<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 20, 1997
Stratosphere Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-12030 88-0292318
(Commission File Number) (IRS Employer Identification No.)
2000 Las Vegas Boulevard, Las Vegas, Nevada 89104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 385-7727
Not Applicable
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
The Company's press release dated Friday, June 20, 1997, filed as Exhibit
99.1 to this Current Report on Form 8-K, is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit No.
99.1 Press Release dated June 20, 1997
99.2 Amended and Restated Investment and Reorganization Agreement among
Stratosphere Corporation, Stratosphere Gaming Corp. and Grand
Casinos, Inc. dated as of June 20, 1997.
99.3 Stratosphere Corporation's First Amended Plan of Reorganization
<PAGE> 3
SIGNATURE
Pursuant to the requirements 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.
STRATOSPHERE CORPORATION
Date: June 24, 1997 By: /s/ Thomas Lettero
---------------------------
Name: Thomas Lettero
Title: Chief Financial Officer
<PAGE> 1
EXHIBIT 99.1
[STRATOSPHERE LOGO]
NEWS RELEASE
STRATOSPHERE CORPORATION
2000 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89104
702-380-7777
702-383-4733 (FAX)
________________________________________________________________________________
FOR FURTHER INFORMATION CONTACT:
Tom Lettero - (702) 383-5207
________________________________________________________________________________
FOR IMMEDIATE RELEASE:
FRIDAY, JUNE 20, 1997
STRATOSPHERE CORPORATION ANNOUNCES
FILING OF REVISED CHAPTER 11 PLAN
LAS VEGAS, NEV. - STRATOSPHERE CORPORATION announced today that it has received
notice that Grand Casinos has withdrawn its support of the prior Plan of
Reorganization in Stratosphere's Chapter 11 proceedings and has terminated the
January 6, 1997 Restructuring Agreement due to the inability of Stratosphere to
achieve minimum required Consolidated Cash Flows (as defined in the agreement).
Stratosphere Corporation, upon receipt of Grand's notice, announced that it and
Grand Casinos have entered into an Amended and Restated Reorganization
Agreement and that it has filed an Amended Plan of Reorganization. The amended
Plan, which is consistent with a valuation report received by an independent
third party, calls for the exchange of the $203 million of First Mortgage Notes
of Stratosphere currently outstanding for $110 million principal amount of new
notes and 10% of the equity of reorganized Stratosphere. The new notes would
continue as senior secured debt and would mature seven years after issuance.
The new notes would bear interest at 8.5% for the first two years after
issuance and at 12.5% thereafter. The amended Plan also permits holders of the
First Mortgage Notes to purchase up to an additional $25 million in new notes
for cash. Grand will provide a standby commitment to purchase any of such new
notes that are not purchased by First Mortgage Note holders.
In addition to the new notes, the holders of the First Mortgage Notes would
receive 4 million shares of Class A Common Stock, which would represent 10% of
the equity ownership and voting interest of reorganized Stratosphere and which
would contain a put/call feature. On or during the 30 day period following the
fifth anniversary of the effective date of the Plan, a majority of the holders
of Class A Common Stock will have the right to require Grand to purchase all,
but not less than all, of the shares of Class A Common Stock then outstanding.
In addition, during the two year period following the fifth anniversary of the
effective date, Grand will have the right to require the holders of Class A
Common Stock to sell to Grand all of the Class A Common Stock then outstanding.
In either case, the per share price would be based on an estimated enterprise
value of Stratosphere at that time, determined using a multiple 7 times
Stratosphere's one-year trailing consolidated cash flow (less long-term debt
and Capital Lease Obligations). Grand may elect to pay the purchase price, at
its discretion, either in cash or in shares of Grand common stock valued at a
price per share equal to 96% of the then fair market value of Grand common
stock.
Under the amended Plan, all currently outstanding Common Stock of Stratosphere
and all other existing equity interests in Stratosphere would be canceled.
<PAGE> 2
In addition to its commitment to purchase up to $25 million in new notes, the
amended Plan provides that Grand would purchase 36 million shares of Class B
Common Stock of reorganized Stratosphere for an aggregate purchase price of $50
million. The shares of Class B Common Stock purchased by Grand would represent
90% of the equity interest and voting power of reorganized Stratosphere. As a
result of the issuance of the Class A Common Stock to the First Mortgage Note
holders and the sale of the Class B Common Stock to Grand, Stratosphere would
have upon completion of the reorganization approximately 40 million shares of
Common Stock outstanding, consisting of 4 million shares of Class A Common
Stock and 36 million shares of Class B Common Stock.
The $75 million of proceeds from the sale of the Class B Common Stock and the
new notes would be used to construct the next phase of the Stratosphere
development, consisting of approximately 1,000 additional hotel rooms, swimming
pool and recreation facilities, and various other improvements to the
Stratosphere resort complex. The budgeted costs for the project are
approximately $75 million. The construction would be undertaken pursuant to
fixed price contracts, with any changes to the project budget requiring written
consent by Grand. Pursuant to the Plan, Grand would provide a completion
guarantee, up to a maximum amount of $25 million, to fund any unanticipated
construction cost overruns with respect to the project. Any amounts paid by
Grand pursuant to the completion guarantee would constitute subordinated debt
of Stratosphere and would accrue interest at the same rate as Stratosphere's
new notes.
Upon closing of the restructuring, Grand and Stratosphere would enter into a
management agreement pursuant to which Grand would provide management of the
above described construction of the next phase of Stratosphere improvements and
its day to day operations for an annual fee to be determined by the Bankruptcy
Court.
The amended Plan is subject to a number of conditions, including plan
confirmation, receipt of all necessary regulatory approvals including those
required by Nevada gaming authorities, completion of definitive plan related
documents, and other customary closing conditions. In particular, Grand's
obligations are subject to the following conditions, among others: (i) that
there be no material adverse change in Stratosphere's business, financial
condition, or results of operations prior to the effective date of the amended
Plan; and (ii) that Grand obtain a favorable opinion from its investment banker
regarding the fairness of the Plan from a financial point of view to Grand and
its shareholders.
The Plan also provides Stratosphere with a 90 day period in which to solicit
alternative restructuring proposals. If a higher and better restructuring
proposal is accepted by Stratosphere during such 90 day period, Grand will have
the option of either (i) offering its own competing proposal or (ii)
terminating its participation in the Stratosphere reorganization. If Grand
terminates its participation under such circumstances, it is entitled to
receive a break fee of $2,000,000 (subject to Bankruptcy Court approval). If
no economically more favorable restructuring proposal is received by
Stratosphere prior to the end of the 90 day period, the Plan supported by Grand
would proceed to confirmation subject to the right of Stratosphere to submit or
receive higher and better proposals as part of the confirmation hearing. The
evaluation of competing restructuring proposals would be made by the
independent members of Stratosphere's board of directors (with advice from
Stratosphere's outside legal and financial advisors) and would be subject to
review by the Bankruptcy Court.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this press
release (as well as information included in oral statements or other written
statements made or to be made by the Company) contains statements that are
forward-looking, such as statements relating to plan for future expansion and
other business development activities as well as other capital spending,
financing sources and the effects of regulation (including gaming and tax
regulation) and competition. Such forward-looking information involves
important risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ from those
expressed in any forward-looking statements made by or on behalf of the
Company. These risks and uncertainties include, but are not limited to, those
relating to development and construction activities, dependence on existing
management, leverage and debt service (including sensitivity to fluctuations in
the interest rates), domestic or global economic conditions, activities of
competitors and the presence of new or additional competition, fluctuations and
changes in customer preferences and attitudes, changes in federal or state tax
laws of the administration of such laws and changes in gaming laws or
regulations (including the legalization of gaming in certain jurisdictions).
For more information, review the Company's filings with the Securities and
Exchange Commission, including the Company's annual report on Form 10-K and
certain registration statements of the Company.
-30-
<PAGE> 1
EXHIBIT 99.2
AMENDED AND RESTATED INVESTMENT AND REORGANIZATION AGREEMENT
AMONG
STRATOSPHERE CORPORATION
STRATOSPHERE GAMING CORP.
AND
GRAND CASINOS, INC.
Las Vegas, Nevada
Dated as of June 20, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
ARTICLE 2
CAPITAL STRUCTURE
Section 2.1 Capitalization 7
Section 2.2 Cancellation of Old Common Stock 7
Section 2.3 Cancellation of Original First Mortgage Notes 8
Section 2.4 Issuance of Remaining Restated Notes 8
Section 2.6 Put/Call of Class A Common Stock 8
ARTICLE 3
GRAND INVESTMENT
Section 3.1 Class B Common Stock 9
Section 3.2 Restated Notes Purchase 9
Section 3.3 Payment of Purchase Price 9
Section 3.4 Cancellation of Existing Grand Indebtedness and Other
Consideration 9
ARTICLE 4
ADDITIONAL AGREEMENTS
Section 4.1 Discharge of Old Standby Equity Commitment 10
Section 4.2 Phase II Completion Guarantee 10
Section 4.3 Completion Guarantee Repayment Obligations and
Subordination 11
Section 4.4 Construction Escrow Account 11
Section 4.5 Amendments to Budget 11
Section 4.6 Management Agreement 11
ARTICLE 5
CLOSING
Section 5.1 The Closing 11
Section 5.2 Closing Deliveries 12
Section 5.3 Actions With Respect to the Plan and the
Restructuring 14
ARTICLE 6
7
<PAGE> 3
CONDITIONS TO CLOSING
Section 6.1 Conditions Precedent to Grand's Obligations 14
Section 6.2 Conditions Precedent to Stratosphere's Obligations 17
Section 6.3 Alternative Transactions 18
Section 6.4 Termination Fee 19
8
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF STRATOSPHERE
Section 7.1 Due Incorporation, Etc. 19
Section 7.2 Capitalization 19
Section 7.3 No Violation of Agreements, Etc. 20
Section 7.4 Due Authorization, Execution and Delivery 20
Section 7.5 Legal Actions 20
Section 7.6 Title to and Condition of Properties 20
Section 7.7 ERISA Plans 20
Section 7.8 Employees 20
Section 7.9 Commission or Broker Fees 20
Section 7.10 Full Disclosure 20
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF GRAND
Section 8.1 Due Incorporation, Etc. 21
Section 8.2 Due Authorization Execution and Delivery 21
Section 8.3 No Violation of Agreements, Etc 21
ARTICLE 9
COVENANTS OF STRATOSPHERE AND GRAND
Section 9.1 Conduct of the Chapter 11 Cases 21
Section 9.2 Executory Contracts 22
Section 9.3 Access to Information; Delivery of Documents 22
Section 9.4 Conduct of Business Prior to Closing 22
Section 9.5 Notification of Changes 22
Section 9.6 Best Efforts 22
Section 9.7 Certain Failures of Conditions 23
ARTICLE 10
MISCELLANEOUS
Section 10.1 Assignability 23
Section 10.2 Notices 23
Section 10.3 Survival of Representations, Warranties and Agreements 24
Section 10.4 Further Assurances 24
Section 10.5 Waiver 24
Section 10.6 Amendments 24
Section 10.7 Applicable Law 24
9
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Section 10.8 Headings 25
Section 10.9 Counterparts 25
Section 10.10 Entire Agreement 25
Section 10.11 Time Is of the Essence 25
Section 10.12 Amended and Restated Agreement 25
Section 10.13 Effectiveness 25
10
<PAGE> 6
AMENDED AND RESTATED INVESTMENT AND REORGANIZATION AGREEMENT
This AMENDED AND RESTATED INVESTMENT AND REORGANIZATION AGREEMENT (this
"Agreement") is made as of the 20th day of June, 1997, by and among
STRATOSPHERE CORPORATION, a Delaware corporation ("Stratosphere"), STRATOSPHERE
GAMING CORP., a Nevada Corporation ("Gaming Corp."), and GRAND CASINOS, INC., a
Minnesota corporation ("Grand"). The parties hereto are collectively referred
to herein as the "Parties."
R E C I T A L S :
WHEREAS, Stratosphere and Grand have previously entered into that certain
Investment and Reorganization Agreement dated as of January 24, 1997 (the
"Prior Agreement") which set forth certain agreements between Grand and
Stratosphere relating to the financial restructuring of Stratosphere and Gaming
Corp., to be effectuated through a Chapter 11 bankruptcy filing by Stratosphere
and Gaming Corp. (the "Restructuring");
WHEREAS, Grand and Stratosphere have agreed to revise certain terms and
conditions of the Restructuring and to amend and restate in its entirety the
Prior Agreement in order to reflect such revised terms and conditions;
WHEREAS, Grand and Stratosphere desire to enter into this Agreement in
order to amend and restate the Prior Agreement and to set forth certain terms
and conditions of Grand's participation in the Restructuring; and
WHEREAS, Grand and Stratosphere intend that, except with respect to
Sections 6.3 and 6.4 hereof which shall be subject to separate Bankruptcy Court
review and approval, this Agreement shall be submitted for review and approval
by the Bankruptcy Court pursuant to the Plan and as part of the process of
confirmation of the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and the
agreements of the parties contained herein, and subject to the conditions
specified herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, except as expressly provided herein or
unless the context otherwise requires, the following terms shall have the
following respective meanings:
"Administrative Expense Reserve" means an amount of cash reserved for use
by Stratosphere and Gaming Corp. to pay certain administrative expenses in
connection with
<PAGE> 7
the Stratosphere resort complex, which shall be subject to approval by the
Bankruptcy Court either as part of the Confirmation Hearing or upon motion by
the debtors.
"Agreement" means this Amended and Restated Investment and Reorganization
Agreement between Stratosphere and Grand.
"Alternative Transaction" shall have the meaning set forth in Section 6.3
hereof.
"Approvals" shall have the meaning set forth in Section 6.1(l) hereof.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, Title 11,
United States Code, as now in effect or hereafter amended, 11 U.S.C. Section
Section 101 et seq.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Nevada or such other court as may have jurisdiction over the
Chapter 11 Cases.
"Chapter 11 Cases" means the cases under Chapter 11 of the Bankruptcy Code
in which Stratosphere and Gaming Corp. are the debtors and
debtors-in-possession pending before the Bankruptcy Court, including all
adversary proceedings pending in connection therewith.
"Class A Common Stock" means the shares of common stock of Reorganized
Stratosphere which shall collectively as a class represent, in the aggregate,
ten percent (10%) of the common equity and voting power of Reorganized
Stratosphere.
"Class B Common Stock" means the shares of common stock of Reorganized
Stratosphere which shall collectively as a class represent, in the aggregate,
ninety percent (90%) of the common equity and voting power of Reorganized
Stratosphere.
"Closing" means the completion of the transactions to occur on the
Closing Date as provided herein.
"Closing Date" means the Effective Date.
"Confirmation Date" means the date upon which the Bankruptcy Court enters
its order confirming the Plan.
"Confirmation Hearing" means the duly noticed hearing held by the
Bankruptcy Court on confirmation of the Plan pursuant to Section 1128 of the
Bankruptcy Code, which hearing may be adjourned by the Bankruptcy Court from
time to time without further notice other than the announcement of the
adjourned date at the Confirmation Hearing.
"Consolidated Cash Flow" means, with respect to Reorganized Stratosphere
for any period subsequent to the Effective Date, EBITDA of Reorganized
Stratosphere,
2
<PAGE> 8
Reorganized Gaming Corp. and any other consolidated subsidiaries of Reorganized
Stratosphere plus or minus (i) any loss or any gain, together with any related
provision for taxes on such loss or gain, realized (in accordance with GAAP) in
connection with any sale of assets (including, without limitation, dispositions
pursuant to sale and leaseback transactions) by Reorganized Stratosphere,
Reorganized Gaming Corp. and any other consolidated subsidiaries of Reorganized
Stratosphere to the extent that such loss or gain (including any related
provision for taxes) was included in EBITDA for such period, plus (ii)
write-downs/charges resulting from the adoption of Financial Accounting
Standards Board pronouncements that do not result in the expenditure of cash or
cash equivalents (including, without limitation, SFAS 121).
"Consolidated Net Income" means, with respect to Reorganized Stratosphere
for any period subsequent to the Effective Date, the aggregate of the net
income (loss) of Reorganized Stratosphere, Reorganized Gaming Corp. and any
other consolidated subsidiaries of Reorganized Stratosphere for such period, on
a consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded (i) any loss or any gain associated with the disposal of any
discontinued operation and any profit or any loss associated with the operation
of any discontinued operation, together with any related provision for taxes on
such discontinued operations; (ii) any extraordinary items, together with any
related provision for taxes on such extraordinary items; and (iii) the
cumulative effect of a change in accounting principles, together with any
related provision for taxes related to such changes in accounting principles.
"Construction Escrow Account" shall have the meaning set forth in Section
4.4 hereof.
"Construction Escrow Agent" means the company selected jointly by
Reorganized Stratosphere and Grand and approved by the Bankruptcy Court to act
as the disbursing agent for all funds held in the Construction Escrow Account
pursuant to the Construction Escrow Agreement.
"Construction Escrow Agreement" means the escrow agreement to be entered
into no later than the Effective Date by Reorganized Stratosphere, Grand, the
Indenture Trustee and the Construction Escrow Agent, which agreement shall set
forth the terms upon which, and the manner in which, funds shall be disbursed
from the Construction Escrow Account to fund completion of Phase II. The
Construction Escrow Agreement shall be substantially in the form filed with the
Bankruptcy Court as part of the Plan Supplement.
"Designated Agreements" shall have the meaning set forth in Section 9.2
hereof.
"Disclosure Statement" means the written disclosure statement that relates
to the Plan, as approved by the Bankruptcy Court pursuant to Section 1125 of
the Bankruptcy Code and Bankruptcy Rule 3017, as such disclosure statement may
be amended, modified or supplemented from time to time.
3
<PAGE> 9
"Distribution Record Date" means the date or dates established by the
Bankruptcy Court which shall be the record date or dates for determining the
holders of the Original First Mortgage Notes entitled to receive distributions
of Restated Notes, Class A Common Stock and Net Available Cash.
"Distributions" shall have the meaning set forth in Section 5.3(g) hereof.
"EBITDA" means, with respect to Reorganized Stratosphere for any period
subsequent to the Effective Date, Consolidated Net Income of Reorganized
Stratosphere, Reorganized Gaming Corp. and any other consolidated subsidiaries
of Reorganized Stratosphere, plus the following expenses incurred by
Reorganized Stratosphere, Reorganized Gaming Corp. and any other consolidated
subsidiaries of Reorganized Stratosphere (all determined in accordance with
GAAP) during any such period: (i) income taxes; (ii) interest (exclusive of
interest income); and (iii) depreciation and amortization; minus (iv) any
provision for income tax benefit recognized (in accordance with GAAP) during
any such period by Reorganized Stratosphere, Reorganized Gaming Corp. and any
other consolidated subsidiaries of Reorganized Stratosphere.
"Effective Date" means the last to occur of (a) the first Business Day
that is at least eleven (11) days after the Confirmation Date and on which no
stay of the Confirmation Order is in effect, and (b) the Business Day on
which all of the conditions set forth in Article 12 of the Plan shall have been
satisfied or waived.
"Effective Date Cash" means all cash and cash equivalents of Stratosphere
and Gaming Corp. on the Effective Date, excluding therefrom the sum of
$75,000,000 (consisting of $50,000,000 in proceeds from the sale of the Class B
Common Stock and $25,000,000 in proceeds from the sale of Restated Notes),
prior to distribution or reservation of any amounts under the Plan.
"GAAP" means generally accepted accounting principles, consistently
applied, (i) in accordance with the opinions, pronouncements, statements,
bulletins, guides and interpretations, as appropriate, of the Financial
Accounting Standards Board, the Accounting Principles Board and the American
Institute of Certified Public Accountants, or (ii) pursuant to such other
guidance by such entities as may be accepted and applied by a significant
segment of the accounting profession, and (iii) in each case as applicable to
the circumstances and as of the date of determination.
"Gaming Authorities" shall mean, collectively, the State of Nevada Gaming
Control Board, the State of Nevada Gaming Commission, and any other regulatory
agency having the authority to regulate the gaming activities of Stratosphere
and Grand.
"Gaming Corp." shall have the meaning set forth in the Recitals to this
Agreement.
"Grand" shall have the meaning set forth in the Preamble to this
Agreement.
4
<PAGE> 10
"Grand Subordinated Claim" means any and all indebtedness of Stratosphere
to Grand arising out of or evidenced by: (a) that certain Notes Completion
Guarantee in the original amount of $50,000,000 dated as of March 9, 1995; (b)
that certain Completion Guarantor Subordination Agreement dated as of March 9,
1995; (c) any and all subordinated notes issued to Grand by Stratosphere from
time to time; and (d) any other loan and security documents, including, but not
limited to debt instruments, evidencing, securing, or relating to such
obligations and claims.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the regulations promulgated thereunder.
"Indenture Trustee" means IBJ Schroder Bank and Trust Company, as
Successor Trustee to American National Bank Association, or such other
successor trustee under the Original First Mortgage Indenture or the Restated
First Mortgage Indenture, as applicable, that has combined capital and surplus
of at least $50,000,000 as set forth in its most recent annual report.
"Independent Committee" means a committee comprised of the disinterested
non-employee members of the Board of Directors of Grand.
"Initial Capital Expense Reserve" means an amount of cash to be segregated
by Stratosphere on the Effective Date for planned capital expenditures
(excluding the construction of Phase II) during the year following the
Effective Date, which amount shall be subject to approval by the Bankruptcy
Court as part of the Confirmation Hearing.
"Interest Expense Reserve" means an amount of cash to be segregated by
Stratosphere as of the Effective Date not to exceed the lesser of (i) the
aggregate amount of the first two (2) semi-annual interest payments on the
Restated Notes and (ii) an amount equal to Effective Date Cash minus Total
Restricted Cash (excluding the Interest Expense Reserve), which amount shall be
subject to approval by the Bankruptcy Court as part of the Confirmation
Hearing.
"Management Agreement" shall have the meaning set forth in Section 4.7
hereof.
"Minimum Working Capital Reserves" shall mean an amount of cash to be
segregated by Stratosphere as of the Effective Date to satisfy working capital
requirements to operate the business of Stratosphere and Gaming Corp., which
amount shall be subject to approval by the Bankruptcy Court as part of the
Confirmation Hearing.
"Net Available Cash" means the sum of Effective Date Cash, minus Total
Restricted Cash.
"Net Income" means, with respect to any person, the net income (loss) of
such person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with
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<PAGE> 11
any related provision for taxes on such gain (but not loss), realized in
connection with any asset sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions) and any disposition of securities
or extinguishment of indebtedness of such person or any of its consolidated
subsidiaries, and (ii) excluding any extraordinary gain (but not loss),
together with any related provision for taxes on such extraordinary gain (but
not loss).
"New Common Stock" means the authorized shares of common stock of
Reorganized Stratosphere, which shall consist of the Class A Common Stock and
the Class B Common Stock.
"Noteholders" means the holders of Stratosphere's 14-1/4% First Mortgage
Notes due 2002 With Contingent Interest in the aggregate original principal
amount of $203,000,000.
"Old Common Stock" means the shares of common stock, $0.01 par value, of
Stratosphere issued and outstanding immediately prior to the Effective Date,
and all options, warrants and similar rights, whether contractual or otherwise,
to acquire such shares of common stock, and all shares or other securities
convertible or otherwise exchangeable into such shares of common stock.
"Old Standby Equity Commitment" means that certain Standby Equity
Commitment between Grand and Stratosphere dated March 9, 1995.
"Original First Mortgage Indenture" means that certain Indenture dated as
of March 9, 1995 by and among Stratosphere, Gaming Corp. and IBJ Schroder Bank
and Trust Company, as Successor Trustee to American Bank National Association,
pursuant to which the Original First Mortgage Notes were issued by
Stratosphere.
"Original First Mortgage Notes" means Stratosphere's 14-1/4% First
Mortgage Notes due 2002 With Contingent Interest in the aggregate original
principal amount of $203,000,000.
"Petition Pleadings" means all Chapter 11 petitions, statements of
financial affairs, schedules of assets and liabilities, and any and all other
documents necessary to commence the Chapter 11 Cases.
"Phase II" shall mean Stratosphere's planned construction of additional
facilities, and improvements to existing facilities, at its resort complex
located in Las Vegas, Nevada, consisting of: (i) completion of construction of
a new guest room tower of approximately 1,000 bays, including the acquisition
of all necessary furniture, fixtures and equipment; (ii) completion of
recreation and swimming pool facilities; (iii) landscape and hardscape at areas
adjacent to the new guest tower, including facade upgrade of floors one through
three; (iv) landscape and fencing at site of proposed aquarium building; (v)
mechanical connection and piping from the existing Phase I central plant; (vi)
build-out
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<PAGE> 12
of Kids Quest facility, consisting of at least 12,500 square feet; and (vii)
renovation of existing resort facilities, including baggage storage, gift shop
and gift kiosk remodel, Sister's Coffee Shop remodel, tower queue remodel, and
porte cochere modifications.
"Phase II Budget" means the detailed budget of the estimated costs of
completing Phase II attached to this Agreement as Exhibit A, which has been
approved by Grand and Stratosphere.
