UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-22494
AMERISTAR CASINOS, INC.
(Exact name of Registrant as Specified in its Charter)
Nevada 88-0304799
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. Box 259, Jackpot, Nevada 89825
(Address of principal executive offices)
(702) 755-6011
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class of Stock Outstanding at August 9, 1996
Common Stock, $.01 par value 20,360,000 shares
AMERISTAR CASINOS, INC.
Form 10-Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
A. Condensed Consolidated Balance Sheets
at June 30, 1996 (unaudited)
and December 31, 1995 3 - 4
B. Condensed Consolidated Statements of
Income (unaudited) for the three months
and six months ended June 30, 1996
and 1995 5
C. Condensed Consolidated Statements of
Cash Flows (unaudited) for the
six months ended June 30, 1996 and 1995 6
D. Notes to Condensed Consolidated
Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 15
Part II. OTHER INFORMATION 16 - 21
SIGNATURE 22
EXHIBIT INDEX 23
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
<S> <C> <C>
June 30, December 31,
1996 1995
-------- --------
(unaudited)
CURRENT ASSETS:
Cash $ 8,732 $ 14,787
Restricted cash 273 256
Restricted security deposit - 11,511
Receivables, net 768 888
Receivables from affiliates - 115
Income tax refund receivable 654 311
Inventories 2,157 2,273
Prepaid expenses 3,429 2,467
Deferred income taxes 1,656 1,199
-------- --------
Total current assets 17,669 33,807
PROPERTY AND EQUIPMENT AND LEASEHOLD
INTERESTS, at cost, less accumulated
depreciation and amortization of
$49,416 and $42,716, respectively 183,056 163,217
DEPOSITS AND OTHER ASSETS 2,103 2,055
PREOPENING COSTS 947 3,141
-------- --------
Total $203,775 $202,220
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
June 30, December 31,
1996 1995
-------- --------
(unaudited)
CURRENT LIABILITIES:
Accounts payable $ 5,306 $ 3,767
Construction contracts payable 3,372 7,838
Accrued liabilities 12,779 10,394
Current obligations under
capitalized leases 411 506
Current maturities of notes
payable and long-term debt 5,814 6,895
-------- --------
Total current liabilities 27,682 29,400
DEFERRED INCOME TAXES 5,904 5,904
OBLIGATIONS UNDER CAPITALIZED LEASES,
net of current maturities 7,288 7,441
NOTES PAYABLE AND LONG-TERM DEBT,
net of current maturities 94,710 94,428
-------- --------
Total liabilities 135,584 137,173
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized - 30,000,000 shares
Issued - None - -
Common stock, $.01 par value:
Authorized - 30,000,000 shares
Issued and outstanding -
20,360,000 shares 204 204
Additional paid-in capital 43,043 43,043
Retained earnings 24,944 21,800
-------- --------
Total stockholders' equity 68,191 65,047
-------- --------
Total $203,775 $202,220
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
---- ---- ---- ----
REVENUES:
Casino $41,246 $25,889 $78,625 $49,167
Food and beverage 5,684 5,036 10,415 9,738
Rooms 1,986 2,114 3,501 3,797
General store 623 678 1,160 1,268
Other 1,370 1,298 2,540 2,713
------- ------- ------- -------
50,909 35,015 96,241 66,683
Less-promotional allowances 3,099 2,667 5,525 5,254
------- ------- ------- -------
47,810 32,348 90,716 61,429
------- ------- ------- -------
OPERATING EXPENSES:
Casino 20,000 11,578 37,175 22,102
Food and beverage 2,996 3,137 6,008 6,178
Rooms 587 601 1,115 1,183
General store 514 572 1,011 1,104
Other 1,174 1,914 2,327 3,035
Selling, general and admin. 8,358 4,948 16,285 9,895
Business development 379 775 802 997
Utilities and maintenance 2,616 1,741 4,937 3,547
Depreciation and amortization 3,531 2,230 6,801 4,493
Preopening costs 291 - 6,146 -
------- ------- ------- -------
40,446 27,496 82,607 52,534
------- ------- ------- -------
INCOME FROM OPERATIONS 7,364 4,852 8,109 8,895
OTHER INCOME (EXPENSE):
Interest income 73 31 266 90
Interest expense (1,604) (1,292) (3,513) (2,563)
Net gain on disposition of assets - - 63 -
------- ------- ------- -------
INCOME BEFORE INCOME TAX PROVISION 5,833 3,591 4,925 6,422
Income tax provision 2,117 1,221 1,781 2,217
------ ------- ------- -------
NET INCOME $ 3,716 $ 2,370 $ 3,144 $ 4,205
======= ======= ======= =======
EARNINGS PER SHARE $ .18 $ .12 $ .15 $ .21
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 20,360 20,360 20,360 20,360
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<TABLE>
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
<S> <C> <C>
Six Months
Ended June 30,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,144 $ 4,205
-------- --------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 6,801 4,493
Change in deferred income taxes - 1,165
Net gain on disposition of fixed assets (63) -
Increase in other current assets (1,085) (621)
Decrease (increase) in other non-current assets 2,172 (983)
(Increase) decrease in income tax receivable (343) 803
Increase in income tax payable - 879
Increase (decrease) in other current liabilities 3,924 (5,616)
-------- --------
Total adjustments 11,406 120
-------- --------
Net cash provided by operating activities 14,550 4,325
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (26,666) (16,099)
Increase in construction contracts payable (4,465) -
Proceeds from sale of assets 63 -
-------- --------
Net cash used in investing activities: (31,068) (16,099)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 3,525 21,102
Restricted security deposit 11,511 -
Principal payments of long-term debt
and capital leases (4,573) (15,100)
-------- --------
Net cash provided by financing activities: 10,463 6,002
-------- --------
Net decrease in cash (6,055) (5,772)
Cash at beginning of period 14,787 9,169
-------- --------
Cash at end of period $ 8,732 $ 3,397
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid during the period for interest
(net of amount capitalized) $ 4,378 $ 2,064
Cash paid for income taxes $ 2,450 $ 370
Assets purchased with long-term debt $ 313 $ 31
Assets purchased with capital leases $ 107 $ -
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
1. -- Principles of consolidation and basis of presentation -
Ameristar Casinos, Inc. ("Ameristar" or "ACI"), through its
wholly owned subsidiaries, owns and operates four gaming and
entertainment properties in Nevada, Mississippi and Iowa. The
Cactus Pete's, Inc. ("CPI") subsidiary owns and operates Cactus
Petes Resort Casino ("Cactus Petes") and The Horseshu Hotel and
Casino (collectively, the "Jackpot Properties"), two casino-hotels
located in Jackpot, Nevada at the Idaho border. Ameristar, through
Ameristar Casino Vicksburg, Inc. ("ACVI"), owns and operates a
riverboat-themed dockside casino ("Vicksburg Casino") and related
land-based facilities (collectively, "Ameristar Vicksburg") in
Vicksburg, Mississippi on a site along the bank of the Mississippi
River near the Interstate 20 bridge. The Ameristar Casino Council
Bluffs, Inc. ("ACCBI") subsidiary owns and operates a cruise
riverboat casino (the "Council Bluffs Casino"). The Council Bluffs
Casino and related land-based facilities (collectively, "Ameristar
Council Bluffs") are located near the Nebraska Avenue exit of
Interstate 29 south across the Missouri River from Omaha, Nebraska.
The Council Bluffs Casino opened on January 19, 1996 and the Main
Street Pavilion opened on June 17, 1996. Construction of ACCBI's
land-based facilities in Council Bluffs, Iowa is expected to be
completed in the fourth quarter of 1996, although no assurance can
be given that construction will be completed as expected. The
failure to complete construction by January 17, 1997, could result
in a loss of ACCBI's gaming license and otherwise have a material
adverse effect on the Company. In addition, Ameristar Casino Las
Vegas, Inc. ("ACLVI") was created on April 30, 1996 to be the
operating entity for the previously announced acquisition of Gem
Gaming Inc., a Henderson, Nevada, based hotel/casino company
building The Reserve Hotel and Casino at the intersection of
Interstate 515 and Lake Mead Drive. Ameristar, together with its
wholly owned subsidiaries, are collectively referred to herein as
the "Company."
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Accordingly, the condensed consolidated financial
statements do not include all of the disclosures required by
generally accepted accounting principles. However, the
accompanying unaudited condensed consolidated financial statements
do contain all adjustments that, in the opinion of management, are
necessary to present fairly the financial position and the results
of operations for the interim periods included therein. The
interim results reflected in the condensed consolidated financial
statements are not necessarily indicative of results to be expected
for the full fiscal year.
The accompanying condensed consolidated financial statements
should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.
2. -- Reducing revolving credit facility -
On July 5, 1995, the Company entered into a Revolving Credit
Facility with a syndicate of banks totaling a maximum of $94.5
million (the "Revolving Credit Facility"). As of June 30, 1996,
the Company had drawn $82.5 million on the Revolving Credit
Facility. These borrowings have been used to repay prior
borrowings of $44.8 million and to fund the continued development
of Ameristar Council Bluffs. The remainder of the proceeds of the
Revolving Credit Facility will be used to fund additional advances
from the Company to ACCBI for the construction of the Ameristar
Council Bluffs project and, after completion of Ameristar Council
Bluffs, for the working capital needs of the Company and its
subsidiaries.
3. -- Commitments and contingencies -
Development of Ameristar Council Bluffs is expected to cost
approximately $106 million, which includes the cost of land,
building, and riverboat and equipment. As of June 30, 1996, the
Company had invested approximately $100 million in Ameristar Casino
Council Bluffs, including $18 million on vessel construction.
On May 31, 1996, the Company signed a definitive agreement to
merge with privately held Gem Gaming, Inc., which is developing The
Reserve Hotel and Casino currently under construction in the Las
Vegas Suburb of Henderson-Green Valley. The transaction is subject
to approval from the Nevada Gaming Control Board, the Nevada Gaming
Commission, Ameristar's stockholders, various regulatory agencies
and lenders and other closing conditions. Ameristar will issue 7.5
million shares of common stock in the merger.
Management's Discussion and Analysis of Financial
Condition and Results of Operations (unaudited)
Ameristar Casinos, Inc. ("Ameristar" or "ACI"), through its
wholly owned subsidiaries, owns and operates four gaming and
entertainment properties in Nevada, Mississippi and Iowa. The
Cactus Pete's, Inc. ("CPI") subsidiary owns and operates Cactus
Petes Resort Casino ("Cactus Petes") and The Horseshu Hotel and
Casino (collectively, the "Jackpot Properties"), two casino-hotels
located in Jackpot, Nevada at the Idaho border. Ameristar, through
Ameristar Casino Vicksburg, Inc. ("ACVI"), owns and operates a
riverboat-themed dockside casino ("Vicksburg Casino") and related
land-based facilities (collectively, "Ameristar Vicksburg") in
Vicksburg, Mississippi on a site along the bank of the Mississippi
River near the Interstate 20 bridge. The Ameristar Casino Council
Bluffs, Inc. ("ACCBI") subsidiary owns and operates a cruise
riverboat casino (the "Council Bluffs Casino"). The Council Bluffs
Casino and related land-based facilities (collectively, "Ameristar
Council Bluffs") are located near the Nebraska Avenue exit of
Interstate 29 south across the Missouri River from Omaha, Nebraska.
The Council Bluffs Casino opened on January 19, 1996 and the Main
Street Pavilion opened on June 17, 1996. Construction of ACCBI's
land-based facilities in Council Bluffs, Iowa is expected to be
completed in the fourth quarter of 1996, although no assurance can
be given that construction will be completed as expected. The
failure to complete construction by January 17, 1997 could have a
material adverse effect on the Company. (See "Part II. Item 5.
Other Information --Deadline for Completion of Ameristar Council
Bluffs.") In addition, Ameristar Casino Las Vegas, Inc. ("ACLVI")
was created on April 30, 1996 to be the operating entity for the
previously announced acquisition of Gem Gaming Inc., a Henderson,
Nevada, based hotel/casino company building The Reserve Hotel and
Casino at the intersection of Interstate 515 and Lake Mead Drive.
(See "Liquidity and Capital Resources" and "Part II. Item 5. Other
Information") Ameristar, together with its wholly owned
subsidiaries, are collectively referred to herein as the "Company."
The Company's quarterly and annual operating results may be
affected by competitive pressures, the timing of the commencement
of new gaming operations, the amount of preopening costs incurred
by the Company, construction at existing facilities and general
weather conditions. Consequently, the Company's operating results
for any quarter or year may not be indicative of results to be
expected for future periods.
Summary
The improvement in operating results for 1996 over 1995 (net
of preopening expenses) was primarily due to the opening of the
Council Bluffs Casino in January 1996 and improved operating
margins at Ameristar Vicksburg.
Consolidated net revenues for the three and six months ended
June 30, 1996, respectively, were $47.8 million and $90.7 million
compared with $32.3 million and $61.4 million, respectively, for
the same periods in 1995, a 48.0% and 47.7% increase, respectively.
Income from operations was $7.4 million and $8.1 million ($7.7
million and $14.3 million before preopening expenses) for the three
and six months ended June 30, 1996, respectively, compared to $4.9
million and $8.9 million for the same periods in the prior year.
Preopening expenses of $291,000 and $6.1 million, respectively, for
the three and six months ended June 30, 1996 are associated with
the opening of Ameristar Council Bluffs.
Total operating expenses before preopening expenses as a
percentage of net revenue decreased to 84% in both the three and
six months ending June 30, 1996, as compared to 85% and 86%,
respectively, in the prior year.
Net income for the three and six months ended June 30, 1996
was $3.7 million and $3.1 million, respectively, compared to net
income of $2.4 million and $4.2 million, respectively, in the same
periods in 1995. Excluding the after-tax effect of preopening
expenses totaling $185,000 and $3.9 million, net income of $3.9
million and $7.0 million was generated in the three and six months
ended June 30, 1996. Earnings per share for the three and six
months ended June 30, 1996 were $.19 and $.35, respectively, before
preopening expenses and $.18 and $.15, respectively, after
preopening expenses, compared to $.12 and $.21, respectively, for
the same periods in the prior year.
Revenue
The Jackpot Properties produced net revenues of $13.5 million
and $25.2 million for the three and six months ended June 30, 1996,
respectively, as compared to $14.4 million and $27.5 million,
respectively, for the same periods in the prior year. Management
believes increased competition in Jackpot and from Native American
casinos in the outer market, including Washington, Oregon and
Alberta, Canada, is having a negative impact on revenues. The
performance of the Jackpot Properties was also affected by adverse
weather conditions during the first quarter of 1996 and a below-
average table games win percentage during the second quarter. An
average table games win percentage would have resulted in
approximately $350,000 in additional casino revenues in the second
quarter. In an effort to improve its competitiveness, Cactus Petes
is increasing its direct marketing efforts to out-lying marketing
areas and is upgrading its slot product by replacing approximately
250 slot machines.
Ameristar Vicksburg continued to be the market leader in
Warren County, Mississippi in the second quarter of 1996 with an
average market share during the second quarter of 33.5%, due in
part to aggressive promotional strategies. Net revenues for
Ameristar Vicksburg were $16.9 million and $33.2 million for the
three and six months ended June 30, 1996, respectively, compared
with $17.8 million and $33.8 million for the same periods in the
prior year.
Ameristar Council Bluffs, which opened January 19, 1996, had
net revenues of $17.3 million and $32.1 million for the three and
six months ended June 30, 1996. Operating income (before
preopening expenses of $291,000 and $6.1 million, respectively) was
$2.6 million and $6.0 million, respectively, for the three and six
months ended June 30, 1996. Management believes that the
completion of the land-based facilities at Ameristar Council
Bluffs, expected in the fourth quarter, will result in improved
gaming revenues and operating income.
On a consolidated basis, casino revenues increased $15.4
million or 59% and $29.5 million or 60%, respectively, for the
three and six months ended June 30, 1996, due primarily to the
opening of the Council Bluffs Casino, partially offset by decreases
at the Jackpot Properties and Ameristar Vicksburg. Food and
beverage revenues increased by $648,000 or 12% and $677,000 or 7%,
respectively, for the three and six months ended June 30, 1996 as
compared to the prior periods. Rooms revenue decreased $128,000 or
6% and $296,000 or 8%, respectively for the three and six month
periods ended June 30, 1996 primarily due to the adverse weather
conditions and increased competition affecting the Jackpot
Properties as discussed above. Other revenues increased $72,000 or
6% for the three months ended June 30, 1996 and decreased $173,000
or 6% for the six months ended June 30, 1996, compared to the three
and six months ended June 30, 1995, primarily due to a significant
reduction in showroom entertainment revenue at Ameristar Vicksburg.
The Company now utilizes the showroom on a more strategic basis by
opening it for special events and nationally known entertainment.
Expenses
Casino expenses increased $8.4 million or 73% and $15.1
million or 68%, respectively, for the three and six months ended
June 30, 1995 as compared to the same periods in the prior year.
This was due primarily to the opening of the Council Bluffs Casino.
Food and beverage expenses decreased $141,000 or 4% and $170,000 or
3%, respectively in the three and six months ended June 30, 1996,
compared to the three and six months ended June 30, 1995 due
primarily to cost containment measures implemented at Ameristar
Vicksburg. For the Jackpot Properties, expenses remained
relatively constant between the three and six months ended June 30,
1996 and for the same periods of the prior year.
Selling, general and administrative expenses increased $3.4
million or 69% and $6.4 million or 65% from the three and six
months ended June 30, 1995, respectively, to the three and six
months ended June 30, 1996. Utilities and maintenance and
depreciation expenses also showed increases in the quarter and the
six months. All of these increases were related primarily to the
opening and operations of Ameristar Council Bluffs. Preopening
expenses of $5.8 million related to the opening of the Council
Bluffs Casino were expensed in the first quarter of 1996 and
$291,000 associated with the opening of the Main Street Pavilion
were expensed in the second quarter of 1996.
Business development costs decreased $396,000 or 51% and
195,000 or 20%, respectively for the three and six months ended
June 30, 1996, compared to the same periods of the prior year. The
Company continues to explore potential gaming development
opportunities in other jurisdictions and potential acquisitions in
the gaming industry.
Interest expense was $1.6 million and $3.5 million, net of
capitalized interest of $559,000 and $1.0 million in the three and
six months ended June 30, 1996, respectively, an increase of
$312,000 or 24% and $950,000 or 37%, respectively, as compared to
the same period in 1995 due primarily to increases in debt
outstanding related to Ameristar Council Bluffs construction. The
Company's incremental borrowing rate was 8.5% in 1996 compared to
10.0% in 1995.
The Company's effective federal tax rate on income for the
three and six months ended June 30, 1996 were 36.3% and 36.2%,
respectively, versus the federal statutory rate of 35%, due to
certain non-deductible expenses.
Liquidity and Capital Resources
The Company's cash flow from operations was $14.6 million for
the six months ended June 30, 1996 as compared to $4.3 million for
the six months ended June 30, 1995. The Company had unrestricted
cash of approximately $8.7 million as of June 30, 1996. The Company
historically has funded its daily operations through net cash
provided by operating activities and its significant capital
expenditures through bank debt and other debt financing. The
Company's current assets decreased by approximately $16.1 million
from December 31, 1995 to June 30, 1996 primarily as a result of
continued construction expenditures at ACCBI of approximately $25.4
million.
The Company, as borrower, and its principal operating
subsidiaries, as guarantors, maintain a Revolving Credit Facility
with Wells Fargo Bank, NA (formerly known as First Interstate Bank
of Nevada, NA) ("WFB") and a syndicate of banks (the "Revolving
Credit Facility"). The maximum principal available at June 30, 1996
was $94.5 million. However, the Company may not borrow under the
Revolving Credit Facility in excess of 3.5 times its rolling four
quarter EBITDA ("Earnings before Interest, Taxes, Depreciation and
Amortization"). As of June 30, 1996, 3.5 times the Company's
rolling four quarter EBITDA exceeded the maximum funds available
under the Revolving Credit Facility. The maximum available
principal reduces semi-annually commencing July 1, 1997 on a
sliding scale (ranging from $4.7 million to $7.1 million in
reductions) with a final principal payment of $42 million due at
maturity on December 31, 2001.
Borrowings under the Revolving Credit Facility bear interest
at a rate based either on LIBOR or on WFB's prime rate, at the
election of the Company, and the ratio of the Company's
consolidated total debt to consolidated cash flow, as measured by
an EBITDA formula. As of June 30, 1996, the Company had three
LIBOR draws outstanding totaling $82.5 million with a current
average interest rate of 8.5 percent per annum. These borrowings
have been used to repay prior borrowings of $44.8 million and to
fund the continued development of Ameristar Council Bluffs. The
remainder of the proceeds of the Revolving Credit Facility will be
used to fund additional advances from the Company to ACCBI for the
construction of the Ameristar Council Bluffs project and, after
completion of Ameristar Council Bluffs, for the working capital
needs of the Company and its subsidiaries.
The Revolving Credit Facility is secured by liens on
substantially all of the real and personal property of the Company
and its subsidiaries. The Revolving Credit Facility binds the
Company to a number of affirmative and negative covenants,
including promises to maintain certain financial ratios within
defined parameters. As of June 30, 1996, the Company was in
compliance with these covenants.
See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources" in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 for additional information
relating to the Revolving Credit Facility.
The Company's subsidiary, ACCBI, has entered into several
other borrowing arrangements with ACI as guarantor. ACCBI entered
into a preferred ship mortgage with General Electric Credit Corp.
on December 28, 1995 for the sum of $11,511,000. Proceeds from an
equipment loan entered into with WFB on December 12, 1995 for
$7,137,400 were used to finance ACCBI's slot machines, surveillance
equipment and property signage. ACCBI also entered into several
additional equipment financing agreements in 1995 totaling
approximately $0.9 million. ACCBI intends to borrow an additional
$3.4 million in 1996 for equipment. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 for
additional information relating to ACCBI's borrowings.
Capital expenditures in the three and six months ended June
30, 1996 were $13.5 million and $26.8 million, respectively,
compared to approximately $11.1 million and $16.8 million for the
three and six months ended June 30, 1995, respectively. The
majority of these expenditures were related to the construction and
development of Ameristar Council Bluffs. The Company funded these
capital expenditures from net cash provided by operating activities
and bank debt, including the Revolving Credit Facility.
The Company anticipates making additional capital expenditures
of approximately $30 million in 1996 for its existing properties
and properties under development, $6 million of which is expected
to be used for the completion of Ameristar Council Bluffs and $20
million for The Reserve. These capital expenditure requirements
are anticipated to be funded out of operating cash flow, purchase
money financing and additional draws on the Revolving Credit
Facility. The Company is currently in negotiations with WFB to
expand its bank line to approximately $175 million. While there
can be no assurance that these negotiations will be completed,
management is confident that terms at least as favorable as the
existing facility can be obtained. Management believes that these
sources will be sufficient to meet the Company's currently
anticipated capital expenditure, including those in connection with
the development of The Reserve, and working capital requirements
during 1996. However, as discussed below under "Part II. Item 5.
Other Information -- Gem Gaming Merger," the plans for The Reserve
are currently being redesigned and the development budget for the
initial development phase(s), portions of which will be expended in
both 1996 and 1997, has not yet been determined. In addition, if
the Company undertakes any additional expansion projects in 1996,
additional funds may be required and there can be no assurance that
sources of such funding will be available to the Company on
acceptable terms.
Factors Affecting Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" from liability for forward-looking statements.
Certain information included in this Form 10-Q and other materials
filed or to be filed by the Company with the Securities and
Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by or on
behalf of the Company) are forward-looking, such as statements
relating to growth and expansion plans, the effects of competition
and potential competition, the adequacy of the Company's liquidity
and capital resources and the completion of financing transactions,
the completion of construction of properties under development, the
closing of the acquisition of The Reserve, the effects of
regulatory requirements and the Company's ability to meet such
requirements and the anticipated outcome of contingent claims
against the Company. Such forward-looking statements involve
important risks and uncertainties, many of which will be beyond the
control of the Company. These risks and uncertainties could
significantly affect anticipated results in the future, both short-
term and long-term, and, accordingly, such results may differ from
those expressed in forward-looking statements made by or on behalf
of the Company. Information concerning some of the factors that
could cause future actual results to differ from those projected in
or anticipated or contemplated by the forward-looking statements
can be found elsewhere in this Report on Form 10-Q and in the
Company's other publicly available reports filed with the
Securities and Exchanged Commission under the Securities Exchange
Act of 1934, including but not limited to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995. In
particular, attention is directed to the cautionary statements
included in this Report under the captions "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Part II. Item 5. Other Information" and in the Form 10-K report
under the captions "Business -- Current Operations," "Business --
Expansion Strategy," "Business -- Government Regulations,"
"Description of Property" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Mississippi DEQ
Ameristar Vicksburg has resolved the matter it had pending
before the State of Mississippi Department of Environmental Quality
("DEQ"). On February 21, 1996, Ameristar Vicksburg received notice
from the DEQ that Ameristar Vicksburg had engaged in apparent
violations of DEQ regulations and the Mississippi Pollution Control
Law as they relate to a waste water pond at Ameristar Vicksburg's
mobile home park in Vicksburg. The pond was drained in March 1995
to facilitate the repair of construction defects that Ameristar
Vicksburg believed posed an imminent risk of failure of the
embankment following heavy rains. On March 27, 1996, Ameristar
Vicksburg received a letter from the DEQ alleging four separate
violations of applicable state and federal law and requested a
meeting. That meeting was held, and Ameristar Vicksburg and the
DEQ entered into an order whereby Ameristar Vicksburg agreed to pay
a fine and to connect the sewer lagoon to the City of Vicksburg
sewer system. The amount of the fine and the cost of connecting to
the City sewer system are immaterial.
See additional information relating to legal proceedings
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
Items 2. and 3. of Part II are not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
a. The Company's Annual Meeting of Stockholders was held on
June 7, 1996.
b and c. The following table shows the tabulation of votes for all
matters put to vote at the Company's Annual Meeting of
Stockholders.
<TABLE>
<S> <C> <C> <C>
Abstentions/
Against/ Broker
Matters Put to Vote For Withheld Non-votes
Election of Directors
Class A Directors
John R. Spina 20,252,486 11,312
Larry A. Hodges 20,252,321 11,477
</TABLE>
The terms of the following directors have continued after the
meeting:
Class B Directors (term expiring in 1997): Paul I. Corddry and
Thomas M. Steinbauer
Class C Director (term expiring in 1998): Craig H. Neilsen
ITEM 5. Other Information
Gem Gaming Merger
On May 31, 1996, the Company, a newly formed subsidiary of the
Company, Ameristar Casino Las Vegas, Inc. ("ACLVI"), and Gem
Gaming, Inc. ("Gem") signed a Merger Agreement providing for the
merger of Gem into ACLVI. The Board of Directors of the Company
approved the transaction at its meeting held on June 7, 1996.
Gem is developing a hotel and casino project in Henderson,
Nevada, to be called The Reserve Hotel & Casino. After the merger,
the Company will complete the development of The Reserve and will
operate The Reserve through ACLVI. As part of the merger, the
Company will issue 7.5 million shares of its common stock to the
shareholders of Gem. Steven W. Rebeil, the CEO of Gem, owns
approximately 96.6% of the Gem stock and will acquire approximately
7,245,000 shares of the Company's common stock in the merger.
Following the merger, Mr. Rebeil will be elected to the Company's
Board of Directors and be appointed Vice Chair. Dominic J.
Magliarditi, the only other stockholder of Gem, will acquire
approximately 255,000 shares of the Company's common stock in the
merger and will be elected as Senior Vice President/Co-General
Counsel of the Company.
The merger agreement contains a provision adjusting the number
of shares of stock to be issued by the Company if the Company
receives a license to operate a casino in western Maryland.
Currently Maryland does not authorize casino gambling. Should
authorizing legislation pass, and should the Company obtain a
license to operate a casino in western Maryland, Messrs. Rebeil and
Magliarditi (as the recipients of the Company's common stock issued
in the merger) may be required to return a portion of the shares to
the Company. The number of shares will be determined by a formula,
but in no event will it exceed an aggregate of 1 million shares of
common stock.
The closing of the merger is subject to a number of
conditions, including receipt of certain approvals from the Nevada
Gaming Commission, the Company's lenders and the Company's
stockholders. Management currently anticipates that the merger
will close in the fourth quarter of 1996.
The Reserve is located on a 53-acre site at the southeast
corner of Interstate 515 and Lake Mead Drive between Henderson and
Green Valley. It is designed to capture the spirit of an exotic
and mysterious safari adventure with the interior decor replicating
the natural environment of an African game reserve. At the request
of the Company and with the cooperation of Gem, the project is
being redesigned. It will consist of three phases. The first
phase will consist of a 30,000 square-foot casino, a 225-room hotel
tower, a buffet, a 24-hour restaurant, and two specialty
restaurants. Phase II will expand the casino to approximately
60,000 square feet and add a specialty restaurant, a food court, a
children's activity center, a cabaret lounge and a sports bar. A
second hotel tower is planned for the third phase. Because of the
extent of the changes, the Company has not yet determined a revised
development budget or opening date for The Reserve. Based on the
original design plans, The Reserve was previously anticipated to
open in the fourth quarter of 1996.
Potential Additional Mississippi Competition
The Mississippi Gaming Commission is considering an
application from Multi Gaming Management to construct an
approximately $125 million casino and auto race track development
on the Big Black River. The Mississippi Gaming Commission has
announced that the matter will be considered at a meeting to be
held in early September 1996.
The proposed site on the Big Black River is near Interstate 20
between Jackson and Vicksburg. Management believes that such a
development would provide a significant competitive advantage over
Ameristar Vicksburg and other gaming operations in Warren County
due to its closer proximity to Jackson. However, there currently
is no exit off Interstate 20 in the vicinity of this site, the area
surrounding this site is undeveloped and lacks any infrastructure
and the site may not meet the navigable waterway requirements of
Mississippi law for the development of a casino. Nevertheless, if
the Mississippi Gaming Commission grants the license, and if the
project is in fact constructed, Ameristar Casino Vicksburg and the
Company will likely be materially and adversely affected.
Deadline for Completion of Ameristar Council Bluffs
The Iowa Racing and Gaming Commission conditioned the award of
the license to Ameristar Council Bluffs upon all of the Company's
facilities being completed one year after the opening of the
casino. The one year anniversary is January 19, 1997. The
Agreement between Iowa West Racing Association and Ameristar
Council Bluffs requires the facilities to be substantially complete
within two years from the date the Iowa Racing and Gaming
Commission awarded the license or the per person admission fee
payable to Iowa West Racing Association increases from $1.50 to
$4.50 until the facilities are substantially complete. The two
year anniversary is January 27, 1997.
Currently all of the land based facilities are complete except
the hotel, the steak house, the sports bar, and the swimming pool
for the hotel. The hotel is currently under construction and is
expected to be completed in the fourth quarter. The sports bar and
swimming pool have been designed and put out to bid but
construction has not yet commenced and the steak house is still in
the design stage. Although management expects all of these
facilities will be completed in the fourth quarter of 1996, no
assurances can be given that construction will be completed as
expected. If all of the land-based facilities are not completed by
the above-indicated anniversary dates, and if either the Iowa
Racing and Gaming Commission or Iowa West Racing Association takes
the position and prevails that such failure violates Ameristar's
promise to such organization, such failure could have a material
adverse effect on Ameristar Council Bluffs and the Company,
including a potential loss of the gaming license and/or the
occurrence of an event of default under one or more credit
facilities.
Compliance with Iowa Cruising Requirements
Under Iowa law, wagering on a "gambling game" is legal when
conducted by a licensee on an "excursion gambling boat." An
"excursion gambling boat" is a self-propelled excursion boat.
"Gambling game" means any game of chance authorized by the Iowa
Racing & Gaming Commission. The excursion season is from April 1
through October 31 of each calendar year. The vessel must operate
at least one "excursion" each day for 100 days during the excursion
season to operate during the off season. Each excursion must
consist of a minimum of two hours.
The Iowa Racing and Gaming Commission has defined an
"excursion" as taking a defined route (an "official cruise"). The
route defined for the Ameristar Council Bluffs excursion gambling
boat requires it to go under the I-80 bridge. Because of high
water, the Ameristar Council Bluffs excursion gambling boat has not
been able to go under the bridge very often during the 1996
excursion season, and based on the number of days remaining in the
excursion season, it is highly unlikely that the Ameristar Council
Bluffs excursion boat will be able to obtain 100 official cruises.
During those days when the captain of the Ameristar Council
Bluffs excursion gambling vessel determines it is safe to sail on
the river, but the vessel cannot go under the bridge, the vessel
sails to the bridge and then reverses course. This "limited
cruise" still lasts two hours. Barring unforseeable mechanical,
weather or other problems, management believes it is likely that
the Council Bluffs excursion gambling vessel will cruise a combined
total of at least 100 "limited cruises" and "official cruises"
during the 1996 excursion season.
The Company has requested an exemption from the Iowa Racing &
Gaming Commission so that limited cruises will count as official
cruises. Management is optimistic that it will obtain such an
exception; however, no assurances can be given. If the Iowa Racing
& Gaming Commission refuses to count limited cruises as satisfying
the excursion requirement, the Council Bluffs excursion boat would
have to cease operations between November 1 and April 1. This
would have a material adverse effect on the Company.
Nebraska Ballot Initiative to Authorize Gaming
There is an initiative currently before the Nebraska Secretary
of State for certification for inclusion upon the ballot in
November 1996. This initiative would authorize certain types of
slot machines in connection with certain Keno parlors and casino
gambling by certain licensed racetracks either at the racetracks or
within 15 miles of the racetracks. Currently there are four
racetracks in Nebraska that satisfy the requirement, including
tracks in Omaha and Lincoln. The Secretary of State is currently
in the process of validating the signatures.
If the initiative is certified for inclusion on the ballot,
and if the initiative passes, the resulting legalization of gaming
in Nebraska likely would have a material adverse effect on
Ameristar Council Bluffs and the Company.
ITEM 6. Exhibits and Reports on Form 8-K
A. The following exhibits are filed as a part of this
report:
10.1 Merger Agreement by and among Gem Gaming, Inc.,
Ameristar Casinos, Inc., Ameristar Casino Las
Vegas, Inc., Steven w. Rebeil, and Dominic J.
Magliarditi, dated May 30, 1996. See also
Exhibit 99.1
10.2 Operating Agreement of Nevada AG Air, LTD.
dated July 5, 1996.
10.3 Sublease between Nevada AG Air, LTD. and
Ameristar Casinos, Inc. dated June 30, 1996.
10.4 Aircraft Operating Agreement between Ameristar
Casinos, Inc. and Gem Air, Inc., dated July 5,
1996.
10.5 First Amendment to Merger Agreement by and
among Gem Gaming, Inc., Ameristar Casinos,
Inc., Ameristar Casino Las Vegas, Inc., Steven
W. Rebeil, and Dominic J. Magliarditi, dated
July 2, 1996.
10.6 Purchase Agreement between Gem Air, Inc.
and Ameristar Casinos, Inc. dated June 30, 1996
27 Financial Data Schedule
99.1 Agreement to furnish the Securities and
Exchange Commission exhibits and schedules to
certain exhibits on Report on Form 10-Q
B. Reports on Form 8-K
None
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.
AMERISTAR CASINOS, INC.
Registrant
Date: August 12, 1996 /s/ Thomas Steinbauer
Thomas Steinbauer
Sr. Vice President
Chief Financial Officer
Exhibit
Number Description of Exhibit
10.1 Merger Agreement by and among Gem Gaming, Inc.,
Ameristar Casinos, Inc., Ameristar Casino Las Vegas,
Inc., Steven w. Rebeil, and Dominic J. Magliarditi,
dated May 30, 1996. See also Exhibit 99.1
10.2 Operating Agreement of Nevada AG Air, LTD.
dated July 5, 1996.
10.3 Sublease between Nevada AG Air, LTD. and
Ameristar Casinos, Inc. dated June 30, 1996.
10.4 Aircraft Operating Agreement between Ameristar
Casinos, Inc. and Gem Air, Inc., dated July 5, 1996.
10.5 First Amendment to Merger Agreement by and
among Gem Gaming, Inc., Ameristar Casinos, Inc.,
Ameristar Casino Las Vegas, Inc., Steven W. Rebeil,
and Dominic J. Magliarditi, dated July 2, 1996.
10.6 Purchase Agreement between Gem Air, Inc. and
Ameristar Casinos, Inc. dated June 30, 1996
27 Financial Data Schedule
99.1 Agreement to furnish the Securities and
Exchange Commission exhibits and schedules to
certain exhibits on Report on Form 10-Q
MERGER AGREEMENT
by and among
GEM GAMING, INC.
AMERISTAR CASINOS, INC.
AMERISTAR CASINO LAS VEGAS, INC.
STEVEN W. REBEIL,
and DOMINIC J. MAGLIARDITI
Dated: May 31, 1996
TABLE OF CONTENTS
Page
1 Definitions 2
1.1 Defined Terms 2
1.2 Other Defined Terms 15
2 The Merger 17
2.1 The Merger 17
2.2 Articles of Incorporation 17
2.3 By-Laws 17
2.4 Directors and Officers 17
2.5 Articles of Merger 17
2.6 Effect of Merger 17
2.7 Additional Actions 17
2.8 Conversion of Shares 18
2.9 Pre-Closing Offering 18
2.10Consideration Adjustment 19
2.11Closing Costs; Transfer Taxes and Fees 21
3 Closing 21
3.1 Closing 21
3.2 Deliveries at Closing 21
4 Representations and Warranties of Gem, Rebeil and
Gem Individuals 23
4.1 Organization of Gem 23
4.2 Capitalization 23
4.3 Authorization 24
4.4 No Adverse Change 24
4.5 Assets 26
4.6 Real Property 26
4.7 Contracts and Options 27
4.8 Permits 28
4.9 No Conflict or Violation 29
4.10Financial Statements 29
4.11Books and Records 30
4.12Litigation 30
4.13Labor Matters 30
4.14Liabilities 30
4.15Compliance with Law 31
4.16No Brokers 31
4.17No Other Agreements to Sell the Assets 31
4.18Proprietary Rights 31
4.19Employee Benefit Plans 32
4.20Transactions with Certain Persons 35
4.21Tax Matters 35
4.22Insurance 36
4.23Accounts Receivable 37
4.24Payments 37
4.25Compliance With Environmental Laws 37
4.26Banking Relationships 40
4.27Project Budget and Project Schedule 40
4.28Existing Plans and Specifications. 40
4.29Margin Securities. 41
4.30Merger Consideration. 41
4.31Restrictive Legend. 41
4.32Receipt of Information. 41
4.33Investment Company Act 42
4.34Accredited Investor 42
4.36Spousal Consent 42
4.37Legal and Tax Advice 42
4.38Material Misstatements Or Omissions. 42
5 Representations and Warranties of Ameristar and ACLV 42
5.1 Organization 42
5.2 Authority Relative to this Agreement 43
5.3 Capitalization of Ameristar and its Subsidiaries 43
5.4 Consents and Approvals; No Violations 43
5.5 SEC Reports; Financial Statements 44
5.6 Information Supplied 44
5.7 No Brokers 45
5.8 Legal and Tax Advice 45
5.9 Insurance 45
5.10Vote Required 45
5.11No Prior Activities 45
5.12Insider Interests 45
6 Additional Pre-Closing Covenants 45
6.1 Further Assurances 45
6.2 No Solicitation 46
6.3 Notification of Certain Matters 47
6.4 Investigation by Ameristar and ACLV 47
6.5 Conduct of Gem's Business 48
6.6 Conduct of Ameristar's Business 50
6.7 Approval of Plans and Specifications. 51
6.8 Construction of the Project 53
6.9 Employee Matters 54
6.10 Board of Directors 54
6.11Information for Ameristar SEC Filings 54
6.12Operation of the Project 54
6.13Gem Air Documents 54
6.14Phase II Option 54
6.15D&O Insurance 54
6.16Authority Relative to this Agreement; Recommendation;
Meeting 55
6.17Gem Individual Guaranties 55
6.18Tax Returns 55
6.19Gem Deliveries 55
6.20Escrow Agreement 56
7 Gaming Approvals 57
7.1 Amendment of Gaming Application 57
7.2 Gaming Approvals 57
7.3 Denial of License; Individuals 57
7.4 Gaming Authority Approvals 58
8 Conditions to Gem's Obligations 58
8.1 Representations, Warranties and Covenants 58
8.2 Consents; Regulatory Compliance and Approval 58
8.3 No Actions or Court Orders 58
8.4 Opinion of Counsel 59
8.5 Certificates 60
8.6 Corporate Documents 60
8.7 Ancillary Agreements 60
8.8 Delivery of Consideration 60
8.9 Corporate Authorization 60
8.10Gem Air 60
9 Conditions to Ameristar's and ACLV's Obligations 60
9.1 Representations, Warranties and Covenants 60
9.2 Consents; Regulatory Compliance and Approval 60
9.3 No Actions or Court Orders 61
9.4 Opinion of Counsel 61
9.5 Certificates 62
9.6 Corporate Documents 62
9.7 Title Insurance and Survey. 62
9.8 Tax Clearance Certificate 63
9.9 Nonforeign Affidavit. 63
9.10Gaming Licenses. 63
9.11Consent to Assignment of Contract Rights. 63
9.12Gem Air. 64
9.13Opinion of Gem Air Counsel. 64
9.14Corporate Authorization. 64
9.15Ancillary Agreements 64
9.16Due Diligence Review 64
10Risk of Loss 64
10.1Risk of Loss 64
11Actions by Gem Individuals, Ameristar and ACLV After
the Closing 65
11.1Books and Records; Tax Matters 65
11.2Survival of Representations, Etc. 65
11.3Indemnifications 66
11.4Disposition Pursuant to Gaming Law 68
11.5Board of Directors 69
11.6Officers 70
11.7Headquarters 70
11.8Restrictions on Transfer 70
11.9Ameristar Common Stock Legend 70
11.10Further Assurances After Closing 71
12Miscellaneous 72
12.1Termination 72
12.2Assignment 73
12.3Notices 74
12.4Choice of Law 74
12.5Entire Agreement; Amendments and Waivers 75
12.6Multiple Counterparts 75
12.7Expenses 75
12.8Invalidity 75
12.9Titles; Gender 75
12.10Publicity 75
12.11Cumulative Remedies. 75
12.12Service of Process, Consent to Jurisdiction. 75
12.13Arbitration. 76
12.14Attorneys' Fees. 76
12.15Conditions Subsequent. 76
12.16Electronic Version of Schedules 76
12.17No Partnership 76
TABLE OF EXHIBITS
Exhibit
A Existing Plans and Specifications
B Form of Gem's Project Status Certificate
C Form of Consent to Assignment of Architect Contract
D Form of Consent to Assignment of Contractor Contract and
Agreement
E Form of Consent to Assignment of Lease
F Form of Consent to Assignment of Option Contract
G Form of Consent to Assignment of Credit
Facility
H Form of General Consent
I Description of Project
J Description of Project Real Property
K Description of Phase II Real Property
L List of Assets and Liabilities Specifically Identified
as Excluded Assets or Excluded Liabilities
M Form of Recapture Agreement
N Registration Rights Agreement
O Form of Registration Rights Consent
P Form of Escrow Agreement and Escrow Instructions
Q Form of Adjustment Excess Payment Note
R Form of Trust Agreement
S [Intentionally Deleted]
T Project Components
U Project Budget
V Project Schedule
W Preliminary Title Report
X Required Consents or Approvals of Ameristar and
ACLV
Y Gem Individual Guaranties
Z Form of Gem Individual Closing Certificate
AA Certain Employees
BB Form of Articles of Merger
CC Affidavit of Non-Foreign Status
DD Form of Ineligible Person Promissory Note
SCHEDULES TO THE DISCLOSURE SCHEDULE
Schedule
4.1 Organization of Seller; List of All Foreign
Jurisdictions
4.2 Gem Proportionate Interest
4.4 Adverse Changes Since Interim Balance Sheet Date
4.5 Assets with Value Exceeding $1,000
4.6 Real Property
4.6A Utilities
4.7 Contracts, Options and Leases
4.8 Permits
4.12 Litigation
4.13 Labor Matters; List of All Employees of Gem
4.18 Proprietary Rights
4.19 Employee Benefit Plans
4.20 Transactions with Certain Persons
4.21 Tax Matters; Audits
4.22 Insurance Policies
4.25 Compliance with Environmental
Laws
4.26 Banking Relationships
4.34 Accredited Investor Status
5.12 Ameristar Insider Interests
6.13 Gem Air Agreements - Terms and Conditions
MERGER AGREEMENT
This MERGER AGREEMENT dated as of May 31, 1996
(this "Agreement"), is made by and among GEM GAMING, INC., a
Nevada
corporation ("Gem"), AMERISTAR CASINOS, INC., a
Nevada corporation ("Ameristar"), AMERISTAR CASINO LAS
VEGAS, INC., a Nevada corporation and a wholly owned
subsidiary of Ameristar ("ACLV"), STEVEN W. REBEIL, an
individual and in his capacity as Trustee of the Karizma
Trust created under that certain Trust Agreement, dated
July 2, 1991, as amended ("Rebeil"), and DOMINIC J.
MAGLIARDITI, an individual ("Magliarditi" and together with
Rebeil, together, the "Gem Individuals").
Recitals
A. WHEREAS, the Gem Individuals collectively own
four
thousand nine hundred (4,900) shares (the "Gem Shares") of
Gem Stock;
B. WHEREAS, ACLV and Gem desire to merge with each
other
and the Gem Individuals wish to receive in exchange for the
Gem Shares in the merger of Gem with ACLV shares of Ameristar
Common Stock upon the terms and subject to the conditions
of this Agreement;
C. WHEREAS, the Board of Directors of Gem has
determined
and the requisite stockholders of Gem have determined,
as evidenced by the execution of this Agreement, that
it is advisable and in the best interests of Gem's
stockholders for Gem to enter into this Agreement, and in
furtherance of such agreement, the Board of Directors of Gem
and the stockholders of Gem has approved the transactions
contemplated in this Agreement;
D. WHEREAS, it is envisioned that the Boards of
Directors of Ameristar and ACLV will approve the transactions
contemplated in this Agreement on or before June 7, 1996;
E. WHEREAS, Gem and Ameristar are entering into
that
certain Interim Funding Agreement concurrently herewith
(the "Interim Funding Agreement") in order to provide, in
advance of the Closing, for an arrangement pursuant to which
Ameristar may provide, in its discretion, additional funding
not to exceed Thirty Million Dollars ($30,000,000) for
the development of appropriate plans and specifications
with respect to the
contemplated "Phase II" of Gem's "Reserve" project in
Henderson, Nevada, and certain other activities related to
the development of the Project or "Phase II"; and
F. WHEREAS, Gem, Ameristar and ACLV intend, by
approving
resolutions authorizing this Agreement, to adopt this
Agreement as a plan of reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated
thereunder.
Agreement
NOW, THEREFORE, in consideration of the mutual
agreements, provisions and covenants
contained in this Agreement,
and
intending to be legally bound hereby, Gem, Ameristar, ACLV
and the Gem Individuals hereby agree as follows:
Article 1
Definitions
1.1 Defined Terms. As used herein, the terms below
shall
have the following meanings. Any of such terms, unless
the context otherwise requires, may be used in the
singular or plural, depending upon the reference.
"Action" shall mean any action, claim,
suit, litigation, proceeding, labor dispute, arbitral
action,
governmental audit, inquiry, criminal prosecution,
investigation or unfair labor practice charge or complaint,
excluding, however, non-governmental claims for monetary
damages only that do not exceed Ten Thousand Dollars
($10,000) individually, and that in the aggregate do not
exceed Fifty Thousand Dollars ($50,000).
"Additional Contractor" shall mean any Person
entering into a Contract after the date hereof with
Ameristar's consent and otherwise in accordance with the
terms of this Agreement for the provision of goods, supplies
or services to be used in readying the project for
Operation.
"Adjustment Amount" shall mean the amount computed
as follows:
(a) If the Completion Differential is less than
or equal to Four Million Dollars ($4,000,000), then the
Adjustment Amount shall equal fifty percent (50%) of
the Completion Differential; and
(b) If the Completion Differential is greater
than Four Million Dollars ($4,000,000), then the Adjustment
Amount shall equal (1) Two Million Dollars ($2,000,000) plus
(2) the excess of the Completion Differential over Four
Million Dollars ($4,000,000).
"Affiliate" shall have the meaning set forth in
the Exchange Act, and the rules and regulations thereunder.
"Ameristar Common Stock" shall mean the common
stock, par value $.01 per share, of Ameristar.
"Ameristar Stock Option Plans" shall mean the
Ameristar Casinos, Inc. 1993 Non-Employee Director Stock
Option Plan, as amended and restated through June 1994,
and the Ameristar Casinos, Inc. Management Stock Option
Incentive Plan, as amended and restated through June 1994.
"Ancillary Agreements" shall mean the
Recapture Agreement and the Registration Rights Agreement,
substantially in the forms attached hereto as Exhibits M and N,
respectively.
"Architect" shall mean Scheurer Architects or any
other architect selected by Gem in connection with the design
of the Project or any other Improvements on the Real Property.
"Architect Consent" shall mean a consent executed
by the Architect, substantially in the form attached
hereto as Exhibit C
and completed in form and substance reasonably
acceptable to Ameristar and ACLV.
"Architect Contract" shall mean that certain
"Standard Form of Agreement Between Owner and Architect"
dated May 15, 1995, between the Architect and Gem, relating
to the design and construction of the Project and the
preparation of plans and specifications, including any
amendments, supplements
or
modifications thereto approved by ACLV.
"Articles of Merger" shall mean articles of merger
to be filed with the Secretary of State of the State of
Nevada pursuant to Section 2.5 in the form of Exhibit BB
attached hereto.
"Assets" shall mean all of Gem's right, title
and interest in and to the business, properties, assets and
rights of any kind, whether tangible or intangible,
real or personal and
constituting, or used in connection with, or related to,
the Business including without limitation all of Gem's right,
title and interest in the following:
(a) all accounts and notes receivable (whether
current or noncurrent), refunds, deposits, prepayments or
prepaid expenses (including without limitation any prepaid
insurance premiums) of Gem;
(b) the Project;
(c) all cash and cash equivalents and
accounts receivable held by Gem;
(d) all Contract Rights;
(e) all Options;
(f) all Leases;
(g) all Real Property;
(h) all Fixtures and Equipment;
(i) all Books and Records;
(j) all Proprietary Rights relating to the
Business, and any premium refunds available from
cancellation of the Insurance Policies;
(k) to the extent transferable, all Permits;
(l) all computers and, to the extent
transferable, software;
(m) all Insurance Policies, to the extent
assignable;
(n) all available supplies, sales
literature, promotional literature, customer, supplier and
distributor lists, art work, display units, telephone and fax
numbers and purchasing records related to the Business;
(o) all rights under or pursuant to all
warranties, representations and guarantees made by suppliers
in connection with the Assets or services furnished to Gem
pertaining to the Business or affecting the Assets, to the
extent such warranties, representations and guarantees are
assignable;
(p) all deposits and prepaid expenses of Gem; and
(q) all claims, causes of action, choses in
action, rights of recovery and rights of set-off of any kind,
against any Person.
"Available Project Reserves" shall mean the amount
of Payment Reserves less the Working Capital Amount.
"Average 10-Day Closing Price" shall mean, with
respect to Ameristar Common Stock as of any date of
measurement, the mean closing price of such stock on the Nasdaq
National Market System (or the principal national securities
exchange, if any, on which such stock is listed) during
the ten (10) trading days immediately preceding the date
of measurement.
"Balance Sheet" shall mean the consolidated
balance sheet of Gem at the date indicated thereon, together
with the notes thereon.
"Books and Records" shall mean the originals of
all books and
records in the possession of Gem including, without
limitation, (a) all records and lists of Gem, (b) all records
and lists pertaining to the Business, customers,
suppliers or
personnel of Gem, (c) all product, business and marketing
plans of Gem and (d) all books, ledgers, files, reports,
plans, drawings and operating records of every kind maintained
by Gem including the originals of Gem's minute books, stock
books and tax returns.
"Boulder Station Standards" shall mean the quality
of design and finishing employed in the Boulder Station
Casino in Las Vegas, Nevada, it being understood that the
Improvements being constructed on the Project Real
Property may utilize different materials and methods than
those used in the Boulder Station Casino in Las Vegas,
Nevada, but that in completing the Project to Boulder
Station Standards, Gem shall have the
obligation to assure that the methods involved in
the
construction will be appropriate and of a quality akin to
that used in the Boulder Station Casino in Las Vegas, Nevada,
taking into account the different types of materials used;
provided, however, any portion of the Project constructed
in strict accordance with
the Approved Plans and Specifications shall be
deemed to satisfy "Boulder Station Standards."
"Business" shall mean Gem's business of
the
development, construction and operation of the Project.
"Camco" shall mean Camco Pacific Construction
Company, Inc.
"Change" shall mean a change in the Plans
and Specifications or a replacement of a partially
completed or completed portion of the Project.
"Closing Date" shall mean the date that is three
(3) business days
following the waiver by Ameristar of
or
satisfaction of the Nevada Gaming Approval Condition;
provided, however, that such date shall be subject to
extension from time to time as may be agreed by Gem,
Ameristar and ACLV, which agreement shall not be
unreasonably withheld, if the closing conditions set forth
in Articles 8 and 9 have not been satisfied. Notwithstanding
the foregoing, under no circumstances shall the Closing Date
extend beyond March 31, 1997.
"Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder.
"Completion Differential" shall mean the amount
by which
(a) the sum of (i) the aggregate amount of
the expenses, costs and Liabilities (including Liabilities
under the Credit Facility) that the Surviving Corporation
shall have incurred in connection with the completion of the
Project and all Project Components after the Effective Time
and through the Operation Date, plus (ii) the aggregate
amount of Gem's
Liabilities (other than Liabilities under the Credit Facility
and the Exterior Sign Lease) existing immediately
preceding the Effective Time, plus (iii) the absolute value
of the negative balance, if any, in the Discretionary Change
Account on the date
when the Completion Differential is calculated, minus (iv)
the positive balance, if any, in the Discretionary Change
Account on the date when the Completion Differential is
calculated, exceeds
(b) the Available Project Reserves as of the
Effective Time.
For the purpose of computing the
Completion
Differential, the amount of Gem's Liabilities under any
Lease with a term longer than three (3) years shall be deemed
to equal the present value of Gem's monetary obligations under
such Lease discounted at eight percent (8%) per annum.
"Confidentiality Agreements" shall mean those
certain reciprocal confidentiality agreements dated as of March
21, 1996, by and between Gem and Ameristar.
"Consent to Assignment of Lease" shall mean a
consent for each Lease, including without limitation, the
Exterior Sign Lease, the Vehicle Rental Lease and the
Phone Lease, each executed by Gem's counterparty to such
Lease and in the form attached hereto as Exhibit E.
"Consent to Assignment of Option Contract" shall mean
a consent for each Option executed by Gem's counterparty to
such Option in the form attached hereto as Exhibit F.
"Consents" shall mean, collectively, the
Contractor Consents and the Architect Consents.
"Constituent Corporations" shall mean ACLV and Gem.
"Contract" shall mean any agreement, contract,
note, loan, evidence of indebtedness, purchase, order,
letter of credit, indenture, security, pledge or other
collateralization agreement,
franchise agreement, undertaking, covenant not to
compete, employment agreement, license, instrument, obligation
or commitment to which Gem is a party or by which Gem or any of
the Assets is bound and which relates to the Business or the
Assets, whether oral or written, but excluding all Leases and
Options.
"Contract Rights" shall mean all of Gem's rights
and obligations under the Contracts.
"Contractor" shall mean each of (a) Camco, KMA, IGT
and Lloyd's, (b) any other Person who has entered into a
Contract with Gem as of the date hereof pertaining to the
Project or the Project Real Property, and (c) any Additional
Contractor.
"Contractor Consent" shall mean a consent executed
by each Contractor substantially in the form attached
hereto as Exhibit D and
completed in form and substance reasonably
acceptable to Ameristar and ACLV.
"Contractor Contract" shall mean each of (a)
that certain Standard Form of Agreement Between Owner and
Contractor dated October 15, 1995, between Camco and Gem
relating to the construction of that part of the
Improvements constituting the casino and related
Improvements, (b) that certain Standard Form of Agreement
Between Owner and Contractor dated October 15, 1995, between
Camco and Gem, relating to the construction of that part of
the Improvements constituting the hotel and the related
Improvements, (c) the agreements between KMA Designs and
Gem pertaining to
the interior design of portions of the Project,
(d) the agreements between IGT and Gem pertaining to
Gaming Equipment to be supplied to the Project, (e) the
agreements
between Lloyd's Refrigeration and Gem pertaining to
certain equipment to be supplied to the Project, and (f)
any other Contract entered into by Gem and any other
Contractor for the provision of goods, supplies or services
to be used in readying the Project for Operation.
"Copyrights" shall mean registered
copyrights, copyright applications and unregistered copyrights.
"Court Order" shall mean any judgment,
decision, consent decree, injunction, ruling or order of any
federal, state or local court or governmental agency,
department or authority that is binding on any Person or its
property under applicable law.
"Credit Facility" shall mean the loans under
that certain Construction Reducing Revolving Credit Facility
dated January 31, 1996, between Gem and Bank of America
National Trust and Savings Association, as Administrative
Agent, Bank of America Nevada, as Co-Agent, and the
additional lenders identified as parties thereto, as amended
by that certain Agreement dated April 10, 1996, in the maximum
principal amount of Twenty-Five Million Dollars ($25,000,000)
secured in part by a deed of trust encumbering the
Project, which Credit Facility (or
any
replacement thereof) shall be subject to Ameristar's approval
in its sole discretion.
"Credit Facility Consent" shall mean that
certain Consent to Assignment of Credit Facility to be
executed by each lender providing financing to Gem under the
Credit Facility in the form attached hereto as Exhibit G.
"Default" shall mean (a) a breach of or default
under any Contract, Option or Lease, (b) the occurrence of
an event that with the
passage of time or the giving of notice or both
would constitute a breach of or default under any
Contract, Option or Lease, or (c) the occurrence of an event
that with the passage of time or the giving of notice or both
would give rise to a right of termination, renegotiation or
acceleration under any Contract, Option or Lease.
"Disclosure Schedule" shall mean a schedule
executed and delivered by Gem to Ameristar and ACLV and
a schedule executed and delivered by Ameristar and ACLV to
Gem as of the date hereof which sets forth the
exceptions to the
representations and warranties contained in Articles 4 and
5 hereof, respectively, and certain other information called
for by this Agreement. Unless otherwise specified, each
reference in this Agreement to any numbered schedule is a
reference to that numbered schedule which is included in the
Disclosure Schedule.
"Discretionary Change" shall mean a Change that is
not a Mandatory Change.
"Distributed Warrant and Stock" shall mean that
certain 1994 Series G Warrant to purchase one-hundred thousand
(100,000) shares of common stock of Players International,
Inc., and one hundred sixty-two thousand one hundred three
(162,103) shares of Player's International, Inc., common
stock, to the extent owned by Gem as of the date hereof.
"Effective Time" shall mean the time of filing of
the Articles of Merger with the Secretary of State of the
State of Nevada in accordance with the provisions of Chapter
92A of the GCL.
"Encumbrance" shall mean any claim, lien,
pledge, option, charge, easement, security interest, deed
of trust, mortgage, right-of-way, encroachment, building
or use
restriction, conditional sales agreement, encumbrance or
other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without
limitation, any agreement to give any of the foregoing in
the future, and any contingent sale or other title retention
agreement or lease in the nature thereof.
"Escrow Agent" shall mean a bank or trust company
as shall be mutually designated by Ameristar and Gem prior to
the Closing.
"Escrow Agreement" shall mean that certain
Escrow Agreement and Escrow Instructions dated as of the
Closing executed by the Escrow Agent, Ameristar, ACLV and
the Gem Individuals, in the form of Exhibit P attached hereto.
"Excluded Liabilities" shall mean any or all of
the following:
(a) Except as otherwise provided in Section 6.9,
any
Liability to or in respect of any employees or former
employees of Gem including without limitation (i) any
Liability under or with respect to any Employee Plan at
any time maintained, contributed to or required to be
contributed to by or with respect to Gem or under which
Gem may incur Liability, or any contributions, benefits or
Liabilities therefor, or any Liability with respect to Gem's
withdrawal or partial withdrawal from or termination of any
Employee Plan and (ii) any claim of an unfair labor practice,
or any claim under any state unemployment compensation or
worker's compensation law or regulation or under any federal
or state employment discrimination law or regulation, which
shall have been asserted on or prior to the Closing Date or is
based on acts or omissions which occurred on or prior to the
Closing Date;
(b) Any Liability of Gem in respect of any Tax;
(c) Any Liability arising from any injury to or
death of any Person or damage to or destruction of any
property, whetherbased on negligence, breach of warranty,
strict
liability, enterprise liability or any other legal or
equitable theory arising from defects in products
manufactured or from services performed by or on behalf of
Gem or any other Person on or prior to the Closing Date;
(d) Any Liability of Gem arising out of or related
to any Action against Gem or any Action which adversely
affects the Assets and which shall have been asserted on or
prior to the Closing Date or to the extent the basis of
which shall have arisen on or prior to the Closing Date;
(e) Any Liability of Gem, any Gem Individual or
any Affiliate of Gem resulting from entering into,
performing its obligations pursuant to or consummating
the transactions contemplated by, this Agreement (including
without limitation, any Liability pursuant to Article 11
hereof);
(f) Any Liability related to the Distributed
Warrant and Stock;
(g) Any Liability of Gem or any Gem Individual to
or in respect of Michael V. Villamor, whether in his capacity
as a stockholder or former stockholder or employee or former
employee
of Gem or otherwise; and
(h) Any Liability related to any Former Property.
"Existing Employment Contracts" shall mean
those Executive Employment Agreements between Gem and
Gregg P. Schatzman and J. Todd Stewart, respectively.
"Existing Gaming Application" shall mean that
certain application
for a license to conduct non-restricted gaming
operations dated May 26, 1995, filed by Gem with the Nevada
State Gaming Control Board and the Nevada Gaming
Commission, and anticipated
to be set for a hearing before the Nevada Gaming
Commission on or about August 25, 1996.
