoning
approval for 2,400 rooms. In order to better service its present
gaming customers and to expand its market, the Company has been
proceeding with certain expansion projects. In the Fall of 1993,
the Company completed a $37 million hotel expansion (the "Tower
Expansion") containing a total of 437 additional suites and other
improvements. In September 1993, 375 of the new suites were
placed into service, and the balance of the suites were placed
into service during October 1993. In July 1993, the Company
commenced a $25 million expansion project (the "Eastside
Expansion"), which included a 25,000 square foot expansion of the
casino to accommodate approximately 500 slot machines and 12
table games (completed December 1993); the new Copacabana
Showroom, a unique circular 430-seat video entertainment and
restaurant complex (opened February 1994); Fiore, a new 186-seat
world class restaurant (opened April 1994); a 36,000 square foot
expansion of the Rio's beach pool area with a second swimming
pool and additional recreation areas (completed April 1994); and
a 135,000 square foot, two-level parking garage with parking
spaces for approximately 434 vehicles (opened December 1993).
The Company commenced construction in May 1994 of an
approximately $75 million hotel and casino expansion (the "Phase
III Expansion") containing a total of 549 additional suites (365
new suites were placed into service in February 1995 and the
remaining suites were placed into service in March 1995),
approximately 10,000 square feet of new casino area which
accommodated approximately 300 additional slot machines (opened
November 1994), an expansion of the "Carnival World Buffet" by
approximately 50% (opened November 1994), a three-level parking
garage with 527 parking spaces (opened August 1994), and assorted
back-of-the-house enhancements. The Company intends to commence
construction in April 1995 of an approximately $20 million
expansion (the "Phase IV Expansion"). The project will add 144
suites to the existing 1,410 suites, add approximately 5,400
square feet of meeting room space, double the size of the
existing Buzios seafood restaurant to approximately 180 seats,
add a new health club and salon facility and include a variety of
back-of-the-house improvements. Completion of the Phase IV
Expansion is expected to occur in stages through the end of 1995.
On March 29, 1995, the Company announced that it has
retained Montgomery Securities as its financial advisor to assist
in evaluating various strategic alternatives for the Company.
The Company was incorporated in California in 1981 and
reincorporated in Nevada in 1988. The Company changed its name
from MarCor Resorts, Inc. to Rio Hotel & Casino, Inc. on February
28, 1992. Its executive offices are located at 3700 West
Flamingo Road, Las Vegas, Nevada 89103, and its telephone number
is (702) 252-7733. Unless stated otherwise, the "Company" refers
to Rio Hotel & Casino, Inc. and its wholly owned subsidiaries.
See Note 1 of Notes to Consolidated Financial Statements.
BUSINESS STRATEGY
The Rio seeks to distinguish itself from its Las Vegas
competitors and to attract the middle to upper-middle income
customer base. The principal aspects of the Company's business
strategy are as follows:
CAPITALIZE ON THE RIO'S UNIQUE QUALITIES. The Rio is the
only all-suite hotel-casino in the United States. The Rio's
standard suites are up to 50% larger than standard Las Vegas
hotel rooms. In addition, the Company selected the Rio's site
for the marketing advantage of its location, which is adjacent to
a major exit from Interstate 15, the freeway linking Las Vegas
with Southern California. The off-Strip location allows Rio
customers to avoid the ever-increasing traffic congestion on the
Las Vegas Strip. As the new generation of themed, destination
resorts continue to open, the Company believes that the Rio's
location will become an increasingly important marketing
advantage. The Company also believes that the Rio's highly
visible and accessible location is an important factor in
attracting gaming customers. The Rio is strategically located to
take advantage of the dynamic residential and commercial growth
of the western portion of metropolitan Las Vegas.
MAINTAIN AN IDENTIFIABLE AND INNOVATIVE MARKET PRESENCE.
The Company has created an identifiable and innovative marketing
presence and continues to build a "signature" Rio theme. The
Rio's Brazilian carnival and rain forest theme incorporates
bright colors, creative interior designs, festive employee
costumes and other exotic touches to contribute to its tropical
ambiance. The Rio's message of a fun-filled, colorful atmosphere
is constantly emphasized. The Rio has developed the Rio Rita(TM)
character as a promotional ambassador to the Rio's hotel-casino
guests and as a focal point upon which many promotional
activities have been built, such as Rio Rita's(TM) Paycheck Poker
Wheel, Carnival Dice, the Jackpot Jungle, Rio Rita's(TM) Lotto
Bucks, Carnival Days, Conga Mania and Brazilia Days. The
Company advertises extensively in the Las Vegas area print,
television and radio media, and periodically in Southern
California, Phoenix and other regional markets.
UTILIZE THE RIO SITE IN ACCORDANCE WITH ITS CONCEPTUAL
MASTER PLAN. The Company intends to fully utilize the 45-acre
Rio site. The Company's conceptual master plan provides for a
systematic and flexible expansion program which, in its
implementation and depending on management's analysis of changing
market conditions, will allow the Rio to expand its customer base
by adding more rooms, expand and adjust the casino and
entertainment areas, and add amenities that will attract more
customers to the Rio. See "Business - Expansion Strategy and
Master Plan."
EMPHASIZE SERVICE EXCELLENCE. Management recognizes that a
hotel-casino is a service operation and therefore the success of
the overall organization is dependent on the consistent quality
of each employee's efforts. Every employee plays an integral
role in contributing to the overall Rio experience for guests.
The Rio's management team continually seeks to instill in each
employee a sense of service excellence designed to exceed guest
expectations. Customer surveys consistently indicate that guests
are sensitive to and impressed by the friendly, sincere and
helpful nature of the Rio's employees. Management believes that
it has succeeded in making the Rio a positive and fun place to
work and that its employees are proud to be members of Team Rio.
In the Spring of 1993, the Rio was recognized as "Best of Las
Vegas" in six categories, including "Most Efficient Service," in
the Spring of 1994, the Rio increased its "Best of Las Vegas"
recognition to eight categories and in the Spring of 1995, the
Rio increased its "Best of Las Vegas" recognition to ten
categories in an annual survey conducted and published by
Nevada's largest daily newspaper.
EXPLOIT NEW GAMING OPPORTUNITIES. Management continues to
evaluate developments and opportunities in the rapidly expanding
gaming industry. The Company's future expansion plans will focus
first on addressing customer demand at the Rio site. Past
expansions of the Rio site have been accompanied by expanded
customer demands for the Company's casino, restaurant and other
entertainment facilities. The Company is also exploring the
feasibility of additional gaming opportunities in Las Vegas and
other jurisdictions. While no assurances can be given that the
Company will ever pursue opportunities off the current Rio site,
the Company may pursue opportunities that management believes to
be in the best interests of the Company.
THE RIO
The Rio, which opened in January 1990, is a 21-story all-
suite hotel-casino containing a broad range of gaming, hotel and
resort amenities. The Rio's location appeals to local customers
and is conveniently located for Las Vegas visitors. The Rio's
elevated site and striking glass facade are visible from all
directions. The Rio's main floor design provides easy customer
access to the casino and all other public areas. The Rio's
Brazilian carnival and rain forest theme incorporates bright
colors, creative interior designs, festive employee costumes and
other exotic touches to contribute to its tropical ambiance.
Quality and style are emphasized throughout all aspects of
marketing and operations in order to build a solid repeat-
customer base. The Rio's facilities are complemented by its
human resources program that is intended to foster friendly and
courteous employees in all service areas.
GAMING. The Rio has 89,000 square feet of casino space.
The casino currently has approximately 2,200 slot machines; 59
table games, including "21," progressive "21," craps, roulette,
pai gow poker, caribbean stud poker, and mini-baccarat; other
casino games such as keno and poker; and a race and sports book.
Gaming operations at the Rio are continually being monitored
and modified to respond to both changing market conditions and
customer demand in an effort to attract new customers while
retaining the existing customer base. New and innovative slot
and table games have been introduced based on customer feedback
and demand from both local customers and Las Vegas visitors. For
example, the number of slot machines has increased in stages from
850 in December 1990 to 2,200 in December 1994.
The Company has developed a mix of slot machines to appeal
to the two primary segments of gaming customers, local residents
and Las Vegas visitors. Management devotes substantial time and
attention to the type, location and player activity of all slot
machines. The Company believes that to continue to attract and
retain slot customers, it must expand the number and variety of
slot machines on its casino floor, particularly its higher
denomination slot machines.
HOTEL. The Rio's 21-story hotel towers contain a total of
1,410 suites, comprised of 1,366 standard Rio suites; 14 "super"
suites; 17 "cariocas" suites; 6 two-story penthouse suites; and 7
executive suites that combine a conference room and an adjoining
suite. In September 1993, 375 new suites were placed into
service and 62 new suites were placed into service during October
1993. In February 1995, 365 new suites were placed into service
and 184 new suites were placed into service during March 1995.
The average Rio occupancy rates were 96.8% and 95.9% for 1993 and
1994, respectively. During 1993 and 1994, the Company believes
that approximately two potential room night bookings were turned
away for each room night booking accepted. The Phase III
Expansion added 549 suites bringing the Rio's hotel suite count
to 1,410 suites in March 1995. The Company anticipates that the
Phase IV Expansion will add an additional 144 suites by January
1996.
The standard Rio suite is a luxury room measuring
approximately 600 square feet, compared to approximately 400
square feet for the standard Las Vegas hotel room. The Brazilian
carnival and rain forest theme is carried throughout the guest
suites in wall coverings, art work and other designer accents.
Suite amenities include carved wood finishes, cut glass, polished
granite surfaces, marble tile in the bath areas, room safes and
refrigerators.
RESTAURANTS, ENTERTAINMENT AND OTHER ATTRACTIONS. While
important to attracting Las Vegas visitor gaming customers, the
high quality, value and variety of food services are critical to
consistently attracting the local resident gaming customer to the
Rio. To provide such variety, seven bars and ten restaurants and
food outlets are located in the Rio's main floor area. The Rio
currently serves an average of approximately 12,000 meals per
day, including banquets and room service. The following table
sets forth, for each restaurant and food outlet, the type of
service provided and the seating capacity:
<TABLE>
<CAPTION>
TYPE NUMBER OF
SEATS
<S> <C> <C>
All American Bar & Steaks, ribs, chicken and 202
Grille seafood
Antonio's Casual fine Italian 116
dining
Beach Cafe 24-hour full menu 314
Buzios Seafood and oyster bar 92
Carnival World Brazilian, Chinese, 980
Buffet Italian, Mexican,
Japanese, Western BBQ and
traditional buffet
Gelato & Sorbets Ice cream desserts 120 (1)
Rio Pizza Pasta Pizza and pasta 120 (1)
Place
Toscano's Deli & Deli items and sandwiches 120 (1)
Market
Copacabana Showroom Dining entertainment 430
complex
Fiore Rotisserie & World class dining 186
Grille
_______________________________
<FN>
(1) Shared seating area
</FN>
</TABLE>
OTHER. The Rio's Copacabana Showroom is a unique, circular
430-seat video, entertainment and restaurant complex which
features two 12-foot by 90-foot video screens, an exhibition
cooking area, multiple tiers of dining room seating and a stage.
The Copacabana Showroom features "Conga", a dinner show/musical
review designed around the Rio's theme. The Copacabana Showroom
is also used for other functions, including: a late-night dance
club with food service; casino-hosted events; concerts; viewing
of sporting events on the large video screens; and corporate
meetings that capitalize on the unique video and audio qualities
of the room.
The Ipanema Lounge and Mambo's each offer live entertainment
in separate casino cocktail lounge settings. The Rio also houses
a gift shop, a Rio logo shop, a barber and beauty shop, and an
exercise room, as well as approximately 13,250 square feet of
public meeting and banquet room facilities.
The Rio's pool/outdoor entertainment area is approximately
59,000 square feet and includes: a landscaped sand beach; an
11-foot waterfall; two swimming pools; a multi-level spa; and a
terrace bar and food service facility.
MARKETING STRATEGY
The Rio targets the middle to upper-middle income segments
of the following five markets: local residents; leisure
travelers; tour and travel customers; special casino customers;
and selected convention, meeting and incentive program groups.
Through the Company's expansion projects, the Company intends to
increase its focus on the visitor market, while preserving and
expanding its reputation in the local market.
LOCAL RESIDENTS. The Rio has placed significant emphasis on
marketing to the local resident gaming customer. The Rio relies
heavily on its location, its food and beverage operations and
slot machine variety to attract local resident patrons. The
Company markets to local residents through extensive local
television, radio and print advertising, active participation in
charitable, community and other public activities, and programs
that attract local residents to the Rio, such as check cashing
promotions. The Rio believes that it is also the beneficiary of
significant word-of-mouth endorsements from local residents,
including Las Vegas area service industry employees.
LEISURE TRAVELERS. The leisure travel segment consists of
guests who are not affiliated with groups and who make their
reservations directly with the resort of their choice or through
independent travel agents. Management believes that the Rio's
location, all-suite concept, Brazilian carnival and rain forest
theme and other resort hotel services and amenities provide a
significant benefit in attracting the middle and upper-middle
strata of the leisure travel segment. Periodically, as hotel
occupancy projections dictate, the Rio utilizes print media,
radio and direct mail to advertise in the Southern California,
Phoenix and other regional leisure travel markets.
TOUR AND TRAVEL CUSTOMERS. The tour and travel market
consists of customers who utilize "packages" to reduce the cost
of travel, lodging and entertainment. These "packages" are
produced by wholesalers and typically emphasize mid-week stays in
Las Vegas. The Rio has developed relationships with national
tour and travel wholesale companies and travel agents. The Rio
maintains a staff of travel professionals who develop and
maintain a presence in the Rio's major markets.
SPECIAL CASINO CUSTOMERS. The special casino customer
segment is composed of frequent gaming customers who are known by
and are in regular communication with Rio casino marketing
personnel. The Rio's suites and other amenities are significant
tools in marketing to this segment. Credit play for qualified
players is also made available based on the judgment of casino
management after an analysis and regular monitoring of the
player's gaming and credit history, as well as on-going casino
play. Special events are also held for these customers on a
regular basis.
SELECTED CONVENTION, MEETING AND INCENTIVE PROGRAM GROUPS.
The Rio focuses its efforts within this segment on groups that
will have sufficient time and propensity to incorporate gaming
activities into their stays. An example of the preferred Rio
meeting participants are those whose meetings are scheduled for
only a portion of the day leaving a large part of the day open
for gaming and entertainment activities. The Rio does not market
to large-scale conventions and meetings. The Rio's marketing
department maintains contacts and data regarding selected
convention, meeting and incentive program planners that the Rio
desires to attract.
OTHER. The Company believes that it also attracts visitors
staying at other Las Vegas hotels and motels. The Company
believes word-of-mouth endorsements by Rio guests and Las Vegas
service industry employees about the Rio, its food services, and
its entertainment in the Copacabana Showroom, the Ipanema Lounge
and Mambo's Lounge are responsible for attracting these Las Vegas
visitors. The Rio provides transportation to such customers
through the use of regularly scheduled Rio shuttle buses that
travel between the Rio and designated Las Vegas Strip locations.
EXPANSION STRATEGY AND MASTER PLAN
The Company's conceptual master plan is composed of three
major elements: location, design and land space.
The Company selected the strategically located site based
upon its proximity to the Las Vegas Strip, Interstate 15 and
Flamingo Road. The Las Vegas Strip is the entertainment and
resort center of Las Vegas and the site of most major Las Vegas
hotel-casinos. Interstate 15 is the primary highway between Las
Vegas and Southern California, and it is Las Vegas' major north-
south freeway. Flamingo Road is a major east-west surface street
connecting southwestern Las Vegas residential and commercial
areas with the Las Vegas Strip and southeastern Las Vegas
residential and commercial areas.
The Rio was designed to permit future expansions without
significant interruption of the Rio's normal business operations.
Depending on management's analysis of changing market conditions,
the Company has designed the Rio to allow more rooms, to expand
and adjust the main floor area, and to add amenities that will
attract more customers. The Rio's original design included
construction of a reinforced foundation for the hotel tower and a
reinforced elevator core to support and facilitate additional
room construction. In anticipation of construction of additional
room towers, the Rio was designed so that future towers could be
constructed at the rear of the facility, away from operations in
the casino and other main floor public areas.
The Company assembled adequate acreage so that the Rio may
expand without being landlocked into a site not large enough to
permit growth. Starting from its original 30 acres, for which it
received zoning approval for up to a 2,400 room hotel-casino, the
Company has acquired additional acreage in 1989 and 1991,
bringing the current Rio site to 45 acres.
The Company has entered into two agreements to acquire a
total of approximately 12 acres of real property adjacent to the
Rio site which may be used for expansion or other ancillary uses.
PHASE III EXPANSION. In May 1994, the Company commenced
construction of the approximately $75 million Phase III Expansion
containing a total of 549 additional suites (365 new suites were
placed into service in February 1995 and 184 new suites were
placed into service in March 1995), approximately 10,000 square
feet of new casino area which accommodated approximately 300
additional slot machines (opened November 1994), an expansion of
the "Carnival World Buffet" by approximately 50% (opened November
1994), a three-level parking garage with 527 parking spaces
(opened August 1994), and assorted back-of-the-house
enhancements. Completion of the Phase III expansion occurred in
stages from August 1994 through March 1995.
Completion of the Phase III Expansion brought the Rio's
total number of hotel suites to 1,410. Upon completion of the
Phase III Expansion, the Rio has approximately 2,200 slot
machines and 59 table games in an 89,000 square foot casino that
serves both Las Vegas locals and an expanded base of hotel
guests. The Phase III Expansion increased seating in the
Carnival World Buffet by approximately 360 seats to approximately
980 seats and added four new food experiences and a bar. The 527-
space parking structure included in the Phase III Expansion is
located near the entrance to the Carnival World Buffet.
PHASE IV EXPANSION. In April 1995, the Company will
commence construction of the approximately $20 million Phase IV
Expansion. The project will add 144 suites to the existing 1,410
suites, add approximately 5,400 square feet of meeting room
space, double the size of the existing Buzios seafood restaurant
to approximately 180 seats, add a new health club and salon
facility and include a variety of back-of-the-house improvements.
Completion of the Phase IV Expansion is expected to occur in
stages through the end of 1995 and will bring the Rio's total
number of hotel suites to 1,554 suites.
ADDITIONAL GAMING OPPORTUNITIES. Management continues to
evaluate developments and opportunities in the rapidly expanding
gaming industry. The Company's future expansion plans will focus
first on addressing customer demand at the Rio. Past expansions
of the Rio have been accompanied by expanded customer demands for
the Company's hotel, casino, restaurant and other entertainment
facilities. The Company is also exploring the feasibility of
additional gaming opportunities in Las Vegas and other
jurisdictions. While no assurances can be given that the Company
will ever pursue opportunities off the current Rio site, the
Company may pursue opportunities that management feels to be in
the best interests of the Company.
COMPETITION
The Rio faces intense competition. Broadly, the Rio
competes with all hotel-casinos in the Las Vegas area and in
other cities for its gaming and hotel customers. The Rio more
directly competes with a number of casinos off the Las Vegas
Strip for many of its local gaming customers.
Most of the Company's revenues and income are derived from
its gaming activities. The Company's gaming revenues depend in
part on hotel patrons who stay at the Rio. The Company faces
intense competition from other hotel-casinos for its hotel
customers. According to the Las Vegas Convention and Visitors
Authority, as of December 31, 1994, the Las Vegas hotel-motel
room inventory was approximately 88,560. The Company expects
that hotel room expansion will continue. As a result of this
increased room availability, average hotel occupancy levels in
Las Vegas and at the Rio may decrease unless visitor volume and
other sources of room demand are sufficient to absorb the
increased room supply. From 1985 through 1994, visitor volume to
Las Vegas increased at a compound annual growth rate of
approximately 7.2%. During 1994, the number of visitors
traveling to Las Vegas increased by 19.9% from 1993.
The Rio competes with other state and international gaming
operations, as well as hotel-casinos located in the Laughlin and
Reno-Lake Tahoe areas of Nevada. The Company believes that it
competes for gaming customers with the casinos in Atlantic City,
New Jersey and other parts of the world, and with state-sponsored
lotteries, on- and off-track wagering, card parlors, riverboat
and Native American gaming ventures and other forms of legalized
gaming in the United States, as well as with gaming on cruise
ships. In addition, certain states have recently legalized, and
several other states are currently considering legalizing, casino
gaming in specific geographic areas within those states. The
Company believes that the legalization of unlimited land-based
casino gaming in or near any major metropolitan area, such as
Chicago or Los Angeles, could have a material adverse effect on
its hotel-casino business. The availability of other gaming
opportunities such as local casinos, lotteries and other forms of
gaming in other states, particularly in areas close to Nevada,
such as California, could adversely affect the Company's
operations.
REGULATION AND LICENSING
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, "Nevada Act");
and (ii) various local regulation. The Company's gaming
operations are subject to the licensing and regulatory control of
the Nevada Gaming Commission ("Nevada Commission"), the Nevada
State Gaming Control Board ("Nevada Board"), and the Clark County
Liquor and Gaming Licensing Board (the "Clark County Board").
The Nevada Commission, the Nevada Board, and the Clark County
Board are collectively referred to as the "Nevada Gaming
Authorities."
The laws, regulations and supervisory procedures of the
Nevada Gaming Authorities are based upon declarations of public
policy which are concerned with, among other things: (i) the
prevention of unsavory or unsuitable persons from having a direct
or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible
accounting practices and procedures; (iii) the maintenance of
effective controls over the financial practices of licensees,
including the establishment of minimum procedures for internal
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) to
provide a source of state and local revenues through taxation and
licensing fees. Changes in such laws, regulations and procedures
could have an adverse effect on the Company's gaming operations.
The Company, which operates the casino, is required to be
licensed by the Nevada Gaming Authorities. The gaming license
requires the periodic payment of fees and taxes and is not
transferable. The Company is registered by the Nevada Commission
as a publicly traded corporation ("Registered Corporation") and
as such, it 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 Company without first obtaining licenses and
approvals from the Nevada Gaming Authorities. The Company has
obtained from the Nevada Gaming Authorities the various
registrations, approvals, permits and licenses required in order
to engage in gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any individual
who has a material relationship to, or material involvement with,
the Company 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 Company 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 Company who are actively and directly involved
in gaming activities of the Company 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.
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 Company, the Company
would have to sever all relationships with such person. In
addition, the Nevada Commission may require the Company 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 Company is required to submit detailed financial and
operating reports to the Nevada Commission. Substantially all
material loans, leases, sales of securities and similar financing
transactions by the Company must be reported to, or approved by,
the Nevada Commission.
If it were determined that the Nevada Act was violated by
the Company, the gaming licenses it holds could be limited,
conditioned, suspended or revoked, subject to compliance with
certain statutory and regulatory procedures. In addition, the
Company 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 Company's
gaming properties and, under certain circumstances, earnings
generated during the supervisor's appointment (except for the
reasonable rental value of the Company's gaming properties) could
be forfeited to the State of Nevada. Limitation, conditioning or
suspension of any gaming license or the appointment of a
supervisor could (and revocation of any gaming license would)
materially adversely affect the Company's gaming operations.
Any beneficial holder of the Company'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 Company's voting securities determined
if the Nevada Commission has reason to believe that such
ownership would otherwise be inconsistent with the declared
policies of the State of Nevada. 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 the Company's voting securities to report the acquisition to
the Nevada Commission. The Nevada Act requires that beneficial
owners of more than 10% of the Company's voting securities apply
to the Nevada Commission for a finding of suitability within 30
days after the Chairman of the Nevada Board mails the written
notice requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which
acquires more than 10%, but not more than 15%, of the Company's
voting securities may apply to the Nevada Commission for a waiver
of such finding of suitability if such institutional investor
holds the voting securities for investment purposes only. An
institutional investor 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 Company, any change in the
Company's corporate charter, bylaws, management, policies or
operations of the Company, or any of its gaming affiliates, or
any other action which the Nevada Commission finds to be
inconsistent with holding the Company's voting securities for
investment purposes only. Activities which are not deemed to be
inconsistent with holding voting securities for investment
purposes only include: (i) voting on all matters voted on by
stockholders; (ii) making financial and other inquiries of
management of the type normally made by securities analysts for
informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other
activities as the Nevada Commission may determine to be
consistent with such investment intent. If the beneficial holder
of voting securities who must be found suitable is a corporation,
partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The
applicant is required to pay all costs of 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 and who
holds, directly or indirectly, any beneficial ownership of the
common stock of a Registered Corporation beyond such period of
time as may be prescribed by the Nevada Commission may be guilty
of a criminal offense. The Company 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
Company, the Company (i) pays that person any dividend or
interest upon voting securities of the Company, (ii) allows that
person to exercise, directly or indirectly, any voting right
conferred through securities held by that person, (iii) pays
remuneration in any form to that person for services rendered or
otherwise, or (iv) fails to pursue all lawful efforts to require
such unsuitable person to relinquish his voting securities for
cash at fair market value.
The Nevada Commission may, in its discretion, require the
holder of any debt security of a Registered Corporation to file
applications, be investigated and be found suitable to own the
debt security of a Registered Corporation. 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 Company 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
by a nominee, the record holder may be required to disclose the
identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds
for finding the record holder unsuitable. The Company is also
required to render maximum assistance in determining the identity
of the beneficial owner. The Nevada Commission has the power to
require the Company's stock certificates to bear a legend
indicating that the securities are subject to the Nevada Act.
The Company 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 July
28, 1994, the Nevada Commission granted the Company prior
approval to make public offerings for a period of one year,
subject to certain conditions ("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. Such 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. Any representation
to the contrary is unlawful.
Changes in control of the Company through merger,
consolidation, stock or asset acquisitions, management or
consulting agreements, or any act or conduct by a person whereby
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 in 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 defense tactics affecting Nevada 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 operators 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
Company can make exceptional repurchases of voting securities
above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada
Act also requires prior approval of a plan of recapitalization
proposed by the Company's Board of Directors in response to a
tender offer made directly to the Registered Corporation's
stockholders for the purposes of acquiring control of the
Registered Corporation.
Licensee fees and taxes, computed in various ways depending
on the type of gaming or activity involved, are payable to the
State of Nevada and to the counties and cities in which the
Nevada licensee's respective operations are conducted. Depending
upon the particular fee or tax involved, these fees and taxes are
payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received; (ii) the
number of gaming devices operated; or (iii) the number of table
games operated. A casino entertainment tax is also paid by
casino operations where entertainment is furnished in connection
with the selling of food or refreshments. Nevada licensees that
hold a license as an operator of a slot route, or a
manufacturer's or distributor's license, also pay certain fees
and taxes to the State of Nevada.
Any person who is licensed, required to be licensed,
registered, required to be registered, or is under common control
with such persons (collectively, "Licensees"), and who proposes
to become involved in a gaming venture outside of Nevada is
required to deposit with the Nevada Board, and thereafter
maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation of the Nevada Board of their
participation in such foreign gaming. The revolving fund is
subject to increase or decrease in the discretion of the Nevada
Commission. Thereafter, Licensees are required to comply with
certain reporting requirements imposed by the Nevada Act.
Licensees 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.
EMPLOYEES
As of December 31, 1994, the Company employed approximately
2,300 full-time employees. The Rio occasionally employs part-
time workers as needed. None of the Company's employees are
covered by collective bargaining agreements. The Company
believes that its relationship with its employees is good.
ITEM 2. PROPERTIES
The Company owns the 45-acre site in Las Vegas on which the
Rio is located. The Rio site is subject to a deed of trust
securing the Company's $125 million revolving credit facility
(the "Rio Bank Loan"), of which $125,000,000 and $67,000,000 was
outstanding at December 31, 1994 and February 28, 1995,
respectively.
The Rio Suite Hotel & Casino site was designed and master-
planned to accommodate at least 2,400 rooms. Twelve acres of the
Rio site were not included in the original master plan, which
provides additional growth potential. The Company is currently
utilizing the additional acreage as parking but is presently
evaluating various uses for the property which should enhance the
Rio's business. Management intends to develop the property to
maximize the utilization of the site.
ITEM 3. LEGAL PROCEEDINGS
As previously reported on April 26, 1994 and May 10, 1994,
complaints (the "Complaints") in purported class action lawsuits were
filed in the United States District Court, Middle District of
Florida (the "Florida Federal Court"), against 41 manufacturers,
distributors and casino operators of video poker and electronic slot
machines, including the Company. The Complaints allege that the
defendants have engaged in a course of conduct intended to induce
persons to play such games based on a false belief concerning how
the gaming machines operate, as well as the extent to which there
is an opportunity to win on a given play. One Complaint alleges
violations of the Racketeer Influenced and Corrupt Organizations
Act (the "RICO Act"), as well as claims of common law fraud,
unjust enrichment and negligent misrepresentation, and seeks
damages in excess of $1 billion. The other Complaint alleges
violations of the RICO Act and seeks damages in excess of $1
billion. The Complaints have been consolidated and have been
transferred to the United States District Court, for the State of
Nevada (the "Nevada Federal Court"). The Florida Federal Court
deferred action on the Company's motion requesting abstention and
did not rule on class certification. The Company expects those
motions to be heard by the Nevada Federal Court. Management
believes that the Complaints are without merit and intends to
defend vigorously the allegations in the Complaints.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
(a) Price Range of Common Stock
The Company's Common Stock is traded on the Nasdaq National
Market under the symbol "RIOH." The following table sets forth
the high and low closing sale prices of the Company's Common
Stock, as reported by the Nasdaq National Market, during the
periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
<S> <S> <C> <C>
1993
First Quarter $14 1/8 $ 9 3/8
Second Quarter 15 5/8 10 7/8
Third Quarter 19 1/8 13 1/2
Fourth Quarter 18 3/4 13 3/4
1994
First Quarter 18 1/8 14 1/4
Second Quarter 16 1/2 12 5/8
Third Quarter 14 3/8 12 3/8
Fourth Quarter 14 1/8 11 11/16
1995
First Quarter (through February 28, 1995) 13 11 3/8
</TABLE>
The last reported sale price of the Common Stock on the
Nasdaq National Market on February 28, 1995 was $12 3/8 per
share. There were approximately 1,784 holders of record of the
Company's Common Stock as of February 28, 1995.
(b) Dividend Policy
The Company has never declared or paid cash dividends on its
Common Stock. The Company presently intends to retain earnings to
finance the operation and expansion of its business and does not
anticipate declaring cash dividends in the foreseeable future.
Under the terms of the covenants in the Rio Bank Loan defined
below, the Company's wholly owned subsidiary, Rio Properties,
cannot pay dividends to the Company without the consent of the
lenders.
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA (1)
Year Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Revenues from Continuing Operations $146,299,304 $109,981,585 $82,475,164 $65,784,480 $55,884,371
Income (Loss) from Continuing Operations $15,966,409 $11,679,991 $5,756,628 $381,181 $(4,836,851)
Loss from Discontinued Operations - - - - - - - - - $395,102) $(1,773,592)
Minority Interest in (Earnings) Loss - - - - - - $(242,240) $(33,164) $2,763,371
Extraordinary Items - - - $(253,711) $793,511 $166,168 - - -
Cumulative Effect of Accounting Change - - - $(776,888) - - - - - - - - -
Net Income (Loss) $15,966,409 $10,649,392 $6,307,899 $119,083 $(3,847,072)
Primary Earnings Per Common Share:
Income (Loss) from Continuing Operations $0.74 $0.60 $0.37 $0.03 $(0.29)
Loss from Discontinued Operations - - - - - - - - - $(0.03) $(0.23)
Extraordinary Items - - - $(0.01) $0.05 $0.01 - - -
Cumulative Effect of Accounting Change - - - $(0.04) - - - - - - - - -
Net Income (Loss) $0.74 $0.55 $0.42 $0.01 $(0.52)
Total Assets $301,165,272 $218,050,376 $149,518,427 $112,267,283 $135,644,148
Long-Term Debt, net of current $110,146,869 $56,875,753 $50,906,000 $53,494,595 $78,682,789
Total Stockholders' Equity $147,839,167 $129,838,481 $86,872,151 $47,731,447 $42,848,681
Cash Dividends Declared Per Common Share - - - - - - - - - - - - - - -
<FN>
(1) The Company divested its real estate operations in December 1991 and results from these operations are restated and shown
above as discontinued operations.
</FN>
<PAGE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(In thousands except per First Second Third Fourth
share data) Quarter Quarter Quarter Quarter Total
1994 (a)
<S> <C> <C> <C> <C> <C>
Revenues $ 34,049 $ 36,168 $ 37,371 $ 38,711 $146,299
Operating profit 6,622 6,923 6,746 5,512 25,803
Net income 3,979 4,780 4,022 3,185 15,966
Net income per common share (b)
Net income $ 0.17 $ 0.22 $ 0.19 $ 0.15 $ 0.74
1993 (a)
Revenues $ 24,756 $ 26,058 $ 27,592 $ 31,576 $109,982
Operating profit 4,525 4,723 4,822 6,162 20,232
Income before extraordinary items
and cumulative effect 2,664 2,861 2,660 3,495 11,680
Net income 1,887 2,861 2,406 3,495 10,649
Net income per common share
Income before extraordinary items
and cumulative effect $ 0.14 $ 0.15 $ 0.14 $ 0.17 $ 0.60
Net income $ 0.10 $ 0.15 $ 0.13 $ 0.17 $ 0.55
<FN>
(a)There were no dividends paid in 1994 or 1993.
(b)Net income per share calculations for each quarter are based on the weighted average number of common stock and
common stock equivalents outstanding during the respective quarters. Accordingly, the sum of the quarters does not
equal the full year income per share for 1994.
</FN>
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Rio's revenues and profits are derived largely from its
gaming activities, although the Company also seeks to maximize
revenues from food and beverage, lodging, entertainment and
retail sales. The Rio generally views its non-casino related
operations as complementary to its core casino operations. The
Rio utilizes entertainment primarily as a casino marketing tool.
The Rio expects to maintain a food and beverage pricing structure
designed to maximize casino customer foot traffic. Such a
structure tends to result in an operating loss for the food and
beverage department, although specific bars or restaurants may
report operating profits.
