---------------------------------------------------------------
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.
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Dated as of July 1, 1997
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS........................... 2
Section 1.1 Certain Defined Terms...................................... 2
Section 1.2 Other Definitional Provisions.............................. 5
ARTICLE II
SALE OF STOCK; TERMINATION OF MANAGEMENT AGREEMENT; CLOSING 5
Section 2.1 Stock Repurchase........................................... 5
Section 2.2 Closing; Closing Date...................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF HARVEYS ............................... 6
Section 3.1 Authority of Harveys....................................... 6
Section 3.2 Authority of HLVMC......................................... 6
Section 3.3 Title to the Common Stock.................................. 7
Section 3.4 No Conflicts............................................... 7
Section 3.5 Consents and Approvals..................................... 7
Section 3.6 Government Licenses, Permits and Related
Approvals.......................................................... 7
Section 3.7 Contracts.................................................. 8
Section 3.8 Employee Information; Extraordinary
Payments. ......................................................... 8
Section 3.9 Labor Relations. ......................................... 8
Section 3.10 Employee Benefit Plans.................................... 9
Section 3.11 Insurance................................................. 10
Section 3.12 Litigation................................................ 10
Section 3.13 Transactions with Affiliates.............................. 10
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...................... 11
Section 4.1 Organization............................................... 11
Section 4.2 Authority of the Purchasers................................ 11
Section 4.3 No Conflicts............................................... 12
Section 4.4 Consents and Approvals..................................... 12
Section 4.5 No Registration............................................ 12
Section 4.6 Brokers.................................................... 12
Section 4.7 Litigation................................................. 12
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
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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.............................. 15
ARTICLE VI
CONDITIONS. .............................. 15
Section 6.1 Conditions Precedent to Obligations of
Parties............................................................ 15
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........................................ 20
ARTICLE VIII
INDEMNIFICATION............................. 20
Section 8.1 Indemnity of the Company................................... 20
Section 8.2 Indemnity of Lily Pond..................................... 21
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................................. 22
Section 8.6 Other Agreements Concerning Indemnity...................... 23
ARTICLE IX
MISCELLANEOUS.............................. 23
Section 9.1 Termination and Abandonment................................ 23
Section 9.2 Fees and Expenses; Transfer Taxes.......................... 24
Section 9.3 Survival of Representations and
Warranties......................................................... 24
Section 9.4 Counterparts............................................... 25
Section 9.5 Governing Law.............................................. 25
Section 9.6 Waiver of Jury Trial....................................... 25
Section 9.7 Notices.................................................... 25
Section 9.8 Successors and Assigns..................................... 26
Section 9.9 Headings; Definitions...................................... 26
Section 9.10 Amendments and Waivers.................................... 27
Section 9.11 Severability.............................................. 27
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
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SCHEDULES:
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 Transactions with Affiliates
Schedule 4.7 Litigation
Schedule 6.3(h) Financial Obligations
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 ▇▇▇▇▇▇
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STOCK PURCHASE and MANAGEMENT BUYOUT AGREEMENT (this "AGREEMENT"),
dated as of July 1, 1997, 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:
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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, legislative, judicial (including any court)
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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 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇.
"HOTEL EMPLOYEES" means persons employed by HLVMC or Harveys and who
perform work at the Hotel or Casino.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, 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.
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"MANAGEMENT AGREEMENT" has the meaning set forth in the recitals to
this Agreement.
"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.
"▇▇▇▇▇▇" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the individual, or the estate of ▇▇▇▇▇
▇. ▇▇▇▇▇▇.
"NEVADA GAMING AUTHORITIES" means the Nevada Gaming Commission, Nevada
State Gaming Control Board, ▇▇▇▇▇ 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
5
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 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
425 Lexington
6
Avenue, New York, New York 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.
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
7
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-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,
8
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.(a) 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.
(b) 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.
(c) Except as provided in Schedule 3.8(c), no Hotel Employee has any
employment contract (oral or written).
(d) 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
9
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. (a) 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 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.
(b) [Intentionally Left Blank].
(c) (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
10
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.
(d) 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 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.
11
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 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
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.
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
12
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 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
13
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. (a) 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 records relating 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;
(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.
(b) Each of the Company and Lily Pond agree 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) they will not take any action (or refrain from taking any action)
that would interfere with the conduct of
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business of the Hotel including the commencement of any construction or
similar activities to expand the Hotel; and
(ii) it will not make requests or impose requirements on the Project
Manager or ▇▇▇▇ Selesnar that would interfere with either of them devoting
their full business time and attention to the management of the business as
concurrently 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. (a) 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 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.
(b) 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,
15
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. (a) 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.
(b) 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.
(c) 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).
(d) 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 ▇▇▇▇▇▇.
Section 5.7 COMMISSION FILING. Lily Pond agrees to prepare a
transfer of interest application form, and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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].
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:
16
(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 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.
17
(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 ▇▇▇▇▇ 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 delivery of this Agreement
and the Transition Services Agreement and the consummation of the
transactions contemplated herein and therein.
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(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) ▇▇▇▇ SELESNAR. ▇▇▇▇ 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) CERTIFICATE. 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
19
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 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 on the date hereof the Transition Services
Agreement.
(g) RELEASES. Lily Pond and ▇▇▇▇▇▇ shall have executed and delivered
releases in the forms of Exhibits D-1 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
20
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 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
21
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 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
22
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 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
23
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:
(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
24
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, ▇▇▇▇▇▇, 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.
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.
25
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.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
with a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(b) If to Harveys, to it at the following address:
Harveys Casino Resorts
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
with a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
26
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(c) If to the Company or Lily Pond, at the following address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 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
27
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 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 a joint release to be issued on
the date hereof by the parties hereto, from the date hereof until the Closing,
each of Harveys, HLVMC, the Company, Lily Pond, and ▇▇▇▇▇▇ 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 without the consent of the other parties hereto,
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
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.
28
(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.
(d) PERMITTED COMMUNICATION. Notwithstanding anything to the
contrary contained herein, Lily Pond and ▇▇▇▇▇▇ and their respective Affiliates
shall not be bound by this Section 9.15 in connection with obtaining gaming
approvals.
29
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:
LILY POND INVESTMENTS, INC.
By
--------------------------
Title:
HARVEYS CASINO RESORTS
By
--------------------------
Title:
HARVEYS L.V. MANAGEMENT
COMPANY, INC.
By
--------------------------
Title:
30
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 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:
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SCHEDULE I
Allocation of Purchase Price
Termination of Management Agreement $24,218,000
Purchase of Common Stock $20,782,000
----------
Total $45,000,000
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----------
Methodology
Termination of Management Agreement