SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-4748
GRIFFIN GAMING & ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-0763055
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1133 Boardwalk, Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 609-344-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
First Mortgage Non-Recourse
Pass-Through Notes American Stock Exchange
Common Stock American Stock Exchange
Class B Redeemable Common Stock
(traded as part of Units with
Junior Mortgage Notes issued by
a subsidiary of registrant) American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
- continued -
Exhibit Index is presented on pages 79 through 90
Total Number of Pages 147
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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 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. [ ]
Based on the closing price on the American Stock Exchange, on February
29, 1996 the aggregate market value of the registrant's Common Stock
held by nonaffiliates was $73,936,000.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
A s of February 29, 1996 there were 7,941,035 shares of the
registrant's Common Stock outstanding and 35,000 shares of the
registrant's Class B Redeemable Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Proxy Statement to be filed for the registrant's 1996
annual meeting of shareholders are incorporated by reference in Part
III hereof.
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PART I
ITEM 1. BUSINESS
(a) General Development of Business
Griffin Gaming & Entertainment, Inc. ("GGE") is a holding company
which, through its indirect wholly owned subsidiary, Resorts
International Hotel, Inc. ("RIH"), is principally engaged in the
ownership and operation of Merv Griffin's Resorts Casino Hotel
("Resorts Casino Hotel") in Atlantic City, New Jersey. GGE was known
as Resorts International, Inc. until its name change, which was
effective June 30, 1995. "GGE" is used herein to refer to the
corporation both before and after its name change. GGE was
incorporated in Delaware in 1958. The term "Company" as used herein
includes GGE and/or one or more of its subsidiaries as the context may
require.
In Atlantic City, the Company owns and operates the Resorts
Casino Hotel, which has approximately 660 guest rooms, a 70,000
square foot casino, an 8,000 square foot simulcast parimutuel betting
and poker area and related facilities, located on the Boardwalk. See
"( c ) Narrative Description of Business" below, and "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS."
Approximately 10 acres of Boardwalk property owned by the Company
is leased to Atlantic City Showboat, Inc. ("ACS") under a 99-year net
lease expiring in 2082 (the "Showboat Lease"). All lease payments due
under the Showboat Lease directly service the Company's interest
obligations under the Showboat Notes described under "(c) Narrative
Description of Business - Showboat Lease" below. The leased acreage
is the site of the Showboat Casino Hotel (the "Showboat") which is
operated by ACS. The Company also owns other real estate in the
Atlantic City area, most of which is vacant land.
Casino operations in Atlantic City are conducted under a casino
license which is subject to periodic review and renewal by action of
the New Jersey Casino Control Commission (the "Casino Control
Commission"). The Company's current license was renewed in January
1996 through January 31, 2000 subject to a financial stability review
after two years. See "Regulation and Gaming Taxes and Fees" under
"(c) Narrative Description of Business" below.
1994 Restructuring
In April 1994 the Company s prepackaged bankruptcy plan of
reorganization (the "Plan") was confirmed by the United States
Bankruptcy Court for the District of Delaware and on May 3, 1994 the
Plan became effective. The Company s reorganization under the Plan
(the "Restructuring") included, among other things, (i) the sale of
the Company s Paradise Island operations and properties (the "SIHL
Sale") and (ii) the exchange of $481,907,000 principal amount of
public indebtedness for $160,000,000 principal amount of new debt
securities, 40% of the common stock of GGE (the "GGE Common Stock"),
the proceeds
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from the sale of the Paradise Island operations and approximately
$36,700,000 cash.
The Paradise Island assets disposed of included the Paradise
Island Resort & Casino, the Ocean Club Golf & Tennis Resort and the
Paradise Paradise Beach Resort. The assets sold included an 18-hole
golf course, approximately six miles of beach and water frontage and
other resort facilities on Paradise Island. A total of 562 acres on
Paradise Island, 218 of which were not used in the Company's former
operations and were available for future development, were included in
the sale. Also, certain assets located in Florida and used in
connection with the Company's former Paradise Island operations were
included in the sale. In addition, the Company's airline operation
was effectively disposed of in the sale by means of an option/put
agreement with a nominal option price. Pursuant to an agreement, the
Company operated the airline on behalf of the purchaser for a small
management fee through early May 1995.
The Plan and Restructuring are more completely described in GGE s
Form 10-K for the year ended December 31, 1994.
(b) Financial Information about Industry Segments
The information called for by this item is incorporated by
reference to the tables entitled "Revenues," "Contribution to
Consolidated Earnings (Loss) Before Income Taxes and Extraordinary
Items" and "Identifiable Assets, Depreciation and Capital Additions"
in "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS."
(c) Narrative Description of Business
Gaming Facilities
Through May 1995, the Resorts Casino Hotel in Atlantic City, New
Jersey, had a 60,000 square foot casino and a simulcast parimutuel
betting and poker area of approximately 8,000 square feet. In late
May 1995, the casino was expanded by approximately 10,000 square feet
which enabled the Company to increase the number of slot machines by
approximately 315 machines. At December 31, 1995, these gaming areas
contained 43 blackjack tables, 18 poker tables, 11 roulette tables, 10
dice tables, eight Caribbean stud poker tables, two baccarat tables,
two let it ride poker tables, one mini-baccarat table, one pai gow
poker table, one big six wheel, one sic bo table, 2,338 slot machines,
and five betting windows and four customer-operated terminals for
simulcast parimutuel betting. Also included in the simulcast area is
a keno lounge which has two keno cashier windows. There are also two
keno windows in the bus waiting area and one on the casino floor.
During 1995, the Company had total gaming revenues from its
Atlantic City casino of $267,757,000. This compares to total gaming
revenues of $250,482,000 for 1994 and $244,116,000 for 1993. In the
last several years, approximately a dozen new table games have been
introduced in order to provide more variety than the basic five table
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games of blackjack, roulette, craps, baccarat and big six, which were
the only games available for the initial 15 years of the gaming
industry in Atlantic City. The Company has offered simulcast betting
and poker since June 1993, keno since June 1994 and Caribbean stud
poker since November 1994.
Casino gaming in Atlantic City is highly competitive and is
strictly regulated under the New Jersey Casino Control Act and
regulations promulgated thereunder (the "Casino Control Act"), which
affect virtually all aspects of the Company's Atlantic City casino
operations. See "Competition" and "Regulation and Gaming Taxes and
Fees" below.
Resort and Hotel Facilities
The Resorts Casino Hotel commenced operations in May 1978 and was
the first casino/hotel opened in Atlantic City. This was accomplished
by the conversion of the former Haddon Hall Hotel, a classic hotel
structure originally built in the early 1900's, into a casino/hotel.
It is situated on approximately seven acres of land with approximately
310 feet of Boardwalk frontage overlooking the Atlantic Ocean. The
Resorts Casino Hotel consists of two hotel towers, the 15-story East
Tower and the nine-story North Tower. In addition to the casino
f a c ilities described above, the casino/hotel complex includes
approximately 660 guest rooms and suites, the 1,400-seat Superstar
Theater, seven restaurants, one cocktail lounge, a VIP slot and table
player lounge, an indoor swimming pool and health club, and retail
stores. The complex also has approximately 50,000 square feet of
convention facilities, including eight large meeting rooms and a
16,000 square foot ballroom.
The Company owns a garage that is connected to the Resorts Casino
Hotel by a covered walkway. This garage is used for patrons' self
parking and accommodates approximately 700 vehicles. The Company also
leases a lot which provides valet parking for approximately 180 cars.
In June 1995 the Company acquired approximately 4.4 acres adjoining
the Resorts Casino Hotel (the "Chalfonte Site" ) which acreage
currently provides additional uncovered self parking for approximately
140 cars and valet parking for approximately 420 cars. The Chalfonte
Site includes approximately 265 feet of Boardwalk frontage and was
previously leased by the Company. The Company intends to expand the
Resorts Casino Hotel by constructing hotel rooms, casino space and a
parking garage on this acreage commencing in late 1996. The expanded
facilities will be connected to the existing hotel structure by a
covered walkway already in place.
Consistent with industry practice, the Company reserves a portion
of its hotel rooms and suites as complimentary accommodations for
high-level casino wagerers. For 1995, 1994 and 1993 the average
occupancy rates, including complimentary rooms, which were primarily
provided to casino patrons, were 94%, 91% and 92%, respectively. The
average occupancy rate and weighted average daily room rental,
excluding complimentary rooms, were 51% and $59, respectively, for
1995. This compares with 47% and $64, respectively, for 1994, and 47%
and $62, respectively, for 1993.
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Capital Improvements
The Company has pursued a major capital improvements program
since 1989 in order to compete more effectively in the Atlantic City
market. During these seven years capital additions at Resorts Casino
Hotel exceeded $122,000,000. In 1995 the Company expanded its casino
by approximately 10,000 square feet and added approximately 315 slot
machines. Also in 1995, a new restaurant, California Pizza Kitchen,
was constructed and opened, five suites were renovated, and the
exterior of the building was painted. In 1994 the Company purchased
221 slot machines, most of which replaced older models, and completed
various capital maintenance projects. In prior years, the Company
converted certain back-of-the-house space into an 8,000 square foot
simulcast facility, opened the VIP slot and table player lounge, "Club
Griffin," and converted the parking garage from valet to self-parking.
The Company has a continual capital maintenance program whereby it
renovates its guest rooms, replaces its slot machines with newer
models, renovates its public areas, including restaurants, as well as
improves its infrastructure such as elevators and air conditioning.
As stated above, the Company intends to expand the Resorts Casino
Hotel by constructing hotel rooms, additional casino space and a
parking garage on the Chalfonte Site which it has acquired. The
Company s expansion plans are preliminary at this time, so the number
of rooms and parking spaces and the size of the additional casino
space to be constructed, as well as the estimated cost, are not yet
determined. Excluding any expenditures on the proposed expansion,
capital expenditures in 1996 on the Resorts Casino Hotel will be
limited to those of a capital maintenance nature and are estimated to
approximate $10,000,000.
Marketing
The Company continues to take advantage of the celebrity status
of Merv Griffin, who is actively engaged in the marketing of the
Resorts Casino Hotel. Mr. Griffin, who is Chairman of the Board of
GGE , is featured in television commercials and in print
advertisements. Mr. Griffin also appears live at the Resorts Casino
Hotel in numerous entertainment events including the nationally
televised "Merv Griffin's New Year's Eve Special 1995" which featured
Harry Belafonte, Tony Bennett and Trisha Yearwood. Merv Griffin's New
Year's Eve Special has been produced live at the Resorts Casino Hotel
each year since 1991. Mr. Griffin is to continue to participate in
the operations and marketing of the Resorts Casino Hotel through the
term of a License and Services Agreement described in Note 12 of Notes
to Consolidated Financial Statements.
The Company's marketing strategy is designed to enhance the
appeal of the Resorts Casino Hotel to the mid and premium-level slot
and table game players, although slot players have been, in recent
years, the primary focus of the Company's marketing efforts. In 1993
the Company introduced the "cash-back" program, which rewards slot
players with cash refunds or complimentaries based on their volume of
play, and expanded and upgraded "Hollywood Hills," its high-limit slot
area. This area was
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further expanded in late May 1995. In the fall of 1994, the Company
increased its charter flight program to recapture lost market share in
table win. The charter program was further expanded in 1995 to
attract mid-level slot players. In the fall of 1994, the Company
introduced the "Griffin Games," created by Merv Griffin, whereby slot
players are chosen at random to participate in daily slot tournaments;
daily tournament winners qualify to participate in a $100,000 "winners
tournament." In January 1995 the "Griffin Games" were expanded to
include patrons playing blackjack and in January 1996 they were
further expanded to include roulette players. The Company also has a
VIP slot and table player lounge, "Club Griffin," which serves
complimentary food and beverages. As in prior years, the Company
continues to emphasize entertainment as an integral part of its
marketing program. The production show Wahoo Baby, created by Merv
Griffin, opened in September 1995 to excellent reviews. The
entertainment schedule is supplemented on a monthly basis with
headliners who included, among others, Regis & Kathie Lee, Rosie
O Donnell and Tony Danza in 1995; for 1996 all of the preceding
headliners are scheduled, as well as Wayne Newton, Tom Jones and the
Beach Boys. In addition to the above, the Company continues to rely
heavily on its bus program to supply a critical mass of low to mid-
level slot players.
New Convention Center and Casino/Hotel Expansion
In January 1992, the State of New Jersey enacted legislation that
authorized a financing plan for the construction of a new convention
center to be located on a 30-acre site next to the Atlantic City train
station at the base of the Atlantic City Expressway. The Company
understands that the new convention center will have 500,000 square
feet of exhibit space and an additional 109,000 square feet of meeting
rooms. Construction of the new convention center began in early 1993
and it is scheduled to be completed in early 1997.
The convention center is part of a broader plan that includes an
additional expansion of the Atlantic City International Airport, the
transformation of the main entryway into Atlantic City into a new
corridor, and the construction of a new 500 room convention hotel.
Officials have commented upon the need for improved commercial air
service into Atlantic City as a factor in the success of the proposed
convention center. See further discussion under "Transportation
Facilities" below. The corridor will link the new convention center
and hotel with the Boardwalk. In all, six blocks are to be
transformed into an expansive park with extensive landscaping, night-
time lighting, a large fountain and pool with a 60-foot lighthouse.
It is believed that additional hotel rooms are necessary to
support the convention center as well as to allow Atlantic City to
become a competitive destination resort. Thus, in addition to the 500
room convention hotel, to further spur construction of new hotel rooms
and renovation of substandard hotel rooms into deluxe accommodations,
up to a total of $100,000,000 has been set aside by the Casino
Reinvestment Development Authority (the "CRDA"), a public authority
created under the Casino Control Act, to aid in financing such
projects. To date, the CRDA has approved the expansion projects
submitted by eight
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casino/hotels which are to receive CRDA financing totaling the
$100,000,000 set aside, and could result in the construction of
approximately 4,000 hotel rooms. The New Jersey legislature is
currently discussing the possibility of increasing the fund by an
additional $50,000,000 to provide further incentive for additional
hotel rooms. Also, Mirage Resorts, Inc., a Las Vegas, Nevada
casino/hotel company, has been selected to be the developer of an
approximately 180 acre tract in the Marina area of Atlantic City.
Mirage Resorts, Inc., proposes to build a $500,000,000, 2,000 room
casino/hotel on that tract. The Company understands that feasibility
studies for development of the tract and its associated infrastructure
are in the preliminary stages.
Although these developments are viewed as positive and favorable
to the future prospects of the Atlantic City gaming industry, the
Company, at this point, can make no representations as to whether, or
to what extent, its results may be affected by the completion of the
new convention center, the proposed airport expansion projects and the
proposed increase in number of hotel rooms in the area.
Transportation Facilities
The lack of an adequate transportation infrastructure in the
Atlantic City area continues to negatively affect the industry's
ability to attract patrons from outside a core geographic area. In
1989, Amtrak express rail service to Atlantic City commenced from
Philadelphia, New York, Washington and other major cities in the
northeast. This service was expected to improve access to Atlantic
City and expand the geographic size of the Atlantic City casino
industry's marketing base. However, Amtrak discontinued its express
rail service to Atlantic City in 1995.
Also, in 1989 the terminal at the Atlantic City International
Airport (located approximately 12 miles from Atlantic City) was
expanded to handle additional air carriers and large passenger jets,
but scheduled service to that airport from major cities by national
air carriers remains extremely limited. In order to attract increased
air service, expansion of the existing terminal is currently in
progress. This construction, which will double the size of the
terminal, is expected to be completed in the spring of 1996. This
project includes a new second level for the terminal, additional
departure gates, an improved baggage handling system and sheltered
walkways connecting the terminal and planes.
Since the inception of gaming in Atlantic City there has been no
significant change in the industry's marketing base or in the
principal means of transportation to Atlantic City, which continues to
be automobile and bus. The resulting geographic limitations and
traffic congestion have restricted Atlantic City's growth as a major
destination resort.
The Company continues to utilize day-trip bus programs. A
non-exclusive easement enables the Resorts Casino Hotel to utilize a
bus tunnel under the adjacent Trump Taj Mahal Casino-Resort (the "Taj
Mahal"), which connects Pennsylvania and Virginia Avenues, and a
service
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road exit from the bus tunnel. This reduces congestion around the
Pennsylvania Avenue bus entrance to the Resorts Casino Hotel. To
accommodate its bus patrons, the Company has a waiting facility which
is located indoors, adjacent to the casino, and offers various
amenities.
Competition
Competition in the Atlantic City casino/hotel industry is
intense. Casino/hotels compete primarily on the basis of promotional
allowances, entertainment, advertising, services provided to patrons,
caliber of personnel, attractiveness of the hotel and casino areas and
related amenities, and parking facilities. The Resorts Casino Hotel
competes directly with 11 casino/hotels in Atlantic City which, in the
aggregate, contain approximately 880,000 square feet of gaming area,
including simulcast betting and poker rooms, and 8,700 hotel rooms.
Significant additional expansion is expected in the near future due to
the previously discussed projects to be financed by the CRDA as well
as the expected re-opening in April 1996 of the Trump Regency Hotel,
which contains 500 hotel rooms and approximately 50,000 square feet
of casino floor space.
The Resorts Casino Hotel is located at the eastern end of the
Boardwalk adjacent to the Taj Mahal, which is next to the Showboat.
These three properties have a total of more than 2,700 hotel rooms and
approximately 308,000 square feet of gaming space in close proximity
to each other. In 1995, the three casino/hotels combined generated
approximately 30% of the gross gaming revenue of Atlantic City. A
28-foot wide enclosed pedestrian bridge between the Resorts Casino
Hotel and the Taj Mahal allows patrons of both hotels and guests for
events being held at the Resorts Casino Hotel and at the Taj Mahal to
move between the facilities without exposure to the weather. A
similar enclosed pedestrian bridge connects the Showboat to the Taj
M a hal, allowing patrons to walk under cover among all three
casino/hotels. The remaining nine Atlantic City casino/hotels are
located approximately one-half mile to one and one-half miles to the
west on the Boardwalk or in the Marina area of Atlantic City.
In recent years, competition for the gaming patron outside of
Atlantic City has become extremely intense. In 1988, only Nevada and
New Jersey had legalized casino operations. Currently, twenty four
states have legalized casinos on land, water or Indian reservations.
Also, The Bahamas and other destination resorts in the Caribbean and
Canada have increased the competition for gaming revenue. Thus, the
competition for the destination resort patron has intensified.
Directly competing with Atlantic City for the day-trip patron is a
casino/hotel on an Indian reservation in Connecticut which currently
operates more than 3,880 slot machines and whose slot revenue for the
year 1995 exceeded $575,000,000, which is twice the slot revenue of
the largest casino/hotel in Atlantic City. A second casino/hotel on
another Indian reservation located in the same area in Connecticut is
expected to open in the fall of 1996. In July 1993 the Oneida Indians
opened a casino near Syracuse, New York. Other Indian reservation
projects have been announced in the states of New York and Rhode
Island which would increase the competition for day-trip patrons.
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This rapid expansion of casino gaming, particularly that which
has been or may be introduced into jurisdictions in close proximity to
Atlantic City, adversely affects the Company's operations as well as
the Atlantic City gaming industry.
Gaming Credit Policy
Credit is extended to selected gaming customers primarily in
order to compete with other casino/hotels in Atlantic City which also
extend credit to customers. Credit play represented 19% of table game
volume at the Resorts Casino Hotel in 1995, 21% in 1994 and 24% in
1993. The credit play percentage of table game volume for the
Atlantic City industry excluding RIH was 22% in 1995, 23% in 1994 and
23 % in 1993. RIH's gaming receivables, net of allowance for
uncollectible amounts, were $3,813,000, $4,216,000 and $3,618,000 as
of December 31, 1995, 1994 and 1993, respectively. The collectibility
of gaming receivables has an effect on results of operations, and
management believes that overall collections have been satisfactory.
Atlantic City gaming debts are enforceable under the laws of New
Jersey and certain other states, although it is not clear whether
other states will honor this policy or enforce judgments rendered by
the courts of New Jersey with respect to such debts.
Security Controls
Gaming at the Resorts Casino Hotel is conducted by Company
trained and supervised personnel. Prior to employment, all casino
personnel must be licensed under the Casino Control Act. Security
checks are made to determine, among other matters, that job applicants
for key positions have had no criminal ties or associations. The
Company employs extensive security and internal controls at its
casino. Security in the Resorts Casino Hotel utilizes closed circuit
video cameras to monitor the casino floor and money counting areas.
The count of monies from gaming is observed daily by government
representatives.
Seasonal Factors
The Company's business activities are strongly affected by
seasonal factors that influence the New Jersey beach tourist trade.
Higher revenues and earnings are typically realized from the Company's
Atlantic City operations during the middle third of the year.
Employees
During 1995 the Company had a maximum of approximately 3,800
employees, almost all of whom were located in Atlantic City. The
Company believes that its employee relations are satisfactory.
Approximately 1,500 of the Company's employees are represented by
unions. Of these employees, approximately 1,200 are represented by
the Hotel Employees and Restaurant Employees International Union Local
54, whose contract expires in September 1999. There are several union
contracts covering other union employees.
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All of the Company's casino employees and casino hotel employees
must be licensed under the Casino Control Act. Casino hotel employees
are those employees whose work requires access to the casino, the
casino simulcasting facility or restricted casino areas. Each casino
and casino hotel employee must meet applicable standards pertaining to
such matters as financial responsibility, good character, ability,
casino training and experience, and New Jersey residency. Hotel
employees are no longer required to be registered with the Casino
Control Commission.
Regulation and Gaming Taxes and Fees
General
The Company's operations in Atlantic City are subject to
regulation under the Casino Control Act, which authorizes the
establishment of casinos in Atlantic City, provides for licensing,
regulation and taxation of casinos and created the Casino Control
Commission and the Division of Gaming Enforcement to administer the
Casino Control Act. In general, the provisions of the Casino Control
Act concern: the ability, character and financial stability and
integrity of casino operators, their officers, directors and employees
and others financially interested in a casino; the nature and
suitability of hotel and casino facilities, operating methods and
conditions; and financial and accounting practices. Gaming operations
are subject to a number of restrictions relating to the rules of
games, type of games, credit play, size of hotel and casino
operations, hours of operation, persons who may be employed, companies
which may do business with casinos, the maintenance of accounting and
cash control procedures, security and other aspects of the business.
There were significant regulatory changes from 1993 through early
1995. The Casino Control Commission approved poker and keno, which
were implemented by casinos in the summers of 1993 and 1994,
respectively. Also, the Casino Control Act was amended to allow
casinos to expand their casino floors before building the requisite
number of hotel rooms, subject to approval of the Casino Control
Commission. This amendment was designed to encourage hotel room
construction by giving casino licensees an incentive and an added
ability to generate money to finance hotel construction. Previous law
only allowed for casino expansion if a casino built new hotel rooms
first. In addition, the minimum casino square footage has been
increased from 50,000 square feet to 60,000 square feet for the first
500 qualifying rooms and allows for an additional 10,000 square feet
for each additional 100 qualifying rooms over 500, up to a maximum of
200,000 square feet. Future costs of regulation have been reduced as
new legislation (i) no longer requires hotel employees to be
registered, (ii) extends the term for casino and casino key employee
license renewals from two years to four years and (iii) allows greater
efficiency by either reducing or eliminating the time permitted the
Casino Control Commission to approve internal controls, patron
complimentary programs and the movement of gaming equipment.
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Casino License
A casino license is initially issued for a term of one year and
must be renewed annually by action of the Casino Control Commission
for the first two renewal periods succeeding the initial issuance of a
casino license. Until recently, the Casino Control Commission was
given the authority to renew a casino license for a period of two
years. This period has been extended to four years, although the
Casino Control Commission may reopen licensing hearings at any time.
A license is not transferable and may be conditioned, revoked or
suspended at any time upon proper action by the Casino Control
Commission. The Casino Control Act also requires an operations
certificate which, in effect, has a term coextensive with that of a
casino license.
On February 26, 1979, the Casino Control Commission granted a
casino license to RIH for the operation of the Company's Atlantic City
casino. In January 1996, RIH's license was renewed until January 31,
2000. RIH's renewed license is subject to a financial stability
review midway through the license period.
Restrictions on Ownership of Equity and Debt Securities
The Casino Control Act imposes certain restrictions upon the
ownership of securities issued by a corporation which holds a casino
license or is a holding, intermediary or subsidiary company of a
corporate licensee (collectively, "holding company"). Among other
r e strictions, the sale, assignment, transfer, pledge or other
disposition of any security issued by a corporation which holds a
casino license is conditional and shall be ineffective if disapproved
by the Casino Control Commission. The restrictions imposed by the
Casino Control Act are more stringent for equity securities than for
debt securities. If the Casino Control Commission finds that an
individual owner or holder of any securities of a corporate licensee
or its holding company must be qualified and is not qualified under
the Casino Control Act, the Casino Control Commission has the right to
propose any necessary remedial action. In the case of corporate
holding companies and affiliates whose securities are publicly traded,
the Casino Control Commission may require divestiture of the security
held by any disqualified holder who is required to be qualified under
the Casino Control Act.
In the event that entities or persons required to be qualified
refuse or fail to qualify and fail to divest themselves of such
security interest, the Casino Control Commission has the right to take
any necessary action, including the revocation or suspension of the
casino license. If any security holder of the licensee or its holding
company or affiliate who is required to be qualified is found
disqualified, it will be unlawful for the security holder to (i)
receive any dividends or interest upon any such securities, (ii)
exercise, directly or through any trustee or nominee, any right
conferred by such securities or (iii) receive any remuneration in any
form from the corporate licensee for services rendered or otherwise.
The Amended and Restated Certificate of Incorporation of GGE provides
that all securities of GGE are held subject to the condition that if
the holder thereof is found to be
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disqualified by the Casino Control Commission pursuant to provisions
of the Casino Control Act, then that holder must dispose of his or her
interest in the securities. The Company s 11% Mortgage Notes due 2003
and 11.375% Junior Mortgage Notes due 2004 (the "Junior Mortgage
Notes") are also subject to the qualification, divestiture and
redemption provisions under the Casino Control Act described herein.
Because the Junior Mortgage Notes are traded as part of Units along
with shares of GGE s Class B redeemable common stock (see "ITEM 5.
MARKET FOR THE REGISTRANT' S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS" ), for purposes of the Casino Control Act, these notes are
considered to be equity securities.
Remedies
In the event that it is determined that a licensee has violated
the Casino Control Act, or if a security holder of the licensee
required to be qualified is found disqualified but does not dispose of
his securities in the licensee or holding company, under certain
circumstances the licensee could be subject to fines or have its
license suspended or revoked.
The Casino Control Act provides for the mandatory appointment of
a conservator to operate the casino and hotel facility if a license is
revoked or not renewed and permits the appointment of a conservator if
a license is suspended for a period in excess of 120 days. If a
conservator is appointed, the suspended or former licensee is entitled
to a "fair rate of return out of net earnings, if any, during the
period of the conservatorship, taking into consideration that which
amounts to a fair rate of return in the casino or hotel industry."
Under certain circumstances, upon the revocation of a license or
failure to renew, the conservator, after approval by the Casino
Control Commission and consultation with the former licensee, may
sell, assign, convey or otherwise dispose of all of the property of
the casino/hotel. In such cases, the former licensee is entitled to a
summary review of such proposed sale by the Casino Control Commission
and creditors of the former licensee and other parties in interest are
entitled to prior written notice of sale.
License Fees, Taxes and Investment Obligations
The Casino Control Act provides for casino license renewal fees
and other fees based upon the cost of maintaining control and
regulatory activities, and various license fees for the various
classes of employees. In addition, a casino licensee is subject
annually to a tax of 8% of "gross revenue" (defined under the Casino
Control Act as casino win, less provision for uncollectible accounts
up to 4% of casino win) and license fees of $500 on each slot machine.
Also, the Casino Control Act has been amended to create a new Atlantic
City fund (the "AC Fund") for economic development projects other than
the construction and renovation of casino/hotels. Beginning in fiscal
year 1995/1996 and for the following three fiscal years, if the amount
of money expended by the Casino Control Commission and the Division of
Gaming Enforcement is less than $57,300,000, the prior year s budget
for these agencies, the amount
- 13 -<PAGE>
of the difference is to be contributed to the AC Fund. Thereafter,
beginning with fiscal year 1999/2000 and for the following three
fiscal years, an amount equal to the average paid into the AC Fund for
the previous four fiscal years shall be contributed to the AC Fund.
Each licensee s share of the amount to be contributed to the AC Fund
is based upon its percentage of the total industry gross revenue for
the relevant fiscal year. After eight years, the casino licensee s
requirement to contribute to this fund ceases.
The following table summarizes, for the periods shown, the fees,
taxes and contributions assessed upon the Company by the Casino
Control Commission.
For the Year
1995 1994 1993
Gaming tax $21,402,000 $19,996,000 $19,545,000
License, investigation,
inspection and other fees 3,917,000 4,218,000 3,985,000
Contribution to AC Fund 224,000
$25,543,000 $24,214,000 $23,530,000
The Casino Control Act, as originally adopted, required a
licensee to make investments equal to 2% of the licensee's gross
r e venue (the "investment obligation") for each calendar year,
commencing in 1979, in which such gross revenue exceeded its
"cumulative investments" (as defined in the Casino Control Act). A
licensee had five years from the end of each calendar year to satisfy
this investment obligation or become liable for an "alternative tax"
in the same amount. In 1984 the New Jersey legislature amended the
Casino Control Act so that these provisions now apply only to
investment obligations for the years 1979 through 1983. As discussed
in Note 18 of Notes to Consolidated Financial Statements certain
issues have been raised concerning the satisfaction of the Company's
investment obligations for the years 1979 through 1983.
Effective for 1984 and subsequent years, the amended Casino
Control Act requires a licensee to satisfy its investment obligation
by purchasing bonds to be issued by the CRDA or by making other
investments authorized by the CRDA, in an amount equal to 1.25% of a
licensee's gross revenue. If the investment obligation is not
satisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of gross revenue. Licensees are required to
make quarterly deposits with the CRDA against their current year
investment obligations. The Company's investment obligations for the
years 1995, 1994 and 1993 amounted to $3,348,000, $3,124,000, and
$3,054,000, respectively, and, with the exception of a $127,000 credit
received in 1995 for making a donation, have been satisfied by
deposits made with the CRDA. At December 31, 1995, the Company held
$5,567,000 face amount of bonds issued by the CRDA and had $18,197,000
on deposit with the CRDA. The CRDA bonds issued through 1995 have
interest rates ranging from 3.9% to 7% and have repayment terms of
between 20 and 50 years.
- 14 -<PAGE>
Showboat Lease
The Showboat has 800 guest rooms, a 60-lane bowling center, a
77,000 square foot casino and a 20,000 square foot simulcast betting
and poker room. The Showboat is situated on approximately 10 acres
which are owned by the Company and leased to ACS pursuant to the
Showboat Lease, a 99-year net lease dated October 26, 1983, as
amended. The Showboat Lease provided for an initial annual rental,
which commenced in March 1987, of $6,340,000, subject to annual
adjustment based upon changes in the consumer price index. The annual
rental was $8,560,000 for the 1995 lease year and is expected to
approximate $8,700,000 for the 1996 lease year.
The Company's First Mortgage Non-Recourse Pass-Through Notes due
June 30, 2000 (the "Showboat Notes") are secured and serviced by the
Showboat Lease, and all lease payments are made to the Indenture
Trustee for the Showboat Notes to meet the Company's interest
obligations under those notes. See Note 8 of Notes to Consolidated
Financial Statements.
The Showboat Lease provides that if, under New Jersey law, the
Company is prohibited from acting as lessor, including any finding by
the Casino Control Commission that the Company is unsuitable, the
Company must appoint a trustee, acceptable to the Casino Control
Commission, to act for the Company and collect all lease payments on
the Company's behalf. In that event, the trustee also must proceed to
sell the Company's interest in the Showboat Lease and the leased
property to a buyer qualified to act as lessor. The net proceeds of
any such sale, together with any unremitted rentals, would be paid to
the Company. Also, if the Company is no longer able to act as a
lessor, as aforesaid, ACS would have an option to acquire ownership of
the 10 acres leased from the Company. The option would be exercisable
during a period of not more than three months. The purchase price
would be an amount equal to the greater of $66,000,000 or the fair
market value of the leased acreage, as defined, but in no event may
the purchase price be more than 11 times the rent being paid by ACS in
the year in which the option may become effective. If the fair market
value is not ascertained within the time required by the Casino
Control Commission, then the purchase price would be the lesser of
$66,000,000 or 11 times the rent being paid by ACS in the year the
option may become effective. In the event of any sale of the leased
property under the circumstances described above, the disposition of
the proceeds of such sale would be governed by the indenture for the
Showboat Notes.
