Exhibit 2.1
STOCK PURCHASE AGREEMENT
dated as of April 24, 2001
among
▇▇▇▇▇▇'▇ Entertainment, Inc.
Colony HCR Voteco, LLC,
Colony Investors III, L.P.
and
Harveys Casino Resorts
TABLE OF CONTENTS
Page
----
ARTICLE I. SALE AND TRANSFER OF SHARES; CLOSING...............................1
Section 1.1 Basic Transaction.......................................1
Section 1.2 Closing.................................................1
Section 1.3 Purchase Price..........................................1
Section 1.4 Closing Deliveries......................................4
ARTICLE II. EFFECT OF THE CLOSING ON OPTIONS OF HARVEYS.......................5
Section 2.1 Harveys Option Plan.....................................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF HARVEYS........................5
Section 3.1 Organization of Harveys and its Subsidiaries............5
Section 3.2 Capitalization..........................................6
Section 3.3 Authority; No Conflict; Required Filings and Consents...8
Section 3.4 Public Filings; Financial Statements....................9
Section 3.5 No Undisclosed Liabilities.............................10
Section 3.6 Absence of Certain Changes or Events...................10
Section 3.7 Taxes..................................................11
Section 3.8 Real Property..........................................12
Section 3.9 Title to Personal Property; Liens......................14
Section 3.10 Intellectual Property..................................15
Section 3.11 Agreements, Contracts and Commitments..................15
Section 3.12 Litigation.............................................16
Section 3.13 Environmental Matters..................................16
Section 3.14 Employee Benefit Plans.................................17
Section 3.15 Compliance with Gaming Laws............................20
Section 3.16 Information Statement..................................22
Section 3.17 Labor Matters..........................................22
Section 3.18 Insurance..............................................22
Section 3.19 Nevada Takeover Statute................................22
Section 3.20 Brokers................................................23
Section 3.21 Transactions With Affiliates...........................23
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLERS........................23
Section 4.1 Organization of Certain Sellers........................23
Section 4.2 Authority..............................................23
Section 4.3 No Conflict; Required Filings and Consents.............24
Section 4.4 Brokers................................................24
Section 4.5 Harveys Shares.........................................24
Section 4.6 All Harveys Capital Stock..............................24
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇'▇........................25
Section 5.1 Organization...........................................25
Section 5.2 Authority; No Conflict; Required Filings and Consents..25
Section 5.3 Intentionally Omitted..................................26
Section 5.4 Brokers................................................26
Section 5.5 Financing..............................................26
Section 5.6 Compliance with Gaming Laws............................27
ARTICLE VI. COVENANTS....................................................... 28
Section 6.1 Conduct of Business of Harveys.........................28
Section 6.2 Cooperation; Notice; Cure..............................32
Section 6.3 No Solicitation........................................32
Section 6.4 Employee Matters.......................................33
Section 6.5 Written Consent and Information Statement..............33
Section 6.6 Access to Information..................................34
Section 6.7 Governmental Approvals.................................34
Section 6.8 Publicity..............................................35
Section 6.9 Indemnification........................................36
Section 6.10 Stockholder Litigation.................................36
Section 6.11 Further Assurances and Actions.........................36
Section 6.12 Transfer Taxes.........................................37
Section 6.13 Harveys Stockholders...................................37
ARTICLE VII. CONDITIONS TO CLOSING...........................................37
Section 7.1 Conditions to Each Party's Obligation to Effect
the Closing............................................37
Section 7.2 Additional Conditions to Obligations of Harveys........38
Section 7.3 Additional Conditions to Obligations of ▇▇▇▇▇▇'▇.......38
ARTICLE VIII. TERMINATION AND AMENDMENT......................................40
Section 8.1 Termination............................................40
Section 8.2 Effect of Termination..................................40
Section 8.3 Fees and Expenses......................................41
Section 8.4 Sellers' Representative................................41
Section 8.5 Amendment..............................................41
Section 8.6 Extension; Waiver......................................41
ARTICLE IX. MISCELLANEOUS....................................................41
Section 9.1 Survival of Certain Matters Following Termination
or Closing.............................................41
Section 9.2 Notices................................................42
Section 9.3 Interpretation.........................................43
Section 9.4 Counterparts...........................................43
Section 9.5 Entire Agreement; No Third Party Beneficiaries.........43
Section 9.6 Governing Law..........................................44
Section 9.7 Assignment.............................................44
Exhibit 1.3(b) Illustration of Calculation of Total Transaction Consideration
Exhibit 6.13 Form of Joinder
TABLE OF DEFINED TERMS
Cross Reference
Terms in Agreement
----- ---------------
Accountants Section 1.3(d)
Acquisition Proposal Section 6.3(a)
Agreement Preamble
Benefit Arrangement Section 3.14(a)
"best knowledge" Section 9.3
Budget Section 6.1
Class A Consideration Section 1.3(a)
Class B Consideration Section 1.3(a)
Closing Section 1.2
Closing Date Section 1.2
Closing Schedule Section 1.3(c)
Code Section 3.7(g)
Colony III Preamble
Confidentiality Agreement Section 6.6
Determination Date Section 1.3(b)
Employee Plans Section 3.14(a)
Environmental Condition Section 3.13
Environmental Laws Section 3.13
Environmental Liabilities and Costs Section 3.13
ERISA Section 3.14(a)
ERISA Affiliate Section 3.14(a)
Exchange Act Section 3.4(a)
Foreign Plan Section 3.14(a)
GAAP Section 3.4(b)
Governmental Approvals Section 6.7(a)
Governmental Entity Section 3.3(c)
▇▇▇▇▇▇'▇ Preamble
▇▇▇▇▇▇'▇ Disclosure Schedule Article V
▇▇▇▇▇▇'▇ Gaming Laws Section 5.6(b)
▇▇▇▇▇▇'▇ Material Adverse Effect Section 5.1
▇▇▇▇▇▇'▇ Permits Section 5.6(a)
Harveys Preamble
Harveys Balance Sheet Section 3.4(b)
Harveys Class A Section 3.2(a)
Harveys Class B Section 3.2(a)
Harveys Common Stock Section 3.2(a)
Harveys Disclosure Schedule Article III
Harveys Gaming Laws Section 3.15(b)
Harveys Leased Property Section 3.8(a)
Harveys Material Adverse Effect Section 3.1
Harveys Material Contracts Section 3.11(a)
Harveys Owned Property Section 3.8(a)
Harveys Permits Section 3.15(a)
Harveys Preferred Stock Section 3.2(a)
Harveys Real Property Section 3.8(a)
Harveys SEC Reports Section 3.4(a)
Harveys Stock Option Plan Section 2.1
HSR Act Section 3.3(c)
Indebtedness Section 3.11(a)
Indemnified Parties Section 6.9(a)
Information Statement Section 3.16
Iowa West Letter of Credit Section 1.3(b)
IRS Section 3.7(h)
Joinder Section 6.13
Lease Documents Section 3.8(c)
Multiemployer Plan Section 3.14(a)
Net Working Capital Section 1.3(b)
Notifying Party Section 6.7(a)
NRS Section 3.19
Option Settlement Amount Section 2.1
Options Section 2.1
Pension Plan Section 3.14(a)
Pinnacle Transaction Section 3.11(c)
SEC Section 3.3(c)
Securities Act Section 3.4(a)
Seller Disclosure Schedule Article IV
Sellers Preamble
Sellers' Representative Section 8.4
Sellers' Representative Certificate Section 1.3(a)
Shares Preamble
Special Flood Hazard Area Section 3.8(f)
Subsidiary Section 3.1
Tax Return Section 3.7(h)
Taxes Section 3.7(h)
Third Party Section 6.3(a)
Total Transaction Consideration Section 1.3(a)
Voteco Preamble
Voting Debt Section 3.2(b)
Welfare Plan Section 3.14(a)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of April 24,
2001, by and among ▇▇▇▇▇▇'▇ ENTERTAINMENT, INC., a Delaware corporation
("▇▇▇▇▇▇'▇"), COLONY HCR VOTECO, LLC, a Delaware limited liability company
("Voteco"), COLONY INVESTORS III, L.P., a Delaware limited partnership
("Colony III"), those other persons executing a Joinder hereto pursuant to
Section 6.13 hereof (collectively with Voteco and Colony III, "Sellers")
and HARVEYS CASINO RESORTS, a Nevada corporation ("Harveys").
WHEREAS, Voteco and Colony III own, in the aggregate, at least 95%
of all of the outstanding capital stock of Harveys;
WHEREAS, Sellers desire to sell, and ▇▇▇▇▇▇'▇ desires to purchase,
all of the issued and outstanding shares of capital stock of Harveys (the
"Shares"), for the consideration and on the terms set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties agree as follows:
ARTICLE I.
SALE AND TRANSFER OF SHARES; CLOSING
Section 1.1 Basic Transaction. On and subject to the terms and
conditions of this Agreement, ▇▇▇▇▇▇'▇ agrees to purchase from each of the
Sellers, and each of the Sellers agrees to sell to ▇▇▇▇▇▇'▇, all of his or
its Shares for the consideration specified below in this Article I.
Section 1.2 Closing. The purchase and sale (the "Closing")
provided for in this Agreement will take place at such time and place to be
agreed upon by ▇▇▇▇▇▇'▇, Harveys and the Sellers' Representative, on a date
to be specified by ▇▇▇▇▇▇'▇, Harveys and the Sellers' Representative, which
shall be no later than the fifth business day after satisfaction or, if
permissible, waiver of the conditions set forth in Article VII (the
"Closing Date"), unless another date is agreed to by ▇▇▇▇▇▇'▇, Harveys and
the Sellers' Representative.
Section 1.3 Purchase Price.
(a) The Sellers shall be entitled to a total transaction
consideration (the "Total Transaction Consideration") to be calculated
pursuant to this Section 1.3, to be allocated among them pursuant to the
direction of Colony III, as evidenced by a certificate signed by the
general partner thereof in the form set forth as Exhibit 1.3(a) hereto (the
"Sellers' Representative Certificate"), certifying as to the allocation of
such consideration and indicating the per share allocation for each of the
Harveys Class A and the Harveys Class B (the "Class A Consideration" and
the "Class B Consideration," respectively). Payment of the Total
Transaction Consideration shall be made in the manner described in this
Section 1.3.
(b) The "Total Transaction Consideration" shall equal: (i) $625
million, minus (ii) the sum of (A) the amount, as set forth on the balance
sheet of Harveys as of the last day of the month immediately preceding the
Closing Date (the "Determination Date"), in accordance with GAAP, without
duplication, of indebtedness for borrowed money (long-term and short-term
(including current portion of long-term debt)), capitalized lease
obligations, synthetic lease obligations, obligations with respect to
letters of credit (other than letters of credit with respect to up to $3.75
million of workers compensation obligations and the letter of credit for
$45 million established pursuant to, and any other amounts payable under
(to the extent the same are set forth on the balance sheet), the Purchase
and Sale Agreement and Joint Escrow Instructions, dated as of August 31,
1999, as amended October 6, 1999, by and between HBR Realty Company, Inc.
and Iowa West Racing Association (the "Iowa West Letter of Credit")), (B)
other guarantees of indebtedness to third parties of the types set forth in
clause (ii)(A) and (C) all payments due to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ pursuant to
the Separation Agreement, dated as of January 4, 2001, by and between
Harveys and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, calculated as of and fully satisfied on the
Closing Date, minus (iii) an amount equal to $20,155,000 (reflecting the
agreed upon appropriate amount of cash and cash equivalents to be on hand
at the Determination Date), plus (iv) the amount of cash and cash
equivalents actually on hand as of the Determination Date, plus (v) the
proceeds (net of any amounts required to be withheld for related taxes) of
the exercise of any stock option exercises from the date hereof to and
including the Determination Date, plus (vi) any increase in the amount of
Net Working Capital between that set forth on Schedule 1.3(b) hereto and
the Net Working Capital as of the Determination Date, plus (vii) any
payments up to $8,100,000 made pursuant to the Vision Iowa Project
Memorandum of Understanding, dated as of December 19, 2000, substantially
in accordance with the Budget, minus (viii) any decrease in the amount of
Net Working Capital between that set forth on Exhibit 1.3(b) hereto and the
Net Working Capital as of the Determination Date, plus (ix) the amount of
any unbudgeted expenditures made by Harveys after the date hereof and on or
prior to the Determination Date that require ▇▇▇▇▇▇'▇' consent under this
Agreement and that have been made with the consent of ▇▇▇▇▇▇'▇, minus (x)
any amounts payable upon or after the Closing to investment bankers and
financial advisors of Harveys with respect to services rendered in
connection with the transactions contemplated hereby in excess of
$4,000,000, minus (xi) any amounts payable upon or after the Closing to
counsel of Harveys with respect to the transactions contemplated hereby in
excess of $1,000,000 minus (xii) the amount paid in cancellation of
Options, together with any related holdback, pursuant to Section 2.1,
including any amounts required to be withheld therefrom for related taxes,
plus (xiii) the unamortized premium of Harveys' 10 5/8% Senior Subordinated
Notes, plus (xiv) $110,000 per day following the Determination Date up to
but not including the Closing Date, minus (xv) the amount of any budgeted
capital expenditures provided in the Budget that Harveys fails to make
(such expenditures to be calculated as $42,500 per day from the date hereof
to but not including the Closing Date), minus (xvi) the amount of any
obligation to make any payment (whether in cash or other property) agreed
or committed to by Harveys or any of its Subsidiaries, whether existing on
the date hereof or incurred thereafter, through the Closing Date, minus
(xvii) for the purpose of paying out the total consideration due to the
stockholders of Harveys at the Closing, without duplication, the pro rata
amount of Total Transaction Consideration as determined in (i) through
(xvi) above to be paid at or after the Closing to other Harveys
stockholders as of the Closing Date that have not executed Joinders in
accordance with Section 6.13 prior to the Closing Date. "Net Working
Capital" shall equal (x) the sum of all current assets (other than cash and
cash equivalents), minus (y) the sum of all current liabilities (other than
short-term debt indebtedness (including current portion of long-term debt)
and other obligations referred to in clause (ii) above), it being expressly
agreed for purposes of avoiding any double counting that any amount or item
which would otherwise be included in the calculation of Net Working Capital
but is otherwise an addition or deduction pursuant to the calculation of
Total Transaction Consideration shall be excluded from the calculation of
Net Working Capital, both as of the Determination Date and as of February
28, 2001. By way of example only and for purposes of clarification, Exhibit
1.3(b) sets forth a calculation of the Total Transaction Consideration
using the Harveys balance sheet as of February 28, 2001.
(c) On or prior to the Closing Date, Harveys shall deliver a
calculation of the Total Transaction Consideration as of the Closing Date,
using the form of calculation thereof as illustrated in Exhibit 1.3(b)
hereto (the "Closing Schedule"). The Total Transaction Consideration shall
be paid by ▇▇▇▇▇▇'▇ to Sellers in accordance with this Section 1.3 on the
Closing Date. Notwithstanding any change with respect to Harveys'
accounting policies or procedures subsequent to the date hereof, the
accounting policies and procedures used to calculate Total Transaction
Consideration or to produce the Closing Statement shall be the same as
those in effect on the date hereof.