"Existing Plans and Specifications" shall mean
the plans and
specifications relating to the design or construction
of the Project in existence as of the date hereof, as more
fully described in Exhibit A attached hereto.
"Exterior Sign Lease" shall mean that certain
Lease Agreement dated as of April 23, 1996, by and between
Gem and Young Electric Sign Company.
"Financial Statements" shall mean the Year-
End Financial Statements and the Interim Financial Statements.
"Fixtures and Equipment" shall mean all of
the furniture, fixtures, furnishings, machinery, automobiles,
trucks, spare parts, supplies, gaming and general equipment
and devices which are or are to be installed and used in
connection with the operation of the Project and other
tangible personal property owned by Gem and used in
connection with the Business, wherever located and including
any such Fixtures and Equipment in the possession
of any of Gem's suppliers, including all warranty
rights with respect thereto.
"Former Property" shall mean each office,
facility, store, warehouse, Improvement, administrative
building and all other real property and related facilities
that was owned, leased or operated by Gem or any of its
current or former Subsidiaries at any time prior to the date
hereof, excluding the Project Real Property.
"GAAP" shall mean generally accepted
accounting principles
set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute
of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or in such
other statements
by such other entity as have been approved by a
significant segment of the accounting profession, which are
in
effect on the date of this Agreement.
"Gaming Authority" shall mean any agency,
authority, board, bureau, commission, department, office or
instrumentality of any nature whatsoever of the United
States or foreign government,
any state, province or any city or other political
subdivision, whether now or hereafter existing, or any officer
or official thereof and any other agency with authority to
regulate (i) any gaming operation (or proposed gaming
operation) owned, managed or
operated by Gem, Ameristar, ACLV, the Surviving
Corporation or any of their Subsidiaries or (ii) the sale
of
alcoholic beverages at any such gaming operation.
"Gaming Laws" shall mean the gaming laws of
any jurisdiction or jurisdictions to which Gem, Ameristar,
ACLV, the
Surviving Corporation or any of their Subsidiaries is, or may
at any time after the date of this Agreement be, subject.
"Gaming License" shall mean every license,
franchise, finding of suitability or other authorization
required to own, lease, operate or otherwise conduct
gaming activities at the Project or in connection with any
other assets now or hereafter owned by Gem, Ameristar, ACLV,
the Surviving Corporation or any other Subsidiary of any of
them, including without limitation, all such licenses
granted under the Nevada Gaming Control Act, the Mississippi
Gaming Control Act, and the Iowa Excursion Boat Gambling Act,
and the regulations promulgated pursuant thereto, and other
applicable federal, state, foreign or local laws and any such
license, franchise or other authority required for Gem's
Operation of the Project.
"GCL" shall mean the General Corporation Law of
the State of Nevada.
"Gem Air" shall mean Gem Air, Inc.
"Gem Air Documents" shall mean the documents to
be executed pursuant to Section 6.13 hereof.
"Gem Individual Closing Certificate" shall mean
a closing certificate executed by a Gem Individual
substantially in the form attached hereto as Exhibit Z and
completed in form and substance reasonably acceptable to
Ameristar and ACLV.
"Gem Individual Guaranties" shall mean any
obligations of any Gem Individuals of any Liabilities of Gem
arising out of the Business or the Assets, but only to the
extent listed on Exhibit Y attached hereto.
"Gem Proportionate Interest" shall mean, as of
any date, with respect to each Gem Stockholder, a
fraction, the numerator of which is the total number of
shares of Gem Stock that are owned by such Gem
Individual, as set forth on Schedule
4.2, and the denominator of which is the total number of
shares of Gem Stock that are outstanding as of such date.
"Gem Stock" shall mean the common stock, par
value $0.00 per share, of Gem.
"Gem Stockholder" shall mean any owner, including
any subsequent transferees, of any interest in any Gem Stock.
"General Consent" shall mean a consent executed in
the form attached hereto as Exhibit H, completed in
form and substance reasonably acceptable to Ameristar and
ACLV.
"Holder" shall mean any owner, including any
subsequent transferees, of any interest in any Ameristar
Common Stock constituting a portion of the Merger
Consideration.
"HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
rules and
regulations thereunder.
"IGT" shall mean International Game Technology.
"Improvements" shall mean all the
buildings, structures, facilities, fixtures and improvements of
every nature whatsoever now or hereafter situated on the Real
Property or any other real property owned by Gem or any of its
Subsidiaries.
"Ineligible Person" shall mean any Person who owns
any capital stock or other interest in Gem (i) who is denied a
Gaming License, disqualified from eligibility for a Gaming
License, or found unsuitable by any Gaming Authority before
the Closing, (ii) whose continued involvement in the Business
or Gem's other business affairs as an employee, director,
officer or otherwise, may, in Ameristar's reasonable opinion
after consultation with counsel, have a material adverse
effect on the likelihood that any Gaming Authority will
issue any Gaming License or other approval to Gem, the
Surviving Corporation, Ameristar or ACLV, or (iii) is
expressly precluded from having any continuing interest in
Gem, the Surviving Corporation, Ameristar or ACLV in any
Gaming License or other approval granted by any Gaming
Authority or as a condition to the issuance or continued
validity of any Gaming License or approval by any Gaming
Authority.
"Insurance Policies" shall mean the insurance
policies related to the Assets listed on Schedule 4.22.
"Interim Balance Sheet" shall mean the
unaudited Balance Sheet dated as of the Interim Balance
Sheet Date and prepared in accordance with GAAP and
Regulation S-X.
"Interim Balance Sheet Date" shall mean March 31,
1996.
"Interim Financial Statements" shall mean the
Interim Balance Sheet, and the unaudited Statement of Profit
and Loss and the unaudited Statement of Changes in Financial
Position, each prepared in accordance with GAAP and
Regulation S-X, for the quarter ended on the Interim Balance
Sheet Date.
"Interim Funding Deed of Trust" shall mean the Deed
of Trust that secures the Interim Funding Agreement.
"Iowa Gaming Authorities" shall mean,
without limitation, the Iowa Racing and Gaming Commission
and the Alcoholic Beverage Division of the Iowa Department
of Commerce and any other applicable governmental or
administrative state or local agency involved in the
regulation of gaming and gaming activities in the State of
Iowa.
"KMA" shall mean KMA Designs, Inc.
"knowledge" shall mean actual, conscious knowledge of
a Person as of the date hereof and after a diligent review of
those files and
records of such Person and such Person's Affiliates
appropriate to reach such conclusion; "knowledge" of a Person
not a natural Person shall mean knowledge on the date hereof
of the executive officers of such Person and after a diligent
review of those files and records of such Person and
such Person's Affiliates appropriate to reach such conclusion.
"Leasehold Estates" shall mean all of Gem's rights
and obligations as lessee under the Leases.
"Leases" shall mean all of the existing leases
with respect to the personal or real property of Gem or under
which Gem holds rights as the lessee, including without
limitation, the Exterior Sign Lease, the Vehicle Rental
Lease and the Phone Lease.
"Liabilities" shall mean any direct or
indirect liability, indebtedness, obligation, commitment,
expense, claim, deficiency, guaranty or endorsement of or by
any Person of any type, whether accrued, absolute,
contingent, matured, unmatured or other.
"Lloyd's" shall mean Lloyd's Refrigeration, Inc.
"Mandatory Change" shall mean a Change that is
required or reasonably intended (i) to cause the Plans and
Specifications or the Project to comply with applicable
Regulations, Gaming Laws or any Court Order, (ii) to cause the
Plans and Specifications to call for the construction of the
entire Project in accordance with reasonably prudent
construction and business practices and Boulder Station
Standards or (iii) to cause any "partially completed or
completed" portion of the Project to satisfy Boulder Station
Standards.
"material adverse effect" or "material adverse
change" shall mean with respect to the Business or the
Assets any significant and substantial adverse effect or
change in the condition (financial or other), business,
results of operations, prospects, assets, Liabilities or
operations of Gem, the Business or the Assets or on the
ability of Gem to consummate the transactions contemplated
hereby, or any event or condition which would, with the passage
of time or the giving of notice, or both, constitute
a "material adverse effect" or "material adverse
change."
"Merger" shall mean the merger of Gem into ACLV
as described in Section 2.1.
"Merger Consideration" shall mean the Closing
Delivery Ameristar
Stock, the Pre-Closing Offering Reduction Share
Proceeds, and each Ineligible Stockholder's right to payment,
if any, pursuant to Section 7.3(e).
"Mississippi Gaming Authorities" shall mean,
without limitation, the Mississippi Gaming Commission and the
Alcoholic Beverage Control Division of the State Tax
Commission of the State of Mississippi and any other
applicable governmental or administrative state or local
agency involved in the regulation of gaming and gaming
activities in the State of Mississippi.
"Nevada Gaming Authorities" shall mean,
without limitation, the Nevada Gaming Commission, the Nevada
State Gaming Control Board, the Clark County Liquor and
Licensing Board, the Henderson City Council and any other
applicable governmental or administrative state or local
agency involved in the regulation of gaming and gaming
activities in the City of Henderson, Clark County, Nevada.
"Operation" shall mean, with respect to the
Project, that:
(i) all Gaming Licenses necessary or appropriate
to permit the Surviving Corporation or Gem to conduct non-
restricted gaming operations at the Project have been granted
and have not been revoked or suspended, and all necessary
approvals from Nevada Gaming Authorities with respect to
the transactions contemplated by this Agreement;
(ii) all Encumbrances (other than
Permitted Encumbrances) related to the construction of the
Project have been paid and/or otherwise satisfied and
released;
(iii) the Project has been completed to
Boulder Station Standards and is in a condition (including
installation of all furnishings, Fixtures and Equipment) to
receive guests in the ordinary course of business;
(iv) gaming and other operations in accordance
with applicable
Gaming Laws are open to the general public and are
being conducted at the Project;
(v) a permanent or temporary certificate of
occupancy has been issued for the Project by the City of
Henderson Building Department; and
(vi) a notice of completion of the Project has
been duly recorded.
"Operation Date" shall mean the date upon which, in
the reasonable
determination of Ameristar, the Project
begins
Operation.
"Options" shall mean all options to purchase or
lease real or personal property whether Gem be the grantor or
grantee thereunder, including without limitation, the options
to lease or purchase real property listed on Schedule 4.7.
"ordinary course of business" or "ordinary course"
or any similar phrase shall mean, with respect to Gem, the
ordinary course of the Business and consistent with Gem's past
practice.
"Patents" shall mean all patents and
patent
applications and registered designs and registered
design
applications.
"Payment Reserves" shall mean, as of the
Effective Time, the
sum of (i) the aggregate amount of cash and cash
equivalents held by Gem, plus (ii) the amount that is
available to be drawn under the Credit Facility.
"Permits" shall mean all licenses, permits,
franchises, approvals,
authorizations, consents or orders of, or filings
with, any governmental authority, whether foreign, federal,
state or local,
or any other Person, necessary or desirable for the
past, present or anticipated conduct of, or relating to
the operation of the Business, excluding Gaming Licenses.
"Permitted Encumbrances" means:
(a) with respect to the Real Property and the Phase
II Real Property, (i) materialmen's, mechanics',
carriers', workmen's,
repairmen's or other like liens arising in the
ordinary course of business for amounts not yet due or which
are being contested in good faith by appropriate
proceedings, provided that the Title Company insures the
Surviving Corporation against collection of the same from the
Real Property; (ii) liens for current taxes not yet due or
any taxes being contested in good faith by appropriate
proceedings, provided that the Title Company insures the
Surviving Corporation against collection of such contested
amounts from the Real Property; (iii) the Credit Facility;
(iv) the Exterior Sign Lease; (v) the Vehicle Rental Lease;
(vi) the Phone Lease; (vii) the Interim Funding Deed of
Trust; and (viii) any title exceptions set forth on the
Project Preliminary Title Report; and
(b) with respect to any other Assets, (i)
any Encumbrances securing the Credit Facility; (ii) to the
extent such Assets are leased pursuant to the Exterior Sign
Lease, the Encumbrance created by the Exterior Sign Lease;
(iii) to the extent such Assets are leased pursuant to the
Vehicle Rental Lease, the Vehicle Rental Lease; and (iv) to
the extent such Assets are leased pursuant to the Phone
Lease, the Phone Lease.
"Person" shall mean any individual,
corporation, partnership, limited liability company,
joint venture, association, joint-stock company,
trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"Phase II" shall mean the additional development
which Gem plans to effect at the Project.
"Phase II Real Property" shall mean that certain
real property located in Clark County, Nevada, and more
particularly described on Exhibit K attached hereto.
"Phone Lease" shall mean that certain Lease dated
March 29, 1996,
by and between Gem and NEC Business Communications
System (West), Inc..
"Plans and Specifications" shall mean the
Existing Plans and Specifications or the Approved
Plans and Specifications.
"Project" shall mean the project to develop,
construct and operate certain hotel and casino improvements to
be located on the Project Real Property in Henderson,
Nevada, consisting more particularly of the improvements
described in Exhibit I attached hereto.
"Project Budget" shall mean the itemized
schedule setting forth, on a line item basis, all of the costs
which Gem anticipates to incur after the date hereof through
the Operation Date in connection with the development,
construction, equipping and opening of the Project attached
hereto as Exhibit U, as such Project Budget may be amended from
time to time by mutual consent of Ameristar and Gem.
"Project Completion Amount" shall mean the sum of
all of the Project Component Completion Amounts.
"Project Component" shall mean each item listed in
the left column on Exhibit T attached hereto.
"Project Component Completion Amount" shall
mean (i), as of the Closing, with respect to each of the
Project Components, the amount certified by Gem in the
Project Status Certificate and (ii) as of the date hereof,
with respect to each of the Project Components, the
corresponding amount listed in the right column on Exhibit T.
"Project Preliminary Title Report" shall mean
the Preliminary Title Report for the Project Real Property, a
copy of which is attached hereto as Exhibit W.
"Project Real Property" shall mean that certain
real property located in Clark County, Nevada, and more
particularly described on Exhibit J attached hereto.
"Project Schedule" shall mean the project
construction schedule attached hereto as Exhibit V.
"Project Status Certificate" shall mean the
certificate to be completed by Gem and delivered to Ameristar
upon Closing pursuant to Section 3.2(a), in the form
attached hereto as Exhibit B
and completed in form and substance reasonably
acceptable to Ameristar and ACLV.
"Proprietary Rights" shall mean all of
Gem's
Copyrights, Patents, Trademarks, technology rights and
licenses, computer software (including without limitation any
source or object codes therefor or documentation relating
thereto), trade secrets,
franchises, know-how, inventions,
designs,
specifications, plans, drawings and intellectual property
rights.
"Real Property" shall mean the Project Real
Property and all other real property owned in fee by Gem,
including without
limitation, all rights, easements and
privileges
appertaining or relating thereto, and all Improvements
located thereon, if any.
"Recapture Agreement" shall mean a Recapture
Agreement by and between Ameristar, Rebeil and Magliarditi
substantially in the form of Exhibit M attached hereto, with
Schedule 2.1 thereof
completed to describe, with respect to each Gem Individual,
by certificate number, the following number of shares of the
Closing Delivery Ameristar Stock that will be delivered to
such Gem Individual in accordance with clause 3.2(c):
Gem Individual Shares
Rebeil 484,700
Magliarditi 15,300
"Registration Rights Agreement" shall mean that
certain Registration Rights Agreement to be executed as of
the Closing Date by Ameristar, Rebeil and Magliarditi in
the form of Exhibit N attached hereto.
"Registration Rights Consent" shall mean that
certain Registration Rights Consent to be executed as of the
Closing Date by Ameristar and Craig H. Neilsen, in the form
of Exhibit O attached hereto.
"Regulation S-X" shall mean Regulation S-X
promulgated by the Securities and Exchange Commission as in
effect at any time and from time-to-time.
"Regulations" shall mean any laws,
statutes, ordinances, regulations, rules, notice
requirements, court decisions, agency guidelines, principles
of law and orders of any foreign, federal, state or local
government and any other governmental department or agency,
including without limitation Environmental Laws, energy, motor
vehicle safety, public utility, zoning, building and health
codes, occupational safety and health and laws respecting
employment practices, employee documentation, terms and
conditions of employment and wages and hours, excluding the
Gaming Laws.
"Representative" shall mean any officer,
director, principal, attorney, agent, employee or other
representative.
"Securities" shall mean all Ameristar Common
Stock, options, warrants to purchase Ameristar Common Stock
or other securities
that can be exercised for, converted into, or
exchanged for Ameristar Common Stock, in each case to the
extent held or owned by any Holder.
"Securities Act" shall mean the Securities Act of
1933, as amended and further amended from time-to-time.
"Subsidiary" shall mean any corporation,
partnership, joint venture or other legal entity of which Gem,
Ameristar, ACLV or such other Person, as the case may be
(either alone or through
or together with any other Subsidiary), owns, directly
or indirectly, more than fifty percent (50%) of the stock or
other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or
other managing body or Person of such other legal entity.
"Surviving Corporation" shall mean ACLV as
the surviving corporation in the Merger.
"Tax" shall mean any federal, state, local, foreign
or other tax, levy, impost, fee, assessment or other
government charge, including without limitation income,
estimated income, business, occupation, franchise,
property, payroll, personal property, sales, transfer,
use, employment, commercial rent, occupancy, franchise or
withholding taxes, and any premium, including without
limitation interest, penalties and additions in connection
therewith.
"Title Company" shall mean Fidelity National
Title Insurance Company.
"Trademarks" shall mean registered
trademarks, registered service marks, trademark and service
mark applications and unregistered trademarks and service
marks and all good will associated with any of the foregoing.
"Trust" shall mean that certain Karizma Trust
created under that certain Trust Agreement, dated July 2,
1991, as amended.
"Vehicle Rental Lease" shall mean each lease or
rental agreement that Ameristar shall have approved in its
reasonable discretion for one or more busses, limousines or
similar vehicles to be used in the operation of the Project.
"Warrants" shall mean (a) agreements, rights
to subscribe (including any preemptive rights), options,
warrants, calls, commitments or rights of any character to
purchase or otherwise acquire any common stock or other
securities of Gem, and (b) outstanding securities of Gem
that are convertible into or exchangeable for capital shares
or other securities of Gem.
"Working Capital Amount" shall mean $500,000, as
such amount may be modified from time to time by written
agreement of Ameristar and Gem.
"Year-End Financial Statements" shall mean the
audited Balance Sheets dated December 31, 1995, December 31,
1994, and December 31, 1993,
prepared in accordance with GAAP and
Regulation S-X, and the related audited Statements of Profit
and Loss and audited Statements of Changes in Financial
Position dated December 31, 1995, December 31, 1994, and
December 31, 1993, each prepared in accordance with GAAP and
Regulation S-X.
1.2 Other Defined Terms. The following terms shall
have
the meanings defined for such terms in the Sections set
forth below:
Term Section
Adjustment Excess Payment 2.10(d)
Adjustment Excess Payment Note 2.10(d)
ALTA
9.7(a)
Ameristar SEC Filings 6.11
Ameristar SEC Reports
5.5(a)
Approved Plans and Specifications
6.7(c)
Benefit Arrangement
4.19(a)
Bulk Sales Act 11.6
Claim
11.3(d)
Claim Notice
11.3(d)
Closing 3.1
Closing Delivery Ameristar Stock
3.2(d)(ii)
Code 4.19(a)
Consideration Value 11.3(a)
Consultant 6.4(b)
Contingency Escrow 2.10(a)
Contingency Escrow Cash 2.10(a)
Damages 11.3(a)
Default Notice 6.3
Discretionary Change Account 6.7(e)
Discretionary Change Order 6.7(d)
Discretionary Change Request 6.7(d)
Disqualified Holder 11.4(b)
Employment Contracts 6.9
Employee Plans 4.19(a)
Environmental Claims 4.25(a)
Environmental Conditions 4.25(a)
Environmental Laws 4.25(a)
Environmental Noncompliance 4.25(a)
ERISA 4.19(a)
ERISA Affiliate 4.19(a)
Exchange Act 5.3(b)
Expected Adjustment Amount 2.10(a)(i)
Final Post-Closing Adjustment Notice 2.10(c)(i)
Funding Request Application 6.7(q)
Gem Air Documents 6.13
Closing Shares 2.8(a)(i)
Gem Shares Recital A
Hazardous Substance 4.25(a)
Ineligible Person Amount 7.3(e)
Multiemployer Plan 4.19(a)
Neilsen 2.9
Neilsen Pre-Closing Disposed Stock 2.9
Nevada Gaming Approval Condition 9.10
PBGC 4.19(a)
Pension Plan 4.19(a)
Pre-Adjustment Consideration Stock 2.8(a)(i)
Pre-Closing Offering 2.9
Pre-Closing Offering Reduction Shares 2.9(a)
Pre-Closing Offering Reduction Shares
Proceeds 2.9(b)
Preliminary Post-Closing Adjustment
Notice 2.10(c)
Project Completion Date 2.10(a)(ii)
Proposed Acquisition Transaction 6.2(a)
Proxy Statement 4.32
Redemption Price 11.4(e)
Release 4.25(a)
Required Transfer 11.4(b)
SEC 5.5(a)
Title Policy 9.7(a)
Transfer 11.8
Trustee 11.4(e)
Voting Trust Agreement 11.4(d)
Welfare Plan 4.19(a)
Article 2
The Merger
2.1 The Merger. In accordance with the provisions of
this Agreement and the GCL, on the Closing Date, Gem will be
merged
with and into ACLV, and ACLV shall be the surviving
corporation in the Merger, shall continue its corporate
existence under the laws of the State of Nevada, and
shall be a wholly-owned subsidiary of Ameristar. At the
Effective Time, the separate existence of Gem shall cease.
By signing this Agreement, each Gem Individual hereby consents
to and approves the Merger.
2.2 Articles of Incorporation. The Articles
of
Incorporation of ACLV, as in effect immediately prior to
the Closing Date, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended as
provided by law.
2.3 By-Laws. The By-Laws of ACLV, as in effect
immediately prior to the Closing Date, shall be the By-Laws of
the Surviving Corporation until thereafter amended as provided
by law.
2.4 Directors and Officers. The directors of
ACLV immediately prior to the Closing Date shall, after the
Effective Time, be the directors of the Surviving
Corporation. The
officers of ACLV immediately prior the Closing Date shall,
after the Closing Date, be the officers of the Surviving
Corporation; provided, however, Gregg P. Schatzman shall
be the General Manager of "The Reserve Hotel and Casino"
and J. Todd Stewart shall be the Chief Financial
Officer of the Surviving Corporation. Each director
and officer of the Surviving Corporation shall hold office
in accordance with the Articles of Incorporation and By-Laws
of the Surviving Corporation.
2.5 Articles of Merger. ACLV and Gem shall file
the Articles of Merger with the Secretary of State of the
State of Nevada in accordance with the provisions of Section
92A.005 et. seq. of the GCL at the time of the Closing.
The Merger shall become effective at the Effective Time.
2.6 Effect of Merger. Upon consummation of the Merger,
the Surviving Corporation shall thereupon and thereafter
possess all the rights, privileges, powers and franchises,
including those of a public as well as of a private
nature, of each of the Constituent Corporations, and be
subject to all the restrictions, disabilities and duties of
each of the Constituent Corporations; and all of the rights,
privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, of
each of the Constituent Corporations, and all debts due to
either of the Constituent Corporations on whatever
account, as well for stock subscriptions as for all other
choses in action or belonging to each of the Constituent
Corporations shall be vested in the Surviving Corporation;
and all property, rights, privileges, powers and franchises and
all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the
several, and respective Constituent Corporations; and the
title to any real estate, vested by deed or otherwise,
under the laws of Nevada or elsewhere in either of the
Constituent Corporations, shall not revert or be in any way
impaired by reason of the Merger; but all rights of creditors
and all liens upon any property as of the Effective Time of
either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of each of
the Constituent Corporations as of the Effective Time shall
thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted
by it.
2.7 Additional Actions. If, at any time after
the Effective Time, the Surviving Corporation shall believe
or be advised that any further assignments or assurances in
law or any other acts are necessary or desirable (a) to
vest, perfect or
confirm, of record or otherwise, in the Surviving
Corporation, title to and possession of any property or
right of either Constituent Corporation acquired or to be
acquired by reason of, or as a result of, the Merger, or (b)
otherwise to carry out the purposes of this Agreement, either
Constituent Corporation and its proper officers and directors
shall be deemed to have granted to the Surviving Corporation
an irrevocable power of attorney to execute and deliver all
such proper deeds, assignments and assur ances
in
law and to undertake all such acts necessary or desirable
to vest, perfect or confirm, of record or otherwise, such
property or rights in the Surviving Corporation and otherwise
to carry out the purposes of this Agreement; and the proper
officers and directors of the Surviving Corporation are
fully authorized in the name of either Constituent
Corporation or otherwise to take any and all such action.
2.8 Conversion of Shares. In consideration of the
Merger,
all shares of Gem Stock will be exchanged as follows:
(a) Each of the Gem Stockholders who is not
an Ineligible Person shall receive:
(i) the number of shares of Ameristar
Common Stock that equals the product of (A) such Gem
Stockholder's Gem Proportionate Interest multiplied times (B)
(1) seven million five hundred thousand (7,500,000) shares of
validly issued, fully paid, non-assessable and unregistered
shares of Ameristar Common Stock (the "Pre-Adjustment
Consideration Stock"), less (2) the number of such shares
of Ameristar Common Stock that constitute Pre-Closing Offering
Reduction Shares (such product with respect to each such
Gem Stockholder, such Gem Stockholder's "Closing Shares"); and
(ii) cash, in an amount equal to the product
of (A) such Gem Stockholder's Gem Proportionate Interest
multiplied times (B) (1) the Pre-Closing Offering Reduction
Shares Proceeds less (2) the Adjustment Amount, if any.
(b) Each Ineligible Person who is a Gem
Stockholder shall receive the right to receive payments in
accordance with clause 7.3(e)
2.9 Pre-Closing Offering. The parties acknowledge
and
agree that nothing herein shall be construed to preclude or
limit Ameristar from (i) authorizing an additional twenty
million (20,000,000) shares of Ameristar Common Stock, (ii)
filing an appropriate registration statement with the
Securities and
Exchange Commission in order to effect, prior to the Closing,
the sale through an underwritten public offering of Ameristar
Common Stock, or (iii) selling up to ten million (10,000,000)
shares of Ameristar Common Stock pursuant to any such
registration statement.
In Ameristar's discretion, said registration
statement may cover Ameristar Common Stock not previously sold
by Ameristar and Ameristar Common Stock owned by other
Persons (including, without limitation, Craig H. Neilsen,
whether in his individual capacity or in his capacity as a
trustee or other fiduciary).
The sale of any Ameristar Common Stock pursuant to
any such registration statement (the "Pre-Closing
Offering") shall not
cause any adjustment in the Pre-Adjustment
Consideration Stock, unless the Ameristar Common Stock so
sold was owned by Craig H. Neilsen (whether in his individual
capacity or in his capacity as a trustee or other fiduciary
("Neilsen")) immediately prior to such sale (the "Neilsen Pre-
Closing Disposed Stock"), in which case:
(a) The seven million five hundred
thousand (7,500,000) shares of Pre-Adjustment Consideration
Stock set forth in Section 2.8 shall be reduced by the
number of shares, not to exceed five hundred thousand
(500,000), that is equal to one-half (1/2) of the Neilsen
Pre-Closing Disposed Stock (the amount of said reduction
referred to herein as the "Pre-Closing Offering Reduction
Shares"); and
(b) The gross proceeds from the sale of the
PreClosing Offering Reduction Shares, less any
underwriter's discount, shall be treated herein as the "Pre-
Closing Offering Reduction Shares Proceeds."
2.10 Consideration Adjustment. The parties generally
intend that (i) ACLV and the Gem Individuals will share
responsibility for the Completion Differential, if any, and
(ii) the Contingency Escrow Cash, if any, will be held in the
Contingency Escrow until the Project is placed into Operation
in order to provide a source of funds to cover the Gem
Individual's share of the Completion Differential. In
furtherance of this general intent, the parties more
specifically agree as follows:
(a) Each of the Parties to the Escrow Agreement
shall execute the Escrow Agreement concurrently herewith.
Funds shall be deposited into the escrow created under the
Escrow Agreement (the "Contingency Escrow") as follows:
(i) Unless at the time of the Closing (A)
the Operation Date shall have occurred, (B) each Contractor and
each Additional Contractor shall have delivered a Contractor
Consent with the box in Paragraph 2(m) thereof checked so as
to indicate that all of such Contractor's work under
its respective Contractor Contract has been completed, and
(C) each Architect shall have delivered an Architect
Consent with the box in Paragraph 2(k) thereof checked so
as to indicate that all such Architect's work under its
respective Architect Contract has been completed, if the Pre-
Closing Offering shall have occurred before the Closing,
then at the Closing, Ameristar shall, after consultation
with the Gem Individuals, compute the expected amount of
the Adjustment Amount based on Ameristar's good faith
projections of the Surviving Corporation's aggregate
expenses, costs and Liabilities to be incurred between the
Closing and the Operation Date in the completion of all
Project Components (the "Expected Adjustment Amount") and
Ameristar shall deposit into the Contingency Escrow the
lesser of (A) the Expected Adjustment Amount and (B) the
Pre-Closing Offering Reduction Shares Proceeds.
(ii) In addition, if any of the Gem
Individuals Transfer (as that term is defined in Section 11.8)
any interest in any Ameristar Common Stock before the date
when (A) the Operation Date shall have occurred, (B) each
Contractor and each Additional Contractor shall have
delivered a Contractor Consent with the box in Paragraph 2(m)
thereof checked so as to indicate that all of such
Contractor's work under its respective Contractor Contract
has been completed, and (C) each Architect shall have
delivered an Architect Consent with the box in Paragraph
2(k) thereof checked so as to indicate that all such
Architect's work under its respective Architect Contract has
been completed (such date, the "Project Completion Date"),
then such Gem Individual shall deposit into the Contingency
Escrow the lesser of (i) the proceeds of such Transfer, and
(ii) the excess of the Expected Adjustment Amount over
the amount of the Contingency Escrow Cash, immediately
after receiving such
proceeds.
The cash deposited into the Contingency Escrow pursuant to
this Subsection 2.10(a) sometimes is referred to herein
as the "Contingency Escrow Cash."
(b) Within sixty (60) days after the
Project Completion Date, Ameristar shall calculate the Gem
Individuals' share of the Completion Differential which shall
be deemed to equal the Adjustment Amount.
(c) Ameristar shall then send a notice to the
Gem
Individuals (the "Preliminary Post-Closing Adjustment
Notice") setting forth Ameristar's computation of the
Adjustment Amount. The Preliminary Post-Closing Adjustment
Notice shall be processed as follows:
(i) If the Gem Individuals concur
with
Ameristar's computation of the Adjustment Amount, as set forth
in the Preliminary Post-Closing Adjustment Notice, then the
Gem Individuals shall so notify Ameristar within five (5)
business days after receiving the Preliminary Post-Closing
Adjustment Notice, and Ameristar and the Gem Individuals shall
thereafter execute an additional notice, which additional
notice shall set forth the Adjustment Amount, as set forth on
the Preliminary PostClosing Adjustment Notice, and such
additional notice shall be deemed to be the "Final Post-
Closing Adjustment Notice."
(ii) If the Gem Individuals disagree
with
Ameristar's computation of the Adjustment Amount, as set forth
in the Preliminary Post-Closing Adjustment Notice, then the
Gem Individuals shall so notify Ameristar and the Gem
Individuals' notice shall set forth the basis of the Gem
Individuals' disagreement in reasonable detail. Within five (5)
business days after the Gem Individuals shall have received
the Preliminary Post-Closing Adjustment Notice, the Gem
Individuals and an authorized representative of Ameristar
shall use their best efforts to meet and confer in Las
Vegas, Nevada, within two (2) business days thereafter with a
view towards agreeing on the Adjustment Amount. If
Ameristar's representative and the Gem Individuals agree on
the Adjustment Amount within five (5) business days after
the Gem Individuals shall have notified Ameristar that the
Gem Individuals disagree with Ameristar's computation of the
Adjustment Amount, then Ameristar and the Gem Individuals shall
thereafter execute an additional notice, which additional
notice shall set forth such agreed upon Adjustment Amount,
and such additional notice shall be deemed to be the "Final
Post-Closing Adjustment Notice." If the Gem Individuals fail
to notify Ameristar that the Gem Individuals disagree with
Ameristar's computation of the Adjustment Amount within five
(5) business days after the Gem Individuals shall have received
the Preliminary Post-Closing Adjustment Notice (as set forth in
this paragraph (ii)) then the Gem Individuals shall be deemed to
have concurred with Ameristar's computation of the Adjustment
Amount.
(iii) If Ameristar's Representative and
the Gem Individuals fail to agree on the Adjustment Amount
within five (5) business days after the Gem Individuals
shall have notified Ameristar that the Gem Individuals
disagree with
Ameristar's computation of the Adjustment Amount, then any
party shall have the right to submit the dispute with respect
to the computation of the Adjustment Amount to arbitration in
accordance with Section 12.13
hereof. In connection with such arbitration,
the parties agree to take such actions, including
without limitation the payment of additional arbitration fees,
as may be reasonably necessary to cause such arbitration to be
concluded as quickly as shall be commercially practicable.
Following a final determination of the Adjustment Amount
in such arbitration
proceeding, Ameristar and the Gem Individuals shall
thereafter
execute an additional notice, which additional notice shall
set forth the Adjustment Amount as determined in such
arbitration, and such additional notice shall be deemed to be
the "Final PostClosing Adjustment Notice."
If any Contingency Escrow Cash shall have been deposited into
the Contingency
Escrow, the Final Post-Closing Adjustment Notice
shall also be sent to the Escrow Agent and shall instruct
the
Escrow Agent to distribute the Contingency Escrow Cash
to
Ameristar, up to the Adjustment Amount. If any
Contingency Escrow Cash remains in the possession of the
Escrow Agent following
the
distribution of the Contingency Escrow Cash pursuant to
the foregoing sentence, then Ameristar shall, in the Post-
Closing Adjustment Notice, direct the Escrow Agent to
distribute such remaining cash to the Gem Individuals. The
Gem Individuals shall not interfere with, and shall take all
steps reasonably requested by Ameristar in order to
facilitate, the distributions to
Ameristar from the Contingency Escrow contemplated by
clause 2.10(a).
(d) If the Adjustment Amount, as described in
the Final Post-Closing Adjustment Notice, if any, exceeds the
amount of the Contingency Escrow Cash disbursed to
Ameristar in
accordance with clause 2.10(c), if any, then the Gem
Individuals shall, not
later than the later of (i) the Closing Date
or
(ii) five (5) days after the Gem Individuals shall have
received a draft of the Final Post-Closing Adjustment Notice
executed by
Ameristar, at their option, either (i) pay to Ameristar
such excess amount, together with interest thereon computed
at the same floating rate per annum that is accruing on
Ameristar's largest debt obligation from the date of the
Preliminary PostClosing Adjustment Notice until the date of
payment, or the date of the Adjustment Excess Payment Note,
as the case may be (the "Adjustment
Excess Payment"), or (ii) execute and deliver
to
Ameristar a promissory note, dated as of the date that the
Gem Individuals
execute such promissory note, in the form
of
Exhibit Q with (A) the "Principal Amount" (as defined
therein) equal to the amount of the Adjustment Excess
Payment; (B) the "Maturity Date" (as defined therein)
completed as the date that is the three year anniversary of
the Closing Date; and (C) the accrual of interest on a
formulaic rate equal to the rate from time to time accruing
on Ameristar's largest debt obligation as
of the Operation Date (determined on the basis of the
principal amount) (the "Adjustment Excess Payment Note").
(e) For the purposes of this Section 2.10, any
notice to be delivered by Ameristar to any of all of the Gem
Individuals may be delivered by Ameristar to Magliarditi and
upon delivery to Magliarditi
all such Gem Individuals shall be deemed to have
received such notice. Ameristar shall be entitled to rely
upon any notice or
other statement of Magliarditi as a statement
representing each of the Gem Individuals, and any statement
by
Magliarditi shall be deemed to be a statement of each of the
Gem Individuals.
2.11 Closing Costs; Transfer Taxes and Fees.
Ameristar shall pay any documentary and transfer taxes and any
sales, use or other taxes imposed by reason of the
transfers of Assets provided hereunder and any
deficiency, interest or penalty asserted with respect
thereto, all fees and costs of recording or filing all
applicable conveyancing instruments described
in
Section 3.2(a), and all costs of obtaining the transfer
of
existing Permits which may be lawfully transferred.
Ameristar and the Surviving Corporation shall be solely
responsible for all
costs and fees payable to any Gaming Authority resulting from
any transaction contemplated by this Agreement.
Article 3
Closing
3.1 Closing. The Closing of the transactions
contemplated herein (the "Closing") shall be held at 10:00 a.m.
local time on the Closing Date at the offices of Schreck,
Jones, Bernhard, Woloson & Godfrey, Las Vegas, Nevada, unless
the parties hereto otherwise
agree.
3.2 Deliveries at Closing.
(a) Documents Confirming Status of the Project.
To
confirm the status of the Project at the Closing and confirm
the covenants of
certain third parties to the transactions
contemplated hereby, Gem shall, at the Closing, deliver
to Ameristar and ACLV each of the following documents in a
form reasonably acceptable to Ameristar and ACLV:
(i) The Project Status Certificate in the
form attached hereto as Exhibit B, which shall be completed to
be true and correct in all material respects. The
Project Status Certificate shall be signed by Rebeil and
the appropriate Representatives of Gem;
(ii) As exhibits to the Project Status
Certificate to be delivered pursuant to Section 3.2(a)(i),
the appropriate Consent for each Contractor Contract and each
Architect Contract, duly executed by the appropriate
Contractor or Architect, as applicable, and dated as of a
date no earlier than two (2) business days before the
Closing Date;
(iii) As an exhibit to the Project
Status
Certificate to be delivered pursuant to Section 3.2(a)(i),
the
Credit Facility Consent duly executed by each lender under
the Credit Facility and dated as of a date no earlier than
two (2) business days before the Closing Date;
(iv) As an exhibit to the Project
Status Certificate to be delivered pursuant to Section
3.2(a)(i), a
Consent to Assignment of Lease for each Lease, including
without limitation, the Exterior Sign Lease, the Vehicle Rental
Lease and the Phone Lease, executed by Gem's counterparty to
such Lease, and dated as of a date no earlier than two (2)
business days before the Closing Date;
(v) As an exhibit to the Project
Status Certificate to be delivered pursuant to Section
3.2(a)(i), a
Consent to Assignment of Option Contract for each
Option, executed by Gem's counterparty to such Option and dated
as of a date no earlier than two (2) business days before
the Closing Date; and
(vi) As an exhibit to the Project
Status Certificate to be delivered pursuant to Section
3.2(a)(i), a
General Consent duly executed by each of Gem's
counterparties under any Contract, other than the Architect
Contract, Contractor Contracts and the documents evidencing
or securing the Credit Facility, and dated as of a date no
earlier than two (2) business days before the Closing Date.
(b) Instruments and Possession. Upon consummation
of the Merger referred to in Section 2.1, Gem will, at the
Closing, deliver to ACLV all of the following items and
documents in a form reasonably acceptable to Ameristar and
ACLV:
(i) all cash and cash equivalents of Gem; and
(ii) all Books and Records, Contracts,
Options, Permits, Leases and Proprietary Rights to the
extent in the possession of Gem or any of its Subsidiaries.
(c) Other Documents.
(i) Articles of Merger. At the Closing, and
upon the terms and subject to the conditions contained
herein, ACLV and Gem shall deliver to each other the Articles
of Merger duly executed by appropriate representatives
thereof.
(ii) Certificates; Opinions. At the Closing,
and upon the terms and subject to the conditions contained
herein, ACLV and Gem shall deliver to each other the
certificates, opinions of counsel and other matters described
in Articles 8 and 9.
(iii) Permits. At the Closing, and upon
the terms and subject to the conditions contained herein, Gem
shall deliver all Permits and any other third party consents
required for the Merger.
(iv) Ancillary Agreements. At the Closing,
and upon the terms and subject to the conditions contained
herein, Ameristar, ACLV, Gem and each Gem Individual shall
execute and deliver each of the Ancillary Agreements to which
it is a party.
(v) Registration Rights Consent. At the
Closing, Ameristar shall and shall cause Craig H. Neilsen to
execute and deliver a Registration Rights Consent in the form
of Exhibit O.
(d) Consideration. At the Closing, and upon the
terms and subject to the condition contained herein,
Ameristar shall deliver the Merger Consideration to the
Gem Stockholders as follows:
(i) Ameristar shall deliver the Pre-
Closing Offering Reduction Shares Proceeds, to the extent that
the same do not
constitute Contingency Escrow Cash pursuant to
Section 2.9(a) hereof.
(ii) Ameristar shall deliver to each
Gem
Stockholder who is not an Ineligible Person, such
Gem
Individual's Closing Shares, if any. The shares of
Ameristar Common Stock required to be delivered by Ameristar
at Closing pursuant to this section 3.2(d)(ii) sometimes is
referred to herein as the "Closing Delivery Ameristar Stock."
(e) Form of Instruments. To the extent that a form
of any document to be delivered hereunder is not attached
as an exhibit hereto, such document shall be in form and
substance, and shall be executed and delivered in a
manner, reasonably satisfactory to the recipient thereof.
Article 4
Representations and Warranties of
Gem, Rebeil and Gem Individuals
Gem and Rebeil hereby jointly and severally represent and
warrant (and each of the Gem Individuals with respect to
Sections 4.2(b), 4.30, 4.31, 4.32, 4.34, 4.35, 4.36, 4.37
and
4.38 hereby represents and warrants) to Ameristar and ACLV
as follows, except as otherwise set forth on the
Disclosure
Schedule, which representations and warranties are, as of
the date hereof, and, except for representations and
warranties stated to be true as of a date other than the date
hereof, will be, as of the Closing Date, true and correct:
4.1 Organization of Gem. Gem is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Nevada with full corporate power and
authority to conduct the Business as it is presently being
conducted and to own and lease its properties and assets.
Gem is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of
its activities make such qualification necessary, except where
the failure to be so qualified or in good standing would not
have a material adverse effect on the Assets or the
Business. Copies of the Articles of Incorporation and By-
Laws of Gem, and all amendments thereto, heretofore delivered
to ACLV are accurate and complete as of the date
hereof. Schedule 4.1
contains a true, correct and complete list of all
jurisdictions in which Gem is qualified to do business as
a foreign corporation. Gem does not have any Subsidiaries.
Other than the stock and warrants listed in Exhibit L attached
hereto, Gem has no direct or indirect stock or other equity or
ownership interest
(whether controlling or not) in any corporation,
association, partnership, joint venture or other entity.
4.2 Capitalization.
(a) The Gem Shares constitute all of the
issued and outstanding shares of capital stock of Gem. In
addition, five thousand (5,000) shares of Gem Stock have
been validly authorized but not issued and, together with
the Gem Shares, constitute all of the Gem Stock that has been
authorized by Gem to date.
(b) The Gem Individuals own, beneficially and
of record, all of the Gem Shares and each Gem Individual
owns, beneficially and of record, the number of Gem Shares set
forth on Schedule 4.2
free and clear of all Encumbrances, other than
Encumbrances which exist solely by virtue of applicable
Gaming Laws.
Except as disclosed in Schedule 4.2, Gem has
no obligation, contingent or otherwise, to issue, sell,
repurchase, redeem or otherwise acquire any of the Gem Shares
or other shares of Gem Stock.
4.3 Authorization. Gem has all requisite corporate
power and authority, and has taken all corporate action
necessary, to execute and deliver this Agreement and the
Ancillary Agreements, to consummate the transactions
contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The
execution and delivery of this Agreement and the
Ancillary Agreements by Gem and the consummation by Gem of the
transactions contemplated hereby and thereby have been duly
approved by the board of directors of Gem and the Gem
Individuals. No other corporate proceedings on the part
of Gem are necessary to authorize this Agreement and the
Ancillary Agreements and the transactions contemplated hereby
and thereby. This Agreement has been duly executed and
delivered by Gem and the Gem Individuals
and is, and upon execution and delivery of the
Ancillary Agreements will be, legal, valid and binding
obligations of Gem and the Gem Individuals enforceable
against them in accordance with its terms.
4.4 No Adverse Change. Since the Interim Balance
Sheet Date, except as set forth on Schedule 4.4, there has not
been any
(a) actual or threatened material adverse
change in Gem's condition (financial or otherwise), assets,
liabilities, working capital, earnings, business, reserves,
revenues, income earnings, or prospects;
(b) material change in accounting
methods, principles or practices by Gem affecting the
Assets, its
Liabilities or the Business;
(c) material revaluation by Gem of any of
the Assets, including without limitation, writing off
notes or accounts receivable;
(d) damage, destruction or loss (whether or
not covered by insurance) adversely affecting the Assets
or the Business;
(e) cancellation of any indebtedness or waiver
or release of any right or claim of Gem relating to its
activities or properties which had or will have a material
adverse effect on the Assets or the Business;
(f) declaration, setting aside, or payment
of dividends or distributions by Gem in respect of any capital
stock of Gem or any redemption, purchase or other acquisition
of any of Gem's equity securities;
(g) increase in the rate of compensation
payable to or to become payable to any director, officer
or other employee of Gem or any consultant (other than amounts
payable to attorneys in the ordinary course and in
accordance with commercially reasonable practice),
Representative or agent of Gem, including without
limitation, the making of any loan to, or the payment,
grant or accrual of any bonus, incentive
compensation, service award or other similar benefit to any
such Person, or the addition to, modification of, or
contribution to any Employee Plan, arrangement or practice
described in the Disclosure Schedule;
(h) adverse change in employee relations
which has or is reasonably likely to have a material adverse
effect on the productivity, the financial condition, results
of operations or Business of Gem or the relationships between
the employees of Gem and the management of Gem;
(i) amendment, cancellation or termination of
any Contract, Option, Lease, commitment, agreement,
transaction or Permit relating to the Assets or the Business
or entry into any Contract, Option, Lease, commitment,
agreement, transaction or Permit which is not in the ordinary
course of business, including without limitation, any
employment or consulting contracts;
(j) mortgage, pledge or other encumbrance of
any Assets;
(k) sales, assignment or transfer of any of
the Assets;
(l) incurrence of indebtedness by Gem
for borrowed money or commitment to borrow money entered into
by Gem, or loans made
or agreed to be made by Gem, or indebtedness
granted to Gem;
(m) incurrence by Gem of Liabilities,
except Liabilities incurred in the ordinary course of
business, or increase or change in any assumptions underlying
or methods of calculating, any doubtful account contingency
or other reserves of Gem;
(n) payment, discharge or satisfaction of
any material Liabilities of Gem other than the payment,
discharge or satisfaction in the ordinary course of business
of Liabilities set forth or reserved for on the Interim
Financial Statements or incurred in the ordinary course of
business;
(o) capital expenditure or the execution of
any Lease, other than in the ordinary course of the completion
of the Project, or any incurring of any obligation therefor
by Gem involving monthly payments in excess of One
Thousand Dollars ($1,000) in the aggregate;
(p) failure to repay any obligation of Gem;
(q) failure of Gem reasonably to carry
on diligently the Business in the ordinary course so as to
keep available to Ameristar and ACLV the services of Gem's
employees, and to preserve for Ameristar and ACLV the
Assets and the Business and the goodwill of Gem's
suppliers, customers, distributors and others having business
relations with it;
(r) disposition or lapsing of any
Proprietary Rights or any
disposition or disclosure to any Person of any
Proprietary Rights not theretofore a matter of public
knowledge;
(s) payment from Gem to or on behalf of
any officer, director, stockholder or employee of Gem,
pursuant to any agreement between Gem and any such Person or
otherwise;
(t) construction of the Project other than in
a commercially appropriate manner, and in substantial
accordance with the Existing Plans and Specifications;
(u) material change in the design,
Project Budget, Project Schedule, or in the Contracts,
Permits, licenses or other rights or obligations of Gem
applicable to the Assets or necessary or appropriate for
Operation of the Project;
(v) event that is reasonably likely to result
in the loss, suspension, impairment or non-issuance of any
material Gaming License
necessary or appropriate to Operation of the
Project;
(w) agreement by Gem to do any of the
foregoing; or
(x) any other event or condition of any
character which in any one case or in the aggregate has
materially adversely affected, or any event or condition known
to Gem (other than matters of general public knowledge
relating to general economic conditions or Gem's industry as
a whole) which it is reasonable to expect will, in any one
case or in the aggregate, materially adversely affect in
the future, the condition (financial or otherwise),
assets, liabilities, working capital, reserves, earnings,
Business or prospects of Gem.
4.5 Assets. Excluding the Real Property and the
Assets covered by the Exterior Sign Lease, the Vehicle Rental
Lease and the Phone Lease, Gem has good and marketable title
to the Assets and upon the consummation of the
transactions contemplated hereby, the Surviving Corporation
will have good and marketable title to all of the Assets,
free and clear of any Encumbrances, except for Permitted
Encumbrances. Schedule 4.5 contains an accurate list and
summary description of all tangible Assets where the value
of an individual item exceeds One Thousand Dollars
($1,000) or where an aggregate of similar items exceeds One
Thousand Dollars ($1,000). To
the
knowledge of Gem, all tangible assets and properties which
are part of the Assets are in good operating condition and
repair and are usable in the ordinary course of business and
conform in all material
respects to all applicable Regulations (including
Environmental Laws) relating to their construction, use
and operation, ordinary wear and tear excepted.
4.6 Real Property. Schedule 4.6 contains a complete
and accurate list of all Real Property.
(a) Real Property. At the Closing, Gem will have
and the Surviving Corporation will have good and
marketable fee simple title to all Real Property free
and clear of all Encumbrances, except for Permitted
Encumbrances. Gem enjoys peaceful and undisturbed possession
of all Real Property.
(b) Actions. There are no pending or, to
the knowledge of Gem, threatened condemnation proceedings or
other Actions relating to any Real Property.
(c) Leases or Other Agreements. Except for the
Leases listed on Schedule 4.7, there are no leases, subleases,
licenses, occupancy agreements, options, rights,
concessions or other agreements or arrangements, written or
oral, granting to any Person the right to purchase, use or
occupy any Real Property or any portion thereof or interest in
any such Real Property.
(d) Utilities. All Improvements are (and to
the knowledge of Gem, the Project upon completion will
continue to be) supplied with utilities (including without
limitation water, sewage, disposal, electricity, gas and
telephone) and other services necessary for the operation
of such Improvements as currently operated (and for
Operation of the Project), and there is no condition which
would reasonably be expected to result in the termination of
the present access from any Improvement to such utility
services. All utilities and other services necessary
for the operation of the Improvements, the Person who provides
or will provide each such utility or services and any
Contract with respect thereto are described on Schedule 4.6A.
To Gem's knowledge, all utilities required for the construction
and Operation of the Project will be available at such times
as are reasonably appropriate to complete construction and
commence Operation of the Project as contemplated by the
Project Schedule.
(e) Construction of Improvements. All
Improvements that have been constructed on the Real
Property have been constructed (i) in conformity, in all
material respects, with all applicable Regulations and the
Approved Plans and Specifications, (ii) so that such
Improvements are structurally sound and contain no material
defects and (iii) to a standard at least equal to Boulder
Station Standards. As of the date hereof, and without taking
into account any Changes, Gem has no reason to anticipate that
the Operation Date will not occur on or before October 1,
1996.
(f) No Special Assessment. Gem has not
received
notice of any special assessment relating to any Real Property
or any portion thereof and there is no pending or, to
Gem's knowledge, threatened special assessment.
4.7 Contracts and Options.
(a) Contracts. Schedule 4.7 sets forth a complete
and accurate list of all Contracts and Options, including
without limitation, those Contracts and Options falling
within the following categories:
(i) Contracts made in the ordinary course
of business;
(ii) All Contractor Contracts and
Architect Contract(s);
(iii) Employment contracts and
severance agreements, including without limitation Contracts
(A) to employ or terminate executive officers or other
personnel and other contracts with present or former
officers, directors or stockholders of Gem or (B) that will
result in the payment by, or the creation of any Liability to
pay on behalf of ACLV or Gem any severance, termination,
"golden parachute," or other similar payments to any present
or former personnel following termination of employment or
otherwise as a result of the consummation of the transactions
contemplated by this Agreement;
(iv) Labor or union contracts,
including collective bargaining, employment and material
consulting agreements to which Gem or any Subsidiary is a
party;
(v) Distribution, franchise, license,
technical assistance, sales, conditional sales, commission,
consulting, agency or advertising contracts related to the
Assets or the Business;
(vi) Options with respect to any property, real
or personal, whether Gem shall be the grantor or grantee
thereunder;
(vii) Contracts involving future
expenditures or Liabilities, actual or potential, in excess of
Ten Thousand Dollars ($10,000) or otherwise material to the
Business or the Assets;
(viii) Contracts or commitments relating
to commission arrangements with others;
(ix) Promissory notes, loans,
agreements, indentures, evidences of indebtedness, letters
of credit, guarantees, or other instruments relating to an
obligation to pay money, whether Gem shall be the
borrower, lender or guarantor
thereunder or whereby any Assets are pledged (excluding
credit provided by Gem in the ordinary course of business to
purchasers of its products);
(x) Contracts containing covenants limiting
the freedom of Gem or any officer, director, stockholder or
Affiliate of Gem, to engage in any line of business or
compete with any person;
(xi) Any Contract with the United States, state
or local government or any agency or department thereof; and
(xii) Material rental, warranty and
service Contracts.
Gem has delivered to ACLV true, correct and complete copies
of all of the Contracts and Options listed on Schedule
4.7,
including all amendments and supplements thereto.
(b) Absence of Defaults. All of the
Contracts, Options and Leases to which Gem is party or by which
it or any of the Assets is bound or affected (including the
instruments and other documents that evidence, secure or
govern the Credit Facility) are valid, binding and
enforceable against the parties thereto other than Gem in
accordance with their terms. Gem has fulfilled, or taken all
action necessary to enable it to fulfill when
due, all
of its material obligations under each of such Contracts,
Options and Leases. To Gem's knowledge, all parties to such
Contracts, Options and Leases have complied in all material
respects with the provisions thereof, no party is in Default
thereunder and no notice of any claim of Default has been
received by Gem.
Gem
has no reason to believe that the products and services
called for by any unfinished Contract cannot be supplied in
accordance with the
terms of such Contract, including time specifications,
and has no reason to believe that any unfinished Contract
will upon performance by Gem result in a material loss to Gem.
With respect to any Leases, Gem has not received any
notice of cancellation or termination under any option or
right reserved to the lessor, or any notice of Default,
thereunder.
(c) Leases. Schedule 4.7 also contains a complete
and accurate description of the terms of all Leases,
including without limitation, a general description of the
leased property or items, the term, the monthly/annual rent,
any and all renewal options, and any requirements for the
consent of third parties to assignments thereof.
(d) Project Components. Except as set forth
in Schedule 4.7, the Contractor Contracts, the Architect
Contract, the Exterior Sign Lease, the Vehicle Rental Lease
and the Phone Lease are in terms and conditions that
are commercially reasonable as to Gem given the Project's
scope and current state of development and constitute all of
the Contracts and agreements that are
necessary or appropriate for construction, procurement
and installation of the Project and collectively require
the Contractors to construct, procure and install the entire
Project.
(e) Existing Employment Contracts. The
Existing Employment Contracts constitute all of the Contracts
between Gem and any of the Gem Individuals with respect to
monetary and other compensation to be paid to the Gem
Individuals for services rendered to Gem.
4.8 Permits. (a) Schedule 4.8 sets forth a complete
list
of all Permits held by Gem and, except as set forth in
Schedule 4.8, each such Permit is freely transferable to the
Surviving Corporation. Except (i) as set forth on Schedule
4.8 and in Section 4.8(d) and (ii) construction related
Permits that are ministerial, non-discretionary and not
required for the current phase of
construction, Gem has each and every Permit that is
required under any regulation or law or otherwise required
for the construction, development or operation of the Project.
Gem
has, and at all times has had, all Permits required under
any
Regulation (including Environmental Laws) in the operation of
its Business or in the ownership of the Assets, and owns or
possesses such Permits free and clear of all Encumbrances
other than Permitted
Encumbrances. Gem is not in Default, nor has it
received any notice of any claim of Default, with respect to
any such Permit. Except as otherwise governed by law, all
such Permits are renewable by their terms or in the ordinary
course of business
without the need to comply with any special
qualification procedures or to pay any amounts other than
routine filing fees and, except as set forth on Schedule 4.8,
will not be adversely
affected by the completion of the transactions
contemplated by this Agreement. Except as set forth on
Schedule 4.8, no present or former Subsidiary, stockholder,
director, officer or employee of Gem or any Affiliate thereof,
or any other Person, firm, corporation or other entity,
owns or has any proprietary, financial or other interest
(direct or indirect) in any Permit which Gem owns, possesses
or uses.
(b) Other than (i) any required filings under the
HSR Act or (ii) in connection with or in compliance with any
Gaming Laws, and except as disclosed on Schedule 4.8 hereto,
no notice to,
declaration, filing
or
registration with, or Permit from, any domestic or
foreign governmental or regulatory body or authority, or
any other Person, is required to be made or obtained by Gem
in connection with the execution, delivery or performance of
this Agreement and the consummation of the transactions
contemplated hereby.
(c) Gem has no reason to anticipate that any
Permit that is required for the continuous development and
operation of the Project will not be issued in the
ordinary course of business.
Gem has no reason to anticipate that, as of the
Closing Date, Ameristar or the Surviving Corporation will not
be able to timely obtain, by transfer from Gem or otherwise,
all Permits necessary or appropriate for the operation of the
Project on and after the Operation Date.
(d) Gem has filed the Existing Gaming Application
with the Nevada Gaming Authorities and has taken all actions
required under any
Gaming Law or any applicable rule or order of any
Gaming Authority as of the Closing Date for the issuance of
all appropriate Gaming Licenses for the operation of the
Project. Gem has no reason to anticipate that Ameristar or
the Surviving Corporation will not be able to timely obtain,
by transfer from Gem or otherwise, all Gaming Licenses
necessary or appropriate to the operation of the Project on and
after the Operation Date.
4.9 No Conflict or Violation. Neither the
execution,
delivery or performance of this Agreement nor the consummation
of the transactions contemplated hereby, nor compliance by Gem
with any of the provisions hereof, will (a) violate or
conflict with any provision of the Articles of Incorporation
or By-Laws of Gem, (b) violate, conflict with, or result in or
constitute a Default under, or
result in the termination of, or accelerate the
performance required by, or result in a right of termination
or acceleration under, or result in the creation of any
Encumbrance upon any of the Assets under, any of the terms,
conditions or provisions of any Contract, Option, Lease or
Permit, (i) to which Gem is a party or (ii) by which the Assets
are bound, (c) violate any Regulation or Court Order, (d)
impose any Encumbrance on the Assets or
the Business, or (e) result in the loss or suspension
or impairment of any Gaming License or any material Permit.
4.10 Financial Statements. Gem has heretofore delivered
the Financial Statements to Ameristar and ACLV. The
Financial Statements
(a) are in accordance with the Books and Records of
Gem, (b) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby and
Regulation SX, and (c) fairly and accurately present the
assets, Liabilities (including all reserves) and financial
position of Gem as of the
respective dates thereof (subject, in the case of the
Interim Financial Statements, to normal year-end adjustments).
The YearEnd Financial Statements have been examined by Arthur
Andersen, LLP, independent certified public accountants,
whose report thereon is included with such Year-End Financial
Statements. At
the respective dates of the Financial Statements, there were
no Liabilities of Gem,
which, in accordance with GAAP, should have
been set forth or reserved for in the Financial Statements or
the notes thereto, which are not set forth or reserved for
in the Financial Statements or the notes thereto.
4.11 Books and Records. Gem has made and kept (and
given
Ameristar and ACLV access to) books and records and
accounts, which, in reasonable detail, accurately and fairly
reflect the activities of Gem. The minute books of Gem
previously delivered to Ameristar and ACLV accurately and
adequately reflect all action
previously taken by the stockholders of Gem, board of
directors and committees of the board of directors of Gem.
The copies of the stock book records of Gem previously
delivered to Ameristar and ACLV are true, correct and
complete, and accurately reflect all transactions effected in
Gem's stock through and including the date hereof. Gem
has neither engaged in any transaction, maintained any bank
account nor used any corporate funds except for transactions,
bank accounts and funds which have been and are reflected in
the normally maintained books and records of Gem.
4.12 Litigation. Except as set forth on Schedule
4.12,
there is no Action pending, or to the best of Gem's
knowledge, threatened or anticipated (a) against, related to
or affecting (i) Gem, the Business or the Assets (including
with respect to Environmental Laws and Gaming Laws), (ii)
any officers or directors of Gem, as such, or (iii) any
Gem Individual in such Person's capacity as a stockholder of
Gem, (b) seeking to delay, limit or enjoin the
transactions contemplated by this Agreement, (c) that
involves the risk of criminal liability, or (d) in which Gem
is a plaintiff, including any derivative suits brought by
or on behalf of Gem. Gem is not in Default with
respect to or subject to any Court Order, and there are
no
unsatisfied judgments against Gem, the Business or the
Assets.
Except as set forth on Schedule 4.12, there is not a
reasonable likelihood of an adverse determination of any
pending Actions. There are no Court Orders or agreements
with, or liens by, any governmental authority or quasi-
governmental entity relating to any Environmental Law which
regulate, obligate, bind or in any way affect Gem or any Real
Property or Former Property.
4.13 Labor Matters. Gem is not a party to any
collective
bargaining agreement or union contract with respect to
its employees with
any labor organization, union, group or
association and there are no employee unions (nor any
other
similar labor or employee organizations) under local
statutes, custom or practice. Gem has not experienced any
attempt by organized labor or its representatives to make
Gem conform to demands of
organized labor relating to its employees, to
recognize a union as its employees' bargaining representative,
or to enter into a binding agreement with organized labor that
would cover the employees of Gem. There is no labor strike
or labor disturbance
pending or, to the best of Gem's knowledge,
threatened against Gem nor is any grievance currently
being asserted, and Gem has not experienced a work stoppage
or other labor difficulty, and is not and has not engaged in
any unlawful employment practice, unlawful discrimination, or
unfair labor practice. Gem
is in material compliance with all applicable
Regulations respecting employment and employment practices,
terms and conditions of employment, prevailing wages, wages
and hours,
affirmative action, and occupational health and safety.