The Company's sole business is the operation of the Rio,
which opened in January 1990. The Rio was originally owned and
operated by a limited partnership ("Rio Partnership") formed by
the Company in 1988. Through a series of transactions involving
an exchange of preferred stock for partnership interests and
later a merger of Rio Partnership into Rio Properties, the
Company increased its ownership of the Rio from 34.4% in 1988 to
100% in 1992. Prior to 1990, the Company's operations consisted
of real estate development and management. In December 1991, the
Company sold all real estate assets and operations not used or
held for the operation or expansion of the Rio.
The Rio was designed to permit multiple expansions in
accordance with a conceptual master plan and has received zoning
approval for 2,400 rooms. An $8 million buffet-casino expansion
was completed in December 1992; the $37 million Tower Expansion
was completed in October 1993; and the $25 million Eastside
Expansion was completed in April 1994. In May 1994, the Company
commenced its Phase III Expansion, an expansion which contained a
total of 549 additional suites (365 new suites were placed into
service in February 1995 and the remaining suites were placed
into service in March 1995), approximately 10,000 square feet of
new casino area that accommodated approximately 300 additional
slot machines (opened November 1994), an expansion of the
Carnival World Buffet by approximately 50% (opened November
1994), a 527-space, three-level parking garage (opened August
1994), and associated back-of-the-house enhancements. The
Phase III Expansion was completed in phases from August 1994
through March 1995. In April 1995, the Company will commence its
$20 million Phase IV Expansion. The project will add 144 suites
to the existing 1,410 suites, add approximately 5,400 square feet
of meeting room space, double the size of the existing Buzios
seafood restaurant to approximately 180 seats, add a new health
club and salon facility and include a variety of back-of-the-
house improvements. Completion of the Phase IV Expansion is
expected to occur in stages through the end of 1995. See
"Business-Expansion Strategy and Master Plan".
YEARS ENDED DECEMBER 31, 1994 AND 1993
Operating profit for the Company increased to $25,802,873
for 1994 from $20,232,262 for 1993, an increase of $5,570,611 or
27.5%. Management believes that the improvement in operating
results was due to increased business levels in 1994 as a result
of having an additional 437 hotel suites for nine months of the
year, an addition of approximately 800 slot machines
(approximately 500 slot machines were added in December 1993 and
approximately 300 slot machines were added in November 1994), an
addition of approximately 13 table games and additional
restaurant capacity compared to 1993.
Net revenues for the Company increased to $146,299,304 for
1994 from $109,981,585 for 1993, an increase of $36,317,719 or
33.0%. Casino revenues increased to $87,164,738 for 1994 from
$71,295,870 for 1993, an increase of $15,868,868 or 22.3%. The
increase in casino revenues was due primarily to an increase in
slot machine revenues of $9,256,595 or 20.4% to $54,488,421 for
1994 from $45,231,826 for 1993 and an increase in table games
revenues of $5,974,199 or 30.1% to $25,803,789 for 1994 from
$19,829,590 for 1993, resulting from the additional slot machines
and table games discussed above.
Room revenues increased to $19,261,477 for 1994 from
$12,334,207 for 1993, an increase of $6,927,270 or 56.2%. The
increase in room revenues resulted primarily from the addition of
437 suites during the fourth quarter of 1993 (375 new suites were
placed in service in September 1993 and 62 suites were placed in
service in October 1993), bringing the Company's total to 861
suites available during 1994. Demand for the Rio's suites
remained high during 1994, at 95.9% occupancy compared to 96.8%
occupancy during 1993.
Food and beverage revenues increased to $47,648,778 for 1994
from $32,573,861 for 1993, an increase of $15,074,917 or 46.3%.
The increase was principally due to the successful opening in
February 1994 of a new 430-seat video, entertainment and
restaurant complex, the successful opening in April 1994 of a new
186-seat world class restaurant, the successful completion in
November 1994 of a 50% expansion of the Carnival World Buffet to
980 seats, an increase in the number of patrons served in other
Rio restaurants and an increase in the average food check
contributed to the increase in food and beverage revenues.
Management believes that operating efficiencies in the food
and beverage departments improved during 1994 compared to 1993.
Expenses in food and beverage were 81% of food and beverage
revenues during 1994 compared to 85% during 1993. Food and
beverage expense margins improved as a result of an increase in
volume, price increases and effective cost control measures.
Casino profit margins were flat. Casino expenses were 44% of
casino revenue during both 1994 and 1993. Selling, general and
administrative expenses were 14% of net revenues during 1994, of
which $421,367 were expenses related to gaming development.
Depreciation and amortization increased to $10,863,844 for
1994 from $7,544,326 for 1993, an increase of $3,319,518 or
44.0%. This increase is attributable to a full year of
depreciation on the Tower Expansion which was completed in
October 1993, depreciation on the Eastside Expansion which was
completed in phases by April 1994 and depreciation on the Phase
III Expansion projects completed during 1994.
Other income for 1994 was a one-time gain of $1,140,010
related to the resale of certain real estate previously owned by
the Company. A one-time gain of $966,510 related to the sale of
real estate which was sold by the Company to a related party in
December 1991. In April 1994, the real estate was resold to a
non-related party. Pursuant to the terms of the sales agreement
between the Company and the related party, the Company was
entitled to a portion of the resale proceeds, which equaled
$966,510, net of expenses. A one-time gain of $173,500 related
to the sale of real estate owned by the Company until May 1991,
when it was sold to a non-related party. Pursuant to the terms
of the sales agreement, the Company was entitled to a portion of
the resale proceeds or refinancing amount, which equaled
$173,500, net of expenses.
Income before extraordinary items and cumulative effect of a
change in accounting principle increased 36.7% to $15,966,409 or
$0.74 per share (fully diluted) for 1994 from $11,679,991 or
$0.60 per share (fully diluted) for 1993. The results for 1993
were impacted by the cumulative effect of a change in accounting
principle resulting from the adoption of Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes"
("SFAS 109"). Adoption of SFAS 109 resulted in a one-time, non-
cash charge in the amount of $776,888 or ($0.04) per share (fully
diluted). The results for 1993 were also adversely affected by
the extraordinary loss on early extinguishment of debt, net of
income tax benefit, of $253,711 or ($0.01) per share (fully
diluted).
Net income for 1994 increased 49.9% to $15,966,409 or $0.74
per share (fully diluted) from $10,649,392 or $0.55 per share
(fully diluted) for 1993 as a result of the factors discussed
above.
YEARS ENDED DECEMBER 31, 1993 AND 1992
Operating profit for the Company increased to $20,232,262
for 1993 from $12,295,761 for 1992, an increase of $7,936,501 or
64.5%. Management believes that the improvement in operating
results was primarily the result of an increase in casino
revenues and food and beverage revenues combined with smaller
increases in operating expenses.
Net revenues for the Company increased to $109,981,585 for
1993 from $82,475,164 for 1992, an increase of $27,506,421 or
33.4%. Casino revenues increased to $71,295,870 for 1993 from
$56,524,184 for 1992, an increase of $14,771,686 or 26.1%. The
increase in casino revenues was due primarily to an increase in
slot machine revenues. Slot machine revenues increased
$11,063,662 or 32.4% to $45,231,826 for 1993 from $34,168,164 for
1992. The increase in slot machine revenues resulted primarily
from the addition of approximately 385 slot machines
(approximately 85 slot machines in April 1992 and approximately
300 slot machines in December 1992) while at the same time the
daily win per slot machine slightly increased. Table game
revenues increased by $3,217,838 or 19.4% to $19,829,590 for 1993
from $16,611,752 for 1992. The increase in table game revenues
resulted primarily from a 16.6% increase in volume to
$123,901,043 for 1993 from $106,307,122 for 1992. Food and
beverage revenues increased to $32,573,861 for 1993 from
$21,171,930 for 1992, an increase of $11,401,931 or 53.9%. The
successful opening in December 1992 of an expanded buffet and an
additional lounge, the successful opening in May 1993 of a new 92-
seat seafood restaurant, as well as a sizable increase in the
number of patrons served, contributed to the increase in food and
beverage revenues.
Demand for the Rio's suites remained high during 1993, at
96.8% occupancy compared to 96.5% occupancy during 1992. There
were 424 suites available during 1992. In September 1993, 375
new suites were placed into service and 62 additional suites were
placed into service in October 1993.
The Company's expense margins improved in 1993 as compared
to 1992. Casino expenses were 44% of casino revenues during 1993
compared to 48% during 1992. Casino expense margins improved as
a result of increased casino activity, particularly in slots,
which has a lower expense margin than other casino games.
Expenses in food and beverage were 85% of food and beverage
revenues during 1993 compared to 87% during 1992. Food and
beverage expense margins improved as a result of a sizable
increase in the number of patrons served and effective cost
controls.
Net interest expense of the Company was reduced primarily
because of reduced average borrowing during the period. The
Company took advantage of the revolving line of credit feature of
its bank loan by applying cash on hand to reduce borrowing
amounts during most of the year. This was partially offset by a
reduction in interest income. Interest expense was also reduced
by $467,798 because of interest capitalized on amounts expended
on the Tower Expansion and Eastside Expansion projects.
Income from continuing operations after minority interests
and tax provisions but before extraordinary items and cumulative
effect of a change in accounting principle increased 111.8% to
$11,679,991 or $0.60 per share (fully diluted) for 1993 from
$5,514,388 or $0.36 per share (fully diluted) for 1992. The
results for 1993 were impacted by the cumulative effect of a
change in accounting principle resulting from the adoption of
SFAS 109 which resulted in a one-time, non-cash charge in the
amount of $776,888 or ($0.04) per share (fully diluted). The
results for 1993 were also adversely affected by the
extraordinary loss on early extinguishment of debt, net of income
tax benefit, of $253,711 or ($0.01) per share (fully diluted).
The results for 1992 were affected by an extraordinary credit of
$793,511 or $0.05 per share (fully diluted), reflecting a
reduction of federal income taxes arising from the carryforward
of prior years' operating losses.
Net income for 1993 increased 68.8% to $10,649,392 or $0.55
per share (fully diluted) from $6,307,899 or $0.41 per share
(fully diluted) for 1992 as a result of the factors discussed
above.
EFFECT OF FASB STATEMENT NO. 106 AND NO. 112
In December 1990, the Financial Accounting Standards Board
issued Statement No. 106 and No. 112, respectively entitled,
"Employers Accounting for Post-Retirement Benefits other than
Pension," and "Employers Accounting for Post-Employment
Benefits." These statements require the recognition and
measurement of post-employment benefits that are not pension
benefits and are effective for fiscal years beginning after
December 15, 1992 and December 15, 1993, respectively.
Management believes that based upon present circumstances these
statements have no impact on the Company's financial position or
results of operations.
IMPACT OF INFLATION
Absent changes in competitive and economic conditions or in
specific prices affecting the industry, the Company believes that
the hotel-casino industry may be able to maintain its real
operating profit margins in periods of general inflation by
increasing minimum wagering limits for its games and increasing
the prices of its hotel rooms, food and beverage and other items,
and by taking actions designed to increase the number of patrons.
The industry may be able to maintain growth in gaming revenues by
the tendency of customer gaming budgets to increase with
inflation. Changes in specific prices (such as fuel and
transportation prices) relative to the general rate of inflation
may have a material effect on the hotel-casino industry.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994, the Company had working capital of
$50,198,343 compared with $38,091,630 at December 31, 1993. Cash
and cash equivalents were $76,426,258 at December 31, 1994
compared with $55,784,937 at December 31, 1993. The increase in
working capital and cash was primarily due to the $60 million
increase to the Rio Bank Loan ($20 million increase effective in
April 1994 and $40 million increase effective in December 1994)
less application of funds for the Company's $37 million Tower
Expansion, $25 million Eastside Expansion and $75 million Phase
III Expansion, and the increase in accounts payable-related party
reflecting construction amounts due on the Phase III Expansion.
During 1994, cash provided from operating activities was
$25,795,875. Investing activities used $66,053,542 of the
Company's cash during 1994. Approximately $3,688,280 of such
expenditures was related to the Company's $37 million Tower
Expansion, $12,517,746 was related to the Eastside Expansion and
$45,809,009 was related to the Phase III Expansion.
.
As of January 1, 1995, the Company's capital commitments
included approximately $29,190,991 for the remainder of the Phase
III Expansion. Based upon cash on hand, cash available through
borrowings under the Rio Bank Loan and anticipated cash from
operations, the Company believes that it has adequate cash
available to fund the remaining cost of the Phase III Expansion.
On March 13, 1995, the Company announced that in April 1995
it will commence construction of its Phase IV Expansion which
will have an estimated cost of $20 million. The Company
presently expects to fund costs of the Phase IV Expansion through
a combination of cash flows from operations and proceeds from the
Rio Bank Loan.
On July 15, 1993, Rio Properties entered into the $65
million Rio Bank Loan with a consortium of banks consisting of
Bank of America National Trust Savings and Association; Bank of
America Nevada; Societe Generale; NBD Bank, N.A.; First Security
Bank of Idaho, N.A.; First Interstate Bank of Nevada, N.A.; and
U.S. Bank of Nevada. The Rio Bank Loan was increased to an $85
million loan in April 1994 and increased to a $125 million loan
in December 1994. The Rio Bank Loan is a revolving credit
facility to be used for construction and working capital
purposes.
The Rio Bank Loan matures on June 30, 2001, and bears
interest on the outstanding principal amount at a rate per annum
equal to the Eurodollar Rate or the Base Rate (as defined in the
Rio Bank Loan) at the election of Rio Properties, plus a
predetermined margin over the Eurodollar Rate or the Base Rate,
as applicable. The Eurodollar Rate means an interest rate per
annum determined pursuant to the following formula:
LIBOR
Eurodollar Rate = ____________________________________
1.00 - Eurodollar Reserve Percentage
The Base Rate means a rate per annum equal to the higher of
the reference rate as it is publicly announced from time to time
by Bank of America in San Francisco, or 0.50% per annum above the
latest Federal Funds Rate. The Rio Bank Loan requires monthly
payments of interest only and quarterly principal reductions in
the amount of $15 million on December 31, 1995, $5 million on
March 31, 1996 and $5 million every quarter thereafter until
maturity. To reduce the risk from rate fluctuations, the Company
has entered into an interest rate swap agreement in the amount of
$20 million from September 30, 1994 through December 29, 1995 and
$15 million from December 29, 1995 through June 28, 1996. In
addition, in August 1994 the Company purchased a $40 million
interest rate cap. The cap is effective on September 30, 1994,
has a three-year term, and provides for quarterly payments to the
Company in the event that three-month LIBOR exceeds 7.00% on any
quarterly reset date. The Company is exposed to credit risk in
the event of non-performance by the counterparties. However, the
Company does not anticipate non-performance by the
counterparties. The Rio Bank Loan is secured by a first priority
mortgage lien on the Rio and certain other real and personal
property of Rio Properties and the Company. The Company is a
guarantor of the Rio Bank Loan.
The Rio Bank Loan contains certain customary financial
covenants to which the Company is subject as well as events of
default if Anthony A. Marnell II beneficially owns less than 10%
of the voting stock of the Company, any person holds or controls
a greater amount of voting stock than the amount held or
controlled by Anthony A. Marnell II, or if either Anthony A.
Marnell II or James A. Barrett, Jr. cease to perform their
functions as Chief Executive Officer and President, respectively,
for a period of 30 consecutive days. The Company is subject to
annual capital expenditure limits of $7.5 million under the Rio
Bank Loan, however, the Company received a written waiver to
allow the Company to construct the Tower Expansion, the Eastside
Expansion, the Phase III Expansion and the Phase IV Expansion.
Because of the annual restrictions on capital expenditures by the
Company contained in the Rio Bank Loan, any other significant new
capital improvements to the Rio will also require the consent of
the lenders.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Rio Hotel & Casino, Inc.:
We have audited the accompanying consolidated balance sheets
of RIO HOTEL & CASINO, INC. (a Nevada corporation) and
subsidiaries as of December 31, 1994 and 1993 and the related
consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended
December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Rio Hotel & Casino, Inc. and subsidiaries as of December 31,
1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 1994, in conformity with generally accepted accounting
principles.
As discussed in Note 7 to the consolidated financial
statements, effective January 1, 1993, the Company changed its
method of accounting for income taxes.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
January 25, 1995
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
1994 1993
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $76,426,258 $55,784,937
Accounts receivable, net 3,204,416 2,926,738
Federal income taxes receivable 139,329 - - -
Inventories 1,378,598 868,367
Prepaid expenses and other assets 4,716,701 4,028,554
Total current assets 85,865,302 63,608,596
PROPERTY AND EQUIPMENT:
Land and improvements 24,666,679 24,666,679
Building and improvements 137,005,432 105,058,208
Equipment, furniture and improvements 43,108,873 37,271,711
Less: accumulated depreciation (32,826,276) (22,240,358)
171,954,708 144,756,240
Construction in progress 38,521,773 7,465,875
Net property and equipment 210,476,481 152,222,115
OTHER ASSETS:
Other, net 4,823,489 2,219,665
$ 301,165,272 $ 218,050,376
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $15,032,534 $ 8,307,833
Accounts payable 2,425,645 2,948,088
Accrued expenses 7,830,706 6,524,620
Federal income taxes payable - - - 339,989
Accounts payable-related party 10,026,210 7,342,468
Accrued interest 351,864 53,968
Total current liabilities 35,666,959 25,516,966
NON-CURRENT LIABILITIES:
Long-term debt, less current
maturities 110,146,869 56,875,753
Deferred income taxes 7,512,277 5,819,176
Total non-current liabilities 117,659,146 62,694,929
Total liabilities 153,326,105 88,211,895
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $0.01 par value;
100,000,000 shares authorized (1994);
50,000,000 shares authorized (1993);
21,371,346 (1994) and 21,147,796 (1993)
shares issued and outstanding 213,714 211,478
Additional paid-in capital 117,214,582 115,182,541
Retained earnings 30,410,871 14,444,462
Total stockholders' equity 147,839,167 129,838,481
$ 301,165,272 $ 218,050,376
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Year Ended December 31,
1994 1993 1992
REVENUES:
<S> <C> <C> <C>
Casino $ 87,164,738 $ 71,295,870 $ 56,524,184
Room 19,261,477 12,334,207 9,611,985
Food and beverage 47,648,778 32,573,861 21,171,970
Other 7,111,105 4,172,272 2,913,199
Casino promotional allowances (14,886,794) (10,394,625) (7,746,174)
146,299,304 109,981,585 82,475,164
EXPENSES:
Casino 38,696,281 31,177,642 27,145,337
Room 6,631,787 4,441,851 3,424,475
Food and beverage 38,795,127 27,799,449 18,365,657
Other 4,959,250 2,784,746 1,879,232
Selling, general and
administrative 20,550,142 16,001,309 13,550,940
Depreciation and amortization 10,863,844 7,544,326 5,813,762
120,496,431 89,749,323 70,179,403
OPERATING PROFIT 25,802,873 20,232,262 12,295,761
OTHER INCOME (EXPENSE):
Interest income 124,786 71,747 157,990
Interest expense, net (1,923,237) (1,838,713) (3,801,495)
Other income, net 1,140,010 - - - 100,000
(658,441) (1,766,966) (3,543,505)
Income before income tax provision
and minority interest 25,144,432 18,465,296 8,752,256
Income tax provision (9,178,023) (6,785,305) (2,995,628)
Income before minority interest 15,966,409 11,679,991 5,756,628
Minority interest in consolidated
partnership income - - - - - - (242,240)
Income before extraordinary items 15,966,409 11,679,991 5,514,388
Extraordinary items:
Reduction of federal income taxes
arising from carryforward of
prior years' operating loss - - - - - - 793,511
Loss on early extinguishment of
debt, net of income tax - - - (253,711) - - -
benefit
Cumulative effect of a change in
accounting principle:
Adoption of SFAS No. 109 - - - (776,888) - - -
Net income $ 15,966,409 $ 10,649,392 $ 6,307,899
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Continued)
For the Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Earnings per Common Share:
Primary:
Income applicable to common
shares $ 0.74 $ 0.60 $ 0.37
Extraordinary items:
Reduction of federal income
taxes arising from carryforward
of prior years' operating loss - - - - - - 0.05
Loss on early extinguishment of
debt, net of income tax benefit - - - (0.01) - - -
Cumulative effect of a change in
accounting principle:
Adoption of SFAS 109 - - - (0.04) - - -
Net income $ 0.74 $ 0.55 $ 0.42
Weighted average number of
common shares outstanding 21,720,121 19,504,466 15,131,332
Fully diluted:
Income applicable to common
shares $ 0.74 $ 0.60 $ 0.36
Extraordinary items:
Reduction of federal income taxes
arising from carryforward of
prior years' operating loss - - - - - - 0.05
Loss on early extinguishment of
debt, net of income tax benefit - - - (0.01) - - -
Cumulative effect of a change in
accounting principle:
Adoption of SFAS 109 - - - (0.04) - - -
Net Income $ 0.74 $ 0.55 $ 0.41
Weighted average number of
common shares outstanding 21,720,381 19,537,515 15,318,828
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<CAPTION>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK
STOCK NUMBER ADDITIONAL RETAINED TOTAL
EXCHANGE OF PAID-IN EARNINGS STOCKHOLDERS'
RIGHTS SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $3,773,938 13,615,696 $136,158 $46,334,180 ($2,512,829) $47,731,447
Conversion of stock exchange rights (3,773,938) 728,461 7,285 3,766,653 - - -
Issuance of common stock 4,256,639 42,565 33,339,150 33,381,715
Common stock offering costs (548,910) (548,910)
Net income for the year 6,307,899 6,307,899
Balance, December 31, 1992 - - - 18,600,796 186,008 82,891,073 3,795,070 86,872,151
Tax benefit of stock options exercised 1,120,823 1,120,823
Issuance of common stock 2,547,000 25,470 32,480,730 32,506,200
Common stock offering costs (541,066) (541,066)
Net income for the year 10,649,392 10,649,392
Implementation of SFAS No. 109 (823,152) (823,152)
Compensation expense for stock
options granted 54,133 54,133
Balance, December 31, 1993 - - - 21,147,796 211,478 115,182,541 14,444,462 129,838,481
Tax benefit of stock options granted 886,132 886,132
Exercise of common stock options 223,550 2,236 1,003,934 1,006,170
Net income for the year 15,966,409 15,966,409
Compensation expense for stock
options granted in 1993 141,975 141,975
Balance, December 31, 1994 $0 21,371,346 $213,714 $117,214,582 $30,410,871 $147,839,167
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 15,966,409 $ 10,649,392 $ 6,307,899
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Loss on early extinguishment of debt,
net of income tax benefit - - - 253,711 - - -
Compensation expense recognized
from stock option grant 141,975 54,133 - - -
Minority interest in net income of
consolidated partnerships - - - - - - 242,240
Depreciation and amortization 10,863,844 7,544,326 5,813,762
Provision for uncollectible accounts 99,772 116,131 93,747
Net loss on sale of assets - - - 10,885 150,000
Cumulative effect of change in accounting
principle - Adoption of SFAS 109 - - - 776,888 - - -
Deferred income taxes 1,693,101 2,265,571 550,373
(Increase) decrease in assets:
Accounts receivable (377,450) (1,484,079) (127,984)
Inventories (510,231) (223,051) (89,849)
Prepaid expenses and other current
assets (827,476) (856,554) (643,369)
Other, net (2,881,750) (662,965) 57,308
Increase (decrease) in liabilities:
Accounts payable (522,443) 304,585 1,384
Accrued federal income tax payable 546,142 91,401 1,318,058
Accrued expenses 1,306,086 1,628,387 955,194
Accrued interest 297,896 (92,009) (267,862)
Net cash provided by operating activities 25,795,875 20,376,752 14,360,901
Cash flows from investing activities:
Proceeds from sale of equipment, furniture and
improvements - - - - - - 230,978
Purchase of equipment, furniture and
improvements (66,053,542) (49,967,458) (9,255,776)
Purchase of land and improvements - - - 22,499 (88,810)
Net cash (used in) investing activities (66,053,542) (49,944,959) (9,113,608)
Cash flows from financing activities:
Proceeds from borrowings 60,014,175 65,000,000 8,000,000
Net proceeds from common stock issuance 1,022,700 32,506,200 30,252,138
Costs paid in connection with prior common
stock offering and stock exchange rights (119,529) (456,821) (457,160)
Loan acquisition costs - - - (1,107,647) - - -
Payments on notes and loans payable (18,358) (53,212,000) (11,807,241)
Net cash provided by financing activies 60,898,988 42,729,732 25,987,737
Net increase in cash and cash equivalents 20,641,321 13,161,525 31,235,030
Cash and cash equivalents, beginning 55,784,937 42,623,412 11,388,382
Cash and cash equivalents, end of period $ 76,426,258 $ 55,784,937 $ 42,623,412
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts
of Rio Hotel & Casino, Inc. and its wholly owned
subsidiaries Rio Properties, Inc. ("Rio Properties," which
owns and operates the Rio Suite Hotel & Casino [the "Rio"]
in Las Vegas, Nevada); MarCor Development Company, Inc.;
MarCor Resort Properties, Inc. ("MRPI"); MarCor Rio Holding
Corp. ("MRHC") (until its dissolution as of December 29,
1992), a subsidiary of MRPI and second-tier subsidiary of
the Company; and one limited partnership, MarCor Resorts,
L.P. V (the "Rio Partnership"), until its merger with Rio
Properties on August 15, 1992 (collectively the "Company").
The Rio Partnership is included in the accounts of the
Company as a result of the Company retaining more than a 50%
ownership interest or a "controlling" interest as defined by
Statement of Financial Accounting Standards No. 94,
"Consolidation of All Majority Owned Subsidiaries".
All significant intercompany balances and transactions have
been eliminated in consolidation.
RECLASSIFICATIONS
The financial statements for prior periods reflect certain
reclassifications, which have no effect on net income, to
conform with classifications adopted in the current year.
CAPITALIZATION OF INTEREST
The Company capitalizes interest on funds disbursed during
the active construction phases of real estate development
and other major projects. Interest capitalized during the
years ended December 31, 1994, 1993, and 1992 was $619,887,
$467,798, and $59,732, respectively.
PROPERTY AND EQUIPMENT
Land and improvements, building and improvements, and
equipment, furniture and improvements are stated at cost.
Depreciation and amortization of property and equipment is
computed using the straight-line method predominantly over
the following estimated useful lives:
Building and improvements 7 to 45 years
Equipment, furniture and improvements 3 to 15 years
INVENTORIES
Inventories are stated at the lower of cost or market. Cost
is determined by using the first-in, first-out method.
REVENUE AND PROMOTIONAL ALLOWANCES
Casino revenues represent the net win from gaming wins and
losses. The retail value of rooms, food, beverage and other
services provided to customers without charge is included in
gross revenue and deducted as promotional allowances. The
estimated departmental costs of providing such promotional
allowances are included in casino costs and expenses as
follows:
<TABLE>
<CAPTION>
For the Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Room $1,273,154 $ 889,448 $ 752,935
Food and Beverage 7,823,819 5,969,683 4,279,365
Other operating
expenses 44,888 36,940 28,202
$9,141,861 $6,896,071 $5,060,502
</TABLE>
EARNINGS PER SHARE
Earnings per common share are computed on the basis of the
weighted average number of common shares and common stock
equivalents outstanding during the period.
HEDGING TRANSACTION
The Company is a party to an interest rate swap agreement
and has purchased an interest rate cap (Note 6). Any net
payments made or received by the Company in connection with
this interest rate swap agreement or interest rate cap, or
any other hedging transaction that the Company may enter
into, will be classified as cash flows from operating
activities.
INCOME TAXES
Effective January 1, 1993, the Company implemented the
provisions of SFAS 109. SFAS 109 utilizes the liability
method and deferred taxes are determined based on the
estimated future tax effects of differences between the
financial statement and tax bases of assets and liabilities
given the provisions of the enacted tax laws. Prior to the
implementation of SFAS 109, the Company accounted for income
taxes using Accounting Principles Board Opinion No. 11.
2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at December 31, 1994 and 1993
include $68 million and $48 million, respectively, in
overnight repurchase agreements with a bank. These items are
recorded at cost which approximates market value and are
considered cash equivalents for purposes of the Consolidated
Statements of Cash Flows.
3. CONSOLIDATED STATEMENTS OF CASH FLOWS
The following supplemental disclosures are provided as part
of the Consolidated Statements of Cash Flows:
<TABLE>
<CAPTION>
For the Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Cash payments made for
interest (net of
amounts capitalized) $1,919,556 $1,728,693 $3,974,045
Cash payments made for
income taxes $6,240,000 $4,428,335 $ 198,627
</TABLE>
Non-cash financing and investing activities:
DECEMBER 31, 1994
Purchase of property and equipment financed through payables
totaled $10,026,210.
Tax benefit arising from the exercise of stock options
granted under the Company's Non-Statutory Stock Option Plan
("NSOP") totaled $886,132.
DECEMBER 31, 1993
Purchase of property and equipment financed through payables
totaled $8,442,660.
Purchase of property and equipment financed through long-
term debt totaled $183,586.
Additional costs of issuing Common Stock totaled $12,194.
Costs of issuing Common Stock financed through payables
totaled $163,801.
Tax benefit arising from the exercise of stock options
granted under the NSOP totaled $1,120,823.
Reduction in paid-in capital as a result of the
implementation of SFAS 109 totaled $823,152. This amount
was charged directly against equity because it reflects the
tax effect of SFAS 109 as it related to the gain on sale of
assets to affiliates of the Company's largest stockholder in
December 1991, which was also recorded directly to equity.
DECEMBER 31, 1992
During 1992, the Company exchanged 728,461 stock exchange
rights for 728,461 shares of the Company's Common Stock. The
transactions resulted in the following changes:
Common Stock $ 7,285
Additional paid-in capital 3,766,653
Stock exchange rights (3,773,938)
$ - - -
On August 14, 1992, the Company, through Rio Properties,
acquired an additional 3.25% of the Rio Partnership in
exchange for 354,549 shares of the Company's Common Stock.
On August 15, 1992, the Rio Partnership was merged into Rio
Properties, with an additional 109,092 shares of Common
Stock issued for the remaining 1% interests in the Rio
Partnership. The summarized results of these transactions
are as follows: (1) Rio Properties now owns 100% of the
assets and liabilities formerly held by the Rio Partnership;
(2) the Rio Partnership, as a result of its merger with Rio
Properties, no longer exists; (3) Rio Properties is wholly
owned by the Company; (4) the Company issued 463,641 shares
of Common Stock to the former minority partners in the Rio
Partnership; (5) MRPI and MRHC, which had previously held
27.90% and 67.85% ownership interests in the Rio
Partnership, respectively, no longer hold such interests.
The transaction resulted in the following:
Value of stock issued (463,641 shares @ $ 3,129,577
$6.75/share)
Minority interests (1,877,067)
Premium paid $ 1,252,510
This premium was allocated based on fair market values among
land, building, and equipment, furniture and improvements.
The Company reclassified $248,951 of Rio assets previously
in equipment, furniture and improvements into other assets
during the year ended December 31, 1992.
The Company reclassified $160,443 of Rio assets previously
in other assets into construction in progress during the
year ended December 31, 1992.
Construction in progress financed through payables totaled
$74,369. Additional asset purchases financed through
payables totaled $829,242. Costs of issuing Common Stock,
financed through payables, totaled $91,750.
4. ACCOUNTS RECEIVABLE
Components of receivables are as follows:
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Casino $2,082,871 $1,669,419
Hotel 1,534,107 1,543,646
Other 66,573 93,036
3,683,551 3,306,101
Less allowance for doubtful
accounts (479,135) (379,363)
$3,204,416 $2,926,738
</TABLE>
5. ACCRUED EXPENSES
Components of accrued expenses are as follows:
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Accrued salaries, wages and
related benefits $4,004,080 $3,300,004
Progressive slot machines and
other gaming accruals 2,033,406 1,971,251
Accrued gaming taxes 1,123,036 952,775
Other accrued liabilities 670,184 300,590
$7,830,706 $6,524,620
</TABLE>
6. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Rio Bank Loan, originally a
$65 million revolving credit
facility, which was amended to
be a $125 million revolving
credit facility with interest
equal to the Eurodollar Rate or
the Base Rate, plus a margin.
The loan matures on June 30,
2001 and is collateralized by a
first deed of trust on the
Rio's real property, equipment
and improvements. $125,000,000 $65,000,000
Special Improvement District
assessment bond, payable over
10 years in twenty
substantially equal semi-annual
installments of principal, plus
6.1% interest. The first
installment was due on May 1,
1994. 165,228 183,586
Other short-term financing of
certain insurance premiums 14,175 ---
125,179,403 65,183,586
Less current maturities (15,032,534) (8,307,833)
$110,146,869 $56,875,753
</TABLE>
The prime interest rates quoted by the Company's primary
lenders at December 31, 1994 and 1993 were 8.50% and 6.00%,
respectively.
At December 31, 1994, the three month Eurodollar Rate was
6.50%. The margin on the Company's Eurodollar Rate
borrowings at December 31, 1994 was 1.00%.
On July 15, 1993, Rio Properties entered into the $65
million Rio Bank Loan with a consortium of banks. The Rio
Bank Loan was increased to an $85 million loan in April 1994
and increased to a $125 million loan in December 1994. The
Rio Bank Loan is a revolving credit facility to be used for
construction and working capital purposes.