(d) Post-Closing Adjustment. If within twenty days following the
Closing Date ▇▇▇▇▇▇'▇ has not given to the Sellers' Representative notice
of its objection to the Closing Schedule (such notice must contain a
statement of the basis of ▇▇▇▇▇▇'▇' objection), then the Total Transaction
Consideration as calculated pursuant to the foregoing shall be deemed
accepted. If ▇▇▇▇▇▇'▇ gives such notice of objection, then the issues in
dispute will be submitted to Deloitte & Touche LLP, certified public
accountants (the "Accountants"), for resolution and the Accountants shall
issue a report with respect to such issue not later than 20 days after such
submission. If issues in dispute are submitted to the Accountants for
resolution, (i) each party will furnish to the Accountants such workpapers
and other documents and information relating to the disputed issues as the
Accountants may request and are available to that party or its Subsidiaries
(or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii)
the determination by the Accountants, as set forth in a notice delivered to
both parties by the Accountants, will be binding and conclusive on the
parties; and (iii) ▇▇▇▇▇▇'▇ and the Sellers will each bear 50% of the fees
of the Accountants for such determination; provided, however, that if the
Accountants determine that the Total Transaction Consideration should be
adjusted downward by an amount in excess of $5.0 million or upward by an
amount in excess of $5.0 million, then Sellers, in the case of a downward
adjustment, or ▇▇▇▇▇▇'▇, in the case of an upward adjustment, shall bear
the fees of such Accountants.
(e) On the third business day following the earlier of (i) the
final determination by the Accountants of the amount of the Total
Transaction Consideration pursuant to Section 1.3(d), if such Total
Transaction Consideration is greater than the aggregate of the payments
made pursuant to Section 1.3(b), ▇▇▇▇▇▇'▇ will pay the difference to
Sellers and holders of Options cashed out pursuant to Section 2.1 and other
Harveys stockholders that have not executed Joinders and whose shares have
been repurchased by Harveys at Closing, to be allocated on a per share
basis consistent with the manner utilized at Closing, and if such Total
Transaction Consideration is less than such aggregate amount, Sellers and
holders of Options cashed out pursuant to Section 2.1 and other Harveys
stockholders that have not executed Joinders and whose shares have been
repurchased by Harveys at Closing, on a per share basis consistent with the
manner utilized at Closing, will pay the difference to ▇▇▇▇▇▇'▇. All
payments will be made together with interest at 7.0% compounded daily
beginning on the Closing Date and ending on the date of payment. Payments
must be made in immediately available funds. Payments to ▇▇▇▇▇▇'▇ must be
made by wire transfer to such bank account as ▇▇▇▇▇▇'▇ will specify.
Section 1.4 Closing Deliveries.
(a) Sellers will deliver to ▇▇▇▇▇▇'▇ on the Closing Date:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank, for transfer to ▇▇▇▇▇▇'▇;
(ii) the resignation of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. as the sole
director of Harveys and each of its Subsidiaries;
(iii) FIRPTA certificates in form and substance reasonably
satisfactory to ▇▇▇▇▇▇'▇;
(iv) a certificate executed by each Seller to the effect that
such Seller's representations and warranties set forth in this Agreement
were true and correct in all material respects as of the date of this
Agreement and are accurate in all material respects as of the Closing Date
as though made on and as of the Closing Date, except for changes
contemplated or permitted by this Agreement; and
(b) ▇▇▇▇▇▇'▇ will deliver to Sellers on the Closing Date:
(i) the Total Transaction Consideration as determined in
Section 1.3, via wire transfer as directed by the Sellers' Representative
in writing; and
(ii) the certificates required by Sections 7.2(a) and 7.2(b).
(c) ▇▇▇▇▇▇'▇ will deliver to Harveys on the Closing Date:
(i) the capital contribution to Harveys as specified in
Section 2.1; and
(ii) any amounts required to repurchase shares of other
Harveys stockholders that have not executed Joinders pursuant to Section
6.13 that are being repurchased at Closing.
ARTICLE II.
EFFECT OF THE CLOSING ON OPTIONS OF HARVEYS
Section 2.1 Harveys Option Plan. Concurrently with the Closing,
each unexpired and unexercised outstanding option, whether or not then
vested or exercisable in accordance with its terms, to purchase shares of
Harveys Common Stock ("Options") previously granted by Harveys or its
Subsidiaries under Harveys' 1999 Omnibus Incentive Plan (the "Harveys Stock
Option Plan") will become exercisable in full and each holder of an Option
shall be entitled to receive from Harveys in cancellation thereof a payment
(subject to applicable income tax withholding, employer taxes and a
holdback amount set forth in the Sellers' Representative Certificate) in an
amount equal to (i) the excess, if any, of the applicable Class A
Consideration or Class B Consideration, as the case may be, over the per
share exercise price of such Option, multiplied by (ii) the number of
shares of Harveys Common Stock subject to such Option (the "Option
Settlement Amount"). The Option Settlement Amount, less the holdback amount
set forth in the Sellers' Representative Certificate, shall be paid in cash
concurrently with the Closing. In order to facilitate such payment,
▇▇▇▇▇▇'▇ concurrently with the Closing shall acquire shares of capital
stock from Harveys for an aggregate purchase price equal to the aggregate
Option Settlement Amount (plus applicable income tax withholding, employer
taxes and heldback amounts) payable to all such Harveys Option holders. The
Option Settlement Amount shall be paid in cash concurrently with the
Closing. From and after the Closing, there shall be no outstanding and
exercisable Options. The surrender of an Option shall be deemed a release
of any and all rights the holder had or may have in respect of such Option.
The Harveys Stock Option Plan and any and all other agreements, plans,
programs or arrangements of Harveys and its Subsidiaries that provide for
the issuance or grant of Options or any other interest in respect of the
capital stock of Harveys or capital stock of or other ownership interest in
any of its Subsidiaries shall terminate as of the Closing. Immediately
following the Closing, no holder of an Option or any participant in the
Harveys Stock Option Plan or any other agreement, plan, program or
arrangement of Harveys shall have any right thereunder to acquire equity
securities or other ownership interests of Harveys or any Subsidiary
thereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF HARVEYS
Harveys represents and warrants to ▇▇▇▇▇▇'▇ that the statements
contained in this Article III are true and correct except as set forth
herein and in the disclosure schedule delivered by Harveys to ▇▇▇▇▇▇'▇ on
or before the date of this Agreement (the "Harveys Disclosure Schedule").
The Harveys Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this
Article III and the disclosure in any paragraph shall qualify other
paragraphs in this Article III.
Section 3.1 Organization of Harveys and its Subsidiaries. Each of
Harveys and its Subsidiaries (as defined below) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, partnership or limited
liability company power and authority to carry on its business as now being
conducted and as proposed to be conducted prior to the Closing. Each of
Harveys and its Subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure
to be so qualified, licensed or in good standing would not have a material
adverse effect on the business, properties, condition (financial or
otherwise), results of operations or prospects of Harveys and its
Subsidiaries, taken as a whole, or any of the three separate businesses
operated as the Harveys Resort & Casino -- Lake Tahoe, Harveys Casino/Hotel
Council Bluffs and Bluffs Run Casino (a "Harveys Material Adverse Effect");
provided, however, that the following, individually and in the aggregate,
shall be excluded from the definition of "Harveys Material Adverse Effect"
and from any determination as to whether any Harveys Material Adverse
Effect has occurred or may occur: any reduction, in and of itself, in
historic or prospective revenues, net income or EBITDA of Harveys C.C.
Management Company, Inc. or Harveys Wagon Wheel Hotel/Casino. Harveys has
delivered to ▇▇▇▇▇▇'▇ a true and correct copy of the Articles of
Incorporation and Bylaws of Harveys and each of its Subsidiaries, in each
case as amended to the date of this Agreement. Assuming compliance by
▇▇▇▇▇▇'▇, its Subsidiaries and their key employees with all Harveys Gaming
Laws (as defined in Section 3.15(b)) (including obtaining all necessary
consents and approvals), the respective organizational documents of
Harveys' Subsidiaries do not contain any provision that would limit or
otherwise restrict the ability of ▇▇▇▇▇▇'▇, following the Closing, from
owning or operating such Subsidiaries on the same basis as Harveys. Except
as set forth in Harveys SEC Reports (as defined in Section 3.4(a)) filed
prior to the date hereof or as disclosed in Section 3.1 of the Harveys
Disclosure Schedule, neither Harveys nor any of its Subsidiaries directly
or indirectly owns (other than ownership interests in Harveys or in one or
more of its Subsidiaries) any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association or
entity. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any other
Subsidiary of such party is a general partner or (ii) at least a majority
of the securities or other interests having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or
more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
Section 3.2 Capitalization.
(a) The authorized capital stock of Harveys consists of
20,000,000 shares of Harveys common stock, consisting of 10,000,000 shares
of Harveys Class A Common Stock, par value $0.01 per share ("Harveys Class
A"), and 10,000,000 shares of Harveys Class B Common Stock, par value $0.01
per share ("Harveys Class B" and, together with Harveys Class A, "Harveys
Common Stock"), and 1,000,000 shares of preferred stock, $0.01 par value
per share ("Harveys Preferred Stock"). As of the date hereof, (i) 68,876
shares of Harveys Class A were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, (ii) 7,268,427 shares of
Harveys Class B were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, and (iii) no shares of Harveys
Preferred Stock are issued and outstanding. Section 3.2(a) of the Harveys
Disclosure Schedule sets forth the number of shares of Harveys Common Stock
reserved for issuance upon exercise of Options granted and outstanding as
of the date hereof. Section 3.2(a) of the Harveys Disclosure Schedule also
sets forth, for the Harveys Stock Option Plan, the dates on which Options
under the plan were granted, the number of Options granted on each such
date and the exercise price thereof. Since February 28, 2001, Harveys has
not made any grants under the Harveys Stock Option Plan. As of the date of
this Agreement, Harveys has not granted any stock appreciation rights or
any other contractual rights the value of which is derived from the
financial performance of Harveys or the value of shares of Harveys Common
Stock. There are no obligations, contingent or otherwise, of Harveys or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of Harveys Common Stock or the capital stock or ownership interests of any
Subsidiary or to provide funds to or make any material investment (in the
form of a loan, capital contribution or otherwise) in any such Subsidiary
or any other entity other than guarantees of bank obligations or
indebtedness for borrowed money entered into in the ordinary course of
business. All of the outstanding shares of capital stock (including shares
which have been issued upon exercise of outstanding options) or other
ownership interests of each of Harveys' Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and, except as disclosed in
Section 3.2(a) of the Harveys Disclosure Schedule, all such shares and
ownership interests are owned by Harveys or another Subsidiary of Harveys
free and clear of all security interests, liens, claims, pledges,
agreements, limitations on Harveys' voting rights, charges or other
encumbrances or restrictions on transfer of any nature, other than imposed
by applicable gaming laws.
(b) There are no bonds, debentures, notes or other indebtedness
of Harveys or any of its Subsidiaries having voting rights (or convertible
into securities having such rights) ("Voting Debt") issued and outstanding.
Except as set forth in Section 3.2(b) of the Harveys Disclosure Schedule or
as reserved for future grants of options or restricted stock under the
Harveys Stock Option Plan as of the date hereof, (i) there are no shares of
capital stock of any class of Harveys, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding; (ii) there are no options, warrants, equity securities, calls,
rights, commitments or agreements of any character to which Harveys or any
of its Subsidiaries is a party or by which it is bound obligating Harveys
or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other
ownership interests (including Voting Debt) of Harveys or any of its
Subsidiaries or obligating Harveys or any of its Subsidiaries to grant,
extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement; and (iii) there are
no voting trusts, proxies or other voting agreements or understandings to
which Harveys or any of its Subsidiaries is a party or by which it or they
are bound with respect to the shares of capital stock of Harveys. All
shares of Harveys Common Stock subject to issuance as specified in this
Section 3.2(b) are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, shall be validly issued, fully paid and nonassessable. Harveys
shall have the right at the Closing pursuant to the Harveys stock option
and restricted stock agreements to repurchase all of the outstanding shares
of Harveys Common Stock, other than those held by any Seller, for the same
price per share as the price to be paid to Sellers.
(c) Section 3.2(c) of the Harveys Disclosure Schedule sets forth
all stockholders of Harveys and the number of shares of Harveys Common
Stock owned by each.
Section 3.3 Authority; No Conflict; Required Filings and Consents.
(a) Harveys has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions to which it is
a party that are contemplated by this Agreement. The execution and delivery
of this Agreement by Harveys and the consummation by Harveys of the
transactions to which it is a party that are contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of
Harveys. This Agreement has been duly executed and delivered by Harveys
and, assuming this Agreement constitutes the valid and binding obligation
of the other parties hereto, constitutes the valid and binding obligation
of Harveys, enforceable against Harveys in accordance with its terms,
subject, as to enforcement, to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereinafter in effect
affecting creditors' rights generally and (ii) general principles of
equity.
(b) Other than as disclosed in Section 3.3(b) of the Harveys
Disclosure Schedule, the execution and delivery of this Agreement by
Harveys does not, and the consummation by Harveys of the transactions to
which it is a party that are contemplated by this Agreement will not, (i)
conflict with, or result in any violation or breach of, any provision of
the Articles of Incorporation or Bylaws of Harveys or the comparable
charter or bylaws of any of its Subsidiaries, (ii) result in any violation
or breach of, or constitute (with or without notice or lapse of time, or
both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Harveys or any of its
Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound, or (iii) subject to the governmental filings and
other matters referred to in Section 3.3(c), conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Harveys or any of its
Subsidiaries or any of its or their properties or assets, except in the
case of clauses (ii) and (iii) for any such breaches, conflicts,
violations, defaults, terminations, cancellations, accelerations, losses or
failures to obtain any such consent or waiver which (x) are not,
individually or in the aggregate, reasonably likely to have a Harveys
Material Adverse Effect or (y) would not materially impair or materially
delay the Closing.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency,
commission, gaming authority or other governmental authority or
instrumentality ("Governmental Entity") is required by or with respect to
Harveys or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by Harveys or the consummation by Harveys or
such Subsidiaries of the transactions to which it is or they are a party
that are contemplated hereby, except for (i) the filing of the pre-merger
notification report under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended ("HSR Act"), (ii) the filing of the Information
Statement (as defined in Section 3.16 below) with the Securities and
Exchange Commission (the "SEC") in accordance with the Exchange Act, (iii)
any approvals and filing of notices required under the Harveys Gaming Laws
(as defined in Section 3.15(b)), (iv) such consents, approvals, orders,
authorizations, permits, filings, declarations or registrations related to,
or arising out of, compliance with statutes, rules or regulations
regulating the consumption, sale or serving of alcoholic beverages or the
renaming or rebranding of the operations of Harveys and its Subsidiaries,
(v) such consents, approvals, orders, authorizations, permits,
registrations, declarations and filings as may be required under applicable
state securities laws, (vi) such filings and consents as may be required
under any environmental health or safety law or regulation pertaining to
any notification, disclosure or required approval triggered by the Closing
or the transactions contemplated by this Agreement, the failure of which to
make or obtain, respectively, would not be reasonably likely to result in a
Harveys Material Adverse Effect, (vii) such other filings, consents,
approvals, orders, authorizations, permits, registrations and declarations
as may be required under the laws of any jurisdiction in which Harveys or
any of its Subsidiaries conducts any business or owns any assets the
failure of which to make or obtain would not be reasonably likely to have a
Harveys Material Adverse Effect and (viii) any consents, approvals, orders,
authorizations, registrations, permits, declarations or filings required by
▇▇▇▇▇▇'▇, any of its Subsidiaries, affiliates or key employees (including,
without limitation, under the ▇▇▇▇▇▇'▇ Gaming Laws (as defined in Section
5.6(b)).
Section 3.4 Public Filings; Financial Statements.
