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EXHIBIT 99.1
SETTLEMENT AGREEMENT
AND RELEASE
This Settlement Agreement ("SETTLEMENT AGREEMENT") and release is
entered into by and between the parties identified below, and on the dates
identified below, and is intended to resolve the matters and disputes between
the parties identified herein.
I
THE SETTLING PARTIES
STRATOSPHERE CORPORATION ("STRATOSPHERE") is a Delaware corporation and
a DEBTOR and DEBTOR IN Possession in Case Number BK-S-97-20554 GWZ before the
United States Bankruptcy Court for the District of Nevada ( hereinafter referred
to as the "BANKRUPTCY COURT"), doing business as among other names, the
Stratosphere Hotel and Casino, a 1444 room hotel and casino operating within the
City of Las Vegas, County of Xxxxx, State of Nevada, and located at 0000 Xxxxx
Xxx Xxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxx 00000. (The hotel and casino referred to
herein is hereinafter referred to as the "SUBJECT PROPERTY".)
STRATOSPHERE GAMING CORP. ("GAMING CORP.") is a Nevada corporation and
a DEBTOR and DEBTOR IN POSSESSION in Case Number BK-S-97-20555 GWZ (collectively
with Case Number BK-S-97-20554 GWZ hereinafter referred to as "BANKRUPTCY
PROCEEDINGS") doing business as, among other names, the Stratosphere Hotel and
Casino. (Hereinafter, Stratosphere and the Stratosphere Gaming Corp. will be
collectively referred to as the "DEBTORS".)
GRAND CASINOS, INC. is a Minnesota corporation, authorized and licensed
to do business within the State of Nevada.
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GRAND CASINOS RESORTS, INC. is a Minnesota corporation. (Hereinafter,
Grand Casinos, Inc. and Grand Casinos Resorts, Inc. will be collectively
referred to as "GRAND".)
LAS VEGAS VACATION CLUB, INC. is a Nevada corporation, authorized and
licensed to do business within the State of Nevada. (Hereinafter referred to as
"LVVC")
XXX XXXXXX ENTERPRISES, INC. is a Nevada corporation, authorized and
licensed to do business within the State of Nevada. (Hereinafter referred to as
"BSE".)
XXX XXXXXX is an individual residing within the State of Nevada who
previously was the sole proprietor of Vegas World Hotel and Casino and is the
owner of 100% of the stock in BSE and LVCC. (Hereinafter, Las Vegas Vacation
Club, Inc., Xxx Xxxxxx Enterprises, Inc., and Xxx Xxxxxx will be collectively
referred to as "STUPAK", unless otherwise noted.)
XXXXXXX XXXXXX is an individual residing in the State of Minnesota and
the Class Representative for the SETTLEMENT CLASS in the BANKRUPTCY ACTION (as
defined below).
THE SETTLEMENT CLASS consists of all persons or entities, including
Xxxxxxx Xxxxxx, to be certified in the BANKRUPTCY ACTION (defined below) and the
NEVADA STATE ACTION (defined below). This definition of "SETTLEMENT CLASS" is
meant to be interpreted in the broadest possible context and is to include,
without limitation, all persons, approximately 19,000 in number, to whom notice
of the BANKRUPTCY ACTION was previously sent, and any other persons who obtained
at any time, from any source, pre-paid vacations, of any length in duration, at
the SUBJECT PROPERTY and/or the Vegas World Hotel and Casino, including, without
limitation, all those purchasers who
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submitted class proofs of claims in the BANKRUPTCY ACTION identified
hereinbelow.
XXXXXXXXX & XXXXXXX is a Nevada general partnership, authorized and
doing business within the County of Xxxxx, State of Nevada, licensed to practice
law within the State of Nevada, and attorneys of record for XXXXXXX XXXXXX and
the SETTLEMENT CLASS.
XXXXXX & XXXXX, P.L.L.C. is an Arizona professional limited liability
corporation, and attorneys of record for XXXXXXX XXXXXX and the SETTLEMENT
CLASS. (Hereinafter Xxxxxxxxx & Xxxxxxx and Xxxxxx & Xxxxx will be collectively
referred to as the "ATTORNEYS REPRESENTING THE SETTLEMENT CLASS".)
Xxxxxx X. Xxxxxx, Esq., Xxxxxx Xxxxxxx, Xxxxxx Xxxx, Xxxxxx Xxxxx,
Xxxxx Xxxxxxxx, and Xxxxxxx Xxxxxxxx, individually, are current or former
officers, directors or professionals of Debtors (collectively, the "DEBTORS
INDIVIDUALS").
