EXHIBIT 10.12
EXECUTION COPY
______________________________________________________________________________
STOCK PURCHASE
AND
MANAGEMENT BUYOUT AGREEMENT
AMONG
HARVEYS L.V. MANAGEMENT COMPANY, INC.,
HARVEYS CASINO RESORTS
LILY POND INVESTMENTS, INC.
AND
HARD ROCK HOTEL, INC.
______________________________________________________________________________
Dated as of July 1, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . 3
Section 1.2 Other Definitional Provisions. . . . . . . . . . . . . . . 6
ARTICLE II
SALE OF STOCK; TERMINATION OF MANAGEMENT AGREEMENT; CLOSING. . . . . . . . . . 6
Section 2.1 Stock Repurchase; Management Buyout. . . . . . . . . . . . 6
Section 2.2 Closing; Closing Date. . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HARVEYS. . . . . . . . . . . . . . . . . . . 7
Section 3.1 Authority of Harveys . . . . . . . . . . . . . . . . . . . 7
Section 3.2 Authority of HLVMC . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Title to the Common Stock. . . . . . . . . . . . . . . . . 7
Section 3.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.5 Consents and Approvals . . . . . . . . . . . . . . . . . . 8
Section 3.6 Government Licenses, Permits and Related Approvals . . . . 8
Section 3.7 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.8 Employee Information; Extraordinary Payments . . . . . . . 8
Section 3.9 Labor Relations. . . . . . . . . . . . . . . . . . . . . . 9
Section 3.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 9
Section 3.11 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.13 Transactions with Affiliates . . . . . . . . . . . . . . . 11
Section 3.14 Use of Certain Ideas . . . . . . . . . . . . . . . . . . . 11
Section 3.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.16 Leases of Real Property. . . . . . . . . . . . . . . . . . 11
Section 3.17 No Other Agreements to Sell. . . . . . . . . . . . . . . . 11
Section 3.18 Governmental Relations . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND LILY POND. . . . . . . . . . 12
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2 Authority of the Purchasers. . . . . . . . . . . . . . . . 12
Section 4.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . 12
Section 4.5 No Registration. . . . . . . . . . . . . . . . . . . . . . 13
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PAGE
Section 4.6 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
CERTAIN AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.1 Conduct of Business. . . . . . . . . . . . . . . . . . . . 13
Section 5.2 Regulatory and Other Authorizations and Consents . . . . . 14
Section 5.3 Further Actions. . . . . . . . . . . . . . . . . . . . . . 14
Section 5.4 Books and Records. . . . . . . . . . . . . . . . . . . . . 15
Section 5.5 [Intentionally Left Blank] . . . . . . . . . . . . . . . . 15
Section 5.6 Stockholders Agreement; By-laws. . . . . . . . . . . . . . 15
Section 5.7 Commission Filing. . . . . . . . . . . . . . . . . . . . . 15
Section 5.8 [Intentionally Left Blank] . . . . . . . . . . . . . . . . 15
Section 5.9 Operating and Capital Budgets. . . . . . . . . . . . . . . 16
ARTICLE VI
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.1 Conditions Precedent to Obligations of Parties . . . . . . 16
Section 6.2 Conditions of the Company's and Lily Pond's Obligation
to Close . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.3 Conditions to Harveys' Obligations to Close. . . . . . . . 18
ARTICLE VII
EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.1 Continuity of Employment . . . . . . . . . . . . . . . . . 19
Section 7.2 Transfer of Plans. . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.1 Indemnity of the Company . . . . . . . . . . . . . . . . . 20
Section 8.2 Indemnity of Lily Pond . . . . . . . . . . . . . . . . . . 20
Section 8.3 Indemnity of Harveys and HLVMC by the Company. . . . . . . 21
Section 8.4 Indemnity of Harveys and HLVMC by Lily Pond. . . . . . . . 21
Section 8.5 Indemnification Procedures . . . . . . . . . . . . . . . . 21
Section 8.6 Other Agreements Concerning Indemnity. . . . . . . . . . . 22
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 9.1 Termination and Abandonment. . . . . . . . . . . . . . . . 22
Section 9.2 Fees and Expenses; Transfer Taxes. . . . . . . . . . . . . 23
Section 9.3 Survival of Representations and Warranties . . . . . . . . 23
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PAGE
Section 9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.6 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 24
Section 9.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.8 Successors and Assigns . . . . . . . . . . . . . . . . . . 26
Section 9.9 Headings; Definitions. . . . . . . . . . . . . . . . . . . 26
Section 9.10 Amendments and Waivers . . . . . . . . . . . . . . . . . . 26
Section 9.11 Severability . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.12 Integration. . . . . . . . . . . . . . . . . . . . . . . . 27
Section 9.13 Joint and Several. . . . . . . . . . . . . . . . . . . . . 27
Section 9.14 No Third Party Beneficiaries . . . . . . . . . . . . . . . 27
Section 9.15 Communications . . . . . . . . . . . . . . . . . . . . . . 27
SCHEDULE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SCHEDULE 3.7 CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SCHEDULE 3.8(c) EMPLOYMENT CONTRACTS . . . . . . . . . . . . . . . . . . . . . 34
SCHEDULE 3.10(a) EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . 35
SCHEDULE 3.10(d) CERTAIN PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . 36
SCHEDULE 3.11 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SCHEDULE 3.12 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SCHEDULE 3.13 TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . . 39
SCHEDULE 4.7 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SCHEDULE 6.3(h). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
CERTIFICATE OF HARD ROCK HOTEL, INC.,
A NEVADA CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
EXHIBIT LIST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SCHEDULES:
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PAGE
Schedule 3.7 Contracts
Schedule 3.8(c) Employee Information
Schedule 3.10(a) Employee Benefit Plans
Schedule 3.10(d) Certain Payments
Schedule 3.11 Insurance
Schedule 3.12 Litigation
Schedule 3.13 Transactiosn with Affiliates
Schedule 4.7 Litigation
Schedule 6.3(h) Financial Obligaitons
EXHIBITS:
EXHIBIT A Form of Transition Services Agreement
EXHIBIT B Form of Amendment to the Stockholders
Agreement
EXHIBIT C-1 Form of Release of Harveys
EXHIBIT C-2 Form of Release of HLVMC
EXHIBIT D-1 Form of Release of Lily Pond
EXHIBIT D-2 Form of Release of Xxxxxx
-iv-
STOCK PURCHASE and MANAGEMENT BUYOUT AGREEMENT (this "AGREEMENT")
dated as of July 1, l997, among HARD ROCK HOTEL, INC., a Nevada corporation
(the "COMPANY"), LILY POND INVESTMENTS, INC., ("LILY POND" and, together with
the Company, the "PURCHASERS"), HARVEYS L.V. MANAGEMENT COMPANY, INC., a
Nevada corporation ("HLVMC"), and HARVEYS CASINO RESORTS, a Nevada
corporation formerly known as Harveys Wagon Wheel, Inc. ("HARVEYS")
W I T N E S S E T H:
WHEREAS, Harveys is the record and beneficial owner of 40% of the
outstanding capital stock of the Company;
WHEREAS, Harveys and the Company are parties to the Management
Agreement, dated as of August 30, 1993 (the "MANAGEMENT AGREEMENT"), setting
forth certain rights and obligations relating to, INTER ALIA, the management
and operation of the Hotel;
WHEREAS, the Company desires to terminate, and Harveys desires to
have terminated, the Management Agreement, upon the terms and subject to the
conditions set forth herein (such termination, the "MANAGEMENT BUYOUT");
WHEREAS, Harveys desires to sell to the Company, and the Company
desires to repurchase from Harveys, all of the outstanding shares of Harveys
Class A Common Stock, no par value per share ("CLASS A COMMON STOCK"), and
Harveys Class B Common Stock, no par value per share ("CLASS B COMMON STOCK";
and, together with such Class A Common Stock, the COMMON STOCK"), of the
Company, upon the terms and subject to the conditions set forth herein (such
purchase the "STOCK REPURCHASE");
WHEREAS, in connection with this Agreement, the Stockholders
Agreement, dated as of August 30, 1993 (the "STOCKHOLDERS AGREEMENT"), by and
among the Company, Harveys and Lily Pond, will be cancelled, all as more
fully set forth herein; and
WHEREAS, upon the consummation of the transactions contemplated
herein, the Management Agreement will be terminated and the Common Stock will
be held in treasury by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
2
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS. As used in this Agreement
the following terms shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with such Person or (if such Person is an individual) is a member of
such person's family. As used in this definition of "AFFILIATE," the term
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person or
entity, whether through ownership of voting securities, by contract or
otherwise.