(a) Harveys has filed all forms, reports and documents required
to be filed by Harveys with the SEC since February 28, 1999 (collectively,
the "Harveys SEC Reports"). The Harveys SEC Reports (including any
financial statements filed as a part thereof or incorporated by reference
therein) (i) at the time filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such subsequent
filing), complied in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be, and (ii) did not, at the time they
were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such subsequent filing), contain any
untrue statement of a material fact or omit to state a material fact
required to be stated in such Harveys SEC Reports or necessary in order to
make the statements in such Harveys SEC Reports, in the light of the
circumstances under which they were made, not misleading. None of Harveys'
Subsidiaries is required to file forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) of Harveys contained in the Harveys SEC
Reports filed prior to the date hereof complied as to form in all material
respects with the applicable published rules and regulations of the SEC
with respect thereto in effect at the time of such filing, was prepared in
accordance with generally accepted accounting principles ("GAAP") in effect
at the time of such preparation applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted
by Form 10-Q under the Exchange Act) and fairly presented in all material
respects the consolidated financial position of Harveys and its
consolidated Subsidiaries as of the dates, and the consolidated results of
its operations and cash flows for the periods, indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which, with respect to interim periods since
November 30, 2000, were not or are not expected to be material in amount.
The unaudited balance sheet of Harveys as of February 28, 2001 is referred
to herein as the "Harveys Balance Sheet."
Section 3.5 No Undisclosed Liabilities. Except as disclosed in the
Harveys SEC Reports filed prior to the date hereof or in Section 3.5 of the
Harveys Disclosure Schedule, and except for liabilities and obligations
incurred since November 30, 2000 in the ordinary course of business
consistent with past practices, Harveys and its consolidated Subsidiaries
do not have any indebtedness, obligations or liabilities of any kind,
whether accrued, contingent or otherwise (whether or not required to be
reflected in financial statements in accordance with GAAP), and whether due
or to become due, which would be reasonably likely to have a Harveys
Material Adverse Effect. Neither Harveys nor its Subsidiaries has any
financial obligation in respect of its or their interest in the City of
South Lake Tahoe redevelopment plan pursuant to the Memorandum of
Understanding, dated as of January 3, 1995, by and between the South Tahoe
Redevelopment Agency, and Harveys Resort Hotel/Casino - Lake Tahoe, as
amended by that certain Addendum No. 1, dated January 2, 1996, as further
amended by that certain Addendum No. 2, dated as of January 7, 1997, as
further amended by that certain Addendum No. 3, dated as of January 19,
1999, and as further amended by that certain Addendum No. 4, dated as of
January 16, 2001
Section 3.6 Absence of Certain Changes or Events. As of the date
hereof, except as disclosed in the Harveys SEC Reports filed prior to the
date hereof or in Section 3.6 of the Harveys Disclosure Schedule, since the
date of the Harveys Balance Sheet, Harveys and its Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been (i)
any event, development, state of affairs or condition, or series or
combination of events, developments, states of affairs or conditions,
which, individually or in the aggregate, has had or is reasonably likely to
have a Harveys Material Adverse Effect; (ii) any damage, destruction or
loss (whether or not covered by insurance) with respect to Harveys or any
of its Subsidiaries which is reasonably likely to have a Harveys Material
Adverse Effect; (iii) any material change by Harveys in its accounting
methods, principles or practices of which ▇▇▇▇▇▇'▇ has not previously been
informed; (iv) any revaluation by Harveys of any of its assets which is
reasonably likely to have a Harveys Material Adverse Effect; (v) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the equity interests
of Harveys or of any of its Subsidiaries, or any redemption, purchase or
other acquisition by Harveys or any of its Subsidiaries of any securities
of Harveys or any of its Subsidiaries; (vi) any split, combination or
reclassification of any of Harveys' capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for, shares of Harveys' capital stock; (vii) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees
of Harveys or any Subsidiary other than increases which would not be
material, individually or in the aggregate, with respect to such officers
or employees receiving such benefit or compensation (based on a comparison
to benefits and compensation received in the year ended November 30, 2000);
(viii) any entry into, renewal, modification or extension of, any material
contract, arrangement or agreement between Harveys or its Subsidiaries, on
the one hand, and with any other party, on the other hand, except for
contracts, arrangements or agreements made in the ordinary course of
business or as contemplated by this Agreement; or (ix) any settlement of
pending or threatened litigation involving Harveys or any of its
Subsidiaries (whether brought by a private party or a Governmental Entity)
other than any settlement which is not reasonably likely to have a Harveys
Material Adverse Effect.
Section 3.7 Taxes.
(a) Each of Harveys and its Subsidiaries has timely filed with
the appropriate taxing authorities all material Federal, state and local
income Tax Returns (as defined in Section 3.7(h)) and all other material
Tax Returns required to be filed through the date hereof and will timely
file any such returns required to be filed on or prior to the Closing Date.
Such Tax Returns and other information filed are (and, to the extent they
will be filed prior to the Closing, will be) complete and accurate in all
material respects. None of Harveys or its Subsidiaries has pending any
request for an extension of time within which to file federal, state or
local income Tax Returns. Harveys has provided to ▇▇▇▇▇▇'▇ copies of
Harveys' Federal and state income Tax Returns for the taxable years ended
November 30, 1997, November 30, 1998 and November 30, 1999.
(b) All Taxes (as defined in Section 3.7(h)) in respect of
periods beginning before the Closing Date have been paid or will be timely
paid, or an adequate reserve has been or will be established therefor in
accordance with GAAP by each of Harveys and its Subsidiaries subject to
such exceptions as are not likely to have a Harveys Material Adverse
Effect.
(c) No Federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any material Taxes or material Tax Returns of any of Harveys or
its Subsidiaries subject to such exceptions as are not likely to have a
Harveys Material Adverse Effect. Neither Harveys nor any of its
Subsidiaries has received a written notice of any such pending audits or
proceedings. There are no outstanding waivers extending the statutory
period of limitation relating to the payment of Taxes due from Harveys or
any of its Subsidiaries.
(d) Neither the IRS nor any other taxing authority (whether
domestic or foreign) has asserted in writing, or to the best knowledge of
Harveys, is threatening to assert, against Harveys or any of its
Subsidiaries any material deficiency or material claim for Taxes in excess
of the reserves established therefor except as which is not likely to have
a Harveys Material Adverse Effect.
(e) There are no liens for Taxes upon any property or assets of
Harveys or any Subsidiary thereof, except for liens for Taxes not yet due
and payable and liens for Taxes that are being contested in good faith by
appropriate proceedings as set forth in the Harveys Disclosure Schedule and
as to which adequate reserves have been established in accordance with GAAP
except as which would not be reasonably likely to have a Harveys Material
Adverse Effect.
(f) Neither Harveys nor any of its Subsidiaries has any
obligation under any Tax sharing agreement or similar arrangement with any
other person or entity with respect to Taxes of such other person or
entity.
(g) Neither Harveys nor any of its Subsidiaries has, with regard
to any assets or property held or acquired by any of them, filed a consent
to the application of Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is defined
in Section 341(f)(4) of the Code) owned by Harveys or any of its
Subsidiaries, except as which would not be reasonably likely to have a
Harveys Material Adverse Effect;
(h) "Taxes" shall mean any and all taxes, charges, fees, levies,
duties, liabilities, impositions or other assessments, including, without
limitation, income, gross receipts, profits, excise, real or personal
property, environmental, recapture, sales, use, value-added, withholding,
social security, retirement, employment, unemployment, occupation, service,
license, net worth, payroll, franchise, gains, stamp, transfer and
recording taxes, fees and charges, imposed by the Internal Revenue Service
("IRS") or any other taxing authority (whether domestic or foreign
including, without limitation, any state, county, local or foreign
government or any subdivision or taxing agency thereof (including a United
States possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest
whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes,
charges, fees, levies, duties, liabilities, impositions or other
assessments. For purposes of this Agreement, "Taxes" also includes any
obligations under any agreements or arrangements with any other person or
entity with respect to Taxes of such other person or entity (including
pursuant to Treas. Reg. ss. 1.1502-6 or comparable provisions of state,
local or foreign tax law) and including any liability for Taxes of any
predecessor entity. "Tax Return" shall mean any report, return, document,
declaration or other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes, including attachments thereto and amendments thereof, and including,
without limitation, information returns, any documents with respect to or
accompanying payments of estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
Section 3.8 Real Property.
(a) Section 3.8(a) of the Harveys Disclosure Schedule identifies
all real property owned by Harveys and its Subsidiaries (the "Harveys Owned
Property") and all real property leased or operated by Harveys and its
Subsidiaries (the "Harveys Leased Property"). The Harveys Owned Property
and the Harveys Leased Property is referred to herein collectively as the
"Harveys Real Property."
(b) Harveys and its Subsidiaries have good and marketable fee
simple title to the Harveys Owned Property, and a valid leasehold interest
in the Harveys Leased Property, free and clear of any and all liens,
encumbrances, restrictions, leases, options to purchase, options to lease,
covenants, assessments, defects, claims or exceptions, except for the
exceptions described in the Lease Documents (as defined below) or the
exceptions described in the Harveys SEC Reports or such other liens or
exceptions that do not and would not, individually or in the aggregate,
materially interfere with the use of the Harveys Real Property as currently
used or would not be reasonably likely to have a Harveys Material Adverse
Effect.
(c) True and correct copies of the documents under which the
Harveys Leased Property is leased or operated (the "Lease Documents") have
been delivered or made available for review to ▇▇▇▇▇▇'▇. The Lease
Documents are unmodified and in full force and effect, and there are no
other agreements, written or oral, between Harveys or any of its
Subsidiaries in the Harveys Leased Property or otherwise relating to the
use and occupancy of the Harveys Owned Property or Harveys Leased Property.
None of Harveys, its Subsidiaries or, to the best knowledge of Harveys and
its Subsidiaries, any other party, is in material default under the Lease
Documents, and, to the best knowledge of Harveys, no defaults (whether or
not subsequently cured) by Harveys, its Subsidiaries or any other party
have been alleged thereunder. To the best knowledge of Harveys and its
Subsidiaries: (i) each landlord named in any of the Lease Documents is not
in material default thereunder, and (ii) no material defaults (whether or
not subsequently cured) by such landlord have been alleged thereunder.
(d) Except as disclosed in Section 3.8(d) of the Harveys
Disclosure Schedule, (i) except as otherwise disclosed in written materials
made available to ▇▇▇▇▇▇'▇ or in Section 3.13 of the Harveys Disclosure
Schedule, to the best knowledge of Harveys and its Subsidiaries, no land or
property adjacent to the Harveys Real Property is in material violation of
any applicable laws, regulations or Restrictions, except for such
violations which, individually or in the aggregate, would not be reasonably
likely to result in a Harveys Material Adverse Effect; and (ii) there are
no material defects in the physical condition of the Harveys Real Property
or the improvements located on the Harveys Real Property, except for
defects which, individually or in the aggregate, would not be reasonably
likely to have a Harveys Material Adverse Effect.
(e) Except as disclosed in Section 3.8(e) of the Harveys
Disclosure Schedule, neither Harveys nor any of its Subsidiaries has
received written notice of, or has any actual knowledge of, any action,
proceeding or litigation pending (and, to the best knowledge of Harveys and
its Subsidiaries, overtly contemplated or threatened) (i) to take all or
any portion of the Harveys Real Property, or any interest therein, by
eminent domain; (ii) to modify the zoning of, or other governmental rules
or restrictions applicable to, the Harveys Real Property or the use or
development thereof; (iii) for any street widening or changes in highway or
traffic lanes or patterns in the immediate vicinity of the Harveys Real
Property; or (iv) otherwise relating to the Harveys Real Property or the
interests of Harveys and its Subsidiaries therein, which would be
reasonably likely to interfere with the use, ownership, improvement,
development and/or operation of the Harveys Real Property; in each case
except for such actions, proceedings or litigation which, individually or
in the aggregate, would not be reasonably likely to have a Harveys Material
Adverse Effect.
(f) Except as disclosed in Section 3.8(f) of the Harveys
Disclosure Schedule, no portion of the Harveys Real Property or the roads
immediately adjacent to and currently utilized to access the Harveys Real
Property: (i) is situated in a "Special Flood Hazard Area," as set forth on
a Federal Emergency Management Agency Flood Insurance Rate Map or Flood
Hazard Boundary Map; (ii) except as otherwise disclosed in written
materials made available to ▇▇▇▇▇▇'▇ or in Section 3.13 of the Harveys
Disclosure Schedule, to the best knowledge of Harveys and its Subsidiaries,
was the former site of any public or private landfill, dump site, retention
basin or settling pond; (iii) except as otherwise disclosed in written
materials made available to ▇▇▇▇▇▇'▇ or in Section 3.13 of the Harveys
Disclosure Schedule, to the best knowledge of Harveys and its Subsidiaries,
was the former site of any oil or gas drilling operations; or (iv) except
as otherwise disclosed in written materials made available to ▇▇▇▇▇▇'▇ or
in Section 3.13 of the Harveys Disclosure Schedule, to the best knowledge
of Harveys and its Subsidiaries, was the former site of any
experimentation, processing, refining, reprocessing, recovery or
manufacturing operation for any petrochemicals.
(g) The parcels constituting the Harveys Owned Property are
assessed separately from all other adjacent property not constituting
Harveys Owned Property for purposes of real property taxes and except as
disclosed in Section 3.8(g) of the Harveys Disclosure Schedule to the best
knowledge of Harveys and its Subsidiaries the property leased to the
applicable Harveys Subsidiary pursuant to each applicable Lease Document
and each of the Parcels of the Harveys Owned Real Property complies with
all applicable subdivision, land parcelization and local governmental
taxation or separate assessment requirements, without reliance on property
not constituting Harveys Real Property.
(h) Except as disclosed in Section 3.8(h) of the Harveys
Disclosure Schedule, the Harveys Real Property is connected to and serviced
by adequate water, sewage disposal, gas and electricity facilities and all
material systems (including, without limitation, heating, air conditioning,
electrical, plumbing and fire/life safety systems) for the basic operation
of the Harveys Real Property are operable and in good condition (ordinary
wear and tear excepted), except as would not be reasonably likely to have a
Harveys Material Adverse Effect.
(i) There are no material commitments to or agreements with any
governmental authority or agency (federal, state or local) affecting the
use or ownership of the Harveys Real Property which are not listed in
Section 3.8(i) of the Harveys Disclosure Schedule or described in the
Harveys SEC Reports.
(j) There are no contracts or other obligations outstanding for
the sale, exchange, material encumbrance, lease or transfer of any of the
Harveys Real Property, or any portion of it, or the businesses operated by
Harveys or any of its Subsidiaries thereon, except as disclosed in Section
3.8(j) of the Harveys Disclosure Schedule and other than contracts and
obligations entered into after the date of this Agreement in compliance
with Section 6.1.
Section 3.9 Title to Personal Property; Liens. To the best
knowledge of Harveys, Harveys and each of its Subsidiaries has sufficiently
good and valid title to, or an adequate leasehold interest in, its material
tangible personal properties and assets (including all riverboats operated
by Harveys and its Subsidiaries) in order to allow it to conduct, and
continue to conduct, its business as and where currently conducted. Such
material tangible personal assets and properties are sufficiently free of
liens to allow each of Harveys and its Subsidiaries to conduct, and
continue to conduct, its business as and where currently conducted and, to
the best knowledge of Harveys, the consummation of the transactions
contemplated by this Agreement will not alter or impair such ability in any
respect which, individually or in the aggregate, would be reasonably likely
to have a Harveys Material Adverse Effect. There are no defects in the
physical condition or operability of such material tangible personal assets
and properties which would impair the use of such assets and properties as
and where such assets and properties are currently used, except for such
defects which, individually or in the aggregate, would not be reasonably
likely to have a Harveys Material Adverse Effect.