Under the Casino Control Act, both the Company and ACS, because
of their lessor-lessee relationship, are jointly and severally liable
for the acts of the other with respect to any violations of the Casino
Control Act by the other. In order to limit the potential liability
that could result from this provision, ACS, its parent, Ocean
Showboat, Inc., and the Company have entered into an indemnity
agreement pursuant to which they agree to indemnify each other from
all liabilities and losses which may arise as a result of acts of the
other party that violate the Casino Control Act. The Casino Control
Commission could determine, however, that the party seeking
indemnification is not entitled to, or is barred from, such
indemnification.
- 15 -<PAGE>
Other Properties
The Company owns in the aggregate approximately 35 acres of land
in Atlantic City at various sites which the Company intends to develop
or are available for sale. The acreage which the Company intends to
develop is the 4.4 acre Chalfonte Site and the parcels available for
sale primarily consists of vacant land in Great Island and waterfront
parcels in the inlet section. See "ITEM 2. PROPERTIES."
(d) Financial Information about Foreign and Domestic Operations
and Export Sales
The Company's foreign operations and properties were disposed of
in May 1994 as part of the Restructuring described under "(a) General
Development of Business - 1994 Restructuring" above. See also "(b)
Financial Information about Industry Segments."
ITEM 2. PROPERTIES
Casino, Hotel and Related Properties
The Company's casino, resort hotel and related properties in
Atlantic City, the approximately 10 acre site of the Showboat and
certain other properties described below are owned in fee, except for
approximately 1.2 acres of the Resorts Casino Hotel site which are
leased pursuant to ground leases expiring from 2056 through 2067.
RIH's fee and leasehold interests in the Resorts Casino Hotel,
the contiguous parking garage and property, all additions and
improvements thereto, and related personal property of RIH compose the
collateral securing the Company s 11% Mortgage Notes due 2003 (the
"Mortgage Notes") and the Junior Mortgage Notes. The Showboat Lease,
including the land subject to the lease, secures the payment of the
Showboat Notes.
Other Properties
The Company owns various non-operating sites, approximating 35
acres, in Atlantic City that could be developed and are available for
sale. Included in these parcels is the 4.4 acre Chalfonte Site and
the 2 acre Steeplechase Pier site, both of which the Company intends
to develop. GGE also owns in fee an approximately 552 acre parcel
located in Atlantic City on Blackhorse Pike, of which approximately
545 acres are considered to be woodlands and wetlands ("Great
Island"). The Company also owns in fee various individual parcels of
property located in the area of Atlantic City known as the South Inlet
which in the aggregate constitute approximately 10 acres and a parcel
of land in Atlantic City consisting of approximately six acres and a
warehouse thereon. The Company is the owner of various additional
properties at scattered sites in Atlantic City. Principal among these
is the so-called "Trans Expo" site, a 2.3 acre parcel located near the
site of the new convention center.
- 16 -<PAGE>
In recent years the commercial real estate market in Atlantic
City has been in a generally depressed state and, even though in
recent months there has been a noticeable increase in interest by
major casino/hotel companies to enter the Atlantic City gaming
industry, the Company does not anticipate any significant real estate
activity in the foreseeable future. In this connection, see Note 15
of Notes to Consolidated Financial Statements for a discussion of a
write-down of the Company s non-operating Atlantic City real estate in
1994.
ITEM 3. LEGAL PROCEEDINGS
U.S. District Court / U.S. Bankruptcy Court Action - Rogers
GGE was named as a nominal defendant in a class action filed by
Nathan Rogers, a shareholder of GGE. The complaint was filed in the
U.S. District Court for the Southern District of New York on January
27, 1995. The defendants in the action were Merv Griffin, The Griffin
Group, Inc. ("Griffin Group," a corporation controlled by Merv
Griffin), David P. Hanlon, who was President, Chief Executive Officer
and a director of GGE through October 31, 1993, and four former
directors of GGE who served in that capacity until the effective date
of the Plan. Rogers alleged a violation of section 14(a) of the
Securities Exchange Act for allegedly false and misleading proxy
statements used to elect directors and auditors at the 1991 and 1992
shareholder meetings. Rogers also filed a claim derivatively on
behalf of GGE alleging that defendants improperly permitted defendant
Griffin not to repay money he allegedly owed to the Company. The
complaint sought, among other things, the appointment of a receiver
until after election of new directors and an unspecified sum of money
as compensatory damages to GGE for allegedly wrongful acts by the
defendants. In November 1995 the District Court for the Southern
District of New York granted GGE's motion to transfer the case to the
U.S. District Court for the District of Delaware where it is now
pending.
On September 25, 1995 plaintiff Rogers filed a Complaint in
Adversary Proceeding in the Bankruptcy Court for the District of New
Jersey (the "NJ Bankruptcy Court"), which court approved the Company s
1990 plan of reorganization. The complaint alleges that the Company
did not comply with its 1990 plan of reorganization in relation to the
repayment by Merv Griffin of his $11,000,000 promissory note. The
complaint further alleges that the Company violated the court order
approving the 1990 plan of reorganization by filing a pre-packaged
plan of reorganization in another district. The complaint seeks to
have a trustee appointed for the Company and to have the issuance of
GGE Common Stock to Merv Griffin pursuant to the 1990 plan of
reorganization voided. The Company believes the litigation is wholly
without merit and has filed a motion to dismiss the adversary
proceeding. The NJ Bankruptcy Court has set March 19, 1996 as the
date for the hearing of that motion.
- 17 -<PAGE>
U.S. District Court Action - GGE v. Lowenschuss
As previously reported, in September 1989 GGE filed an action in
the U.S. District Court for the Eastern District of Pennsylvania to
recover certain sums paid to the defendant, as trustee for two
Individual Retirement Accounts and the Fred Lowenschuss Associates
Pension Plan, for GGE stock in the 1988 merger, in which GGE was
acquired by Merv Griffin. This action was transferred to the NJ
Bankruptcy Court in connection with the Company's former bankruptcy
case commenced there in 1989.
In February 1992, the NJ Bankruptcy Court issued an opinion
granting partial summary judgment in favor of GGE on one of its six
causes of action. The NJ Bankruptcy Court reserved the issue of
remedies for trial.
In A ugust 1992, Fred Lowenschuss filed for chapter 11
reorganization in the U. S. Bankruptcy Court for the District of
Nevada (the "Nevada Bankruptcy Court"). As a result, the NJ
Bankruptcy Court stayed GGE's action against Lowenschuss.
The Nevada Bankruptcy Court confirmed Fred Lowenschuss' plan of
reorganization in October 1993. GGE appealed certain portions of the
confirmation order and other orders of the Nevada Bankruptcy Court.
In June 1994, the U. S. District Court for the District of Nevada (the
"Nevada District Court") granted GGE's appeal in all respects. In
October 1995, the U.S. Court of Appeals for the Ninth Circuit affirmed
the Nevada District Court s ruling in all respects. In November 1995,
the Court of Appeals denied Fred Lowenschuss petition for rehearing.
On November 2 and 3, 1995, the NJ Bankruptcy Court held a trial
on the merits of GGE s claims against the trustee of the Fred
Lowenschuss Associates Pension Plan. The NJ Bankruptcy Court heard
oral arguments on February 29, 1996 and has not yet rendered a final
judgment.
The foregoing litigation and bankruptcy proceedings have spawned
additional and related litigation, including the following: (i) an
injunction action brought by Fred Lowenschuss, wherein the Nevada
Bankruptcy Court enjoined GGE from proceeding against Fred Lowenschuss
individually; the Nevada District Court dismissed appeals by both GGE
and Fred Lowenschuss, and Fred Lowenschuss has appealed the Nevada
District Court s dismissal to the Ninth Circuit; (ii) a malicious
prosecution action brought by Fred Lowenschuss against GGE and its
counsel that was dismissed by the Nevada Bankruptcy Court; Fred
Lowenschuss has appealed that dismissal to the Nevada District Court;
(iii) an action filed by Laurance Lowenschuss, as trustee of the Fred
Lowenschuss Associates Pension Plan, in the Nevada District Court
against GGE, which was transferred to the New Jersey District Court;
in January 1996, the New Jersey District Court referred the matter to
the NJ Bankruptcy Court; (iv) another injunction action brought by
Fred Lowenschuss against GGE in the Nevada Bankruptcy Court, which GGE
has moved to dismiss.
- 18 -<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The principal market for GGE Common Stock is the American Stock
Exchange. The high and low quarterly sales prices on the American
Stock Exchange of GGE Common Stock in 1995 and 1994 were as follows:
1995 1994
Quarter High Low High Low
First 12 1/2 4 1/16 9 3/8 6 9/16
Second 19 11/16 11 9/16 8 7/16 3 3/4
Third 17 1/4 11 7/8 5 5/8 3 3/4
Fourth 14 1/4 10 5 3 3/4
At the 1995 annual meeting the shareholders approved a one-for-
five reverse stock split of the GGE Common Stock (the "Reverse Stock
Split"), which was effective as of the close of business on June 30,
1995. The sales prices reflected above for periods prior to that date
have been restated to give effect to the Reverse Stock Split.
No dividends were paid on GGE Common Stock during the last two
fiscal years.
The number of holders of record of GGE Common Stock on February
29, 1996 was 1,728.
As part of the Restructuring described under "ITEM 1. BUSINESS -
(a) General Development of Business - 1994 Restructuring" the Company
issued 35,000 units (the "Units") each comprised of one share of GGE s
Class B redeemable common stock (the "Class B Stock") and $1,000
principal amount of Junior Mortgage Notes issued by Resorts
International Hotel Financing, Inc., a subsidiary of GGE. Shares of
Class B Stock are traded only as part of Units. Therefore, no
separate market information is available for Class B Stock. In
November 1994 RIH purchased 12,899 of the Units.
- 19 -<PAGE>
<TABLE>ITEM 6. SELECTED FINANCIAL DATA
The information presented below should be read in conjunction with the consolidated financial statements,
including notes thereto, presented under "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA."
(In Thousands of Dollars, except per share data)
<CAPTION> For the Year Ended December 31,
Operating Information (Note A) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Operating revenues (Note B) $301,740 $353,016 $ 439,564 $436,934 $418,243
Earnings (loss) from operations (Note B) $ 41,678 $(48,570) $ 12,898 $ 21,502 $ 16,036
Recapitalization costs (Note C) (5,232) (8,789) (2,848)
Proceeds from Litigation Trust (Note D) 2,542
Other income (deductions), net (Note E) (25,779) (47,631) (105,273) (73,456) (58,438)
Earnings (loss) before income taxes and
extraordinary items 15,899 (98,891) (101,164) (54,802) (42,402)
Income tax benefit (expense) (Note F) (1,000) 1,348 831
Earnings (loss) before extraordinary items 15,899 (98,891) (102,164) (53,454) (41,571)
Extraordinary items (Note G) 190,008
Net earnings (loss) $ 15,899 $ 91,117 $(102,164) $(53,454) $(41,571)
Per share data - primary (Note H):
Earnings (loss) before extraordinary items $ 1.87 $ (15.13) $ (25.34) $ (13.27) $ (10.35)
Extraordinary items 29.07
Net earnings (loss) $ 1.87 $ 13.94 $ (25.34) $ (13.27) $ (10.35)
Per share data - fully diluted:
Net earnings $ 1.83
</TABLE>
<TABLE><CAPTION> At December 31,
Balance Sheet Information (Note A) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total assets $338,451 $317,248 $ 575,785 $568,950 $567,890
Current maturities of long-term debt
(Note I) $ 589 $ 5 $ 466,336 $ 828 $ 1,571
Long-term debt, excluding current
maturities (Note I) $217,356 $212,466 $ 85,029 $460,712 $392,667
Shareholders' equity (deficit) $ 25,947 $ 10,031 $(113,744) $(17,262) $ 36,099
</TABLE>
- 20 -<PAGE>
Notes to Selected Financial Data
Note A: See Note 2 of Notes to Consolidated Financial Statements for
a description of the transactions that occurred in connection with the
Restructuring, which was effective May 3, 1994.
Changes in operations during the past five years include the
following: As part of the Restructuring, on May 3, 1994, the Company
sold its Paradise Island subsidiaries as well as assets of GGE and
certain U.S. subsidiaries that supported the Paradise Island
operations, and the Company's scheduled airline operation which
serviced routes between South Florida and Paradise Island was
effectively disposed of. See "SIHL Sale" in Note 2 of Notes to
Consolidated Financial Statements. The Company's security consulting
service operations were sold in 1991.
Note B: The loss from operations in 1994 includes a $72,463,000 loss
on the SIHL Sale and a charge of $20,525,000 for the write-down of
certain non-operating properties to net realizable value. Operating
revenues for 1994 include the sales of various parcels of land in
Atlantic City for net proceeds of $534,000. Earnings from operations
include a net loss of $99,000 on those sales.
Operating revenues for 1993 include the sale of a residential
lot in The Bahamas for net proceeds of $445,000. Earnings from
operations for 1993 include a net gain of $224,000 on that sale.
Operating revenues for 1992 include the sale of a residential
lot in The Bahamas for net proceeds of $213,000. Earnings from
operations for 1992 include a net loss of $17,000 on that sale.
Note C: Recapitalization costs incurred in 1994, 1993 and 1992 relate
to the Restructuring described in Note 2 of Notes to Consolidated
Financial Statements.
Note D: Proceeds from Litigation Trust represents cash distributed to
the Company from a litigation trust (the "Litigation Trust")
established under a previous plan of reorganization to pursue certain
claims against a former affiliate.
Note E: This item includes interest income, interest expense and
amortization of debt discounts.
Note F: For the years 1991 and 1992 the Company accounted for income
taxes in accordance with Statement of Financial Accounting Standards
No. 96, "Accounting for Income Taxes." Effective January 1, 1993 the
Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." There was no effect on the
accompanying financial data nor was there a cumulative effect of
adopting this statement.
See Note 16 of Notes to Consolidated Financial Statements for
further discussion of income taxes for 1995, 1994 and 1993. The
income tax benefits reported in 1992 and 1991 represent federal income
tax refunds.
- 21 -<PAGE>
Note G: As described in Note 2 of Notes to Consolidated Financial
Statements, as part of the Restructuring the Company exchanged its
Senior Secured Redeemable Notes due April 15, 1994 (the "Series
Notes") for certain consideration. The difference between the
carrying value of the Series Notes and the sum of the fair values of
the items exchanged therefor resulted in a gain of $186,000,000 which
is reported as an extraordinary item.
In November 1994, RIH purchased 12,899 Units comprising
$12,899,000 principal amount of Junior Mortgage Notes and 12,899
shares of Class B Stock of GGE at a price of $6,740,000. The
resulting gain of $4,008,000 was recorded as an extraordinary item.
Note H: Per share data have been restated to give effect to the
Reverse Stock Split described in Note 10 of Notes to Consolidated
Financial Statements.
Note I: These items are presented net of unamortized discounts.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Liquidity
At December 31, 1995 the Company's working capital amounted to
$30,746,000, including unrestricted cash and equivalents of
$51,210,000. A substantial amount of the unrestricted cash and
equivalents is required for day-to-day operations, including
approximately $10,000,000 of currency and coin on hand which amount
varies by days of the week, holidays and seasons, as well as
additional cash balances necessary to meet current working capital
needs.
On May 3, 1994 the Company's plan of reorganization became
effective. The Company s reorganization included, among other things,
(i) the SIHL Sale and (ii) the exchange of $481,907,000 principal
amount of Series Notes for $160,000,000 principal amount of new debt
securities, 40% of GGE Common Stock, the proceeds from the SIHL Sale
and approximately $36,700,000 cash. The Restructuring resulted in a
significant reduction in the Company's unrestricted cash and
equivalents; however, the Restructuring also resulted in a significant
decrease in the Company's long-term debt outstanding. The Company
believes that the Restructuring has improved its long term liquidity
and enhanced its ability to meet its financial obligations as they
become due.
Capital Expenditures and Other Uses of Funds
In recent years, capital expenditures have consistently been a
significant use of financial resources. See capital additions by
geographic and business segment in the table entitled "Identifiable
Assets, Depreciation and Capital Additions" below.
- 22 -<PAGE>
Capital additions for Resorts Casino Hotel in 1993 amounted to
$21,618,000, as the Company converted certain back-of-the-house space
into an 8,000 square foot simulcast facility which also houses poker
tables, various other table games, a keno lounge and a full service
bar. Also, 280 slot machines were purchased, most of which replaced
older models, and the VIP slot and table player lounge, "Club
Griffin," opened. Capital expenditures in 1994 at this property
totaled $7,744,000 and included the purchase of 221 slot machines,
most of which replaced older models, the purchase of equipment and
minor renovations to accommodate keno and Caribbean stud poker and
various other capital maintenance projects. Capital expenditures in
1995 at Resorts Casino Hotel totaled $13,272,000. These included
approximately $4,000,000 for the conversion of certain existing
facilities into an additional 10,000 square feet of casino gaming area
as the Company modified a portion of its bus waiting area to house
approximately 155 slot machines and converted Mr. G s lounge to
accommodate approximately 160 more slot machines. The cost noted
above includes the cost of slot machines and related equipment. The
Company also converted the space formerly occupied by the Celebrity
Deli into a California Pizza Kitchen and the new Oceanside cocktail
lounge at a cost of approximately $2,900,000. The balance of capital
expenditures for 1995 included approximately $900,000 for suite
renovations, as well as various other capital maintenance projects.
Also in 1995 the Company acquired the 4.4 acre Chalfonte Site on
the Boardwalk, adjacent to Resorts Casino Hotel, from an affiliate of
Harrah s Atlantic City in exchange for certain non-operating real
estate in the marina area of Atlantic City and approximately
$6,100,000 in cash. The Company had been leasing this property and
using it as a parking lot since 1985. The Company intends to use this
a d ditional acreage to expand its Atlantic City operations by
constructing hotel rooms, additional casino space and a parking
garage, though its plans are preliminary at this time. The Company is
proceeding with the development of cost estimates for such expansion
and has not yet determined the extent to which additional financing,
if any, will be required.
For the Paradise Island properties, which were disposed of in the
SIHL Sale, capital additions in 1993 totaled $3,747,000 and included
the purchase of 110 new slot machines as replacements for older models
as well as various maintenance projects. The expenditures of
$1,958,000 in 1994 were largely made on behalf of Sun International
Hotels Limited ("SIHL"), the purchaser in the SIHL Sale, in accordance
with the agreement for that sale.
In N ovember 1994 RIH purchased 12,899 Units comprising
$12,899,000 principal amount of Junior Mortgage Notes and 12,899
shares of Class B Stock for $6,740,000.
Another significant use of funds in recent years has been
recapitalization costs, which amounted to $8,738,000 and $8,332,000 in
1994 and 1993, respectively. These legal, financial and other
advisory fees and costs were largely related to the Restructuring,
though minor
- 23 -<PAGE>
amounts included therein related to the Company's 1990 plan of
reorganization.
Capital Resources and Other Sources of Funds
Since 1993 operations have been the most significant source of
funds to the Company.
In 1993 Merv Griffin, Chairman of the Board of GGE, made a
partial payment of $3,477,000 of principal on his note payable to GGE
(the "Griffin Note"). As described in Note 12 of Notes to
Consolidated Financial Statements, the Griffin Note was then canceled
and a new note (the "Group Note") from Griffin Group was substituted
therefor. In 1994 pursuant to the Plan, after certain fees the
Company owed Griffin Group pursuant to its License and Services
Agreement (the "Griffin Services Agreement," also described in Note
12) were applied to reduce the balance due under the Group Note,
Griffin Group paid the $3,008,000 balance due under the Group Note.
In 1995, in connection with the casino expansion at Resorts
Casino Hotel, the Company financed the purchase of slot machines and
related equipment with a $1,815,000 bank loan.
The Company has a $19,738,000 senior credit facility (the Senior
Facility, which is further described in Note 9 of Notes to
Consolidated Financial Statements) available for the period ending May
2, 1996 should the Company have additional cash needs. The Company
believes that the Senior Facility will also serve as a source of funds
for expansion, development and/or an investment opportunity as well as
a safeguard if an emergency arises from current operations. However,
market interest rates and other economic conditions, among other
factors, will determine if it is appropriate for the Company to draw
on the Senior Facility or obtain a substitute facility.
RESULTS OF OPERATIONS
General
The Paradise Island portion of the casino/hotel and real estate
segments, as well as the airline segment, were disposed of through the
SIHL Sale effective May 3, 1994. Results of these operations for the
year 1993 and the first four months of 1994 are included in the
segment tables which follow.
- 24 -<PAGE>
Revenues
For the Year Ended December 31,
(In Thousands of Dollars) 1995 1994 1993
Casino/hotel:
Atlantic City, New Jersey:
Casino $267,757 $250,482 $244,116
Rooms 6,978 7,134 6,974
Food and beverage 12,704 14,609 15,926
Other casino/hotel 5,787 4,508 4,463
293,226 276,733 271,479
Paradise Island, The Bahamas(a):
Casino 28,115 62,943
Rooms 13,419 28,734
Food and beverage 13,646 30,917
Other casino/hotel 7,708 18,867
-0- 62,888 141,461
Total casino/hotel 293,226 339,621 412,940
Real estate related:
Atlantic City, New Jersey 8,501 8,813 8,057
Paradise Island, The Bahamas(a) 445
8,501 8,813 8,502
Airline(a) 5,674 21,802
Other segments 13 12 115
Intersegment eliminations (1,104) (3,795)
Revenues from operations $301,740 $353,016 $439,564
(a) These operations were disposed of through the SIHL Sale.
Casino/hotel - Atlantic City, New Jersey
Casino revenues from the Company's Atlantic City casino/hotel
increased by $17,275,000 in 1995 and by $6,366,000 in 1994. The
Company s slot and table game win increased by $18,585,000 in 1995 and
by $3,516,000 in 1994. The Company s slot and table game win
increases, which amounted to 8.1% in 1995 and 1.4% in 1994, compare to
increases for the Atlantic City gaming industry of 9.7% and 2.8% for
those periods, respectively. This market growth favorably reflects
the expansion of existing Atlantic City casinos and hotels; however,
such expansion by the Company s competitors adversely affects the
Company's operations in that it significantly increases the Company's
cost of obtaining additional revenue. In that regard, several
competing properties have announced expansion projects. See New
Convention Center and Casino/Hotel Expansion under ITEM 1. BUSINESS
- (c) Narrative Description of Business for related discussion.
- 25 -<PAGE>
In 1995 RIH s slot win increased by $16,310,000, due to increased
amounts wagered, and its table game win increased by $2,275,000,
primarily due to an increase in hold percentage (ratio of casino win
to total amount of chips purchased). The increased amounts wagered by
slot patrons reflect the Company s 10,000 square-foot casino expansion
during 1995, which enabled RIH to increase its number of slot machines
by more than 15%, as well as increased emphasis on bus and junket air
programs. Further affecting the comparison of RIH s casino revenues
during the years presented was poor weather conditions during the
first quarter of 1994, which adversely affected operations in that
period as the principal means of transportation to Atlantic City is by
automobile or bus. RIH s revenue from poker, simulcasting and keno
combined decreased by $1,310,000 in 1995.
In the fall of 1994 RIH increased its program of charter flights
in an effort to recapture some of its lost market share of table game
win. During 1995 the Company also targeted table players through
certain other efforts, including match play promotions, the expansion
of the Griffin Games to include table players and renovation of some
of Resorts Casino Hotel s suites. More suite renovations are planned
for 1996. However, in light of the increased promotions offered by
competing properties, the Company s expanded efforts in this area
enabled the Company to maintain, but not increase, its market share of
table game win in 1995.
In 1994 RIH's slot win increased by $10,084,000 due to increased
amounts wagered, and table game win was down $6,568,000 primarily due
to decreased amounts wagered. RIH s percentage increase in slot win
in 1994 exceeded that of the Atlantic City industry. However, in 1994
the industry experienced a slight increase in table game win while
RIH s table game win decreased by 8.4%. These results reflect the
fact that slot players had been the prime focus of RIH's marketing
efforts until the fall of 1994 as discussed above. RIH's revenue from
poker, simulcasting and keno combined increased by $2,850,000 in 1994,
the first full year these games were offered.
The decrease in RIH s food and beverage revenues in 1995 was due
primarily to the closing of the Celebrity Deli in early April and, to
a lesser extent, Mr. G s lounge in mid March for the renovations
discussed under FINANCIAL CONDITION - Capital Expenditures and Other
Uses of Funds above. Also, there was a decline in the number of
patrons served at the "all-you-can-eat Beverly Hills Buffet. This
decline was attributable to price increases effected during the second
quarter of 1994 as management determined that this promotion was no
longer cost effective at the prior price levels.
RIH's food and beverage revenues were down in 1994 primarily due
to reduced patronage at the Beverly Hills Buffet due to price
increases noted above. Also in 1994, there was a general decline in
the number of patrons served at all of RIH's food and beverage
facilities.
As discussed above, because the principal means of transportation
to Atlantic City is by automobile or bus, the industry s results may
be affected by periods of inclement weather. In January and February
of
- 26 -<PAGE>
1996 the northeastern United States experienced the Blizzard of 1996"
and other storms. These storms, as well as the threat of other severe
weather, adversely affected the Company s gaming revenues and may have
adversely affected the Company s operating results in early 1996.
Casino/hotel - Paradise Island, The Bahamas
The Company's Paradise Island casino/hotel facilities were
disposed of in the SIHL Sale effective May 3, 1994. The Company's
Paradise Island revenues for 1994 reflect the Company's operation of
the Paradise Island properties through April 30, 1994.
Real Estate Related
Atlantic City real estate related revenues in 1995, 1994 and 1993
largely represent rent from ACS pursuant to the Showboat Lease. Such
rent receipts are restricted for the payment of interest on the
Showboat Notes. See Note 8 of Notes to Consolidated Financial
Statements. Atlantic City real estate related revenues for 1994 also
include $534,000 from the sale of certain properties in Atlantic City.
Airline
The Company's airline operation was effectively disposed of in
the SIHL Sale by means of an option/put agreement with a nominal
option price. The only aircraft owned by the Company was transferred
to a subsidiary of SIHL as part of the SIHL Sale. Pursuant to an
agreement, the Company operated the airline on behalf of SIHL for a
small management fee through early May 1995. All profits earned or
losses incurred in such operation accrued to or were borne by SIHL.
Airline revenues presented in the segment tables herein reflect
airline operations through April 30, 1994.
- 27 -<PAGE>
Contribution to Consolidated Earnings (Loss)
Before Income Taxes and Extraordinary Items
For the Year Ended December 31,
(In Thousands of Dollars) 1995 1994 1993
Casino/hotel:
Atlantic City, New Jersey $ 26,346 $ 20,791 $ 12,069
Paradise Island, The
Bahamas(a) 10,206 (9,979)
26,346 30,997 2,090
Real estate related:
Atlantic City, New Jersey 8,156 (13,494) 6,654
Paradise Island, The
Bahamas(a) 224
8,156 (13,494) 6,878
Airline(a) (7) (14)
Other segments (114) (19) (122)
Management fees, net of
corporate expense 7,290 6,416 4,066
Loss on SIHL Sale (72,463)
Earnings (loss) from operations 41,678 (48,570) 12,898
Other income (deductions):
Interest income 3,518 2,686 3,174
Interest expense (25,318) (35,271) (57,244)
Amortization of debt discounts (3,979) (15,046) (51,203)
Recapitalization costs (5,232) (8,789)
Proceeds from Litigation Trust 2,542
Earnings (loss) before income
taxes and extraordinary items $ 15,899 $(98,891) $(101,164)
(a) These operations were disposed of through the SIHL Sale.
Casino/hotel - Atlantic City, New Jersey
C a sino, hotel and related operating results increased by
$5,555,000 for 1995 as the increased revenues described above were
partially offset by a net increase in operating costs. The most
significant variances in operating expenses were increases in casino
promotional costs ($7,300,000), casino win tax ($1,500,000), payroll
and related costs ($1,000,000) and the accrual for performance and
incentive bonuses ($1,000,000). Casino promotional costs increased
due to the expanded junket air program as well as increases in the
amount of cash giveaway to bus patrons. Casino win tax increased
relative to the increase in casino revenues. Payroll and related
costs increased due to increased salary and wage rates, as the average
number of employees was down slightly for the year.
Casino, hotel and related operating results increased by
$8,722,000 for 1994 due to the combination of the increased revenues
described above and a net decrease in operating expenses. The most
significant decreases in operating expenses in 1994 were in payroll
and related
- 28 -<PAGE>
costs ($2,500,000), food and beverage costs ($1,400,000) and
advertising expense ($900,000). Payroll and related costs were down
primarily due to decreased staffing levels. The decrease in food and
beverage costs resulted primarily from reduced patronage at the
Beverly Hills Buffet and, to a lesser extent, other food and beverage
facilities as described above. Advertising costs were down largely
because 1993 included advertising costs associated with the
introduction of the "cash-back" program (a promotion which rewards
slot players by giving cash back to patrons based on their level of
play) and the 15th anniversary celebration of Resorts Casino Hotel.
Favorable variances in these and other costs were partially offset by
increases in other expenses. The most significant increase was in
casino promotional costs ($2,500,000) due primarily to the "cash-back"
program noted above, which commenced in late April 1993, and increased
cash giveaways to bus patrons. Another significant cost increase was
in the accrual for performance and incentive bonuses ($700,000).
For a discussion of competition in the Atlantic City casino/hotel
industry see "Competition" under "ITEM 1. BUSINESS - (c) Narrative
Description of Business."
Casino/hotel - Paradise Island, The Bahamas
The Company's Paradise Island casino/hotel facilities were
disposed of in the SIHL Sale effective May 3, 1994. The Paradise
Island operating results for 1994 reflect the Company's operation of
the Paradise Island properties through April 30, 1994.
Real Estate Related
Atlantic City real estate related results for 1994 include a
charge of $20,525,000 for the write-down of certain non-operating
properties to net realizable value. See Note 15 of Notes to
Consolidated Financial Statements. The comparison of earnings from
Atlantic City real estate related activities is also affected by
annual increases in rental income under the Showboat Lease described
above, a $400,000 credit in 1995 resulting from the favorable
settlement of certain prior years property tax appeals and a loss of
$99,000 in 1994 on sales of certain properties in Atlantic City.
Airline
The Company's airline operation was effectively disposed of in
the SIHL Sale by means of an option/put agreement with a nominal
option price. Pursuant to an agreement, the Company operated the
airline on behalf of SIHL for a small management fee through early May
1995. All profits earned or losses incurred in such operation accrued
to or were borne by SIHL. Operating results of the airline segment
presented herein include airline operations through April 30, 1994.
- 29 -<PAGE>
Management Fees, Net of Corporate Expense
This segment includes credits for management fees which GGE
charges certain subsidiaries based on three percent of their gross
revenues. The corresponding charges are included in the segments
where the respective subsidiary's operations are reported. Management
fees charged by GGE to RIH amounted to $9,651,000, $9,082,000 and
$8,911,000 in 1995, 1994 and 1993, respectively. Management fees
charged to other subsidiaries totaled $1,971,000 and $4,635,000 in
1994 and 1993, respectively.
Corporate expense, net of management fees, for 1995 includes a
$1,000,000 credit from a favorable litigation settlement. Corporate
expense decreased by $2,350,000 in 1994 due primarily to decreases in
payroll and related costs associated with certain executives whose
service to the Company terminated.
The Environmental Protection Agency ("EPA") has named a
predecessor to GGE as a potentially responsible party in the Bay Drum
hazardous waste site (the "Site") in Tampa, Florida which the EPA has
listed on the National Priorities List. No formal action has
commenced against GGE and GGE intends to dispute any claims of this
nature, if asserted. Although it may ultimately be determined that
GGE is one of several hundred parties that are jointly and severally
liable for the costs of Site remediation and for damages to natural
resources at the Site caused by hazardous wastes, the extent of such
liability, if any, cannot be determined at this time.
Loss on SIHL Sale
See Note 2 of Notes to Consolidated Financial Statements for a
description of the SIHL Sale.
Other Income (Deductions)
The decreases in interest expense and amortization of debt
discounts for 1995 and 1994 are attributable to the Restructuring,
which resulted in a significant decrease in the principal amount of
debt outstanding as well as a reduction in interest rates. Also
affecting the comparison of these expenses is the fact that the
Company stopped accruing interest and amortizing debt discounts on the
Series Notes as of March 21, 1994, the date the Company entered
bankruptcy proceedings, while the accrual of interest and amortization
of discounts on the Mortgage Notes and the Junior Mortgage Notes did
not start until May 3, 1994. See Note 8 of Notes to Consolidated
Financial Statements for a description of the Mortgage Notes and
Junior Mortgage Notes.
Recapitalization costs in 1994 and 1993 include costs of
financial advisers retained to assist in the development and analysis
of financial alternatives which resulted in the Restructuring and
other legal and advisory fees incurred in connection with such
Restructuring. Also, in 1994 the Company recorded credits of
$3,256,000 resulting from the
- 30 -<PAGE>
reversal of restructuring reserves provided in connection with the
Company's 1990 plan of reorganization.
Proceeds from Litigation Trust represent the distribution that
the Company received as a holder of units of beneficial interest in
the litigation trust established under the Company's 1990 plan of
reorganization.