"Phase II Completion Guarantee" shall have the meaning set forth in
Section 4.2 hereof.
"Plan" shall mean the Amended Plan of Reorganization filed by Stratosphere
and Gaming Corp. relating to the Chapter 11 Cases, either as filed with the
Bankruptcy Court or as it may be amended, supplemented or modified from time to
time, including all exhibits and schedules annexed thereto or referenced
therein and/or in the supplement thereto which is filed with the Bankruptcy
Court and which contains exhibits thereto.
"Plan Distributed Cash" shall mean the cash to be paid to the holders of
allowed claims in all classes pursuant to the Plan, excluding therefrom the Net
Available Cash.
"Plan Related Documents" means, collectively, the Plan, the Disclosure
Statement, this Agreement, the Restated First Mortgage Indenture and the
Management Agreement.
"Prior Agreement" means that certain Investment and Reorganization
Agreement dated as of January 24, 1997 between Stratosphere and Grand, which
Prior Agreement is amended and restated in its entirety by this Agreement as
set forth in Section 10.12 hereof.
"Reorganized Gaming Corp." means Stratosphere Gaming Corp., a Nevada
corporation, on and after the Effective Date.
"Reorganized Stratosphere" means Stratosphere Corporation, a Delaware
corporation, on and after the Effective Date.
"Restated First Mortgage Indenture" means the Amended and Restated
Indenture to be entered into by Reorganized Stratosphere, Reorganized Gaming
Corp., and the Indenture Trustee, under which the Restated First Mortgage Notes
shall be issued, which indenture shall be substantially in the form of the
indenture filed with the Bankruptcy Court as part of the Plan Supplement.
"Restated Notes" means the First Mortgage Notes of Reorganized
Stratosphere in the aggregate principal amount of $135,000,000 due seven years
after issuance, which First Mortgage Notes shall bear interest, payable in
cash, at the rate of 8-1/2% per annum for the initial 2 years following
issuance and at the rate of 12-1/2% per annum thereafter, and shall be issued
and distributed pursuant to the Plan on the Distribution Date in partial
exchange and substitution for the Original First Mortgage Notes and on a date
subsequent to the Effective Date in exchange for $25,000,000 in cash, and shall
be governed by the terms of the Restated First Mortgage Indenture contained in
the Plan Supplement.
7
<PAGE> 13
"Restricted Account" shall mean an interest bearing deposit account
established by Reorganized Stratosphere following the Effective Date into
which, in accordance with the Plan, all cash generated by the operations of
Reorganized Stratosphere following the Effective Date in excess of the cash
requirements necessary to operate the business, up to an aggregate amount equal
to the outstanding principal balance of the Restated Notes from time to time,
shall be deposited.
"Restricted Gaming Reserve" shall mean cash in the aggregate amount of
$7,000,000, to be segregate by Stratosphere or Gaming Corp., as the case may
be, as of the Effective Date to satisfy bankroll requirements.
"Restructuring" shall have the meaning set forth in the Recitals to this
Agreement.
"SEC" means the United States Securities and Exchange Commission and any
successor agency thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
regulations promulgated thereunder.
"Securities Litigation Claims" shall have the meaning set forth in the
Plan.
"Stratosphere" shall have the meaning set forth in the Preamble to this
Agreement.
"Termination Fee" shall have the meaning set forth in Section 6.4 hereof.
"Total Restricted Cash" means the aggregate of the Administrative Expense
Reserve, the Initial Capital Expense Reserve, the Minimum Working Capital
Reserve, the Plan Distributed Cash, the Interest Expense Reserve, the
Restricted Gaming Reserve and any other restricted cash amounts.
"Trailing Cash Flow Valuation" shall have the meaning set forth in Section
2.6(b) hereof.
In addition to the foregoing definitions, capitalized terms used as
defined terms but not defined herein shall have the respective meanings
provided in the Plan.
ARTICLE 2
CAPITAL STRUCTURE
Section 2.1 Capitalization. Upon consummation of the Plan, the
capitalization of Stratosphere shall be as follows:
(a) Class A Common. There shall be 4,000,000 shares of Class A Common Stock
issued and outstanding, all of which shares shall, in accordance with the Plan,
be issued to the Noteholders pro rata in accordance with their holding of
Original First Mortgage Notes on the Distribution Record Date. The Class A
Common Stock shall collectively,
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as a class, represent ten percent (10%) of the common equity and voting power
of Reorganized Stratosphere.
(b) Class B Common. There shall be 36,000,000 shares of Class B
Common Stock issued and outstanding, all of which shares shall, in
accordance with the Plan, be issued to Grand. Grand shall pay
$50,000,000 in cash for the Class B Common Stock, as described in
Article 3 of this Agreement. The issued and outstanding shares of
Class B Common Stock shall collectively, as a class, represent ninety
percent (90%) of the common equity and voting power of Reorganized
Stratosphere.
(c) Restated Notes. Reorganized Stratosphere will issue
$135,000,000 principal amount of Restated Notes, as follows: (i)
$110,000,000 principal amount of the Restated Notes shall, in
accordance with the Plan, be issued on the Effective Date to the
Noteholders pro rata in accordance with their holdings of Original
First Mortgage Notes on the Distribution Record Date; and (ii)
$25,000,000 principal amount of the Restated Notes shall, in
accordance with the plan, be sold for cash at par as described in
Section 2.4 of this Agreement.
Section 2.2 Cancellation of Old Common Stock. On the Effective
Date, the Old Common Stock shall be canceled and extinguished, and the
holders of the Old Common Stock shall not receive any equity or other interest
in Reorganized Stratosphere or any other consideration in exchange for
cancellation of the Old Common Stock.
Section 2.3 Cancellation of Original First Mortgage Notes. On the
Effective Date, the Original First Mortgage Notes shall be canceled and
extinguished in exchange for the Class A Common Stock, the Net Available Cash
and $110,000,000 aggregate principal amount of Restated Notes. Other than the
shares of Class A Common Stock, the Net Available Cash and $110,000,000
aggregate principal amount of Restated Notes to be issued pursuant to the Plan,
the holders of the Original First Mortgage Notes shall not receive any equity
or other interest in Reorganized Stratosphere or any other consideration in
exchange for cancellation of the Original First Mortgage Notes.
Section 2.4 Issuance of Remaining Restated Notes. The portion of the
Restated Notes not issued to holders of the Original First Mortgage Notes in
exchange for cancellation of the Original First Mortgage Notes, which portion
of the Restated Notes shall have an aggregate face amount of $25,000,000, shall
be sold at par as soon as practicable following the Effective Date, as follows:
(i) first, such Restated Notes will be offered to the holders of the Original
First Mortgage Notes as of the Distribution Record Date pro rata in accordance
with their respective holdings of Original First Mortgage Notes; (ii) second,
the unpurchased portion of such Restated Notes, if any, will be offered to
those holders of Original First Mortgage Notes making purchases of Restated
Notes pursuant to the preceding clause (i), pro rata in accordance with their
purchase of such remaining Restated Notes; and (iii) third, the unpurchased
portion of such Restated Notes, if any, will be purchased by Grand.
Notwithstanding the foregoing, the offer and sale of any such Restated Notes to
the holders of Original First Mortgage Notes shall be structured and conducted
so as to qualify for an exemption from the registration
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requirements of the Securities Act, and such offer and sale of Restated Notes
will be limited, to the extent appropriate, to those holders of Original First
Mortgage Notes that may be eligible and qualified to purchase Restated Notes
pursuant to such exception. Reorganized Stratosphere shall deposit the
proceeds of the sale of such Restated Notes into the Construction Escrow
Account immediately upon receipt.
Section 2.5 Reserve Accounts. In accordance with the Plan, and subject
to the terms and conditions set forth therein:
(a) On the Effective Date, Stratosphere shall deposit cash in amount
equal to the Interest Expense Reserve in an interest reserve account, and such
funds shall be available for interest payments during the first year following
issuance of the Restated Notes; provided, that the amount of cash so deposited
shall not exceed an amount equal to Effective Date Cash minus Total Restricted
Cash;
(b) On the Effective Date, the Net Available Cash, if any, shall be
distributed to the holders of Original Notes pro rata; and
(c) Following the Effective Date, Reorganized Stratosphere will
periodically deposit into the Restricted Account all cash generated by the
operations of Reorganized Stratosphere in excess of the Total Restricted Cash.
All interest earned on the Restricted Account will be retained, and the entire
balance of the Restricted Account will be applied to repayment of the principal
of the Restated Notes at maturity.
Section 2.6 Put/Call of Class A Common Stock.
(a) Commencing on the fifth anniversary of the Effective Date and
continuing for a period of thirty days thereafter, the holders of a majority of
the Class A Common Stock shall have the right to require Grand to purchase all,
but not less than all, of the shares of Class A Common Stock issued and
outstanding at such time, if any. Commencing on the fifth anniversary of the
Effective Date and continuing for a period of two (2) years thereafter, Grand,
or the holders of a majority of the Class B Common Stock, shall have the right
to require the holders of the Class A Common Stock to sell to Grand or its
designee all, but not less than all, of the shares of Class A Common Stock
issued and outstanding at such time.
(b) In the event that either Grand or the holders of the Class A
Common Stock shall exercise their respective rights pursuant to clause
(a) of this Section 2.6, the purchase and sale of Class A Common Stock shall be
at a price per share equal to the quotient of (i) ten percent (10%) of the
Trailing Cash Flow Valuation of Reorganized Stratosphere, divided by (ii) the
number of shares of Class A Common Stock issued and outstanding as of the
effective date of such purchase and sale. For purposes hereof, the phrase
"Trailing Cash Flow Valuation" shall mean an amount equal to seven (7) times
the Consolidated Cash Flow of Reorganized Stratosphere for the four fiscal
quarter periods ending on the last day of the fiscal quarter immediately
preceding the date of determination minus the aggregate amount of long-term
debt (net of cash in excess of restricted amounts, excluding the Interest
Expense Reserve) and capital lease obligations of Reorganized Stratosphere (on
a consolidated basis) as of the date of determination.
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(c) In the event that either Grand or the holders of the Class A Common
Stock shall exercise their respective rights pursuant to clause (a) of this
Section 2.6, Grand may, at its election and in its sole discretion, pay the
purchase price for such shares of Class A Common Stock either (i) in cash, (ii)
by delivery of common stock of Grand having a fair market value, based on the
average reported closing price of such Grand common stock over the ten trading
days immediately prior to the effective date of such transaction, equal to
104.167% of the purchase price for such shares of Class A Common Stock as
determined in accordance with clause (b) of this Section 2.6, or (iii) through
a combination of cash and Grand common stock as set forth in clauses (i) and
(ii) above.
ARTICLE 3
GRAND INVESTMENT
Section 3.1 Class B Common Stock.
(a) Subject to the terms and conditions of this Agreement, on the
Effective Date, Grand shall purchase 36,000,000 shares of Class B Common Stock,
which shall constitute all of the issued and outstanding Class B Common Stock
as of the Effective Date, for an aggregate purchase price of $50,000,000.
Subject to the terms and conditions of this Agreement and further subject to
compliance with applicable laws and regulations, no later than the Closing
Date, Grand shall remit $50,000,000 to the Construction Escrow Account, which
shall represent the purchase price for the shares of Class B Common Stock to be
purchased by Grand pursuant to this Section 3.1(a). Grand may at its sole
discretion deposit such purchase price in the Construction Escrow Account prior
to the Closing Date, and such deposited amounts shall be used to commence the
construction of Phase II in accordance with the Construction Escrow Agreement.
Section 3.2 Restated Notes Purchase. Subject to the terms and conditions
of this Agreement, Grand shall purchase at par any and all Restated Notes that
are not purchased by holders of Original First Mortgage Notes in accordance
with Section 2.4 hereof, up to an aggregate principal face amount and purchase
price of $25,000,000. Grand shall not be required to place any funds in escrow
or post any bond or other security in respect of its obligation to purchase
such Restated Notes.
Section 3.3 Payment of Purchase Price. The purchase price for all shares
of Class B Common Stock and any Restated Notes purchased by Grand pursuant to
Section 3.1 or 3.2 hereof shall be paid by wire transfer of immediately
available funds to the Construction Escrow Account. The terms and manner in
which funds may be released from the Construction Escrow Account shall be set
forth in the Construction Escrow Agreement which shall be in form and substance
reasonably acceptable to Grand and Stratosphere and which otherwise shall be
consistent with the description set forth in Section 4.4 of this Agreement.
Section 3.4 Cancellation of Existing Grand Indebtedness and Other
Consideration. As additional consideration for the Class B Common Stock to be
issued to Grand on the Effective Date, (i) Grand shall
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agree to purchase all unpurchased Restated Notes as set forth in Section 3.2,
and (ii) Grand shall provide the Phase II Completion Guarantee as described in
Section 4.2. In addition, to facilitate the Restructuring, Grand shall consent
and agree to the subordination of the Grand Subordinated Claims in the manner
provided in the Plan.
ARTICLE 4
ADDITIONAL AGREEMENTS
Section 4.1 Discharge of Old Standby Equity Commitment. No later than
the Confirmation Date, the Old Standby Equity Commitment shall be rejected and
terminated and all obligations and liabilities (if any) of Grand thereunder
shall be permanently released and discharged in full, and Grand thereafter
shall have no further liability or obligation to make any further advances to
or investments in Stratosphere, other than in connection with the sale of the
Restated Notes as described in Article 3 and pursuant to the Phase II
Completion Guarantee as described in Section 4.2 hereof. Grand shall waive any
claim for damages arising out of or relating to the rejection and termination
of the Old Standby Equity Commitment.
Section 4.2 Phase II Completion Guarantee. On the Closing Date, Grand
shall enter into a guarantee agreement (the "Phase II Completion Guarantee") in
favor of the holders of the Restated Notes pursuant to which Grand shall
guarantee the payment of all costs necessary for the completion of Phase II, up
to a maximum of $25,000,000 in the aggregate (subject to the second sentence of
this Section 4.2), over and above the proceeds of the sale of the Class B
Common Stock and the Restated Notes deposited in the Construction Escrow
Account. So long as Grand does not make or cause to be made any material
changes to the plans or specifications for Phase II which result in increases
in the total amount of the Phase II Budget, Grand's obligations under the Phase
II Completion Guarantee shall be limited to $25,000,000 in the aggregate;
provided, that such $25,000,000 limitation shall be increased by the amount of
any increases in the total amount of the Phase II Budget that may be made or
caused to have been made by Grand. The obligations of Grand under the Phase II
Completion Guarantee shall consist of the following: (a) to cause all costs of
constructing and completing Phase II, including, without limitation, the costs
of all labor, materials, supplies, equipment, permits and consulting costs,
including but not limited to fees of architects and engineers, related thereto,
to be paid and satisfied as the same shall become due; (b) to cause any and all
costs and cost overruns of constructing and completing Phase II that are not
paid by Stratosphere or Gaming Corp. to be paid, funded and satisfied; and (c)
to cause all costs relating to Phase II and any related real property,
including without limitation the payment of taxes, assessments, utilities,
insurance and maintenance expenses, to be funded, paid and satisfied prior to
delinquency. Notwithstanding the foregoing, Grand shall only be liable under
the Phase II Completion Guarantee to the extent that there are not sufficient
funds on deposit in the Construction Escrow Account to finance completion of
Phase II. The Phase II Completion Guarantee shall be in form and substance
consistent with this Agreement and reasonably acceptable to Grand and shall
specifically provide that in no event shall Grand incur, directly or
indirectly, any obligation, contingent or otherwise, for payment of the
principal amount of the Restated Notes. Grand's obligations under the
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Phase II Completion Guarantee shall be suspended during any force majeure event
which makes it physically impossible or unlawful to complete Phase II,
including without limitation: strikes, lockouts or other labor trouble; fire or
other casualty; governmental preemption in connection with a national
emergency; breakdown, accident or other acts of God; acts of war, insurrection,
civil strife and commotion; and any statute, rule, order or regulation of any
legislature or governmental agency or any department or subdivision thereof.
The Phase II Completion Guarantee shall provide that, if and to the extent that
there are not sufficient funds on deposit in the Construction Escrow Account to
finance the completion of Phase II, Grand shall pay into the Construction
Escrow Account, within five (5) business days after receipt of notice thereof,
an amount equal to any costs incurred in connection with the completion of
Phase II which are expended for items included in the Phase II Budget.
Section 4.3 Completion Guarantee Repayment Obligations and Subordination.
Funds made available by Grand under the Phase II Completion Guarantee shall
constitute loans to Reorganized Stratosphere and shall (i) be evidenced by
promissory notes bearing interest at the same rate as the Restated Notes, (ii)
be subordinated to the full payment in cash or in kind, as applicable, of all
principal, premium (if any), interest and other payments under the Restated
Notes, and (iii) mature after the maturity of the Restated Notes. Stratosphere
may repay the principal of such subordinated loans at any time subsequent to
the repayment in full of the Restated Notes, provided that Stratosphere shall
repay the principal of such subordinated loans not later than one year
following repayment in full of the Restated Notes. Interest on such
subordinated loans may be paid only if no event of default shall exist with
respect to the Restated Notes. Payments of interest and principal on such
subordinated loans shall otherwise be payable to Grand to the extent permitted
by the terms of the Restated First Mortgage Indenture.
Section 4.4 Construction Escrow Account. Reorganized Stratosphere shall
establish an escrow account (the "Construction Escrow Account") and shall
deposit in the Construction Escrow Account, immediately upon receipt, all
proceeds of the sale of the Class B Common Stock and the Restated Notes which
shall equal not less than $75,000,000 in the aggregate. The funds held in the
Construction Escrow Account shall be beneficially owned by Reorganized
Stratosphere, and Reorganized Stratosphere shall grant to the Indenture
Trustee, for the benefit of the holders of the Restated First Mortgage Notes, a
security interest in all of Reorganized Stratosphere's right, title and
interest in the Construction Escrow Account. Reorganized Stratosphere, Grand,
the Indenture Trustee and the Construction Escrow Agent shall enter into the
Construction Escrow Agreement which shall set forth the terms upon which, and
the manner in which, funds shall be disbursed from the Construction Escrow
Account to fund completion of Phase II. The terms of the Construction Escrow
Account shall provide for operation thereof in a manner consistent with
customary construction terms and escrow financing arrangements. The
Construction Escrow Agent shall be a party reasonably acceptable to each of
Grand and Reorganized Stratosphere.
Section 4.5 Amendments to Budget. Any amendments to the Phase II Budget
must be approved in writing by Grand and the Construction Escrow Agent.
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Section 4.6 Management Agreement. Effective on the Closing Date,
Reorganized Stratosphere and Grand shall enter into a management agreement (the
"Management Agreement") pursuant to which Grand shall manage the construction
of Phase II and the day-to-day operations of Reorganized Stratosphere. The
Management Agreement shall have an initial two-year term commencing on the
Closing Date. Grand shall receive a management fee in an amount to be
determined by the Bankruptcy Court as part of confirmation of the Plan;
provided, however, that Reorganized Stratosphere may not make any payments of
management fees to Grand during the continuance of a default in the payment of
principal, premium (if any) or interest under the Restated Notes; provided,
further, that any such unpaid management fees shall be paid by Reorganized
Stratosphere to Grand immediately upon the cure of such payment default.
During the term of the Management Agreement, no other fees, charges, payments
or expense reimbursement shall be paid by Reorganized Stratosphere to Grand in
respect of the services which are the subject of the Management Agreement.
ARTICLE 5
CLOSING
Section 5.1 The Closing. Subject to the terms and conditions of the
Agreement, on the Closing Date: (i) all of the Old Common Stock shall be
extinguished and canceled; (ii) Grand shall pay to Reorganized Stratosphere the
purchase price for the Class B Common Stock to be purchased by Grand pursuant
to Section 3.1 hereof, and Grand shall receive from Reorganized Stratosphere
the certificates representing such shares of Class B Common Stock; (iii) the
shares of Class A Common Stock and a portion of the Restated Notes having an
aggregate face amount of $110,000,000 shall be issued to the holders of the
Original First Mortgage Notes pursuant to the Plan as described in Article 2 of
this Agreement; and (iv) a notice of effectiveness of the Plan shall be filed
and served. The Closing shall occur at the offices of Gordon & Silver, Ltd.,
Fourteenth Floor, 3800 Howard Hughes Parkway, Las Vegas, Nevada 89109, or at
such other place as the parties mutually agree, on such date and at such time
as the parties may agree.
Section 5.2 Closing Deliveries.
(a) At the Closing, simultaneous with or prior to the delivery by
Reorganized Stratosphere to Grand of the Class B Common Stock to be acquired by
Grand pursuant to Section 3.1, Grand shall deliver to Reorganized Stratosphere
the following:
(i) a certificate, dated the Closing Date, from an officer of
Grand to the effect that the conditions set forth in Section 6.2
which have not been waived in writing by Stratosphere have been
satisfied; and
(ii) such other documents as may be reasonably requested by
Stratosphere.
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(b) At the Closing, simultaneous with or prior to the delivery by
Grand of the purchase price for the Class B Common Stock to be acquired by Grand
pursuant to Section 3.1, Reorganized Stratosphere shall deliver to Grand the
following:
(i) duly executed certificates evidencing all Class B Common
Stock to be acquired by Grand pursuant to Section 3.1 of this
Agreement;
(ii) the Plan and Confirmation Order, which order shall be
certified by the clerk of the Bankruptcy Court;
(iii) evidence of the filing with the SEC and any applicable
state securities regulatory authorities of any documents or other
filings required pursuant to the Securities Act and any applicable
state securities or blue sky laws with respect to the issuance of the
Class A Common Stock, the Class B Common Stock, the Restated Notes
and any other securities of Reorganized Stratosphere offered under
the Plan;
(iv) a certificate, dated as of the Closing Date, from an
officer of Reorganized Stratosphere to the effect that the conditions
set forth in Section 6.1 which have not been waived in writing by
Grand have been satisfied;
(v) the legal opinion of Gordon & Silver, Ltd., counsel to
Stratosphere, addressed to Grand and dated the Closing Date, and
subject to customary qualifications and assumptions, as to matters
customary for transactions of the type contemplated hereby and as to
such other matters as Grand may reasonably request, including but not
limited to the following: (a) that the Class B Common Stock issued
to Grand on the Closing Date is duly authorized, fully paid and
nonassessable; (b) that this Agreement and the other agreements
executed and delivered by Stratosphere to Grand pursuant to the Plan
are duly authorized and enforceable; (c) that the transactions
contemplated by this Agreement, and the issuance of the Class B
Common Stock to Grand, are not in violation of any applicable laws
(including the Securities Act); and (d) such other matters as may be
reasonably requested by Grand; provided, that Gordon & Silver, Ltd.
may rely upon the opinion of Maslon Edelman Borman & Brand (or such
other securities counsel as may be retained by Stratosphere and
approved by the Bankruptcy Court) as to any matters related to
federal and/or state securities law; and
(vi) such other documents as may be reasonably requested by
Grand.
Section 5.3 Actions With Respect to the Plan and the Restructuring.
Stratosphere shall:
(a) As promptly as practicable after the date hereof, prepare, in
accordance with applicable law and with the reasonable cooperation of Grand, a
disclosure statement, including the forms of any and all documents required to
be filed as exhibits thereto (the "Disclosure Statement") and all related
documents, in each case consistent
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with the terms hereof (including those contained in the Plan) and otherwise
acceptable to Grand, necessary for the solicitation of acceptances of the Plan
under the Bankruptcy Code;
(b) At the earliest practicable date, make all filings with applicable
governmental authorities as may be required by applicable law on a timely
basis, including, without limitation, the registration or qualification under
any applicable state securities and "blue sky" laws, of the Class A Common
Stock, the Class B Common Stock, the Restated Notes and any other securities of
Reorganized Stratosphere offered under the Plan;
(c) File with the Bankruptcy Court the Disclosure Statement in the
Chapter 11 Cases under the Bankruptcy Code, and file the appropriate pleadings
to obtain hearing dates for the approval of the Disclosure Statement and the
Plan in each case as promptly as possible;
(d) Request the earliest practicable date for consideration and
approval of the Disclosure Statement, time for acceptance or rejection of the
Plan by impaired creditors, and confirmation of the Plan and use its best
efforts to obtain confirmation of the Plan as promptly as practicable following
the Petition Date;
(e) Use its best efforts to obtain confirmation of the Plan, with only
such changes or modifications thereto as are acceptable to Grand, and use its
best efforts to obtain the dismissal of all appeals, applications and motions
for reconsideration with respect to the Disclosure Statement, Plan, other order
or ruling or order confirming the Plan, as promptly as practicable;
(f) Use its best efforts to obtain all necessary approvals to
consummation of the Restructuring from all Gaming Authorities and to comply
with all applicable orders, rules, and regulations thereof;
(g) Subject to the terms and conditions of the confirmed Plan, use its
best efforts to cause the distributions to be made as contemplated by the
confirmed Plan (the "Distributions") as promptly as practicable following the
Confirmation Date; and
(h) To facilitate the submission of Alternative Transaction Proposals
pursuant to Section 6.3 hereof, Stratosphere shall establish and maintain a due
diligence room which shall contain such documents and other information
necessary and appropriate to facilitate the efforts of third parties to
formulate Alternative Transaction Proposals.
ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 Conditions Precedent to Grand's Obligations. The Closing and
Grand's obligations hereunder, including Grand's obligation to purchase any
Class B
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Common Stock or Restated Notes, shall be subject to the satisfaction, in all
material respects, as of the Closing Date, of each of the following conditions:
(a) Compliance by Stratosphere. Stratosphere shall have performed and
complied with all of its material covenants and other material obligations under
this Agreement, the Restructuring Agreement and the Plan Related Documents.
Stratosphere shall not be in default of its obligations under this Agreement or
any of the Plan Related Documents.
(b) Proceedings Relating to the Chapter 11 Cases. In connection with
the proceedings in the Chapter 11 Cases:
(i) There shall not have been timely filed with the Bankruptcy
Court in the Chapter 11 Cases any Claims for environmental expenses or
liabilities in excess of $1,000,000 in the aggregate (unless settled prior
to the Confirmation Date for an amount not exceeding $1,000,000 in the
aggregate).
(ii) No Trustee (as such term is defined under the Bankruptcy
Code) shall have been appointed in the Chapter 11 Cases.
(iii) The Chapter 11 Cases shall not have been converted to a
liquidation case under Chapter 7 of the Bankruptcy Code.
(iv) Stratosphere shall have sufficient cash on the Closing Date
to make all cash payments required to be made on the Closing Date pursuant
to the Plan.
(v) All claims of creditors, secured or unsecured, and equity
holders shall be treated consistent with the terms of the Plan or as
otherwise satisfactory to Grand.
(vi) The Bankruptcy Court shall have entered an order approving
Sections 6.3 and 6.4 of this Agreement.
(c) Plan. A Confirmation Order and any other orders by the Bankruptcy
Court necessary to confirm the Plan or implement the Confirmation Order and
approve the Plan Related Documents, any documents related hereto and the
transactions contemplated hereby shall be entered, each of which order or orders
shall be a final order acceptable in form and substance to Grand and its counsel
in all material respects. The Plan Related Documents and all other documents
contained in the Plan Supplement shall be in the form approved by Grand for
filing by Stratosphere, with such modifications or amendments as are consistent
with this Agreement and the Plan and are acceptable in form and substance to
Grand. The Plan shall provide for the satisfaction or extinguishment of all
claims against Stratosphere in a manner satisfactory to Grand.
(d) Rejection of Old Standby Equity Commitment. All obligations under
and in connection with the Old Standby Equity Commitment shall be rejected and
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permanently discharged and released in full pursuant to the Plan and the
Confirmation Order.
(e) Waivers, Consents and Opinions. Grand shall have received all
necessary waivers, consents, approvals and opinions required under its existing
debt instruments to permit Grand's consummation of the Restructuring as
described herein.
(f) Fairness Opinion. Grand shall have received a favorable opinion from
a nationally recognized investment banking firm, which opinion shall be in form
and substance reasonably acceptable to Grand's board of directors and to the
Independent Committee, concerning the fairness to Grand and its shareholders
from a financial point of view of the transactions contemplated by this
Agreement.
(g) Capitalization. As of the Closing Date, no shares of common stock or
other capital stock, options, warrants or other similar rights of Reorganized
Stratosphere shall be issued and outstanding or reserved for issuance, other
than the shares of Class A Common Stock to be issued to holders of Original
First Mortgage Notes in accordance with the Plan and the shares of Class B
Common Stock to be issued to Grand pursuant to the Plan as described in Section
3.1. When issued in accordance with this Agreement and the Plan, all
outstanding shares of Class A Common Stock and Class B Common Stock shall have
been duly and validly issued and shall be fully paid and nonassessable.
(h) No Prohibition of Transaction. There shall not be in force any order,
decree or ruling by any court or governmental body having jurisdiction, or any
threatened or pending complaint of a governmental body or any person praying
for an order, decree or ruling of a court restraining or enjoining the
consummation of or rendering illegal the transactions contemplated by this
Agreement, and there shall not be in force any such order or decree (including
any injunction or temporary restraining order granted pursuant to a complaint
filed under the federal antitrust laws); provided, however, that nothing in
this Agreement shall require Stratosphere or Grand to seek a stay pending
appeal of any such injunction, decree or order other than a temporary
restraining order.
(i) Material Adverse Change. There shall not have occurred, directly or
indirectly, after the date hereof and before the Closing Date any material
adverse change in Stratosphere's condition (financial or otherwise), business,
assets, liabilities, properties, prospects, results of operations or relations
with employees or suppliers.
(j) HSR Act. Stratosphere shall have complied with the HSR Act, if such
compliance is required. Neither the United States Department of Justice nor
the Federal Trade Commission shall have threatened or taken any action to
prohibit or enjoin the transactions contemplated by this Agreement which has
not been terminated or withdrawn.
(k) Securities Filings. Stratosphere shall have obtained all necessary
approvals and qualifications under applicable state securities and "blue sky"
laws to the
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issuance of the Class A Common Stock, the Class B Common Stock and/or the
Restated Notes as contemplated hereby and by the Plan, and neither the SEC nor
any similar securities commission or regulatory authority of any state or other
jurisdiction shall have issued any order which would have the effect of
preventing the issuance or the trading of the Class A Common Stock, the Class B
Common Stock and/or the Restated Notes.
(l) Regulatory Approvals. Stratosphere shall have received all regulatory
approvals, including without limitation all approvals by the Gaming
Authorities, which shall have become final and nonappealable or any period of
objection by regulatory authorities shall have expired, as applicable, and all
other material approvals, permits, authorizations, consents, licenses and
agreements from other third parties that are necessary or appropriate to permit
the transactions contemplated hereby and by the Plan and any related agreements
and to permit Stratosphere to carry on its business after the Closing Date in a
manner consistent in all material respects with the manner in which it was
carried on prior to the Closing Date (collectively, the "Approvals"), which
Approvals shall not contain any condition or restriction that materially
impairs Stratosphere's ability to carry on its business in such manner.
(m) Filings and Service. None of the Plan Related Documents shall have
been modified in any respect or withdrawn without the prior consent of Grand.
(n) Force Majeure. Since the date hereof, there shall have occurred no
outbreak or escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions or
other adverse change in the financing markets that impairs (or could reasonably
be expected to impair) in any material respect Stratosphere's ability to carry
on its business in a manner consistent in all material respects with prior
practice, or impairs (or could reasonably be expected to impair) in any
material respect Grand's ability to realize the intended benefits and value of
this Agreement or any related agreement.
(o) Representations and Warranties. All representations and warranties of
Stratosphere and Reorganized Stratosphere set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Effective Date.
The foregoing conditions contained in this Section 6.1 are intended solely for
the benefit of Grand. Grand shall at all times have the right to waive any
condition. All approvals given by Grand under this Section 6.1 shall be in
writing. The waiver by Grand of any condition shall not relieve any other
party of any liability or obligation with respect to any covenant or agreement
set forth herein.
Section 6.2 Conditions Precedent to Stratosphere's Obligations. The
Closing and the obligations of Stratosphere and Reorganized Stratosphere
hereunder shall be subject to the satisfaction, in all material respects, as of
the Closing Date, of each of the following conditions:
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(a) Compliance by Grand. The representations and warranties made by Grand
in this Agreement shall be true and accurate in all material respects on the
date hereof and on and as of the Closing Date with same effect as though such
representations and warranties had been given on and as of the Closing Date.
Grand shall have performed or complied in all material respects with all of its
covenants and other obligations under this Agreement and under the Plan which
are to be performed or complied with by it prior to or on the Closing Date.
(b) Proceedings Relating to the Chapter 11 Cases. A Confirmation Order
and any other orders by the Bankruptcy Court necessary to confirm the Plan and
approve this Agreement, any documents related hereto and the transactions
contemplated hereby shall be entered, each of which order or orders shall be a
Final Order reasonably acceptable in form and substance to Stratosphere and its
counsel.
(c) Proceedings Relating to the Closing. All agreements, documents and
instruments contemplated by this Agreement to be executed and delivered by
Grand shall have been duly executed by Grand and be ready for delivery upon
consummation of the transactions contemplated by this Agreement, and Grand
shall have paid the purchase price for the Class B Common Stock to be purchased
by Grand pursuant to Section 3.1.
(d) No Prohibition of Transaction. There shall not be in force any order,
decree or ruling by any court or governmental body having jurisdiction, or any
threatened or pending complaint of a governmental body or any person praying
for an order, decree or ruling of a court restraining or enjoining the
consummation of or rendering illegal the transactions contemplated by this
Agreement, and there shall not be in force any such order or decree (including
any injunction or temporary restraining order granted pursuant to a complaint
filed under the federal antitrust laws); provided, however, that nothing in
this Agreement shall require Stratosphere or Grand to seek a stay pending
appeal of any such injunction, decree or order other than a temporary
restraining order.
(e) Regulatory Approvals. Grand shall have received all Approvals, which
Approvals shall have become final and nonappealable or any period of objection
by regulatory authorities shall have expired, as applicable.
The foregoing conditions contained in this Section 6.2 are intended solely for
the benefit of Stratosphere and Reorganized Stratosphere. Stratosphere and
Reorganized Stratosphere shall at all times have the right to waive any
condition. All approvals given by Stratosphere or Reorganized Stratosphere
under this Section 6.2 shall be in writing. The waiver by Stratosphere or
Reorganized Stratosphere of any condition shall not relieve Grand of any
liability or obligation of Grand with respect to any representation, warranty,
covenant, or agreement set forth herein.
Section 6.3 Alternative Transactions.
(a) During the ninety (90) day period commencing upon the date the Plan
and this Agreement are filed with the Bankruptcy Court (the "Proposal Period"),
Stratosphere shall actively solicit or initiate inquiries or proposals from,
and engage in
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<PAGE> 26
discussions or negotiations with, and provide information to, any person
regarding an investment in and financial restructuring of Stratosphere in lieu
of the transactions contemplated by this Agreement (each an "Alternative
Transaction Proposal"). Stratosphere shall notify Grand in writing within two
(2) business days of the receipt of any Alternative Transaction Proposal,
whether written or oral, which notice shall identify the parties to, and set
forth in reasonable detail the terms and conditions of, such Alternative
Transaction Proposal. Subject to the provisions of Section 6.4 below,
Stratosphere may accept any such Alternative Transaction Proposal received
during the Proposal Period as hereinafter provided, if and only if: (i) such
Alternative Transaction Proposal provides for economic terms and conditions
more favorable to Stratosphere than those provided by the Restructuring as
described in this Agreement and the Plan; (ii) such Alternative Transaction
Proposal is in writing and in form and content sufficient to constitute a
legally binding and enforceable agreement of the party making such Alternative
Transaction Proposal upon acceptance by Stratosphere; (iii) such Alternative
Transaction Proposal is not subject to receipt of third-party financing by, or
completion of due diligence to the satisfaction of, the party making such
Alternative Transaction Proposal, or to other conditions materially different
than those provided hereunder; (iv) Stratosphere notifies Grand in writing
within ten (10) days of receipt of such Alternative Transaction Proposal that
Stratosphere intends to accept such Alternative Transaction; (v) such
Alternative Transaction Proposal is accompanied by a cash deposit of at least
$2,000,000, which deposit shall be held by Stratosphere pending the acceptance
or rejection of such proposal pursuant to this Section 6.3; and (vi) Grand does
not, within ten (10) days after receipt of notice that Stratosphere intends to
accept such Alternative Transaction Proposal (the "Acceptance Notice"), submit
to Stratosphere in writing a competing restructuring proposal that provides for
economic terms and conditions more favorable to Stratosphere than the terms and
conditions of such Alternative Transaction Proposal, which competing
restructuring proposal, if made by a third party as an Alternative Transaction
Proposal, would meet the requirements of (ii) and (iii) above (a "Grand
Competing Proposal"); provided, that Stratosphere may extend the Proposal
Period by up to thirty (30) days if, at the expiration of the initial Proposal
Period, Stratosphere shall be actively engaged in negotiations that
Stratosphere's board of directors reasonably and in good faith believes will
result in the submission of an Alternative Transaction Proposal and
Stratosphere notifies Grand in writing of such extension not less than ten (10)
days prior to the expiration of such initial Proposal Period. If Grand makes a
Grand Competing Proposal as provided above, such Grand Competing Proposal shall
be deemed accepted by Stratosphere, subject to the provisions of this Section
6.3(a) and subject further to the right to submit or receive higher and better
proposals as part of the Confirmation Hearing, and the terms and conditions of
such Grand Competing Proposal shall be implemented through the Plan as
contemplated herein, with appropriate amendments to reflect such terms and
conditions. If Grand does not submit a Grand Competing Proposal within the ten
(10) day period provided above, Stratosphere may accept the Alternative
Transaction Proposal which was the subject of the Acceptance Notice, but only
if such Alternative Transaction Proposal is accepted in writing, with a copy of
such acceptance provided to Grand as notice of such acceptance, within three
(3) days after the expiration of such ten (10) day period. Any material change
in the terms and conditions of an Alternative Transaction Proposal delivered to
Grand shall be deemed to constitute the receipt of a new Alternative
Transaction Proposal which may be accepted
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<PAGE> 27
only upon compliance with all of the provisions of this Section 6.3(a). Upon
acceptance by Stratosphere of an Alternative Transaction Proposal in accordance
with this Section 6.3(a), this Agreement, subject to the provisions of Section
6.4 below, shall terminate. For purposes of this Section 6.3, a restructuring
proposal shall be deemed to contain economic terms and conditions more
favorable to Stratosphere only if the board of directors of Stratosphere
(excluding any directors affiliated with Grand or any directors who are
otherwise not disinterested with respect to such determination) determines in
good faith, based on the advice of an independent financial advisor, that such
proposal provides for aggregate consideration to Stratosphere, Gaming Corp. and
their respective creditors in an amount greater than would be provided by the
proposal to which such proposal is being compared. Any dispute among
Stratosphere, Grand and/or any third party regarding the relative economics of
any competing proposals shall be submitted by Stratosphere to the Bankruptcy
Court for prompt resolution. If an Alternative Transaction Proposal is
accepted by Stratosphere in accordance with the terms hereof, the Plan shall be
modified accordingly to reflect the terms and conditions thereof.
(b) Other than as expressly permitted by Section 6.3(a), Stratosphere may
not accept, consider, entertain or negotiate, or enter into or consummate any
agreement in furtherance of, any Alternative Transaction Proposal.
Section 6.4 Termination Fee. If this Agreement is terminated pursuant to
Section 6.3, or if a competing plan of reorganization supported by a party
other than Grand (excluding affiliates of Grand) is confirmed by the Bankruptcy
Court and Grand has not breached any of its obligations under this Agreement in
any material respect, then Stratosphere shall pay to Grand a termination fee in
the amount of $2,000,000, subject to approval by the Bankruptcy Court prior to
the actual payment thereof after a review of the reasonableness of Grand's
out-of-pocket fees, costs and expenses (including, without limitation, all
legal and professional fees and costs) incurred in connection with the
Restructuring (the "Termination Fee"). Within 15 days following the execution
of this Agreement, Stratosphere shall request that the Bankruptcy Court approve
the provisions of Sections 6.3 and 6.4 of this Agreement. Stratosphere and
Gaming Corp. shall not be entitled to accept an Alternative Transaction
Proposal except in accordance with Sections 6.3 and 6.4 of this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF STRATOSPHERE
As an inducement to Grand to enter into this Agreement, Stratosphere
hereby represents and warrants to Grand, as follows:
Section 7.1 Due Incorporation, Etc. Stratosphere is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own or lease and operate
its properties and to carry on its business as now conducted except where the
failure to be so organized, existing and in good standing, or to have such
power and authority would not individually or in the aggregate have a material
adverse effect on the business or financial condition of
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<PAGE> 28
Stratosphere. Stratosphere is duly qualified or licensed to do business as a
foreign corporation in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or license necessary, except for such jurisdictions
where the failure so to qualify or be licensed would not have a material
adverse effect on the business or financial condition of Stratosphere.
Section 7.2 Capitalization. Immediately following the Closing, the only
shares of capital stock of Reorganized Stratosphere which shall be issued and
outstanding or reserved for issuance shall be the shares of Class A Common
Stock to be issued to holders of Original First Mortgage Notes in accordance
with the Plan and the shares of Class B Common Stock to be issued to Grand
pursuant to the Plan as described in Section 3.1. Immediately following the
Closing, there shall not be any subscriptions, options, warrants, calls,
rights, convertible securities or other agreements or commitments of any
character obligating Reorganized Stratosphere to issue, transfer or sell any
of its securities, nor will there be any rights to receive dividends or other
distributions in respect of any such securities.
Section 7.3 No Violation of Agreements, Etc. Subject to entry of the
Confirmation Order, the execution, delivery and performance of this Agreement
by Stratosphere, and of the agreements and other documents herein contemplated
to be executed by Stratosphere, and the consummation of the transactions
contemplated hereby and thereby, will not result in any violation of, or
constitute a default by Stratosphere under, or be in conflict with any term of,
its existing charter documents or bylaws, or any material contract, agreement,
instrument, judgment, decree, order, rule, statute or regulation to which
Stratosphere is a party or which is otherwise applicable to Stratosphere,
except as may be otherwise rejected or modified by a Bankruptcy Court order.
Section 7.4 Due Authorization, Execution and Delivery. This Agreement
has been, and the agreements and other documents herein contemplated to be
executed by Stratosphere will have been by the Closing Date, duly authorized by
all necessary corporate action on the part of Stratosphere. This Agreement has
been duly executed and delivered by a duly authorized signatory of Stratosphere
and constitutes, and such agreements and other documents will at the Closing
constitute, valid and binding obligations of Stratosphere, enforceable against
Stratosphere in accordance with their respective terms.
Section 7.5 Legal Actions. Except for matters raised in connection with
the Chapter 11 Cases of which Grand has received notice, as of the date of this
Agreement, there are no legal or governmental actions, claims, suits,
proceedings or investigations pending against Stratosphere which have not been
disclosed or referred to in the Plan or any schedules thereto that would
prevent the transactions contemplated by this Agreement and, to the best
knowledge of Stratosphere, no such proceedings are threatened or contemplated
by governmental authorities or others.
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<PAGE> 29
Section 7.6 Title to and Condition of Properties. Except (i) such
defects of title or liens as are immaterial in the aggregate to the business of
Stratosphere, (ii) liens arising under the Restated First Mortgage Indenture
and (iii) as contemplated or created by the Plan, as of the Closing Date,
Stratosphere will have good and marketable title to all the real properties
and other assets (tangible, intangible or mixed) it purports to own, free and
clear of all liens, and will enjoy peaceful and undisturbed possession under
all leases to which it is a party as lessee, except for such leases that, in
the aggregate, are immaterial to the business of Stratosphere .
Section 7.7 ERISA Plans. Except as set forth in Schedule 7.7,
Stratosphere is not a party to or participant in any defined benefit plan or
defined contribution plan governed by the Employee Retirement Income Security
Act of 1974, as amended, and any liabilities of Stratosphere under any such
plan now or heretofore in effect are fully funded or otherwise adequately
provided for.
Section 7.8 Employees. Except for the agreement with the local
culinary union, none of the employees of Stratosphere are unionized. There are
no pending, unresolved labor grievances or employment discrimination claims of
which Stratosphere has received actual notice to which Stratosphere is a party
involving the operation of its business or assets, which if resolved adversely
to Stratosphere would, either individually or in the aggregate, have a material
adverse effect on the business, operations or financial condition of
Stratosphere.
Section 7.9 Commission or Broker Fees. Stratosphere has dealt with no
person entitled to any commission, finder's fee or other broker's, finder's or
intermediary's compensation in connection with the transactions contemplated by
this Agreement.
Section 7.10 Full Disclosure. Neither (i) the Disclosure Statement as
filed by Stratosphere in the Chapter 11 Cases, nor (ii) any further or amended
Disclosure Statement, as of the date filed with the Bankruptcy Court, nor (iii)
the final Disclosure Statement in the form distributed to creditors of
Stratosphere in connection with final approval of the Plan, as of the date so
distributed and as of the Closing Date, nor (iv) this Agreement nor any
document contemplated hereby or thereby or furnished by or on behalf of
Stratosphere in connection with the negotiation and the sale of the Class A
Common Stock, the Class B Common Stock, and/or the Restated Notes, nor (v) any
documents or filings filed with the SEC or any state securities or "blue sky"
regulatory agency, as of the date filed and as of the Closing Date:
(a) will contain any untrue statement of a material fact or will omit
to state any material fact necessary to make the statements contained therein
or herein, in light of the circumstances under which they were made, not
misleading; or
(b) will fail to comply with the requirements of Section 1125(e) of the
Bankruptcy Code.
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<PAGE> 30
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF GRAND
As an inducement to Stratosphere to enter into this Agreement, Grand
hereby represents and warrants to Stratosphere, as follows:
Section 8.1 Due Incorporation, Etc. Grand is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has all requisite power and authority to own or lease and operate
its properties and to carry on its business as presently conducted.
Section 8.2 Due Authorization Execution and Delivery. This Agreement and
the transactions contemplated hereunder have been duly authorized by all
necessary corporate action on the part of Grand. This Agreement and, subject
to the satisfaction of all conditions to Grand's obligations herein contained,
the performance by Grand of its obligations hereunder have been approved by the
Independent Committee. This Agreement has been duly executed and delivered by
a duly authorized signatory of Grand and constitutes the valid and binding
obligation of Grand, enforceable in accordance with its terms, except as
enforcement may be affected by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or limiting
creditors' rights generally.
Section 8.3 No Violation of Agreements, Etc. Subject to entry of the
Confirmation Order and to the satisfaction of all conditions to Grand's
obligations hereunder, the execution, delivery and performance of this
Agreement by Grand, and of the agreements and other documents herein
contemplated to be executed by Grand, and the consummation of the transactions
contemplated hereby and thereby, will not result in any violation of, or
constitute a default by Grand under, or be in conflict with any term of, its
existing charter documents or bylaws, or any material contract, agreement,
instrument, judgment, decree, order, rule, statute or regulation to which Grand
is a party or which is otherwise applicable to Grand.
ARTICLE 9
COVENANTS OF STRATOSPHERE AND GRAND
Section 9.1 Conduct of the Chapter 11 Cases. Stratosphere shall consult
with Grand on all aspects of Stratosphere's participation in the Chapter 11
Cases, including without limitation the preparation of the Plan and all other
matters described in Section 5.3 of this Agreement. Grand shall reasonably
cooperate with Stratosphere in the preparation of the Plan and the prosecution
of the Chapter 11 Cases.
Section 9.2 Executory Contracts. Grand and Stratosphere agree that
those contracts set forth on Schedule 9.2 hereto (the "Designated Agreements")
shall be accepted and assumed in the Chapter 11 Cases. Stratosphere shall not
reject or accept and assume any other executory contracts or agreements in the
Chapter 11 Cases without the prior written consent of Grand.
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<PAGE> 31
Section 9.3 Access to Information; Delivery of Documents. Through the
Closing Date, subject to the terms of any applicable confidentially agreement
between Stratosphere and Grand, Stratosphere shall allow the designated
officers, attorneys, accountants and other representatives of Grand access at
reasonable times and upon prior notice by Grand to all records and files,
correspondence, audits and properties, as well as to all information relating
to commitments, contracts, titles and financial condition, or otherwise
pertaining to the business and affairs of Stratosphere. Stratosphere shall
deliver promptly to Grand copies of all filings in connection with the Chapter
11 Cases and all orders from the Bankruptcy Court received in connection
therewith.
Section 9.4 Conduct of Business Prior to Closing. Stratosphere agrees
that, prior to the Closing Date, unless Grand otherwise agrees in writing or as
otherwise expressly contemplated or permitted by this Agreement:
(a) Stratosphere shall not directly or indirectly, do or permit to occur
any of the following: (i) issue, sell, pledge, dispose of or encumber any
additional shares of, or any options, warrants, conversion privileges or rights
of any kind to acquire any shares of, any of its capital stock; (ii) amend or
propose to amend its articles of incorporation; (iii) split, combine or
reclassify any outstanding shares of its capital stock, or declare, set aside
or pay any dividend or other distribution payable in cash, stock, property or
otherwise with respect to shares of Old Common Stock; (iv) redeem, purchase or
acquire or offer to acquire any shares of its capital stock; (v) acquire (by
merger, exchange, consolidation, acquisition of stock or assets or otherwise)
any corporation, partnership, joint venture or other business organization or
division or material assets thereof; (vi) incur any indebtedness for borrowed
money or issue any debt securities; (vii) engage, solicit or initiate inquiries
or proposals from, or engage in discussions or negotiations with, or accept,
agree to or enter into or consummate any agreement in furtherance of, any
Alternative Transaction Proposal, except as specifically permitted by Section
6.3 of this Agreement; or (viii) enter into or propose to enter into, or modify
or propose to modify, any agreement, arrangement or understanding with respect
to any of the matters set forth in this Section 9.4(a);
(b) Stratosphere shall maintain its good standing under the laws of its
state of incorporation and shall notify Grand of any governmental or third
party complaints, investigations or hearings (or communications indicating that
the same may be contemplated); and
(c) Stratosphere shall not take any action other than in the ordinary
course of business as previously conducted or enter into any material
agreement, contract or commitment, except as contemplated in the Plan.