Section 3.10 Intellectual Property. Section 3.10 of the Harveys
Disclosure Schedule lists all (i) trademark and service ▇▇▇▇ registrations
and applications and web domain urls owned by Harveys or any of its
Subsidiaries and (ii) trademark, service ▇▇▇▇ and trade name license
agreements to which Harveys or any of its Subsidiaries is a party. Except
as disclosed in Section 3.10 of the Harveys Disclosure Schedule, Harveys
and its Subsidiaries own or possess adequate and enforceable rights to use
all material trademarks, trademark applications, trade names, service
marks, trade secrets (including customer lists and customer databases),
copyrights, patents, licenses, know-how and other proprietary intellectual
property rights as are necessary in connection with the businesses of
Harveys and its Subsidiaries as currently conducted without material
restrictions or material conditions on use, and, to the best knowledge of
Harveys, there is no conflict with the rights of Harveys and its
Subsidiaries therein or any conflict by them with the rights of others
therein which, individually or in the aggregate would be reasonably likely
to have a Harveys Material Adverse Effect.
Section 3.11 Agreements, Contracts and Commitments.
(a) Except as disclosed in the Harveys SEC Reports filed prior to
the date of this Agreement, as disclosed in Section 3.11(a) of the Harveys
Disclosure Schedule or as contemplated by this Agreement, neither Harveys
nor any of its Subsidiaries is a party to any oral or written (i)
agreement, contract, indenture or other instrument relating to Indebtedness
(as defined below) in an amount exceeding $500,000, (ii) partnership, joint
venture or limited liability or management agreement with any person (other
than as between Harveys and its wholly-owned Subsidiaries), (iii)
agreement, contract, or other instrument relating to any merger,
consolidation, business combination, share exchange, business acquisition,
or for the purchase, acquisition, sale or disposition of any assets of
Harveys or any of its Subsidiaries outside the ordinary course of business,
(iv) other contract, agreement or commitment to be performed after the date
hereof which would be a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC), (v) agreement, contract, or other instrument
relating to any "strategic alliances" (i.e., cross-marketing, affinity
relationships, etc.), (vi) contract, agreement or commitment which
materially restricts (geographically or otherwise) the conduct of any line
of business by Harveys or any of its Subsidiaries (collectively, the
"Harveys Material Contracts"). "Indebtedness" means any liability in
respect of (A) borrowed money, (B) capitalized lease obligations, (C) the
deferred purchase price of property or services (other than trade payables
in the ordinary course of business) and (D) guarantees of any of the
foregoing incurred by any other person other than Harveys or any of its
Subsidiaries.
(b) Except as disclosed in the Harveys SEC Reports or as
disclosed in Section 3.11(b) of the Harveys Disclosure Schedule, (i) each
of the Harveys Material Contracts is valid and binding upon Harveys or any
of its Subsidiaries, as the case may be (and, to Harveys' best knowledge,
on all other parties thereto), in accordance with its terms and is in full
force and effect, (ii) there is no material breach or violation of or
default by Harveys or any of its Subsidiaries under any of the Harveys
Material Contracts, whether or not such breach, violation or default has
been waived, and (iii) no event has occurred with respect to Harveys or any
of its Subsidiaries which, with notice or lapse of time or both, would
constitute a material breach, violation or default of, or give rise to a
right of termination, modification, cancellation, foreclosure, imposition
of a lien, prepayment or acceleration under, any of the Harveys Material
Contracts, which breach, violation, default, termination, modification,
cancellation, foreclosure, imposition of a lien, prepayment or acceleration
referred to in clause (ii) or (iii), alone or in the aggregate with other
such breaches, violations, defaults, terminations, modifications,
cancellations, foreclosures, impositions of a lien, prepayments or
accelerations referred to in clause (ii) or (iii), would be reasonably
likely to have a Harveys Material Adverse Effect.
(c) Except as disclosed in Section 3.11(c) of the Harveys
Disclosure Schedule, Harveys and its Subsidiaries have terminated, and have
no continuing liabilities or obligations under, any agreement, contract or
arrangement with any person or entity relating to (i) the unconsummated
acquisition of Pinnacle Entertainment, Inc. (the "Pinnacle Transaction") or
(ii) the proposed resort in Salisbury Beach, Massachusetts.
Section 3.12 Litigation. Except as disclosed in the Harveys SEC
Reports filed prior to the date of this Agreement or in Section 3.12 of the
Harveys Disclosure Schedule, (a) there is no action, suit or proceeding,
claim, arbitration or investigation against Harveys, or any of its
Subsidiaries pending, or as to which Harveys, or any of its Subsidiaries
has received any written notice of assertion or, to the best knowledge of
Harveys, threatened against, Harveys or any of its Subsidiaries or any
property or asset of Harveys or any of its Subsidiaries, before any court,
arbitrator, or administrative, governmental or regulatory authority or
body, domestic or foreign, that, individually or in the aggregate, would be
reasonably likely to (i) have a Harveys Material Adverse Effect or (ii)
prevent the consummation of the transactions contemplated by this
Agreement; and (b) there is no judgment, order, injunction or decree of any
Governmental Entity outstanding against Harveys or any of its Subsidiaries
that would be reasonably likely to have any effect referred to in clauses
(i) or (ii) above. Harveys has received no notice of any pending or current
SEC investigation of Harveys related to the Pinnacle Transaction.
Section 3.13 Environmental Matters.
Except as disclosed in Section 3.13 of the Harveys Disclosure
Schedule or as would not be reasonably likely to have a Harveys Material
Adverse Effect, (a) Harveys is in compliance with all applicable
Environmental Laws and to Harveys' knowledge holds all permits,
registrations and licenses necessary under Environmental Laws, (b) to
Harveys' knowledge there are no Environmental Liabilities and Costs of
Harveys and its Subsidiaries, (c) to Harveys' knowledge there are no
Environmental Conditions, (d) none of Harveys and its Subsidiaries has
received any notices from any governmental agency or other third party
alleging liability under or violation of any Environmental Law, or alleging
responsibility for the removal, clean-up, or remediation of any
Environmental Condition, (e) Harveys is not subject to any enforcement or
investigatory action by any governmental agency regarding an Environmental
Condition with respect to any Harveys Real Property or any other property
related in any way to Harveys or its Subsidiaries (f) to Harveys' knowledge
no asbestos containing materials or polychlorinated biphenyls (i.e., PCBs)
are contained in or stored on any of the Harveys Real Properties, and (g)
to Harveys' knowledge there have been no leaks, releases, spills or
discharge of fluids from any underground or above-ground storage tanks
located on any of the Harveys Real Properties. As used herein, the terms
"toxic" or "hazardous" wastes, substances or materials shall include,
without limitation, all those so designated and all those in any way
regulated by any Environmental Laws. The representations and warranties in
this Section 3.13 and in Sections 3.8(d) and 3.8(f), constitute the sole
and exclusive representations and warranties made by Harveys concerning
Environmental Laws.
For purposes of this Section 3.13, the following definitions shall
apply:
"Environmental Laws" means all applicable and legally enforceable
foreign, federal, state and local statutes or laws, common law, judgments,
orders, regulations, licenses, permits, rules and ordinances relating to
pollution or protection of health, safety or the environment, including,
but not limited to the Federal Water Pollution Control Act (33
U.S.C.ss.1251 et seq.), Resource Conservation and Recovery Act (42
U.S.C.ss.6901 et seq.), Safe Drinking Water Act (42 U.S.C.ss.3000(f) et
seq.), Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), Clean Air
Act (42 U.S.C.ss.7401 et seq.), Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C.ss.9601 et seq.) and other similar
state and local statutes, in effect as of the date hereof.
"Environmental Condition" means the release into the environment
of any pollution, including without limitation any contaminant, pollutant,
hazardous or toxic waste, substance or material as a result of which
Harveys (1) has or may become liable to any person, (2) is or was in
violation of any Environmental Law, (3) has or may be required to incur
response costs for investigation or remediation, or (4) by reason of which
any of the Properties or other assets of Harveys, may be subject to any
lien under Environmental Laws.
"Environmental Liabilities and Costs" means all liabilities,
obligations, responsibilities, obligations to conduct cleanup, losses,
damages, deficiencies, punitive damages, consequential damages, treble
damages, costs and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees and
costs of investigations and feasibility studies and responding to
government requests for information or documents), fines, penalties,
restitution and monetary sanctions, interest, direct or indirect, known or
unknown, absolute or contingent, past, present or future, resulting from
any claim or demand, by any person or entity, under any Environmental Law,
or arising from Environmental Conditions.
Section 3.14 Employee Benefit Plans.
(a) Definitions. The following terms, when used in this Section
3.14 shall have the following meanings. Any of these terms may, unless the
context otherwise requires, be used in the singular or the plural depending
on the reference.
(i) Benefit Arrangement. "Benefit Arrangement" shall mean any
employment, consulting, severance or other similar contract, arrangement or
policy and each plan, program or agreement providing for workers'
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, life insurance, health, accident
benefits (including without limitation any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits), deferred compensation,
profit-sharing bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation which (1) is not a
Welfare Plan, Pension Plan, Foreign Plan or Multiemployer Plan under which
Harveys or ERISA Affiliate may incur any liability, and (2) covers any
employee or former employee of Harveys or any ERISA Affiliate (with respect
to their relationship with such entities).
(ii) Code. "Code" shall have the meaning set forth in Section
3.7(g).
(iii) Employee Plans. "Employee Plans" shall mean all Benefit
Arrangements, Multiemployer Plans, Foreign Plans, Pension Plans and Welfare
Plans.
(iv) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(v) ERISA Affiliate. "ERISA Affiliate" shall mean any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations" with, under "common control" with, or a member of an
"affiliated service group" with, Harveys as defined in Section 414(b), (c),
(m) or (o) of the Code or any partnership of which Harveys or any of its
Subsidiaries is a general partner.
(vi) Foreign Plan. "Foreign Plan" shall mean any employee
benefit plan covering employees or former employees of any Subsidiary of
Harveys or any ERISA Affiliate which is organized under the laws of any
country other than the U.S. (with respect to such employees' relationship
with such entities) which if maintained or administered in or otherwise
subject to the laws of the United States would constitute a Pension Plan, a
Multiemployer Plan or Welfare Plan.
(vii) Multiemployer Plan. "Multiemployer Plan" shall mean any
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA, under
which Harveys or any ERISA Affiliate may incur any liability.
(viii) Pension Plan. "Pension Plan" shall mean any "employee
pension benefit plan" as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) under which Harveys or any ERISA Affiliate may incur
any liability.
(ix) Welfare Plan. "Welfare Plan" shall mean any "employee
welfare benefit plan" as defined in Section 3(1) of ERISA, under which
Harveys or any ERISA Affiliate may incur any material liability.
(b) Disclosure; Delivery of Copies of Relevant Documents and
Other Information. Section 3.14(b) of the Harveys Disclosure Schedule
contains a complete list of the Employee Plans. True and complete copies of
each of the following documents (if applicable) have been made available by
Harveys to ▇▇▇▇▇▇'▇: (i) each Employee Plan (other than any Multiemployer
Plan) and, if applicable, related trust agreements, and all amendments,
(ii) the most recent determination letter issued by the IRS or analogous
ruling under foreign law with respect to each Employee Plan, (iii) for the
three most recent plan years, Annual Reports on Form 5500 Series required
to be filed with any governmental agency for each Pension Plan and Welfare
Plan, and (iv) all actuarial reports prepared for the last three plan years
for each Pension Plan.
(c) Representations.
(i) Employee Plans
(A) No Pension Plan is subject to Title IV of ERISA
or the minimum funding requirements of Section 412 of the
Code. Each Pension Plan and each related trust that is
intended to qualify under the provisions of Code Section
401(a) and 501(a) has so qualified during the period from its
adoption to date.
(B) Each Employee Plan has been maintained in
material compliance with its terms and, both as to form and in
operation, with the requirements prescribed by any and all
applicable laws, including without limitation ERISA and the
Code to the extent applicable.
(C) (i) The methodologies used by Harveys to
determine participants' benefits and Harveys' liabilities
under Harveys' Supplemental Executive Retirement Plan, Senior
Supplemental Executive Retirement Plan and Section 7 of the
Change of Control Plan, as such methodologies have been
disclosed to ▇▇▇▇▇▇'▇, are a reasonable application of the
terms of such plans, (ii) Harveys' calculation of the
participants' benefits and Harveys' liabilities thereunder as
disclosed to ▇▇▇▇▇▇'▇ are accurate and consistent with such
methodologies and (iii) Harveys has consistently applied such
methodologies in the past. The seven participants in Harveys'
Change of Control Plan listed in that certain Resolution
2001-9 of the Board of Directors of Harveys Casino Resorts
Reaffirming Participants in Harveys Casino Resorts Change of
Control Plan, attached hereto as Exhibit 3.14(c) are the only
participants under Harveys' Change of Control Plan.
(ii) Multiemployer Plans
(A) Neither Harveys nor any ERISA Affiliate has, at
any time, withdrawn from a Multiemployer Plan in a "complete
withdrawal" or a "partial withdrawal" as defined in Sections
4203 and 4205 of ERISA, respectively, so as to result in a
liability, contingent or otherwise (including without
limitation the obligations pursuant to an agreement entered
into in accordance with Section 4204 of ERISA), of Harveys or
any ERISA Affiliate which has not been fully satisfied.
Neither Harveys nor any ERISA Affiliate has engaged in, or is
a successor or parent corporation to an entity that has
engaged in, a transaction described in Section 4212(c) of
ERISA. If, as of the Closing Date, Harveys (and all ERISA
Affiliates) were to withdraw from all Multiemployer Plans to
which it (or any of them) has contributed or been obligated to
contribute, it (and they) would incur no material liabilities
to such plans under Title IV of ERISA.
(B) To the best of Harveys' knowledge, with respect
to each Multiemployer Plan: (1) no such Multiemployer Plan has
been terminated or is in reorganization under ERISA so as to
result, directly or indirectly, in any liability, contingent
or otherwise, of Harveys or any ERISA Affiliate under Title IV
of ERISA; and (2) no proceeding has been initiated by any
person (including the Pension Benefit Guaranty Corporation) to
terminate any Multiemployer Plan.
(iii) Welfare Plans. None of Harveys, any ERISA Affiliate or
any Welfare Plan has any present or future obligation to make any payment
to, or with respect to any present or former employee of Harveys or any
ERISA Affiliate pursuant to, any retiree medical benefit plan, or other
retiree Welfare Plan, except to the extent required by the Code or ERISA.
Harveys and its ERISA Affiliates have performed all of their obligations
with respect to all self-funded and self-administered Welfare Plans and
have made appropriate entries in their financial statements for all
obligations and liabilities under such Welfare Plans that have accrued but
are not yet due, including without limitation, reserves for incurred but
unreported claims. All required contributions to, and payments from each
Welfare Plan have been made on a timely basis. No event has occurred and no
circumstances exist that could result in a material increase in premium
costs of any Welfare Plans that are insured or in a material increase in
benefit costs of any Welfare Plans that are self-insured.
(iv) Deductibility of Payments. There is no contract,
agreement, plan or arrangement covering any employee or former employee of
Harveys (with respect to its relationship with such entities) that,
individually or collectively, provides for the payment by Harveys of any
amount (i) that is not deductible under Section 162 or 404 of the Code or
(ii) that is an "excess parachute payment" pursuant to Section 280G of the
Code.