Income Taxes
See Note 16 of Notes to Consolidated Financial Statements for a
discussion of the Company's income taxes during the years 1993 through
1995.
- 31 -<PAGE>
<TABLE> Identifiable Assets, Depreciation and Capital Additions
(In Thousands of Dollars)
<CAPTION>
Identifiable assets
Less accumulated
depreciation and
Gross valuation Net Capital
assets allowances assets Depreciation additions
For the Year Ended
December 31, 1995 December 31, 1995
<S> <C> <C> <C> <C> <C>
Casino/hotel - Atlantic City,
New Jersey $269,595 $(65,747) $203,848 $13,434 $13,272
Real estate related -
Atlantic City, New Jersey 93,799 93,799
Other segments 100 100 27
Corporate(a) 40,754 (50) 40,704 18 47
$404,248 $(65,797) $338,451 $13,452 $13,346
</TABLE>
<TABLE><CAPTION> For the Year Ended
December 31, 1994 December 31, 1994
<S> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey $254,419 $(52,891) $201,528 $13,205 $ 7,744
Paradise Island, The
Bahamas(b) 3,732 1,958
254,419 (52,891) 201,528 16,937 9,702
Real estate related -
Atlantic City, New Jersey 87,647 87,647
Airline(b) 276 186
Other segments 5
Corporate(a) 28,107 (34) 28,073 32 36
$370,173 $(52,925) $317,248 $17,250 $ 9,924
/TABLE
<PAGE>
<TABLE> Identifiable Assets, Depreciation and Capital Additions
(In Thousands of Dollars)
<CAPTION>
Identifiable assets
Less accumulated
depreciation and
Gross valuation Net Capital
assets allowances assets Depreciation additions
For the Year Ended
December 31, 1993 December 31, 1993
<S> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey $244,054 $(40,390) $203,664 $13,674 $21,618
Paradise Island, The
Bahamas(b) 207,003 (46,398) 160,605 13,325 3,747
451,057 (86,788) 364,269 26,999 25,365
Real estate related:
Atlantic City, New Jersey 108,271 (33) 108,238 9
Paradise Island, The
Bahamas(b) 33,114 33,114
141,385 (33) 141,352 9
Airline(b) 12,887 (2,750) 10,137 831 445
Other segments 1,546 (47) 1,499 13 2
Corporate(a) 58,883 (355) 58,528 72 101
$665,758 $(89,973) $575,785 $27,924 $25,913
(a) Includes cash equivalents, restricted cash equivalents not pledged for operations, and other corporate
assets.
(b) These operations were disposed of through the SIHL Sale.
/TABLE
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements and supplementary
data are presented on the following pages:
Page
Financial Statements Reference
Report of Independent Auditors 35
Consolidated Balance Sheets at December 31,
1995 and 1994 36
Consolidated Statements of Operations for the
years ended December 31, 1995, 1994 and 1993 38
Consolidated Statements of Cash Flows for the
years ended December 31, 1995, 1994 and 1993 39
Consolidated Statements of Changes in
Shareholders' Equity for the years ended
December 31, 1995, 1994 and 1993 40
Notes to Consolidated Financial Statements 41
Financial Statement Schedules:
Schedule I: Condensed Financial
Information of Registrant 61
Schedule II: Valuation Accounts for the
years ended December 31,
1995, 1994 and 1993 66
Supplementary Data
Selected Quarterly Financial Data (Unaudited) 67
- 34 -<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Griffin Gaming & Entertainment, Inc.
We have audited the accompanying consolidated balance sheets of
Griffin Gaming & Entertainment, Inc. as of December 31, 1995 and 1994,
and the related consolidated statements of operations, changes in
shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1995. Our audits also included the
financial statement schedules listed in the Index at Item 14(a).
These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements and schedules 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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Griffin Gaming & Entertainment, Inc. at December
31, 1995 and 1994, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects
the information set forth therein.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 19, 1996
- 35 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
December 31,
Assets 1995 1994
Current assets:
Cash (including cash equivalents
of $35,515 and $21,321) $ 51,210 $ 35,503
Restricted cash equivalents 4,362 5,388
Receivables, net 7,910 6,509
Inventories 2,447 1,793
Prepaid expenses 6,615 9,531
Total current assets 72,544 58,724
Land held for investment,
development or resale 93,795 87,641
Property and equipment:
Land and land rights 54,384 54,384
Land improvements 158 158
Hotels and other buildings 116,318 108,410
Furniture, machinery and equipment 50,142 45,148
Construction in progress 200 41
221,202 208,141
Less accumulated depreciation (62,227) (49,024)
Net property and equipment 158,975 159,117
Deferred charges and other assets 13,137 11,766
$338,451 $317,248
See Notes to Consolidated Financial Statements.
- 36 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
Liabilities and Shareholders' December 31,
Equity 1995 1994
Current liabilities:
Current maturities of long-term debt,
net of unamortized discounts $ 589 $ 5
Accounts payable and accrued
liabilities 41,209 41,046
Total current liabilities 41,798 41,051
Long-term debt, net of unamortized
discounts:
Mortgage Notes 108,128 106,877
Junior Mortgage Notes 18,633 18,432
Showboat Notes 89,676 87,149
Other 919 8
217,356 212,466
Deferred income taxes 53,350 53,700
Commitments and contingencies (Note 18)
Shareholders' equity:
GGE Common Stock - 7,941,035 and
7,938,835 shares outstanding -
$.01 par value 79 397
Class B Stock - 35,000 shares
outstanding - $.01 par value
Capital in excess of par 129,572 129,237
Accumulated deficit (103,704) (119,603)
Total shareholders' equity 25,947 10,031
$ 338,451 $ 317,248
See Notes to Consolidated Financial Statements.
- 37 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
For the Year Ended December 31,
1995 1994 1993
Revenues:
Casino $267,757 $278,597 $ 307,059
Rooms 6,978 20,553 35,708
Food and beverage 12,704 28,255 46,843
Other casino/hotel revenues 5,800 12,216 23,330
Other operating revenues 4,582 18,122
Real estate related 8,501 8,813 8,502
301,740 353,016 439,564
Expenses:
Casino 156,091 160,371 189,304
Rooms 3,698 6,030 10,906
Food and beverage 14,235 25,131 41,859
Other casino/hotel operating
expenses 34,281 46,446 69,918
Other operating expenses 3,483 14,697
Selling, general and
administrative 37,979 48,124 70,453
Depreciation 13,452 17,250 27,924
Real estate related 326 1,763 1,605
Write-down of non-operating
real estate 20,525
Loss on SIHL Sale 72,463
260,062 401,586 426,666
Earnings (loss) from operations 41,678 (48,570) 12,898
Other income (deductions):
Interest income 3,518 2,686 3,174
Interest expense (25,318) (35,271) (57,244)
Amortization of debt discounts (3,979) (15,046) (51,203)
Recapitalization costs (5,232) (8,789)
Proceeds from Litigation Trust 2,542
Earnings (loss) before income
taxes and extraordinary items 15,899 (98,891) (101,164)
Income tax expense (1,000)
Earnings (loss) before
extraordinary items 15,899 (98,891) (102,164)
Extraordinary items 190,008
Net earnings (loss) $ 15,899 $ 91,117 $(102,164)
Per share data - primary:
Earnings (loss) before
extraordinary items $ 1.87 $ (15.13) $ (25.34)
Extraordinary items 29.07
Net earnings (loss) $ 1.87 $ 13.94 $ (25.34)
Weighted average number of
shares and equivalents 8,522 6,537 4,031
Per share data - fully diluted:
Net earnings $ 1.83
Weighted average number of
shares and equivalents 8,675
See Notes to Consolidated Financial Statements.
- 38 -<PAGE>
<TABLE> GRIFFIN GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
<CAPTION> For the Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 300,089 $ 347,896 $ 441,354
Cash paid to suppliers and employees (242,511) (285,343) (393,013)
Cash flow from operations before interest and income taxes 57,578 62,553 48,341
Interest received 3,431 2,882 3,809
Interest paid (25,088) (15,002) (8,440)
Income taxes paid, net of refunds (353) (285) 306
Net cash provided by operating activities 35,568 50,148 44,016
Cash flows from investing activities:
Cash proceeds from SIHL Sale, net of cash balances
transferred 39,747
Payments for property and equipment (13,093) (9,924) (25,308)
Purchase of land held for investment, development or resale (6,154)
Purchase of 12,899 Units (6,740)
Proceeds from sales of land held for investment, development
or resale 650 445
CRDA deposits and bond purchases (3,152) (3,044) (3,025)
Proceeds from sales of short-term money market securities
with maturities greater than three months 1,377
Purchases of short-term money market securities with
maturities greater than three months (492)
Net cash provided by (used in) investing activities (22,399) 20,689 (27,003)
Cash flows from financing activities:
Proceeds from borrowing 1,815
Cash (including cash proceeds of SIHL Sale) distributed
to noteholders (103,434)
Collection of note receivable from related party 3,008 3,477
Payments of recapitalization costs (8,738) (8,332)
Proceeds from Litigation Trust 2,542
Repayments of non-public debt (320) (118) (2,251)
Proceeds from exercise of stock options 17
Net cash provided by (used in) financing activities 1,512 (106,740) (7,106)
Net increase (decrease) in cash and cash equivalents 14,681 (35,903) 9,907
Cash and cash equivalents at beginning of period 40,891 76,794 66,887
Cash and cash equivalents at end of period $ 55,572 $ 40,891 $ 76,794
See Notes to Consolidated Financial Statements./TABLE
<PAGE>
<TABLE> GRIFFIN GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In Thousands of Dollars)
<CAPTION>
GGE Capital
Common Class B in excess Accumulated Notes
Stock Stock of par deficit receivable
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $ 202 $102,092 $(108,556) $(11,000)
Collection on Griffin Note 3,477
Cancellation of Griffin Note 7,523
Issuance of Group Note (7,523)
Reduction of Group Note applied to
prepaid services 2,205
Net loss for year 1993 (102,164)
Balance at December 31, 1993 202 102,092 (210,720) (5,318)
Shares issued to financial advisers in
settlement of recapitalization costs 6 859
Reduction of Group Note applied to
prepaid services 2,310
Collection of Group Note 3,008
Shares issued in exchange for Series
Notes 170 $-0- 24,245
Shares issued to affiliate of Griffin
Group in satisfaction of final
payment under service agreement 19 2,041
Net earnings for year 1994 91,117
Balance at December 31, 1994 397 -0- 129,237 (119,603) -0-
Reverse Stock Split (318) 318
Issuance of shares for stock options
exercised 17
Net earnings for year 1995 15,899
Balance at December 31, 1995 $ 79 $-0- $129,572 $(103,704) $ -0-
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Griffin Gaming & Entertainment, Inc. ("GGE") was known as Resorts
International, Inc. until its name change, which was effective June
30, 1995. "GGE" is used herein to refer to the corporation both
before and after its name change. The term "Company" as used herein
includes GGE and/or one or more of its subsidiaries, as the context
may require.
Principles of Consolidation
The consolidated financial statements include the accounts of GGE
and its subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
Accounting Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Revenue Recognition
The Company records as revenue the win from casino gaming
activities which represents the difference between amounts wagered and
amounts won by patrons. Revenues from hotel and related services and
from theater ticket sales are recognized at the time the related
service is performed.
Complimentary Services
The Consolidated Statements of Operations reflect each category
of operating revenues excluding the retail value of complimentary
services provided to casino patrons without charge. The retail value
of such complimentary services excluded from revenues amounted to
$28,494,000, $28,982,000 and $33,794,000 for the years 1995, 1994 and
1993, respectively. The rooms, food and beverage, and other
casino/hotel operations departments allocate a percentage of their
total operating expenses to the casino department for complimentary
services provided to casino patrons. These allocations do not
n e c essarily represent the incremental cost of providing such
complimentary services to casino patrons. Amounts allocated to the
casino department from the other operating departments were as
follows:
- 41 -<PAGE>
(In Thousands of Dollars) 1995 1994 1993
Rooms $ 4,813 $ 4,236 $ 4,470
Food and beverage 16,846 15,787 20,353
Other casino/hotel operations 6,403 7,467 7,412
Total allocated to casino $28,062 $27,490 $32,235
Cash Equivalents
The Company considers all of its short-term money market
securities purchased with maturities of three months or less to be
cash equivalents. The carrying value of cash equivalents approximates
fair value due to the short maturity of these instruments.
Inventories
Inventories of provisions, supplies and spare parts are carried
at the lower of cost (first-in, first-out) or market.
Property and Equipment
Property and equipment are depreciated over the estimated useful
lives reported below using the straight-line method for financial
reporting purposes.
Land improvements 10 - 25 years
Hotels and other buildings 20 - 28 years
Furniture, machinery and equipment 3 - 5 years
Casino Reinvestment Development Authority ("CRDA") Obligatory
Investments
Under the New Jersey Casino Control Act ("Casino Control Act"),
the Company is obligated to purchase CRDA bonds, which will bear a
below-market interest rate, or make an alternative qualifying
investment. The Company charges to expense an estimated discount
related to CRDA investment obligations as of the date the obligation
arises based on fair market interest rates of similar quality bonds in
existence as of that date. On the date the Company actually purchases
the CRDA bond, the estimated discount previously recorded is adjusted
to reflect the actual terms of the bonds issued and the then existing
fair market interest rate for similar quality bonds.
The discount on CRDA bonds purchased is amortized to interest
income over the life of the bonds using the effective interest rate
method.
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Payment-In-Kind ("PIK") Interest Accrual
When the Company elects to satisfy its interest obligations
through PIK instead of cash interest payments, for financial statement
purposes, such interest is accrued at the estimated market value of
the securities to be issued. The discount resulting from the
difference between face value and estimated market value of the
additional securities decreases interest expense of the current period
and is amortized to expense over the remaining life of the issue.
Income Taxes
GGE and all of its domestic subsidiaries file consolidated U.S.
federal income tax returns.
The Company accounts for income taxes under the liability method
prescribed by Statement of Financial Accounting Standards No. 109
("SFAS 109"), "Accounting for Income Taxes." Under this method, the
deferred tax liability is determined based on the difference between
the financial reporting and tax bases of assets and liabilities and
enacted tax rates which will be in effect for the years in which the
differences are expected to reverse. Deferred tax liabilities are
recognized for differences that will result in taxable amounts in
future years. Deferred tax assets are recognized for differences that
will result in deductible amounts in future years and for
carryforwards. A valuation allowance is recognized based on estimates
of the likelihood that some portion or all of the deferred tax asset
will not be realized.
There are no income taxes in The Bahamas and the income of GGE's
former Bahamian subsidiaries was generally not subject to U.S. federal
income taxation until it was distributed to a U.S. parent. Deferred
federal income taxes were provided on the undistributed earnings of
Bahamian subsidiaries until their disposition.
Per Share Data
Per share data was computed using the weighted average number of
shares of GGE s common stock (the "GGE Common Stock") outstanding.
When dilutive, stock options and warrants were included as share
equivalents using the treasury stock method. Fully diluted earnings
per share reflect additional dilution related to stock options and
warrants due to the use of the market price at the end of certain
periods, when higher than the average price for such periods.
Per share data, as well as references to number of shares and
market prices of GGE Common Stock, have been restated to give effect
to the Reverse Stock Split described in Note 10.
Impact of Newly Issued Accounting Standards
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of ( SFAS 121"), which
requires impairment losses to be recorded on long-lived assets used in
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o p erations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are
less than the assets carrying amount. SFAS 121 also addresses the
accounting for long-lived assets that are expected to be disposed of.
The Company will adopt SFAS 121 in 1996 and, based on current
circumstances, believes the effect, if any, of adoption will be
insignificant.
Reclassifications
Certain previously reported amounts were reclassified for
comparative purposes.
NOTE 2 - 1994 RESTRUCTURING
In April 1994 the Company s prepackaged bankruptcy plan of
reorganization (the "Plan") was confirmed by the United States
Bankruptcy Court for the District of Delaware and on May 3, 1994 (the
"Effective Date") the Plan became effective. The Company s
reorganization under the Plan (the "Restructuring ) included, among
other things, (i) the sale of the Company s Paradise Island operations
and properties (the SIHL Sale ) and (ii) the exchange of $481,907,000
principal amount of Senior Secured Redeemable Notes due April 15, 1994
(the "Series Notes") for $160,000,000 principal amount of new debt
securities (see Note 8), 40% of GGE Common Stock on a fully diluted
basis (excluding certain stock options), the proceeds from the SIHL
Sale and approximately $36,700,000 cash. Included in the cash
distributed to noteholders was a $2,542,000 cash distribution which
the Company received from a litigation trust (the "Litigation Trust")
established under a previous plan of reorganization to pursue certain
claims against a former affiliate.
The difference between the carrying value of the Series Notes and
the sum of the fair values of the items exchanged therefor resulted in
a gain of $186,000,000 which was reported as an extraordinary item.
SIHL Sale
Sun International Investments Limited ("SIIL"), an unrelated
party, acquired a 60% interest in the Company s Paradise Island
operations, through Sun International Hotels Limited ("SIHL"), a
subsidiary of SIIL formed for that purpose. SIIL purchased 60% of the
capital stock of SIHL for $90,000,000 plus interest at 7.5% from
January 1, 1994 through the Effective Date. Pursuant to the purchase
agreement, SIHL then purchased 100% of the equity of Resorts
International (Bahamas) 1984 Limited, GGE s former indirect Bahamian
subsidiary which, along with its subsidiaries, owned and operated the
Company s Paradise Island properties. Also, certain subsidiaries of
SIHL acquired certain assets of GGE and its U.S. subsidiaries which
supported the Paradise Island operations and assumed certain related
liabilities. The purchase price received from SIHL was $65,000,000 in
cash, plus interest at 7.5% from January 1, 1994 through the Effective
Date, and 2,000,000 Series A Ordinary Shares of SIHL (the "SIHL
Shares"), which amounts to the remaining 40% of the capital stock of
SIHL. These cash proceeds as well
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as the SIHL Shares were distributed to holders of Series Notes
pursuant to the Plan.
Although the SIHL Sale was effective May 3, 1994, the
consolidated statements of operations and cash flows reflect the
Paradise Island operations through April 30, 1994. The loss on SIHL
Sale represents the difference between the carrying values and the
fair values of the assets and equity interests sold.
For information as to the revenues and contribution to
consolidated earnings (loss) from operations of the operations
disposed of in the SIHL Sale, see the Paradise Island portion of the
casino/hotel segment, the Paradise Island portion of the real estate
related segment and the airline segment in the segment tables included
in "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS."
Recapitalization Costs
Recapitalization costs in 1994 and 1993 include costs of
financial advisers retained to assist in the development and analysis
of financial alternatives which resulted in the Restructuring and
other legal and advisory fees incurred in connection with such
Restructuring. Also, recapitalization costs for 1994 include credits
of $3,256,000 recorded in the fourth quarter resulting from the
reversal of restructuring reserves provided in connection with the
Company's 1990 plan of reorganization.
NOTE 3 - CASH EQUIVALENTS
Cash equivalents and restricted cash equivalents at December 31,
1995 included reverse repurchase agreements (federal government
securities purchased under agreements to resell those securities) with
National Westminster Bank NJ in the amount of $2,994,000 under which
the Company had not taken delivery of the underlying securities. This
agreement matured January 2, 1996.
The Company's cash equivalents at December 31, 1995 also included
U.S. Treasury Bills.
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NOTE 4 - RESTRICTED CASH EQUIVALENTS
Components of restricted cash equivalents at December 31 were as
follows:
(In Thousands of Dollars) 1995 1994
Showboat Lease payments and interest
earned thereon held by trustee
(see Note 13) $3,595 $3,494
Amount, including interest earned,
on deposit with trustee for
Litigation Trust 1,711
Other 767 183
$4,362 $5,388
NOTE 5 - RECEIVABLES
Components of receivables at December 31 were as follows:
(In Thousands of Dollars) 1995 1994
Gaming $ 7,332 $ 8,035
Less allowance for doubtful accounts (3,519) (3,819)
3,813 4,216
Non-gaming:
Hotel and related 1,163 799
Contracts and notes 205 270
Other 2,780 1,306
4,148 2,375
Less allowance for doubtful accounts (51) (82)
4,097 2,293
$ 7,910 $ 6,509
NOTE 6 - CRDA OBLIGATORY INVESTMENTS
The Casino Control Act, as originally adopted, required a
licensee to make investments equal to 2% of the licensee's gross
revenue (as defined in the Casino Control Act) (the "investment
obligation") for each calendar year, commencing in 1979, in which such
gross revenue exceeded its "cumulative investments" (as defined in the
Casino Control Act). A licensee had five years from the end of each
calendar year to satisfy this investment obligation or become liable
for an "alternative tax" in the same amount. In 1984 the New Jersey
legislature amended the Casino Control Act so that these provisions
now apply only to investment obligations for the years 1979 through
1983.
Effective for 1984 and subsequent years, the amended Casino
Control Act requires a licensee to satisfy its investment obligation
by purchasing bonds to be issued by the CRDA, or by making other
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investments authorized by the CRDA, in an amount equal to 1.25% of a
licensee's gross revenue. If the investment obligation is not
satisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of gross revenue. Since 1985, a licensee has
been required to make quarterly deposits with the CRDA against its
current year investment obligation.
From time to time RIH has donated certain funds it has had on
deposit with the CRDA in return for either relief from its obligation
to purchase CRDA bonds or credits against future CRDA deposits.
At December 31, 1995, RIH had $5,567,000 face value of bonds
issued by the CRDA and had $18,197,000 on deposit with the CRDA. The
CRDA bonds have interest rates ranging from 3.9% to 7% and have
repayment terms of between 20 and 50 years. These bonds and deposits,
net of an estimated discount charged to expense to reflect the
below-market interest rate payable on the bonds, are included in other
assets in the Company's Consolidated Balance Sheet.
RIH records charges to expense to reflect the below-market
interest rate payable on the bonds it may have to purchase to fulfill
its investment obligation at the date the obligation arises. The
charges in 1995, 1994 and 1993 for discounts on obligations arising in
those years were $1,567,000, $1,461,000 and $1,541,000, respectively.
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of accounts payable and accrued liabilities at
December 31 were as follows:
(In Thousands of Dollars) 1995 1994
Accrued payroll and related taxes and
benefits $12,241 $12,170
Accrued interest 7,839 7,609
Accrued gaming taxes, fees and related
assessments 7,211 7,064
Trade payables 2,163 1,441
Customer deposits and unearned revenues 2,081 2,152
Accrued costs of recapitalization 590 995
Other accrued liabilities 9,084 9,615
$41,209 $41,046
NOTE 8 - LONG-TERM DEBT
As described in Note 2, on May 3, 1994, the Series Notes were
exchanged for, among other things, $160,000,000 principal amount of
new debt securities which consist of $125,000,000 principal amount of
11% Mortgage Notes (the "Mortgage Notes") due September 15, 2003 and
$35,000,000 principal amount of 11.375% Junior Mortgage Notes (the
"Junior Mortgage Notes") due December 15, 2004. The Mortgage Notes
and the Junior Mortgage Notes were issued by Resorts International
Hotel
- 47 -<PAGE>
Financing, Inc. ("RIHF"), a wholly-owned subsidiary of GGE, and are
guaranteed by Resorts International Hotel, Inc. ("RIH"), GGE s
indirect subsidiary which owns and operates Merv Griffin s Resorts
Casino Hotel (the "Resorts Casino Hotel") in Atlantic City, New
Jersey.
The Mortgage Notes are secured by a $125,000,000 promissory note
made by RIH (the "RIH Promissory Note"), the terms of which mirror the
terms of the Mortgage Notes. The RIH Promissory Note and RIH s
guaranty of the Mortgage Notes are secured by liens on the Resorts
Casino Hotel, consisting of RIH s fee and leasehold interests in the
Resorts Casino Hotel, the contiguous parking garage and property, and
related personal property. The liens securing the Mortgage Notes will
be subordinated to the lien securing the Senior Facility Notes (see
Note 9) or notes issued under a similar working capital facility, if
such notes are issued.
The Junior Mortgage Notes were issued as part of Units (the
"Units") with GGE s Class B Redeemable Common Stock (the "Class B
Stock"). The Units are described further in Note 10. The Junior
Mortgage Notes are secured by a $35,000,000 promissory note made by
RIH (the "RIH Junior Promissory Note"), the terms of which mirror the
terms of the Junior Mortgage Notes. The RIH Junior Promissory Note
and RIH s guaranty of the Junior Mortgage Notes are also secured by
liens on the Resorts Casino Hotel property as described above. The
liens securing the Junior Mortgage Notes will be subordinated to the
lien securing the Senior Facility Notes (see Note 9) or notes issued
under a similar working capital facility, if such notes are issued,
and are subordinated to the liens securing the Mortgage Notes.
The indentures pursuant to which the Mortgage Notes and the
Junior Mortgage Notes were issued (collectively, the Indentures )
prohibit RIH and its subsidiaries from paying dividends, from making
other distributions in respect of their capital stock, and from
purchasing or redeeming their capital stock, with certain exceptions,
unless certain interest coverage ratios are attained. Also, the
Indentures restrict RIH and its subsidiaries from incurring additional
indebtedness, with certain exceptions, and limit intercompany loans by
RIH to GGE to loans from proceeds of the Senior Facility (or a similar
working capital facility) and other advances not in excess of
$1,000,000 in the aggregate at any time outstanding. As of December
31, 1995, RIH had total shareholder s equity of $45,676,000 of which
approximately $36,000,000 is restricted as to distribution under these
Indenture provisions.
A total of 35,000 Units were issued as part of the Restructuring
in May 1994. In November 1994 RIH purchased 12,899 Units comprising
$12,899,000 principal amount of Junior Mortgage Notes and 12,899
shares of Class B Stock at a price of $6,740,000. The resulting gain
of $4,008,000 was reported as an extraordinary item.
The First Mortgage Non-Recourse Pass-Through Notes due June 30,
2000 (the "Showboat Notes") were issued pursuant to the Company s 1990
plan of reorganization. The Company owns a 10-acre parcel of land in
Atlantic City underlying the Showboat Casino Hotel which parcel is
subject to a 99-year net lease (the "Showboat Lease") which expires in
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2082. The Showboat Notes are non-recourse notes, secured by a
mortgage encumbering that 10-acre parcel, by a collateral assignment
of the Showboat Lease, and by a pledge of any proceeds of the sale of
such mortgage and collateral assignment.
The carrying value and fair value by component of long-term debt
at December 31 were as follows:
1995 1994
Carrying Fair Carrying Fair
(In Thousands of Dollars) Value Value Value Value
Mortgage Notes $125,000 $115,313 $125,000 $ 83,750
Less unamortized
discount (16,872) (18,123)
108,128 106,877
Junior Mortgage Notes 35,000 35,000
Less notes held by RIH (12,899) (12,899)
22,101 20,333 22,101 13,040
Less unamortized
discount (3,468) (3,669)
18,633 18,432
Showboat Notes 105,333 97,433 105,333 88,480
Less unamortized
discount (15,657) (18,184)
89,676 87,149
Other 1,508 1,508 13 13
217,945 234,587 212,471 185,283
Less due within one year (589) (589) (5) (5)
$217,356 $233,998 $212,466 $185,278
The fair value presented above for the Company's long-term debt
is based on December 31 closing market prices for publicly traded debt
and carrying value for other debt, because other debt is not
considered material to the total.
Minimum principal payments of long-term debt outstanding as of
December 31, 1995, for the five years thereafter are as follows: 1996
- $589,000; 1997 - $636,000; 1998 - $283,000; 1999 - none; and 2000 -
$105,333,000.
In accordance with Statement of Position 90-7, Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code,
the Company stopped accruing interest and amortizing discounts on the
Series Notes as of March 21, 1994, the date the Company filed its
prepackaged bankruptcy cases.
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The accrual of interest and amortization of discounts on the
Mortgage Notes and the Junior Mortgage Notes commenced on May 3, 1994.
Interest on the Mortgage Notes is payable semi-annually on March 15
and September 15 in each year. Interest on the Junior Mortgage Notes
is payable semi-annually on June 15 and December 15 in each year. In
certain circumstances, interest payable on the Junior Mortgage Notes
may be satisfied by the issuance of additional Units.
Interest on the Showboat Notes consists of a pass-through
(subject to certain adjustments) of the lease payments received under
the Showboat Lease. See Note 13 for a description of the Showboat
Lease. Interest is payable semi-annually on January 15 and July 15.
The effective interest rates on the Company's publicly held debt
at December 31, 1995 were as follows: Mortgage Notes - 14.1%; Junior
Mortgage Notes - 14.8%; and Showboat Notes - 11.2%.
NOTE 9 - SENIOR FACILITY
As part of the Restructuring the Company entered into a senior
note purchase agreement (the "Senior Facility") with certain funds and
accounts advised or managed by Fidelity Management & Research Company.
The Senior Facility, as amended, is available for a single borrowing
of up to $19,738,000 during the period ending May 2, 1996, through the
issuance of notes (the "Senior Facility Notes"). If issued, the
Senior Facility Notes will bear interest at 11.75% and will be due in
2002. The Senior Facility Notes will be senior obligations of RIHF
secured by a promissory note from RIH in an aggregate principal amount
of up to $19,738,000 payable in amounts and at times necessary to pay
the principal of and interest on the Senior Facility Notes. The
Senior Facility Notes will be guaranteed by RIH and secured by a lien
of the Resorts Casino Hotel property as described in Note 8. Market
interest rates and other economic conditions, among other factors,
will determine if it is appropriate for the Company to draw on the
Senior Facility.
NOTE 10 - SHAREHOLDERS' EQUITY
On June 27, 1995, GGE s shareholders approved a one-for-five
reverse stock split (the "Reverse Stock Split") of GGE Common Stock,
par value $.01 per share, of which there were previously 100,000,000
shares authorized. The Reverse Stock Split became effective on June
30, 1995, on which date each share of GGE Common Stock was
reclassified into one-fifth of a new share of GGE Common Stock and the
total authorized shares of GGE Common Stock was, therefore, reduced to
20,000,000. The par value of the GGE Common Stock remains $.01 per
share after the Reverse Stock Split. As of June 30, 1995, $318,000
was reclassified from GGE Common Stock to capital in excess of par in
order to reflect the Reverse Stock Split. All references to number of
shares, per share amounts and market prices of GGE Common Stock in the
c o nsolidated financial statements and notes thereto have been
retroactively restated to reflect the Reverse Stock Split.
GGE is authorized to issue 120,000 shares of Class B Stock. The
Class B Stock was not affected by the Reverse Stock Split. Holders of
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Class B Stock are entitled to elect one-third of the Board of
Directors of GGE and under certain circumstances they would be
entitled to elect a majority of the Board of Directors. Holders of
Class B Stock do not participate in any dividends which may be
declared by GGE s Board of Directors.
Each share of Class B Stock is to be issued as part of a Unit
comprising $1,000 principal amount of Junior Mortgage Notes and one
share of Class B Stock. Shares of Class B Stock may not be
transferred separately from the related Junior Mortgage Notes. Upon
redemption, or cancellation following the purchase thereof, of each
$1,000 principal amount of Junior Mortgage Notes, GGE will redeem, at
a price of $.01 per share, the share of Class B Stock issued as part
of that Unit.
GGE is authorized to issue 10,000,000 shares of preferred stock.
As of December 31, 1995 no shares of preferred stock had been issued.
NOTE 11 - STOCK OPTIONS AND WARRANTS
Pursuant to the Restructuring, the Resorts International, Inc.
Senior Management Stock Option Plan (the "1990 SOP") was terminated,
although holders of options granted under that plan retain their
options, and the Resorts International, Inc. 1994 Stock Option Plan
(the "1994 SOP") was adopted. The 1994 SOP, as amended, allows for
the granting of options to purchase up to 466,685 shares of GGE Common
Stock to members of the Company s management, its Boards of Directors,
and certain others providing services to the Company. The 1994 SOP is
administered by a Compensation/Option Committee of GGE s Board of
Directors. The exercise price of options granted under the 1994 SOP
will not be less than fair market value of GGE Common Stock on the
date of grant. All options granted under the 1994 SOP will expire not
later than ten years from the date of grant.
Also in connection with the Restructuring, GGE issued a warrant
(the "Griffin Warrant"), which is exercisable through May 3, 1998, to
purchase 933,370 shares of GGE Common Stock at $6.00 per share to an
affiliate ("ARH") of The Griffin Group, Inc. (the "Griffin Group"), a
corporation controlled by Merv Griffin, Chairman of the Board of GGE.
Subsequent to the issuance of the Griffin Warrant, ARH sold portions
of the Griffin Warrant to Thomas E. Gallagher and Lawrence Cohen,
officers of ARH. Mr. Gallagher is President, Chief Executive Officer
and a member of the Board of Directors of GGE; Mr. Cohen is a member
of the Board of Directors of RIH.
In accordance with the anti-dilution and adjustment provisions of
the 1994 SOP, the 1990 SOP and the Griffin Warrant, all of GGE s
outstanding options and warrants as of June 30, 1995 were reduced by
80% and the exercise prices were increased accordingly as a result of
the Reverse Stock Split. All of the information provided herein with
regard to number of shares and exercise prices have been adjusted for
the Reverse Stock Split.