II
THE DISPUTES
By this SETTLEMENT AGREEMENT, the parties intend on settling and
resolving all disputes between the parties in the following actions:
1. That bankruptcy adversarial proceeding known as "Xxxxxxx Xxxxxx,
Individually and on behalf of all other similarly situated Claimants vs.
Stratosphere Corporation and Stratosphere Gaming Corporation," United States
Bankruptcy Court, District of Nevada, Adversarial No. 982008 ("BANKRUPTCY
ACTION").
2. That Nevada State court action known as "Xxxxxxx Xxxxxx,
individually and on behalf of all others similarly situated vs. Xxx and Xxxx Xxx
Xxxxxx, Xxx Xxxxxx Enterprises, Inc., Las Vegas Vacation Club, Inc., Grand
Casinos, Inc., Grand Casinos Resorts, Inc., State of Nevada, County of Xxxxx,
Eighth Judicial District, Case Number
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A370127. ( The "NEVADA STATE ACTION" or together with THE BANKRUPTCY ACTION,
the "Actions".)
3. That interpleader action commenced in the BANKRUPTCY PROCEEDINGS
entitled "The Bank of New York, Plaintiff vs. Stratosphere Corporation, a
Delaware Corporation; Xxx Xxxxxx dba Vegas World Casino and Hotel; and Does 1-5,
inclusive, Defendants," and the cross claim Stratosphere Corporation v. Xxx
Xxxxxx dba Vegas World Casino & Hotel", Adversary No. 972286 ("INTERPLEADER
ACTION").
4. That certain Motion To Authorize; (1) Payment of Proof of Claim; (2)
Expenditure Outside The Ordinary Course of Business; and (3) To Deposit Monies
in Court Registry filed in the BANKRUPTCY PROCEEDINGS on February 10, 1998.
("COMPEL MOTION") granted by the BANKRUPTCY COURT on March 19, 1998 ("COMPEL
MOTION ORDER") .
5. That certain complaint to compel turnover of property entitled
"Stratosphere Corporation a Delaware Corporation, Plaintiff vs. Xxxxxx Xxxxxx,
an individual, Defendant" filed in the BANKRUPTCY PROCEEDINGS as Adversary No.
982041 on February 6, 1998. ("TURNOVER ACTION").
III
PROCESS FOR APPROVAL BY NEVADA STATE COURT
AND BANKRUPTCY COURT OF PROPOSED SETTLEMENT
The parties to this SETTLEMENT AGREEMENT agree to cooperate in seeking
the establishment of the procedure satisfactory to all parties to this
SETTLEMENT AGREEMENT to secure the complete and final dismissal, with prejudice,
of the ACTIONS in accordance with the terms of this Settlement Agreement. The
parties shall further join in taking such steps
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as may be necessary, or as may be requested by either the BANKRUPTCY COURT or
the Nevada State Court hearing the NEVADA STATE ACTION (hereinafter the "NEVADA
STATE COURT"), and otherwise use their best efforts to effectuate the above, and
the parties therefore agree as follows:
1. GRAND, STUPAK, and the ATTORNEYS REPRESENTING THE SETTLEMENT CLASS
have convened a Nevada Rule of Civil Procedure 16(c) conference in the NEVADA
STATE ACTION to discuss with the NEVADA STATE COURT the process described in
this SETTLEMENT AGREEMENT for settling the NEVADA STATE COURT ACTION.
2. The general terms of this SETTLEMENT AGREEMENT having been deemed
acceptable by the NEVADA STATE COURT, GRAND, STUPAK, and the ATTORNEYS
REPRESENTING THE SETTLEMENT CLASS will, within 5 (five) days of execution of
this SETTLEMENT AGREEMENT, execute the following stipulations in a form
acceptable to the NEVADA STATE COURT:
a. Certification, for settlement purposes only, of a settlement
class in the NEVADA STATE ACTION under Nev. R. Civ. P.26(b)(3)
conforming to the definition of SETTLEMENT CLASS in Article I of
this SETTLEMENT AGREEMENT. This contemplated stipulation is
conditional and shall be null and void in the event this
SETTLEMENT AGREEMENT is not approved by both the NEVADA STATE
COURT and the BANKRUPTCY COURT pursuant to the provisions of
Article III, Paragraph 4. This stipulation to the certification
of a SETTLEMENT CLASS shall also be null and void if more than
two hundred and fifty (250) potential SETTLEMENT CLASS members
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opt out of the SETTLEMENT CLASS certified in the NEVADA STATE
ACTION. In the event that certification becomes null and void due
to the provisions of this paragraph, GRAND and STUPAK will be
deemed to have preserved all their rights to challenge any
further attempt to certify a class in the NEVADA STATE ACTION.