(v) Litigation. There is no material action, order, writ,
injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding, arbitral action, governmental audit or investigation, relating
to or seeking benefits under any Employee Plan that or to the best
knowledge of Harveys, is pending against Harveys, any ERISA Affiliate or
any Employee Plan (other than routine claims for benefits).
(vi) No Acceleration or Creation of Rights. Except as
provided in Section 2.1 or disclosed in Section 3.14 of the Harveys
Disclosure Schedule neither the execution and delivery of this Agreement by
Harveys nor the consummation of the transactions contemplated hereby will
result in the acceleration or creation of any rights of any current or
former employee of Harveys or any of its Subsidiaries to benefits under any
Employee Plan (including, without limitation, the acceleration of the
vesting or exercisability of any stock options, the acceleration of the
vesting of any restricted stock, the acceleration of the accrual or vesting
of any benefits under any Pension Plan or the acceleration or creation of
any rights under any severance, parachute or change in control agreement).
Section 3.15 Compliance with Gaming Laws.
(a) Each of Harveys and its Subsidiaries, and each of their
respective directors (but with respect to non-employee directors, only to
Harveys' best knowledge), officers, persons performing management functions
similar to officers and, to Harveys' best knowledge, partners hold all
permits, registrations, findings of suitability, licenses, variances,
exemptions, certificates of occupancy, orders and approvals of all
Governmental Entities (including all authorizations under Harveys Gaming
Laws, the Merchant Marine Act of 1920 and the Shipping Act of 1916 and
Certificates of Inspection issued by the U.S. Coast Guard), necessary to
conduct the business and operations of Harveys and each of its
Subsidiaries, each of which is in full force and effect in all material
respects, except for such permits, registrations, findings of suitability,
licenses, variances, exemptions, certificates of occupancy, orders and
approvals the failure of which to hold would not, individually or in the
aggregate, be reasonably likely to have a Harveys Material Adverse Effect
(the "Harveys Permits") and no event has occurred which permits, or upon
the giving of notice or passage of time or both would permit, revocation,
non-renewal, modification, suspension, limitation or termination of any
Harveys Permit that currently is in effect the loss of which either
individually or in the aggregate would be reasonably likely to have a
Harveys Material Adverse Effect. Each of Harveys and its Subsidiaries, and
each of their respective directors (but with respect to non-employee
directors, only to Harveys' best knowledge), officers, persons performing
management functions similar to officers and, to Harveys' best knowledge,
partners, are in compliance with the terms of the Harveys Permits, except
for such failures to comply, which singly or in the aggregate, would not,
individually or in the aggregate, be reasonably likely to have a Harveys
Material Adverse Effect. Except as disclosed in the Harveys SEC Reports
filed prior to the date of this Agreement, the businesses of Harveys and
its Subsidiaries are not being conducted in violation of any law, ordinance
or regulation of any Governmental Entity (including, without limitation,
any Harveys Gaming Laws), except for possible violations which individually
or in the aggregate do not and would not be reasonably likely to have a
Harveys Material Adverse Effect. Harveys has received no notice of any
investigation or review by any Governmental Entity with respect to Harveys
or any of its Subsidiaries that is pending, and, to the best knowledge of
Harveys, no investigation or review is threatened, nor has any Governmental
Entity indicated any intention to conduct the same, other than those the
outcome of which would not, individually or in the aggregate, be reasonably
likely to have a Harveys Material Adverse Effect.
(b) The term "Harveys Gaming Laws" means any Federal, state,
local or foreign statute, ordinance, rule, regulation, permit, consent,
registration, finding of suitability, approval, license, judgment, order,
decree, injunction or other authorization, including any condition or
limitation placed thereon, governing or relating to the current or
contemplated casino and gaming activities and operations and manufacturing
and distributing operations of Harveys or any of its Subsidiaries,
including, without limitation, the Nevada Gaming Control Act and the rules
and regulations promulgated thereunder, the ▇▇▇▇▇▇▇ County, Nevada Code and
the rules and regulations promulgated thereunder, the Iowa Parimutuel
Wagering Act, Chapter 99D of the Code of Iowa, the Riverboat Gambling Act,
Chapter 99F of the Code of Iowa and the rules and regulations of the Iowa
Racing and Gaming Commission promulgated under Chapters 99D and 99F, the
Colorado Division of Gaming and the rules and regulations promulgated
thereunder and any applicable state gaming law and any federal or state
laws relating to currency transactions.
(c) Except as disclosed in Section 3.15(c) of the Harveys
Disclosure Schedule, neither Harveys nor any of its Subsidiaries, nor any
of their respective directors (but with respect to non-employee directors,
only to Harveys' best knowledge), officer, key employee or persons
performing management functions similar to officers or, to Harveys' best
knowledge, partners of Harveys or any of its Subsidiaries has received any
written claim, demand, notice, complaint, court order or administrative
order from any Governmental Entity in the past three years under, or
relating to any violation or possible violation of any Harveys Gaming Laws
which did or would be reasonably likely to result in fines or penalties of
$50,000 or more. To Harveys' best knowledge, there are no facts, which if
known to the regulators under the Harveys Gaming Laws would be reasonably
likely to result in the revocation, limitation or suspension of a license,
finding of suitability, registration, permit or approval of it or them, or
of any officer, director, other person performing management functions
similar to an officer or partner, under any Harveys Gaming Laws. Neither
Harveys nor any of its Subsidiaries has suffered a suspension or revocation
of any Harveys Permit held under the Harveys Gaming Laws.
Section 3.16 Information Statement. Neither the Information
Statement to be sent to the stockholders of Harveys in connection with the
action taken by written consent of Harveys' stockholders with respect to
approval of "excess parachute payments" pursuant to Section 280G of the
Code (the "Information Statement"), nor any amendment thereof or supplement
thereto, will, as of the date thereof, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Information Statement will comply as to form in all material respects with
the applicable provisions of the Exchange Act and the rules and regulations
thereunder in effect as of the filing date thereof; provided, however, that
Harveys makes no representation with respect to any information supplied or
to be supplied by ▇▇▇▇▇▇'▇ for inclusion in the Information Statement or
any amendment thereof or supplement thereto.
Section 3.17 Labor Matters. Except as disclosed in Section 3.17 of
the Harveys Disclosure Schedule or as would not be reasonably likely to
have a Harveys Material Adverse Effect, (i) to the best knowledge of
Harveys, there are no activities or proceedings of any labor union to
organize any non-unionized employees; (ii) neither Harveys nor any of its
Subsidiaries has breached or otherwise failed to comply with any provision
of any collective bargaining agreement or contract and there are no
grievances outstanding against Harveys or any of its Subsidiaries under any
such agreement or contract; (iii) there are no unfair labor practice
complaints pending against Harveys or any of its Subsidiaries before the
National Labor Relations Board, or any similar foreign labor relations
governmental bodies, or any current union representation questions
involving employees of Harveys or any of its Subsidiaries; and (iv) there
is no strike, slowdown, work stoppage or lockout, or, to the best knowledge
of Harveys, threat thereof, by or with respect to any employees of Harveys
or any of its Subsidiaries. Harveys and its Subsidiaries are not parties to
any collective bargaining agreements.
Section 3.18 Insurance. Harveys has provided to ▇▇▇▇▇▇'▇ accurate
and complete copies of all material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by Harveys or any of its Subsidiaries. All
such insurance policies are with reputable insurance carriers and provide
coverage as is reasonably prudent to cover normal risks incident to the
business of Harveys and its Subsidiaries and their respective properties
and assets.
Section 3.19 Nevada Takeover Statute. As of the date hereof and at
all times on or prior to the Closing, the provisions of Sections 78.378
through 78.3793 of the Nevada Revised Statutes (the "NRS") are, and shall
be, inapplicable to the transactions contemplated by this Agreement.
Section 3.20 Brokers. None of Harveys, any of its Subsidiaries,
or, to the best knowledge of Harveys, any of their respective officers,
directors or employees have employed any broker, financial advisor or
finder or incurred any liability for any brokerage fees, commissions or
finder's fees in connection with the transactions contemplated by this
Agreement, except that Harveys has retained Bear, ▇▇▇▇▇▇▇ & Co. Inc. and
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. as its financial advisors, the arrangements with
which have been disclosed to ▇▇▇▇▇▇'▇ prior to, and will not be modified in
a manner adverse to ▇▇▇▇▇▇'▇ subsequent to, the date of this Agreement.
Section 3.21 Transactions With Affiliates. Other than the
transactions contemplated by this Agreement and except to the extent
disclosed in the Harveys SEC Reports or as disclosed in Section 3.21 of the
Harveys Disclosure Schedule, from February 2, 1999 through the date of this
Agreement, there have been no transactions, agreements, arrangements or
understandings between Harveys or any of its Subsidiaries, on the one hand,
and Harveys' affiliates or other persons, on the other hand, that would be
required to be disclosed under Item 404 of Regulation S-K under the
Securities Act.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each Seller represents and warrants to ▇▇▇▇▇▇'▇, severally and not
jointly, as to itself that the statements contained in this Article IV are
true and correct except as set forth herein and in the disclosure schedule
delivered by Sellers' Representative to ▇▇▇▇▇▇'▇ on or before the date of
this Agreement (the "Seller Disclosure Schedule"). The Seller Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article IV and the disclosure in any
paragraph shall qualify other paragraphs in this Article IV.
Section 4.1 Organization of Certain Sellers. If such Seller is a
corporation, limited liability company or limited partnership, it is duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization.
Section 4.2 Authority. Such Seller has the requisite power and
authority to enter into this Agreement (or any Joinder hereto) and to
consummate the transactions to which it is a party that are contemplated by
this Agreement and to perform his or its obligations hereunder. This
Agreement (or any Joinder hereto) has been duly executed and delivered by
such Seller and, assuming this Agreement (or any Joinder hereto)
constitutes the valid and binding obligation of the other parties hereto,
constitutes the valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms, subject, as to
enforcement, to (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereinafter in effect affecting
creditors' rights generally and (ii) general principles of equity.
Section 4.3 No Conflict; Required Filings and Consents
(a) Neither the execution and delivery of this Agreement by such
Seller, nor the consummation by such Seller of the transactions to which it
is a party that are contemplated by this Agreement will, (i) if such Seller
is a corporation, limited liability company or limited partnership,
conflict with, or result in any violation or breach of, any provision of
the certificate of incorporation, limited liability or operating agreement
or partnership agreement of such Seller, (ii) result in any violation or
breach of, or constitute a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material
benefit) under, or require a consent or waiver under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which such Seller
is a party or by which such Seller or any of its properties or assets may
be bound, or (iii) subject to the governmental filings and other matters
referred to in Section 4.3(b) conflict with or violate any permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to such Seller or any of its
properties or assets, except in the case of clauses (ii) and (iii) for any
such breaches, conflicts, violations, defaults, terminations,
cancellations, accelerations, losses or failures to obtain any such consent
or waiver which would not materially impair or materially delay the
Closing.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to such Seller in connection with the execution
and delivery of this Agreement or the consummation by such Seller of the
transactions to which it is a party that are contemplated hereby, except
for (i) filings under the Exchange Act, the HSR Act or the Harveys Gaming
Laws or (ii) such consents, approvals, orders, authorizations,
registrations, declarations, or filings required by or with respect to
▇▇▇▇▇▇'▇ or Harveys or any of its Subsidiaries (including, without
limitation, under the HSR Act, the Harveys Gaming Laws and the ▇▇▇▇▇▇'▇
Gaming Laws).
Section 4.4 Brokers. Such Seller has not employed any broker,
financial advisor or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement, except that Harveys has retained Bear,
▇▇▇▇▇▇▇ & Co. Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. as its financial advisors.
Section 4.5 Harveys Shares. Such Seller holds of record and owns
beneficially the number of Harveys Shares set forth next to such Seller's
name in Section 3.2(c) of the Harveys Disclosure Schedule, free and clear
of all security interests, liens, claims, pledges, agreements, limitations
on such Seller's voting rights, charges or other encumbrances or
restrictions on transfer of any nature, other than those imposed by the
Securities Act, state securities laws or applicable gaming laws. Sellers
are not parties to any option, warrant, purchase right, or other contract
or commitment (other than this Agreement) obligating such Seller to sell,
transfer, or otherwise dispose of any capital stock of Harveys. Such Seller
is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of Harveys.
Section 4.6 All Harveys Capital Stock. Upon the Closing, ▇▇▇▇▇▇'▇
shall own all of such Seller's shares of capital stock of Harveys.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇'▇
▇▇▇▇▇▇'▇ represents and warrants to Harveys that the statements
contained in this Article V are true and correct except as set forth herein
and in the disclosure schedule delivered by ▇▇▇▇▇▇'▇ to Harveys on or
before the date of this Agreement (the "▇▇▇▇▇▇'▇ Disclosure Schedule"). The
▇▇▇▇▇▇'▇ Disclosure Schedule shall be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this Article V and the
disclosure in any paragraph shall qualify other paragraphs in this Article
V only to the extent that it is reasonable from a reading of such
disclosure that it also qualifies or applies to such other paragraphs.
Section 5.1 Organization. Each of ▇▇▇▇▇▇'▇ and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate,
partnership and limited liability company power and authority to carry on
its business as now being conducted and as proposed to be conducted prior
to the Closing. Each of ▇▇▇▇▇▇'▇ and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary,
except where the failure to be so qualified, licensed or in good standing
would not have a material adverse effect on the business, properties,
condition (financial or otherwise), results of operations or prospects of
▇▇▇▇▇▇'▇ and its Subsidiaries, taken as a whole (a "▇▇▇▇▇▇'▇ Material
Adverse Effect"). ▇▇▇▇▇▇'▇ has delivered to Harveys a true and correct copy
of the Certificate of Incorporation and Bylaws of ▇▇▇▇▇▇'▇, as amended to
the date of this Agreement.
Section 5.2 Authority; No Conflict; Required Filings and Consents.
(a) ▇▇▇▇▇▇'▇ has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement and the
consummation by ▇▇▇▇▇▇'▇ of the transactions to which it is a party that
are contemplated by this Agreement by ▇▇▇▇▇▇'▇ have been duly authorized by
all necessary corporate action on the part of ▇▇▇▇▇▇'▇. This Agreement has
been duly executed and delivered by ▇▇▇▇▇▇'▇ and constitutes the valid and
binding obligation of ▇▇▇▇▇▇'▇, enforceable against ▇▇▇▇▇▇'▇ in accordance
with its terms, subject, as to enforcement, to (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereinafter
in effect affecting creditors' rights generally and (ii) general principles
of equity.