Section 9.5 Notification of Changes. Stratosphere shall promptly notify
Grand, and Grand shall promptly notify Stratosphere, of the existence or
happening of any fact, event or occurrence prior to the Closing Date of which
Stratosphere or Grand, as applicable, has knowledge which materially alters the
accuracy or completeness of any representation or warranty, or which
constitutes a material breach or renders impractical the performance of any
covenant or agreement, of such party contained in this Agreement.
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<PAGE> 32
Section 9.6 Best Efforts. Stratosphere shall use its best efforts to
satisfy or cause to be satisfied all of the conditions precedent to its or
Grand's obligations hereunder which are to be satisfied or performed by
Stratosphere. Grand shall use its best efforts to satisfy or cause to be
satisfied all of the conditions precedent to its or Stratosphere's obligations
hereunder which are to be satisfied or performed by Grand. The parties hereto
shall cooperate with each other in obtaining any consents or agreements of
third parties necessary for the performance by them of their obligations under
this Agreement and the consummation of the transactions contemplated hereby.
Whenever the consent or approval of a party is required hereunder, such consent
or approval shall not be unreasonably withheld.
Section 9.7 Certain Failures of Conditions. If the failure of any
condition of the obligation of a party hereunder is primarily attributable to
the action or omission from and after the date hereof of such party, then such
condition shall be deemed to have been satisfied and the failure of such
condition shall not excuse the performance of such party of its obligations
hereunder.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Assignability. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. Except as otherwise provided herein, Grand may assign all or part of
its rights hereunder to any of its Affiliates. This Agreement is not
assignable by Stratosphere, by operation of law or otherwise (except to
Reorganized Stratosphere) without the prior written consent of Grand, except to
the Indenture Trustee as collateral for the Original First Mortgage Notes. Any
assignment or attempted assignment of all or any portion of this Agreement
which is not expressly permitted hereby shall be null and void and of no force
or effect.
Section 10.2 Notices. Any notice by either party to the other hereunder
shall be deemed sufficiently given if in writing either served by personal
delivery or sent by overnight courier guaranteeing next-day delivery or by
telecopy, addressed (until further written notice of change of address), if to
Stratosphere, to:
STRATOSPHERE CORPORATION
2000 Las Vegas Boulevard South
Las Vegas, Nevada 89104
Attn: Richard Schuetz
Andrew S. Blumen
Telephone: (702) 380-7777
Fax: (702) 383-4733
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<PAGE> 33
with a copy to:
GORDON & SILVER, LTD.
3800 Howard Hughes Parkway, 14th Floor
Las Vegas, Nevada 89109
Attn: Gerald M. Gordon, Esq.
Telephone: (702) 796-5555
Fax: (702) 369-2666
and if to Grand:
GRAND CASINOS, INC.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Attn: Bruce Martin, Esq.
Joseph M. Valandra
Telephone: (612) 449-9092
Fax: (612) 449-7003
with a copy to:
SQUIRE, SANDERS & DEMPSEY L.L.P.
Two Renaissance Square
40 N. Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attn: Craig D. Hansen, Esq.
Christopher D. Johnson, Esq.
Telephone: (602) 528-4000
Fax: (602) 253-8129
Notice given by personal delivery shall be effective upon delivery. Notice
transmitted by overnight courier guaranteeing next-day delivery shall be
effective on the business day following timely delivery to such courier.
Notice transmitted by telecopy shall be effective when receipt is acknowledged.
Section 10.3 Survival of Representations, Warranties and Agreements. All
of Stratosphere's, Reorganized Stratosphere's and Grand's representations and
warranties hereunder shall survive the execution and delivery of this
Agreement, any investigation by Grand or Stratosphere, as the case may be, and
the issuance to Grand, and the purchase and sale by Grand, of the Class B
Common Stock and any Restated Notes.
Section 10.4 Further Assurances. Following the Closing, the parties
shall take such actions and execute and deliver such instruments as may be
reasonably requested (at the expense of the requesting party) to further
perfect, evidence or consummate the transactions contemplated by this Agreement
and the Plan.
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<PAGE> 34
Section 10.5 Waiver. A waiver on the part of either of the parties
hereto of any term, provision or condition of this Agreement or breach thereof
shall not constitute a precedent, nor bind either party hereto to a waiver of
any other term, provision or condition of this Agreement or any other or
succeeding breach of the same or any other term, provision or condition
thereof.
Section 10.6 Amendments. This Agreement shall not be modified, amended
or otherwise changed without the written agreement of Stratosphere and Grand.
Section 10.7 Applicable Law. This Agreement shall be governed by the
laws of the State of Nevada (without reference to the provisions thereof
relating to conflicts of laws) and applicable federal bankruptcy law and any
questions arising hereunder shall be construed or determined in accordance with
such laws. The parties hereby agree to retain jurisdiction in the Bankruptcy
Court with respect to questions arising under this Agreement.
Section 10.8 Headings. The table of contents and the headings at the
beginning of the articles, sections and subsections of this Agreement are
solely for the convenience of the parties and are not a part of this Agreement.
Section 10.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 10.10 Entire Agreement. This Agreement (including all Schedules
hereto) contains the entire understanding between the parties relating to its
subject matter and supersedes all prior agreements, understandings,
representations and statements, oral or written.
Section 10.11 Time Is of the Essence. Time is of the essence of this
Agreement.
Section 10.12 Amended and Restated Agreement. This Agreement amends and
restates in its entirety the Prior Agreement, and this Agreement shall, from
and after the date of execution hereof, supersede the Prior Agreement in all
respects. The parties hereto acknowledge and agree that all references to the
Prior Agreement in any other document, instrument or agreement shall, from and
after the date of execution hereof, be deemed to refer to this Agreement.
Section 10.13 Effectiveness. This Agreement shall be effective
immediately upon execution by Grand and Stratosphere, subject, however, to
receipt of any approval from the Gaming Authorities which may be required as a
pre-condition to such effectiveness.
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<PAGE> 35
IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Investment and Reorganization Agreement to be executed as of the date first
above written.
STRATOSPHERE CORPORATION, a
Delaware
corporation
By /s/ Andrew S. Blumen
--------------------------------
Its Executive Vice President and General
Counsel
STRATOSPHERE GAMING CORP., a
Nevada
corporation
By /s/ Andrew S. Blumen
----------------------------
Its Secretary
GRAND CASINOS, INC., a Minnesota
corporation
By /s/ Joseph M. Valandra
------------------------------------
Joseph M. Valandra, Vice President
30
<PAGE> 1
Exhibit 99.3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEVADA
In re: ) In Proceedings Under Chapter 11
)
STRATOSPHERE CORPORATION, ) CASE NO. 97-20554 GWZ
a Delaware corporation, )
) (Joint Administration Only)
Debtor. )
In re: ) CASE NO. 97-20555 GWZ
)
STRATOSPHERE GAMING CORP., )
a Nevada corporation, )
)
Debtor. )
)
DEBTORS' FIRST AMENDED PLAN OF REORGANIZATION
GORDON & SILVER, LTD.
3800 Howard Hughes Parkway
14th Floor
Las Vegas, Nevada 89109
(702) 796-5555
Attorneys: Gerald M. Gordon
William N. Noall
Thomas H. Fell
Counsel to STRATOSPHERE CORPORATION
and STRATOSPHERE GAMING CORP.,
Debtors-In-Possession
Dated: Las Vegas, Nevada
June 20, 1997
<PAGE> 2
Stratosphere Corporation ("Stratosphere") and Stratosphere Gaming Corp.
("Gaming Corp."), the debtors and debtors-in-possession in the above-captioned
Chapter 11 reorganization cases (collectively, the "Debtors"), together with
Stratosphere Land Corporation ("Stratosphere Land"), hereby jointly propose
this First Amended Plan of Reorganization ("Plan") for the resolution of the
Debtors outstanding claims and equity interests. All creditors and other
parties-in-interest should refer to the Disclosure Statement (as that term is
defined herein) for a discussion of the Debtors' history, business, properties,
results of operations and financial projections for future operations and for a
summary and analysis of the plan of reorganization and certain related matters.
Stratosphere Land is a co-proponent of the plan of reorganization within the
meaning of Section 1129 of the Bankruptcy Code (as such term is defined
herein).
ALL HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTORS
ARE ENCOURAGED TO READ THIS PLAN OF REORGANIZATION, THE DISCLOSURE
STATEMENT AND THE RELATED SOLICITATION MATERIALS IN THEIR ENTIRETY
BEFORE VOTING TO ACCEPT OR REJECT THIS PLAN.
Subject to the restrictions on modifications set forth in Section 1127 of
the Bankruptcy Code and Bankruptcy Rule 3019, and those restrictions on
modifications set forth in Article 15 to this Plan, the Debtors expressly
reserve the right to alter, amend or modify this Plan, one or more times before
its substantial consummation.
ARTICLE 1
DEFINITIONS, RULES OF INTERPRETATION AND COMPUTATION OF TIME
A. DEFINITIONS
For purposes of this Plan, except as expressly provided or unless the
context otherwise requires, all capitalized terms not otherwise defined shall
have the meanings ascribed to them in Article 1 of this Plan. Any term used in
this Plan that is not defined herein, but is defined in the Bankruptcy Code or
the Bankruptcy Rules, shall have the meaning ascribed to that term in the
Bankruptcy Code or the Bankruptcy Rules. Whenever the context requires, such
terms shall include the plural as well as the singular, the masculine gender
shall include the feminine, and the feminine gender shall include the
masculine.
As used in this Plan, the following terms shall have the meanings
specified below:
ADMINISTRATIVE CLAIM. A Claim for any cost or expense of administration
of the Chapter 11 Cases allowed under Sections 503(b), 507(b) or 546(c)(2) of
the Bankruptcy Code and entitled to priority under Section 507(a)(1) of the
Bankruptcy Code, including, but not limited to: (i) fees payable pursuant to
Section 1930 of Title 28 of the United States Code; (ii) the actual and
necessary costs and expenses incurred after the Petition Date of preserving the
Estates, including wages, salaries, or commissions for services rendered after
the commencement of the Chapter 11 Cases; and (iii) all Professional Fees
approved by the Bankruptcy Court pursuant to interim and final allowances. To
the extent that a Claim is allowed as an Administrative Claim pursuant to
Section 365(d)(3) of the Bankruptcy Code, such Claim shall
<PAGE> 3
also be deemed an "Administrative Claim" under this section.
ADMINISTRATIVE CLAIM BAR DATE. The date or dates established by the
Bankruptcy Court for the filing of Administrative Claims, excepting therefrom
Claims for Professional Fees and Preserved Ordinary Course Administrative
Claims.
ADMINISTRATIVE EXPENSE RESERVE. The amount of Cash to be segregated by
Reorganized Stratosphere and Reorganized Gaming Corp., to pay Administrative
Claims, including, without limitation, those claims set forth in Article 2 of
this Plan. The amount of the Administrative Expense Reserve shall be subject
to approval by the Bankruptcy Court as part of the Confirmation Hearing.
AFFILIATE. This term will refer to and mean with respect to any specified
Person, any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person and, with respect to
any specified natural Person, any other Person having a relationship by blood,
marriage or adoption not more remote than first cousins with such natural
Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise.
ALLOWED CLAIM. Any Claim, or any portion thereof, against the Debtors:
(i) proof of which, requests for payment of which, or application for allowance
of which, was filed or deemed to be filed on or before the Bar Date,
Administrative Claim Bar Date or the Professional Fee Bar Date, as the case may
be, for filing proofs of claim or requests for payment for Claims of such type
against the Debtors; (ii) if no proof of Claim is filed, which has been or
hereafter is listed by the Debtors in the Schedules as liquidated in amount and
not disputed or contingent; or (iii) a Claim that is allowed in any contract,
instrument, indenture or other agreement entered into in connection with this
Plan and, in any case, a Claim as to which no objection to the allowance
thereof has been interposed within the applicable period of limitation fixed by
this Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court.
The term "Allowed," when used to modify a reference in this Plan to any Claim
or Class of Claims, shall mean a Claim (or any Claim in any such Class) that is
so allowed, e.g. an "Allowed Secured Claim" is a Claim that has been allowed to
the extent of the value, as determined by the Bankruptcy Court pursuant to
Section 506(a) of the Bankruptcy Code, of any interest in property of the
Estate of the Debtors securing such Claim.
AMENDED CAPITAL LEASE AGREEMENT. The Amended and Restated Lease Agreement
to be entered into on the Effective Date by Reorganized Gaming Corp. and First
Security, which is one of the documents pursuant to which the Capital Lease
Claims will be restructured. The Amended Capital Lease Agreement shall be
substantially in the form filed with the Bankruptcy Court as part of the Plan
Supplement.
AMENDED HELLER CAPITAL LEASE. The Amended and Restated Lease Agreement
Intended
<PAGE> 4
As Security Agreement to be entered into on the Effective Date by Reorganized
Gaming Corp. and Heller, pursuant to which the Heller Lease Claims will be
restructured. The Amended Heller Capital Lease shall be substantially in the
form filed with the Bankruptcy Court as part of the Plan Supplement.
AMENDED PARTICIPATION AGREEMENT. The Amended and Restated Participation
Agreement to be entered into on the Effective Date by Reorganized Stratosphere,
Reorganized Gaming Corp., First Security, and the Capital Lease Bank Group,
which is one of the documents pursuant to which the Capital Lease Bank Claims
will be restructured. The Amended Participation Agreement shall be
substantially in the form filed with the Bankruptcy Court as part of the Plan
Supplement.
BALLOT. The form of ballot or ballots that will be distributed with the
Disclosure Statement to holders of Claims entitled to vote under this Plan in
connection with solicitation of acceptances of this Plan.
BANKRUPTCY CODE. The Bankruptcy Reform Act of 1978, Title 11, United
States Code, as applicable to the Chapter 11 Cases, as now in effect or
hereafter amended, 11 U.S.C. Section Section 101 et seq.
BANKRUPTCY COURT. The Bankruptcy Court of the United States District
Court for the District of Nevada or such other court as may have jurisdiction
over the Chapter 11 Cases.
BANKRUPTCY RULES. Collectively, the Federal Rules of Bankruptcy
Procedure, the local rules of the Bankruptcy Court and the Federal Rules of
Civil Procedure, as applicable to the Chapter 11 Cases, as now in effect or
hereinafter amended.
BAR DATE. The date or dates established by the Bankruptcy Court for the
filing of proofs of Claim for all Creditors, including the holders of
Reclamation Claims, if any, excepting therefrom, Administrative Claims,
Preserved Ordinary Course Administrative Claims, and Claims for Professional
Fees.
BUSINESS DAY. Any day other than a Saturday, Sunday or other day on which
commercial banks in Clark County, Nevada are authorized or required by law to
close.
CAPITAL LEASE BANK GROUP. Collectively, Bank of Scotland, Wells Fargo
Bank, National Association (successor by merger to First Interstate Bank of
Nevada), Societe Generale, Credit Lyonnais (Los Angeles Branch), BA Leasing and
Capital Corporation, First Security, The CIT Group/Equipment Financing, Inc.,
United States National Bank of Oregon, The First National Bank of Boston,
Imperial Bank, and Trustmark National Bank and their respective successors and
assigns.
CAPITAL LEASE CLAIMS. Any and all indebtedness of the Debtors to First
Security and the Capital Lease Bank Group arising out of or evidenced by: (i)
the Original Participation Agreement; (ii) the Original Capital Lease
Agreement; (iii) that certain Loan Agreement dated as
<PAGE> 5
of April 29, 1996; (iv) that certain Standstill and Amendment Agreement dated
as of October 31, 1996; and (v) any and all loan and security documents,
including, but not limited to, Debt Instruments, evidencing, securing, or
relating in any way to such Capital Lease Claims. The Capital Lease Claims
shall be deemed Allowed Secured Claims for purposes of voting and receiving
distributions under this Plan.
CASH. Currency, checks, negotiable instruments and wire transfers of
immediately available funds.
CHAPTER 11 CASES. The cases under Chapter 11 of the Bankruptcy Code in
which Stratosphere and Gaming Corp. are the debtors and debtors-in-possession
pending before the Bankruptcy Court, including all adversary proceedings
pending in connection therewith.
CLAIM. Any right to payment from the Debtors, whether or not such right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured arising
at any time before the Effective Date or relating to any event that occurred
before the Effective Date; or any right to an equitable remedy for breach of
performance if such breach gives rise to a right of payment from the Debtors,
whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
CLASS. A category of holders of Claims, Equity Interests, or Gaming Corp.
Common Stock as classified in this Plan.
CLASS A COMMON STOCK. The shares of common stock of Reorganized
Stratosphere which as of the Effective Date shall collectively as a class
represent, in the aggregate, ten percent (10%) of the common equity and voting
power of Reorganized Stratosphere.
CLASS B COMMON STOCK. The shares of common stock of Reorganized
Stratosphere which as of the Effective Date shall collectively as a class
represent, in the aggregate, ninety percent (90%) of the common equity and
voting power of Reorganized Stratosphere.
CONFIRMATION. The entry by the Bankruptcy Court of the Confirmation
Order.
CONFIRMATION DATE. The date upon which the Bankruptcy Court enters the
Confirmation Order confirming this Plan.
CONFIRMATION HEARING. The duly noticed hearing held by the Bankruptcy
Court on confirmation of this Plan pursuant to Section 1128 of the Bankruptcy
Code. The Confirmation Hearing may be adjourned by the Bankruptcy Court from
time to time without further notice other than the announcement of the
adjourned date at the Confirmation Hearing.
CONFIRMATION ORDER. An order entered by the Bankruptcy Court confirming
this Plan.
CONSOLIDATED CASH FLOW. With respect to Reorganized Stratosphere for any
period
<PAGE> 6
subsequent to the Effective Date, EBITDA of Reorganized Stratosphere,
Reorganized Gaming Corp. and any other consolidated subsidiaries of Reorganized
Stratosphere, plus or minus (i) any loss or any gain, together with any related
provision for taxes on such loss or gain, realized (in accordance with GAAP) in
connection with any sale of assets (including, without limitation, dispositions
pursuant to sale and leaseback transactions) by Reorganized Stratosphere,
Reorganized Gaming Corp. and any other consolidated subsidiaries of Reorganized
Stratosphere to the extent that such loss or gain (including any related
provision for taxes) was included in EBITDA for such period, plus (ii)
write-downs/charges resulting from the adoption of Financial Accounting
Standards Board pronouncements that do not result in the expenditure of cash or
cash equivalents (including, without limitation, SFAS 121).
CONSOLIDATED NET INCOME. With respect to Reorganized Stratosphere for any
period, subsequent to the Effective Date, the aggregate of the net income
(loss) of Reorganized Stratosphere, Reorganized Gaming Corp., and any other
consolidated subsidiaries of Reorganized Stratosphere for such period, on a
consolidated basis, determined in accordance with GAAP; provided, that there
shall be excluded (i) any loss or any gain associated with the disposal of any
discontinued operation and any profit or any loss associated with the operation
of any discontinued operation, together with any related provision for taxes on
such discontinued operations; (ii) any extraordinary items, together with any
related provision for taxes on such extraordinary items; and (iii) the
cumulative effect of a change in accounting principles, together with any
related provision for taxes related to such changes in accounting principles.
CONSTRUCTION ESCROW ACCOUNT. The escrow account to be established on or
before the Effective Date by Reorganized Stratosphere into which all of the net
proceeds of the sale of the Class B Common Stock and $25,000,000 of the
Restated First Mortgage Notes (which shall equal not less than $75,000,000)
shall be deposited. The Construction Escrow Account shall be established in
accordance with the Construction Escrow Agreement at an institution selected by
Reorganized Stratosphere and approved by the Bankruptcy Court and that has
combined capital and surplus of at least $50,000,000 as set forth in its most
recent annual report.
CONSTRUCTION ESCROW AGREEMENT. The escrow agreement to be entered into on
or before the Effective Date by Reorganized Stratosphere, Grand, the Indenture
Trustee and the Construction Escrow Agent, which agreement shall set forth the
terms upon which, and the manner in which, funds shall be disbursed from the
Construction Escrow Account to fund completion of Phase II. The Construction
Escrow Agreement shall be substantially in the form filed with the Bankruptcy
Court as part of the Plan Supplement.
CONSTRUCTION ESCROW AGENT. The Person selected by Reorganized
Stratosphere and approved by the Bankruptcy Court to act as the disbursing
agent for all funds held in the Construction Escrow Account pursuant to the
Construction Escrow Agreement.
CONTINGENT CLAIM. A Claim which is either contingent or unliquidated on
or immediately before the Confirmation Date.
CREDITOR. Any holder of a Claim, whether or not such Claim is an Allowed
Claim,
<PAGE> 7
encompassed within the statutory definition set forth in Section 101(a) of the
Bankruptcy Code.
CREDITORS' COMMITTEE. Any Official Committee of General Unsecured
Creditors appointed by the United States Trustee in the Chapter 11 Cases
pursuant to Section 1102(a)(1) of the Bankruptcy Code.
CURE. The distribution on the Effective Date or as soon thereafter as
practicable of Cash, or such other property as may be agreed upon by the
parties or ordered by the Bankruptcy Court, with respect to the assumption of
an executory contract or unexpired lease, pursuant to Section 365(b) of the
Bankruptcy Code, in an amount equal to all unpaid monetary obligations, without
interest, or such other amount as may be agreed upon by the parties, under such
executory contract or unexpired lease, to the extent such obligations are
enforceable under the Bankruptcy Code and applicable bankruptcy law.
DEBT INSTRUMENT. A debenture, bond, promissory note, note or other
transferable instrument or document evidencing any payment obligation.
DEBTORS. Collectively, Stratosphere and Gaming Corp., as the
debtors-in-possession in the Chapter 11 Cases, pursuant to Sections 1107 and
1108 of the Bankruptcy Code.
DISBURSING AGENT. Reorganized Stratosphere or such other Person as may be
retained by the Reorganized Stratosphere and approved by the Bankruptcy Court,
to hold and distribute certain consideration to the holders of Allowed Claims
in Classes 1, 2, 3, 4, 6, 7 and 8 of this Plan. With respect to distributions
to the holders of Original First Mortgage Notes (whether as part of Class 5 or
Class 8), the Indenture Trustee shall be the Disbursing Agent.
DISCLOSURE STATEMENT. The written disclosure statement that relates to
this Plan, as approved by the Bankruptcy Court pursuant to Section 1125 of the
Bankruptcy Code and Bankruptcy Rule 3017, as such disclosure statement may be
amended, modified or supplemented from time to time.
DISPUTED CLAIM. A Claim which is: (i) subject to timely objection
interposed by the Debtors or any party in interest entitled to file and
prosecute such objection in the Chapter 11 Cases, if at such time such
objection remains unresolved; (ii) a Claim that is listed by the Debtors as
disputed, unliquidated or contingent in the Schedules; or (iii) if no objection
has been timely filed, a Claim which has been asserted in a timely filed proof
of claim in an amount greater than or in a Class different than that listed by
the Debtors in the Schedules as liquidated in amount and not disputed or
contingent; provided, however, that the Bankruptcy Court may estimate a
Disputed Claim for purposes of allowance pursuant to Section 502(c) of the
Bankruptcy Code. The term "Disputed", when used to modify a reference in this
Plan to any Claim or Class of Claims, shall mean a Claim (or any Claim in such
Class) that is a Disputed Claim as defined herein. In the event there is a
dispute as to classification or priority of a Claim, it shall be considered a
Disputed Claim in its entirety. Until such time as a Contingent Claim becomes
fixed and absolute, such Claim shall be treated as a Disputed Claim and not an
Allowed Claim for purposes related to voting, allocations, and distributions
under this Plan.
<PAGE> 8
DISPUTED EQUITY INTEREST. An Equity Interest which is the subject of a
timely objection interposed by the Debtors, or any party in interest entitled
to file and prosecute any such objection in the Chapter 11 Cases, if at such
time such objection remains unresolved.
DISTRIBUTION DATE. The date, occurring as soon as practicable after the
Effective Date, upon which distributions are made to holders of Allowed Claims
under this Plan.
DISTRIBUTION RECORD DATE. The date or dates established by the Bankruptcy
Court, which shall be the Record Date or Dates for determining the holders of
the Original First Mortgage Notes entitled to receive distributions under this
Plan.
EBITDA. With respect to Reorganized Stratosphere for any period
subsequent to the Effective Date, Consolidated Net Income of Reorganized
Stratosphere, Reorganized Gaming Corp. and any other consolidated subsidiaries
of Reorganized Stratosphere, plus the following expenses incurred by
Reorganized Stratosphere, Reorganized Gaming Corp. and any other consolidated
subsidiaries of Reorganized Stratosphere (determined in accordance with GAAP)
during any such period: (i) income taxes; (ii) interest (exclusive of interest
income); (iii) depreciation and amortization; and minus (iv) any provision for
income tax benefit recognized (in accordance with GAAP) during any such period
by Reorganized Stratosphere, Reorganized Gaming Corp. and any other
consolidated subsidiaries of Reorganized Stratosphere.