The Rio Bank Loan matures on June 30, 2001, and bears
interest on the outstanding principal amount at a rate per
annum equal to the Eurodollar Rate or the Base Rate (as
defined in the Rio Bank Loan) at the election of Rio
Properties, plus a predetermined margin over the Eurodollar
Rate or the Base Rate, as applicable. The Eurodollar Rate
means an interest rate per annum determined pursuant to the
following formula:
LIBOR
Eurodollar Rate = ____________________________________
1.00 - Eurodollar Reserve Percentage
The Base Rate means a rate per annum equal to the higher of
the reference rate as it is publicly announced from time to
time by Bank of America in San Francisco, or 0.50% per annum
above the latest Federal Funds Rate. The Rio Bank Loan
requires monthly payments of interest only and principal
reductions of $15 million on December 31, 1995, $5 million
on March 31, 1996 and $5 million every quarter thereafter
until maturity. To reduce the risk from rate fluctuations,
the Company has entered into an interest rate swap agreement
in the amount of $20 million from September 30, 1994 through
December 29, 1995 and $15 million from December 29, 1995
through June 28, 1996. In addition, in August 1994 the
Company purchased a $40 million interest rate cap. The cap
is effective on September 30, 1994, has a three year term,
and provides for quarterly payments to the Company in the
event that three-month LIBOR exceeds 7.00% on any quarterly
reset date. The Company is exposed to credit risk in the
event of non-performance by the counterparties. However,
the Company does not anticipate non-performance by the
counterparties. The Rio Bank Loan is secured by a first
priority mortgage lien on the Rio and certain other real and
personal property of Rio Properties and the Company. The
Company is a guarantor of the Rio Bank Loan.
The Rio Bank Loan contains certain customary financial
covenants to which the Company is subject. Because of
annual restrictions on capital expenditures by the Company
contained in the Rio Bank Loan, any new significant capital
improvements to the Rio will require the consent of the
lenders.
The revolving credit feature of the Rio Bank Loan allows the
Company to pay down and reborrow principal under the line of
credit as the Company deems appropriate. The Company
utilized this ability by reborrowing $50 million on
December 30, 1993 and repaying $50 million on January 3,
1994. The Company also reborrowed $69 million on
December 30, 1994 and repaid $69 million on January 3, 1995
under the terms of the Rio Bank Loan.
As of December 31, 1994, annual maturities of total notes
and loans payable are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
<S> <C>
December 31, 1995 $ 15,032,534
December 31, 1996 20,018,359
December 31, 1997 20,018,359
December 31, 1998 20,018,359
December 31, 1999 20,018,359
Thereafter 30,073,433
$125,179,403
</TABLE>
Based upon the present operations of the Rio, internal
projections of revenues and expenses, and other anticipated
cash requirements of Rio Properties during 1995, the Company
anticipates meeting required principal and interest payments
under the Rio Bank Loan during 1995.
The carrying values of assets included in the consolidated
financial statements, which collateralize bank loans
payable, are as follows:
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Building and improvements $137,005,432 $105,058,208
Equipment, furniture and
improvements 43,108,873 37,271,771
Land and improvements 24,666,679 24,666,679
Construction in progress 38,521,773 7,465,875
$243,302,757 $174,462,473
</TABLE>
7. INCOME TAXES
In February 1992, the Financial Accounting Standards Board
issued SFAS 109 which supersedes previous pronouncements on
accounting for income taxes and is effective for fiscal
years commencing after December 15, 1992. The Company
adopted SFAS 109 in the first quarter of 1993 by reporting
the effect of SFAS 109 as a cumulative effect of a change in
accounting principle and not restating prior periods. The
effect of SFAS 109 recorded in January 1993 decreased net
income as a non-cash, non-recurring cumulative effect of a
change in accounting principle by an amount totaling
$776,888. It also reduced paid-in capital by an amount
totaling $823,152. This amount was charged directly against
equity because it reflects the tax effect of SFAS 109 as it
related to the gain on sale of assets to affiliates of the
Company's largest stockholder in December 1991, which was
also recorded directly to equity.
The federal income tax provisions for the years ended
December 31, 1994 and 1993 consist of the following:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Provision before tax rate change and
extraordinary items $9,178,023 $6,671,872
Additional provision due to tax rate
change (see below) --- 113,433
Provision before extraordinary item 9,178,023 6,785,305
Income tax benefit from extraordinary
loss on early retirement of debt --- (130,700)
Total Income Tax Provision $9,178,023 $6,654,605
</TABLE>
The Revenue Reconciliation Act of 1993 raised the Corporate
Income Tax Rate from 34% to 35%, retroactively to January 1,
1993. In accordance with the requirements of SFAS 109, the
deferred income tax assets and liabilities were adjusted
accordingly, resulting in a charge against income in the
amount of $113,433.
The following schedule reconciles the Company's effective
tax rate to the statutory rate:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 34.0%
Depreciation on premium allocated in
Rio Partnership exchange 0.5% 0.7% 1.2%
Disallowance for tax purposes of
certain meals, travel and
entertainment expenses 1.2% 0.4% ---
Other (0.2)% --- ---
Effective rate 36.5% 36.1% 35.2%
</TABLE>
During 1994, the Company utilized all remaining alternative
minimum tax credit carryforwards.
The Company's deferred tax assets (liabilities) at
December 31, 1994 consisted of the following:
<TABLE>
<CAPTION>
Current Non-Current
<S> <C> <C>
Depreciation & amortization $(7,613,359)
Deferred employee benefits $ 391,927 ---
Bad debt expense 136,105 ---
Other deferred tax assets,
net 34,231 101,082
$ 562,263 $(7,512,277)
</TABLE>
The Company's deferred tax assets (liabilities) at December
31, 1993 consisted of the following:
<TABLE>
<CAPTION>
Current Non-Current
<S> <C> <C>
Depreciation & amortization $(6,231,735)
Alternative Minimum Tax ("AMT")
credit carryforwards $ 868,160 ---
Partnership syndication fees --- 234,779
Deferred employee benefits 373,273 ---
Bad debt expense 132,777 ---
Other deferred tax assets,
net 28,982 177,780
$1,403,192 $(5,819,176)
</TABLE>
The current portion of the Company's net deferred tax assets
is included on the Consolidated Balance Sheet under the
heading "Prepaid Expenses and Other Current Assets."
The Company has determined that it is probable that the full
amount of the tax benefit from the deferred tax assets will
be realized and therefore, has not recorded a valuation
allowance to reduce the carrying value of the deferred tax
assets.
Prior to 1993, the Company accounted for income taxes in
accordance with APB 11. The provision for income taxes for
the year ended December 31, 1992 is as follows:
<TABLE>
<CAPTION>
1992
<S> <C>
Provision before extraordinary item $(2,995,628)
Extraordinary credit carryforward of prior
years' loss 793,511
Net provision $(2,202,117)
</TABLE>
8. COMMITMENTS AND CONTINGENCIES
In connection with the bank loan agreements, the Company has
entered into agreements with certain key stockholders,
directors and executive officers to facilitate borrowings by
the Company. These individuals personally guaranteed the
previous bank loan made to Rio Properties in exchange for
compensation of $1,250,000 upon the satisfaction of certain
terms and conditions. The first potential payment
obligation of the Company of $250,000 commenced with the
fiscal year ended December 31, 1990 and continued to
December 31, 1994, with a two-year extension provision. No
amounts were due or paid arising out of the years ended
December 31, 1990 or 1991. The Company made $250,000
payments in each of the three years ended December 31, 1994,
1993, and 1992. The Company anticipates paying the entire
balance on or before December 31, 1996. Because the
personal guaranties under the former bank loan have been
replaced under the Rio Bank Loan with provisions that
trigger events of default should the Company's Chief
Executive Officer voluntarily allow his stockholdings in the
Company to fall below 10% or that of another holder or if
the Company's Chief Executive Officer or Chief Operating
Officer cease for a period of 30 consecutive days to hold
their respective executive officer positions, the agreement
with the guarantors has been amended to terminate the
guarantor payments in the event that said events of default
are triggered by voluntary act of the respective guarantors.
Effective January 1, 1991, Rio Properties maintains an
employee profit sharing plan for all employees who have
accredited service. Contributions to the plan are
discretionary and cannot exceed amounts permitted under the
Internal Revenue Code. Contributions of $215,039, $109,701,
and $69,113 have been authorized and charged to income for
the years ended December 31, 1994, 1993, and 1992,
respectively.
In the normal course of business, the Company is involved
with various negotiations and legal matters. In addition,
Rio Properties is a potential defendant in various personal
injury allegations. Management is of the opinion that the
effect of these matters is not material to the consolidated
financial statements.
9. STOCKHOLDERS' EQUITY
COMMON STOCK
During 1994, the Company issued 223,550 shares of Common
Stock at exercise prices ranging from $3.00 per share to
$15.625 per share pursuant to options previously granted
under the Company's NSOP (see below).
On November 24, 1993, the Company sold in a public offering
2,300,000 shares of Common Stock at a net price per share of
$13.60. The proceeds from the sale were received in
November 1993.
During 1993, the Company issued 247,000 shares of Common
Stock at exercise prices ranging from $3.00 per share to
$6.00 per share pursuant to options previously granted under
the Company's NSOP (see below).
On November 24, 1992, the Company sold in a public offering
3,737,500 shares of Common Stock at a net price per share of
$7.98. The proceeds from the sale were received in December
1992.
On August 15, 1992, the Company issued 463,641 shares of
Common Stock to the partners in the Rio Partnership in
exchange for 4.25% of the Rio Partnership (Note 3).
During 1992, the Company issued 55,400 shares of Common
Stock at exercise prices ranging from $3.00 per share to
$5.00 per share pursuant to options previously granted under
the Company's NSOP (see below).
STOCK OPTIONS
Key officers and employees are eligible to participate in
the Company's NSOP. As of December 31, 1994, 2,637,500
shares were available for issuance pursuant to options
granted under the NSOP and 2,585,500 options had been
granted at exercise prices ranging from $3.00 to $15.625 per
share. As of December 31, 1994, 505,950 options had been
exercised and 144,500 options had been forfeited, resulting
in 1,935,050 options outstanding.
The NSOP will terminate July 8, 1997, subject to the right
of the Board of Directors to terminate the NSOP prior
thereto.
On September 5, 1991, the Company's Board of Directors
adopted the 1991 Directors' Stock Option Plan, which was
ratified by the Company's stockholders on May 16, 1992,
under which options to purchase up to 100,000 shares of
Common Stock may be granted to non-employee directors. The
option exercise price is 100% of the fair market value of
the Common Stock on the date of grant. As of December 31,
1994, 85,000 options had been granted at exercise prices
ranging from $3.00 per share to $16.00 per share. As of
December 31, 1994, 20,000 options had been exercised and
1,000 options had been forfeited, resulting in 64,000
options outstanding.
STOCK EXCHANGE RIGHTS
On September 28, 1990, MRHC issued 6,638,214 shares of
preferred stock (the "Stock Exchange Rights") in exchange
for 60.85 Rio Partnership Units. These Stock Exchange Rights
permitted the exchange for the Company Common Stock on a one-
for-one basis after March 28, 1991, and the Company could
have required exchange any time on or after December 31,
1999. In connection with this transaction, the Company paid
$13,681,286 of costs in excess of recorded minority
interests for the Rio Partnership Units. All costs were
allocated to assets based on fair market values; however,
the costs in excess of recorded minority interests paid to
related parties were not recorded. As of December 31, 1992,
all 6,638,214 Stock Exchange Rights had been exchanged for
the Company's Common Stock. The Company has reflected the
cost of the issuance of the Stock Exchange Rights in its
stockholders' equity.
10. RELATED PARTY TRANSACTIONS
The Company has contracted with two affiliates of the
Company's largest stockholder for the design and
construction of a 21-story hotel tower containing 549 suites
(the "Phase III Expansion") for a total of $64,166,368. As
of December 31, 1994, the Company had capitalized
$37,241,468 in connection with these contracts. As of
December 31, 1994, $10,026,210 had been accrued in
connection with these construction and design contracts.
In 1993, the Company contracted with two affiliates of the
Company's largest stockholder for the design and
construction of a 21-story hotel tower containing 437 suites
(the "Tower Expansion") and an expansion of the Rio's public
area (the "Eastside Expansion"). The two contracts were in
amounts not to exceed $57,557,093. Amounts capitalized in
connection with these contracts totaled $50,193,919. As of
December 31, 1993, $7,189,042 had been accrued in connection
with these construction and design contracts. As of
December 31, 1994, all amounts due in connection with these
contracts had been capitalized and paid.
On July 1, 1992, the Company entered into contracts with two
affiliates of the Company's largest stockholder in an amount
not to exceed $6,107,571 for the design and construction of
an addition to the Rio's buffet restaurant, as well as
expansion of casino space and addition of a lounge. As of
December 31, 1992, $5,605,540 had been capitalized in
connection with these contracts. As of December 31, 1992,
$984,195 had been accrued in connection with these
contracts. As of December 31, 1993, all amounts due in
connection with these contracts had been capitalized and
paid.
In December 1991, the Company sold non-Rio real estate to an
affiliate of the Company's largest stockholder. In April
1994, the affiliated entity sold the real estate to a non-
related party. Pursuant to the terms of the sales
agreement, the Company was entitled to a portion of the
sales proceeds which equaled $966,510, net of expenses.
The Company entered into consulting contracts with an
affiliated entity to provide real estate, financial and
supervisory services through April 30, 1992. The contract
was terminated three months early, on January 31, 1992, by
mutual agreement of the parties. Revenues earned thereunder
during the years ended December 31, 1994, 1993, and 1992
were $0, $0, and $100,000, respectively.
The Company reimbursed an affiliate of the Company's largest
stockholder for certain expenses advanced on behalf of or
supplied to the Company during the years ended December 31,
1993 and December 31, 1992 of approximately $162,425 and
$121,000, respectively. Nominal amounts were paid by the
Company to the affiliate for similar purposes during 1994.
Such amounts were generally billed to the Company at the
affiliate's cost.
Two director/officers of the Company are associated with
affiliated entities which render various architectural and
construction services for the Company. The Company paid
these entities, in the aggregate, approximately $50,416,348,
$44,567,088 and $5,669,743 during the years ended
December 31, 1994, 1993, and 1992, respectively, for their
services.
Entities in which a director of the Company is the principal
stockholder and the executive officer received commissions
from the Company totaling approximately $124,912, $90,325
and $79,000 for the years ended December 31, 1994, 1993, and
1992, respectively, arising out of the acquisition of
various insurance coverage by the Company.
The Company believes that the transactions described above
are on terms at least as favorable as would have been
obtained from non-related parties.
11. MARCOR RESORTS, L.P. V (THE RIO PARTNERSHIP)
During the year ended February 28, 1989, a limited
partnership (known as MarCor Resorts, L.P. V, a Nevada
limited partnership) was formed. Until its merger into Rio
Properties on August 15, 1992, the Rio Partnership was
included in the consolidated financial statements of the
Company. The Company obtained a 34.4% general partnership
interest in the Rio Partnership in exchange for land, cash
and certain other assets with a collective value of
$13,760,000. The exchange resulted in a deferred gain to the
Company of $1,608,274. Subsequently, the Company acquired an
additional 0.5% limited partnership interest.
On September 28, 1990, MarCor Rio Holding Corp. issued
6,638,214 stock exchange rights in exchange for 60.85 Rio
Partnership Units, increasing the Company's total investment
in the Rio Partnership to 95.75%. As a result of this
transaction, certain related party rules came into effect,
thereby requiring the reversal of the deferred gain of
$1,608,274 recorded upon initial capitalization of the
partnership.
On August 15, 1992, the Rio Partnership merged with Rio
Properties (Note 3), resulting in the Company owning 100% of
the net assets formerly held by the Rio Partnership. As a
result of the merger, the Rio Partnership ceased to exist.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information is incorporated by reference from the
Company's Proxy Statement to be filed with the Commission in
connection with the Annual Meeting of Stockholders on
May 16, 1995.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the
Company's Proxy Statement to be filed with the Commission in
connection with the Annual Meeting of Stockholders on
May 16, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
This information is incorporated by reference from the
Company's Proxy Statement to be filed with the Commission in
connection with the Annual Meeting of Stockholders on
May 16, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the
Company's Proxy Statement to be filed with the Commission in
connection with the Annual Meeting of Stockholders on
May 16, 1995.
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:
Consolidated Balance Sheets at December 31, 1994
and December 31, 1993.
Consolidated Statements of Income for the Years Ended
December 31, 1994, 1993 and 1992.
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1994, 1993 and 1992.
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992.
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
Included in Part IV of this report:
Schedule III - Condensed Financial Information of
Registrant
Schedule VIII - Valuation and Qualifying Accounts
Other schedules are omitted because of the absence of conditions
under which they are required or because the required information
is given in the financial statements or notes thereto.
ITEM 14. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4.01 Amended and Restated Articles of Incorporation of
Rio Hotel & Casino, Inc. filed July 19, 1994, are
incorporated herein by reference from the Company's
(SEC File No. 0-13760) Report on Form 10-Q for the
Quarter Ended June 30, 1994, Part II, Item 6(a),
Exhibit 4.01.
4.02 Amended and Restated Bylaws of Rio Hotel & Casino,
Inc. certified March 3, 1993 are incorporated herein by
reference from the Company's (SEC File No. 0-13760)
Report on Form 8-K for the Year Ended December 31,
1992, Part IV, Item 14, Exhibit 4.02.
4.03 Specimen Common Stock Certificate for the Common
Stock of Rio Hotel & Casino, Inc. is incorporated
herein by reference from the Company's Registration
Statement on Form S-3 filed on August 24, 1992, File
No. 33-51092, Part II, Item 16, Exhibit 4.01.
4.04 Agreement and Plan of Exchange by and between Rio
Hotel & Casino, Inc., a Nevada corporation, and Rio
Properties, Inc., a Nevada corporation, dated
August 14, 1992, is incorporated herein by reference
from the Company's Registration Statement on Form S-3
filed on August 24, 1992, File No. 33-51092, Part II,
Item 16, Exhibit 2.01.
4.05 Form of Subscription and Exchange Agreement
between Rio Properties, Inc., a Nevada corporation, and
MarCor Resorts, Inc., a Nevada corporation, and
subscriber is incorporated herein by reference from the
Company's Registration Statement on Form S-3 filed on
August 24, 1992, File No. 33-51092, Part II, Item 16,
Exhibit 2.02.
4.06 Rio Hotel & Casino, Inc. Non-Statutory Stock
Option Plan as amended September 5, 1991, as amended
February 28, 1992 (to reflect change in Company name)
and as amended June 22, 1993, is incorporated herein by
reference from the Company's (SEC File No. 33-38752)
Registration Statement on Form S-8 filed on October 5,
1993, Item 8, Exhibit 4.04.
4.07 Rio Hotel & Casino, Inc. Directors' Stock Option
Plan As Amended February 28, 1992 (to reflect change in
Company name only) is incorporated herein by reference
from the Company's (SEC File No. 2- 88147) Annual
Report on Form 10-K for the Year Ended December 31,
1991, Part IV, Item 14(c), Exhibit 4.07.
4.08 Rio Suite Hotel & Casino Employee Retirement
Savings Plan Trust Agreement dated February 11, 1991;
First Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan dated March 20, 1992,
effective April 1, 1992; Second Amendment to the Rio
Suite Hotel & Casino Employee Retirement Savings Plan
dated March 20, 1992, effective April 1, 1992; Third
Amendment to the Rio Suite Hotel & Casino Employee
Retirement Savings Plan dated December 14, 1992,
effective August 15, 1992, and Rio Suite Hotel & Casino
Employee Retirement Savings Plan, Participant Loan
Program dated March 19, 1992 are incorporated herein by
reference from the Company's Registration Statement on
Form S-8, filed January 8, 1993, File No. 33-56860,
Part II, Item 8, Exhibit 4.11; Rio Suite Hotel & Casino
Employment Retirement Savings Plan dated February 21,
1991 is incorporated herein by reference from the
Company's Registration Statement on Form S-8, Amendment
No. 1, filed February 3, 1993, File No. 33-56860, Part
II, Item 8, Exhibit 4.11; Fourth Amendment to the Rio
Suite Hotel & Casino Employee Retirement Savings Plan
dated April 30, 1993, effective July 1, 1993; Fifth
Amendment to the Rio Suite Hotel & Casino Employee
Retirement Savings Plan dated August 17, 1993,
effective July 1, 1993; Sixth Amendment to the Rio
Suite Hotel & Casino Employee Retirement Savings Plan
dated October 27, 1993, effective October 25, 1993;
Seventh Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan Trust Agreement dated
and effective December 16, 1993; and Eighth Amendment
to the Rio Suite Hotel & Casino Employee Retirement
Savings Plan dated May 3, 1994, effective May 1, 1994
are incorporated herein by reference from the Company's
(SEC File No. 0-13760) Report on Form 10-Q for the
Quarter Ended June 30, 1994, Part II, Item 6(a),
Exhibit 4.03; Ninth Amendment to the Rio Suite Hotel &
Casino Employee Retirement Savings Plan dated August
26, 1994, effective August 25, 1994; Tenth Amendment to
the Rio Suite Hotel & Casino Employee Retirement
Savings Plan dated and effective January 1, 1995; and
Eleventh Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan dated and effective
January 12, 1995.
4.09 Rio Hotel & Casino, Inc. 1995 Long-Term Incentive
Plan as adopted January 26, 1995.
4.10 Credit Agreement among Bank of America National
Trust and Savings Association, as agent for itself and
other financial institutions, as Lenders, and Rio
Properties, Inc., as Borrower, dated July 15, 1993;
Line A Note executed by Rio Properties, Inc., as
Borrower, in favor of Bank of America National Trust
and Savings Association, in the amount of $9,692,307.70
dated July 15, 1993; Line A Note executed by Rio
Properties, Inc., as Borrower, in favor of Bank of
America Nevada, in the amount of $3,230,769.23, dated
July 15, 1993; Line A Note executed by Rio Properties,
Inc., as Borrower, in favor of Societe Generale, in the
amount of $6,461,538.46, dated July 15, 1993; Line A
Note executed by Rio Properties, Inc., as Borrower, in
favor of NBD Bank, N.A., in the amount of
$6,461,538.46, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in favor
of First Security Bank of Idaho, N.A., in the amount of
$6,461,538.46, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in favor
of First Interstate Bank of Nevada, N.A., in the amount
of $6,461,538.46, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in favor
of U.S. Bank of Nevada, in the amount of $3,230,769.23,
dated July 15, 1993; Line B Note executed by Rio
Properties, Inc., as Borrower, in favor of Bank of
America National Trust and Savings Association, in the
amount of $5,307,692.30 dated July 15, 1993; Line B
Note executed by Rio Properties, Inc., as Borrower, in
favor of Bank of America Nevada, in the amount of
$1,769,230.77 dated July 15, 1993; Line B Note executed
by Rio Properties, Inc., as Borrower, in favor of First
Interstate Bank of Nevada, N.A., in the amount of
$3,538,461.54 dated July 15, 1993; Line B Note executed
by Rio Properties, Inc., as Borrower, in favor of First
Security Bank of Idaho, N.A., in the amount of
$3,538,461.54 dated July 15, 1993; Line B Note executed
by Rio Properties, Inc., as Borrower, in favor of NBD
Bank, N.A., in the amount of $3,538,461.54 dated July
15, 1993; Line B Note executed by Rio Properties, Inc.,
as Borrower, in favor of Societe Generale, in the
amount of $3,538,461.54 dated July 15, 1993; Line B
Note executed by Rio Properties, Inc., as Borrower, in
favor of U.S. Bank of Nevada, in the amount of
$1,769,230.77 dated July 15, 1993; Revolving Note
executed by Rio Properties, Inc., as Borrower, in favor
of Bank of America National Trust and Savings
Association, in the amount of $15,000,000 dated July
15, 1993; Revolving Note executed by Rio Properties,
Inc., as Borrower, in favor of Bank of America Nevada,
in the amount of $5,000,000 dated July 15, 1993;
Revolving Note executed by Rio Properties, Inc., as
Borrower, in favor of First Interstate Bank of Nevada,
N.A., in the amount of $10,000,000 dated July 15, 1993;
Revolving Note executed by Rio Properties, Inc., as
Borrower, in favor of First Interstate Bank of Idaho,
N.A., in the amount of $10,000,000 dated July 15, 1993;
Revolving Note executed by Rio Properties, Inc., as
Borrower, in favor of NBD Bank, N.A., in the amount of
$10,000,000 dated July 15, 1993; Revolving Note
executed by Rio Properties, Inc., as Borrower, in favor
of Societe Generale, in the amount of $10,000,000 dated
July 15, 1993; Revolving Note executed by Rio
Properties, Inc., as Borrower, in favor of U.S. Bank of
Nevada, in the amount of $5,000,000 dated July 15,
1993; Security Agreement executed by Rio Properties,
Inc., as Debtor, in favor of Bank of America National
Trust and Savings Association, as agent for itself and
other financial institutions, as Secured Party, dated
July 15, 1993; Construction Deed of Trust With
Assignment of Rents and Fixture Filing among Rio
Properties, Inc., as Trustor, Equitable Deed Company,
as Trustee, and Bank of America National Trust and
Savings Association, as agent for itself and the other
financial institutions, as Beneficiary, dated July 15,
1993; Unsecured Indemnity Agreement executed by Rio
Properties, Inc., as Indemnitor, in favor of Bank of
America National Trust and Savings Association, as
agent for itself and other financial institutions,
dated July 15, 1993; Guaranty executed by Rio Hotel &
Casino, Inc., as Guarantor, in favor of Bank of America
National Trust and Savings Association, as agent for
itself and other financial institutions, as Guaranteed
Parties, dated July 15, 1993; and, Parent Guarantor
Security Agreement by Rio Hotel & Casino, Inc., as
Debtor, in favor of Bank of America National Trust and
Savings Association, as agent for itself and other
financial institutions, as Secured Party, dated July
15, 1993 are incorporated by reference from the
Company's (SEC File No. 2-88147) Report on Form 8-K
dated July 15, 1993, Item 7(c), Exhibit 28.01; First
Amendment to Credit Agreement dated as of October 25,
1993 and Second Amendment and Waiver to Credit
Agreement dated as of November 8, 1993 among Rio
Properties, Inc., Bank of America National Trust and
Savings Association, Bank of America Nevada, First
Interstate Bank of Nevada, First Security Bank of
Idaho, N.A., NBD Bank, N.A., Societe Generale, and U.S.
Bank of Nevada are incorporated by reference from the
Company's (SEC File No. 0-13760) Annual Report on Form
10-K for the Year Ended December 31, 1993, Part IV,
Item 14(c), Exhibit 4.09.
4.11 Third Amendment to Credit Agreement dated as of
April 15, 1994 among Rio Properties, Inc., Bank of
America National Trust and Savings Association, as
Agent and as a Bank, Bank of America, Nevada, First
Interstate Bank of Nevada, First Security Bank of
Idaho, N.A, NBD Bank, N.A., Societe Generale, and U.S.
Bank of Nevada; Memorandum of Amendments to Credit
Agreement and Amendment to Construction Deed of Trust
with Assignment of Rents and Fixture Filing dated as of
May 9, 1994 by Rio Properties, Inc. and Bank of America
National Trust and Savings Association are incorporated
herein by reference from the Company's (SEC File No. 0-
13760) Report on Form 10-Q for the Quarter Ended June
30, 1994, Part II, Item 6(a), Exhibit No. 4.02; and
Fourth Amendment to Credit Agreement among Rio
Properties, Inc., a Nevada corporation, as Borrower,
and Bank of America National Trust and Savings
Association, First Interstate Bank of Nevada, First
Security Bank of Idaho, N.A., NBD Bank, N.A., Societe
Generale, Bank of America, Nevada, U.S. Bank of Nevada,
Bank of Scotland and Midlantic Bank, N.A., as Lenders;
and Second Memorandum of Amendment to Credit Agreement
and Amendment to Construction Deed of Trust with
Assignment of Rents and Fixture Filing between Borrower
and Bank of America National Trust and Savings
Association, as agent for Lenders, dated December 16,
1994 are incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form 8-K
dated December 16, 1994, Item 7(c), Exhibit 10.01;
Fifth Amendment to Credit Agreement dated as of March
20, 1995, among Rio Properties, Inc., Bank of America
National Trust and Savings Association, as Agent and as
a Bank, First Interstate Bank of Nevada, First Security
Bank of Idaho, N.A., NBD Bank, N.A., Societe Generale,
Bank of America Nevada, U.S. Bank of Nevada, Bank of
Scotland and Midlantic Bank, N.A., as Banks.
10.01 First Amendment to Agreement dated October 25, 1993
by and among Rio Hotel & Casino, Inc., and Marnell Corrao,
Inc., Marnell Corrao Associates, Inc., MarCor
Partnership, Anthony A. Marnell II, Barrett Family
Revocable Living Trust dated December 18, 1981, James
A. Barrett, Jr. and Maureen M. Barrett incorporated
herein by reference from the Company's (SEC File No. 0-
13760) Annual Report on Form 10-K for the Year Ended
December 31, 1993, Part IV, Item 14(c), Exhibit 10.01; and
Agreement by and among MarCor Resorts Inc., Marnell Corrao,
Inc., Marnell Corrao Associates, Inc., MarCor Partnership,
The Anthony A. Marnell II Revocable Living Trust dated June
16, 1982, Anthony A. Marnell II, Sandra J. Marnell, Barrett
Family Revocable Living Trust dated December 18, 1981, James
A. Barrett, Jr. and Maureen M. Barrett dated February 22, 1989.
10.02 Agreement of Purchase and Sale by and among MarCor
Resorts, Inc., MarCor Resort Properties, Inc., MarCor
Development Company, Inc., MarCor Resorts, L.P.V and
Focus 2000, Inc., entered into December 30, 1991;
Agreement to Assume and Hold Harmless Note entered into
by and among MarCor Development Company, Inc. and Focus
2000, Inc. on December 30, 1991; are incorporated
herein by reference from the Company's (SEC File No. 2-
88147) Report on Form 8-K dated December 30, 1991, Item
7(c), Exhibit 2.01.
10.03 Completion Guaranty dated November 20, 1992, by
and among Rio Properties, Inc. and Marnell Corrao,
Inc., Marnell Corrao Associates, Inc., MarCor
Partnership, Focus 2000, Inc., The Anthony A. Marnell
II Revocable Living Trust dated June 16, 1982, Anthony
A. Marnell II, Barrett Family Revocable Living Trust
dated December 18, 1981, and James A. Barrett, Jr. and
Maureen M. Barrett, husband and wife, collectively as
Guarantors is incorporated herein by reference from the
Company's Registration Statement on Form S-2, Pre-
Effective Amendment No. 2, filed November 23, 1992,
File No. 33-53758, Part II, Item 16, Exhibit 10.13.
10.04 Memorandum of Understanding dated as of June 30,
1992, by and among MarCor Resorts, L.P. V, Focus 2000,
Inc., and Anthony A. Marnell II and James A. Barrett,
Jr. is incorporated herein by reference from the
Company's Registration Statement on Form S-2, Pre-
Effective Amendment No. 2, filed November 23, 1992,
File No. 33-53758, Part II, Item 16, Exhibit 10.14.
10.05 Interest Rate and Currency Exchange Agreement
dated as of July 28, 1993 between Rio Properties, Inc.
and Bank of America National Trust and Savings
Association is incorporated herein by reference from
the Company's (SEC File No. 0-13760) Annual Report on
Form 10-K for the Year Ended December 31, 1993, Part
IV, Item 14(c), Exhibit 10.11.
10.06 Architectural Agreement entered into as of
February 25, 1994 between Rio Hotel & Casino, Inc., as
Owner, and Anthony A. Marnell II, Chartered, as
Architect is incorporated herein by reference from the
Company's (SEC File No. 0-13760), Annual Report on Form
10-K for the Year Ended December 31, 1993, Part IV,
Item 14(c), Exhibit 10.12.
10.07 Building Contract entered into as of February 25,
1994 between Marnell Corrao Associates, Inc., as
General Contractor, and Rio Properties, Inc., as Owner
is incorporated herein by reference from the Company's
(SEC File No. 0-13760), Annual Report on Form 10-K for
the Year Ended December 31, 1993, Part IV, Item 14(c),
Exhibit 10.13.
10.08 Architectural Agreement entered into as of
February 9, 1995 between Rio Hotel & Casino, Inc., as
Owner, and Anthony A. Marnell, Chartered, as Architect.
10.09 Building Contract entered into as of February 27,
1995 between Marnell Corrao Associates, Inc., as
General Contractor, and Rio Properties, Inc., as Owner.
10.10 Real Estate Purchase and Sale Agreement entered
into as of January 25, 1995 between Focus 2000, Inc.,
as Seller, and Rio Properties, Inc., as Buyer.
10.11 Exchange Agreement entered into as of January 6,
1995 between Allied Building Materials, Cinderlane,
Inc., and Rio Hotel & Casino, Inc.
10.12 Letter Agreement regarding Rate Cap Transaction
dated August 11, 1994 between Bank of America National
Trust and Savings Association and Rio Properties, Inc.
21.01 List of the Company's Subsidiaries.
23.01 Consent of Arthur Andersen LLP.
27.01 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
The Company reported on Form 8-K dated
December 16, 1995 that it increased its borrowing
capacity by $40 million pursuant to an amendment to the
Rio Bank Loan (the "Amendment"). The Amendment also
extended the maturity date of the Rio Bank Loan to June
30, 2001. Moreover, the Company reported the
appointment of Susan L. Johnson as Secretary of the
Company.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To the Board of Directors of
Rio Hotel & Casino, Inc.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of Rio Hotel &
Casino, Inc. and subsidiaries included elsewhere in this annual
report and have issued our report thereon dated January 25, 1995.
Our report on the consolidated financial statements includes an
explanatory paragraph with respect to the change in the method of
accounting for income taxes as discussed in Note 7 to the
consolidated financial statements. Our audit was made for the
purpose of forming an opinion on the basic financial statements
taken as a whole. The financial statement schedules listed in
Item 14 are the responsibility of the Company's management and
are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state 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
January 25, 1995
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RIO HOTEL & CASINO, INC.