(b) Other than as disclosed in Section 5.2(b) of the ▇▇▇▇▇▇'▇
Disclosure Schedule, the execution and delivery of this Agreement by
▇▇▇▇▇▇'▇ does not, and the consummation by ▇▇▇▇▇▇'▇ of the transactions to
which it is a party that are contemplated by this Agreement will not, (i)
conflict with, or result in any violation or breach of, any provision of
the Certificate of Incorporation or Bylaws of ▇▇▇▇▇▇'▇ or the comparable
charter or organizational documents of any of its Subsidiaries, (ii) result
in any violation or breach of, or constitute (with or without notice or
lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material
benefit) under, or require a consent or waiver under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which ▇▇▇▇▇▇'▇ or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) subject to the governmental
filings and other matters referred to in Section 5.2(c), conflict with or
violate any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to ▇▇▇▇▇▇'▇
or any of its Subsidiaries or any of its or their properties or assets,
except in the case of clauses (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which
(x) are not, individually or in the aggregate, reasonably likely to have a
▇▇▇▇▇▇'▇ Material Adverse Effect or (y) would not impair or delay the
Closing.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to ▇▇▇▇▇▇'▇ or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by ▇▇▇▇▇▇'▇ or
the consummation by ▇▇▇▇▇▇'▇ or such Subsidiaries of the transactions to
which it is or they are a party that are contemplated hereby or thereby,
except for (i) the filing of the pre-merger notification report under the
HSR Act, (ii) any approvals and filing of notices required under the
▇▇▇▇▇▇'▇ Gaming Laws (as defined in Section 5.6(b)) or the Harveys Gaming
Laws, (iii) such consents, approvals, orders, authorizations, permits,
filings, or registrations related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or serving
of alcoholic beverages, (iv) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable state securities laws, (v) such filings and consents as
may be required under any environmental health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered
by the Closing or the transactions contemplated by this Agreement, the
failure of which to make or obtain, respectively, would not be reasonably
likely to result in a ▇▇▇▇▇▇'▇ Material Averse Effect, and (vi) such other
filings, consents, approvals, orders, registrations and declarations as may
be required under the laws of any jurisdiction in which the Company or any
of its Subsidiaries conducts any business or owns any assets the failure of
which to make or obtain would not be reasonably likely to have a ▇▇▇▇▇▇'▇
Material Adverse Effect.
Section 5.3 Intentionally Omitted.
Section 5.4 Brokers. None of ▇▇▇▇▇▇'▇, any of its Subsidiaries, or
any of their respective officers, directors or employees have employed any
broker, financial advisor or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement, except that ▇▇▇▇▇▇'▇ has
retained Deutsche Banc Alex. ▇▇▇▇▇ Inc. and CIBC World Markets as financial
advisors, the arrangements with which have been disclosed in writing to
Harveys prior to the date hereof.
Section 5.5 Financing. ▇▇▇▇▇▇'▇ will have available on the Closing
Date sufficient funds to enable ▇▇▇▇▇▇'▇ to (i) pay the Total Transaction
Consideration (exclusive of the deduction set forth in clauses (xii) and
(xvii) of Section 1.3(b)), (ii) purchase any of Harveys' outstanding 105/8
% Senior Subordinated Notes due 2006 required to be purchased pursuant to
the change of control provisions contained in the instruments governing
such indebtedness, (iii) repay all outstanding amounts under the Second
Amended and Restated Credit Agreement, dated as of October 5, 1999, as
amended, among Harveys and certain of its Subsidiaries, as Borrowers, the
Lenders herein named, ▇▇▇▇▇ Fargo Bank, National Association, as Swingline
Lender, L/C Issuer and Agent Bank, Credit Lyonnais Los Angeles Branch, as
Syndication Co-Agent, Deutsche Bank Securities, as Documentation Agent,
Societe Generale and Bank One, N. A. as Co-Managing Agents and (iv)
replace, assume or substitute in full the Iowa West Letter of Credit.
Section 5.6 Compliance with Gaming Laws.
(a) Each of ▇▇▇▇▇▇'▇ and its Subsidiaries, and each of their
respective directors (but with respect to non-employee directors, only to
▇▇▇▇▇▇'▇' best knowledge), officers, persons performing management
functions similar to officers and, to ▇▇▇▇▇▇'▇' best knowledge, partners,
hold all permits, registrations, findings of suitability, licenses,
variances, exemptions, certificates of occupancy, orders and approvals of
all Governmental Entities under the ▇▇▇▇▇▇'▇ Gaming Laws necessary to
conduct the business and operations of ▇▇▇▇▇▇'▇ and each of its
Subsidiaries, each of which is in full force and effect in all material
respects, except for such permits, registrations, findings of suitability,
licenses, variances, exemptions, certificates of occupancy, orders and
approvals the failure of which to hold would not, individually or in the
aggregate, be reasonably likely to have a ▇▇▇▇▇▇'▇ Material Adverse Effect
(the "▇▇▇▇▇▇'▇ Permits") and no event has occurred which permits, or upon
the giving of notice or passage of time or both would permit, revocation,
non-renewal, modification, suspension, limitation or termination of any
▇▇▇▇▇▇'▇ Permit that currently is in effect the loss of which either
individually or in the aggregate would be reasonably likely to have a
▇▇▇▇▇▇'▇ Material Adverse Effect. Each of ▇▇▇▇▇▇'▇ and its Subsidiaries,
and each of their respective directors (but with respect to non-employee
directors, only to ▇▇▇▇▇▇'▇' best knowledge), officers, persons performing
management functions similar to officers and, to ▇▇▇▇▇▇'▇' best knowledge,
partners, are in compliance with the terms of the ▇▇▇▇▇▇'▇ Permits, except
for such failures to comply, which singly or in the aggregate, would not,
individually or in the aggregate, be reasonably likely to have a ▇▇▇▇▇▇'▇
Material Adverse Effect. Except as disclosed in the forms, reports, and
documents required to be filed by ▇▇▇▇▇▇'▇ with the SEC filed prior to the
date of this Agreement, the businesses of ▇▇▇▇▇▇'▇ and its Subsidiaries are
not being conducted in violation of any ▇▇▇▇▇▇'▇ Gaming Law, except for
possible violations which individually or in the aggregate do not and would
not be reasonably likely to have a ▇▇▇▇▇▇'▇ Material Adverse Effect.
▇▇▇▇▇▇'▇ has received no notice of any investigation or review by any
Governmental Entity under any ▇▇▇▇▇▇'▇ Gaming Law with respect to ▇▇▇▇▇▇'▇
or any of its Subsidiaries that is pending, and, to the best knowledge of
▇▇▇▇▇▇'▇, no investigation or review is threatened, nor has any
Governmental Entity indicated any intention to conduct the same, other than
those the outcome of which would not, individually or in the aggregate, be
reasonably likely to have a ▇▇▇▇▇▇'▇ Material Adverse Effect.
(b) The term "▇▇▇▇▇▇'▇ Gaming Laws" means any Federal, state,
local or foreign statute, ordinance, rule, regulation, permit, consent,
registration, finding of suitability, approval, license, judgment, order,
decree, injunction or other authorization, including any condition or
limitation placed thereon, governing or relating to the current or
contemplated casino and gaming activities and operations of ▇▇▇▇▇▇'▇ or any
of its Subsidiaries, including, without limitation, the Nevada Gaming
Control Act and the rules and regulations promulgated thereunder, the ▇▇▇▇▇
County, Nevada Code and the rules and regulations promulgated thereunder,
the ▇▇▇▇▇▇▇ County, Nevada Code and the rules and regulations promulgated
thereunder, the Louisiana Economic Development and Gaming Act and the rules
and regulations promulgated thereunder, the Louisiana Riverboat Economic
Gaming Control Act and the rules and regulations promulgated thereunder,
the New Jersey Casino Control Act and the rules and regulations promulgated
thereunder, and the rules and regulations promulgated thereunder, the
Illinois Riverboat Gambling Act and the rules and regulations promulgated
thereunder, the Mississippi Gaming Control Act and the rules and
regulations promulgated thereunder, the Missouri Riverboat Gambling Act and
the rules and regulations promulgated thereunder, the Indian Gaming
Regulatory Act of 1988 and the rules and regulations promulgated
thereunder, any state-tribal gaming compact and any applicable state gaming
law and any federal or state laws relating to currency transactions.
(c) Except as disclosed in Section 5.6(c) of the ▇▇▇▇▇▇'▇
Disclosure Schedule, neither ▇▇▇▇▇▇'▇ nor any of its Subsidiaries, nor any
director (but with respect to non-employee directors, only to ▇▇▇▇▇▇'▇'
best knowledge), officer, key employee or, to ▇▇▇▇▇▇'▇' best knowledge,
partners of ▇▇▇▇▇▇'▇ or any of its Subsidiaries has received any written
claim, demand, notice, complaint, court order or administrative order from
any Governmental Entity in the past three years under, or relating to any
violation or possible violation of any ▇▇▇▇▇▇'▇ Gaming Laws which did or
would be reasonably likely to result in fines or penalties of $50,000 or
more. To ▇▇▇▇▇▇'▇' best knowledge, there are no facts, which if known to
the regulators under the ▇▇▇▇▇▇'▇ Gaming Laws could reasonably be expected
to result in the revocation, limitation or suspension of a license, finding
of suitability, registration, permit or approval of it or them, or of any
officer, director, person performing management functions similar to an
officer or partner, under any ▇▇▇▇▇▇'▇ Gaming Laws. Neither ▇▇▇▇▇▇'▇ nor
any of its Subsidiaries has suffered a suspension or revocation of any
▇▇▇▇▇▇'▇ Permit held under the ▇▇▇▇▇▇'▇ Gaming Laws.
ARTICLE VI.
COVENANTS
Section 6.1 Conduct of Business of Harveys. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, subject to the limitations
set forth below, Harveys agrees as to itself and each of its Subsidiaries
(except to the extent that ▇▇▇▇▇▇'▇ shall otherwise consent in writing) to
carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
Taxes when due subject to good faith disputes over such debts or Taxes, to
pay or perform its other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with
past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and key
employees and preserve its relationships with customers, suppliers,
distributors, and others having business dealings with it. Harveys has
delivered concurrently herewith its operating budget (the "Budget").
Harveys shall make in all material respects the capital expenditures
reflected in the Budget. Without limiting the generality of the foregoing
and except as expressly contemplated by this Agreement, and except as
disclosed on Section 6.1 of the Harveys Disclosure Schedule, during the
period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Closing, without the written
consent of ▇▇▇▇▇▇'▇, Harveys shall not and shall not permit any of its
Subsidiaries to:
(i) adopt any amendment to its Articles of Incorporation or
Bylaws or comparable charter or organizational documents;
(ii) (A) issue, pledge or sell, or authorize the issuance,
pledge or sale of additional shares of capital stock of any class (other
than upon exercise of Options outstanding on the date of this Agreement),
or securities convertible into capital stock of any class, or any rights,
warrants or options to acquire any convertible securities or capital stock,
or any other securities in respect of, in lieu of, or in substitution for,
shares of Harveys Common Stock outstanding on the date hereof or (B) amend,
waive or otherwise modify any of the terms of any employee option, warrant
or stock option plan of Harveys or any of its Subsidiaries, including
without limitation, the Options or the Harveys Stock Option Plan, except
that Harveys may make such amendments, waivers and modifications that (i)
will not impair in any respect ▇▇▇▇▇▇'▇' ability to consummate the
transactions contemplated hereby and (ii) will not result in any cost,
liability or obligation to ▇▇▇▇▇▇'▇ or any of its Subsidiaries either
before or after Closing or any cost, liability or obligation to Harveys or
its Subsidiaries that adversely affects ▇▇▇▇▇▇'▇ or its Subsidiaries in any
respect whatsoever; provided, however, that Harveys shall be permitted to
grant options and issue stock or restricted stock to employees of Harveys
and its Subsidiaries, so long as such employees accept and agree to the
terms of that certain Stockholders Agreement, dated as of February 2, 1999,
by and among Harveys, Voteco, Colony III, and stockholders party thereto
or, in the case of any employee to be issued stock or restricted stock,
such employee executes a Joinder;
(iii) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other than
between any wholly-owned Subsidiary of Harveys and Harveys or any other
wholly-owned Subsidiary of Harveys;
(iv) split, combine, subdivide, reclassify or redeem,
purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any shares of its capital stock, or any of its other
securities;
(v) except as permitted by paragraph (ii) above, increase the
compensation or fringe benefits payable or to become payable to its
directors, officers or employees (whether from Harveys or any of its
Subsidiaries), or pay any benefit not required by any existing plan or
arrangement (including, without limitation, the granting of stock options,
stock appreciation rights, shares of restricted stock or performance units)
or grant any severance or termination pay to (except pursuant to existing
agreements or policies, which shall be interpreted and implemented in a
manner consistent with past practice), or enter into any employment or
severance agreement with, any director, officer or employee of Harveys or
any of its Subsidiaries or establish, adopt, enter into, or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, savings, welfare, deferred
compensation, employment, termination, severance or other employee benefit
plan, agreement, trust, fund, policy or arrangement for the benefit or
welfare of any directors, officers or current or former employees,
including any Benefit Arrangement, Pension Plan or Welfare Plan, except (i)
to the extent required by applicable law or regulation, (ii) pursuant to
any collective bargaining agreements or Employee Plan as in effect on the
date of this Agreement consistent with past practices or (iii) for salary
and other benefit increases, grants, payments or modifications in the
ordinary course of business consistent with past practice to employees
other than executive officers of Harveys, (iv) to extend the term of any
existing employment agreements to a date not later than the day following
the Closing Date on the same terms as such previous employment agreements,
or (v) to pay bonuses to employees not otherwise permitted pursuant to this
Section 6.1 so long as the Total Transaction Consideration is reduced in an
amount equal to the aggregate amount of such bonuses;
(vi) (A) sell, pledge, lease, dispose of, grant, encumber, or
otherwise authorize the sale, pledge, disposition, grant or encumbrance of
any of the properties or assets of Harveys or any of its Subsidiaries,
except for (1) sales of current assets in the ordinary course of business
and consistent with past practice in connection with Harveys' hotel, casino
and related operations, (2) sales of equipment and other non-current assets
in the ordinary course of business and consistent with past practice in
connection with Harveys' hotel, casino and related operations in an amount
not to exceed $250,000 individually or $1,000,000 in the aggregate or (3)
other sales which, individually do not exceed $50,000 or which, in the
aggregate, do not exceed $125,000 or (B) acquire (including, without
limitation, by merger, consolidation, lease or acquisition of stock or
assets) any corporation, partnership, other business organization or any
division thereof (or a substantial portion of the assets thereof) or any
other assets, except for (1) acquisitions of current assets in the ordinary
course of business and consistent with past practice in connection with
Harveys' hotel, casino and related operations, (2) acquisitions of
equipment and other non-current assets in the ordinary course of business
and consistent with past practice in connection with Harveys' hotel, casino
and related operations in an amount individually not to exceed $250,000 or
(3) other acquisitions which, individually, do not exceed $50,000 or which,
in the aggregate, do not exceed $125,000; provided, however, that neither
Harveys nor any of its Subsidiaries shall enter into any agreement with a
term of greater than one year which is not terminable within 30 days
without cost (other than a de minimis cost) to Harveys or such Subsidiary;
(vii) (A) incur, assume or pre-pay any Indebtedness, except
that Harveys and its Subsidiaries may incur or pre-pay debt in the ordinary
course of business under existing lines of credit, (B) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except
in the ordinary course of business consistent with past practice, or (C)
except as contractually required to do so as of the date of this Agreement,
make any loans, advances or capital contributions to, or investments in,
any other person (including advances to employees) except in the ordinary
course of business consistent with past practice and except for loans,
advances, capital contributions or investments between any wholly-owned
Subsidiary of Harveys and Harveys or another wholly-owned Subsidiary of
Harveys; provided, however, that neither Harveys nor any of its
Subsidiaries shall enter into any agreement with a term of greater than one
year which is not terminable within 30 days without cost (other than a de
minimis cost) to Harveys or such Subsidiary;
(viii) authorize, recommend, propose or announce an intention
to adopt a plan of complete or partial liquidation or dissolution of
Harveys or any of its Subsidiaries;
(ix) make or rescind any material express or deemed election
relating to Taxes, settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or except as may be required by applicable law, make any
change to any of its material methods of reporting income or deductions for
Federal income tax purposes from those employed in the preparation of its
Federal income tax return for the taxable year ending November 30, 1999,
provided, however, that ▇▇▇▇▇▇'▇ shall not unreasonably withhold its
consent to any such matter that would preclude Harveys from timely filing
its Tax Returns or timely paying its Taxes;
(x) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted, unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
in the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the consolidated financial
statements of Harveys;
(xi) other than in the ordinary course of business and
consistent with past practice, waive any rights of substantial value or
make any payment, direct or indirect, of any material liability (other than
debt subject to paragraph (vii) above) of Harveys or of any of its
Subsidiaries before the same comes due in accordance with its terms;
(xii) fail to maintain its existing insurance coverage of all
types in effect (however, in the event any such coverage shall be
terminated or lapse, to the extent available at reasonable cost, Harveys
may procure substantially similar substitute insurance policies which in
all material respects are in at least such amounts and against such risks
as are currently covered by such policies);
(xiii) enter into any collective bargaining agreement or any
successor collective bargaining agreement;
(xiv) make any change with respect to accounting policies or
procedures, unless required by GAAP or the SEC, other than reasonable and
usual actions in the ordinary course of business and consistent with past
practice;
(xv) modify, amend or terminate any of the Harveys Material
Contracts or waive, release or assign any material rights or claims, except
in the ordinary course of business and consistent with past practice;
(xvi) take, or agree to commit to take, any action that would
make any representation or warranty of Harveys contained herein inaccurate
in any respect at, or as of any time prior to, the Closing so as to cause
the conditions to ▇▇▇▇▇▇'▇ to consummate the transactions contemplated
herein not to be satisfied;
(xvii) except for employment arrangements permitted by this
Agreement, engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of Harveys'
affiliates (other than Harveys' wholly-owned Subsidiaries) which involves
the transfer of consideration or has a financial impact on Harveys, other
than pursuant to such agreements, arrangements, or understandings existing
on the date of this Agreement;
(xviii) close, shut down, or otherwise eliminate any of the
casinos owned or operated by Harveys or any of its Subsidiaries, except for
such closures, shutdowns or eliminations which are (i) required by action,
order, writ, injunction, judgment or decree or otherwise required by law,
or (ii) due to acts of God or other force majeure events;
(xix) substantially change the manner in which it administers
the Welfare Plans or make any changes that would materially impact the cost
of administration of the Welfare Plans; or
(xx) enter into an agreement, contract, commitment or
arrangement to do any of the foregoing, or to authorize or announce an
intention to do any of the foregoing.