EFFECTIVE DATE. The last to occur of: (i) the first Business Day that is
at least eleven (11) days after the Confirmation Date and on which no stay of
the Confirmation Order is in effect; and (ii) the Business Day on which all of
the conditions set forth in Article 12 to this Plan shall have been satisfied
or waived.
EFFECTIVE DATE CASH. All Cash of the Debtors, excluding therefrom the
sum of $75,000,000 (consisting of $50,000,000 in proceeds from the sale of the
Class B Common Stock and $25,000,000 of the Restated First Mortgage Notes), on
the Effective Date prior to distribution or reservation of any amounts under
this Plan.
EQUITY INTEREST. Any interest in Stratosphere, including Old Common
Stock, represented by any class or series of common or preferred stock issued
by Stratosphere prior to the Effective Date and any warrants, options or rights
to purchase any such common or preferred stock.
EQUITY INTEREST - RELATED CLAIM. Any Claim arising from the rescission of
a purchase or sale of an Equity Interest, or for damages arising from the
purchase or sale of an Equity Interest, or any Claim by any Person that asserts
equitable or contractual rights of reimbursement, contribution or
indemnification arising from such Claim.
ESTATE. Collectively, the estate created for the Debtors in the Chapter
11 Cases, pursuant to Section 541 of the Bankruptcy Code.
<PAGE> 9
FINAL ORDER. An order or judgment which has not been reversed,
stayed, modified or amended and is no longer subject to appeal, certiorari
proceeding or other proceeding for review or rehearing, and as to which no
appeal, certiorari proceeding, or other proceeding for review or rehearing
shall then be pending.
FIRST SECURITY. First Security Trust Company of Nevada, and its
successors and assigns.
GAAP. The generally accepted accounting principles consistently applied,
(i) in accordance with the opinions, pronouncements, statements, bulletins,
guidelines, and interpretations, as appropriate, of the Financial Accounting
Standards Board, the Accounting Principals Board and the American Institute of
Certified Public Accountants, or (ii) pursuant to such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, and (iii) in each case applicable to the circumstances and as of
the date of determination.
GAMING AUTHORITIES. Collectively, the Gaming Board, the Gaming
Commission, and any other regulatory agency having the authority to regulate
the gaming activities of the Debtors and Grand.
GAMING BOARD. The State of Nevada Gaming Control Board established
pursuant to Nev. Rev. Stat Section 463.010, et seq., as amended from time to
time.
GAMING COMMISSION. The State of Nevada Gaming Commission established
pursuant to Nev. Rev. Stat. Section 463.010, et seq., as amended from time to
time.
GAMING CORP. Stratosphere Gaming Corp., a Nevada corporation, one of the
debtors and debtors-in-possession in the Chapter 11 Cases pending before the
Bankruptcy Court.
GAMING CORP. COMMON STOCK. All of the common stock issued by Gaming Corp.
and held by Stratosphere, including, if applicable, any warrants, options, or
rights to purchase any such common stock.
GENERAL UNSECURED CLAIM. A Claim not secured by a charge against or
interest in property in which the Debtors' Estate has an interest.
GRAND. Grand Casinos, Inc., a Minnesota corporation.
GRAND CAPITAL LEASE CREDIT ENHANCEMENT GUARANTEE. The Limited Capital
Lease Guarantee in the amount not to exceed $8,684,362, executed by Grand,
pursuant to which Grand has guaranteed, among other things, Reorganized Gaming
Corp.'s obligations under the Amended Capital Lease Agreement.
GRAND SUBORDINATED CLAIM. Any and all indebtedness of Stratosphere to
Grand arising out of or evidenced by: (i) that certain Notes Completion
Guarantee in the original amount of $50,000,000, dated as of March 9, 1995;
(ii) that certain Completion Guarantor Subordination
<PAGE> 10
Agreement dated as of March 9, 1995; (iii) any and all subordinated notes
issued to Grand by Stratosphere from time to time; and (iv) any other loan
and security documents, including, but not limited to Debt Instruments,
evidencing, securing, or relating to such obligations and claims.
HELLER. Heller Financial Group, Inc.
HELLER CAPITAL LEASE CLAIMS. Any and all indebtedness of the Debtors to
Heller arising out of or evidenced by: (i) that certain Lease Intended As
Security dated as of June 28, 1996; and (ii) any and all loan and security
documents, including, but not limited to Debt Instruments, evidencing,
securing, or relating in any way to such Heller Capital Lease Claims.
INDENTURE TRUSTEE. IBJ Schroder Bank and Trust Company, as Successor
Trustee to American National Bank Association, or such other successor trustee
under the Original First Mortgage Indenture or the Restated First Mortgage
Indenture, as the case may be, that has combined capital and surplus of at
least $50,000,000 as set forth in its most recent annual report.
INTEREST EXPENSE RESERVE. The amount of Cash to be segregated by
Reorganized Stratosphere as of the Effective Date not to exceed the lesser of:
(i) the aggregate amount of the first two (2) semi-annual interest payments on
the Restated First Mortgage Notes; and (ii) an amount equal to Effective Date
Cash minus Total Restricted Cash (excluding therefrom, the amount of the
Interest Expense Reserve), which amount shall be subject to approval by the
Bankruptcy Court as part of the Confirmation Hearing.
INITIAL CAPITAL EXPENSE RESERVE. The amount of Cash to be segregated by
Reorganized Stratosphere on the Effective Date for planned capital expenditures
(excluding construction of Phase II) during the year following the Effective
Date, which amount shall be subject to approval by the Bankruptcy Court as part
of the Confirmation Hearing.
INVESTMENT AGREEMENT. The Amended and Restated Investment and
Reorganization Agreement, dated as of June 20, 1997, executed by Stratosphere
Gaming Corp. and Grand, as amended or modified from time to time. A copy of
the Investment Agreement is attached hereto as Exhibit 1.
IRS. The Internal Revenue Service.
MINIMUM WORKING CAPITAL RESERVE. The amount of Cash to be segregated by
Reorganized Stratosphere as of the Effective Date to satisfy working capital
requirements to operate the business. The amount of the Minimum Working
Capital Reserve shall be subject to approval by the Bankruptcy Court as part of
the Confirmation Hearing.
NET AVAILABLE CASH. The Effective Date Cash minus Total Restricted Cash.
NEW COMMON STOCK. The authorized shares of common stock of Reorganized
Stratosphere, which shall consist of the Class A Common stock and the Class B
Common Stock.
<PAGE> 11
NEW MANAGEMENT AGREEMENT. The management agreement to be entered into on
the Effective Date by Reorganized Stratosphere and Grand, pursuant to which
Grand shall manage the construction of Phase II and the day to day operations
of Reorganized Stratosphere. The New Management Agreement shall be
substantially in the form filed with the Bankruptcy Court as part of the Plan
Supplement.
NOTEHOLDER COMMITTEE. The additional committee appointed by the United
States Trustee pursuant to Section 1102(a)(2) of the Bankruptcy Court comprised
of certain holders of the Original First Mortgage Notes and the Indenture
Trustee.
NOTICE AND A HEARING. This phrase shall have the same meaning as provided
for in Section 102(1) of the Bankruptcy Code.
OLD COMMON STOCK. The shares of common stock, $.01 par value, of
Stratosphere issued and outstanding immediately prior to the Effective Date,
and all options, warrants and similar rights, whether contractual or otherwise,
to acquires such shares of common stock, and all shares or other securities
convertible or otherwise exchangeable into such shares of common stock.
ORIGINAL CAPITAL LEASE AGREEMENT. The Lease Agreement, dated as of April
29, 1996, between Gaming Corp., as Lessee, and First Security, as Lessor.
ORIGINAL FIRST MORTGAGE INDENTURE. The Indenture dated as of March 9,
1995, among Stratosphere, Gaming Corp., and IBJ Schroder Bank and Trust
Company, as Successor Trustee to American National Bank Association, pursuant
to which the Original First Mortgage Notes were issued by Stratosphere.
ORIGINAL FIRST MORTGAGE NOTES. The 14-1/4% First Mortgage Notes due 2002
with Contingent Interest, in the original principal amount of $203,000,000,
issued by Stratosphere under the Original First Mortgage Indenture.
ORIGINAL PARTICIPATION AGREEMENT. The Participation Agreement dated as of
April 29, 1996, among Stratosphere, Gaming Corp., First Security and the
Capital Lease Bank Group.
ORIGINAL SUBSIDIARY GUARANTEE. The guarantee by Gaming Corp. of the
obligations of Stratosphere under the Original First Mortgage Notes, which
guarantee is set forth in Section 11.01 of the Original First Mortgage Notes
Indenture.
PERSON. An individual, a corporation, a limited liability company, a
partnership, an association, a joint stock company, a joint venture, an estate,
a trust, an unincorporated organization or a government, governmental unit or
any subdivision thereof or any other entity.
PETITION DATE. The date (i.e., January 27, 1997) on which the Debtors
filed their voluntary petition commencing the Chapter 11 Cases.
<PAGE> 12
PHASE II. Stratosphere's planned construction of additional facilities and
improvements to existing facilities, at its resort complex located in Las
Vegas, Nevada, consisting of: (i) completion of construction of a new guest
room tower of approximately 1,000 bays, including the acquisition of all
necessary furniture, fixtures and equipment; (ii) completion of recreation
and swimming pool facilities; (iii) landscape and hardscape at areas adjacent
to the new guest tower, including facade upgrade of floors one through three;
(iv) landscape and fencing at site of proposed aquarium building; (v)
mechanical connection and piping from the existing Phase I central plant; (vi)
build-out of Kids Quest facility, consisting of at least 12,500 square feet;
and (vii) renovation of existing resort facilities, including baggage
storage, gift shop and gift kiosk remodel, Sister's Coffee Shop remodel, tower
queue remodel, and porte cochere modifications.
PHASE II BUDGET. The estimated costs of completing construction of Phase
II attached as Exhibit 2 to this Plan.
PHASE II COMPLETION GUARANTEE. The Completion Guarantee to be entered
into between Grand, Reorganized Stratosphere, and the Indenture Trustee, under
which Grand shall guarantee, on the terms and subject to the conditions set
forth therein, completion of Phase II up to a maximum of $25,000,000 in the
aggregate. The Phase II Completion Guarantee shall be substantially in the
form filed with the Bankruptcy Court as part of the Plan Supplement.
PHASE II COMPLETION SUBORDINATION AGREEMENT. The Phase II Completion
Subordination Agreement to be entered into on the Effective Date by Grand and
the Indenture Trustee, pursuant to which any funds advanced by Grand under the
Phase II Completion Guarantee shall be subordinated to the full payment (in
cash or in kind, as applicable) to the Restated First Mortgage Notes and the
Capital Lease Claims, as modified and restructured pursuant to this Plan and
related documentation. The Phase II Completion Subordination Agreement shall
be substantially in the form filed with the Bankruptcy Court as part of the
Plan Supplement.
PLAN. This First Amended Plan of Reorganization, dated as of June 20,
1997, either in its present form or as it may be amended, supplemented or
modified from time to time, including all exhibits and schedules annexed hereto
or referenced herein and the Plan Supplement.
PLAN DISTRIBUTED CASH. The Cash to be paid pursuant to this Plan to the
holders of Allowed Claims in all Classes hereunder, excluding therefrom the Net
Available Cash.
PLAN SUPPLEMENT. The supplement filed with the Bankruptcy Court which
contains additional exhibits to this Plan. The Plan Supplement shall be a part
of this Plan as if such exhibits were set forth more fully herein.
PRESERVED ORDINARY COURSE ADMINISTRATIVE CLAIM. Administrative Claims
that are based on liabilities incurred by the Debtors in the purchase, lease or
use of goods and services in the ordinary course of its business, including,
but not limited to, Administrative Claims due on account of services provided
to the Debtors after the Petition Date by its employees.
<PAGE> 13
PRIORITY BENEFIT PLAN CONTRIBUTION CLAIM. Any Claim entitled to priority
in payment under Section 507(a)(4) of the Bankruptcy Code.
PRIORITY TAX CLAIM. Any Claim entitled to priority in payment under
Section 507(a)(7) of the Bankruptcy Code.
PRIORITY WAGE CLAIM. Any Claim entitled to priority in payment under
Section 507(a)(3) of the Bankruptcy Code.
PROFESSIONAL FEE BAR DATE. The date, as set by order of the Bankruptcy
Court, on or before which applications for compensation or expense
reimbursement, including Professional Fees receivable pursuant to Section
503(b), must be filed with the Bankruptcy Court.
PROFESSIONAL FEES. The Administrative Claims for compensation and
reimbursement submitted pursuant to Sections 330, 331 or 503(b) of the
Bankruptcy Code of Persons: (i) employed pursuant to an order of the
Bankruptcy Court under Sections 327 or 1103 of the Bankruptcy Code; or (ii) for
whom compensation and reimbursement has been allowed by the Bankruptcy Court
pursuant to Section 503(b) of the Bankruptcy Code, including, but not limited
to, reasonable professional fees and expenses incurred by the Indenture Trustee
and counsel to the Indenture Trustee, that are not otherwise satisfied in
accordance with other provisions of this Plan.
PRO RATA. The ratio of an Allowed Claim or Allowed Equity Interest in a
particular class to the aggregate amount of all such Allowed Claims or Allowed
Equity Interests in any such Class.
PUT/CALL ARRANGEMENT. The right of a majority of the holders of the Class
A Common Stock to require Grand to purchase all issued and outstanding shares
of Class A Common Stock, and the right of Grand to require to all holders of
the Class A Common Stock to sell all issued and outstanding shares of Class A
Common Stock to Grand, pursuant to and in accordance with Section 6.2 of this
Plan.
RECLAMATION CLAIMS. Any Claim against the Debtors by any Person arising
out of the sale of goods to the Debtors, in the ordinary course of such
Person's business, provided that such Person has otherwise satisfied the
requirements of Section 546(c) of the Bankruptcy Code and the Uniform
Commercial Code, as applicable.
REINSTATED OR REINSTATEMENT. These terms shall mean: (i) leaving
unaltered the legal, equitable, and contractual rights of the holder of a Claim
so as to leave such Claim unimpaired in accordance with Section 1124 of the
Bankruptcy Code; or (ii) notwithstanding any contractual provision or
applicable law that entitles the holder of such Claim to demand or receive
accelerated payment of such Claim after the occurrence of a default: (a) Curing
any such default that occurred before or after the Petition Date, other than a
default of a kind specified in Section 365(b)(2) of the Bankruptcy Code; (b)
reinstating the maturity of such Claim as such maturity existed before such
default; (c) compensating the holder of such Claim for any damages incurred
<PAGE> 14
as a result of any reasonable reliance by such holder on such contractual
provision or such applicable law; and (d) not otherwise altering the legal,
equitable, or contractual rights to which such Claim entitles the holder of
such Claim; provided, however, that any contractual right that does not pertain
to the payment when due of principal and interest on the obligation on which
such Claim is based, including, but not limited to, financial covenant ratios,
negative pledge covenants, covenants or restrictions on merger or
consolidation, and affirmative covenants regarding corporate existence
prohibiting certain transactions or actions contemplated by this Plan, or
conditioning such transactions or actions on certain factors, shall not be
required in order to accomplish Reinstatement.
RELATED SECURITY DOCUMENTS. Any and all loan and security documents,
including, but not limited to Debt Instruments, evidencing, securing, or
otherwise relating to the Restated First Mortgage Notes and all security or
collateral related thereto.
REORGANIZED GAMING CORP. Stratosphere Gaming Corp., a Nevada corporation,
on and after the Effective Date.
REORGANIZED GAMING CORP. ARTICLES. The Restated Articles of Incorporation
of Reorganized Gaming Corp., which shall be substantially in the form filed
with the Bankruptcy Court as part of the Plan Supplement.
REORGANIZED GAMING CORP. BY-LAWS. The Restated By-Laws of Reorganized
Gaming Corp., which shall be substantially in the form filed with the
Bankruptcy Court as part of the Plan Supplement.
REORGANIZED STRATOSPHERE. Stratosphere Corporation, a Delaware
corporation, on and after the Effective Date.
REORGANIZED STRATOSPHERE ARTICLES. The Restated Certificate of
Incorporation of Reorganized Stratosphere, which shall be substantially in the
form filed with the Bankruptcy Court as part of the Plan Supplement.
REORGANIZED STRATOSPHERE BY-LAWS. The Restated By-Laws of Reorganized
Stratosphere, which shall be substantially in the form filed with the
Bankruptcy Court as part of the Plan Supplement.
RESTATED FIRST MORTGAGE INDENTURE. The Amended and Restated Indenture to
be entered into by Reorganized Stratosphere, Reorganized Gaming Corp., and the
Indenture Trustee, under which the Restated First Mortgage Notes shall be
issued, which indenture shall be substantially the form of the indenture filed
with the Bankruptcy Court as part of the Plan Supplement.
RESTATED FIRST MORTGAGE NOTES. The First Mortgage Notes of Reorganized
Stratosphere in the aggregate principal amount of $135,000,000 due seven years
after issuance, which First Mortgage Notes shall bear interest, payable in
cash, at the rate of 8-1/2% per annum for the
<PAGE> 15
initial two (2) years following issuance and at the rate of 12-1/2% per annum
thereafter, shall be issued on the Effective Date in partial exchange and
substitution for the Original First Mortgage Notes and on a date subsequent to
the Effective Date, in exchange for $25,000,000 in Cash, and shall be governed
by the terms of the Restated First Mortgage Indenture.
RESTATED SUBSIDIARY GUARANTEE. The guarantee by Reorganized Gaming Corp.
of the obligations of Reorganized Stratosphere under the Restated First
Mortgage Notes, which guarantee shall be set forth in the Restated First
Mortgage Indenture or in a separate guarantee agreement to be filed with the
Bankruptcy Court as part of the Plan Supplement.
RESTRICTED ACCOUNT. The interest bearing deposit account to be
established by Reorganized Stratosphere on the Effective Date in accordance
with the Restated First Mortgage Indenture and as described in Section 5.1(c)
hereof.
RESTRICTED GAMING RESERVE. The sum of $7,000,000 Cash to be segregated by
Reorganized Stratosphere or Reorganized Gaming Corp., as the case may be, as of
the Effective Date, to satisfy the bankroll requirements.
SCHEDULES. The schedules of assets and liabilities and any amendments
thereto filed by the Debtors with the Bankruptcy Court in accordance with
Section 521(1) of the Bankruptcy Code.
SEC. The United States Securities and Exchange Commission.
SECURED CLAIM. A Claim to the extent of the value of any interest in
property of the Debtors' Estate securing such Claim or to the extent of the
amount of such Claim subject to setoff in accordance with Section 553 of the
Bankruptcy Code, in either case as determined pursuant to Section 506(a) of the
Bankruptcy Code.
SECURED TAX CLAIMS. The Claim of any state or local governmental unit
which is secured by a lien upon property owned by the Debtors by operation of
applicable law, including, but not limited to, every such Claim for unpaid real
and personal property taxes.
SECURITIES ACT. The Securities Act of 1933, as amended, and the
regulations promulgated thereunder.
SECURITIES LITIGATION CLAIM. Any Claim arising from the rescission of a
purchase or sale of Original First Mortgage Notes, or for damages arising from
the purchase or sale of Original First Mortgage Notes, or any Claim by any
Person that asserts equitable or contractual rights of reimbursement,
contribution or indemnification arising from such a Claim.
STATUTORY COMMITTEE. Collectively, the Creditors Committee, the
Noteholders Committee, and any other committee appointed pursuant to Section
1102 of the Bankruptcy Code.
<PAGE> 16
STRATOSPHERE. Stratosphere Corporation, a Delaware corporation, one of
the debtors and debtors-in-possession in the Chapter 11 Cases pending before
the Bankruptcy Court.
STRATOSPHERE LAND. Stratosphere Land Corporation, a Nevada corporation, a
wholly-owned subsidiary of Stratosphere.
STRATOSPHERE LAND DEED OF TRUST. The Deed of Trust, Assignment of Rents
and Security Agreement, to be entered on the Effective Date between
Stratosphere Land and the Indenture Trustee, which shall be substantially in
the form filed with the Bankruptcy Court as part of the Plan Supplement.
SUBORDINATED CLAIM. Any Claim or Equity Interest subordinated, for
purposes of distribution or otherwise, pursuant to Section 510 of the
Bankruptcy Code.
TAXES. All income, gaming, franchise, excise, sales, use, employment,
withholding, property, payroll or other taxes, assessments, or governmental
charges, together with any interest, penalties, additions to tax, fines, and
similar amounts relating thereto, imposed or collected by any federal, state,
local or foreign governmental authority.
TOTAL RESTRICTED CASH. The aggregate of the Administrative Expense
Reserve, the Initial Capital Expense Reserve, the Minimum Working Capital
Reserve, this Plan Distributed Cash, the Interest Expense Reserve, the
Restricted Gaming Reserve, and any other restricted cash amounts.
VOTING RECORD DATE. The date established by the Bankruptcy Court prior to
the approval of the Disclosure Statement for purposes of voting on this Plan by
holders of Allowed Claims arising out of the Original First Mortgage Notes.
B. COMPUTATION OF TIME.
In computing any period of time prescribed or allowed by this Plan, unless
otherwise expressly provided, the provisions of Bankruptcy Rule 9006(a) shall
apply.
C. RULES OF INTERPRETATION.
For purposes of this Plan and the Plan Supplement only, (i) any reference
in this Plan or Plan Supplement to a contract, instrument, release, indenture,
or other agreement or document's being in particular form or on particular
terms and conditions means that such document shall be substantially in such
form or substantially on such terms and conditions; (ii) any reference in this
Plan or Plan Supplement to an existing document or exhibit filed or to be filed
means such document or exhibit as it may have been or may be amended, modified,
or supplemented; (iii) unless otherwise specified, all references in this Plan
or Plan Supplement to Sections, Articles, Schedules and Exhibits are references
to Sections, Articles, Schedules and Exhibits of or to this Plan; (iv) the
words "herein," "hereof," "hereto," and "hereunder" refer to this Plan in its
entirety rather than to a particular portion of this Plan; (v) captions and
headings to Articles and Sections
<PAGE> 17
are inserted for convenience of reference only and are not intended to be a
part of or to affect the interpretation of this Plan; and (vi) the rules of
construction set forth in Section 102 of the Bankruptcy Code and in the
Bankruptcy Rules shall apply unless otherwise expressly provided.
<PAGE> 18
ARTICLE 2
TREATMENT OF UNCLASSIFIED CLAIMS
The Claims against the Debtors set forth in this Article 2 are not
designated as Classes pursuant to Section 1123(a)(1) of the Bankruptcy Code.
The holders of such Claims are not entitled to vote on this Plan. The
treatment of the Claims set forth below is consistent with the requirements of
Section 1129(a)(9)(A) of the Bankruptcy Code.
TREATMENT OF ADMINISTRATIVE CLAIMS.
GENERALLY. Each Allowed Administrative Claim, other than Preserved
Ordinary Course Administrative Claims and Reclamation Claims, shall be
paid in full in Cash (or otherwise satisfied in accordance with its
terms) upon the latest of: (i) the Effective Date, or as soon thereafter
as practicable; (ii) such date as may be fixed by the Bankruptcy Court,
or as soon thereafter as practicable; (iii) the tenth (10th) Business Day
after such Claim is Allowed, or as soon thereafter as practicable; and
(iv) such date as the holder of such Claim and Reorganized Stratosphere
or Reorganized Gaming Corp., as the case may be, have agreed or shall
agree.
REQUESTS FOR PAYMENT. All requests for payment of Administrative
Claims (except for Professional Fees and Preserved Ordinary Course
Administrative Claims) must be filed by the Administrative Claims Bar
Date or the holders thereof shall be forever barred from asserting such
Administrative Claims against the Debtors, Reorganized Stratosphere, and
Reorganized Gaming Corp. All final applications for allowance and
disbursement of Professional Fees must be filed by the Professional Fee
Bar Date. All such applications must be in compliance with all of the
terms and provisions of any applicable order of the Bankruptcy Court,
including the Confirmation Order, and all other orders governing payment
of Professional Fees. Such applications may be later amended to include
any fees and costs incurred after the Confirmation Date.
PRESERVED ORDINARY COURSE ADMINISTRATIVE CLAIMS. Each Allowed Preserved
Ordinary Course Administrative Claim shall be paid by Reorganized Stratosphere
or Reorganized Gaming Corp., as the case may be, pursuant to either: (i) the
terms and conditions under which such Claim arose; or (ii) in the ordinary
course of Reorganized Stratosphere or Reorganized Gaming Corp.'s business.
Such payments shall be made by Reorganized Stratosphere or Reorganized Gaming
Corp., as the case may be, without further action by the holder of such Claim.