"BUSINESS DAY" means any day which is not a Saturday, a Sunday or
such other day on which banking institutions in New York, New York, generally
are authorized or required by law or executive order to be closed.
"CASINO" means the casino located at the Hotel.
"CLASS A COMMON STOCK" has the meaning set forth in the recitals of
this Agreement.
"CLASS B COMMON STOCK" has the meaning set forth in the recitals of
this Agreement.
"CLOSING means the consummation of the transactions contemplated
by Article II of this Agreement.
"CLOSING DATE" has the meaning set forth in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
"COMMON STOCK" has the meaning set forth in the recitals of this
Agreement.
"COMPANY" has the meaning set forth in the opening paragraph of
this Agreement.
"COMPANY'S PLANS" has the meaning set forth in Section 7.1.
"ERISA" has the meaning set forth in Section 3.10.
"GOVERNMENTAL AUTHORITY" means any nation or government (domestic
or foreign), any state or other political subdivision thereof and any entity
or person exercising executive,
3
legislative, judicial (including any court) regulatory or administrative
functions of or pertaining to government.
"HARVEYS" has the meaning set forth in the opening paragraph of
this Agreement.
"HARVEYS PLANS" has the meaning set forth in Section 7.1.
"HLVMC" has the meaning set forth in the opening paragraph of this
Agreement.
"HOTEL" means the property known as the Hard Rock Hotel & Casino,
located at 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx.
"HOTEL EMPLOYEES" means persons employed by HLVMC or Harveys and
who perform work at the Hotel or Casino.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
l976, as amended.
"INDEBTEDNESS" means, for any Person (without duplication) (a)
obligations created, issued or incurred by such Person for borrowed money;
(b) obligations of such Person to pay the deferred purchase or acquisition
price of property or services, other than trade accounts payable (other than
for borrowed money) arising, and accrued expenses incurred, in the ordinary
course of business; (c) Indebtedness of others secured by a Lien on the
property of such Person, whether or not the respective Indebtedness so
secured has been assumed by such Person; (d) obligations of such Person in
respect of letters of credit or similar instruments issued or accepted by
banks and other financial institutions for account of such Person; (e)
capital lease obligations of such Person; (f) all obligations of such Person
to pay a specified purchase price for goods or services whether or not
delivered or accepted, I.E., take-or-pay and similar obligations; and (g)
Indebtedness of others guaranteed by such Person or for which such Person may
become contingently liable.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8.5.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or otherwise), security interest, security
agreement or arrangement (including any conditional sale or other title
retention agreement or any financing lease having substantially the same
economic effect as any of the foregoing) or other restriction or charge of
any kind or nature whatsoever.
"LOSSES" has the meaning set forth in Section 8.1.
"MANAGEMENT AGREEMENT" has the meaning set forth in the recitals to
this Agreement.
4
"MANAGEMENT BUYOUT" has the meaning set forth in the recitals to
this Agreement.
"MATERIAL ADVERSE EFFECT" means a material adverse effect,
individually or in the aggregate, on the business, assets, condition
(financial or otherwise), results of operations or prospects of the Company.
"XXXXXX" means Xxxxx X. Xxxxxx, the individual, or the estate of
Xxxxx X. Xxxxxx.
"NEVADA GAMING AUTHORITIES" means the Nevada Gaming Commission,
Nevada State Gaming Control Board, Xxxxx County Liquor and Gaming Licensing
Board and any other governmental or administrative agency having jurisdiction
over the gaming operations of the Company in the State of Nevada.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"PLAN" has the meaning set forth in Section 3.10.
"PROCESS AGENT" has the meaning set forth in Section 9.6.
"PURCHASE PRICE" has the meaning set forth in Section 2.2.
"SEC" means the Securities and Exchange Commission and any
successor organization.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the SEC promulgated from time
to time thereunder.
"SMSA" means Standard Metropolitan Statistical Area.
"STOCKHOLDERS AGREEMENT" has the meaning set forth in the recitals
to this Agreement.
"STOCK REPURCHASE" has the meaning set forth in the recitals of
this Agreement.
"TRANSFERRED EMPLOYEES" means (i) any employee offered employment
by the Company immediately after the Closing, and who accepts such offer of
employment at that time, including in each case those on vacation who were
employed by HLVMC immediately prior to the Closing, and (ii) any employee on
leave of absence or disability who returns to active employment within one
year (or 18 months in the case of individuals who are disabled due to an
injury or illness for which workers compensation benefits are payable after
the Closing), in each case on terms that are substantially similar in the
aggregate (including salary, job responsibility
5
and location) to those provided to such employees immediately prior to the
Closing or leave, as the case may be.
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement to be entered into between HLVMC and the Company, substantially in
the form of Exhibit A.
Section 1.2 OTHER DEFINITIONAL PROVISIONS. (a) Terms defined
in this Agreement apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun includes the
corresponding masculine, feminine and neuter forms. Unless otherwise
required by the context, the words "include," "includes" and "including" are
deemed to be followed by the phrase "without limitation."
(b) References to a Section or an Article are, unless
otherwise specified, to one of the Sections or Articles of this Agreement,
and references to a Schedule or Exhibit are, unless otherwise specified, to
one of the Schedules or Exhibits attached hereto.
ARTICLE II
SALE OF STOCK; TERMINATION OF MANAGEMENT AGREEMENT; CLOSING
Section 2.1 STOCK REPURCHASE; MANAGEMENT BUYOUT. On the basis
of the representations, warranties, covenants and agreements and subject to
the satisfaction or waiver of the conditions set forth herein, at the
Closing, Harveys shall sell to the Company, and the Company shall repurchase
from Harveys, (i) the Common Stock and (ii) Harveys' rights under the
Management Agreement. At the Closing, the Company will deliver by wire
transfer, in immediately available funds, to the account specified by Harveys
$45,000,000 in United States dollars (the "PURCHASE PRICE"), in consideration
for the repurchase of the Common Stock and the buyout of the Management
Agreement. The Purchase Price will be allocated to the purchase of the
Common Stock and the buyout of the Management Agreement in the manner set
forth in Schedule I. At the Closing, Harveys shall deliver to the Company,
free and clear of Liens, for cancellation by the Company, certificates
representing the Common Stock, with appropriate share transfer forms
attached, duly endorsed in blank, together with evidence of payment of any
applicable transfer taxes.
Section 2.2 CLOSING; CLOSING DATE. Upon the terms and subject
to the conditions set forth herein, the Closing will take place on the
Closing Date at 10:00 a.m., New York City time, at the offices of Xxxxxxx
Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx or such other
place as shall be agreed upon by the parties hereto. The "CLOSING DATE"
shall be the date on which the Closing occurs and shall mean the fifth
Business Day after the satisfaction (or waiver) of the conditions to the
Closing set forth in Article VI of this Agreement, or such other date and
time as may be agreed by the parties hereto.
6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HARVEYS
Harveys hereby represents and warrants to the Company on the date
hereof and on the Closing Date as follows:
Section 3.1 AUTHORITY OF HARVEYS. Harveys is a corporation
duly organized, validly existing and in good standing under the laws of
Nevada. Harveys has the power and authority to execute and deliver this
Agreement and each other agreement entered into in connection herewith to
which it is a party and to perform its obligations hereunder and thereunder
and consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, the performance of Harveys'
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary proceedings on the part of the board of directors and the
stockholders of Harveys. This Agreement has been, and at the Closing Date
each of such other agreement will have been, duly executed and delivered by
Harveys, and, assuming the due execution hereof or thereof by the Company,
constitutes (or, in the case of such other agreement, on the Closing Date
will constitute) the legal, valid and binding agreement of Harveys,
enforceable against Harveys in accordance with its terms.
Section 3.2 AUTHORITY OF HLVMC. HLVMC is a corporation duly
organized, validly existing and in good standing under the laws of Nevada.