Section 6.2 Cooperation; Notice; Cure. Subject to compliance with
applicable law (including, without limitation, antitrust laws and Harveys
Gaming Laws), from the date hereof until the Closing, each of ▇▇▇▇▇▇'▇ and
Harveys shall confer on a regular and frequent basis with one or more
representatives of the other party to report on the general status of
ongoing operations. Each of ▇▇▇▇▇▇'▇ and Harveys shall promptly notify the
other in writing of, and will use all commercially reasonable efforts to
cure before the Closing Date, any event, transaction or circumstance, as
soon as practical after it becomes known to such party, that causes or will
cause any covenant or agreement of ▇▇▇▇▇▇'▇ or Harveys under this Agreement
to be breached in any material respect or that renders or will render
untrue in any material respect any representation or warranty of ▇▇▇▇▇▇'▇
or Harveys contained in this Agreement. Nothing contained in Section 6.1
above shall prevent Harveys from giving such notice, using such efforts or
taking any action to cure or curing any such event, transaction or
circumstance. No notice given pursuant to this paragraph shall have any
effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.
Section 6.3 No Solicitation.
(a) Prior to the earlier of the Closing and the termination of
this Agreement in accordance with Section 8.1, Harveys shall not, directly
or indirectly, through any officer, director, employee, financial advisor,
representative or agent of such party (i) solicit, initiate, or encourage
any inquiries or proposals that constitute, or could reasonably be expected
to lead to, an Acquisition Proposal, (ii) engage in negotiations or
discussions with any person (or group of persons) other than ▇▇▇▇▇▇'▇ or
its respective affiliates (a "Third Party") concerning, or provide any
non-public information to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to or recommend any Acquisition Proposal.
"Acquisition Proposal" means any proposal or offer from any person relating
to any direct or indirect acquisition or purchase of assets (including
capital stock) of Harveys or any of its Subsidiaries comprising 25% or more
of Harveys' consolidated assets (by book or by fair market value) or of
over 25% of any class of equity securities of Harveys or any of its
material Subsidiaries or (b) any tender offer or exchange offer that if
consummated would result in any person beneficially owning 25% or more of
any class of equity securities of Harveys or any of its material
Subsidiaries, or (c) any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Harveys (or any of its material Subsidiaries) and a third party in each
case other than the transactions contemplated by this Agreement.
(b) Harveys shall notify ▇▇▇▇▇▇'▇ immediately after receipt by
Harveys (or any of their advisors) of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition
Proposal or for access to the properties, books or records of such party by
any person or entity that informs such party that it is considering making,
or has made, an Acquisition Proposal. Such notice shall be made orally and
in writing and shall indicate the identity of the offeror and the terms and
conditions of such proposal, inquiry or contact.
Section 6.4 Employee Matters.
(a) Harveys shall promptly pay or provide when due all
compensation and benefits earned prior to the Closing Date as provided
pursuant to the terms of any Employee Plans in existence as of the date
hereof and as otherwise set forth in Section 3.14(b) of the Harveys
Disclosure Schedule for all employees (and former employees) and directors
(and former directors) of Harveys. ▇▇▇▇▇▇'▇ and Harveys agree that Harveys
shall pay promptly or provide when due all compensation and benefits
required to be paid pursuant to the terms of any agreement with any
employee, former employee, director or former director in effect as of the
Closing.
(b) (i) Harveys shall use its reasonable best efforts prior to
the Closing to obtain from each of the Harveys employees that would have
amounts payable to them, or subject to accelerated payments or vesting,
under all plans and agreements which would constitute "parachute payments"
within the meaning of Section 280G of the Code an agreement in writing to
limit amounts payable to them to those amounts that would be fully
deductible pursuant to Section 280G of the Code unless the stockholders of
Harveys approve such amounts pursuant to Section 280G(B)(5)(B) of the Code
(the "Waivers");
(ii) Following execution of the Waivers, Harveys shall use
its reasonable best efforts to obtain written consent pursuant to Section
280G(b)(5)(B) of the Code to the amounts waived pursuant to the Waivers
from stockholders of Harveys owning at least 75% of the outstanding voting
stock of Harveys. Such consent shall by its terms become effective on the
20th calendar day following mailing of the Information Statement (or such
later time as may be required by the Exchange Act).
Section 6.5 Written Consent and Information Statement. Following
the date hereof, Harveys shall use its reasonable efforts to obtain the
written consent of at least 75% of the voting power of Harveys approving
the compensation arrangements with certain of Harveys' employees, including
"excess parachute payments" pursuant to Section 280G of the Code. Harveys
shall, as promptly as practicable after the execution of this Agreement,
prepare and file with the SEC the Information Statement, and any amendments
or supplements thereto, to be mailed to all holders of Harveys Class A.
Section 6.6 Access to Information.
(a) Upon reasonable notice, subject to applicable law, including
without limitation, antitrust laws and Harveys Gaming Laws, Harveys shall
(and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of ▇▇▇▇▇▇'▇, reasonable
access, during normal business hours during the period from the date hereof
to the Closing, to all its personnel, properties, books, contracts,
commitments and records and, during such period, Harveys shall, and shall
cause its Subsidiaries to, furnish promptly to the other (i) copies of
monthly financial reports and development reports, (ii) a copy of each
report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws and (iii) all other information concerning its business,
properties and personnel as ▇▇▇▇▇▇'▇ may reasonably request. ▇▇▇▇▇▇'▇ will
hold any such information furnished to it by Harveys, which is nonpublic in
confidence in accordance with the Confidentiality Agreement dated November
23, 1999, between ▇▇▇▇▇▇'▇ and Colony Capital LLC, as extended by the
letter agreement dated February 12, 2001 (the "Confidentiality Agreement").
No information or knowledge obtained in any investigation pursuant to this
Section 6.6 shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations
of the parties to consummate the transactions contemplated herein.
(b) For purposes of complying with Section 1.3(d), the Sellers'
Representative and its officers, directors, managers, member, partners,
employees, financial advisors, legal advisors, accountants, representatives
and agents shall have reasonable access, during normal business hours
during the period of any dispute of the amount of Total Transaction
Consideration in Section 1.3(d) following the Closing, to Harveys' and its
Subsidiaries' applicable personnel, properties, books and records and
Harveys shall, and shall cause its Subsidiaries to, promptly furnish to the
Sellers' Representative and its officers, managers, members, partners,
employees, financial advisors, legal advisors, accountants, other
representatives and agents all information as may be reasonably required
for the purposes specified in Section 1.3(d).
Section 6.7 Governmental Approvals.
(a) The parties hereto shall cooperate with each other and use
their reasonable best efforts (and, with respect to the Harveys Gaming
Laws, the ▇▇▇▇▇▇'▇ Gaming Laws and antitrust laws, if applicable, shall use
their reasonable best efforts to cause their respective directors and
officers to do so) to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings,
to obtain as promptly as practicable all permits, registrations, licenses,
findings of suitability, consents, variances, exemptions, orders, approvals
and authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement, including, without limitation, all filings required under the
HSR Act, the Harveys Gaming Laws and the ▇▇▇▇▇▇'▇ Gaming Laws
("Governmental Approvals"), and to comply (and, with respect to the Harveys
Gaming Laws and the ▇▇▇▇▇▇'▇ Gaming Laws, to cause their respective
directors and officers to so comply) with the terms and conditions of all
such Governmental Approvals. The parties hereto and their respective
officers, directors and affiliates shall use their reasonable best efforts
to file within 30 days after the date hereof, and in all events shall file
within 60 days after the date hereof, all required initial applications and
documents in connection with obtaining the Governmental Approvals
(including without limitation under applicable Harveys Gaming Laws and
▇▇▇▇▇▇'▇ Gaming Laws) and shall act reasonably and promptly thereafter in
responding to additional requests in connection therewith. The parties
hereto acknowledge that this Agreement is subject to the review and
approval of the Iowa Racing and Gaming Commission. Harveys and ▇▇▇▇▇▇'▇
shall have the right to review in advance, and to the extent practicable
each will consult the other on, in each case subject to applicable laws
relating to the exchange of information (including, without limitation,
antitrust laws and Harveys Gaming Laws), all the information relating to
Harveys or the ▇▇▇▇▇▇'▇, as the case may be, and any of their respective
Subsidiaries, directors, officers and stockholders which appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by
this Agreement. Without limiting the foregoing, each of Harveys and
▇▇▇▇▇▇'▇ (the "Notifying Party") will notify the other promptly of the
receipt of comments or requests from Governmental Entities relating to
Governmental Approvals, and will supply the other with copies of all
correspondence between the Notifying Party or any of its representatives
and Governmental Entities with respect to Governmental Approvals; provided,
however, that it shall not be required to supply the other party with
copies of all communication relating to the personal applications of
individual applicants except for evidence of filing.
(b) Harveys and ▇▇▇▇▇▇'▇ shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by
this Agreement which causes such party to reasonably believe that there is
a reasonable likelihood that such consent or approval from such
Governmental Entity will not be obtained or that the receipt of any such
approval will be materially delayed. Harveys and ▇▇▇▇▇▇'▇ each shall use
its reasonable best efforts to take, or cause to be taken, all actions
reasonably necessary to defend any lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions
contemplated by this Agreement, seeking to prevent the entry by any
Governmental Entity of any decree, injunction or other order challenging
this Agreement or the consummation of the transactions contemplated by this
Agreement, appealing as promptly as possible any such decree, injunction or
other order and having any such decree, injunction or other order vacated
or reversed.
(c) Notwithstanding the foregoing or any other provision of this
Agreement, ▇▇▇▇▇▇'▇ shall have no obligation or affirmative duty under this
Section 6.7 to dispose of any of its assets or properties, disassociate
itself from any person or entity, or agree to do any of the foregoing at
any time in the future, in connection with seeking any Governmental
Approval.
Section 6.8 Publicity. ▇▇▇▇▇▇'▇ and Harveys shall agree on the
form and content of the initial press release regarding the transactions
contemplated hereby and thereafter shall consult with each other before
issuing, provide each other the opportunity to review and comment upon and
use all reasonable efforts to agree upon, any press release or other public
statement with respect to any of the transactions contemplated hereby and
shall not issue any such press release or make any such public statement
prior to such consultation and prior to considering in good faith any such
comments, except as may be required by applicable law.
Section 6.9 Indemnification.
(a) From and after the Closing, ▇▇▇▇▇▇'▇ agrees that it will, and
will cause Harveys to, indemnify and hold harmless each present and former
director and officer of Harveys (the "Indemnified Parties"), against any
costs or expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities or amounts paid in settlement incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of or
pertaining to matters existing or occurring at or prior to the Closing,
whether asserted or claimed prior to, at or after the Closing, to the
fullest extent that Harveys would have been permitted under Nevada law, its
Articles of Incorporation, its Bylaws and any indemnification agreements or
arrangements in effect on the date hereof to indemnify such Indemnified
Party.
(b) For a period of six years after the Closing, ▇▇▇▇▇▇'▇ shall
maintain or shall cause Harveys to maintain in effect a directors' and
officers' liability insurance policy covering those persons who are
currently covered by Harveys' directors' and officers' liability insurance
policy (copies of which have been heretofore delivered by Harveys to
▇▇▇▇▇▇'▇) with coverage in amount and scope at least as favorable as
Harveys' existing coverage; provided that in no event shall ▇▇▇▇▇▇'▇ or
Harveys be required to expend in the aggregate annually in excess of 200%
of the annual premium currently paid by Harveys for such coverage; and if
such annual premium would at any time exceed 200% of the such amount, then
▇▇▇▇▇▇'▇ or Harveys shall maintain insurance policies which provide the
maximum and best coverage available at an annual premium equal to 200% of
such amount.
(c) In the event that Harveys or ▇▇▇▇▇▇'▇ or any of its
respective, successors or assigns (i) consolidates with or merges into any
other person and is not the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in
each such case, proper provision will be made so that the successors and
assigns of Harveys or ▇▇▇▇▇▇'▇ will assume the obligations thereof set
forth in this Section 6.9.
(d) The provisions of this Section 6.9 are intended to be an
addition to the rights otherwise available to the current officers and
directors of Harveys by law, charter, statute, bylaw or agreement, and
shall operate for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives.
Section 6.10 Stockholder Litigation. Harveys shall give ▇▇▇▇▇▇'▇
the reasonable opportunity to participate in the defense of any stockholder
litigation against Harveys and its directors relating to the transactions
contemplated hereby.
Section 6.11 Further Assurances and Actions.
(a) Subject to the terms and conditions herein, each of the
parties hereto agrees to use its reasonable best efforts to take, or cause
to be taken, alm appropriate action, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
by this Agreement, including, without limitation, (i) using their
respective reasonable best efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of
Governmental Entities and parties to contracts with each party hereto as
are necessary for consummation of the transactions contemplated by this
Agreement, and (ii) to fulfill all conditions precedent applicable to such
party pursuant to this Agreement.