b. Limited stay of the NEVADA STATE ACTION and the tolling of all
discovery and other deadlines. Any party hereto may act to lift
the stay after ten (10) days of providing written notice to the
other parties that settlement efforts have failed.
c. Referral by the NEVADA STATE COURT to the BANKRUPTCY COURT of the
initial determination of the following with respect to the NEVADA
STATE ACTION.
(1) pre-approval of the settlement contemplated by this SETTLEMENT
AGREEMENT.
(2) adequacy and method of notice to potential members of the
SETTLEMENT CLASS in the NEVADA STATE ACTION.
(3) allowing the BANKRUPTCY COURT to conduct a fairness hearing
regarding the settlement contemplated by this SETTLEMENT
AGREEMENT and a determination of the fee application by the
ATTORNEYS REPRESENTING THE SETTLEMENT CLASS in the BANKRUPTCY
PROCEEDINGS and NEVADA STATE ACTION together with the creation by
the BANKRUPTCY COURT of an Order and Findings of Fact with
respect to the issues identified in this paragraph.
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3. DEBTORS and the ATTORNEYS REPRESENTING THE SETTLEMENT CLASS agree to
expand the definition of the existing certified class in the BANKRUPTCY ACTION
to correspond with the definition of the SETTLEMENT CLASS in Article I of this
SETTLEMENT AGREEMENT and to provide identical notice to all potential members of
the SETTLEMENT CLASS in the BANKRUPTCY ACTION as is sent to potential members of
the SETTLEMENT CLASS in the NEVADA STATE ACTION including the right to opt out
of the SETTLEMENT CLASS and to obtain an Order of the BANKRUPTCY Court
("BANKRUPTCY COURT CERTIFICATION ORDER") to that effect. DEBTORS and the
ATTORNEYS REPRESENTING THE CLASS further agree to promptly seek an entry of a
stipulated Order staying and tolling all discovery and other deadlines in the
BANKRUPTCY ACTION pending the BANKRUPTCY COURT'S final approval hearing.
4. GRAND, STUPAK and the ATTORNEYS REPRESENTING THE SETTLEMENT CLASS
agree that in addition to the conditions stated in Article IV, Paragraph 8 and
Article V, the conditions precedent to the settlement contemplated by this
SETTLEMENT AGREEMENT becoming effective are; (a) the issuance of a final
non-appealable Order (the "STATE APPROVAL ORDER") by the NEVADA STATE COURT
approving this settlement, with respect to the NEVADA STATE ACTION, and either
adopting the BANKRUPTCY COURT'S ORDER and findings of fact pursuant to Article
III, Paragraph 2.c. of this SETTLEMENT AGREEMENT, or entering a substantially
similar order and findings of its own acceptable to each of the parties hereto;
(b) the BANKRUPTCY COURT ORDER (the "RULE 7023 ORDER") approving this SETTLEMENT
AGREEMENT pursuant to Rule 7023 becoming final and non-appealable; (c) approval
by the BANKRUPTCY COURT of this SETTLEMENT AGREEMENT as a settlement
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and compromise pursuant to Bankruptcy Rule 9019 to be evidenced by an Order (the
"9019 ORDER") and such 9019 ORDER becoming final and non-appealable; and (d) the
absence of any collateral attack challenging this SETTLEMENT AGREEMENT due to
the method of providing notice to the potential SETTLEMENT CLASS. Forty-eight
(48) hours after all such conditions precedent have been satisfied, or by close
of the next business day, whichever is later, shall be the "EFFECTIVE DATE" as
and for GRAND, its affiliates, officers, directors, agents, employees, (all of
the foregoing, both individually and in their corporate capacity), STUPAK and
the SETTLEMENT CLASS.
