Agreement as of
May 26, 2004 by and among American Entertainment Properties
Corp. (“Parent”), a Delaware corporation, having
offices at 2000 Las Vegas Blvd. South, Las Vegas, Nevada 89104, and
American Casino & Entertainment Properties LLC, a Delaware
limited liability company (“Issuer”), having offices at
2000 Las Vegas Blvd. South, Las Vegas, Nevada 89104, and Issuer
Subsidiaries (as defined below).
WHEREAS, Issuer is
treated, for federal income tax purposes, as a disregarded entity,
of which all items of income, deduction, gain and loss are treated
as having been earned or incurred by Parent;
WHEREAS, Issuer is
the sole direct or indirect owner of certain limited liability
companies which are likewise treated as disregarded entities, of
which all items of income, deduction, gain and loss are treated as
having been earned or incurred by Parent;
WHEREAS, Parent is
the common parent of an affiliated group (as such term is defined
in the Internal Revenue Code of 1986, as amended, or any succeeding
law (the “Code”)) which includes the Issuer Corporate
Subsidiaries (as defined below):
WHEREAS, Parent
and its subsidiaries will file consolidated federal income tax
returns (“Consolidated Federal Returns”) for all
periods in which Parent and such subsidiaries are members of an
affiliated group (as defined in the Code); and
WHEREAS, Parent
and Issuer believe it is desirable to provide for the allocation
and payment of federal and state income tax liabilities and certain
related matters.
NOW, THEREFORE, in
consideration of the foregoing and of the covenants set forth
below, the parties hereto have agreed as follows:
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(i)
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“Issuer Group” means
Issuer together with the Issuer Subsidiaries. “Issuer
Subsidiaries” means the Issuer Corporate Subsidiaries and the
Issuer Disregarded Entities. “Issuer Corporate
Subsidiaries” means Stratosphere Corporation, American Casino
& Entertainment Properties Finance Corp. and any other direct
and indirect subsidiaries of Issuer which are corporations eligible
to be
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included in a
Consolidated Return (as defined below) with Parent. “Issuer
Disregarded Entities” means Charlie’s Holding LLC,
Arizona Charlie’s, LLC, Fresca, LLC and any other entities
which are directly or indirectly wholly-owned by Issuer and which,
for federal income tax purposes, are treated as disregarded
entities of which all items of income, deduction, gain and loss are
treated as earned or incurred by Parent.
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(ii)
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“Consolidated Returns”
mean all Consolidated Federal Returns and all state income or
franchise tax returns filed by Parent on a consolidated or combined
basis with the Issuer Group (“Consolidated State
Returns”).
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(iii)
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“Federal Income Taxes”
means any income tax imposed under the Code including, without
limitation, the corporate income tax, the minimum tax imposed on
corporations, and the personal holding company tax.
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(iv)
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“State Income Taxes”
means any income or franchise tax imposed under the tax law of any
state (or political subdivision thereof) including, without
limitation, corporate income taxes and minimum taxes.
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(v)
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“Net Operating Loss”
means the amount of any net operating loss as defined in the Code
or under the tax law of any state.
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(vi)
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“Net Capital Loss” means
the amount of any net capital loss as defined in the Code or under
the tax law of any state.
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(vii)
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“Credit” means the
amount of any tax credit allowed under the Code or under the tax
law of any state including, without limitation, investment tax
credits and foreign tax credits.
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(viii)
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The
“Regulations” means the regulations and proposed
regulations issued by the Secretary of the Treasury interpreting
the Code.
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(ix)
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The
“Consolidated Group” means the affiliated group (as
defined in the Code) of which Parent (or its successor) is the
common parent, for so long as such affiliated group files a
Consolidated Return.
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(x)
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“Tax Benefits” as to any
entity (or group of entities) means the Net Operating Loss, Net
Capital Loss, and Credits generated by or available to such entity
(or group of entities) and any carryforwards or carrybacks
thereof.
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(xi)
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“Final Determination”
shall mean the final resolution of liability for any Tax for a
taxable period, (i) by IRS Form 870 or 870-AD (or any
successor form thereto), on the date of the final acceptance by or
on behalf of a party thereto, or by a comparable form under the
laws of another jurisdiction; except that a Form 870 or 870-AD
or comparable form that reserves (whether by its terms or by
operation of law) the right of the taxpayer to file a claim for
refund and/or the right of taxing authority to assert a further
deficiency shall not constitute a Final Determination; (ii) by
a decision, judgment, decree, or other order by a court of
competent jurisdiction, which has become final and unappealable;
(iii) by a closing agreement or accepted offer in compromise
under Section 7121 or 7122 of the Code, or comparable
agreement under the laws of another jurisdiction; (iv) by any
allowance of a refund or credit in respect of an overpayment of
Tax, but only after the expira
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