BALANCE SHEETS
December 31,
1994 1993
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 35,635 $ 229,442
Accounts receivable from affiliates 3,214,304 1,151,300
Total current assets 3,249,939 1,380,742
Other assets:
Investments in subsidiaries 153,227,263 137,834,206
Other, net 1,938,022 1,051,890
155,165,285 138,886,096
$158,415,224 $140,266,838
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ - - - $ 25,000
Total current liabilities - - - 25,000
Non-current liabilities due to 10,576,057 10,403,357
subsidaries
Stockholders' equity
Common Stock, $0.01 par value;
100,000,000 shares authorized (1994);
50,000,000 shares authorized (1993);
21,371,346 (1994) and 21,147,796 (1993)
shares issued and outstanding 213,714 211,478
Additional paid-in capital 117,214,582 115,182,541
Retained earnings 30,410,871 14,444,462
Total stockholders' equity 147,839,167 129,838,481
$158,415,224 $140,266,838
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RIO HOTEL & CASINO, INC.
STATEMENTS OF INCOME
For the Year Ended December 31,
1994 1993 1992
Revenues:
<S> <C> <C> <C>
Management and service fees $ - - - $ - - - $ 100,000
Interest Income 2,537 6,724 1,269,379
Other revenues 966,510 393,537 943,601
Subsidiary earnings 15,267,612 10,592,688 5,012,681
16,236,659 10,992,949 7,325,661
Costs and Expenses:
General and administrative 270,250 343,557 915,913
Depreciation and amortization - - - - - - 5,952
Interest expense - - - - - - 4,281
Other income and expenses - - - - - - 91,616
270,250 343,557 1,017,762
Net income $ 15,966,409 $ 10,649,392 $ 6,307,899
<PAGE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
RIO HOTEL & CASINO, INC.
STATEMENTS OF CASH FLOWS
Year Ended December 31,
1994 1993 1992
Cash flows from operating activities:
<S> <C> <C> <C>
Net Income $ 15,966,409 $ 10,649,392 $ 6,307,899
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Earnings from subsidiary investments (15,267,612) (10,592,688) (5,012,681)
Depreciation and amortization - - - - - - 5,952
Gain on sale of equipment, furniture and
improvements - - - - - - (4,784)
(Increase) decrease in assets:
Receivables 64,113 (79,821) 314,297
Prepaid expenses and other current assets - - - 13,811 11,726
Due (to) subsidiaries (1,820,498) (1,077,493) (1,565,760)
Other, net - - - 3,719 (3,578)
Decrease in liabilities:
Accounts payable-trade (25,000) (164,770) (207,291)
Accrued interest - - - - - - (553)
Net cash (used in) operating activities (1,082,588) (1,247,850) (154,773)
Cash flows from investing activities:
Proceeds from sale of equipment, furniture and - - - - - - 90,975
improvements
Investments in subsidiaries (14,390) (30,730,375) (29,485,305)
Net cash used in investing activities (14,390) (30,730,375) (29,394,330)
Cash flows from financing activities:
Net proceeds from common stock issuance 1,022,700 32,506,200 30,252,138
Common stock offerings cost (119,529) (456,821) (457,160)
Payments on notes and loans payable - - - - - - (62,107)
Net cash provided by financing activities 903,171 32,049,379 29,732,871
Net increase (decrease) in cash and cash equivalents (193,807) 71,154 183,768
Cash and cash equivalents, beginning of period 229,442 158,288 (25,480)
Cash and cash equivalents, end of period $ 35,635 $ 229,442 $ 158,288
</TABLE>
<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
December 31, December 31, December 31,
1994 1993 1992
<S> <C> <C> <C>
Cash payments made
for interest
(net of amounts
capitalized) $ --- $ --- $ 4,834
</TABLE>
Supplemental Schedule of Non-Cash Investing and Financing Activities
DECEMBER 31, 1994
Tax benefit arising from the exercise of stock options
granted under the NSOP totaled $886,132.
DECEMBER 31, 1993
Additional costs of issuing Common Stock financed through
payables totaled $12,194.
Costs of issuing Common Stock financed through payables
totaled $163,801.
Tax benefit arising from the exercise of stock options
granted under the Company's NSOP totaled $1,120,823.
Reduction of paid-in capital as a result of the
implementation of SFAS 109 totaled $823,152. This amount was
charged directly against equity because it reflects the tax
effect of SFAS 109 as it related to the gain on sale of assets to
affiliates of the Company's largest stockholder in December 1991,
which was also recorded directly to equity (Note 10).
DECEMBER 31, 1992
During 1992, the Company exchanged 728,461 stock exchange
rights for 728,461 shares of the Company's Common Stock. The
transactions resulted in the following changes:
Common Stock $ (7,285)
Notes Receivable 4,732,892
Due from Subsidiaries 113,319
Investments in Subsidiaries (4,732,892)
Additional Paid-In Capital (3,766,653)
Stock exchange rights 3,660,619
$ ---
On August 14, 1992, the Company, through a subsidiary,
acquired an additional 3.25% of the Rio Partnership in exchange
for 354,549 shares of the Company's Common Stock. On August 15,
1992, the Rio Partnership was merged into a subsidiary of the
Company, with an additional 109,092 shares of Common Stock of the
Company issued for the remaining 1% interests in the Rio
Partnership. The transactions resulted in the following changes:
Common Stock $ ($4,636)
Additional Paid-In Capital (3,124,941)
Due to Subsidiaries (42,554,852)
Investments in Subsidiaries 45,684,429
$ ---
Costs of issuing Common Stock, financed through payables,
totaled $91,750.
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
for the Three Years Ended December 31, 1994
Reserve for
Uncollectibles
<S> <C>
Balance, December 31, 1991 $ 169,485
Additions charged to income 470,439
Accounts written off, less recoveries (376,692)
Balance, December 31, 1992 263,232
Additions charged to income 523,491
Accounts written off, less recoveries (407,360)
Balance, December 31, 1993 379,363
Additions charged to income 512,999
Accounts written off, less recoveries (413,227)
Balance, December 31, 1994 $ 479,135
</TABLE>
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.
RIO HOTEL & CASINO, INC.
March 28, 1995 By:/S/ HARLAN D. BRAATEN
Harlan D. Braaten, Treasurer
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
SIGNATURE TITLE DATE
/S/ANTHONY A. MARNELL II Chairman of the Board March 28, 1995
Anthony A. Marnell II of Directors and Chief
Executive Officer
(Principal Executive
Officer)
/S/JAMES A. BARRETT, JR. President, Chief March 28, 1995
James A. Barrett, Jr. Operating Officer and
Director
/S/HARLAN D. BRAATEN Treasurer and Chief March 28, 1995
Harlan D. Braaten Financial Officer
(Principal Financial
Officer)
/S/JOHN A. STUART Director March 28, 1995
John A. Stuart
/S/THOMAS Y. HARTLEY Director March 28, 1995
Thomas Y. Hartley
/S/DEAN P. PETERSEN Director March 28, 1995
Dean P. Petersen
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
4.01 Amended and Restated Articles of Incorporation of Rio Hotel &
Casino, Inc. filed July 19, 1994, are incorporated herein by
reference from the Company's (SEC File No. 0-13760) Report on Form
10-Q for the Quarter Ended June 30, 1994, Part II, Item 6(a),
Exhibit 4.01.
4.02 Amended and Restated Bylaws of Rio Hotel & Casino, Inc.
certified March 3, 1993 are incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form 8-K for the Year
Ended December 31, 1992, Part IV, Item 14, Exhibit 4.02.
4.03 Specimen Common Stock Certificate for the Common Stock of Rio
Hotel & Casino, Inc. is incorporated herein by reference from the
Company's Registration Statement on Form S-3 filed on August 24,
1992, File No. 33-51092, Part II, Item 16, Exhibit 4.01.
4.04 Agreement and Plan of Exchange by and between Rio Hotel &
Casino, Inc., a Nevada corporation, and Rio Properties, Inc., a
Nevada corporation, dated August 14, 1992, is incorporated herein by
reference from the Company's Registration Statement on Form S-3 filed
on August 24, 1992, File No. 33-51092, Part II, Item 16,
Exhibit 2.01.
4.05 Form of Subscription and Exchange Agreement between Rio
Properties, Inc., a Nevada corporation, and MarCor Resorts, Inc., a
Nevada corporation, and subscriber is incorporated herein by
reference from the Company's Registration Statement on Form S-3 filed
on August 24, 1992, File No. 33-51092, Part II, Item 16,
Exhibit 2.02.
4.06 Rio Hotel & Casino, Inc. Non-Statutory Stock Option Plan as
amended September 5, 1991, as amended February 28, 1992 (to reflect
change in Company name) and as amended June 22, 1993, is incorporated
herein by reference from the Company's (SEC File No. 33-38752)
Registration Statement on Form S-8 filed on October 5, 1993, Item 8,
Exhibit 4.04.
4.07 Rio Hotel & Casino, Inc. Directors' Stock Option Plan As Amended
February 28, 1992 (to reflect change in Company name only) is
incorporated herein by reference from the Company's (SEC File No. 2-
88147) Annual Report on Form 10-K for the Year Ended December 31,
1991, Part IV, Item 14(c), Exhibit 4.07.
4.08 Rio Suite Hotel & Casino Employee Retirement Savings Plan Trust
Agreement dated February 11, 1991; First Amendment to the Rio Suite
Hotel & Casino Employee Retirement Savings Plan dated March 20, 1992,
effective April 1, 1992; Second Amendment to the Rio Suite Hotel &
Casino Employee Retirement Savings Plan dated March 20, 1992,
effective April 1, 1992; Third Amendment to the Rio Suite Hotel &
Casino Employee Retirement Savings Plan dated December 14, 1992,
effective August 15, 1992, and Rio Suite Hotel & Casino Employee
Retirement Savings Plan, Participant Loan Program dated March 19,
1992 are incorporated herein by reference from the Company's
Registration Statement on Form S-8, filed January 8, 1993, File No.
33-56860, Part II, Item 8, Exhibit 4.11; Rio Suite Hotel & Casino
Employment Retirement Savings Plan dated February 21, 1991 is
incorporated herein by reference from the Company's Registration
Statement on Form S-8, Amendment No. 1, filed February 3, 1993, File
No. 33-56860, Part II, Item 8, Exhibit 4.11; Fourth Amendment to the
Rio Suite Hotel & Casino Employee Retirement Savings Plan dated April
30, 1993, effective July 1, 1993; Fifth Amendment to the Rio Suite
Hotel & Casino Employee Retirement Savings Plan dated August 17,
1993, effective July 1, 1993; Sixth Amendment to the Rio Suite Hotel
& Casino Employee Retirement Savings Plan dated October 27, 1993,
effective October 25, 1993; Seventh Amendment to the Rio Suite Hotel
& Casino Employee Retirement Savings Plan Trust Agreement dated and
effective December 16, 1993; and Eighth Amendment to the Rio Suite
Hotel & Casino Employee Retirement Savings Plan dated May 3, 1994,
effective May 1, 1994 are incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form 10-Q for the Quarter
Ended June 30, 1994, Part II, Item 6(a), Exhibit 4.03; Ninth
Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings
Plan dated August 26, 1994, effective August 25, 1994; Tenth
Amendment to the Rio Suite Hotel & Casino Employee Retirement Savings
Plan dated and effective January 1, 1995; and Eleventh Amendment to
the Rio Suite Hotel & Casino Employee Retirement Savings Plan dated
and effective January 12, 1995.
4.09 Rio Hotel & Casino, Inc. 1995 Long-Term Incentive Plan as
adopted January 26, 1995.
4.10 Credit Agreement among Bank of America National Trust and
Savings Association, as agent for itself and other financial
institutions, as Lenders, and Rio Properties, Inc., as Borrower,
dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as
Borrower, in favor of Bank of America National Trust and Savings
Association, in the amount of $9,692,307.70 dated July 15, 1993; Line
A Note executed by Rio Properties, Inc., as Borrower, in favor of
Bank of America Nevada, in the amount of $3,230,769.23, dated July
15, 1993; Line A Note executed by Rio Properties, Inc., as Borrower,
in favor of Societe Generale, in the amount of $6,461,538.46, dated
July 15, 1993; Line A Note executed by Rio Properties, Inc., as
Borrower, in favor of NBD Bank, N.A., in the amount of $6,461,538.46,
dated July 15, 1993; Line A Note executed by Rio Properties, Inc., as
Borrower, in favor of First Security Bank of Idaho, N.A., in the
amount of $6,461,538.46, dated July 15, 1993; Line A Note executed by
Rio Properties, Inc., as Borrower, in favor of First Interstate Bank
of Nevada, N.A., in the amount of $6,461,538.46, dated July 15, 1993;
Line A Note executed by Rio Properties, Inc., as Borrower, in favor
of U.S. Bank of Nevada, in the amount of $3,230,769.23, dated July
15, 1993; Line B Note executed by Rio Properties, Inc., as Borrower,
in favor of Bank of America National Trust and Savings Association,
in the amount of $5,307,692.30 dated July 15, 1993; Line B Note
executed by Rio Properties, Inc., as Borrower, in favor of Bank of
America Nevada, in the amount of $1,769,230.77 dated July 15, 1993;
Line B Note executed by Rio Properties, Inc., as Borrower, in favor
of First Interstate Bank of Nevada, N.A., in the amount of
$3,538,461.54 dated July 15, 1993; Line B Note executed by Rio
Properties, Inc., as Borrower, in favor of First Security Bank of
Idaho, N.A., in the amount of $3,538,461.54 dated July 15, 1993; Line
B Note executed by Rio Properties, Inc., as Borrower, in favor of NBD
Bank, N.A., in the amount of $3,538,461.54 dated July 15, 1993; Line
B Note executed by Rio Properties, Inc., as Borrower, in favor of
Societe Generale, in the amount of $3,538,461.54 dated July 15, 1993;
Line B Note executed by Rio Properties, Inc., as Borrower, in favor
of U.S. Bank of Nevada, in the amount of $1,769,230.77 dated July 15,
1993; Revolving Note executed by Rio Properties, Inc., as Borrower,
in favor of Bank of America National Trust and Savings Association,
in the amount of $15,000,000 dated July 15, 1993; Revolving Note
executed by Rio Properties, Inc., as Borrower, in favor of Bank of
America Nevada, in the amount of $5,000,000 dated July 15, 1993;
Revolving Note executed by Rio Properties, Inc., as Borrower, in
favor of First Interstate Bank of Nevada, N.A., in the amount of
$10,000,000 dated July 15, 1993; Revolving Note executed by Rio
Properties, Inc., as Borrower, in favor of First Interstate Bank of
Idaho, N.A., in the amount of $10,000,000 dated July 15, 1993;
Revolving Note executed by Rio Properties, Inc., as Borrower, in
favor of NBD Bank, N.A., in the amount of $10,000,000 dated July 15,
1993; Revolving Note executed by Rio Properties, Inc., as Borrower,
in favor of Societe Generale, in the amount of $10,000,000 dated July
15, 1993; Revolving Note executed by Rio Properties, Inc., as
Borrower, in favor of U.S. Bank of Nevada, in the amount of
$5,000,000 dated July 15, 1993; Security Agreement executed by Rio
Properties, Inc., as Debtor, in favor of Bank of America National
Trust and Savings Association, as agent for itself and other
financial institutions, as Secured Party, dated July 15, 1993;
Construction Deed of Trust With Assignment of Rents and Fixture
Filing among Rio Properties, Inc., as Trustor, Equitable Deed
Company, as Trustee, and Bank of America National Trust and Savings
Association, as agent for itself and the other financial
institutions, as Beneficiary, dated July 15, 1993; Unsecured
Indemnity Agreement executed by Rio Properties, Inc., as Indemnitor,
in favor of Bank of America National Trust and Savings Association,
as agent for itself and other financial institutions, dated July 15,
1993; Guaranty executed by Rio Hotel & Casino, Inc., as Guarantor, in
favor of Bank of America National Trust and Savings Association, as
agent for itself and other financial institutions, as Guaranteed
Parties, dated July 15, 1993; and, Parent Guarantor Security
Agreement by Rio Hotel & Casino, Inc., as Debtor, in favor of Bank of
America National Trust and Savings Association, as agent for itself
and other financial institutions, as Secured Party, dated July 15,
1993 are incorporated by reference from the Company's (SEC File No.
2-88147) Report on Form 8-K dated July 15, 1993, Item 7(c), Exhibit
28.01; First Amendment to Credit Agreement dated as of October 25,
1993 and Second Amendment and Waiver to Credit Agreement dated as of
November 8, 1993 among Rio Properties, Inc., Bank of America National
Trust and Savings Association, Bank of America Nevada, First
Interstate Bank of Nevada, First Security Bank of Idaho, N.A., NBD
Bank, N.A., Societe Generale, and U.S. Bank of Nevada are
incorporated by reference from the Company's (SEC File No. 0-13760)
Annual Report on Form 10-K for the Year Ended December 31, 1993, Part
IV, Item 14(c), Exhibit 4.09.
4.11 Third Amendment to Credit Agreement dated as of April 15, 1994
among Rio Properties, Inc., Bank of America National Trust and
Savings Association, as Agent and as a Bank, Bank of America, Nevada,
First Interstate Bank of Nevada, First Security Bank of Idaho, N.A,
NBD Bank, N.A., Societe Generale, and U.S. Bank of Nevada; Memorandum
of Amendments to Credit Agreement and Amendment to Construction Deed
of Trust with Assignment of Rents and Fixture Filing dated as of May
9, 1994 by Rio Properties, Inc. and Bank of America National Trust
and Savings Association are incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form 10-Q for the Quarter
Ended June 30, 1994, Part II, Item 6(a), Exhibit No. 4.02; and Fourth
Amendment to Credit Agreement among Rio Properties, Inc., a Nevada
corporation, as Borrower, and Bank of America National Trust and
Savings Association, First Interstate Bank of Nevada, First Security
Bank of Idaho, N.A., NBD Bank, N.A., Societe Generale, Bank of
America, Nevada, U.S. Bank of Nevada, Bank of Scotland and Midlantic
Bank, N.A., as Lenders; and Second Memorandum of Amendment to Credit
Agreement and Amendment to Construction Deed of Trust with Assignment
of Rents and Fixture Filing between Borrower and Bank of America
National Trust and Savings Association, as agent for Lenders, dated
December 16, 1994 are incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form 8-K dated December
16, 1994, Item 7(c), Exhibit 10.01; Fifth Amendment to Credit
Agreement dated as of March 20, 1995, among Rio Properties, Inc.,
Bank of America National Trust and Savings Association, as Agent and
as a Bank, First Interstate Bank of Nevada, First Security Bank of
Idaho, N.A., NBD Bank, N.A., Societe Generale, Bank of America
Nevada, U.S. Bank of Nevada, Bank of Scotland and Midlantic Bank,
N.A., as Banks.
10.01 First Amendment to Agreement dated October 25, 1993 by and
among Rio Hotel & Casino, Inc., and Marnell Corrao, Inc.,
Marnell Corrao Associates, Inc., MarCor Partnership, Anthony A.
Marnell II, Barrett Family Revocable Living Trust dated December
18, 1981, James A. Barrett, Jr. and Maureen M. Barrett
incorporated herein by reference from the Company's (SEC File
No. 0-13760) Annual Report on Form 10-K for the Year Ended December
31, 1993, Part IV, Item 14(c), Exhibit 10.01; and Agreement by and
among MarCor Resorts Inc., Marnell Corrao, Inc., Marnell Corrao
Associates, Inc., MarCor Partnership, The Anthony A. Marnell II
Revocable Living Trust dated June 16, 1982, Anthony A. Marnell II,
Sandra J. Marnell, Barrett Family Revocable Living Trust dated
December 18, 1981, James A. Barrett, Jr. and Maureen M. Barrett dated
February 22, 1989.
10.02 Agreement of Purchase and Sale by and among MarCor Resorts,
Inc., MarCor Resort Properties, Inc., MarCor Development Company,
Inc., MarCor Resorts, L.P.V and Focus 2000, Inc., entered into
December 30, 1991; Agreement to Assume and Hold Harmless Note entered
into by and among MarCor Development Company, Inc. and Focus 2000,
Inc. on December 30, 1991; are incorporated herein by reference from
the Company's (SEC File No. 2-88147) Report on Form 8-K dated
December 30, 1991, Item 7(c), Exhibit 2.01.
10.03 Completion Guaranty dated November 20, 1992, by and among Rio
Properties, Inc. and Marnell Corrao, Inc., Marnell Corrao Associates,
Inc., MarCor Partnership, Focus 2000, Inc., The Anthony A. Marnell II
Revocable Living Trust dated June 16, 1982, Anthony A. Marnell II,
Barrett Family Revocable Living Trust dated December 18, 1981, and
James A. Barrett, Jr. and Maureen M. Barrett, husband and wife,
collectively as Guarantors is incorporated herein by reference from
the Company's Registration Statement on Form S-2, Pre-Effective
Amendment No. 2, filed November 23, 1992, File No. 33-53758, Part II,
Item 16, Exhibit 10.13.
10.04 Memorandum of Understanding dated as of June 30, 1992, by and
among MarCor Resorts, L.P. V, Focus 2000, Inc., and Anthony A.
Marnell II and James A. Barrett, Jr. is incorporated herein by
reference from the Company's Registration Statement on Form S-2, Pre-
Effective Amendment No. 2, filed November 23, 1992, File No. 33-
53758, Part II, Item 16, Exhibit 10.14.
10.05 Interest Rate and Currency Exchange Agreement dated as of July
28, 1993 between Rio Properties, Inc. and Bank of America National
Trust and Savings Association is incorporated herein by reference
from the Company's (SEC File No. 0-13760) Annual Report on Form 10-K
for the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit
10.11.
10.06 Architectural Agreement entered into as of February 25, 1994
between Rio Hotel & Casino, Inc., as Owner, and Anthony A. Marnell
II, Chartered, as Architect is incorporated herein by reference from
the Company's (SEC File No. 0-13760), Annual Report on Form 10-K for
the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.12.
10.07 Building Contract entered into as of February 25, 1994 between
Marnell Corrao Associates, Inc., as General Contractor, and Rio
Properties, Inc., as Owner is incorporated herein by reference from
the Company's (SEC File No. 0-13760), Annual Report on Form 10-K for
the Year Ended December 31, 1993, Part IV, Item 14(c), Exhibit 10.13.
10.08 Architectural Agreement entered into as of February 9, 1995
between Rio Hotel & Casino, Inc., as Owner, and Anthony A. Marnell,
Chartered, as Architect.
10.09 Building contract entered into as of February 27, 1995 between
Marnell Corrao Associates, Inc., as General Contractor, and Rio
Properties, Inc., as Owner.
10.10 Real Estate Purchase and Sale Agreement entered into as of
January 25, 1995 between Focus 2000, Inc., as Seller, and Rio
Properties, Inc., as Buyer.
10.11 Exchange Agreement entered into as of January 6, 1995 between
Allied Building Materials, Cinderlane, Inc., and Rio Hotel & Casino,
Inc.
10.12 Letter Agreement regarding Rate Cap Transaction dated August 11,
1994 between Bank of America National Trust and Savings Association
and Rio Properties, Inc.
21.01 List of the Company's Subsidiaries.
23.01 Consent of Arthur Andersen LLP.
27.01 Financial Data Schedule.
NINTH AMENDMENT TO THE
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
THE UNDERSIGNED do hereby adopt the following amendments to
the above stated plan. This amendment has been duly authorized
by the Board of Directors.
Effective August 25, 1994, the Rio Suite Hotel & Casino
Employment Retirement Savings Plan is amended as follows:
ARTICLE VII, AMENDMENT, TERMINATION, MERGERS AND LOANS, is
amended to add the following Section 7.0:
7.0 ACTION BY EMPLOYER
For purposes of Amendment, Termination, Merger and
Consolidation, as provided herein in Sections 7.1,
7.2 and 7.3, any action by the Employer shall
require the approval of:
(a) the Employer's Board of Directors; and
(b) each Plan Trustee.
IN WITNESS WHEREOF, the Company has duly executed this
amendment, this 26th day of August, 1994.
RIO PROPERTIES, INC. dba
RIO SUITE HOTEL & CASINO
BY: /s/Harlan D. Braaten
Harlan D. Braaten
Trustee
BY: /s/James A. Barrett, Jr.
James A. Barrett, Jr.
Trustee
BY: /s/Donald Marrandino
Donald Marrandino
Trustee
TENTH AMENDMENT TO THE
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
THE UNDERSIGNED, do hereby adopt the following amendments to
the above stated Plan. These amendments have been duly
authorized by the Board of Directors.
Effective January 1, 1995, the Rio Suite Hotel & Casino
Employment Retirement Savings Plan is amended as follows:
ARTICLE I, DEFINITIONS, Section 1.8 "COMPENSATION," is
amended, as to its first paragraph, to be:
"Compensation" with respect to any Participant means wages,
commissions, tips, and bonuses, and excludes any taxable or non-
taxable fringe benefits provided by the Employer. Amounts
contributed by the Employer under the within Plan, except for an
Employee's compensation that is deferred pursuant to Section 4.2,
shall not be considered as Compensation. Compensation for any
Self-Employed Individual shall be equal to his Earned Income."
IN WITNESS WHEREOF, the Company has duly executed this
amendment this 1st day of January, 1995.
RIO PROPERTIES, INC. dba
RIO SUITE HOTEL & CASINO
BY: /s/HARLAN D. BRAATEN
HARLAN D. BRAATEN
TRUSTEE
BY: /s/JAMES A. BARRETT, JR.
JAMES A. BARRETT, JR.
TRUSTEE
BY: /s/DONALD MARRANDINO
DONALD MARRANDINO
TRUSTEE
ELEVENTH AMENDMENT TO THE
RIO SUITE HOTEL & CASINO
EMPLOYMENT RETIREMENT SAVINGS PLAN
PART I. SECTION 401(a)(17)
LIMITATION AMENDMENT
TO RIO SUITE HOTEL & CASINO EMPLOYEE RETIREMENT SAVINGS PLAN
THE UNDERSIGNED do hereby adopt the following amendment to
the above stated plan. This amendment has been duly authorized by
the Board of Directors.
In addition to other applicable limitations set forth in the
plan, and notwithstanding any other provision of the plan to the
contrary, for plan provision of the plan to the contrary, for
plan years beginning on or after January 1, 1994, the annual
compensation of each employee taken into account under the plan
shall not exceed the OBRA '93 annual compensation limit. The OBRA
'93 annual compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance
with section 401(a)(17)(B) of the Internal Revenue code. The cost-
of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months,
the OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For plan year beginning on or after January 1, 1994, any
reference in this plan to the limitation under section 401(a)(17)
of the Code shall mean the OBRA '93 annual compensation limit set
forth in this provision.
If compensation for any prior determination period is taken
into account in determining an employee's benefits accruing in
the current plan year, the compensation for that prior
determination period is subject to the OBRA '93 annual
compensation limit in effect for that prior determination period.
For this purpose, for determination periods beginning before the
first day of the first plan year beginning on or after January 1,
1994, the OBRA '93 annual compensation limit is $150,000.
<PAGE>
IN WITNESS WHEREOF, the Company has duly executed this
amendment this 12th day of January, 1995.
RIO PROPERTIES, INC. dba
RIO SUITE HOTEL & CASINO
BY: /s/HARLAN D. BRAATEN
HARLAN D. BRAATEN
TRUSTEE
BY: /s/JAMES A. BARRETT, JR.
JAMES A. BARRETT, JR.
TRUSTEE
BY: /s/DONALD MARRANDINO
DONALD MARRANDINO
TRUSTEE
RIO HOTEL & CASINO, INC.
1995 LONG-TERM INCENTIVE PLAN
Adopted by the Board of Directors January 26, 1995
1. Purpose
The 1995 Long-Term Incentive Plan (the "Plan") is intended
to promote the interests of Rio Hotel & Casino, Inc. and its
subsidiaries (collectively the "Corporation") by offering those
executive officers, key employees and outside consultants of the
Corporation who are primarily responsible for the management,
growth and success of the business of the Corporation, the
opportunity to participate in a long-term incentive plan designed
to reward them for their services and to encourage them to
continue in the employ of or to provide services to the
Corporation.
2. Definitions
For all purposes of this Plan, the following terms shall
have the following meanings:
"Common Stock" means Rio Hotel & Casino, Inc. common stock,
$.01 par value.
"ISO" means incentive stock options qualified under
Section 422 of the Internal Revenue Code of 1986, as amended.
"Non-statutory Options" means stock options not qualified
under Section 422 of the Internal Revenue Code of 1986, as
amended.
"Restricted Shares" means shares of Common Stock which have
not been registered under federal securities law.
"Rio" means Rio Hotel & Casino, Inc.
"Subsidiary" means any company of which Rio owns, directly
or indirectly, the majority of the combined voting power of all
classes of stock.
3. Administration
The Plan shall be administered by a Committee (the
"Committee") of not less than two non-employee directors of Rio
selected by, and serving at the pleasure of, Rio's Board of
Directors ("Rio Board"). Directors who are also employees of Rio
or any Subsidiary, or who have been such employees within one
year, may not serve on the Committee.Such non-employee directors
shall be "disinterested" directors as provided under Rule 16b-
<PAGE>
3(c)(2)(i) of the Securities Exchange Act of 1934 ("Exchange
Act").
Plan participants may each be granted options to purchase up
to a maximum of 560,000 shares in any one (1) year. Initially,
the Corporation or Subsidiary will recommend to the Committee
persons to whom awards may be granted. The Committee then shall
have the authority, subject to the terms of the Plan, to
determine, based upon recommendations, the persons to whom awards
shall be granted ("Participants") the number of shares covered by
each award, the time or times at which awards shall be granted,
the timing of when awards shall vest, and the terms and
provisions of the instruments by which awards shall be evidenced,
and to interpret the Plan and make all determinations necessary
or to a person advisable for its administration. The Committee
shall notify the Rio Board of all decisions concerning awards
granted to Participants under the Plan, the interpretation
thereof, and determinations concerning its administration.
4. Eligibility
Only persons who are employees, outside consultants,
officers or employee-directors of the Corporation shall be
granted awards. An ISO may not be issued to a person who, at the
time of grant is a non-employee of the Corporation or to a person
who owns stock of the Corporation possessing more than 10% of the
total combined voting power of all classes of stock of the
Corporation or a subsidiary.
5. Stock Subject to the Plan
The stock from which awards may be granted shall be shares
of Common Stock. When Restricted Shares are vested or when
options are exercised, Rio may either issue authorized but
unissued Common Stock or Rio may transfer issued Common Stock
held in its treasury. Each of the respective boards of Rio and
Subsidiaries will fund the Plan to the extent so required to
provide Common Stock for the benefit of Participants. The total
number of shares of Common Stock which may be granted as
Restricted Shares or stock options shall not exceed, in the
aggregate, 2,000,000 shares in total. Any Restricted Shares
awarded and later forfeited are again subject to award under the
Plan. If an option expires, or is otherwise terminated prior to
its exercise, the shares of Common Stock covered by such an
option immediately prior to such expiration or other termination
shall continue to be available for grant under the Plan.
6. Granting of Options
The date of grant of options to Participants under the Plan
will be the date on which the options are awarded by the
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<PAGE>
Committee. The grant of any option to any Participant shall
neither entitle nor disqualify such Participant from
participating in any subsequent grant of options.
7. Terms and Conditions of Options
Options shall be designated Non-statutory options or ISOs
and shall be evidenced by written instruments approved by the
Committee. Such instruments shall conform to the following terms
and conditions:
7.1 Option price
The option price per share for an option shall be the
fair market value of the Common Stock under option on the day the
option is granted, which shall be an amount equal to the last
reported sale price of the Common Stock on such date on the
Nasdaq National Market, or such other stock exchange on which the
Common Stock may be listed from time to time. The option price
shall be paid (i) in cash or (ii) in Common Stock, including
Common Stock underlying the option being exercised, having a fair
market value equal to such option price or (iii) in a combination
of cash and Common Stock, including Common Stock underlying the
option being exercised. The fair market value of Common Stock
delivered to the Corporation pursuant to the immediately
preceding sentence shall be determined on the basis of the last
reported sale price of the Common Stock on the Nasdaq National
Market on the day of exercise or, if there was no such sale price
on the day of exercise, on the day next preceding the day of
exercise on which there was such a sale.
7.2 Term and exercise of options
No option shall be exercisable sooner than six months
and one day from the date of grant.
Except in special circumstances, each option shall
expire on the tenth anniversary of the date of its grant and
shall be exercisable according to a vesting schedule to be
determined by the Committee. However the Committee may include
in any option instrument, initially or by amendment at any time,
a provision making any installment or installments exercisable at
such earlier date, if the Committee deems such provision to be in
the interests of the Corporation or necessary to realize the
reasonable expectation of the optionee.
After becoming exercisable, each installment shall
remain exercisable until expiration or termination of the option.
After becoming exercisable an option may be exercised by the
optionee from time to time, in whole or part, up to the total
number of shares with respect to which it is then exercisable.
3
<PAGE>
The Committee may provide that payment of the option exercise
price may be made following delivery of the certificate for the
exercised shares.
Upon the exercise of a stock option, the purchase price
will be payable in full in cash or Common Stock, or a combination
thereof, as provided in Paragraph 7.1. Any shares of Common
Stock so assigned and delivered to Rio or the Subsidiary, as
applicable, in payment or partial payment of the purchase price
will be valued at Fair Market Value on the exercise date. Upon
the exercise of an option, Rio or a Subsidiary, as applicable,
shall withhold from the shares of Common Stock to be issued to
the Participant the number of shares necessary to satisfy Rio's
or the Subsidiary's, as applicable, obligation to withhold
federal taxes, such determination to be based on the shares' Fair
Market Value on the date of exercise.
7.3 Termination of employment or association
If an optionee ceases, other than by reason of death or
retirement as determined under any of the Corporation's pension
plans, if any, to be employed or associated with the Corporation,
all options granted to such optionee and exercisable on the date
of termination of employment or association shall expire on the
earlier of (i) the tenth anniversary after the date of grant or
(ii) three months after the day such optionee's employment or
association ends.
If an optionee retires, all options granted to such
optionee, and exercisable on the date of such optionee's
retirement shall expire on the earlier of (i) the tenth
anniversary after the date of grant or (ii) the second anni-
versary of the day of such optionee's retirement.