Without limiting the foregoing, Gem is in compliance with the
Immigration Reform and Control Act of 1986 and maintains a
current Form I-9, as required by such Act, in the personnel
file of each employee hired after November 9, 1986. Schedule
4.13 sets forth the names and current annual salary rates or
current hourly wages of all present employees of Gem and
also sets forth the earnings for each of such employees
as reflected on Form W-2 for the 1995 calendar year.
4.14 Liabilities. Gem has no material Liabilities due or
to
become due, except (a) Liabilities which are set forth
or reserved for on the Interim Balance Sheet which have not
been paid or discharged since the Interim Balance Sheet
Date, (b) Liabilities arising in the ordinary course of
business under Contracts, Options, Leases, Permits and
other business arrangements described in the
Disclosure Schedule, and
(c) Liabilities under the Credit Facility, up to an
aggregate amount
of
Twenty-Five Million Dollars ($25,000,000). As of the
date hereof, the aggregate amount drawn under the Credit
Facility does not exceed
Two Million Eight Hundred Thousand Dollars
($2,800,000.00). Exhibit Y attached hereto accurately
describes all Gem Individual Guaranties existing as of the date
hereof, the documents evidencing the same, the guarantor
thereunder, and the maximum liability thereunder.
4.15 Compliance with Law. Gem, in the conduct of
the Business, has not violated and is in compliance
with all Regulations, Gaming Laws and Court Orders relating to
the Assets or the Business or operations of Gem, except where
the violation or failure to comply, individually or in the
aggregate, would not have a material adverse effect on the
Assets or the Business. Gem has not received any notice to
the effect that, or otherwise been advised that, it is not
in compliance with any such Regulations, Gaming Laws or
Court Orders, and Gem has no reason to anticipate that any
existing circumstances are likely to result in violations
of any of the foregoing which failure or violation could,
in any one case or in the aggregate, have a material
adverse effect on the Assets of the Business or the
Operation of the Project.
4.16 No Brokers. Neither Gem nor any of its
respective officers, directors, employees, stockholders or
Affiliates has employed or made any agreement with any broker,
finder or similar agent or any Person or firm which will
result in the obligation of Ameristar or ACLV or any of
their Affiliates to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the
transactions contemplated hereby.
4.17 No Other Agreements to Sell the Assets. Neither any
of
the Gem Individuals nor Gem nor any of Gem's officers,
directors, stockholders or Affiliates have any commitment
or legal obligation, absolute or contingent, to any other
Person or firm other than Ameristar and ACLV to sell, assign,
transfer or effect a sale of any of the Assets (other than
inventory in the ordinary course of business), to sell or
effect a sale of the capital stock of Gem, to effect any
merger, consolidation, liquidation, dissolution or other
reorganization of Gem, or to enter into any agreement or cause
the entering into of an agreement with respect to any of the
foregoing.
4.18 Proprietary Rights.
(a) Proprietary Rights. Schedule 4.18 lists all
of Gem's Proprietary Rights. Schedule 4.18 also sets
forth:
(i) for each Patent, the number, normal expiration date
and subject matter for each country in which such Patent has
been issued, or, if applicable, the application number, date of
filing and subject matter for each country, (ii) for each
Trademark, the application serial number or registration
number, the class of goods covered and the expiration date
for each country in which a Trademark has been registered and
(iii) for each Copyright, the number and date of filing for
each country in which a Copyright has been filed. The
Proprietary Rights listed in Schedule 4.18 are all those
used or expected to be used by Gem in connection with the
Business. True and correct copies of all Patents
(including and all pending applications) owned,
controlled, created or used by or on behalf of Gem or in which
Gem has any interest whatsoever have been provided to
Ameristar and ACLV. The design of the Project does not
infringe on the intellectual property rights of any other
Person.
(b) Royalties and Licenses. Gem does not have
any
obligation to compensate any Person for the use of any
such Proprietary Rights nor has Gem granted to any Person any
license, option or other rights to use in any manner
any of its Proprietary Rights, whether requiring the payment
of royalties or not.
(c) Ownership and Protection of Proprietary
Rights.
Gem owns or has a valid right to use each of the
Proprietary Rights, and the Proprietary Rights will not cease
to be valid rights of Gem
by reason of the execution, delivery
and
performance of this Agreement or the consummation of
the
transactions contemplated hereby. Gem has not received
any notice of invalidity or infringement of any rights of
others with respect to such Trademarks. Gem has taken all
reasonable and prudent steps to protect the Proprietary Rights
from infringement by any other Person. No other Person (i)
has the right to use any of Gem's Trademarks on the goods or
services on which they are now being used either in
identical form or in such near resemblance thereto as to be
likely, when applied to the goods or services of any such
Person, to cause confusion with such Trademarks or to cause
a mistake or to deceive, (ii) has notified Gem that it is
claiming any ownership of or right to use such Proprietary
Rights, or (iii) to the best of Gem's knowledge, is infringing
upon any such Proprietary Rights in any way. Gem's use of
the Proprietary Rights does not and will not conflict with,
infringe upon or otherwise violate the valid rights of any
third party in or to such Proprietary Rights, and no Action
has been instituted against or notices received by Gem
that are presently outstanding alleging that Gem's use of the
Proprietary Rights infringes upon or otherwise violates any
rights of a third party in or to such Proprietary Rights.
There are not, and it is reasonably expected that after the
Closing there will not be, any restrictions on the Surviving
Corporation's utilization of the Proprietary Rights.
4.19 Employee Benefit Plans.
(a) Definitions. The following terms, when used
in
this Section 4.19, shall have the following meanings. Any
of
these terms may, unless the context otherwise requires, be
used in the singular or the plural depending on the reference.
(i) Benefit Arrangement. "Benefit
Arrangement" shall mean any employment, consulting, severance
or other similar contract, arrangement or policy and each
plan, arrangement (written or oral), program, agreement or
commitment providing for insurance coverage (including without
limitation any self-insured arrangements),
workers' compensation, disability
benefits,
supplemental unemployment benefits, vacation benefits,
retirement benefits, life, health, disability or
accident benefits (including without limitation any
"voluntary employees' beneficiary association" as defined in
Section 501(c)(9) of the Code providing for the same or
other benefits) or for deferred compensation,
profit-sharing bonuses, stock options, stock
appreciation rights, stock purchases or other forms of
incentive compensation or
post-retirement insurance, compensation or
benefits which (A) is not a Welfare Plan, Pension Plan or
Multi employer Plan, (B) is entered into, maintained,
contributed to or required to be contributed to, as the case
may be, by Gem or an ERISA Affiliate or under which Gem or
any ERISA Affiliate may incur any Liability, and (C) covers
or has covered any employee or former employee of Gem or any
ERISA Affiliate (with respect to their relationship with such
entities).
(ii) Code. "Code" shall mean the Internal
Revenue Code of 1986, as amended.
(iii) Employee Plans. "Employee Plans"
shall mean all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
(iv) ERISA. "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended.
(v) ERISA Affiliate. "ERISA Affiliate"
shall mean any entity which is (or at any relevant time was) a
member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service
group" with, Gem as defined in Section 414(b), (c), (m) or (o)
of the Code.
(vi) Multiemployer Plan. "Multiemployer
Plan" shall mean any "multiemployer plan," as defined in
Section 3(37) or 4001(a)(3) of ERISA, (A) which Gem or any
ERISA Affiliate maintains, administers, contributes to or
is required to contribute to, or, after September 25, 1980,
maintained, adminis tered, contributed to or was required to
contribute to, or under which Gem or any ERISA Affiliate
may incur any Liability and (B) which covers or has covered
any employee or former employee of Gem or any ERISA Affiliate
(with respect to their relationship with such entities).
(vii) PBGC. "PBGC" shall mean the
Pension Benefit Guaranty Corporation.
(viii) Pension Plan. "Pension Plan" shall
mean any "employee pension benefit plan" as defined in Section
3(2) of ERISA (other than a Multiemployer Plan) (A) which
Gem or any ERISA Affiliate maintains, administers,
contributes to or is required to contribute to, or, within
the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute
to, or under which Gem or any ERISA Affiliate may incur
any Liability and (B) which covers or has covered any
employee or former employee of Gem or any ERISA Affiliate
(with respect to their relationship with such
entities).
(ix) Welfare Plan. "Welfare Plan" shall mean
any "employee welfare benefit plan" as defined in Section
3(1) of ERISA (other than a Multiemployer Plan), (A) which
Gem or any ERISA Affiliate maintains, administers,
contributes to or is required to contribute to, or under
which Gem or any ERISA Affili ate may incur any Liability and
(B) which covers or has covered any employee or former
employee of Gem or any ERISA Affiliate
(with respect to their relationship with such entities).
(b) Disclosure; Delivery of Copies of
Relevant
Documents and Other Information. Schedule 4.19 contains
a complete list of Employee Plans which cover or have
covered employees of Gem (with respect to their relationship
with such entities). True and complete copies of each of
the following documents have been
delivered by Gem to Ameristar and ACLV:
(i) each Welfare Plan (and, if applicable, related
trust agreements) which covers or has covered employees of
Gem (with respect to their relationship with such
entities) and all amendments thereto, all written
interpretations thereof and written descriptions thereof
which have been distributed to Gem's employees and all annuity
contracts or other funding instruments, (ii) each Employee Plan
which covers or has covered employees of Gem (with respect
to their relationship with such entities) including
written interpretations thereof and
written
descriptions thereof which have been distributed to
Gem's employees (including descriptions of the number and
level of employees covered thereby) and a complete
description of any Employee Plan which is not in writing,
(iii) for the three most recent plan years, Annual Reports on
Form 5500 Series required to be filed with any
governmental agency for each Employee Plan
which covers or has covered employees of Gem (with respect to
its relationship with such entities), (iv) a description of
complete age, salary, service and related data as of the last
day of the last plan year for employees and former employees
of Gem, and (v) a description setting forth the amount of
any Liability of the company as of the Closing Date for
payments more than thirty (30) calendar days past due with
respect to each Welfare Plan which covers or has covered
employees or former employees of Gem.
(c) Representations.
(i) ERISA Affiliates. There are no
ERISA Affiliates and there have never been any ERISA
Affiliates.
(ii) Pension Plans. There are no Pension
Plans. Gem has not engaged in, and is not a successor
or parent corporation to an
entity that has engaged in, a transaction
described in Section 4069 of ERISA.
(iii) Multiemployer Plans. There are
no
Multiemployer Plans.
(iv) Welfare Plans.
A. Each Welfare Plan which covers or
has covered employees or former employees of Gem (with
respect to their relationship with such entities) has been
maintained in com pliance with its terms and, both as to form
and operation, with the requirements prescribed by any and all
Regulations and Courts Orders which are applicable to such
Welfare Plan, including without limitation ERISA and the
Code.
B. None of Gem, any ERISA Affiliate or
any Welfare Plan has any present or future obligation to
make any payment to, or with respect to any present or former
employee of Gem or any ERISA Affiliate pursuant to, any
retiree medical benefit plan, or other retiree Welfare Plan,
and no condition exists which would prevent Gem from
amending or terminating any such benefit plan or Welfare Plan.
C. Each Welfare Plan which covers or
has covered employees or former employees of Gem and which
is a "group health plan," as defined in Section 607(1) of
ERISA, has
been operated in compliance with provisions of Part 6 of Title
I, Subtitle B of ERISA and Sections 162(k) and 4980B of the
Code at all times.
(v) Benefit Arrangements. Each Benefit
Arrange ment which covers or has covered employees or former
employees of Gem (with respect to their relationship with such
entities) has been maintained in compliance with its
terms and with the requirements prescribed by any and all
Regulations and Court Orders which are
applicable to such Benefit Arrangement,
including without limitation the Code. Except as set forth
in the Disclosure
Schedule, and except as provided by law, the
employment of all Persons presently employed or retained by
Gem is terminable at will.
(vi) Unrelated Business Taxable Income.
No Employee Plan (or trust or other funding vehicle
pursuant thereto) is subject to any tax under Code Section 511.
(vii) Deductibility of Payments. There is
no contract, agreement, plan or arrangement covering any
employee or former employee of Gem (with respect to its
relationship with such entities) that, individually or
collectively, provides for the payment by Gem of any amount
(i) that is not deductible under Section 162(a)(1) or 404 of
the Code or (ii) that is an "excess parachute payment"
pursuant to Section 280G of the Code.
(viii) Fiduciary Duties and
Prohibited Transactions. Neither Gem nor any plan fiduciary of
any Welfare Plan which covers or has covered employees or
former employees of Gem, has engaged in any transaction in
violation of Sections 404 or 406 of ERISA or any "prohibited
transaction," as defined in Section 4975(c)(1) of the Code,
for which no exemption exists under Section 408 of ERISA or
Section 4975(c)(2) or (d) of the Code, or has otherwise
violated the provisions of Part 4 of Title I, Subtitle B of
ERISA. Gem has not knowingly participated in a violation of
Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary
of any Welfare Plan and has not been assessed any civil
penalty under Section 502(l) of ERISA.
(ix) Validity and Enforceability. Each
Welfare Plan related trust agreement, annuity contract or
other funding instrument and Benefit Arrangement which covers
or has covered employees or former employees of Gem (with
respect to their relationship with such entities) is legally
valid and binding and in full force and effect.
(x) Litigation. There is no Action or
Court Order outstanding, relating to or seeking benefits
under any Employee Plan that is pending, threatened or
anticipated against Gem or any Employee Plan.
(xi) No Amendments. Neither Gem has any
announced plan or legally binding commitment to create any
additional Employee Plans which are intended to cover
employees or former employees of Gem (with respect to their
relationship with such entities) or to amend or modify any
existing Employee Plan which covers or has covered employees
or former employees of Gem (with respect to their relationship
with such entities).
(xii) No Other Material Liability. No
event has occurred in connection with which Gem or any
Employee Plan, directly or indirectly, could be subject
to any material Liability (A) under any Regulation or Court
Order relating to any Employee Plans or
(B) pursuant to any obligation of Gem to
indemnify any Person against Liability incurred under any
such
Regulation or Court Order as they relate to the Employee Plans.
(xiii) No Acceleration or Creation
of Rights. Neither the execution and delivery of this
Agreement or other related agreements by Gem nor the
consummation of the transactions contemplated hereby or the
related transactions will result in the acceleration or
creation of any rights of any Person to benefits under any
Employee Plan (including, without limitation, the acceleration
of the vesting or exercisability of any stock options, the
acceleration of the vesting of any restricted stock any
Pension Plan or the acceleration or creation of any rights
under any severance, parachute or change in control agreement).
4.20 Transactions with Certain Persons. Except as set
forth on Schedule 4.20, no officer, director or employee of Gem
nor any member of any such Person's immediate family is
presently, or within five (5) years has been, a party to any
transaction with Gem including without limitation, any
contract, agreement or other arrangement (a) providing for
the furnishing of services by, (b) providing for the
rental of real or personal property from, or (c) otherwise
requiring payments to (other than for services as officers,
directors or employees of Gem) any such Person or
corporation, partnership, trust or other Person in which
any such Person has an interest as a stockholder, officer,
director, trustee or partner. Schedule 4.20 sets forth
a complete and accurate list of all Contracts with or
pertaining to Gem or any of its Subsidiaries and to which any
director, officer or stockholder of Gem or any of its
Subsidiaries is a party.
4.21 Tax Matters.
(a) Filing of Tax Returns. Gem (and any
affiliated group of which Gem is now or has been a member) has
timely filed with the appropriate taxing authorities all
returns (including without
limitation, information returns and other material
information) in respect of Taxes required to be filed through
the date hereof and will timely file any such returns required
to be filed on or prior to the Closing Date. The returns
and other information filed are complete and accurate in
all material respects. Except as specified in Schedule 4.21,
neither Gem, nor any affiliated group of which Gem now is or
was a member, has requested any extension of time within
which to file returns (including without limitation
information returns) in respect of any taxes. Gem has
delivered to Ameristar and ACLV complete and accurate copies of
Gem's federal tax return for 1994. Gem has in due course and
in compliance with all applicable Regulations requested an
extension with respect to its 1995 federal tax return.
(b) Payment of Taxes. All Taxes, in respect
of periods beginning before the Closing Date, have been timely
paid, or will be timely paid, or an adequate reserve
has been established therefor, as set forth in Schedule
4.21 or the Financial Statements, and Gem does not have
any material
Liability for Taxes in excess of the amounts so paid or
reserves so established.
(c) Audits, Investigations or Claims. Except as
set forth in Schedule 4.21, the consolidated federal
income tax returns of Gem have been examined by the Internal
Revenue Service for all periods to and including those
set forth in the Disclosure Schedule, and except to the
extent shown therein, no material deficiencies for Taxes have
been claimed, proposed or assessed by any taxing or other
governmental authority against Gem. Except as set forth in
Schedule 4.21, there are no pending
or, to the best of Gem's knowledge, threatened
audits,
investigations or claims for or relating to any
material additional Liability in respect of Taxes, and
there are no matters under discussion with any governmental
authorities with respect to Taxes that in the reasonable
judgment of Gem, or its counsel, are likely to result in a
material additional Liability for Taxes. Audits of federal,
state, and local returns for Taxes by the relevant taxing
authorities have been completed for each period and set forth
in Schedule 4.21 and, except as set forth in Schedule 4.21,
Gem has not been notified that any taxing authority
intends to audit a return for any period. Except as set
forth in Schedule 4.21, no extension of a statute of
limitations relating to Taxes is in effect with respect to Gem.
(d) Lien. There are no liens for Taxes (other
than
for current Taxes not yet due and payable) on the Assets.
(e) Safe Harbor Lease Property. None of the Assets
is property that is required to be treated as being owned by
any other Person pursuant to the so-called safe harbor
lease provisions of former Section 168(f)(8) of the Code.
(f) Security for Tax-Exempt Obligations. None of
the Assets directly or indirectly secures any debt the
interest on which is tax-exempt under Section 103(a) of the
Code.
(g) Tax-Exempt Use Property. None of the Assets
is
"tax-exempt use property" within the meaning of Section 168(h)
of the Code.
(h) Foreign Person. Gem is not a Person other than
a United States Person within the meaning of the Code.
(i) No Withholding. The transaction
contemplated
herein is not subject to the tax withholding provisions
of Section 3406 of the Code, or of Subchapter A of Chapter 3 of
the Code or of any other provision of law.
4.22 Insurance. Schedule 4.22 contains a complete
and accurate list of all policies or binders of fire,
liability, title, worker's compensation, product liability
(which list shall be for two (2) years) and other forms of
insurance (showing as to each policy or binder the carrier,
policy number, coverage limits, expiration dates, annual
premiums, a general description of the type of coverage
provided, loss experience history by line of coverage)
maintained by Gem on the Business, the Assets or its employees.
All insurance coverage applicable to Gem, the
Business and the Assets is in full force and effect, insures
Gem in reasonably sufficient amounts against all risks
usually insured against by Persons operating similar
businesses or properties of similar size in the
localities where such businesses or properties are located,
provides coverage as may be required by applicable Regulation
or Gaming Law and by any and all Contracts to which Gem is
a party and has been issued by insurers of recognized
responsibility. There is no Default under any such coverage
nor has there been any failure to give notice or present any
claim under any such coverage in a due and timely fashion.
There are no outstanding unpaid premiums except in the
ordinary course of business and no notice of cancellation
or nonrenewal of any such coverage has been received. There
are no provisions in such insurance policies for
retroactive or
retrospective premium adjustments. All products
liability, general liability and workers' compensation
insurance policies maintained by Gem have been occurrence
policies and not claimsmade policies. There are no
outstanding performance bonds covering or issued for the
benefit of the Gem. To Gem's
knowledge, there are no facts upon which an insurer might
be justified in reducing coverage or increasing premiums on
existing policies or binders and no insurer has advised
Gem that it intends to reduce coverage, increase premiums or
fail to renew existing policy or binder.
4.23 Accounts Receivable. The accounts receivable set
forth on the Interim Balance Sheet, and all accounts receivable
arising since the Interim Balance Sheet Date, represent bona
fide claims of Gem against debtors for sales, services
performed or other charges arising on or before the date
hereof, and all the goods delivered and services performed
which gave rise to said accounts were delivered or performed
in accordance with the applicable orders, Contracts or
customer requirements. To Gem's knowledge, said accounts
receivable are subject to no
defenses,
counterclaims or rights of setoff and are fully collectible
in the ordinary course of business without cost in
collection efforts therefor, except to the extent of the
appropriate reserves for bad debts on accounts receivable as
set forth on the Interim Balance Sheet and, in the case of
accounts receivable arising since the Interim Balance Sheet
Date, to the extent of a reasonable reserve rate for bad
debts on accounts receivable which is not greater than the
rate reflected by the reserve for bad debts on the Interim
Balance Sheet.
4.24 Payments. Gem has not, directly or indirectly, paid
or delivered any fee, commission or other sum of money or
item or property, however characterized, to any finder,
agent, client, customer, supplier, government official or
other party, in the United States or any other country,
which is in any manner related to the Business, Assets or
operations of Gem, which is, or may be with the passage of
time or discovery, illegal under any federal, state or local
laws of the United States (including without limitation the
U.S. Foreign Corrupt Practices Act) or any other country
having jurisdiction, and Gem has not participated, directly or
indirectly, in any boycotts or other similar practices
affecting any of its actual or potential customers and has at
all times done business in an open and ethical manner.
4.25 Compliance With Environmental Laws.
(a) Definitions. The following terms, when used
in
this Section 4.25, shall have the following meanings. Any
of
these terms may, unless the context otherwise requires, be
used in the singular or the plural depending on the reference.
(i) "Gem", for purposes of this Section,
shall include (A) all Affiliates of Gem, (B) all
partnerships, joint ventures and other entities or
organizations in which Gem was at any time or is a
partner, joint venturer, member or participant and (C)
all predecessor or former corporations, partnerships, joint
ventures, organizations, businesses or other entities,
whether in existence as of the date hereof or at any time
prior to the date hereof, the assets or obligations of which
have been acquired or assumed by Gem or to which Gem
has succeeded.
(ii) "Release" shall mean and include
any spilling, leaking, pumping, pouring, emitting,
emptying,
discharging, injecting, escaping, leaching, dumping or
disposing into the environment or the workplace of any
Hazardous Substance, and otherwise as defined in any
Environmental Law.
(iii) "Hazardous Substance" shall mean
any substance, material, or waste which is or may become
regulated by any federal, state or local governmental
regulatory agency or
authority, including, but not limited to, any material
or substance, whether solid, liquid or gas, which is (A)
defined as "hazardous wastes," "hazardous substances," "toxic
substances," "pollutants," "contaminants," "chemicals known to
the State to cause cancer or reproductivity toxicity,"
"radioactive
materials," or other similar designations in, or
otherwise subject to, regulation under any Environmental
Law now or hereinafter in effect; (B) petroleum;
(C) asbestos;
(D) polychlorinated biphenyls; (E) designated as a
"hazardous substance" pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1321)
or listed pursuant to Section 307 of the Clean Water Act (33
U.S.C. Section 1317), or any amendments thereto; (F) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.
(42 U.S.C. Section 6903), or any amendments thereto; (G) defined as
"hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S. C.
Section 9601), or any amendments thereto; or (H) designated
as a "hazardous substance," "hazardous waste," "hazardous
material" or similar designation under Nevada law.
(iv) "Environmental Laws" shall mean
all
Regulations which regulate or relate to the protection or
cleanup of the
environment, the use,
treatment, storage, transportation, generation,
manufacture, processing, distribution, handling or disposal
of, or emission, discharge or other release or threatened
release of, Hazardous Substances, the preservation or
protection of waterways, groundwater, drinking water,
air, wildlife, plants or other natural resources.
Environmental Laws shall include, without limitation, the
Federal Insecticide, Fungicide, Rodenticide Act, Resource
Conservation & Recovery Act, Clean Water Act, Safe
Drinking Water Act, Atomic Energy Act, Toxic Substances
Control Act, Clean Air Act, Comprehensive Environmental
Response,
Compensation and Liability Act, Emergency Planning and
Community Right-to-Know Act, Hazardous Materials Transportation
Act and all analogous or related federal, state or local
law, each as amended.
(v) "Environmental Conditions" means
conditions of the environment, including the ocean,
natural resources (including flora and fauna), soil, surface
water, ground water, any present or potential drinking water
supply, subsurface strata or the ambient air, relating to or
arising out of the use, handling, storage,
treatment, recycling, generation,
transportation, release, spilling, leaking, pumping,
pouring, emptying, discharging, injecting, escaping, leaching,
disposal, dumping or threatened release of any Hazardous
Substance by Gem or Gem's predecessors in interest at, on,
about or under the Real Property or the Former Property.
With respect to claims by employees, Environmental
Conditions also includes the exposure of Persons to Hazardous
Substances within any workplace on the Real Property or the
Former Property.
(vi) "Environmental Noncompliance" means, but
is not limited to: (1) the release or threatened release of
any Hazardous Substances into the environment, any storm
drain, sewer, septic system or publicly owned treatment
works, in violation of any effluent or emission limitations,
standards or other criteria or guidelines established by
any applicable Environmental Law, permit, entitlement,
implementation or other enforceable plan or order; (2) any
noncompliance of physical structure, equipment, process or
facility with the requirements of building or fire codes,
zoning or land use regulations or ordinances, conditional
use permits and the like; (3) any
facility operations, procedures, designs, etc. which do
not conform to the statutory or regulatory requirements of
applicable Environmental Law; (4) the failure to have
obtained permits, variances
or other authorizations necessary for the legal
operation of any equipment, process, facility or any
other
activity under applicable Environmental Laws; (5) the
operation of any facility or equipment in violation of
any permit condition, schedule of compliance, administrative
or court order and the like under applicable Environmental
Laws.
(vii) "Environmental Claims" shall
include, without limitation; claims, demands, suits, causes of
action for personal injury or property damage (including any
depreciation of property values, lost use of property,
consequential damages arising directly or indirectly out of
Environmental Conditions or Environmental Noncompliances);
actual or threatened damages to natural resources; claims for
the recovery of response costs, or administrative or judicial
orders directing the performance of investigations, response
or remedial actions under applicable Environmental Laws; a
requirement to implement "corrective action" pursuant to
any order or permit issued pursuant to the federal
Resource Conservation and Recovery Act and/or
corresponding state law; claims for restitution, contribution
or equitable indemnity from third parties or any
governmental
agency; fines, penalties, liens against property; claims
for injunctive relief or other orders or notices of violation
from federal, state or local agencies or courts; and, with
regard to any present or former employees, exposure to or
injury from Environmental
Conditions or Environmental Noncompliances.
(b) Real Property and Improvements. Except as
set
forth on Schedule 4.25, the Real Property is, and at all
times
has been, and all Former Properties were at all times when
owned, leased or operated by Gem, owned, leased and
operated in compliance with all Environmental Laws and in a
manner that will not give
rise to any Liability under any Environmental Laws.
Without limiting the foregoing, and except as set forth
in Schedule 4.25, (i) there is not and has not been any
Hazardous Substance used, generated, treated, stored,
transported, disposed of, handled or otherwise existing on,
under, about or emanating from any
Real Property or any Former Property, except for
quantities of any such Hazardous Substances stored or
otherwise held on, under or about any such Real Property in
full compliance with all
Environmental Laws and necessary for the operation of
the Business, (ii) Gem has at all times used, generated,
treated, stored, transported, disposed of or otherwise
handled its
Hazardous Substances in compliance with all Environmental
Laws
and in a manner that will not result in Liability of Gem
under any Environmental Law, and (iii) there is not now and
has not been at any time in the past any underground or
above-ground storage tank or pipeline at any Real Property or
Former Property where the installation, use, maintenance,
repair, testing, closure or removal of such tank or pipeline
was not in compliance with all Environmental Laws and there has
been no Release from or rupture
of any such tank or pipeline, including without
limitation any Release from or in connection with the filling
or emptying of such tank.
(c) Notice of Violation. Except as set forth
in
Schedule 4.25, Gem has not received any written notice
of alleged, actual or potential responsibility for, or any
written inquiry or investigation regarding (i) any Release or
threatened Release of any Hazardous Substance at any
location, whether at the Real Property, the Former Properties
or otherwise or (ii) an alleged violation of or non-compliance
with the conditions of any Permit required under any
Environmental Law or the provisions of
any Environmental Law. Except as set forth in Schedule 4.25,
Gem has received no written notice of any other claim,
demand or Action by any individual or entity alleging any
actual or threatened injury or damage to any Person,
property, natural resource or the environment arising from
or relating to any Release or threatened Release of any
Hazardous Substances at, on, under, in, to or from any Real
Property or Former Properties, or in connection with any
operations or activities of Gem.
(d) Environmental Conditions and/or
Environmental
Noncompliances. Except as set forth in Schedule 4.25, there
are no present or past Environmental Conditions in any way
relating to the Business or at any Real Property or Former
Property.
(e) Environmental Audits or Assessments.
True, complete and correct copies of the written reports, and
all parts thereof, including any drafts of such reports if such
drafts are in the possession or control of Gem, of all
environmental audits or assessments which have been conducted
at any Real Property or Former Property, either by Gem or any
attorney, environmental consultant or engineer engaged for
such purpose, have been delivered to Ameristar and ACLV and
a list of all such reports, audits and assessments and any
other similar report, audit or assessment of which Gem has
knowledge is included on the Disclosure Schedule.
(f) Indemnification Agreements. Gem is not a
party,
whether as a direct signatory or as successor, assign or
third party beneficiary, or otherwise bound, to any Lease or
other Contract (excluding the Insurance Policies disclosed
on the Disclosure Schedule) under which Gem is
obligated by
or entitled to the benefits of, directly or indirectly,
any representation, warranty, indemnification, covenant,
restriction or other undertaking concerning Environmental
Conditions.
(g) Releases or Waivers. Gem has not released
any
other Person from any claim under any Environmental Law or
waived any rights concerning any Environmental Condition.
(h) Notices, Warnings and Records. Gem has given
all notices and warnings, made all reports, and has kept
and maintained all records required by and in compliance with
all Environmental Laws.
(i) Fundamental Claims. Except as set forth
on
Schedule 4.25, there are no pending, or to the best of
Gem's
knowledge, threatened, Environmental Claims relating in any
way to the Business or the Real Property or Former Property.
4.26 Banking Relationships. Schedule 4.26 sets forth
a complete and accurate description of all arrangements that
Gem has with any banks, savings and loan associations,
brokerages or other financial institutions providing for
checking accounts, deposit accounts, safe deposit boxes,
borrowing arrangements, and certificates of deposit or
otherwise, indicating in each case account numbers, if
applicable, and the Person or Persons authorized to act or
sign on behalf of Gem in respect of any of the foregoing.
As of the date hereof, the aggregate principal amount
outstanding of the Credit Facility is Two Million Eight
Hundred Thousand Dollars ($2,800,000), and Twenty-Two Million
TwoHundred Thousand Dollars ($22,200,000) remains available to
be drawn under the Credit Facility.
4.27 Project Budget and Project Schedule. As of the
date hereof, the Project Budget adequately describes the
anticipated cost of completing the Project and causing
Operation of the
Project to occur. With respect to each Project Component,
the Project Component Completion Amount corresponding to such
Project Component constitutes the reasonable good faith
estimate of Gem and of Rebeil of the cost to complete such
Project Component. As of the date hereof, the Project
Schedule reasonably accurately reflects the anticipated
schedule for completing the Project and causing Operation of
the Project to occur. As of the date hereof, and assuming
no Changes, the completion of the Project in accordance with
the Existing Plans and Specifications and the Project
Schedule will result in a Completion Differential equal to
Five Million Four-Hundred Seventy-One Thousand Dollars
($5,471,000). Gem and the Gem Individuals acknowledge and
agree that neither Ameristar nor ACLV have approved or
endorsed the Project Budget, and that the Project Budget is
attached hereto solely for the purpose of this representation
and warranty. The
Project Budget shall not in any way be deemed an
acknowledgment by Ameristar or ACLV that the Project can be
developed for the amounts set forth in the Project Budget.
4.28 Existing Plans and Specifications. The Existing
Plans and Specifications include all of the plans and
specifications relating to the design or construction of
the Project in existence as of the date hereof and
together call for the construction of the entire Project to
Boulder Station Standards.
4.29 Margin Securities. Gem does not own or intend
to acquire any "margin security" as defined in Regulation G (12
CFR Part 207) or Regulation U (12 CFR Part 221) of the
Board of Governors of the Federal Reserve System.
4.30 Merger Consideration. Each Gem Individual
represents and warrants that the portion of the Closing
Delivery Ameristar Stock to be delivered to him at the Closing
is being acquired for his own account, with no intention of
assigning any participation or interest therein, and without
a view to the distribution of any portion thereof, except in
accordance with the Securities Act and all applicable state
securities laws. Each Gem Individual is a resident solely
of the State of Nevada, and all material negotiations
relating to this Agreement and the transactions
contemplated hereby involving such Gem Individual occurred
while such Gem Individual was in the State of Nevada.
Gem and each Gem Individual understands that the
Closing Delivery Ameristar Stock is not being registered
under the Securities Act or any state securities law and
must be held indefinitely unless it is subsequently
registered thereunder or an exemption from such registration
is available. Each of Gem and each Gem Individual
understands that, except as otherwise provided in this
Agreement or the Registration Rights Agreement, the Closing
Delivery Ameristar Stock is not being registered under the
Securities Act or any state securities law in part on the
grounds that the issuance thereof is exempt under Section
4(2) of the Securities Act, and Regulation D
promulgated
thereunder, as a transaction by an issuer not involving
any public offering; that Ameristar's reliance on such
exemption is predicated in part on the foregoing
representation and warranty of Gem and each Gem Individual
and that in the view of the Securities and Exchange
Commission, the statutory basis for the exemption claimed
would not be present if, notwithstanding such representation
and warranty, Gem or any Gem Individual contemplates
acquiring any of the Closing Delivery Ameristar Stock for
sale upon the occurrence or non-occurrence of some
predetermined event. Each Gem Individual understands
and
acknowledges that the sale of the Closing Delivery
Ameristar Stock by such Person may be restricted or
limited by the qualification or listing requirements of
the Nasdaq National
Market System or any national securities exchange upon which
the common stock of Ameristar is designated or listed for
trading.
4.31 Restrictive Legend. Gem and each Gem
Individual
understands that Ameristar will have an appropriate stop
order placed on its records indicating the existence of the
terms of this Agreement, and that the certificates
representing the Merger Consideration shall bear the following
legend:
"THE SHARES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAW, AND MAY BE SOLD, TRANSFERRED
OR ENCUMBERED ONLY PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ALL APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO A NO-ACTION LETTER
FROM THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION OR PURSUANT TO AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL
THAT SUCH REGISTRATION IS UNNECESSARY."
4.32 Receipt of Information. Gem and each Gem
Individual
hereby acknowledges receipt of a copy of the following
documents from Ameristar: (i) Report on Form 10-K for the
fiscal year ended December 31, 1995, (ii) Proxy Statement and
Annual Report to Stockholders distributed to stockholders in
connection with the Annual Meeting of Stockholders to be
held on June 7, 1996 ("Proxy Statement"), and (iii) Report
on Form 10-Q for the quarter ended March 31, 1996.
4.33 Investment Company Act. Gem is not, and after
the
Closing will not be, an "investment company" or a
company "controlled" by an investment company as such terms
are defined in the Investment Company Act of 1940, as amended.
4.34 Accredited Investor. Gem and each Gem Stockholder
is
an "accredited investor" as that term is defined in Rule
501(a) of the Securities and Exchange Commission. Schedule
4.34 sets forth in reasonable detail all bases upon
which each Gem Individual is an "accredited investor."
4.35 Information Provided for Ameristar SEC Filings.
All
information provided to Ameristar and ACLV by Gem and/or the
Gem Individuals pursuant to Section 6.11 does not contain and
will not, at any time prior to the stockholders' meeting of
Ameristar to approve the issuance of Ameristar Common Stock
hereunder, contain any untrue statement of a material fact or
omit to state any material fact necessary to make such
information or any part thereof not misleading.
4.36 Spousal Consent. Each Gem Individual's spouse, if
any, has executed a Spousal Consent to this Agreement in the
place indicated below.
4.37 Legal and Tax Advice. Gem and each of the
Gem
Individuals has had an opportunity to discuss this Agreement
with counsel of their respective choosing, and to have the
legal consequences of this Agreement and the transactions
contemplated hereby explained by such counsel. Gem and
each of the Gem Individuals also has had an opportunity to
seek and obtain the advice of a competent tax professional
with respect to the tax consequences of this Agreement and
the transactions contemplated hereby. Neither
Gem nor any of the Gem Individuals is relying
upon Ameristar, ACLV or any of their respective
stockholders,
directors, officer, agents or Representatives for purposes
of
integrating the provisions of this Agreement or assessing
the consequences hereof.
4.38 Material Misstatements Or Omissions.
No
representations or warranties by Gem in this Agreement, nor
any document, exhibit, statement, certificate or schedule
heretofore or hereinafter furnished to Ameristar or ACLV
pursuant hereto, or in connection with the transactions
contemplated hereby, including without limitation the
Disclosure Schedule, contains or will contain any untrue
statement of a material fact, or omits or will omit
to state any material fact necessary to make the
statements or facts contained therein not misleading. Gem
has
disclosed all events, conditions and facts materially
affecting the Business, prospects and financial condition of
Gem.
Article 5
Representations and Warranties of Ameristar and ACLV
Ameristar and ACLV hereby represent and warrant to
Gem as follows, which representations and warranties are, as
of the date hereof, and, except for representations and
warranties stated to be true as of a date other than the date
hereof, will be, as of the Closing Date, true and correct:
5.1 Organization.
(a) Each of Ameristar and its Subsidiaries is
duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or
organization and has all requisite power and authority to own,
lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such
power and authority would not have a material adverse effect
on Ameristar and its Subsidiaries, taken as a whole.
(b) Ameristar has heretofore delivered to Gem
accurate and complete copies of the Articles of Incorporation
and By-Laws, as currently in effect, of Ameristar and ACLV.
Each of Ameristar and its Subsidiaries is duly qualified or
licensed and in good standing to do business 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 licensing necessary, except in
such jurisdictions where the failure to be so duly qualified
or licensed and in good standing would not have a material
adverse effect on Ameristar and its Subsidiaries taken as a
whole.
5.2 Authority Relative to this Agreement.
As of the date hereof, this Agreement and
the transactions and performance contemplated hereby have
not yet been approved by the Board of Directors of
Ameristar. In addition, as of the date hereof, the issuance
of Ameristar Common Stock as contemplated herein has not been
approved by Ameristar's stockholders.
5.3 Capitalization of Ameristar and its Subsidiaries.
(a) As of the date hereof, the authorized
capital stock of Ameristar consists of thirty million
(30,000,000) shares of Ameristar Common Stock of which, as of
the date hereof, twenty million three hundred sixty thousand
(20,360,000) shares of Ameristar Common Stock were issued
and outstanding, and thirty
million (30,000,000) shares of preferred stock, $0.01 par
value per share, none of which are outstanding; provided,
however, the amounts set forth in this Section 5.3 may be
adjusted prior to the Closing pursuant to Section 2.10(a) or
otherwise. All of the outstanding shares of Ameristar Common
Stock have been validly issued, and are fully paid,
nonassessable and free of preemptive rights. Except as set
forth above and as specifically set forth in Ameristar's
Annual Report on Form 10-K for the year ended December 31,
1995, and the Proxy Statement, as of the date hereof,
there are outstanding (i) no shares of capital stock or other
voting securities of Ameristar, (ii) no securities of
Ameristar or its Subsidiaries convertible into or
exchangeable for shares of capital stock of voting securities
of Ameristar, (iii) no options or other rights to acquire from
Ameristar or its Subsidiaries, and no obligations of Ameristar
or its Subsidiaries to issue, any capital stock, voting
securities or securities convertible into or exchangeable
for capital stock or voting securities of Ameristar, except
for options granted pursuant to the Ameristar Stock Option
Plans, and (iv) no equity equivalents, interests in the
ownership or earnings of Ameristar or its Subsidiaries or
other similar rights. As of the date hereof, there are no
outstanding obligations of Ameristar or any of its
subsidiaries to repurchase, redeem or otherwise acquire
any Securities. There are no stockholder agreements, voting
trusts or other agreements or understandings to which
Ameristar is a party or by which it is bound relating to
the voting of any shares of capital stock of Ameristar.
(b) The Ameristar Common Stock constitutes the
only class of equity securities of Ameristar or its
subsidiaries registered or required to be registered under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
5.4 Consents and Approvals; No Violations. Except
for
filings, Permits, authorizations, consents and approvals as
may be required under, and other applicable requirements
of, the Securities Act, the Exchange Act, state securities or
blue sky laws, applicable Gaming Laws or rules or
Regulations of any Gaming Authority, the HSR Act and the
rules applicable to the Nasdaq Stock Market, no filing with
or notice to, and no Permit, authorization, consent or approval
of, any governmental entity is necessary for the execution and
delivery by Ameristar or ACLV of this Agreement or the
consummation by Ameristar or ACLV of the transactions
contemplated hereby, except where the failure to obtain such
Permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a material
adverse effect on Ameristar. Following receipt of the
approvals described in Section 9.14 and in the foregoing
sentence, neither the execution, delivery and performance of
this Agreement by Ameristar or ACLV nor the consummation by
Ameristar or ACLV of the transactions contemplated hereby
will (i) conflict with or result in any breach of any
provision of the respective Articles of Incorporation or By-
Laws (or similar governing documents) of Ameristar or ACLV or
any of Ameristar's Subsidiaries, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or
Encumbrance) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license,
contract, agreement
or other
instrument or obligation to which Ameristar or ACLV or any
of Ameristar's other subsidiaries is a party or by which
Ameristar or ACLV or any of Ameristar's other Subsidiaries is a
party or by which any of them or any of their respective
properties or assets may be bound, or (iii) violate any
order, writ, injunction, decree, law, statute, rule or
Regulation applicable to Ameristar
or ACLV or any of Ameristar's Subsidiaries or any of
their respective properties or assets, except in the case of
(ii) or (iii) for violations, breaches or defaults which would
not have a material adverse effect on Ameristar.
5.5 SEC Reports; Financial Statements.
(a) Ameristar has filed all required forms,
reports and documents with the Securities and Exchange
Commission (the "SEC") since November 9, 1993, each of which
has complied in all material respects with all applicable
requirements of the
Securities Act and the Exchange Act, each as in effect on
the dates such forms, reports and documents were filed.
Ameristar has heretofore delivered to Gem, in the form filed
with the SEC (including any amendments thereto but excluding
any exhibits), (i) its Annual Reports on Form 10-K for the
fiscal years ended December 31, 1994, and December 31, 1995,
(ii) all definitive proxy statements relating to Ameristar's
meetings of stockholders (whether annual or special) held since
November 9, 1993, (iii) all other reports or registration
statements (excluding on Form S8) filed by Ameristar with the
SEC since November 9, 1993 (all of the foregoing,
collectively, the "Ameristar SEC Reports"), and (iv) a
Transition Report on Form 10-Q for the fiscal quarter ended
December 31, 1993. None of such Ameristar SEC Reports,
including, without limitation, any financial statements
or
schedules included or incorporated by reference
therein,
contained, when filed, any untrue statement of a material fact
or omitted to state a material fact required to be stated
or incorporated by reference therein or necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited
consolidated
financial statements of Ameristar included in the Ameristar
SEC Reports fairly present, in conformity with GAAP (except as
may be indicated in the notes thereto), the consolidated
financial position of Ameristar and its consolidated
subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the
periods then ended.
5.6 Information Supplied. None of the
information contained in or incorporated by reference to the
proxy statement will, at the date mailed to stockholders and at
the times of the meeting or meetings of stockholders of
Ameristar to be held in connection with the transactions
contemplated by this Agreement, contain any untrue statement of
a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of
the
circumstances under which they are made, not misleading,
except to the extent such untrue statement or failure to state a
fact is based on information submitted to Ameristar by Gem or
any of its Representatives. The proxy statement will comply as
to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated
thereunder.
5.7 No Brokers. Neither Ameristar, ACLV nor any of
their
officers, directors, employees, stockholders or Affiliates
has employed or made any agreement with any broker, finder or
similar agent or any Person or firm which will result in the
obligation of
Gem
or any of its respective Affiliates to pay any finder's
fee, brokerage fees or commission or similar payment in
connection with the transactions contemplated hereby.
5.8 Legal and Tax Advice. Ameristar and ACLV have had
an
opportunity to discuss this Agreement with counsel of
their respective choosing, and to have the legal consequences
of this Agreement and the transactions contemplated hereby
explained by
such counsel. Ameristar and ACLV have also had an opportunity
to seek and obtain the advice of a competent tax professional
with respect to the tax consequences of this Agreement
and the transactions contemplated hereby. Neither Ameristar
nor ACLV is relying upon Gem, any Gem Individual, or any of
their respective stockholders, directors, officer, agents or
Representatives for purposes of integrating the provisions
of this Agreement or assessing the consequences hereof.
5.9 Insurance. Ameristar and its subsidiaries
maintain general liability and other business insurance that
Ameristar believes to be reasonably prudent for its business.
5.10 Vote Required. The vote of the holders of
Ameristar's capital stock necessary to approve the
transactions contemplated by this Agreement, including without
limitation, issuance of the Ameristar Common Stock is, pursuant
to Section 6(i)(1), Part III, Schedule D of the By-Laws of
the National Association of Securities Dealers, Inc., the
affirmative vote of the holders of a majority of the
outstanding shares of Ameristar Common Stock voted on the
proposal to so issue the Ameristar Common Stock. The vote of
the holders of Ameristar's Common Stock necessary to approve
the transactions contemplated by this Agreement is,
pursuant to the GCL, the affirmative vote of the holders of
a majority of the outstanding shares of Ameristar Common
Stock. Ameristar, as the sole stockholder of ACLV, has
approved and adopted this Agreement, subject to the approval
of Ameristar's stockholders and Board of Directors.
5.11 No Prior Activities. Except for obligations
incurred in connection with its incorporation or
organization or the negotiation
and consummation of this Agreement and
the
transactions contemplated hereby, ACLV has neither incurred
any obligation or liability nor engaged in any business or
activity of any type or kind whatsoever or entered into any
agreement or arrangement with any Person.
5.12 Insider Interests. Except as set forth
in
Schedule 5.12, no officer or director of Ameristar has
any
interest in any material property, real or personal, tangible
or intangible, used in or pertaining to the business of
the Ameristar or any Subsidiary, except for the ordinary rights
of a stockholder.
Article 6
Additional Pre-Closing Covenants
Gem, the Gem Individuals, Ameristar and ACLV
each covenant with the other as follows:
6.1 Further Assurances. Upon the terms and subject to
the conditions contained herein, the parties agree, until
the
Closing, (i) to use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement,
(ii) to execute any documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to
carry out any of the transactions contemplated hereunder,
and (iii) to cooperate with each other in connection with
the foregoing. Without limiting the foregoing, the parties
agree to use their respective best efforts (A) to obtain
all necessary waivers, consents and approvals from other
parties to the Contracts, Options and Leases; provided,
however that neither Ameristar nor ACLV shall
be required to make any payments, commence litigation or agree
to modifications of the terms thereof in order to obtain any
such waivers, consents or approvals, (B) to obtain all
necessary Permits as are required to be obtained under any
Regulations, (C) to defend all Actions challenging this
Agreement or the consummation of the transactions
contemplated hereby, (D) to lift or rescind any injunction or
restraining order or other Court Order adversely affecting
the ability of the parties to
consummate the transactions contemplated hereby, (E) to give
all notices to, and make all registrations and filings with
third parties, including without limitation, submissions of
information requested by governmental authorities and Gaming
Authorities, (F) to fulfill all conditions to this
Agreement, and (G) to obtain all approvals required from
any Gaming Authority and to comply with all applicable Gaming
Laws or any applicable rule or order of any Gaming Authority
to ensure that (i) Ameristar and ACLV will be able to conduct
non-restricted gaming operations at the Project and (ii)
the transactions contemplated by this Agreement will not
interfere with Ameristar's continued operation of its other
businesses or any of its Subsidiaries and assets which they
possess as of the Closing Date. Within forty-five (45)
calendar days after the execution and delivery of this
Agreement, ACLV and Gem shall make all filings required under
the HSR Act. In addition, Gem will commence all action
required under this Section 6.1 by a date which is early
enough to allow the transactions contemplated hereunder to be
consummated by the Closing Date.
6.2 No Solicitation.
(a) No Solicitation. From the date hereof through
the Closing or the earlier termination of this Agreement, Gem
and the Gem Individuals shall not, and shall cause each
of their respective stockholders or Representatives
(including without limitation investment bankers, attorneys
and accountants), not to, directly or indirectly, enter
into, solicit, initiate or continue any discussions or
negotiations with, or encourage or respond to any inquiries or
proposals by, or participate in any negotiations with, or
provide any information to, or otherwise cooperate in any
other way with any Person or group, other than Ameristar or
ACLV and their Representatives, concerning any sale of all
or a portion of the Assets or the Business, or of any shares
of capital stock of Gem, or any merger, consolidation,
liquidation, dissolution or similar transaction involving
Gem (each such transaction being referred to herein as a
"Proposed Acquisition Transaction"). Neither Gem nor any Gem
Individual shall, and Gem shall cause each Gem Stockholder not
to directly or indirectly, through any Gem Individual,
officer, director, employee, Representative, agent or
otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any Person (including, without
limitation, a "Person" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) relating to
any Proposed Acquisition Transaction or participate in any
negotiations regarding, or furnish to any other Person any
information with respect to Gem or any of its subsidiaries
for the purposes of, or otherwise cooperate in any way with,
or assist or participate in, facilitate or encourage, any
effort or attempt by any other Person to seek or effect a
Proposed Acquisition Transaction. Gem and each Gem
Individual hereby represents that it or he is not now engaged
in discussions or negotiations with any party other than
Ameristar and ACLV with respect to any of the foregoing. Gem
agrees not to release any third party from, or waive any
provision of, the Confidentiality Agreements.
(b) Notification. Gem shall immediately
notify Ameristar and ACLV if any discussions or negotiations
are sought to be initiated, any inquiry or proposal is
made, or any information is requested with respect to any
Proposed Acquisition Transaction and
notify Ameristar and ACLV of the terms of any
proposal which it may receive in respect of any such
Proposed Acquisition
Transaction, including without limitation the
identity of the prospective purchaser or soliciting party.
6.3 Notification of Certain Matters. From the date
hereof through the Closing, each party hereto shall give
prompt notice (a "Default Notice") to each other party of
(a) the occurrence, or failure to
occur, of any event which occurrence or failure
would be likely to cause any representation or warranty
contained in this Agreement or in any exhibit or schedule
hereto to be untrue or inaccurate in any material respect and
(b) any material failure of any party or any of its respective
Affiliates, or of any of their respective stockholders or
Representatives, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by
it under this Agreement or any exhibit or schedule
hereto; provided, however, that such
disclosure shall not be deemed to cure any breach of
a
representation, warranty, covenant or agreement or to satisfy
any condition. Gem
shall promptly notify Ameristar and ACLV of any
Default, the threat or commencement of any Action, or
any development that occurs before the Closing that could in
any way materially
affect Gem, the Assets or the Business.
6.4 Investigation by Ameristar and ACLV.
Subject to the Confidentiality Agreements, and
as required to preserve any applicable attorney-client
privilege:
(a) From the date hereof through the Closing Date,
Gem shall, and shall
cause its officers, directors, employees and
agents to, afford the Representatives of Ameristar, ACLV
and
their Affiliates complete access at all reasonable times to
the Assets for the
purpose of inspecting the same, and to the
officers, employees, agents, attorneys, accountants,
properties, Books and Records, Contracts, Options, Leases and
Permits of Gem, and shall furnish
Ameristar, ACLV, their Affiliates and their
Representatives all financial, operating and other data
and information and copies of any and all Contracts, Options,
Leases and Permits as Ameristar, ACLV or their Affiliates,
through their respective Representatives, may reasonably
request, including an unaudited balance sheet, prepared in
accordance with GAAP and Regulation S-X,
and the related unaudited Statements of Profit
and Loss and Statements of Changes in Financial Position,
each prepared in accordance with GAAP and Regulation S-X,
for each month from the
date hereof through the Closing Date within ten
(10) calendar days after the end of each month which
financial statements shall
(a) be true, correct and complete, (b) be in
accordance with the Books and Records of Gem and (c)
accurately
set forth the assets, Liabilities and financial
condition,
results of operations and other information purported to be
set forth therein in accordance with GAAP consistently applied.
(b) (i) Each of Ameristar and ACLV shall have
the right, at its sole cost and expense to (A) physically
inspect the Real Property and the Improvements, including such
structural and other tests of the Improvements as Ameristar or
ACLV shall deem necessary, (B)
conduct tests of the soil surface or subsurface
waters and air quality at, in, on, beneath or about the
Real
Property, and such other procedures as may be recommended by
an independent
environmental consultant selected by Ameristar and
ACLV (the "Consultant") based on its reasonable
professional
judgment, in a manner consistent with good engineering
practice (with an appropriate indemnification from Ameristar
to Gem for any damage or liability that may be incurred
thereby if the transactions contemplated hereby do not
close), (C) inspect records, reports, permits,
applications, monitoring results, studies, correspondence,
data and any other information or documents relevant to
environmental conditions or environmental noncompliance
(including without limitation, such contacts and inquiries
of Governmental Authorities or such other parties as
Ameristar and ACLV deem advisable or prudent), and (D)
inspect all buildings and equipment at the Real Property,
including without limitation the visual inspection of the
Improvements for asbestos-containing construction materials.
(ii) Ameristar's and ACLV's right to
conduct tests, inspect records and other documents, and
visually inspect all buildings and equipment at the Real
Property shall also be subject to the following terms and
conditions:
A. All environmental testing performed
on Ameristar's and ACLV's behalf shall be conducted by
the
Consultant;
B. Gem shall have the right to
accompany the Consultant as it performs testing;
C. Except as otherwise required by law,
any information concerning the Real Property gathered by
Ameristar and ACLV or the Consultant as the result of, or in
connection with, the testing shall be kept confidential in
accordance with subsection (D) below and shall not be
revealed to, or discussed with, anyone other than
Representatives of Ameristar, ACLV or Gem who agree to comply
with the provisions of subsection (D) below; and
D. In the event that any party to
this Agreement or any party set forth in clause (C) above is
requested or required to disclose information described in
subparagraph (b)(i), Ameristar and ACLV shall provide Gem or
Gem shall provide Ameristar and ACLV, as the case may be,
with prompt notice of such request so that Gem or Ameristar
and ACLV, as the case may be, may seek an appropriate
protective order or waiver by the other party's compliance
with this Agreement. If, in the absence of a protective order
or the receipt of a waiver hereunder, such party is
nonetheless, in the opinion of its counsel, compelled to
disclose such information to any tribunal or else stand
liable for contempt or suffer other censure or penalty, such
party will furnish only that portion of the information which
is legally required and will exercise its reasonable
efforts to obtain reliable assurance that confidential
treatment will be afforded to the
disclosed information. The requirements of this
subparagraph shall not apply to information in the public
domain or lawfully acquired on a nonconfidential basis from
others.
6.5 Conduct of Gem's Business. From the date
hereof through the Closing, Gem shall, except as contemplated
by this Agreement, or as consented to by Ameristar in
writing, operate the Business in the ordinary course of
business and substantially in accordance with past practice
and will not take any action inconsistent with this Agreement
or with the consummation of the Closing.
Without limiting the generality of the foregoing, Gem
shall not, except as specifically contemplated by this
Agreement or as consented to by Ameristar in writing:
(a) change or amend the Articles of Incorporation
or By-Laws of Gem;
(b) enter into, extend, materially modify,
terminate or renew any option, lease, agreement, contract,
note, loan, evidence of indebtedness, purchase, order,
letter of credit, indenture,
security or pledge agreement, franchise agreement,
undertaking, practice, covenant not to compete,
employment
agreement, license, instrument, obligation or commitment to
which Gem is a party or is bound and which relates to the
Business or the Assets, whether oral or written;
(c) sell, assign, transfer, convey, lease,
mortgage, pledge or otherwise dispose of or encumber any of the
Assets, or any interests therein, except in the ordinary
course of business or as may be necessary for the
construction of the Project in accordance with the provisions
of this Agreement;
(d) incur any Liability for long-term interest
bearing indebtedness, guarantee the obligations of others,
indemnify others or, except in the ordinary course of
business, or as may be necessary for the construction of the
Project in accordance with the provisions of this Agreement,
incur any other Liability;
(e) (i) take any action with respect to the grant
of any bonus, severance or termination pay (other than
pursuant to policies or agreements of Gem in effect on the
date hereof that are described on the Disclosure Schedule) or
with respect to any increase
of benefits payable
under
its severance or termination pay policies or agreements in
effect on the date hereof or increase in any manner the
compensation or fringe benefits of any employee or pay any
material benefit not required by any existing Employee Plan or
policy;
(ii) make any change in the key
management structure of Gem, including without limitation,
the hiring of additional
officers or the termination of existing officers,
other than in the ordinary course; provided, however, Gem
shall not make any such change with respect to the Gem
Individuals, without the prior written consent of Ameristar,
which consent shall not be unreasonably withheld;
(iii) adopt, enter into or amend any
Employee Plan, agreement (including without limitation any
collective bargaining
or employment agreement), trust, fund or other
arrangement for the benefit or welfare of any employee,
except for any such amendment as may be required to
comply with applicable Regulations; or
(iv) fail to maintain all Employee Plans
in accordance with applicable Regulations;
(f) acquire by merger or consolidation with, or
merge or consolidate with, or purchase substantially all of
the assets of, or otherwise acquire any material assets or
business of any corporation, partnership, association or
other business organization or division thereof;
(g) declare, set aside, make or pay any dividend
or other distribution in respect of Gem's capital stock;
(h) fail to expend funds for budgeted
capital expenditures or commitments;
(i) willingly allow or permit to be done, any act
by which any of the Insurance Policies may be suspended,
impaired or canceled;
(j) (i) fail to pay its accounts payable and
any
debts or obligations owed by it, or pay or discharge when due
any Liabilities, in the ordinary course of business; or
(ii) fail to collect its accounts receivable
in the ordinary course of business;
(k) fail to maintain the Assets in substantially
their current state of repair, excepting normal wear and tear
or fail to replace, consistent with Gem's past practice,
inoperable, wornout or obsolete or destroyed Assets;
(l) make any loans or advances to any
partnership,
firm or corporation, or, except for expenses incurred in
the ordinary course of business or as may be necessary for
the construction of the Project in accordance with the
provisions of this Agreement, any individual;
(m) make any income tax election or settlement
or
compromise with tax authorities;
(n) fail to comply in any material respect with
all
Regulations applicable to it, the Assets and the Business;
(o) intentionally do any other act which would
cause
any representation or warranty of Gem in this Agreement to be
or become untrue in any material respect;
(p) issue, repurchase or redeem or commit to
issue,
repurchase or redeem, any shares of Gem's capital stock,
any options or other rights to acquire such stock or any
securities convertible into or exchangeable for such stock;
(q) fail to use its reasonable efforts to (i)
retain
Gem's employees, (ii) maintain the Business so that
such employees will remain available to the Surviving
Corporation on and after the Closing Date, (iii) maintain
existing relationships with suppliers, customers and others
having business dealings with Gem and (iv) otherwise to
preserve the goodwill of the Business so that such
relationships and goodwill will
be
preserved on and after the Closing Date;
(r) enter into any agreement, or otherwise
become
obligated, to do any action prohibited hereunder; and
(s) take or fail to take any action that would
result in the loss or suspension or impairment of any material
Gaming License or violation of any material Gaming Law or
applicable rule or order of any Gaming Authority.
Notwithstanding the foregoing, Gem shall have the
right to distribute any portion of the Distributed Warrant and
Stock to Gem's stockholders before the Closing if Gem shall no
longer have any obligations under any put or call arrangements
with respect to such portion of the Distributed Warrant and
Stock.
6.6 Conduct of Ameristar's Business. Except
as
contemplated by this Agreement, during the period from the
date hereof to the Closing Date, Ameristar will, and will cause
each of its Subsidiaries to, conduct its operations in the
ordinary course of business substantially consistent with past
practice and in a manner reasonably contemplated to preserve
the goodwill and ongoing business of Ameristar unimpaired
through the Closing Date. The parties acknowledge and agree
that such operation may include the acquisition of additional
assets or the acquisition, development or operation of
additional or new business
enterprises in the gaming, food services, entertainment
or lodging industries. Except as otherwise expressly
provided in this Agreement (including, without limitation,
Section 5.3, prior
to the Closing Date, Ameristar will not, except in the
ordinary course of business, without the prior written consent
of Gem:
(a) amend its articles of incorporation or
bylaws,
except as necessary to consummate the transactions
contemplated hereby;
(b) split, combine or reclassify any shares of
its
capital stock; declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property
or any
combination thereof) in respect of any shares of its
capital stock or otherwise make any payments to stockholders
in their capacity as such; or redeem or otherwise acquire
any of its Securities;
(c) adopt a plan of complete or partial
liquidation,
dissolution, restructuring, capitalization or
other
reorganization of Ameristar;
(d) authorize for issuance, issue, sell, deliver
or
agree or commit to issue, sell or deliver (whether through
the issuance orgranting of options, warrants,
commitment,
subscriptions, rights to purchase or otherwise) any
Ameristar Common Stock or any preferred stock or any other
securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights)
totaling, or exercisable for or convertible into shares
of Ameristar Common Stock totaling, in the aggregate, more
than sixty-six percent (66%) of the total number of shares of
Ameristar Common Stock outstanding on the date hereof; or
(e) except for and as contemplated or required by
the Ameristar Stock Option Plans, grant options to purchase, or
make restricted stock grants with respect to, shares of
Ameristar Common Stock or any preferred stock.
