-------------------
STOCKHOLDERS AGREEMENT
BY AND AMONG:
HARD ROCK HOTEL, INC., A NEVADA CORPORATION,
XXXXXX'X WAGON WHEEL, INC., A NEVADA CORPORATION,
AND
LILY POND INVESTMENTS, INC., A NEVADA CORPORATION,
WHOLLY OWNED BY XXXXX XXXXXX
-------------------
TABLE OF CONTENTS
TABLE OF CONTENTS................................................... i-iii
RECITALS............................................................ 1
ARTICLE I DEFINITIONS........................................... 1
1.1 DEFINED TERMS......................................... 1
1.1.1 ADDITIONAL CAPITAL CONTRIBUTIONS............... 1
1.1.2 AFFILIATE OR AFFILIATED ENTITY................. 2
1.1.3 ANNUAL PLAN AND ANNUAL OPERATING BUDGET........ 2
1.1.4 ARTICLES OF INCORPORATION...................... 2
1.1.5 ASSIGNMENT AND ASSUMPTION AGREEMENT............ 2
1.1.6 BYLAWS......................................... 2
1.1.7 CLASS A STOCK.................................. 2
1.1.8 CLASS B STOCK.................................. 2
1.1.9 COMPUTATION DATE............................... 2
1.1.10 CONTRIBUTION LOAN.............................. 2
1.1.11 DIRECTORS AND BOARD OF DIRECTORS............... 2
1.1.12 EFFECTIVE DATE................................. 2
1.1.13 EVENT OF DEFAULT, DEFAULTING STOCKHOLDER, AND
NON-DEFAULTING STOCKHOLDER..................... 3
1.1.14 XXXXXX'X GUARANTEE............................ 3
1.1.15 IMPROVEMENTS.................................. 3
1.1.16 INDEPENDENT DIRECTOR.......................... 3
1.1.17 LICENSING AGREEMENT........................... 3
1.1.18 LOAN OR LOANS................................. 3
1.1.19 MANAGEMENT AGREEMENT.......................... 3
1.1.20 NEVADA GAMING AUTHORITIES..................... 3
1.1.21 PERCENTAGE INTEREST........................... 4
1.1.22 PROJECT....................................... 4
1.1.23 PROJECT MANAGER............................... 4
1.1.24 PROPERTY...................................... 4
1.1.25 SHARES........................................ 4
1.1.26 SUBLICENSE AGREEMENT.......................... 4
1.1.27 SUPERVISORY AGREEMENT......................... 4
1.1.28 TRANSFERRING STOCKHOLDER AND TRANSFER......... 4
1.1.29 TRANSFEROR AND TRANSFEREE..................... 4
ARTICLE II ORGANIZATION AND MANAGEMENT........................... 4
2.1 ISSUANCE AND DISTRIBUTION OF SHARES................... 5
2.2 PURPOSE OF THE AGREEMENT.............................. 5
2.3 ARTICLES AND BYLAWS................................... 5
2.4 BOARD OF DIRECTORS.................................... 5
2.5 REMOVAL............................................... 5
2.6 VACANCIES............................................. 6
2.7 COVENANT TO VOTE...................................... 6
2.8 REPLACEMENT OF INDEPENDENT DIRECTOR................... 6
2.9 VOTING REQUIREMENTS................................... 6
2.10 OTHER DECISIONS....................................... 7
2.11 PREEMPTIVE RIGHTS..................................... 7
2.12 CERTIFICATES TO BE LEGENDED........................... 7
-i-
ARTICLE III COVENANTS AND WARRANTIES.............................. 7
3.1 SUBLICENSE AGREEMENT.................................. 7
3.2 MANAGEMENT AGREEMENT.................................. 8
3.3 OTHER OPPORTUNITIES................................... 8
3.4 PRINCIPAL OFFICE...................................... 9
3.5 PROJECT LOANS......................................... 9
3.6 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS........ 10
3.6.1 XXXXXX'X REPRESENTATIONS AND WARRANTIES....... 10
3.6.2 LILY POND'S AND XXXXXX'X REPRESENTATIONS AND
WARRANTIES.................................... 10
3.6.3 SCHEDULES AND INFORMATION PROVIDED............ 11
3.7 MODIFICATION OF EXISTING PLANS........................ 11
3.8 EQUITY PARTICIPATION.................................. 12
3.9 CONTRACTS WITH RELATED PARTIES........................ 12
3.10 OTHER BUSINESS ACTIVITIES............................. 12
3.11 TRANSFER TO TRUST..................................... 12
ARTICLE IV SALE, TRANSFER OR MORTGAGE............................ 13
4.1 RESTRICTION ON TRANSFER............................... 13
4.2 PERMITTED TRANSFERS................................... 13
4.3 RESTRAINING ORDER..................................... 14
4.4 GAMING COMMISSION APPROVAL............................ 14
4.5 PUBLIC OFFERINGS...................................... 14
4.6 TERMINATION OF OBLIGATIONS............................ 15
4.7 AGREEMENTS WITH TRANSFEREES........................... 15
ARTICLE V ADDITIONAL CAPITAL CONTRIBUTIONS AND DIVIDENDS........ 16
5.1 ADDITIONAL CAPITAL CONTRIBUTIONS...................... 16
5.1.1 GENERAL....................................... 16
5.1.2 NOTICE BY COMPANY............................. 16
5.1.3 CONTRIBUTION LOANS............................ 16
5.1.4 REPAYMENT THROUGH DISTRIBUTIONS............... 16
5.1.5 REMEDIES...................................... 17
5.1.6 NO THIRD PARTY RIGHTS......................... 18
5.2 INTEREST ON CAPITAL................................... 19
5.2.1 .............................................. 19
5.2.2 .............................................. 19
5.3 DIVIDENDS............................................. 19
ARTICLE VI ACCOUNTING AND TAX PREPARATION........................ 19