Any installment not exercisable on the date of such
termination or retirement shall expire and be thenceforth
unexercisable. Whether authorized leave of absence or absence in
military or governmental service may constitute employment for
the purposes of the Plan shall be conclusively determined by the
Committee.
4
<PAGE>
7.4 Exercise upon death of optionee
If an optionee dies, the option may be exercised, to
the extent of the number of shares that the optionee could have
exercised on the date of such death, by the optionee's estate,
personal representative or beneficiary who acquires the option by
will or by the laws of descent and distribution. Such exercise
may be made at any time prior to the earlier of (i) the tenth
anniversary after the date of grant or (ii) the first anniversary
of such optionee's death. On the earlier of such dates, the
option shall terminate.
7.5 Assignability
No option shall be assignable or transferable by the
optionee except by will or by the laws of descent and distri-
bution and during the lifetime of the optionee the option shall
be exercisable only by such optionee.
7.6 Limitation on Incentive Stock Options
During a calendar year, the aggregate fair market value
of the option stock (determined at the time of the ISO grant) for
which ISOs are exercisable by a person for the first time under
the Plan, cannot exceed $100,000.
8. Restricted Share Awards
8.1 Grant of Restricted Share Awards
The Committee will determine for each Participant the
time or times when Restricted Shares shall be awarded and the
number of shares of Common Stock to be covered by each Restricted
Share award.
8.2 Restrictions
Shares of Common Stock issued to a Participant as a
Restricted Share award will be subject to the following
restrictions ("Share Restrictions"):
(a) Except as set forth in Paragraphs 8.4 and 8.5, all
of the Restricted Shares subject to a Restricted Award will
be forfeited and returned to Rio or, in the event such
Restricted Shares were provided to the Participant from
shares of Common Stock purchased by the Subsidiary, then the
Restricted Shares will be returned to the Subsidiary. In
either case, all rights of the Participant to such
Restricted Shares will terminate without any payment of
consideration by Rio or the Subsidiary with which the
Participant is employed or associated, unless the
Participant maintains his or her employment or association
5
<PAGE>
(including consulting arrangements) with Rio or a Subsidiary
for a period of time determined by the Committee.
(b) During the longer of the restriction period
("Restriction Period") relating to a Restricted Share award
or a period of six months and one day from the date of the
award, none of the Restricted Shares subject to such award
may be sold, assigned, bequeathed, transferred, pledged,
hypothecated or otherwise disposed of in any way by the
Participant.
(c) The Committee may require the Participant to enter
into an escrow agreement providing that the certificates
representing Restricted Shares sold or granted pursuant to
the Plan will remain in the physical custody of Rio or the
employing Subsidiary or an escrow holder during the
Restriction Period.
(d) Each certificate representing a Restricted Share
sold or granted pursuant to the Plan will bear a legend
making appropriate reference to the restrictions imposed on
the Restricted Share.
(e) The Committee may impose other restrictions on any
Restricted Shares sold pursuant to the Plan as it may deem
advisable, including without limitation, restrictions under
the Securities Act of 1933, as amended, under the require-
ments of any stock exchange upon which such share or shares
of the same class are then listed and under any state secur-
ities laws or other securities laws applicable to such
shares.
8.3 Rights as a Stockholder
Except as set forth in Paragraph 8.2(b), the recipient
of a Restricted Share award will have all of the rights of a
stockholder of Rio with respect to the Restricted Shares,
including the right to vote the Restricted Shares and to receive
all dividends or other distributions made with respect to the
Restricted Shares.
8.4 Lapse of Restrictions at Termination of Employment
In the event of the termination of employment, or
association of a Participant during the Restriction Period by
reason of death, total and permanent disability, retirement as
determined under any of the Corporation's pension plans, if any,
or discharge from employment other than a discharge for cause,
the Committee may, at its discretion, remove Share Restrictions
on Restricted Shares subject to a Restricted Share award.
6
<PAGE>
Restricted Shares to which the Share Restrictions have
not so lapsed will be forfeited and returned to the Corporation
as provided in Paragraph 8.2(a).
8.5 Lapse of Restrictions at Discretion of the Committee
The Committee may shorten the Restriction Period or
remove any or all Share Restrictions if, in the exercise of its
absolute discretion, it determines that such action is in the
best interests of the Corporation and equitable to the
Participant.
8.6 Listing and Registration of Shares
The Corporation may, in its reasonable discretion,
postpone the issuance and/or delivery of Restricted Shares until
completion of stock exchange listing, or registration, or other
qualification of such Restricted Shares under any law, rule or
regulation.
8.7 Designation of Beneficiary
A Participant may, with the consent of the Committee,
designate a person or persons to receive, in the event of death,
any Restricted Shares to which such Participant would then be
entitled. Such designation will be made upon forms supplied by
and delivered to the Committee and may be revoked in writing by
the Participant. If a Participant fails effectively to designate
a beneficiary, then such Participant's estate will be deemed to
be the beneficiary.
8.8 Withholding of Taxes for Restricted Shares
When the Participant, as holder of the Restricted
Shares, recognizes income, either on the Date of Grant or the
date the restrictions lapse, Rio or a Subsidiary, as applicable,
shall withhold from the shares of Common Stock, the number of
shares necessary to satisfy Rio's or the Subsidiary's, as
applicable, obligation to withhold federal taxes, such
determination to be based on the shares' Fair Market Value as of
the date income is recognized.
9. Capital Adjustments
The number and price of Common Stock covered by each award
of options and/or Restricted Shares and the total number of
shares that may be granted or sold under the Plan shall be
proportionally adjusted to reflect, subject to any required
action by stockholders, any stock dividend or split,
recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other
similar corporate change.
7
<PAGE>
10. Change of Control
Notwithstanding the provisions of Section 9, in the event of
a change of control, all share restrictions on all Restricted
Shares will lapse and vesting on all unexercised stock options
will accelerate to the change of control date. For purposes of
this plan, a "Change of Control" of Rio shall be deemed to have
occurred at such time as (a) any "person" (as that term is used
in Section 13(d) and 14(d) of the Exchange Act), other the
Anthony A. Marnell II, James A. Barrett, or their affiliates,
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of Rio
representing 25.0% or more of the combined voting power of Rio's
outstanding securities ordinarily having the right to vote at the
election of directors; or (b) individuals who constitute the
Board of Directors of Rio on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent
to the date hereof whose election was approved by at least a
majority of the directors comprising the Incumbent Board, or
whose nomination or election was approved by a majority of the
Board of Directors of Rio serving under an Incumbent Board, shall
be, for purposes of this clause (b), considered as if he or she
were a member of the Incumbent Board; or (c) merger,
consolidation or sale of all or substantially all the assets of
Rio occurs, unless such merger or consolidation shall have been
affirmatively recommended to Rio's stockholders by a majority of
the Incumbent Board; or (d) a proxy statement soliciting proxies
from stockholders of Rio, by someone other than the current
management of Rio seeking stockholder approval of a plan of
reorganization, merger or consolidation of Rio with one or more
corporations as a result of which the outstanding shares of Rio's
securities are actually exchanged for or converted into cash or
property or securities not issued by Rio unless the
reorganization, merger or consolidation shall have been
affirmatively recommended to Rio's stockholders by a majority of
the Incumbent Board.
11. Approvals
The issuance of shares pursuant to this Plan is expressly
conditioned upon obtaining all necessary approvals from all
regulatory agencies from which approval is required, including
gaming regulatory agencies, and upon obtaining stockholder
ratification of the Plan.
12. Effective Date of Plan
The effective date of the Plan is January 26, 1995.
8
<PAGE>
13. Term and Amendment of Plan
This Plan shall expire on January 30, 2005 (except to
options and Restricted Shares outstanding on that date). Rio's
Board may terminate or amend the Plan in any respect at any time,
except that, without the approval of the holders of a majority of
the outstanding Common Stock: the total number of shares that
may be sold, issued or transferred under the Plan may not be
increased (except by adjustment pursuant to Section 9); the
provisions of Section 4 regarding eligibility may not be
modified; the purchase price at which shares may be offered
pursuant to options may not be reduced (except by adjustment
pursuant to Section 9); and the expiration date of the Plan may
not be extended and no change may be made which would cause the
Plan not to comply with Rule 16b-3 of the Exchange Act. No
action of the Rio Board or Rio's stockholders, however, may,
without the consent of an optionee or Restricted Shares grantee,
alter or impair such Participant's rights under any option or
Restricted Shares previously granted.
14. No Right of Employment
Neither the action of Rio in establishing this Plan, nor any
action taken by any Board of Rio or any Subsidiary or the
Committee, nor any provision of the Plan itself, shall be
construed to limit in any way the right of Rio to terminate a
Participant's employment or association at any time; nor shall it
be evidence of any agreement or understanding, expressed or
implied, that the Corporation will employ an employee in any
particular position nor ensure participation in any future
compensation or stock purchase program.
15. Withholding Taxes
Rio or the Subsidiary, as applicable, shall have the right
to deduct withholding taxes from any payments made pursuant to
the Plan or to make such other provisions as it deems necessary
or appropriate to satisfy its obligations to withhold federal,
state or local income or other taxes incurred by reason of
payments or the issuance of Common Stock under the Plan.
Whenever under the Plan, Common Stock is to be delivered upon
vesting of Restricted Shares or exercise of an option, the
Committee shall be entitled to require as a condition of delivery
that the Participant remit or provide for the withholding of an
amount sufficient to satisfy all federal, state and other
government withholding tax requirements related thereto.
16. Plan not a Trust
Nothing contained in the Plan and no action taken pursuant
to the Plan shall create or be construed to create a trust of any
kind, or a fiduciary relationship, between the Corporation and
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<PAGE>
any Participant, the executor, administrator or other personal
representative, or designated beneficiary of such Participant, or
any other persons. If and to the extent that any Participant or
such Participant's executor, administrator or other personal
representative, as the case may be, acquires a right to receive
any payment from the Corporation pursuant to the Plan, such right
shall be no greater than the right of an unsecured general
creditor of the Corporation.
17. Notices
Each Participant shall be responsible for furnishing the
Committee with the current and proper address for the mailing of
notices and delivery of agreements, Common Stock and cash
pursuant to the Plan. Any notices required or permitted to be
given shall be deemed given if directed to the person to whom
addressed at such address and mailed by regular United States
mail, first-class and prepaid. If any item mailed to such
address is returned as undeliverable to the addressee, mailing
will be suspended until the Participant furnishes the proper
address. This provision shall not be construed as requiring the
mailing of any notice or notification if such notice is not
required under the terms of the Plan or any applicable law.
18. Severability of Provisions
If any provision of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be con-
strued and enforced as if such provisions had not been included.
19. Payment to Minors, etc.
Any benefit payable to or for the benefit of a minor, an
incompetent person or other person incapable of receipting there-
for shall be deemed paid when paid to such person's guardian or
to the party providing or reasonably appearing to provide for the
care of such person, and such payment shall fully discharge the
Committee, the Corporation and other parties with respect
thereto.
20. Headings and Captions
The headings and captions herein are provided for reference
and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.
21. Controlling Law
This Plan shall be construed and enforced according to the
laws of the State of Nevada to the extent not preempted by
federal law, which shall otherwise control.
10
<PAGE>
22. Enforcement of Rights
In the event the Corporation or a Participant is required to
bring any action to enforce the terms of this Plan, the
prevailing party shall be reimbursed by the non-prevailing party
for all costs and fees, including actual attorney fees, for
bringing and pursuing such action.
11
FIFTH AMENDMENT TO
CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Fifth
Amendment") is dated as of March 20, 1995 among Rio Properties,
Inc., a Nevada corporation (the "Company"), the several financial
institutions party hereto ("Banks"), and Bank of America National
Trust and Savings Association, as agent for the Banks (the
"Agent" ), and amends that certain Credit Agreement dated as of
July 15, 1993, among the Company, the Banks and the Agent, as
amended by a First Amendment to Credit Agreement dated as of
October 25, 1993, a Second Amendment to Credit Agreement dated as
of November 8, 1993, a Third Amendment to Credit Agreement dated
as of April 15, 1994 and a Fourth Amendment to Credit Agreement
dated as of December 16, 1994 (as so amended, the "Agreement").
RECITAL
The Company has requested the Agent and the Banks to
amend the Agreement, and the Agent and Banks are willing to so
amend the Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
1. TERMS. All terms used herein shall have the same
meanings as in the Agreement unless otherwise defined herein. All
references to the Agreement herein shall mean the Agreement as
hereby amended
2. AMENDMENT TO AGREEMENT. The Banks and the Agent
hereby agree that the Agreement is hereby amended as follows;
2.1 Section 1.01 of the Agreement is amended by
inserting the following additional definition in proper
alphabetical order:
"'PHASE 4 EXPANSION' means the expansion on the
Real Property of the hotel casino property known as Rio
Hotel & Casino, including the addition of 141 guest
suites and three super suites, the expansion of meeting
room space and a restaurant, the expansion and
relocation of the fitness center, hair salon and
associated back office areas, and related furnishings,
fittings and equipment."
<PAGE>
2.2 Section 7.04(c) of the Agreement is amended by
deleting "$50,000,000" and inserting "$30,000.000" in lieu
thereof.
2.3 Section 7.13 of the Agreement is amended and
restated in its entirety as follows:
"7.13 CAPITAL EXPENDITURES. The Company and its
consolidated Subsidiaries shall not make or commit to
make Capital Expenditures (excluding the Construction
Costs of $37,000,000 for the Phase 2 Expansion,
$25,000,000 for the Eastside Expansion, $75,000,000 for
the Phase 3 Expansion and $20,000.000 for the Phase 4
Expansion in 1994, 1995 and 1996) exceeding an amount
equal to $7,500,000 plus the available but unused
Capital Expenditures from the prior fiscal year, but
not to exceed $l2,500,000 in any event."
3. REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to the Banks and Agent:
3.1 AUTHORITY. The Company has all necessary power
and has taken all corporate action necessary to make this Fifth
Amendment, the Agreement, and all other agreements and
instruments executed in connection herewith and therewith, the
valid and enforceable obligations they purport to be.
3.2 NO LEGAL OBSTACLE TO AGREEMENT. Neither the
execution of this Fifth Amendment, the making by the Company of
any borrowings under the Agreement, nor the performance of the
Agreement has constituted or resulted in or will constitute or
result in a breach of the provisions of any contract to which the
Company is a party, or the violation of any law, judgment, decree
or governmental order, rule or regulation applicable to the
Company, or result in the creation under any agreement or
instrument of any security interest, lien, charge, or encumbrance
upon any of the assets of the Company. No approval or
authorization of any governmental authority is required to permit
the execution, delivery or performance by the Company of this
Fifth Amendment, the Agreement, or the transactions contemplated
hereby or thereby, or the making of any borrowing by the Company
under the Agreement.
3.3 INCORPORATION OF CERTAIN REPRESENTATIONS. The
representations and warranties set forth in Article V of the
Agreement are true and correct in all respects on and as of the
date hereof as though made on and as of the date hereof.
3.4 DEFAULT. No Event of Default under the Agreement
has occurred and is continuing.
2
<PAGE>
4. CONDITIONS, EFFECTIVENESS. The effectiveness of
this Fifth Amendment shall be subject to the compliance by the
Company with its agreements herein contained, and to the delivery
of the following to the Agent in form and substance satisfactory
to the Agent and the Majority Banks:
4.1 CORPORATE RESOLUTIONS. A copy of a resolution or
resolutions passed by the Board of Directors of the Company,
certified by the Secretary or an Assistant Secretary of the
Company as being in full force and effect on the date hereof,
authorizing the amendments to the Agreement herein provided for
and the execution, delivery and performance of this Fifth
Amendment and any note or other instrument or agreement required
hereunder.
4.2 AUTHORIZED SIGNATORIES. A certificate, signed by
the Secretary or an Assistant Secretary of the Company dated the
date hereof, as to the incumbency of the person or persons
authorized to execute and deliver this Fifth Amendment and any
instrument or agreement required hereunder on behalf of the
Company.
4.3 OTHER EVIDENCE. Such other evidence with respect
to the Company or any other person as the Agent or any Bank may
reasonably request to establish the consummation of the
transactions contemplated hereby, the taking of all corporate
action in connection with this Fifth Amendment and the Agreement
and the compliance with the conditions set forth herein.
5. MISCELLANEOUS.
5.1 EFFECTIVENESS OF THE AGREEMENT. Except as hereby
expressly amended, the Agreement shall remain in full force and
effect, and is hereby ratified and confirmed in a11 respects.
5.2 WAIVERS. This Fifth Amendment is specific in time
and in intent and does not constitute, nor should it be construed
as, a waiver of any other right, power or privilege under the
Loan Documents, or under any agreement, contract, indenture,
document or instrument mentioned in the Loan Documents; nor does
it preclude any exercise thereof or the exercise of any other
right, power or privilege, nor shall any future waiver of any
right, power, privilege or default hereunder, or under any
agreement, contract, indenture, document or instrument mentioned
in the Loan Documents, constitute a waiver of any other default
of the same or of any other term or provision.
5.3 COUNTERPARTS. This Fifth Amendment may be
executed in any number of counterparts and all of such
3
<PAGE>
Counterparts taken together shall be deemed to constitute one and
the same instrument. This Fifth Amendment shall not become
effective until the Parent Guarantor, the Company, the Majority
Banks and the Agent shall have signed a copy hereof, whether the
same or counterparts and the same shall have been delivered to
the Agent.
5.4 JURISDICTION. This Fifth Amendment, and any
instrument or agreement required hereunder, shall be governed by
and construed under the laws Of the State of Nevada.
IN WITNESS WHEREOF, the parties hereto have caused this
Fifth Amendment to be duly executed and delivered as of the date
first written above.
RIO PROPERTIES, INC.
By:/s/James A. Barrett Jr.
Title:President
By:/s/Harlan D. Braaten
Title: SR VP and CFO, Treasurer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Agent
By:
L. Chenevert, Jr.
Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:
Jon Varnell
Vice President
FIRST INTERSTATE BANK OF NEVADA
By:
Title:
(signatures continue)
4
<PAGE>
FIRST SECURITY BANK OF IDAHO, N.A.
By:
Title:
NBD BANK, N.A.
By:
Title:
SOCIETE GENERALE
By:
Title:
BANK OF AMERICA NEVADA
By:
Title:
U.S. BANK OF NEVADA
By:
Title:
BANK OF SCOTLAND
By:
Title:
MIDLANTIC BANK, N.A.
By:
Title:
5
<PAGE>
CONSENT OF GUARANTOR
The undersigned hereby consents to the foregoing Fifth
Amendment to Credit Agreement dated as of March 20, 1995 and
confirms that its Parent Guaranty dated as of July 15, 1993
remains in full force and effect before and after giving effect
to this Fifth Amendment.
RIO HOTEL AND CASINO, INC.
By:/s/James A. Barrett Jr.
Title:President
By:/s/Harlan Braaten
Title:SR VP and CFO, Treasurer
AGREEMENT
Agreement made this 22nd day of February, 1989, by and
among MarCor Development Company, Inc., a Nevada corporation
(hereinafter the "Company") and Marnell Corrao, Inc., Marnell
Corrao Associates, Inc., Marcor Partnership, Anthony A. Marnell
II Revocable Living Trust dated June 16, 1982, Anthony A. Marnell
II and Sandra J. Marnell (hereinafter collectively "Marnell")
Barrett Family Revocable Living Trust dated December 18, 1981 and
James A. Barrett, Jr. and Maureen M. Barrett (hereinafter
collectively "Barrett") (Marnell and Barrett shall collectively
hereinafter be referred to as "Guarantors").
W I T N E S S E T H
Whereas, the Company's wholly-owned subsidiary, MarCor
Resort Properties, Inc., a Nevada corporation (hereinafter
"MarCor Resort") is general managing partner of MarCor Resorts,
L.P. V, a Nevada limited partnership (hereinafter "LPV") which is
developing, constructing and will operate that certain
hotel/casino property to be known as Rio Suite Hotel and Casino
in Las Vegas, Nevada (hereinafter "Rio"); and
Whereas, MarCor Resort, on behalf of LPV negotiated and
entered into that certain Construction and Term Loan Agreement
dated as of January 10, 1989 (hereinafter the "Loan") by and
among LPV and First Interstate Bank of Nevada, N.A., First
Interstate Bank of California, the Long-Term Credit Bank of Japan
(Los Angeles Agency) and First Security Bank of Idaho, N.A.,
(hereinafter the "Banks") to finance construction of the Rio; and
Whereas, Guarantors guarantee of completion of
construction and guarantee of payment and performance of the Loan
(hereinafter collectively the "Guarantees") was critical to, and
an integral part of, the willingness of the Banks to enter into
the Loan with LPV; and
Whereas, the Company has agreed to compensate
Guarantors for the significant value realized and to be realized
by the Company through its ownership of MarCor Resort and LPV as
a result of the completion of construction and opening of the
Rio, made possible by the Loan; and
Whereas, Guarantors are at substantial financial risk
as a result of the Guarantees, and the compensation to be granted
hereunder is fair and equitable.
Now, Therefore, in consideration of the Guarantees and
the mutual covenants contained herein, it is hereby agreed as
follows:
1. The Company agrees that a reasonable consideration to be
paid to Guarantors for making possible the Loan by entering into
the Guarantees is One Million Two Hundred Fifty Thousand Dollars
($1,250,000) (hereinafter the "Guarantor Compensation").
1
<PAGE>
2. The Company will pay the Guarantor Compensation on the following
terms and conditions:
(a) In each fiscal year of the Company commencing with the
fiscal year ended February 28, 1991, should MarCor Resort's net
income before taxes from the Rio, including the incentive fee, if
any, (hereinafter the "Rio Net Income") be equal to or greater
than Nine Hundred Thousand Dollars ($900,000), the Company will
pay to Guarantors the aggregate sum of Two Hundred Fifty Thousand
Dollars ($250,000).
(b) The payment of Two Hundred Fifty Thousand Dollars ($250,000)
will be paid to the Guarantors for each year subsequent to the
year ended February 28, 1991 in which the Rio Net Income is equal
to or greater than Nine Hundred Thousand Dollars ($900,000),
ending with the year ended February 28, 1995.
(c) All liability of the Company hereunder shall be satisfied
and fully paid after a total of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) has been paid to Guarantors.
(d) Should Guarantors not be paid a total of One Million Two
hundred Fifty Thousand Dollars ($1,250,000) hereunder after
calculating the payment due for the year ended February 28, 1995,
the obligation hereunder shall continue for two additional years,
on the same terms and conditions. If, after the calculations
described above have been made through the fiscal year ended
February 28, 1997, a total of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) has not been paid hereunder to
Guarantors, all further obligation of the Company to make such
payments to Guarantors shall cease.
3. The payment calculated in Paragraph 2 shall be paid to
Guarantors no later than 120 days after the end of each
respective fiscal year of the Company.
4. In the event, prior to 10 days after the fiscal year ending
February 28, 1997,
(a) there is a change in control of the Company;
(b) the Company sells, assigns or transfers its
controlling interest in MarCor Resort;
(c) MarCor Resort sells, assigns or transfers its general
partnership interest in LPV; or
(d) LPV sells, assigns or transfers its interest in the
Rio regardless of the performance of the Rio,
then all or any unpaid portion of the Guarantor Compensation
shall become immediately due and payable in full.
2
<PAGE>
5. Should the Company change its fiscal year during the periods
covered hereunder, the parties agree to amend this Agreement in
writing to make the relevant dates consistent with such change.
6. The Guarantors Compensation paid hereunder shall be
apportioned as follows:
Marnell Corrao, Inc. 0%
Marnell Corrao Associates, Inc. 0%
MarCor Partnership 0%
Anthony A. Marnell II Revocable Living
Trust dated June 16, 1982 84%
Anthony A. Marnell and Sandra J. Marnell 0%
Barrett Family Revocable Living Trust
dated December 18, 1981 16%
James A. Barrett, Jr. and Maureen J. Barrett 0%
7. If any term, condition, covenant or provision of this
Agreement, or any application thereof, shall be held by a Court
of competent jurisdiction to be invalid, void, or unenforceable,
all provisions, covenants and conditions of this Agreement and
all applications thereof, not held invalid, void or
unenforceable, shall continue in full force and effect and shall
in no way be affected, impaired or invalidated thereby.
8. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada.
9. The failure of either party to insist in any one or more
instances upon performance of any terms or conditions of this
Agreement shall be construed as a waiver of future performance of
any such term, covenant or condition but the obligations of
either party with respect thereto shall continue in full force
and effect.
10. This Agreement cannot be changed, modified, or discharged
orally, but only if consented to in writing by all parties.
11. In the event of any controversy or dispute arising
hereunder, the prevailing party in subsequent litigation shall be
permitted to recover attorney's fees from the other party.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the day and year first above
written.
Marnell Corrao, Inc. Marnell Corrao Associates,
Inc.
By /s/ Anthony A. Marnell II By /s/ Anthony A. Marnell II
MarCor Partnership Anthony A. Marnell II
Revocable Living Trust dated
June 16, 1982
By /s/ James A. Barrett, Jr. By /s/ Anthony A. Marnell II
Anthony A. Marnell II Sandra J. Marnell
By /s/ Anthony A. Marnell II By /s/ Sandra J. Marnell
Barrett Family Revocable James A. Barrett, Jr.
Living Trust dated
December 18, 1981
By /s/ James A. Barrett, Jr. By /s/ James A. Barrett, Jr.
Maureen M. Barrett
By /s/ Maureen M. Barrett
4
THE AMERICAN INSTITUTE OF ARCHITECTS
AIA Document B141
Standard Form of Agreement Between
Owner and Architect
1987 Edition
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION
WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION
OR MODIFICATION
AGREEMENT
made as of the Ninth day of February in the year of Nineteen
Hundred and Ninety-Five
BETWEEN the Owner: Rio Hotel & Casino, Inc.
3700 West Flamingo Road
Las Vegas, Nevada 89103
and the Architect: Anthony A. Marnell II, Chtd.
4495 South Polaris Avenue
Las Vegas, Nevada 89103
For the following Project:
<PAGE>
RIO PHASE IV EXPANSION
Architect's Project No. AAM 204-95
See Attachment #1
The Owner and Architect agree as set forth below.
TERMS AND CONDITIONS OF AGREEMENT BETWEEN OWNER AND ARCHITECT
ARTICLE 1
ARCHITECT'S RESPONSIBILITIES
1.1 ARCHITECT'S SERVICES
1.1.1 The Architect's services consist of those services
performed by the Architect, Architect's employees and Architect's
consultants as enumerated in Articles 2 and 3 of this Agreement
and any other services included in Article 12.
1.1.2 The Architect's services shall be performed as
expeditiously as is consistent with professional skill and care
and the orderly progress of the Work. Upon request of the Owner,
the Architect shall submit for the Owner's approval a schedule
for the performance of the Architect's services which may be
adjusted as the Project proceeds, and shall include allowances
for periods of time required for the Owner's review and for
approval of submissions by authorities having jurisdiction over
the Project. Time limits established by this schedule approved
by the Owner shall not, except for reasonable cause, be exceeded
by the Architect or Owner.
1.1.3 The services covered by this Agreement are subject to the
time limitations contained in Subparagraph 11.5.1.
ARTICLE 2
SCOPE OF ARCHITECT'S BASIC SERVICES
2.1 DEFINITION
2.1.1 The Architect's Basic Services consist of those described
in Paragraphs 2.2 through 2.6 and any other services identified
in Article 12 as part of Basic Services, and include normal
structural, mechanical and electrical engineering services.
2.2 SCHEMATIC DESIGN PHASE
2.2.1 The Architect shall review the program furnished by the
Owner to ascertain the requirements of the Project and shall
arrive at a mutual understanding of such requirements with the
Owner.
2.2.2 The Architect shall provide a preliminary evaluation of
the Owner's program, schedule and construction budget
requirements, each in terms of the other, subject to the
limitations set forth in subparagraph 5.2.1.
2.2.3 The Architect shall review with the Owner alternative
approaches to design and construction of the Project.
2.2.4 Based on the mutually agreed-upon program, schedule and
construction budget requirements, the Architect shall prepare,
for approval by the Owner, Schematic Design Documents consisting
of drawings and other documents illustrating the scale and
relationship of Project components.
2.2.5 The Architect shall submit to the Owner a preliminary
estimate of Construction Cost based concurrent area, volume or
other unit costs.
2.3 DESIGN DEVELOPMENT PHASE
2.3.1 Based on the approved Schematic Design Documents and any
adjustments authorized by the Owner in the program, schedule or
construction budget, the Architect shall prepare, for approval by
the Owner, Design Development Documents consisting of drawings
and other documents to fix and describe the size and character of
the Project as to architectural, structural, mechanical and
electrical systems, materials and such other elements as may be
appropriate.
2.3.2 The Architect shall advise the Owner of any adjustments to
the preliminary estimate of Construction Cost.
2.4 CONSTRUCTION DOCUMENTS PHASE
2.4.1. Based on the approved Design Development Documents and any
further adjustments in the scope or quality of the Project or in
the construction budget authorized by the Owner, the Architect
shall prepare, for approval by the Owner, Construction Documents
consisting of Drawings and Specifications setting forth in detail
the requirements for the construction of the Project.
2.4.2 SEE EXHIBIT "A"
2.4.3 The Architect shall advise the Owner of any adjustments to
previous preliminary estimates of Construction Cost indicated by
changes in requirements or general market conditions.
2.4.4 The Architect shall assist the Owner in connection with
the Owner's responsibility for filing documents required for the
approval of governmental authorities having jurisdiction over the
Project.
2.5 BIDDING OR NEGOTIATION PHASE
2.5.1 SEE EXHIBIT "A"
2.6 CONSTRUCTION PHASE - ADMINISTRATION OF THE CONSTRUCTION
CONTRACT
2.6.1 SEE EXHIBIT "A"
2.6.2 SEE EXHIBIT "A"
2.6.3 Duties, responsibilities and limitations of authority of
the Architect shall not be restricted, modified or extended
without written agreement of the Owner and Architect with consent
of the Contractor, which consent shall not be unreasonably
withheld.
2
<PAGE>
2.6.4 The Architect shall be a representative of and shall
advise and consult with the Owner (1) during construction until
final payment to the Contractor is due, and (2) as an Additional
Service at the Owner's direction from time to time during the
correction period described in the Contract for Construction.
The Architect shall have authority to act on behalf of the Owner
only to the extent provided in this Agreement unless otherwise
modified by written instrument.
2.6.5 The Architect shall visit the site at intervals
appropriate to the stage of construction or as otherwise agreed
by the Owner and Architect in writing to become generally
familiar with the progress and quality of the Work completed 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
shall not be required to make exhaustive or continuous on-site
inspections to check the quality or quantity of the Work. On the
basis of on-site observations as an architect, the Architect
shall keep the Owner informed of the progress and quality of the
Work, and shall endeavor to guard the Owner against defects and
deficiencies in the Work. (More extensive site representation
may be agreed to as an Additional Service as described in
Paragraph 3.2.)
2.6.6 The Architect shall not have control over or charge of and
shall not be responsible for construction means, methods,
techniques, sequences or procedures, or for safety precautions
and programs in connection with the Work, since these are solely
the Contractor's responsibility under the Contract for
Construction. The Architect shall not be responsible for the
Contractor's schedules or failure to carry out the Work in
accordance with the Contract Documents. The Architect shall not
have control over or charge of acts or omissions of the
Contractor, Subcontractors, or their agents or employees, or of
any other persons performing portions of the Work.
2.6.7 The Architect shall at all times have access to the Work
wherever it is in preparation or progress.
2.6.8 Except as may otherwise be provided in the Contract
Documents or when direct communications have been specially
authorized, the Owner and Contractor shall communicate through
the Architect. Communications by and with the Architect's
consultants shall be through the Architect.
2.6.9 SEE EXHIBIT "A"
2.6.10 SEE EXHIBIT "A"
2.6.11 The Architect shall have authority to reject Work which
does not conform to the Contract Documents. Whenever the
Architect considers it necessary or advisable for implementation
of the intent of the Contract Documents, the Architect will have
authority to require additional inspection or testing of the Work
in accordance with the provisions of the Contract Documents,
whether or not such Work is fabricated, installed or completed.
However, neither this authority of the Architect not 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.
2.6.12 The Architect shall review and approve or take other
appropriate action upon 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 shall be taken with such reasonable promptness
as to cause no delay in the Work or in the construction of the
Owner or of 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 fur substantiating
instructions for installation or performance of equipment or
systems designed by the Contractor, all of which remain the
responsibility of the Contractor to the extent required by the
Contract Documents. The Architect's review shall not constitute
approval of safety precautions or, unless otherwise specifically
stated by the Architect, of construction means, methods,
techniques, sequences or procedures. The Architect's approval of
a specific item shall not indicate approval of an assembly of
which the item is a component. When professional certification
of performance characteristics of materials, systems or equipment
is required by the Contract Documents, the Architect shall be
entitled to rely upon such certification to establish that the
materials, systems or equipment will meet the performance
criteria required by the Contract Documents.
2.6.13 SEE EXHIBIT "A"
2.6.14 SEE EXHIBIT "A"
3
<PAGE>
2.6.15 The Architect shall interpret and decide matters
concerning performance of the Owner and Contractor under the
requirements of the Contract Documents on written request of
either the Owner or Contractor. The Architect's response to such
requests shall be made with reasonable promptness and within any
time limits agreed upon.
2.6.16 Interpretations and decisions of the Architect shall be
consistent with the intent of and reasonably inferable from the
Contract Documents and shall be in writing or in the form of
drawings. When making such interpretations and initial
decisions, the Architect shall endeavor to secure faithful
performance by both Owner and Contractor, shall not show
partiality to either, and shall not be liable for results of
interpretations or decisions so rendered in good faith.
2.6.17 The Architect's decisions on matters relating to aesthetic
effect shall be final if consistent with the intent expressed in
the Contract Documents.
2.6.18 The Architect shall render written decisions within a
reasonable time on all claims, disputes or other matters in
question between the Owner and Contractor relating to the
execution or progress of the Work as provided in the Contract
Documents.