HLVMC has the power and authority to execute and deliver this Agreement, the
Transition Services Agreement and each other agreement entered into in
connection herewith to which it is a party and to perform its obligations
hereunder and thereunder and consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Transition
Services Agreement, the performance of HLVMC's obligations hereunder and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary proceedings on the part of the board of
directors and the stockholders of HLVMC. This Agreement has been, and at the
Closing Date each of such other agreement will have been, duly executed and
delivered by HLVMC and, assuming the due execution hereof or thereof by the
Company, constitutes (or, in the case of such other agreement, on the Closing
Date will constitute) the legal, valid and binding agreement of HLVMC,
enforceable against HLVMC in accordance with its terms.
Section 3.3 TITLE TO THE COMMON STOCK. Upon consummation of
the Stock Repurchase at the Closing as contemplated by this Agreement, the
Company will acquire from Harveys good and valid title to the Common Stock
free and clear of any Liens.
Section 3.4 NO CONFLICTS. The execution, delivery and
performance by each of Harveys and HLVMC of this Agreement and the other
agreements entered into in connection herewith and the consummation of the
transactions contemplated hereby and thereby will not (i) violate or conflict
with any provision of Harveys or HLVMC's Articles of Incorporation or by-
7
laws or similar organizational instrument, subject to obtaining the consents
and approvals disclosed in Section 3.5, (ii) violate or conflict with any
law, rule or regulation or any court or administrative order, process,
judgment or decree to which each of Harveys or HLVMC is a party or by which
each of them (or any of their respective properties or assets) is bound or
(iii) violate, breach or conflict with any provision of, or result in the
acceleration of or entitle any party to accelerate (whether after notice or
lapse of time or both) any obligation under or pursuant to any provision of,
any indenture, agreement, contract or other instrument to which Harveys is a
party or by which any of its assets is bound.
Section 3.5 CONSENTS AND APPROVALS. Except for the requisite
approvals of the Nevada Gaming Authorities, no registration, filing,
application, notice, consent, approval, order, qualification or waiver is
required to be made, filed, given or obtained by Harveys or HLVMC with, to or
from any persons or Governmental Authorities or private agencies in
connection with the consummation of the Stock Repurchase, the Management
Buyout or the other transactions contemplated hereby (including, without
limitation, the execution of the Transition services Agreement) or the
performance of the obligations of Harveys and HLVMC hereunder except for
those that have already been made, filed, given or obtained and are in full
force and effect.
Section 3.6 GOVERNMENT LICENSES, PERMITS AND RELATED
APPROVALS. The Company has each license, permit, consent, approval,
authorization, qualification and order of any Governmental Authority
necessary to enable it to conduct its business, except where the failure to
have any such license, permit, consent, approval, authorization,
qualification or order could not, individually or in the aggregate, have a
Material Adverse Effect. All such licenses, permits, consents, approvals,
authorizations, qualifications and orders were validly issued, are in full
force and effect, and the Company is in compliance with the terms and
conditions thereof, except where the failure to be in such compliance has not
resulted in and could not, individually or in the aggregate, result in a
Material Adverse Effect.
Section 3.7 CONTRACTS. Schedule 3.7 contains a true and
correct list of all contracts and agreements in effect entered into by
Harveys or HLVMC on behalf of, or for the benefit of, the Company.
Section 3.8 EMPLOYEE INFORMATION; EXTRAORDINARY PAYMENTS.
Harveys has furnished to the Company a complete list of all full and
part-time Hotel Employees and a description of all compensation for each of
such employees (on a year-to-date basis) as of June 8, 1997.
(a) The transactions contemplated by this Agreement will not
trigger any extraordinary payments of any kind to Harveys or Affiliate of
Harveys or any Hotel Employee.
(b) Except as provided in Schedule 3.8(c), no Hotel Employee
has any employment contract (oral or written).
8
(c) The Company is in compliance in all material respects
with all applicable laws, rules and regulations relating to the employment of
labor, including those relating to discrimination, wages, hours, and the
payment of social security and similar taxes.
Section 3.9 LABOR RELATIONS. (a) There are no controversies
pending or, to the knowledge of Harveys, threatened between the Company,
Harveys or HLVMC on the one hand, and any of the Hotel Employees, prospective
Hotel Employees, former Hotel Employees (including retirees), or labor unions
or other collective bargaining representatives representing Hotel Employees
on the other; (b) no unfair labor practice complaints have been filed against
the Company, Harveys or HLVMC and none of the Company, Harveys or HLVMC has
received any notice or communication reflecting an intention or a threat to
file any such complaint with respect to any Hotel Employee; (c) there is no
labor strike, dispute, slow-down or stoppage pending or, to the knowledge of
Harveys, threatened against the Company; (d) no representation petition is
pending with the National Labor Relations Board (or any other labor relations
board) in respect of any of the Hotel's or Casino's operations; (e) HLVMC has
paid in full to all Hotel Employees all wages, salaries, commissions,
bonuses, benefits and other compensation due to such employees; (f) none of
the Company, Harveys or HLVMC has effectuated any layoffs of employees or
implemented any early retirement, separation or window program within the
past three years, nor has the Company, Harveys or HLVMC planned or announced
any such action or program for the future; (g) no promises of benefit
improvements under the Plans have been made by the Company, Harveys or HLVMC
or any Affiliate thereof to any Hotel Employee; (h) no grievance (including
without limitation, any discrimination charge) is pending which might have a
Material Adverse Effect; (i) with respect to any Hotel Employee, each of the
Company, Harveys and HLVMC is in compliance with its obligations pursuant to
the Worker Adjustment and Retraining Notification Act of 1988, and all other
notification and bargaining obligations arising under any collective
bargaining agreement, statute or otherwise, the non-compliance with which
could, individually or in the aggregate, have a Material Adverse Effect; and
(j) since December 31, 1996, except in the ordinary course of business
consistent with past practice, there has not been any general increase in the
wages, salaries, compensation, pension or other benefits payable to Hotel
Employees, or any specific increase in the wages, salaries, compensation,
pension or other benefits payable to any Hotel Employee that receives in
excess of $30,000 per annum in base salary, nor has there been any
commitment, agreement or resolution to make any commitment or enter into any
agreement relating to any such increase.
Section 3.10 EMPLOYEE BENEFIT PLANS. Schedule 3.10(a)
contains a correct and complete list of each "employee benefit plan" (within
the meaning of section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), (including, without limitation, multiemployer
plans within the meaning of Section 3(37) of ERISA), stock purchase, stock
option, severance, employment, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other employee
benefit plans, agreements, programs, policies or other arrangements, whether
or not subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transaction
9
contemplated in this Agreement or otherwise), whether formal or informal,
oral or written, legally binding or not under which any Hotel Employee or
former Hotel Employee or any member of the Company's or Harveys' Controlled
Group (defined as organizations which are members of a controlled group of
organizations within the meaning of sections 414 (b), (c), (m) or (o) of the
Code), has any present or future right to benefits or under which the Company
had or has any past, present or future liability. All such plans,
agreements, programs, policies and arrangements are referred to collectively
as "Plans." No Plan is an "EMPLOYEE PENSION PLAN" within the meaning of
section 3(2) of ERISA or a "MULTIEMPLOYER PLAN" within the meaning of Section
3(37) of ERISA.
(a) [Intentionally Left Blank]
(b) (i) Each Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions
of ERISA, the Code and other applicable laws, rules and regulations; (ii)
with respect to any Plan, no actions, suits or claims (other than routine
claims for benefits in the ordinary course) are pending or threatened, no
facts or circumstances exist which could give rise to any such actions, suits
or claims and Harveys will promptly notify the Company in writing of any
pending or threatened claims arising between the date hereof and the Closing
Date; (iii) none of HLVMC, Harveys nor the Company or any other party has
engaged in a prohibited transaction, as such term is defined under Section
4975 of the Code or Section 406 of ERISA, which could subject Harveys, HLVMC,
the Company or the Company to any taxes, penalties or other liabilities under
Section 4975 of the Code or Sections 409, 502(i) or 502(l) of ERISA; (iv) no
event has occurred and no condition exists that would subject the Company,
either directly or by reason of its affiliation with any member of its
Controlled Group, to any tax, fine or penalty imposed by ERISA, the Code or
other applicable laws, rules and regulations; (v) all insurance premiums
required to be paid with respect to any Plan as of the Closing Date have been
or will be paid prior thereto and adequate reserves have been provided for on
the Company's balance sheet for any premiums (or portion thereof)
attributable to service on or prior to the Closing Date; (vi) for each Plan
with respect to which a Form 5500 has been filed, no material change has
occurred with respect to matters covered by the most recent Form since the
date hereof; and (vii) each Plan may be amended or terminated without
obligation or liability (other than those obligations and liabilities for
which specific assets have been set aside in a trust or other funding
vehicle) including any Plan that provides life, health or other welfare
benefits to retirees, other than continuation coverage under Section 4980B of
the Code and Part 6 Subtitle B of ERISA.
