Exhibit 10.5

 

COLONY RESORTS LVH ACQUISITIONS, LLC

 

SECURITIES PURCHASE AGREEMENT

 

June 18, 2004

 

Colony Resorts LVH Holdings, LLC

1999 Avenue of the Stars, Suite 1200

Los Angeles, California 90067

 

Attn: Thomas J. Barrack, Jr.

 

Colony Resorts LVH Holdings, LLC, a Delaware limited liability company (the
“Investor”) hereby agrees with Colony Resorts LVH Acquisitions, LLC., a Nevada
limited liability company (the “Company”), as follows:

 

1. PURCHASE AND SALE OF SECURITIES

 

Subject to the terms and conditions hereof, the Company is selling to the
Investor and the Investor is purchasing from the Company the number of the
Company’s Class B non-voting membership units (“Class B Membership Units”), set
forth on Schedule I hereto (the “Securities”) for (i) the aggregate amount in
cash set forth on Schedule I hereto and (ii) the surrender of the Company’s
Membership Units currently held by the Investor, which were acquired by the
Investor prior to the date hereof as consideration for capital contributions to
the Company in the aggregate amount of $29,028,000 in cash. Such sale and
purchase shall be effected by the Company delivering to the Investor duly
endorsed certificates evidencing the Securities to be purchased or subscribed
against delivery by the Investor to the Company of the applicable amount set
forth on Schedule I. All payments for Securities shall be made by check or wire
transfer. Upon receipt of certificates evidencing the Securities, the Investor
will execute all documentation reasonably necessary to make it a party to the
company’s Amended and Restated Limited Liability Company Agreement, dated of
even date herewith (the “Limited Liability Company Agreement”), the form of
which is attached as Exhibit A hereto.

 

2. REPRESENTATIONS AND WARRANTIES

 

Neither the Company nor any other Person makes any representation or warranty
herein with respect to the Securities or the business and operations of the
Company except as follows:

 

(a) The Company represents and warrants that:

 

(i) Existence. The Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Nevada.

 

(ii) Authorization and Enforceability. The Company has full power and authority
and has taken all required action necessary to permit it to execute and deliver
this

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Agreement and to perform the terms hereof and to issue and deliver the
Securities, and none of such actions will violate any provision of the
Certificate of Formation or the Limited Liability Company Agreement of the
Company. This Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.

 

(iii) Issuance of Securities. Upon issuance the Securities will be validly
issued and outstanding, fully paid and nonassessable, and shall represent 40% of
the Class B Membership Units of the Company then issued and outstanding.

 

(iv) Capitalization. The equity capitalization of the Company is as set forth on
Exhibit B hereto. Other than as set forth on Exhibit B, there are no existing
options, convertible securities, warrants, calls or commitments of any character
relating to any unissued shares of capital stock other than as contemplated in
(i) the Limited Liability Company Agreement or (ii) the securities purchase
agreements, dated even date herewith between the Company and Colony Resorts LVH
VoteCo, LLC, Colony Resorts LVH Coinvstment VoteCo, LLC and Colony Resorts LVH
Co-Investment Partners, L.P.

 

(b) The Investor acknowledges and agrees that it is relying solely on its own
knowledge of the business and operations of the Company and its own evaluation
of the merits and risks of the investment contemplated by this Securities
Purchase Agreement (the “Agreement”). In addition, the Investor represents and
warrants that:

 

(i) Offering Exemption. The Investor understands that the Securities have not
been registered under the Securities Act, nor qualified under any state
securities laws, and that they are being offered and sold pursuant to an
exemption from such registration and qualification based in part upon the
representations of the Investor contained herein.

 

(ii) Knowledge of Offer. The Investor is familiar with the business and
operations of the Company and has been given the opportunity to obtain all
information that it has requested regarding the Company’s business plans and
prospects.

 

(iii) Knowledge and Experience; Ability to Bear Economic Risks. The Investor has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment contemplated by
this Agreement. The Investor is able to bear the economic risk of its investment
in the Company (including a complete loss of its investment).