(b) In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement or to vest ▇▇▇▇▇▇'▇
with full title to all properties, assets, rights, approvals, immunities,
franchises of any of the parties to the Closing, the proper officers and/or
directors of ▇▇▇▇▇▇'▇ and the particular Seller shall take all such
necessary action and such individual Seller shall bear the cost of any such
necessary action; provided, that if such action is necessary due to events
or circumstances particular to ▇▇▇▇▇▇'▇, ▇▇▇▇▇▇'▇ shall bear the cost of
such action.
Section 6.12 Transfer Taxes. All transfer, documentary, sales,
use, stamp, registration and other such Taxes (including all applicable
real estate transfer or gains Taxes) and related fees (including any
penalties, interest and additions to Tax) incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
Harveys stockholders, and Harveys, the Harveys stockholders and ▇▇▇▇▇▇'▇
shall cooperate in preparing and filing all Tax Returns and other
documentation on a timely basis as may be required to comply with the
provisions of such Tax laws.
Section 6.13 Harveys Stockholders. Voteco and Colony III shall
exercise their rights pursuant to Section 2.6 of the Stockholders Agreement
and shall use their reasonable best efforts to cause the other holders of
Harveys Common Stock to execute a joinder hereto in substantially the form
of Exhibit 6.13 hereto (a "Joinder") and each of such other holders of
Harveys Common Stock shall have executed such a Joinder; provided however,
that the foregoing shall be deemed to be satisfied if Harveys, concurrently
with the Closing, shall have the right to repurchase the Shares of any such
stockholder for the same price per share as other holders of Harveys Common
Stock; provided further, that in such event, the amount of Total
Transaction Consideration shall be reduced by the amount payable to such
stockholders upon Harveys' exercise of such right.
ARTICLE VII.
CONDITIONS TO CLOSING
Section 7.1 Conditions to Each Party's Obligation to Effect the
Closing. The respective obligations of each party to this Agreement to
effect the Closing shall be subject to the satisfaction or waiver by each
party prior to the Closing of the following conditions:
(a) No Injunctions. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any order, executive order, stay,
decree, judgment or injunction or statute, rule, regulation which is in
effect and which has the effect of making the Closing illegal or otherwise
prohibiting consummation of the Closing.
(b) Governmental Approvals. All Governmental Approvals required
to consummate the transactions contemplated hereby shall have been obtained
(including, without limitation, under the Harveys Gaming Laws and the
▇▇▇▇▇▇'▇ Gaming Laws), all such approvals shall remain in full force and
effect, all statutory waiting periods in respect thereof (including,
without limitation, under the HSR Act) shall have expired and no such
approval or expiration shall contain any conditions, limitations or
restrictions, except, in each case where the failure of such to be the case
would not be reasonably likely to have a Harveys Material Adverse Effect or
a ▇▇▇▇▇▇'▇ Material Adverse Effect or require ▇▇▇▇▇▇'▇ to take any of the
actions listed in Section 6.7(c).
Section 7.2 Additional Conditions to Obligations of Harveys. The
obligation of Harveys to effect the Closing is subject to the satisfaction
of each of the following conditions prior to the Closing, any of which may
be waived in writing exclusively by Harveys:
(a) Representations and Warranties. The representations and
warranties of ▇▇▇▇▇▇'▇ set forth in this Agreement shall be true and
correct in all material respects (except for those qualified as to
materiality or a ▇▇▇▇▇▇'▇ Material Adverse Effect, which shall be true and
correct) as of the date of this Agreement and, except to the extent such
representations speak as of an earlier date, as of the Closing Date as
though made on and as of the Closing Date, except for changes contemplated
by this Agreement. Harveys shall have received a certificate signed on
behalf of ▇▇▇▇▇▇'▇ by the chief executive officer and the chief financial
officer of ▇▇▇▇▇▇'▇ to such effect.
(b) Performance of Obligations of ▇▇▇▇▇▇'▇. ▇▇▇▇▇▇'▇ shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Harveys
shall have received a certificate signed on behalf of ▇▇▇▇▇▇'▇ by the chief
executive officer and the chief financial officer of ▇▇▇▇▇▇'▇ to such
effect.
(c) Third-Party Consents. ▇▇▇▇▇▇'▇ shall have received all
third-party consents and approvals required to be obtained by ▇▇▇▇▇▇'▇ in
connection with the transactions contemplated hereby under any contract to
which ▇▇▇▇▇▇'▇ or any of its Subsidiaries may be a party, except for such
third-party consents and approvals as to which the failure to obtain,
individually or in the aggregate, would not reasonably be expected to
impair or delay the consummation of the Closing.
(d) Letter of Credit. ▇▇▇▇▇▇'▇ shall have replaced, assumed or
substituted in full the Iowa West Letter of Credit.
Section 7.3 Additional Conditions to Obligations of ▇▇▇▇▇▇'▇. The
obligations of ▇▇▇▇▇▇'▇ to effect the Closing are subject to the
satisfaction of each of the following conditions prior to the Closing, any
of which may be waived in writing exclusively by ▇▇▇▇▇▇'▇:
(a) Representations and Warranties. The representations and
warranties of Harveys set forth in this Agreement shall be true and correct
in all material respects (except for those qualified as to materially or a
Harveys Material Adverse Effect, which shall be true and correct) as of the
date of this Agreement and, except to the extent such representations and
warranties speak as of an earlier date, as of the Closing Date as though
made on and as of the Closing Date, except for changes contemplated or
permitted by this Agreement including Section 6.1 hereof; provided that,
with respect to the truth and correctness of such representations and
warranties as of the Closing Date, with respect to the use of the term
"Harveys Material Adverse Effect" in such representations and warranties
the following, both individually and in the aggregate, shall be excluded
from the definition of "Harveys Material Adverse Effect" and from any
determination as to whether any Harveys Material Adverse Effect has
occurred or may occur: (i) the fact, in and of itself, that Harveys fails
to meet projections (whether by Harveys or independent third parties) of
earnings, revenues or other financial performance measures, (ii) the
effects of changes that are applicable to the gaming industry or to the
financial, banking, currency or capital markets in general, in and of
themselves, and (iii) any reduction, in and of itself, in historic or
prospective revenues, net income or EBITDA of Harveys C.C. Management
Company, Inc. or Harveys Wagon Wheel Hotel/Casino. ▇▇▇▇▇▇'▇ shall have
received a certificate signed on behalf of Harveys by the chief executive
officer and the chief financial officer of Harveys to such effect.
(b) Performance of Obligations of Harveys and Sellers. Harveys
and Sellers shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and ▇▇▇▇▇▇'▇ shall have received a certificate signed on
behalf of Harveys by the chief executive officer and the chief financial
officer of Harveys to such effect.
(c) No Material Adverse Change. Between the date of this
Agreement and the Closing, there shall have been no material adverse change
in the business, properties, assets, liabilities, operations, condition
(financial or otherwise) or prospects of Harveys and its Subsidiaries,
taken as a whole, or of any of the three separate businesses operated as
the Harveys Resort & Casino - Lake Tahoe, Harveys Casino/Hotel Council
Bluffs and Bluffs Run Casino; provided, however, that the following, both
individually and in the aggregate, shall be excluded from any determination
as to whether any material adverse change has occurred or may occur: (i)
the fact, in and of itself, that Harveys fails to meet projections (whether
by Harveys or independent third parties) of earnings, revenues or other
financial performance measures, (ii) the effects of changes that are
applicable to the gaming industry or to the financial, banking, currency or
capital markets in general, in and of themselves and (iii) any reduction,
in and of itself, in historic or prospective revenues, net income or EBITDA
of Harveys C.C. Management Company, Inc. or Harveys Wagon Wheel
Hotel/Casino.
(d) Third-Party Consents. ▇▇▇▇▇▇'▇ and Harveys shall have
received all third-party consents and approvals required to be obtained by
▇▇▇▇▇▇'▇ or Harveys in connection with the transactions contemplated hereby
(including any consents required for the renaming or rebranding of any
Harveys or its subsidiaries' gaming operations), under any contract to
which ▇▇▇▇▇▇'▇ or Harveys (or any of their respective Subsidiaries) may be
a party, other than consents related to Indebtedness listed on Section
3.3(b) of the Harveys Disclosure Schedule, consents related solely to
▇▇▇▇▇▇'▇ agreements and arrangements that are unrelated to Harveys, and
except for such third-party consents and approvals as to which the failure
to obtain, either individually or in the aggregate, would not be reasonably
likely to result in (i) a material adverse change in the business,
properties, assets, liabilities, operations, condition (financial or
otherwise) or prospects of Harveys and its Subsidiaries, taken as a whole
or (ii) a ▇▇▇▇▇▇'▇ Material Adverse Effect, as the case may be.
(e) No Disposition Required. No disposition of any Harveys
Subsidiary or operation thereof prior to or upon consummation of the
Closing shall be required as a condition of any Governmental Approval.
(f) Advisory Committee Approval. The Colony III Advisory
Committee shall have approved the sale of Colony III's shares of Harveys
Common Stock to ▇▇▇▇▇▇'▇.
(g) Tax Withholding Forms and Certificates. ▇▇▇▇▇▇'▇ shall have
received a statement (in form and substance reasonably satisfactory to
▇▇▇▇▇▇'▇) that satisfies ▇▇▇▇▇▇'▇' obligations under Treasury Regulation
Section 1.1445-2(b)(2), state tax clearance certificates or any other
document(s) which may be required by any taxing authority in order to
relieve ▇▇▇▇▇▇'▇ of any obligation to withhold any portion of the payments
to the Harveys stockholders pursuant to this Agreement.
ARTICLE VIII.
TERMINATION AND AMENDMENT
Section 8.1 Termination. This Agreement may be terminated at any
time prior to the Closing (with respect to Sections 8.1(b) and 8.1(c), by
written notice by the terminating party to the other party), whether before
or after approval of the matters presented in connection with the Closing
by the stockholders of Harveys:
(a) by mutual written consent of Harveys and ▇▇▇▇▇▇'▇; or
(b) by either ▇▇▇▇▇▇'▇ or Harveys if the transactions
contemplated hereby shall not have been consummated on or prior to December
31, 2001 (provided that the right to terminate this Agreement under this
Section 8.1(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of or resulted in
the failure of the Closing to occur on or before such date); or
(c) by either ▇▇▇▇▇▇'▇ or Harveys if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final
action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Closing and the transactions
contemplated hereby.
Section 8.2 Effect of Termination. In the event of termination of
this Agreement as provided in Section 8.1, this Agreement shall immediately
become void and there shall be no liability or obligation on the part of
▇▇▇▇▇▇'▇ or Harveys, or their respective officers, directors, stockholders
or Affiliates, except as set forth in Sections 8.3, 9.2, 9.3, 9.5 and 9.6
and except that such termination shall not limit liability for a willful
breach of this Agreement; provided that, the provisions of Sections 8.3,
9.2, 9.3, 9.5 and 9.6 of this Agreement and the Confidentiality Agreement
shall remain in full force and effect and survive any termination of this
Agreement.
Section 8.3 Fees and Expenses.
(a) Except as set forth in Section 8.3(b), all fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
whether or not the Closing is consummated.
(b) If (provided that Harveys is not then in material breach of
its obligations under this Agreement) ▇▇▇▇▇▇'▇ fails to obtain any permits,
registrations, licenses, findings of suitability, consents, variances,
exemptions, orders, approvals or authorizations which are necessary
pursuant to Harveys Gaming Laws or the ▇▇▇▇▇▇'▇ Gaming Laws to consummate
the transactions contemplated by this Agreement and this Agreement is
thereafter terminated pursuant to Section 8.1(b) solely due to such
failure, then ▇▇▇▇▇▇'▇ shall promptly, but in no event later than two
business days following written demand therefor, pay to Harveys by wire
transfer an amount equal to $5.0 million, which amount shall be inclusive
of any fees or expenses incurred by Harveys and shall represent Harveys'
sole and exclusive remedy against ▇▇▇▇▇▇'▇ and any of its Subsidiaries and
their respective directors, officers, employees, agents, advisors or other
representatives with respect to the occurrences giving rise to such
payment.
Section 8.4 Sellers' Representative. Sellers hereby appoint Colony
III to act as representative for all Sellers (the "Sellers'
Representative"). Colony III shall act on behalf of and shall bind all
Sellers as their representative in all matters related to this Agreement
and the consummation of the transactions contemplated hereby, including,
without limitation, in any amendment or supplement hereto.
Section 8.5 Amendment. This Agreement may be amended by ▇▇▇▇▇▇'▇,
Harveys and the Sellers' Representative. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of ▇▇▇▇▇▇'▇,
Harveys and the Sellers' Representative.
Section 8.6 Extension; Waiver. At any time prior to the Closing,
▇▇▇▇▇▇'▇, Harveys and the Sellers' Representative, by action taken or
authorized by their respective Boards of Directors (in the case of the
Sellers' Representative, or comparable governing body, may, to the extent
legally allowed (i) extend the time for or waive the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any
of the agreements or conditions contained here. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party (or, in
the case of Sellers, by the Sellers' Representative).
ARTICLE IX.
MISCELLANEOUS
Section 9.1 Survival of Certain Matters Following Termination or
Closing. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Closing, except for the agreements contained in Sections 1.3(d)
and (e), 6.6(b), 6.9 and 6.11(b) and Article IX. The Confidentiality
Agreement shall survive the execution and delivery of this Agreement. At
the Closing, the rights and obligations under the Confidentiality Agreement
of the parties thereto shall terminate.
Section 9.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(a) if to Harveys, to
Harveys Casino Resorts
▇▇▇▇▇▇▇ ▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Colony Capital, LLC
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▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
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Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Sellers, to
Colony Investors III, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to ▇▇▇▇▇▇'▇, to
▇▇▇▇▇▇'▇ Entertainment, Inc.
▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.3 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement
they shall be deemed to be followed by the words "without limitation." The
phrase "made available" in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available. The phrases "the date of this
Agreement", "the date hereof," and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to April 24, 2001. As
used in this Agreement, "best knowledge" means with respect to a person
other than an individual, the knowledge of any executive officer, director
or key employee of such person. Any such individual will be deemed to have
"knowledge" of a particular fact or other matter if: (i) such individual is
actually aware of such fact or other matter or (ii) such individual could
be expected to discover or otherwise become aware of such fact or other
matter in the ordinary course of performing such individual's employment
duties in a prudent manner.
Section 9.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement.
Section 9.5 Entire Agreement; No Third Party Beneficiaries. This
Agreement and all documents and instruments referred to herein (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof, and (b) except as provided in Section 6.9 are
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder; provided that the Confidentiality Agreement
shall remain in full force and effect until the Closing. Each party hereto
agrees that, except for the representations and warranties contained in
this Agreement and the respective Disclosure Schedules, none of ▇▇▇▇▇▇'▇ or
Harveys makes any other representations or warranties, and each hereby
disclaims any other representations and warranties made by itself or any of
its officers, directors, employees, agents, financial and legal advisors or
other representatives, with respect to the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the
delivery or disclosure to any of them or their respective representatives
of any documentation or other information with respect to any one or more
of the foregoing.
Section 9.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws applicable to contracts made and to
be performed in of the State of Nevada, without regard to any applicable
conflicts of law.
Section 9.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of ▇▇▇▇▇▇'▇, Harveys and the Sellers' Representative.
Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be signed by their respective duly authorized officers as of the date first
written above.
▇▇▇▇▇▇'▇ ENTERTAINMENT, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Chairman of the Board and CEO
HARVEYS CASINO RESORTS
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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By: ▇▇▇▇ ▇▇▇▇▇▇▇
Its: Executive Vice President and
Office of the Chief Executive
Officer
COLONY HCR VOTECO, LLC
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Its: Manager
COLONY CAPITAL III, L.P.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Its: President