Notwithstanding the foregoing, before the Closing
Date, Ameristar may authorize an additional twenty million
(20,000,000) shares of Ameristar Common Stock and issue up
to ten million (10,000,000) additional shares of Ameristar
Common Stock pursuant to Section 2.9 hereof before the Closing
Date and Ameristar may issue other shares of Ameristar Common
Stock in accordance with the Ameristar Stock Option Plans and
may increase the number of shares issuable under the
Ameristar Stock Option Plans by not more than five hundred
thousand (500,000) shares of Ameristar Common Stock.
6.7 Approval of Plans and Specifications.
(a) The parties acknowledge and agree that as of
the date hereof, Gem
has obtained the Existing Plans and
Specifications to govern the construction of the
Improvements involved in the Project. From time to time
after the date hereof, Gem shall
prepare such additional plans and
specifications (and, as appropriate, modifications to any
plans or specifications previously approved by ACLV) as may be
required in accordance with reasonably prudent construction
and business practices in connection with any additional or
alternative work and Improvements necessary or appropriate in
order to cause the Project to be completed in a manner
consistent with Boulder Station Standards.
(b) All plans and specifications shall be subject
to
ACLV's approval, which shall not be unreasonably withheld.
In
determining whether to grant or withhold its approval, ACLV
may consider, among other things, whether the
plans and
specifications are reasonably calculated to lead to completion
of the Project and to ready the Project for Operation in
accordance with reasonably prudent construction and business
practices and Boulder Station Standards. The Existing Plans
and Specifications shall be deemed approved by ACLV for
purposes of this Agreement as of the date hereof. All
additional plans and specifications, and all modifications to
the Existing Plans and Specifications or any previously
approved Plans and Specifications, shall be deemed approved by
ACLV for purposes of this Agreement if not
disapproved by ACLV within thirty (30) days after ACLV's
receipt thereof. In each case, any disapproval shall set
forth with
reasonable particularity the reason for the disapproval.
(c) All plans and specifications approved by ACLV
in accordance with the provisions of this Section 6.7
shall be referred to herein as the "Approved Plans and
Specifications." The parties acknowledge and agree that
ACLV's approval of any plans and specifications shall
not be construed as a representation, warranty or
certification by ACLV to Gem or any other
Person
as to the quality of the plans and specifications or the
work called for thereby, it being understood that Gem shall
retain until the Closing all responsibility and liability for
assuring that the work involved with the Project is
adequately and appropriately undertaken. Rather, the purpose
of ACLV's review and approval of plans and specifications
shall be solely to provide comfort to ACLV that, during
the period prior to the Effective Time, Gem is proceeding
to develop the Project, and ready the Project for
Operation, in accordance with reasonably prudent construction
and business practices and Boulder Station Standards.
(d) Before the Effective Time, Gem shall have
no obligation to make any Discretionary Change unless Gem
and Ameristar shall have executed a written agreement that
describes such Discretionary Change in reasonable detail (a
"Discretionary Change Order"). Before the Effective Time,
Ameristar or Gem may in its sole discretion, deliver a written
request that Gem make a Discretionary Change (a "Discretionary
Change Request") to the other of Ameristar or Gem. If
Ameristar or Gem delivers a Discretionary Change Request
to the other of Ameristar or Gem, then a duly authorized
representative of Ameristar and a duly authorized
representative of Gem shall use their best efforts to meet at
10:00 A.M. on the next business day following the date that
Ameristar delivers its Discretionary Change Request to Gem, at
a site in the Las Vegas area reasonably appropriate for
consideration of the requested Discretionary Change, to
confer with respect to the scope and the additional cost or
cost savings resulting from the proposed Discretionary Change.
If each of Gem and Ameristar, acting in its reasonable
business discretion, agrees to implement a Discretionary
Change, then Ameristar and Gem shall execute a
Discretionary Change Order. If Gem and Ameristar also agree
on the additional cost or cost savings that will result from
the proposed Discretionary Change, each in its reasonable
business discretion, then the Discretionary Change Order
shall also specify such additional cost or cost savings.
(e) The parties hereby establish the
"Discretionary Change Account" for the purpose of tracking
the effect of discretionary changes on the cost to
design, procure and
construct the Project. As of the date hereof, the
Discretionary Change Account shall have a zero balance.
The Discretionary Change Account may have a negative balance.
The balance in the
Discretionary Change Account shall be adjusted as follows:
(1) If Ameristar and Gem execute a
Discretionary Change Order that specifies the additional cost
that will result from the corresponding Discretionary Change,
then the amount of
such additional cost shall be immediately added to the balance
in the Discretionary Change Account.
(2) If Ameristar and Gem execute a
Discretionary Change Order that specifies the cost savings
that will result from the corresponding Discretionary
Change, then the amount of
such cost savings shall be immediately deducted from the
balance in the Discretionary Change Account.
(3) If Ameristar and Gem execute a
Discretionary Change Order that does not specify the cost
savings or additional cost that will result from the
corresponding Discretionary Change or the Surviving
Corporation shall have determined, after the Effective Time
to make a Discretionary Change, then
the
Discretionary Change Account shall not be adjusted with
respect to the corresponding Discretionary Change until
all of the design, procurement and construction work to be
completed in
connection with such Discretionary Change shall have
been
completed, and within ten (10) days after such time,
Ameristar shall compute the additional direct
cost or
direct cost savings (without overhead) that shall have
resulted from the corresponding Discretionary Change and
Ameristar shall deliver written notice thereof to each of
the Gem Individuals. If the Gem Individuals dispute
Ameristar's computation of such additional cost or cost
savings and notify Ameristar of such dispute within five
(5) days after receiving Ameristar's computation, then the
matter shall be submitted to arbitration in accordance with
Section 12.13. If the Gem Individuals fail to so notify
Ameristar within such five (5) day period, then the Gem
Individuals shall be deemed to accept Ameristar's computation
of
such additional cost or cost savings, as the case may be.
Such
excess cost, if any, shall be added to the balance in
the Discretionary Change Account, and such cost savings, if
any, shall be deducted from the balance in the Discretionary
Change Account.
Gem shall keep detailed books of account in connection with
all costs incurred or saved as a result of Discretionary
Changes and other commercially appropriate records in
connection with
Discretionary Changes. Ameristar shall have the right to
review and audit such books of account and other records
before the Effective Time at Gem's regular business office
between the hours of 8:00 A.M. and 5:00 P.M., Monday through
Friday.
(f) From the date hereof of until the Effective
Time, Ameristar shall have the right to direct that Gem make
Mandatory Changes. If Ameristar directs that Gem make a
Mandatory Change, then Gem shall promptly make such Mandatory
Change. If Ameristar directs that Gem make a Change, and
Ameristar certifies that Ameristar in good faith believes
that such change is a Mandatory Change, but Gem believes
that such Change is a Discretionary Change, then Gem shall
nevertheless make such Change and Gem and Ameristar will
proceed in accordance with Section 12.13
to
establish whether such Change is a Discretionary Change, and
if
such Change is established to be a Discretionary Change, then
the "Discretionary Change Account" shall be modified as
provided in
paragraph 6.7(e) above.
(g) Under no circumstances shall Ameristar's
approval of any Change or directive that Gem make a
Mandatory Change constitute approval by Ameristar of any
"Funding Request
Application" under the Interim Funding Agreement.
(h) From the date hereof until the Closing Date,
Gem shall deliver to Ameristar and ACLV, at least as often as
every two (2) weeks, a project status report which shall
generally describe the current status of construction of the
Project and shall specify the current status of the work in
connection with each of the Project Components as of the date
thereof. Further, Gem shall provide Ameristar with copies
of all constructionrelated reports and any correspondence
between Gem and any Contractor or Architect.
(i) For the purposes of this Section 6.7, any
notice to be delivered by Ameristar to any of all of the Gem
Individuals may be delivered by Ameristar to Magliarditi and
upon delivery to Magliarditi all such Gem Individuals shall
be deemed to have received such notice. Ameristar shall be
entitled to rely upon any notice or other statement of
Magliarditi as a statement representing each of the Gem
Individuals, and any statement by Magliarditi shall be deemed
to be a statement of each of the Gem Individuals.
6.8 Construction of the Project. Gem shall
cause construction of the Project and all Improvements on
the Real Property, including without limitation, the
procurement and installation of all Fixtures and Equipment
and other tangible assets owned, leased or used by Gem in
connection with the Improvements
to
proceed with diligence and continuity in a good and
workmanlike manner in accordance with the Approved Plans and
Specifications, the Contractor Contracts and the Project
Budget. Until the Closing, Gem shall continue to cause
the Project and all Improvements on the Real Property,
including without limitation, all Fixtures and Equipment
and other tangible assets owned, leased or used by Gem in
connection with the Improvements to be designed, procured,
installed and constructed in a manner so that upon completion
such Project, Improvements and Fixtures and Equipment will
be (i) structurally sound with no known material defects, (ii)
in good operating condition and repair, subject to ordinary
wear and tear, (iii) not in need of maintenance, repair or
correction except for ordinary routine maintenance and repair,
the cost of which would not be material, (iv) sufficient for
the ordinary operation of Project and (v) in conformity,
in all material
respects, with all applicable Regulations.
Notwithstanding the foregoing, the Project shall, at a
minimum, be constructed and finished to Boulder Station
Standards. Gem
shall deliver written notice to Ameristar and ACLV promptly
after Gem shall have determined that the Project Schedule no
longer accurately reflects the anticipated schedule for
completing the Project and causing Operation of the Project to
occur.
6.9 Employee Matters.
Ameristar and ACLV each shall enter into
employment contracts with the individuals listed on Exhibit
AA attached hereto. The Gem Individuals listed on Exhibit AA
attached hereto shall enter into employment contracts with
Ameristar containing the material terms set forth therein and
such additional terms as the parties may agree upon in the
exercise of good faith (any such contract that is
executed by Ameristar or ACLV, an "Employment Contract").
6.10 Board of Directors. Ameristar shall cause its By-
Laws to be amended before the Closing Date in order to
allow the appointment of Steven W. Rebeil to Ameristar's Board
of Directors pursuant to Section 11.5.
6.11 Information for Ameristar SEC Filings. In
connection with the Pre-Closing Offering or obtaining the
approval of the stockholders of Ameristar for the
issuance of the Merger Consideration and otherwise in order
to comply with the reporting requirements applicable to
Ameristar under the Securities Act, Ameristar will need to
prepare and file with the Securities and Exchange Commission
various documents and reports, including without limitation,
a proxy statement meeting the requirements of Regulation 14A
of the Securities and Exchange Commission, a Current
Report on Form 8-K or a registration statement with
respect to the Pre-Closing Offering (the "Ameristar
SEC
Filings"). Gem and the Gem Individuals will upon
request promptly provide Ameristar and its Representatives any
and all information necessary for the preparation of the
Ameristar SEC Filings. Each of Gem and each of the Gem
Individuals shall cause all information provided by it or
him, as the case may be, neither to contain any untrue
statement, at any time, of material fact nor to omit to state
any material fact necessary to make such information or any
part thereof not misleading. If
any
financial statements of Gem required to be included in
any Ameristar SEC Filings are required to be audited and
such financial statements have not been audited as of the date
of this Agreement, Gem shall cause such financial statements
promptly to be
audited by
Arthur
Andersen, LLP, at the expense of Gem; provided,
however,
Ameristar shall reimburse Gem for such expenses to the
extent such expenses result from the preparation or audit
of any financial statement that is not required in
connection with obtaining approval of Gem's Existing Gaming
Application.
6.12 Operation of the Project. If the Operating Date
occurs before the Closing Date, Gem shall, except as
Ameristar shall otherwise agree in writing, operate the
Project in the ordinary course of business and in a
commercially appropriate manner, and in accordance with all
applicable Regulations and Gaming Laws.
6.13 Gem Air Documents. Ameristar and Rebeil shall
enter into such agreements, instruments and other documents
as are necessary to effect the transaction described on
Schedule 6.13
attached hereto (the "Gem Air Documents") on the other
terms described herein.
6.14 Phase II Option. Gem shall record the
Option pertaining to the Phase II Real Property in the Official
Records of the Clark County Recorder's Office on or before June
30, 1996.
6.15 D&O Insurance. So long as Rebeil is a member
of Ameristar's Board of Directors and as long as any of the
Gem Individuals are officers and/or directors of Ameristar,
Ameristar shall maintain, at its sole expense, directors
and officers liability insurance no less favorable to its
directors and officers than such insurance in effect as of
the date hereof (copies of which have previously been
delivered to Gem), to the extent such insurance remains
commercially available, on commercially reasonable terms and
conditions.
6.16 Authority Relative to this Agreement;
Recommendation; Meeting. On or
before the Closing Date, each of Ameristar and
ACLV shall use its best efforts to obtain all necessary
corporate power and authority to execute and deliver this
Agreement and the Ancillary
Agreements and to consummate the transactions
contemplated hereby and thereby. Assuming that such authority
is obtained, then on or before the Closing Date, the
Boards of Directors of Ameristar and ACLV and Ameristar,
as the sole stockholder of ACLV, shall duly and validly
authorize the
execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions
and other agreements contemplated hereby and thereby,
and Ameristar
represents and warrants that no other corporate proceedings
on the part of Ameristar or ACLV will be necessary to authorize
this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby or thereby,
except that, as referred to in Section 5.10, (i) the
approval of Ameristar's stockholders of the issuance of
Ameristar Common Stock in the Merger is required pursuant
to the rules of the Nasdaq Stock Market, and
(ii) the approval of Ameristar's and ACLV's
stockholders, respectively, of the transactions contemplated
by this Agreement is required pursuant to the GCL. Ameristar
shall call a meeting of its stockholders to be held as
promptly as practicable after the date hereof for the purpose
of voting upon all necessary resolutions for the execution
and delivery of this Agreement and the Ancillary Agreements,
the consummation of the transactions contemplated hereby and
thereby and the performance of the obligations of Ameristar
and ACLV hereunder and thereunder and related matters
contemplated hereby and thereby.
6.17 Gem Individual Guaranties. Each of the parties
shall
use its reasonable efforts to cause each of the Gem
Individuals to be released from any and all liability under
any of the Gem Individual Guaranties on or before July 31,
1996, pursuant to instruments reasonably satisfactory to
such Gem Individual.
If
any Gem Individual shall not have been released from
liability under any of the Gem Individual Guaranties on or
before the Closing Date, then, from and after the Effective
Time, Ameristar shall indemnify such Gem Individual on the
terms and subject to the conditions set forth in Section 11.3.
To the extent that any of the obligees under the Gem Individual
Guaranties require, as a prerequisite to releasing any Gem
Individual from liability under any of the Gem Individual
Guaranties, that Ameristar provide a replacement guaranty to
such obligee, then Ameristar shall execute and
deliver a commercially reasonable replacement
guaranty to such obligee so long as such replacement
guaranty (i) will neither cause Ameristar to violate any
Regulation or Gaming Law nor
result in the breach of any
covenant,
representation or warranty under any contract,
instrument, security agreement, mortgage, deed of trust or
other agreement to which Ameristar or ACLV is a party or by
which any asset of Ameristar or ACLV is bound, (ii) will
not require Ameristar or ACLV to encumber any of their
respective assets and (iii) will not require Ameristar to be
liable to the extent such obligation or Liability arises out
of or results from (A) any breach of any representation or
warranty or the inaccuracy of any
representation made by Gem or such Gem Individual under such
Gem Individual Guaranty or the documentation evidencing
the
underlying obligation secured by such Gem Individual
Guaranty, except to the extent disclosed in the Disclosure
Schedule, or (B) any breach, before the Closing, of any
covenant made by Gem or such Gem Individual under such Gem
Individual Guaranty or the documentation evidencing the
underlying obligation secured by such Gem Individual
Guaranty, except to the extent disclosed in the Disclosure
Schedule.
6.18 Tax Returns. On or before June 30, 1996, Gem
shall
cause its 1995 federal income tax return to be filed with
the Internal Revenue Service. Promptly following the filing of
such returns, Gem shall deliver a copy of each such
return to Ameristar and ACLV.
6.19 Gem Deliveries. On or before June 6, 1996, Gem
shall
deliver to Ameristar each of the following documents in the
form and substance reasonably acceptable to Ameristar:
(a) a consent of Bank of America National Trust and
Savings Association, as administrative agent with respect to
the Credit Facility, to the execution, delivery and
recordation of the Interim Funding Deed of Trust, the
execution and delivery of the Interim Funding Agreement, and
the advance of funds by Ameristar under the Interim Funding
Agreement;
(b) all material environmental reports on the Real
Property in Gem's possession that are, together with a
reliance letter from the Consultant that provided a Phase I
Site Assessment for the Property, or a Phase II Site
Assessment for the Real Property prepared in connection with
the Credit Facility and Terracon, as the preparer of the
Geotechnical Exploration, The Reserve Hotel and Casino, SWC
Lake Mead Drive and Soloman Street, Henderson, Nevada, dated
June 12, 1995, Project Number 64955164, in each case stating
that Ameristar shall be entitled to rely on the findings,
discussions and other matters set forth in such reports and
all matters related to the Merger Agreement and the Interim
Funding Agreement; and
(c) an opinion of Nevada counsel reasonably acceptable
to Ameristar that:
(i) Incorporation. Gem is a corporation
duly incorporated, validly existing and in good standing
under the laws of the State of Nevada. Gem is duly
qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the ownership or
leasing of its property or nature of the Business requires
such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Business or the Assets.
(ii) Trust Formation. The Trust is a trust duly
formed and validly existing under the laws of the State of
Nevada.
(iii) Power and Authority. Gem has the
necessary corporate power and authority, and the Trust has
all necessary trust power and authority, to enter into this
Agreement and the Ancillary
Agreements and to consummate the transactions
contemplated hereby and thereby. Gem has all material
Permits, licenses, franchises and other authority required
under federal and applicable state law to conduct the
Business as now being conducted.
Gem has the necessary corporate power and authority
to own, lease and operate the Assets and its other properties
and to conduct the Business as presently conducted.
(iv) Corporate Action and Enforceability.
The
execution, delivery and performance of this Agreement,
the
Ancillary Agreements and the transactions contemplated hereby
and thereby by Gem have been duly authorized by all
necessary corporate action of Gem or trust action of the Trust,
as the case may be, and this Agreement has been duly executed
and delivered by Gem and the Trust, and no approval of the
stockholders of Gem is required in connection therewith
or, if required, such approval has been duly obtained in
accordance with the provisions of Gem's Articles of
Incorporation and By-Laws and applicable law, and this
Agreement constitutes a legally valid and binding obligation
of Gem, or the Trust, as the case may be, enforceable
against Gem, or the Trust, as the case may be, in accordance
with its terms, except as limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to creditors'
rights generally or by equitable principles (whether
considered in an action at law or in equity), (ii)
limitations
imposed by federal or state law or equitable principles upon
the availability of specific performance, injunctive relief or
other
equitable remedies, or (iii) other customary
limitations
reasonably satisfactory to Ameristar's and ACLV's counsel.
6.20 Escrow Agreement. Concurrently herewith,
Ameristar, ACLV and the Gem Individuals shall execute and
deliver the Escrow Agreement.
Article 7
Gaming Approvals
7.1 Amendment of Gaming Application. Gem shall
cooperate
with Ameristar and ACLV in their attempts to amend, to the
extent practicable, Gem's Existing Gaming Application so as to
reflect the current ownership and management of Gem and to
permit the concurrent (or previous, if necessary)
consideration by the Nevada Gaming Commission of (a) the
request to approve the transactions contemplated by this
Agreement and a Gaming License for ACLV for the Project and
(b) the request for a Gaming License from the State of
Nevada for Gem for the Project; provided, however, that Gem's
Existing Gaming Application shall not be so amended if such
an amendment reasonably would be expected to cause any
material delay in the scheduled hearing date for Gem's Existing
Gaming Application before the Nevada Gaming Commission.
7.2 Gaming Approvals. Gem, each of the Gem
Individuals,
Ameristar and ACLV agree to use their best efforts to obtain
and retain in full force and effect at all times, as soon as
possible (i) all Gaming Licenses necessary for Operation of
the Project and (ii) all necessary approvals from the
appropriate Gaming Authorities with respect to the
transactions contemplated by this Agreement, including
without limitation, the Nevada
Gaming
Authorities, the Iowa Gaming Authorities and the
Mississippi Gaming Authorities.
7.3 Denial of License; Individuals. If any Person
shall
become an Ineligible Person prior to the Closing, the
following provisions shall apply:
(a) Each Ineligible Person shall, and Gem shall
cause each Ineligible Person to, immediately and permanently,
resign from any position, including as director or
officer, in Ameristar, Gem or ACLV and each Ineligible Person
shall have no further management role in Ameristar, Gem or
ACLV.
(b) If required to do so by any Nevada
Gaming Authority as a condition to licensure, each
Ineligible Person shall, and Gem shall cause each Ineligible
Person to, dispose of all of its securities or other ownership
interests in Gem.
(c) Each Ineligible Person shall, and Gem shall
cause each Ineligible Person to, cooperate with Gem, Ameristar
and ACLV in their efforts to obtain and retain in full force
and effect all Gaming Licenses and other approvals from any
Nevada Gaming Authority related to the Operation of the
Project.
(d) Sections 6.9(b) shall not be applicable to
such
Ineligible Person.
(e) Such Ineligible Person shall not receive
any Ameristar Common Stock at the Closing and such
Ineligible Person's Gem Stock shall not be converted to
Ameristar Common Stock, but such Ineligible Person shall
instead have all of his Gem Stock converted at the Closing
into the right to receive the proceeds of a secondary
offering (net of any underwriters'
discount or other out-of-pocket costs reasonably related to
such secondary offering), to be concluded by Ameristar
within one hundred eighty (180) days after the Closing, of
the number of shares of
Ameristar Common Stock
that
equals the product of (x) the number of shares of Pre-
Adjustment Consideration Stock multiplied times (y) such
Ineligible Person's Gem Proportionate Interest; provided,
however, if Ameristar reasonably determines on the basis of
any Gaming Law or order from any Gaming Authority or on
any other basis that such a secondary offering of Ameristar
Common Stock has been rendered commercially infeasible or if
Ameristar does not conclude such a secondary offering on or
before the date that is one hundred eighty (180) days after
the Closing, then on such date Ameristar shall either (i) pay
to such Ineligible Person an amount equal to the product of (A)
the Average 10-Day Closing Price as of the day that is one
hundred eighty (180) days after the Closing multiplied
times (B) the number of shares of Pre-Adjustment
Consideration Stock multiplied times (C) such Ineligible
Person's Gem Proportionate Interest (the "Ineligible Person
Amount"), or (ii) deliver a promissory note in the form of
Exhibit DD attached hereto with a principal amount equal to
the Ineligible Person Amount and a maturity date that is three
(3) years after the last day of the foregoing 180-day period.
(f) Notwithstanding the foregoing, neither Gem nor
any Gem Individual shall delay the Closing as a result of any
Person becoming an Ineligible Person.
7.4 Gaming Authority Approvals. Ameristar shall make
the necessary and appropriate declarations, filings,
applications or registrations in order to obtain approval
from the Iowa Gaming Authorities and the Mississippi Gaming
Authorities with respect to the transactions contemplated
by this Agreement and the Operation of the Project.
Article 8
Conditions to Gem's Obligations
The obligations of Gem and the Gem Individuals
to consummate the transactions provided for hereby are
subject, in the discretion of Gem, to the satisfaction, on or
prior to the Closing Date, of each of the following
conditions, any of which may be waived by Gem:
8.1 Representations, Warranties and Covenants.
All
representations and warranties of Ameristar and ACLV contained
in this Agreement shall be true and correct in all material
respects at and as of the date of this Agreement and at and
as of the Closing Date, except as and to the extent that
the facts and conditions upon which such representations
and warranties are based are expressly required or permitted
to be changed by the terms hereof, and Ameristar and ACLV
shall have performed and satisfied in all material respects
all agreements and covenants required hereby to be
performed by them prior to or on the Closing Date.
8.2 Consents; Regulatory Compliance and Approval.
Gem
shall be satisfied that all approvals required under
any
Regulations to carry out the transactions contemplated by
this Agreement shall have been obtained and that the parties
shall have complied with all Regulations applicable to the
Merger. Ameristar and ACLV shall have complied with the
requirements of the HSR Act.
8.3 No Actions or Court Orders. Except as a result of
a
Person being an Ineligible
Person,
no Action by any governmental authority, including
without
limitation any Gaming Authority, or other Person shall have
been instituted or threatened which questions the validity or
legality of the
transactions contemplated hereby and which could
reasonably be expected to damage Ameristar, ACLV, the Assets
or the Business materially if the transactions contemplated
hereby are consummated, including without limitation any
material adverse effect on the right or ability of Ameristar
or ACLV to own, operate, possess or transfer the Assets
after the Closing. There shall not be any Regulation or Court
Order that makes the Merger contemplated hereby illegal or
otherwise prohibited.
8.4 Opinion of Counsel. Ameristar and ACLV shall
have
delivered to Gem an opinion of counsel to Ameristar and
ACLV, dated as of the Closing Date, in form and substance
reasonably satisfactory to Gem, to the effect that:
(a) Incorporation. Ameristar and ACLV
are
corporations duly organized, validly existing and in
good
standing under the laws of the State of Nevada.
(b) Corporate Power and Authority. Ameristar and
ACLV have the necessary corporate power and authority to
enter into this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby.
(c) Corporate Action and Enforceability.
The
execution, delivery and performance of this Agreement and
the
Ancillary Agreements by Ameristar and ACLV have been
duly authorized by all
necessary corporate action of Ameristar and
ACLV, and this Agreement and the Ancillary Agreements have
been duly executed and delivered by Ameristar and ACLV, and
constitute legally valid and binding obligations of
Ameristar and ACLV, enforceable against Ameristar and ACLV in
accordance with their terms, except as limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights
generally or by equitable principles (whether
considered in an action at law or in equity), (ii)
limitations
imposed by federal or state law or equitable principles upon
the availability of specific performance, injunctive relief or
other equitable
remedies, or (iii) other customary limitations
reasonably satisfactory to Gem's counsel.
(d) Capital Stock. All of the outstanding
Ameristar Common Stock has been duly authorized and validly
issued and is fully paid and non-assessable. As of the
Closing Date, and taking into account
the consummation of the transactions
contemplated by this Agreement, Ameristar's issued
and
outstanding capital stock will consist of twenty million
three hundred sixty thousand (20,360,000) shares of Ameristar
Common Stock plus the number of shares of Ameristar Common
Stock that shall have been issued in accordance with the
terms of this Agreement (including any Pre-Closing
Offering). Ameristar will transfer to Gem at the Closing good
and marketable title to the Merger Consideration, free and
clear of all Encumbrances, except those required by
applicable Gaming Laws and any Encumbrances created pursuant
to this Agreement, and at the Closing will have full right,
power and authority to transfer said shares to Gem.
(e) No Breach of Contracts. Neither the execution
and delivery of this Agreement or the Ancillary
Agreements by Ameristar and ACLV nor the consummation of
the transactions contemplated hereby or thereby will (i)
violate the Articles of Incorporation or By-Laws of
Ameristar or ACLV, (ii) cause a
Default under any term or provision of any contract known to
such counsel to which Ameristar or ACLV is a party, or (iii)
to the best knowledge of such counsel, violate any
Court Order applicable to Ameristar or ACLV.
(f) No Violation of Law. Neither the execution
and performance of this Agreement or the Ancillary
Agreements by Ameristar or ACLV nor the consummation of
the transactions contemplated hereby or thereby will
violate or result in a failure to comply with any
Regulation or Court Order applicable to Ameristar or ACLV.
In rendering such opinions, such counsel may rely
as they deem advisable (i) as to matters governed by the
laws of jurisdictions other than states in which they
maintain offices, upon opinions of local counsel satisfactory
to such counsel, and (ii) as to factual matters, upon
certificates and assurances of public officials and
officers of Ameristar and ACLV.
In
addition, such opinions may be subject to such
additional qualifications and exceptions as are reasonably
acceptable to counsel to Gem.
8.5 Certificates. Each of Ameristar and ACLV shall
furnish Gem with such certificates of its officers and others
to evidence compliance with the conditions set forth in this
Article 8 as Gem may reasonably request.
8.6 Corporate Documents. Gem shall have received from
both Ameristar and ACLV resolutions adopted by the Boards of
Directors of Ameristar and ACLV, respectively, approving this
Agreement, the Ancillary Agreements and the transactions
contemplated hereby or thereby, certified by Ameristar's
and ACLV's corporate secretary, respectively.
8.7 Ancillary Agreements. Each of Ameristar and ACLV
shall have executed and delivered each of the Ancillary
Agreements to which Ameristar or ACLV is a party.
8.8 Delivery of Consideration. Ameristar shall
have delivered such portion of the Merger Consideration as is
required to be delivered pursuant to Article 2 hereof as of the
Closing.
8.9 Corporate Authorization. The stockholders and
the Board of Directors of each of Ameristar and ACLV shall
have approved all necessary resolutions for the execution and
delivery of this Agreement and the Ancillary Agreements, the
consummation of the transactions contemplated hereby and
thereby and the performance of the obligations of Ameristar
and ACLV hereunder and thereunder.
8.10 Gem Air. Ameristar shall have executed and
delivered all of the Gem Air Documents to which it is a party
to Rebeil.
Article 9
Conditions to Ameristar's and ACLV's Obligations
The obligations of Ameristar and ACLV to consummate
the transactions provided for hereby are subject, in the
discretion of Ameristar and ACLV, to the satisfaction, on
or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Ameristar and ACLV:
9.1 Representations, Warranties and Covenants.
All
representations
and
warranties of Gem contained in this Agreement shall be true
and correct in all material respects at and as of the date of
this Agreement and at and as of the Closing Date, except as and
to the extent that the facts and conditions upon
which such representations and warranties are based are
expressly required or permitted to be changed by the terms
hereof, and Gem shall have performed and satisfied in
all material respects all agreements and
covenants required hereby to be performed by it
prior to or on the Closing Date.
9.2 Consents; Regulatory Compliance and Approval.
All
Permits, consents, approvals and waivers from
governmental
authorities, other than Gaming Authorities, and other
parties (including
creditors) necessary to the consummation of the
transactions contemplated hereby, including the
consents,
approvals and waivers described in Exhibit X attached hereto,
and for the Operation of the Project by Ameristar and
ACLV (including, without limitation, all required third party
consents to the assignment of the Contracts, Options and
Leases to be assumed by ACLV) as are necessary or appropriate
for the stage of the construction of the Project as of the
Closing Date shall have been obtained. Ameristar and ACLV
shall be satisfied that all approvals required under any
Regulations to carry out the transactions contemplated by
this Agreement shall have been obtained and that the
parties shall have complied with all Regulations applicable
to the transactions contemplated by this Agreement. Gem
shall have complied with the requirements of the
HSR Act.
9.3 No Actions or Court Orders. No Action by
any
governmental authority or other Person shall have been
instituted or threatened which questions the validity or
legality of the transactions contemplated hereby and which
could reasonably be expected to damage Ameristar, ACLV, the
Assets or the Business materially if
the transactions contemplated hereby are
consummated, including without limitation, any material
adverse effect on the right or ability of ACLV to own,
operate, possess or transfer the Assets after the Closing.
There shall not be any Regulation or Court Order that makes the
purchase and sale of the Business or the Assets contemplated
hereby illegal or otherwise prohibited.
9.4 Opinion of Counsel. Gem shall have delivered
to
Ameristar and ACLV an opinion of counsel to Gem, dated as of
the Closing Date, in form and substance reasonably
satisfactory to Ameristar and ACLV, to the effect that:
(a) Incorporation. Gem is a corporation
duly incorporated, validly existing and in good standing
under the laws of the State of Nevada. Gem is duly
qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the ownership or
leasing of its property or nature of the Business requires
such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Business or the Assets.
(b) Trust Formation. The Trust is a trust duly
formed and validly existing under the laws of the State of
Nevada.
(c) Power and Authority. Gem has the
necessary corporate power and authority, and the Trust has
all necessary trust power and authority, to enter into this
Agreement and the Ancillary
Agreements and to consummate the transactions
contemplated hereby and thereby. Gem has all material
Permits, licenses, franchises and other authority required
under federal and applicable state law to conduct the
Business as now being
conducted. Gem has the necessary corporate power and
authority
to own, lease and operate the Assets and its other properties
and to conduct the Business as presently
conducted.
(d) Corporate Action and Enforceability.
The
execution, delivery and performance of this Agreement,
the
Ancillary Agreements and the transactions contemplated hereby
and thereby by Gem have been duly authorized by all
necessary corporate action of Gem or trust action of the Trust,
as the case may be, and this Agreement and the Ancillary
Agreements have been duly executed and delivered by Gem, and
no approval of the stockholders of Gem is required in
connection therewith or, if required, such approval has been
duly obtained in accordance with the provisions of Gem's
Articles of Incorporation and By-Laws and applicable
law, and this Agreement and each Ancillary Agreement
constitutes a legally valid and binding obligation of Gem and
the Trust, enforceable against Gem or the Trust, as the case
may be, in accordance with its terms, except
as limited
by
(i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally
or by equitable principles (whether considered in an action at
law or in equity), (ii) limitations imposed by federal or
state law or equitable
principles upon the availability of specific
performance, injunctive relief or other equitable remedies,
or (iii) other customary limitations reasonably
satisfactory to Ameristar's and ACLV's counsel.
(e) No Breach of Contracts. Neither the execution
and delivery of this Agreement or the Ancillary Agreements by
Gem nor the consummation of the transactions contemplated
hereby or thereby will (i) violate the Articles of
Incorporation or By-Laws of Gem, (ii) cause a Default under
any term or provision of any material Contract or Lease known
to such counsel to which Gem is a party or by which the
Assets are bound, or (iii) to the best knowledge of such
counsel, violate any Court Order applicable to Gem.
(f) No Violation of Law. Neither the execution
and performance of this Agreement or the Ancillary Agreements
by Gem nor the consummation of the transactions contemplated
hereby or thereby will violate or result in a failure to
comply with any Regulation
or Court Order known to such counsel, applicable to
the Business or operations of Gem; and, to the best knowledge
of such counsel, Gem has all material licenses, franchises and
other authority required to conduct the Business as it is
now being conducted;
and no Permit of, or filing with, any governmental
authority or, to the best knowledge of such counsel, any
other Person, is required for the execution and delivery
of this Agreement or the Ancillary Agreements by Gem or the
consummation by either
Gem of the transactions contemplated hereby and
thereby, except as set forth in this Agreement, the
Disclosure Schedule, the exhibits hereto or the Ancillary
Agreements.
(g) Capitalization. The Gem Individuals
own
beneficially and of record, all of the Gem Shares and, to
the best knowledge of such counsel, each Gem Individual
owns, beneficially and of record, the number of shares of Gem
Stock set forth on Schedule 4.2 free and clear of all
Encumbrances, other than Encumbrances which exist solely by
virtue of applicable Gaming Laws. Except as disclosed in
Schedule 4.2, and to the
best knowledge of such counsel, Gem has no obligation,
contingent or otherwise, to repurchase, redeem or otherwise
acquire any of the Gem Shares or other shares of Gem Stock.
The Gem Shares constitute
all of the issued and outstanding shares of capital
stock of Gem. Five thousand (5,000) shares of Gem Stock
have
been validly authorized but not issued and, together with the
Gem Shares, constitute all of the of Gem Stock that has
been authorized by Gem.
(h) Transfer and Assignment. The documents to
be delivered
by Gem at the Closing to effect the Merger are
effective to do so.
(i) No Defaults. To the best knowledge of
such counsel, Gem is not in Default under any term or provision
of any Contract, Option or Lease except for such Defaults which
will not have a material adverse effect upon Gem, the
Business or the Assets.
In rendering such opinions, such counsel may rely
as they deem advisable (a) as to matters governed by the
laws of jurisdictions other than states in which they
maintain offices, upon opinions of local counsel satisfactory
to such counsel, and (b) as to factual matters, upon
certificates and assurances of public officials and officers
of Gem. In addition, such opinions may be subject to such
additional qualifications and exceptions as are reasonably
acceptable to counsel to Ameristar and ACLV.
9.5 Certificates. Gem shall furnish Ameristar and
ACLV
with such certificates of its officers and others to
evidence compliance with the conditions set forth in this
Article 9 as may be reasonably requested by Ameristar and
ACLV. In addition, Ameristar and ACLV shall have received
from each Gem Individual a properly executed Gem Individual
Closing Certificate.
9.6 Corporate Documents. Ameristar and ACLV shall
have
received from Gem resolutions adopted by the Board of
Directors of Gem approving this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and
thereby, certified by Gem's corporate secretary.
9.7 Title Insurance and Survey.
(a) Title Insurance. ACLV shall have received
the Title Company's American Land Title Association ("ALTA")
Extended Coverage Owner's Policy of Title Insurance (the
"Title Policy") on all of the Real Property, subject only to
the exceptions shown on the Project Preliminary Title Report
and previously approved by Ameristar, and without exception
for (i) survey matters (except as shown on the survey
furnished pursuant to Subsection (b)
below); (ii) mechanics' or materialmen's liens;
(iii) "parties in possession"; (iv) the Interim Funding
Agreement Deed of Trust; or (v) the liens securing the
Credit Facility, with coverage in an amount to be
reasonably determined by Ameristar
(it being understood that it would be reasonable for
Ameristar to require coverage in the approximate amount of
SixtyOne Million Dollars ($61,000,000)).
(b) Survey. Gem shall have delivered to Ameristar
and ACLV an ALTA survey of the Real Property dated as of a
date no earlier than fourteen (14) days before the Closing,
which shall be certified to ACLV and the Title Company and
show no matters which materially adversely affect the use or
value of the Real Property or render title thereto
unmarketable and shall show (i) no encroachments that
materially impair the value or use of the Real Property, (ii)
that the Improvements (including without limitation all
buildings and loading docks and the parking lots appurtenant
thereto) are entirely located on the Project Real Property
and (iii) that the Project Real Property has access to all
adjacent roads and that such roads are publicly dedicated.
(c) Option Assurances. With respect to the Phase
II Real Property, Ameristar and ACLV shall have received
appropriate assurances that: (i) the Option pertaining to the
Phase II Real Property is in full force and effect; (ii) at
the Closing, the Surviving
Corporation shall become
the
optionee under said Option; and (iii) said Option permits
the optionee thereunder to acquire the Phase II Real Property
in a manner which will reasonably permit the optionee to
effect the development of Phase II on the Phase II Real
Property. The
Option shall have been duly recorded in the Official Records
of the Clark
County Recorder and Ameristar and ACLV shall have
received the Title Company's commitment to issue its
ALTA Extended Coverage Owner's Policy of Title Insurance
upon the Surviving Corporation's exercise of the Option
insuring the Surviving Corporation as the owner of the Phase
II Real Property subject only to non-monetary Encumbrances
reasonably approved by Ameristar, with coverage in an amount
to be reasonably determined by Ameristar.
9.8 Tax Clearance Certificate. Gem shall provide
Ameristar and ACLV with a clearance certificate or similar
document(s) that may be required by any state taxing authority
in order to relieve Ameristar and ACLV of any obligation to
withhold any portion of the Merger Consideration.
9.9 Nonforeign Affidavit. Gem and each Gem
Individual
shall furnish Ameristar and ACLV with an affidavit,
substantially in the form attached hereto as Exhibit CC,
stating, under penalty of perjury, the transferor's
United States
taxpayer
identification number and that the transferor is not a
foreign person, pursuant to Section 1445(b)(2) of the Code.
9.10 Gaming Licenses. Ameristar, ACLV and Gem shall
have
received from the Nevada Gaming Authorities approval for
the Merger and the other transactions contemplated hereby,
to the extent deemed necessary by Ameristar (the "Nevada
Gaming Approval Condition"); provided, however, that the
approval of the
transactions contemplated by this Agreement by the Iowa
Gaming Authorities and the Mississippi Gaming Authorities shall
not be a condition to Ameristar's and ACLV's obligations
hereunder. If,
however, such approval by the Iowa Gaming Authorities and
the Mississippi Gaming Authorities shall not have been
received by Ameristar,
ACLV and Gem prior to the Closing Date, Ameristar,
ACLV and the Gem Individuals shall use their best efforts
to obtain such approvals as soon as commercially possible after
the Closing Date.
9.11 Consent to Assignment of Contract Rights. With
respect to every Contract, Option, or Lease which provides
that the consummation of the transactions herein
contemplated will constitute
an assignment under such Contract, Option or Lease,
Ameristar and ACLV shall have received a properly
executed Contractor
Consent, Architect Consent, Credit Facility Consent,
Consent to Assignment of Lease, Consent to Assignment of
Option Contract or General Consent.
9.12 Gem Air. Each of Gem, the Gem Individuals and Gem
Air shall have executed and delivered to Ameristar all of the
Gem Air Documents to which it is a party.
9.13 Opinion of Gem Air Counsel. Gem shall have
delivered
to Ameristar and ACLV an opinion of counsel to Gem Air, dated
as of the
Closing Date, in form and substance reasonably
satisfactory to Ameristar and ACLV, that the Gem Air
Documents constitute the legally valid and binding obligation
of Gem Air, enforceable against Gem Air in accordance with
its terms, except
as limited by (i) bankruptcy, insolvency,
reorganization, moratorium or
other similar laws
relating to creditors' rights generally or by
equitable
principles (whether considered in an action at law or in
equity), (ii) limitations imposed by federal or state law or
equitable principles upon the availability of specific
performance, injunctive relief or other equitable remedies,
or (iii) other customary limitations reasonably satisfactory
to Ameristar's and ACLV's counsel.
9.14 Corporate Authorization. The stockholders and
the
Board of Directors of each of Ameristar and ACLV shall
have approved all necessary resolutions for the execution and
delivery of this Agreement and the Ancillary Agreements, the
consummation of the transactions contemplated hereby and
thereby and the performance of the obligations of Ameristar
and ACLV hereunder and thereunder, which approval by the
stockholders of Ameristar shall satisfy the requirements
imposed on the issuance of the Merger Consideration for the
continued inclusion of Ameristar Common Stock in the Nasdaq
National Market System.
9.15 Ancillary Agreements. Each of Gem and each of the
Gem
Individuals shall have delivered all of the Ancillary
Agreements to which such Person is a party.
9.16 Due Diligence Review. Ameristar, ACLV and
their
Representatives shall have conducted the investigation
described in Section 6.4 including a due diligence review of
the Contracts, the Leases, the Options, Gem's Books and
Records, Financial Statements, and other records and
accounts of the Business, including without limitation, a
review of items disclosed on the exhibits or schedules
hereto, and in the sole discretion of Ameristar and ACLV,
Ameristar and ACLV, on the basis of such review, shall be
satisfied that there has been no breach of the
representations and warranties or the pre-closing covenants
of Gem or the Gem Individuals made pursuant to this Agreement.
Such review shall have no effect whatsoever on the Liability of
Gem or the Gem Individuals to Ameristar and ACLV under this
Agreement or otherwise for breach of any representations,
warranties, or covenants of Gem or the Gem Individuals
hereunder.
Article 10
Risk of Loss
10.1 Risk of Loss. From the date hereof through the
Closing
Date, all risk of loss or damage to the property owned by
Gem, including the Assets, shall be borne by Gem and thereafter
shall be borne by the Surviving Corporation. If any material
portion of the Assets is destroyed or damaged by fire or any
other cause on or prior to the Closing Date, other than use,
wear or loss in the ordinary course of business, Gem shall give
written notice to ACLV as soon as practicable after, but in
any event within five (5) calendar days of, discovery of
such damage or destruction, the amount of insurance, if any,
covering such Assets and the amount, if any, which Gem is
otherwise entitled to receive as a consequence. Prior to the
Closing, ACLV shall have the option, which shall be exercised
by written notice to Gem within ten (10) calendar days after
receipt of Gem's notice or if there is not ten (10)
calendar days prior to the Closing Date, as soon as
practicable prior to the Closing Date, of (a) accepting
such Assets in their destroyed or damaged condition in which
event ACLV shall be entitled to the proceeds of any insurance
or other proceeds payable with respect to such loss and
subject to Section 11.3(f), to such indemnification for
any uninsured
portion of such loss pursuant to Section 11.3, and the
full
Merger Consideration shall be paid or (b) terminating
this Agreement in accordance with Section 12.1.
Article 11
Actions by Gem Individuals, Ameristar and ACLV
After the Closing
11.1 Books and Records; Tax Matters.
(a) Books and Records. Each party agrees that it
will cooperate with and make available to the
other parties, during
normal business hours, all Books and Records, information
and employees (without substantial disruption of employment)
retained and remaining in existence after the Closing which
are necessary or useful in
connection with any tax inquiry, audit,
investigation or dispute, any litigation or investigation or
any other matter requiring any such Books and Records,
information or employees for
any reasonable business purpose. The party
requesting any such Books and Records, information or
employees
shall bear all of the out-of-pocket costs and expenses
(including without limitation attorneys' fees, but excluding
reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such Books
and Records, information or employees.
All information received pursuant to
this
Section 11.1(a) shall be subject to the terms of
the
Confidentiality Agreements.
(b) Cooperation and Records Retention. The
Gem
Individuals, Ameristar and the Surviving Corporation
shall (i) each provide the other with such assistance as may
reasonably be requested by any of them in connection with the
preparation of any return, audit, or other examination by any
taxing authority or judicial or administrative proceedings
relating to Liability for Taxes
relating in any way to the Business or the Assets,
(ii) each retain and provide the other with any records or
other information that may be relevant to such
return, audit or
examination, proceeding or determination relating
in
any way to the Surviving Corporation, the Business or the
Assets, and (iii) each provide the other with any final
determination of any such audit or examination, proceeding,
or determination that affects any amount required to be shown
on any tax return of the other for any
period. Without limiting the generality of the
foregoing, the Gem Individuals, Ameristar and the
Surviving
Corporation shall each retain, until the applicable statutes
of
limitations (including any extensions) have expired, copies
of
all tax returns, supporting work schedules, and other records
or information that may be relevant to such
returns for all tax
periods or portions thereof ending on or before the Closing
Date and shall not destroy or otherwise dispose of
any such records
without first providing the other party with a
reasonable opportunity to review and copy the same.
11.2 Survival of Representations, Etc. All of
the
representations, warranties, covenants and agreements made
by each party in this Agreement, the Disclosure Schedule, or in
any attachment, exhibit, certificate, document or
list delivered by
any such party pursuant hereto shall survive the Closing for
a period of (and claims based upon or arising
out of such
representations, warranties, covenants and agreements may
be asserted at any time before the date which shall be) three
(3) years following the Closing (except with respect to
the
representations and warranties set forth in Sections 4.19,
4.21, 4.25, 5.3 and 5.5 which shall survive until the
expiration of the
applicable statute of limitations (with extensions) with
respect to the matters addressed in such sections. Each
party hereto shall be entitled to rely upon the
representations and warranties of the other party set forth in
this Agreement. The termination of the representations and
warranties provided herein shall not affect the rights of a
party in respect of any Claim (as defined in Section 11.3(d))
made by such party in a writing received by the other party
prior to the expiration of the applicable survival period
provided herein.
11.3 Indemnifications.
(a) By Gem and the Gem Individuals. Gem and the
Gem Individuals shall indemnify, protect, defend and hold
harmless Ameristar, the Surviving Corporation, their Affiliates
and their respective Representatives, from and against any
and all costs, losses (including without limitation diminution
in value), Taxes, Liabilities, obligations, damages,
lawsuits, deficiencies, claims, demands, and expenses
(whether or not arising out of third-party claims),
including without limitation interest,
penalties, costs of mitigation, losses in connection with
any Environmental Law (including without limitation any clean-
up or remedial action), lost profits and other losses
resulting from any shutdown, delay in commencement or
curtailment of operations, damages to the environment,
attorneys' fees and all amounts paid in investigation,
defense or settlement of any of the foregoing (herein,
"Damages"), incurred in connection with, arising out of,
resulting from or incident to (i) any breach of
any
representation or warranty or the inaccuracy of
any
representation, made by Gem or any Gem Individual in or
pursuant to this Agreement, including, in the Ancillary
Documents or the Project Status Certificate; (ii) any breach
of any covenant or agreement made by Gem or any Gem
Individual in or pursuant to this Agreement; (iii) any
Excluded Liability; or (iv) any Liability imposed upon
Ameristar or the Surviving Corporation by reason of the
Surviving Corporation's status as owner of the Business or
the Assets; provided, however, that after the Closing,
Rebeil's aggregate liability under this Section 11.3 shall
not exceed the value of the Merger Consideration (the
"Consideration Value"); provided, further, that for the
purpose of computing the Consideration Value, the Ameristar
Common Stock that constitutes part of the Merger Consideration
shall be valued at the Average 10-Day Closing Price as of the
Closing Date and any Adjustment Excess Payment Note shall
be valued at its original face amount; provided, further,
the liability of the Gem Individuals hereunder shall be
reduced if and to the extent Ameristar or the Surviving
Corporation ultimately receives, without a reservation of
rights, amounts related to such Damages under its insurance
policies. To the extent that Ameristar believes that
Ameristar has a justifiable claim under its insurance
policies with respect to any Damages, Ameristar shall pursue
such claim in good faith.
The term "Damages" as used in this Section 11.3 is
not
limited to matters asserted by third parties against
Ameristar, ACLV or the Surviving Corporation, but includes
Damages incurred or sustained by Ameristar, ACLV or the
Surviving Corporation in the absence of third party claims.
Payments by Ameristar, ACLV or the Surviving Corporation of
amounts for which Ameristar, ACLV or the Surviving
Corporation is indemnified hereunder, and payments by Gem
of amounts for which Gem is indemnified, shall not be a
condition precedent to recovery. Gem's obligation to
indemnify Ameristar, ACLV or the Surviving Corporation,
and Ameristar's, ACLV's or the Surviving Corporation's
obligation to indemnify Gem, shall not limit any other
rights, including without limitation rights of contribution
which either party may
have under statute or common law.
(b) By Ameristar and ACLV. Ameristar, ACLV and
the
Surviving Corporation, jointly and severally, shall
indemnify, save and hold harmless Gem, its respective
Affiliates and subsidiaries, and
its respective Representatives and
stockholders, and the Gem Individuals from and against any
and all Damages incurred in connection with, arising
out of, resulting from
or incident to (i) any breach of
any
representation or warranty or the inaccuracy of
any
representation, made by Ameristar or ACLV in or pursuant to
this Agreement; (ii) any breach of any covenant or agreement
made by Ameristar
or
ACLV in or pursuant to this Agreement; or (iii) from and
after the Closing, any obligation or Liability of such Gem
Individual under any Gem Individual Guaranty, except to the
extent such obligation or Liability arises out of or results
from (A) any breach of any representation or warranty or the
inaccuracy of any representation, made by Gem or such Gem
Individual under such Gem Individual Guaranty or the
documentation evidencing the
underlying obligation secured by such Gem Individual
Guaranty, except to the extent disclosed in the Disclosure
Schedule, or (B) any breach, before the Closing, of any
covenant made by Gem or such Gem Individual under such Gem
Individual Guaranty or the documentation evidencing the
underlying obligation secured by such Gem Individual
Guaranty, except to the extent disclosed in the Disclosure
Schedule; provided, however, that after the Closing, the
aggregate liability of Ameristar, ACLV and the Surviving
Corporation hereunder shall not exceed the
Consideration Value.
(c) Cooperation. Each indemnified party
shall cooperate in all reasonable respects with the
indemnifying party and such attorneys in the investigation,
trial and defense of such lawsuit or action and any
appeal arising therefrom; provided, however, that the
indemnified party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and
any appeal arising therefrom. The parties shall cooperate with
each other in any notifications to insurers.
(d) Defense of Claims. If a claim for Damages
(a
"Claim") is to be made by a party entitled to
indemnification hereunder against the indemnifying party, the
party claiming such indemnification shall, subject to Section
11.3, give written notice (a "Claim Notice") to the
indemnifying party as soon as practicable after the party
entitled to indemnification becomes aware of any fact,
condition or event which may give rise to Damages for which
indemnification may be sought under this Section 11.3.
If any lawsuit or enforcement action is filed
against any party entitled to the benefit of indemnity
hereunder, written notice thereof shall be given to the
indemnifying party as promptly as practicable (and in any
event within fifteen (15) calendar days after the service of
the citation or summons). The failure of any indemnified
party to give timely notice hereunder shall not affect rights
to indemnification hereunder, except to the extent that the
indemnifying party demonstrates actual damage caused by such
failure. After such notice, if the indemnifying party shall
acknowledge in writing to the indemnified party that the
indemnifying party shall be obligated under the terms of its
indemnity hereunder in connection with such lawsuit or
action, then the indemnifying party shall be entitled, if it so
elects at its own cost, risk and expense, (i) to take
control of the defense and investigation of such lawsuit or
action, (ii) to employ and engage attorneys of its own
choice, subject to the indemnified party's prior written
approval (which approval shall not be withheld or delayed
unreasonably), to handle and defend
the same unless the named parties to such action or
proceeding include both the indemnifying party and the
indemnified party and the indemnified party has been advised in
writing by counsel that there may be one or more legal
defenses available to such indemnified party that are
different from or additional to those available to the
indemnifying party, in which event the
indemnified party shall be entitled, at the indemnifying
party's cost, risk and expense, to separate counsel of its own
choosing, and (iii) to compromise or settle such claim, which
compromise or settlement shall be made only with the written
consent of the indemnified party, such consent not to be
unreasonably withheld; provided, however, if the remediation
or resolution of any such claim will occur on or at any
Real Property or is reasonably expected to have a material
adverse effect on the indemnified party's business
operations, then, notwithstanding the foregoing, the
indemnified party shall be entitled to control such
remediation or resolution, including without limitation
to
take control of the defense and investigation of such lawsuit
or
action, to employ and engage attorneys of its own choice
to
handle and defend the same, at the indemnifying party's
cost, risk and expense, and to compromise or settle such claim.
If the indemnifying party fails to assume the defense of
such claim within fifteen (15) calendar days after receipt
of the Claim Notice, the indemnified party against which
such claim has been asserted will (upon delivering notice to
such effect to the indemnifying party) have the right
to undertake, at the
indemnifying party's cost and expense, the defense, compromise
or settlement of such claim on behalf of and for the account
and risk of the indemnifying party. In the event the
indemnified party assumes the defense of the claim, the
indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense,
compromise or settlement. The
indemnifying party shall be liable for any settlement of
any action effected pursuant to and in accordance with this
Section 11.3 and for any final judgment (subject to any right
of appeal), and the indemnifying party agrees to indemnify and
hold harmless an indemnified party from and against any
Damages by reason of
such settlement or judgment.
(e) Sole and Exclusive Remedy. The remedies
provided for in this Section 11.3 shall be sole and
exclusive for any claim of any description by any of the
parties hereto against any of the other parties hereto for any
breach of a representation or warranty or covenant set forth
in Article 3, 4, 5 or 6 of this Agreement in any manner,
whether such claim sounds in contract, tort, law, equity or
otherwise, except that any party hereto may seek specific
performance in a court of competent jurisdiction of the
obligation of any other party hereto to close
the
transactions contemplated by this Agreement in compliance
with the terms of this Agreement, as well as of compliance
with any post-Closing covenants contained herein. No
party to this Agreement, and no third party, shall have any
claim, right or
remedy of any description against any Gem Individual (other
than against Rebeil) for any breach of a representation or
warranty or covenant set forth in Article 3, 4, 5 or 6 of this
Agreement in
any manner, whether such claims sound in contract, tort,
law, equity or otherwise.
(f) Brokers and Finders. Pursuant to the
provisions of this Section 11.3,
each of Ameristar, ACLV, the Surviving
Corporation, Gem and Rebeil shall indemnify, hold harmless
and defend the other party from the payment of any and all
broker's and finder's expenses, commissions, fees or other
forms of
compensation which may be due or payable from or by
the indemnifying party, or may have been earned by any third
party acting on behalf of the indemnifying party in connection
with the
negotiation and execution hereof and the consummation of
the
transactions contemplated hereby.
(g) Representatives. Except for the Gem
Individuals, no individual Representative of any party shall
be personally liable for
any Damages under the provisions contained in this
Section 11.3. Nothing herein shall relieve either party of
any Liability to make any payment expressly required to be
made by
such party pursuant to this Agreement. Notwithstanding
the
foregoing or anything else set forth in this Section 11.3,
each Gem Individual shall be liable and shall in no way be
absolved of responsibility for the breach of any of its
representations or
warranties set forth in Sections 4.2(b) 4.30, 4.32, 4.33,
4.34,
4.35, or 4.36.
11.4 Disposition Pursuant to Gaming Law. The
parties
acknowledge that it is critical to the ongoing and
prospective
business of Ameristar that Ameristar and its Subsidiaries
retain the right to operate in the gaming industry both in
the states where Ameristar or any of its Subsidiaries
currently operate and in any
jurisdictions within which Ameristar or any
of
its Subsidiaries may determine in the future that it
is
commercially desirable to operate. In order to implement
this mutual intention, the parties agree as follows:
(a) Without limiting the applicability of any
other provision of this Agreement, each Holder shall timely
file all required applications with Gaming Authorities, and
shall use such Holder's respective best efforts to promptly
obtain all required Gaming Licenses in connection with such
Holder's ownership of
Securities and any position as an officer and director
of
Ameristar held by such Holder or such Holder's designees,
no
later than the date required by applicable statute, rule
or
regulation, and shall further file a full and complete
response
to any request of any Gaming Authority for additional
information as promptly as possible and, in any event, as
required by
applicable Gaming Laws.
(b) Notwithstanding any other provision of
this Agreement, if any Gaming Authority requires that any
Holder must be licensed, qualified or found suitable under
any applicable Gaming Law
and such Holder (i) fails to apply for a license,
qualification or a finding of suitability within thirty (30)
days after being requested to do so by such Gaming
Authority or
Ameristar (or such shorter period required by applicable
law), (ii) is not so licensed, qualified or found
suitable, or
(iii) any Gaming Authority directs Ameristar, ACLV, the
Surviving Corporation, or any of their Subsidiaries to cease
doing business with or associate with such Holder (a Holder
described in clauses (i), (ii) or (iii) being a
"Disqualified Holder"), Ameristar shall have the right, at its
option, to require such Disqualified Holder to dispose of its
holdings of Securities, to the extent deemed necessary by
any Gaming Authority. Such Disqualified Holder shall
dispose of its holdings of Securities within one hundred
twenty (120) days of such Disqualified Holder's receipt of
notice from Ameristar requesting such disposition (a "Required
Transfer"), or such earlier date as may be required by
such
Gaming Authority or applicable Gaming Laws. Upon a request
from a Disqualified Holder required to dispose of its
holdings of
Ameristar Common Stock pursuant to this Section
11.4(b),
Ameristar shall cooperate with such Disqualified Holder
by
including the amount of Ameristar Common Stock required to
be
disposed of in a secondary offering to be undertaken within
one hundred twenty (120) days or such earlier date as may be
ordered by the Gaming Authority, at the sole expense of the
Disqualified Holder.
(c) Under no circumstances, including,
without limitation, the existence of the obligation of any
Holder to effect a Required Transfer, will Ameristar have any
obligation to repurchase any of the Securities.
(d) Notwithstanding Section 11.4(b) above, if
any Gaming Authority requires a Disqualified Holder to dispose
of its holdings of Merger Consideration sooner than within
any onehundred twenty (120) day period provided for such
disposition in Section
11.4(b), then, with the approval of such Gaming
Authority, the Disqualified Holder shall provide Ameristar with
a voting trust agreement governing all Securities held
or
controlled by such Holder substantially in the form
attached
hereto as Exhibit R to be effective until the secondary
offering contemplated in Section 11.4(b) can be completed
(the "Voting Trust Agreement").
(e) Upon the occurrence of an event causing a
Required Transfer, the trust under the Voting Trust Agreement
shall be established as soon as practicable but, in any
event, no later than thirty (30) days after such
Disqualified Holder shall have become aware of the
occurrence of such event, or such earlier date required by
any Gaming Authority, at which time the affected Securities
will be transferred thereto as promptly
as
practicable.
The "Trustee," as such term is defined in the Voting
Trust Agreement, shall
be a Person reasonably selected by Ameristar.
If such Gaming Authority fails to approve the voting
trust agreement contemplated by this subsection, then
Ameristar shall have the right to redeem that portion of
the Disqualified Holder's
holdings of Ameristar Common Stock as Ameristar
reasonably deems necessary to comply with any applicable
Gaming
Law at a price equal to eighty percent (80%) of the Average
10Day Closing Price of Ameristar Common Stock as of the date
of such redemption (the "Redemption Price"). The Redemption
Price shall be paid in cash in full by Ameristar
pursuant to a repayment schedule deemed reasonable by
Ameristar, with the full Redemption Price to be paid in cash
by Ameristar within one (1) year following the redemption.
11.5 Board of Directors. Effective upon the Closing,
the
number of directors comprising the full Board of Directors
of
Ameristar shall be six (6) (as shall be provided in the By-
Laws of Ameristar). The present five (5) directors of
Ameristar shall continue in office for the terms for which they
were elected, and Ameristar shall cause to be elected to its
Board of Directors Steve Rebeil who shall be a "Class C"
Director and whose term shall expire in 1998.
11.6 Officers. The present officers of Ameristar
shall
continue in office and, upon Closing, Ameristar shall cause
the following executives of Gem to be elected to the
following offices of Ameristar:
Steven W. Rebeil Vice-Chairman
Dominic J. Magliarditi Senior Vice-President and
CoGeneral Counsel
11.7 Headquarters. As soon as reasonably
practicable
following the Closing, Ameristar shall cause its
corporate headquarters to be relocated to Las Vegas, Nevada.