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Options to purchase the following shares of GGE Common Stock were
outstanding at December 31, 1995:
Exercise Options Options
Plan Price Outstanding Exercisable
1990 SOP $ 9.37500 280,677 280,677
1994 SOP $ 5.15625 205,500 56,625
1994 SOP $10.46875 115,000 28,750
1994 SOP $14.06250 4,000 4,000
1994 SOP $15.75000 15,000
Warrants $ 6.00000 933,370 933,370
1,553,547 1,303,422
In 1995 options to purchase 1,200 shares at $9.375 per share and
1,000 shares at $5.15625 per share were exercised. No shares were
issued in connection with the exercise of stock options during 1994 or
1993.
NOTE 12 - RELATED PARTY TRANSACTIONS
License and Services Agreements
In April 1993, GGE, RIH and Griffin Group entered into a license
and services agreement (the "Griffin Services Agreement") effective as
of September 17, 1992. Pursuant to this agreement, Griffin Group
granted GGE and RIH a non-exclusive license to use the name and
likeness of Merv Griffin to advertise and promote the Company's
facilities and operations. Also pursuant to the Griffin Services
Agreement, Mr. Griffin is to provide certain services to the Company,
including serving as Chairman of the Board of GGE and as a host,
producer and featured performer in various shows to be presented in
R e sorts Casino Hotel, and furnishing marketing and consulting
services.
The Griffin Services Agreement is to continue until September 17,
1997 and provides for earlier termination under certain circumstances
including, among others, a change of control (as defined) of the
Company and Mr. Griffin ceasing to serve as Chairman of the Board of
GGE.
The Griffin Services Agreement provides for compensation to
Griffin Group in the amount of $2,000,000 for the year ended September
16, 1993, and in specified amounts for each of the following years,
which increase at approximately 5% per year. In accordance with the
Griffin Services Agreement, upon signing, the Company paid Griffin
Group $4,100,000, representing compensation for the first two years.
Thereafter, the Griffin Services Agreement called for annual payments
on September 17, each representing a prepayment for the year ending
two years hence. In
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lieu of paying in cash, at the Company's option, the Company could
satisfy its obligation to make any of the payments required under the
Griffin Services Agreement by reducing the amount of the note
receivable from Griffin Group (the "Group Note") described below. In
September 1993 the Company notified Griffin Group that it would
satisfy its obligation to make the $2,205,000 payment for the year
ending September 16, 1995 by reducing the Group Note by that amount.
In May 1994, as part of the Restructuring, GGE reduced the Group Note
by $2,310,000 in satisfaction of the payment due in September 1994 for
the year ending September 16, 1996. The final payment required under
the Griffin Services Agreement, $2,425,000, was to be due in September
1995. On August 1, 1994, following review and approval by the
independent members of GGE's Board of Directors, GGE agreed to issue
388,000 shares of GGE Common Stock to an affiliate of Griffin Group in
satisfaction of this final payment obligation. The closing price of
GGE Common Stock on the date of the agreement was $5.3125 per share.
The shares are not registered under the Securities Act of 1933 and are
restricted securities. In the event of an early termination of the
Griffin Services Agreement, and depending on the circumstances of such
early termination, all or a portion of the compensation paid to
Griffin Group in respect of the period subsequent to the date of
termination may be required to be repaid to the Company.
The Griffin Services Agreement also provided for the issuance of
the Griffin Warrant described in Note 11.
In the Griffin Services Agreement the Company agreed to
indemnify, defend and hold harmless Griffin Group and Mr. Griffin
against certain claims, losses and costs, and to maintain certain
insurance coverage with Mr. Griffin and Griffin Group as named
insureds.
Notes Receivable from Related Parties
Pursuant to the Company's 1990 plan of reorganization, in
September 1990 GGE received $12,345,000 in cash and an $11,000,000
promissory note (the "Griffin Note") from Merv Griffin for certain
shares of GGE Common Stock purchased by him. In April 1993, in
accordance with the Griffin Services Agreement, Mr. Griffin made a
partial payment of $4,100,000 on this note comprised of $3,477,000
principal and $623,000 accrued interest. The Griffin Note, which then
had a remaining balance of $7,523,000, was canceled and a new note
from Griffin Group, the Group Note, in the amount of $7,523,000 was
substituted therefor. The Group Note was unconditionally guaranteed
as to principal and interest by Mr. Griffin and bore interest at the
rate of 3%. As noted above, the balance of the Group Note was reduced
by $2,205,000 in September 1993 and by $2,310,000 in May 1994 in
satisfaction of fees due to Griffin Group under the Griffin Services
Agreement. Also in May 1994, as part of the Restructuring, Griffin
Group repaid the remaining principal balance of $3,008,000 and accrued
interest thereon.
Other
Effective May 1, 1995 Thomas E. Gallagher became President and
Chief Executive Officer of GGE. Mr. Gallagher has been President and
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Chief Executive Officer of Griffin Group since April 1992. In
connection with Mr. Gallagher s appointment as President and Chief
Executive Officer of GGE, following review and approval by independent
members of GGE s Board of Directors, GGE agreed to pay $300,000 per
year for his services in this capacity. In 1995 such payments were
made to Griffin Group where Mr. Gallagher remains President and Chief
Executive Officer.
The Company reimbursed Griffin Group $183,000, $296,000 and
$219,000 for charter air services related to Company business rendered
in 1995, 1994 and 1993, respectively.
In 1995 and 1994 the Company incurred charges from unaffiliated
parties of $450,000 and $394,000, respectively, in producing the
nationwide television broadcast of "Merv Griffin's New Year's Eve
Special" from Resorts Casino Hotel. For the 1993 production of "Merv
Griffin's New Year's Eve Special," which also was broadcast
nationwide, the Company paid $100,000 and provided certain facilities,
labor and accommodations to subsidiaries of January Enterprises, Inc.,
of which Merv Griffin formerly was Chairman.
In 1995 the Company entered into an agreement with Players Island
Resort Casino Spa ("Players Island"), a subsidiary of Players
International, Inc. ("Players"), to produce and present a stage show
in the theater of Players Island in Mesquite, Nevada. The Company
received $266,000 from Players Island under this agreement for
services rendered during 1995, which services resulted in a modest
profit after expenses. Griffin Group owns in excess of 10% of the
outstanding common stock of Players. Mr. Gallagher serves as a member
of the Board of Directors of Players.
Also from time to time the Company has reimbursed Griffin Group,
at cost, for certain costs incurred by Griffin Group on behalf of the
Company. The Company has also paid standard room rates for hotel
rooms occupied by Company personnel or patrons of the Company at
certain hotels owned or controlled by Griffin Group.
Antonio C. Alvarez II, a shareholder of Alvarez & Marsal, Inc.,
was a member of the Board of Directors of GGE from September 1990
until the Effective Date. In 1994 the Company paid Alvarez & Marsal,
Inc. $225,000 and issued 22,500 shares (as adjusted for the Reverse
Stock Split) of GGE Common Stock as compensation for financial
advisory services rendered in connection with the Restructuring.
NOTE 13 - SHOWBOAT LEASE
The Company leases to a subsidiary ("ACS") of Showboat, Inc., a
resort and casino operator, approximately 10 acres of land adjacent to
the Boardwalk in Atlantic City. Under the 99-year net lease, lease
payments are payable in equal monthly installments on the first day of
each month. The lease payments for the lease year ending March 31,
1996, total $8,560,000. The lease payments are adjusted annually, as
of April 1, for changes in the consumer price index.
- 54 -<PAGE>
Pursuant to the lease agreement, the Company is unable to
transfer its interest in the lease, other than to an affiliate,
without giving ACS the opportunity to purchase such interest at terms
no less favorable than agreed to by any other party.
As described in Note 8, the Showboat Notes are secured by a
mortgage encumbering the real property which is subject to the
Showboat Lease, by a collateral assignment of the Showboat Lease, and
by a pledge of any proceeds of the sale of such mortgage and
collateral assignment. Lease payments under the Showboat Lease are
required to be passed-through to holders of the Showboat Notes.
NOTE 14 - RETIREMENT PLANS
GGE and certain of its subsidiaries participate, and certain of
GGE's former subsidiaries participated, in a defined contribution plan
covering substantially all of their non-union employees. The Company
makes contributions to this plan based on a percentage of eligible
employee contributions. Total pension expense for this plan was
$652,000, $683,000 and $804,000 in 1995, 1994 and 1993, respectively.
In addition to the plan described above, union and certain other
employees of RIH and certain former subsidiaries of GGE are covered by
multi-employer defined benefit pension plans to which the subsidiaries
make, or made, contributions. The Company's pension expense for these
plans totaled $881,000, $1,066,000 and $1,392,000 in 1995, 1994 and
1993, respectively.
NOTE 15 - WRITE-DOWN OF NON-OPERATING REAL ESTATE
The Company owns various non-operating sites in Atlantic City,
New Jersey, which are available for sale. Certain of these properties
could be developed while others are designated as wetlands. In 1994,
based on a study of these properties, the Company determined that
write-downs totaling $20,525,000 were appropriate in order to properly
reflect the net realizable value of these properties.
NOTE 16 - INCOME TAXES
In 1995 and 1994 the Company recorded current federal tax
provisions of $350,000 and $300,000, respectively, representing
estimated alternative minimum tax ("AMT") resulting from utilization
of net operating loss ("NOL") carryforwards to offset the regular
taxable income generated in those years. These current federal tax
provisions were offset by deferred federal tax benefits of the same
amounts resulting from the carryforward of AMT credits generated.
In 1995, taxable income was generated by recurring operations.
In 1994, however, the taxable income was largely generated by the sale
of the Paradise Island operations. Though this sale resulted in a
$72,463,000 loss for book purposes, the tax bases of the assets and
equity sold were significantly less than the book bases. The NOLs
utilized were available to the Company under the provisions of the
Internal Revenue Code for gains existing as of the date of change in
- 55 -<PAGE>
ownership. The gain on the exchange of the Series Notes in 1994 was
excludable from the Company's federal taxable income because the
exchange occurred pursuant to a plan confirmed by the Bankruptcy
Court.
In 1993, NOLs were generated for federal tax purposes, therefore
no current federal tax provision was recorded in that year. In August
1993 tax law changes were enacted which resulted in an increase in the
Company's federal income tax rate. The increase resulted in a
$1,000,000 increase in the Company's deferred income tax liability and
a deferred income tax provision of the same amount.
No state tax provision was recorded in 1995, 1994 or 1993 due to
the utilization of state NOL carryforwards in states where the Company
generated taxable income.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax
liabilities and assets as of December 31 were as follows:
(In Thousands of Dollars) 1995 1994
Deferred tax liabilities:
Basis differences on land held for
investment, development or resale $ (32,700) $ (32,700)
Basis differences on property and
equipment (20,900) (20,700)
Other (3,100) (2,800)
Total deferred tax liabilities (56,700) (56,200)
Deferred tax assets:
NOL carryforwards 197,000 195,800
Basis differences on land held for
investment, development or resale 16,000 16,000
Book reserves not yet deductible
for tax 14,350 12,900
Basis differences on debt 8,400 10,000
Tax credit carryforwards 1,000 3,100
Other 4,700 5,900
Total deferred tax assets 241,450 243,700
Valuation allowance for deferred
tax assets (238,100) (241,200)
Deferred tax assets, net of
valuation allowance 3,350 2,500
Net deferred tax liabilities $ (53,350) $ (53,700)
The effective income tax rate on the earnings (loss) before
income taxes and extraordinary items varies from the statutory federal
income tax rate as a result of the following factors:
- 56 -<PAGE>
1995 1994 1993
Statutory federal income tax
rate 35.0% (35.0%) (35.0%)
NOL carryforwards utilized (23.9%)
NOLs for which no tax
benefit was recognized 37.2% 34.7%
Deferred income tax benefit
of temporary differences (13.7%)
Other, including impact of
increase in tax rate in 1993 2.6% (2.2%) 1.3%
Effective tax rate 0.0% 0.0% 1.0%
For federal income tax purposes the Company had NOL carryforwards
of approximately $562,000,000 at December 31, 1995. Of this amount,
approximately $185,000,000 is not limited as to use. Due to the
change of ownership of GGE in 1990, the balance of the NOL
carryforwards (the "Pre-Change NOLs") is limited in its availability
to offset future taxable income of the Company. As a result of these
limitations, all but approximately $78,000,000 of these Pre-Change
NOLs are expected to expire unutilized. The unrestricted NOLs
combined with that portion of the restricted NOLs which the Company
believes will become available to the Company for utilization in spite
of the limitations total $263,000,000 and expire as follows:
$22,000,000 in 2004, $128,000,000 in 2005, $23,000,000 in 2006,
$31,000,000 in 2007, $58,000,000 in 2008 and $1,000,000 in 2009.
Also at December 31, 1995, the Company had federal income tax
credit carryforwards of approximately $400,000, which expire $100,000
per year between 2006 and 2009, and federal AMT tax credits of
approximately $600,000, which carry forward indefinitely.
At December 31, 1995, RIH had approximately $125,000,000 of NOL
carryforwards in New Jersey which expire as follows: $13,000,000 in
1996, $111,000,000 in 1997 and $1,000,000 in 2001.
T h e source of earnings (loss) before income taxes and
extraordinary items was as follows:
(In Thousands of Dollars) 1995 1994 1993
U.S. source earnings (loss) $15,899 $(106,487) $ (81,542)
Foreign source earnings (loss) 7,596 (19,622)
Earnings (loss) before income
taxes and extraordinary items $15,899 $ (98,891) $(101,164)
- 57 -<PAGE>
NOTE 17 - STATEMENTS OF CASH FLOWS
Supplemental disclosures required by Statement of Financial
Accounting Standards No. 95, "Statement of Cash Flows," are presented
below.
(In Thousands of Dollars) 1995 1994 1993
Reconciliation of net earnings
(loss) to net cash provided
by operating activities:
Net earnings (loss) $15,899 $ 91,117 $(102,164)
Adjustments to reconcile net
earnings (loss) to net cash
provided by operating
activities:
Extraordinary items (190,008)
Loss on SIHL Sale 72,463
Write-down of non-operating
real estate 20,525
Depreciation 13,452 17,250 27,924
Amortization (principally
debt discounts) 3,979 15,046 51,254
Interest expense settled by
issuance of long-term debt 40,268
Provision for doubtful
receivables 925 1,212 2,889
Provision for discount on
CRDA obligations, net of
amortization 1,561 1,456 1,538
Deferred tax provision
(benefit) (350) (300) 1,000
Recapitalization costs 5,232 8,789
Proceeds from Litigation
Trust (2,542)
Net loss on asset
dispositions 36 107 220
Net (increase) decrease in
receivables (2,579) (913) 2,236
Net (increase) decrease in
inventories and prepaid
expenses 2,056 3,967 (849)
Net (increase) decrease in
deferred charges and other
assets 215 1,073 (416)
Net increase in accounts
payable and accrued
liabilities 374 14,463 11,327
Net cash provided by
operating activities $35,568 $ 50,148 $ 44,016
- 58 -<PAGE>
(In Thousands of Dollars) 1995 1994 1993
Non-cash investing and
financing transactions:
Exchange of real estate in
Atlantic City (at carrying
value of property exchanged) $1,501
Exchange of Series Notes for:
Mortgage Notes and Junior
Mortgage Notes (at
estimated market value) $135,300
SIHL Shares (at estimated
market value) 60,000
GGE Common Stock (at
estimated market value) 24,415
Other liabilities 125
Exchange of Griffin Note for
Group Note $7,523
Reduction in Group Note
applied to prepaid services 2,310 2,205
Issuance of GGE Common Stock
for prepaid services 2,060
Issuance of GGE Common Stock
in settlement of certain
recapitalization costs 865
Increase in liabilities for
additions to property and
equipment and other assets 80 632
Reclassifications to other
assets from receivables
and property and equipment 450
NOTE 18 - COMMITMENTS AND CONTINGENCIES
CRDA
Certain issues have been raised by the CRDA and the State of New
Jersey Department of the Treasury (the "Treasury") concerning the
satisfaction of RIH s investment obligations for the years 1979
through 1983 (see Note 6). These matters were dormant for some time
until late 1995, when the Company was contacted by the CRDA. In a
recent meeting with CRDA representatives the Company was informed that
it would be hearing from the Treasury in the near future regarding a
resolution of these matters. If these issues are determined
adversely, RIH could be required to pay the relevant amount in cash to
the CRDA. However,
- 59 -<PAGE>
management believes a negotiated settlement with an insignificant
monetary cost to the Company is probable.
Litigation
GGE and certain of its subsidiaries are defendants in certain
litigation. In the opinion of management, based upon advice of
counsel, the aggregate liability, if any, arising from such litigation
will not have a material adverse effect on the accompanying
consolidated financial statements.
NOTE 19 - GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION
Schedules of geographic and business segment information relating
to (i) revenues, (ii) contribution to consolidated earnings (loss)
before income taxes and extraordinary items and (iii) identifiable
assets, depreciation and capital additions are included in "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
- 60 -<PAGE>
SCHEDULE I
GRIFFIN GAMING & ENTERTAINMENT, INC.
(Registrant)
BALANCE SHEETS
(In Thousands of Dollars)
December 31,
Assets 1995 1994
Current assets:
Cash (including cash equivalents
of $13,181 and $8,625) $ 13,183 $ 8,627
Restricted cash equivalents 3,612 5,388
Receivables 977 277
Prepaid expenses 464 965
Total current assets 18,236 15,257
Land held for investment,
development or resale 93,795 86,641
Property and equipment, net of
accumulated depreciation of $153
and $118 1,358 1,366
Deferred charges and other assets 315
Net advances to subsidiaries 23,356 43,008
Investments in subsidiaries, at
cost plus equity in earnings 22,666 (3,417)
$159,726 $142,855
See Notes to Financial Statements.
- 61 -<PAGE>
SCHEDULE I
GRIFFIN GAMING & ENTERTAINMENT, INC.
(Registrant)
BALANCE SHEETS
(In Thousands of Dollars, except par value)
Liabilities and Shareholders' December 31,
Equity 1995 1994
Current liabilities - accounts
payable and accrued liabilities $ 9,703 $ 11,375
Long-term debt, net of unamortized
discount 89,676 87,149
Deferred income taxes 34,400 34,300
Commitments and contingencies (Note F)
Shareholders' equity:
GGE Common Stock - 7,941,035 and
7,938,835 shares outstanding -
$.01 par value 79 397
Class B Stock - 35,000 shares
outstanding - $.01 par value
Capital in excess of par 129,572 129,237
Accumulated deficit (103,704) (119,603)
Total shareholders equity 25,947 10,031
$ 159,726 $ 142,855
See Notes to Financial Statements.
- 62 -<PAGE>
SCHEDULE I
GRIFFIN GAMING & ENTERTAINMENT, INC.
(Registrant)
STATEMENTS OF OPERATIONS
(In Thousands of Dollars)
For the Year Ended December 31,
1995 1994 1993
Revenues:
Management fees charged
subsidiaries $ 9,651 $ 11,053 $ 13,546
Real estate related and other
revenues 9,311 9,143 8,383
18,962 20,196 21,929
Expenses:
Real estate related 884 1,785 1,278
Corporate expense 2,343 4,609 9,403
Depreciation 37 51 89
Write-down of non-operating
real estate 12,775
Loss on SIHL Sale 74,019
3,264 93,239 10,770
Earnings (loss) from operations 15,698 (73,043) 11,159
Other income (deductions):
Interest income 1,132 1,032 1,909
Interest expense (8,578) (24,404) (57,000)
Amortization of debt discounts (2,527) (14,289) (51,203)
Recapitalization costs (1,236) (2,727)
Proceeds from Litigation Trust 847
Earnings (loss) before equity in
net earnings (loss) of
subsidiaries, registrant income
taxes and extraordinary item 5,725 (111,093) (97,862)
Equity in net earnings (loss) of
subsidiaries 10,174 16,195 (3,704)
Earnings (loss) before
registrant income taxes and
extraordinary item 15,899 (94,898) (101,566)
Income tax benefit (expense) 15 (598)
Earnings (loss) before
extraordinary item 15,899 (94,883) (102,164)
Extraordinary item 186,000
Net earnings (loss) $15,899 $ 91,117 $(102,164)
See Notes to Financial Statements.
- 63 -<PAGE>
<TABLE> SCHEDULE I
GRIFFIN GAMING & ENTERTAINMENT, INC.
(Registrant)
STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
<CAPTION> For the Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 9,311 $ 8,609 $ 8,383
Management fees from subsidiaries 9,651 11,053 13,546
Cash paid to suppliers and employees (5,485) (8,015) (11,429)
Cash flow from operations before interest and income taxes 13,477 11,647 10,500
Interest received 1,124 1,306 2,562
Interest paid (8,477) (8,250) (8,199)
Income taxes refunded (paid) and received from (paid to)
subsidiaries 97 (711) 308
Net cash provided by operating activities 6,221 3,992 5,171
Cash flows from investing activities:
Cash proceeds from SIHL Sale 70,147
Purchase of land held for investment, development or resale (6,154)
Proceeds from sales of land held for investment,
development or resale 534
Payments for property and equipment (47) (36) (107)
Repayments from (advances to) subsidiaries 2,743 1,632 (7,909)
Net cash provided by (used in) investing activities (3,458) 72,277 (8,016)
Cash flows from financing activities:
Cash (including cash proceeds of SIHL Sale) distributed to
noteholders (103,434)
Dividends received from subsidiary 12,262
Payments of recapitalization costs (4,742) (2,270)
Collection of note receivable from related party 3,008 3,477
Proceeds from Litigation Trust 847
Proceeds from exercise of stock options 17
Net cash provided by (used in) financing activities 17 (92,059) 1,207
Net increase (decrease) in cash and cash equivalents 2,780 (15,790) (1,638)
Cash and cash equivalents at beginning of period 14,015 29,805 31,443
Cash and cash equivalents at end of period $16,795 $ 14,015 $ 29,805
See Notes to Financial Statements./TABLE
<PAGE>
SCHEDULE I
GRIFFIN GAMING & ENTERTAINMENT, INC.
(Registrant)
NOTES TO FINANCIAL STATEMENTS
Note A - General
The Notes to Consolidated Financial Statements contained
elsewhere in this report are an integral part of the registrant's
financial statements and should be read in conjunction therewith.
Note B - 1994 Restructuring
See Note 2 of Notes to Consolidated Financial Statements for a
description of the Restructuring.
Note C - Long-term Debt
The Showboat Notes described in Note 8 of Notes to Consolidated
Financial Statements are the registrant's only long-term debt
outstanding at December 31, 1995. The principal amount of these
notes, $105,333,000, is due in the year 2000.
If the Senior Facility Notes described in Note 9 of Notes to
Consolidated Financial Statements are issued, they will be guaranteed
by the registrant.
Note D - Class B Redeemable Common Stock
See Note 10 of Notes to Consolidated Financial Statements for a
description of the registrant s Class B Stock.
Note E - Dividends
In May 1994, as part of the Restructuring, the registrant
received cash dividends totalling $12,262,000 from subsidiaries in
order for the registrant to make certain distributions called for by
the plan of reorganization.
As described in Note 8 of Notes to Consolidated Financial
Statements, the Indentures for the Mortgage Notes and the Junior
Mortgage Notes contain certain restrictions on the payment of
dividends or other distributions by RIH and its subsidiaries.
Note F - Commitments and Contingencies
The registrant is a defendant in certain litigation. In the
opinion of management, based upon advice of counsel, the aggregate
liability, if any, arising from such litigation will not have a
material adverse effect on the accompanying financial statements.
- 65 -<PAGE>
<TABLE> SCHEDULE II
GRIFFIN GAMING & ENTERTAINMENT, INC.
VALUATION ACCOUNTS
(In Thousands of Dollars)
<CAPTION>
Balance at Additions Balance at
beginning charged to Deductions end of
of period expenses SIHL Sale (A) period
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1995:
Allowance for doubtful receivables:
Gaming $3,819 $ 902 $(1,202) $3,519
Other 82 23 (54) 51
$3,901 $ 925 $(1,256) $3,570
For the year ended December 31, 1994:
Allowance for doubtful receivables:
Gaming $6,598 $ 846 $(2,248) $(1,377) $3,819
Other 1,276 366 (1,511) (49) 82
$7,874 $1,212 $(3,759) $(1,426) $3,901
For the year ended December 31, 1993:
Allowance for doubtful receivables:
Gaming $6,952 $2,336 $(2,690) $6,598
Other 1,212 553 (489) 1,276
$8,164 $2,889 $(3,179) $7,874
(A) Write-off of uncollectible accounts, net of recoveries.
/TABLE
<PAGE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(In Thousands of Dollars, except per share data)
The table below reflects selected quarterly financial data for the years 1995 and 1994.
1995 1994
For the Quarter First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues
(Note A) $69,761 $76,700 $85,602 $69,677 $111,872 $ 90,816 $79,760 $70,568
Earnings (loss) from
operations (Note A) $ 6,155 $12,182 $16,755 $ 6,586 $ 8,112 $(79,764) $15,056 $ 8,026
Recapitalization
costs (Note B) (4,382) (5,406) 1,300 3,256
Proceeds from
Litigation Trust
(Note C) 2,542
Other income
(deductions), net
(Note D) (6,135) (6,486) (6,595) (6,563) (30,006) (5,184) (6,571) (5,870)
Earnings (loss) before
extraordinary items 20 5,696 10,160 23 (23,734) (90,354) 9,785 5,412
Extraordinary items
(Notes B and E) 187,300 (1,300) 4,008
Net earnings (loss) $ 20 $ 5,696 $10,160 $ 23 $(23,734) $ 96,946 $ 8,485 $ 9,420
Per share data -
primary (Note F):
Earnings (loss)
before extraordinary
items $ -0- $ .65 $ 1.16 $ -0- $ (5.89) $ (14.31) $ 1.25 $ .68
Extraordinary items 29.66 (.16) .51
Net earnings (loss) $ -0- $ .65 $ 1.16 $ -0- $ (5.89) $ 15.35 $ 1.09 $ 1.19
Per share data - fully
diluted (Note F):
Net earnings $ .65 $ 1.16 $ -0-
/TABLE
<PAGE>
Notes to Selected Quarterly Financial Data
Note A: The Company's Paradise Island operations were disposed of on
May 3, 1994, through the SIHL Sale, as part of the Restructuring. The
loss from operations for the second quarter of 1994 includes a loss of
$73,108,000 on the SIHL Sale and a $20,525,000 charge for the write-
down of non-operating real estate in Atlantic City. Earnings from
operations for the fourth quarter of 1994 includes a credit adjustment
of $645,000 to the loss on SIHL Sale. See Notes 2 and 15 of Notes to
Consolidated Financial Statements.
Note B:In October 1994, after settlement of the majority of
recapitalization costs and updating estimates of unbilled costs and
costs still to be incurred, the Company determined that the cash
balance required to pay such costs was $1,300,000 less than originally
anticipated. This determination resulted in the $1,300,000
reclassification from recapitalization costs to extraordinary items
reported in the third quarter of 1994. Recapitalization costs in the
fourth quarter of 1994 represent credits resulting from the reversal
of restructuring reserves provided in connection with the Company's
1990 plan of reorganization.
Note C: Proceeds from Litigation Trust represents cash distributed to
the Company from a litigation trust established under a previous plan
of reorganization to pursue certain claims against a former affiliate.
Note D: Includes interest income, interest expense and amortization
of debt discounts.
Note E: See Notes 2 and 8 of Notes to Consolidated Financial
Statements.
Note F: Per share data for the four quarters of 1995 and 1994 do not
add to the total reported for the year due to changes in the average
number of shares and equivalents outstanding during the year.
Per share data have been restated to give effect to the
Reverse Stock Split described in Note 10 of Notes to Consolidated
Financial Statements.
- 68 -<PAGE>
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
The information called for by this item with respect to directors
is incorporated by reference to the registrant's definitive proxy
statement which is to be filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934 in connection with GGE's 1996 annual
meeting of shareholders.
The executive officers of GGE are:
Executive
Officer
Name Age Since
Merv Griffin 70 1988
Chairman of the Board of Directors
Thomas E. Gallagher 51 1995
President and Chief Executive Officer
Matthew B. Kearney 56 1982
Executive Vice President - Finance,
Chief Financial Officer and Treasurer
David G. Bowden 55 1979
Vice President - Controller, Chief
Accounting Officer, Secretary
and Assistant Treasurer
GGE's officers serve at the pleasure of the Board of Directors.
Business Experience
The principal occupations and business experience for the last
five years or more of the executive officers of GGE are as follows:
Merv Griffin - Chairman of the Board of GGE since November
1988; Chairman of Griffco Resorts Holding, Inc. ("Griffco," a
company which through September 1990 was owned by Mr. Griffin and
from November 1988 through September 1990 was GGE's parent) from
its incorporation in May 1986 to September 1990; President of
Griffco from September 1988 to September 1990; Chairman of
Griffin Group since its incorporation in September 1988; Chairman
of J anuary Enterprises, Inc. ("January Enterprises"), a
television production and holding company doing business as Merv
Griffin Enterprises, from 1964 to May 1986, and Chief Executive
Officer from 1964 to
- 69 -<PAGE>
March 1994; director of Hollywood Park Operating Company from 1987 to
June 1991; television and radio producer since 1945. Mr. Griffin
created and produced the nationally syndicated television game shows,
"Wheel of Fortune" and "Jeopardy." For 21 years, through 1986, Mr.
Griffin hosted "The Merv Griffin Show," a nationally syndicated talk
show. In 1986, Mr. Griffin sold January Enterprises to The Coca Cola
Company, but he continues to act as Executive Producer of "Wheel of
Fortune" and "Jeopardy," now owned by Sony Pictures Entertainment,
Inc.
Thomas E. Gallagher - Director of GGE since October 1993;
President and Chief Executive Officer of GGE since May 1995;
President and Chief Executive Officer of Griffin Group since
April 1992; a director of Players International, Inc., a gaming
company, since December 1992. For the preceding 15 years, Mr.
Gallagher was a partner of the law firm of Gibson, Dunn &
Crutcher.
Matthew B. Kearney - Executive Vice President - Finance of GGE
since September 1993; Chief Financial Officer of GGE since 1982;
Treasurer of GGE since May 1993; Office of the President of GGE
from November 1993 to March 1995; Vice President - Finance of GGE
from 1982 through September 1993.
David G. Bowden - Vice President - Controller and Chief
Accounting Officer of GGE since 1979; Secretary of GGE since
August 1994.
ITEM 11. EXECUTIVE COMPENSATION
The information called for by this item is incorporated by
reference to the registrant's definitive proxy statement which is to
be filed pursuant to Regulation 14A under the Securities Exchange Act
of 1934 in connection with GGE's 1996 annual meeting of shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information called for by this item is incorporated by
reference to the registrant's definitive proxy statement which is to
be filed pursuant to Regulation 14A under the Securities Exchange Act
of 1934 in connection with GGE's 1996 annual meeting of shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this item is incorporated by
reference to the registrant's definitive proxy statement which is to
be filed pursuant to Regulation 14A under the Securities Exchange Act
of 1934 in connection with GGE's 1996 annual meeting of shareholders.
- 70 -<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Documents Filed as Part of This Report
1. The financial statement index required herein is incorporated by
reference to "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA."
2. The index of financial statement schedules required herein is
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA." Financial statement schedules not included
have been omitted because they are either not applicable or the
required information is shown in the consolidated financial
statements or notes thereto.
3. The following exhibits are filed herewith or incorporated by
reference:
Exhibit
Numbers Exhibit
(2) Plan of Reorganization. (Incorporated by reference to
Appendix A of the Information Statement/Prospectus
included in registrant's Form S-4 Registration Statement
in File No. 33-50733.)
(3)(a)(1) Form of Amended and Restated Certificate of Incorporation
of GGE. (Incorporated by reference to Exhibit 3.01 to
registrant's Form S-1 Registration Statement in File No.
33-53371.)
(3)(a)(2) Form of Amendment to Amended and Restated Certificate of
Incorporation. (Incorporated by reference to Exhibit A
to registrant s Definitive Proxy Statement filed on May
23, 1995 on Schedule 14A in File No. 1-4748.)
(3)(b) Form of Amended and Restated By-Laws of GGE.
(Incorporated by reference to Exhibit 3.02 to
registrant's Form S-1 Registration Statement in File No.
33-53371.)
(4)(a) See Exhibits (3)(a)(1), (3)(a)(2) and (3)(b) as to the
rights of holders of registrant's common stock.
(4)(b)(1) Form of Indenture among RIHF, as issuer, RIH, as
guarantor, and State Street Bank and Trust Company of
Connecticut, National Association, as trustee, with
respect to RIHF 11% Mortgage Notes due 2003.