ALLOWED PRIORITY TAX CLAIMS. Each Allowed Priority Tax Claim, if any,
will be paid in full in Cash on the Effective Date; provided, however, that
Reorganized Stratosphere or Reorganized Gaming Corp., as the case may be, may
elect to pay such Claims through deferred Cash payments over a period not
exceeding six (6) years after the date of assessment of such Claim, of a value
as of the Effective Date, equal to the Allowed amount of such Claim. In that
event, such payments shall be made in equal annual installments of principal,
plus interest
<PAGE> 19
accruing from the Effective Date at the rate on the unpaid portion of Allowed
Priority Tax Claim set forth in Internal Revenue Code Sections 6621 and 6622.
The first such payment shall be payable on the latest of: (i) the Effective
Date; (ii) the tenth (10th) Business Day after the date on which an
order allowing such Claim becomes a Final Order; and (iii) such other time as
is agreed upon by the holder of such Claim and Reorganized Stratosphere or
Reorganized Gaming Corp., provided, however, that Reorganized Stratosphere or
Reorganized Gaming Corp., as the case may be, shall have the right to prepay
any such Allowed Priority Tax Claim, or any remaining balance of such Claim, in
full or in part, at any time on or after the Effective Date, without premium or
penalty.
ALLOWED RECLAMATION CLAIMS. All requests for payment of Reclamation
Claims must be filed by the Bar Date or the holders thereof shall be forever
barred from asserting such Reclamation Claim against the Debtors, Reorganized
Stratosphere, and Reorganized Gaming Corp. Each Allowed Reclamation Claim
shall be paid in full in Cash upon the latest of: (i) the Effective Date, or
as soon thereafter as practicable; (ii) such date as may be fixed by the
Bankruptcy Court, or as soon thereafter as practicable; (iii) the tenth (10th)
Business Day after such Claim is Allowed during the Chapter 11 Cases, or as
soon thereafter as practicable; and (iv) such date as the holder of such
Reclamation Claim and Reorganized Stratosphere or Reorganized Gaming Corp., as
the case may be, have agreed or shall agree.
<PAGE> 20
ARTICLE 3
DESIGNATION OF CLASSES OF CLAIMS AND EQUITY INTERESTS
Pursuant to this Plan and in accordance with Section 1123(a)(1) of the
Bankruptcy Code, all Claims of Creditors and the holders of Equity Interests
and the Gaming Corp. Common Stock (except Administrative Claims, Priority Tax
Claims, Reclamation Claims, and Preserved Ordinary Course Administrative
Claims) are placed in the Classes described below. A Claim, Equity Interest or
the Gaming Corp. Common Stock, is classified in a particular Class only to the
extent that the Claim or Equity Interest qualifies within the description of
that Class and is classified in other Classes only to the extent that any
remainder of the Claim or Equity Interest qualifies within the description of
such other Classes. A Claim is also classified in a particular Class only to
the extent that such Claim is an Allowed Claim in that Class and has not been
paid, released or otherwise satisfied prior to the Effective Date.
SUMMARY OF CLASSIFICATION.
Class 1: Priority Wage Claims Unimpaired
- no solicitation required
Class 2: Priority Benefit Plan Unimpaired
Contribution Claims - no solicitation required
Class 3: Secured Tax Claims Unimpaired
- no solicitation required
Class 4: Miscellaneous Secured Claims Unimpaired
- no solicitation required
Class 5: Original First Mortgage Note Claims Impaired
- entitled to vote
Class 6: Heller Lease Claims Impaired
- entitled to vote
Class 7: Capital Lease Claims Impaired
- entitled to vote
Class 8: General Unsecured Claims Impaired
- entitled to vote
Class 9: Grand Subordinated Claims Impaired
- deemed rejected
Class 10: Securities Litigation Claim Impaired
- deemed rejected
Class 11: Gaming Corp. Common Stock Unimpaired
Class 12: Equity Interests and - not entitled to vote
Equity Interests - Related Impaired
Claims - deemed rejected
<PAGE> 21
SPECIFIC CLASSIFICATION.
CLASS 1 - PRIORITY WAGE CLAIMS. Class 1 consists of all Claims that are
entitled to priority under Section 507(a)(3) of the Bankruptcy Code.
CLASS 2 - PRIORITY BENEFIT PLAN CONTRIBUTION CLAIMS. Class 2 consists of
all Claims that are entitled to priority under Section 507(a)(4) of the
Bankruptcy Code.
CLASS 3 - SECURED TAX CLAIMS. Class 3 consists of all Secured Tax Claims.
Each holder of a Secured Tax Claim shall be considered to be in its own
separate subclass within Class 3, and each such subclass shall be deemed to be
a separate Class for purposes of this Plan.
CLASS 4 - MISCELLANEOUS SECURED CLAIMS. Class 4 consists of all Secured
Claims, other than Secured Claims in Class 5, Class 6, and Class 7. Each
holder of a Miscellaneous Secured Claim shall be considered to be in its own
separate subclass within Class 4, and each such subclass shall be deemed to be
a separate Class for purposes of this Plan.
CLASS 5 - ORIGINAL FIRST MORTGAGE NOTE CLAIMS. Class 5 consists of all
Claims under the Original First Mortgage Notes, provided that, such Class makes
an election in the manner provided in and pursuant to Section 1111(b)(1)(A)(i)
of the Bankruptcy Code. If Class 3 does not elect the treatment afforded by
Section 1111(b)(1)(A)(i) of the Bankruptcy Code, Class 3 shall consist of only
the Allowed Secured Claims evidenced by the Original First Mortgage Notes.
CLASS 6 - HELLER LEASE CLAIMS. Class 6 consists of the Heller Lease
Claims.
CLASS 7 - CAPITAL LEASE CLAIMS. Class 7 consists of the Capital Lease
Claims. For purposes of this Plan only, the Capital Lease Claims shall be
deemed Allowed Secured Claims.
CLASS 8 - GENERAL UNSECURED CLAIMS. Class 8 consists of all General
Unsecured Claims, excepting therefrom, the Grand Subordinated Claims which are
contained in Class 9 under this Plan. If Class 5 does not elect the treatment
afforded by Section 1111(b)(1)(A)(i) of the Bankruptcy Code, Class 8 shall also
include the unsecured deficiency Claim of holders of the Original First
Mortgage Notes.
CLASS 9 - GRAND SUBORDINATED CLAIMS. Class 9 consists of the Grand
Subordinated Claims.
CLASS 10 - SECURITIES LITIGATION CLAIM. Class 10 consists of all
Securities Litigation Claim, if any.
CLASS 11 - GAMING CORP. COMMON STOCK. Class 11 consists of the Gaming
Corp. Common Stock held by Stratosphere.
<PAGE> 22
CLASS 12 - EQUITY INTERESTS AND EQUITY INTEREST RELATED CLAIMS. Class 12
consists of all Equity Interests and all Equity Interest Related Claims.
<PAGE> 23
ARTICLE 4
DESIGNATION OF AND PROVISIONS FOR TREATMENT OF CLASSES OF CLAIMS NOT
IMPAIRED BY THIS PLAN
CLASS 1 - PRIORITY WAGE CLAIMS. Each Allowed Priority Wage Claim shall be
paid in full in Cash upon the latest of: (i) the Effective Date, or as soon
thereafter as practicable; (ii) such date as may be fixed by the Bankruptcy
Court, or as soon thereafter as practicable; (iii) the tenth (10th) Business
Day after such Claim is allowed, or as soon thereafter as practicable; and (iv)
such date as the holder of such Claim and Reorganized Stratosphere or
Reorganized Gaming Corp., as the case may be, have agreed or shall agree.
Class 1 is unimpaired under this Plan; holders of Allowed Claims in Class 1 are
not entitled to vote on this Plan.
CLASS 2 - PRIORITY BENEFIT PLAN CONTRIBUTION CLAIMS. Each Allowed
Priority Benefit Plan Contribution Claim, if any, shall be paid in full in Cash
upon the latest of: (i) the Effective Date, or as soon thereafter as
practicable; (ii) such date as may be fixed by the Bankruptcy Court, or as soon
thereafter as practicable; (iii) the tenth (10th) Business Day after such Claim
is Allowed, or as soon thereafter as practicable; and (iv) such date as the
holder of such Claim and Reorganized Stratosphere or Reorganized Gaming Corp.,
as the case may be, have agreed or shall agree. Class 2 is unimpaired under
this Plan; holders of Allowed Claims in Class 2 are not entitled to vote on
this Plan.
CLASS 3 - SECURED TAX CLAIMS. Each Allowed Secured Tax Claim shall be
paid in full in Cash upon the latest of: (i) the Effective Date, or as soon
thereafter as practicable; (ii) such date as may be fixed by the Bankruptcy
Court, or as soon thereafter as practicable; (iii) the tenth (10th) Business
Day after such Claim is Allowed, or as soon thereafter as practicable; (iv) the
date on which such Secured Tax Claim is scheduled to be paid in the ordinary
course of business under applicable law or regulation; and (v) such date as the
holder of such Claims and Reorganized Stratosphere or Reorganized Gaming Corp.,
as the case may be, have agreed or shall agree. Class 3 is unimpaired under
this Plan; holders of Allowed Claims in Class 3 are not entitled to vote on
this Plan.
CLASS 4 - MISCELLANEOUS SECURED CLAIMS. On the Effective Date, at
Reorganized Stratosphere's or Reorganized Gaming Corp.'s option, the holder of
any Allowed Secured Claims in Class 4 shall receive one (1) of the following
alternative treatments:
the holder of such Claim shall be treated in accordance with the terms
and conditions of all Debt Instruments evidencing such Claim and the legal,
equitable or contractual rights to which each holder of such Claim is
entitled shall not otherwise be altered;
any default, other than a default of the kind specified in Section
365(b)(2) of the Bankruptcy Code, shall be Cured or Reinstated;
the maturity of the Claims shall be Reinstated as such maturity existed
before any
<PAGE> 24
default;
the other legal, equitable or contractual rights to
which the holder of the Claim is entitled shall not otherwise
be altered, provided, however, that as to any Allowed Secured
Claim which is a nonrecourse claim and exceeds the value of the
collateral securing the Claim, the collateral may be sold at a
sale at which the holder of such Claim has an opportunity to
bid;
on the Effective Date, or on such other date thereafter as may be
agreed to by Reorganized Stratosphere or Reorganized Gaming Corp., as
applicable, and the holder of such Claim, the Estate shall abandon the
collateral securing such Claim to the holder thereof in full satisfaction
and release of such Claim; or
on the Effective Date, the holder of such Claim shall receive, on
account of such Claim, Cash equal to its Allowed Secured Claim, or such
lesser amount to which the holder of such Claim shall agree, in full
satisfaction and release of such Claim. Class 4 is unimpaired under this
Plan; and the holders of Allowed Claims in Class 4 are not entitled to
vote on this Plan.
CLASS 11 - GAMING CORP. COMMON STOCK. On the Effective Date, Reorganized
Stratosphere shall own the Gaming Corp. Common Stock and Reorganized Gaming
Corp. shall continue as a wholly-owned subsidiary of Reorganized Stratosphere.
Class 11 is unimpaired under this Plan; the holder of the Class 11 Gaming Corp.
Common Stock is not entitled to vote on this Plan.
<PAGE> 25
ARTICLE 5
DESIGNATION OF AND PROVISIONS FOR TREATMENT OF CLASSES OF CLAIMS AND EQUITY
INTERESTS IMPAIRED BY THIS PLAN
CLASS 5 - ORIGINAL FIRST MORTGAGE NOTES. The holders of Allowed Claim
arising out of Original First Mortgage Notes shall receive the following
treatment under this Plan.
ELECTION MADE. If Class 5 elects the treatment afforded by Section
1111(b)(1)(A)(i) of the Bankruptcy Code, the holders of Allowed Class 5
Original First Mortgage Notes shall receive on the Distribution Date, in
full satisfaction, settlement, release, discharge of, and in exchange and
substitution for such Allowed Claims, their Pro Rata share of: (i)
$110,000,000 in principal amount of the Restated First Mortgage Notes;
(ii) the Class A Common Stock; and (iii) the Net Available Cash.
NO ELECTION MADE. If Class 5 does not elect the treatment afforded
by Section 1111(b)(1)(A)(i) of the Bankruptcy Code, the holders of
Allowed Class 5 Original First Mortgage Notes shall receive, on the
Distribution Date, in full satisfaction, settlement, release, discharge
of, and in exchange and substitution for that portion of their Allowed
Claim that is an Allowed Secured Claim, their Pro Rata share of: (i)
$110,000,000 in principal amount of the Restated First Mortgage Notes;
and (ii) the Net Available Cash.
PRINCIPAL TERMS. The principal terms and conditions of the Restated
First Mortgage Notes are summarized as follows:
PRINCIPAL AMOUNT: $135,000,000, of which $110,000,000 shall be
issued and distributed on the Distribution Date as provided in
Sections 5.1(a) and 5.1(b) above, and on a date subsequent to
the Distribution Date, the remaining $25,000,000 of Restated
First Mortgage Notes shall be issued for Cash as provided in
Section 6.3 of this Plan.
INTEREST: Interest on the outstanding principal amount of the
Restated First Mortgage Notes shall be payable semi-annually in
Cash at the rate of 8.5% per annum for the initial 2 years
following issuance and at the rate of 12.5% per annum thereafter
until maturity. The Restated First Mortgage Notes will mature
on the seventh (7th) anniversary of the Effective Date.
RESTRICTED ACCOUNT: As provided more fully in the Restated First
Mortgage Indenture, on the Effective Date, Reorganized
Stratosphere shall establish the Restricted Account and,
following the Effective Date, periodically deposit therein all
Cash generated by the business of Reorganized Stratosphere in
excess of the Cash requirements necessary to operate the
business in a reasonable and prudent manner up to the principal
amount of the Restated First Mortgage Notes. All interest
earned on the Restricted Account will be retained therein, and
the entire balance of the Restricted
<PAGE> 26
Account will be applied to repayment of the principal of the
Restated First Mortgage Notes at maturity. The specific terms and
conditions of the Restricted Account, and the rights and
obligations of Reorganized Stratosphere and other parties with
respect thereto, shall be set forth in the Restated First Mortgage
Indenture.
PRIORITY: As provided more fully in the Restated First Mortgage
Indenture and related loan and security documents, the Restated
First Mortgage Notes shall be senior secured indebtedness of
Reorganized Stratosphere ranking senior in right of payment to
all subordinated indebtedness of Reorganized Stratosphere.
SECURITY: As provided more fully in the Restated First Mortgage
Indenture and the Related Security Documents, the Restated First
Mortgage Notes shall be secured by a first lien on all assets of
Reorganized Stratosphere and Reorganized Gaming Corp. In
addition, on the Effective Date, Stratosphere Land shall execute
and deliver to the Indenture Trustee the Stratosphere Land Deed
of Trust (including the assignment of certain indebtedness of
Stratosphere Land to Stratosphere), pursuant to which
Stratosphere Land shall convey to the Indenture Trustee a first
lien upon certain real property described therein as security
for the Restated First Mortgage Notes, subject to the release
and subordination provisions set forth in Stratosphere Land Deed
of Trust and the Restated First Mortgage Indenture.
Notwithstanding anything in this Plan or the Confirmation Order
to the contrary, the liens and security interests that secure
the Original First Mortgage Notes shall not be altered by
Confirmation or the discharge or other provisions of this Plan.
All such liens and security interests shall survive Confirmation
and shall be merged into the liens and security interests
securing the Restated First Mortgage Notes.
GUARANTEE: On the Effective Date, Reorganized Gaming Corp. shall
execute and deliver to the Indenture Trustee the Restated
Subsidiary Guarantee, pursuant to which Reorganized Gaming Corp.
shall unconditionally guarantee Reorganized Stratosphere's
obligations under the Restated First Mortgage Notes.
FEES AND EXPENSES: On the Effective Date, all then unpaid
reasonable fees, costs, charges, and any other expenses under
the Original First Mortgage Indenture, including any reasonable
fees and expenses of professionals retained by the Indenture
Trustee as agreed to by Stratosphere or otherwise approved by
the Bankruptcy Court, shall be paid by the Debtor to the
Indenture Trustee.
CLASS 6 - HELLER LEASE CLAIMS. On the Effective Date, in full
satisfaction and settlement of the Heller Lease Claims, Reorganized
Stratosphere and Reorganized Gaming Corp. shall
<PAGE> 27
execute and deliver to Heller the Heller Amended Capital Lease. In addition,
Reorganized Stratosphere and Reorganized Gaming Corp. shall execute and deliver
to Heller and any such other and further documentation necessary to implement
the terms and conditions of the Heller Amended Capital Lease.
CLASS 7 - CAPITAL LEASE CLAIMS. On the Effective Date, in full
satisfaction and settlement of the Capital Lease Claims, Reorganized
Stratosphere and Reorganized Gaming Corp., as applicable, shall execute and
deliver to First Security and the Capital Lease Bank Group the Amended Capital
Lease Agreement and the Amended Participation Agreement. In addition, on or
prior to the Effective Date, Grand shall execute and deliver to the First
Security and the Capital Lease Bank Group the Grand Capital Lease Credit
Enhancement Guarantee.
CLASS 8 - GENERAL UNSECURED CLAIMS. Allowed Class 8 General Unsecured
Claims shall receive the following treatment:
ELECTION MADE. If Class 5 elects the treatment afforded by Section
1111(b)(1)(A)(i) of the Bankruptcy Code, each holder of an Allowed Class
8 General Unsecured Claim shall receive their Pro Rata share of
$5,000,000 Cash, upon the latest of: (i) the Effective Date, or as soon
thereafter as practicable; (ii) the tenth (10th) Business Day after such
Claim is allowed, or as soon thereafter as practicable; and (iii) such
date as the holder of such Claim and Reorganized Stratosphere or
Reorganized Gaming Corp., as the case may be, have agreed or shall agree.
NO ELECTION MADE. If Class 5 does not elect the treatment afforded
by Section 1111(b)(1)(A)(i) of the Bankruptcy Code, each holder of an
Allowed Class 8 General Unsecured Claim, which shall include the
unsecured deficiency Claims of the holders of Allowed Original First
Mortgage Notes, shall receive their Pro Rata share of (i) $5,000,000
Cash, and (ii) the Class A Common Stock. The number of shares of Class A
Common Stock to be issued to each holder of a Class 8 General Unsecured
Claim shall be rounded down to the closest whole number and no
distribution will be made with respect to any fractional share interest.
Such distribution shall be made upon the latest of: (i) the Effective
Date, or as soon thereafter as practicable; (ii) the tenth (10th)
Business Day after such Claim is allowed, or as soon thereafter as
practicable; and (iii) such date as the holder of such Claim and
Reorganized Stratosphere or Reorganized Gaming Corp., or the case may be,
have agreed or shall agree.
DELIVERY OF DISTRIBUTIONS. Except with respect to distributions to
holders of Original First Mortgage Notes which shall be governed by
Article 11 of this Plan, distributions to holders of Allowed General
Unsecured Claims in Class 8 shall be made by the Disbursing Agent: (i) at
the addresses set forth on the proofs of Claim filed by such holders (or
at the last known addresses of such holders if no proof of Claim is filed
or if the Debtor has been notified of a change of address); (ii) at the
addresses set forth in any written notices of address changes delivered
to the Disbursing Agent after the date of any related proof of Claim; or
(iii) at the addresses reflected in the Schedules if no proof of Claim
has been filed and the Disbursing Agent has not received a written notice
of a
<PAGE> 28
change of address. If any holder's distribution is returned as
undeliverable, no further distributions to such holder shall be made
unless and until the Disbursing Agent is notified of such holder's then
current address, at which time all missed distributions shall be made to
such holder without interest. Amounts in respect of undeliverable
distributions made through the Disbursing Agent shall be returned to
Reorganized Stratosphere until such distributions are claimed. All
claims for undeliverable distributions shall be made on or before the
second anniversary of the Effective Date. After such date, all unclaimed
property shall revert to Reorganized Stratosphere or Reorganized Gaming
Corp., as the case may be, and the Claim of any holder or successor to
such holder with respect to such property shall be discharged and forever
barred notwithstanding any federal or state escheat laws to the contrary.
CLASS 9 - GRAND SUBORDINATED CLAIMS. On account of the Grand Subordinated
Claims, the holder thereof shall receive nothing.
CLASS 10 - SECURITIES LITIGATION CLAIM. On account of its Securities
Litigation Claim, the holder thereof shall receive nothing.
CLASS 12 - EQUITY INTERESTS AND EQUITY INTERESTS RELATED CLAIMS. Each
holder of an Interest and each holder of an Equity Interest Related Claim shall
receive nothing, and the Equity Interest shall be canceled and terminated
without further act or action under any applicable agreement, law, regulation,
order or rule.
<PAGE> 29
ARTICLE 6
MEANS FOR IMPLEMENTATION OF PLAN
NEW COMMON STOCK. On the Effective Date, Reorganized Stratosphere shall
have 40,000,000 issued and outstanding shares of New Common Stock, consisting
of 4,000,000 shares of Class A Common stock and 36,000,000 shares of Class B
Common Stock. On the Effective Date, the issued and outstanding Class A Common
Stock shall collectively represent ten percent (10%) of the common equity and
voting power of Reorganized Stratosphere and the issued and outstanding Class B
Common Stock shall collectively represent ninety percent (90%) of the common
equity and voting power of Reorganized Stratosphere.
PUT/CALL ARRANGEMENT. The holders of the Class A Common Stock shall have
the right to require Grand to purchase all issued and outstanding shares of
Class A Common Stock, and Grand shall have the right to require the holders of
the Class A Common Stock to sell all issued and outstanding shares of Class A
Common Stock to Grand, on the following terms and conditions:
EXERCISE. Commencing on the fifth (5th) anniversary of the
Effective Date and continuing for a period of thirty (30) days
thereafter, the holders of a majority of the Class A Common Stock shall
have the right to require Grand to purchase all, but not less than all,
of the shares of Class A Common Stock issued and outstanding at such
time, if any. Commencing on and after the fifth anniversary of the
Effective Date and continuing for a period of two (2) years thereafter,
Grand, or the holder(s) of a majority of Class B Common Stock, shall
have the right to require the holders of the Class A Common Stock to
sell to Grand or its designee all, but not less than all, of the shares
of Class A Common Stock issued and outstanding at such time.
FORMULA. In the event that either Grand or the holders of the
Class A Common Stock shall exercise their respective rights as
described in Section 6.2.1 hereof, the purchase and sale of Class A
Common Stock shall be at a price per share equal to the quotient of:
(i) ten percent (10%) of the Trailing Cash Flow Valuation of
Reorganized Stratosphere, divided by (ii) the number of Class A Common
Stock issued and outstanding as of the effective date of such purchase
and sale. For purposes hereof, the phrase "Trailing Cash Flow
Valuation" shall mean an amount equal to seven (7) times the
Consolidated Cash Flow of Reorganized Stratosphere for the four (4)
fiscal quarter periods ending on the last day of the fiscal quarter
immediately preceding the date of determination, minus the aggregate
amount of long-term debt (net of cash in excess of restricted amounts,
excluding the Interest Expense Reserve) and capital lease obligations
of Reorganized Stratosphere (on a consolidated basis) as of the date of
determination.
PAYMENT. In the event that either Grand or the holders of the
Class A
<PAGE> 30
Common Stock shall exercise their respective rights pursuant to Section
6.2.1 hereof, Grand may at its election and in its sole discretion, pay
the purchase price for such shares of Class A Common Stock either (i)
in Cash, (ii) by delivery of common stock of Grand having a fair market
value, based on the average reported closing price of such Grand common
stock over the ten trading days immediately prior to the effective date
of such transaction, equal to 104.167% of the purchase price for such
shares of Class A Common Stock as determined in accordance with Section
6.2.2 hereof, or (iii) through a combination of Cash and Grand common
stock as set forth in subclauses (i) and (ii) of this Section 6.2.3.
<PAGE> 31
SALE OF RESTATED FIRST MORTGAGE NOTES.
TERMS OF OFFERING. In addition to the Restated First Mortgage Notes to be
issued to holders of Original First Mortgage Notes as described herein,
Reorganized Stratosphere shall offer for sale at par $25,000,000 in aggregate
principal amount of Restated First Mortgage Notes. Such offering of Restated
First Mortgage Notes shall commence as soon as practicable following the
Effective Date, as follows: (i) first, such Restated First Mortgage Notes will
be offered to the holders of the Original First Mortgage Notes as of the
Distribution Record Date pro rata in accordance with their respective holdings
of Original First Mortgage Notes; (ii) second, the unpurchased portion of such
Restated First Mortgage Notes, if any, will be offered to those holders of
Original First Mortgage Notes making purchases of Restated First Mortgage Notes
pursuant to the preceding clause (i), pro rata in accordance with their
purchase of such remaining Restated First Mortgage Notes; and (iii) third, the
unpurchased portion of such Restated First Mortgage Notes, if any, will be
purchased by Grand. Reorganized Stratosphere shall deposit the proceeds of the
sale of such Restated First Mortgage Notes into the Construction Escrow Account
immediately upon receipt.