5. STUPAK, DEBTORS and THE ATTORNEYS REPRESENTING THE SETTLEMENT CLASS
agree that in addition to the conditions stated in Article V. A, B & C (2), the
conditions precedent to the settlement contemplated by this SETTLEMENT AGREEMENT
becoming effective are (a) the RULE 7023 ORDER approving the SETTLEMENT
AGREEMENT pursuant to RULE 7023 becoming final and non-appealable; and (b)
approval by the BANKRUPTCY COURT of this SETTLEMENT AGREEMENT as a settlement
and compromise pursuant to BANKRUPTCY RULE 9019 to be evidenced by the final and
non-appealable 9019 ORDER. Forty-eight hours after all such conditions are
satisfied, or by close of the next business day, whichever is later, shall be
the "EFFECTIVE DATE" as and for DEBTOR, DEBTORS INDIVIDUALS, their affiliates,
agents, officers, directors and employees, (all of the foregoing, both
individually and in their corporate capacity), STUPAK and the SETTLEMENT CLASS.
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IV
TERMS OF THE SETTLEMENT WITH
XXXXXXX XXXXXX AND THE CLASS
XXXXXXX XXXXXX, individually, and on behalf of and as a member of the
SETTLEMENT CLASS, the SETTLEMENT CLASS, and their agents, consultants,
successors, experts, heirs, administrators, executors, and assigns, fully
release and forever discharge, DEBTORS AND REORGANIZED DEBTORS, GRAND, STUPAK,
and their respective affiliates, agents, directors, employees, officers, and
subsidiaries both individually and in their corporate capacities of any and all
liability, claims, demands, actions, or causes of action, of whatever kind or
nature, arising out of or in any way connected with the ACTIONS, for and in
consideration of the following:
1. DEBTORS and REORGANIZED DEBTORS, hereby agree, to provide XXXXXXX
XXXXXX and the SETTLEMENT CLASS for use at the SUBJECT PROPERTY, now and in the
future, under whatever name the SUBJECT PROPERTY shall be known by, or by
whomever the SUBJECT PROPERTY shall be owned, managed or controlled by, use and
enjoyment of the unredeemed hotel Room Nights, pre-paid by the SETTLEMENT CLASS,
and previously purchased as part of those STUPAK marketing programs known as
"The Vacation Club", "The Stratosphere Club" and "The Stratosphere Tower Club",
or otherwise, and purchased from STUPAK or his or its affiliates or agents.
These unredeemed Room Nights as reflected in the records of STRATOSPHERE and
STUPAK and as set forth in Exhibit A attached hereto, shall be provided without
further costs or annual dues to the SETTLEMENT CLASS. Exhibit A shall include
the total number of room nights available to each and every member of the
SETTLEMENT CLASS to whom Class notice was previously sent, in the
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BANKRUPTCY ACTION, regardless of whether that member still has unredeemed
vacation package benefits available or not. The actual number of Room Nights
shall be ascertained prior to this SETTLEMENT AGREEMENT being approved by the
BANKRUPTCY COURT, and shall be set forth in Exhibit A in a form which provides
sufficient data to determine the individual holder, the number of Room Nights
the holder is entitled to, and any restrictions or limitations the SETTLEMENT
CLASS MEMBERS were subject to when they originally purchased these Room Nights.
(Hereinafter, this portion of the Settlement Agreement shall be referred to as
the "ROOM NIGHTS" portion of the settlement).
Usage of the Room Nights due and owing the SETTLEMENT CLASS shall be
made based upon room availability at the SUBJECT PROPERTY. DEBTORS and their
successors and/or assigns agree to use their best efforts to allow the
SETTLEMENT CLASS members to utilize their ROOM NIGHTS on the dates requested by
members of the SETTLEMENT CLASS, subject to reasonable business judgment, any
use restrictions existing on the subject packages as originally sold, and
excluding all major holiday weekends, Super Bowl weekend, and the COMDEX and CES
convention weeks. In no way, however, shall any member of the SETTLEMENT CLASS
be deprived of the ultimate use of his/her ROOM NIGHTS as set forth in Exhibit
A, even if this requires a reasonable extension of any relevant time period to
utilize ROOM NIGHTS for any individual member of the SETTLEMENT CLASS' ROOM
NIGHTS so long as he or she makes a valid request within the permitted time
period for those remaining ROOM NIGHTS which request could not be satisfied by
DEBTORS within the allowed time period.
2. While DEBTORS and REORGANIZED DEBTORS hereby agree that while
XXXXXXX
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XXXXXX and the SETTLEMENT Class are in use and enjoyment of the ROOM
NIGHTS at the SUBJECT PROPERTY to be provided as part of this Settlement
Agreement, DEBTORS and REORGANIZED DEBTORS agree to provide to XXXXXXX XXXXXX
and the SETTLEMENT Class, without cost or monetary obligation, unlimited free
alcoholic and/or non-alcoholic beverages, of any kind provided in the normal
course, which are served at any bar then operated and located in the casino.