11.8 Restrictions on Transfer. Each Holder shall not
sell, assign, encumber, pledge, transfer, give away or dispose
of any Ameristar Common Stock constituting a portion of
the Merger
Consideration (any of the foregoing being hereinafter referred
to as a "Transfer") unless:
(a) the Person in whose favor such Transfer
is made shall deliver to Ameristar a written acknowledgment
that the Ameristar Common Stock to be transferred is
subject to this Agreement and that such Person and such
Person's successors in interest are bound by this Agreement
on the same terms as the transferor of such Ameristar Common
Stock, but prior to any such Transfer, the Person proposing
to make such Transfer shall give Ameristar (A) notice
describing the manner and circumstances of the proposed
Transfer and (B) if reasonably requested
by
Ameristar, a written opinion in form and substance
reasonably satisfactory to legal counsel of Ameristar to the
effect that the proposed Transfer may be effected without
registration under the Securities Act or any applicable state
law; or
(b) such Transfer shall be made pursuant to
a public offering registered under the Securities Act, and
in accordance with applicable state law or in a transaction
pursuant to Rule 144 of the SEC's regulations.
Any attempted Transfer other than in accordance with
this Agreement shall be void, the rights of the Person in whose
favor such Transfer
is made shall
be
subordinate in all respects to the rights of Ameristar in
such Ameristar Common Stock, and Ameristar shall refuse to
recognize any such Transfer and shall not reflect on its
records any change in record ownership of the Ameristar Common
Stock pursuant to any such attempted Transfer.
11.9 Ameristar Common Stock Legend. Each
certificate evidencing any Ameristar Common Stock constituting
a portion of the Merger Consideration shall bear a legend in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS
CERTIFICATE ARE SUBJECT TO A MERGER AGREEMENT
DATED AS OF MAY 31, 1996, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICE OF
AMERISTAR CASINOS, INC., AND WILL BE
FURNISHED TO THE HOLDER ON REQUEST TO
THE SECRETARY OF AMERISTAR CASINOS,
INC. SUCH MERGER AGREEMENT PROVIDES,
AMONG OTHER THINGS, FOR CERTAIN
RESTRICTIONS ON, AND REQUIREMENTS FOR,
THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED BY THIS
CERTIFICATE AND THE VOTING RIGHTS OF
THE HOLDER OF THIS CERTIFICATE AND THAT
SUCH SECURITIES MAY BE SUBJECT TO
PURCHASE BY AMERISTAR CASINOS, INC., AS
WELL AS CERTAIN OTHER PERSONS, UPON THE
OCCURRENCE OF CERTAIN EVENTS."
11.10 Further Assurances After Closing.
(a) Upon the terms and subject to the
conditions
contained herein, the parties agree, after the Closing, (i)
to use all reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement
and the Ancillary Agreements, (ii) to execute any
documents, instruments
or
conveyances of any kind which may be reasonably necessary
or advisable to carry out any of the transactions
contemplated thereunder, and (iii) to cooperate with each other
in connection
with the foregoing. Without limiting the foregoing, the
parties agree to use their respective best efforts (A) to
obtain all necessary waivers, consents and approvals from
other parties to the Contracts, Options and Leases to be
assumed by the Surviving Corporation; provided, however, that
neither Ameristar nor the Surviving Corporation shall be
required to make any payments, commence litigation or
agree to modifications of the terms thereof in order to
obtain any such waivers, consents or approvals, (B) to
obtain all necessary Permits as are required to be obtained
under any Regulations, (C) to defend all Actions challenging
this Agreement or any of the Ancillary Agreements or the
consummation of the transactions contemplated thereby, (D) to
lift or rescind any injunction or restraining order or
other Court Order adversely affecting the ability of the
parties to consummate the transactions contemplated thereby,
(E) to give all notices to, and make all registrations and
filings with third parties, including without limitation,
submissions of information requested by governmental
authorities and Gaming Authorities, (F) to fulfill all
conditions to this Agreement and the Ancillary Agreements, and
(G) to obtain all approvals required from any Gaming
Authority and to comply with all applicable Gaming Laws or any
applicable rule or order of any Gaming Authority to ensure
that (i) Ameristar and the Surviving Corporation will be able
to conduct non-restricted gaming operations at the Project
and (ii) the transactions contemplated by this Agreement
and the Ancillary Agreements will not interfere with
Ameristar's
continued operation of its Subsidiaries or other businesses
and assets which they possess as of the Closing Date.
(b) Subject to the terms and subject to the
conditions contained herein, upon the Closing, each and every
party hereto does hereby constitute Ameristar, acting for and
on behalf of the Surviving Corporation and each successor
or assign of the Surviving Corporation, the true and lawful
attorney of each and every party hereto, irrevocably, with
full power (in the name of each of the parties or
otherwise) to ask, require, demand, receive, compound and
give acquittance for any and all moneys and claims for moneys
due and to become due under or arising out of this Agreement
or any of the Ancillary Agreements or any of the Assets,
including without limitation any insurance policies with
respect to the Project, to elect remedies thereunder, to
endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or
institute any proceedings in connection therewith which
Ameristar may deem to be necessary or advisable; provided,
however, that Ameristar shall give each of the parties
notice of any action taken by it as such attorney-in-fact
promptly after taking any such action.
(c) Each of Ameristar, the Surviving Corporation
and each of the Gem Individuals shall use its best efforts to
cause the Merger to qualify, and will not (both before
and after consummation of the Merger) take any actions
which to its knowledge could reasonably be expected to
prevent the Merger from qualifying as a reorganization under
the provisions of Section 368 of the Code. Each of
Ameristar, the Surviving Corporation and each of the Gem
Individuals agrees not to take any action that to its
knowledge could reasonably be expected to adversely affect the
ability of Ameristar to treat the Merger as a pooling of
interests, and each of Ameristar, the Surviving Corporation
and each of the Gem Individuals agrees to take such action as
may be reasonably required to negate the impact of any past
actions which to its knowledge could reasonably be expected to
adversely impact the ability of Ameristar to treat the Merger
as a pooling of interests. The taking by Ameristar, the
Surviving Corporation or each of the Gem Individuals of any
action prohibited by the previous sentence, or the failure
of Ameristar, the Surviving
Corporation or any of the Gem Individuals to take any
action prohibited by the previous sentence, shall, if the
Merger is not able to be accounted for as a pooling of
interests, constitute a breach of this Agreement by
Ameristar, the Surviving Corporation or such Gem Individual,
as the case may be, for the purposes of clauses 12.1(a)(iv)
and (vii).
Article 12
Miscellaneous
12.1 Termination.
(a) Termination. This Agreement may be terminated
at any time prior to Closing:
(i) By mutual written consent of Ameristar
and Gem;
(ii) By Ameristar or Gem if the Closing shall
not have occurred on or before March 31, 1997; provided,
however, that this provision shall not be available to
Ameristar if Gem has the right to terminate this Agreement
under clause (vi), clause (vii) or clause (viii) of this
Section 12.1, and this provision shall not be available to
Gem if Ameristar has the right to terminate this Agreement
under clause (iii), clause (iv) or clause (v) of this Section
12.1;
(iii) By Ameristar if there is a
material
breach of any representation or warranty set forth in Article
4 hereof and (x) Gem shall have failed to cause the
adverse consequences of such breach to be completely
ameliorated within twenty (20) days after Gem or any Gem
Individual shall have received or sent a Default Notice with
respect to such breach or (y) Gem knew or reasonably should
have known of such breach on the date hereof; provided,
however, Ameristar must terminate this Agreement, if at all,
no later than thirty (30) days after Ameristar or ACLV
shall have received or sent such Default Notice;
(iv) By Ameristar if there is a material breach
of any covenant or agreement to be complied with or performed
by Gem or any Gem Individual pursuant to the terms of this
Agreement and Gem shall have failed to cure such breach
within ten (10) days after Gem or any Gem Individual shall
have received or sent a Default Notice with respect to such
breach; provided, however, Ameristar must terminate this
Agreement, if at all, no later than thirty (30) days after
Ameristar or ACLV shall have received or sent such Default
Notice;
(v) By Ameristar if there is a material
failure of a condition set forth in Article 9 to be satisfied
(and such condition is not waived in writing by Ameristar) on
or prior to the Closing Date, or the occurrence of any event
which results or would result in the failure of a condition set
forth in Article 9 to be satisfied on or prior to the Closing
Date, provided that Ameristar may not terminate this
Agreement prior to the Closing if Gem has not had an adequate
opportunity to cure such failure;
(vi) By Gem if there is a material breach of
any representation or warranty set forth in Article 5 hereof
and (x) Ameristar shall have failed to cause the adverse
consequences of such breach to be completely ameliorated
within twenty (20) days after Ameristar or ACLV shall have
received or sent a Default Notice with respect to such
breach or (y) Ameristar knew or
reasonably should have known of such breach on the date
hereof; provided, however, Gem must terminate this Agreement,
if at all, no later than thirty (30) days after Gem or any
Gem Individual shall have received or sent such Default
Notice;
(vii) By Gem if there is a material breach
of any covenant or agreement to be complied with or
performed by Ameristar pursuant to the terms of this
Agreement and Ameristar shall have failed to cure such breach
within ten (10) days after Ameristar or ACLV shall have
received or sent a Default Notice with respect to such
breach; provided, however, Gem must terminate this
Agreement, if at all, no later than thirty (30) days after
Gem or any Gem Individual shall have received or sent such
Default Notice;
(viii) By Gem if there is a material failure
of a condition set forth in Article 8 to be satisfied (and
such condition is not waived in writing by Gem) on or prior
to the Closing Date, or the occurrence of any event which
results or would result in the failure of a condition set
forth in Article 8 to be satisfied on or prior to the Closing
Date, provided that Gem may not terminate this Agreement
prior to the Closing if Ameristar has not had an adequate
opportunity to cure such failure; or
(ix) On or after June 8, 1996, by Ameristar or
Gem unless, on or before the date of such termination, the
Board of Directors of Ameristar shall have authorized the
execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions
contemplated hereby and thereby and the performance by
Ameristar of its obligations hereunder and thereunder.
(b) In the Event of Termination. In the event
of
termination of this Agreement:
(i) Each party will redeliver all documents,
work papers and other material of any other party relating
to the transactions contemplated hereby, whether so obtained
before or after the execution hereof, to the party furnishing
the same;
(ii) The provisions of the
Confidentiality Agreements shall continue in full force and
effect; and
(iii) No party hereto shall have any
Liability to any other party to this Agreement, except as
stated in this Subsection 12.1(b), except in accordance with
Section 11.3. The foregoing provisions shall not limit or
restrict the availability of specific performance or other
injunctive relief to the extent that specific performance or
such other relief would otherwise be available to a party
hereunder.
12.2 Assignment. Neither this Agreement nor any of
the rights or obligations hereunder may be assigned by any
party without the prior written consent of the other parties;
except that Ameristar, ACLV or the Surviving Corporation may,
subject to Gem's approval, which approval shall not be
unreasonably withheld, assign all such rights to any lender
as collateral security and assign all such rights and
obligations to a wholly-owned subsidiary (or a partnership
controlled by Ameristar or ACLV) or Subsidiaries of
Ameristar, ACLV or the Surviving Corporation or to a
successor in interest to Ameristar, ACLV or the Surviving
Corporation which shall assume all obligations and Liabilities
of Ameristar, ACLV or the Surviving Corporation under this
Agreement. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, and
no other Person shall have any right, benefit or obligation
under this Agreement as a third party beneficiary or otherwise.
12.3 Notices. All notices, requests, demands and
other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed
to have been duly given when received if personally
delivered; when
transmitted if transmitted by telecopy, electronic or
digital transmission method; the day after it is sent, if sent
for next day delivery to a domestic address by
recognized overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice
shall be sent to:
If to Gem or any Gem Individual, addressed to:
Gem Gaming, Inc.
777 West Lake Mead Drive
Henderson, Nevada 89015
Attention: Dominic J. Magliarditi,
Esq.
With a copy to:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Attention: Kenneth M. Doran,
Esq.
If to Ameristar or ACLV, addressed to:
Ameristar Casinos, Inc.
P.O. Box 452
550 Blue Lakes Boulevard North
Twin Falls, Idaho 83301
Attention: Brian E. Katz, Esq.
With a copy to:
Latham & Watkins
701 B Street
Suite 2100
San Diego, California 92101
Attention: Bruce P. Shepherd,
Esq.
or to such other place and with such other copies as either
party may designate as to itself by written notice to the
others.
12.4 Choice of Law. This Agreement shall be
construed, interpreted and the rights of the parties
determined in accordance with the laws of the State of
Nevada (without reference to choice of law provisions),
except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party
to or the subject of this Agreement, and as to those
matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
12.5 Entire Agreement; Amendments and Waivers.
This Agreement, the Ancillary Agreements, the Interim
Funding Agreement, the Escrow Agreement, together with all
exhibits and schedules hereto and thereto (including the
Disclosure Schedule), and the Confidentiality Agreements
constitute the entire
agreement among the parties pertaining to the subject
matter hereof and supersede all prior or contemporaneous
agreements, understandings, negotiations and discussions,
whether oral or
written, of the parties. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto. No amendment, supplement,
modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby.
No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise
expressly provided.
12.6 Multiple Counterparts. This Agreement may be
executed
in one or more counterparts, and by different parties hereto
in separate counterparts, each of which when executed
shall be deemed to be an original, including counterparts
transmitted by facsimile, but all of which taken together
shall constitute one and the same agreement.
12.7 Expenses. Except as otherwise specified in
this
Agreement, each party hereto shall pay its own legal,
accounting, out-of-pocket and other expenses incident to this
Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
12.8 Invalidity. In the event that any one or more of
the
provisions contained in this Agreement or in any other
instrument referred to herein, shall, for any reason, be held
to be invalid, illegal or unenforceable in any respect, then
to the maximum extent permitted by law, such
invalidity, illegality
or
unenforceability shall not affect any other provision of
this Agreement or any other such instrument.
12.9 Titles; Gender. The titles, captions or headings
of
the Articles, Sections and Subsections herein, and the use of
a particular gender, are for convenience of reference only and
are not intended to be a part of or to affect or restrict the
meaning or interpretation of this Agreement.
12.10 Publicity. Neither Ameristar, ACLV, the
Surviving Corporation nor Gem shall issue any press release
or make any public statement regarding the transactions
contemplated hereby, without prior written approval of the
other party, which shall not be unreasonably withheld.
12.11 Cumulative Remedies. All rights and remedies
of
either party hereto are cumulative of each other and of
every other right or remedy such party may otherwise have at
law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
12.12 Service of Process, Consent to Jurisdiction.
(a) Service of Process. Each of the parties
hereto irrevocably consents to the service of any process,
pleading, notices or other papers by the mailing of copies
thereof by registered, certified or first class mail, postage
prepaid, to such party at such party's address set forth
herein, or by any other method provided or permitted under
Nevada law.
(b) Consent and Jurisdiction. Each party
hereto irrevocably and unconditionally (1) agrees that any
suit, action or other legal proceeding arising out of this
Agreement may be brought in the United States District Court
located in Las Vegas, Nevada, or, if such court does not have
jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in the County of Clark, Nevada; (2)
consents to the jurisdiction or any
such court in any such suit, action or proceeding; and (3)
waives any objection which such party may have to the laying of
venue of any such suit, action or proceeding in any such court.
12.13 Arbitration. Notwithstanding anything herein
to
the contrary, in the event that there shall be any
controversy, dispute or claim after the Closing arising out of
or relating to this Agreement, including without limitation
the indemnities provided in Section 11.3, or the breach
thereof, the parties agree that such controversy, dispute or
claim shall be settled by final and binding arbitration in Las
Vegas, Nevada, administered by the American Arbitration
Association, in accordance with its Commercial Arbitration
Rules then in effect or such other procedures as the
parties may agree to prior to the Closing. Depositions may
be taken and other discovery may be obtained during such
arbitration proceedings to the same extent as authorized
in civil judicial proceedings. Any award issued as a result
of such arbitration shall
be final and binding between the parties thereto, and shall
be enforceable by any court having jurisdiction over the
party against whom enforcement is sought. The fees and
expenses of such arbitration (including reasonable attorneys'
fees) or any action to enforce an arbitration award shall be
paid by the party that does not prevail in such arbitration.
12.14 Attorneys' Fees. If any party to this
Agreement
brings an action to enforce its rights under this Agreement,
the prevailing party shall be entitled to recover its
costs and expenses, including without limitation,
reasonable attorneys' fees, incurred in connection with
such action, including any appeal of such action.
12.15 Conditions Subsequent. This Agreement and
the
transactions and performance contemplated hereby have
been approved by the Board of Directors of ACLV. This
Agreement and the transactions and performance contemplated
hereby have not yet been approved by the Board of
Directors of Ameristar.
In
addition, the issuance of Ameristar Common Stock as
contemplated herein has not been approved by Ameristar's
stockholders. All of ACLV's obligations hereunder shall be
subject to the approval of this Agreement and the
transactions contemplated hereby by Ameristar, as the
sole stockholder of ACLV. All of
the
obligations of Ameristar hereunder shall be subject to
the approval of the stockholders and the Board of
Directors of Ameristar. Neither ACLV nor Ameristar shall
have any obligation hereunder until all such approvals have
been obtained.
12.16 Electronic Version of Schedules. Ameristar
shall
be entitled to have an electronic version of all
Schedules constituting the Disclosure Schedule prepared by Gem,
which shall be in a format that will facilitate the filing of
such Schedules, if required, with the SEC.
12.17 No Partnership. The parties hereto are
solely
parties to a merger agreement and no party shall be deemed to
be (i) a venture partner with any other party or its
Representatives or Affiliates in any manner whatsoever, or
(ii) an agent of any other party or its Representatives
or Affiliates for
any
purposes. Until the Effective Time, neither Ameristar nor
ACLV shall not be deemed to be in privity of contract
with any Contractor, Architect or provider of services
employed, retained or contracted with in connection with the
construction of the Project.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed on their respective
behalf, by their respective officers thereunto duly
authorized, all as of
the day and year first above written.
AMERISTAR:
AMERISTAR CASINOS,
INC., a Nevada
corporation
By: /s/ Craig H. Neilsen by Tim Smith
Name: Craig H. Neilsen
Its: President
On this 30th day of May, 1996, Craig
H. Neilsen directed Tim Smith,
in his presence as well as our own, to sign the foregoing
document as "Craig H. Neilsen." Upon viewing the signature
as signed by Tim Smith, and in
our presence, Craig H. Neilsen declared to us that he
adopted it as his own signature.
/s/ Adrianne N. Fisse
Witness
/s/ Terri L. Karnes
Witness
State of Nevada )
) ss.
County of Clark )
I, Catherine Zeljeznjak, Notary Public in
and for said county and state, do hereby certify that
Craig H. Neilsen personally appeared before me and is known
or identified to me to be
the President of
Ameristar Casinos, Inc., the corporation that executed
the within instrument or the person who executed the
instrument on behalf of said corporation. Craig H. Neilsen,
who being unable due to physical incapacity to sign his name
or offer his mark, did direct
Tim Smith, in his
presence, as well as my own, to sign his name to the
foregoing document. Craig H. Neilsen, after viewing his name
as signed by Tim Smith,
thereupon adopted it as his own by acknowledging to me his
intention to so adopt as if he had personally executed
the same in behalf of said
corporation, and further acknowledged to me that such
corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and
official seal this 30th day of May, 1996.
/s/ Catherine Zeljeznjak
Notary Public
My Commission Expires on: 6/24/99
ACLV:
AMERISTAR CASINO LAS VEGAS, INC.,
a Nevada corporation
By: /s/ Craig H. Neilsen by Tim Smith
Name: Craig H. Neilsen
Its: President
On this 30th day of May, 1996, Craig H. Neilsen directed
Tim Smith, in his presence as well as our own, to sign the
foregoing document as "Craig H. Neilsen." Upon viewing the
signature as signed by Tim Smith, and in our presence,
Craig H. Neilsen declared to us that he adopted it as his own
signature.
/s/ Adrianne N. Fisse
Witness
/s/ Terri L. Karnes
Witness
State of Nevada )
) ss.
County of Clark )
I, Catherine Zeljeznjak, Notary Public in and for said
county and state, do hereby certify that Craig H. Neilsen
personally appeared before me and is known or identified to
me to be the President of Ameristar Casino Las Vegas, Inc., the
corporation that executed the within instrument or the person
who executed the instrument on behalf of said corporation.
Craig H. Neilsen, who being unable due to physical
incapacity to sign his name or offer his mark, did
direct Tim Smith, in his presence, as well as my own, to
sign his name to the foregoing document. Craig H. Neilsen,
after viewing his name as signed by Tim Smith, thereupon adopted it
as his own by acknowledging to me his intention to so adopt as if
he had personally executed the same in behalf of said
corporation, and further acknowledged to me that such
corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal this 30th day of May, 1996.
/s/ Catherine Zeljeznjak
Notary Public
My Commission Expires on: 6/24/99
GEM:
GEM GAMING INC.,
a Nevada corporation
By /s/ Steven W. Rebeil
Name: Steven W. Rebeil
Its Chairman, CEO
By /s/ Dominic J. Magliarditi
Name: Dominic J. Magliarditi
Its Vice President
STEVEN W. REBEIL, an individual
/s/ Steven W. Rebeil
STEVEN W. REBEIL,
in his capacity as Trustee of the Karizma Trust created
under that certain Trust Agreement dated July 2, 1991,
as amended
/s/ Steven W. Rebeil
DOMINIC J. MAGLIARDITI,
an individual
/s/ Dominic J. Magliarditi
Consent of Spouse of Steven W. Rebeil
The undersigned hereby confirms (i) that she has
read, approved of and agreed with the terms of this
Agreement, the Escrow Agreement, each Ancillary Agreement to
which her spouse is a party, the Interim Funding Agreement,
and all transactions contemplated thereby, (ii) that as the
spouse of one of the signatories thereto, her property
(including her interests in any community property) may be held
liable for the obligations of her spouse under this Agreement,
the Escrow Agreement, all Ancillary Agreements to which he is a
party, the Interim Funding Agreement, and all transactions
and other agreements contemplated thereby, (iii) that she
will be bound by this Agreement, the Escrow Agreement, all
Ancillary Agreements to which her spouse is a party, the
Interim Funding Agreement, and all other agreements
contemplated thereby as if she were a party thereto, and that
any agreements, acknowledgements, representations or warranties
made by her spouse under this Agreement, the Escrow Agreement,
any of the Ancillary Agreements to which he is a party, the
Interim Funding Agreement, or any other agreements
contemplated thereby shall apply equally to the
undersigned as if made by the undersigned, (iv) that she
approves all actions taken to date by her spouse in
connection with this Agreement, the Escrow
Agreement, any Ancillary Agreement to which her spouse is
a party, the Interim Funding Agreement, and all transactions
and other agreements contemplated thereby, and that she
has authorized and empowered her spouse to take any and all
further actions which he deems necessary or appropriate in
order to effect the transactions contemplated thereby,
and (v) that Ameristar may rely upon the confirmations set
forth in this Consent of Spouse in entering into and
proceeding with this Agreement.
Date: 5/29/96 /s/ Jilly Rebeil
Consent of Spouse of Dominic J. Magliarditi
The undersigned hereby confirms (i) that she has
read, approved of and agreed with the terms of this
Agreement, the Escrow Agreement, each Ancillary Agreement to
which her spouse is a party, the Interim Funding Agreement,
and all transactions contemplated thereby, (ii) that as the
spouse of one of the signatories thereto, her property
(including her interests in any community property) may be held
liable for the obligations of her spouse under this Agreement,
the Escrow Agreement, all Ancillary Agreements to which he is a
party, the Interim Funding Agreement, and all transactions
and other agreements contemplated thereby, (iii) that she
will be bound by this Agreement, the Escrow Agreement, all
Ancillary Agreements to which her spouse is a party, the
Interim Funding Agreement, and all other agreements
contemplated thereby as if she were a party thereto, and that
any agreements, acknowledgements, representations or warranties
made by her spouse under this Agreement, the Escrow Agreement,
any of the Ancillary Agreements to which he is a party, the
Interim Funding Agreement, or any other agreements
contemplated thereby shall apply equally to the
undersigned as if made by the undersigned, (iv) that she
approves all actions taken to date by her spouse in
connection with this Agreement, the Escrow
Agreement, any Ancillary Agreement to which her spouse is
a party, the Interim Funding Agreement, and all transactions
and other agreements contemplated thereby, and that she
has
authorized and empowered her spouse to take any and all
further actions which he deems necessary or appropriate in
order to effect the transactions contemplated thereby,
and (v) that Ameristar may rely upon the confirmations set
forth in this Consent of Spouse in entering into and
proceeding with this Agreement.
Date: 5/28/96 /s/ Francine Magliarditi
Consent of Craig H. Neilsen
The undersigned, Craig H. Neilsen, individually and in
his capacity as Trustee of the testamentary trust created
under the Last Will and Testament of Ray Neilsen, dated
October 9, 1963, as a material stockholder in Ameristar
(which itself is the sole owner of the stock of ACLV),
hereby confirms (a) that he has received the Agreement and
(b) absent his intervening discovery of material breach by
Gem or the Gem Individuals of the representations and
warranties set forth in the Agreement, or of conduct or
facts materially inconsistent with the transactions
contemplated by the Agreement, he will support, subject
to applicable Gaming Laws and any fiduciary duties, at any
meeting of the stockholders or the board of directors of
Ameristar or ACLV called in order (among other purposes)
to consider the execution of the Agreement, the execution
and delivery of the Agreement by Ameristar and ACLV.
Date: May 30, 1996 /s/ Craig H. Neilsen by Tim Smith
Craig H. Neilsen, an individual
/s/ Craig H. Neilsen by Tim Smith
Craig H. Neilsen, in his capacity as
sole
Trustee of the testamentary
trust created under the Last
Will and Testament of Ray
Neilsen, dated October 9, 1963.
On this 30th day of May, 1996, Craig
H. Neilsen directed Tim Smith,
in his presence as well as our own, to sign the foregoing
document as "Craig H. Neilsen." Upon viewing the signature
as signed by Tim Smith, and
in our presence, Craig H. Neilsen declared to us that he
adopted it as his own signature.
/s/ Adrianne N. Fisse
Witness
/s/ Terri L. Karnes
Witness
State of Nevada )
) ss.
County of Clark )
I, Catherine Zeljeznjak, Notary Public in and
for said county and state, do hereby certify that Craig H.
Neilsen personally appeared before me and is known or
identified to me to be the person whose name is subscribed to
the within instrument. Craig H. Neilsen, who being unable due
to physical incapacity to sign his name or
offer his mark, did direct
Tim Smith, in his presence, as well as
my own, to sign the foregoing document as "Craig H. Neilsen."
Craig H. Neilsen, after viewing his name as
signed by
Tim Smith, thereupon adopted it as his
own by acknowledging to me his intention to so adopt as if
he had personally executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and
official seal this 30th day of May, 1996.
/s/ Catherine Zeljeznjak
Notary Public
My Commission Expires on: 6/24/99
EXHIBIT M
FORM OF RECAPTURE AND ADJUSTMENT EXCESS SECURITY AGREEMENT
This RECAPTURE AGREEMENT dated as of
_________________, 1996 (for reference purposes only) (this
"Agreement") is made by and among AMERISTAR CASINOS,
INC., a Nevada corporation ("Ameristar"), STEVEN W.
REBEIL, an individual and in his capacity as Trustee of
the Karizma Trust created under that certain Trust
Agreement, dated July 2, 1991, as amended,
("Rebeil") and DOMINIC J. MAGLIARDITI, an
individual
("Magliarditi" and together with Rebeil, the "Gem
Individuals").
Recitals
A. WHEREAS, Gem Gaming, Inc. ("Gem"),
Ameristar,
Ameristar Casino Las Vegas Inc., a Nevada corporation, a
wholly owned subsidiary of Ameristar ("ACLV"), and the Gem
Individuals are the parties to that certain Merger Agreement,
dated as of May 31, 1996 (the "Merger Agreement"). Capitalized
terms used herein without definition shall have the meanings
given to such terms in the Merger Agreement if defined therein;
B. WHEREAS, pursuant to the Merger Agreement, the
Gem
Individuals have agreed to a merger of Gem into ACLV pursuant
to which the Gem Individuals shall receive certain Ameristar
Common Stock;
C. WHEREAS, the parties to the Merger
Agreement
anticipate that certain contingencies might increase the value
of Ameristar's Common Stock, and that in the event of the
occurrence of such contingencies, such parties intend that
there should be an adjustment in the amount of Ameristar
Common Stock obtained by the Gem Individuals through the Merger
Agreement;
D. WHEREAS, the parties hereto are required
in
accordance with Section 3.2(c)(iv) of the Merger Agreement
to
execute this Agreement to provide for the reconveyance of
certain Ameristar Common Stock to Ameristar on the terms and
conditions more particularly set forth herein.
Agreement
NOW, THEREFORE, in consideration of the
mutual agreements, provisions and covenants contained in this
Agreement, and intending to be legally bound hereby, the Gem
Individuals hereby jointly and severally hereby agree and
Ameristar hereby agrees as follows:
1. The Recapture Stock.
1.1. Computation of Recapture Amount. If each
of the following conditions (the "Maryland Recapture
Conditions") shall have occurred:
(i) On or before December 31, 1997, the
state legislature for the State of Maryland shall have
adopted legislation legalizing casino gambling (the
"Gaming Legislation");
(ii) The Gaming Legislation shall have become
law within a reasonable period of time after the
legislature for the
State of Maryland shall have adopted the Gaming
Legislation (including, without limitation, such time as
may be necessary to override a veto of the Governor
of
Maryland);
(iii) Ameristar or any Affiliate of
Ameristar shall
have been awarded a license or other approval to
operate a gaming facility in Allegheny County, Maryland,
or any contiguous county within the State of Maryland
("Western Maryland") no later than thirty (30) days
after such a license or other approval shall have been
awarded to any other
Person with respect to another gaming facility to be
located within Western Maryland; and
(iv) Ameristar or any Affiliate of Ameristar
shall have commenced gaming operations in Western
Maryland on or before the date that is two (2) years
following the award of a license to operate a gaming
facility in Western Maryland; provided, however, such two
(2) year period may be extended to
the extent that the commencement of such gaming
operations shall have been delayed as a result of
weather conditions, explosions, fires, earthquakes, or
other natural calamities or acts of God, acts of war or
the public enemy whether war be declared or not,
public disorders, labor unrest, insurrection,
rebellion, sabotage, riots or violent demonstrations or
any other event or circumstances which is beyond the
reasonable control, directly or indirectly, of Ameristar,
then Ameristar shall compute the "Western Maryland
Recapture Share Amount" in accordance with Exhibit "1" attached
hereto and incorporated herein by this reference and
deliver a written notice (the "Western Maryland Recapture
Notice") to the Gem Individuals specifying the Western
Maryland Recapture Share Amount and the Average 10-Day
Closing Price as of the date of the Western Maryland Recapture
Notice (the "Recapture Notice 10-Day Closing Price").
1.2. Obligation to Convey Upon Receipt
of
Recapture Notice. Within ten (10) days after the Gem
Individuals shall have received the Western Maryland
Recapture Notice, the Gem Individuals shall convey to
Ameristar (a) the number of Pledged Shares (as defined
below) as adjusted to reflect stock splits, reverse stock
splits and stock dividends pursuant to Section 1.3 below (as
so adjusted, the "Adjusted Pledged Shares") up to the Western
Maryland Recapture Share Amount, plus (b) if the Western
Maryland Recapture Share Amount exceeds the number of Adjusted
Pledged Shares, either (i) additional shares of
Ameristar Common Stock equal in amount to the excess of
the Western Maryland Recapture Share Amount over the
number of Adjusted Pledged Shares (the "Excess Share Amount")
or (ii) the Excess Share Amount multiplied times the
Recapture Notice 10-Day Closing Price.
Notwithstanding the foregoing, the Gem
Individuals shall not have any obligation to convey any cash
or Ameristar Common Stock under this Agreement unless
Ameristar or an Affiliate of Ameristar has, on or before
December 31, 2000, opened a gaming facility in Western
Maryland to the public.
1.3. Anti-Dilution Adjustment. In case
Ameristar shall (i) declare a dividend or make a
distribution on its outstanding shares of Ameristar
Common Stock in shares of Ameristar Common Stock, (ii)
subdivide or reclassify its
outstanding shares of Ameristar Common Stock into a
greater number of shares, or (iii) combine or reclassify its
outstanding shares of Ameristar Common Stock into a smaller
number of shares and a provision of this Agreement provides
that a specified number of shares of Ameristar Common Stock
shall be adjusted in such event, then such number of shares,
at the time of the record date for such dividend or
distribution or of the effective date of such subdivision,
combination or reclassification, shall be adjusted so that it
shall equal the number of Shares of Ameristar Common Stock
determined by multiplying the specified number of shares
of Ameristar Common Stock, by
a
fraction, the numerator of which shall be the number of shares
of Ameristar Common Stock outstanding after giving effect to
such action, and the denominator of which shall be the
number of shares of Ameristar Common Stock outstanding
immediately prior to such action. Such adjustment shall be
made successively whenever any event listed above shall occur.
2. Grant of Security Interest.
2.1. Collateral. As security for the prompt
and complete payment and performance when due of any and all
of the obligations of the Gem Individuals under this
Agreement (the "Obligations"), now existing or hereafter
arising, each of the
Gem Individuals hereby collaterally assigns, conveys,
mortgages, pledges, hypothecates and transfers to Ameristar,
and grants and creates a lien on and first priority
security interest (the "Security Interest") in favor of
Ameristar, in all right, title and interest of such Gem
Individual in and to the Ameristar Common Stock described
in Schedule 2.1 hereto (the "Pledged Stock"), and all
proceeds thereof, including, without limitation, dividends and
other property received and receivable by such Gem Individual
in connection with the Pledged Stock (the Pledged Stock and
such proceeds to be referred to herein collectively as the
"Collateral").
3. Covenants and Agreements. Each Gem
Individual
hereby covenants and agrees that such Gem Individual
shall faithfully observe and fulfill, and shall cause to be
observed and fulfilled, each and all of the following
covenants:
3.1. Further Assurances. Each Gem
Individual shall, from time to time at his expense, and upon
request by Ameristar promptly execute and deliver all
further instruments and documents, and take all further action
that may be reasonably necessary or advisable, or that
Ameristar reasonably determines may be necessary, in order
to perfect and protect the Security Interest granted or
purported to be granted hereby or to enable Ameristar to
exercise and enforce its rights and remedies hereunder
with respect to the Collateral.
3.2. Stock Certificates. Each Gem
Individual shall promptly deliver to Ameristar all originals of
certificates and other documents, instruments and agreements
evidencing the Collateral which are now held or hereafter
received by such Gem Individual, together with blank stock
powers executed by such Gem Individual.
3.3. Limitation on Liens on the Collateral.
Each Gem Individual shall not create, incur or permit to
exist, shall defend the Collateral now owned or hereafter
acquired by it against, and shall take such other action as
is necessary to remove, any Encumbrance or claim on or to
the Collateral,
and
shall defend the right, title and interest of Ameristar in and
to any of the Collateral against the claims and demands of
all Persons whomsoever.
3.4. Limitations on Sales and Transfers. Each
Gem Individual shall not sell, transfer, assign or otherwise
dispose of any of the Collateral or any rights thereto.
4. Remedies; Rights Upon Default. Until (i) any
Gem
Individual shall have failed to perform any of the
Obligations when and as due or (ii) any of the representations
and warranties set forth in this Agreement shall be false
(any such event, an "Event of Default") and Ameristar shall
have given notice to each Gem Individual of Ameristar's
intent to exercise
its
rights pursuant to Subparagraph 4.4 below, each Gem
Individual shall be permitted (a) to receive all dividends
paid on the Collateral (other than dividends paid in
additional capital stock unless such additional capital stock
is pledged to Ameristar pursuant to a Pledge Agreement in
form and substance acceptable to Ameristar) and (b) to
exercise all voting and corporate rights with respect to
such capital stock. Upon the occurrence and during the
continuance of an Event of Default, Ameristar may do one or
more of the following with respect to the Collateral:
4.1. upon notice to each Gem Individual,
which notice need not be in writing, make such payments and
do such acts as Ameristar may deem necessary to protect,
perfect or
continue the perfection of the Security Interest in
the
Collateral, including, without limitation, paying,
purchasing, contesting or compromising any Encumbrance which
is, or purports to be, prior to or superior to the
Security Interest granted hereunder, and commencing,
appearing or otherwise participating in or controlling any
action or proceeding purporting to affect the Security Interest
in or ownership of the Collateral;
4.2. foreclose on the Collateral as
herein provided or in any manner permitted by law. Each Gem
Individual hereby waives, to the extent permitted by
applicable law, notice and judicial hearing in connection
with Ameristar's taking possession or collection,
recovery, receipt, appropriation, repossession, retention,
set-off, sale, leasing, conveyance, assignment, transfer or
other disposition of or realization upon any or all of the
Collateral, including, without limitation, any and all prior
notice and hearing for any prejudgment remedy or remedies and
any such right which such Gem Individual would otherwise
have under the constitution or any statute or other law of the
United States of America or of any state;
4.3. without notice, except as specified
below, sell the Collateral, or any part thereof, in one or
more parcels at public or private sale, at Ameristar's
offices or elsewhere, at such time or times, for cash, on
credit or for future delivery, and at a commercially
reasonable price or prices and on other commercially
reasonable terms. Each Gem Individual agrees that, to the
extent notice of sale shall be required by law, at least ten
(10) days' notice to such Gem Individual of the time and the
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable
notification. At any sale of the Collateral, if permitted
by law, Ameristar may bid (which bid may be, in whole or in
part, in the form of cancellation of indebtedness) for the
purchase of the Collateral or any portion thereof for the
account of Ameristar. Ameristar shall not be obligated to
make any sale of the Collateral regardless of notice of
sale having been given. Ameristar may adjourn any public or
private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned. Ameristar shall incur no liability as a result of
the manner of sale of the Collateral, or any part thereof, at
any private sale conducted in a commercially reasonable
manner. Each Gem Individual hereby waives, to the extent
permitted by applicable law, any claims against Ameristar
arising by reason of the fact that the price at which
the Collateral, or any part thereof, may have been sold at a
private sale was less than the price which might have been
obtained at public sale or was less than the aggregate
amount of the Obligations, even if Ameristar accepts the
first offer received which Ameristar in good faith deems to be
commercially reasonable under the circumstances and does not
offer the Collateral to more than one offeree. To the full
extent permitted by law, each Gem Individual shall have the
burden of proving that any such sale of the Collateral was
conducted in a commercially unreasonable manner.
To the extent permitted by law, each Gem Individual
hereby specifically waives all rights of redemption, stay
or appraisal which it has or may have under any law now
existing or hereafter enacted. Each Gem Individual authorizes
Ameristar, at any time and from time to time, to execute, in
connection with a sale of the Collateral pursuant to the
provisions of this Agreement, any endorsements, assignments
or other instruments of conveyance or transfer with respect to
the Collateral;
4.4. upon notice to each Gem Individual,
endorse the Collateral in the name of Ameristar or its nominee
as pledgee
or otherwise take such action as Ameristar shall in its
sole discretion deem necessary or desirable with respect
to the Collateral, and Ameristar or its nominee may
thereafter, in its sole discretion, without notice,
exercise all voting, consent, managerial and other rights
relating to the Collateral and exercise any and all rights
of conversion, exchange, subscription or any other rights,
privileges or options pertaining to the Collateral as if it
were the absolute owner thereof, including, without
limitation, the right to (i) receive all permitted
distributions, if any, made for the account of any Gem
Individual and (ii) exchange any and all of the Collateral
upon the merger, consolidation,
reorganization, recapitalization or other
readjustment of Ameristar, all without liability except
to account for property actually received by Ameristar,
but
Ameristar shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing; and
4.5. exercise in respect of the Collateral,
in
addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies
of a secured party after default under the Nevada Uniform
Commercial Code.
5. No Duty on Ameristar's Part, Limitation
on
Ameristar's Obligations. The powers conferred on
Ameristar hereunder are solely to protect Ameristar's
interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. Ameristar shall be
accountable only for amounts that it actually receives as a
result of the exercise of such powers.
6. Reasonable Care. Ameristar shall exercise
the
same degree of care hereunder as it exercises in connection
with similar transactions for its own account. Ameristar
shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its
possession if the
Collateral is accorded treatment substantially equal to
that which Ameristar accords or would accord collateral
held by Ameristar in similar transactions for its own
account. Without
limiting the generality of the foregoing and except as
otherwise provided by applicable law, Ameristar shall not be
required to marshall any collateral, including, without
limitation, the Collateral subject to the Security Interest
created hereby and any guaranties of the Obligations, or to
resort to any item of Collateral or guaranties in any
particular order; and all of Ameristar's rights hereunder
and in respect of such Collateral and guaranties shall be
cumulative and in addition to all other rights, however
existing or arising. To the extent that each Gem Individual
lawfully may, each Gem Individual hereby (a) agrees that he
will not invoke any law relating to the marshalling of
collateral which might cause delay in or impede the
enforcement of Ameristar's rights under this Agreement or
under any other instrument evidencing any of the Obligations
or under which any of the Obligations is outstanding or
by which any of the Obligations is secured or guaranteed
and (b) irrevocably waives the benefits of all laws and any
and all rights to equity of redemption or other rights of
redemption that it may have in equity or at law with respect
to the Collateral.
7. Miscellaneous.
7.1. Notices. All notices, requests, demands
and
other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed
to have been duly given when received if personally
delivered; when
transmitted if transmitted by telecopy, electronic or
digital transmission method; the day after it is sent, if sent
for next day delivery to a domestic address by
recognized overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice
shall be sent to:
If to Rebeil, addressed to:
With a copy to:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Attention: Kenneth M. Doran,
Esq.
If to Magliarditi, addressed to:
If to Ameristar, addressed to:
Ameristar Casinos, Inc.
P.O. Box 452
550 Blue Lakes Boulevard North
Twin Falls, Idaho 83301
Attention: Brian E. Katz, Esq.
With a copy to:
Latham & Watkins
701 B Street
Suite 2100
San Diego, California 92101
Attention: Bruce P. Shepherd,
Esq.
or to such other place and with such other copies as either
party may designate as to itself by written notice to the
others.
7.2. Choice of Law. This Agreement shall be
construed, interpreted and the rights of the parties
determined in accordance with the laws of the State of
Nevada (without reference to choice of law provisions),
except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party
to or the subject of this Agreement, and as to those
matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
7.3. Entire Agreement; Amendments and Waivers.
This Agreement, the Merger Agreement, the Ancillary
Agreements, the Interim Funding Agreement, the Escrow
Agreement, together with all exhibits and schedules
hereto and thereto, and the Confidentiality Agreements,
constitute the entire agreement among the parties pertaining
to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. This Agreement
may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. No
amendment,
supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the
provisions of this Agreement
shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such
waiver constitute
a continuing waiver unless otherwise expressly
provided.
7.4. Multiple Counterparts. This Agreement may
be executed in one or more counterparts, and by different
parties hereto in
separate counterparts, each of which when executed
shall be deemed to be an original, including
counterparts transmitted by facsimile, but all of which taken
together shall constitute one and the same agreement.
7.5. Invalidity. In the event that any one or more
of the provisions contained in this Agreement or in any
other instrument referred to herein, shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect,
then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other
provision of this Agreement or any other such instrument.
7.6. Titles; Gender. The titles, captions or
headings of the Articles and Sections herein, and the use of a
particular gender, are for convenience of reference only
and are not intended to be a part of or to affect or restrict
the meaning or interpretation of this Agreement.
7.7. Service of Process, Consent to Jurisdiction.
(a) Service of Process. Each of the
parties hereto irrevocably consents to the service of any
process, pleading, notices or other papers by the mailing
of copies thereof by registered, certified or first class
mail, postage prepaid, to such party at such party's address
set forth herein, or by any other method provided or permitted
under Nevada law.
(b) Consent and Jurisdiction. Each party
hereto irrevocably and unconditionally (1) agrees that any
suit, action or other legal proceeding arising out of this
Agreement may be brought in the United States District Court
located in Las Vegas, Nevada or, if such court does not have
jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in the County of Clark, Nevada; (2)
consents to the jurisdiction or any such court in any such
suit, action or proceeding; and (3) waives any objection which
such party may have to the laying of venue of any such suit,
action or proceeding in any such court.
7.8. Attorneys' Fees. If any party to this
Agreement brings an action to enforce its rights under this
Agreement, the prevailing
party shall be entitled to recover its costs and
expenses, including without limitation reasonable
attorneys' fees, incurred in connection with such action,
including any appeal of such action.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed on their respective
behalf, by their respective officers thereunto duly
authorized, all as of the day and year first above written.
AMERISTAR:
AMERISTAR CASINOS,
INC., a Nevada
corporation
By:
Name: Craig H. Neilsen
Its: President
On this _____ day of _____________________, 19____, Craig
H. Neilsen directed ________________________________________,
in his presence as well as our own, to sign the foregoing
document as "Craig H. Neilsen." Upon viewing the signature
as signed by ______________________________________, and in
our presence, Craig H. Neilsen declared to us that he
adopted it as his own signature.
Witness
Witness
State of Nevada )
) ss.
County of Clark )
I, _________________________________, Notary Public in
and for said county and state, do hereby certify that
Craig H. Neilsen personally appeared before me and is known
or identified to me to be the
_________________________ of
_________________________, the corporation that executed
the within instrument or the person who executed the
instrument on behalf of said corporation. Craig H. Neilsen,
who being unable due to physical incapacity to sign his name
or offer his mark, did direct
______________________________________, in his
presence, as well as my own, to sign his name to the
foregoing document. Craig H. Neilsen, after viewing his name
as signed by ___________________________________________,
thereupon adopted it as his own by acknowledging to me his
intention to so adopt as if he had personally executed
the same in behalf of said
corporation, and further acknowledged to me that such
corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and
official seal this _____ day of ______________________, 19____.
Notary Public
My Commission Expires on:
REBEIL:
STEVEN W. REBEIL,
an individual
STEVEN W. REBEIL,
in his capacity as Trustee of
the Karizma Trust created under
that
certain Trust Agreement, dated
July 2, 1991
MAGLIARDITI:
DOMINIC J. MAGLIARDITI,
an individual
Exhibit "1"
Ameristar shall calculate the "Western Maryland Recapture
Share Amount" as follows:
(1) First, Ameristar shall calculate
(a) the "Adjusted Ameristar Merger
Shares," which shall equal the number
of shares of
Ameristar Common Stock within the
Merger Consideration (as such term is held in
the Merger Agreement) as adjusted to reflect
stock splits, reverse stock splits, stock
dividends and similar matters in accordance
with Section 1.3 of the Agreement from and
after the Closing; and
(b) The "Adjusted Western Maryland
Recapture Cap," which shall equal One
Million (1,000,000)
shares of Ameristar Common Stock, as adjusted
to reflect stock splits, reverse stock splits,
stock dividends and similar matters in
accordance with Section 1.3 of the Agreement
from and after the Closing.
(2) Next, Ameristar shall calculate the amount of
its consolidated net income attributable to
Western Maryland operations (the "Western Maryland
Net Income") for the first full 12-month period,
ending at the end of a calendar quarter (i.e.,
end of March, June, September or December), that
follows the opening to the public of a
gaming facility in Western Maryland by
Ameristar or an Affiliate of Ameristar in
Western Maryland (the "Western Maryland Measurement
Period"). For purposes of this calculation, expenses
of Ameristar and its Affiliates that are not
reasonably attributable to a particular geographic
location (i.e., corporate overhead) shall be
allocated to particular geographic locations
based upon the proportionate revenues
generated during the Western Maryland
Measurement
Period by the various locations.
(3) Next, Ameristar:
(a) shall divide Ameristar's
total consolidated net income during the
Western
Maryland Measurement Period by the
total
outstanding shares of common stock of the
Company as of the end of the Western Maryland
Measurement
Period. This figure shall be referred to as the
"Ameristar Earnings/Share"); and
(b) shall divide the Western Maryland Net
Income by the total outstanding shares of common
stock of the Company as of the end of the Western
Maryland Measurement Period. This figure shall be
referred to as the "Western Maryland
Earnings/Share").
(4) Next, Ameristar shall determine the "Ameristar
Earnings/Share Multiple" by dividing the Average 10-Day
Closing Price as of the end of the Western Maryland
Measurement Period by the Ameristar Earnings/Share.
(5) Next, Ameristar shall calculate the "Western
Maryland Value Contribution/Share" by multiplying the
Western Maryland Earnings/Share times the Ameristar
Earnings/Share Multiple.
(6) Next, Ameristar shall calculate the "Gem Western
Maryland Enrichment" by multiplying the Western
Maryland Value Contribution/Share times the number of
shares of Adjusted Ameristar Merger Shares.
(7) The Western Maryland Recapture Shares shall equal
one-half of the Gem Western Maryland Enrichment divided
by the Adjusted Ameristar Merger Shares; provided,
however, that the Western Maryland Recapture Shares
shall not exceed the Adjusted Western Maryland
Recapture Cap.
Schedule 2.1 to Recapture Agreement
Pledged Stock
EXHIBIT N
REGISTRATION RIGHTS AGREEMENT
by and among
AMERISTAR CASINOS, INC.
and
STEVEN W. REBEIL, and
DOMINIC J. MAGLIARDITI
Dated as of ____________, 1996
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made and entered into as of ____________, 1996, by and between
AMERISTAR CASINOS, INC., a Nevada corporation (the "Issuer"), and
STEVEN W. REBEIL, an individual and in his capacity as Trustee of
the Karizma Trust created under that certain Trust Agreement,
dated July 2, 1991, as amended (in either such capacity,
"Rebeil") and DOMINIC J. MAGLIARDITI, an individual
("Magliarditi", together with Rebeil, the "Gem Individuals").
This Agreement is made pursuant to that certain Merger
Agreement, dated as of May 31, 1996 (the "Merger Agreement"), by
and between the Issuer, Gem Gaming, Inc., Ameristar Casino Las
Vegas, Inc., and the Gem Individuals. In order to induce Gem to
consummate the transactions contemplated by the Merger Agreement,
the Issuer has agreed to provide the registration rights set
forth in this Agreement.
In consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
(1) Definitions
As used in this Agreement, the following
capitalized terms shall have the following meanings:
Board: The Board of Directors of the Issuer.
Common Stock: The Common Stock, par value $.01
per share, of the Issuer.
Demand Notice: See Section 3(a) hereof.
Demand Registration: A registration pursuant to
Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of
1934, as amended from time to time.
Holder: Any party hereto (other than the Issuer)
and any holder of Registrable Securities who agrees in writing to
be bound by the provisions of this Agreement.
Investors: Any Gem Individuals who hold
Registrable Securities, collectively.
NASD: National Association of Securities Dealers,
Inc.
Person: An individual, partnership, limited
liability company, joint venture, corporation, trust or
unincorporated organization, a government or any department,
agency or political subdivision thereof or other entity.
Piggyback Notice: See Section 4(a) hereof.
Piggyback Registration: A registration pursuant
to Section 4 hereof.
Prospectus: The prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
Registrable Securities: All shares of Common
Stock issuable on the date hereof pursuant to the Merger
Agreement and any securities of the Issuer that may be issued or
distributed with respect to, or in exchange or substitution for,
or conversion of, such Common Stock and such other securities
pursuant to a stock dividend, stock split or other distribution,
merger, consolidation, recapitalization or reclassification or
otherwise; provided, however, that any Registrable Securities
shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such Registrable Securities
has been declared effective under the Securities Act and such
Registrable Securities have been disposed of in accordance with
the plan of distribution set forth in such Registration
Statement, (ii) such Registrable Securities are distributed
pursuant to Rule 144 (or any similar provision then in force)
under the Securities Act or (iii) such Registrable Securities
shall have been otherwise transferred and new certificates for
them not bearing a legend restricting further transfer under the
Securities Act shall have been delivered by the Issuer; and
provided, further, that any securities that have ceased to be
Registrable Securities cannot thereafter become Registrable
Securities and any security that is issued or distributed in
respect of securities that have ceased to be Registrable
Securities is not a Registrable Security.
Registration: A Demand Registration or a
Piggyback Registration.
Registration Expenses: See Section 7 hereof.
Registration Statement: Any registration
statement of the Issuer that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as
amended from time to time.
Underwritten Registration or Underwritten
Offering: A sale of securities of the Issuer to an underwriter
for reoffering to the public.
2. Securities Subject to this Agreement
(a) Registrable Securities. The securities
entitled to the benefits of this Agreement are the Registrable
Securities.
(b) Holders of Registrable Securities. A Person
is deemed to be a Holder of Registrable Securities whenever such
Person owns of record Registrable Securities or has the right to
acquire such Registrable Securities, whether or not such
acquisition has actually been affected and disregarding any legal
restrictions upon the exercise of such right.
3. Demand Registration
(a) Right to Demand; Demand Notices. Subject to
the provisions of this Section 3 at any time during the period
commencing on the date which is six months following the date
hereof and ending on the tenth anniversary of such date,
Investors holding more than 50% of the Registrable Securities may
make one written request to the Issuer for registration under and
in accordance with the provisions of the Securities Act of all or
part of the Registrable Securities held by the Investors.
Promptly upon receipt of such request (but in no event more than
five business days thereafter), the Issuer shall serve written
notice (the "Demand Notice") of such registration request to all
Holders, and the Issuer shall include in such registration all
Registrable Securities of any Holder with respect to which the
Issuer has received written requests for inclusion therein within
15 days after the Demand Notice has been given to the applicable
Holders; provided, however, that the Issuer shall not be required
to cause such registration if the Holders do not indicate an
intention to register Common Stock having a reasonably
anticipated aggregate offering price, net of underwriting
discounts and commissions, of at least Two Million Dollars
($2,000,000); provided, further, that the maximum number of
shares that the Issuer shall be required to register pursuant to
this Section 3 shall be One Million (1,000,000) (if an aggregate
amount greater than such number is requested to be registered and
the Issuer determines, in its sole discretion, not to register
the additional shares, then the requested shares shall be
proportionately abated as necessary to fall within the One
Million (1,000,000) maximum). All requests made pursuant to this
Section 3 shall specify the aggregate amount of Registrable
Securities to be registered and shall also specify the intended
methods of disposition thereof.
(b) Issuer's Right to Defer Registration. If the
Issuer is requested to effect the Demand Registration and the
Issuer furnishes to the Investors a copy of a resolution of the
Board certified by the secretary of the Issuer stating that in
the good faith judgment of the Board it would be adverse to the
Issuer and its securityholders for such registration statement to
be filed on or before the date such filing would otherwise be
required hereunder, the Issuer shall have the right to defer such
filing for a period of not more than 90 days after receipt of the
request for such registration from the Investors. If the Issuer
shall so postpone the filing of a registration statement and if
the Investors within 30 days after receipt of the notice of
postponement advise the Issuer in writing that the Investors have
determined to withdraw such request for registration, then such
Demand Registration shall be deemed to be withdrawn and such
request shall be deemed not to have been exercised for purposes
of determining whether the Holders included in such Demand
Registration are required to pay their pro rata portion of the
Registration Expenses pursuant to Section (3)(d) hereof.
(c) Registration Statement Form. Any
Registration under this Section 3 shall be on such appropriate
registration form of the SEC (i) as shall be selected by the
Issuer and as shall be reasonably acceptable to the Investors and
(ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of
disposition specified in the Investors' request for such
registration. If, in connection with any registration under this
Section 3 that is proposed by the Issuer to be on Form S-3 or any
successor form to such Form, the managing underwriter, if any,
shall advise the Issuer in writing that in its opinion the use of
another permitted form is of material importance to the success
of the offering, then such registration shall be on such other
permitted form.
(d) Expenses. The Issuer will pay all
Registration Expenses in connection with the Demand Registration
of Registrable Securities pursuant to this Section 3 upon the
written request of the Investors.
(e) Effective Registration Statement. The Issuer
shall be deemed to have effected the Demand Registration if
(i) the Registration Statement relating to such Demand
Registration is declared effective by the SEC; provided, however,
that no Demand Registration shall be deemed to have been effected
if (x) such registration, after it has become effective, is
interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court by
reason of an act or omission by the Issuer or (y) the conditions
to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are
not satisfied because of an act or omission by the Issuer (other
than a failure of the Issuer or any of its representatives to
execute or deliver any closing certificate by reason of facts or
circumstances not within the control of the Issuer or such
representatives) or (ii) at any time after the Investors request
the Demand Registration and prior to the effectiveness of the
Registration Statement, the preparation of such Registration
Statement is discontinued or such Registration Statement is
withdrawn or abandoned at the request of the Holders of a
majority of Registrable Securities sought to be registered in
such Registration Statement unless such Holders have elected to
pay and have paid to the Issuer in full the Registration Expenses
in connection with such Registration Statement.
(f) Priority on Demand Registrations. If the
managing underwriter or agent of the Demand Registration (or, in
the event that the Demand Registration is not being underwritten,
any of the Investors), advises the Issuer in writing that in its
opinion the number of securities requested to be included in the
Demand Registration exceeds the number that can be sold in the
offering covered by the Demand Registration without a significant
adverse effect on the price, timing or distribution of the
securities offered, the Issuer shall include in such registration
only the number of securities that, in the opinion of such
underwriter or agent (or any of the Investors, as the case may
be), can be sold without a significant adverse effect on the
price, timing or distribution of the securities offered, selected
pro rata among the Holders that have requested to be included in
the Demand Registration based upon the relative aggregate amount
of gross proceeds to be received by such Holders in such offering
to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount recommended by such
underwriters or agent (or any of the Investors, as the case may
be).
The Issuer and other holders of securities of the
Issuer may include such securities in such Registration if, but
only if, such underwriter or agent (or any of the Investors, as
the case may be) concludes that such inclusion will not interfere
with the successful marketing of all the Registrable Securities
requested to be included in such registration.
(g) Selection of Underwriters. If any offering
pursuant to the Demand Registration involves an Underwritten
Offering, the Holders of a majority of the Registrable Securities
included in the Demand Registration shall have the right to
select the managing underwriter or underwriters to administer the
offering, which managing underwriter or underwriters shall have
nationally recognized standing and be reasonably satisfactory to
the Issuer.
(h) Subsequent Registration Rights. Issuer may
grant subsequent investors in Issuer rights of registration upon
demand (such as those provided in Section 3(a) hereof) and
piggyback registration rights (such as those provided in Section
4 hereof); provided, however, that (i) such rights are limited to
shares of Common Stock (including, in the case of any
Underwritten Offering, shares issuable upon the conversion of
convertible securities or upon the exercise of warrants if such
conversion or exercise is effected by the sellers or the
underwriters prior to the sale to the public in such offering),
(ii) such rights are not inconsistent with the provisions hereof,
and (iii) the instrument granting such rights specifically
confirms the rights of the Holders of Registrable Securities
hereunder.
4. Piggyback Registrations
(a) Participation. Subject to Sections 4(b) and
10 hereof, if at any time after the date hereof the Issuer files
a registration statement under the Securities Act with respect to
an offering of any equity securities by the Issuer for its own
account or for the account of any of its equity holders (other
than (i) a registration on Form S-4 or S-8 or any successor form
to such Forms, or (ii) any registration of securities as it
relates to an offering and sale to management of the Issuer
pursuant to any employee stock plan or other employee benefit
plan arrangement) with respect to an offering that includes any
shares of Common Stock, then the Issuer shall give prompt notice
(the "Initial Notice") to the Investors and the Investors shall
be entitled to include in such registration statement the
Registrable Securities held by them. If the Investors elect to
include any or all of their Registrable Securities in such
registration statement, then the Issuer shall give prompt notice
(the "Piggyback Notice") to each Holder (excluding the Investors)
and each such Holder shall be entitled to include in such
registration statement the Registrable Securities held by it.
The Initial Notice and Piggyback Notice shall offer the Investors
and the Holders, respectively, the opportunity to register such
number of shares of Registrable Securities as each Investor and
each Holder may request and shall set forth (i) the anticipated
filing date of such registration statement and (ii) the number of
shares of Common Stock that is proposed to be included in such
registration statement. The Issuer shall include in such
registration statement such shares of Registrable Securities for
which it has received written requests to register such shares
within 15 days after the Initial Notice and seven days after the
Piggyback Notice has been given.
(b) Underwriter's Cutback. Notwithstanding the
foregoing, if a Registration pursuant to this Section 4 involves
an Underwritten Offering and the managing underwriter or
underwriters of such proposed Underwritten Offering delivers an
opinion to the Holders that the total or kind of securities that
such Holders and any other person or entity intends to include in
such offering would be reasonably likely to adversely affect the
price, timing or distribution of the securities offered in such
offering, then the Issuer shall include in such Registration (i)
100% of the securities that the Person (which may be the Issuer)
initiating such Registration proposes to sell, and (ii) second,
to the extent of the amount of securities that all other holders
have requested to be included in such Registration, which, in the
opinion of the managing underwriter or underwriters, can be sold
without such adverse effect referred to above, such amount to be
allocated pro rata among all other holders based upon the
relative aggregate amount of gross proceeds to be received by any
other holders in the offering.
(c) Expenses. The Issuer will pay all
Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 4.
(d) Issuer Control. The Issuer may decline to
file a registration statement after giving the Initial Notice or
the Piggyback Notice, or withdraw a registration statement after
filing and after such Piggyback Notice, but prior to the
effectiveness of the Registration Statement, provided that the
Issuer shall promptly notify each Holder in writing of any such
action and provided further that the Issuer shall bear all
reasonable expenses incurred by such Holder or otherwise in
connection with such withdrawn registration statement.
(e) No Effect on Demand Registrations. No
registration effected under this Section 4 shall be deemed to
have been effected pursuant to Section 3 hereof or shall relieve
the Issuer of its obligation to effect a registration upon
request under Section 3 hereof.
5. Hold-Back Agreements
(a) Restrictions on Public Sale by Holder of
Registrable Securities. Each Holder whose Registrable Securities
are covered by a Registration Statement filed pursuant to
Sections 3 and 4 hereof agrees, if requested by the managing
underwriter or underwriters in an Underwritten Offering, not to
effect any public sale or distribution of securities of the
Issuer the same as or similar to those being registered, or any
securities convertible into or exchangeable or exercisable for
such securities, in such Registration Statement, including a sale
pursuant to Rule 144 under the Securities Act (except as part of
such Underwritten Registration), during the seven-day period
prior to, and during the 90-day period (or such longer period of
up to 180 days as may be required by such underwriter) beginning
on, the effective date of any Registration Statement in which
such Holders are participating (except as part of such
Registration) or the commencement of the public distribution of
securities, to the extent timely notified in writing by the
Issuer or the managing underwriters.