(c) Except as set forth on schedule 3.10(d), no Plan exists
which could result in the payment to any Hotel Employee of any money or other
property or rights or accelerate or provide any other rights or benefits to
any Hotel Employee as a result of the transactions contemplated in this
Agreement.
Section 3.11 INSURANCE. The Company has maintained in full
force and effect the insurance on the properties, assets and business of the
Company as described on Schedule
10
3.11 at all times since December 31, 1993. The Company maintains and will
continue to maintain in full force and effect such insurance.
Section 3.12 LITIGATION. Except as set forth in schedule 3.12,
neither Harveys nor HLVMC is a party to, nor, to the knowledge of Harveys,
are either of them threatened in writing with any legal action or other
proceeding before any Governmental Authority which (i) asserts the invalidity
of this Agreement or (ii) questions the consummation by Harveys or HLVMC of
any of the transactions contemplated hereby.
Section 3.13 TRANSACTIONS WITH AFFILIATES. From and after the
closing, except for the Transition Services Agreement and the Mutual
Releases, the Company will not be a party to any contract or agreement
(whether written or oral) with Harveys, HLVMC or any Affiliate of Harveys
other than those described on Schedule 3.13.
Section 3.14 USE OF CERTAIN IDEAS. Neither Harveys nor any of
its Affiliates has any intention to directly or indirectly manage, own any
part of, operate, advise or become an officer, employee, director or
consultant of any Person which manages, owns any part of, operates, or serves
as an advisor to a hotel/casino located within the Las Vegas, Nevada SMSA
whose decor is principally based on "rock 'n' roll" music memorabilia.
Section 3.15 BROKERS. Except for Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation (the fees and expenses of whom will be borne solely by
Harveys and HLVMC), neither Harveys nor HLVMC has employed, or is subject to
the valid claim of, any broker, finder, consultant or other intermediary in
connection with this Agreement or the transactions contemplated hereby.
Section 3.16 LEASES OF REAL PROPERTY. Neither Harveys nor
HLVMC has leased any space within the Hotel.
Section 3.17 NO OTHER AGREEMENTS TO SELL. Except for the
Stockholders Agreement, neither Harveys nor any Affiliate thereof has any
agreement, absolute or contingent, with any other Person to sell the Common
Stock, or to effect any merger, consolidation or other reorganization of the
Company, or to enter into any agreement with respect thereto.
Section 3.18 GOVERNMENTAL RELATIONS. Neither Harveys, HLVMC
nor the Company has received any notice with respect to the Company from a
Governmental Authority of (i) a pending audit adjustment or assessment or
(ii) a pending disciplinary action.
11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND LILY POND
The Company hereby represents and warrants to Harveys and HLVMC on
the date hereof and the Closing Date with regard to matters affecting the
Company, and Lily Pond hereby represents and warrants to Harveys and HLVMC on
the date hereof and the Closing Date with regard to matters affecting Lily
Pond, as follows:
Section 4.1 ORGANIZATION. Lily Pond is validly existing and
in good standing under the laws of the state of its incorporation.
Section 4.2 AUTHORITY OF THE PURCHASERS. Each of the Company
and Lily Pond has the power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder and, subject to
the receipt of the requisite approvals of the Nevada Gaming Authorities, to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement, the performance of the Company's and Lily Pond's
obligations hereunder and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary proceedings on
the part of the Company and Lily Pond. This Agreement has been duly executed
and delivered by each of the Company and Lily Pond and, assuming the due
execution hereof by HLVMC and Harveys, this Agreement constitutes the legal,
valid and binding agreement of the Company and Lily Pond, enforceable against
the Company and Lily Pond in accordance with its terms.
Section 4.3 NO CONFLICTS. The execution, delivery and
performance by the Company and Lily Pond of this Agreement and the other
agreements entered into in connection herewith and the consummation of the
transactions contemplated hereby and thereby will not (i) violate or conflict
with any provision of the Company's or Lily Pond's Articles of Incorporation
or by-laws or similar organizations instrument, subject to obtaining the
consents and approvals disclosed in Section 4.4, (ii) violate or conflict
with any law, rule or regulation or any court or administrative order,
process, judgment or decree to which Lily Pond is a party or by which it (or
any of its properties or assets (other than the Company) is bound or (iii)
violate, breach or conflict with any provision of, or result in the
acceleration of or entitle any party to accelerate (whether after notice or
lapse or time or both) any obligation under or pursuant to any provision of,
any indenture, agreement, contract or other instrument to which Lily Pond is
a party or by which any of its assets (other than the Company) is bound.
Section 4.4 CONSENTS AND APPROVALS. Except for the requisite
approvals of the Nevada Gaming Authorities, no registration, filing,
application, notice, consent, approval, order, qualification or waiver is
required to be made, filed, given or obtained with, to or from any persons or
Governmental Authorities or private agencies in connection with the
consummation of the stock Repurchase, the Management Buyout or the other
transactions contemplated hereby (including, without limitation, the
execution of the Transition Services Agreement) or the
12
performance of the obligations of Lily Pond and the Company hereunder except
for those that have already been made, filed, given or obtained and are in
full force and effect.
Section 4.5 NO REGISTRATION. The Company acknowledges that
the Common stock has not been registered for sale under the Securities Act,
or under any state securities laws.
Section 4.6 BROKERS. Except for Leeds Group Inc. (the fees
and expenses of whom will be borne solely by the Company), neither Lily Pond
nor the Company has employed nor is subject to the valid claim of, any
broker, finder, consultant or other intermediary in connection with this
Agreement or the transactions contemplated hereby.
Section 4.7 LITIGATION. Except as set forth in schedule 4.7,
Lily Pond is not a party to, nor, to the knowledge of Lily Pond, is it
threatened with, any legal action or other proceeding before any Governmental
Authority which (i) asserts the invalidity of this Agreement or (ii)
questions the consummation by Lily Pond of any of the transactions
contemplated hereby, and Lily Pond does not have any knowledge of any basis
for any such legal action or proceeding.
ARTICLE V
CERTAIN AGREEMENTS
Section 5.1 CONDUCT OF BUSINESS. Each of Harveys and HLVMC
agrees that, unless the prior written consent of Lily Pond is obtained to do
otherwise, during the period commencing on the date hereof and ending on the
Closing Date:
(i) the business of the Company will be conducted by
HLVMC in accordance with the Management Agreement and only in
accordance with the most recent approved Annual Operating Budget (as
defined in the Management Agreement), consistent with past practice, and
the Company and HLVMC shall each use its reasonable commercial efforts
to preserve the Company's present business organization intact and keep
available the services of the Hotel Employees;
(ii) HLVMC shall maintain the books, accounts and
recordsrelating to the Hotel and Casino in the usual, regular and
ordinary manner, on a basis consistent with past practice, and shall
cause the Company to comply with and perform in all material respects
all laws and contractual and other obligations applicable to it and its
business;
(iii) HLVMC shall not enter into, on behalf of the
Company, any contract, agreement or other commitment which is outside
the ordinary course of business except agreements for services to be
rendered after the Closing;
13
(iv) Harveys shall not settle or compromise any
litigation (whether or not commenced prior to the date of this
Agreement) related to the Hotel and Casino;
(v) neither Harveys nor HLVMC shall take any action or
fail to take any action that would cause the representations and
warranties to become untrue; and
(vi) neither Harveys nor HLVMC nor the Company shall
authorize any of, or commit or agree to take any action inconsistent
with the foregoing.