(Incorporated by reference to Exhibit 4.04 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
- 71 -<PAGE>
(4)(b)(2) Form of Mortgage between RIH and State Street Bank and
Trust Company of Connecticut, National Association,
securing Guaranty of RIHF Mortgage Notes. (Incorporated
by reference to Exhibit 4.22 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(4)(b)(3) Form of Mortgage between RIH and RIHF, securing RIH
Promissory Note. (Incorporated by reference to Exhibit
4.23 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(b)(4) Form of Assignment of Agreements made by RIHF, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
RIH Promissory Note. (Incorporated by reference to
Exhibit 4.24 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(4)(b)(5) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Promissory
Note. (Incorporated by reference to Exhibit 4.25 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(b)(6) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
Guaranty of RIHF Mortgage Notes. (Incorporated by
reference to Exhibit 4.26 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(4)(b)(7) Form of Assignment of Operating Assets made by RIH, as
Assignor, to State Street Bank and Trust Company of
Connecticut, National Association, as Assignee, regarding
Guaranty of RIHF Mortgage Notes. (Incorporated by
reference to Exhibit 4.28 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(4)(b)(8) Form of Assignment of Operating Assets made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Promissory
Note. (Incorporated by reference to Exhibit 4.34 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(b)(9) Form of Amended and Restated $125,000,000 RIH Promissory
Note. (Incorporated by reference to Exhibit A to Exhibit
(4)(b)(1) hereto.)
(4)(c)(1) Form of Indenture between RIHF, as issuer, RIH, as
guarantor, and U.S. Trust Company of California, N.A., as
trustee, with respect to RIHF 11.375% Junior Mortgage
Notes due 2004. (Incorporated by reference to Exhibit
4.05 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
- 72 -<PAGE>
(4)(c)(2) Form of Mortgage between RIH and U.S. Trust Company of
California, N.A., securing Guaranty of RIHF Junior
Mortgage Notes. (Incorporated by reference to Exhibit
4.29 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(3) Form of Mortgage between RIH and RIHF, securing RIH
Junior Promissory Note. (Incorporated by reference to
Exhibit 4.30 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(4)(c)(4) Form of Assignment of Agreements made by RIHF, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding RIH Junior Promissory Note.
(Incorporated by reference to Exhibit 4.31 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(c)(5) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Junior
Promissory Note. (Incorporated by reference to Exhibit
4.32 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(6) Form of Assignment of Leases and Rents made by RIH, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding Guaranty of RIHF Junior Mortgage
Notes. (Incorporated by reference to Exhibit 4.33 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(4)(c)(7) Form of Assignment of Operating Assets made by RIH, as
Assignor, to U.S. Trust Company of California, N.A., as
Assignee, regarding the Guaranty of the RIHF Junior
Mortgage Notes. (Incorporated by reference to Exhibit
4.35 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(8) Form of Assignment of Operating Assets made by RIH, as
Assignor, to RIHF, as Assignee, regarding RIH Junior
Promissory Note. (Incorporated by reference to Exhibit
4.27 to registrant's Form S-4 Registration Statement in
File No. 33-50733.)
(4)(c)(9) Form of Amended and Restated $35,000,000 RIH Junior
Promissory Note. (Incorporated by reference to Exhibit A
to Exhibit (4)(c)(1) hereto.)
(4)(d) Indenture dated as of September 14, 1990, between the
registrant and The Bank of New York, as Trustee, with
respect to registrant's First Mortgage Non-Recourse
Pass-Through Notes due June 30, 2000, with Exhibits as
executed. (Incorporated by reference to Exhibit (4)(b)
to registrant's Form 10-Q Quarterly Report for the
quarter ended September 30, 1990, in File No. 1-4748.)
- 73 -<PAGE>
(4)(e) Form of Warrant issued to Atlantic Resorts Holdings, Inc.
for 746,695 shares, to Thomas E. Gallagher for 140,006
shares and to Lawrence Cohen for 46,669 shares.
(4)(f)* Resorts International, Inc. Senior Management Stock
Option Plan. (Incorporated by reference to Exhibit 8.5
to Exhibit 35 to registrant's Form 8 Amendment No. 1 to
its Form 8-K Current Report dated August 30, 1990, in
File No. 1-4748.)
(4)(g)* Resorts International, Inc. 1994 Stock Option Plan (as
amended on June 27, 1995). (Incorporated by reference to
Exhibit (4)(b) to registrant s Form 10-Q Quarterly Report
for the quarter ended June 30, 1995, in File No. 1-4748.)
(10)(a)(1) Lease Agreement, dated October 26, 1983, between the
registrant and Ocean Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(i) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31,
1986, in File No. 1-4748.)
(10)(a)(2) First Amendment, dated January 15, 1985, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (assignee from affiliate
- Ocean Showboat, Inc.).
(10)(a)(3) Second and Third Amendments, dated July 5 and October 28,
1985, respectively, to Lease Agreement, dated October 26,
1983, between the registrant and Atlantic City Showboat,
Inc. (Incorporated by reference to Exhibit (10)(c)(iii)
to registrant's Form 10-K Annual Report for the fiscal
year ended December 31, 1985, in File No. 1-4748.)
(10)(a)(4) Restated Third Amendment, dated August 28, 1986, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(iv) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1986, in File No. 1-4748.)
(10)(a)(5) Fourth Amendment, dated December 16, 1986, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(v) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31,
1986, in File No. 1-4748.)
(10)(a)(6) Fifth Amendment, dated February 1987, to Lease Agreement,
dated October 26, 1983, between the registrant and
Atlantic City Showboat, Inc. (Incorporated by reference
to Exhibit (10)(c)(vi) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1986, in
File No. 1-4748.)
- 74 -<PAGE>
(10)(a)(7) Sixth Amendment, dated March 13, 1987, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(vii) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1986, in File No. 1-4748.)
(10)(a)(8) Seventh Amendment, dated October 18, 1988, to Lease
Agreement, dated October 26, 1983, between the registrant
and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(viii) to registrant's Form
10-K Annual Report for the fiscal year ended December 31,
1988, in File No. 1-4748.)
(10)(b)(1)* GGE Executive Health Plan. (Incorporated by reference to
Exhibit (10)(c)(1) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1992, in
File No. 1-4748.)
(10)(b)(2)* Resorts Retirement Savings Plan. (Incorporated by
reference to Exhibit (10)(c)(2) to registrant's Form 10-K
Annual Report for the fiscal year ended December 31,
1991, in File No. 1-4748.)
(10)(c)(1)* Employment Agreement, dated May 3, 1991, between GGE and
Matthew B. Kearney. (Incorporated by reference to
Exhibit (10)(d)(3) to registrant's Form 10-K Annual
Report for the fiscal year ended December 31, 1991, in
File No. 1-4748.)
(10)(c)(2)* Amendment to Employment Agreement, dated December 3,
1992, between GGE and Matthew B. Kearney. (Incorporated
by reference to Exhibit 10.24 to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(10)(c)(3)* Second Amendment to Employment Agreement, dated September
24 , 1 993, between GGE and Matthew B. Kearney.
(Incorporated by reference to Exhibit 10.25 to
registrant's Form S-4 Registration Statement in File No.
33-50733.)
(10)(d)(1)* Nonqualified Stock Option Agreement, dated as of June 30,
1995, between the registrant and Thomas E. Gallagher.
(10)(d)(2)* Nonqualified Stock Option Agreement, dated as of May 3,
1991, between the registrant and Matthew B. Kearney.
(Incorporated by reference to Exhibit (10)(e)(3) to
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1991, in File No. 1-4748.)
(10)(d)(3)* Nonqualified Stock Option Agreement, dated as of August
1, 1994, between the registrant and Matthew B. Kearney.
(10)(d)(4)* Nonqualified Stock Option Agreement, dated as of August
9, 1995, between the registrant and Matthew B. Kearney.
- 75 -<PAGE>
(10)(d)(5)* Nonqualified Stock Option Agreement, dated as of May 3,
1991, between the registrant and David G. Bowden.
(Incorporated by reference to Exhibit (10)(e)(5) to
registrant's Form 10-K Annual Report for the fiscal year
ended December 31, 1991, in File No. 1-4748.)
(10)(d)(6)* Nonqualified Stock Option Agreement, dated as of August
1, 1994, between the registrant and David G. Bowden.
(10)(e)(1)* License and Services Agreement, dated as of September 17,
1992, among Griffin Group, GGE and RIH. (Incorporated by
reference to Exhibit 10.34(a) to registrant's Form S-4
Registration Statement in File No. 33-50733.)
(10)(e)(2)* Form of Amendment to License and Services Agreement,
dated as of September 17, 1992, among Griffin Group, GGE
and RIH. (Incorporated by reference to Exhibit 10.34(b)
to registrant's Form S-4 Registration Statement in File
No. 33-50733.)
(10)(f) Litigation Trust Agreement, dated as of September 17,
1990, among GGE, Resorts International Financing, Inc.,
Griffin Resorts Holding Inc. and Griffin Resorts Inc.
(now GGRI, Inc.). (Incorporated by reference to Exhibit
1.46 to Exhibit 35 to the Form 8 Amendment dated
November 16, 1990, to registrant's Form 8-K Current
Report dated August 30, 1990, in File No. 1-4748.)
(10)(g) Form of Intercreditor Agreement by and among RIHF, RIH,
GGE, GGRI, Inc., State Street Bank and Trust Company of
Connecticut, National Association, U.S. Trust Company of
California, N.A. and any lenders which provide additional
facilities. (Incorporated by reference to Exhibit 10.64
to registrant's Form S-4 Registration Statement in File
No. 33-50733.)
(10)(h)(1) Form of Note Purchase Agreement dated May 3, 1994, among
RIHF, GGE and RIH, and certain funds advised or managed
by Fidelity Management & Research Company with respect to
issuance of Senior Facility Notes. (Incorporated by
reference to Exhibit 10.65 to Form S-1 Registration
Statement in File No. 33-53371.)
(10)(h)(2) Revised term sheet for 11.0% Senior Secured Loan due 2002
with RIHF as issuer. (Incorporated by reference to
Exhibit 10.54 to registrant's Form S-4 Registration
Statement in File No. 33-50733.)
(10)(h)(3) Letter agreement dated February 27, 1995, amending
Exhibit (10)(h)(1) hereto. (Incorporated by reference to
Exhibit (10)(n)(3) to registrant s Form 10-K Annual
Report for the fiscal year ended December 31, 1994, in
File No. 1-4748.)
- 76 -<PAGE>
(10)(i) Form of Registration Rights Agreement dated as of April
29, 1994, among GGE, RIHF, RIH, Fidelity Management &
Research Company and The TCW Group, Inc. (Incorporated
by reference to Exhibit 10.66 to Form S-1 Registration
Statement in File No. 33-53371.)
(10)(j) F o r m of Nominee Agreement between RIHF and RIH.
(Incorporated by reference to Exhibit 10.57 to Form S-1
Registration Statement in File No. 33-53371.)
(11) Statement re computation of per share data.
(21) Subsidiaries of the registrant.
(27) Financial data schedule.
_________________
* Management contract or compensatory plan.
Registrant agrees to file with the Securities and Exchange
Commission, upon request, copies of any instrument defining the rights
of the holders of its consolidated long-term debt.
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by GGE covering an event
during the fourth quarter of 1995. No amendments to previously filed
Forms 8-K were filed during the fourth quarter of 1995.
(c) Exhibits Required by Item 601 of Regulation S-K
The exhibits listed in Item 14(a)3. of this report, and not
incorporated by reference to a separate file, follow "SIGNATURES."
(d) Financial Statement Schedules Required by Regulation S-X
The financial statement schedules required by Regulation S-X are
incorporated by reference to "ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA."
- 77 -<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GRIFFIN GAMING & ENTERTAINMENT, INC.
(Registrant)
Date: March 8, 1996 By /s/ Merv Griffin
Merv Griffin
Chairman of the Board
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.
By /s/ Merv Griffin March 8, 1996
Merv Griffin
Chairman of the Board
By /s/ Thomas E. Gallagher March 8, 1996
Thomas E. Gallagher
President and Director
(Principal Executive Officer)
By /s/ William J. Fallon March 8, 1996
William J. Fallon
Director
By /s/ Jay M. Green March 8, 1996
Jay M. Green
Director
By /s/ Charles Masson March 8, 1996
Charles Masson
Director
By /s/ Vincent J. Naimoli March 8, 1996
Vincent J. Naimoli
Director
By /s/ Matthew B. Kearney March 8, 1996
Matthew B. Kearney
Executive Vice President - Finance
(Principal Financial Officer)
By /s/ David G. Bowden March 8, 1996
David G. Bowden
Vice President - Controller
(Principal Accounting Officer)
- 78 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(2) Plan of Reorganization. Incorporated by
reference to Appendix A
of the Information
Statement/Prospectus
included in registrant s
Form S-4 Registration
Statement in File No.
33-50733.
(3)(a)(1) Form of Amended and Incorporated by
Restated Certificate of reference to Exhibit
Incorporation of GGE. 3.01 to registrant s
Form S-1 Registration
Statement in File No.
33-53371.
(3)(a)(2) Form of Amendment to Incorporated by
Amended and Restated reference to Exhibit A
Certificate of to registrant s
Incorporation. Definitive Proxy
Statement filed on May
23, 1995 on Schedule 14A
in File No. 1-4748.
(3)(b) Form of Amended and Incorporated by
Restated By-Laws of GGE. reference to Exhibit
3.02 to registrant s
Form S-1 Registration
Statement in File No.
33-53371.
(4)(a) See Exhibits (3)(a)(1),
(3)(a)(2) and (3)(b) as
to the rights of holders
of registrant s common
stock.
- 79 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(b)(1) Form of Indenture among Incorporated by
RIHF, as issuer, RIH, as reference to Exhibit
guarantor, and State 4.04 to registrant s
Street Bank and Trust Form S-4 Registration
Company of Connecticut, Statement in File No.
National Association, as 33-50733.
trustee, with respect to
RIHF 11% Mortgage Notes
due 2003.
(4)(b)(2) Form of Mortgage between Incorporated by
RIH and State Street reference to Exhibit
Bank and Trust Company 4.22 to registrant s
of Connecticut, National Form S-4 Registration
Association, securing Statement in File No.
Guaranty of RIHF 33-50733.
Mortgage Notes.
(4)(b)(3) Form of Mortgage between Incorporated by
RIH and RIHF, securing reference to Exhibit
RIH Promissory Note. 4.23 to registrant s
Form S-4 Registration
Statement in File No.
33-50733.
(4)(b)(4) Form of Assignment of Incorporated by
Agreements made by RIHF, reference to Exhibit
as Assignor, to State 4.24 to registrant s
Street Bank and Trust Form S-4 Registration
Company of Connecticut, Statement in File No.
National Association, as 33-50733.
Assignee, regarding RIH
Promissory Note.
(4)(b)(5) Form of Assignment of Incorporated by
Leases and Rents made by reference to Exhibit
RIH, as Assignor, to 4.25 to registrant s
RIHF, as Assignee, Form S-4 Registration
regarding RIH Promissory Statement in File No.
Note. 33-50733.
- 80 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(b)(6) Form of Assignment of Incorporated by
Leases and Rents made by reference to Exhibit
RIH, as Assignor, to 4.26 to registrant s
State Street Bank and Form S-4 Registration
Trust Company of Statement in File No.
Connecticut, National 33-50733.
Association, as
Assignee, regarding
Guaranty of RIHF
Mortgage Notes.
(4)(b)(7) Form of Assignment of Incorporated by
Operating Assets made by reference to Exhibit
RIH, as Assignor, to 4.28 to registrant s
State Street Bank and Form S-4 Registration
Trust Company of Statement in File No.
Connecticut, National 33-50733.
Association, as
Assignee, regarding
Guaranty of RIHF
Mortgage Notes.
(4)(b)(8) Form of Assignment of Incorporated by
Operating Assets made by reference to Exhibit
RIH, as Assignor, to 4.34 to registrant s
RIHF, as Assignee, Form S-4 Registration
regarding RIH Promissory Statement in File No.
Note. 33-50733.
(4)(b)(9) Form of Amended and Incorporated by
Restated $125,000,000 reference to Exhibit A
RIH Promissory Note. to Exhibit (4)(b)(1)
hereto.
(4)(c)(1) Form of Indenture Incorporated by
between RIHF, as issuer, reference to Exhibit
RIH, as guarantor, and 4.05 to registrant's
U.S. Trust Company of Form S-4 Registration
California, N.A., as Statement in File No.
trustee, with respect to 33-50733.
RIHF 11.375% Junior
Mortgage Notes due 2004.
- 81 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(c)(2) Form of Mortgage between Incorporated by
RIH and U.S. Trust reference to Exhibit
Company of California, 4.29 to registrant's
N.A., securing Guaranty Form S-4 Registration
of RIHF Junior Mortgage Statement in File No.
Notes. 33-50733.
(4)(c)(3) Form of Mortgage between Incorporated by
RIH and RIHF, securing reference to Exhibit
RIH Junior Promissory 4.30 to registrant's
Note. Form S-4 Registration
Statement in File No.
33-50733.
(4)(c)(4) Form of Assignment of Incorporated by
Agreements made by RIHF, reference to Exhibit
as Assignor, to U.S. 4.31 to registrant's
Trust Company of Form S-4 Registration
California, N.A., as Statement in File No.
Assignee, regarding RIH 33-50733.
Junior Promissory Note.
(4)(c)(5) Form of Assignment of Incorporated by
Leases and Rents made by reference to Exhibit
RIH, as Assignor, to 4.32 to registrant's
RIHF, as Assignee, Form S-4 Registration
regarding RIH Junior Statement in File No.
Promissory Note. 33-50733.
(4)(c)(6) Form of Assignment of Incorporated by
Leases and Rents made by reference to Exhibit
RIH, as Assignor, to 4.33 to registrant's
U.S. Trust Company of Form S-4 Registration
California, N.A., as Statement in File No.
Assignee, regarding 33-50733.
Guaranty of RIHF Junior
Mortgage Notes.
- 82 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(c)(7) Form of Assignment of Incorporated by
Operating Assets made by reference to Exhibit
RIH, as Assignor, to 4.35 to registrant's
U.S. Trust Company of Form S-4 Registration
California, N.A., as Statement in File No.
Assignee, regarding the 33-50733.
Guaranty of the RIHF
Junior Mortgage Notes.
(4)(c)(8) Form of Assignment of Incorporated by
Operating Assets made by reference to Exhibit
RIH, as Assignor, to 4.27 to registrant's
RIHF, as Assignee, Form S-4 Registration
regarding RIH Junior Statement in File No.
Promissory Note. 33-50733.
(4)(c)(9) Form of Amended and Incorporated by
Restated $35,000,000 RIH reference to Exhibit A
Junior Promissory Note. to Exhibit (4)(c)(1)
hereto.
(4)(d) Indenture dated as of Incorporated by
September 14, 1990, reference to Exhibit
between the registrant (4)(b) to registrant's
and The Bank of New Form 10-Q Quarterly
York, as Trustee, with Report for the quarter
respect to registrant's ended September 30,
First Mortgage 1990, in File No.
Non-Recourse 1-4748.
Pass-Through Notes due
June 30, 2000, with
Exhibits as executed.
(4)(e) Form of Warrant issued Pages 91 - 110.
to Atlantic Resorts
Holdings, Inc. for
746,695 shares, to
Thomas E. Gallagher for
140,006 shares and to
Lawrence Cohen for
46,669 shares.
- 83 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(4)(f) Resorts International, Incorporated by
Inc. Senior Management reference to Exhibit 8.5
Stock Option Plan. to Exhibit 35 to
registrant's Form 8
Amendment No. 1 to its
Form 8-K Current Report
dated August 30, 1990,
in File No. 1-4748.
(4)(g) Resorts International, Incorporated by
Inc. 1994 Stock Option reference to Exhibit
Plan (as amended on June (4)(b) to registrant s
27, 1995). Form 10-Q Quarterly
Report for the quarter
ended June 30, 1995, in
File No. 1-4748.
(10)(a)(1) Lease Agreement, dated Incorporated by
October 26, 1983, reference to Exhibit
between the registrant (10)(c)(i) to
and Ocean Showboat, Inc. registrant's Form 10-K
Annual Report for the
fiscal year ended
December 31, 1986, in
File No. 1-4748.
(10)(a)(2) First Amendment, dated Pages 111 - 121.
January 15, 1985, to
Lease Agreement, dated
October 26, 1983,
between the registrant
and Atlantic City
Showboat, Inc. (assignee
from affiliate - Ocean
Showboat, Inc.).
- 84 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(10)(a)(3) Second and Third Incorporated by
Amendments, dated July 5 reference to Exhibit
and October 28, 1985, (10)(c)(iii) to
respectively, to Lease registrant's Form 10-K
Agreement, dated October Annual Report for the
26, 1983, between the fiscal year ended
registrant and Atlantic December 31, 1985, in
City Showboat, Inc. File No. 1-4748.
(10)(a)(4) Restated Third Incorporated by
Amendment, dated August reference to Exhibit
28, 1986, to Lease (10)(c)(iv) to
Agreement, dated October registrant's Form 10-K
26, 1983, between the Annual Report for the
registrant and Atlantic fiscal year ended
City Showboat, Inc. December 31, 1986, in
File No. 1-4748.
(10)(a)(5) Fourth Amendment, dated Incorporated by
December 16, 1986, to reference to Exhibit
Lease Agreement, dated (10)(c)(v) to
October 26, 1983, registrant's Form 10-K
between the registrant Annual Report for the
and Atlantic City fiscal year ended
Showboat, Inc. December 31, 1986, in
File No. 1-4748.
(10)(a)(6) Fifth Amendment, dated Incorporated by
February 1987, to Lease reference to Exhibit
Agreement, dated October (10)(c)(vi) to
26, 1983, between the registrant's Form 10-K
registrant and Atlantic Annual Report for the
City Showboat, Inc. fiscal year ended
December 31, 1986, in
File No. 1-4748.
- 85 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(10)(a)(7) Sixth Amendment, dated Incorporated by
March 13, 1987, to Lease reference to Exhibit
Agreement, dated October (10)(c)(vii) to
26, 1983, between the registrant's Form 10-K
registrant and Atlantic Annual Report for the
City Showboat, Inc. fiscal year ended
December 31, 1986, in
File No. 1-4748.
(10)(a)(8) Seventh Amendment, dated Incorporated by
October 18, 1988, to reference to Exhibit
Lease Agreement, dated (10)(c)(viii) to
October 26, 1983, registrant's Form 10-K
between the registrant Annual Report for the
and Atlantic City fiscal year ended
Showboat, Inc. December 31, 1988, in
File No. 1-4748.
(10)(b)(1) GGE Executive Health Incorporated by
Plan. reference to Exhibit
(10)(c)(1) to
registrant's Form 10-K
Annual Report for the
fiscal year ended
December 31, 1992, in
File No. 1-4748.
(10)(b)(2) Resorts Retirement Incorporated by
Savings Plan. reference to Exhibit
(10)(c)(2) to
registrant's Form 10-K
Annual Report for the
fiscal year ended
December 31, 1991, in
File No. 1-4748.
- 86 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(10)(c)(1) Employment Agreement, Incorporated by
dated May 3, 1991, reference to Exhibit
between GGE and Matthew (10)(d)(3) to
B. Kearney. registrant's Form 10-K
Annual Report for the
fiscal year ended
December 31, 1991, in
File No. 1-4748.
(10)(c)(2) Amendment to Employment Incorporated by
Agreement, dated reference to Exhibit
December 3, 1992, 10.24 to registrant's
between GGE and Matthew Form S-4 Registration
B. Kearney. Statement in File No.
33-50733.
(10)(c)(3) Amendment to Employment Incorporated by
Agreement, dated reference to Exhibit
September 24, 1993, 10.25 to registrant's
between GGE and Matthew Form S-4 Registration
B. Kearney. Statement in File No.
33-50733.
(10)(d)(1) Nonqualified Stock Pages 122 - 127.
Option Agreement, dated
as of June 30, 1995,
between the registrant
and Thomas E. Gallagher.
(10)(d)(2) Nonqualified Stock Incorporated by
Option Agreement, dated reference to Exhibit
as of May 3, 1991, (10)(e)(3) to
between the registrant registrant's Form 10-K
and Matthew B. Kearney. Annual Report for the
fiscal year ended
December 31, 1991, in
File No. 1-4748.
(10)(d)(3) Nonqualified Stock Pages 128 - 133.
Option Agreement, dated
as of August 1, 1994,
between the registrant
and Matthew B. Kearney.
- 87 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(10)(d)(4) Nonqualified Stock Pages 134 - 139.
Option Agreement, dated
as of August 9, 1995,
between the registrant
and Matthew B. Kearney.
(10)(d)(5) Nonqualified Stock Incorporated by
Option Agreement, dated reference to Exhibit
as of May 3, 1991, (10)(e)(5) to
between the registrant registrant's Form 10-K
and David G. Bowden. Annual Report for the
fiscal year ended
December 31, 1991, in
File No. 1-4748.
(10)(d)(6) Nonqualified Stock Pages 140 - 144.
Option Agreement, dated
as of August 1, 1994,
between the registrant
and David G. Bowden.
(10)(e)(1) License and Services Incorporated by
Agreement, dated as of reference to Exhibit
September 17, 1992, 10.34(a) to registrant's
among Griffin Group, GGE Form S-4 Registration
and RIH. Statement in File No.
33-50733.
(10)(e)(2) Form of Amendment to Incorporated by
License and Services reference to Exhibit
Agreement, dated as of 10.34(b) to registrant's
September 17, 1992, Form S-4 Registration
among Griffin Group, GGE Statement in File No.
and RIH. 33-50733.
- 88 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(10)(f) Litigation Trust Incorporated by
Agreement, dated as of reference to Exhibit
September 17, 1990, 1.46 to Exhibit 35 to
among GGE, Resorts the Form 8 Amendment
International Financing, dated November 16,
Inc., Griffin Resorts 1990, to registrant's
Holding Inc. and Griffin Form 8-K Current Report
Resorts Inc. (now GGRI, dated August 30, 1990,
Inc.). in File No. 1-4748.
(10)(g) Form of Intercreditor Incorporated by
Agreement by and among reference to Exhibit
RIHF, RIH, GGE, GGRI, 10.64 to registrant's
Inc., State Street Bank Form S-4 Registration
and Trust Company of Statement in File No.
Connecticut, National 33-50733.
Association, U.S. Trust
Company of California,
N.A. and any lenders
which provide additional
facilities.
(10)(h)(1) Form of Note Purchase Incorporated by
Agreement dated May 3, reference to Exhibit
1994, among RIHF, GGE 10.65 to Form S-1
and RIH, and certain Registration Statement
funds advised or managed in File No. 33-53371.
by Fidelity Management &
Research Company with
respect to issuance of
Senior Facility Notes.
(10)(h)(2) Revised term sheet for Incorporated by
11.0% Senior Secured reference to Exhibit
Loan due 2002 with RIHF 10.54 to registrant's
as issuer. Form S-4 Registration
Statement in File No.
33-50733.
- 89 -<PAGE>
GRIFFIN GAMING & ENTERTAINMENT, INC.
Form 10-K for the fiscal year
ended December 31, 1995
EXHIBIT INDEX
Reference to previous
Exhibit filing or page number
Number Exhibit in Form 10-K
(10)(h)(3) Letter agreement dated Incorporated by
February 27, 1995, reference to Exhibit
amending Exhibit (10)(n)(3) to
(10)(h)(1) hereto. registrant s Form 10-K
Annual Report for the
fiscal year ended
December 31, 1994, in
File No. 1-4748.
(10)(i) Form of Registration Incorporated by
Rights Agreement dated reference to Exhibit
as of April 29, 1994, 10.66 to Form S-1
among GGE, RIHF, RIH, Registration Statement
Fidelity Management & in File No. 33-53371.
Research Company and The
TCW Group, Inc.
(10)(j) Form of Nominee Incorporated by
Agreement between RIHF reference to Exhibit
and RIH. 10.57 to Form S-1
Registration Statement
in File No. 33-53371.
(11) Statement re computation Page 145.
of per share data.
(21) Subsidiaries of the Page 146.
registrant.
(27) Financial data schedule. Page 147.
- 90 -<PAGE>
EXHIBIT (4)(e)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS
OF ANY OTHER JURISDICTION AND HAS BEEN SOLD IN RELIANCE UPON
EXEMPTIONS THEREUNDER. THE SALE, PLEDGE OR OTHER TRANSFER OF
THIS SECURITY IS RESTRICTED IN ACCORDANCE WITH THE SECURITIES ACT
AND SUCH SECURITIES LAWS. THE HOLDER OF THIS SECURITY AGREES
THAT THIS SECURITY MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (1) TO GRIFFIN GAMING & ENTERTAINMENT, INC.
(2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS, OR (3) IN COMPLIANCE WITH OR PURSUANT TO EXEMPTIONS FROM
THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE SECURITIES
ACT AND SECURITIES LAWS OF ANY STATE.
WARRANT
to Purchase Common Stock of
GRIFFIN GAMING & ENTERTAINMENT, INC.
No. __
THIS IS TO CERTIFY THAT, for value received, ________
____________________ is entitled to purchase from GRIFFIN GAMING
& ENTERTAINMENT, INC., a corporation organized under the laws of
the State of Delaware (the "Company"), at any time or from time
to time following the date hereof and prior to 5:00 p.m. (New
York City time) on May 3, 1998 (the "Expiration Date") at the
Warrant Office (as defined in Section 2.1), at the exercise price
stated in Section 1.6 (the "Exercise Price"), _______ duly
authorized, validly issued, fully paid and nonassessable shares
of Common Stock (as defined in Section 3.1(a)) and is entitled
also to exercise the other appurtenant rights, powers and
privileges hereinafter set forth.
ARTICLE I
Exercise of Warrants
1.1 Method of Exercise. To exercise this Warrant in
whole or in part, the holder hereof shall deliver to the Company,
at any time or from time to time following the date hereof and
prior to 5:00 p.m. (New York City time) on the Expiration Date at
the Warrant Office, (a) a written notice, in substantially the
form of the Subscription Notice attached as Schedule A hereto, of
- 91 -<PAGE>
such holder's election to exercise this Warrant, which notice
shall specify the number of shares of Common Stock to be
purchased, (b) a bank or certified check in an amount equal to
the payment of the aggregate Exercise Price for the number of
shares of Common Stock being purchased and (c) this Warrant. The
Company shall, as promptly as practicable and in any event within
14 days thereafter, execute and deliver or cause to be executed
and delivered, in accordance with said notice, a certificate or
certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or
certificates so delivered shall be in denominations as may be
specified in said notice and shall be issued in the name of such
holder or such other name as shall be designated in said notice.
Such certificate or certificates shall be deemed to have been
issued, and such holder or holders or any other person so
designated to be named therein shall be deemed for all purposes
to have become the holder of record of such shares of Common
Stock, as of the date said notice, payment and Warrant is
received by the Company as aforesaid. If this Warrant shall have
been exercised only in part, the Company shall, upon surrender of
this Warrant, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the
rights of such holder to purchase the remaining shares of Common
Stock subject to this Warrant, which new Warrant shall in all
other respects be identical with this Warrant, or, at the request
of such holder, appropriate notation may be made on this Warrant
and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of such stock certificates or
new Warrants, except that the holder hereof shall (i) pay and
satisfy (or deliver funds to the Company in an amount sufficient
to pay and satisfy) all stock transfer taxes which shall be
payable upon the issuance of such stock certificate or
certificates, if such stock certificates shall be registered in a
name or names other than the name of the holder hereof, and (ii)
pay and satisfy (or deliver funds to the Company in an amount
sufficient to pay and satisfy) any federal, state or local
withholding taxes payable in connection with the issuance of
shares of Common Stock hereunder.
1.2 Warrant Shares to be Fully Paid and Nonassessable.
All shares of Common Stock issued upon the exercise of this
Warrant (the "Warrant Shares") shall be validly issued, fully
paid and nonassessable.
1.3 Fractional Shares. Upon any exercise of this
Warrant, the Company shall not issue a certificate representing
any fraction of a share of Common Stock. In lieu of such
issuance, the Company shall pay to the holder of this Warrant
cash in an amount equal to the Current Market Value of a share of
Common Stock (as defined in Section 3.1(a)) multiplied by such
- 92 -<PAGE>
fraction.
1.4 Legend on Warrant Shares. Each certificate for
Warrant Shares shall bear a legend substantially as follows:
THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED("THE SECURITIES ACT"), OR THE SECURITIES LAWS
OF ANY OTHER JURISDICTION AND HAVE BEEN SOLD IN
RELIANCE UPON EXEMPTIONS THEREUNDER. THE SALE, PLEDGE
OR OTHER TRANSFER OF SUCH SECURITIES IS RESTRICTED IN
ACCORDANCE WITH THE SECURITIES ACT AND SUCH SECURITIES
LAWS. THE HOLDER HEREOF AGREES THAT THESE SECURITIES
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) TO THE COMPANY, (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, OR
(3) IN COMPLIANCE WITH OR PURSUANT TO EXEMPTIONS FROM
THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
Any certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except a
new certificate issued upon completion of a public distribution
pursuant to a registration statement under the Securities Act of
securities represented thereby) also shall bear such legends
unless, in the case of the legend regarding registration under
the Securities Act, in the opinion of counsel reasonably
acceptable to the Company, the securities represented thereby no
longer require such legend.