REGISTRATION OF SECURITIES. The offer and sale of such Restated First
Mortgage Notes to the holders of Original First Mortgage Notes shall be
structured and conducted so as to qualify for an exemption from the
registration requirements of the Securities Act, and such offer and sale of
Restated First Mortgage Notes will be limited, to the extent appropriate, to
those holders of Original First Mortgage Notes that may be eligible and
qualified to purchase Restated First Mortgage Notes pursuant to such exception.
<PAGE> 32
GRAND PARTICIPATION.
PURCHASE OF CLASS B COMMON STOCK. On the Effective Date, Grand shall
purchase 36,000,000 shares of Class B Common Stock, which shall constitute all
of the issued and outstanding Class B Common Stock as of the Effective Date,
for an aggregate purchase price of $50,000,000. Subject to the terms and
conditions of the Investment Agreement and further subject to compliance with
applicable laws and regulations, Grand shall remit $50,000,000 to the
Construction Escrow Account, which shall represent the full purchase price for
the shares of Class B Common Stock to be purchased by Grand. Grand may at its
sole discretion deposit such purchase price in the Construction Escrow Account
prior to the Effective Date, and such deposited amounts shall be used to
commence the construction of Phase II in accordance with the Construction
Escrow Agreement.
COMMITMENT TO PURCHASE RESTATED FIRST MORTGAGE NOTES. Subject to the
terms and conditions of the Investment Agreement, Grand shall purchase at par
any and all of the $25,000,000 in aggregate principal amount of Restated First
Mortgage Notes to be offered by Reorganized Stratosphere that are not purchased
by holders of Original First Mortgage Notes, up to an aggregate principal face
amount and purchase price of $25,000,000. Grand shall not be required to place
any funds in escrow or post any bond or other security in respect of its
standby obligation to purchase such Restated First Mortgage Notes.
PAYMENT OF PURCHASE PRICE. The purchase price for all shares of Class B
Common Stock and any Restated First Mortgage Notes purchased by Grand shall be
paid by wire transfer of immediately available funds to the Construction Escrow
Account. The terms and manner in which funds may be released from the
Construction Escrow Account shall be set forth in the Construction Escrow
Agreement.
ADDITIONAL CONSIDERATION. As additional consideration for the issuance of
the Class B Common Stock to Grand on the Effective Date, Grand either has or
shall: (i) agree to purchase all unpurchased Restated First Mortgage Notes as
described herein; (ii) provide the Phase II Completion Guarantee; (iii) enter
into the Management Agreement with respect to the management of Reorganized
Stratosphere; and (iv) deliver the Grand Capital Lease Credit Enhancement
Guarantee. In addition, to facilitate the Restructuring, Grand shall consent
and agree to the subordination of the Grand Subordinated Claims in the manner
provided in this Plan.
PHASE II COMPLETION GUARANTEE. On the Effective Date, Grand shall enter
into the Phase II Completion Guarantee in favor of the holders of the Restated
First Mortgage Notes pursuant to which Grand shall guarantee the payment of all
costs necessary for the completion of Phase II up to a maximum of $25,000,000
in the aggregate, except that, if Grand makes or causes to be made any material
changes to this Plans or specifications for Phase II which result in increases
in the total amount of the Phase II Budget, such $25,000,000 limitation shall
be increased by the amount of any increase in the total
<PAGE> 33
amount of the Phase II Budget that may be made or caused to have been
made by Grand. The obligations of Grand under the Phase II
Completion Guarantee shall consist of the obligation: (i) to cause
all costs of constructing and completing Phase II, including, without
limitation, the costs of all labor, materials, permits, supplies,
equipment, permits and consulting costs, including, but not limited
to, fees of architects and engineers, to be paid and satisfied as the
same shall become due; (ii) to cause any and all costs and cost
overruns of constructing and completing Phase II that are not paid by
Reorganized Stratosphere or Reorganized Gaming Corp. to be paid,
funded and satisfied; and (iii) to cause all costs relating to Phase
II and any related real property, including, without limitation, the
payment of taxes, assessments, utilities, insurance and maintenance
expenses, to be funded, paid and satisfied prior to delinquency.
Notwithstanding the foregoing, Grand shall only be liable under the
Phase II Completion Guarantee to the extent that there are not
sufficient funds on deposit in the Construction Escrow Account to
finance completion of Phase II. In no event shall Grand incur,
directly or indirectly, any obligation, contingent or otherwise, for
payment of the principal amount of the Restated First Mortgage Notes.
Grand's obligations under the Phase II Completion Guarantee shall be
suspended during any force majeure event which makes it physically
impossible or unlawful to complete Phase II, including without
limitation: strikes, lockouts or other labor trouble; fire or other
casualty; governmental preemption in connection with a national
emergency; breakdown, accident or other acts of God; acts of war,
insurrection, civil strife and commotion; failure to supply despite
reasonable diligence of Stratosphere; and any statute, rule, order or
regulation of any legislature or governmental agency or any
department or subdivision thereof. The Phase II Completion Guarantee
shall provide that, if and to the extent that there are not
sufficient funds on deposit in the Construction Escrow Account to
finance the completion of Phase II, Grand shall pay into the
Construction Escrow Account, within five (5) business days after
receipt of notice thereof, an amount equal to any approved costs
incurred in connection with the completion of Phase II which are
expended for items included in the Phase II Budget. Funds made
available by Grand under the Phase II Completion Guarantee shall
constitute loans to Reorganized Stratosphere and shall: (i) be
evidenced by promissory notes bearing interest at the same rate as
the Restated First Mortgage Notes; (ii) be subordinated to the full
payment in Cash or in kind, as applicable, of all principal, premium
(if any), interest and other payments under the Restated First
Mortgage Notes; and (iii) mature after the maturity of the Restated
First Mortgage Notes Stratosphere may repay the principal of such
subordinated loans at any time subsequent to the repayment in full of
the Restated First Mortgage Notes, provided, that, Stratosphere shall
repay the principal of such subordinated loans not later than one (1)
year
following repayment in full of the Restated First Mortgage Notes. Interest on
such subordinated loans may be paid only if no event of default shall exist
with respect to the Restated First Mortgage Notes. Payments of interest and
principal on such subordinated loans shall otherwise be payable to Grand to the
extent permitted by the terms of the Restated First Mortgage Indenture.
MANAGEMENT AGREEMENT On the Effective Date, Reorganized Stratosphere and Grand
shall enter into the Management Agreement pursuant to which Grand shall manage
the construction of Phase II and the day-to-day operations of Reorganized
Stratosphere. The Management Agreement shall have an initial two (2) year term
commencing on the Effective Date. Grand shall receive a management fee in an
amount to be determined by the Bankruptcy Court as part of Confirmation Hearing
concerning this Plan; provided however, that Reorganized Stratosphere may not
make any payments of management fees to Grand during the continuance of a
default in the
<PAGE> 34
payment of principal, premium (if any) or interest with respect to the Restated
First Mortgage Notes or the Capital Lease Claims, as modified and restructured
pursuant to this Plan and related documentation; provided, further, that any
such unpaid management fees shall be paid by Reorganized Stratosphere to Grand
immediately upon the cure of such payment default. During the term of the
Management Agreement, no other fees, charges, payments or expense reimbursement
shall be paid by Reorganized Stratosphere to Grand in respect of the services
which are the subject of the Management Agreement.
CONSTRUCTION OF PHASE II. Reorganized Stratosphere shall establish the
Construction Escrow Account pursuant to the Construction Escrow Agreement, and
shall deposit into the Construction Escrow Account immediately upon receipt all
net proceeds of the sale of the Class B Common Stock and Restated First
Mortgage Notes, which shall equal not less than $75,000,000 in the aggregate.
The funds held in the Construction Escrow Account shall be beneficially owned
by Reorganized Stratosphere, and Reorganized Stratosphere shall grant to the
Indenture Trustee, for the benefit of the holders of the Restated First
Mortgage Notes, a security interest in all of Reorganized Stratosphere's right,
title and interest in the Construction Escrow Account. Reorganized
Stratosphere, the Indenture Trustee and the Construction Escrow Agent shall
enter into the Construction Escrow Agreement, which sets forth the terms upon
which, and the manner in which, funds shall be disbursed from the Construction
Escrow Account to fund completion of Phase II. The estimated costs of
completing Phase II as set forth in the Phase II Budget shall not exceed
$75,000,000 in the aggregate, and any amendments to the Phase II Budget must be
approved in writing by Grand.
NEW CERTIFICATE OF INCORPORATION AND BYLAWS. As of the Effective Date,
the certificate of incorporation and bylaws of the Debtors shall be amended and
restated substantially in the forms of the Reorganized Stratosphere Articles,
Reorganized Stratosphere By-Laws, Reorganized Gaming Corp. By-Laws, and
Reorganized Gaming Corp. Articles, which provide for, among other things, the
authorization of any and all acts necessary to effectuate this Plan including,
without limitation, the issuance of the Class A Common Stock, the Class B
Common Stock, and the Restated First Mortgage Notes. Such restated certificates
of incorporation and by-laws shall also provide, pursuant to Section 1123(a)(b)
of the Bankruptcy Code, for: (i) a provision prohibiting the issuance of
non-voting equity securities; and (ii) if applicable, a provision as to the
class of securities issued pursuant to this Plan or thereafter possessing
voting power, for an appropriate distribution of such power among such classes,
including, in the case of any class of equity securities having a preference
over another class of equity securities with respect to dividends, adequate
provisions for the election of directors representing such preferred class in
the event of a default in the payment of such dividends.
NO CORPORATE ACTION REQUIRED. As of the Effective Date: (i) the adoption
of the Reorganized Stratosphere Articles, Reorganized Stratosphere By-laws, the
Reorganized Gaming Corp. Articles, the Reorganized Gaming Corp. By-laws or
similar constituent documents for Reorganized Stratosphere and Reorganized
Gaming Corp.; (ii) the selection of directors and officers for Reorganized
Stratosphere and Reorganized Gaming Corp.; (iii) the adoption, execution,
delivery and implementation of all contracts, leases, instruments, releases and
other agreements related to or contemplated by this Plan; and (iv) the other
matters provided for under or in furtherance of this Plan involving corporate
action to be taken by or required of the Debtors, Reorganized Stratosphere or
Reorganized Gaming Corp. shall be deemed to have occurred and be effective as
provided herein, and shall be authorized and approved in all respects without
further order of the Bankruptcy Court or any requirement of further action by
the stockholders or directors of the Debtors, Reorganized Stratosphere, and
Reorganized Gaming Corp. As of the Effective Date, the term of each of the
officers and directors of the Debtor not continuing in office, if any, shall
terminate pursuant to the Confirmation Order without any further action by the
stockholders or directors of the Debtors, Reorganized Stratosphere or
Reorganized Gaming
<PAGE> 35
Corp.
DIRECTORS AND OFFICERS. On the Effective Date, the operation of
Reorganized Stratosphere and Reorganized Gaming Corp. shall become the general
responsibility of their respective Boards of Directors, who shall thereafter
have responsibility for the management, control and operation or Reorganized
Stratosphere and Reorganized Gaming Corp. The names of the initial Board of
Directors and executive officers of Reorganized Stratosphere shall be disclosed
at or prior to the hearing on the approval of the Disclosure Statement. All
such directors and executive officers of Reorganized Stratosphere and
Reorganized Gaming Corp. shall be deemed to have been elected or appointed, as
the case may be, pursuant to the Confirmation Order, but shall not take office
until the Effective Date. Those directors and officers not continuing in
office after the Effective Date, if any, shall be deemed removed therefrom
without cause as of the Effective Date pursuant to the Confirmation Order.
<PAGE> 36
ARTICLE 7
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
ASSUMPTION OR REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
EXECUTORY CONTRACTS. All executory contracts set forth on the schedule of
assumed executory contracts filed with the Bankruptcy Court as part of the Plan
Supplement that exist between the Debtors and any Person shall be deemed
assumed by Reorganized Stratosphere or Reorganized Gaming Corp., as the case
may be, as of the Effective Date, except for any executory contract: (i) that
has been rejected pursuant to an order of the Bankruptcy Court entered prior to
the Confirmation Date; or (ii) as to which a motion for approval of the
rejection of such executory contract, if applicable, has been filed with the
Bankruptcy Court prior to the Confirmation Date.
UNEXPIRED LEASES. All unexpired leases set forth on the schedule of
assumed leases filed with the Bankruptcy Court as part of the Plan Supplement,
that exist between the Debtors and any Person shall be deemed assumed by
Reorganized Stratosphere or Reorganized Gaming Corp., as the case may be, as of
the Effective Date, except for any unexpired lease: (i) that has been
rejected pursuant to an order of the Bankruptcy Court entered prior to the
Confirmation Date; or (ii) as to which a motion for approval of the rejection
of such unexpired lease, if applicable, has been filed with the Bankruptcy
Court prior to the Confirmation Date.
APPROVAL OF ASSUMPTION OR REJECTION. Entry of the Confirmation Order
shall constitute: (i) the approval, pursuant to Section 365(a) of the
Bankruptcy Code, of the assumption of the executory contracts and unexpired
leases assumed pursuant to this Plan or otherwise during the Chapter 11 Cases;
and (ii) the approval, pursuant to Section 365(a) of the Bankruptcy Code, of
the rejection of the executory contracts and unexpired leases rejected pursuant
to this Plan or otherwise during the Chapter 11 Cases. Notwithstanding
anything contained herein to the contrary, and subject to the provisions of the
Investment Agreement, the Debtors shall have the right to add or delete any
executory contract or unexpired lease that is initially an assumed executory
contract or an assumed unexpired lease on the schedules filed with the
Bankruptcy Court as part of the Plan Supplement.
CURE OF DEFAULTS. On the Effective Date or as soon thereafter as is
practicable, Reorganized Stratosphere or Reorganized Gaming Corp., as the case
may be, shall Cure any defaults under any executory contract or unexpired lease
assumed pursuant to this Plan in accordance with Section 365(b)(1) of the
Bankruptcy Code.
POST-PETITION DATE CONTRACTS AND LEASES. Executory contracts and
unexpired leases entered into and other obligations incurred after the Petition
Date by the Debtors shall be performed by the Debtors, Reorganized
Stratosphere, or Reorganized Gaming Corp., as applicable, in the ordinary
course of their business.
<PAGE> 37
BAR DATE. All proofs of Claims with respect to Claims arising from the
rejection of any executory contract or unexpired lease shall be filed with the
Bankruptcy Court no later than thirty (30) days after the Confirmation Date.
Any Claim not filed within such time shall be forever barred.
INDEMNIFICATION OBLIGATIONS. Any obligations of the Debtors to indemnify
any officer, director or employee serving as a fiduciary of any employee
benefit plan or program of the Debtors, pursuant to charter, by-laws, contract
or applicable state law shall be deemed to be, and shall be treated as, an
executory contract and assumed by Reorganized Stratosphere and Reorganized
Gaming Corp., as the case may be, on the Confirmation Date. Any obligation of
the Debtors to indemnify, reimburse, or limit the liability of any officer,
director, employee, agent, professional, financial advisor, or underwriter of
any securities issued by the Debtors shall: (i) be rejected, canceled, and
discharged pursuant to this Plan as of the Confirmation Date; and (ii) be
subordinated pursuant to Section 510 of the Bankruptcy Code.
<PAGE> 38
ARTICLE 8
CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED CLASSES
In the event that any impaired Class is determined to have rejected this
Plan in accordance with Section 1126 of the Bankruptcy Code, the Debtors and
Grand may use the provisions of Section 1129(b) of the Bankruptcy Code to
satisfy the requirements for confirmation of this Plan.
ARTICLE 9
PRESERVATION OF LITIGATION CLAIMS
In accordance with Section 1123(b)(3) of the Bankruptcy Code, and except
as otherwise expressly provided herein, Reorganized Stratosphere and
Reorganized Gaming Corp. shall retain and may, in their sole discretion,
enforce, sue on, settle or compromise (or decline to do any of the following)
all claims, rights or causes of action, suits, and proceedings, whether in law
or in equity, whether known or unknown, that the Debtors or their Estates may
hold against any Person, including, but not limited to, those listed on Exhibit
3 to this Plan. Reorganized Stratosphere and Reorganized Gaming Corp. may
pursue such retained litigation claims in accordance with their respective best
interests.
ARTICLE 10
SECURITIES TO BE ISSUED IN CONNECTION WITH THIS PLAN
Reorganized Stratosphere shall issue for distribution in accordance with
the provisions of this Plan the Restated First Mortgage Notes and the shares of
New Common Stock required for distribution or sale pursuant to the provisions
of this Plan.
ARTICLE 11
PROVISIONS GOVERNING DISTRIBUTIONS TO HOLDERS OF ORIGINAL FIRST MORTGAGE NOTES
DATE OF DISTRIBUTIONS. Distributions under this Plan to the holders of
the Original First Mortgage Notes shall be made on the Distribution Date.
DISBURSING AGENT. All distributions required under this Plan to the
holders of Original First Mortgage Notes shall be deposited with the Indenture
Trustee who shall deliver such distributions to the holders of Claims in
accordance with the provisions of this Plan and the terms of the Original First
Mortgage Indenture and, to the extent applicable, the Restated First Mortgage
Indenture.
SURRENDER OF SECURITIES OR INSTRUMENTS. On or before the Distribution
Date, or as soon
<PAGE> 39
as practicable thereafter, each holder of an instrument evidencing a Claim on
account of Original First Mortgage Notes shall surrender such instrument to the
Indenture Trustee and such instrument shall be canceled. No distribution of
property hereunder shall be made to or on behalf of any such holder unless and
until such instrument is received by the Indenture Trustee, or the
unavailability of such instrument is reasonably established to the satisfaction
of the Indenture Trustee. Any such holder who fails to surrender or cause to
be surrendered such instrument or fails to execute and deliver an affidavit of
loss and indemnity reasonably satisfactory to the Indenture Trustee prior to
the fifth (5th) anniversary of the Effective Date, shall be deemed to have
forfeited all rights and Claims in respect of such instrument and shall not
participate in any distribution hereunder, and all property in respect of such
forfeited distribution, including interest accrued thereon, shall revert to
Reorganized Stratosphere notwithstanding any federal or state escheat laws to
the contrary.
DISTRIBUTION RECORD DATE. At the close of business on the Distribution
Record Date, the transfer ledgers of the Indenture Trustee shall be closed, and
there shall be no further changes in the record holders of the Original First
Mortgage Notes. Reorganized Stratosphere and the Indenture Trustee shall have
no obligation to recognize any transfer of such Original First Mortgage Notes
occurring after the Distribution Record Date. Reorganized Stratosphere and the
Indenture Trustee shall be entitled instead to recognize and deal for all
purposes hereunder with only those record holders stated on the transfer
ledgers as of the close of business on the Distribution Record Date.
DELIVERY OF DISTRIBUTIONS. Distributions to holders of Original First
Mortgage Notes shall be made by the Indenture Trustee at the addresses
contained in the official records of the Indenture Trustee. If any holder's
distribution is returned as undeliverable, no further distributions to such
holder shall be made unless and until the Indenture Trustee is notified of such
holder's then current address, at which time all missed distributions shall be
made to such holder without interest. Amounts in respect of undeliverable
distributions shall be made to such holder without interest. Amounts in
respect of undeliverable distributions made through the Indenture Trustee shall
be returned to Reorganized Stratosphere until such distributions are claimed.
All claims for undeliverable distributions shall be made on or before the fifth
(5th) anniversary of the Effective Date. After such date, all unclaimed
property shall revert to Reorganized Stratosphere and the claim of any holder
or successor to such holder with respect to such property shall be discharged
and forever barred notwithstanding any federal or state escheat laws to the
contrary.
FRACTIONAL DOLLARS; DE MINIMIS DISTRIBUTIONS. Any other provision of this
Plan notwithstanding, payments of fractions of dollars shall not be made.
Whenever any payment of a fraction of a dollar under this Plan would otherwise
be called for, the actual payment made shall reflect a rounding of such
fraction to the nearest whole dollar (up or down), with half dollars being
rounded down. The Indenture Trustee shall not make any payment of less than
twenty-five dollars ($25.00) with respect to any Claim in Class 5 unless a
request therefor is made in writing to the Indenture Trustee.
<PAGE> 40
ARTICLE 12
CONDITIONS PRECEDENT
CONDITIONS TO CONFIRMATION. The following are conditions precedent to
confirmation of this Plan:
The Bankruptcy Court shall have entered an order approving the
Disclosure Statement with respect to this Plan in form and substance
reasonably acceptable to Grand and the Debtors; and,
The Confirmation Order shall be in form and substance reasonably
acceptable to Grand and the Debtors.
CONDITIONS TO EFFECTIVENESS. The following are conditions precedent to
the occurrence of the Effective Date, each of which may be satisfied or waived
in accordance with Section 12.3 of this Plan:
The Confirmation Date shall have occurred and the Confirmation Order
shall, among other things, provide that:
The provisions of the Confirmation Order are nonseverable and mutually
dependent;
All executory contracts or unexpired leases assumed by
Reorganized Stratosphere and Reorganized Gaming Corp. during the
Chapter 11 Cases or under this Plan shall remain in full force and
effect for the benefit of Reorganized Stratosphere and Reorganized
Gaming Corp. notwithstanding any provision in such contract or
lease (including those described in Sections 365(b)(2) and (f) of
the Bankruptcy Code) that prohibits such assignment or transfer or
that enables, permits or requires termination of such contract or
lease;
Except as expressly provided in this Plan, the Debtors are discharged
effective upon the Effective Date from any "debt" (as that term is
defined in Section 101(12) of the Bankruptcy Code), and the
Debtors' liability in respect thereof is extinguished completely,
whether reduced to judgment or not, liquidated or unliquidated,
contingent or noncontingent, asserted or unasserted, fixed or
unfixed, matured or unmatured, disputed or undisputed, legal or
equitable, or known or unknown, or that arose from any agreement
of the Debtors that has either been assumed or rejected in the
Chapter 11 Cases or pursuant to this Plan, or obligation of the
Debtors incurred before the Confirmation Date, or from any conduct
of the Debtors prior to the Confirmation Date, or that otherwise
arose before the Confirmation Date, including, without limitation,
all interest, if any, on any such debts, whether such interest
accrued before or after the Petition
<PAGE> 41
Date;
This Plan does not provide for the liquidation of all or
substantially all of the property of the Debtors and its
confirmation is not likely to be followed by the liquidation of
Reorganized Stratosphere or Stratosphere Gaming Corp. or the need
for further financial reorganization.
The Bankruptcy Court in the Confirmation Order shall have
approved the validity and enforceability of the Restated
Subsidiary Guarantee and the Stratosphere Land Deed of Trust to be
delivered pursuant to this Plan, and that such conveyances are not
subject to being rendered unenforceable under Sections 544, 547,
and 548 of the Bankruptcy Code or under any applicable law
governing fraudulent conveyances.
The Confirmation Order shall be a Final Order, except that Grand shall
reserve the right to cause the Effective Date to occur notwithstanding the
pendency of an appeal of the Confirmation Order, under circumstances that would
moot such appeal.
Each of the conditions precedent to the obligations of the Debtors and
Grand under the Investment Agreement shall have been satisfied or waived by the
involved party as provided therein.
No request for revocation of the Confirmation Order under Section 1144
of the Bankruptcy Code shall have been made, or, if made, shall remain pending.
The Bankruptcy Court in the Confirmation Order shall have approved the
retention of jurisdiction provisions in Article 14 of this Plan.
All documents necessary to implement the transactions contemplated by
this Plan shall be in form and substance reasonably acceptable to the Debtors
and Grand.
Grand and the Debtors shall have received any and all required approvals
by the Gaming Authorities to consummate this Plan and the issuance of the
securities hereunder.
From and after the Confirmation Date, there shall not have occurred,
directly or indirectly, any material adverse change in Stratosphere's condition
(financial or otherwise), business, assets, liabilities, properties, prospects,
results of operations, or relations with employees or suppliers.
Stratosphere and Gaming Corp. shall have sufficient Cash on the
Effective Date to make all Cash payments required to be made under this Plan on
the Effective Date or Distribution Date, as the case may be. In addition,
after taking into account the Cash payments to be made by Stratosphere and
Gaming Corp. pursuant to this Plan, Stratosphere and Gaming Corp. shall have
sufficient working capital to conduct their operations in the ordinary course
of their business.
<PAGE> 42
WAIVER OF CONDITIONS. The conditions set forth in Sections 12.1 and 12.2
hereof, may be waived by Stratosphere only with the prior written consent and
approval of Grand.
<PAGE> 43
ARTICLE 13
TITLE TO PROPERTY; DISCHARGE; INJUNCTION
REVESTING OF ASSETS. Subject to the provisions of this Plan, the property
of the Estate of the Debtors shall revest in Reorganized Stratosphere and
Reorganized Gaming Corp. on the Effective Date. As of the Effective Date, all
such property of the Debtors shall be free and clear of all liens, Claims and
Equity Interests of holders thereof, except as otherwise provided herein. From
and after the Effective Date, Reorganized Stratosphere and Reorganized Gaming
Corp. may operate their business, and may use, acquire and dispose of their
property free of any restrictions of the Bankruptcy Code, including the
employment of and payment to professionals, except as otherwise provided in
this Plan or the Confirmation Order.