(Hereinafter, this portion of the Settlement Agreement will be referred to as
the "DRINKS").
3. While DEBTORS and REORGANIZED DEBTORS hereby agree that while
XXXXXXX XXXXXX and the SETTLEMENT CLASS are in use and enjoyment of the ROOM
NIGHTS at the SUBJECT PROPERTY to be provided as a part of this Settlement
Agreement, DEBTORS and REORGANIZED DEBTORS agree to provide to each member of
the SETTLEMENT CLASS, without cost or monetary obligation, with unlimited free
access by that member of the SETTLEMENT CLASS via the elevators to the
"Stratosphere Tower", or whatever name that tower of approximately one hundred
and ten stories located upon the Subject Property is hereafter referred to as
during that SETTLEMENT CLASS member's stay. (Hereinafter, this portion of the
Settlement Agreement will be referred to as the "ELEVATIONS");
4. The parties agree to the following timetable for disbursements of
the total cash proceeds of the settlement (the "Cash Proceeds"):
a. In the event no appeals or collateral attacks are filed challenging
the State Approval Order, the 9019 Order , the 7023 order, or the method of
providing notice to the potential Settlement Class, the disbursement of the Cash
Proceeds shall occur as follows:
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upon the STATE APPROVAL ORDER becoming final (thirty [30] days after receipt of
written notice of entry of the STATE APPROVAL ORDER with no appeal filed), the
9019 ORDER becoming final (eleven [11] days after the 9019 Order is docketed
with no appeal filed) and the RULE 7023 Order becoming final (eleven [11] days
after the RULE 7023 ORDER is docketed with no appeal filed), together with
receipt by counsel for GRAND and STUPAK of the stipulation of dismissal, with
prejudice, of the NEVADA STATE ACTION (in the form attached hereto as Exhibit B)
and signed by the ATTORNEYS REPRESENTING THE SETTLEMENT CLASS, and upon the
release described in this Article IV and the GRAND/STUPAK RELEASE (as defined in
Article V, Paragraph C below) becoming fully effective, GRAND shall, within
forty-eight (48) hours thereof, deposit by wire transfer the sum of $1,150,000
(One Million One Hundred Fifty Thousand Dollars), in cash, and STUPAK shall,
within forty-eight (48) hours thereof, or after May 1, 1998, whichever is later,
deposit by wire transfer the sum of $1,150,000 (One Million One Hundred Thousand
Dollars), in cash to the Xxxxxxxxx & Xxxxxxx Class Action Trust Account. DEBTORS
shall instruct the escrow to, within five (5) business days of the Effective
Date as defined in Article III, Paragraph 5, wire transfer the sum of $700,000
(Seven Hundred Thousand Dollars), in cash from the funds deposited with the
Bankruptcy Court registry in the Interpleader Action, into the "Xxxxxxxxx &
Xxxxxxx Class Action Trust Account." The ATTORNEYS REPRESENTING THE SETTLEMENT
CLASS SHALL PROVIDE the account number in writing to Grand, Stupak and the
Debtors and confirm deposit of each parties' contribution of the same, in
writing by same day facsimile and by copy of deposit receipt, to all counsel for
all parties to this SETTLEMENT AGREEMENT.
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b. In the event an appeal is filed in either the BANKRUPTCY ACTION
and/or the NEVADA STATE ACTION, GRAND, STUPAK, and the DEBTORS or REORGANIZED
DEBTORS shall deposit by wire transfer within 48 hours of the filing of the
notice of appeal, or 30 days after STATE COURT APPROVAL, whichever is later,
there above-stated respective contributions ($3,000,000 in total - the CASH
PROCEEDS) into a segregated, interest-bearing, trust account to be opened with
Nevada Title, Nevada Title acting as trustee over said funds. The ATTORNEYS
REPRESENTING THE SETTLEMENT CLASS shall be responsible for opening said interest
bearing trust account upon notice of appeal being filed, and notifying GRAND,
STUPAK and the DEBTORS or REORGANIZED DEBTORS of the account number of said
interest-bearing trust account. In the event that any Appeals Court overturns
and/or modifies the STATE APPROVAL ORDER, the 9019 ORDER and/or the 7023 ORDER,
and said Appeals Court order becomes final and nonappealable, the balance of the
trust account shall be paid, within forty-eight (48) hours by wire transfer
deposit, to the designated accounts of GRAND, STUPAK and the DEBTORS or
REORGANIZED DEBTORS in an amount equal to the respective contributions of GRAND,
STUPAK, and the DEBTORS or REORGANIZED DEBTORS. In the event of denial or
dismissal of all appeals of the STATE APPROVAL ORDER, the 9019 ORDER, and the
7023 ORDER, Nevada Title will be directed to deposit, within 48 hours by wire
transfer, the balance of the trust account to the Xxxxxxxxx and Xxxxxxx Class
Action Trust Account for distribution by the ATTORNEYS REPRESENTING THE
SETTLEMENT CLASS as directed by the BANKRUPTCY COURT and/or the NEVADA STATE
COURT.