1.5 Acknowledgment of Continuing Obligation. The
Company will, at the time of any exercise of this Warrant in
whole or in part, upon reasonable request of the holder hereof,
acknowledge in writing its continuing obligation to the holder
hereof in respect of any rights to which the holder shall
continue to be entitled after such exercise in accordance with
this Warrant; provided, however, that the failure of the holder
hereof to make any such request shall not affect the continuing
obligation of the Company to the holder in respect of such
rights.
1.6 Exercise Price. The price per share at which each
share of Common Stock will be purchased upon exercise of this
Warrant shall be $6 per share, subject to adjustment pursuant to
ARTICLE III.
ARTICLE II
Warrant Office; Transfer,
Division or Combination of Warrants
- 93 -<PAGE>
2.1 Warrant Office. The Company shall maintain an
office for certain purposes specified herein (the "Warrant
Office"), which office shall initially be the Company's office at
1133 Boardwalk, Atlantic City, New Jersey 08401 and may
subsequently be such other office of the Company or of any
transfer agent of the Common Stock as to which written notice has
previously been given to all the holders of Warrants.
2.2 Ownership of Warrant. The Company may deem and
treat the person in whose name this Warrant is registered as the
holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the
Company) for all purposes and shall not be affected by any notice
to contrary.
2.3 Transfer of Warrants. The Company agrees to
maintain at the Warrant Office books for the registration of
transfer of the Warrants.
ARTICLE III
Anti-Dilution Provisions
3.1 Mandatory Adjustments. (a) In addition to the
terms defined elsewhere in this Warrant, as used in this Warrant,
the following terms have the following meanings:
"Additional Shares of Common Stock" means all shares of
Common Stock issued subsequent to the Effective Date other than
(A) shares issued upon exercise of the Warrants and (B) any
shares of Common Stock issued in connection with any Convertible
Securities, warrants or options granted after the Effective Date
which have an exercise or conversion price per share equal to or
greater than the Current Market Value on the date they are
granted.
"Capitalized Lease" means, with respect to any Person,
any lease or any other agreement with respect to the use of
property that, in accordance with GAAP, should be capitalized on
the lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any person means, as
of any date as of which the amount thereof is to be determined,
the amount of the liability capitalized in respect of a
Capitalized Lease of such Person.
"Common Stock" means the common stock, par value $.01
per share, of the Company as constituted on July 1, 1995 and any
capital stock into which such common stock thereafter may be
changed on one or more occasions as a result of a stock split,
- 94 -<PAGE>
stock dividend or combination or reclassification of shares, or
through a merger, consolidation, reorganization or
recapitalization, or by any other means, and in addition to such
common stock also includes capital stock of the Company of any
other class that is not preferred as to dividends or assets over
any other class of capital stock of the Company and that is not
subject to redemption; provided, however, that the shares of
Common Stock receivable upon exercise of the Warrants shall
include only shares designated as Common Stock on July 1, 1995;
and provided, further, however, that "Common Stock" shall not
include shares of the Company's Class B Redeemable Common Stock,
par value $.01 per share.
"Convertible Securities" means Indebtedness, shares of
stock or other securities that, with or without payment of
additional consideration in cash or property, are convertible
into or exchangeable for Additional Shares of Common Stock,
either immediately or upon the arrival of a specified date or the
happening of a specified event.
"Current Market Value" of a share of Common Stock
means, for each trading day: (A) the closing price for Common
Stock as reported on the American Stock Exchange; (B) if the
Common Stock is not listed on the American Stock Exchange, the
closing price as reported on the principal national securities
exchange on which the Common Stock is listed; (C) if the Common
Stock is not listed on any national securities exchange, the
closing price in the over-the-counter market as reported on the
NASDAQ/National Market System; or (D) if no such closing price is
available, the fair market value as determined in good faith by
the Board of Directors of the Company.
"Current Warrant Price" per share of Common Stock, as
of any date, means the amount equal to the quotient resulting
from dividing the Exercise Price per Stock Unit in effect on such
date by the number of shares (including any fractional share) of
Common Stock comprising a Stock Unit on such date.
"Indebtedness" of any Person means, as of any date as
of which the amount thereof is to be determined, (i) all
obligations of such Person that, in accordance with generally
accepted accounting principles, would be classified on a balance
sheet of such Person as debt or indebtedness, including all
obligations of such Person in respect of borrowed money or
evidenced by bonds, debentures, notes or other evidences of
indebtedness, and (ii) in addition (A) all obligations that are
secured by any Lien existing on property owned by such Person
whether or not the obligations secured thereby shall have been
assumed by such Person, (B) all Capitalized Lease Obligations of
such Person, (C) all obligations of such Person to purchase any
materials, supplies or other property, or to obtain the services
of any Person, if the relevant contract or other related document
- 95 -<PAGE>
requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of
whether or not delivery of such materials, supplies or other
property is ever made or tendered or such services are ever
performed or tendered, (D) all obligations of such Person to
advance or supply funds to, or to purchase property or services
from, any other Person in order to maintain the working capital,
net worth or any other balance sheet condition of such other
Person or to pay debts dividends or expenses of such other Person
or to assure such other Person or any third party against any
liability or loss and (E) guarantees, endorsements and other
contingent obligations, direct or indirect, on the part of such
Person (other than endorsement of negotiable instruments for
collection in the ordinary course of business) for the payment,
discharge or satisfaction of Indebtedness of others to pay the
same or to the owners of such indebtedness of others of the
character described above, including any agreement, contingent or
otherwise, to (x) purchase such indebtedness of others, (y)
purchase or sell property or services primarily to permit the
debtor in respect of such indebtedness of others to pay the same
or the owner of such Indebtedness of others to avoid loss or (z)
supply funds to or invest in any such debtor.
"Lien" means: (i) any interest in property (whether
real, personal or mixed and whether tangible or intangible) that
secures an obligation owed to, or a claim by, a Person other than
the owner of such property, whether such interest is based on the
common law, statute or contract, including without limitation any
such interest arising from a Capitalized Lease, arising from a
mortgage, charge, pledge, security agreement, conditional sale or
trust receipt, arising by way of the right of set-off, or deposit
in trust, or arising from a lease, consignment or bailment given
for security purposes; (ii) any encumbrances upon such property
that does not secure such an obligation; and (iii) any exception
to or defect in the title to or ownership interest in such
property, including without limitation reservations, rights of
entry, possibilities of reverter, encroachments, easements, right
of way, restrictive covenants, leases, licenses and profits a
prendre.
"Person" includes an individual, a corporation, an
association, a partnership, a trust or estate, a government and
any agency or political subdivision thereof or any other entity.
"Stock Unit" means one share of Common Stock until the
occurrence of any adjustment specified in this Section 3.1 and
thereafter means such other number of shares of Common Stock as
may result from any one or more of such adjustments.
"Warrants" means the warrants, of which this Warrant is
one, to purchase up to an aggregate of 4,666,850 shares of Common
Stock which were originally issued by the Company on May 3, 1994,
- 96 -<PAGE>
and subsequently reduced by a one-for-five reverse stock split
effective June 30, 1995. The owners of the remaining Warrants
#__ and #__ are _____________________ (_______ shares) and
_______________________ (_______ shares), respectively.
(b) If at any time or from time to time the Company
shall (i) take a record of the holders of the Common Stock for
the purpose of entitling them to receive a dividend payable in,
or other distribution of, shares of Common Stock, (ii) subdivide
the outstanding shares of Common Stock into a larger number of
shares of Common Stock or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares of Common Stock then
the number of shares of Common Stock thereafter constituting a
Stock Unit shall be adjusted so as to consist of the same number
of shares that a record holder of the number of shares of Common
Stock constituting a Stock Unit immediately prior to the
happening of such event would own or be entitled to receive after
the happening of such event.
(c) If at any time or from time to time the Company
shall take a record of the holders of the Common Stock for the
purpose of entitling them to receive any dividend or other
distribution of (i) any evidence of Indebtedness (other than
Convertible Securities), (ii) any share of its capital stock
(other than Convertible Securities or Additional Shares of Common
Stock) or any other securities or property (other than cash) or
(iii) any warrant or other right to subscribe for or purchase any
Indebtedness (other than Convertible Securities), any shares of
its capital stock (other than Convertible Securities or
Additional Shares of Common Stock) or any other securities or
property, then the number of shares of Common Stock thereafter
constituting a Stock Unit shall be adjusted to that number
determined by multiplying the number of shares of Common Stock
constituting a Stock Unit immediately prior to such adjustment by
a fraction the numerator of which is the Current Market Value of
a share of Common Stock at such record date and the denominator
of which is the Current Market Value of a share of Common Stock
less the portion of any such cash so distributable and of the
value of such Indebtedness, shares of capital stock, other
securities or property or warrants or other subscription or
purchase rights so distributable that are applicable to one share
of Common Stock. A reclassification of the Common Stock into
shares of Common Stock and shares of any other class of capital
stock shall be deemed a distribution by the Company to the
holders of the Common Stock of such shares of such other class of
capital stock within the meaning of this Section 3.1(c) and, if
the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as part of
such reclassification, shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of
Common Stock within the meaning of Section 3.1(b).
- 97 -<PAGE>
(d) If at any time or from time to time, except as
provided in this Section 3.1(d), the Company shall issue or sell
any Additional Shares of Common Stock for a consideration per
share less than the Current Market Value per share of Common
Stock, then the number of shares of Common Stock thereafter
constituting a Stock Unit shall be adjusted to that number
determined by multiplying the number of shares of Common Stock
constituting a Stock Unit immediately prior to such adjustment by
a fraction (i) the numerator of which is the number of shares of
Common Stock outstanding immediately prior to the issuance of
such Additional Shares of Common Stock, plus the number of
Additional Shares of Common Stock deemed to be outstanding
pursuant to Sections 3.1(e) and 3.1(f) immediately prior to the
issuance of Additional Shares of Common Stock as contemplated by
this section 3.1(d) plus the number of such Additional Shares of
Common Stock intended to be issued or sold as contemplated by
this Section 3.1(D) (without giving effect to the adjustment then
being made) and (ii) the denominator of which is the number of
shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock, plus the
number of Additional Shares of Common Stock deemed to be
outstanding pursuant to Sections 3.1(e) and 3.1(f) immediately
prior to the issuance of Additional Shares of Common Stock as
contemplated by this Section 3.1(d), plus the number of shares of
Common Stock that the aggregate consideration for the total
number of such Additional Shares of Common Stock intended to be
issued or sold as contemplated by this Section 3.1(d) (without
giving effect to the adjustment then being made) would purchase
at such Current Market Value. For the purposes of this Section
3.1(d), the date as of which the Current Market Value and the
Exercise Price per share of Common Stock shall be computed shall
be the earlier of the date on which the Company enters into a
firm contract for the issuance of such Additional Shares of
Common Stock or the date of actual issuance of such Additional
Shares of Common Stock. The provisions of this Section 3.1(d)
shall not apply to any issuance of Additional Shares of Common
Stock for which an adjustment is provided under Section 3.1(b).
No adjustment of the number of shares of Common Stock
constituting a Stock Unit shall be made under this Section 3.1(d)
upon the issuance of any Additional Shares of Common Stock that
are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of
any conversion or exchange rights in any Convertible Securities,
if any such adjustment previously shall have been made upon the
issuance of such warrants or other rights or upon the issuance of
such Convertible Securities (or upon the issuance of any warrant
or other rights therefor) pursuant to Sections 3.1(e) or 3.1(f).
(e) If at any time or from time to time the Company
shall take a record of the holders of the Common Stock for the
purpose of entitling them to receive a distribution of, or in any
manner (whether directly or by assumption in a merger in which
- 98 -<PAGE>
the Company is the surviving corporation and in which the
shareholders of the Company immediately prior to the merger
continue to own at least 51% of the Common Stock outstanding
immediately after the merger or otherwise) shall issue or sell
any warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exercise, exchange or convert
thereunder are immediately exercisable, and the consideration per
share for which Additional Shares of Common Stock at any time
thereafter may be issuable pursuant to the terms of such
Convertible Securities shall be less than the Current Market
Value per share of Common Stock, then the number of shares of
Common Stock thereafter constituting a Stock Unit shall be
adjusted as provided in Section 3.1(d) on the basis that (i) the
maximum number of Additional Shares of Common Stock issuable
pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding as
of the date of the determination of the Current Market Value per
share of Common Stock as hereinafter provided, and (ii) the
aggregate consideration for such maximum number of Additional
Shares of Common Stock shall be deemed to be the minimum
consideration received or receivable by the Company for the
issuance of such Additional Shares of Common Stock pursuant to
the terms of such warrants, right or Convertible Securities. For
the purposes of this Section 3.1(e), the date as of which the
Current Market Value per share of Common Stock shall be computed
shall be the earliest of (x) the date on which the Company shall
take a record of the holders of the Common Stock for the purpose
of entitling them to receive any such warrants or other rights,
(y) the date on which the Company shall enter into a firm
contract for the issuance of such warrants or other rights and
(z) the date of actual issuance of such warrants or other rights.
(f) If at any time or from time to time the Company
shall take a record of the holders of Common Stock for the
purpose of entitling them to receive a distribution of, or shall
in any manner (whether directly or by assumption in a merger in
which the Company is the surviving corporation and in which the
shareholders of the Company immediately prior to the merger
continue to own at least 51% of the Common Stock outstanding
immediately after the merger or otherwise) issue or sell, any
Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the
consideration per share for which Additional Shares of Common
Stock may at any time thereafter be issuable pursuant to the
terms of such Convertible Securities shall be less than the
Current Market Value per share of Common Stock, then the number
of shares of Common Stock thereafter constituting a Stock Unit
shall be adjusted as provided in Section 3.1(d) on the basis that
(i) the maximum number of Additional Shares of Common Stock
necessary to effect the conversion or exchange of all such
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Convertible Securities shall be deemed to have been issued and
outstanding as of the date for the determination of the Current
Market Value per share of Common Stock as hereinafter provided
and (ii) the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the
minimum consideration received or receivable by the Company for
the issuance of such Additional Shares of Common Stock pursuant
to the terms of such Convertible Securities. For the purposes of
this Section 3.1(f), the date as of which the Current Market
Value per share of Common Stock shall be computed shall be the
earliest of (x) the date on which the Company shall take a record
of the holders of Common Stock for the purpose of entitling them
to receive any such Convertible Securities, (y) the date on which
the Company shall enter into a firm contract for the issuance of
such Convertible Securities and (z) the date of actual issuance
of such Convertible Securities. No adjustment of the number of
shares of Common Stock constituting a Stock Unit shall be made
under this Section 3.1(f) upon the issuance of any Convertible
Securities that are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the
issuance of such warrants or other rights pursuant to Section
3.1(e).
(g) If, at any time after any adjustment of the number
of shares of Common Stock constituting a Stock Unit shall have
been made pursuant to Section 3.1(e) or 3.1(f) on the basis of
the issuance of warrants or other rights or the issuance of
Convertible Securities, or after any new adjustments of the
number of shares of Common Stock constituting a Stock Unit shall
have been made pursuant to this Section 3.1(g): (i) such
warrants or rights or the right of conversion or exchange under
such Convertible Securities shall expire in whole or in part and
a portion of such warrants or rights, or the right of conversion
or exchange in respect of a portion of such Convertible
Securities, as the case may be, shall not have been exercised,
or, (ii) the consideration per share, for which shares of Common
Stock are issuable pursuant to such warrants or rights or the
terms of such Convertible Securities, shall be increased solely
by virtue of provisions therein contained for an automatic
increase in such consideration per share upon the arrival of a
specified date or the happening of a specified event, such
previous adjustment shall be rescinded and annulled and the
Additional Shares of Common Stock that were deemed to have been
issued by virtue of the computation made in connection with the
adjustment so rescinded and annulled, shall no longer be deemed
to have been issued by virtue of such computation. Thereupon, a
recomputation shall be made of the effect of such rights or
options or Convertible Securities on the basis of (i) treating
the number of Additional Shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous
exercise of such warrants or rights or such right of conversion
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or exchange under such Convertible Securities, as having been
issued on the date or dates of such original adjustment and on
the exact terms on which the original adjustment was made, and
(ii) treating any such warrants or rights or any such Convertible
Securities that then remain outstanding and exercisable,
exchangeable or convertible into Additional Shares of Common
Stock as having been granted or issued immediately after the time
of such increase of the consideration per share for which shares
of Common Stock are issuable under such warrants or rights or
Convertible Securities; and, if and to the extent called for by
the foregoing provisions of this Section 3.1(g) on the basis
aforesaid, a new adjustment of the number of shares of Common
Stock constituting a Stock Unit shall be made, which new
adjustment shall supersede the previous adjustment so rescinded
and annulled.
(h) The following provision shall be applicable to the
making of adjustments of the number of shares of Common Stock
constituting a Stock Unit provided for in this Section 3.1:
(i) The sale or other disposition of any issued
shares of Common Stock owned or held by or for the account of the
Company shall be deemed an issuance thereof for the purposes of
this Section 3.1.
(ii) To the extent that any Additional Shares of
Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities shall be issued for
a cash consideration, the consideration received by the Company
therefor shall be deemed to be the amount of the cash received or
receivable by the Company therefor or, if such Additional Shares
of Common Stock or Convertible Securities are offered by the
Company for subscription, the subscription price or, if such
Additional Shares of Common Stock or Convertible Securities are
sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price, in any
such case excluding any amounts paid or receivable for accrued
interest or accrued dividends, or otherwise in connection with,
the issue thereof. To the extent that such issuance shall be for
a consideration other than cash, except as herein otherwise
expressly provided, the amount of such consideration shall be
deemed to be the fair market value of such consideration at the
time of such issuance. In case any Additional Shares of Common
Stock or any Convertible Securities or any warrants or other
rights to subscribe for or purchase such Additional Shares of
Common Stock or Convertible Securities shall be issued in
connection with any merger in which the Company issues any
securities, the amount of consideration therefor shall be deemed
to be the fair market value of such portion of the assets and
business of the nonsurviving corporation as is determined to be
attributable to such Additional Shares of Common Stock,
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Convertible Securities, warrants or other rights, as the case may
be, in good faith by the Board of Directors of the Company. In
the event of any consolidation or merger of the Company in which
the Company is not the surviving corporation or in the event of
any sale of all or substantially all the assets of the Company
for stock or other securities of any corporation, the Company
shall be deemed to have issued a number of Additional Shares of
Common Stock or Convertible Securities of the other corporation
computed on the basis of the actual exchange ratio on which the
transaction was predicated and the consideration received for
such issuance shall be equal to the fair market value on the date
of such transaction, of such stock or securities of the other
corporation, and if any such calculation results in adjustment in
the number of shares of Common Stock comprising a Stock Unit
immediately prior to such merger, consolidation or sale for
purposes of this Section 3.1(h), such merger, consolidation or
sale shall be deemed to have been made after giving effect to
such adjustment. The consideration for Additional Shares of
Common Stock issuable pursuant to any warrants or other rights to
subscribe for or purchase the same shall be the consideration
received by the Company for issuing such warrants or other
rights, plus the additional consideration payable to the Company
upon the exercise of such warrants or other rights. The
consideration for any Additional Shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be the
consideration received by the Company for issuing any warrants or
other rights to subscribe for or purchase such Convertible
Securities, plus the consideration paid or payable to the Company
in respect of the subscription for or purchase of such
Convertible Securities, plus the additional consideration, if
any, payable to the Company upon the exercise of the right of
conversion or exchange in such Convertible Securities. In case
of the issuance at any time of any Additional Shares of Common
Stock or Convertible Securities in payment or satisfaction of any
dividends upon any class of capital stock other than Common
Stock, the Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a
consideration equal to the amount of such dividend so paid or
satisfied.
(iii) The adjustments required by this Section
3.1 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that no adjustment of
the number of shares of Common Stock constituting a Stock Unit
that would otherwise be required shall be made (except in the
case of a subdivision or combination of shares of Common Stock,
as provided for in Section 3.1(b)) unless and until such
adjustment either by itself or with other adjustments not
previously made adds or subtracts at least 1/20th of a share to
or from the number of shares of Common Stock constituting a Stock
Unit immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount
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(except as aforesaid) shall be carried forward and made as soon
as such adjustment, together with other adjustments required by
this Section 3.1 and not previously made, would result in a
minimum adjustment. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(iv) In computing adjustments under this Section
3.1, fractional interest in Common Stock shall be taken into
account to the nearest one-thousandth of a share.
(v) If the Company shall take a record of the
holders of the Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to
shareholders thereof, legally abandon its plan to pay or deliver
such dividend, distribution, subscription or purchase rights,
then thereafter no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made in
respect thereof shall be rescinded and annulled.
(i) If the Company shall reorganize its capital,
reclassify its capital stock, merge or consolidate into another
corporation, or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another
corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets,
shares of common stock of the successor or acquiring corporation
are to be received by or distributed to the holders of shares of
Common Stock, then the holder shall have the right thereafter to
receive, upon exercise of this Warrant, Stock Units comprising
the number of shares of common stock of the successor or
acquiring corporation receivable, upon or as a result of such
reorganization, reclassification, merger, consolidation or
disposition of assets, by a holder of the number of shares of
Common Stock constituting a Stock Unit immediately prior to such
event. If, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets,
any cash, shares of stock or other securities or property of any
nature whatsoever (including warrants or other subscription or
purchase rights) are to be received by or distributed to the
holders of shares of Common Stock in addition to common stock of
the successor or acquiring corporation, there shall be a
reduction of the Current Warrant Price per Stock Unit in an
amount equal to the amount of any such cash and of the value of
such shares of stock or other securities or property to be
received by or distributed to the holders of shares of Common
Stock applicable to the number of shares of Common Stock then
constituting a Stock Unit. Upon any such reorganization,
reclassification, merger, consolidation or disposition of assets,
the successor or acquiring corporation shall expressly assume the
due and punctual observance and performance of the covenants and
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conditions of this Warrant to be performed and observed by the
Company, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of
Directors of the Company)in order to provide for adjustments of
Stock Units which shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 3.1(i). For the
purposes of this Section 3.1(i), "common stock of the successor
or acquiring corporation" shall include stock of such corporation
of any class that is not preferred as to dividends or assets over
any other class of stock of such corporation and that is not
subject to redemption and also shall include any evidences of
indebtedness, shares of stock or other securities that are
convertible into or exchangeable for any such stock, either
immediately or upon the occurrence of a specified date or the
happening of a specified event and any warrant or other right to
subscribe for or purchase any such stock. The foregoing
provision of this Section 3.1(i) similarly shall apply to
successive reorganizations, reclassifications, mergers,
consolidations or dispositions of assets.
(j) If at any time or from time to time the Company
shall take any action affecting the Common Stock, other than an
action described in this Section 3.1, unless in the opinion of
the Board of Directors of the Company such action will not have a
materially adverse effect upon the rights of the holders of
Warrants, the number of shares of Common Stock or other stock
constituting a Stock Unit, or the Current Warrant Priced, shall
be adjusted in such manner and at such time as the Board of
Directors of the Company may determine to be equitable in the
circumstances.
(k) Irrespective of any adjustments of the number or
kind of securities issuable upon exercise of this Warrant or the
Exercise Price, this Warrant may continue to express the same
number of shares of Common Stock and Exercise Price as stated
prior to any such adjustments.
(l) The Company shall make any computation required
under this Section 3.1. If any such computation is challenged by
a holder of Warrants, a "Big Six" accounting firm ("Accounting
Firm") chosen by the Company shall make the computation. The
holder shall bear all costs incurred in connection with the
services of such Accounting Firm unless the calculation made by
the Accounting Firm (i) differs from the Company's calculation by
more than 15% and (ii) such difference is detrimental to the
holder, in which case the Company shall bear all such costs.
(m) Whenever there is an adjustment in the Exercise
Price or in the number or kind of securities constituting a Stock
Unit, as provided in this Section 3.1, the Company shall (i)
promptly file in the custody of its Secretary or Assistant
Secretary a certificate signed by an officer of the Company,
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showing in detail the facts requiring such adjustment and the
number and kind of securities constituting a Stock Unit after
such adjustment, and (ii) cause a copy of such calculation of the
adjustment and a notice stating that such adjustment has been
affected and stating the Exercise Price then in effect and the
number and kind of securities constituting a Stock Unit to be
sent to the holders.
(n) If the Company shall propose (i) to pay a dividend
payable in stock of any class to the holders of shares of Common
Stock or to make any other dividend or distribution to the
holders of shares of Common Stock, (ii) to offer to the holders
of shares of Common Stock rights to subscribe for or to purchase
shares of Common Stock or shares of stock of any class or any
other securities, or rights or options convertible into or
exchangeable for shares of Common Stock, (iii) to affect any
reclassification of the Common Stock (other than a
reclassification involving only the subdivision or combination of
outstanding shares of Common Stock), (iv) to effect any capital
reorganization, (v) to effect any consolidation, merger or sale,
transfer or other disposition of all or substantially all of its
property, assets or business or (vi) to effect the liquidation,
dissolution or winding up of the Company, the Company will give
notice, at lest ten days prior to the relevant record date for
determining holders entitled to vote on any such transaction or
to receive any such dividend or distribution, of such proposed
action to the holder of this warrant specifying the date on which
a record is to be taken for the purposes of such stock dividend,
distribution or rights, or the date on which such
reclassification, reorganization, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution or winding up is
to take place and the date of participation therein by the
holders of shares of Common Stock, if any such date is to be
fixed, and setting forth such facts with respect thereto as shall
be reasonably necessary to indicate the effect of such action on
the Common Stock and the number and kind of any other shares of
stock that will constitute a Stock Unit, and the Exercise Price,
after giving effect to any adjustment that will be required as a
result of such action.
3.2 Voluntary Adjustment by the Company. The Company
may at its option, at any time during the term of this Warrant,
reduce the then current Exercise Price to any amount deemed
appropriate by a majority of the independent members of the Board
of Directors of the Company; provided, however, that if the
Company elects so to reduce the then current Exercise Price, such
reduction shall remain in effect for a least a 15-day period,
after which time the Company may, at its option, reinstate the
Exercise Price in effect prior to such reduction.
3.3 No Adjustment for Dividends. Except as expressly
provided in Section 3.1, no adjustment in respect of any
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dividends or other payments or distributions made to holders of
securities issuable upon exercise of this Warrant shall be made
during the term of this Warrant or upon the exercise of this
Warrant.
ARTICLE IV
Certain Covenants of the Company
4.1 Reservation of Stock. The Company shall reserve
and set apart and have at all time, free from preemptive rights
and free from liens, claims and encumbrances created by the
Company, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the
exercise of this Warrant sufficient to enable it at any time to
fulfill all its obligations hereunder.
4.2 Fully Paid Stock. Before taking any action which
would cause an adjustment reducing the Exercise Price below the
then par value of the shares of Common Stock or other securities
issuable hereunder upon exercise of this Warrant, the Company
will take any corporate action which may be necessary in order
that the Company may validly and legally issue fully paid and
nonassessable shares of such Common Stock or other securities
issuable hereunder at such adjusted Exercise Price.
4.3 Certain Registrations. If any shares of Common
Stock or other securities issuable hereunder required to be
reserved for the purposes of exercise of this Warrant require
registration with or approval of any governmental authority under
any federal law (other than the Securities Act) or under any
state law (other than securities or Blue Sky laws) before such
shares or other securities may be issued upon exercise of this
Warrant, the Company will, at its expense and as expeditiously as
possible, cause such shares or other securities to be duly
registered or approved, as the case may be.
ARTICLE V
Miscellaneous
5.1 Entire Agreement. This Warrant shall constitute
the entire agreement between the holder hereof and the Company
with respect to the issuance of this Warrant and the Warrant
Shares and related transactions and shall supersede all previous
negotiations, commitments, writings, understandings and
agreements (whether written or oral) with respect thereto.
5.2 Successors and Assigns. This Warrant and the
rights evidenced hereby shall inure to the benefit of and be
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binding upon the successor and assigns of the Company and the
holder hereof, subject to the limitations on assignment and
transfer set forth in the legend at the head of this Warrant.
5.3 Waiver and Amendment. Any term or provision of
this Warrant may be waived at any time by the party which is
entitled to the benefits thereof and any term or provision of
this Warrant may be amended or supplemented at any time by
agreement of the holder hereof and the Company, except that any
waiver of any term or condition, or any amendment or
supplementation, of this Warrant must be in writing and signed by
the holder hereof and the Company. A waiver of any breach or
failure to enforce any of the terms or conditions of this Warrant
must be in writing and signed by the holder hereof and the
Company. A waiver of any breach or failure to enforce any of the
terms or conditions of this Warrant shall not in any way affect,
limit or waive a party's rights hereunder at any time to enforce
strict compliance thereafter with every term or condition of this
Warrant.
5.4 Governing Law; Binding Effect; Severability.
(a) This Warrant shall be enforced, governed and
construed in all respects in accordance with the laws of the
State of New York without giving effect to conflicts of law rules
or principles.
(b) This Warrant and the rights, powers and duties set
forth herein shall be binding upon and inure to the benefit of
the parties hereto, and their respective heirs, estates, legal
representatives, successors and permitted assigns.
(c) If any provision of this Warrant is valid or
unenforceable under any applicable statue or rule of law, then
such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may
prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
5.5 File of Warrant. A copy of this Warrant shall be
filed with the records of the Company.
5.6 Notices. Any notice or other communication
required or permitted to be given or delivered hereunder to the
holder hereof shall be delivered personally, sent by courier
guaranteeing overnight delivery or sent by certified or
registered mail (return receipt requested, postage prepaid) to
the holder at the last address shown on the books of the Company
maintained at the Warrant Office for the registration of
transfers of the Warrants or at any more recent address of which
the holder shall have notified the Company in writing. Any
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notice or other communication required or permitted to be given
or delivered hereunder to the Company shall be delivered
personally, sent by courier guaranteeing overnight delivery of
sent by certified or registered mail (return receipt requested,
postage prepaid) to the Warrant Office or such other address as
shall have been furnished by the Company to the holder hereof.
All such notices and other communications shall be deemed to have
been duly given (a) if personally delivered, on the date
delivered, (b) if sent by courier guaranteeing overnight
delivery, on the date delivered, or (c) if by certified or
registered mail, on the fifth business day after the date of
mailing, in each case given or addressed as aforesaid.
5.7 Limitation of Liability; Not Stockholders. No
provision of this Warrant shall be construed as conferring upon
the holder hereof the right to vote, consent, receive dividends
or receive notice as a stockholder of the Company. No provision
hereof, in the absence of affirmative action by the holder hereof
to purchase shares of Common Stock or other securities upon
exercise of this Warrant, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price therefor or as a
stockholder of the Company, whether such liability is asserted by
the Company, by creditors of the Company or by others.
5.8 Loss, Destruction, Etc. of Warrants. Upon receipt
of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of this Warrant, and in the case of any
such loss, theft or destruction upon delivery of a bond of
indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of this Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such
lost, stolen, destroyed or mutilated Warrant. Any Warrant issued
under the provisions of this Section 5.8 in lieu of any Warrant
alleged to be lost, destroyed or stolen, or in lieu of any
mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
5.9 Headings. The headings of the Articles and
Sections of this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this
Warrant.
5.10 Casino Control Act. This Warrant shall be subject
to the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seg.,
and the rules and regulations of the New Jersey Casino Control
Commission (the "Commission") as they currently exist or as they
hereinafter may be amended (the "Act"), including without
limitation the following:
(a) This Warrant shall be subject to redemption
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by the Company, by action of the Board of Directors, if, in the
judgment of the Board of Directors, such action should be taken,
pursuant to Section 151(b) of the General Corporation Law of
Delaware or any other applicable provision of law, to the extent
necessary to prevent the loss or secure the reinstatement of any
government-issued license or franchise held by the Company or any
of its subsidiaries to conduct any portion of the business of the
Company or such subsidiary, which license or franchise is
conditioned upon some or all of the holders of the Company's
securities possessing prescribed qualifications. In the event a
the holder of this Warrant is found not to possess such
prescribed qualifications by the Commission pursuant to the Act
(a "Disqualified Holder"), such Disqualified Holder shall
indemnify the Company for any and all direct or indirect costs,
including attorneys' fees, incurred by the Company as a result of
such holder's continuing ownership or failure to divest promptly.
(b) If the holder of this Warrant is found to be
a Disqualified Holder, the holder shall dispose of his interest
in the Company within 120 days following the Company's receipt of
notice (the "Notice Date") of the holder's disqualification
(which notice immediately shall be delivered to the holder).
(c) It shall be unlawful for a Disqualified
Holder to (i) receive any dividends or interest upon this
Warrant, (ii) exercise directly or through any trustee or
nominee, any right conferred by this Warrant, or (iii) receive
any remuneration in any form, for services rendered or otherwise,
from any subsidiary of the Company that holds a casino license
issued by the Commission.