DISCHARGE. Except as provided in this Plan or the Confirmation Order, the
rights afforded under this Plan and the treatment of Claims and Equity
Interests under this Plan shall be in exchange for and in complete
satisfaction, discharge and release of all Claims and termination of all Equity
Interests, including any interest accrued on Claims from the Petition Date.
Except as provided in this Plan or the Confirmation Order, Confirmation shall:
(a) discharge the Debtors, Reorganized Stratosphere, and Reorganized Gaming
Corp. from all Claims or other debts that arose before the Confirmation Date,
and all debts of the kind specified in Sections 502(g), 502(h) or 502(i) of the
Bankruptcy Code, whether or not: (i) a proof of claim based on such debt is
filed or deemed filed pursuant to Section 501 of the Bankruptcy Code; (ii) a
Claim based on such debt is allowed pursuant to Section 502 of the Bankruptcy
Code; or (iii) the holder of a Claim based on such debt has accepted this Plan;
and (b) terminate all Equity Interests and other rights of equity security
holders in the Debtors.
INJUNCTION. Except as provided in this Plan or the Confirmation Order, as
of the Confirmation Date, all entities that have held, currently hold or may
hold a Claim or other debt or liability that is discharged or an Equity
Interest or other right of an equity security holder that is terminated
pursuant to the terms of this Plan are permanently enjoined from taking any of
the following actions on account of any such discharged Claims, debts or
liabilities or terminated Equity Interests or rights: (i) commencing or
continuing in any manner any action or other proceeding against the Debtors,
Reorganized Stratosphere, Reorganized Gaming Corp., or their respective
property; (ii) enforcing, attaching, collecting or recovering in any manner any
judgment, award, decree or order against the Debtors, Reorganized Stratosphere
Reorganized Gaming Corp., or their respective property; (iii) creating,
perfecting or enforcing any lien or encumbrance against the Debtors,
Reorganized Stratosphere, Reorganized Gaming Corp., or their respective
property; (iv) asserting a setoff, right of subrogation or recoupment of any
kind against any debt, liability or obligation due to the Debtors, Reorganized
Stratosphere, Reorganized Gaming Corp., or their respective property; and (v)
commencing or continuing any action, in any manner, in any place, that does not
comply with or is inconsistent with the provisions of this Plan or the
Bankruptcy Code. Notwithstanding anything contained in this Plan to the
contrary, nothing set forth herein shall prevent Reorganized Stratosphere from
initiating or pursuing any claim or cause of action it may have against Robert
Stupak or any of his Affiliates.
<PAGE> 44
EXCULPATION. Neither Reorganized Stratosphere, Reorganized Gaming Corp.,
Grand, the Capital Lease Bank Group, nor any Statutory Committee, nor any of
their respective present or former members, directors, officers, employees,
advisors, attorneys, or agents, shall have or incur any liability to any holder
of a Claim or Equity Interest, or any other party in interest, or any of their
respective agents, employees, representatives, financial advisors, attorneys,
or Affiliates, or any of their successors or assigns, for any act or omission
in connection with, relating to, or arising out of, the Chapter 11 Cases, the
pursuit of confirmation of this Plan, the consummation of this Plan, except for
their willful misconduct, and in all respects shall be entitled to reasonably
rely upon the advice of counsel with respect to their duties and
responsibilities under this Plan or in the context of the Chapter 11 Cases. No
holder of a Claim or Interest, or any other party in interest, including their
respective agents, employees, representatives, financial advisors, attorneys or
Affiliates, shall have any right of action against Reorganized Stratosphere,
Reorganized Gaming Corp., Grand, the Capital Lease Bank Group, any Statutory
Committee, or any of their respective present or former members, officers,
directors, employees, advisors, attorneys, or agents, for any act or omission
in connection with, relating to, or arising out of, the Chapter 11 Cases, the
pursuit of confirmation of this Plan, the consummation of this Plan, or the
administration of this Plan, except for their willful misconduct.
NO WAIVER. Nothing set forth in this Plan shall preclude or otherwise
prohibit the assertion of a claim or cause of action by any Person entitled to
assert any such claim or cause of action under applicable law against any
professional, financial advisor, or underwriter in conjunction with the
purchase or sale of the Original First Mortgage Notes.
<PAGE> 45
ARTICLE 14
RETENTION OF JURISDICTION
JURISDICTION. Notwithstanding the entry of the Confirmation Order and the
occurrence of the Effective Date, the Bankruptcy Court shall retain such
jurisdiction over the Chapter 11 Cases after the Effective Date as is legally
permissible, including jurisdiction to:
Allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any Claim,
including the resolution of any request for payment of any Administrative
Claim and the resolution of any and all objections to the allowance or
priority of Claims;
Grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or
this Plan;
Resolve any matters related to the assumption, assumption and
assignment or rejection of any executory contract or unexpired lease to
which the Debtors are a party and to hear, determine and, if necessary,
liquidate, any Claims arising therefrom or cure amounts related thereto;
Ensure that distributions to holders of Allowed Claims are
accomplished pursuant to the provisions of this Plan;
Decide or resolve any motions, adversary proceedings, contested or
litigated matters and any other matters and grant or deny any
applications or motions involving the Debtors that may be pending on the
Effective Date;
Enter such orders as may be necessary or appropriate to implement or
consummate the provisions of this Plan and all contracts, instruments,
releases and other agreements or documents created in connection with
this Plan or the Disclosure Statement, except as otherwise provided
herein;
Resolve any cases, controversies, suits or disputes that may arise
in connection with the consummation, interpretation or enforcement of
this Plan or any Person's obligations incurred in connection with this
Plan;
Modify this Plan before or after the Effective Date pursuant to
Section 1127 of the Bankruptcy Code or modify the Disclosure Statement or
any contract, instrument, release or other agreement or document created
in connection with this Plan or the Disclosure Statement; or remedy any
defect or omission or reconcile any inconsistency in any Bankruptcy Court
order, this Plan, the Disclosure Statement or any contract, instrument,
release or other agreement or document created in connection with this
Plan or the Disclosure Statement, in such manner as may be necessary or
appropriate to consummate this Plan, to the extent authorized by the
Bankruptcy Code;
<PAGE> 46
Issue injunctions, enter and implement other orders or take such
other actions as may be necessary or appropriate to restrain interference
by any entity with consummation or enforcement of this Plan, except as
otherwise provided herein;
Enter and implement such orders as are necessary or appropriate if
the Confirmation Order is for any reason modified, stayed, reversed,
revoked or vacated;
Determine any other matters that may arise in connection with or
relate to this Plan, the Disclosure Statement, the Confirmation Order or
any contract, instrument, release or other agreement or document created
in connection with this Plan or the Disclosure Statement, except as
otherwise provided herein; and
Enter an order closing the Chapter 11 Cases.
<PAGE> 47
ARTICLE 15
MODIFICATION, AMENDMENT, AND WITHDRAWAL OF PLAN
MODIFICATION AND AMENDMENT. Prior to any termination of the Investment
Agreement, Stratosphere and Gaming Corp. may alter, amend, or modify this Plan
or any Exhibits thereto under Section 1127(a) of the Bankruptcy Code at any
time, provided such alteration, amendment or modification is approved, in
writing, by Grand in its sole discretion. After the Confirmation Date and
prior to substantial consummation of this Plan as defined in Section 1101(2) of
the Bankruptcy Code, Stratosphere and Gaming Corp. may, under Section 1127(b)
of the Bankruptcy Code, institute proceedings in the Bankruptcy Court to remedy
any defect or omission or reconcile any inconsistencies in this Plan, the
Disclosure Statement, or the Confirmation Order, and such matters as may be
necessary to carry out the purposes and effects of this Plan so long as such
proceedings do not materially adversely affect the treatment of holders of
Claims or holders of Equity Interests under this Plan, and provided further
that Grand consents, in writing, to such proceedings; provided, however, that
prior notice of such proceedings shall be served in accordance with the
Bankruptcy Rules or order of the Bankruptcy Court. Any modification or
amendment to this Plan or the documents contained in the Plan Supplement that
affects the rights and treatment of the Capital Lease Bank Group shall be
subject to the prior written approval of the Capital Lease Bank Group.
TERMINATION OR WITHDRAWAL. If the Investment Agreement is terminated
according to its terms, Stratosphere and Gaming Corp. may alter, amend, or
modify this Plan or any Exhibits thereto consistent with the provision of
Section 1127(a) of the Bankruptcy Code at any time.
<PAGE> 48
ARTICLE 16
MISCELLANEOUS
FILING OF OBJECTIONS TO CLAIMS. After the Effective Date, objections to
Claims shall be made and objections to Claims made previous thereto shall be
pursued by Reorganized Stratosphere or Reorganized Gaming Corp., as the case
may be, or any other party properly entitled to do so after notice to
Reorganized Stratosphere and approval by the Bankruptcy Court. Any objections
made after the Effective Date shall be filed and served not later than
forty-five (45) days after the Effective Date; provided, however, that such
period may be extended by order of the Bankruptcy Court for good cause shown.
SETTLEMENT OF OBJECTIONS AFTER EFFECTIVE DATE. From and after the
Effective Date, Reorganized Stratosphere or Reorganized Gaming Corp., as the
case may be, may litigate to judgment, propose settlements of, or withdraw
objections to, all pending or filed Disputed Claims, and Reorganized
Stratosphere or Reorganized Gaming Corp., as applicable, may settle or
compromise any Disputed Claim, without notice and a hearing and without
approval of the Bankruptcy Court.
EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS; TIMING. Each of the
officers of the Debtors, Reorganized Stratosphere, and Reorganized Gaming Corp.
is authorized and directed under the resolutions of the board of directors of
the Debtors, Reorganized Stratosphere, or Reorganized Gaming Corp., as the case
may be, to execute, deliver, file or record such contracts, instruments,
releases and other agreements or documents and to take such actions as may be
necessary or appropriate to effectuate and further evidence the terms and
conditions of this Plan and any securities issued pursuant to this Plan. All
transactions that are required to occur on the Effective Date under the terms
of this Plan shall be deemed to have occurred simultaneously. The Debtors,
Reorganized Stratosphere, and Reorganized Gaming Corp. are authorized and
directed to do such acts and execute such documents as are necessary to
implement this Plan.
EXEMPTION FROM TRANSFER TAXES. Pursuant to Section 1146(c) of the
Bankruptcy Code, the issuance, transfer or exchange of equity securities, or
other Estate property under this Plan shall not be subject to any stamp, real
estate, transfer, mortgage, recording or other similar tax.
REVOCATION OR WITHDRAWAL OF THIS PLAN. If this Plan is withdrawn or
revoked, then this Plan shall be deemed null and void and nothing contained
herein shall be deemed to constitute a waiver of any Claims by or against the
Debtors or any other Person nor shall the withdrawal or revocation of this Plan
prejudice in any manner the rights of the Debtors or any Person in any further
proceedings involving the Debtors. In the event this Plan is withdrawn or
revoked, nothing set forth herein shall be deemed an admission of any sort and
this Plan and any transaction contemplated thereby shall not be admitted into
evidence in any proceeding.
BINDING EFFECT. This Plan shall be binding upon, and shall inure to the
benefit of, the Debtors, the holders of all Claims and Equity Interests and
their respective successors and assigns.
<PAGE> 49
GOVERNING LAW. Except to the extent that the Bankruptcy Code or other
federal law is applicable or as provided in any document contained in the Plan
Supplement or in any document which remains unaltered by this Plan, the rights,
duties and obligations of the Debtors and any other Person arising under this
Plan shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of Nevada, without giving effect to Nevada's choice
of law provisions.
INTERCOMPANY CLAIMS. Except with respect to the Original Subsidiary
Guarantee, which shall be amended and restated pursuant to the Restated
Subsidiary Guarantee, any intercompany Claims between or against Stratosphere
and Gaming Corp., as the case may be, shall remain unaltered by this Plan, and
such intercompany Claims shall be paid or otherwise satisfied in the ordinary
course of business.
MODIFICATION OF PAYMENT TERMS. Reorganized Stratosphere and Reorganized
Gaming Corp. reserve the right to modify the treatment of any Allowed Claim or
Equity Interest in any manner adverse only to the holder of such Claim or
Equity Interest at any time after the Effective Date upon the prior written
consent of the holder whose Allowed Claim or Equity Interest treatment is being
adversely affected.
SET OFFS. The Debtors, Reorganized Stratosphere, and Reorganized Gaming
Corp., may, but shall not be required to, set off or recoup against any Claim
or Equity Interest and the payments or other distributions to be made pursuant
to this Plan in respect of such Claim, claims of any nature whatsoever that
arose prior to the Petition Date which the Debtors may have against the holder
of such Claim or Equity Interest to the extent such Claims may be set off or
recouped under applicable law, but neither the failure to do so nor the
allowance of any Claim or Equity Interest hereunder shall constitute a waiver
or release by the Debtors, Reorganized Stratosphere, or Reorganized Gaming
Corp., of any such claim that it may have against such holder.
NOTICES. Any notice required or permitted to be provided under this Plan
shall be in writing and served by either: (a) certified mail, return receipt
requested, postage prepaid, (b) hand delivery or (c) reputable overnight
courier service, freight prepaid, to be addressed as follows:
If to the Debtors STRATOSPHERE CORPORATION
Las Vegas Boulevard South
Las Vegas, Nevada 89104
Attn: Richard Schuetz, President and
Chief Executive Officer
Andrew S. Blumen,
Executive Vice President and
General Counsel
Telephone: (702) 380-7777
Fax: (702) 383-4733
<PAGE> 50
With a copy to: GORDON & SILVER, LTD.
Howard Hughes Parkway, 14th Floor
Las Vegas, Nevada 89109
Attn: Gerald M. Gordon, Esq.
William M. Noall, Esq.
Telephone: (702) 796-5555
Fax: (702) 369-2666
If to Grand: GRAND CASINOS, INC.
Cheshire Lane
Minnetonka, Minnesota 55305
Attn: Bruce Martin, General Counsel
Joseph M. Valandra, Vice President
Telephone: (612) 449-9092
Fax: (612) 449-7003
With a copy to: SQUIRE, SANDERS & DEMPSEY, LLP
Two Renaissance Square
N. Central Avenue, Suite 2700
Phoenix, Arizona 85004
Attn: Craig D. Hansen, Esq.
Christopher D. Johnson, Esq.
Telephone: (602) 528-4000
Fax: (602) 253-8129
With a copy to: BEESLEY & PECK, LTD.
Corporate Pointe
South Virginia Street
Suite 250
Reno, Nevada 89502
Attn: Bruce T. Beesley, Esq.
Telephone: (702) 827-8666
Fax: (702) 827-8722
If to the Noteholders Committee:
CARGILL FINANCIAL SERVICES CORPORATION
Clearwater Drive
Minnetonka, Minnesota 55343-9497
Attn: Patrick J. Halloran
Steven Adams, Esq.
Telephone: (612) 984-3048/3404
Fax: (612) 984-3913/3898
With a copy to: SHEA & CARLYON, LTD.
<PAGE> 51
South Fourth Street
Suite 200
Las Vegas, Nevada 89101
Attn: James P. Shea, Esq.
Candace C. Carlyon, Esq.
Telephone: (702) 471-7432
Fax: (702) 471-7435
JONES, DAY, REAVIS & POGUE
With a copy to: West Wacker Drive
Chicago, Illinois 60601-1692
Attn: David S. Kurtz, Esq.
Telephone: (312) 782-3939
Fax: (312) 782-8585
If to the Indenture Trustee: IBJ SCHRODER BANK AND TRUST COMPANY
One State Street
New York, New York 10004
Attn: Max Volmar
Telephone: (212) 858-2428
Fax: (212) 858-2156
With a copy to: BRYAN CAVE LLP
Suite 3600
N. Broadway
St. Louis, Missouri 63102-2750
Attn: Gregory D. Willard, Esq.
John W. Hoffman, Esq.
Telephone: (314) 259-2000
Fax (314) 259-2020
STATUTORY COMMITTEE. Any Statutory Committee appointed in the Chapter 11
Cases shall terminate on the Effective Date and shall thereafter have no
further responsibilities in respect of the Chapter 11 Cases, except with
respect to preparation of filing of applications for compensation and
reimbursement of expenses.
SEVERABILITY. If any provision of this Plan is found by the Bankruptcy
Court to be invalid, illegal or unenforceable, then, at the option of Grand,
such provision shall not affect the validity or legality of any other provision
of this Plan which shall remain effective.
WITHHOLDING AND REPORTING REQUIREMENTS. In connection with this Plan and
all instruments and securities issued in connection therewith and distributions
thereon, Reorganized Stratosphere, the Disbursing Agent, and the Indenture
Trustee, as the case may be, shall comply with all withholding and reporting
requirements imposed by any federal, state, local, or foreign taxing authority,
and all distributions hereunder shall be subject to any such withholding and
<PAGE> 52
reporting requirements.
POST CONFIRMATION REPORTING. Until the entry of the final decree closing
the Chapter 11 Cases, Reorganized Stratosphere and Reorganized Gaming Corp.
shall file with the clerk of the Bankruptcy Court, not later than four (4)
months after the entry of the Confirmation Order and every six (6) months
thereafter, a report of the action taken by Reorganized Stratosphere and
Reorganized Gaming Corp. and the progress made toward consummation of the
confirmed Plan.
DATED: June 20, 1997
Respectfully submitted,
STRATOSPHERE CORPORATION,
a Delaware corporation
By: _________________________________
Andrew S. Blumen, Executive Vice President
STRATOSPHERE GAMING CORP.,
a Nevada corporation
By:__________________________________
Andrew S. Blumen, Executive Vice President
GORDON & SILVER, LTD.
By: __________________________________
Gerald M. Gordon,
Attorney for the Debtors-In-Possession
STRATOSPHERE LAND CORPORATION,
a Nevada corporation
By:__________________________________
<PAGE> 53
Andrew S. Blumen, Executive Vice President
<PAGE> 54
EXHIBIT 1
TO
FIRST AMENDED PLAN OF REORGANIZATION
AMENDED AND RESTATED INVESTMENT AND REORGANIZATION AGREEMENT
DATED AS OF JUNE 20, 1997
<PAGE> 55
EXHIBIT 2
TO
FIRST AMENDED PLAN OF REORGANIZATION
PHASE II BUDGET
<PAGE> 56
EXHIBIT 3
TO
FIRST AMENDED PLAN OF REORGANIZATION
CERTAIN PRESERVED POTENTIAL CAUSES OF ACTION
<PAGE> 57
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS, RULES OF INTERPRETATION AND COMPUTATION OF
TIME 2
Definitions
Administrative Claim
Administrative Claim Bar Date
Administrative Expense Reserve
Affiliate
Allowed Claim
Amended Capital Lease Agreement.
Amended Heller Capital Lease
Amended Participation Agreement
Ballot
Bankruptcy Code
Bankruptcy Court.
Bankruptcy Rules
Bar Date.
Business Day
Capital Lease Bank Group
Capital Lease Claims
Cash.
Chapter 11 Cases
Claim
Class.
Class A Common Stock
Class B Common Stock
Confirmation
Confirmation Date
Confirmation Hearing
Confirmation Order
Consolidated Cash Flow
Consolidated Net Income
Construction Escrow Account
Construction Escrow Agreement
Construction Escrow Agent
Contingent Claim
Creditor.
Creditors' Committee
Cure.
Debt Instrument
Debtors.
<PAGE> 58
Disbursing Agent
Disclosure Statement
Disputed Claim
Disputed Equity Interest
Distribution Date
Distribution Record Date
EBITDA
Effective Date
Effective Date Cash
Equity Interest
Equity Interest - Related Claim
Estate.
Final Order
First Security
GAAP
Gaming Authorities
Gaming Board
Gaming Commission
Gaming Corp.
Gaming Corp. Common Stock
General Unsecured Claim
Grand
Grand Capital Lease Credit Enhancement Guarantee
Grand Subordinated Claim
Heller
Heller Capital Lease Claims
Indenture Trustee
Interest Expense Reserve
Initial Capital Expense Reserve
Investment Agreement
IRS
Minimum Working Capital Reserve
Net Available Cash
New Common Stock
New Management Agreement
Noteholder Committee
Notice and a Hearing
Old Common Stock
Original Capital Lease Agreement
Original First Mortgage Indenture
Original First Mortgage Notes
Original Participation Agreement
Original Subsidiary Guarantee
Person
Petition Date
<PAGE> 59
Phase II
Phase II Budget
Phase II Completion Guarantee
Phase II Completion Subordination Agreement
Plan
Plan Distributed Cash
Plan Supplement
Preserved Ordinary Course Administrative Claim
Priority Benefit Plan Contribution Claim
Priority Tax Claim
Priority Wage Claim
Professional Fee Bar Date
Professional Fees
Pro Rata
Put/Call Arrangement
Reclamation Claims
Reinstated or Reinstatement
Related Security Documents
Reorganized Gaming Corp.
Reorganized Gaming Corp. Articles
Reorganized Gaming Corp. By-Laws
Reorganized Stratosphere
Reorganized Stratosphere Articles
Reorganized Stratosphere By-Laws
Restated First Mortgage Indenture
Restated First Mortgage Notes
Restated Subsidiary Guarantee
Restricted Account
Restricted Gaming Reserve
Schedules
SEC
Secured Claim
Secured Tax Claims
Securities Act
Securities Litigation Claim
Statutory Committee
Stratosphere.
Stratosphere Land.
Stratosphere Land Deed of Trust
Subordinated Claim
Taxes
Total Restricted Cash
Voting Record Date
B. Computation of Time.
<PAGE> 60
C. Rules of Interpretation.
ARTICLE 2 TREATMENT OF UNCLASSIFIED CLAIMS
Treatment of Administrative Claims
Preserved Ordinary Course Administrative Claims
Allowed Priority Tax Claims
Allowed Reclamation Claims
ARTICLE 3 DESIGNATION OF CLASSES OF CLAIMS AND EQUITY INTERESTS
Summary of Classification
Specific Classification
ARTICLE 4 DESIGNATION OF AND PROVISIONS FOR TREATMENT OF CLASSES
OF CLAIMS NOT IMPAIRED BY THIS PLAN
Class 1 - Priority Wage Claims
Class 2 - Priority Benefit Plan Contribution Claims
Class 3 - Secured Tax Claims
Class 4 - Miscellaneous Secured Claims
Class 11 - Gaming Corp. Common Stock
ARTICLE 5 DESIGNATION OF AND PROVISIONS FOR TREATMENT OF CLASSES OF CLAIMS
AND EQUITY INTERESTS IMPAIRED BY THIS PLAN
Class 5 - Original First Mortgage Notes.
Class 6 - Heller Lease Claims.
Class 7 - Capital Lease Claims
Class 8 - General Unsecured Claims
Class 9 - Grand Subordinated Claims
Class 10 - Securities Litigation Claim
Class 12 - Equity Interests and Equity Interests Related Claims
ARTICLE 6 MEANS FOR IMPLEMENTATION OF PLAN
New Common Stock
Put/Call Arrangement
Sale of Restated First Mortgage Notes.
Grand Participation
New Certificate of Incorporation and Bylaws
No Corporate Action Required
Directors and Officers
ARTICLE 7 EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Assumption or Rejection of Executory Contracts and Unexpired Leases.
<PAGE> 61
Cure of Defaults
ARTICLE 8 CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED CLASSES
ARTICLE 9 PRESERVATION OF LITIGATION CLAIMS
ARTICLE 10 SECURITIES TO BE ISSUED IN CONNECTION WITH THIS PLAN
ARTICLE 11 PROVISIONS GOVERNING DISTRIBUTIONS TO HOLDERS OF ORIGINAL FIRST
MORTGAGE NOTES
Date of Distributions
Disbursing Agent
Surrender of Securities or Instruments
Distribution Record Date.
Delivery of Distributions
Fractional Dollars; De Minimis Distributions
ARTICLE 12 CONDITIONS PRECEDENT
Conditions To Confirmation
Conditions To Effectiveness
Waiver of Conditions
ARTICLE 13 TITLE TO PROPERTY; DISCHARGE; INJUNCTION
Revesting of Assets
Discharge
Injunction.
Exculpation
No Waiver
ARTICLE 14 RETENTION OF JURISDICTION
Jurisdiction
ARTICLE 15 MODIFICATION, AMENDMENT, AND WITHDRAWAL OF PLAN
Modification and Amendment
Termination or Withdrawal
ARTICLE 16 MISCELLANEOUS
Filing of Objections to Claims
Settlement of Objections After Effective Date
Effectuating Documents; Further Transactions; Timing
Exemption from Transfer Taxes.
<PAGE> 62
Revocation or Withdrawal of this Plan
Binding Effect
Governing Law
Intercompany Claims
Modification of Payment Terms
Set Offs
Notices
Statutory Committee
Severability
Withholding and Reporting Requirements
Post Confirmation Reporting
<PAGE> 63
EXHIBIT 1: INVESTMENT AND REORGANIZATION AGREEMENT
DATED AS OF JUNE __, 1997
EXHIBIT 2: PHASE II BUDGET
EXHIBIT 3: CERTAIN PRESERVED POTENTIAL CAUSES OF ACTION