It is understood and agreed the ATTORNEYS REPRESENTING THE SETTLEMENT
CLASS will
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apply to the BANKRUPTCY COURT for payment of their fees and costs from the
proceeds of the settlement described above at the time of application for the
RULE 7023 ORDER. It is further understood the BANKRUPTCY COURT'S Order with
respect to such fees is subject to review and approval by the NEVADA STATE COURT
as provided in Article III, Paragraph 4 above. The ATTORNEYS REPRESENTING THE
SETTLEMENT CLASS hereby agree to limit their recovery to an amount not to exceed
the total cash proceeds of the settlement, (the "CASH PROCEEDS") in the amount
of $3,000,000 (Three Million Dollars) and agree not to seek recovery of any
additional attorneys' fees and costs in excess of the CASH PROCEEDS, or to claim
any right to recover any portion, share or percentage of the ROOM NIGHTS, DRINKS
AND/OR ELEVATIONS portions of this SETTLEMENT AGREEMENT, or condition final
approval of this SETTLEMENT AGREEMENT upon approval of said attorneys' fees.
GRAND, STUPAK, and DEBTORS further agree not to object to the application by the
ATTORNEYS REPRESENTING THE SETTLEMENT CLASS for recovery of their attorneys'
fees and costs to the extent the application conforms to this SETTLEMENT
AGREEMENT.
5. The costs incurred in administrating the ROOM NIGHTS, DRINKS and
ELEVATIONS portion of this SETTLEMENT AGREEMENT, shall be borne solely by the
then owner of the SUBJECT PROPERTY, whether DEBTORS or otherwise. It is
understood that DEBTORS are only responsible to provide CLASS MEMBERS the
benefits set forth in this SETTLEMENT AGREEMENT, and as set forth in detail in
Exhibit A, and are not responsible for any dispute resolution, including but not
limited to CLASS MEMBER disputes claiming more ROOM NIGHTS than set forth in
Exhibit A or requests for refunds. It is further understood by all parties
hereto that in no event will Grand have any obligations whatsoever for ROOM
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NIGHTS, DRINKS or ELEVATIONS.
6. Honoring of the ROOM NIGHTS, DRINKS and ELEVATIONS portion of the
settlement by the DEBTORS or REORGANIZED DEBTORS, subject to Article V,
Paragraphs A and B, shall begin no later than thirty (30) days after the 9019
ORDER and the RULE 7023 ORDER becoming final and non-appealable (whichever is
later), and shall continue until fully satisfied on the terms, conditions,
benefits and limitations as XXXXXXX XXXXXX and the SETTLEMENT CLASS were subject
to by contract relative to the ROOM NIGHTS, DRINKS and ELEVATIONS portion of the
settlement at the time originally purchased, and as further described and/or
limited hereinabove. Any time limitations found in any contract for purchase by
XXXXXXX XXXXXX and the SETTLEMENT CLASS of pre-paid vacations from STUPAK, or
otherwise, are hereby, however, deemed extended by a time period equal to the
period from the original "cancellation" of the pre-paid vacation packages
(January 13, 1997) to the date upon which the DEBTORS and REORGANIZED DEBTORS
begin honoring the ROOM NIGHTS, DRINKS, and ELEVATIONS portions of the
SETTLEMENT AGREEMENT. In no way however shall this extension be seen in any way
as a limitation on the right of any individual member of the SETTLEMENT CLASS to
utilize his ROOM NIGHTS, as such right is described in Article IV, Paragraph 1
of this SETTLEMENT AGREEMENT.