IN WITNESS WHEREOF, the Company has caused this Warrant
to be signed in its name by its duly authorized officer.
Dated as of ________
GRIFFIN GAMING & ENTERTAINMENT, INC.
By:_________________________________
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SCHEDULE A
to
Warrant
SUBSCRIPTION NOTICE
The undersigned, the holder of he foregoing Warrant,
hereby elects to exercise purchase rights represented by said
Warrant for, and to purchase thereunder, ___________ shares of
the Common Stock covered by Said Warrant and herewith makes
payment in full of the Exercise Price therefor by bank or
certified check pursuant to Section 1.1 of such Warrant, and
requests: (a) that certificates for such shares (and any
securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose
address is _________________________________________; and (b) if
such shares shall not include all the shares issuable as provided
in said Warrant, that a new Warrant of like tenor and date for
the balance of the shares issuable thereunder be delivered to the
undersigned and in connection therewith the undersigned is
surrendering the original Warrant enclosed herewith.
_____________________________
Dated: ___________, 199__.
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EXHIBIT (10)(a)(2)
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement, made this 15th day of
January, 1985, between Resorts International, Inc., a Delaware
corporation ("Lessor") and Atlantic City Showboat, Inc., a New Jersey
corporation ("Lessee").
WITNESSETH:
BACKGROUND OF AGREEMENT
A. Lessor and Lessee's parent corporation, Ocean Showboat,
Inc., entered into a Lease Agreement ("Lease") for certain property
located in the City of Atlantic City ("Demised Premises"), as more
particularly described in the Lease, dated October 26, 1983.
B. On December 3, 1984, Ocean Showboat, Inc., assigned the
Lease to Lessee pursuant to the provisions of paragraph 13.1 of the
Lease.
C. Lessor and Lessee desire to amend the Lease as set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein and in the Lease, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. All words and terms used herein shall have the same meanings
as those set forth in the Lease, unless otherwise provided herein.
2. Paragraph 1 of the definitions section of the Lease, which
defines "Demised Premises", is amended by deleting therefrom Exhibit
"A", annexed to and made a part of the Lease, and substituting in its
place Exhibit "A", a metes and bounds survey by Arthur W. Ponzio
Company & Associates, Inc., annexed hereto and by this reference made
a part hereof.
3. Article 2.2, subparagraph (a) is amended by inserting the
following before the last word ("or") in the subparagraph:
provided, however, that for each full day following December
18, 1984 when Lessor does not hold title to the Demised
Premises, one (1) day shall be added to the above three (3)
year period.
4. Article 2.3 is amended by deleting therefrom the first
sentence only and substituting in its place the following:
Lessee shall pay to Lessor as fixed annual rental a sum equal
to the number obtained by multiplying the number of feet of Boardwalk
frontage on the Demised Premises which is agreed to be 317 feet (for
the purposes of this Article, the Boardwalk is considered parallel to
Pacific Avenue) multiplied by Twenty Thousand and 00/100 ($20,000.00)
Dollars which sum equals Six Million Three Hundred Forty Thousand
($6,340,000) Dollars (hereinafter the "Rent") for each Lease Year.
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5. Article 2.5 is amended by deleting therefrom all references
to "$6,000,000" and substituting in their place the figure which
constitutes the Rent calculated pursuant to the provisions of Article
2.3, as modified by this Amendment to Lease; i.e., $6,340,000.
6. Article 3.1 is amended by deleting on line 9 the phrase "50
bowling lanes" and substituting therefor the phrase "60 bowling
lanes".
7. Article 3.4 is amended by adding to the end thereof the
following:
Annexed hereto as Exhibit "C", and by this reference made a
part hereof, is a metes and bounds description and a survey
drawing depicting the initial designated Staging Area, of
which Lessee may take possession under this Lease effective
upon execution of this Amendment to Lease and terminating on
December 1, 1987 unless earlier terminated by Lessor (said
secondary lease to be known as the "Staging Lease"). The
grant of the Staging Lease shall be conditioned upon
issuance of all necessary approvals from any agency having
or asserting jurisdiction over the matter, including,
without limit, the Housing Authority of the City of Atlantic
City. "Reasonable rent" for the purpose of this Article, 3.4
only, shall be defined as all costs of carrying the Staging
Area, including, without limit, taxes, utilities, rent and
assessments which may be charged against the parcel or
parcels initially or subsequently designated as the Staging
Area. Lessor reserves the right to cancel the use of the
Staging Area and the Staging Lease for the initial Staging
Area upon 90 days notice to Lessee. If so cancelled, Lessor
shall use its best efforts to provide a substitute staging
area at a reasonable rent.
8. Article 3.6 is deleted in its entirety and the following is
substituted in its place:
Subject to article 30.14 below, construction on the Building
shall begin on or before May 31, 1985 and shall be completed on or
before December 31, 1987.
9. Article 7.2 is amended by adding to the end thereof the
following:
In connection with the foregoing, Lessor agrees that,
to the extent required for convenient, efficient and economical
utility service to Lessee's Building, Lessor shall promptly grant such
easements to Lessee or to such parties providing utility services for
such portions of the Service Road and Service Road Extension
(hereinafter defined) as are necessary to provide utility service to
the Building and Demised Premises, including but not limited to water,
sewer, electric, gas, telephone, TV cable and storm sewer including
easements to accommodate installation of all fire hydrants and other
facilities required in connection with obtaining of all permits
necessary for the operation of the Building.
10. Article 9.1 is amended by adding the following after the
first sentence of the Article:
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Lessee acknowledges that the Demised Premises is subject to
certain tax liens and that such liens shall not constitute a default
of the above warranties. Lessee's liability in connection with such
tax liens shall be as provided in Article 2.6 above.
11. Article 9.9 is deleted in its entirety and the following is
substituted in its place:
Lessor will use its best efforts to obtain access from the
Demised Premises to any approved pedestrian skyway constructed
to any facility or connecting passageway on the north side of
Pacific Avenue.
12. Article 9.15 is amended by adding the following sentence:
For the purpose of this Article 9.15, "commencement of
construction" shall be defined as commencement of foundations or
superstructure work and shall not include piling and related
excavation work.
13. Article 9.13 is deleted in its entirety and the following
is substituted in its place:
Lessor covenants that the southern portion of the westerly line
of the Demised Premises shall be 552' from the easterly line of
Virginia Avenue, that the northern portion of the westerly line
of the Demised Premises shall be 577' from the easterly line of
Virginia Avenue as more particularly depicted in Exhibit "A",
annexed hereto and by this reference made a part hereof, and
that any structures constructed in the 210 foot area reserved
for the future development as depicted on Exhibit B
(hereinafter "210 foot area") between the southerly exterior
line of the tower of the hotel-casino on Lessor's Parcel south
to the City Boardwalk and east to the Demised Premises (other
than said hotel-casino or any integral part thereof) shall have
a maximum height from the City Boardwalk level of ten stories.
Such 210 foot area shall not be used for the maintenance of any
nuisance or for any use or other purpose which interferes,
except as set forth herein, with the use of the Building, the
Demised Premises and any operations thereon, or for any use or
other purpose not in keeping with the aesthetic appeal of
properties adjacent to the City Boardwalk. Lessee agrees that,
without limitation, usual, customary and reasonable
construction activities conducted on the 210' area shall not
constitute a nuisance. Lessor further covenants that, except
for column supports, enclosed chases for mechanical and
electric utilities, screen walls and like structures, which
items shall be installed subject to approval of all
governmental agencies or departments thereof having or claiming
jurisdiction over such matters, the 17 foot wide strip
immediately adjacent to the westerly line of the Service Road
Extension (defined below) shall serve as an egressway at grade
as set forth in paragraph 15.9. At not less than 16 feet above
grade level, or at any other height above grade level
authorized by governmental agencies, Lessor shall be permitted
to overbuild any portion of the 17 foot strip immediately
adjacent to the westerly line of the Service Road Extension
(hereinafter defined as "17 Foot Egressway") and the westerly
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33 feet of the Service Road. Lessor further covenants that,
subject to the height restriction set forth herein, the
easterly wall of any building constructed in the 210 foot area
by any party shall be not closer than seventeen (17') feet to
the westerly line of the Demised Premises. Lessor and Lessee
further covenant that the 17' wide Service Road Extension more
fully described below and the 17' wide egressway shall be
dedicated to the uses more specifically set forth in Article 15
below.
14. Article 15.1 is amended by deleting the last sentence
thereof and substituting in its place the following:
Lessor and Lessee covenant that they shall cooperate with each
other in coordinating the construction of the common facility referred
to in Article 15.3(c) below for its entire length from Pacific Avenue
to the Boardwalk as depicted and made part hereof in Exhibit "B",
which facility shall be completed not later than 90 days before the
Opening Date, provided, however, that the Lessee's construction does
not prevent access to the area in sufficient time to reasonably
construct the common facility and provided that Lessee provides to
Lessor a proposed opening date which is its best estimate of such date
and which is no earlier than September 1, 1986. The remaining common
facilities shall be completed within eighteen (18) months following
the Opening Date. All of the above is subject to the occurrence of any
force majeure event under Article 30.14 hereof and Lessee's
cooperation. Subject to the approval of any governmental agency or
department thereof having or claiming jurisdiction over the Service
Road and the Service Road Extension, Lessor and Lessee agree that, if
necessary to accommodate construction on the 210 foot area, for
purposes of this paragraph, completion of the Service Road and Service
Road Extension shall include construction of those components thereof
(including at a minimum the subbase materials) necessary to enable
Lessee to use such areas for the purposes described herein. Lessor
agrees that final completion of the Service Road and Service Road
Extension shall occur not later than 18 months after the Opening Date.
15. Article 15.2 is deleted in its entirety and the following
is substituted in its place:
Except as otherwise provided herein, the cost of construction
and reconstruction when necessary and expense of maintenance of the
Common Facilities as hereinafter defined shall be borne equally by
Lessor and Lessee. In the event that a governmental entity, or other
entity, shall make a grant of funds available for construction,
reconstruction and/or maintenance of all or a part of the Common
Facilities, and said funds are used therefor, Lessee shall be entitled
to a pro rata reimbursement/reduction of costs borne by it hereunder
on account of such construction, reconstruction and/or maintenance.
Lessor shall determine the cost, design, construction and
choice of contractor to be used in construction of all Common
Facilities; provided, however, that Lessor, shall consult with Lessee
on design determinations with respect to the Common Facility described
in Article 15.3(a). The pedestrian passageway shall be located in the
area depicted in the attached Exhibit B. Lessor or its designee shall
manage the Common Facilities and shall make its books and records
related to said Common Facilities immediately available during normal
- 114 -<PAGE>
business hours promptly after reasonable request by Lessee or an agent
of Lessee. With respect to the facility described in 15.3(a) hereof,
Lessor shall bear the cost of construction, reconstruction and expense
of maintenance for such facility from the casino to be constructed on
Lessor's Parcel to the westerly line of the Demised Premises; Lessee
shall bear the cost of construction, reconstruction and expense of
maintenance for such facility from said point to Lessee's Building.
Further, with respect to the facility described in Article 15.3(c)
hereof, Lessor shall bear the entire cost of construction,
reconstruction and expense of maintenance of such facility during the
Term of this Lease.
16. Article 15.3 is amended by deleting therefrom in their
entirety subparagraphs (b) and (c) and substituting in their place the
following:
(b) Deleted
(c) The approximately 50-foot wide Service Road as shown on the
plot plan annexed hereto as Exhibit "B" ("Service Road"), and the
approximately 17-foot wide Service Road Extension and ramp to
Boardwalk ("Service Road Extension") also shown on Exhibit "B". Lessor
warrants that the combined Service Road and Service Road Extension
shall have an intersection at Pacific Avenue, as depicted on Exhibit
"B" and shall include a ramp up to the Atlantic City Boardwalk, and
that the Service Road and Service Road Extension shall be constructed
in accordance with and shall include all appurtenances and amenities
required by all specifications, laws, rules, regulations, ordinances,
orders, directives and enactments of the City of Atlantic City,
Atlantic City Housing Authority, and any agency or department thereof
and any other governmental agency or department having or claiming
jurisdiction over construction and operation of such facilities.
Lessee's use of the Service Road from Pacific Avenue to a point
approximately 868 feet south of Pacific Avenue (said point being 70
feet south of the southerly end of Lessees loading dock as depicted on
Exhibit B) shall be limited to service vehicles providing deliveries
to the Building, trash removal and similar services. Lessee covenants
that passenger vehicles and buses to Lessee's Building shall be
precluded from utilizing the Service Road. Lessee further covenants
that its service vehicles shall enter and exit the Service Road at
Pacific Avenue. Notwithstanding the above limitations on Lessee's use
of the Service Road, the Service Road and Service Road Extension shall
be open and available at all times during the term of the Lease for
emergency vehicle access to the Atlantic City Boardwalk, the Building
and any structures to be constructed in the 210 foot area and for
emergency exiting from the Building and any structure to be
constructed in the 210 foot area, as required by any governmental
agency or department having or claiming jurisdiction over such
matters, and as more specifically set forth in Article 15.9 below. It
is expressly understood that the Lessor reserves the right to make any
use whatsoever of the Service Road and Service Road Extension,
provided that such use does not unreasonably interfere with the use by
Lessee as provided herein. Lessor shall be solely responsible for all
costs of permits, approvals, design, construction, maintenance and
repair of the Service Road and, Service Road Extension, and all
appurtenances and amenities (excluding utilities) required in
connection therewith during the term of the Lease. Lessee acknowledges
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that it shall be responsible for all costs of construction of any
improvements on the Demised Premises necessary to connect or utilize
the Service Road and Service Road Extension with the Building.
17. Article 15.3 is further amended by adding to sub-paragraph
(a) the following:
Lessor and Lessee agree that the pedestrian passageway shall be
constructed in a manner so as to reach an elevation of approximately
26' above mean sea level at the westerly line of the Demised Premises.
Lessor and Lessee also agree that the portion of the pedestrian
passageway located on or above the 210 foot area may, from time to
time, be redesigned, integrated into future construction, demolished,
reconstructed, placed out of use, or otherwise altered to accommodate
development at no cost to Lessee on the 210' area. Lessor agrees that
the location at which the pedestrian passageway penetrates the
Building wall shall not be changed and that the time when the
pedestrian passageway may be placed out of use for the reasons set
forth in this paragraph shall be limited to that reasonably necessary
to accomplish the development.
18. Article 15.3 is further amended by adding thereto the
following paragraph:
Paragraph (d): Within two (2) weeks of the date of execution of
this amendment, Lessor agrees to make available to Lessee schematic
drawings, in sufficient detail to locate the position and general
characteristics of the Service Road and Service Road Extension, and to
generally depict such facilities and all appurtenances and amenities
not located on the Demised Premises required in connection with
construction thereof. Lessor further agrees that it shall make
available to Lessee for its general information detailed engineering
and construction drawings depicting the Service Road and Service Road
Extension, promptly upon their completion.
19. Article 15.5(b) is amended by deleting therefrom in their
entirety subparagraphs (1), (2) and (3), and substituting in their
place the following:
(1) Facility described in Article 15.3(a): Lessor shall bear
that portion that applies to such facility from Lessor's hotel-casino
on Lessor's Parcel to the westerly line of the Demised Premises;
Lessee shall bear the remainder.
(2) Deleted.
(3) Facilities described in Article 15.3(c): Lessor shall bear
all taxes on the Service Road. Lessor and Lessee shall share the taxes
equally for the Service Road Extension.
20. Article 15.6 is amended by deleting from the first sentence
the "provisio" clause, and the clause following the "proviso" clause,
and substituting in their places the following:
provided, however, that the Lessor shall be entitled to the
entire award on account of a Taking of the Service Road and Service
Road Extension up to the full value of such facilities; Lessee shall
only be entitled to any additional sum made as an award which is
awarded to recompense it for its easement for use of the Service Road
and Service Road Extension for ingress and egress from its loading and
service docks, and for emergency egress and exiting purposes as more
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specifically set forth in Article 15.9, below, or awarded to
recompense for all costs which may be incurred by Lessee in acquiring
and constructing alternate emergency egress facilities as required by
all governmental agencies or departments thereof having or claiming
jurisdiction thereover.
21. Article 15 is amended by adding thereto the following new
paragraphs:
15.8: (a) In addition to any of the rights of Lessee to any
areas described herein, Lessor grants and conveys to Lessee, for the
benefit of Lessee and its contractors, subcontractors, employees,
invitees and licensees, a nonexclusive license over and across those
certain parcels of real property owned by Lessor and more particularly
described and depicted in Exhibit "F", annexed hereto and by this
reference made a part hereof, for use by Lessee in connection with
construction of the Building for the temporary stockpiling of
excavated material until completion of the foundations, said license
to terminate upon completion of the foundations for Lessee's building.
(b) In addition to any of the rights of Lessee to any areas
described herein, Lessor grants and conveys to Lessee, for the benefit
of Lessee and its contractors, subcontractors, employees, invitees and
licensees, a nonexclusive license over and across those certain
parcels of real property owned by Lessor and more particularly
described and depicted in Exhibit "G", annexed hereto and by this
reference made a part hereof, for use by Lessee in connection with
construction of the Building for ingress and egress to and from the
Demised Premises by construction and construction-related vehicles.
The license for the area east of the Demised Premises as depicted on
Exhibit G shall be revocable by Lessor on 90 days notice to Lessee.
The license for the area west of the Demised Premises as depicted on
Exhibit G shall be irrevocable and shall continue until the Opening
Date, at which time such license shall expire without further action
of the parties.
15.9: In addition to any of the rights of Lessee to any areas
described herein, Lessor grants and conveys to Lessee, for its benefit
and for the benefit of its employees, tenants, invitees and licensees,
a non-exclusive and irrevocable easement for the term of the Lease,
upon, over and across the Service Road, the Service Road Extension and
the 17 Foot Egressway, as more particularly described in Exhibits B
and D, annexed hereto and by this reference made a part hereof
(hereinafter referred to as "Egress Areas") for purposes of emergency
vehicle access to the Building and to any structure to be constructed
in the future in the 210 foot area and to the Atlantic City Boardwalk
and for purposes of emergency exiting from the Building and any
structure to be constructed in the 210 foot area, such easement to
include surface and air rights over the area marked such in Exhibits B
and D and surface rights only for the area marked such in Exhibits B
and D. Lessor and Lessee covenant and agree that, for the term of the
Lease, no use shall be made of the Egress Areas which is contrary to
emergency exiting procedures and emergency vehicle access
requirements, as approved by all governmental agencies or departments
having or claiming jurisdiction over such emergency matters. Lessor
specifically reserves the right to utilize the Egress Areas in any
manner consistent with the approvals or limitations of such agencies,
provided such uses do not prevent the uses granted to Lessee herein.
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Lessor further covenants and agrees with Lessee that for the term of
the Lease, and with the exception of certain supporting columns and
other facilities generally described in paragraph 9.13, the easterly
17 feet of the Service Road and the Service Road Extension shall
remain open to the sky and unobstructed. Lessor retains all of its
rights to construct in the air rights over both the westerly 33 feet
of the Service Road and the seventeen (17') foot wide strip
immediately adjacent to the westerly line of the Service Road
Extension, at such height and pursuant to such approvals and
conditions as may be permitted or required by all governmental
agencies or departments thereof having or claiming jurisdiction over
such matters, which clear height shall be not less than sixteen (16')
feet above grade.
15.10: Lessee covenants that to the extent required to provide
adequate exiting from the Building and any building to be erected in
the 210' area, it will not construct or erect or build, permit, allow
or suffer to be constructed, erected or built any obstructions except
stair towers for exiting the Building within the 17 feet west of the
westerly wall of the Building.
15.11(a) Lessor acknowledges that an agency has sought from
Lessee a commitment that, if an exterior open area for public
emergency exiting shall become available to the east of the Demised
Premises, Lessee will agree, subject to obtaining all required
approvals for use of such areas, to construct exits through the
easterly wall of the Building onto such public, exterior open exiting
areas as may become available. To the extent that such exiting areas
become available in the future, and to the extent that Lessee may
become obligated to provide exits through its easterly wall into such
areas, Lessor and Lessee agree to cooperate with each other in making
such egress areas available.
(b) If such exterior open areas become available in the future,
and if Lessee provides exits through its easterly wall into such
areas, Lessee covenants that it shall utilize only eight and one half
feet (8 1/2') east ("8 1/2 foot area") from the easterly wall of its
Building for such exiting. Lessee agrees that it will design any such
exiting through the easterly wall of the Building to limit the area
required at grade east of the Demised Premises to a width of 8 1/2
feet to accommodate such exiting and that such design shall not
provide for any structures within or doors opening into such 8 1/2
foot area. Lessee agrees to allow Lessor to review and comment on such
design as it progresses. If the above conditions are met, Lessor
agrees to grant to Lessee and Lessee agrees to accept from Lessor a
non-exclusive easement for surface exiting (not including air rights)
on the 8 1/2 foot area for a period to correspond to the term of this
Lease. Consideration for any easement or leasehold east of the
building for such exiting shall be computed in the same manner as Rent
pursuant to Article 2.3; i.e., at $20,000 per Boardwalk foot per year
for a total of $170,000 annually (8.5 x $20,000). Such sum or sums
shall be added to the Rent herein and paid from Lessee to Lessor as
additional Rent.
15.12 (a) Depicted and described in Exhibit E, annexed hereto
and by this reference made a part hereof, is a portion of the Demised
Premises which Lessor and Lessee have agreed shall be temporarily
dedicated by Lessee for use as a portion of the Service Road. Lessor
acknowledges that construction of a portion of the Service Road on the
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area described in Exhibit E (hereinafter referred to as "Triangle")
will facilitate access to and from Lessee's Building and the 210 foot
area which abuts the Service Road. Accordingly, Lessee grants to
Lessor an easement to construct, maintain and utilize a portion of the
Service Road on the Triangle, said easement to be co-extensive with
the term of this Lease, subject to the termination provisions set
forth below, and pursuant to such easement to use the Triangle for the
purpose of an unobstructed Service Road and consistent with those
purposes described in Article 15.3 of the Lease.
(b) Lessor represents, warrants and covenants to Lessee that,
if Lessor obtains title to the All Wars Memorial Building and the real
property on which said building is erected (hereinafter referred to as
the "City Property"), the Service Road within a reasonable time
thereafter will be realigned as more particularly described in
subparagraph c hereof and upon such realignment, without further
action of the parties, all rights of Lessor to use the Triangle
pursuant to the easement granted in subparagraph (a) hereof will
cease, the easement will terminate and Lessee will again be entitled
to exclusive and quiet possession of the Triangle free of any interest
of Lessor.
(c) Lessor represents, warrants and covenants to Lessee that
the portion of the City Property described and depicted in Exhibit H
annexed hereto will be added to and become a part of the Demised
Premises, without cost to Lessee and without any increase in the rent
provided in the Lease, upon Lessor's acquisition of the City Property
and realignment of the Service Road. Additionally, at the time of such
acquisition, Lessor will cause the Service Road to be realigned so
that the easterly line of the Service Road abuts the westerly line of
the Demised Premises including the 25' x 80' parcel depicted in
Exhibit H.
22. Article 23.1 is amended by deleting therefrom the address
for notice "to the Lessee" and substituting in its place the
following:
ATLANTIC CITY SHOWBOAT, INC.
P.O. Box 840
Atlantic City, N.J. 08404
23. Article 30 is amended by adding thereto the following new
section:
30.17: Pursuant to the provisions of Section 82(c)(9) of the
Casino Control Act, N.J.S.A.5:12-82(c)(9), Lessor and Lessee
acknowledge that the New Jersey Casino Control Commission has
concluded that each is jointly and severally liable for all acts,
omissions and violations of the Casino Control Act with respect to the
Demised Premises by the other regardless of actual knowledge of such
act, omission or violation and notwithstanding any provision in this
Lease to the contrary; provided, however, that the provisions of this
paragraph shall not be applicable until such time as Lessee is granted
an Operations Certificate. Lessor and Lessee acknowledge that the
above is not the result of their mutual bargain, but rather, mandated
by the New Jersey Casino Control Commission's interpretation of the
Casino Control Act. If for any reason such interpretation no longer
obtains or is declared invalid the above shall immediately become null
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and void. Lessor and Lessee reserve their respective rights to
challenge in a court of law or equity this provision of the Lease and
if such court, for any reason, declares that the New Jersey Casino
Control Commission or any other State authority lacks the authority to
require this provision, it shall be null and void.
24. Lessor agrees that it shall perform such further acts,
execute all documents necessary to carry out the provisions of this
agreement.
25. Except as specifically modified by this amendment, all
provisions of the Lease are ratified and confirmed by Lessor and
Lessee.
26. This amendment shall be binding upon, and shall inure to
the benefit of, the parties hereto and their successors and assigns.
IN WITNESS HEREOF, Lessor and Lessee have caused this First
Amendment to Lease Agreement to be executed the date indicated above.
ATTEST: RESORTS INTERNATIONAL, INC.
/s/ John M. Donnelly By: /s/ I.G. Davis, Jr.
ATTEST: ATLANTIC CITY SHOWBOAT, INC.
/s/ H. Gregory Masky By: /s/ Frank A. Modica
Secretary FRANK A. MODICA, President
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ACKNOWLEDGMENT
STATE OF NEW JERSEY )
ss
COUNTY OF ATLANTIC )
BE IT REMEMBERED THAT on this 15th day of January, 1985 before
me, the subscriber, a Notary Public of New Jersey, personally appeared
I.G. Davis, Jr. of Resorts International, Inc. who I am satisfied is
the person who signed the within instrument, and he acknowledged that
he signed, sealed with the corporate seal and delivered the same as
such officer aforesaid, and that the within instrument is the
voluntary act and deed of such corporation.
/s/ John M. Donnelly
STATE OF NEVADA)
ss
COUNTY OF CLARK)
BE IT REMEMBERED THAT on this 17th day of January, 1985 before
me, the subscriber, a Notary Public of the State of Nevada, personally
appeared Frank A. Modica, President of Atlantic City Showboat, Inc.,
who I am satisfied is the person who signed, sealed with the corporate
seal and delivered the same as such officer aforesaid, and that the
within instrument is the voluntary act and deed of such corporation.
/s/ Jean Y. Zorn
- 121 -<PAGE>
EXHIBIT (10)(d)(1)
NONQUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
GRIFFIN GAMING & ENTERTAINMENT, INC.
1994 STOCK OPTION PLAN
THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of
June 30, 1995 between Griffin Gaming & Entertainment, Inc., a
Delaware corporation (the "Company"), and Thomas E. Gallagher
(the "Executive").
R E C I T A L S
A. The Company has adopted the 1994 Stock Option Plan (the
"Plan"), a copy of which is annexed hereto as Exhibit 1.
B. T h e Company desires to grant the Executive the
opportunity to acquire a proprietary interest in the Company in
consideration of the Executive's contribution to the success and
progress of the Company.
C. In accordance with the Plan, the Committee (as defined
in the Plan) has as of March 27, 1995 (subject to shareholder
approval which approval was given on June 27, 1995) granted to
the Executive an option (the "Option") to purchase shares of
common stock, par value $.01 per share, of the Company (the
"Shares"), subject to the terms and conditions of the Plan and
this Agreement.
AGREEMENTS
1. Definitions. Capitalized terms not defined herein
shall have the meanings set forth in the Plan.
2. Grant of Option. The Company grants to the Executive
the right and option to purchase all or any part of an aggregate
of 100,000 Shares (the "Option Shares"), at the purchase price
of $10.46875 per share, on the terms and conditions set forth
herein. This Option is not intended to qualify for treatment as
an Incentive Stock Option within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended (the "Code").
- 122 -<PAGE>
3. Exercisability. The Option shall become exercisable to
the extent of one-fourth of the number of Option Shares on
September 27, 1995, one-fourth on August 1, 1996, one-fourth on
August 1, 1997 and one-fourth on August 1, 1998, on a cumulative
basis. In the event of (1) the termination of the Executive's
directorship due to death, disability or retirement, (2) there is
a Change of Control (as defined in Section 12 below), (3) the
Executive ceases to serve as a Director of the Company for any
reason other than a voluntary resignation by the Executive or
termination for cause by the Company, all of the Executive's
options become exercisable. During the period the Option is
exercisable, it may be exercised by the Executive as to the whole
or any part thereof at any time or from time to time.
4. Expiration. The Option shall expire upon the earliest
to occur of:
(a) the tenth anniversary of the Effective Date;
(b) in the event the Executive ceases to be a member
of the Board of Directors of the Company, other than due to
circumstances described in paragraph (c) or (d), three months
after the Executive ceases to be a Director.
(c) the termination of the Executive's directorship
with the Company if such termination is a termination by the
Company for cause, in which case all rights of the Executive
under this Agreement shall be immediately forfeited, except as to
Option Shares already purchased;
(d) the first anniversary of the termination of the
Executive's directorship if the termination is by reason of death
or disability.
For purposes of this Section 4, during the period, if
any, following a termination of the Executive's directorship and
prior to the expiration of the Option, the Option shall be
exercisable only to the extent exercisable on the date of such
termination.
5. Assignment or Transfer. The Option shall not be
assignable or transferable by the Executive other than by will or
by the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined in the Code.
During the lifetime of an optionee, the Option shall be
exercisable only by the optionee or the optionee's guardian or
legal representative.
6. Adjustments. If the Company's outstanding Shares are
increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities
o f the Company or another corporation by reason of any
consolidation, merger, combination, liquidation, reorganization,
recapitalization,
- 123 -<PAGE>
stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in
capital structure of the Company, the number of kind of shares or
interests subject to this Option and the per share price thereof
shall be appropriately adjusted at the time of such event. Any
fractional shares or interests resulting from such adjustment
shall be eliminated.
7. Exercise of the Option. A person electing to exercise
this Option shall deliver to the Secretary of the Company a
written and signed notice of such election and of the number of
Shares such person has elected to purchase and shall at the time
of delivery of such notice pay for the full purchase price of the
Shares such person has elected to purchase in United States
dollars by personal check, bank draft or money order drawn to the
order of the Company (and, in any event, in an amount not less
than the aggregate par value of such Shares). The Committee
further may, in its discretion, permit payment of the purchase
price in such form or in such manner as may be permissible under
the Plan and under any applicable law.
8. Compliance with Legal Requirements. No Shares shall be
issued or transferred pursuant to this Agreement unless and until
all legal requirements applicable to such issuance or transfer
have, in the opinion of counsel of the Company, been satisfied.
Such requirements may include, but are not limited to, listing,
registering or qualifying the Shares subject to the Option upon
any securities exchange or under any state or federal law,
satisfying any applicable law relating to the transfer of
unregistered securities or demonstrating the availability of an
exemption from applicable laws, placing a legend on the shares to
the effect that they were issued in reliance upon an exemption
from registration under the Securities Act of 1933 (the "Act")
and may not transferred other than in reliance upon Rule 144
promulgated under the Act, if available, or upon another
exemption from the Act, or obtaining the consent or approval of
any governmental regulatory body. The Company has filed a
registration statement on Form S-8 under the Act in order to
register Shares subject to the Plan.
In connection with any such issuance or transfer, or
registration, the person acquiring Shares shall, if requested by
the Company, provide information and assurances satisfactory to
counsel to the Company with respect to such matters as the
Company may deem desirable to assure compliance with all
applicable legal requirements.
9. No Interest in Shares Subject to Option. Neither the
Executive (individually or as a member of a group) nor any
beneficiary or other person claiming under or through the
Executive shall have any right, title, interest, or privilege in
or to any Shares allocated or reserved for the purpose of the
Plan or subject to this Agreement except as to such Shares, if
any, as shall have
- 124 -<PAGE>
been issued to such person upon exercise of this Option or any
part of it.
10. Plan Controls. The Option hereby granted is subject
to, and the Company and Executive agree to be bound by, all of
the terms and conditions of the Plan, as the same may be amended
from time to time in accordance with the terms thereof, but no
such amendment shall be effective as to the Option without the
Executive's consent insofar as it may adversely affect the
Executive's rights under this Agreement. The Committee shall
h a ve sole discretion to determine whether the events or
conditions described in this Agreement have been satisfied and to
make all other interpretations, constructions and determinations
required under this Agreement (except those which the Executive
is expressly permitted to make), and all such determinations by
the Committee shall be conclusive.
11. Not an Employment Contract. Nothing in the Plan, in
this Agreement or any other instrument executed pursuant thereto
shall confer upon the Executive any right to continue in the
employ of the Company or shall affect the right of the Company to
terminate the employment of the Executive with or without cause.