(b) No Inconsistent Agreements. The Issuer will
not hereafter enter into, and is not presently a party to, any
agreement with respect to its securities which is inconsistent
with the rights granted to the holders of Registrable Securities
by this Agreement or otherwise conflicts with the provisions
hereof.
6. Registration Procedures
In connection with the Issuer's Registration
obligations pursuant to Sections 3 and 4 hereof, the Issuer will
use its commercially reasonable efforts to effect such
Registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of distribution
thereof, and pursuant thereto the Issuer will as expeditiously as
possible:
(a) prepare and file with the SEC a Registration
Statement or Registration Statements relating to the applicable
Demand Registration or Piggyback Registration including all
exhibits and financial statements required by the SEC to be filed
therewith, and use its commercially reasonable efforts to cause
such Registration Statement to become effective; provided that
before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuer will furnish to the
Holders of Registrable Securities covered by such Registration
Statement and their counsel and to each underwriter or agent, if
any, copies of such Registration Statement or Prospectus
substantially in the form proposed to be filed at least five
business days, with respect to any Demand Registration, or two
business days,
with respect to any Piggyback Registration, prior to the filing
date and copies of any amendments or supplements substantially in
the form proposed to be filed with respect to a Demand
Registration at least two business days prior to the filing date,
which documents will be subject to the reasonable review of such
Holders and underwriter or agent and their respective counsel,
and the Issuer will not file any Registration Statement or
Prospectus or, with respect to any Demand Registration, any
amendment or supplement thereto (including such documents
incorporated by reference) to which the majority of the Holders
covered by such Registration Statement shall reasonably object;
and provided, further, that the Issuer will furnish copies of any
amendments or supplements in the form filed with respect to any
Piggyback Registration, simultaneously with the filing of such
amendments or supplements;
(b) prepare and file with the SEC such amendments
and post-effective amendments to the Registration Statement as
may be necessary to keep the Registration Statement effective for
a period of not less than 180 days (or such shorter period which
will terminate when all Registrable Securities covered by such
Registration Statement have been sold or withdrawn), or, if such
Registration Statement relates to an Underwritten Offering, such
longer period as in the opinion of counsel for the underwriters a
Prospectus is required by law to be delivered in connection with
sales of Registrable Securities by an underwriter or dealer;
cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with
the provisions of the Securities Act, the Exchange Act, and the
rules and regulations promulgated thereunder with respect to the
disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof
set forth in such Registration Statement or supplement to the
Prospectus;
(c) notify the selling Holders and the managing
underwriters, if any, and (if requested) confirm such advice in
writing, as soon as practicable after notice thereof is received
by the Issuer (i) when the Registration Statement or any
amendment thereto has been filed or becomes effective, the
Prospectus or any amendment or supplement to the Prospectus has
been filed, and, to furnish such selling Holders and managing
underwriters with copies thereof, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (iii) of the
issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or any order
preventing or suspending the use of any preliminary Prospectus or
Prospectus or the initiation or threatening of any proceeding for
such purposes, (iv) if at any time the representations and
warranties of the Issuer contemplated by paragraph (m) below
cease to be true and correct and (v) of the receipt by the Issuer
of any notification with respect to the suspension of the
qualification of the Registrable Securities for offering or sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(d) promptly notify the selling Holders and the
managing underwriters, if any, at any time during the
effectiveness of the Registration Statement when the Issuer
becomes aware of the happening of any event as a result of which
the Prospectus included in such Registration Statement (as then
in effect) contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
therein (in the case of the Prospectus and any preliminary
Prospectus, in light of the circumstances under which they were
made) when such Prospectus was delivered not misleading or, if
for any other reason it shall be necessary during such time
period to amend or supplement the Prospectus in order to comply
with the Securities Act
and, in either case as promptly as practicable thereafter,
prepare and file with the SEC, and furnish without charge to the
selling Holders and the managing underwriters, if any, a
supplement or amendment to such Prospectus that shall correct
such statement or omission or effect such compliance;
(e) make every reasonable effort to obtain the
withdrawal of any stop order or other order suspending the use of
any preliminary Prospectus or Prospectus or suspending any
qualification of the Registrable Securities;
(f) if requested by the managing underwriter or
underwriters or a Holder of Registrable Securities being sold in
connection with an Underwritten Offering, promptly incorporate in
a Prospectus supplement or post-effective amendment such
information as the managing underwriters and the Holders of a
majority of the Registrable Securities being sold agree should be
included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without
limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price
being paid therefor by such underwriters and with respect to any
other terms of the Underwritten (or best efforts underwritten)
Offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post
effective amendment;
(g) furnish to each selling Holder who so
requests and each managing underwriter, without charge, one
executed copy and as many conformed copies as they may reasonably
request, of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(h) deliver to each selling Holder and the
underwriters, if any, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) and any
amendment or supplement thereto as such Persons may reasonably
request (it being understood that the Issuer consents to the use
of the Prospectus or any amendment or supplement thereto by each
of the selling Holders and the underwriters, if any, in
connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or
supplement thereto) and such other documents as such selling
Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities by such Holder;
(i) on or prior to the date on which the
Registration Statement is declared effective, use its best
efforts to register or qualify, and cooperate with the selling
Holders, the managing underwriter or agent, if any, and their
respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of each state and other
jurisdiction of the United States as any such seller, underwriter
or agent reasonably requests in writing and do any and all other
acts or things reasonably necessary or advisable to keep such
registration or qualification in effect for so long as such
Registration Statement remains in effect and so as to permit the
continuance of sales and dealings therein for as long as may be
necessary to complete the distribution of the Registrable
Securities covered by the Registration Statement; provided that
the Issuer will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or
to take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(j) cooperate with the selling Holders and the
managing underwriter or agent, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends;
and enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any
sale of Registrable Securities to the underwriters;
(k) use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(l) not later than the effective date of the
applicable Registration, provide a CUSIP number for all
Registrable Securities and provide the applicable trustee or
transfer agent with printed certificates for the Registerable
Securities that are in a form eligible for deposit with The
Depository Trust Company;
(m) make such representations and warranties to
the Holders of Registrable Securities being registered, and the
underwriters or agents, if any, in form, substance and scope as
are customarily made by issuers in primary underwritten public
offerings;
(n) enter into such customary agreements
(including an underwriting agreement) and take all such other
actions as the majority of the Holders of any Registrable
Securities being sold or the managing underwriter or agent, if
any, reasonably request in order to expedite or facilitate the
Registration and disposition of such Registrable Securities;
(o) obtain for delivery to the Holders of
Registrable Securities being registered and to the underwriter or
agent an opinion or opinions from counsel for the Issuer, upon
consummation of the sale of such Registrable Securities to the
underwriters (the "Closing Date") in customary form and in form,
substance and scope reasonably satisfactory to such Holders,
underwriters or agents and their counsel;
(p) obtain for delivery to the Issuer and the
underwriter or agent, with copies to the Holders, a cold comfort
letter from the Issuer's independent public accountants in
customary form and covering such matters of the type customarily
covered by cold comfort letters as the managing underwriter or
the Holders of a majority of the Registrable Securities being
sold reasonably request, dated the effective date of the
Registration Statement and brought down to the Closing Date;
(q) cooperate with each seller of Registrable
Securities and each underwriter or agent participating in the
disposition of such Registrable Securities and their respective
counsel in connection with any filings required to be made with
the NASD;
(r) make available for inspection by a
representative of the Holders of a majority of the Registrable
Securities, any underwriter participating in any disposition
pursuant to such Registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other
records, pertinent corporate documents and properties of the
Issuer, and cause the Issuer's officers, directors and employees
to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection
with such Registration; provided that any records, information or
documents that are designated by the Issuer in writing as
confidential shall be kept confidential by such Persons unless
disclosure of such records, information or documents is required
by law;
(s) use its best efforts to comply with all
applicable rules and regulations of the SEC and make generally
available to its security holders, as soon as reasonably
practicable (but not more than 18 months) after the effective
date of the Registration Statement, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act
and the rules and regulations promulgated thereunder;
(t) as promptly as practicable after filing with
the SEC of any document that is incorporated by reference into
the Registration Statement or the Prospectus, provide copies of
such document to counsel for the selling Holders and to the
managing underwriters, if any; and
(u) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by
such Registration Statement from and after a date not later than
the effective date of such Registration Statement.
The Issuer may require each seller of Registrable
Securities as to which any Registration is being effected to
furnish to the Issuer such information regarding the distribution
of such securities and such other information relating to such
Holder and its ownership of Registrable Securities as the Issuer
may from time to time reasonably request in writing. Each Holder
agrees to furnish such information to the Issuer and to cooperate
with the Issuer as necessary to enable the Issuer to comply with
the provisions of this Agreement.
Each Holder agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the
Issuer of the happening of any event of the kind described in
Section 6(d) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to such
Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by
Section 6(d) hereof, or until it is advised in writing by the
Issuer that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus, and, if so
directed by the Issuer, such Holder will deliver to the Issuer
(at the Issuer's expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of
receipt of such notice.
7. Registration Expenses
All expenses incident to the Issuer's performance
of or compliance with this Agreement, including without
limitation (i) all registration and filing fees, and any other
fees and expenses associated with filings required to be made
with any stock exchange, the SEC and the NASD (including, if
applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel as may be required by the rules and
regulations of the NASD), (ii) all fees and expenses of
compliance with state securities or blue sky laws (including fees
and disbursements of counsel for the underwriters or selling
Holders in connection with blue sky qualifications of the
Registrable Securities and determination of their eligibility for
investment under the laws of such jurisdictions as the managing
underwriters or the majority of the Holders of the Registrable
Securities being sold may designate), (iii) all printing and
related messenger and delivery expenses (including expenses of
printing certificates for the Registrable Securities in a form
eligible for deposit with The Depository Trust Company and of
printing prospectuses), (iv) all fees and disbursements of
counsel for the Issuer and of all independent certified public
accountants of the Issuer (including the expenses of any "cold
comfort" letters required by or incident to such performance),
(v) Securities Act liability insurance if the Issuer so desires
or the underwriters so require, (vi) all fees and expenses
incurred in connection with the listing of the Registrable
Securities on any securities exchange and all rating agency fees,
(vii) all reasonable fees and disbursements of one counsel
selected by the Holders of the Registrable Securities being
registered to represent such Holders in connection with such
registration, (viii) all fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities,
excluding underwriting discounts and commissions and transfer
taxes, if any, and fees and disbursements of counsel to
underwriters (other than such fees and disbursements incurred in
connection with any registration or qualification of Registrable
Securities under the securities or blue sky laws of any state),
and (ix) fees and expenses of other Persons retained by the
Issuer (all such expenses being herein called "Registration
Expenses"), will be borne by the Issuer, regardless of whether
the Registration Statement becomes effective (except as provided
in Section 3(e) hereof). The Issuer will, in any event, pay its
internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or
accounting duties), the expense of any audit and the fees and
expenses of any Person, including special experts, retained by
the Issuer.
8. Indemnification
(a) Indemnification by Issuer. The Issuer agrees
to indemnify and hold harmless, to the full extent permitted by
law, each Holder, its officers, directors and employees and each
Person who controls such Holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of
a material fact contained in any Registration Statement,
Prospectus or preliminary Prospectus or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Issuer by such
Holder expressly for use therein; provided, however, that the
Issuer shall not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of
or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any such preliminary
Prospectus if (i) such Holder failed to deliver or cause to be
delivered a copy of the Prospectus to the Person asserting such
loss, claim, damage, liability or expense after the Issuer had
furnished such Holder with a sufficient number of copies of the
same and (ii) the Prospectus completely corrected in a timely
manner such untrue statement or omission; and provided, further,
that the Issuer shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission in the
Prospectus, if such untrue statement or alleged untrue statement,
omission or alleged omission is completely corrected in an
amendment or supplement to the Prospectus and the Holder
thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of the
Registrable Securities to the Person asserting such loss, claim,
damage, liability or expense after the Issuer had furnished such
Holder with a sufficient number of copies of the same in a timely
manner. The Issuer will also indemnify underwriters, selling
brokers, dealer managers and similar securities industry
professionals participating in the distribution, their officers
and directors and each Person who controls such Persons (within
the meaning of the Securities Act) to the same extent as provided
above with respect to the indemnification of the Holders, if
requested.
(b) Indemnification by Selling Holder of
Underlying Securities. In connection with each Registration,
each selling Holder shall furnish to the Issuer in writing such
information and affidavits as the Issuer reasonably requests for
use in connection with any Registration Statement or Prospectus
and agrees to indemnify and hold harmless, to the full extent
permitted by law, the Issuer, its directors and officers and each
Person who controls the Issuer (within the meaning of the
Securities Act) against any losses, claims, damages or
liabilities and expenses resulting from any untrue statement of a
material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary
Prospectus or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such
untrue statement or omission is contained in any information or
affidavit so furnished in writing by such selling Holder to the
Issuer specifically for inclusion in such Registration Statement
or Prospectus and has not been corrected in a subsequent writing
prior to or concurrently with the sale of the Registrable
Securities to the Person asserting such loss, claim, damage,
liability or expense. In no event shall the liability of any
selling Holder hereunder or under any underwriting agreement be
greater in amount than the dollar amount of the proceeds received
by such Holder upon the sale of the Registrable Securities giving
rise to such indemnification obligation. The Issuer shall be
entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the
distribution, to the same extent as provided above with respect
to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration
Statement.
(c) Conduct of Indemnification Proceedings. Any
Person entitled to indemnification hereunder will (i) give prompt
(but in any event within 30 days after such Person has actual
knowledge of the facts constituting the basis for
indemnification) written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and
(ii) permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified
party; provided, however, that any delay or failure to so notify
the indemnifying party shall relieve the indemnifying party of
its obligations hereunder only to the extent, if at all, that it
is prejudiced by reason of such delay or failure; provided,
further, that any Person entitled to indemnification hereunder
shall have the right to select and employ separate counsel and to
participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person
unless (a) the indemnifying party has agreed in writing to pay
such fees or expenses, or (b) the indemnifying party shall have
failed to assume the defense of such claim within a reasonable
time after receipt of notice of such claim from the Person
entitled to indemnification hereunder and employ counsel
reasonably satisfactory to such Person or (c) in the reasonable
judgment of any such Person, based upon advice of its counsel, a
conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if
the Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such
Person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such
consent will not be unreasonably withheld), provided that an
indemnified party shall not be required to consent to any
settlement involving the imposition of equitable remedies or
involving the imposition of any material obligations on such
indemnified party other than financial obligations for which such
indemnified party will be indemnified hereunder. No indemnifying
party will be required to consent to entry of any judgment or
enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. Whenever the
indemnified party or the indemnifying party receives a firm offer
to settle a claim for which indemnification is sought hereunder,
it shall promptly notify the other of such offer. If the
indemnifying party refuses to accept such offer within 20
business days after receipt of such offer (or of notice thereof),
such claim shall continue to be contested and, if such claim is
within the scope of the indemnifying party's indemnity contained
herein, the indemnified party shall be indemnified pursuant to
the terms hereof. If the indemnifying party notifies the
indemnified Party in writing that the indemnifying party desires
to accept such offer, but the indemnified party refuses to accept
such offer within 20 business days after receipt of such notice,
the indemnified party may continue to contest such claim and, in
such event, the total maximum liability of the indemnifying party
to indemnify or otherwise reimburse the indemnified party
hereunder with respect to such claim shall be limited to and
shall not exceed the amount of such offer, plus reasonable out-of
pocket costs and expenses (including reasonable attorneys' fees
and disbursements) to the date of notice that the indemnifying
party desires to accept such offer, provided that this sentence
shall not apply to any settlement of any claim involving the
imposition of equitable remedies or to any settlement imposing
any material obligations on such indemnified party other than
financial obligations for which such indemnified party will be
indemnified hereunder. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel
for all parties indemnified by such indemnifying party with
respect to such claim, unless in the written opinion of counsel
to the indemnified party, reasonably satisfactory to the
indemnifying party, use of one counsel would be expected to give
rise to a conflict of interest between such indemnified party and
any other of such indemnified parties with respect to such claim,
in which event the indemnifying party shall be obligated to pay
the fees and expenses of one such additional counsel.
(d) Other Indemnification. Indemnification
similar to that specified in this Section 8 (with appropriate
modifications) shall be given by the Issuer and each seller of
Registrable Securities with respect to any required registration
or other qualification of securities under federal or state law
or regulation of governmental authority other than the Securities
Act.
(e) Contribution. If for any reason the
indemnification provided for in the preceding clauses (a) and (b)
is unavailable to an indemnified party or insufficient to hold it
harmless as contemplated by the preceding clauses (a) and (b),
then the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the
relative fault of the indemnified party and the indemnifying
party, as well as any other relevant equitable considerations,
provided that no selling Holder shall be required to contribute
in an amount greater than the dollar amount of the proceeds
received by such selling Holder with respect to the sale of any
securities. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
9. Rule 144
The Issuer covenants that it will file the reports
required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC
thereunder, and it will take such further action as any Holder
may reasonably request, all to the extent required from time to
time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of
the exemption provided by (a) Rule 144 under the Securities Act,
as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon
the request of any Holder, the Issuer will deliver to such Holder a
written statement as to whether it has complied with such
information and requirements. Notwithstanding anything contained
in this Section 9, the Issuer may deregister under Section 12 of
the Exchange Act if it then is permitted to do so pursuant to the
Exchange Act and the rules and regulations thereunder.
10. Additional Parties
The Issuer may enter into various stockholder's
and stock option agreements on or subsequent to the date hereof
with certain key employees of the Issuer or one of its
subsidiaries (the "Management Investors") pursuant to which the
Management Investors will agree to purchase and/or will receive
options to purchase shares of Common Stock. Such
agreements may provide that (i) in the event the Issuer registers
shares of Common Stock held by the Investors, the Management
Investors have the right, subject to certain conditions, to
require the Issuer to register under the Securities Act shares of
Common Stock held by them, and (ii) the Management Investors will
agree to be bound by all of the terms, conditions and obligations
of this Agreement. Each of the parties hereto acknowledges the
registration rights of the Management Investors and agrees that
the Issuer's obligations under this Agreement, including, in
particular, its obligations under Section 4(b) hereof, coincide
with its obligations to the Management Investors, with respect to
registration rights. The parties hereto agree that (i) each
Management Investor is a third-party beneficiary of Sections
3(d), 4(c) and 7 hereof to the extent such Management Investor
has the right to require the Issuer to register under the
Securities Act shares of Common Stock held by him upon receiving
notice of a Registration requested by the Investors pursuant to
Sections 3 or 4 hereof, and (ii) such Management Investors shall
have no rights to request Registration under Section 3 hereof.
11. Participation in Underwritten Registrations
No Person may participate in any Underwritten
Registration hereunder unless such Person (a) agrees to sell such
Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled to approve such
arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting
arrangements. Nothing in this Section 11 shall be construed to
create any additional rights regarding the Registration of
Registrable Securities in any Person otherwise than as set forth
herein.
12. Miscellaneous
(a) Remedies. Remedies for breach by the Issuer
of its obligations to register the Registrable Securities shall
be as set forth herein. Each Holder, in addition to being
entitled to exercise all rights provided herein or granted by
law, including recovery of damages, shall be entitled to specific
performance of its rights under this Agreement. The Issuer
agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at
law would be adequate.
(b) Amendments and Waivers. The provisions of
this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless
the Issuer has obtained the written consent of the Holders of a
majority of the outstanding Registrable Securities; provided,
however, that the Issuer and the Investors may amend, modify or
supplement the provisions of this Agreement and may waive or
consent to departures from the provisions hereof, without the
consent of the Holders of a majority of the outstanding
Registrable Securities so long as such amendment, modification,
supplement, waiver or consent does not materially adversely
affect the rights of Holders of Registrable Securities hereunder,
or so long as such amendment, modification, supplement, waiver or
consent affects the rights of the Investors and other Holders of
Registrable Securities hereunder equally.
(c) Notices. All notices and other
communications provided for or permitted hereunder shall be made
in writing by hand delivery, registered first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, to the most current
address given by such Holder to the Issuer in accordance
with the provisions of this Section 12(c), which address
initially is, with respect to the Investors, c/o Gem Gaming,
Inc., 777 West Lake Mead Drive, Henderson, Nevada 89015,
Attention: Dominic J. Magliarditi; and
(ii) if to the Issuer, initially to the
address set forth below and thereafter to such other
address, notice of which is given in accordance with the
provisions of this Section 12(c): Ameristar Casinos, Inc.,
550 Blue Lakes Boulevard North, Twin Falls, Idaho 83301,
Attention: Brian E. Katz.
All such notices and communications shall be
deemed to have been duly given: at the time delivered by hand, if
personally delivered; four business days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged by addressee, if by facsimile
transmission; and on the next business day if timely delivered to
an air courier guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement,
including, without limitation, all registration rights in
connection with the ownership of all or a portion of the
Registrable Securities pursuant to Sections 3 and 4 hereof, shall
inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including, without limitation and
without the need for an express assignment, subsequent Holders of
Registrable Securities who agree in writing to be bound by the
provisions of this Agreement.
(e) Counterparts. This Agreement may be executed
in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original, including counterparts transmitted by
facsimile, and all of which taken together shall constitute one
and the same agreement.
(f) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Nevada, without regard to the principles of conflicts of
laws.
(h) Severability. In the event that any one or
more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any
such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired
thereby.
(i) Entire Agreement. This Agreement, the Merger
Agreement, the Ancillary Agreements, the Interim Funding
Agreement, the Escrow Agreement, together with all exhibits and
schedules hereto and thereto, and the Confidentiality Agreements,
constitute the entire agreement among the parties hereto in
respect of the subject matter contained herein and supersede all
prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. There are no
restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein with respect to the
registration rights granted by the Issuer with respect to the
securities issued pursuant to the Merger Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
Issuer: AMERISTAR CASINOS, INC.,
a Nevada Corporation
By:
Name: Craig H. Neilsen
Title: President
On this _____ day of _____________________, 19____, Craig H.
Neilsen directed ________________________________________, in his
presence as well as our own, to sign the foregoing document as
"Craig H. Neilsen." Upon viewing the signature as signed by
______________________________________, and in our presence,
Craig H. Neilsen declared to us that he adopted it as his own
signature.
Witness
Witness
State of Nevada )
) ss.
County of Clark )
I, _________________________________, Notary Public in and
for said county and state, do hereby certify that Craig H.
Neilsen personally appeared before me and is known or identified
to me to be the _________________________ of
_________________________, the corporation that executed the
within instrument or the person who executed the instrument on
behalf of said corporation. Craig H. Neilsen, who being unable
due to physical incapacity to sign his name or offer his mark,
did direct ______________________________________, in his
presence, as well as my own, to sign his name to the foregoing
document. Craig H. Neilsen, after viewing his name as signed by
___________________________________________, thereupon adopted it
as his own by acknowledging to me his intention to so adopt as if
he had personally executed the same in behalf of said
corporation, and further acknowledged to me that such corporation
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal this _____ day of ______________________, 19____.
Notary Public
My Commission Expires on:
Investor: STEVEN W. REBEIL,
an individual
STEVEN W. REBEIL,
in his capacity as Trustee of the
Karizma Trust created under that certain Trust
Agreement, dated July 2, 1991, as amended,
DOMINIC J. MAGLIARDITI,
an individual
EXHIBIT O
FORM OF REGISTRATION RIGHTS CONSENT AND VOTING AGREEMENT
CRAIG H. NEILSEN
C/O AMERISTAR CASINOS, INC.
550 BLUE LAKES BOULEVARD NORTH
TWIN FALLS, IDAHO 83301
May ___, 1996
Ameristar Casinos, Inc.
550 Blue Lakes Boulevard North
Twin Falls, Idaho 83301
Re: Registration Rights
To whom it may concern:
Pursuant to Section 4.2.2.13 of that certain Plan of
Reorganization dated as of November 15, 1993 (the "Plan") by and
among Craig H. Neilsen, Ameristar Casinos, Inc. ("Ameristar"),
and Craig H. Neilsen, in his capacity as Trustee of the
testamentary trust created under the Last Will and Testament of
Ray Neilsen, dated October 9, 1963, the undersigned, as the
holders of a majority of the Shares held by the Holders, hereby
consent to Ameristar's entering into a registration rights
agreement (the "Registration Rights Agreement") with Gem Gaming,
Inc. ("Gem"), in substantially the form attached to that certain
Merger Agreement dated May 31, 1996 by and among Gem, Ameristar,
Ameristar Casino Las Vegas, Inc., Steven W. Rebeil ("Rebeil"),
and Dominic J. Magliarditi (the "Merger Agreement"), and
acknowledge that the Registration Rights Agreement may have the
effect of diminishing the amount of Shares included in a
registration filed by Ameristar. Capitalized terms used herein
without definition have the meanings ascribed to them in the
Plan.
The undersigned also agrees that, subject to the
undersigned's fiduciary duties as a stockholder and member of the
Board of Directors of Ameristar and as Trustee of the
testamentary trust created under the Last Will and Testament of
Ray Neilsen, dated October 9, 1963, so long as Rebeil continues
to own at least five percent (5%) of the voting capital stock of
Ameristar Casinos, Inc. ("Ameristar"), the undersigned will
continue to support and use good faith efforts to cause
Ameristar's Board of Directors to support the election of Rebeil
to the Board of Directors of Ameristar, and thereafter to vote
his voting capital stock in Ameristar and any other voting
capital stock of Ameristar that he controls as a trustee to elect
Rebeil to the Board of Directors of Ameristar, all of the
foregoing, for so long as none of the following circumstances
exist:
(i) Rebeil, either alone or in concert with other
persons, shall have attempted to or be in the process of
attempting to obtain control of sufficient shares of the voting
capital stock of Ameristar to elect at least a majority of the
members of the Board of Directors of Ameristar;
(ii) Rebeil shall be mentally or otherwise incompetent
to serve on the Board of Directors of Ameristar; or
(iii) Rebeil shall have become a Disqualified
Holder (as such term is defined in the Merger Agreement).
CRAIG H. NEILSEN
CRAIG H. NEILSEN, in
his capacity as sole Trustee of the
testamentary trust created under the
Last Will and Testament of Ray Neilsen,
dated October 9, 1963.
On this ______ day of ____________________, 19____, Craig H.
Neilsen directed ________________________________________, in his
presence as well as our own, to sign the foregoing document as
"Craig H. Neilsen." Upon viewing the signature as signed by
_________________________________________, and in our presence,
Craig H. Neilsen declared to us that he adopted it as his own
signature.
Witness
Witness
State of Nevada )
) ss.
County of Clark )
I, ______________________________, Notary Public in and for
said county and state, do hereby certify that Craig H. Neilsen
personally appeared before me and is known or identified to me to
be the person whose name is subscribed to the within instrument.
Craig H. Neilsen, who being unable due to physical incapacity to
sign his name or offer his mark, did direct
________________________________, in his presence, as well as my
own, to sign the foregoing document as "Craig H. Neilsen." Craig
H. Neilsen, after viewing his name as signed by
________________________________, thereupon adopted it as his own
by acknowledging to me his intention to so adopt as if he had
personally executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal this ____ day of __________________________, 19____.
Notary Public
My Commission Expires on:
EXHIBIT P
FORM OF ESCROW AGREEMENT AND ESCROW INSTRUCTIONS
[To be executed concurrently]
OPERATING AGREEMENT
OF
NEVADA AG AIR, LTD.,
A NEVADA LIMITED-LIABILITY COMPANY
Dated as of July 5, 1996
OPERATING AGREEMENT
OF
NEVADA AG AIR, LTD.,
A NEVADA LIMITED-LIABILITY COMPANY
This Operating Agreement ("Agreement") is made and entered
into at Las Vegas, Nevada, as of this fifth day of July, 1996, by
and between the undersigned, GEM AIR, INC., a Nevada corporation
("Gem Air"), and AMERISTAR CASINOS, INC., a Nevada corporation
("ACI"), who constitute all of the Members of NEVADA AG AIR,
LTD., a Nevada limited-liability company (the "Company"), with
reference to the recitals set forth below.
R E C I T A L S
A. The undersigned Members have formed the Company
pursuant to the provisions of Chapter 86 of the Nevada Revised
Statutes.
B. The undersigned Members desire, by this Agreement, to
set forth their agreement as to the affairs of the Company and
the conduct of its business.
NOW, THEREFORE, in consideration of the covenants and
promises made herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
I.1 Adjusted Capital Account Deficit. "Adjusted Capital
Account Deficit" means, with respect to any Member, the deficit
balance, if any, in such Member's Capital Account as of the end
of the relevant Fiscal Year, after giving effect to the following
adjustments:
(a) increase such Capital Account by any amounts which such
Member is obligated to contribute to the Company pursuant to the
terms of this Agreement or otherwise, or is deemed to be
obligated to contribute pursuant to Regulations 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) reduce such Capital Account by the amount of the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6).
I.2 Affiliate. "Affiliate" means, when used with reference
to a specified Person, (a) the principal of such Person, (b) any
Person directly or indirectly controlling, controlled by or under
common control with such Person, (c) any Person owning or
controlling ten percent (10%) or more of the outstanding voting
interests of such Person and (d) any relative or spouse of such
Person.
I.3 Agreement. "Agreement" means this Operating Agreement,
as originally executed and as amended from time to time, as the
context requires.
I.4 Assignment of Lease. "Assignment of Lease" means an
Assignment, Acceptance and Consent that has been executed and
acknowledged by an authorized representative of Gem Air, of Clark
County, Nevada and of Johnny Ribeiro Builder, Inc. of Nevada, a
Nevada corporation, in the form of Exhibit "C" attached hereto
and incorporated herein by reference.
I.5 Capital Account. "Capital Account" means, with respect
to any Member, the capital account maintained for such Member as
set forth in Section 3.2 after giving effect to the adjustments
set forth in Sections 3.3 and 3.4.
I.6 Capital Contribution. "Capital Contribution" shall
mean, with respect to any Member, the total amount of cash and
the agreed fair market value (net of liabilities) of other assets
contributed to the Company by such Member and any subsequent
contributions of cash and the agreed fair market value (net of
liabilities) of any other property subsequently contributed to
the Company by such Member, as set forth in detail in Article III
hereof.
I.7 Cash Available for Distribution. "Cash Available For
Distribution" means the total cash revenues generated by the
Company's operations (including proceeds from the sale of Company
assets or the refinancing of any loan to the Company), less all
cash expenditures of the Company for debt service, operating
expenses and capital improvements and replacements (including,
without limitation, principal and interest payable on any
indebtedness of the Company; legal, accounting, brokerage or
similar service fees; and real estate taxes and assessments), and
less a reasonable amount determined by the Company to be set
aside for reserves, contingencies and anticipated obligations as
determined by the Manager.
I.8 Code. "Code" means the Internal Revenue Code of 1986,
as amended from time to time.
I.9 Fiscal Year. "Fiscal Year" means the period commencing
on January 1 of each calendar year and terminating on December 31
of such calendar year.
I.10 FRPTA Affidavit. "FRPTA Affidavit" means an affidavit
of Gem Air in the form of Exhibit "D" duly executed by an
authorized representative of Gem Air.
I.11 Grant Deed. "Grant Deed" means a grant deed conveying
fee title in the structures, fixtures and other improvements
constituting a portion of the Real Property to the Company on the
Title Company's standard form.
I.12 Ground Lease. "Ground Lease" means that certain Ground
Lease executed by Johnny Ribeiro Builder, Inc. of Nevada, a
Nevada corporation, in favor of Gem Air recorded August 24, 1994
in Book 940624 as Instrument No. 00225, Official Records of the
Clark County Recorder.
I.13 Lease. "Lease" means a Lease of the Real Property in
the form of Exhibit "E" attached hereto and incorporated herein
by this reference to be entered into by and between ACI and the
Company.
I.14 Lien. "Lien" means any claim, lien, pledge, option,
charge, easement, security interest, deed of trust, mortgage,
right-of-way, encroachment, building or use restriction,
conditional sales agreement, encumbrance or other right of third
parties, whether voluntarily incurred or arising by operation of
law, and includes, without limitation, any agreement to give any
of the foregoing in the future, and any contingent sale or other
title retention agreement or lease in the nature thereof.
I.15 Majority. "Majority" means, for any meeting of
Members, the presence in person or by proxy of Members owning an
aggregate fifty-one percent (51%) or more Percentage Interest in
the Company at the time of the action taken.
I.16 Manager. "Manager" means each Person elected to manage
the Company pursuant to Section 10.1 of this Agreement.
I.17 Member Nonrecourse Debt. "Member Nonrecourse Debt" has
the meaning set forth in Regulations Section 1.704-2(b)(4).
I.18 Member Nonrecourse Debt Minimum Gain. "Member
Nonrecourse Debt Minimum Gain" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a
nonrecourse liability of the Company, determined in accordance
with Regulations Sections 1.704-2(i)(2) and (3).
I.19 Member Nonrecourse Deductions. "Member Nonrecourse
Deductions" has the meaning set forth in Regulations Section
1.704-2(i)(2). The amount of Member Nonrecourse Deductions with
respect to a Member Nonrecourse Debt for a Fiscal Year of the
Company equals the excess (if any) of the net increase (if any)
in the amount of the Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt during that Fiscal
Year over the aggregate amount of any distributions during that
Fiscal Year to the Member that bears (or is deemed to bear) the
economic loss for such Member Nonrecourse Debt to the extent such
distributions are from the proceeds of such Member Nonrecourse
Debt and are allocable to an increase in Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(2).
I.20 Members. "Member" means a Person who (a) has been
admitted to the Company as a member in accordance with the
Articles of Organization or this Agreement, or an assignee of a
Member's interest (including the right to vote and to participate
in management), who has become a Member pursuant to Article VII
and (b) has not resigned, withdrawn or been expelled as a Member
or, if other than an individual, been dissolved.
I.21 Minimum Gain. "Minimum Gain" means the amount
determined by computing with respect to each nonrecourse
liability of the Company, the amount of gain of whatever
character, if any, that would be realized if it disposed in a
taxable transaction of the portion of the Property subject to
such liability in full satisfaction thereof, and by then
aggregating the amounts so computed as set forth in Regulations
Section 1.704-2(d).
I.22 Net Profits and Net Losses. "Net Profits and Net
Losses" mean, for each Fiscal Year or other period, the net
income or loss of the Company, as determined by the auditors or
accountants then employed by the Company, in accordance with
Section 703 of the Code, applied consistently with prior periods,
with the following adjustments:
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken in computing Net Profits or
Net Losses shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Code
Section 705(b)(2)(B) or treated as Code Section 705(b)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Net Profits or
Net Losses shall be subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Property
with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the fair
market value of the Property disposed of, notwithstanding that
the adjusted tax basis of such Property differs from its fair
market value;
(d) An amount equal to the depreciation, amortization or
other cost recovery reduction allowable with respect to an asset
for such Fiscal Year or other period; and
(e) Notwithstanding any other provisions of this
subsection, any items of income, gain, loss or deduction which
are specifically allocated shall not be taken into account in
computing Net Profits or Net Losses.
I.23 Percentage Interest. "Percentage Interest" means the
proportionate share of a Member's interest in the capital of the
Company.
I.24 Permitted Liens. "Permitted Liens" means with respect
to the Real Property, the items shown on the Preliminary Title
Report.
I.25 Person. "Person" means an individual, partnership,
limited partnership, corporation, trust, estate, association,
limited-liability company or other entity, whether domestic or
foreign.
I.26 Personal Property. "Personal Property" means that
certain personal property described in Schedule "1" to the Bill
of Sale attached hereto as Exhibit "H" and incorporated herein by
this reference.
I.27 Preliminary Title Report. "Preliminary Title Report"
means the preliminary title report on the Real Property issued by
Title Company, a copy of which is attached hereto as Exhibit "A"
and incorporated herein by this reference.
I.28 Property. "Property" means all assets of the Company,
both tangible and intangible, or any portion thereof.
I.29 Real Property. "Real Property" means that certain real
property located in Las Vegas, Clark County, Nevada, commonly
known as 135 East Reno, Suites F-3 and F-7, and more particularly
described on Exhibit "B" attached hereto and incorporated herein
by this reference, together with all improvements, fixtures,
trees, shrubs and other vegetation constructed or located thereon
and all easements, rights-of-way and other matters benefiting
such real property.
I.30 Regulations. "Regulations" means the federal income
tax regulations promulgated by the U.S. Treasury Department under
the Code, as such may be amended from time to time.
I.31 Secretary of State. "Secretary of State" means the
office of the Secretary of State of the State of Nevada.
I.32 Title Company. "Title Company" means Fidelity National
Title Company.
I.33 Title Policy. "Title Policy" shall mean the Title
Company's ALTA Owner's Leasehold Policy of Title Insurance, Form
B (1992) with the "western regional exceptions" deleted therefrom
dated as of the date hereof, insuring the Company in an amount
equal to Seven Hundred Fifty Thousand Dollars ($750,000.00), and
showing good and marketable fee simple title to the Real Property
vested in the Company free and clear of all covenants,
conditions, rights, rights of way, easements, liens,
encumbrances, or other matters affecting title to or use of the
Real Property, other than the exceptions contained in the
Preliminary Title Report together with the following endorsements
to such title policy: (i) ALTA Endorsement Form 4 and (ii) an
endorsement to the effect that the Company's coverage shall not
be limited or denied on the basis of the imputation of any
knowledge of Gem Air or any of its officers or directors to the
Company.
ARTICLE II.
INTRODUCTORY MATTERS
II.1 Principal Office. The principal office of the Company
in this state shall be located at 777 W. Lake Mead, Henderson,
Nevada 89015, which office may but need not be a place of its
business in this state. The Members may change the location of
the principal office from one location to another in the State of
Nevada as the Members may designate or as the business of the
Company may require.
II.2 Other Offices. Other offices may at any time be
established by the Members at any place or places.
II.3 Duration. The latest date upon which the Company is to
dissolve shall be June 30, 2025, unless earlier terminated prior
thereto in accordance with the provisions hereof by unanimous
agreement of the Members or pursuant to Chapter 86 of the Nevada
Revised Statutes.
II.4 Purpose. The purpose(s) for which this limited-
liability company is organized is/are to own and maintain the
Real Property and to engage in such other lawful enterprises as
may be incidental or appurtenant to the foregoing.
ARTICLE III
CAPITAL CONTRIBUTIONS
III.1 Initial Capital. The initial capital of the Company
shall be the initial Capital Contributions of the Members as more
completely described below:
(a) Contemporaneously with the execution of this Agreement,
ACI shall contribute cash or cash equivalents in an amount equal
to Two Hundred Eighty-Nine Thousand Nine Hundred Forty-Nine
Dollars ($289,949.00) plus the cost of the Title Policy to the
Company.
(b) Contemporaneously with the execution of this Agreement,
Gem Air shall contribute the Real Property to the Company, free
and clear of all Liens other than Permitted Liens.
(c) In connection with the contribution of the Real
Property to the Company, contemporaneously with the execution of
this Agreement, Gem Air shall execute and deliver to the Company
a Grant Deed and an Assignment of Lease conveying all of Gem
Air's interest and title in and to the Real Property to the
Company, together with (i) a consent and estoppel certificate
from each lender whose loan is secured by a lien or other
interest in the Real Property consenting to the sale and transfer
of the Real Property to the Company and certifying that the
amount of debt secured by such loan does not exceed Three Hundred
Twenty Thousand One Hundred Two Dollars and Fifteen Cents
($320,102.15) as of July 5, 1996 and that such lender is unaware
of any default or breach under any of the documents that secure
or evidence such loan and (ii) the FRPTA Affidavit. The Company
will cause the Grant Deed and the Assignment of Lease to be
recorded in the Official Records of the Clark County Recorder.
Promptly after the Company notifies Gem Air that the Grant Deed
has been recorded, Gem Air shall cause Title Company to issue the
Title Policy to the Company. Gem Air shall be deemed to have
contributed the Real Property to the Company only when the
Company shall have received the Tile Policy and ACI shall have
received a copy of the Title Policy.
(d) Contemporaneously with the execution of this Agreement,
Gem Air shall execute and deliver to the Company a Bill of Sale
(the "Bill of Sale") in the form attached hereto as
Exhibit "H" attached hereto and incorporated herein by
this reference.
(e) For the purposes of this Agreement the Real Property
and the Personal Property together shall be deemed to have a fair
market value equal to Five Hundred Seventy-Nine Thousand Eight
Hundred Ninety-Eight Dollars ($579,898.00) (net of liabilities
secured by such contributed property that the Company is
considered to assume or take subject to for purposes of Section
752 of the Code).
III.2 Capital Accounts. Capital Accounts shall be
established on the Company's books representing the Members'
respective Capital Contributions to the Company. A separate
Capital Account shall be maintained for each Member and, for book
purposes, separated into a contribution account and an income
(loss) account maintained according to generally accepted
accounting principles. The Capital Account of each contributing
Member shall be credited with the amount of such Member's initial
Capital Contribution upon receipt thereof by the Company.
III.3 General Rules for Adjustment of Capital Accounts. The
Capital Account of each Member shall be:
(a) Increased by:
(i) The amount of the Member's cash or in-kind capital
contributions to the Company;
(ii) The agreed fair market value of any property
contributed by the Member to the Company (net of liabilities
secured by any such contributed property that the Company is
considered to assume or take subject to for purposes of Section
752 of the Code);
(iii) The amount of Net Profits (items of income and gain,
including that from tax) allocated to the Member pursuant to
Article IV hereof or other provisions of this Agreement; and
(iv) Any other increases required by this Agreement or the
Regulations including Sections 1.704-2(g)(1) and 1.704-2(i)(5).
(b) Decreased by:
(i) All amounts paid or distributed to the Member, other
than amounts required to be treated as a payment for property or
services under the Code;
(ii) The agreed fair market value of any property (actually
and deemed) distributed in kind to the Member pursuant to this
Agreement (net of any liabilities secured by such distributed
property that such Member is considered to assume or take subject
to for purposes of Section 752 of the Code); and
(iii) The amount of Net Losses (items of deduction and loss)
allocated to the Member pursuant to Article IV hereof or other
provisions of this Agreement; and
(iv) Any other decreases required by the Regulations,
including the items described in Regulations Section 1.704-
1(b)(2)(ii)(d)(4), (5) and (6).
Before decreasing a Member's Capital Account with
respect to the distribution of any property to such Member, all
Members' accounts shall be adjusted to reflect the manner in
which the unrealized income gain, loss, and deduction inherent in
such property (that has not been previously
reflected in the Members' Capital Accounts) would be allocated
among the Members' if there were a taxable disposition of such
property by the Company on the date of distribution, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(e).
III.4 Special Rules With Respect to Capital Accounts.
(a) Consideration of Code. Notwithstanding any other
provision of this Agreement, each Member's Capital Account shall
be maintained and adjusted in accordance with the Code and the
Regulations, including Regulation Section 1.704-1(b)(2)(iv) and
appropriate adjustments to the Capital Accounts permitted in the
case of a Member who receives the benefit of any special basis
adjustments under Sections 734, 743 and 754 of the Code. In
determining the amount of any liability for purposes of Sections
3.3(a) and 3.3(b) above, there shall be taken into account
Section 752(c) of the Code and any other applicable provisions of
the Code and the Regulations.
(b) Revaluation of Assets. Members' Capital Accounts shall
be adjusted in accordance with, and upon the occurrence of an
event described in Regulations Section 1.704-1(b)(2)(iv)(f),
including the addition of new Members pursuant to Section 8.2
hereof or the receipt of additional capital contributions
pursuant to Section 3.7 hereof, to reflect a revaluation of
Company's assets on the Company's books. Such adjustments to the
Members' Capital Accounts shall be made in accordance with
Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of
depreciation, depletion, amortization and gain or loss with
respect to such revalued property.
(c) Time of Adjustment. For purposes of computing the
balance in a Member's Capital Account, no credit shall be given
for any Capital Contribution which such Member is to make until
such contribution is actually made.
(d) Intent to Comply with Treasury Regulations. All
provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Regulations Section
1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations. The Members shall make any
appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b).
III.5 Federal Income Tax Elections. The Company may make all
elections for federal income tax purposes, including but not
limited to an election pursuant to Code Section 754 to adjust the
basis of the Company's assets under Code Sections 734 or 743. In
the event an election pursuant to Code Section 754 is made by the
Company, upon the adjustment to the basis of the Company's
assets, the Members' Capital Accounts shall be adjusted in
accordance with the requirements of Regulation Section 1.704-
1(b)(2)(iv)(m).
III.6 Rights With Respect to Capital; Interest. No Member
shall have the right to withdraw or receive any return of its
Capital Contribution, and no Capital Contribution may be returned
in the form of property other than cash except as specifically
provided herein. No interest shall be paid or credited to the
Members on their Capital Accounts or upon any undistributed
profits left on deposit with the Company.
III.7 Additional Capital Contributions. In no event shall
any Member be required to make an additional Capital Contribution
to the Company, to make any loan, or to cause to be loaned to the
Company any money or assets. However, the Members may authorize
the Company to solicit additional Capital Contributions from the
Members in an amount determined by the Members (the "Amount
Solicited"). The Company shall send a notice of solicitation to
all the Members and each Member wishing to make an additional
Capital Contribution (each, a "Contributing Member") shall so
notify the Company in writing within twenty (20) days after
delivery of the notice, indicating the amount such Member is
willing to contribute (the "Offer of Contribution"). Unless the
Members otherwise agree, if the Contributing Members' Offers of
Contribution exceed the Amount Solicited, each Contributing
Member shall be entitled to contribute the proportion of the
Amount Solicited of such Contributing Member's Percentage
Interest, determined immediately before the solicitation for
Capital Contributions. If the aggregate Offers of Contribution
are less than the Amount Solicited, the Company may, at its
option, elect to accept the Offers of Contribution it has
received or reject such Offers of Contribution and cancel the
solicitation.
ARTICLE IV
PROFITS AND LOSSES
IV.1 Net Profits and Losses. Subject to the provisions of
this Article IV, the Net Profits and Losses of the Company for
any Fiscal Year shall be allocated and credited to the Members'
Capital Accounts in proportion to their Percentage Interests,
provided, however, that if, and to the extent that the allocation
of Net Loss in this manner would cause a Member to have an
Adjusted Capital Account Deficit at the end of the Fiscal Year,
then such Net Loss shall be allocated to the Member(s) who have a
positive Capital Account balance in proportion that such positive
balances bear to one another until the Capital Accounts of all
Members have been reduced to zero, after which the balance of any
such loss or deduction shall be allocated as otherwise provided
in this Article IV.
IV.2 Special Allocations.
(a) Qualified Income Offset. Except as provided in Section
4.2(b) hereof, in the event any Member unexpectedly receives any
adjustments, allocations or distributions described in clauses
(4), (5) or (6) of Regulations Section 1.704-1(b)(2)(ii)(d),
items of income and gain shall be specially allocated to each
such Member in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital
Account Deficit created by such adjustments, allocations or
distributions of such Member as quickly as possible. This
Section 4.2(a) is intended to constitute a "qualified income
offset" within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(d)(3).
(b) Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 4.2, if there is a net decrease in
Member Minimum Gain during any Fiscal Year, each Member who would
otherwise have an Adjusted Capital Account Deficit at the end of
such Fiscal Year shall be specially allocated, before any other
allocation under this Article IV, items of income and gain for
such Fiscal Year (and, if necessary, subsequent years) in
proportion to and to the extent of an amount equal to such
Member's share of the net decrease in Minimum Gain determined in
accordance with Regulations Section 1.704-2(g)(2). This Section
4.2(b) is intended to comply with, and shall be interpreted
consistently with, the "minimum gain chargeback" provisions of
Regulations Section 1.704-2(f).
(c) Member Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Article IV, but
except Section 4.2(b), if there is a net decrease in Member
Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any Fiscal Year of the Company, each
Member who has a share of the Member Nonrecourse Debt Minimum
Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of income and gain for such year (and,
if necessary, subsequent years) in an amount equal such Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(i)(4).
This Section 4.2(c) is intended to comply with, and shall be
interpreted consistently with, the "minimum gain chargeback"
requirement of that Section of the Regulations.
(d) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any Fiscal Year or other period shall be specially
allocated to the Member who bears (or is deemed to bear) the
economic risk of loss with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable in
accordance with Regulations Section 1.704-2(i)(2).
IV.3 Curative Allocations. The allocations set forth in
Sections 4.2(b), (c) and (d) (the "regulatory allocations") are
intended to comply with certain requirements of Regulations
Section 1.704-1(b). The regulatory allocations shall be taken
into account in allocating other profits, losses and items of
income, gain, loss and deduction among the Members so that, to
the extent possible, the net amount of such allocations of other
profits, losses and other items, and the regulatory allocations
to each Member, shall be equal to the net amount that would have
been allocated to each such Member if the regulatory allocations
had not occurred.
IV.4 Residual Allocations. Except as otherwise provided in
this Agreement all items of income, gain, loss, deduction and any
other allocations not otherwise provided for shall be divided
among the Members in the same proportions as they share Net
Profits or Net Losses, as the case may be, for the Fiscal Year.
IV.5 Fees to Members or Affiliates. Notwithstanding the
provisions of Section 4.1, in the event that any fees, interest
or other amounts paid to any Member or any Affiliate thereof
pursuant to this Agreement or otherwise, and deducted by the
Company in reliance on Section 707(a) and/or 707(c) of the Code,
are disallowed as deductions to the Company on its federal income
tax return and are treated as distributions, then:
(a) the Net Profits or Net Losses, as the case may be, for
the Fiscal Year in which such fees, interest, or other amounts
were paid shall be increased or decreased, as the case may be, by
the amount of such fees, interest, or other amounts that are
treated as distributions; and
(b) there shall be allocated to the Member to which (or to
whose Affiliate) such fees, interest, or other amounts were paid,
prior to the allocations pursuant to Section 4.1, an amount of
gross income for the Fiscal Year equal to the amount of such
fees, interest, or other amounts that are treated as
distributions.
IV.6 Section 704(c) Allocation. If Section 704(c) of the
Code applies to property (other than cash) contributed by a
Member to the Company (so as to take into account the variation
between the tax basis of such property and its fair market value
at the time of its contribution), then the Members' Capital
Accounts shall be adjusted in accordance with Regulations
Section 1.704-1(b)(2)(iv)(g) and such item of income, gain, loss, and
deduction with respect to any such property shall be allocated to
such Member solely for income tax purposes in the manner so required
or permitted.
IV.7 Federal Income Tax. It is the intent of the Company
and its Members that the Company will be governed by the
applicable provisions of Subchapter K of Chapter 1 of the Code.
ARTICLE V
DISTRIBUTIONS
V.1 Initial Distribution. Promptly after the date when Gem
Air shall have conveyed the Real Property and the Personal
Property to the Company and delivered the Bill of Sale and the
Title Policy to the Company, and a copy of the Title Policy to
ACI, the Company shall distribute Two Hundred Eighty-Nine
Thousand Nine Hundred Forty-Nine Dollars ($289,949.00).
V.2 Operating Distributions. The Company's Cash Available
For Distribution shall, at such times as the Manager of the
Company deems advisable, be distributed first, pro rata, among
the Members in the ratio of the principal loan balances
outstanding until all accrued but unpaid interest on all loans or
advances made by any Member to the Company (at the Member's
option), if any, has been paid and then the principal amounts
thereof, and second, to the Members in proportion to their
Percentage Interests as of the date of any such distribution.
V.3 Distribution on Dissolution and Liquidation. In the
event of the dissolution and liquidation of the Company for any
reason, after the payment of or provision for creditors,
including Members who are creditors, pursuant to NRS 86.521 and
other applicable law, and the payment of loans or advances that
may have been made by any of the Members for working capital, the
proceeds from the liquidation of the Company's Property shall be
distributed among the Members in accordance with their respective
positive Capital Account balances (after adjustments) in
accordance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
ARTICLE VI
MEMBERS
VI.1 Powers. Subject to the provisions of the Articles of
Organization, this Agreement, and the provisions of the Nevada
Revised Statutes, all powers shall be exercised by or under the
authority of, and the business and affairs of the Company shall
be controlled by, the Members. Without prejudice to such general
powers, but subject to the same limitations, it is hereby
expressly declared that the Members shall have the following
powers and that no Manager or Member shall take any action
described below unless such action shall have been approved by a
Vote of the Members:
(a) To select and remove the Managers, agents and employees
of the Company, prescribe such powers and duties for them as may
be consistent with law, the Articles of Organization or this
Agreement, fix their compensation, and require from them security
for faithful service. The Members shall remove the Manager only
if the Members unanimously agree to do so.
(b) To conduct, manage and control the affairs and business
of the Company, and to make such rules and regulations therefor
consistent with the law, with the Articles of Organization or
this Agreement.
(c) To change the principal office of this Company from one
location to another within Nevada; to fix and locate from time to
time one or more subsidiary offices of the Company; and to
designate any place within or without the State of Nevada for the
holding of any Members' meeting or meetings.
(d) To mortgage, lease, pledge, hypothecate, grant a
security interest in or otherwise dispose of any Property of the
Company, other than in the ordinary course of business;
(e) To borrow money and incur indebtedness for the purpose
of the Company, and to cause to be executed and delivered
therefor, in the Company name, promissory notes, bonds,
debentures, deeds of trust, mortgages, pledges, hypothecations or
other evidence of debt and securities.
VI.2 Compensation of Members. The Company shall have
authority to pay to any Member a reasonable salary for said
Member's services to the Company if all Members agree in writing.
It is understood that the salary paid to any Member under the
provisions of this Section shall be determined without regard to
the income of the Company and shall be considered as an operating
expense of the Company and shall be deducted as an expense item
in determining the net profits and losses of the Company.
V1.3 General Restrictions. No Member, Manager or other
officer of the Company shall have the right, power or authority
to do any of the following acts without the prior unanimous
written agreement of all the Members:
(a) expend or use any Company money or Property except upon
the account of and for the benefit of the Company;
(b) enter into or commit to any agreement, contract,
commitment or obligation on behalf of the Company obligating any
Member to find additional capital, to make or guarantee a loan or
to increase its personal liability to either the Company or third
parties;
(c) compromise, settle, or release any debt due the Company
except upon full payment thereof or except in the ordinary course
of business;
(d) possess or assign rights in specific Property for other
than a Company purpose, or assign the Property in trust for
creditors or on the assignee's promise to pay the debts of the
Company;
(e) pledge any of the Company's credit or Property for
other than company purposes;
(f) receive or permit any Member to receive any fee or
rebate, or to participate in any reciprocal business arrangements
that would have the effect of circumventing any of the provisions
hereof;
(g) materially alter the business of the Company or deviate
from any approved business plan of the Company as set forth in
this Agreement;
(h) permit or cause the Company to place title to any
Property in the name of a nominee;
(i) permit the Company's funds to be commingled with the
funds of any other Person;
(j) confess a judgment against the Company, the Property,
or any of the Members;
(k) dispose of any of the goodwill of the Company's
business;
(l) submit a Company claim or liability to arbitration;
(m) admit any person as a Member except as otherwise
provided in this Agreement;
(n) attempt to dissolve or withdraw from the Company;
(o) do any act in contravention of this Agreement; or
(p) do any other act which would make it impossible to
carry on the ordinary business of the Company.
VI.4 Action by the Members. All actions of the Members are
taken by the Members in proportion to their Percentage Interests
at the time of the action taken. Except as specifically
otherwise provided herein, the Members may vote, approve a matter
or take any action by the vote of Members at a meeting at which a
quorum is present, in person or by proxy, or without a meeting by
written consent. The vote of fifty-one percent (51%) of the
Majority (wherein each Member casts a number of votes in
proportion to the Member's Percentage Interest in the Company)
("Vote") shall be required to approve any action at any meeting
at which a quorum is present, unless a greater vote is required
or a lesser vote is provided for by this Agreement or by the
Nevada Revised Statutes. Except for the Managers, acting in
their capacity as Managers, no Member shall take any action with
respect to the Management or operation of the Company unless such
action shall have been approved by action of the Members.
VI.5 Place of Meetings of Members. The meetings of the
Members shall be held at the principal office of the Company set
forth in the Articles of Organization, unless some other
appropriate and convenient location, is designated in the notice
of the meeting.
VI.6 Annual Meetings. The annual meeting of the Members
shall be held on the first day of June of each year at the hour
of 11:00 p.m., beginning with the year 1997. Should said day
fall upon a legal holiday, then any such annual meeting of
Members shall be held at the same time and place on the next day
which is not a legal holiday. At the annual meeting, the Members
shall transact such business as may be properly brought before
the meeting.
VI.7 Notice. Written notice of each annual meeting signed
by the Manager or by such other person or persons as the Members
shall designate, shall be given to each Member entitled to vote
at the meeting, either personally, by mail with charges prepaid,
or by facsimile, addressed to such Member at his or her last
known business address appearing on the books of the Company. If
a Member gives no address, notice shall be deemed to have been
given him or her if sent by mail or by facsimile addressed to the
principal office of the Company. All such notices shall be sent
to each Member entitled thereto not less than ten (10) nor more
than sixty (60) calendar days before each annual meeting, and
shall specify the place, the day and the hour of such meeting.
VI.8 Special Meetings. Special meetings of the Members for
any purpose may be called at any time by the Manager or by one
or more Members holding in the aggregate more than a ten percent
(10%) Percentage Interest in the Company. Except in special
cases where other express provision is made by statute, notice of
such special meetings shall be given in the same manner as for
annual meetings of Members. Notices of any special meeting shall
specify, in addition to the place, day and hour of such meetings,
the purpose or purposes for which the meeting is called.
VI.9 Waiver of Notice. The transactions carried out at any
meeting of the Members, however called and noticed or wherever
held, shall be as valid as though had at a meeting regularly
called and noticed if (a) all of the Members are present at the
meeting, or (b) a quorum of the Members are present and if,
either before or after the meeting, each of the Members not
present signs a written waiver of notice or a consent to holding
such meeting or an approval of the minutes thereof, which waiver,
consent or approval shall be filed with the other records of the
Company or made a part of the minutes of the meeting, or (c) a
Member attends a meeting without notice and does not protest
prior to the meeting or at its commencement that notice was not
given to him or her.
VI.10 Adjourned Meetings And Notice Thereof. Any Members'
meeting, annual or special, whether or not a quorum is present,
may be adjourned from time to time by the vote of a Majority,
present in person or represented by proxy, but in the absence of
a quorum no other business may be transacted at any such meeting.
Other than by announcement at the meeting at which such
adjournment is taken, it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at
an adjourned meeting. However, when any Members' meeting, either
annual or special, is adjourned for thirty (30) days or more,
notice of the adjourned meeting shall be given as in the case of
an original meeting.
VI.11 Action By Written Consent. Any action which may be
taken at any annual or special meeting of Members may be taken by
the Members without a meeting if authorized by the written
consent of Members holding at least a fifty-one percent (51%)
Percentage Interest in the Company, unless a lesser vote is
provided for in this Agreement or the Nevada Revised Statutes.
In no instance where action is authorized by written consent need
a meeting of Members be called or noticed, however, unless the
consents of all Members have been given in writing, a copy of the
action taken by less than unanimous written consent must be sent
to all Members at least ten (10) days before consummation of the
action authorized by such approval.
VI.12 Quorum. A Majority of the Members shall constitute a
quorum at all meetings of the Members for the transaction of
business. Each Member shall be entitled to vote in proportion to
his or her Percentage Interest, provided that if, pursuant to the
Nevada Revised Statutes or the terms of this Agreement, a Member
is not entitled to vote on a specific matter, then such Member's
number of votes and Percentage Interest shall not be considered
for purposes of determining whether a quorum is present or
whether approval by the vote of the Members has been obtained, in
respect of such specific matter.
VI.13 Delegation of Authority To Members and Managers. Any
one or more of the Managers or Members may at any time or times,
and for such period as the Members shall determine, be delegated
the authority to determine questions relating to specific areas
of the conduct, operation, and management of the Company. Until
such direction or delegation of authority is made, however, the
Members and Managers shall have the authority set forth in this
Article VI and Article X below and that given them by the
Members.
VI.14 Expense Reimbursements. The Company shall reimburse
the Members for all expenses reasonably incurred by them on
behalf of the Company or in connection with the performance of
their obligations hereunder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
VII.1 Reciprocal Representations and Warranties. Each of the
Members represents and warrants to the other Members, as of the
date hereof, after giving effect to the execution and delivery of
this Agreement, as follows:
VII.1.1 Neither such Member nor any Affiliate, any agent or
other Person acting on behalf of such Member, directly or
indirectly, has offered any of the Interests or any similar
security of the Company for sale to or solicited offers to buy
any thereof from any Person.
VII.1.2 Such Member's execution, delivery and performance of
this Agreement and, in the case of Gem Air only, the Grant Deed,
has been duly authorized by all necessary actions on its part,
and does not contravene, or constitute a default under, any
provision of applicable law or regulation or of this Agreement or
of any material agreement, lease, judgment, injunction, order,
decree or other instrument binding upon it or any of its
Affiliates or result in the creation or imposition of any lien on
any of its assets or the assets of any of its Affiliates.
VII.1.3 There is no action, suit or proceeding pending against,
or to such Member's knowledge threatened against or affecting, it
or any of its Affiliates or any of its or their rights or assets
before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an
adverse decision which could adversely affect the business,
financial position or results of operations of the Company or
which in any manner draws into question the validity of this
Agreement or, in the case of Gem Air only, the Grant Deed and the
Assignment of Lease.
VII.1.4 This Agreement represents its legally valid and binding
agreement.
VII.2 Representations and Warranties of Gem Air. Gem Air
represents and warrants to ACI and the Company, as of the date
hereof, after giving effect to the execution and delivery of this
Agreement as follows:
VII.2.1 There are no leases, subleases, occupancies, or
tenancies in effect pertaining to the Real Property other than
the Ground Lease and, there are no oral agreements with any third
parties providing rights of occupancy with respect to the Real
Property.