2.6.19 The Architect's decisions on claims, disputes or other
matters, including those in question between the Owner and
Contractor, except for those relating to aesthetic effect as
provided in Subparagraph 2.6.17, shall be subject to arbitration
as provided in this Agreement and in the Contract Documents.
ARTICLE 3
ADDITIONAL SERVICES
3.1 GENERAL
3.1.1 The services described in this Article 3 are not included
on Basic Services unless so identified in Article 12, and they
shall be paid for by the Owner as provided in this Agreement, in
addition to the compensation for Basic Services. The services
described under Paragraphs 3.2 and 3.4 shall only be provided if
authorized or confirmed in writing by the Owner. If services
described under Contingent Additional Services in Paragraph 3.3
are required due to circumstances beyond the Architect's control,
the Architect shall notify the Owner prior to commencing such
services. If the Owner deems that such services described under
Paragraph 3.3 are not required, the Owner shall give prompt
written notice to the Architect. If the Owner indicates in
writing that all or part of such Contingent Additional Services
are not required, the Architect shall have no obligation to
provide those services.
3.2 PROJECT REPRESENTATION BEYOND BASIC SERVICES
3.2.1. SEE EXHIBIT "A"
3.2.2 SEE EXHIBIT "A"
3.2.3 Through the observations by such Project Representatives,
the Architect shall endeavor to provide further protection for
the Owner against defects and deficiencies in the Work but the
furnishing of such project representation shall not modify the
rights, responsibilities or obligations of the Architect as
described elsewhere in this Agreement.
3.3. CONTINGENT ADDITIONAL SERVICES
3.3.1 Making revisions in Drawings, Specifications or other
documents when such revisions are:
.1 inconsistent with approvals or instructions
previously given by the Owner, including revisions
made necessary by adjustments in the Owner's
program or Project budget;
.2 required by the enactment or revision of codes,
laws or regulations subsequent to the preparation
of such documents; or
.3 due to changes required as a result of the Owner's
failure to render decisions in a timely manner.
3.3.2 Providing services required because of significant changes
in the Project including, but not limited to, size, quality,
complexity, the Owner's schedule, or the method of bidding or
negotiating and contracting for construction, except for services
required under Subparagraph 5.2.5.
3.3.3 Preparing Drawings, Specifications and other documentation
and supporting data, evaluating Contractor's proposals, and
providing other services in connection with Change Orders and
Construction Change Directives.
3.3.4 Providing services in connection with evaluating
substitutions proposed by the Contractor and making subsequent
revisions to Drawings, Specifications and other documentation
resulting therefrom.
3.3.5 Providing consultation concerning replacement of Work
damaged by fire or other cause during construction, and
furnishing services required in connection with the replacement
of such Work.
3.3.6 Providing services made necessary by the default of the
Contractor, by major defects or deficiencies in the Work of the
Contractor, or by failure of performance of either the Owner or
Contractor under the Contract for Construction.
3.3.7 SEE EXHIBIT "A"
3.3.8 Providing services in connection with a public hearing,
arbitration proceeding or legal proceeding except where the
Architect is party thereto.
3.3.9 Preparing documents for alternate, separate or sequential
bids or providing services in connection with bidding,
negotiation or construction prior to the completion of the
Construction Documents Phase.
3.4 OPTIONAL ADDITIONAL SERVICES
3.4.1 Providing analyses of the Owner's needs and programming
the requirements of the Project.
3.4.2 Providing financial feasibility or other special studies.
3.4.3 Providing planning surveys, site evaluations or
comparative studies of prospective sites.
4
<PAGE>
3.4.4 SEE EXHIBIT "A"
3.4.5 Providing services relative to future facilities, systems
and equipment.
3.4.6 Providing services to investigate existing conditions or
facilities or to make measured drawings thereof.
3.4.7 Providing services to verify the accuracy of drawings or
other information furnished by the Owner.
3.4.8 Providing coordination of construction performed by
separate contractors or by the Owner's own forces and
coordination of services required in connection with construction
performed and equipment supplied by the Owner.
3.4.9 Providing services in connection with the work of a
construction manager or separate consultants retained by the
Owner.
3.4.10 Providing detailed estimates of Construction Cost.
3.4.11 Providing detailed quantity surveys or inventories of
material, equipment and labor.
3.4.12 Providing analyses of owning and operating costs.
3.4.13 SEE EXHIBIT "A"
3.4.14 Providing services for planning tenant or rental spaces.
3.4.15 Making investigations, inventories of materials or
equipment, or valuations and detailed appraisals of existing
facilities.
3.4.16 Preparing a set of reproducible record drawings showing
significant changes in the Work made during construction based on
marked-up prints, drawings and other data furnished by the
Contractor to the Architect.
3.4.17 Providing assistance in the utilization of equipment or
systems such as testing, adjusting and balancing, preparation of
operation and maintenance manuals, training personnel for
operation and maintenance, and consultation during operation.
3.4.18 SEE EXHIBIT "A"
3.4.19 Providing services of consultants for other than
architectural, structural, mechanical and electrical engineering
portions of the Project provided as a part of Basic Services.
3.4.20 Providing any other services not otherwise included in
this Agreement or not customarily furnished in accordance with
generally accepted architectural practice.
ARTICLE 4
OWNER'S RESPONSIBILITY
4.1 The Owner shall provide full information regarding
requirements for the Project, including a program which shall set
forth the Owner's objectives, schedule, constraints and criteria,
including space requirements and relationships, flexibility,
expandability, special equipment, systems and site requirements.
4.2 The Owner shall establish and update an overall budget for
the Project, including the Construction Cost, the Owner's other
costs and reasonable contingencies related to all of these costs.
4.3 If requested by the Architect, the Owner shall furnish
evidence that financial arrangements have been made to fulfill
the Owner's obligations under this Agreement.
4.4 See Article 12
4.5 The Owner shall furnish surveys describing physical
characteristics, legal limitations and utility locations for the
site of the Project, and a written legal description of the site.
The surveys and legal information shall include, as applicable,
grades and lines of streets, alleys, pavements and adjoining
property and structures; adjacent drainage; rights-of-way,
restrictions, easements, encroachments, zoning, deed
restrictions, boundaries and contours of the site; locations,
dimensions and necessary data pertaining to existing buildings,
other improvements and trees; and information concerning
available utility services and lines, both public and private,
above and below grade, including inverts and depths. All the
information on the survey shall be referenced to a Project
benchmark.
4.6 See Exhibit "A"
4.6.1 The Owner shall furnish the services of other consultants
when such services are reasonably required by the scope of the
Project and are requested by the Architect.
4.7 The Owner shall furnish structural, mechanical, chemical,
air and water pollution tests, tests for hazardous materials, and
other laboratory and environmental tests, inspections and reports
required by law or the Contract Documents.
4.8 The Owner shall furnish all legal, accounting and
insurance counseling services as may be necessary at any time for
the Project, including auditing services the Owner may require to
verify the Contractor's Applications for Payment or to ascertain
how or for what purposes the Contractor has used the money paid
by or on behalf of the Owner.
4.9 The services, information, surveys and reports required by
Paragraphs 4.5 through 4.8 shall be furnished at the Owner's
expense, and the Architect shall be entitled to rely upon the
accuracy and completeness thereof.
4.10 Prompt written notice shall be given by the Owner to the
Architect if the Owner becomes aware of any fault or defect in
the Project or nonconformance with the Contract Documents.
4.11 The proposed language of certificates or certifications
requested of the Architect or Architect's consultants shall be
submitted to the Architect for review and approval at least 14
days prior to execution. The Owner shall not request
certifications that would require knowledge or services beyond
the scope of this Agreement.
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ARTICLE 5
CONSTRUCTION COST
5.1 DEFINITION
5.1.1 The Construction Cost shall be the total cost or estimated
cost to the Owner of all elements of the Project designed or
specified by the Architect.
5.1.2 The Construction Cost shall include the cost at current
market rates of labor and materials furnished by the Owner and
equipment designed, specified, selected or specially provided for
by the Architect, plus a reasonable allowance for the
Contractor's overhead and profit. In addition, a reasonable
allowance for contingencies shall be included for market
conditions at the time of bidding and for changes in the Work
during construction.
5.1.3 Construction Cost does not include the compensation of the
Architect and Architect's consultants, the costs of the land,
rights-of-way, financing or other costs which are the
responsibility of the Owner as provided in Article 4.
5.2 RESPONSIBILITY FOR CONSTRUCTION COST
5.2.1 Evaluations of the Owner's Project budget, preliminary
estimates of Construction Cost and detailed estimates of
Construction Cost, if any, prepared by the Architect, represent
the Architect's best judgment as a design professional familiar
with the construction industry. It is recognized, however, that
neither the Architect nor the Owner has control over the cost of
labor, materials or equipment, over the Contractor's methods of
determining bid prices, or over competitive bidding, market or
negotiating conditions. Accordingly, the Architect cannot and
does not warrant or represent that bids or negotiated prices will
not vary from the Owner's Project budget or from any estimate of
Construction Cost or evaluation prepared or agreed to by the
Architect.
5.2.2 No fixed limit of Construction Cost shall be established
as a condition of this Agreement by the furnished, proposal or
establishment of a Project budget, unless such fixed limit has
been agreed upon in writing and signed by the parties hereto. If
such a fixed limit has been established, the Architect shall be
permitted to include contingencies for design, bidding and price
escalation, to determine what materials, equipment, component
systems and types of construction are to be included in the
Contract Document, to make reasonable adjustments in the scope of
the Project and to include in the Contract Documents alternate
bids to adjust the Construction Cost to the fixed limit. Fixed
limits, if any, shall be increased in the amount of an increase
in the Contract Sum occurring after execution of the Contract for
Construction.
5.2.3 If the Bidding or Negotiation Phase has not commenced
within 90 days after the Architect submits the Construction
Documents to the Owner, any Project budget or fixed limit of
Construction Cost shall be adjusted to reflect changes in the
general level of prices in the construction industry between the
date of submission of the Construction Documents to the Owner and
the date on which proposals are sought.
5.2.4 If a fixed limit of Construction Cost (adjusted as
provided in Subparagraph 5.2.3) is exceeded by the lowest bona
fide bid or negotiated proposal, the Owner shall:
.1 give written approval of an increase in such fixed limit;
.2 authorize rebidding or renegotiating of the Project within a
reasonable time;
.3 if the Project is abandoned, terminate in accordance with
Paragraph 8.3; or
.4 cooperate in revising the Project scope and qualify as
required to reduce the Construction Cost.
5.2.5 If the Owner chooses to proceed under Clause 5.2.4.4,
the Architect, without additional charge, shall modify the
Contract Documents as necessary to comply with the fixed limit,
if established as a condition of this Agreement. The
modification of Contract Documents shall be the limit of the
Architect's responsibility arising out of the establishment of a
fixed limit. The Architect shall be entitled to compensation in
accordance with this Agreement for all services performed whether
or not the Construction Phase is commenced.
ARTICLE 6
USE OF ARCHITECT'S DRAWINGS, SPECIFICATIONS AND OTHER DOCUMENTS
6.1 The Drawings, Specifications and other documents prepared by
the Architect for this Project are instruments of the Architect's
service for use solely with respect to this Project and, unless
otherwise provided, the Architect shall be deemed the author of
these documents and shall retain all common law, statutory and
other reserved rights, including the copyright. The Owner shall
be permitted to retain copies, including reproducible copies, of
the Architect's Drawings, Specifications and other documents for
information and reference in connection with the Owner's use and
occupancy of the Project. The Architect's Drawings,
Specifications or other documents shall not be used by the Owner
or others on other projects, for additions to this Project or for
completion of this Project by others, unless the Architect is
adjudged to be in default under this Agreement, except by
agreement in writing and with appropriate compensation to the
Architect.
6.2 Submission or distribution of documents to meet official
regulatory requirements or for similar purposes in connection
with the Project is not to be construed as publication in
derogation of the Architect's reserved rights.
ARTICLE 7
ARBITRATION
7.1 Claims, disputes or other matters in question between the
parties to this Agreement arising out of or relating to this
Agreement or breach thereof shall be subject to and decided by
arbitration in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association
currently in effect unless the parties mutually agree otherwise.
7.2 Demand for arbitration shall be filed in writing with the
other party to this Agreement and with the American Arbitration
Association. A demand for arbitration shall be made within a
reasonable time after the claim, dispute or other matter in
question has arisen. In no event shall the demand for
arbitration be made after the date when institution of legal or
equitable proceedings based on such claim, dispute or other
matter in question would be barred by the applicable statutes of
limitations.
7.3 No arbitration arising out of or relating to this Agreement
shall include, by consolidation, joinder or in any other manner,
an additional person or entity not a party to this Agreement,
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except by written consent containing a specific reference to this
Agreement signed by the Owner, Architect, and any other person or
entity sought to be joined. Consent to arbitration involving an
additional person or entity shall not constitute consent to
arbitration of any claim, dispute or other matter in question not
described in the written consent or with a person or entity not
named or described therein. The foregoing agreement to arbitrate
and other agreements to arbitrate with an additional person or
entity duly consented to by the parties to this Agreement shall
be specifically enforceable in accordance with applicable law in
any court having jurisdiction thereof.
7.4 The award rendered by the arbitrator or arbitrators shall be
final, and judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof.
ARTICLE 8
TERMINATION, SUSPENSION OR ABANDONMENT
8.1 This Agreement may be terminated by either party upon not
less than seven (7) days' written notice should the other party
fail substantially to perform in accordance with the terms of
this Agreement through no fault of the party initiating the
termination.
8.2 If the Project is suspended by the Owner for more than 30
consecutive days, the Architect shall be compensated for services
performed prior to notice of such suspension. When the Project
is resumed, the Architect's compensation shall be equitably
adjusted to provide for expenses incurred in the interruption and
resumption of the Architect's services.
8.3 This Agreement may be terminated by the Owner upon not less
than seven (7) days' written notice to the Architect in the event
that the Project is permanently abandoned. If the Project is
abandoned by the Owner for more than 90 consecutive days, the
Architect may terminate this Agreement by giving written notice.
8.4 Failure of the Owner to make payments to the Architect in
accordance with this Agreement shall be considered substantial
nonperformance and cause for termination.
8.5 If the Owner fails to make payment when due the Architect
for services and expenses, the Architect may, upon seven (7)
days' written notice to the Owner, suspend performance of
services under this Agreement. Unless payment in full is
received by the Architect within seven (7) days of the date of
the notice, the suspension shall take effect without further
notice. In the event of a suspension of services, the Architect
shall have no liability to the Owner for delay or damage caused
the Owner because of such suspension of services.
8.6 In the event of termination not the fault of the Architect,
the Architect shall be compensated for services performed prior
to termination, together with Reimbursable Expenses then due and
all Termination Expenses as defined in Paragraph 8.7.
8.7 Termination Expenses are in addition to compensation for
Basic and Additional Services, and include expenses which are
directly attributable to termination. Termination Expenses shall
be computed as a percentage of the total compensation for Basic
Services and Additional Services earned to the time of
termination, as follows:
.1 Twenty percent (20%) of the total compensation for Basic and
Additional Services earned to date if termination occurs before
or during the predesign, site analysis, or Schematic Design
Phases; or
.2 Ten percent (10%) of the total compensation for Basic an
Additional Services earned to date if termination occurs during
the Design Development Phase; or
.3 Five percent (5%) of the total compensation for Basic and
Additional Services earned to date if termination occurs during
any subsequent phase.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 Unless otherwise provided, this Agreement shall be governed
by the law of the principal place of business of the Architect.
9.2 See Exhibit "A"
9.3 Causes of action between the parties to this Agreement
pertaining to acts or failures to act shall be deemed to have
accrued and the applicable statutes of limitations shall commence
to run not later than either the date of Substantial Completion
for acts or failures to act occurring prior to Substantial
Completion, or the date of issuance of the final Certificate for
Payment for acts or failures to act occurring after Substantial
Completion.
9.4 See Exhibit "A"
9.5 The Owner and Architect, respectively, bind themselves their
partners, successors, assigns and legal representatives to the
other party to this Agreement and to the partners, successors,
assigns and legal representatives of such other party with
respect to all covenants of this Agreement. Neither Owner nor
Architect shall assign this Agreement without the written consent
of the other.
9.6 This Agreement represents the entire and integrated
agreement between the Owner and Architect and supersedes all
prior negotiations, representations or agreements, either written
or oral. This Agreement may be amended only by written
instrument signed by both Owner and Architect.
9.7 Nothing contained in this Agreement shall create a
contractual relationship with or a cause of action in favor of a
third party against either the Owner or Architect.
9.8 Unless otherwise provided in this Agreement, the Architect
and Architect's consultants shall have no responsibility for the
discovery, presence, handling, removal or disposal of or exposure
of persons to hazardous materials in any form at the Project
site, including but not limited to asbestos, asbestos products,
polychlorinated biphenyl (PCB) or other toxic substances.
9.9 The Architect shall have the right to include
representations of the design of the Project, including
photographs of the exterior and interior, among the Architect's
promotional and professional materials. The Architect's
materials shall not include the Owner's confidential or
proprietary information if the Owner has previously advised the
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Architect in writing of the specific information considered by
the Owner to be confidential or proprietary. The Owner shall
provide professional credit for the Architect on the construction
sign and in the promotional materials for the Project.
ARTICLE 10
PAYMENTS TO THE ARCHITECT
10.1 DIRECT PERSONNEL EXPENSE
10.1.1 Direct Personnel Expense is defined as the direct
salaries of the Architect's personnel engaged on the Project and
the portion of the cost of their mandatory and customary
contributions and benefits related thereto, such as employment
taxes and other statutory employee benefits, insurance, sick
leave, holidays, vacations, pensions and similar contributions
and benefits.
10.2 REIMBURSABLE EXPENSES
10.2.1 Reimbursable Expenses are in addition to compensation
for Basic and Additional Services and include expenses incurred
by the Architect and Architect's employees and consultants in the
interest of the Project, as identified in the following Clauses.
10.2.1.1 Expense of transportation in connection with the
Project; expenses in connection with authorized out-of-town
travel; long-distance communications; and fees paid for securing
approval of authorities having jurisdiction over the Project.
10.2.1.2 See Exhibit "A"
10.2.1.3 If authorized in advance by the Owner, expense of
overtime work requiring higher than regular rates.
10.2.1.4 See Exhibit "A"
10.2.1.5 Expense of additional insurance coverage or limits,
including professional liability insurance, requested by the
Owner in excess of that normally carried by the Architect and
Architect's consultants.
10.2.1.6 See Exhibit "A"
10.3 PAYMENTS ON ACCOUNT OF BASIC SERVICES
10.3.1 An initial payment as set forth in Paragraph 11.1 is
the minimum payment under this Agreement.
10.3.2 Subsequent payments for Basic Services shall be made
monthly and, where applicable, shall be in proportion to services
performed within each phase of service, on the basis set forth in
Subparagraph 11.2.2.
10.3.3 If and to the extent that the time initially
established in Subparagraph 11.5.1 of this Agreement is exceeded
or extended through no fault of the Architect, compensation for
any services rendered during the additional period of time shall
be computed in the manner set forth in Subparagraph 11.3.2.
10.3.4 When compensation is based on a percentage of
Construction Cost and any portions of the Project are deleted or
otherwise not constructed, compensation for those portions of the
Project shall be payable to the extent services are performed on
those portions, in accordance with the schedule set forth in
Subparagraph 11.2.2, based on (1) the lowest bona fide bid or
negotiated proposal, or (2) if no such bid or proposal is
received, the most recent preliminary estimate of Construction
Cost or detailed estimate of Construction Cost for such portions
of the Project.
10.4 PAYMENTS ON ACCOUNT OF ADDITIONAL SERVICES
10.4.1 Payments on account of the Architect's Additional
Services and for Reimbursable Expenses shall be made monthly upon
presentation of the Architect's statement of services rendered or
expenses incurred.
10.5 PAYMENTS WITHHELD
10.5.1 No deductions shall be made from the Architect's
compensation on account of penalty, liquidated damages or other
sums withheld from payments to contractors, or on account of the
cost of changes in the Work other than those for which the
Architect has been found to be liable.
10.6 ARCHITECT'S ACCOUNTING RECORDS
10.6.1 Records of Reimbursable Expenses and expenses
pertaining to Additional Services and services performed on the
basis of a multiple of Direct Personnel Expense shall be
available to the Owner or the Owner's authorized representative
at mutually convenient times.
ARTICLE 11
BASIS OF COMPENSATION
The Owner shall compensate the Architect as follows:
11.1 An initial payment of ______________________________________
Dollars ($__________) shall be made upon execution of this
Agreement and credited to the Owner's account at final payment.
11.2 BASIC COMPENSATION
See Attachment #2
11.2.1 For Basic Services, as described in Article 2, and any
other services included in Article 12 as part of Basic Services,
Basic Compensation shall be computed as follows:
(Insert basis of compensation, including stipulated sums,
multiples or percentages, and identify phases to which particular
methods of compensation apply, if necessary)
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11.2.2 Where compensation is based on a stipulated sum or
percentage of Construction Cost, progress payments for Basic
Services in each phase shall total the following percentages of
the total Basic Compensation payable:
(Insert additional phases as appropriate.)
Schematic Design Phase: Ten Percent (10%)
Design Development Phase: Twenty Percent (20%)
Construction Documents Phase: Sixty Percent (60%)
Bidding or Negotiation Phase: Zero Percent ( 0%)
Construction Phase: Ten Percent (10%)
Total Basic Compensation One Hundred Percent (100%)
11.3 COMPENSATION FOR ADDITIONAL SERVICES
11.3.2 FOR PROJECT REPRESENTATION BEYOND BASIC SERVICES, as
described in Paragraph 3.2, compensation shall be computed as
follows:
Compensation shall be paid to the Architect in an
amount and at the times as may be agreed upon between
Owner and Architect, should Project representation
beyond Basic Services be required and authorized by
Owner.
11.3.2 FOR ADDITIONAL SERVICES OF THE ARCHITECT, as described
in Articles 3 and 12, other than (1) Additional Project
Representation, as described in Paragraph 3.2, and (2) services
included in Article 12 as part of Basic Services, but excluding
services of consultants, compensation shall be computed as
follows:
a. Total hours per classifications multiplied (x) by hourly
rate;
b. Total payroll of all classifications multiplied (x) by .30
(insurance/payroll tax burden);
c. Total payroll including payroll taxes multiplied (x) by one
and one-half times.
11.3.3 FOR ADDITIONAL SERVICES OF CONSULTANTS, including
additional structural, mechanical and electrical engineering
services and those provided under Subparagraph 3.4.19 or
identified in Article 12 as part of Additional Services, a
multiple of One and one-quarter (1.25) times the amounts billed
to the Architect for such services.
11.4 REIMBURSABLE EXPENSES
11.4.1 FOR REIMBURSABLE EXPENSES, as described in Paragraph
10.2, and any other items included in Article 12 as Reimbursable
Expenses, a multiple of One and one-quarter (1.25) times the
expenses incurred by the Architect, the Architect's employees and
consultants in the interest of the Project.
11.5 ADDITIONAL PROVISIONS
11.5.1 IF THE BASIC SERVICES covered by this Agreement have
not been completed within twenty (20) months of the date hereof,
through no fault of the Architect, extension of the Architect's
services beyond that time shall be compensated as provided in
Subparagraphs 10.3.3 and 11.3.2.
11.5.2 Payments are due and payable Twenty-one (21) days from
the date of the Architect's invoice. Amounts unpaid Twenty-two
(22) days after the invoice date shall bear interest at the rate
entered below, or in the absence thereof at the legal rate
prevailing from time to time at the principal place of business
of the Architect.
Current prime rate of interest plus 2% as that rate is
established by Bank of America of Nevada.
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11.5.3 The rates and multiples set forth for Additional
Services shall be annually adjusted in accordance with normal
salary review practices of the Architect.
ARTICLE 12
OTHER CONDITIONS OR SERVICES
ARCHITECT'S RELATIONSHIP WITH CONTRACTOR
12.1 The Owner acknowledges that the Architect on this Project is
a professional corporation which is owned by Anthony A. Marnell
II, who, in addition to being a licensed Architect within the
State of Nevada, is also the majority stockholder of Marnell
Corrao Associates, Inc., the Contractor on this Project. The
Owner acknowledges this relationship between Architect and
Contractor and accepts in every respect this close association
between the two of them. In light of the special relationship
existing between the Architect and Contractor, the Owner agrees
that in case of termination of the Contractor for whatever
reason, the terms and conditions of this Agreement will, at the
option of the Architect, be renegotiated. The Owner and
Architect agree that all documents provided herein shall be
solely for use on this Project, and the Owner understands and
agrees that Marnell Corrao Associates, Inc., shall be the General
Contractor on this Project.
OWNER'S PROJECT REPRESENTATIVE
12.2 The Owner shall designate representative(s) authorized to
act in the Owner's behalf with respect to this Project. The Owner
of such authorized representative(s) shall examine the documents
submitted by the Architect and shall render decisions pertaining
thereto promptly, to avoid unreasonable delay in the progress of
the Architect's services. For purposes of this Agreement, the
representative(s) shall be Donald Marrantino.
INSURANCE
12.3 The Architect shall effect and maintain insurance to protect
himself from claims under Workmen's Compensation Acts; claims for
damages because of bodily injury including personal injury,
sickness or disease, or death of any of his employees, and for
claims for damages because of injury to or destruction of
tangible property including loss of use resulting therefrom; and
from claims arising out of the performance of professional
services caused by any errors, omissions or negligent acts of the
Architect. Architect shall secure Professional Liability
Insurance in the amount of ONE MILLION DOLLARS ($1,000,000) and
shall remain in full force and effect during the entire course of
the work and shall endeavor to maintain that dollar amount of
insurance for a period of seven (7) years after completion of the
Project.
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OTHER SERVICES
12.4 The Architect shall furnish the services to provide and be
responsible for any submissions and/or the coordination required
to gain approval by any public or private company and/or other
governmental agencies having jurisdiction over the Project
including the Paradise Town Board, Clark County Planning
Commission, Clark County Commissioners, Clark County Department
of Building and Safety, Clark County Fire Department, State of
Nevada Fire Marshall, Las Vegas Valley Water District, Clark
County Sanitation District, Nevada Power Company, Central
Telephone Company and Southwest Gas Corporation. The Architect
hereby acknowledges that other professional Architectural and
Engineering services provided for within this Agreement which are
beyond the normal Architectural, Structural, Mechanical and
Electrical Engineering services for the Project are as follows:
A. Soils Investigation Report and Foundation Engineering
B. Civil Engineering
C. Food and Beverage Service Equipment Design and
Specifications
D. Traffic Investigation and Report
E. Hotel Tower Glazing System Design and Specifications
F. Life Safety Systems Design and Consultation
G. Interior and Exterior Signage/Lighting Design
Consultation
H. Sound and Page Design and Consultation
I. Interior Design Documents/Specifications and
Consultation
J. Landscape Design Documents and Specifications
K. Drainage Study and Update
Where individuals are specifically designated, Owner and
Architect grant each other the right to substitute other
individuals in the event of death, disability, or dismissal with
approval of the other party with such approval not to be
unreasonably withheld.
The Architect shall provide lien releases for the Project from
all consultants upon completion and final payment for the Project
to Architect, only if requested by Owner.
OTHER OWNER'S RESPONSIBILITIES
12.5 The Owner shall furnish the services of a Professional
Engineer to provide those services which may include a Traffic
Report and/or a Drainage Flood Report should they be required to
gain approval by any public or private company and/or other
governmental agencies having jurisdiction over the Project.
This Agreement entered into as of the day and year first written
above.
OWNER ARCHITECT
/s/James A. Barrett Jr. /s/Anthony Marnell
(Signature) (Signature)
____________________________ _____________________________
(Printed name and title) (Printed name and title)
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ATTACHMENT #1
WHEREAS, the Owner intends to design, construct and maintain
a new twenty-one (21) story hotel tower; addition to the existing
Phase II Tower and Casino Level additions as follows:
I. SITE
A. ROADWAYS
- Realign Driveway at existing Dock due to the New
Tower/Purchasing Office Layout.
B. SURFACE PARKING
- Realign Self Parking Lot at the end of Phase II
Tower.
C. LANDSCAPE
- Landscape modifications as required for new
construction as part of the expansion.
II. HOTEL/CASINO BUILDING
A. BASEMENT
NEW
1. Approximately 5,000 square feet of new Basement
(to include):
- Relocated Time Office
- New Accounting Storage
- New Banquet Storage
REMODEL AREAS
2. Remodel of existing Basement (to include):
- Remodel of Human Resources
- Remodel Employee Information
B. FIRST FLOOR
NEW
- Approximately 27,490 square feet of new addition:
1. Buzio's Expansion (2,900 s.f.)
- Expanded kitchen
- Expanded seating
- Relocated Entry
2. New Spa and Exercise Rooms (6,670 s.f.)
- Spa to include Men's and Women's Locker Rooms
- Two (2) Massage Rooms
- Two (2) Saunas
3. New Salon (2,000 s.f.)
- Relocated from Rio East Casino
4. New enclosed Public Corridor (2,340 s.f.)
- Extension of existing
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5. Meeting Rooms (5,430 s.f.)
- Relocate operable walls to allow for the
addition of one (1) meeting room
6. New Public Men's/Women's Restrooms (1,170 s.f.)
- Located in existing Meeting Room next to
Beach Cafe
7. New Purchasing Office (1,430 s.f.)
8. New Receiving, Cold Storage, and Freezer (4,612
s.f.)
- Provide one (1) additional Receiving Dock
- Cold Storage (1,861 s.f.)
- Freezer (838 s.f.)
9. New Banquet Storage (964 s.f.)
REMODEL AREAS
1. Buzio's - remodel existing Seafood Bar, Kitchen,
and relocate entry
2. New Bar at Rio Beach Cafe
3. Remodel existing Banquet Kitchen
4. Remodel existing Meeting Rooms. (End Meeting Room
where Public Restrooms were added and Meeting Room where stage
platform and bar were deleted)
5. Remodel existing Banquet Storage
6. Remodel existing Liquor Storage and receiving
C. SECOND FLOOR
NEW
- Approximately 5,103 square feet
1. New conference Rooms (2,700 s.f.)
2. Relocated Security Office (100 s.f.)
3. Extended Corridor
REMODELED AREAS
1. Existing Exercise Room to become new Conference
Room
D. PHASE IV TOWER FLOORS
1. Levels 3 - 20
- Approximately 5,103 s.f. each
- 141 Typical Suites
- 3 Super Suites
Total = 144 Keys
For purposes of this Agreement, the Scope of Work delineated
above shall be titled: Rio Phase IV Expansion, Architect's
Project AAM 204-95, hereinafter referred to as the "Project".
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ATTACHMENT #2
BASIC COMPENSATION
11.2.1 Basic Compensation for Basic Services, as described in
Paragraphs 1.1 through 1.5, and any other services included in
Article 12 as a part of Basic Services, Basic Compensation shall
be computed as follows:
Basic Compensation shall be the Architectural and Engineering
Fee, calculated at four percent (4%) of actual construction costs
including specialty equipment (i.e. food and bar service
equipment, elevators, lighting, sound equipment, etc., and actual
F.F. & E. buyout, which includes: wallcovering, carpet,
specialty lighting, fixtures, furnishings, millwork and
finishes). This Architectural and Engineering Fee would equal to
four percent (4%) of the Construction/F.F. & E. costs, or Seven
Hundred Thirty-One Thousand Dollars ($731,000.00).
Owner shall be invoiced monthly in proportion to "Basic Services"
rendered by the Architect, and shall be invoiced separately for
any expenses incurred for Additional Services of the Architect,
Additional Services of Consultants and Reimbursable Expenses.
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EXHIBIT "A"
2.4.2 The Architect shall assist the Owner in the preparation
of necessary bidding information, bidding forms, the Conditions
of the Contract, and the form of Agreement between the Owner and
Contractor.
Amended to read:
2.4.2 The Architect shall assist the Owner, only if requested
by the Owner, in the preparation of the necessary bidding
information, bidding forms, the Conditions of the Contract, and
the form of Agreement between the Owner and Contractor.
2.5.1 The Architect, following the Owner's approval of the
Construction Documents and of the latest preliminary estimate of
Construction Cost, shall assist the Owner in obtaining bids of
negotiated proposals and assist in awarding and preparing
contracts of construction.
Amended to read:
2.5.1 The Architect, following the Owner's approval of the
Construction Documents and of the latest preliminary estimate of
Construction Cost, shall assist the Owner and negotiated
Contractor, only if requested by Owner, in obtaining bids of
negotiated proposals and assist in awarding and preparing
contracts for construction.
2.6.1 The Architect's responsibility to provide Basic
Services for the Construction Phase under this Agreement
commences with the award of the Contract for Construction and
terminates at the earlier of the issuance to the Owner of the
final Certificate for Payment or 60 days after the date of
Substantial Completion of the Work, unless extended under the
terms of Subparagraph 10.3.3.
Amended to read:
2.6.1 The Architect's responsibility to provide Basic
Services for the Construction Phase under this Agreement
commences with the award of the Contract for Construction and
terminates at the earlier of the issuance to the Owner of the
Final Certificate for Payment by the Contractor or 60 days after
the date of Substantial Completion of the Work, unless extended
under the terms of Subparagraph 10.3.3.
2.6.2 The Architect shall provide administration of the
Contract for Construction as set forth below and in the edition
of AIA Document A201, General Conditions of the Contract for
Construction, current as of the date of this Agreement, unless
otherwise provided in this Agreement.
Amended to read:
2.6.2 The Architect shall provide administration of the
Contract for Construction as set forth below, unless otherwise
provided in this Agreement.
2.6.9 Based on the Architect's observations and evaluations
of the Contractor's Applications for Payment, the Architect shall
review and certify the amounts due the Contractor.
Amended to read:
2.6.9 Based on the Architect's observations and evaluations
of the Contractor's Applications for Payment, the Architect shall
review and certify the amounts due the Contractor, only if
requested by the Owner.