(a) Lily Pond agrees that, unless the prior written consent of
Harveys is obtained to do otherwise, during the period commencing on the date
hereof and ending on the Closing Date:
(i) it will not direct the Company nor will it take
any action (or refrain from taking any action) that would interfere
with the conduct of the business of the Hotel including the commencement
of any construction or similar activities to expand the Hotel; and
(ii) it wi1l not make requests or impose requirements
on Xxxx Selesnar or any members of his staff that would interfere
with any of them devoting their full business time and attention to the
management of the business as currently carried on by the Hotel.
Section 5.2 REGULATORY AND OTHER AUTHORIZATIONS AND CONSENTS.
Each of the parties hereto will use its reasonable efforts to obtain the
timely authorizations, consents, orders and approvals of Governmental
Authorities and officials and of other third parties that may be or become
necessary, proper or advisable in connection with the performance of its
obligations pursuant to this Agreement and the consummation of the
transactions contemplated hereby and will cooperate fully with each other in
promptly seeking to obtain such authorizations, consents, orders and
approvals as may be necessary, proper or advisable for the performance of its
respective obligations pursuant to this Agreement including, without
limitation, the receipt of all requisite approvals of the Nevada Gaming
Authorities. The parties hereto will promptly file any additional
information requested as soon as practicable after receipt of the request,
will not take any action which will have the effect of delaying, impairing or
impeding the receipt of any required approvals and will use their reasonable
efforts to secure such approvals as promptly as possible.
Section 5.3 FURTHER ACTIONS. Subject to the terms and
conditions hereof, each of the parties hereto agrees to use its reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
14
effective the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing, the parties agree to cooperate with each
other in order to obtain the regulatory approvals necessary to enable the
consummation of the transactions contemplated hereby.
(a) Upon request Harveys and HLVMC shall make available to
the Company a current, accurate and complete copy (or, to the extent no such
copy exists, an accurate description) of each Plan and, to the extent
applicable, with respect to each Plan, (i) any related trust agreement,
annuity contract or other funding instrument; (ii) the most recent
determination letter; (iii) any summary plan description and other written
communications (or a description of any oral communications) by the Company
or HLVMC to Hotel Employees concerning the extent of the benefits provided
under a Plan; and (iv) for the three most recent years, the Form 5500 and
attached schedules.
Section 5.4 BOOKS AND RECORDS. On the Closing Date, HLVMC and
Harveys shall transfer to the Company all contracts, agreements, commitments,
books, records, files and other data relating to the Hotel and/or Casino,
including any of the foregoing stored on computer.
Section 5.5 [INTENTIONALLY LEFT BLANK]
Section 5.6 STOCKHOLDERS AGREEMENT; BY-LAWS. Concurrently
with the execution and delivery of this Agreement the parties shall execute
and deliver an amendment to the stockholders Agreement substantially in the
form of Exhibit B hereto.
(a) Prior to the Closing Date, the Company shall amend its
by-laws to provide for the waiver of Nevada Revised Statutes Sections 78.378
through 78.3793, inclusive.
(b) Prior to the Closing Date, the Company shall amend its
Articles of Incorporation to provide that the Company shall be excluded from
the application of Nevada Revised Statutes Section 78.288.2(b).
(c) Prior to the Closing Date, the Company shall not (i)
issue any capital stock, (ii) incur any Indebtedness or (iii) declare or pay
any dividend or distribution, in each case without the prior written consent
of Xxxxxx.
Section 5.7 COMMISSION FILING. Lily Pond agrees to prepare a
transfer of interest application form, and Xxxxxx agrees to file an amended
shareholder's application form and an operator's application form with the
Nevada Gaming Authorities no later than thirty (30) days after the date
hereof. Each of Harveys, HLVMC, Lily Pond and Xxxxxx agree to cooperate with
the Nevada Gaming Authorities' investigation, including the furnishing of all
information and/or documents requested by said Authorities.
Section 5.8 [INTENTIONALLY LEFT BLANK]
15
Section 5.9 OPERATING AND CAPITAL BUDGETS. Immediately upon
the execution hereof the Annual Operating Budget and Annual Plan (each as
defined in the Management Agreement) previously submitted by HLVMC to the
Company on September 30, 1996, shall be deemed approved NUNC PRO TUNC as of
November 1, 1996.
ARTICLE VI
CONDITIONS
Section 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES.
The respective obligations of the parties hereto are subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions:
(a) NO INJUNCTION, ETC. There shall not be in effect any
preliminary or permanent injunction or other order issued by any federal or
state court of competent jurisdiction in the United States or by any United
States federal or state governmental or regulatory body nor any statute,
rule, regulation or executive order promulgated or enacted by any United
States federal or state governmental authority which restrains, enjoins or
otherwise prohibits the Closing.
(b) NO PROCEEDING OR LITIGATION. No suit, action or
governmental proceeding before any court or other Governmental Authority
shall have been commenced and be pending or currently threatened by any
Governmental Authority against Harveys, HLVMC or the Company or any of their
Affiliates seeking to restrain, prevent or change in any material respect the
transactions contemplated in this Agreement or seeking material damages in
connection with any of such transactions.
Section 6.2 CONDITIONS OF THE COMPANY'S AND LILY POND'S
OBLIGATION TO CLOSE. The Company's and Lily Pond's obligation to consummate
the Closing is subject to the satisfaction on or prior to the Closing Date of
each of the following additional conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Harveys and HLVMC contained herein shall be
true and correct (in all material respects, in the case of those
representations and warranties which are not by their express terms qualified
by reference to materiality) at and as of the Closing Date (other than
Section 3.14), with the same force and effect as though made at and as of the
Closing Date, except to the extent that any representation or warranty is
made as of a specified date, in which case such representation or warranty
shall be true and correct (in all material respects, in the case of those
representations and warranties which are not by their express terms qualified
by reference to materiality) as of such date.
(b) PERFORMANCE OF AGREEMENT. Each of Harveys and HLVMC
shall have performed in all material respects all obligations and agreements,
and complied in all
16
material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by such party prior to or at the
Closing Date.
(c) CERTIFICATE OF HARVEYS. The Company shall have received
a certificate of Harveys and HLVMC, dated the Closing Date, executed on
behalf of Harveys and HLVMC by the President or a Senior Vice President, to
the effect that the conditions specified in (a) and (b) above have been
fulfilled.
(d) APPROVAL OF THE NEVADA GAMING AUTHORITIES. All approvals
from the Nevada Gaming Authorities necessary or advisable for the performance
of the transactions contemplated herein shall have been obtained, without the
imposition of conditions on such approvals unacceptable to the Company in its
sole and absolute discretion. The parties hereto acknowledge that the
requirement for obtaining such approvals may not be waived.
(e) DEBT FINANCING. The Company shall have received the
proceeds of debt financing sufficient to consummate the transactions
contemplated by this Agreement and to repay all outstanding principal of and
interest on Indebtedness owed by the Company to Xxxxx Fargo Bank on terms
satisfactory to the Company in its sole discretion.
(f) POWERS OF ATTORNEY. Harveys shall have delivered to the
Company instruments or certificates of cancellation, discharge and release in
form and substance satisfactory to the Company, effecting or evidencing the
cancellation, discharge or release of all powers of attorney related to the
Hotel and Casino.
(g) BANK ACCOUNTS. Either Harveys or HLVMC shall have
delivered to the Company, or the Company shall otherwise have obtained, such
instruments in form and substance satisfactory to the Company, effecting or
evidencing the cancellation, discharge or release of HLVMC of all ownership
and control, in favor of the Company or its designee(s), of all bank accounts
of the Company.
(h) TRANSITION SERVICES AGREEMENT. HLVMC shall have executed
and delivered to the Company the Transition Services Agreement.
(i) SECRETARY'S OR ASSISTANT SECRETARY'S CERTIFICATE. The
Company shall have received from Harveys and HLVMC certificates, dated the
Closing Date, of a Secretary or Assistant Secretary, Harveys or HLVMC, as the
case may be, certifying the incumbency of those officers of Harveys or HLVMC,
as the case may be, executing this Agreement and any closing document
delivered hereunder. Attached to such certificate as Exhibit A shall be a
copy of the Certificate of Incorporation and By-Laws of Harveys or HLVMC, as
the case may be, certified by such Secretary or Assistant Secretary as in
effect (except as otherwise specified in such certificate) at all times since
the date of the first resolution referred to in the next succeeding sentence.