7. This SETTLEMENT AGREEMENT, in its entirety, and all Court Orders
approving it, shall be binding upon all current and subsequent owners of the
SUBJECT PROPERTY, their successors in interest, and/or assigns. Debtors shall
cause a Memorandum of this SETTLEMENT AGREEMENT to be recorded upon the SUBJECT
PROPERTY as provided in the Escrow Instructions attached as Exhibit C hereto, so
as to provide notice to all of the
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property and contract rights of the SETTLEMENT CLASS in the SUBJECT PROPERTY
created by this Settlement Agreement. This Agreement shall remain in effect
until the earlier of the use by the SETTLEMENT CLASS of all Room Nights to which
the SETTLEMENT CLASS is entitled or January 1, 2009. It is understood by the
parties that the provisions of this paragraph have no force or effect with
respect to the releases by the SETTLEMENT CLASS of GRAND and STUPAK following
their compliance with Article IV, Paragraph 4 of this SETTLEMENT AGREEMENT.
8. This SETTLEMENT AGREEMENT is conditioned upon approval of this
SETTLEMENT AGREEMENT, in its entirety, by the BANKRUPTCY COURT with regard to
DEBTORS, DEBTORS INDIVIDUALS, STUPAK and the SETTLEMENT CLASS, and with regard
to GRAND, STUPAK and the SETTLEMENT CLASS, the approval of the BANKRUPTCY COURT
and the NEVADA STATE COURT as provided in Article III, Paragraph 4 herein. As it
relates to GRAND and STUPAK, this SETTLEMENT AGREEMENT and the certification of
the SETTLEMENT CLASS in the NEVADA STATE ACTION shall not be effective in the
event more than two hundred and fifty (250) potential class members opt out of
the SETTLEMENT CLASS to be certified in the NEVADA STATE COURT, absent waiver of
this condition by GRAND and STUPAK.
V.
TERMS OF THE SETTLEMENT BETWEEN STUPAK,
STRATOSPHERE AND GRAND
A. The parties to this SETTLEMENT AGREEMENT agree that the following
conditions precedent for the settlement set forth in Article IV hereof, to
be effective, must be satisfied within five days of execution of this
SETTLEMENT AGREEMENT:
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1. STUPAK AND DEBTORS will open an Escrow with Nevada Title Company,
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxx Xxxxx, Xxxxxx 00000 ("Escrow Agent"), and
deposit an executed copy of this SETTLEMENT AGREEMENT and Escrow instructions in
the form attached hereto as Exhibit C with the Escrow Agent.
2. STUPAK and DEBTORS will execute and deliver to Escrow Agent a
stipulated Order in the form attached hereto as Exhibit D which shall be lodged
in the Interpleader Action upon the entry of the 9019 ORDER directing that upon
entry of the Interpleader Order (i) all moneys, funds, and STRATOSPHERE stock
(held by the Bank of New York) be immediately deposited with the BANKRUPTCY
COURT registry; and (ii) the Bank of New York shall receive from such moneys the
immediate payment of attorneys' fees and costs in the amount of $2,021.03 and
$1,250.00 in Escrow Fees. Upon the Effective Date as provided for in Article
III, Paragraph 5, the balance of all such moneys, funds and STRATOSPHERE stock
less the $700,000 paid directly to the Xxxxxxxxx & Xxxxxxx Class Action Trust
Account be released from the registry to Stratosphere and the Interpleader
Action shall be dismissed.
3. STUPAK will execute and deliver to the Escrow Agent a quitclaim
deed, transferring in fee simple, and free and clear of any and all deeds of
trust, liens (except taxes not yet due and payable) and/or mortgages to
STRATOSPHERE that real property in the County of Xxxxx, State of Nevada,
commonly identified as the property upon which the "Xxxxxxx Xxxxxx Center," is
located (legally described in Exhibit E attached hereto) along with all
appurtenances, fixtures and improvements thereon. DEBTORS hereby agree that so
long as DEBTORS own the Xxxxxxx Xxxxxx Center, DEBTORS shall permit the City of
Las
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Vegas to continue to use the Xxxxxxx Xxxxxx Center without payment of rent
consistent with prior and current uses.