 

(iv) Limitations on Disposition. The Investor recognizes that no public market
exists for the Securities and no representation has been made to the Investor
that such public market will exist in the future. The Investor understands that
the Investor must bear the economic risk of this investment indefinitely unless
its Securities are registered pursuant to the Securities Act or an exemption
from such registration is available, and unless the disposition of such
Securities is qualified under applicable state securities laws or an exemption
from such qualification is available, except as provided in Article IX of the
Limited Liability Company Agreement, the Company has no obligation or present
intention of so registering the Securities. The Investor further understands
that there is no assurance that any exemption from the Securities Act will be
available, or, if available, that such exemption will allow the Investor to

 

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Transfer any or all of the Securities, in the amounts, or at the time the
Investor might propose. The Investor understands at the present time that Rule
144 promulgated under the Securities Act by the Commission (“Rule 144”) is not
applicable to sales of the Securities because they are not registered under
Section 12 of the Exchange Act (as hereinafter defined). The Investor further
acknowledges that the Company is not presently under any obligation to register
the Securities under Section 12 of the Exchange Act.

 

(v) Investment Purpose. The Investor is acquiring the Securities solely for its
own account for investment and not with a view toward the resale, Transfer, or
distribution thereof, nor with any present intention of distributing the
Securities. No other Person has any right with respect to or interest in the
Securities to be purchased by the Investor, nor has the Investor agreed to give
any Person any such interest or right in the future.

 

(vi) Capacity. The Investor has full power and legal right to execute and
deliver this Agreement and to perform its obligations hereunder.

 

(vii) Accredited Investor. The Investor is an “accredited investor” as such term
is defined by the Securities Act.

 

3. INTERPRETATION OF THIS AGREEMENT

 

(a) Terms Defined. As used in this Agreement, the following terms have the
respective meanings set forth below:

 

Exchange Act: the Securities Exchange Act of 1934, as amended.

 

Person: an individual, partnership, joint-stock company, corporation, limited
liability company, trust or unincorporated organization, and a government or
agency or political subdivision thereof.

 

Securities Act: the Securities Act of 1933, as amended.

 

Transfer: any sale, assignment, pledge, hypothecation, or other disposition or
encumbrance.

 

(b) Directly or Indirectly. Where any provision in this Agreement refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.

 

(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed entirely within such State.

 

(d) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.

 

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4. MISCELLANEOUS

 

(a) Notices.

 

(i) All communications under this Agreement shall be in writing and shall be
delivered by hand or mailed by overnight courier or by registered or certified
mail, postage prepaid:

 

(A) if to the Company, at 3000 Paradise Road, Las Vegas, Nevada 89109, marked
for attention of President, or at such other address as the Company may have
furnished the Investor in writing;

 

(B) if to the Investor, at address listed above, or at such other address as the
Investor may have furnished the Company in writing.

 

(ii) Any notice so addressed shall be deemed to be given: if delivered by hand,
on the date of such delivery; if mailed by courier, on the first business day
following the date of such mailing; and if mailed by registered or certified
mail, on the third business day after the date of such mailing.

 

(b) Reproduction of Documents. This Agreement and all documents relating
thereto, including, without limitation, (i) consents, waivers and modifications
which may hereafter be executed, (ii) documents received by the Investor
pursuant hereto (except for certificates evidencing the Securities) and (iii)
financial statements, certificates and other information previously or hereafter
furnished to the Investor, may be reproduced by the Investor by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and the Investor may destroy any original document so
reproduced. The parties hereto agree and stipulate that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by the Investor in the regular course
of business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.

 

(c) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties.

 

(d) Amendment and Waiver. This Agreement may be amended, and the observance of
any term of this Agreement may be waived, with, and only with, the written
consent of the Company and the Investor.

 

(e) Counterparts. This Agreement may be executed in one or more counterparts
(including by facsimile), each of which shall be deemed an original and all of
which together shall be considered one and the same agreement.

 

[Signature Page Follows]

 

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Very truly yours,

COLONY RESORTS LVH ACQUISITIONS, LLC

By:

 

/s/    Rodolfo Prieto        

    Name:   Rodolfo Prieto     Title:   Chief Executive Officer

 

ACCEPTED & AGREED:

COLONY RESORTS LVH HOLDINGS, LLC

By:

 

/s/    Thomas J. Barrack, Jr.        

    Name:   Thomas J. Barrack, Jr.     Title:   Chief Executive Officer and
President

 

[Signature Page to Colony Holdings SPA]

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SCHEDULE I

 

PURCHASES OF SECURITIES BY COLONY RESORTS LVH HOLDINGS, LLC

 

Number of Class A

Membership Units

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Price per unit of Class A

Membership Units

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Number of Class B

Membership Units

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Price per Unit of Class B

Membership Units

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Total

Consideration

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0

  $100   600,000   $100   $60,000,000*

 

* Total consideration includes the surrender to the Company by the Investor of
the Membership Units previously acquired by the Investor for $29,028,000 in
cash.