Attached to such certificate as Exhibit B shall be certified copies of the
resolutions of the Board of Directors of Harveys or HLVMC, as the case may
be, authorizing the execution and
17
delivery of this Agreement and the Transition Services Agreement and the
consummation of the transactions contemplated herein and therein.
(j) RESIGNATION OF OFFICERS AND DIRECTORS. Any Person who is an
officer or director of the Company and who is an Affiliate of either Harveys or
HLVMC shall have resigned such position.
(k) RELEASES. Harveys and HLVMC shall have executed and
delivered releases in the forms of Exhibits C-1 and C-2, respectively.
(l) XXXX SELESNAR. Xxxx Selesnar shall be employed by Harveys
as the general manager of the Hotel and there shall not have been any diminution
of his duties since the date hereof.
Section 6.3 CONDITIONS TO HARVEYS' OBLIGATIONS TO CLOSE.
Harveys obligations to consummate the Closing are subject to the satisfaction on
or prior to the Closing Date of each of the following additional conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
Representations and warranties of the Company and Lily Pond contained herein
shall be true and correct (in all material respects, in the case of those
representations and warranties which are not by their express terms qualified
by reference to materiality) at and as of the Closing Date, with the same
force and effect as though made at and as of the Closing Date, except to the
extent that any representation or warranty is made as of a specified date, in
which case such representation or warranty shall be true and correct (in all
material respects, in the case of those representations and warranties which
are not by their express terms qualified by reference to materiality) as of
such date.
(b) PERFORMANCE OF AGREEMENTS. The Company and Lily Pond
shall have performed in all material respects all obligations and agreements,
and complied in all material respects with all covenants and conditions,
contained in this Agreement to be performed or complied with by them prior to
or at the Closing Date.
(c) Harveys shall have received a certificate of the Company
and Lily Pond, dated the Closing Date, executed by Lily Pond and on behalf of
the Company, by a Vice President, to the effect that the conditions specified
in paragraphs (a) and (b) above have been fulfilled.
(d) SECRETARY'S OR ASSISTANT SECRETARY'S CERTIFICATE. Harveys
shall have received from the Company and Lily Pond certificates, dated the
Closing Date, of a Secretary or Assistant Secretary of the Company or Lily
Pond, as the case may be, certifying the incumbency of those officers of the
Company or Lily Pond, as the case may be, executing this Agreement and any
closing document delivered hereunder. Attached to such certificate as Exhibit
A shall be a
18
copy of the Certificate of Incorporation and By-Laws of the Company or Lily
Pond, as the case may be, certified by such Secretary or Assistant Secretary
as in effect (except as otherwise specified in such certificate) at all times
since the date of the first resolution referred to in the next succeeding
sentence. Attached to such certificate as Exhibit B shall be certified copies
of the resolutions of the Board of Directors of the Company or Lily Pond, as
the case may be, authorizing the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein.
(e) FEES AND REIMBURSABLE EXPENSES OWED. Harveys shall have
received the Base Management Fee and Incentive Fee (each as defined in the
Management Agreement) and all fees and expenses reimbursable under the
Management Agreement accrued up to the Closing Date.
(f) TRANSITION SERVICES AGREEMENT. The Company shall have
executed and delivered to Harveys the Transition Services Agreement.
(g) RELEASES. Lily Pond and Xxxxxx shall have executed and
delivered releases in the forms of Exhibits D-l and D-2, respectively.
(h) FINANCIAL OBLIGATIONS. All financial and other
obligations of HLVMC or Harveys pertaining to the Company or the management
of the Company and described on Schedule 6.3(h) shall have become the
obligations of the Company.
ARTICLE VII
EMPLOYEE MATTERS
Section 7.1 CONTINUITY OF EMPLOYMENT. The parties hereto
intend that there shall be continuity of employment with respect to all the
Transferred Employees. The Company will offer employment as a successor
employer immediately after the Closing to Hotel Employees. Any Hotel
Employee on leave of absence or disability who returns to active employment
within one year (or 18 months in the case of individuals who are disabled due
to an injury or illness for which workers compensation benefits are payable)
after the Closing shall be offered employment by the Company on such date
and, upon acceptance of such offer of employment shall thereupon become a
Transferred Employee. Nothing in this Section 7.1 shall interfere with or
curtail the ability of the Company to make employment decisions with respect
to the Transferred Employees subsequent to the Closing.
Section 7.2 TRANSFER OF PLANS. (a) No assets or liabilities
with respect to any plan, program or arrangement established by Harveys or
any other employer for the benefit of any employees of the Hotel (the
"HARVEYS PLANS") shall be transferred as a result of this Agreement.
Benefits payable to any Transferred Employees under the Harveys Plans
(including, for the purposes of this Section 7.2, any related supplemental
nonqualified plan maintained for the benefit of any Transferred Employee
whose benefits under Harveys' Plans would otherwise
19
have been limited under the Code (a "SERP")) through the Closing shall be
payable to such Transferred Employees pursuant to the terms of, and at the
time and in the amounts provided under, the Harveys Plans based upon such
Transferred Employees' years of service with, and compensation received from,
Harveys through the Closing (including periods of employment with any other
employer which is taken into account under any of the Harveys Plans). All
Transferred Employees who are not fully vested as of the Closing in benefits
accrued as of such date under the Harveys Plans (other than a SERP) will
become fully vested in such accrued benefits. All Harveys stock options
granted to Transferred Employees shall become fully vested upon the Closing.
(b) As soon as practicable after the Closing, the Company
shall cause the Transferred Employees to be enrolled in the employee benefit
plans, programs and arrangements of the Company in which they are eligible to
participate. Subject to any necessary approvals of both of the applicable
pension boards, all such employees shall be granted service credit under each
corresponding plan of the Company for purposes of eligibility and vesting,
for creditable service performed prior to Closing.
(c) Harveys shall be responsible for all medical, dental and
other insurance claims incurred by Hotel Employees prior to becoming
Transferred Employees but will be reimbursed by the Company as soon as
practicable after the Closing.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 INDEMNITY OF THE COMPANY. On and after the
Closing Date, Harveys and HLVMC jointly and severally agree to defend,
indemnify, reimburse and hold harmless, up to an amount not to exceed $45
million in the aggregate, the Company, each of the Company's Affiliates and
each officer and director thereof against any and all (i) losses, debts,
liabilities, damages, obligations, claims, demands, judgments or settlements
of any nature or kind, known or unknown, liquidated or unliquidated,
including all reasonable out-of-pocket costs and expenses relating thereto
(legal, accounting or otherwise) (collectively, "Losses") arising out of or
resulting from (X) any breach of any representation or warranty by or on
behalf of Harveys contained in Article III hereof; PROVIDED, that the
aggregate amount of such Losses exceed $500,000 and then from the first
dollar of all such Losses, or (Y) any other covenant or agreement of Harveys
or HLVMC contained in this Agreement or the Transition Services Agreement,
unless such breach of such covenant or agreement was waived by the Company in
writing, or (ii) 40% of all Losses arising out of or resulting from any
business or activity of HLVMC, as the manager of the Hotel prior to the
Closing Date, or any litigation relating thereto, other than in connection
with the ordinary course of business.
Section 8.2 INDEMNITY OF LILY POND. On and after the Closing
Date, Harveys and HLVMC jointly and severally agree to defend, indemnify,
reimburse and hold harmless, up
20
to an amount not to exceed $45 million in the aggregate, Lily Pond, each of
Lily Pond's Affiliates and each officer and director thereof against any and
all Losses arising out of or resulting from (i) any breach of any
representation or warranty by or on behalf of HLVMC contained in Article III
hereof; PROVIDED, that the aggregate amount of such Losses exceed $500,000
and then from the first dollar of all such Losses, or (ii) any other covenant
or agreement of Harveys or HLVMC contained in this Agreement or the
Transition Services Agreement, unless such breach of such covenant or
agreement was waived by Lily Pond in writing.