4. In partial consideration of the release by STUPAK to DEBTORS of the
stock on deposit with Bank of New York, as well as other consideration provided
by STUPAK, DEBTORS and DEBTORS INDIVIDUALS to each other, DEBTORS, DEBTORS
INDIVIDUALS and STUPAK will execute and enter into, and deliver to the Escrow
Agent, a mutual release attached hereto as Exhibit E ("STUPAK/DEBTORS RELEASE")
of any and all claims any of these parties may have against each other, or
against any of their current or former affiliates, officers, directors, agents
and employees individually or in their corporate capacity, whether related to
the ACTIONS, or otherwise, any adversarial claims, pending or contemplated or
arising out of the ACTIONS or conduct, occurring prior to the date of this
SETTLEMENT AGREEMENT. The failure of any individual to sign this release shall
have no effect on its enforceability and validity with regard to the release as
to all other signing parties. In addition to other considerations set forth in
this agreement, the DEBTORS INDIVIDUALS release of STUPAK shall be deemed
adequate consideration for STUPAK'S release of the DEBTORS INDIVIDUALS.
5. DEBTORS will prepare and file a motion to approve this SETTLEMENT
AGREEMENT with the BANKRUPTCY COURT pursuant to Bankruptcy Rule 9019.
X. XXXXXX and DEBTORS agree that upon the Effective Date as defined in Article
III, Paragraph 5 (unless waived by DEBTORS) the following will take place:
1. The four individual proofs of claims filed by STUPAK in the
BANKRUPTCY PROCEEDINGS for unsecured claims in the amount of One Hundred and
Twelve Million
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Dollars ($112,000,000), Three Hundred Thousand Dollars ($300,000), Three Hundred
and Fifty Thousand Dollars ($350,000), and Fifteen Million Dollars
($15,000,000), totaling $127,650,000 (One Hundred Twenty Seven Million, Six
Hundred Fifty Thousand Dollars), will be deemed withdrawn with prejudice and of
no further force and effect.
2. In partial consideration of receipt of the cash on deposit with the
Bank of New York, and all other considerations set forth in this SETTLEMENT
AGREEMENT, DEBTORS and/or their successors-in-interest, affiliates, or assigns,
jointly and severally, will be obligated to provide the ROOM NIGHTS, ELEVATIONS,
and DRINK portions of the settlement as set forth in Article IV of this
SETTLEMENT AGREEMENT;
3. The Escrow Agent shall: (i) record and deliver to STRATOSPHERE the
grant deed transferring the STUPAK CENTER to STRATOSPHERE; (ii) deliver to
DEBTORS the INTERPLEADER Order; and (iii) deliver to DEBTORS, DEBTORS
INDIVIDUALLY AND STUPAK the DEBTOR/STUPAK RELEASE; and
4. The TURNOVER ACTION shall be dismissed with prejudice and the COMPEL
MOTION ORDER deemed of no further force and effect and all moneys and other
assets on deposit in the BANKRUPTCY COURT registry shall be released to DEBTORS
with the exception of the $700,000 to be paid directly to the Xxxxxxxxx &
Xxxxxxx Class Action Trust Account.
C. The parties to the SETTLEMENT AGREEMENT agree that the following conditions
precedent must be satisfied for the settlement set forth in Article IV, hereof
to be effective:
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Within five days of execution of this SETTLEMENT AGREEMENT, GRAND and
STUPAK and certain individuals will execute and deliver to the Escrow Agent, a
mutual release in the form attached hereto as Exhibit F of any and all claims
any party may have against each other, or any of their current or former
affiliates, officers, directors, agents and employees individually or in their
corporate capacity whether related to the ACTIONS, or otherwise (the
"GRAND/STUPAK RELEASE"). The GRAND/STUPAK RELEASE will become fully effective
once the STATE APPROVAL ORDER becomes a final non-appealable order as described
in Article IV, Paragraph 4 above. The failure of any individual to sign this
release shall have no effect on its enforceability and validity with regard to
the release as to all other signing parties.
2. Within five days of execution of this SETTLEMENT AGREEMENT, GRAND,
STUPAK, certain other individuals and certain of the DEBTORS INDIVIDUALS will
execute and enter into a Joint Defense Agreement (the "JOINT DEFENSE AGREEMENT")
related to the certain securities litigation commonly referred to as Master File
No. CV-S-96-00708PMP (PLH) in a form acceptable to the parties thereto. The
JOINT DEFENSE AGREEMENT will be effective upon its execution. Notwithstanding
the foregoing, the parties to this SETTLEMENT AGREEMENT understand that a breach
of the Joint Defense Agreement shall not effect the obligations of the Parties
under this SETTLEMENT AGREEMENT.
It is understood by the parties that this is a compromised settlement
of disputed claims, and that current and contemporaneous value has been given to
each other by all parties to this SETTLEMENT AGREEMENT. It is further understood
that the above-mentioned
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