2.6.10 Delete.
15
<PAGE>
2.6.13 The Architect shall prepare Change Orders and
Construction Change Directives, with supporting documentation and
data if deemed necessary by the Architect as provided in
Subparagraphs 3.1.1 and 3.3.3 for the Owner's approval and
execution in accordance with the Contract Documents, and may
authorize minor changes in the Work not involving an adjustment
in the Contract Sum or an extension of the Contract Time which
are not inconsistent with the intent of the Contract Documents.
Amended to read:
2.6.13 The Architect may authorize minor changes in the Work
not involving an adjustment in the Contract Sum or an extension
of the Contract Time which are not inconsistent with the intent
of the Contract Documents.
2.6.14 The Architect shall conduct inspections to determine
the date or dates of Substantial Completion and the date of final
completion, shall receive and forward to the Owner for the
Owner's review and records written warranties and related
documents required by the Contract Documents and assembled by the
Contractor, and shall issue a final Certificate for Payment upon
compliance with the requirements of the Contract Documents.
Amended to read:
2.6.14 The Architect shall forward to the Owner for the
Owner's review and records, any other written warranties and
related documents required by the Contract Documents and not
received, assembled and issued directly to the Owner by the
Contractor.
3.2.1 If more extensive representation at the site than is
described in Subparagraph 2.6.5 is required, the Architect shall
provide one or more Project Representatives to assist in carrying
out such additional on-site responsibilities.
Amended to read:
3.2.1 If more extensive representation at the site than is
described in Subparagraph 2.6.5 is required by the Owner, the
Architect shall provide one or more Project Representatives to
assist in carrying out such additional on-site responsibilities.
3.2.2 Project Representatives shall be selected, employed and
directed by the Architect, and the Architect shall be compensated
therefor as agreed by the Owner and Architect. The duties,
responsibilities and limitations of authority of Project
Representatives shall be as described in the edition of AIA
Document B352 current as of the date of this Agreement, unless
otherwise agreed.
Amended to read:
3.2.2 Project Representatives shall be selected, employed and
directed by the Architect, and the Architect shall be compensated
therefor as agreed by the Owner and Architect.
3.3.7 Delete.
3.4.4 Providing special surveys, environmental studies and
submissions required for approvals of governmental authorities or
others having jurisdiction over the Project.
Amended to read:
3.4.4 Providing special surveys, environmental studies and
submission required for approvals of governmental authorities or
others having jurisdiction over the Project beyond that normally
required to gain public hearing before the Clark County Planning
Commission and Clark County Commissioners with regard to
Architectural Review, Variance, etc. if required.
3.4.13 Delete.
16
<PAGE>
3.4.18 Providing services after issuance to the Owner of the
final Certificate for Payment; or in the absence of a final
Certificate for Payment, more than 60 days after the date of
Substantial Completion of the Work.
Amended to read:
3.4.18 Providing services after issuance to the Owner of the
final Certificate for Payment by the Contractor, or in the
absence of a final Certificate for Payment, more than 60 days
after the date of Substantial Completion of the Work.
4.6 Delete.
9.2 Delete.
9.4 The Owner and Architect waive all rights against each other
and against the contractors, consultants, agents and employees of
the other for damages, but only to the extent covered by property
insurance during construction, except such rights as they may
have to the proceeds of such insurance as set forth in the
edition of AIA Document A201, General Conditions of the Contract
for Construction, current as of the date of this Agreement. The
Owner and Architect each shall require similar waivers from their
contractors, consultants and agents.
Amended to read:
9.4 The Owner and Architect waive all rights against each other
and against the contractors, consultants, agents and employees of
the other for damages, but only to the extent covered by property
insurance during construction. The Owner and Architect each
shall require similar waivers from their contractors, consultants
and agents.
10.2.1.2 Expense of reproductions, postage and handling of
Drawings, Specifications and other documents.
Amended to read:
10.2.1.2 Expense of reproducing photographs and other documents
other than those used by the Architect for his Consultants or in-
house use.
10.2.1.4 Expense of renderings, models and mock-ups requested by
the Owner.
Amended to read:
10.2.1.4 Expense of additional renderings, artwork, not provided
for by Architect, and/or models and mock-ups as specifically
requested by the Owner for his exclusive use on the Project.
10.2.1.6 Delete.
17
27 February 1995
Mr. Don Marrandino
General Manager
RIO SUITE HOTEL & CASINO
3700 West Flamingo Road
Las Vegas, Nevada 89103
Reference: RIO PHASE IV EXPANSION
Guaranteed Maximum Price (G.M.P.) Proposal
(Revised 2-27-95)
Dear Don:
We are pleased to submit to you a Guaranteed Maximum Price
Proposal for construction of The Rio Phase IV Expansion. This
Proposal was prepared in accordance with Project Drawings A2.0,
A2.1, A2.2, A2.3 and A2.3B dated 16 January 1995, TAO.2 dated 17
January 1995, TA1.1 dated 16 January 1995, TA2.0 dated 19 January
1995, TA2.1, TA2.2, TA2.3 and TA2.4 dated 16 January 1995, TA2.5
19 January 1995 and TA5.0, TA5.1, TA5.2 and TA6.0 dated 17
January 1995, as prepared by Anthony A. Marnell II, Chtd.
This G.M.P. Proposal is based on the following Scope of Work as
depicted in the above referenced drawings:
* Construction of a three (3) bay addition to the Phase II
Tower to include (138) typical suites (King or Queen) and two (2)
three module suites.
* Construction of a fully developed basement and first (1st)
level of the new Tower addition.
* Development of second (2nd) floor to include new meeting
room, office and storage rooms.
* Remodel (34) typical suites and one (1) three module suite.
* Construction of new Lowrise areas to include new meeting
rooms, expanded public corridor, Buzio's Restaurant, new exercise
area, spa, common reception, salon, expanded banquet storage, new
purchasing offices, expanded loading dock, expanded receiving and
liquor storage, new refrigerated storage and freezer storage, new
record storage and time office.
1
<PAGE>
* Remodel of approximately 7,035 square feet of existing
Lowrise area to include public restrooms, expanded banquet
kitchen, removal of stage at banquet storage, Human Resource
Department and miscellaneous back-of-house areas. (Please note:
this G.M.P. does not include the new Beach Cafe Bar).
* Construction of a Temporary Public Entrance Corridor similar
to the one provided during the Phase III Lowrise Expansion.
* Construction of all related onsite improvements including
roadway, parking lot and landscaping modifications.
* Interior Furnishing, Fixtures and Equipment (FF&E), as
required for all new and remodeled building areas.
Don, the Guaranteed Maximum Price Proposal for the above outlined
Scope of Work is Eighteen Million One Hundred Seventeen Thousand
Two Hundred Fifty Eight Dollars ($18,117,258).
Our Cost Estimate Breakdown for the above G.M.P. amount is
attached hereto for your review. This Cost Estimate Breakdown
dated 27 February 1995 provides a detailed square foot breakdown
for all new and remodeled building areas included in this
Proposal (reference the attached list of exclusions for items
specifically excluded from this G.M.P. Proposal).
If you should have any questions please feel free to contact us
at your convenience.
Sincerely,
MARNELL CORRAO ASSOCIATES
/s/Robert P. Martin
Robert P. Martin
RPM/dmm
cc: Anthony A. Marnell II
James A. Barrett, Jr.
Harlan Braaten
Lyn Baxter
Perry Eiman
File
2
<PAGE>
<TABLE>
<CAPTION>
RIO PHASE IV EXPANSION
Preliminary
Magnitude Estimate Revised 2/27/95
LOWRISE & TOWER EXPANSION
DESCRIPTION AREA CONSTRUCTION INTER- EQUIP- TOTAL
IORS MENT
----------- ---- ------------- ------ ------ -----
SITEWORK/
DEMOLITION
-----------
<S> <C> <S> <C> <C> <C> <C> <C> <C>
Utility Allowance 570,952 0 0 570,952
Relocation
Site Clear 59,000 SF 1.50 88,500 0 0 88,500
&
Demolition
Roadway 21,100 SF 3.75 79,125 0 0 79,125
Modification
Landscaping Allowance 30,000 0 0 30,000
Plaza 7,900 SF 4.50 35,550 0 0 35,550
Concrete
Entry 8,680 SF 15.0 130,200 0 0 130,200
Planter &
Stairs
SUBTOTAL 934,327 0 0 934,327
SITEWORK/
DEMOLITION
------------------------------------------------------------------------------
LOWRISE
BUILDING
AREAS
----------
BASEMENT
LEVEL (NEW)
Records 4,650 SF 80 388,000 0 0 388,000
Storage
Relocated 300 SF 80 24,000 0 0 24,000
Time Office
SUBTOTAL 5,150 SF 80.0 412,000 0 0 412,000
BASEMENT
(NEW)
------------------------------------------------------------------------------
BASEMENT
LEVEL
(REMODEL)
Human 1,700 SF 30 51,000 20 34,000 0 85,000
Resources
SUBTOTAL 1,700 SF 30.00 51,000 20.00 34,000 0 85,000
BASEMENT
(REMODEL)
------------------------------------------------------------------------------
FIRST FLOOR
(NEW)
Buzio's
Expansion
- Dining 1,846 SF 115 212,290 85 156,910 0 369,200
Area
- Expand 330 SF 110 36,300 0 0 36,300
Kitchen
- Expand 225 SF 125 28,125 115 25,875 0 54,000
Bar
- New Bar 281 SF 125 35,125 125 35,125 0 70,250
- Waiting 379 SF 105 39,795 75 28,425 0 68,220
Area
- Clear 52,900 10,000 0 62,900
Story
(529 SF)
- Food 265,000 265,000
Service
Equipment
New Meeting 5,428 SF 105 569,940 50 271,400 160,000 1,001,340
Rooms
Exercise 1,800 SF 95 171,000 50 90,000 0 261,000
Room
Spa 2,520 SF 115 289,800 50 126,000 125,000 540,800
Facilities
Common 275 SF 105 28,875 75 20,625 0 49,500
Reception
Area
Michael's 1,814 SF 105 190,470 100 181,400 0 371,870
Salon
Pool 190 SF 95 18,050 0 0 18,050
Storage
Expand 2,340 SF 95 222,300 45 105,300 0 327,600
Public
Corridor
Temporary Allowance 100,000 0 0 100,000
Entrance
Tunnel
BACK OF
HOUSE AREAS
Expand 188 SF 85 15,980 0 0 15,980
Receiving
Dock
Expand 1,307 SF 85 111,095 0 0 111,095
Liquor
Storage
Expand 606 SF 80 48,480 0 0 48,480
Receiving
Relocate 1,435 SF 80 114,800 20 28,700 0 143,500
Purchasing
Offices
Refrigerated 1,861 SF 85 158,185 0 104 193,54 351,729
Storage
Freezer 838 SF 90 75,420 104 87,152 162,572
Storage
Extended 1,133 SF 80 90,640 0 0 90,640
Corridor
and Stairs
Expanded 964 SF 80 77,120 0 0 77,120
Banquet
Storage
Operable 250 SF 80 20,000 0 0 20,000
Wall
SUBTOTAL 22,699 SF 119.24 2,706,690 47.57 1,079.760 830,696 4,617,146
FIRST FLOOR
(NEW)
----------------------------------------------------------------------------
FIRST FLOOR
(REMODEL)
Public 1,117 SF 90 100,530 65 72,605 0 173,135
Restrooms
Expand 1,335 SF 85 113,475 0 75 100,125 213,600
Banquet
Kitchen
New Lobster 200 SF 100 20,000 80 12,000 0 32,000
Tank
Buzio's - 374 SF 75 28,050 0 75 28,050 58,100
Dishwashing
& Walkin
Buzio's - 446 SF 60 26,760 125 55,750 0 82,510
Remodel Bar
Banquets 554 SF 50 27,700 0 0 27,700
Storage
Stage @ 225 SF 75 16,875 0 0 16,875
Banquet
Storage
Liquor 909 SF 20 18,180 0 0 18,180
Storage
Receiving 751 SF 20 15,020 0 0 15,020
BOH 140 SF 35 4,900 0 0 4,900
Corridor
SUBTOTAL 6,051 SF 61.39 371,490 23.20 140,355 128,175 640,020
FIRST FLOOR
(REMODEL)
------------------------------------------------------------------------------
PHASE II
TOWER
EXPANSION
------------
2nd Floor 5,300 SF 85 450,500 0 0 450,500
- Meeting 3,494 SF 0 85 296,900 0 296,900
Room
- Office 110 SF 0 45 4,950 0 4,950
- Corridor 852 SF 0 45 38,340 0 38,340
3rd - 19th 90,100 SF 80 7,208,000 0 0 7,208,000
Floors
20th Floor 5,300 SF 82 434,600 0 0 434,600
Typical 138 EA 0 9000 1,242,000 0 1,242,000
Suites
3 Module 2 EA 0 30000 60,000 0 60,000
Suite
Corridors 18 EA 0 8000 144,000 0 144,000
140 Keys
SUBTOTAL 100,700 SF 80.37 8,093,100 17.74 1,786,280 0 9,879,380
PHASE II
TOWER EXP.
-------------------------------------------------------------------------------
PHASE II
TOWER
REMODEL
2nd Floor 540 SF 45 24,300 0 0 24,300
3rd - 19th 20,213 SF 45 909,585 0 0 909,585
Floors
20th Floor 1,150 SF 50 57,500 0 0 57,500
Typical 34 EA 0 7000 238,000 0 238,000
Suites
3 Module 1 EA 0 20000 20,000 0 20,000
Suite
SUBTOTAL 21,903 SF 45.26 991,385 11.78 258,000 0 1,249,385
PHASE II
TOWER
REMODEL
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSTRUCTION CONTINGENCY 300,000 300,000
-------------------------------------------------------------------------------
TOTAL PRELIMINARY MAGNITUDE 13,859,992 3,298,395 958,871 18,117,258
ESTIMATE
--------------------------------------------------------------------------------
<S> <C> <C>
ALTERNATE ADD #1: NEW BEACH CAFE BAR ADD 107,145
ALTERNATE ADD #2: CONVERT EXISTING MICHAEL'S AREA TO SLOTS ADD 207,500
(2075 SF)
ALTERNATE ADD #3: NEW PUBLIC ELEVATOR CAR (P-6) ADD 227,500
</TABLE>
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
this 25th day of January, 1995, by and between FOCUS 2000, INC.,
a Nevada corporation ("Seller"), and RIO PROPERTIES, INC., a
Nevada corporation ("Buyer").
TERMS OF AGREEMENT:
1. PROPERTY. Subject to the terms hereof, Seller hereby
agrees to sell, and Buyer hereby agrees to purchase, that certain
real property located in Clark County, Nevada, more particularly
described on Exhibit "A" hereto, together with all improvements,
rights, entitlements and hereditiments appurtenant thereto
(collectively the "Property").
2. PURCHASE PRICE. The purchase price for the Property
(the "Purchase Price") shall be Three Million Two Hundred and
Three Thousand One Hundred and Ninety One Dollars
($3,203,191.00). The Purchase Price shall be payable in cash at
close of escrow (see Exhibit "B" for Letter Agreement dated
December 12, 1994).
3. ESCROW. Within two (2) business days after execution
of this Agreement, Buyer and Seller shall open an escrow with Ms.
Angie Galindo of United Title ("Escrow Agent"), 2300 West Sahara
Avenue, Suite 140, Las Vegas, Nevada 89102, by depositing an
executed copy of this Agreement. The parties shall promptly
execute and deliver such escrow instructions and additional
documents, not inconsistent with this Agreement, as may be
required to effectuate the intent hereof.
4. CLOSE OF ESCROW. Escrow shall close on or before
March 15, 1995, (the "Closing Date"). Seller shall convey the
Property to Buyer or Buyer's nominee by grant, bargain and sale
deed as is customary in Nevada, free and clear of all
encumbrances other than such reservations, conditions, easements,
rights of way, and covenants of record, identified below, as
evidenced by a policy of title insurance, to which no objection
has been made by Buyer prior to its purchase of the Property. At
close of escrow, Seller shall cause Escrow Agent to issue to
Buyer an ALTA extended coverage owner's policy of title
insurance, with coverage in the amount of the Purchase Price,
insuring Buyer's title subject only to Items 1, 2, 3, 4, 5, 6 and
7 as shown on the preliminary title report dated December 29th,
1994 and attached hereto as Exhibit "C". Closing costs shall be
apportioned between the parties as is customary in Clark County,
Nevada.
5. OBLIGATIONS AT CLOSING. At the Closing, the parties
shall have the following obligations:
1
<PAGE>
(a) SELLER'S OBLIGATIONS. The Seller shall tender the
following to the Buyer at the Closing:
(i) a grant, bargain, and sale deed for the
Property;
(ii) possession of the Property; and
(iii) any and all other documents reasonably
required by the Buyer to consummate the Closing that are
consistent with the terms of this Agreement.
(b) BUYER'S OBLIGATIONS. The Buyer shall tender the
following to the Seller at the Closing:
(i) the Purchase Price; and
(ii) any and all other documents reasonably
required by the Seller to consummate the Closing that are
consistent with the terms of this Agreement.
6. PRORATIONS. Unpaid property taxes, sewer use fees, and
all other assessments will be adjusted pro rata at the time of
the Closing. The parties agree that an amount equal to rent
revenues less ordinary operating expenses will be prorated from
the date of the Letter Agreement, December 12, 1994, with Buyer
being credited with all net revenues from that date to the date
of Closing.
7. BROKERS. Buyer and Seller hereby represent and warrant
to each other that they have not retained or dealt with any
broker or agent with respect to this transaction except Focus
2000, Inc., representing Seller, whose commission shall be the
obligation of Seller pursuant to separate agreement. Buyer and
Seller each hereby agree to indemnify and hold the other harmless
from and against the claims of any other broker, agent or finder
claiming by or through the indemnifying party.
8. CONDITION OF PROPERTY. Buyer agrees and acknowledges
that Buyer shall be deemed to have agreed to accept the Property
"As Is", based upon Buyer's independent investigation thereof,
and Seller shall not be liable for any latent or patent defects
in the property, except that Seller shall disclose to Buyer any
defects of which it has actual knowledge prior to Closing,
including violation of any laws, rules or regulations pertaining
to hazardous substances or environmental laws.
9. SELLER'S LIABILITIES. Nothing herein contained shall
obligate the Buyer to assume any of the obligations of the
Seller, regardless of whether such liabilities relate to the
Property.
2
<PAGE>
10. SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller
represents and warrants to the Buyer as follows:
(a) AUTHORITY. The Seller is a duly incorporated,
validly existing corporation in good standing under the laws of
Nevada. The Seller has the corporate power and corporate
authority to sell and transfer the Property in accordance
herewith. The Seller has taken all requisite corporate and other
action necessary to approve and effect the transactions
contemplated by this Agreement and authorize the execution of
this Agreement on its behalf by the officer whose signature
appears on the signature page of this Agreement. No consents of
any third parties are required for the execution and performance
of this Agreement by the Seller.
(b) NO BREACH. The execution and delivery of this
Agreement, the consummation of the transactions provided for
herein, and the fulfillment of the terms hereof will not result
in a breach of any of the terms or provisions of, or constitute a
default under, any agreement of the Seller or any instrument to
which the Seller is a party or by which the Seller or the
Property is bound, or any law, rule, judgment, decree or order of
any court or governmental body.
(c) LEASES. There shall be at the Closing only one
lease on or relating to the Property, which is attached hereto as
Exhibit D.
(e) LITIGATION. The Seller has not been served in
connection with, and to the actual knowledge of the Seller, the
Seller is not a party to or threatened with, any pending
litigation affecting the Property, which, if determined adversely
to the Seller, would have a materially adverse affect on the
Seller's ability to carry out the terms and conditions of this
Agreement or on the value of the Property as a whole. To the
actual knowledge of the Seller, there is no pending condemnation
proceeding with respect to any portion of the Property.
11. BUYER'S REPRESENTATIONS AND WARRANTIES. The Buyer
represents and warrants to the Seller as follows:
(a) AUTHORITY. The Buyer is a duly incorporated,
validly existing corporation in good standing under the laws of
Nevada. The Buyer has the corporate power and corporate authority
to purchase and accept delivery of the Property in accordance
herewith. The Buyer has taken all requisite corporate and other
action necessary to approve and effect the transactions
contemplated by this Agreement and authorize the execution of
this Agreement on its behalf by the officer whose signature
appears on the signature page of this Agreement. No consents of
3
<PAGE>
any third parties are required for the execution and performance
of this Agreement by the Buyer.
(b) NO BREACH. The execution and delivery of this
Agreement, the consummation of the transactions contemplated
hereunder and the fulfillment of the terms hereof will not result
in a breach of any of the terms or provisions of, or constitute a
default under, any agreement of the Buyer or any instrument of
which the Buyer is a party or by which the Buyer is bound, or any
law, rule, judgment, decree or order of any court or governmental
body.
(c) LITIGATION. The Buyer has not been served in
connection with, and to the knowledge of the Buyer, the Buyer is
not a party to or threatened with, any pending litigation
affecting this Agreement, which, if determined adversely to the
Buyer, would have a materially adverse affect on the Buyer's
ability to carry out the terms and conditions of this Agreement.
12. FURTHER ASSURANCES. Each party acknowledges its duty
to, and shall exercise good faith and fair dealing in connection
with the transactions contemplated herein. At the request and
expense of one party, whether at or after the Closing, without
further consideration, the other party shall execute and deliver
such further instruments and take such other action as the
requesting party may reasonably request in order to effectuate
the transactions set forth herein, consistent with the terms
hereof.
13. INDEMNIFICATIONS. Buyer agrees to defend, indemnify
and hold Seller harmless for, from, and against any and all
claims, demands, judgments, liabilities, obligations, taxes,
fines, and penalties arising out of Buyer's ownership of the
Property subsequent to the Closing or any breach of any
representation, warranty or covenant of the Buyer under this
Agreement.
Seller agrees to defend, indemnify, and hold Buyer
harmless for, from, and against any and all claims, demands,
judgments, liabilities, obligations, taxes, fines, and penalties
arising out of Seller's ownership of the Property prior to the
Closing, or any breach of any representation, warranty or
covenant of the Seller under this Agreement.
14. NOTICES. Any notices hereunder shall be hand delivered
or sent by certified mail, postage prepaid, return receipt
requested; addressed as follows:
4
<PAGE>
SELLER: BUYER:
449S South Polaris Avenue 3700 West Flamingo Road
Las Vegas, Nevada 89103 Las Vegas, Nevada 89103
Attention: Robert H. O'Neil Attention: General Manager
Notices mailed as aforesaid shall be deemed delivered on the
earlier of (a) actual receipt, or (b) three (3) business days
after deposited in the U.S. mail.
15. GENERAL. Time is of the essence hereof. This Agreement
represents the entire agreement of the parties, and may only be
amended in writing. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns. The waiver of any default by Seller or
Buyer shall not be construed as a continuing waiver, or a waiver
of any subsequent default of the same or any other provision of
this Agreement. The terms of this Agreement shall be governed
under Nevada law. In the event of any action to enforce the terms
of this Agreement, the action shall be brought in a court of
competent jurisdiction in Clark County, Nevada, and the
prevailing party shall be entitled to costs and attorneys fees
from the other party. This Agreement may be executed in
counterparts.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Agreement as of the date first set forth above.
SELLER: BUYER:
FOCUS 2000, INC., RIO PROPERTIES, INC.,
a Nevada corporation, a Nevada corporation,
By: /s/ ROBERT H. O'NEIL By: /s/ HARLAN BRAATEN
Its: Executive Vice President Its: Senior Vice President &
CFO
5
<PAGE>
ALTA/ACSM
LAND TITLE SURVEY
EXCHANGE AGREEMENT
THIS AGREEMENT is made and entered into as of this 6th day
of January, 1995, by and between ALLIED BUILDING MATERIALS, a
Nevada corporation ("Allied"), CINDERLANE, INC., a Nevada
corporation ("Cinder"), and RIO HOTEL AND CASINO, INC. a Nevada
corporation ("Rio").
R E C I T A L S:
WHEREAS Allied is the owner of that certain real property
located in Clark County, Nevada and described on Exhibit "A"
attached hereto (the "Exchange Parcel"); and
WHEREAS Cinder desires to acquire the Exchange Parcel; and
WHEREAS Allied has identified a parcel of real property in
Clark County, Nevada, described on Exhibit "B" attached hereto
(the "Replacement Parcel") to which Allied will, if Cinder
acquires the Exchange Property, relocate; and
WHEREAS the Replacement Parcel was the subject of existing
Escrow No. 94420214 with United Title, pursuant to Escrow
Instructions dated September 27, 1994 attached hereto as Exhibit
"C" (the "Purchase Agreement") executed by Allied and Tom Dyke
Drilling and Blasting; and
WHEREAS, subject to the following terms and conditions, the
parties intend that (a) Allied shall assign its rights under the
Purchase Agreement to Cinder, (b) Cinder shall acquire the
Replacement Parcel, (c) Cinder shall construct a replacement
facility for Allied upon the Replacement Parcel, and (d) the
parties shall then exchange the Exchange Parcel for the
Replacement Parcel, in a manner that will qualify as a like kind
exchange under Section 1031 of the Internal Revenue Code;
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned
agree as follows:
W I T N E S S E T H:
1. PURCHASE AGREEMENT FOR REPLACEMENT PROPERTY. Allied
hereby assigns to Cinder all rights, title, interest and
obligations of Allied under the Purchase Agreement, including any
rights to earnest money previously deposited in escrow, and
Cinder hereby accepts the assignment and assumes the obligations
of Allied under the Purchase Agreement.
1
<PAGE>
2. ESCROW; FURTHER ASSURANCES. Upon the execution hereof,
the parties shall open an escrow with Angie Galindo of United
Title ("Escrow Agent"), 2300 W. Sahara Ave., Suite 140, Las
Vegas, Nevada 89102, by depositing an executed copy of this
Agreement. The parties shall promptly execute and deliver such
escrow instructions and additional documents, not inconsistent
with this Agreement, as may be required to effectuate the intent
hereof.
3. ACQUISITION OF REPLACEMENT PARCEL. Cinder shall
proceed to close escrow and acquire the Replacement Parcel,
pursuant to the terms of the Purchase Agreement.
4. CONSTRUCTION OF REPLACEMENT FACILITY. Upon acquisition
of the permits described in Section 11, Cinder shall construct,
at its cost and expense (up to a total cost of $2,425,451.80), an
office and cinder block plant (the "Block Plant") in a good
workmanlike manner according to plans and specifications provided
by Allied, which may be changed or altered by Allied from time to
time in its sole discretion (the "Replacement Facility"). In the
event the cost of construction of the Replacement Facility
exceeds $2,425,451.80 Allied shall make a loan to Cinder in the
amount of the excess (the "Loan"), the proceeds of which will be
deposited with the construction control described below and
disbursed by the construction control solely for construction of
the Replacement Facility. The Loan shall be repaid on the
Exchange Date (as defined below) pursuant to Section 13. The
Replacement Facility shall be the property of Cinder until the
Exchange (as defined below), at which time ownership of the
Replacement Facility will be conveyed to Allied. Allied and its
employees, agents and contractors, shall have the right to enter
onto the Replacement Property to monitor the construction of the
Replacement Facility and install equipment and fixtures. Allied
shall designate an individual (which may be one of its employees
or agents) reasonably acceptable to Cinder to be the agent of
Cinder to monitor and supervise the construction of the
Replacement Facility and make all decisions and execute all
orders and instructions in connection therewith (the "Designee").
The Designee shall have full responsibility for the monitoring
and supervision of the construction of the Replacement Facility.
Allied shall indemnify and hold Cinder harmless from any loss,
injury, damage, claim or expense (including attorneys fees)
arising from or in connection with the use, occupancy or entrance
on the Replacement Property by Allied or its employees, agents or
Designee, including any actions or omissions of the Designee not
specifically authorized by Cinder or arising from or in
connection with the construction of the Replacement Facility
unless due to acts, omissions or negligence of Cinder or its
employees. Cinder shall not be responsible for any failures or
delays in the construction of the Replacement Facility caused by
Allied or its Designee.
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Allied shall, subject to the reasonable consent of Cinder,
designate the contractor or contractors for the construction of
the Replacement Facility. All contracts, invoices, work orders or
other agreements and expenditures relating to the construction of
the Replacement Facility shall be subject to the approval of
Allied.
Cinder shall proceed with construction of the Replacement
Facility with all due speed and shall complete the same in a
workmanlike manner by twelve (12) months after the acquisition of
the permits described in Section 11 (unless extended pursuant to
Section 11 below), but this date shall be extended for all delays
in construction resulting from causes beyond the reasonable
control of Cinder, such as strikes, lockouts, acts of God, civil
commotion, fire and unavoidable casualty, all of which are not
occasioned by any default or negligence on Cinder's part (the
"Completion Date"). The Completion Date shall also be extended by
the time needed to perform any additional construction requested
by Allied. The Exchange Date shall not be extended by reason of
any extension of the Completion Date other than pursuant Section
11. From and after the Exchange Date, Cinder may reenter the
Replacement Property to complete any portion of the construction
that has not yet been completed. During the period of such
reentry, Cinder shall not unreasonably interfere with any work
being performed or to be performed by Allied.
5. CONSTRUCTION CONTROL\DISBURSEMENT. Unless the parties
have earlier agreed in writing to a different method of
disbursement of construction funds, within thirty (30) days after
the opening of escrow hereunder the parties shall jointly retain
a mutually-acceptable, qualified, bonded, third-party
construction control service doing business in Clark County, to
hold and disburse the funds for the construction of the
Replacement Facility (the Construction Funds"), and to provide
voucher control, lien control, work inspections, and similar
functions customarily undertaken by construction control
agencies. The parties shall cooperate to provide construction
control with such plans, construction cost break-downs,
disbursement schedules and similar materials as may be reasonably
requested by construction control.
6. DEPOSIT OF CONSTRUCTION FUNDS. Upon acquisition of the
permits described in Section 11, Cinder shall from time to time
deposit the total amount of up to $2,425,451.80 in cash or
instrument reasonably acceptable to Allied as the Construction
Funds. Cinder shall deposit sums as are reasonably necessary to
pay disbursements from the Construction Funds as disbursements
become due and payable. Any interest accruing on the Construction
Funds in the construction control shall inure to the benefit of
Cinder. The fee charged by construction control shall be included
as a cost of construction of the Replacement Facility.
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7. ALLIED'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
Allied hereby agrees, represents, warrants and covenants to
Cinder as follows:
(a) Allied is a Nevada corporation duly formed and validly
existing under the laws of the State of Nevada, is
qualified to transact business in Nevada and has the
full power and authority to execute this Agreement.
(b) All necessary corporate action has been taken to duly
authorize the execution and delivery by Allied of this
Agreement and all documents and instruments
contemplated by this Agreement, as well as the
performance by Allied of the covenants and obligations
to be performed and carried out by it hereunder.
(c) The execution, delivery and performance by Allied of
this Agreement and such other instruments and documents
to be executed and delivered in connection herewith by
Allied do not, and will not, result in any violation
of, or conflict with, or constitute a default under,
any provisions of any agreement or any mortgage, deed
of trust, indenture, lease, security agreement or other
instrument or agreement to which Allied is a party, or
any judgment, writ, decree, order, injunction, rule or
governmental regulation to which Allied is subject.
(d) To the best of Allied's knowledge, Allied is not
prohibited from consummating the transactions
contemplated by this Agreement by any law, rule,
regulation, instrument, agreement, order or judgment.
(e) Allied shall not permit any liens or other encumbrances
against the Exchange Parcel or the Replacement Parcel
prior to the Exchange Date. In the event any such liens
or charges are filed, Allied shall cause the same to be
bonded or discharged of record prior to the exchange.
(f) Allied has not received any notice of, and, to the best
of Allied's knowledge, there do not exist any, current
violations of any laws, statutes, ordinances,
regulations or other requirements of any governmental
agency in connection with or related to the Exchange
Parcel.
(g) There are not any existing, pending or, to the best of
Allied's knowledge, anticipated, litigation,
condemnation or similar proceedings against or
involving the Exchange Parcel.
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(h) Allied shall not transfer, encumber or otherwise
hypothecate the Exchange Parcel or any portion thereof
or interest therein, so long as this Agreement remains
in effect.
(i) Until the Exchange Date, the Exchange Parcel may be
used and occupied only for a Block Plant and related
uses. No activity by Allied or suffered by Allied shall
be permitted on the Exchange Parcel or the Replacement
Parcel that would have a material detrimental effect on
or materially injure or damage the Exchange Parcel or
the Replacement Parcel.
(j) Allied shall not commit or permit waste or a nuisance
upon the Exchange Parcel or the Replacement Parcel or
cause there to be any material change in the condition
of the Exchange Property or the Replacement Parcel
(other than as reasonably necessary for the
construction of the Replacement Facility) from the date
of this Agreement to the Exchange Date.
(k) Allied shall comply with all applicable laws,
ordinances and governmental regulations now or
hereafter in force and effect relating to the
construction, maintenance, operation, use, and
occupancy of the Exchange Parcel or Replacement Parcel,
as well as all requirements from time to time imposed
by all required insurance.