Section 8.3 INDEMNITY OF HARVEYS AND HLVMC BY THE COMPANY. On
and after the Closing Date, the Company agrees to defend, indemnify,
reimburse and hold harmless, up to an amount not to exceed $45 million in the
aggregate, each of Harveys and HLVMC, their respective Affiliates and each
officer and director thereof against any and all Losses arising out of or
resulting from any breach of (i) any representation or warranty by or on
behalf of the Company contained in Article IV hereof; PROVIDED, that the
aggregate amount of such Losses exceed $500,000 and then from the first
dollar of all such Losses, and (ii) any other covenant or agreement of the
Company contained in this Agreement or the Transition Services Agreement,
unless such breach of such covenant or agreement was waived by each of
Harveys and HLVMC.
Section 8.4 INDEMNITY OF HARVEYS AND HLVMC BY LILY POND. On
and after the Closing Date, Lily Pond agrees to defend, indemnify, reimburse
and hold harmless, up to an amount not to exceed $45 million in the
aggregate, each of Harveys and HLVMC, their respective Affiliates and each
officer and director thereof against any and all Losses arising out of or
resulting from any breach of (i) any representation or warranty by or on
behalf of Lily Pond contained in Article IV hereof; PROVIDED, that the
aggregate amount of such Losses exceed $500,000 and then from the first
dollar of all such Losses, and (ii) any other covenant or agreement of Lily
Pond contained in this Agreement, unless such breach of such covenant or
agreement was waived by each of Harveys and HLVMC.
Section 8.5 INDEMNIFICATION PROCEDURES. In the event that any
Person shall incur or suffer any Losses in respect of which indemnification
may be sought hereunder, such Person (an "INDEMNIFIED PARTY") may assert a
claim for indemnification by written notice to the indemnifying parties under
this Article VIII. In the case of Losses arising or which may arise by
reason of any third-party claim, promptly after receipt by the Indemnified
Party of notice of the assertion of the claim, the Indemnified Party shall
promptly notify the indemnifying parties in writing of the claim; PROVIDED
that the failure to notify the indemnifying parties will not relieve such
indemnifying parties from any liability which they may have to such
Indemnified Party, except to the extent that (and only to the extent that)
such failure results in a failure of actual notice to the indemnifying
parties and such indemnifying parties are damaged as a result of such failure
to give notice. In any such action brought against an Indemnified Party, the
indemnifying parties will be entitled to participate therein and, to the
extent that they may wish (and provided that they will have acknowledged in
writing to the Indemnified Party the obligation of the indemnifying parties
to indemnify the Indemnified Party in respect of such claim or action fully
21
pursuant to this Article VIII and have provided reasonable assurance of their
financial ability to satisfy such obligations), to assume the defense thereof
with counsel reasonably satisfactory to such Indemnified Party. After notice
from the indemnifying parties to the Indemnified Party of its election to
assume the defense of such claim or action, the indemnifying parties will not
be liable to the Indemnified Parties under this Article VIII for any legal or
other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation;
PROVIDED that the Indemnified Party will have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel will be at the expense of such Indemnified
Party unless (i) the employment thereof has been specifically authorized by
the indemnifying parties, (ii) such Indemnified Party will have been advised
by counsel reasonably satisfactory to the indemnifying parties that there may
be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying parties and in the
reasonable judgment of such counsel it is advisable for such Indemnified
Party to employ separate counsel, or (iii) the indemnifying parties have
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the Indemnified Party, in which case, if such Indemnified
Party notifies the indemnifying parties in writing that it elects to employ
separate counsel at the expense of the indemnifying parties, such
indemnifying parties will not have the right to assume the defense of such
action on behalf of such Indemnified Party. The indemnifying parties will not
be liable for any settlement of any such action effected without their
written consent (which consent will not be unreasonably withheld), but if
settled with its written consent, the indemnifying parties will indemnify and
hold harmless any Indemnified Party from and against any loss or liability by
reason of such settlement in accordance with this Article VIII. The
indemnifying parties will not settle any action without the consent of the
Indemnified Party unless such settlement is for money damages only and
contains an unconditional release of the Indemnified Party.
Section 8.6 OTHER AGREEMENTS CONCERNING INDEMNITY. The
indemnities provided in this Article 8 shall survive the Closing.
Notwithstanding anything in the foregoing to the contrary, the amount of any
indemnity payable pursuant to this Article 8 by either Harveys and HLVMC, on
the one hand, or Lily Pond and the Company on the other, shall be reduced by
any tax benefit due the party claiming the loss.
ARTICLE IX
MISCELLANEOUS
Section 9.1 TERMINATION AND ABANDONMENT.
(a) GENERAL. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time, but not later
than the Closing Date:
22
(i) by mutual consent of Lily Pond, the Company,
Harveys and HLVMC;
(ii) by Lily Pond or the Company if the Closing shall
not have occurred on or before six months from the date hereof, unless the
absence of such occurrence shall be due to the failure of the Company to
perform in all material respects its obligations under this Agreement
required to be performed by it at or prior to the Closing; or
(iii) by Harveys and HLVMC if the Closing shall not have
occurred on or before six months from the date hereof, unless the absence of
such occurrence shall be due to the failure of HLVMC or Harveys to perform in
all material respects its obligations under this Agreement required to be
performed by it at or prior to the Closing.
(b) PROCEDURE UPON TERMINATION. In the event of the
termination and abandonment of this Agreement, written notice thereof will
promptly be given to the other parties hereto and this Agreement will
terminate and the transactions contemplated hereby (except as provided in
Section 9.2) shall be abandoned without further action by any of the parties
hereto.
Section 9.2 FEES AND EXPENSES; TRANSFER TAXES. (a) If the
transactions contemplated hereby are consummated, each of the Company, Lily
Pond, Harveys and HLVMC will pay its own fees and expenses incident to the
negotiation, preparation and execution of this Agreement and the Transition
Services Agreement, including attorneys', accountants' and other advisors'
fees and the fees and expenses of any broker, finder or agent retained by
such party in connection with the transactions contemplated by the Agreement
and any expenses incurred by the Company in contemplation of the consummation
of the Management Buyout (the "FEES AND EXPENSES") . If the transactions
contemplated hereby are not consummated, Lily Pond will pay the Fees and
Expenses of Lily Pond and the Company, and Harveys and HLVMC will pay the
Fees and Expenses of Harveys and HLVMC; PROVIDED, if the transactions
contemplated hereby are not consummated as a result of action or inaction by
either Harveys or HLVMC of any provision contained in Article V, then Harveys
and HLVMC shall be jointly and severally liable for the Fees and Expenses
incurred by Lily Pond and the Company and if the transactions contemplated
hereby are not consummated as a result of action or inaction by Lily Pond of
any provision contained in Article V or, in the case of Section 5.7 only,
Xxxxxx, then Lily Pond shall be liable for the Fees and Expenses incurred by
Harveys, HLVMC and the Company.
(b) HLVMC shall pay, or cause to be paid, all recordation,
stock transfer or similar taxes or fees, deed, stamp or other taxes,
recording charges, fees, or other similar costs or expenses of any kind
required in connection with the effectuation of the transactions contemplated
by this Agreement, whether such tax or fee is imposed on HLVMC, Harveys or
the Company.
23
Section 9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
Representations and warranties of the parties contained in this Agreement or
in any Schedule hereto will survive the Closing until eighteen months after
the Closing Date except that the Representations and warranties contained in
Sections 3.1, 3.3, 3.10, 3.14, 4.1 and 4.2 shall survive the Closing until
the expiration of the longest statute of limitations applicable thereto,
including any extensions thereof. No action or proceeding may be brought or
litigation commenced with respect to any of the representations and
warranties which survive only until eighteen months after the Closing Date
unless written notice thereof, setting forth in reasonable detail the claimed
misrepresentation or breach of warranty, shall have been delivered to the
party alleged to have breached such representation or warranty prior to such
date and no action or proceeding may be brought or litigation commenced with
respect to the remaining Representations and warranties unless written notice
thereof, setting forth in reasonable detail the claimed misrepresentation or
warranty, shall have been delivered prior to the expiration of such statute
of limitations.
Section 9.4 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
agreement, and will become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 9.5 GOVERNING LAW. The laws of the State of [Nevada]
will govern the interpretation, validity and performance of the terms of this
Agreement.