12. Change of Control. For the purposes of this
Agreement, "Change of Control" shall mean the occurrence of any
one of the following events:
(i) any "person", as such term is used in Sections
3(a)(9) and 13(d) of the Securities Exchange Act of 1934, other
than Mr. Merv Griffin and his affiliates becomes a "beneficial
owner", as such term is used in Rule 13d-3 promulgated under that
Act, of 50% or more of the Company's Voting Stock, provided that
the foregoing reference to 50% shall become 35% whenever Mr. Merv
Griffin disposes of all or substantially all of the Company's
Voting Stock presently held by Mr. Griffin;
(ii) the Company adopts any plan of liquidation
providing for the distribution of all or substantially all of its
assets;
(iii) all or substantially all of the business of the
Company is disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company
i m mediately prior to such merger, consolidation or other
t r a nsaction beneficially own, directly or indirectly, in
substantially the same proportion as they owned the Voting Stock
of the Company, all of the Voting Stock or other ownership
interests of the entity or entities, if any, that succeed to the
business of the Company);
(iv) the Company combines with another company and is
the surviving corporation but, immediately after the combination,
the shareholders of the Company immediately prior to the
combination hold, directly or indirectly, 50% or less of the
Voting Stock of
- 125 -<PAGE>
the combined company (there being excluded from the number of
shares held by such shareholders, but not from the Voting Stock
of the combined company, any shares received by "affiliates", as
such term is defined in the rules of the Securities and Exchange
Commission, of such other company in exchange for stock of such
other company); or
(v) Merv Griffin is no longer Chairman of the Board of
Directors of the Company.
For the purposes of this Section 12, "Voting Stock"
shall mean capital stock of any class or classes having general
voting power under ordinary circumstances (not including the
Class B stock of the Company), in the absence of contingencies,
to elect the directors of a corporation.
13. Governing Law. All rights under this Agreement shall
be governed by and construed in accordance with the laws of the
State of Delaware.
14. Taxes. The Committee may, in its discretion, make such
provisions and take such steps as it may deem necessary or
appropriate for the withholding of all federal, state, local and
other taxes required by law to be withheld with respect to the
issuance or exercise of the Option, including, but not limited
to, deducting the amount of any such withholding taxes from any
other amount then or thereafter payable to the Executive, or
requiring the Executive to pay to the Company the amount required
to be withheld or to execute such documents as the Committee
deems necessary or desirable to enable it to satisfy its
withholding obligations.
15. Notices. All notices, requests, demands and other
communications pursuant to this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered,
telexed or telecopied to, or, if mailed, when received by, the
other party at the following addresses (or at such other address
as shall be given in writing by either party to the other):
If to the Company, to:
Griffin Gaming & Entertainment, Inc.
1133 Boardwalk
Atlantic City, NJ 08404
Attention: The Secretary
If to the Executive, to the address set
forth next to his signature hereto.
- 126 -<PAGE>
16. Effective Date. By execution below, this Agreement is
entered into as of March 27, 1995.
GRIFFIN GAMING & ENTERTAINMENT, INC.
By: /s/ Matthew B. Kearney
Matthew B. Kearney
Its:
Executive Vice President -
Finance and
Chief Financial Officer
Address for Notices: AGREED TO AND ACCEPTED:
By: /s/ Thomas E. Gallagher
- 127 -<PAGE>
EXHIBIT (10)(d)(3)
NONQUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
GRIFFIN GAMING & ENTERTAINMENT, INC.
1994 STOCK OPTION PLAN
THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of
August 1, 1994 (the "Effective Date") between Griffin Gaming &
Entertainment, Inc., a Delaware corporation (the "Company"), and
Matthew B. Kearney (the "Executive").
R E C I T A L S
A. The Company has adopted the 1994 Stock Option Plan (the
"Plan"), a copy of which is annexed hereto as Exhibit 1.
B. T h e Company desires to grant the Executive the
opportunity to acquire a proprietary interest in the Company in
consideration of the Executive's contribution to the success and
progress of the Company.
C. In accordance with the Plan, the Committee (as defined
in the Plan) has as of the Effective Date granted to the
Executive an option (the "Option") to purchase shares of common
stock, par value $.01 per share, of the Company (the "Shares"),
subject to the terms and conditions of the Plan and this
Agreement.
AGREEMENTS
1. Definitions. Capitalized terms not defined herein
shall have the meanings set forth in the Plan.
2. Grant of Option. The Company grants to the Executive
the right and option to purchase all or any part of an aggregate
of 40,000 Shares (the "Option Shares"), at the purchase price
of $5.15625 per share, on the terms and conditions set forth
herein. This Option is not intended to qualify for treatment as
an Incentive Stock Option within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended (the "Code").
- 128 -<PAGE>
3. Exercisability. The Option shall become exercisable to
the extent of one-fourth of the number of Option Shares on August
1, 1995, one-fourth on August 1, 1996, one-fourth on August 1,
1997 and one-fourth on August 1, 1998, on a cumulative basis. In
the event of (1) the termination of the Executive's employment
due to death, disability or retirement, (2) there is a Change of
Control (as defined in Section 12 below), (3) the Executive
terminates his employment following a material diminution in his
duties and responsibilities, and (4) the Company terminates or
elects not to renew, other than for cause, the Executive's
employment through August 1, 1998, all of the Executive's options
become exercisable. During the period the Option is exercisable,
it may be exercised by the Executive as to the whole or any part
thereof at any time or from time to time.
4. Expiration. The Option shall expire upon the earliest
to occur of:
(a) the tenth anniversary of the Effective Date;
(b) in the event the Executive ceases to be an
employee of the Company, other than due to circumstances
described in paragraph (c) or (d), three months after the
Executive ceases to be an employee of the Company;
(c) the termination of the Executive's employment with
the Company if such termination is a termination by the Company
for cause, in which case all rights of the Executive under this
Agreement shall be immediately forfeited, except as to Option
Shares already purchased;
(d) the first anniversary of the termination of the
Executive's employment if the termination is by reason of death
or disability.
For purposes of this Section 4:
(i) during the period, if any, following a
termination of the Executive's employment and prior to the
expiration of the Option, the Option shall be exercisable only to
the extent exercisable on the date of such termination; and
(ii) employment by the Company shall include
employment by any subsidiary of the Company.
5. Assignment or Transfer. The Option shall not be
assignable or transferable by the Executive other than by will or
by the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined in the Code.
During the lifetime of an optionee, the Option shall be
exercisable only by the optionee or the optionee's guardian or
legal representative.
- 129 -<PAGE>
6. Adjustments. If the Company's outstanding Shares are
increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities
o f the Company or another corporation by reason of any
consolidation, merger, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-
off, spin-off, combination of shares, exchange of shares or other
like change in capital structure of the Company, the number of
kind of shares or interests subject to this Option and the per
share price thereof shall be appropriately adjusted at the time
of such event. Any fractional shares or interests resulting from
such adjustment shall be eliminated.
7. Exercise of the Option. A person electing to exercise
this Option shall deliver to the Secretary of the Company a
written and signed notice of such election and of the number of
Shares such person has elected to purchase and shall at the time
of delivery of such notice pay for the full purchase price of the
Shares such person has elected to purchase in United States
dollars by personal check, bank draft or money order drawn to the
order of the Company (and, in any event, in an amount not less
than the aggregate par value of such Shares). The Committee
further may, in its discretion, permit payment of the purchase
price in such form or in such manner as may be permissible under
the Plan and under any applicable law.
8. Compliance with Legal Requirements. No Shares shall be
issued or transferred pursuant to this Agreement unless and until
all legal requirements applicable to such issuance or transfer
have, in the opinion of counsel of the Company, been satisfied.
Such requirements may include, but are not limited to, listing,
registering or qualifying the Shares subject to the Option upon
any securities exchange or under any state or federal law,
satisfying any applicable law relating to the transfer of
unregistered securities or demonstrating the availability of an
exemption from applicable laws, placing a legend on the shares to
the effect that they were issued in reliance upon an exemption
from registration under the Securities Act of 1933 (the "Act")
and may not transferred other than in reliance upon Rule 144
promulgated under the Act, if available, or upon another
exemption from the Act, or obtaining the consent or approval of
any governmental regulatory body. The Company has filed a
registration statement on Form S-8 under the Act in order to
register Shares subject to the Plan.
In connection with any such issuance or transfer, or
registration, the person acquiring Shares shall, if requested by
the Company, provide information and assurances satisfactory to
counsel to the Company with respect to such matters as the
Company may deem desirable to assure compliance with all
applicable legal requirements.
- 130 -<PAGE>
9. No Interest in Shares Subject to Option. Neither the
Executive (individually or as a member of a group) nor any
beneficiary or other person claiming under or through the
Executive shall have any right, title, interest, or privilege in
or to any Shares allocated or reserved for the purpose of the
Plan or subject to this Agreement except as to such Shares, if
any, as shall have been issued to such person upon exercise of
this Option or any part of it.
10. Plan Controls. The Option hereby granted is subject
to, and the Company and Executive agree to be bound by, all of
the terms and conditions of the Plan, as the same may be amended
from time to time in accordance with the terms thereof, but no
such amendment shall be effective as to the Option without the
Executive's consent insofar as it may adversely affect the
Executive's rights under this Agreement. The Committee shall
h a ve sole discretion to determine whether the events or
conditions described in this Agreement have been satisfied and to
make all other interpretations, constructions and determinations
required under this Agreement (except those which the Executive
is expressly permitted to make), and all such determinations by
the Committee shall be conclusive.
11. Not an Employment Contract. Nothing in the Plan, in
this Agreement or any other instrument executed pursuant thereto
shall confer upon the Executive any right to continue in the
employ of the Company or shall affect the right of the Company to
terminate the employment of the Executive with or without cause.
12. Change of Control. For the purposes of this
Agreement, "Change of Control" shall mean the occurrence of any
one of the following events:
(i) any "person", as such term is used in Sections
3(a)(9) and 13(d) of the Securities Exchange Act of 1934, other
than Mr. Merv Griffin and his affiliates becomes a "beneficial
owner", as such term is used in Rule 13d-3 promulgated under that
Act, of 50% or more of the Company's Voting Stock, provided that
the foregoing reference to 50% shall become 35% whenever Mr. Merv
Griffin disposes of all or substantially all of the Company's
Voting Stock presently held by Mr. Griffin;
(ii) the Company adopts any plan of liquidation
providing for the distribution of all or substantially all of its
assets;
(iii) all or substantially all of the business of the
Company is disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company
i m mediately prior to such merger, consolidation or other
t r a nsaction beneficially own, directly or indirectly, in
substantially the same proportion as they owned the Voting Stock
of the Company, all of
- 131 -<PAGE>
the Voting Stock or other ownership interests of the entity or
entities, if any, that succeed to the business of the Company);
(iv) the Company combines with another company and is
the surviving corporation but, immediately after the combination,
the shareholders of the Company immediately prior to the
combination hold, directly or indirectly, 50% or less of the
Voting Stock of the combined company (there being excluded from
the number of shares held by such shareholders, but not from the
Voting Stock of the combined company, any shares received by
"affiliates", as such term is defined in the rules of the
Securities and Exchange Commission, of such other company in
exchange for stock of such other company); or
(v) Merv Griffin is no longer Chairman of the Board of
Directors of the Company.
For the purposes of this Section 12, "Voting Stock"
shall mean capital stock of any class or classes having general
voting power under ordinary circumstances (not including the
Class B stock of the Company), in the absence of contingencies,
to elect the directors of a corporation.
13. Governing Law. All rights under this Agreement shall
be governed by and construed in accordance with the laws of the
State of Delaware.
14. Taxes. The Committee may, in its discretion, make such
provisions and take such steps as it may deem necessary or
appropriate for the withholding of all federal, state, local and
other taxes required by law to be withheld with respect to the
issuance or exercise of the Option, including, but not limited
to, deducting the amount of any such withholding taxes from any
other amount then or thereafter payable to the Executive, or
requiring the Executive to pay to the Company the amount required
to be withheld or to execute such documents as the Committee
deems necessary or desirable to enable it to satisfy its
withholding obligations.
15. Notices. All notices, requests, demands and other
communications pursuant to this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered,
telexed or telecopied to, or, if mailed, when received by, the
other party at the following addresses (or at such other address
as shall be given in writing by either party to the other):
If to the Company, to:
Griffin Gaming & Entertainment, Inc.
1133 Boardwalk
Atlantic City, NJ 08404
Attention: The Secretary
- 132 -<PAGE>
If to the Executive, to the address set
forth next to his signature hereto.
16. Effective Date. By execution below, this Agreement is
entered into as of the Effective Date.
GRIFFIN GAMING & ENTERTAINMENT, INC.
By: /s/ Thomas E. Gallagher
Thomas E. Gallagher
Its:
President and
Chief Executive Officer
Address for Notices: AGREED TO AND ACCEPTED:
By: /s/ Matthew B. Kearney
- 133 -<PAGE>
EXHIBIT (10)(d)(4)
NONQUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
GRIFFIN GAMING & ENTERTAINMENT, INC.
1994 STOCK OPTION PLAN
THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of
August 9, 1995 (the "Effective Date") between Griffin Gaming &
Entertainment, Inc., a Delaware corporation (the "Company"), and
Matthew B. Kearney (the "Executive").
R E C I T A L S
A. The Company has adopted the 1994 Stock Option Plan (the
"Plan"), a copy of which is annexed hereto as Exhibit 1.
B. T h e Company desires to grant the Executive the
opportunity to acquire a proprietary interest in the Company in
consideration of the Executive's contribution to the success and
progress of the Company.
C. In accordance with the Plan, the Committee (as defined
in the Plan) has as of the Effective Date granted to the
Executive an option (the "Option") to purchase shares of common
stock, par value $.01 per share, of the Company (the "Shares"),
subject to the terms and conditions of the Plan and this
Agreement.
AGREEMENTS
1. Definitions. Capitalized terms not defined herein
shall have the meanings set forth in the Plan.
2. Grant of Option. The Company grants to the Executive
the right and option to purchase all or any part of an aggregate
of 5,000 Shares (the "Option Shares"), at the purchase price of
$15.75 per share, on the terms and conditions set forth herein.
This Option is not intended to qualify for treatment as an
Incentive Stock Option within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code").
- 134 -<PAGE>
3. Exercisability. The Option shall become exercisable to
the extent of one-third of the number of Option Shares on August
1, 1996, one-third on August 1, 1997 and one-third on August 1,
1998, on a cumulative basis. In the event of (1) the termination
of the Executive's employment due to death, disability or
retirement, (2) there is a Change of Control (as defined in
Section 12 below), (3) the Executive terminates his employment
f o llowing a material diminution in his duties and
responsibilities, and (4) the Company terminates or elects not
to renew, other than for cause, the Executive's employment
through August 1, 1998, all of the Executive's options become
exercisable. During the period the Option is exercisable, it may
be exercised by the Executive as to the whole or any part thereof
at any time or from time to time.
4. Expiration. The Option shall expire upon the earliest
to occur of:
(a) the tenth anniversary of the Effective Date;
(b) in the event the Executive ceases to be an
employee of the Company, other than due to circumstances
described in paragraph (c) or (d), three months after the
Executive ceases to be an employee of the Company;
(c) the termination of the Executive's employment with
the Company if such termination is a termination by the Company
for cause, in which case all rights of the Executive under this
Agreement shall be immediately forfeited, except as to Option
Shares already purchased;
(d) the first anniversary of the termination of the
Executive's employment if the termination is by reason of death
or disability.
For purposes of this Section 4:
(i) during the period, if any, following a
termination of the Executive's employment and prior to the
expiration of the Option, the Option shall be exercisable only to
the extent exercisable on the date of such termination; and
(ii) employment by the Company shall include
employment by any subsidiary of the Company.
5. Assignment or Transfer. The Option shall not be
assignable or transferable by the Executive other than by will or
by the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined in the Code.
During the lifetime of an optionee, the Option shall be
exercisable only by the optionee or the optionee's guardian or
legal representative.
- 135 -<PAGE>
6. Adjustments. If the Company's outstanding Shares are
increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities
o f the Company or another corporation by reason of any
consolidation, merger, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-
off, spin-off, combination of shares, exchange of shares or other
like change in capital structure of the Company, the number of
kind of shares or interests subject to this Option and the per
share price thereof shall be appropriately adjusted at the time
of such event. Any fractional shares or interests resulting from
such adjustment shall be eliminated.
7. Exercise of the Option. A person electing to exercise
this Option shall deliver to the Secretary of the Company a
written and signed notice of such election and of the number of
Shares such person has elected to purchase and shall at the time
of delivery of such notice pay for the full purchase price of the
Shares such person has elected to purchase in United States
dollars by personal check, bank draft or money order drawn to the
order of the Company (and, in any event, in an amount not less
than the aggregate par value of such Shares). The Committee
further may, in its discretion, permit payment of the purchase
price in such form or in such manner as may be permissible under
the Plan and under any applicable law.
8. Compliance with Legal Requirements. No Shares shall be
issued or transferred pursuant to this Agreement unless and until
all legal requirements applicable to such issuance or transfer
have, in the opinion of counsel of the Company, been satisfied.
Such requirements may include, but are not limited to, listing,
registering or qualifying the Shares subject to the Option upon
any securities exchange or under any state or federal law,
satisfying any applicable law relating to the transfer of
unregistered securities or demonstrating the availability of an
exemption from applicable laws, placing a legend on the shares to
the effect that they were issued in reliance upon an exemption
from registration under the Securities Act of 1933 (the "Act")
and may not transferred other than in reliance upon Rule 144
promulgated under the Act, if available, or upon another
exemption from the Act, or obtaining the consent or approval of
any governmental regulatory body. The Company has filed a
registration statement on Form S-8 under the Act in order to
register Shares subject to the Plan.
In connection with any such issuance or transfer, or
registration, the person acquiring Shares shall, if requested by
the Company, provide information and assurances satisfactory to
counsel to the Company with respect to such matters as the
Company may deem desirable to assure compliance with all
applicable legal requirements.
- 136 -<PAGE>
9. No Interest in Shares Subject to Option. Neither the
Executive (individually or as a member of a group) nor any
beneficiary or other person claiming under or through the
Executive shall have any right, title, interest, or privilege in
or to any Shares allocated or reserved for the purpose of the
Plan or subject to this Agreement except as to such Shares, if
any, as shall have been issued to such person upon exercise of
this Option or any part of it.
10. Plan Controls. The Option hereby granted is subject
to, and the Company and Executive agree to be bound by, all of
the terms and conditions of the Plan, as the same may be amended
from time to time in accordance with the terms thereof, but no
such amendment shall be effective as to the Option without the
Executive's consent insofar as it may adversely affect the
Executive's rights under this Agreement. The Committee shall
h a ve sole discretion to determine whether the events or
conditions described in this Agreement have been satisfied and to
make all other interpretations, constructions and determinations
required under this Agreement (except those which the Executive
is expressly permitted to make), and all such determinations by
the Committee shall be conclusive.
11. Not an Employment Contract. Nothing in the Plan, in
this Agreement or any other instrument executed pursuant thereto
shall confer upon the Executive any right to continue in the
employ of the Company or shall affect the right of the Company to
terminate the employment of the Executive with or without cause.
12. Change of Control. For the purposes of this
Agreement, "Change of Control" shall mean the occurrence of any
one of the following events:
(i) any "person", as such term is used in Sections
3(a)(9) and 13(d) of the Securities Exchange Act of 1934, other
than Mr. Merv Griffin and his affiliates becomes a "beneficial
owner", as such term is used in Rule 13d-3 promulgated under that
Act, of 50% or more of the Company's Voting Stock, provided that
the foregoing reference to 50% shall become 35% whenever Mr. Merv
Griffin disposes of all or substantially all of the Company's
Voting Stock presently held by Mr. Griffin;
(ii) the Company adopts any plan of liquidation
providing for the distribution of all or substantially all of its
assets;
(iii) all or substantially all of the business of the
Company is disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company
i m mediately prior to such merger, consolidation or other
t r a nsaction beneficially own, directly or indirectly, in
substantially the same proportion as they owned the Voting Stock
of the Company, all of
- 137 -<PAGE>
the Voting Stock or other ownership interests of the entity or
entities, if any, that succeed to the business of the Company);
(iv) the Company combines with another company and is
the surviving corporation but, immediately after the combination,
the shareholders of the Company immediately prior to the
combination hold, directly or indirectly, 50% or less of the
Voting Stock of the combined company (there being excluded from
the number of shares held by such shareholders, but not from the
Voting Stock of the combined company, any shares received by
"affiliates", as such term is defined in the rules of the
Securities and Exchange Commission, of such other company in
exchange for stock of such other company); or
(v) Merv Griffin is no longer Chairman of the Board of
Directors of the Company.
For the purposes of this Section 12, "Voting Stock"
shall mean capital stock of any class or classes having general
voting power under ordinary circumstances (not including the
Class B stock of the Company), in the absence of contingencies,
to elect the directors of a corporation.
13. Governing Law. All rights under this Agreement shall
be governed by and construed in accordance with the laws of the
State of Delaware.
14. Taxes. The Committee may, in its discretion, make such
provisions and take such steps as it may deem necessary or
appropriate for the withholding of all federal, state, local and
other taxes required by law to be withheld with respect to the
issuance or exercise of the Option, including, but not limited
to, deducting the amount of any such withholding taxes from any
other amount then or thereafter payable to the Executive, or
requiring the Executive to pay to the Company the amount required
to be withheld or to execute such documents as the Committee
deems necessary or desirable to enable it to satisfy its
withholding obligations.
15. Notices. All notices, requests, demands and other
communications pursuant to this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered,
telexed or telecopied to, or, if mailed, when received by, the
other party at the following addresses (or at such other address
as shall be given in writing by either party to the other):
If to the Company, to:
Griffin Gaming & Entertainment, Inc.
1133 Boardwalk
Atlantic City, NJ 08404
Attention: The Secretary
- 138 -<PAGE>
If to the Executive, to the address set
forth next to his signature hereto.
16. Effective Date. By execution below, this Agreement is
entered into as of the Effective Date.
GRIFFIN GAMING & ENTERTAINMENT, INC.
By: /s/ Thomas E. Gallagher
Thomas E. Gallagher
Its:
President and
Chief Executive Officer
Address for Notices: AGREED TO AND ACCEPTED:
By: /s/ Matthew B. Kearney
- 139 -<PAGE>
EXHIBIT (10)(d)(6)
NONQUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
GRIFFIN GAMING & ENTERTAINMENT, INC.
1994 STOCK OPTION PLAN
THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of
August 1, 1994 (the "Effective Date") between Griffin Gaming &
Entertainment, Inc., a Delaware corporation (the "Company"), and
David G. Bowden (the "Executive").
R E C I T A L S
A. The Company has adopted the 1994 Stock Option Plan (the
"Plan"), a copy of which is annexed hereto as Exhibit 1.
B. T h e Company desires to grant the Executive the
opportunity to acquire a proprietary interest in the Company in
consideration of the Executive's contribution to the success and
progress of the Company.
C. In accordance with the Plan, the Committee (as defined
in the Plan) has as of the Effective Date granted to the
Executive an option (the "Option") to purchase shares of common
stock, par value $.01 per share, of the Company (the "Shares"),
subject to the terms and conditions of the Plan and this
Agreement.
AGREEMENTS
1. Definitions. Capitalized terms not defined herein
shall have the meanings set forth in the Plan.
2. Grant of Option. The Company grants to the Executive
the right and option to purchase all or any part of an aggregate
of 7,000 Shares (the "Option Shares"), at the purchase price of
$5.15625 per share, on the terms and conditions set forth herein.
This Option is not intended to qualify for treatment as an
Incentive Stock Option within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code").
- 140 -<PAGE>
3. Exercisability. The Option shall become exercisable to
the extent of one-fourth of the number of Option Shares on August
1, 1995, one-fourth on August 1, 1996, one-fourth on August 1,
1997 and one-fourth on August 1, 1998, on a cumulative basis. In
the event of the termination of the Executive's employment due to
death, disability or retirement or there is a Change of Control,
all of the Executive's options become exercisable. During the
period the Option is exercisable, it may be exercised by the
Executive as to the whole or any part thereof at any time or from
time to time.
4. Expiration. The Option shall expire upon the earliest
to occur of:
(a) the tenth anniversary of the Effective Date;
(b) in the event the Executive ceases to be an
employee of the Company, other than due to circumstances
described in paragraph (c) or (d), three months after the
Executive ceases to be an employee of the Company;
(c) the termination of the Executive's employment with
the Company if such termination is a termination by the Company
for cause, in which case all rights of the Executive under this
Agreement shall be immediately forfeited, except as to Option
Shares already purchased;
(d) the first anniversary of the termination of the
Executive's employment if the termination is by reason of death
or disability.
For purposes of this Section 4:
(i) during the period, if any, following a
termination of the Executive's employment and prior to the
expiration of the Option, the Option shall be exercisable only to
the extent exercisable on the date of such termination; and
(ii) employment by the Company shall include
employment by any subsidiary of the Company.
5. Assignment or Transfer. The Option shall not be
assignable or transferable by the Executive other than by will or
by the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined in the Code.
During the lifetime of an optionee, the Option shall be
exercisable only by the optionee or the optionee's guardian or
legal representative.
6. Adjustments. If the Company's outstanding Shares are
increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities
o f the Company or another corporation by reason of any
consolidation,
- 141 -<PAGE>
m e r g e r , combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-
off, spin-off, combination of shares, exchange of shares or other
like change in capital structure of the Company, the number of
kind of shares or interests subject to this Option and the per
share price thereof shall be appropriately adjusted at the time
of such event. Any fractional shares or interests resulting from
such adjustment shall be eliminated.
7. Exercise of the Option. A person electing to exercise
this Option shall deliver to the Secretary of the Company a
written and signed notice of such election and of the number of
Shares such person has elected to purchase and shall at the time
of delivery of such notice pay for the full purchase price of the
Shares such person has elected to purchase in United States
dollars by personal check, bank draft or money order drawn to the
order of the Company (and, in any event, in an amount not less
than the aggregate par value of such Shares). The Committee
further may, in its discretion, permit payment of the purchase
price in such form or in such manner as may be permissible under
the Plan and under any applicable law.
8. Compliance with Legal Requirements. No Shares shall be
issued or transferred pursuant to this Agreement unless and until
all legal requirements applicable to such issuance or transfer
have, in the opinion of counsel of the Company, been satisfied.
Such requirements may include, but are not limited to, listing,
registering or qualifying the Shares subject to the Option upon
any securities exchange or under any state or federal law,
satisfying any applicable law relating to the transfer of
unregistered securities or demonstrating the availability of an
exemption from applicable laws, placing a legend on the shares to
the effect that they were issued in reliance upon an exemption
from registration under the Securities Act of 1933 (the "Act")
and may not transferred other than in reliance upon Rule 144
promulgated under the Act, if available, or upon another
exemption from the Act, or obtaining the consent or approval of
any governmental regulatory body. The Company has filed a
registration statement on Form S-8 under the Act in order to
register Shares subject to the Plan.
In connection with any such issuance or transfer, or
registration, the person acquiring Shares shall, if requested by
the Company, provide information and assurances satisfactory to
counsel to the Company with respect to such matters as the
Company may deem desirable to assure compliance with all
applicable legal requirements.
9. No Interest in Shares Subject to Option. Neither the
Executive (individually or as a member of a group) nor any
beneficiary or other person claiming under or through the
Executive shall have any right, title, interest, or privilege in
or to any Shares allocated or reserved for the purpose of the
Plan or subject
- 142 -<PAGE>
to this Agreement except as to such Shares, if any, as shall have
been issued to such person upon exercise of this Option or any
part of it.
10. Plan Controls. The Option hereby granted is subject
to, and the Company and Executive agree to be bound by, all of
the terms and conditions of the Plan, as the same may be amended
from time to time in accordance with the terms thereof, but no
such amendment shall be effective as to the Option without the
Executive's consent insofar as it may adversely affect the
Executive's rights under this Agreement. The Committee shall
h a ve sole discretion to determine whether the events or
conditions described in this Agreement have been satisfied and to
make all other interpretations, constructions and determinations
required under this Agreement (except those which the Executive
is expressly permitted to make), and all such determinations by
the Committee shall be conclusive.
11. Not an Employment Contract. Nothing in the Plan, in
this Agreement or any other instrument executed pursuant thereto
shall confer upon the Executive any right to continue in the
employ of the Company or shall affect the right of the Company to
terminate the employment of the Executive with or without cause.
12. Governing Law. All rights under this Agreement shall
be governed by and construed in accordance with the laws of the
State of Delaware.
13. Taxes. The Committee may, in its discretion, make
such provisions and take such steps as it may deem necessary or
appropriate for the withholding of all federal, state, local and
other taxes required by law to be withheld with respect to the
issuance or exercise of the Option, including, but not limited
to, deducting the amount of any such withholding taxes from any
other amount then or thereafter payable to the Executive, or
requiring the Executive to pay to the Company the amount required
to be withheld or to execute such documents as the Committee
deems necessary or desirable to enable it to satisfy its
withholding obligations.
14. Notices. All notices, requests, demands and other
communications pursuant to this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered,
telexed or telecopied to, or, if mailed, when received by, the
other party at the following addresses (or at such other address
as shall be given in writing by either party to the other):
If to the Company, to:
Griffin Gaming & Entertainment, Inc.
1133 Boardwalk
Atlantic City, NJ 08404
Attention: The Secretary
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If to the Executive, to the address set
forth next to his signature hereto.
15. Effective Date. By execution below, this Agreement is
entered into as of the Effective Date.
GRIFFIN GAMING & ENTERTAINMENT, INC.
By: /s/ Matthew B. Kearney
Matthew B. Kearney
Its:
Executive Vice President -
Finance and
Chief Financial Officer
Address for Notices: AGREED TO AND ACCEPTED:
By: /s/ David G. Bowden
- 144 -<PAGE>
EXHIBIT (11)
GRIFFIN GAMING & ENTERTAINMENT, INC.
COMPUTATION OF PER SHARE DATA
(In Thousands, except per share data)
For the Year Ended December 31,
1995 1994 1993
Per Share Data - Primary (A):
Earnings (loss):
Earnings (loss) before
extraordinary items $15,899 $(98,891) $(102,164)
Extraordinary items 190,008
Net earnings (loss) $15,899 $ 91,117 $(102,164)
Shares and share equivalents:
Weighted average number of shares
of GGE Common Stock outstanding 7,940 6,537 4,031
Weighted average number of share
equivalents outstanding 582
Weighted average number of shares
and share equivalents 8,522 6,537 4,031
Earnings (loss) per share:
Earnings (loss) before
extraordinary items $1.87 $(15.13) $(25.34)
Extraordinary items 29.07
Net earnings $1.87 $ 13.94 $(25.34)
Per Share Data - Fully Diluted (A):
Net earnings $15,899
Shares and share equivalents:
Weighted average number of shares
of GGE Common Stock outstanding 7,940
Weighted average number of share
equivalents outstanding 735
Weighted average number of shares
and share equivalents 8,675
Net earnings per share $1.83
(A) Per share data, as well as references to number of shares and
equivalents, have been restated to give effect to the one-for-
five Reverse Stock Split that was effective June 30, 1995.
- 145 -<PAGE>
EXHIBIT (21)
GRIFFIN GAMING & ENTERTAINMENT, INC.
SUBSIDIARIES OF THE REGISTRANT
AS OF DECEMBER 31, 1995
Percentage of
Outstanding
Place of Stock Held
Name of Subsidiary Incorporation By Registrant
GGRI, Inc. Delaware 100%
Griffin Entertainment, Inc. Nevada 100%
New Pier Operating Company, Inc. New Jersey 100%
Resorts International
Hotel Financing, Inc. Delaware 100%
Resorts International Hotel, Inc. New Jersey (1)
(1) 100% owned by GGRI, Inc.
The registrant's subsidiaries generally do business in their
respective corporate names or distinctive short forms thereof which
are readily identifiable. Resorts International Hotel, Inc. uses the
name Merv Griffin's Resorts Casino Hotel extensively. Griffin
Entertainment, Inc. also does business as Merv Griffin Entertainment,
Inc.
The names of certain subsidiaries, which considered in the
aggregate did not constitute a "significant subsidiary" as of December
31, 1995 as defined in Rule l-02(w) of Regulation S-X, have been
omitted.<PAGE>
- 146 -<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GRIFFIN
GAMING & ENTERTAINMENT, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
THERETO INCLUDED IN THE FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> $55,572<F1>
<SECURITIES> 0
<RECEIVABLES> $8,495
<ALLOWANCES> $3,570
<INVENTORY> $2,447
<CURRENT-ASSETS> $72,544
<PP&E> $221,202
<DEPRECIATION> $62,227
<TOTAL-ASSETS> $338,451
<CURRENT-LIABILITIES> $41,798
<BONDS> $217,356<F2>
<COMMON> $79
0
0
<OTHER-SE> $25,868
<TOTAL-LIABILITY-AND-EQUITY> $338,451
<SALES> 0
<TOTAL-REVENUES> $301,740
<CGS> 0
<TOTAL-COSTS> $208,631<F3>
<OTHER-EXPENSES> $13,452<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $29,297
<INCOME-PRETAX> $15,899
<INCOME-TAX> 0
<INCOME-CONTINUING> $15,899
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $15,899
<EPS-PRIMARY> $1.87
<EPS-DILUTED> $1.83
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $35,515 AND
RESTRICTED CASH EQUIVALENTS OF $4,362.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F3>EXCLUDES DEPRECIATION.
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