(l) Allied shall not cause or permit any Hazardous Material
to be brought upon, kept, or used in or about the
Exchange Parcel or the Replacement Parcel by its
agents, employees, contractors or invitees, without the
prior written consent of Cinder. Allied further
represents and warrants that, to the best of Allied's
knowledge, Allied has no knowledge of any Hazardous
Material having been brought upon, kept, or used in or
about the Exchange Parcel in violation of any
environmental laws prior to the date of this Exchange
Agreement. Allied shall, within fifteen (15) days
following receipt thereof, provide Cinder with a copy
of (i) any notice from any local, state or federal
governmental authority of any violation or
administrative or judicial order or complaint having
been filed or about to be filed against Allied or the
Exchange Parcel or the Replacement Parcel alleging any
violation of any local, state or federal environmental
law or regulation or requiring Allied to take any
action with respect to any release on or in the
Exchange Parcel or the Replacement Parcel or the soil
or ground water under or adjacent to the Exchange
Parcel or the Replacement Parcel of Hazardous Material,
or (ii) any notices from a federal, state or local
governmental agency or private party alleging that
Allied may be liable or responsible for cleanup,
remodel, removal, restoration or other response costs
in connection with Hazardous Material on or in the
Exchange Parcel or the Replacement Parcel or the soil
or ground water under or adjacent to the Exchange
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Parcel or the Replacement Parcel or any damages caused
by such release. As used herein, the term "Hazardous
Materials" means any hazardous toxic substance,
material or waste that is or becomes regulated by any
local governmental authority, the State of Nevada or
the United States government. The term "Hazardous
Materials" includes, without limitation, any material
or substance that is (i) defined as a "hazardous waste"
under NRS 459.400 et. seq., (ii) petroleum, (iii)
asbestos, (iv) designated as a "hazardous substance"
pursuant to Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. 1321), (v) defined as a
"hazardous waste" pursuant to Section 1004 of the
Federal Resource Conservation and Recovery Act, (42
U.S.C. 6901 et seq.), (vi) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act,
(42 U.S.C. 9601 et seq.), or (vii) defined as a
"regulated substance" pursuant to subchapter IX, Solid
Waste Disposal Act (Regulation of Underground Storage
Tanks), (42 U.S.C. 6991 et seq.).
(m) The Purchase Agreement as attached hereto as Exhibit
"C" constitutes the entire agreement between Allied and
Tom Dyke Drilling and Blasting with respect to the
Replacement Parcel. Allied has not previously assigned
all or any portion of its interests under the Purchase
Agreement to any party.
(n) To the best of Allied's knowledge, there are no
interests in, claims to, or liens or encumbrances on,
the Exchange Parcel except as set forth in the
preliminary title report attached hereto as Exhibit
"E."
The foregoing representations and warranties shall be true and
correct as of the date hereof and as of the Exchange, and shall
survive the Exchange. Allied hereby agrees to indemnify and hold
Cinder harmless from and against any loss, injury, damage, claim
or expense (including attorneys fees) arising from or in
connection with any failure of any of Allied's (and its
employees, agents and Designee) representations warranties and
covenants set forth herein or elsewhere in this Agreement.
6
8. CINDER'S AND RIO'S REPRESENTATIONS, WARRANTIES AND
COVENANTS. Cinder and Rio hereby agree, represent, warrant and
covenant to Allied as follows:
(a) Cinder and Rio are Nevada corporations duly formed and
validly existing under the laws of the State of Nevada,
are qualified to transact business in Nevada and have
the full power and authority to execute this Agreement.
(b) All necessary corporate action has been taken to duly
authorize the execution and delivery by Cinder and Rio
of this Agreement and all documents and instruments
contemplated by this Agreement, as well as the
performance by Cinder of the covenants and obligations
to be performed and carried out by it hereunder.
(c) The execution, delivery and performance by Cinder and
Rio of this Agreement and such other instruments and
documents to be executed and delivered in connection
herewith by Cinder and Rio do not, and will not, result
in any violation of, or conflict with, or constitute a
default under, any provisions of any agreement or any
mortgage, deed of trust, indenture, lease, security
agreement or other instrument or agreement to which
Cinder or Rio is a party, or any judgment, writ,
decree, order, injunction, rule or governmental
regulation to which Cinder or Rio is subject.
(d) To the best of Cinder's or Rio's knowledge, neither
Cinder nor Rio is prohibited from consummating the
transactions contemplated by this Agreement by any law,
rule, regulation, instrument, agreement, order or
judgment.
(e) Cinder shall not permit any liens or other encumbrances
against the Exchange Parcel or the Replacement Parcel
prior to the Exchange Date. In the event any such liens
or charges are filed, Cinder shall cause the same to be
bonded or discharged of record prior to the exchange.
(f) Cinder has not received any notice of and, to the best
of Cinder's knowledge, there do not exist any, current
violations of any laws, statutes, ordinances,
regulations or other requirements of any governmental
agency in connection with or related to the Replacement
Parcel.
(g) There are not any existing, pending or, to the best of
Cinder's knowledge, anticipated, litigation,
condemnation or similar proceedings against or
involving the Replacement Parcel.
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(h) Cinder shall not transfer, encumber or otherwise
hypothecate the Replacement Parcel or any portion
thereof or interest therein, so long as this Agreement
remains in effect.
(i) The Replacement Parcel may be used and occupied only
for construction of a Block Plant and related uses. No
activity by Cinder or suffered by cinder shall be
permitted on the Exchange Parcel or the Replacement
Parcel that would have a material detrimental effect on
or materially injure or damage the Exchange Parcel or
the Replacement Parcel.
(j) Cinder shall not commit or permit waste or a nuisance
upon the Exchange Parcel or the Replacement Parcel or
cause there to be any material change in the condition
of the Exchange Property or the Replacement Parcel
(other than as reasonably necessary for the
construction of the Replacement Facility) from the date
of this Agreement to the Exchange Date.
(k) Cinder shall comply with all applicable laws,
ordinances and governmental regulations now or
hereafter in force and effect relating to the
construction, maintenance, operation, use, and
occupancy of the Exchange Parcel or Replacement Parcel,
as well as all requirements from time to time imposed
by all required insurance.
(l) Cinder shall not cause or permit any Hazardous Material
to be brought upon, kept, or used in or about the
Exchange Parcel or the Replacement Parcel by its
agents, employees, contractors or invitees, without the
prior written consent of Allied. Cinder shall, within
fifteen (15) days following receipt thereof, provide
Allied with a copy of (i) any notice from any local,
state or federal governmental authority of any
violation or administrative or judicial order or
complaint having been filed or about to be filed
against Cinder or the Exchange Parcel or the
Replacement Parcel alleging any violation of any local,
state or federal environmental law or regulation or
requiring Cinder to take any action with respect to any
release on or in the Exchange Parcel or the Replacement
Parcel or the soil or ground water under or adjacent to
the Exchange Parcel or the Replacement Parcel of
Hazardous Material, or (ii) any notices from a federal,
state or local governmental agency or private party
alleging that Cinder may be liable or responsible for
cleanup, remodel, removal, restoration or other
response costs in connection with Hazardous Material on
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<PAGE>
or in the Exchange Parcel or the Replacement Parcel or
the soil or ground water under or adjacent to the
Exchange Parcel or the Replacement Parcel or any
damages caused by such release.
(m) Cinder shall at all times maintain (i) public liability
insurance and course of construction insurance with
coverage in commercially reasonable amounts of at least
$2,000,000.00 combined single limit, and (ii) fire and
extended coverage insurance on the Replacement Facility
in an amount equal to the replacement cost thereof.
Each such policy shall name Allied as an additional
insured, and shall include an endorsement whereby
Allied shall be entitled to at least fifteen (15) days
prior written notice in the event of any cancellation
or reduction in coverage of such policy. Cinder shall
provide Allied with satisfactory evidence of the
existence of such insurance upon the request of Allied
from time to time. The cost of insurance required
pursuant to this subsection 8(m) shall be included as a
cost of construction of the Replacement Facility.
The foregoing representations and warranties shall be true and
correct as of the date hereof and as of the Exchange, and shall
survive the Exchange. Cinder and Rio hereby agree to indemnify
and hold Allied harmless from and against any loss, injury,
damage, claim or expense (including attorneys fees) arising from
or in connection with any failure of any of Cinder's and Rio's
(and their employees and agents) representations, warranties or
covenants set forth herein or elsewhere in this Agreement.
9. CERTAIN DISCLAIMERS.
(a) Allied hereby acknowledges that it has had ample
opportunity to investigate the Replacement Parcel and
to conduct all desired feasibility studies in
connection therewith, and, (subject to the
representations and warranties set forth in Section 8
above and Cinder's covenants to construct the
Replacement Facility) Allied hereby agrees to accept
same "as is." Except as specifically provided in this
Agreement, Cinder makes no representation, warranty or
claim whatsoever with respect to the condition of the
Replacement Parcel or its fitness for Allied's intended
use.
(b) Cinder hereby acknowledges that it has had ample
opportunity to investigate the Exchange Parcel and to
conduct all desired feasibility studies in connection
therewith, and (subject to the representations and
warranties set forth in Section 7 above) Cinder hereby
9
<PAGE>
agrees to accept same "as is." Except as specifically
provided in this Agreement, Allied makes no
representation, warranty or claim whatsoever with
respect to the condition of the Exchange Parcel
or its fitness for Cinder's intended use. Cinder
further acknowledges that it is aware that underground
petroleum storage tanks were removed from the Exchange
Property in 1993 and that it has made its own
inspections and investigations and has had the
opportunity to obtain from Allied all such
documentation and other information in the possession
of Allied necessary to evaluate the condition of the
Exchange Property.
10. EXCHANGE. On or (at Allied's option) before twelve
months from the acquisition of the permits described in Section
11 (the "Exchange Date"), (a) Cinder shall convey to Allied fee
title to the Replacement Parcel and Replacement Facility,
including all improvements, rights and hereditiments appurtenant
thereto, and (b) Allied shall convey to Cinder fee title to the
Exchange Parcel, including all improvements, rights and
hereditiments appurtenant thereto. (The foregoing conveyances are
herein referred to as the "Exchange"). Title to the Exchange
Parcel shall be conveyed by grant, bargain and sale deed subject
only to those interests, liens and encumbrances existing on the
date hereof, including those shown on the preliminary title
report attached hereto as Exhibit "E" (other than the deed of
trust shown as Item 6 on Exhibit "E," which Item shall be removed
at or prior to the Exchange Date). Title to the Replacement
Parcel shall be conveyed by grant, bargain and sale deed subject
only to Items Nos. 1, 2, 3, 4, 5, 6, 7, 8 and 9 shown on the
preliminary title report attached hereto as Exhibit "F" and
insured by an ALTA owners title policy subject only to such
exceptions, with such endorsements as Allied reasonably requires.
Closing costs shall be allocated between the parties as is
customary in Clark County, Nevada (the seller to pay premiums for
CLTA title insurance and the buyer to pay premiums for ALTA
coverage and any endorsements). Cinder shall pay the cost of any
survey of the Replacement Parcel necessary to obtain an ALTA
policy of title insurance. Cinder shall be entitled to possession
of the entire Exchange Parcel, and Allied shall be entitled to
possession of the entire Replacement Parcel, upon the
consummation of the Exchange.
11. FAILURE TO OBTAIN PERMITS; EXTENSION OF EXCHANGE DATE.
The parties acknowledge that the construction and operation
of the Replacement Facility will require certain use permits from
the city of North Las Vegas under applicable zoning. The parties
agree to cooperate to obtain such permits. In the event the
permits cannot be obtained by June 1, 1995, the parties shall
10
<PAGE>
select another parcel reasonably acceptable to both parties to be
the new Replacement Parcel and Cinder shall attempt to sell (or
exchange) the original Replacement Parcel and apply the proceeds
to the purchase of the new Replacement Parcel. The provisions of
this Section 11 relating to selection of another Replacement
Parcel in the event certain permits cannot be obtained shall also
apply to the new Replacement Parcel. In the event the cost of the
new Replacement Parcel exceeds the proceeds from the sale (or
exchange) of the original Replacement Parcel, Allied will loan to
Cinder one-half (1/2) of the difference, which loan shall be
repaid on the Exchange Date pursuant to Section 13 below. In the
event a new Replacement Parcel is not acquired by Cinder and all
necessary permits from the city of North Las Vegas by December
31, 1995, either party may terminate this Agreement by written
notice to the other, in which case the original Replacement
Parcel then held by Cinder shall be sold as soon as reasonably
practicable at a price reasonably acceptable to both parties, and
any gain or loss shared equally by the parties.
If Allied has good reason to believe that completion of the
Replacement Facility will be delayed beyond the Exchange Date due
to causes outside Allied's control or reasonable ability to cure,
Allied may so notify Cinder in writing on or before Sixty (60)
days prior to the Exchange Date, which notice shall set forth the
cause for the anticipated delay. In such event, Allied may
thereupon elect to extend the Exchange Date for up to sixty t60)
additional days. In addition, if completion of the Replacement
Facility is delayed due to Cinder's failure to perform its
obligations under this Agreement in a timely manner, Allied shall
have the right, at its option and without limitation of remedies,
to extend the Exchange Date for a period of time equal to said
delay.
12. EXCHANGE VALUE OF REPLACEMENT PARCEL. The exchange
value of the Replacement Parcel shall be an amount equal to the
sum of (a) the purchase price for the Replacement Parcel under
the Purchase Agreement (or pursuant to Section 11 above) plus all
related closing costs (the "Replacement Parcel Land Cost"), plus
(b) the cost of construction of the Replacement Facility (the
"Construction Costs").
13. EXCHANGE. On the Exchange Date, Allied shall deliver
the Exchange Property and cancel all indebtedness under the Loan
and/or any loan pursuant to Section 11 in exchange for the
delivery by Cinder of the Replacement Parcel and $4,000,000 in
cash or immediately available funds.
14. REMOVAL OF PERSONAL PROPERTY FROM EXCHANGE PARCEL.
Allied shall have the right to remove any and all buildings (or
parts thereof), fixtures, inventory, equipment and other property
from the Exchange Parcel, at any time prior to the Exchange and
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for a period of sixty (60) days thereafter; provided, however,
that after the Exchange Allied shall give Cinder reasonable prior
notice of any such removal, and shall indemnify Cinder and hold
it harmless from and against any damage, injury claim, loss or
expense (including attorneys fees) arising in connection with any
such entry onto the Exchange Parcel.
15. DESTRUCTION OR CONDEMNATION. If all or any portion of
the Replacement Facility is destroyed by fire or other casualty
prior to the Exchange Date, at Allied's request Cinder shall
rebuild the Replacement Facility, using such insurance proceeds
as may be available therefor. If the proceeds from insurance are
insufficient to rebuild the Replacement Facility, the additional
amounts shall be paid by Cinder and included as part of the
Construction Costs. If the entire Replacement Parcel is taken
under eminent domain (or transferred by deed in lieu of
condemnation) prior to the Exchange Date, this Agreement shall
terminate and the proceeds shall be allocated to Cinder. If the
entire Exchange Parcel is taken under eminent domain (or
transferred by deed in lieu of condemnation) prior to the
Exchange Date, this Agreement shall terminate with respect to the
Exchange Parcel and the Agreement will continue with respect to
Allied's acquisition of the Replacement Parcel at a purchase
price equal to the Replacement Parcel Purchase Price PLUS the
Construction Costs, and the proceeds from the condemnation shall
be allocated to Allied. If only a portion of the Exchange Parcel
or the Replacement Parcel is so taken and the acquiring party
reasonably determines that the property remaining is unsuitable
for its intended use and so notifies the other party within
thirty (30) days after said taking, the partial taking shall be
treated as a complete taking. Otherwise, in the event of a
partial taking this Agreement shall be null and void as to the
property taken, but shall continue as to all other property
subject hereto, and the exchange value or purchase price (as
applicable) of the taken property shall be reduced PRO RATA.
16. MEMORANDA OF AGREEMENT. Concurrently herewith, the
parties shall execute two (2) Memoranda of Agreement giving
notice of the existence (but not the terms) of this Agreement.
Concurrently with the opening of escrow, one Memorandum of
Agreement shall be recorded against the Exchange Parcel.
Concurrently with Cinder's acquisition of the Replacement Parcel,
the second Memorandum of Agreement shall be recorded against the
Replacement Parcel. Upon any termination of this Agreement, each
party shall execute and deliver such documents as are necessary
to remove the Memoranda of Agreement from record.
17. CONFIDENTIALITY. The parties acknowledge that the
terms of this transaction are highly confidential, and that the
disclosure thereof to third parties may be detrimental to the
parties' bargaining power in future transactions. Therefore,
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except for the memoranda described in Section 16 above, each
party hereby covenants and agrees to keep the terms and
conditions hereof strictly confidential, to be disseminated
amongst such party's personnel on a "need-to-know" basis only.
Unless required by law, neither party shall disclose or permit
the disclosure of any such terms or conditions to any third party
whatsoever, without the prior written consent of the other party
in its absolute discretion.
18. DEFAULT. In the event of any default hereunder, the
non-defaulting party shall have all rights and remedies available
at law or in equity, including (without limiting the generality
of the foregoing) the right to compel specific performance of
this Agreement.
19. BROKERS. Each party hereby represents and warrants to
the other that it has not retained or dealt with any broker or
agent with respect to this transaction. Each party further agrees
to indemnify and hold the other harmless from and against the
claims of any broker, agent or finder claiming by or through the
indemnifying party.
20. NOTICES. Any notices hereunder shall be hand delivered
or sent by certified mail, postage prepaid, return receipt
requested, addressed as follows:
ALLIED: CINDER AND RIO:
3333 Cinder Lane 3700 W. Flamingo Road
Las Vegas, Nevada 89103 Las Vegas, Nevada 89103
Attention: Ernie Selman Attention: Jay Barrett
Notices mailed as aforesaid shall be deemed delivered on the
earlier of (a) actual receipt, or (b) two business days after
deposited in the U.S. mail.
21. SECTION 1031 EXCHANGE. The parties each agree to
cooperate with the other as reasonably necessary to effect a tax
free exchange under Section 1031 of the Internal Revenue Code of
1986 (as amended); provided, however, that (a) the cooperating
party shall not be obligated for any additional expense
associated with such exchange, (b) the Exchange Date shall not be
delayed thereby, (c) neither party shall be required to hold
title to any real property except as contemplated by this
Agreement, and (d) neither party shall be responsible for, nor
makes any representations or warranties concerning the efficacy
of, any such tax-free exchange undertaken by the other party.
22. CONSTRUCTION. As used in this Agreement, the
masculine, feminine or neuter gender and the singular or plural
numbers shall each be deemed to include the other whenever the
context so requires. This Agreement shall be construed as a whole
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and in accordance with its fair meaning and without regard to any
presumption or other rule requiring construction against the
party causing this Agreement or any part of this Agreement to be
drafted. The parties acknowledge that each party has reviewed
this Agreement and has had the opportunity to have it reviewed by
legal counsel. If any words or phrases in this Agreement are
stricken or otherwise eliminated, whether or not other words or
phrases have been added, this Agreement shall be construed as if
the words or phrases stricken or otherwise eliminated were never
included in this Agreement, and no implication or inference will
be drawn from the fact that the words or phrases were stricken or
otherwise eliminated.
23. NO PARTNERSHIP. THIRD PERSON. It is not intended by
this Agreement to, and nothing contained in this Agreement shall,
create any partnership, joint venture or other arrangement
between the parties hereto except as specifically provided
herein. No term or provision of this Agreement is intended to
benefit any person, partnership, corporation or other entity not
a party hereto (including, without limitation, any broker), and
no such other person, partnership, corporation or entity shall
have any right or cause of action hereunder.
24. NON-FOREIGN ENTITY. The parties shall execute and
deliver to escrow on or before the Exchange Date an affidavit as
required by Internal Revenue Code Section 1445(b)(2) setting
forth such party's taxpayer identification number and address and
stating that it is not a foreign person for purposes of that
Section.
25. GENERAL. Time is of the essence hereof. This Agreement
represents the entire agreement of the parties as to the subject
matter hereof, and may only be amended in writing. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. The waiver of
any default by either party shall not be construed as a
continuing waiver, or a waiver of any subsequent default of the
same or any other provision of this Agreement. If any provision
of this Agreement is adjudged invalid or unenforceable, the
remainder of this Agreement shall not be affected thereby. The
terms of this Agreement shall be governed under Nevada law. In
the event of any action to enforce the terms of this Agreement,
the prevailing party shall be entitled to costs and attorneys
fees from the other party. This Agreement may be executed in
counterparts.
26. AUTHORITY. Each of the signatories hereto represents
and warrants that he or she is duly authorized to execute this
Agreement on behalf of Allied, Cinder or Rio (as applicable).
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27. GUARANTY. The obligations of Cinder set forth herein
shall be guaranteed both as to payment and performance by Rio.
IN WITNESS WHEREOF the undersigned have executed this
Agreement as of the date first set forth above.
ALLIED BUILDING MATERIALS, CINDERLANE, INC., a
a Nevada corporation Nevada corporation
By: /s/Ernest L. Selman By: /s/Susan L Johnson
Ernest L. Selman Susan L. Johnson
Treasurer President
RIO HOTEL AND CASINO, INC.
a Nevada corporation
By: /s/Harlan D. Braaten
Harlan D. Braaten
Sr. V.P. & CFO
15
<PAGE>
MEMORANDUM OF AGREEMENT
PLEASE TAKE NOTICE that the undersigned have entered into an
agreement dated January 6, 1995 (the "Agreement") pursuant to
which ALLIED BUILDING MATERIALS, a Nevada corporation, shall have
the right to acquire title to that certain real property located
in the City of North Las Vegas, Clark County, Nevada, more
particularly described on Exhibit "A" attached hereto and
incorporated herein (the "Property"). The Agreement further
prohibits any transfer or encumbrance of the Property except
pursuant to the terms of the Agreement.
DATED: January 6, 1995.
ALLIED BUILDING MATERIALS, CINDERLANE, INC., a
a Nevada corporation Nevada corporation
By: /s/Ernest L. Selman By: /s/Susan L. Johnson
Ernest L. Selman Susan L. Johnson
Vice President President
STATE OF NEVADA )
: ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on this 9th day
of January, 1995, by ERNEST L. SELMAN as President of Allied
Building Materials.
/s/
Notary Public
(My Commission Expires: July 31,
1998)
(SEAL)
16
<PAGE>
STATE OF NEVADA )
: ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on this 6th day
of February, 1995, by SUSAN L. JOHNSON as President of
Cinderlane, Inc.
/s/
Notary Public
(My Commission Expires: April 16,
1998)
(SEAL)
17
<PAGE>
EXHIBIT "A"
THAT PORTION OF THE SOUTHEAST QUARTER (SE l/4) OF THE SOUTHWEST
QUARTER (SW 1/4) OF SECTION 31, TOWNSHIP 19 SOUTH, RANGE 62 EAST,
M.D.B. & M., DESCRIBED AS FOLLOWS:
LOT TWO (2) AS SHOWN BY AMENDED MAP THEREOF IN FILE 65 OF PARCEL
MAPS, PAGE 76, IN THE OFFICE OF THE COUNTY RECORDER, CLARK
COUNTY, NEVADA, RECORDED JULY 25, 1990 IN BOOK 900725 AS DOCUMENT
NO. 00626, OFFICIAL RECORDS.
AND
THAT PORTION OF THE NORTHEAST QUARTER (NE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 6, TOWNSHIP 20 SOUTH, RANGE 62 EAST
AND LOT 1 IN BLOCK 7 OF NELLIS INDUSTRIAL PARK AS SHOWN IN BOOK
10 OF PLATS, PAGE 76, MORE PARTICULARLY SHOWN ON THAT CERTAIN LOT
LINE ADJUSTMENT PLAT RECORDED JULY 6, 1990 IN BOOK 900706 AS
DOCUMENT NO. 00898 AND IN FILE 55, PAGE 69 OF SURVEYS AS FOLLOWS:
COMMENCING AT THE NORTHEAST CORNER OF SAID NORTHWEST QUARTER (NW
1/4) OF SAID SECTION 6;
THENCE SOUTH 87 DEGREES 04'06" WEST ALONG THE NORTH LINE OF SAID
NORTHWEST QUARTER (NW 1/4) A DISTANCE OF 326.68 FEET TO A POINT
IN THE MOST EASTERLY CORNER OF SAID LOT 1 AND ALSO BEING THE TRUE
POINT OF BEGINNING;
THENCE CONTINUING ALONG THE NORTHERLY LINE OF SAID LOT 1 SOUTH 87
DEGREES 04'06" WEST A DISTANCE OF 310.84 FEET TO A POINT; THENCE
SOUTH 45 DEGREES 29'32" EAST A DISTANCE OF 199.43 FEET TO A POINT
IN THE SOUTHERLY LINE OF SAID LOT 1;
THENCE NORTH 44 DEGREES 38'28" EAST ALONG THE SOUTHERLY LINE OF
LOT 1 A DISTANCE OF 143.89 FEET TO A POINT IN THE BEGINNING OF A
CURVE;
THENCE ALONG SAID CURVE HAVING A RADIUS OF 340.00, AN ARC OF
85.97 AND A TANGENT OF 43.22 TO THE TRUE POINT OF BEGINNING.
When recorded return to:
Ernie Selman
3333 Cinder Lane
Las Vegas, Nevada 89103
18
<PAGE>
MEMORANDUM OF AGREEMENT
PLEASE TAKE NOTICE that the undersigned have entered into an
agreement ("Agreement") pursuant to which CINDERLANE, INC., a
Nevada corporation shall have the right to acquire title to that
certain real property located in Clark County, Nevada and
described on Exhibit "A" attached hereto and incorporated herein
("Property"). The Agreement further prohibits any transfer or
encumbrance of the Property except pursuant to the terms of the
Agreement.
DATED: January 6, 1995.
ALLIED BUILDING MATERIALS, CINDERLANE, INC., a
a Nevada corporation Nevada corporation
By: /s/Ernest L. Selman By: /s/Susan L. Johnson
Ernest L. Selman Susan L. Johnson
Vice President President
STATE OF NEVADA )
: ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on this 9th day
of January, 1995, by ERNEST L. SELMAN as President of Allied
Building Materials.
/s/
Notary Public
(My Commission Expires: July 31,
1998)
(SEAL)
19
<PAGE>
STATE OF NEVADA )
: ss.
COUNTY OF CLARK )
This instrument was acknowledged before me on this 6th day
of February, 1995, by SUSAN L. JOHNSON as President of
Cinderlane, Inc.
/s/
Notary Public
(My Commission Expires: April 16,
1998)
(SEAL)
20
<PAGE>
EXHIBIT "A"
That portion of the Southwest Quarter (SW 1/4) of Section 17,
Township 21 South, Range 61 East, M.D.B.& M., described as
follows:
COMMENCING AT THE NORTHEAST CORNER OF THE SOUTHWEST QUARTER (SW
1/4) OF SAID SECTION 17; THENCE SOUTHERLY ALONG THE EAST LINE
THEREOF, A DISTANCE OF 236.2 FEET TO A POINT ON THE NORTHWESTERLY
RIGHT-OF-WAY LINE OF THE LOS ANGELES AND SALT LAKE (UNION
PACIFIC) RAILROAD RIGHT-OF-WAY (200 FEET WIDE); THENCE SOUTH 28
DEGREES 12' WEST ALONG SAID RIGHT-OF-WAY LINE, A DISTANCE OF
1058.9 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING
SOUTH 28 DEGREES 12' WEST, A DISTANCE OF 585.91 FEET TO A POINT;
THENCE NORTH 61 DEGREES 48' WEST, A DISTANCE OF 679.4 FEET, MORE
OR LESS, TO A POINT ON THE WEST LINE OF THE EAST HALF (E 1/2) OF
THE SOUTHWEST QUARTER (SW 1/4) OF SAID SECTION 17; THENCE NORTH
01 DEGREES 18'00" EAST, ALONG SAID WEST LINE, A DISTANCE OF 6.54
FEET: THENCE NORTH 49 DEGREES 53'30" EAST, 44.64 FEET; THENCE
SOUTH 89 DEGREES 16'40" EAST, 76.48 FEET; THENCE NORTH 49 DEGREES 53'30"
EAST, A DISTANCE OF 498.21 FEET; THENCE NORTH 34 DEGREES 07'00"
EAST TO A POINT DISTANT NORTH 61 DEGREES 48' WEST, 435.29 FEET
FROM THE TRUE POINT OF BEGINNING; THENCE SOUTH 61 DEGREES 48'
EAST, A DISTANCE OF 435.29 FEET TO THE TRUE POINT OF BEGINNING.
When recorded return to:
Timothy J. Adams, Esq.
6900 Westcliff Drive
Suite 515
Las Vegas, Nevada 89128
21
TO: Rio Properties, Inc. ("Counterparty")
Attn: Roger M. Szepelak
Rapidfax: (702) 252 7633
FROM: Bank of America National Trust and Savings Association
("BofA")
555 California Street
San Francisco, CA 94104
William L. Denton
Phone No.: (415) 953-1449
Rapidfax No.: (415) 622-3548
DATED: August 11, 1994
RE: USD 40,000,000.00 Swap Transaction
Dear Sir:
The purpose of this letter agreement is to confirm the terms
and conditions of the Swap Transaction entered into between us on
the Trade Date specified below (the "Swap Transaction"). This
letter agreement constitutes a "Confirmation" as referred to in
the 1992 Master Agreement specified below.
The definitions and provisions contained in the 1991 ISDA
Definitions (as published by the International Swap Dealers
Association, Inc.) are incorporated into this Confirmation. In
the event of any inconsistency between those definitions and
provisions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms part of, and is
subject to, the 1992 Master Agreement dated as of July 28, 1993,
as amended and supplemented from time to time (the "Agreement"),
between you and us. All provisions contained in the Agreement
govern this Confirmation except as expressly modified below.
THIS FACSIMILE TRANSMISSION WILL BE THE ONLY WRITTEN
COMMUNICATION REGARDING THIS SWAP TRANSACTION EXCHANGED BETWEEN
US. Per the ISDA guidelines, this facsimile transmission will be
sufficient for all purposes to evidence a binding supplement to
the Agreement. However, we will agree to sign and return your
hard copy versions of this Confirmation, should you need to meet
audit requirements.
<PAGE>
2. The terms of the particular Swap Transaction, that is a
Rate Cap Transaction, to which this Confirmation relates are as
follows:
Notional Amount: USD 40,000,000.00
Trade Date: August 10, l994
Effective Date: September 30, 1994
Termination Date: September 30, 1997, subject to
adjustment in accordance with the
Modified Following Business Day
Convention
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer
Payment Date: August 12, 1994
Fixed Amount: USD 796,000.00
Floating Amounts:
Floating Rate Pay BofA
Cap Rate: 7.00000%
Floating Rate Payer
Payment Dates: The 30th of March, June, September
and December of each year,
beginning with December 30, 1994,
ending on and including the
Termination Date
Floating Rate for
Initial Calculation
Period: To be determined.
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: Three (3) Months
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: First day of each Calculation
Period
Compounding: Inapplicable
Business Day: New York and London
2
<PAGE>
Business Day Convention: Modified Following
Calculation Agent: BofA
3. Account Details
Payments to BofA: Fed Funds to Bank of America NT and
SA San Francisco ABA No. 1210-0035-
8 BISD Acct No. 33006-83980 Attn:
IRS Operations
Payments to
Counterparty: Fed Funds to Bank of America Nevada
Las Vegas Nevada ABA No. 1224 0072
4 Account Rio Properties Inc. Acct
No. 99005 9875
4. Offices
Office of BofA: The San Francisco Head Office
Office of
Counterparty: Las Vegas, Nevada
Variations to the
Exchange Agreement for
this Swap Transaction: None
Please confirm your agreement to be bound by the terms
stated herein by executing the copy of this Confirmation enclosed
for that purpose and returning it to us or by sending to us a
telex or letter, within 24 hours of receipt of this Confirmation
to Bank of America NT & SA San Francisco Telex No 249839 Answer
Back OPRST UR or Rapidfax No. 415-622-3548 Attention: William L.
Denton RMPG Operations, substantially in the form below:
Quote
We acknowledge receipt of your rapidfax dated August 11,
1994 with respect to the Swap Transaction entered into on August
10, 1994 between Rio Properties, Inc. and Bank of America
National Trust and Savings Association with a Notional Amount of
USD 40,000,000.00 and a Termination Date of September 30, 1997,
and confirm our agreement to be hound by the terms specified in
such rapidfax.
Unquote
3
<PAGE>
This Confirmation shall be conclusively deemed accurate and
complete by Counterparty if not objected to within two (2)
Business Days from the date of receipt.
Yours sincerely,
For and on behalf of:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:/s/Bob Oxenburg
Name: Bob Oxenburg
Title: VP
Confirmed as of the
date first above written:
RIO PROPERTIES, INC.
By:/s/James A. Barrett Jr. By:
Name: James A. Barrett Jr. Name:
Title: President Title:
4
<TABLE>
<CAPTION>
EXHIBIT 21.01
SUBSIDIARIES OF THE REGISTRANT
CORPORATIONS
STATE OF
NAME INCORPORATION PARENT COMPANY
------------------ ------------- --------------
<S> <C> c>
MarCor Development Nevada Rio Hotel &
Company, Inc. Casino, Inc.
MarCor Resort Nevada Rio Hotel &
Properties, Inc. Casino, Inc.
Rio Properties, Inc. Nevada Rio Hotel &
Casino, Inc.
Cinderlane, Inc. Nevada Rio Properties, Inc.
</TABLE>
CONSENT OF INDEPENDANT PUBLIC ACCOUNTANTS
As independant public accountants, we hereby consent to the incorporation
of our reports dated January 25, 1995 (1994 Annual Report on Form 10-K
and Supplemental Schedules), included in this form 10-K, into Rio Hotel
& Casino, Inc.'s previously filed registration statements on Form S-8
(File No. 33-38752), Form S-8 (File No. 33-68130), Form S-8 (File No.
33-56860), Form S-3 (File No. 33-70192), Form S-3 (File No. 51092)
and Form S-3 (File No. 33-36598).
/s/Arthur Anderson LLP
ARTHUR ANDERSON LLP
Las Vegas, Nevada
March 28, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 76,426
<SECURITIES> 0
<RECEIVABLES> 3,683
<ALLOWANCES> 479
<INVENTORY> 1,379
<CURRENT-ASSETS> 85,865
<PP&E> 843,303
<DEPRECIATION> 32,826
<TOTAL-ASSETS> 301,165
<CURRENT-LIABILITIES> 35,667
<BONDS> 110,147
<COMMON> 214
0
0
<OTHER-SE> 147,625
<TOTAL-LIABILITY-AND-EQUITY> 301,165
<SALES> 146,299
<TOTAL-REVENUES> 146,424
<CGS> 0
<TOTAL-COSTS> 120,496
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,923
<INCOME-PRETAX> 25,144
<INCOME-TAX> 9,178
<INCOME-CONTINUING> 15,966
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,966
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