Section 9.6 WAIVER OF JURY TRIAL. The Company, HLVMC and
Harveys hereby irrevocably and unconditionally waive trial by jury in any
legal action or proceeding relating to this Agreement or any other agreement
entered into in connection therewith and for any counterclaim with respect
thereto.
Section 9.7 NOTICES. All notices hereunder shall be in
writing and will be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or
certified mail, return receipt requested, postage prepaid ,or sent by
telecopy to the party to whom it is directed. If mailed, such notice will be
deemed effective three days after mailing and shall be sent as follows:
(a) If to HLVMC to it at the following addresses:
Harveys L.V. Management Company, Inc.
X.X. Xxx 000
Xxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000;
24
with a copy to:
Xxxxxxxxx & Xxxxxx, Ltd.
000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Xxxxxx, Xxxxx & Bockius LLP
000 X. Xxxxx Xxxxxx, 00xx Xx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxx Xxxxxxx, Esq.
(b) If to Harveys, to it at the following address:
Harveys Casino Resorts
X.X. Xxx 000
Xxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000;
with a copy to:
Xxxxxxxxx & AIling, Ltd.
000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. AIling, Esq.
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 X. Xxxxx Xxxxxx, 00xx Xx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxx Xxxxxxx, Esq.
25
(c) If to the Company or Lily Pond, at the following address:
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Chief Executive Officer
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
or at such other address as any such party shall have specified in writing to
the other parties hereto.
Section 9.8 SUCCESSORS AND ASSIGNS. This Agreement will be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, executors and legal representatives; PROVIDED
that no party hereto will assign its rights or delegate its obligations under
this Agreement without the express prior written consent of each other party
hereto. Notwithstanding the foregoing, the Company will have the right to
assign its rights and obligations hereunder to an Affiliate of the Company.
Section 9.9 HEADINGS; DEFINITIONS. The section and article
headings contained in this Agreement are inserted for convenience of
reference only and will not affect the meaning or interpretation of this
Agreement. All capitalized terms defined herein are equally applicable to
both the singular and plural forms of such terms.
Section 9.10 AMENDMENTS AND WAIVERS. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed
by the party against whom enforcement of any such modification or amendment
is sought. Either Harveys and HLVMC or the Company and Lily Pond may, only by
an instrument in writing, waive compliance by such other party hereto with
any term or provision of this Agreement to be performed or complied with.
The waiver by any party hereto of a breach of any term or provision of this
Agreement will not operate or be construed as a waiver of any subsequent
breach or a waiver of any other provision of this Agreement.
Section 9.11 SEVERABILITY. If any provision of this Agreement
or the application thereof to any Person or circumstance is invalid or
unenforceable to any extent, the remainder of
26
this Agreement and the application of such provision to other Persons or
circumstances will not be affected thereby and may be enforced to the
greatest extent permitted by law.
Section 9.12 INTEGRATION. This Agreement taken together with
the Transition Services Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
Section 9.13 JOINT AND SEVERAL. All covenants, representations
and warranties made by HLVMC or Harveys in this Agreement shall be deemed to
be joint and several covenants, representations and warranties of HLVMC and
Harveys.
Section 9.14 NO THIRD PARTY BENEFICIARIES. This Agreement
shall inure exclusively to the benefit of and be binding upon the parties
hereto and their respective successors, assigns, executors and legal
representatives. Nothing in this Agreement, express or implied, is intended
to confer on any Person other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
Section 9.15 COMMUNICATIONS.
(a) PUBLIC ANNOUNCEMENTS. Except for the joint press release
to be issued by the parties hereto on the date hereof, from the date hereof
until the Closing, each of Harveys, HLVMC, the Company, Lily Pond and Xxxxxx
will not, and will not permit any of its respective Affiliates or
representatives to, issue or cause the publication of any press release or
make any other public announcement with respect to the transactions
contemplated by this Agreement or the conduct of the business of the Hotel,
unless such announcement is required by law, in which case the disclosing
party will inform the other parties of such announcement as far in advance as
is practicable.
(b) EMPLOYEES. Without limiting the provisions of Section
4(c) (3) of the Management Agreement, from the date hereof through the
Closing, no party hereto will conduct meetings to discuss the transactions
contemplated by this Agreement with the employees at large or send written
communications to the employees at large with respect to the transactions
contemplated by this Agreement, without the approval of the other parties
hereto, which approval shall not be unreasonably withheld.
(c) INJUNCTIVE RELIEF. The parties acknowledge that there
may be no adequate remedy at law for a breach of this Section 9.15 and that
money damages may not be an adequate remedy for breach of such Section.
Therefore, the parties agree that each party hereto shall have the right, in
addition to any other rights it may have, to injunctive relief and specific
performance of this Section 9.15 in the event of any breach of such Section.
The remedy set forth in the preceding two sentences is cumulative and shall
in no way limit any other remedy any party hereto has at law, in equity or
pursuant hereto.
27
(d) PERMITTED COMMUNICATION. Notwithstanding anything to the
contrary contained herein, Lily Pond and Xxxxxx and their respective
Affiliates shall not be bound by this Section 9.15 in connection with
obtaining gaming approvals.
28
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties as of the date first above written.
HARD ROCK HOTEL, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Title:
By: ________________________________
Title:
LILY POND INVESTMENTS, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Title:
HARVEYS CASINO RESORTS
By: ________________________________
Title:
HARVEYS L.V. MANAGEMENT
COMPANY, INC.
By: ________________________________
Title:
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties as of the date first above written.
HARD ROCK HOTEL, INC.
By: ________________________________
Title:
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Title: Secretary
LILY POND INVESTMENTS, INC.
By: ________________________________
Title:
HARVEYS CASINO RESORTS
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Title: President/CEO
HARVEYS L.V. MANAGEMENT
COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Title: President
I, XXXXX X. XXXXXX, agree to vote my shares in Lily Pond to cause Lily
Pond to take all reasonable actions required pursuant to the terms of this
Agreement to be taken by Lily Pond to consummate and make effective the
transactions contemplated by this Agreement.
By: /s/ Xxxxx Xxxxxx
--------------------------------
XXXXX X. XXXXXX
SCHEDULE I
Allocation of Purchase Price
Termination of Management Agreement $24,218,000
Purchase of Common Stock $20,782,000
-----------
Total $45,000,000
-----------
-----------
Methodology
Termination of Management Agreement
SCHEDULE 3.7
CONTRACTS
None.
SCHEDULE 3.8(c)
EMPLOYMENT CONTRACTS
Xxxx Xxxxxxxx
SCHEDULE 3.10(a)
EMPLOYEE BENEFIT PLANS
GENERAL
Medical Insurance
Dental Insurance
Vision Care
Medical Stop Loss Insurance
Life Insurance
Accidental Death & Dismemberment Insurance
Supplemental Life Insurance
Long Term Disability
401k Plan
Company Stock Purchase Plan
EXECUTIVE
Short Term Incentive Plan
Stock Option Plan
Long Term Incentive Plan (Xxxx Selesnar only)
SCHEDULE 3.10(d)
CERTAIN PAYMENTS
As provided in Section 7.2(a) of the Stock Purchase and Management Buyout
Agreement, all Harveys stock options granted to Transferred Employees shall
become fully vested upon the Closing.
SCHEDULE 3.11
INSURANCE
TYPE OF INSURANCE CARRIER
General Liability Insurance Company of the West
Automobile
Umbrella Liability AIG
Zurich
CIGNA
Fireman's Fund
Excess Workers Compensation National Union
Crime Aetna
Kidnap & Xxxxxx Aetna
Fiduciary Liability Aetna
Professional/General Liability Scottsdale
Pool & Spa
Bond
Nevada Sales Tax Travelers/Aetna
Nevada Contractors Board Travelers/Aetna
Self Insurer's Workers Compensation St. Xxxx
SCHEDULE 3.12
LITIGATION
None.
SCHEDULE 3.13
TRANSACTIONS WITH AFFILIATES
Stockholders Agreement, dated as of August 30, 1993, by and among Hard Rock
Hotel, Inc., Harveys Casino Resorts (f/k/a Harveys Wagon Wheel, Inc.), and
Lily Pond, Inc., as amended to date.
SCHEDULE 4.7
LITIGATION
None.
SCHEDULE 6.3(h)
None.