VII.2.2 Other than this Agreement, Gem Air has not entered into
any sales contracts for the sale of all or any portion of the
Real Property in bulk or otherwise and there are no unrecorded
agreements, options, or rights of first refusal to purchase all
or part of the Real Property.
VII.2.3 Gem Air has not conducted or authorized the placement,
generation, transportation, storage, release, treatment or
disposal at or around the Real Property of any material amounts
of any hazardous substance; and there has never been any release
of material amounts of any hazardous substances in, on, under,
about or within the Real Property.
VII.2.4 All of the improvements that constitute a portion of
the Real Property have been constructed and used in compliance
with all laws and in accordance with commercial reasonable
construction practice. All such improvements have been made with
all required governmental permits, final inspections and
approvals and Gem Air has not received any notice of any
violation of any City, County, State or Federal building, zoning,
fire or health laws, codes, statutes, ordinances, regulations or
rules filed or issued against the Real Property.
VII.2.5 Gem Air is the sole legal and beneficial owner of the
Real Property, and Gem Air holds leasehold title to the portion
of the Real Property described as Tract A on the Title Report and
holds fee title to the portion of the Real Property described as
Tract B on the title report, in each case free and clear of any
and all liens other than Permitted Liens; and upon the execution
and recordation of the Grant Deed with the Clark County Recorder's
Office, Gem Air shall have conveyed to the Company good and
merchantable title to the Real Property free and clear of any and
all Liens other than Permitted Liens.
VII.2.6 A true and complete copy of the Ground Lease is
attached hereto as Exhibit "F" and incorporated herein by this
reference. The Ground Lease continues in full force and effect
and has not been assigned, modified, supplemented or amended in
any way.
VII.2.7 Gem Air has neither delivered nor received any notice
that Gem Air has committed a default under the Ground Lease, and
there are no uncured defaults by Gem Air under the Ground Lease
and Gem Air knows of no event or condition which has occurred or
exists or which with the passing of time, the giving or notice,
or both, would constitute a default by Gem Air under the Ground
Lease. As of the date hereof, Gem Air has made all payments
required to be made under the Ground Lease.
VII.2.8 A full and complete copy of the Business Loan Agreement
by and between Bank of America, Nevada, a Nevada banking
corporation (the "Bank") and Gem Air is attached hereto as
Exhibit "G" (the "Business Loan Agreement"). The Business Loan
Agreement and that certain Deed of Trust made by Gem Air to the
Bank and recorded August 24, 1994 in Book 940824 as Instrument
No. 00226 of the Official Records in the Office of the Clark
County Recorder constitute all of the agreement between the Bank
and Gem Air. The aggregate principal amount plus accrued
interest of the loan evidenced by the Business Loan Agreement
Three Hundred Twenty Thousand One Hundred Two Dollars and Fifteen
Cents ($320,102.15). Gem Air is not in default under the
Business Loan Agreement and the Bank has not delivered to Gem Air
any notice of the Bank's intent or ability to accelerate or to
terminate the Business Loan Agreement. Gem Air is not aware of
any events or conditions which have occurred or exist or which
with the passing of time, the giving or notice, or both, would
constitute a default by Gem Air under the Business Loan Agreement
or any document securing it.
ARTICLE VIII
TRANSFER OF MEMBERS' INTERESTS, ADMISSION OF NEW
MEMBERS, AND DEFAULT BY MEMBER
VIII.1 Approval of Members. The interest of each Member of
the Company is personal property, and such interest may be
transferred and assigned only as provided in this Agreement. No
transfer, hypothecation, encumbrance or assignment of a Member's
interest, or any part thereof, shall be valid without the consent
of a Majority of the Members of the Company other than the Member
proposing to dispose of its interest unless such transfer is to a
wholly-owned subsidiary of such Member, in which case, such
transfer shall be deemed approved. If the transfer is so
approved, as a substituted Member, the transferee shall have all
the rights and powers and be subject to all the restrictions and
liabilities of its assignor, and shall have the right to
participate in the management of the business and affairs of the
Company, except that the substitution of the assignee does not
release the assignor from liability to the Company under this
section. If less than a Majority of the Members other than the
Member proposing to dispose of its interest do not consent to the
proposed transfer or assignment of an interest, the transfer may
still be done, however, the transferee of the Member's interest
shall have no right to participate in the management of the
business and affairs of the Company or to become a Member
thereof. The transferee is only entitled to receive the share of
profits or other compensation by way of income and the return of
contributions, to which the transferring Member would otherwise
be entitled.
VIII.2 Admission of New Members. New Members may be admitted
to membership in the Company upon the consent of all of the
Members. The amount of Capital Contribution which must be made
by a new Member shall be determined by the vote of all existing
Members. A new Member shall not be admitted into the Company
until the Capital Contribution required of such Person has been
made and he or she agrees in writing to be bound by the terms and
provisions of and to assume all obligations under the Articles of
Organization and this Agreement, as amended. Upon admission the
new Member shall have all rights and duties of a Member of this
Company.
VIII.3 Sale of a Member's Interest. Any Member who desires to
sell his share and interest in the Company must give the right of
first refusal to purchase said share and interest for the same
price as being offered by a bona fide buyer to the other Members
(the "Offeree Members"), by written notice containing all
material terms, price and conditions of such proposed sale and
transfer. Each Offeree Member shall then have thirty (30) days
in which to accept such offer and purchase said interest on the
terms and conditions provided in the offer, each Member electing
to purchase having the right to purchase that percentage of the
interest being sold obtained by dividing its respective
Percentage Interest of the Company by the aggregate Percentage
Interests of all Members electing to purchase. Unless one or
more offeree Member elects to accept the offer and purchase the
selling Member's interest within said thirty (30) days as
aforesaid, the selling Member shall then be free to sell or
convey its interest to any third party offeree, but only on the
terms and conditions set forth in the original offer and in
compliance with the terms of Section 8.4 below. If the selling
Member does not complete the transfer of its interest to a third
party within thirty (30) days after expiration of the above-
described thirty (30) day acceptance period, the Offeree Members
shall again be granted a right of refusal with respect to such
transfer.
VIII.4 Agreements with Transferees. In the event that a
Member transfers its interest in the Company to any person or
entity pursuant to the provisions of this Article, other than
another existing Member, no such transfer shall be effective
unless and until the proposed transferee agrees in writing to be
bound by the terms and provisions of and to assume all
obligations of the transferor and to be subject to all
restrictions to which the transferor is subject under the
Articles of Organization and this Agreement, as amended.
VIII.5 Default. The occurrence of either of the following
events shall constitute an event of default (an "Event of
Default") on the part of the Member:
(a) violation by a Member of any of the restrictions set
forth in Section 8.1 upon the right of a Member to transfer its
interest in the Company; or
(b) a material default by a Member in the performance of,
or a failure to comply with, any obligation or undertaking in
this Agreement.
The defaulting Member shall have thirty (30) days following such
Member's receipt of written notice of default from any other
Member to cure the default, or fifteen (15) days where the
default is due solely to the non-payment of monies to pay such
monies, or in the case of non-monetary default, to commence
substantial efforts to cure such default and within a reasonable
time complete the curing of such default.
VIII.6 Remedies. Upon the occurrence of any Event of
Default, the Company and each non-defaulting Member shall have
all remedies available at law or in equity against the defaulting
Member.
ARTICLE IX
[INTENTIONALLY DELETED]
ARTICLE X
THE MANAGER
X.1 Managers. The Company shall be managed by ACI and Gem
Air (the "Managers"), who shall have such rights, duties and
powers specified in this Agreement, or conferred upon the
Managers by the Vote of the Members.
X.2 Duties of the Managers. The Managers acting together
constitute the general manager and chief executive officer of the
Company and shall have, subject to the control of the Members,
general supervision, direction and control of the business of the
Company and its employees. The Managers acting together shall
manage the business affairs of the Company and shall have the
authority and responsibility to represent and bind the Company,
and enter into, execute and deliver any contracts, agreements,
instruments and documents on behalf of the Company. The Managers
acting together shall preside at all meetings of the Members.
The Manager shall have the general powers and duties of
management typically vested in a director or board of directors
of a corporation, and all powers and duties necessary, advisable
or convenient to administer and operate the business and affairs
of the Company, and such other powers and duties as may be
prescribed by the Members or implied by law, including the power
to:
(a) mortgage, lease, pledge, hypothecate, grant a security
interest in or otherwise dispose of any Property of the Company;
(b) sell, exchange, assign, transfer, convey or lease the
Property or any portion thereof; and
(c) select and retain the accountants or lawyers of the
Company and other consultants to the Company.
X.3 Restrictions on Managers. The foregoing
notwithstanding, and in addition to other acts expressly
prohibited or restricted by this Agreement or by law, each
Manager is expressly prohibited from the following:
(a) doing any act which would make it impossible to carry
on the ordinary business of the Company;
(b) confessing a judgment against the Company in connection
with any threatened or pending legal action;
(c) admitting any other person as a Member, except as
provided in this Agreement; and
(d) executing or delivering any assignment for the benefit
of creditors of the Company's assets.
X.4 Removal, Resignation and Vacancies. The Members may
remove the Managers, either with or without cause, by a unanimous
Vote. The Managers may resign at any time by giving written
notice to the Members. Any such resignation shall take effect at
the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective. Any vacancy in the office of the Manager may be filled
by a Vote of the Members through the appointment of a successor
officer who shall hold the office for the unexpired term.
X.5 Compensation of Managers. The Company shall pay to the
Managers such salary and other benefits as shall be approved from
time to time by the unanimous Vote of the Members.
X.6 Expense Reimbursements. The Company shall reimburse
the Managers for all expenses reasonably incurred by the Manager
on behalf of the Company or in connection with the performance of
its obligations hereunder.
X.7 Tax Matters. ACI shall be "Tax Matters Partner" (as
that term is defined in Section 6231 of the Code) to represent
the Company in connection with all tax examinations and
proceedings and to oversee the Company's tax affairs in the best
interests of the Company.
X.8 Tax Elections. On behalf of the Company, ACI may make
all elections for federal income tax purposes, including the use
of an accelerated depreciation method in any depreciable unit of
the Company's assets, and to adjust the basis of assets pursuant
to Sections 734, 743 and 754 of the Code in case of a transfer of
all or part of a ACI's interest.
X.9 Other Agreements. Each of the Members hereby
authorizes and directs the Managers to execute and enter into the
Lease on behalf of the Company.
ARTICLE XI
ACCOUNTING, RECORDS AND BANK ACCOUNTS
XI.1 Records and Accounting. The books and records of the
Company shall be kept, and the financial position and the results
of its operations recorded, in accordance with the accounting
methods elected to be followed by ACI for federal income tax
purposes. The books and records of the Company shall reflect all
Company transactions and shall be appropriate and adequate for
the Company's business.
XI.2 Access to Accounting Records. All accounting books and
records of the Company, including files, and tax returns and
information, shall be maintained at any office of the Company or
at the Company's principal place of business. Each Member, and
his duly authorized representative, agent or attorney, upon
reasonable request, shall have access to them at such office of
the Company and the right to inspect, examine and copy them at
reasonable times. Any Member may require a review and/or audit
of the books, records and reports of the Company. The Company
shall keep all records required by Nevada Revised Statutes 86.241
at an office of the Company in the State of Nevada.
XI.3 Annual Tax Information. ACI shall use its best efforts
to cause the Company to deliver to each Member within ninety (90)
days after the end of each Fiscal Year all information necessary
for the preparation of such Member's federal income tax return.
Federal, state and local tax returns of the Company shall be
prepared or caused to be prepared and filed in a timely manner by
ACI.
XI.4 Obligations of Members to Report Allocations. The
Members are aware of the income tax consequences of the
allocations made by this Agreement and hereby agree to be bound
by the provisions of this Section in reporting their shares of
the income and loss for income tax purposes.
XI.5 Bank Accounts. From time to time, the Manager or such
person or persons as the Members may designate, whether such
persons be Members or not, shall open and maintain one or more
bank accounts (provided each such institution has a net worth in
excess of One Hundred Million Dollars ($100,000,000) and is
federally insured); rent safety deposit boxes or
vaults; sign checks, written directions, or other
instruments to withdraw all or any part of the funds belonging to
the Company and on deposit in any savings account or checking
account; negotiate and purchase certificates of deposit, obtain
access to the Company safety deposit box or boxes, and,
generally, sign such forms on behalf of the Company as may be
required to conduct the banking activities of the Company.
ARTICLE XII
DISSOLUTION OF THE COMPANY AND
TERMINATION OF A MEMBER'S INTEREST
X11.1 Dissolution. The Company shall be dissolved and its
affairs wound up (a) at the time specified in the Articles of
Organization, (b) upon the written agreement of all of the
Members, in which event the Members will proceed with reasonable
promptness to liquidate the Company, (c) upon the termination of
the Company pursuant to the order of a court of competent
jurisdiction, or (d) upon the death, insanity, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member or
the occurrence of any other event which terminates a Member's
continued membership in the Company, unless the business of the
Company is continued by the consent of not less than a Majority
of all the remaining Members of the Company under a right to do
so stated in the Articles of Organization of the Company, or by a
Majority of all the remaining Members agreeing in writing within
ninety (90) days after the event to so continue the business of
the Company.
XII.2 Statement of Intent to Dissolve. As soon as possible
after the occurrence of any of the events specified in Section
12.1, two signed copies of a Statement of Intent to Dissolve
shall be delivered to the Secretary of State in such form as
prescribed by the Secretary of State.
X11.3 Conduct of Business. Upon the filing by the Secretary
of State of the Statement of Intent to Dissolve, the Company
shall cease to carry on its business, except insofar as may be
necessary for the winding up of its business, but its separate
existence shall continue until Articles of Dissolution have been
filed with the Secretary of State or until a decree dissolving
the Company has been entered by a court of competent
jurisdiction.
XII.4 Death of a Member; Continuation. After the death of a
Member, if all the remaining Members consent to the continuation
of the business of the Company, the personal representative
("Representative") of the deceased Member and, after the
distribution of the deceased Member's estate, the deceased
Member's heirs or legatees, shall immediately succeed to the
interest of the deceased Member in the Company. During
administration of the estate of the deceased Member, such
Representative (and after distribution of the deceased Members'
estate such heirs or legatees) shall have the same rights and
obligations in the Company for the remainder of the Company's
term as the deceased Member would have had, if the deceased
Member had survived. Such rights and obligations shall include,
but shall not be limited to, the conduct of the Company's
business and the share in the profits and losses of the Company.
XII.5 Option To Purchase Dissolved Member's Interest. Upon
the dissolution of a Member, the Company shall have the option,
within one hundred twenty (120) days of the Member's date of
dissolution, to purchase the dissolved Member's interest in the
Company for an agreed upon price, or if no price can be agreed
upon, the fair market value of such interest as determined by an
independent qualified appraiser appointed by the Members and the
dissolved Member's Representative. If they cannot agree on an
appraiser, the Members and such Representative shall agree on three
(3) possible appraisers and chose one (1) of them at random. If the
Company elects to purchase the interest of the dissolved Member,
it shall pay the agreed price or the fair market value of such
interest to the dissolved Member's Representative, in cash,
within such 120-day period. If the Company does not purchase the
interest of the dissolved Member within such 120-day period, then
all rights to purchase the dissolved Member's interest pursuant
to this Section shall terminate.
XII.6 Bankruptcy. Upon the institution of bankruptcy
proceedings by a Member under the federal Bankruptcy Code, or
upon the institution of a bankruptcy proceeding against a Member
which proceeding is not dismissed or discharged within a period
of sixty (60) days after the filing thereof, or upon the
attachment, execution or other judicial seizure of all of
substantially all of a Member's assets or a Member's interest, if
the attachment, execution or other judicial seizure would have a
materially adverse effect upon the performance of the Member in
its obligations under this Agreement and is not released or
discharged within a period of sixty (60) days after the filing
thereof (which Member, under any scenario, shall hereinafter be
referred to as the "Bankrupt Member"), if all the remaining
Members consent to the continuation of the business of the
Company, the remaining Members shall have the right to purchase
the entire membership interest of the Bankrupt Member at a price
equal to the fair market value of such interest at the time of
such bankruptcy, as determined by an independent qualified
appraiser appointed by the Members, including the Bankrupt
Member. If they cannot agree on an appraiser, the Members,
including the Bankrupt Member, shall agree on three (3) possible
appraisers and chose one (1) of them at random. The purchase of
a Bankrupt Member's interest shall be an all cash transaction
completed within one hundred and twenty (120) days after the date
the bankruptcy petition is filed by or against the Bankrupt
Member. The Company shall send a notice of the bankruptcy to all
the Members and each Member wishing to purchase all or part of
the Bankrupt Member's interest (a "Purchasing Member") must so
notify all the other Members in writing within twenty (20) days
after delivery of the notice. Unless they agree otherwise, if
there is more than one Purchasing Member, each Purchasing Member
may purchase the same proportion of the Bankrupt Member's
interest in proportion to his or her Percentage Interest. If no
remaining Member wishes to purchase the Bankrupt Member's
interest, or the Purchasing Members do not actually purchase the
Bankrupt Member's interest within the time set forth in this
Section 12.6, then all rights to purchase the Bankrupt Member's
interest pursuant to this Section shall terminate.
ARTICLE XIII
TRUST MEMBERS
XIII.1 Trustee Liability. When any trustee becomes a Member
of this Company, he shall be a Member not individually but solely
as a trustee, in the exercise and under the power and authority
conferred upon and vested in such trustee. Nothing contained in
this Agreement shall be construed as creating any liability on
any such trustee personally to pay any amounts required to be
paid hereunder, or to perform any covenant, either express or
implied, contained herein; all such liability, if any, is hereby
expressly waived by the other Members of this Company. Any
liability of any Member which is a trust (whether to the Company
or to any third person) shall be a liability to the full extent
of the trust estate and shall not be a personal liability of any
Trustee, grantor or beneficiary of any trust.
XIII.2 Status of Successor Trustees as Members. Any successor
trustee or co-trustee of any trust which is a Member shall be
entitled to exercise the same rights and privileges and be
subject to the same duties and obligations as the
predecessor trustee. As used in this Article XIII, the term
"trustee" shall include any and all such successor trustees.
ARTICLE XIV
INDEMNIFICATION
XIV.1 Indemnity. The Company does hereby indemnify and hold
harmless the Members, the Managers, Affiliates, officers and any
Person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the
Company, by reason of the fact that he is or was a Manager,
Member, employee or agent of this Company, or is or was serving
at the request of the Company as Manager, officer, employee or
agent of another limited-liability company or corporation,
against expenses, including attorneys' fees, judgment, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with the action, suit or proceeding if he acted
in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the Company, and, with
respect to a criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
does not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interest of this Company, and
that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
XIV.2 Indemnity If Successful. To the extent that a Member,
Manager, employee or agent of this Company has been successful on
the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 14.1, or in defense of any
claim, issue or matter therein, this Company does hereby
indemnify such person or entity against expenses, including
attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
XIV.3 Advance Payment of Expenses. The expenses of Members
and Managers incurred in defending a civil or criminal action,
suit or proceeding shall be paid by this Company as they are
incurred and in advance of the final disposition of the action,
suit or proceeding, upon receipt of an undertaking by or on
behalf of the Member or Manager to repay the amount if it is
ultimately determined by a court of competent jurisdiction that
he is not entitled to be indemnified by this Company. The
provisions of this subsection do not affect any rights to
advancement of expenses to which personnel other than Members or
Managers may be entitled under any contract or otherwise by law.
XIV.4 Other Arrangements Not Excluded. The indemnification
and advancement of expenses authorized in or ordered by a court
pursuant to this Article XIV:
(a) Do not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be
entitled under the Articles of Organization or any agreement,
vote of Members or otherwise, for either an action in his
official capacity or an action in another capacity while holding
his office, except that indemnification, may not be made to or on
behalf of any Member or Manager if a final adjudication
establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
(b) Continue for a person who has ceased to be a Member,
Manager, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
XIV.5 Errors and Omissions Insurance. The Company may
purchase and maintain insurance, at the Company's expense, on
behalf of the Members and such other Persons as the Members shall
determine, against any liability that may be asserted against, or
any expense that may be incurred by, such Person in connection
with the activities of the Company and/or the Members' acts or
omissions as the Members of the Company regardless of whether the
Company would have the power to indemnify such Person against
such liability under the provisions of this Agreement.
XIV.6 Violation of this Agreement. Any Member who violates
any of the terms, conditions and provisions of this Agreement or
who breaches any representation and warranty set forth herein
will keep and save harmless the Company, the Property and will
also indemnify the other then Members from any and all claims,
demands and actions of every kind and nature whatsoever which may
arise our of or by reason of the violation of any terms and
conditions of this Agreement or the breach of any representation
or warranty set forth herein.
ARTICLE XV
MISCELLANEOUS PROVISIONS
XV.1 Insurance. During the course of the term for which
this Company is formed, the Company will carry liability
insurance in amounts deemed appropriate by the Manager.
XV.2. Complete Agreement. This Agreement, and the Articles
of Organization, constitute the complete and exclusive statement
of the Agreement among the Members with respect to the subject
matter contained herein and therein. This Agreement and the
Articles replace and supersede all prior agreements by and among
the Members or any of them with respect to the subject matter
contained herein and therein. This Agreement and the Articles
supersede all prior written and oral statements and no
representation, statement, or condition or warranty not contained
in this Agreement or the Articles will be binding on the Members
or of any force and effect whatsoever with respect to the subject
matter contained herein and therein.
XV.3 Amendments. This Agreement may be amended by the
Members but only at a special or annual meeting of the Members,
not by written consent, and only if the notice of the intention
to amend the Agreement was contained in the notice of the
meeting, or such notice of a meeting is waived by all Members.
Notwithstanding any provision to the contrary in the Articles of
Organization, in no event shall the Articles be amended without
the vote of a Majority of the Members.
XV.4 Applicable Law. This Agreement, and its application,
shall be governed exclusively by its terms and by the laws of the
State of Nevada.
XV.5 Headings. The headings in this Agreement are inserted
for convenience only and are in no way intended to describe,
interpret, define, or limit the scope, extent or intent of this
Agreement or any provisions contained herein.
XV.6 Counterparts. This Agreement may be executed in
counterparts, all of which will be deemed to be one and the same
instrument, and it shall be sufficient for each party to have
executed at least one, but not necessarily the same, counterpart.
XV.7 Severability. If any provision of this Agreement or
the Application thereof to any person or circumstance shall be
deemed invalid, illegal or unenforceable to any extent, the
remainder of this Agreement and the application thereof shall not
be affected and shall be enforceable to the fullest extent
permitted by law.
XV.8 Heirs, Successors and Assigns. Each and all of the
covenants, terms, provisions and agreements contained in this
Agreement shall be binding upon and inure to the benefit of the
existing Members, all new and substituted Members, and their
respective assignees (whether permitted by this Operating
Agreement or not), heirs, legal representatives, successors and
assigns.
XV.9 Disclaimers. Each Member hereby acknowledges and
represents as follows:
(a) I am familiar with the Company and all of its proposed
activities and have the knowledge and experience necessary to
evaluate this particular investment, and have read and understand
each and every provision in this Agreement. I recognize that an
investment in the Company involves certain risks, and I have
taken full cognizance of and understanding all of the risk
factors related to the purchase of an interest in the Company. I
am aware that the Company has no financial or operating history.
(b) I am aware that this Agreement was drafted by counsel
for the Company and that said counsel has in no way undertaken to
represent me or any other Member individually. I acknowledge
that I have been encouraged to seek competent counsel in
connection with the negotiation of this Agreement, and that I
have had adequate opportunity to do so.
XV.10 Concurrent Representation; Waiver.
XV.10.1 Latham & Watkins and Schreck, Jones, Bernhard, Woloson
& Godfrey, counsel for ACI (each such counsel, "Counsel"), may
from time to time, at the direction of the Managers, serve as
counsel to the Company. Each of the Members hereby acknowledges
that it may be impacted differently than the other Members or the
Company by decisions made in implementing this Agreement and/or
the transactions contemplated by this Agreement. Notwithstanding
these inherent conflicts of interest and other potential issues
and divergences of interests among the Members and the Company,
each of the Members agrees as follows:
(a) To cooperate in the concurrent representation of its
interests and the interests of the Members and/or the Company by
Counsel.
(b) To maintain in confidence all information and advice
which Counsel may provide to it.
(c) That all facts and circumstances communicated to
Counsel by it may be disclosed to any other Member.
XV.10.2 Each of the Members and/or the Company shall have the
right to terminate Counsel's representation of it. In such case,
each of the Members agrees that Counsel shall continue to have
the right to represent the other Members and/or the Company and
that Counsel's representation of it prior to the termination
shall not form a basis for disqualifying Counsel from
representing the other Members and/or the Company in litigation
or otherwise.
XV.10.3 Each of the Members agrees that Counsel shall have the
right at any time to withdraw from its representation of any or
all of the Members and/or the Company for good cause. Good cause
shall mean a failure by any of the Members and/or the Company to
cooperate or follow Counsel's advice on a material matter or to
pay Counsel's statements in a timely manner, a
determination by Counsel that the conflicts between any
of the Members and/or the Company preclude Counsel's further
representation, or any other material matter that in Counsel's
judgment impairs an effective attorney-client relationship. Each
of the Members agrees that following any such termination of
representation by Counsel, Counsel shall continue to have the
right to represent one or more of the Members and/or the Company
and that Counsel's representation of it prior to the termination
shall not form a basis for disqualifying Counsel from
representing the other Members and/or the Company in litigation
or otherwise.
IN WITNESS WHEREOF, this Operating Agreement was adopted by
a unanimous vote of all the Members of this Company at the
organizational meeting thereof held on July 5, 1996.
GEM AIR, INC., a Nevada
corporation, Member
By: /s/ Steven W. Rebeil
Name: Steven W. Rebeil
Title: President
AMERISTAR CASINOS, INC., a Nevada
corporation, Member
By: /s/ Brian E. Katz
Name: Brian E. Katz
Title: Sr. Vice President
Exhibit A
Preliminary Title Report
Exhibit B
Description of the Real Property
Exhibit C
Assignment of Lease
RECORDING REQUESTED BY
AND WHEN RECORDED, RETURN TO:
Steven J. Levine, Esq.
Latham & Watkins
701 "B" Street, Suite 2100
San Diego, California 92101
ASSIGNMENT, ACCEPTANCE AND CONSENT
THIS ASSIGNMENT, ACCEPTANCE AND CONSENT (the "Assignment")
is made as of July 5, 1996, by and between GEM AIR, INC., a
Nevada corporation ("Assignor"), NEVADA AG AIR, LTD., a Nevada
limited liability company ("Assignee"), JOHNNY RIBEIRO BUILDER,
INC. OF NEVADA, a Nevada corporation ("Consenting Party"), and
the COUNTY OF CLARK, a political subdivision of the State of
Nevada (the "County").
Recitals
A. Subject Agreement. Assignor and Consenting Party are
all of the current parties to that certain Ground Lease by and
between Assignor and Consenting Party recorded August 24, 1994,
in the Official Records of the Clark County Recorder in Book
940624 as Instrument No. 00225 (the "Subject Agreement") covering
that certain real property located in Clark County, Nevada, and
more particularly described in Exhibit "C" attached hereto and
incorporated herein by this reference.
B. County Lease. The County and Consenting Party are the
parties to that certain Lease dated as of August 20, 1985, as
amended by that certain First Amendment to Lease dated August 4,
1992, pursuant to which Consenting Party has an interest in the
property covered by the Ground Lease (the "County Lease").
C. Sublease. Assignee desires to sublease to Ameristar
Casinos, Inc. ("Ameristar") its interest in both the property
covered by the Subject Agreement and the County Lease and its
interest in the airplane hangar located thereon. Assignee and
Ameristar desire to enter into a certain Sublease of a portion of
the premises covered by the Subject Agreement (the "Sublease"),
the effectiveness of which is conditioned upon the consent of
Consenting Party and the County to the terms and provisions
thereof. Consenting Party and the County desire to evidence
their consent to the Sublease.
D. Purpose. Assignor now desires to assign to Assignee
certain rights and obligations under the Subject Agreement.
Assignee desires to accept and assume such rights and
obligations, and Consenting Party desires to evidence its consent
to such assignment, acceptance and assumption and to confirm for
Assignee certain matters relating to the Subject Agreement and
the Sublease.
Agreement
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree as
follows:
1. Assignment. Assignor hereby assigns all of its right,
title and interest in, to and under the Subject Agreement to
Assignee.
2. Acceptance and Assumption. Assignee hereby accepts the
foregoing assignment and assumes all of the obligations of
Assignor with respect to the Subject Document.
3. Consent. Each of Consenting Party and the County
hereby consents to the foregoing assignment, acceptance and
assumption.
4. Confirmation of Matters Relating to Subject Agreement.
Assignor and Consenting Party hereby certify to Assignee that the
following matters relating to the Subject Agreement are true and
correct as of the date hereof:
(a) Full Force and Effect. Attached hereto as Exhibit "A"
is a true and complete copy of the Subject Agreement. The
Subject Agreement continues in full force and effect and has not
been assigned, modified, supplemented or amended in any way.
(b) No Notice to Terminate. Neither Consenting Party nor
Assignor has delivered to the other party any notice to terminate
in the future the Subject Agreement or any right or obligations
thereunder.
(c) No Uncured Defaults. There are no uncured defaults by
Assignor or Consenting Party under the Subject Agreement, and
neither Consenting Party nor Assignor knows of any events or
conditions which have occurred or exist or which with the passing
of time, the giving of notice, or both, would constitute a
default by the other party under the Subject Agreement.
(d) Payments Current. All payments required to be made by
Assignor to Consenting Party under the Subject Agreement as of
the date hereof have been made.
(e) Extension of Option Unexercised. In the event that the
Subject Agreement provides Assignor with any right to extend the
term of all or any part of the Subject Agreement, such option has
not been exercised as of the date hereof, and Consenting Party
does not know of any events or conditions which have occurred or
exist which with the passing of time, the giving of notice, or
both, would terminate the right of Assignee to exercise such
option.
5. County Lease. Consenting Party and the County hereby
certify to Assignee that the following matters relating to the
County Lease are true and correct as of the date hereof:
(a) Full Force and Effect. Attached hereto as Exhibit "B"
is a true and complete copy of the County Lease. The County
Lease continues in full force and effect and has not been
assigned, modified, supplemented or amended in any way.
(b) Payments Current. All payments required to be made by
Consenting Party to the County under the County Lease as of the
date hereof have been made.
6. Sublease. Each of Consenting Party and the County
hereby consents to the Sublease and each and every term and
provision thereof.
7. Miscellaneous. This Assignment shall be binding upon
and shall inure to the benefit of the respective heirs,
successors and assigns of the parties hereto. Each party agrees
to execute any and all other documents reasonably necessary or
appropriate in order to effect the assignment to Assignee of the
Subject Agreement and any rights thereunder in accordance with
the terms of this Assignment. This Assignment may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument. The headings used herein are inserted for
purposes of reference and are not intended to be part of or to
effect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be duly executed on their respective behalf, by
their respective officers, thereunto duly authorized, all as of
the day and year first above written.
ASSIGNOR: CONSENTING PARTY:
GEM AIR, INC., JOHNNY RIBEIRO BUILDER, INC.
a Nevada corporation OF NEVADA, a Nevada corporation
By: /s/ Steven W. Rebeil By:
Name: Steven W. Rebeil Name:
Title: President Title:
ASSIGNEE: COUNTY:
NEVADA AG AIR, LTD., a Nevada THE COUNTY OF CLARK, a
limited liability company political subdivision of the
State of Nevada
By: Ameristar Casinos, Inc.,
a Nevada corporation, Member
By:
Name:
By: /s/ Brian E. Katz Title:
Name: Brian E. Katz
Title: Sr. Vice President
By: Gem Air, Inc., a Nevada
corporation, Member
By: /s/ Steven W. Rebeil
Name: Steven W. Rebeil
Title: President
STATE OF NEVADA ) ASSIGNOR
) SS:
COUNTY OF CLARK )
On this 5th day of July, 1996,
personally appeared before me, a notary public,
Steven W. Rebeil, personally
known or proven to me to be the person whose name is subscribed
to the above instrument who acknowledged that he executed the
instrument.
/s/ Beverly J. McKinney
NOTARY PUBLIC
My commission expires: April 9, 1999
STATE OF NEVADA ) ASSIGNEE:
) SS: Ameristar Casinos, Inc.
COUNTY OF CLARK )
On this 8th day of July, 1996,
personally appeared before me, a notary public,
Brian E. Katz, personally
known or proven to me to be the person whose name is subscribed
to the above instrument who acknowledged that he executed the
instrument.
/s/ Tina F. Luper
NOTARY PUBLIC
My commission expires: 3/28/2002
STATE OF NEVADA ) ASSIGNEE:
) SS: Gem Air, Inc.
COUNTY OF CLARK )
On this 5th day of July, 1996,
personally appeared before me, a notary public,
Steven W. Rebeil, personally
known or proven to me to be the person whose name is subscribed
to the above instrument who acknowledged that he executed the
instrument.
/s/ Beverly J. McKinney
NOTARY PUBLIC
My commission expires: April 9, 1999
STATE OF NEVADA ) CONSENTING PARTY
) SS:
COUNTY OF CLARK )
On this ______ day of __________________, 1996,
personally appeared before me, a notary public,
____________________________________________________, personally
known or proven to me to be the person whose name is subscribed
to the above instrument who acknowledged that he executed the
instrument.
_____________________________________
NOTARY PUBLIC
My commission expires:
STATE OF NEVADA ) COUNTY
) SS:
COUNTY OF CLARK )
On this ______ day of __________________, 1996,
personally appeared before me, a notary public,
____________________________________________________, personally
known or proven to me to be the person whose name is subscribed
to the above instrument who acknowledged that he executed the
instrument.
_____________________________________
NOTARY PUBLIC
My commission expires:
EXHIBIT "A" TO ASSIGNMENT
Attach copy of the Subject Agreement
EXHIBIT "B" TO ASSIGNMENT
Attach copy of the County Lease
EXHIBIT "C" TO ASSIGNMENT
Attach Description of Property
Exhibit D
Form of FRPTA Affidavit
CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code provides that a
buyer of a U.S. real property interest must withhold part of the
purchase price as security for the potential tax obligation of a
foreign seller. This Certificate is made to inform Nevada AG
Air, Ltd. (the "Company") that the withholding of amounts
pursuant to Internal Revenue Code Section 1445 is not required
upon the disposition of a U.S. real property interest by Gem Air,
Inc., a Nevada corporation ("Gem Air"). Gem Air hereby certifies
that:
1. Gem Air is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate as defined in the
Internal Revenue Code and Income Tax Regulations;
2. Gem Air's U.S. employer identification number is
88-0301763;
3. Gem Air's business address is 135 E. Reno, Suite F-7
and Suite F-3, Las Vegas, Nevada.
Gem Air understands that this Certificate may be disclosed
to the Internal Revenue Service by the Company and that making a
false statement in this Certificate may be punished by fine,
imprisonment, or both.
Under penalty of perjury, I declare that I have examined
this Certificate and to the best of my knowledge and belief it is
true, correct and complete, and I further declare that I have the
authority to sign this document on behalf of Gem Air.
Date: _________________ GEM AIR, INC., a Nevada corporation
By:
Name:
Title:
Exhibit E
Form of Lease
Exhibit F
Ground Lease
Exhibit G
Business Loan Agreement
Exhibit H
Form of Bill of Sale
For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, GEM AIR, INC., a
Nevada corporation ("Seller"), does hereby grant, bargain,
transfer, sell, assign, convey and deliver to NEVADA AG AIR,
LTD., a Nevada limited liability company ("Buyer"), all right,
title and interest in and to all of the machinery, furniture,
furnishings, materials, supplies, spare parts, goods, equipment
and related additions and accessories and other items of personal
property described in Schedule "1" attached hereto and
incorporated herein by this reference, together with all
additions, accessories, appurtenances, spare parts and
replacements not specifically described in Schedule "1" but that
are either incorporated into, in respect of, or applicable to any
such item of personal property described in Schedule "1" (the
"Personal Property"). Seller hereby represents and warrants to
Buyer that Seller is conveying the Personal Property to Buyer
free and clear of all liens, security interests, encumbrances and
other claims to the Property.
Seller, for itself, its successors and assigns hereby
covenants and agrees that, at any time and from time to time
forthwith upon the written request of Buyer, Seller will do,
execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, each and all of such further acts,
deeds, assignments, transfers, conveyances, powers of attorney
and assurances as may reasonably be required by Buyer in order to
assign, transfer, set over, convey, assure and confirm unto and
vest in Buyer, its successors and assigns, title to the assets
sold, conveyed, transferred and delivered by this Bill of Sale.
Executed at ________________________, this ______ day
of________, 1996.
GEM AIR, INC.,
a Nevada corporation
By:
Its:
Schedule "1" To Bill of Sale
List of Personal Property
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
1.1 Adjusted Capital Account Deficit 1
1.2 Affiliate 1
1.3 Agreement 2
1.4 Assignment of Lease 2
1.5 Capital Account 2
1.6 Capital Contribution 2
1.7 Cash Available for Distribution 2
1.8 Code 2
1.9 Fiscal Year 2
1.10 FRPTA Affidavit 2
1.11 Grant Deed 2
1.12 Ground Lease 2
1.13 Lease 3
1.14 Lien 3
1.15 Majority 3
1.16 Manager 3
1.17 Member Nonrecourse Debt 3
1.18 Member Nonrecourse Debt Minimum Gain 3
1.19 Member Nonrecourse Deductions 3
1.20 Members 3
1.21 Minimum Gain 3
1.22 Net Profits and Net Losses 4
1.23 Percentage Interest 4
1.24 Permitted Liens 4
1.25 Person 4
1.26 Personal Property. 4
1.27 Preliminary Title Report 5
1.28 Property 5
1.29 Real Property 5
1.30 Regulations 5
1.31 Secretary of State 5
1.32 Title Company 5
1.33 Title Policy 5
ARTICLE II INTRODUCTORY MATTERS 5
2.1 Principal Office 5
2.2 Other Offices 5
2.3 Duration 6
2.4 Purpose 6
ARTICLE III CAPITAL CONTRIBUTIONS 6
3.1 Initial Capital 6
3.2 Capital Accounts 7
3.3 General Rules for Adjustment of
Capital Accounts 7
3.4 Special Rules With Respect to
Capital Accounts 8
3.5 Federal Income Tax Elections 8
3.6 Rights With Respect to Capital;
Interest 9
3.7 Additional Capital Contributions 9
ARTICLE IV PROFITS AND LOSSES 9
4.1 Net Profits and Losses 9
4.2 Special Allocations 9
4.3 Curative Allocations 10
4.4 Residual Allocations 10
4.5 Fees to Members or Affiliates 11
4.6 Section 704(c) Allocation 11
4.7 Federal Income Tax 11
ARTICLE V DISTRIBUTIONS 11
5.1 Initial Distribution 11
5.2 Operating Distributions 11
5.3 Distribution on Dissolution and
Liquidation 12
ARTICLE VI MEMBERS 12
6.1 Powers 12
6.2 Compensation of Members 12
6.3 General Restrictions 13
6.4 Action by the Members 14
6.5 Place of Meetings of Members 14
6.6 Annual Meetings 14
6.7 Notice 14
6.8 Special Meetings 14
6.9 Waiver of Notice 15
6.10 Adjourned Meetings And Notice Thereof 15
6.11 Action By Written Consent 15
6.12 Quorum 15
6.13 Delegation of Authority To Members
and Managers 15
6.14 Expense Reimbursements 16
ARTICLE VII REPRESENTATIONS AND WARRANTIES 16
7.1 Reciprocal Representations and
Warranties 16
ARTICLE VIII TRANSFER OF MEMBERS' INTERESTS,
ADMISSION OF NEW MEMBERS,
AND DEFAULT BY MEMBER 18
8.1 Approval of Members 18
8.2 Admission of New Members 18
8.3 Sale of a Member's Interest 18
8.4 Agreements with Transferees 19
8.5 Default 19
8.6 Remedies 19
ARTICLE IX [INTENTIONALLY DELETED] 19
ARTICLE X THE MANAGER 19
10.1 Managers 19
10.2 Duties of the Managers 19
10.3 Restrictions on Managers 20
10.4 Removal, Resignation and Vacancies 20
10.5 Compensation of Managers 20
10.6 Expense Reimbursements 21
10.7 Tax Matters 21
10.8 Tax Elections 21
10.9 Other Agreements. 21
ARTICLE XI ACCOUNTING, RECORDS AND BANK ACCOUNTS 21
11.1 Records and Accounting 21
11.2 Access to Accounting Records 21
11.3 Annual Tax Information 21
11.4 Obligations of Members to Report
Allocations 21
11.5 Bank Accounts 22
ARTICLE XII DISSOLUTION OF THE COMPANY AND
TERMINATION OF A MEMBER'S INTEREST 22
12.1 Dissolution 22
12.2 Statement of Intent to Dissolve 22
12.3 Conduct of Business 22
12.4 Death of a Member; Continuation 22
12.5 Option To Purchase Dissolved Member's
Interest 23
12.6 Bankruptcy 23
ARTICLE XIII TRUST MEMBERS 24
13.1 Trustee Liability 24
13.2 Status of Successor Trustees as
Members 24
ARTICLE XIV INDEMNIFICATION 24
14.1 Indemnity 24
14.2 Indemnity If Successful 24
14.3 Advance Payment of Expenses 25
14.4 Other Arrangements Not Excluded 25
14.5 Errors and Omissions Insurance 25
14.6 Violation of this Agreement 25
ARTICLE XV MISCELLANEOUS PROVISIONS 25
15.1 Insurance 25
15.2 Complete Agreement 26
15.3 Amendments 26
15.4 Applicable Law 26
15.5 Headings 26
15.6 Counterparts 26
15.7 Severability 26
15.8 Heirs, Successors and Assigns 26
15.9 Disclaimers 26
SUBLEASE
1. BASIC PROVISIONS ("BASIC PROVISIONS")
1.1 PARTIES: This Sublease ("SUBLEASE"), dated for reference
purposes only as of June 30, 1996, is made by and between NEVADA AG
AIR, LTD., a Nevada limited liability company ("SUBLESSOR"), and
AMERISTAR CASINOS, INC., a Nevada corporation ("SUBLESSEE")
(collectively the "PARTIES," or individually a "PARTY").
1.2 PREMISES: That certain real property, including all
improvements therein or to be provided by Sublessor under the terms
of this Sublease, and commonly known by the street address of 135
East Reno, Suites F-3 and F-7, Las Vegas, located in the County of
Clark, State of Nevada, and more particularly described on Exhibit
"A" attached hereto and incorporated herein by this reference,
together with all improvements, fixtures, trees, shrubs and other
vegetation constructed or located thereon and all easements, rights-
of-way and other matters benefiting such real property, and the
personal property described on Exhibit "C" attached hereto and
incorporated herein by this reference (together, the "PREMISES").
1.3 MASTER LEASE: Sublessor is the lessee of the Premises by
virtue of a Ground Lease, hereinafter referred to as the "Master
Lease," a copy of which is attached hereto marked Exhibit "B,"
dated July 21, 1994, wherein Johnny Ribeiro Builder, Inc. of
Nevada, a Nevada corporation, is the lessor, hereinafter referred
to as the "Master Lessor."
1.4 TERM: The Term of this Sublease shall commence on the
date hereof ("COMMENCEMENT DATE") and end on July 31, 2025
("EXPIRATION DATE"). (See Paragraph 3 for further provisions.)
1.5 BASE RENT: The total rent payable by Sublessor to Master
Lessor pursuant to Section 4 of the Master Lease (the "BASE RENT")
plus ___________________ Dollars ($_____) per month (the "EXCESS
RENT"), payable on the first (1st) day of each month commencing on
July 1, 1996. (See Paragraph 4 for further provisions.)
1.6 PERMITTED USE: The Premises shall be used by Sublessee
for the maintenance and storage of aircraft and any other purpose
consistent with Section 7 of the Master Lease. (See Paragraph 5
for further provisions.)
2. PREMISES.
2.1 LETTING. Sublessor hereby leases to Sublessee, and
Sublessee hereby leases from Sublessor, the Premises, for the Term,
at the rental, and upon all of the terms, covenants and conditions
set forth in this Sublease.
2.2 CONDITION. Sublessor shall deliver the Premises to
Sublessee clean and free of debris on the Commencement Date and
warrants to Sublessee that the existing plumbing, fire sprinkler
system, lighting, air conditioning, heating and loading doors, if
any, in the Premises, other than those constructed by Sublessee,
shall be in good operating condition on the Commencement Date. If
a non-compliance with said warranty exists as of the Commencement
Date, Sublessor shall, except as otherwise provided in this
Sublease, promptly after receipt of written notice from Sublessee
setting forth with specificity the nature and extent of such non-
compliance, rectify the same at Sublessor's expense.
2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING
CODE. Sublessor warrants to Sublessee that the improvements on the
Premises comply with all applicable covenants or restrictions of
record and applicable building codes, regulations and ordinances in
effect on the Commencement Date. Said warranty does not apply to
the use to which Sublessee will put the Premises or to any
Alterations or Utility Installations (as defined in Paragraph
6.3(a)) made or to be made by Sublessee. If the Premises do not
comply with said warranty, Sublessor shall, except as otherwise
provided in this Sublease, promptly after receipt of written notice
from Sublessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Sublessor's expense.
2.4 ACCEPTANCE OF PREMISES. Sublessee hereby acknowledges:
(a) that it has satisfied with respect to the condition of the
Premises (including but not limited to, the electrical and fire
sprinkler systems, security, environmental aspects, compliance with
Applicable Law, as defined in Paragraph 5.3) and the present and
future suitability of the Premises for Sublessee's intended use,
(b) that Sublessee has made such investigation as it deems
necessary with reference to such matters and assumes all
responsibility therefor as the same relate to Sublessee's occupancy
of the Premises and/or the Term of this Sublease, and (c) that
neither Sublessor, nor any of Sublessor's agents, has made any oral
or written representations or warranties with respect to the said
matters other than as set forth in this Sublease.
3. TERM.
3.1 TERM. The Commencement Date, Expiration Date and Term of
this Sublease are as specified in Paragraph 1.4.
3.2 DELAY IN POSSESSION. If for any reason Sublessor cannot
deliver possession of the Premises to Sublessee as agreed herein by
the Commencement Date, Sublessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of
this Sublease, or the obligations of Sublessee hereunder, or extend
the Term hereof, but in such case, Sublessee shall not, except as
otherwise provided herein, be obligated to pay rent or perform any
other obligation of Sublessee under the terms of this Sublease
until Sublessor delivers possession of the Premises to Sublessee.
If possession of the Premises is not delivered to Sublessee within
sixty (60) days after the Commencement Date, Sublessee may, at its
option, by notice in writing to Sublessor within ten (10) days
thereafter, cancel this Sublease, in which event the parties shall
be discharged from all obligations hereunder; provided, however,
that if such written notice by Sublessee is not received by
Sublessor within said ten (10) day period, Sublessee's right to
cancel this Sublease shall terminate and be of no further force or
effect. Except as may be otherwise provided, and regardless of
when the Term actually commences, if possession is not tendered to
Sublessee when required by this Sublease and Sublessee does not
terminate this Sublease as aforesaid, the period free of the
obligation to pay Base Rent, if any, that Sublessee would
otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Sublessee would
otherwise have enjoyed under the terms hereof, but minus any days
of delay caused by the acts, changes or omissions of Sublessor.
4. RENT.
4.1 BASE RENT. Sublessee shall cause payment of the Base
Rent and other rent or charges, as the same may be adjusted from
time to time, to be received by Sublessor in lawful money of the
United States, without offset or deduction, on or before the day on
which it is due under the terms of this Sublease. Base Rent and
all other rent and charges for any period during the Term hereof
which is for less than one (1) full calendar month shall be
prorated based upon the actual number of days of the calendar month
involved. Payment of Base Rent and other charges shall be made to
Sublessor at its address stated herein or to such other persons or
at such other addresses as Sublessor may from time to time
designate in writing to Sublessee.
5. USE.
5.1 USE. Sublessee shall use and occupy the Premises only
for the purposes set forth in Paragraph 1.6, or any other use which
is comparable thereto, and for no other purpose. Sublessee shall
not use or permit the use of the Premises in a manner that creates
waste or a nuisance, or that disturbs owners and/or occupants of,
or causes damage to, neighboring premises or properties.
5.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Sublease shall mean any product,
substance, chemical, material or waste whose presence, nature,
quantity and/or intensity of existence, use, manufacture, disposal,
transportation, spill, release or effect, either by itself or in
combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or
welfare, the environment or the Premises, (ii) regulated or
monitored by any governmental authority, or (iii) a basis for
liability of Sublessor to any governmental agency or third party
under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products, by-products or
fractions thereof. Sublessee shall not engage in any activity in,
on or about the Premises which constitutes a Reportable Use (as
hereinafter defined) of Hazardous Substances without the express
prior written consent of Sublessor and compliance to a timely
manner (at Sublessee's sole cost and expense) with all Applicable
Law (as defined in Paragraph 5.3). "REPORTABLE USE" shall mean
(i) the installation or use of any above or below ground storage
tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice,
registration or business plan is required to be filed with, any
governmental authority; provided, however, that the use of gasoline
or petroleum on the Premises as contemplated by the Master Lease
shall not constitute a "Reportable Use." Reportable Use shall also
include Sublessee's being responsible for the presence in, on or
about the Premises of a Hazardous Substance with respect to which
any Applicable Law requires that a notice be given to persons
entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Sublessee may, without Sublessor's
prior consent, but in compliance with all Applicable Law, use any
ordinary and customary materials reasonably required to be used by
Sublessee in the normal course of Sublessee's business permitted on
the Premises, so long as such use is not a Reportable Use and does
not expose the Premises or neighboring properties to any meaningful
risk of contamination or damage or expose Sublessor to any
liability therefor. In addition, Sublessor may (but without any
obligation to do so) condition its consent to the use or presence
of any Hazardous Substance, activity or storage tank by Sublessee
upon Sublessee's giving Sublessor such additional assurances as
Sublessor, in its reasonable discretion, deems necessary to protect
itself, the public, the premises and the environment against
damage, contamination or injury and/or liability therefrom or
therefor, including, but not limited to, the installation (and
removal on or before Sublease expiration or earlier termination) of
reasonably necessary protective modifications to the Premises (such
as concrete encasements).
(b) DUTY TO INFORM SUBLESSOR. If Sublessee knows, or has
reasonable cause to believe, that a Hazardous Substance, or a
condition involving or resulting from the same, has come to be
located in, on, under or about the Premises, other than as
previously consented to by Sublessor, Sublessee shall immediately
give written notice of such fact to Sublessor. Sublessee shall
also immediately give Sublessor a copy of any statement, report,
notice, registration, application, permit, business plan, license,
claim, action or proceeding given to, or received from, any
governmental authority or private party, or persons entering or
occupying the Premises, concerning the presence, spill, release,
discharge of, or exposure to, any Hazardous Substance or
contamination in, on, or about the Premises, including but not
limited to, all such documents as may be involved in any Reportable
Uses involving the Premises.
(c) INDEMNIFICATION. Sublessee shall indemnify, protect,
defend and hold Sublessor, its agents, employees, lenders and
ground lessor, if any, and the Premises, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, permits and attorneys'
and consultants' fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for
Sublessee or at Sublessee's direction. Sublessee's obligations
under this Paragraph 5 shall include, but not be limited to, the
effects of any contamination or injury to persons, property or the
environment created or suffered by Sublessee, and the cost of
investigation (including consultant's and attorneys' fees and
testing), removal, remediation, restoration and/or abatement
thereof, or of any contamination therein involved, and shall
survive the expiration or earlier termination of this Sublease. No
termination, cancellation or release agreement entered into by
Sublessor and Sublessee shall release Sublessee from its
obligations under this Sublease with respect to Hazardous
Substances or storage tanks, unless specifically so agreed by
Sublessor in writing at the time of such agreement.
5.3 INSPECTION; COMPLIANCE. Sublessor and Sublessor's
Lender(s) (as defined in Paragraph 7.3(a)) shall have the right to
enter the Premises, in the case of any emergency, and otherwise
upon twenty-four hours written notice to Sublessee, for the purpose
of inspecting the condition of the Premises, and to employ experts
and/or consultants in connection therewith and/or to advise
Sublessor with respect to Sublessee's activities, including but not
limited to, the installation, operation, use, monitoring,
maintenance, or removal of any Hazardous Substance or storage tank
on or from the Premises. The costs and expenses of any such
inspections shall be paid by the party requesting same, unless a
Default or Breach of this Sublease, violation of Applicable Law, or
a contamination, caused or materially contributed to by Sublessee
is found to exist or be imminent, or unless the inspection is
requested or ordered by a governmental authority as the result of
any such existing or imminent violation or contamination. In any
such case, Sublessee shall upon request reimburse Sublessor or
Sublessor's Lender, as the case may be, for the costs and expenses
of such inspections.
6. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS; TRADE
FIXTURES AND ALTERATIONS.
6.1 SUBLESSOR'S OBLIGATIONS.
(a) Sublessor shall, at all times, keep the Premises and
every part thereof in good order, condition and repair (whether or
not such portion of the Premises requiring repair, or the means of
repairing the same, are reasonably or readily accessible to
Sublessee, and whether or not the need for such repairs occurs as a
result of Sublessee's use, any prior use, the elements or the age
of such portion of the Premises), including, without limiting the
generality of the foregoing, all equipment or facilities serving
the Premises, such as plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities, boilers, fired or
unfired pressure vessels, fire sprinkler and/or standpipe and hose
or other automatic fire extinguishing system, including fire alarm
and/or smoke detection systems and equipment, fire hydrants,
fixtures, walls (interior and exterior), ceilings, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking
lots, fences, retaining walls, signs sidewalks and parkways located
in, on, about, or adjacent to the Premises. Sublessor, in keeping
the Premises in good order, condition and repair, shall exercise
and perform good maintenance practices. Sublessor's obligations
shall include restorations, replacements or renewals when necessary
to keep the Premises and all improvements thereon or a party
thereof in good order, condition and state of repair.
(b) Upon receipt of written notice of the need of such
repairs, Sublessor shall, at Sublessor's expense, keep the
foundations, exterior roof and structural aspects of the Premises
in good order, condition and repair. Sublessor shall not, in any
event, have any obligation to make any repairs until Sublessor
receives written notice of the need for such repairs.
(c) It is the intention of the Parties that the terms of this
Sublease govern the respective obligations of the Parties as to
maintenance and repair of the Premises. Sublessee and Sublessor
expressly waive the benefit of any statute now or hereafter in
effect to the extent it is inconsistent with the terms of this
Sublease with respect to, or which affords Sublessee the right to
make repairs at the expense of Sublessor or to terminate this
Sublease by reason of, any needed repairs.
6.2 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" is used in this Sublease to refer to all carpeting,
window coverings, air lines, power panels, electrical distribution,
security, fire protection systems, communication systems, lighting
fixtures, heating, ventilating, and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term
"TRADE FIXTURES" shall mean Sublessee's machinery and equipment
that can be removed without doing material damage to the Premises.
The term "ALTERATIONS" shall mean any modification of the
improvements on the Premises from that which are provided by
Sublessor under the terms of this Sublease, other than Utility
Installations or Trade Fixtures, whether by addition or deletion.
Sublessee shall not make any Alterations or Utility Installations
in, on, under or about the Premises without Sublessor's prior
written consent. Sublessee may, however, make non-structural
Utility Installations to the interior of the Premises (excluding
the roof), as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing
walls, and the cumulative cost thereof during the Term of this
Sublease as extended does not exceed Twenty-Five Thousand Dollars
($25,000).
(b) CONSENT. Any Alterations or Utility Installations that
Sublessee shall desire to make and which require the consent of the
Sublessor shall be presented to Sublessor in written form with
proposed detailed plans. All consents given by Sublessor, whether
by virtue of Paragraph 6.2(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Sublessee's acquiring all
applicable permits required by governmental authorities; (ii) the
furnishing of copies of such permits together with a copy of the
plans and specifications for the Alteration or Utility Installation
to Sublessor prior to commencement of the work thereon; and (iii)
the compliance by Sublessee with all conditions of said permits in
a prompt and expeditious manner. Following the presentation by
Sublessee to Sublessor of the written notice required by this
Paragraph 6.2(b), Sublessor shall have ten (10) days to notify
Sublessee of any decision to withhold consent to the Alterations or
Utility Installations described in the written notice. If
Sublessor fails to notify Sublessee of Sublessor's intent to
withhold consent within such ten (10) day period, Sublessor shall
be deemed to have consented to the Alterations or Utility
Installations described in the written notice. Any Alterations or
Utility Installations by Sublessee during the Term of this Sublease
shall be done in a good and workmanlike manner, with good and
sufficient materials, and in compliance with all Applicable Law.
Sublessee shall promptly upon completion thereof furnish Sublessor
with as-built plans and specifications therefor.
7. INSURANCE; INDEMNITY.
7.1 LIABILITY INSURANCE. CARRIED BY SUBLESSOR. Sublessee
shall maintain during the Term of this Sublease, a Commercial
General Liability policy of insurance protecting Sublessor and
Sublessee (as an additional insured) against claims for bodily
injury, personal injury and property damage based upon, involving
or arising out of the ownership, use, occupancy or maintenance of
the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in
an amount not less than One Million Dollars ($1,000,000) per
occurrence. The policy shall not contain any intra-insured
exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Sublease as an
"insured contract" for the performance of Sublessee's indemnity
obligations under this Sublease. All insurance to be carried by
Sublessee shall be primary to and not contributory with any similar
insurance carried by Sublessee.
7.2 PROPERTY INSURANCE-BUILDING AND IMPROVEMENTS. Sublessee
shall obtain and keep in force during the Term of this Sublease a
policy or policies in the name of Sublessor, with loss payable to
Sublessor and to the holders of any mortgages, deeds of trust or
ground leases on the premises ("LENDER(S)"), insuring loss or
damage to the Premises. The amount of such insurance shall be
equal to the full replacement cost of the Premises, as the same
shall exist from time to time, or the amount required by Lenders,
but in no event more than the commercially reasonable and available
insurable value thereof if, by reason of the unique nature or age
of the improvements involved, such latter amount is less than full
replacement cost. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood
and/or earthquake unless required by a Lender), including coverage
for any additional costs resulting from debris removal and
reasonable amounts of coverage for the enforcement of any ordinance
or law regulating the reconstruction or replacement of any
undamaged sections of the Premises required to be demolished or
removed by reason of the enforcement of any building, zoning,
safety or land use laws as the result of a covered cause of loss,
but not including plate glass insurance. Said policy or policies
shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard
protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers
for Las Vegas, Nevada.
7.3 INSURANCE POLICIES. Insurance required hereunder shall
be in companies duly licensed to transact business in the State of
Nevada, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, as set forth in the most
current issue of "Best's Insurance Guide." Sublessee shall not do
or permit to be done anything which shall invalidate the insurance
policies referred to in this Paragraph 7. Sublessee shall cause to
be delivered to Sublessor certified copies of, or certificates
evidencing the existence and amounts of, the insurance, and with
the additional insureds, required under Paragraphs 7.1 and 7.2. No
such policy shall be cancelable or subject to modification except
after thirty (30) days prior written notice to Sublessor.
Sublessee shall, at least thirty (30) days prior to the expiration
of such policies, furnish Sublessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Sublessor may
order such insurance.
7.4 WAIVER OF SUBROGATION. Without affecting any other
rights or remedies, Sublessee and Sublessor (EACH A "WAIVING
PARTY") each hereby release and relieve the other, and waive their
entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's
property arising out of or incident to the perils required to be
insured against under Paragraph 7.1 and 7.2. The effect of such
releases and waivers of the right to recover damages shall not be
limited by the amount of insurance carried or required, or by any
deductibles applicable thereto.
8. DAMAGE OR DESTRUCTION.
8.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or
destruction to the improvements on the Premises, the repair cost of
which damage or destruction is less than fifty percent (50%) of the
then Replacement Cost of the Premises immediately prior to such
damage or destruction, excluding from such calculation the value of
the land and Sublessee Owned Alterations and Utility Installations.
(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or
destruction to the Premises, the repair cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement
Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land.
(c) "INSURED LOSS" shall mean damage or destruction to
improvements on the Premises, which was caused by an event required
to be covered by the insurance described in Paragraph 7.2,
irrespective of any deductible amounts or coverage limits involved.
(d) "REPLACEMENT COST" shall mean the cost to repair or
rebuild the improvements owned by Sublessor at the time of the
occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the
operation of applicable building codes, ordinances or laws, and
without deduction for depreciation.
(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence
or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph
5.2(a), in, on, or under the Premises.
8.2 DAMAGE-INSURED LOSS. If a Premises Partial Damage or
Premises Total Destruction that is an Insured Loss occurs, then
Sublessor shall, at Sublessor's expense, repair such damage (but
not Sublessee's Trade Fixtures) as soon as reasonably possible and
this Sublease shall continue in full force and effect.
Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such
repair, Sublessor shall promptly contribute the shortage in
proceeds as and when required to complete said repairs. In the
event, however, the shortage in proceeds was due to the fact that,
by reason of the unique nature of the improvements, full
replacement cost insurance coverage
was not commercially reasonable and available, Sublessor shall
have no obligation to pay for the shortage in insurance proceeds or
to fully restore the unique aspects of the Premises unless
Sublessee provides Sublessor with the funds to cover same, or
adequate assurance thereof, within ten (10) days following receipt
of written notice of such shortage and request therefor. If
Sublessor receives said funds or adequate assurance thereof within
said ten (10) day period, Sublessor shall complete the repairs as
soon as reasonably possible and this Sublease shall remain in full
force and effect. If Sublessor does not receive such funds or
assurance within said period, Sublessor may nevertheless elect by
written notice to Sublessee within ten (10) days thereafter to make
such restoration and repair as is commercially reasonable with
Sublessor paying any shortage in proceeds, in which case this
Sublease shall remain in full force and effect. If in such case
Sublessor does not so elect, then this Sublease shall terminate
sixty (60) days following the occurrence of the damage or
destruction. Unless otherwise agreed, Sublessee shall in no event
have any right to reimbursement from Sublessor for any funds
contributed by Sublessee to repair any such damage or destruction.
Premises Partial Damage or Premises Total Destruction due to flood
or earthquake shall be subject to Paragraph 8.3 rather than this
Paragraph 8.2, notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made
available for the repairs if made by either Party.
8.3 DAMAGE-UNINSURED LOSS. If a Premises Partial Damage or
Premises Total Destruction that is not an Insured Loss occurs,
unless caused by a grossly negligent or willful act of Sublessee
(in which event Sublessee shall make the repairs at Sublessee's
expense and this Sublease shall continue in full force and effect,
but subject to Sublessor's rights under Paragraph 11), Sublessor
may at Sublessor's option, either: (i) repair such damage as soon
as reasonably possible at Sublessor's expense, in which event this
Sublease shall continue in full force and effect; or (ii) give
written notice to Sublessee within thirty (30) days after receipt
by Sublessor of knowledge of the occurrence of such damage of
Sublessor's desire to terminate this Sublease as of the date sixty
(60) days following the giving of such notice. In the event
Sublessor elects to give such notice of Sublessor's intention to
terminate this Sublease, Sublessee shall have the right within ten
(10) days after the receipt of such notice to give written notice
to Sublessor of Sublessee's commitment to pay for the repair of
such damage totally at Sublessee's expense and without
reimbursement from Sublessor. Sublessee shall provide Sublessor
with the required funds or satisfactory assurance thereof within
thirty (30) days following Sublessee's said commitment. In such
event this Sublease shall continue in full force and effect, and
Sublessor shall proceed to make such repairs as soon as reasonably
possible and the required funds are available. If Sublessee does
not give such notice and provide the funds or assurance thereof
within the time specified above, this Sublease shall terminate as
of the date specified in Sublessor's notice of termination.
8.4 TERMINATION-ADVANCE PAYMENTS. Upon termination of this
Sublease pursuant to this Paragraph 8, an equitable adjustment
shall be made concerning advance Base Rent and any other advance
payments made by Sublessee to Sublessor.
8.5 WAIVE STATUTES. Sublessor and Sublessee agree that the
terms of this Sublease shall govern the effect of any damage to or
destruction of the Premises with respect to the termination of this
Sublease and hereby waive the provisions of any present or future
statute to the extent inconsistent herewith.
9. REAL PROPERTY TAXES.
9.1 PAYMENT OF TAXES. Sublessor shall pay the Real Property
Taxes, as defined in Paragraph 9.2, applicable to the Premises.
9.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the
term "REAL PROPERTY TAXES" shall include any form of real estate
tax or assessment, general, special, ordinary or extraordinary, and
any license fee, commercial rental tax, improvement bond or bonds,
levy or tax (other than inheritance, personal income or estate
taxes) imposed upon the Premises by any authority having the direct
or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street,
drainage or other improvement district thereof, levied against any
legal or equitable interest of Sublessor in the Premises or in the
real property of which the Premises are a part, Sublessor's right
to rent or other income therefrom, and/or Sublessor's business of
leasing the Premises. Notwithstanding anything to the contrary
contained in this Paragraph 9.2, the term Real Property Taxes shall
not include any tax, fee, levy, assessment or charge (i) in
substitution of partially or totally, any tax, fee, levy,
assessment or charge hereinabove included within the definition of
Real Property Tax or (ii) the nature of which was herein before
included within the definition of Real Property Tax; or (iii) which
is imposed as a result of a transfer, either partial or total, of
Sublessor's interest in the Premises or which is added to a tax or
charge herein before included within the definition of Real
Property Tax by reason of such transfer, or (iv) which is imposed
by reason of this transaction, any modifications or changes hereto,
or any transfers hereof.
9.3 PERSONAL PROPERTY TAXES. Sublessee shall pay prior to
delinquency all taxes assessed against and levied upon Trade
Fixtures, Alterations, Utility Installations, furnishings,
equipment and all personal property of Sublessee contained in the
Premises or elsewhere. When possible, Sublessee shall cause its
Trade Fixtures, Alterations, Utility Installations, furnishings,
equipment and all other personal property to be assessed and billed
separately from the real property of Sublessor. If any of
Sublessee's said personal property shall be assessed with
Sublessor's real property, Sublessee shall pay Sublessor the taxes
attributable to Sublessee within ten (10) days after receipt of a
written statement setting forth the taxes applicable to Sublessee's
property.
10. UTILITIES. Sublessor shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and
services supplied to the Premises, together with any taxes thereon.
Sublessee shall reimburse Sublessor for all reasonable costs and
expenses that are properly documented and incurred by Sublessor
during the Term of this Sublease in accordance with Paragraph 9.
11. REIMBURSEMENT. Sublessee shall reimburse Sublessor for
all costs and expenses that are properly documented, reasonable and
incurred by Sublessor in the operation or maintenance of the
Premises during the Term of this Sublease, including without
limitation, costs and expenses incurred in connection with
Sublessor's obligations under Paragraphs 9.1 and 10, in accordance
with the provisions hereof; provided, however, Sublessee shall have
no obligation to reimburse Sublessor for any costs or expenses that
arise from (i) the negligence or willful misconduct of Sublessor or
any of its employees, (ii) any and all claims, proceedings, losses,
liabilities, suits, judgements, costs, expenses, penalties, taxes
or fines (for purposes of this Paragraph 11, each a "Claim"),
regardless of when the same is made or incurred, whether during or
after the Term, by any employee of Sublessor, (iii) Sublessor's
employment of any employee, (iv) any Claim
for personal injury, wrongful death or the destruction of property,
including the Premises, whether based on a theory of negligence,
strict liability or any other theory, or (v) any claim, lien,
pledge, option, charge, easement, security interest, lease,
conditional sales agreement, encumbrance or other right of third
parties whether voluntarily incurred or arising by operation of
law, and including without limitation, any agreement to give any of
the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof (for purposes of
this Paragraph 11, each a "Lien") by Sublessor and attributable to
the Premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 Neither this Sublease nor any of the rights or
obligations hereunder may be assigned by any Party without the
prior written consent of the other Party, which consent shall not
be unreasonably withheld.
12.2 Any assignee of, or sublessee under, this Sublease shall,
by reason of accepting such assignment or entering into such
sublease, be deemed, for the benefit of Sublessor, to have assumed
and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or
performed by Sublessee during the term of said assignment or
sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which
Sublessor has specifically consented in writing.
13. DEFAULT; BREACH; REMEDIES.
13.1 DEFAULT; BREACH. A "DEFAULT" is defined as a failure by
the Sublessee to observe, comply with or perform any of the terms,
covenants, conditions or rules applicable to Sublessee under this
Sublease. A "BREACH" is defined as the occurrence of any one or
more of the following Defaults, and, where a grace period for cure
after notice is specified herein, the failure by Sublessee to cure
such Default prior to the expiration of the applicable grace
period, and shall entitle Sublessor to pursue the remedies set
forth in Paragraph 13.2:
(a) The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises;
(b) Except as expressly otherwise provided in this Sublease,
the failure by Sublessee to make any payment of Base Rent or any
other monetary payment required to be made by Sublessee hereunder,
whether to Sublessor or to a third party, as and when due, the
failure by Sublessee to provide Sublessor with reasonable evidence
of insurance or surety bond required under this Sublease, or the
failure of Sublessee to fulfill any obligation under this Sublease
which endangers or threatens life or property, where such failure
continues for a period of thirty (30) days following written notice
thereof by or on behalf of Sublessor to Sublessee;
(c) A Default by Sublessee as to the terms, covenants,
conditions or provisions of this Sublease that are to be observed,
complied with or performed by Sublessee, other than those described
in subparagraphs (a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice
thereof by or on behalf of Sublessor to Sublessee; provided,
however, that if the nature of
Sublessee's Default is such that more than thirty (30)
days are reasonably required for its cure, then it shall not be
deemed to be a Breach of this Sublease by Sublessee if Sublessee
commences such cure within said thirty (30) day period and
thereafter diligently prosecutes such cure to completion; or
(d) The occurrence of any of the following events: (i) the
making by Sublessee of any general arrangement or assignment for
the benefit of creditors; (ii) Sublessee's becoming a "debtor" as
defined in 11 U.S.C. Section 101 or any successor statute thereto (unless,
in the case of a petition filed against Sublessee, the same is
dismissed within sixty (60) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of
Sublessee's assets located at the Premises or of Sublessee's
interest in this Sublease, where possession is not restored to
Sublessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of
Sublessee's assets located at the Premises or of Sublessee's
interest in this Sublease, where such seizure is not discharged
within thirty (30) days; provided, however, in the event that any
provision of this subparagraph (d) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect
the validity of the remaining provisions.
13.2 REMEDIES. If Sublessee fails to perform any affirmative
duty or obligation of Sublessee under this Sublease, within ten
(10) days after written notice to Sublessee (or in case of an
emergency, without notice), Sublessor may at its option (but
without obligation to do so), perform such duty or obligation on
Sublessee's behalf, including but not limited to, the obtaining of
reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals. The costs and expenses of any such
performance by Sublessor shall be due and payable by Sublessee to
Sublessor upon invoice therefor. In the event of a Breach of this
Sublease by Sublessee, as defined in Paragraph 13.1, with or
without further notice or demand, and without limiting Sublessor in
the exercise of any right or remedy which Sublessor may have be
reason of such Breach, Sublessor may:
(a) Terminate Sublessee's right to possession of the Premises
by any lawful means, in which case this Sublease and the Term
hereof shall terminate and Sublessee shall immediately surrender
possession of the Premises to Sublessor. In such event Sublessor
shall be entitled to recover from Sublessee: (i) the worth at the
time of the award of the unpaid rent which had been earned at the
time of termination; (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such
rental loss that the Sublessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the Term after the time of
award exceeds the amount of such rental loss that the Sublessee
proves could be reasonably avoided; and (iv) any other amount
necessary to compensate Sublessor for all the detriment proximately
caused by the Sublessee's failure to perform its obligations under
this Sublease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to, the cost
of recovering possession of the Premises, expenses of reletting,
including necessary renovation and alteration of the Premises and
reasonable attorneys' fees. The worth at the time of award of the
amount referred to in provision (iii) of the prior sentence shall
be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%). Efforts by Sublessor to mitigate damages caused by
Sublessee's Default or Breach of this Sublease shall not waive
Sublessor's right to recover damages under this Paragraph. If
termination of this Sublease is obtained through the provisional
remedy of unlawful detainer, Sublessor shall have the right to
recover in such proceeding the unpaid rent and damages as are
recoverable therein, or Sublessor may reserve therein the right to
recover all or any part thereof in a
separate suit for such rent and/or damages. If a notice
and grace period required under subparagraphs 13.1(b), (c) or (d)
was not previously given, a notice to pay rent or quit, or to
perform or quit, as the case may be, given to Sublessee under any
statute authorizing the forfeiture of leases for unlawful detainer
shall also constitute the applicable notice for grace period
purposes required by subparagraphs 11.1(b), (c) or (d). In such
case, the applicable grace period under subparagraphs 13.1(b), (c)
or (d) and under the unlawful detainer statute shall run
concurrently after the one such statutory notice, and the failure
of Sublessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a
Breach of this Sublease entitling Sublessor to the remedies
provided for in this Sublease and/or by said statute;
(b) Continue the Sublease and Sublessee's right to possession
in effect after Sublessee's Breach and abandonment and recover the
rent as it becomes due, provided Sublessee has the right to sublet
or assign, subject only to reasonable limitations. See Paragraphs
12 and 27 for the limitations on assignment and subletting, which
limitations Sublessee and Sublessor agree are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the
appointment of a receiver to protect the Sublessor's interest under
the Sublease, shall not constitute a termination of the Sublessee's
right to possession; or
(c) Pursue any other remedy now or hereafter available to
Sublessor under the laws or judicial decisions of the State of
Nevada.
The expiration or termination of this Sublease and/or the
termination of Sublessee's right to possession shall not relieve
Sublessee from liability under any indemnity provisions of this
Sublease as to matters occurring or accruing during the Term hereof
or by reason of Sublessee's occupancy of the Premises.
14. MASTER LEASE.
14.1 This Sublease is and shall be at all times subject and
subordinate to the Master Lease.
14.2 The terms, conditions and respective obligations of
Sublessor and Sublessee to each other under this Sublease shall be
the terms and conditions of the Master Lease except for those
provisions of the Master Lease which are directly contradicted by
this Sublease in which event the terms of this Sublease document
shall control over the Master Lease. Therefore, for the purposes
of this Sublease, wherever in the Master Lease the word "Lessor" is
used it shall be deemed to mean the Sublessor herein and wherever
in the Master Lease the word "Lessee" is used it shall be deemed to
mean the Sublessee herein.
14.3 Sublessor agrees to maintain the Master Lease during the
entire Term of this Sublease, subject, however, to any earlier
termination of the Master Lease without the fault of the Sublessor,
and to comply with or perform Sublessor's obligations under the
Master Lease and to hold Sublessee free and harmless of and from
all liability, judgments, costs, damages, claims or demands arising
out of Sublessor's failure to comply with or perform Sublessor's
obligations under the Master Lease.
14.4 Sublessor represents to Sublessee that the Master Lease
is in full force and effect and that no default exists on the part
of any party to the Master Lease.
15. ASSIGNMENT OF SUBLEASE AND DEFAULT.
15.1 Sublessor hereby assigns and transfers to Master Lessor
the Sublessor's interest in this Sublease and all rentals and
income arising therefrom, subject however to terms of Paragraph
15.2 hereof.
15.2 Master Lessor, by executing this document, agrees that
until a default shall occur in the performance of Sublessor's
Obligations under the Master Lease, that Sublessor may receive,
collect and enjoy the rents accruing under this Sublease. However,
if Sublessor shall default in the performance of its obligations to
Master Lessor then Master Lessor shall receive and collect,
directly from Sublessee, all rent owing and to be owed under this
Sublease. Master Lessor shall not, by reason of this assignment of
the Sublease nor by reason of the collection of rents from the
Sublessee, be deemed liable to Sublessee for any failure of the
Sublessor to perform and comply with Sublessor's Remaining
Obligations. So long as Sublessee continues to pay rent due
hereunder to Master Lessor under this Section 15.2, Master Lessor
shall not interfere with Sublessee's use or occupancy of the
Premises.
15.3 Sublessor hereby irrevocably authorizes and directs
Sublessee, upon receipt of any written notice from the Master
Lessor stating that a default exists in the performance of
Sublessor's obligations under the Master Lease, to pay to Master
Lessor the rents due and to become due under the Sublease.
Sublessor agrees that Sublessee shall have the right to rely upon
any such statement and request from Master Lessor, and that
Sublessee shall pay such rents to Master Lessor without any
obligation or right to inquire as to whether such default exists
and notwithstanding any notice from or claim from Sublessor to the
contrary and Sublessor shall have no right or claim against
Sublessee for any such rents so paid by Sublessee.
15.4 No changes or modifications shall be made to this
Sublease without the consent of Master Lessor.
16. CONDEMNATION. If the Premises or any portion thereof are
taken under the power of eminent domain or sold under the threat of
the exercise of said power (all of which are herein called
"CONDEMNATION"), this Sublease shall terminate as to the part so
taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%)
of the floor area of the Premises, or more than twenty-five percent
(25%) of the land area not occupied by any building, is taken by
condemnation, Sublessee may, at Sublessee's option, to be exercised
in writing within ten (10) days after Sublessor shall have given
Sublessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authorities shall
have taken possession) terminate this Sublease as of the date the
condemning authority takes such possession. If Sublessee does not
terminate this Sublease in accordance with the foregoing, this
Sublease shall remain in full force and effect as to the portion of
the Premises remaining.
17. SEVERABILITY. The invalidity of any provision of this
Sublease, as determined by a court of competent jurisdiction, shall
in no way affect the validity of any other provision hereof.
18. TIME OF ESSENCE. Time is of the essence with respect to
the performance of all obligations to be performed or observed by
the Parties under this Sublease.
19. RENT DEFINED. All monetary obligations of Sublessee to
Sublessor under the terms of this Sublease are deemed to be rent.
20. NO PRIOR OR OTHER AGREEMENTS. This Sublease contains all
agreements between the Parties with respect to any matter mentioned
herein and no other prior or contemporaneous agreement or
understanding shall be effective.
21. NOTICES.
21.1 All notices required or permitted by this Sublease shall
be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by regular, certified
or registered mail or U.S. Postal Service Express Mail, with
postage prepaid, or by facsimile transmission, and shall be deemed
sufficiently given if served in a manner specified in this
Paragraph 20. The addresses noted adjacent to a Party's signature
on this Sublease shall be that Party's address for delivery or
mailing of notice purposes. Either Party may by written notice to
the other specify a different address for notice purposes. A copy
of all notices required or permitted to be given to Sublessor
hereunder shall be concurrently transmitted to such party or
parties at such addresses as Sublessor may from time to time
hereafter designate by written notice to Sublessee.
21.2 Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery
shown on the receipt, or if no delivery date is shown, the postmark
thereon. If sent by regular mail, the notice shall be deemed given
forty-eight (48) hours after the same is addressed as required
herein and mailed with postage prepaid. Notices delivered by U.S.
Postal Service Express Mail or overnight courier that guarantees
same-day delivery shall be deemed given twenty-four (24) hours
after delivery of the same to the United States Postal Service or
courier. If any notice is transmitted by facsimile transmission or
similar means, the same shall be deemed served or delivered upon
telephone confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mail. If notice
is received on a Sunday or legal holiday, it shall be deemed
received on the next business day.
22. WAIVERS. No waiver by Sublessor of the Default or Breach
of any term, covenant or condition hereof by Sublessee, shall be
deemed a waiver of any other term, covenant or condition hereof, or
of any subsequent Default or Breach by Sublessee of the same or of
any other term, covenant or condition hereof. Sublessor's consent
to, or approval of, any act shall not be deemed to render
unnecessary the obtaining of Sublessor's consent to, or approval
of, any subsequent or similar act by Sublessee, or be construed as
the basis of an estoppel to enforce the provision or provisions of
this Sublease requiring such consent. Regardless of Sublessor's
knowledge of a Default or Breach at the time of accepting rent, the
acceptance of rent by Sublessor shall not be a waiver of any
preceding Default or Breach by Sublessee of any provision hereof,
other than the failure of Sublessee to pay the particular rent so
accepted. Any payment given Sublessor by Sublessee may be accepted
by Sublessor on account of moneys or damages due Sublessor,
notwithstanding any qualifying statements or conditions made by
Sublessee in connection therewith, which such statements and/or
conditions shall be of no force or effect whatsoever unless
specifically agreed to by Sublessor at or before the time of
deposit of such payment.
23. RECORDING. Either Sublessor or Sublessee shall, upon
request of the other, execute, acknowledge and deliver to the other
a short form memorandum Sublease for recording purposes. The Party
requesting recordation shall be responsible for payment of any fees
or taxes applicable thereto.
24. NO RIGHT TO HOLDOVER. Sublessee has no right to retain
possession of the Premises or any part thereof beyond the
expiration or earlier termination of this Sublease.
25. CUMULATIVE REMEDIES. No remedy or election hereunder
shall be deemed exclusive but shall, wherever possible, be
cumulative with all other remedies at law or in equity.
26. COVENANTS AND CONDITIONS. All provisions of this
Sublease to be observed or performed by Sublessee or Sublessor are
both covenants and conditions.
27. BINDING EFFECT; CHOICE OF LAW. This Sublease shall be
binding upon the Parties, their personal representatives,
successors and assigns and be governed by the laws of the State of
Nevada. Any litigation between the Parties hereto concerning this
Sublease shall be initiated in Clark County, Nevada.
28. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
28.1 SUBORDINATION. This Sublease shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"),
now or hereafter placed by Sublessor upon the real property of
which the Premises are a part, to any and all advances made on the
security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof. Sublessee
agrees that the Lenders holding any such Security Device shall have
no duty, liability or obligation to perform any of the obligations
of Sublessor under this Sublease, but that in the event of
Sublessor's default with respect to any such obligation, Sublessee
will give any Lender whose name and address have been furnished
Sublessee in writing for such purpose notice of Sublessor's default
and allow such Lender thirty (30) days following receipt of such
notice for the cure of said default before invoking any remedies
Sublessee may have by reason thereof. If any Lender shall elect to
have this Sublease superior to the lien of its Security Device and
shall give written notice thereof to Sublessee, this Sublease shall
be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.
28.2 ATTORNMENT. Subject to the non-disturbance provisions of
Paragraph 29.3, Sublessee agrees to attorn to a Lender or any other
party who acquires ownership of the Premises by reason of a
foreclosure of a Security Device, and that in the event of such
foreclosure, such new owner shall not: (i) be liable for any act or
omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets
or defenses which Sublessee might have against any prior lessor; or
(iii) be bound by prepayment of more than one (1) month's rent.
28.3 NON-DISTURBANCE. With respect to Security Devices
entered into by Sublessor after the execution of this Sublease,
Sublessee's subordination of this Sublease shall be subject to
receiving assurance (a "non-disturbance agreement") from the Lender
that Sublessee's possession and this Sublease, including
any options to extend the Term hereof, will not be disturbed
so long as Sublessee is not in Breach hereof and attorns to the
record owner of the Premises.
28.4 SELF-EXECUTING. The agreements contained in this
Paragraph 29 shall be effective without the execution of any
further documents; provided, however, that, upon written request
from Sublessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Sublessee and Sublessor shall execute
such further writings as may be reasonably required to separately
document any such subordination or non-subordination, attornment
and/or non-disturbance agreement as it provided for herein.
29. ATTORNEYS' FEES. If any Party brings an action or
proceeding to enforce the terms hereof or declare rights hereunder,
the Prevailing Party (as hereafter defined) in any such proceeding,
action or appeal thereon, shall be entitled to reasonably
attorney's fees. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or
proceeding is pursued to decisions or judgment. The term,
"PREVAILING PARTY" shall include, without limitation, a Party who
substantially obtains or defeats the relief sought, as the case may
be, whether by compromise, settlement, judgment, or abandonment by
the other Party of its claim or defense. The attorneys' fee award
shall not be computed in accordance with any court fee schedule,
but shall be such as to fully reimburse all attorneys' fees
reasonably incurred. Sublessor shall be entitled to attorneys'
fees, costs and expenses incurred in the preparation and service of
notices of Default and consultations in connection therewith,
whether or not a legal action is subsequently commenced in
connection with such Default or resulting Breach.
30. SUBLESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Sublessor
and Sublessor's agents shall have the right to enter the Premises
at any time, in the case of an emergency, and otherwise at
reasonable times for the purpose of showing the same to prospective
purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the
building of which they are a part, as Sublessor may reasonably deem
necessary.
31. SIGNS. Neither Sublessor or Sublessee shall place any
sign upon the Premises, except with the prior written consent of
the other Party. If Sublessor places any sign up on the Premises,
it shall be deemed to have consented to the same.
32. TERMINATIONS; MERGER. Unless specifically stated
otherwise in writing by Sublessor, the voluntary or other surrender
of this Sublease by Sublessee, the mutual termination or
cancellation hereof, or a termination hereof by Sublessor for
Breach by Sublessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, Sublessor shall,
in the event of any such surrender, termination or cancellation,
have the option to continue any one or all of any existing
subtenancies. Sublessor's failure within ten (10) days following
any such event to make a written election to the contrary by
written notice of the holder of any such lesser interest, shall
constitute Sublessor's election to have such event constitute the
termination of such interest.
33. CONSENTS.
(a) Except as otherwise provided herein, wherever in this
Sublease the consent of a Party is required to an act by or for the
other Party, such consent shall not be unreasonably withheld or
delayed. Sublessor's actual reasonable costs and expenses
(including but not limited to architects', attorneys', engineers'
or other consultants' fees) incurred in the consideration of, or
response to, a request by Sublessee for any Sublessor consent
pertaining to this Sublease or the Premises, including but not
limited to consents to an assignment, a subletting or the presence
or use of a Hazardous Substance, practice or storage tank, shall be
paid by Sublessee to Sublessor upon receipt of an invoice and
supporting documentation therefor. Subject to Paragraph 13.2(e)
(applicable to assignment or subletting), Sublessor may, as a
condition to considering any such request by Sublessee, require
that Sublessee deposit with Sublessor an amount of money reasonably
calculated by Sublessor to represent the cost Sublessor will incur
in considering and responding to Sublessee's request. Except as
otherwise provided, any unused portion of said deposit shall be
refunded to Sublessee without interest. Sublessor's consent to any
act, assignment of this Sublease or subletting of the Premises by
Sublessee shall not constitute an acknowledgment that no Default or
Breach by Sublessee of this Sublease exists, nor shall such consent
be deemed a waiver of any then existing Default of Breach, except
as may be otherwise specifically stated in writing by Sublessor at
the time of such consent.
(b) All conditions to Sublessor's consent authorized by this
Sublease are acknowledged by Sublessee as being reasonable. The
failure to specify herein any particular condition to Sublessor's
consent shall not preclude the imposition by Sublessor at the time
of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which
consent is being given.
34. QUIET POSSESSION. Upon payment by Sublessee of the rent
for the Premises and the observance and performance of all of the
covenants, conditions and provisions on Sublessee's part to be
observed and performed under this Sublease, Sublessee shall have
quiet possession of the Premises for the entire Term hereof subject
to all of the provisions of this Sublease.
35. SECURITY MEASURES. Sublessee hereby acknowledges that
the rental payable to Sublessor hereunder does not include the cost
of guard service or other security measures and that Sublessor
shall have no obligations whatsoever to provide same. Sublessee
assumes all responsibility for the protection of the Premises,
Sublessee, its agents and invitees and their property from the acts
of third parties.
36. RESERVATIONS. Sublessor reserves to itself the right,
from time to time, to grant without the consent or joinder of
Sublessee, such easements, rights and dedications that Sublessor
deems necessary, and to cause the recordation of parcel maps and
restrictions, so long as such easements, rights, dedications, maps
and restrictions do not unreasonably interfere with the use of the
Premises by Sublessee. Sublessee agrees to sign any documents
reasonably requested by Sublessor to effectuate any such easement
rights, dedication, map or restrictions.
37. PERFORMANCE UNDER PROTEST. If at any time a dispute
shall arise as to any amount or sum of money to be paid by one
Party to the other under the provisions hereof, the Party against
whom the obligation to pay the money is asserted shall have the
right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment and there
shall survive the right on the part of said Party to institute suit
for recovery of such sum. If it shall be adjudged that there was
no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay under the
provisions of this Sublease.
38. AUTHORITY. If either Party hereto is a corporation,
trust, or general or limited partnership, each individual executing
this Sublease on behalf of such entity represents and warrants that
he or she is duly authorized to execute and deliver this Sublease
on its behalf. If Sublessee is a corporation, trust or
partnership, Sublessee shall, within thirty (30) days after request
by Sublessor, deliver to Sublessor evidence satisfactory to
Sublessor of such authority.
39. CONFLICT. Any conflict between the printed provisions of
this Sublease and the typewritten or handwritten provisions shall
be controlled by the typewritten or handwritten provisions.
40. OFFER. Preparation of this Sublease by Sublessor or
Sublessor's agent and submission of same to Sublessee shall not be
deemed an offer to lease to Sublessee. This Sublease is not
intended to be binding until executed by all Parties hereto.
41. AMENDMENTS. This Sublease may be modified only in
writing, signed by the parties in interest at the time of the
modification. The Parties shall amend this Sublease from time to
time to reflect any adjustments that are made to the Base Rent or
other rent payable under this Sublease. As long as they do not
materially change Sublessee's obligations hereunder, Sublessee
agrees to make such reasonable non-monetary modifications to this
Sublease as may be reasonably required by an institutional,
insurance company, or pension plan Lender in connection with the
obtaining of normal financing or refinancing of the property of
which the Premises are a part.
42. MULTIPLE PARTIES. Except as otherwise expressly provided
herein, if more than one person or entity is named herein as either
Sublessor or Sublessee, the obligations of such multiple parties
shall be the joint and several responsibility of all persons or
entities named herein as such Sublessor or Sublessee.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
SUBLESSOR AND SUBLESSEE HAVE CAREFULLY READ AND REVIEWED THIS
SUBLEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE
EXECUTION OF THIS SUBLEASE SHOW THEIR INFORMED AND VOLUNTARY
CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
SUBLEASE IS EXECUTED, THE TERMS OF THIS SUBLEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF SUBLESSOR AND
SUBLESSEE WITH RESPECT TO THE PREMISES.
The parties hereto have executed this Sublease at the place on the
dates specified above to their respective signatures.
Executed at 135 East Reno, Suite F-7 Executed at 550 Blue Lakes Blvd. N.
Las Vegas, NV 89119 Twin Falls, ID 83301
on July 5, 1996 on July 5, 1996
by Sublessor: by Sublessee:
NEVADA AG AIR, LTD. AMERISTAR CASINOS, INC.
By: AMERISTAR CASINOS, INC., its By /s/ Brian E. Katz
Manager Name Printed: Brian E. Katz
Title: Sr. Vice President
Address: PO Box 452
550 Blue Lakes Blvd. N.
Twin Falls, ID 83301
By /s/ Brian E. Katz Tel. No.(208) 733-2282
Name Printed: Brian E. Katz Fax No. (208) 733-2580
Titled: Sr. Vice President
Address: PO Box 452
550 Blue Lakes Blvd N.
Twin Falls, ID 83301
By
Tel. No.(208) 733-2282 Name Printed:
Fax No. (208) 733-2580 Title:
Address:
Tel. No.( )
Fax No. ( )
By: GEM AIR, INC., its Manager
By /s/ Steven W. Rebeil
Name Printed: Steven W. Rebeil
Title: President
Address: 135 E. Reno, Ste F-7
Las Vegas, NV 89119
Tel. No.(702) 558-7000
Fax No. (702) 558-7008
MASTER LESSOR'S CONSENT TO SUBLEASE
The undersigned ("Master Lessor"), lessor under the
Master Lease, hereby consents to the foregoing Sublease without
waiver of any restriction in the Master Lease concerning further
assignment or subletting. Master Lessor certifies that, as of the
date of Master Lessor's execution hereof, Sublessor is not in
default or breach of any of the provisions of the Master Lease, and
that the Master lease has not been amended or modified except as
expressly set forth in the foregoing Sublease.
MASTER LESSOR:
JOHNNY RIBEIRO BUILDER, INC. OF NEVADA,
a Nevada corporation
Date:
By:
Name:
Title:
EXHIBIT "A"
Description of the Premises
EXHIBIT "B"
Master Lease
EXHIBIT "C"
Description of the Personal Property
AIRCRAFT OPERATING AGREEMENT
THIS AIRCRAFT OPERATING AGREEMENT dated as of July 5, 1996 (this
"Agreement") is made by and between AMERISTAR CASINOS, INC., a Nevada
corporation ("Ameristar") and GEM AIR, INC., a Nevada corporation
("Gem Air").
RECITALS
A. Gem Air and Ameristar (each an "Owner") own, as tenants in common,
the Aircraft described on Exhibit "A" attached hereto and incorporated herein
by this reference.
B. Ameristar and Gem Air desire to set forth their agreements with
respect to the maintenance and operation of the Aircraft as more particularly
set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement and intending to be legally bound hereby,
Ameristar and Gem Air hereby agree as follows:
1. AGREEMENTS AS TO THE OPERATION OF THE AIRCRAFT
1.1 Operational Control:
(a) Ameristar will exercise operational control of the Aircraft.
As used in this Agreement, "operational control" shall have
the meaning provided in the FAA's regulations, 14 C.F.R.
Subchapter A, Part 1, Section 1.1.
(b) In furtherance of the provisions of Section 1.1(a), the
Captain of the Aircraft shall be an employee of Ameristar,
shall be designated by Ameristar and shall at all times be
subject to Ameristar's direction and control. The Captain
of the Aircraft shall have complete discretion concerning
preparation of the Aircraft for flight, the load carried
and its distribution, whether or not a flight shall be
undertaken or abandoned once undertaken, any deviation
from the proposed route, where landing shall be made,
and all other matters relating to the operation of the
Aircraft.
1.2 Operation: Each Owner shall:
(a) not request that the Captain use the Aircraft in any manner
contrary to any recommendation of the manufacturers of the
Aircraft, any Engine or any Part of any recommendation,
regulation or ruling of the FAA or for any purpose for which
the Aircraft is not designed or reasonably suitable; provided
that FAA requirements will control over any directions from
Ameristar;
(b) not accept payment for the use of the Aircraft of take any
action with respect to the use of operation of the Aircraft
that reasonably may be expected to cause the operations of the
Aircraft to fail to comply with the requirements of 14 C.F.R.
Section 91.501.
(c) not use the Aircraft for the carriage of:
(i) whole animals living or dead except in the cargo
compartments according to I.A.T.A. regulations, and
except domestic pet animals carried in a suitable
container to prevent the escape of any liquid and to
ensure the welfare of the animals;
(ii) acids, toxic chemicals, other corrosive materials,
explosives, nuclear fuels, nuclear wastes, or any
nuclear assemblies or components, except as permitted
for passenger aircraft under the "Restriction of Goods"
schedule issued by I.A.T.A. from time to time and
provided that all the requirements for packaging or
otherwise contained therein are fulfilled; or
(iii) any other goods, materials or items of cargo which could
reasonably by expected to cause damage to the Aircraft
and which would not be adequately covered by the
Insurances;
(d) not cause the Aircraft to proceed to, or remain at, any
location which is for the time being the subject of a
prohibition order (or any similar order or directive) by:
(i) any Governmental Entity of the State of Registration; or
(ii) any Governmental Entity of the country in which such
location is situated;
(iii) any Governmental Entity having jurisdiction over
Ameristar or the Aircraft;
(e) use the Aircraft only in accordance with applicable Federal,
state and local law; and
(f) not permit the Aircraft to fly or to be transported outside
of the forty-eight (48) contiguous states of the United
States of America without the other Owner's prior consent and
without proper documentation for such a flight.
1.3 Use of Aircraft:
(a) Except as provided in Section 1.3(b), the Aircraft shall be
used only as directed by Ameristar or Ameristar's authorized
representative in connection with Ameristar's business,
including business related entertainment. Ameristar shall
have the right to reserve the use of the Aircraft by
telephonic, telefacsimile or written notice to Steven W.
Rebeil of Gem Air.
(b) At any time when Ameristar is not using the Aircraft for
business purposes, subject to reasonable advance notice
given to Ameristar, each Owner shall have the right to use
the Aircraft (including the calling of the Aircraft from a
location away from its base of operations) and to cause the
Aircraft to be available for the carriage of such Owner's
guests; provided, however,
(i) Neither party shall charge any fee, assessment or
other charge for such carriage; and
(i) Neither party shall use the Aircraft (except as
permitted under Section 1.3(a) hereof) if such use
reasonably could be expected to interfere with
Ameristar's use of the Aircraft based on Ameristar's
expected use of the Aircraft or any reservation that
Ameristar shall have made for use of the Aircraft;
provided, further, if Ameristar fails to use the
Aircraft within two hours after the time reserved with
any such reservation, then such reservation shall have
no further force or effect.
2. MAINTENANCE.
Ameristar, with the advice and consultaion of Gem Air, shall have full
control and responsibility for the maintenance and servicing of the Aircraft.
Ameristar shall be responsible for all bookkeeping with respect to the
Aircraft. However, Gem Air may cause regularly scheduled maintenance and
servicing of the Aircraft to be performed at the cost of Ameristar if such
maintenance is not completed within a reasonable time after the date when such
maintenance is required to be completed; provided, however, that Gem Air shall
not cause such maintenance to be commenced or performed unless Ameristar fails
to commence to cure such failure within five (5) days after written notice from
Gem Air.
3. INSURANCE.
Ameristar shall purchase such insurance for the Aircraft as Ameristar,
in the good faith exercise of its discretion, determines is appropriate,
including liability insurance insuring both Ameristar and Gem Air and
casualty insurance covering the Aircraft.
4. SALE AND ENCUMBRANCE OF THE AIRCRAFT.
4.1 Sale of the Aircraft.
(a) If any Owner (the "Assigning Owner") proposes to sell,
transfer, or otherwise assign ("Assign") all or any portion of its interest in
the Aircraft (the "Interest") for consideration, it shall give written notice
thereof to the other Owner (the "Non-Assigning Owner"); provided, however,
this section 4.1(a) shall be inapplicable to any bona fide collateral
assignment of any Interst and to any proposal to Assign an Interest to a
wholly-owned subsidiary of an Owner. Promptly after the Non-Assigning
Owner receives such a notice, the Assigning Owner and the Non-Assigning Owner
shall meet and confer with respect to the sale of the Aircraft from the
Assigning Onwer to the Non-Assigning Owner. Each Owner shall negotiate in
good faith in respect to such sale; provided, however, neither Owner shall have
any obligation to sell its Interest or to purchase the other Owner's Interest.
If the Owners are unable to agree on the sale of the Assigning Owner's Interest
to the Non-Assigning Owner within thirty (30) days after such notice, then
the Non-Assigning Owner shall use its good faith efforts to market the Aircraft
and to consummate a sale of the Aircraft at a reasonable price. The Assigning
Owner and the Non-Assigning Owner shall each use its good faith effort to
cooperate with the other Owner in connection with the marketing and sale of the
Aircraft and shall execute and deliver to the other Owner, if necessary, such
further instruments as may be necessary to consummate such sale.
(b) Upon the sale of the Aircraft, the affairs of the owner with
respect to the Aircraft shall be wound up and liquidated. The net proceeds
available to the owners after the sale of the Aircraft shall be applied in the
following order of priority:
(i) To the payment of debts and liabilities pertaining
to the Aircraft.
(ii) To the setting up of any reserves which may be
reasonable and necessary for any contingent or
unforeseen liability or obligations of Owner which
relate directly to the Aircraft.
(iii) The balance of any proceeds shall be paid out and
distributed among the Owners in accordance with their
ownership interests in the Aircraft. In the event the
proceeds of the sale of the Aircraft consist of a
promissory note, each Owner shall be entitled to
receive that portion of each installment payment, and
the final payment, in accordance with its ownership
interest in the Aircraft. An independent escrow
agent shall be the party who shall retain the original
promissory note and shall be entitled to collect and
distribute payments thereon. If the maker under the
promissory note shall be in default thereof, Ameristar
and Gem Air is authorized to take all steps necessary to
enforce such promissory note and all remedies with
respect thereto.
(c) Other than as specifically provided in this Agreement, no
Owner shall voluntarily, involuntarily or by operation of law Assign,
encumber or pledge its ownership Interst in the Aircraft, or any part
thereof, nor enter into any agreement as a result of which any person, firm
or corporation may own an Interest in the Aircraft, except upon the prior
written consent of the Owner.
4.2 Encumbrance of the Aircraft. Ameristar shall be the Owner with
authority to negotiate additional or replacement financing for the Aircraft;
provided, however, neither party shall pledge, collaterally assign, hypothecate
or encumber the Aircraft or any interest in the Aircraft for a purpose unrelated
to the Aircraft or refinancing of the Aircraft. If Ameristr determines, in the
good faith exercise of its business judgment, that obtaining additional or
replacement financing for the Aircraft would be beneficial, then Ameristar may
negotiate and obtain such financing on behalf of both Owners on terms and
conditions satisfactory to Ameristar in the good faith exercise of its business
judgment. If Ameristar negotiates such financing, then each Owner shall execute
and deliver to the other Owner or any third party, if necessary, such further
instruments, including without limitation, documents evidencing such additional
or replacement financing or securing such additional or replacement financing
with a security interest in the Aircraft, and will take such other actions as
Ameristar reasonably may request in order to consummate such additional or
replacement financing.
5. PAYMENT OF COSTS.
5.1 Gem Air shall pay or reimburse Ameristar for any and all variable
costs of Gem Air's use of the Aircraft, including, without limitation, with
respect to each and every flight by or at the direction of Gem Air, Gem Air's
agent or Gem Air's guests, for the costs of the following items:
(a) Fuel, oil, lubricants, and other additives utilized in
such flights;
(b) Travel expenses of the crew, including food, lodging and
ground transportation;
(c) Hangar and tie-down costs away from the aircraft's base of
operation;
(d) Landing fees, airport taxes, and similar assessments
away from the Aircraft's base of operations;
(e) Customs, foreign permits, and similar fees directly
related to the flight;
(f) Passenger ground transportation; and
(g) Additional cost of flight planning and weather contract
services attributable to the specific flight only.
Gen Air shall also pay or reimburse Ameristar for any costs or expenses that
arise from (i) any lien, encumbrance or security interests affecting the
Aircraft that (A) has been caused by Gem Air or that results from or relates
to Gem Air's partial ownership of the Aircraft and (B) has not been approved by
Ameristar in a written instrument delivered to Gem Air; (ii) the negligence or
willful misconduct of Gem Air or any of its employees; (iii) any failure of the
Aircraft or any Owner of the Aircraft or any other person to comply with any
Federal Aviation Regulation to the extent that such failure results from any
direction given by Gem Air to any person, or any action or ommission on the
part of Gem Air; or (iv) any breach by Gem Air of any of its obligations
hereunder.
5.2 Except as provided in Section 5.1, Ameristar shall pay all fixed
and variable costs of the operation and maintenace of the aircraft, including,
without limitation, any debt service payments on debt existing as of the date
hereof that is secured by the Aircraft and insurance premiums, taxes and
salaries and benefits for the Aircraft crew.
6. MISCELLANCEOUS
6.1 This Agreement and all rights and duties of the parties arising
from or relating in any way to the subject matter of this Agreement shall be
governed by and construed in accordance with the laws of the State of Nevada.
6.2 This Agreement may be executed in one or more counterparts, each
of which shall be an original but all of which shall constitute one and the
same instrument.
6.3 From time to time, each party will execute and deliver to the
other party, if necessary, such further instruments and will take such other
action as such other party reasonably may request in order to discharge and
perform its obligations and agreements under this Agreement.
6.4 If any provision of this Agreement or the application thereof to
any party or circumstance shall, to any extent by helf invalid or
unenforceable, then the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to whom or which
it is held invalid or unenforceable, shall not be affected thereby.
6.5 In the event that any Owner refers this Agreement to an attorney
in order to enforce its rights or remedies hereunder, then the prevailing
person in any controversy, litigation, arbitration or similary proceedings
shall be entitled in addition to any relief granted in connection therewith,
to an award of its attorney's fees and other costs and expenses incurred in
connection therewith.
IN WITNESS WHEREOF, the parties hereho have agreed to the foregoing terms
and conditions.
AMERISTAR CASINOS, INC., a Nevada
corporation
By: /s/ Brian E. Katz
Name: Brian E. Katz
Title: Sr. Vice President
GEM AIR, INC., a Nevada corporation
By: /s/ Steven W. Rebeil
Name Steven W. Rebeil
Title President
EXHIBIT "A"
The Aircraft
1982 Cessna Citation ISP, Serial No. 501-0236, FAA No. 711VF; left engine,
Pratt & Whitney PCE 77371, right engine, Pratt & Whitney PCE 77375.
FIRST AMENDMENT TO MERGER AGREEMENT
THIS FIRST AMENDMENT TO MERGER AGREEMENT (the "First
Amendment") is made as of July 2, 1996 by and among GEM GAMING,
INC., a Nevada corporation ("Gem"), AMERISTAR CASINOS, INC.,
a Nevada corporation ("Ameristar"), AMERISTAR CASINO LAS VEGAS,
INC., a Nevada corporation and a wholly owned subsidiary of
Ameristar ("ACLV"), STEVEN W. REBEIL, an individual and in his
capacity as Trustee of the Karizma Trust created under that
certain Trust Agreement, dated July 2, 1991, as amended
("Rebeil"), and DOMINIC J. MAGLIARDITI, an individual
("Magliarditi" and together with Rebeil, together, the "Gem
Individuals").
RECITALS
A. Agreement. Gem, Ameristar, ACLV, Rebeil and
Magliarditi are the parties to that certain Merger Agreement
dated as of May 31, 1996 (the "Agreement").
B. Purpose. Gem, Ameristar, ACLV, Rebeil and Magliarditi
now desire to amend the Agreement in accordance with the terms of
this First Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, Gem, Ameristar, ACLV,
Rebeil and Magliarditi hereby agree as follows:
1. Revision of Property Development Agreement. Exhibit
"1" to the form of Recapture Agreement attached to the Merger
Agreement as Exhibit "M" is hereby revised and replaced in its
entirety to read as set forth in Exhibit "A" attached hereto and
incorporated herein by this reference.
2. Counterparts. This First Amendment may be executed in
multiple counterparts, each of which executed and delivered shall
be deemed to be an original and all of which together shall
constitute one and the same agreement.
3. Continuing Effect. As amended hereby, the Merger
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First
Amendment as of the date first above written.
AMERISTAR:
AMERISTAR CASINOS, INC.,
a Nevada corporation
By: /s/ Craig H. Neilsen/by
Christing L. Hinton
Name: Craig H. Neilsen
Its: President
On this 19th day of July, 19 96, Craig H. Neilsen directed
Christine L. Hinton, in his presence as well as our own, to sign
the foregoing document as "Craig H. Neilsen." Upon viewing the
signature as signed by Christine L. Hinton, and in our presence,
Craig H. Neilsen declared to us that he adopted it as his own
signature.
/s/Dawn Levine
Witness
/s/ Brenda R. Townsend
Witness
State of Nevada )
) ss.
County of Clark )
I, Catherine Zeljeznjak, Notary Public in and for said
county and state, do hereby certify that Craig H. Neilsen
personally appeared before me and is known or identified to me to
be the President of Ameristar Casinos, Inc., the corporation that
executed the within instrument or the person who executed the
instrument on behalf of said corporation. Craig H. Neilsen, who
being unable due to physical incapacity to sign his name or offer
his mark, did direct Christine L. Hinton, in his presence, as
well as my own, to sign his name to the foregoing document.
Craig H. Neilsen, after viewing his name as signed by Christine
L. Hinton, thereupon adopted it as his own by acknowledging to me
his intention to so adopt as if he had personally executed the
same in behalf of said corporation, and further acknowledged to
me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal this 19th day of July, 1996.
/s/ Catherine Zeljeznjak
Notary Public
My Commission Expires on:
6/24/99
ACLV:
AMERISTAR CASINO LAS VEGAS, INC.,
a Nevada corporation
By:/s/ Craig H. Neilsen/by
Christine L. Hinton
Name: Craig H. Neilsen
Its: President
On this 19th day of July, 1996, Craig H. Neilsen directed
Christine L. Hinton, in his presence as well as our own, to sign
the foregoing document as "Craig H. Neilsen." Upon viewing the
signature as signed by Christine L. Hinton, and in our presence,
Craig H. Neilsen declared to us that he adopted it as his own
signature.
/s/Brenda L. Townsend
Witness
/s/ Dawn Levine
Witness
State of Nevada )
) ss.
County of Clark )
I, Catherine Zeljeznjak, Notary Public in and for said
county and state, do hereby certify that Craig H. Neilsen
personally appeared before me and is known or identified to me to
be the President of Ameristar Casino Las Vegas, Inc., the
corporation that executed the within instrument or the person who
executed the instrument on behalf of said corporation. Craig H.
Neilsen, who being unable due to physical incapacity to sign his
name or offer his mark, did direct Christine L. Hinton, in his
presence, as well as my own, to sign his name to the foregoing
document. Craig H. Neilsen, after viewing his name as signed by
Christine L. Hinton, thereupon adopted it as his own by
acknowledging to me his intention to so adopt as if he had
personally executed the same in behalf of said corporation, and
further acknowledged to me that such corporation executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal this 19th day of July, 1996.
/s/ Catherine Zeljeznjak
Notary Public
My Commission Expires on:
6/24/99
GEM:
GEM GAMING INC.,
a Nevada corporation
By: /s/ Steven W. Rebeil
Name: Steven W. Rebeil
Its Chairman
By /s/ Dominic J. Magliarditi
Name: Dominic J. Magliarditi
Its Vice President
STEVEN W. REBEIL,
an individual
/s/ Steven W. Rebeil
STEVEN W. REBEIL,
in his capacity as Trustee of the
Karizma Trust created under that
certain Trust Agreement dated
July 2, 1991, as amended
/s/ Steven W. Rebeil
DOMINIC J. MAGLIARDITI,
an individual
/s/ Dominic Magliarditi
EXHIBIT "A" TO FIRST AMENDMENT
Exhibit "1"
Ameristar shall calculate the "Western Maryland Recapture Share
Amount" as follows:
(1) First, Ameristar shall calculate
(a) the "Adjusted Ameristar Merger Shares,"
which shall equal the number of shares of
Ameristar Common Stock within the Merger
Consideration (as such term is held in the Merger
Agreement) as adjusted to reflect stock splits,
reverse stock splits, stock dividends and similar
matters in accordance with Section 1.3 of the
Agreement from and after the Closing; and
(b) The "Adjusted Western Maryland Recapture
Cap," which shall equal One Million (1,000,000)
shares of Ameristar Common Stock, as adjusted to
reflect stock splits, reverse stock splits, stock
dividends and similar matters in accordance with
Section 1.3 of the Agreement from and after the
Closing.
(2) Next, Ameristar shall calculate the amount of its
consolidated net income attributable to Western
Maryland operations (the "Western Maryland Net Income")
for the first full 12-month period, ending at the end
of a calendar quarter (i.e., end of March, June,
September or December), that follows the opening to the
public of a gaming facility in Western Maryland by
Ameristar or an Affiliate of Ameristar in Western
Maryland (the "Western Maryland Measurement Period").
For purposes of this calculation, expenses of Ameristar
and its Affiliates that are not reasonably attributable
to a particular geographic location (i.e., corporate
overhead) shall be allocated to particular geographic
locations based upon the proportionate revenues
generated during the Western Maryland Measurement
Period by the various locations.
(3) Next, Ameristar:
(a) shall divide Ameristar's total
consolidated net income during the Western
Maryland Measurement Period by the total
outstanding shares of common stock of the Company
as of the end of the Western Maryland Measurement
Period. This figure shall be referred to as the
"Ameristar Earnings/Share"); and
(b) shall divide the Western Maryland Net
Income by the total outstanding shares of common
stock of the Company as of the end of the Western
Maryland Measurement Period. This figure shall be
referred to as the "Western Maryland
Earnings/Share").
(4) Next, Ameristar shall determine the "Ameristar
Earnings/Share Multiple" by dividing the Average 10-Day
Closing Price as of the end of the Western Maryland
Measurement Period by the Ameristar Earnings/Share.
(5) Next, Ameristar shall calculate the "Western
Maryland Value Contribution/Share" by multiplying the
Western Maryland Earnings/Share times the Ameristar
Earnings/Share Multiple.
(6) Next, Ameristar shall calculate the "Gem Western
Maryland Enrichment" by multiplying the Western
Maryland Value Contribution/Share times the number of
shares of Adjusted Ameristar Merger Shares.
(7) The Western Maryland Recapture Shares shall equal
one-half of the Gem Western Maryland Enrichment divided
by the 10-Day Closing Price as of the end of the
Western Maryland Measurement Period; provided, however,
that the Western Maryland Recapture Shares shall not
exceed the Adjusted Western Maryland Recapture Cap.
PURCHASE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is
entered into this 30th day of June, 1996 by and between Gem Air,
Inc., a Nevada corporation ("Seller") and Ameristar Casinos, Inc,
a Nevada Corporation ("Purchaser").
WHEREAS, Seller is the owner of a 1982 Cessna Citation
1SP, Serial No. 501-0236 and FAA No. 711VF;
WHEREAS, Purchaser desires to acquire and purchase and
Seller desires to sell an undivided one-half (1/2) interest in
the Aircraft in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises
and covenants contained herein, the parties agree as follows:
1. Purchase and Sale. Subject to the provisions of
this Agreement, Seller shall on the Closing Date (as defined
herein), transfer, convey, assign, sell and deliver to Purchaser,
an undivided one-half (1/2) interest in the 1982 Cessna Citation
1SP, Serial No. 501-0236 and FAA No. 711VF with Pratt & Whitney
engines, Serial Nos.: left - PCE 77371; right - PCE 77375 (the
"Aircraft").
2. Purchase Price. The total purchase price for the
Aircraft is $466,123.71 (the "Purchase Price"). The Purchase
Price of $466,123.71 shall be payable in immediately available
funds when (i) Seller shall have delivered the Aircraft to
Purchaser at Las Vegas, Nevada, (ii) Seller shall have executed a
bill of sale prepared on FAA form 8050-2 and a warranty bill of
sale in the form of Exhibit "C" attached hereto and incorporated
herein granting good and marketable title to the Aircraft to
Purchaser and (iii) Seller shall have delivered a commitment to
issue the Title Policy described below to Purchaser. The
Purchase Price is payable in lawful money of the United States of
America, or by check drawn upon and duly certified by a bank
satisfactory to Seller and payable in such money otherwise
specified in this Agreement.
3. Contingencies of Purchase. The purchase of the
Aircraft by Purchaser is subject to the following contingencies,
which must be completed to Purchaser's satisfaction before the
Closing Date. If the contingencies are not satisfied Purchaser
and Purchaser shall have no obligations under this Agreement.
(a) Purchaser's receipt and approval of a title
commitment on the Aircraft issued by Aero Records and Title
Co. (the "Title Company") pursuant to which the Title
Company shall be irrevocably committed to issue an owner's
policy of title insurance on the Aircraft in the form of the
pro-forma policy attached hereto as Exhibit "B" subject to
the security agreement of The CIT Group ("CIT") and the
items set forth in such pro-forma title insurance policy in
the form of the pro-forma policy attached hereto as Exhibit
"B" ("Permitted Encumbrances");
(b) The Aircraft delivered in airworthy condition with
all systems, installed equipment and engines in normal
working order;
(c) Completion of Purchaser's visual inspection and
any other inspections and/or surveys that Purchaser deems
reasonably necessary.
(d) All published airworthiness directives and
mandatory service bulletins completed and current (all
mandatory service bulletins issued and not yet required to
be completed shall be be completed by the close of the
purchase), and all inspections current pursuant to the
manufacture's recommended maintenance program;
(e) All defects found as a result of any inspection
which affect the airworthiness of the Aircraft are remedied
by Seller before delivery of the Aircraft to Purchaser;
(f) Seller to provide Purchaser with a valid and
current FAA Certificate of Airworthiness and the Aircraft
shall be in good working order and repair, all as of the
Closing Date; and
(g) CIT shall have approved the transaction
contemplated by this Agreement in writing.
4. Title and Delivery.
(a) Title to the Aircraft shall pass to Purchaser free
and clear of any and all liens and encumbrances and free of
any damage history when the full Purchase Price is paid to
Seller, on or before the Closing Date. The Aircraft shall
be delivered to Portland, Oregon on or before the Closing
Date.
(b) All title and escrow fees will be paid by
Purchaser. Where payment is made by check, title to the
Aircraft shall remain with Seller until the checks are
finally paid.
(c) All risk of loss, injury, destruction, or damage
to the Aircraft from any cause whatsoever shall be assumed
by Purchaser at the time of delivery of such title documents
or upon physical delivery of said Aircraft, in the event
that such physical delivery shall proceed the delivery of
the title documents.
(d) On delivery, Seller shall furnish to Purchaser all
log books, complete and continuous since the Aircraft was
new, flight manuals, maintenance manuals, wiring diagrams,
engine covers and other records and paperwork and all other
minor equipment normally considered a part of the Aircraft.
(e) Seller represents that the total time on the
Aircraft and engines is the number of hours listed on
Exhibit A. Seller represents that the aircraft has no
damage history. Seller agrees that Purchaser may use the
registration number pending the issuance of a registration
number to Purchaser by the FAA.
(f) Seller represents and warrants to Purchaser as
follows:
(i) There are no liens or security interests
that encumber the Aircraft other than the Permitted
Encumbrances;
(ii) A true and correct copy of each document
and amendment thereto that memorializes or secures any
loan made by CIT to Seller is attached hereto;
(iii) Seller is not in default under any such
document; and
(iv) Seller has performed all inspections
required by the Manufacturer.
(v) The aggregate amount of indebtedness secured
by the Aircraft is $667,752.59.
5. Closing Date. The Closing Date shall occur on
July 8, 1996, unless the parties have satisfied all conditions of
the purchase described herein and they agree on another date for
the closing of the purchase.
6. Taxes. Purchaser hereby agrees to pay any and all
taxes, duties, or fees assessed or levied by any international,
national, state, or local authority as a result of the sale,
delivery, registration or ownership of the Aircraft.
7. Broker. Seller and Buyer represent to each other
that neither party has employed a broker in connection with this
Agreement.
8. Force Majeure. Seller shall not be liable for
failure to deliver or delays in delivery due date to causes
beyond its control. In such event, Purchaser's sole remedy and
Seller's sole liability for failure to deliver, or delay in
delivery, will be limited to the return of that part of the
Purchase Price which Purchaser may have paid to Seller.
9. Enforceability. In the event any provision of
this Agreement is prohibited by or invalid under applicable law,
such provisions shall be ineffective only to the extent of such
prohibition or invalidity, without effecting the remainder of
such provision or the remaining provisions of this Agreement
which shall continue in full force and effect.
10. Headings. Article and paragraph headings used in
this Agreement are for the convenience of the parties and shall
not effect the interpretation of this Agreement.
11. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the
purchase and sale of the Aircraft described and referred to
herein. All prior representations and understandings having been
merged in this Agreement.
12. Amendments. This Agreement may not be modified or
terminated orally and no claim, modification, termination or
waiver of any of its provisions shall be valid unless in writing
signed by the party to be bound thereby. The terms and
conditions of this Agreement supersede and cancel any terms
contained in any other documents to the extent they are
inconsistent to this Agreement.
13. Counterparts. This Agreement may be executed in
one or more counterparts and each of said counterparts shall for
all purposes be deemed an original, but all such counterparts
shall constitute one and the same instrument.
14. Further Assurances. Each party hereto shall
execute and deliver all such further instruments and documents as
may reasonably be required in order to fully carry out the intent
and accomplish the purposes of this Agreement.
15. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Nevada.
16. Attorneys' Fees. Should any action be filed by
other party to enforce the terms of this Agreement, the
prevailing party in any such action shall be entitled to full
reimbursement of all attorneys' fees and expenses.
IN WITNESS WHEREOF, this Agreement was executed the day
and year first above written.
SELLER: PURCHASER:
GEM AIR, INC. AMERISTAR CASINOS, INC.
By:/s/ Steven W. Rebeil By:/s/ Brian E. Katz
Steven W. Rebeil, President
Its:Sr. Vice President
EXHIBIT "A"
AIRCRAFT:
Serial No. 501-0236
FAA No. 711VF
Total Time: Aircraft 1800.9 hours
Total Time: Left Engine Pratt & Whitney
Serial No. PCE 77371
1800.9 hours
Total Time: Right Engine Pratt & Whitney
Serial No. PCE 77375
1541.6 hours
Exhibit C
Form of Warranty Bill of Sale
KNOW ALL MEN BY THESE PRESENTS that for an in consideration of
the sum of one dollar and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, GEM AIR, INC., a corporation organized under the
laws of Nevada ("Ameristar"), hereby sells, transfers, conveys,
contributes, sets over and delivers to Ameristar an undivided one-
half (1/2) interest in all of the right, title and interest of
Seller in and to that certain Cessna Citation ISP Aircraft
bearing Manufacturer's Serial No. 501-0236, U.S. Registration
Mark 711VF, including those certain Pratt & Whitney engines
bearing Manufacturer's Serial nos. 77371 and 77375 and all FAA
approved Flight Manuals and applicable Wiring Diagrams and
Maintenance, Repair, Weight and Balance, Flight Crew Operating,
and other documentation in respect of the Aircraft (collectively
the "Aircraft"). Capitalized terms used by not otherwise defined
herein shall have the respective meanings set forth in the
Purchase Agreement.
Gem Air hereby warrants to Ameristar, its successors and assigns
(including Ameristar's lenders), that there is hereby conveyed to
Ameristar good and merchantable title to the Aircraft, free and
clear of any security interest, lien, mortgage, pledge, claim,
encumbrance, charge, restriction or right of others whatsoever,
except for permitted Encumbrances, and Gem Air agrees with
Ameristar and its successors and assigns that it will warrant and
defend forever such title so conveyed against all claims and
demands whatsoever.
This Bill of Sale shall be deemed delivered in Law Vegas, Nevada
and shall be governed by, and construed in accordance with Nevada
law.
The Aircraft has a seven hundred fifty (750) or more rated
takeoff horsepower or the equivalent thereof.
IN WITNESS WHEREOF, GEM AIR, INC., has caused this Bill of Sale
to be executed this Fifth day of July, 1996.
GEM AIR, INC.
By: /s/ Steven w. Rebeil
Name: Steven W. Rebeil
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This data should be reviewed in conjunction with the financial statements
included in this report.
</LEGEND>
<CIK> 0000912145
<NAME> AMERISTAR CASINOS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 9004
<SECURITIES> 0
<RECEIVABLES> 768
<ALLOWANCES> 0
<INVENTORY> 2157
<CURRENT-ASSETS> 17669
<PP&E> 232472
<DEPRECIATION> 47416
<TOTAL-ASSETS> 203775
<CURRENT-LIABILITIES> 27682
<BONDS> 0
0
0
<COMMON> 204
<OTHER-SE> 67987
<TOTAL-LIABILITY-AND-EQUITY> 203775
<SALES> 90716
<TOTAL-REVENUES> 90716
<CGS> 0
<TOTAL-COSTS> 82607
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3513
<INCOME-PRETAX> 4925
<INCOME-TAX> 1781
<INCOME-CONTINUING> 3144
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3144
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
AGREEMENT TO FURNISH EXHIBITS AND SCHEDULES
AMERISTAR CASINOS, INC. hereby agrees to furnish
supplementally to the Securities and Exchange Commission
upon its request a copy of any of the exhibits and schedules
to the following Exhibits to the Report on Form 10-Q: 10.1.
Merger agreement by and among Gem Gaming, Inc., Ameristar
Casinos, Inc., Ameristar Casino Las Vegas, Inc., Steven W.
Rebeil, and Dominic J. Magliarditi, dated May 30, 1996.
Each of the foregoing Exhibits includes a list setting forth
a description of each such exhibit or schedule.