6.1 BOOKS AND RECORDS..................................... 19
6.1.1 GENERAL....................................... 19
6.1.2 ACCOUNTING BASIS.............................. 20
6.1.3 INFORMATION TO STOCKHOLDER.................... 20
6.2 RIGHTS OF INSPECTION.................................. 20
6.3 FISCAL YEAR........................................... 20
6.4 AUDIT................................................. 20
6.5 BANK ACCOUNTS......................................... 20
6.6 OTHER ACCOUNTING DECISIONS............................ 20
6.7 PREPARATION OF TAX RETURNS............................ 20
6.8 TAX DECISIONS NOT SPECIFIED........................... 21
-ii-
ARTICLE VII DEFAULT AND DISSOLUTION............................... 21
7.1 EVENTS OF DEFAULT..................................... 21
7.2 CAUSES OF DISSOLUTION................................. 21
7.3 ELECTION OF NON-DEFAULTING STOCKHOLDER................ 22
7.3.1 PURCHASE OF INTEREST.......................... 22
7.3.2 CLOSING....................................... 22
7.3.3 UNSUITABILITY................................. 22
7.4 DISPOSITION OF DOCUMENTS AND RECORDS.................. 23
ARTICLE VIII APPRAISAL............................................. 23
8.1 GENERAL............................................... 23
8.2 APPRAISAL PROCEDURE................................... 23
ARTICLE IX GENERAL PROVISIONS.................................... 24
9.1 COMPLETE AGREEMENT; AMENDMENT......................... 24
9.2 NOTICES............................................... 24
9.2.1 ADDRESSES..................................... 24
9.2.2 NOTICE EFFECTIVE DATE......................... 25
9.2.3 CHANGES....................................... 25
9.3 ATTORNEY FEES......................................... 25
9.4 VALIDITY.............................................. 25
9.5 SURVIVAL OF RIGHTS.................................... 25
9.6 GOVERNING LAW AND VENUE............................... 26
9.7 WAIVER................................................ 26
9.8 REMEDIES IN EQUITY.................................... 26
9.9 TERMINOLOGY........................................... 26
9.10 COUNTERPARTS.......................................... 27
9.11 SURVIVAL OF INDEMNITY OBLIGATIONS, EXCLUSIVE RIGHTS,
AND REPRESENTATIONS AND WARRANTIES.................... 27
9.12 FEES AND COMMISSIONS.................................. 27
9.13 FURTHER ASSURANCES.................................... 27
9.14 REIMBURSEMENT OF EXPENSES............................. 27
9.15 SEVERABILITY.......................................... 27
9.16 SPOUSAL CONSENTS...................................... 28
9.17 RESTRICTIONS TO RUN WITH SHARES....................... 28
9.18 ADDITIONAL STOCKHOLDERS............................... 28
9.19 TERMINATION........................................... 28
-iii-
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement") dated as of August 30,
1993, is by and among Hard Rock Hotel, Inc., a Nevada corporation (the
"Company"), Xxxxxx'x Wagon Wheel, Inc., a Nevada corporation ("Xxxxxx'x"),
and Lily Pond Investments, Inc., a Nevada corporation ("Lily Pond") wholly
owned by Xxxxx Xxxxxx ("Xxxxxx"). Each of the parties hereto (other than the
Company) and any other holder of Shares (as defined below) of the Company who
shall hereafter become a party to or agree to be bound by the relevant
provisions of this Agreement is sometimes hereinafter referred to as a
"Stockholder" and all of such parties are sometimes hereinafter referred to
as the "Stockholders."
RECITALS
X. Xxxxxx has acquired from Hard Rock Cafe Licensing Corporation, a
New York corporation ("Licensor"), a right and license to use the "Hard Rock
Hotel" name and xxxx ("Hotel Brand"). Xxxxxx and Xxxxxx'x have entered into a
letter of intent dated March 30, 1993 concerning the organization and joint
ownership of an entity to own, develop and operate a hotel/casino utilizing
the Hotel Brand and Xxxxxx'x management experience and expertise.
B. The parties hereto deem it in their respective best interests and
in the best interest of the Company to provide consistent and uniform
management for the Company, to regulate certain of their rights in connection
with their interests in the Company and to restrict the sale, assignment,
transfer, encumbrance or other disposition of the Shares (as defined below)
to be issued to the Stockholders and to provide for certain rights and
obligations with respect thereto, and desire to enter into this Agreement in
order to effectuate those purposes and the transactions contemplated herein.
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings:
1.1.1 "ADDITIONAL CAPITAL CONTRIBUTION(S)" shall refer to the
capital contributions by the Stockholders to the Company as provided in
Section 5.1, to the extent the Company requires funds in addition to the
capital contributions provided for in Section 2.1, and any loan or other
third party financing in such amounts as are sufficient to enable the Company
to carry out the purposes of this Agreement.
-1-
1.1.2 "AFFILIATE" or "AFFILIATED ENTITY" shall refer to any person
or entity which, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the subject
entity. The term "CONTROL" shall mean having ownership of twenty percent
(20%) or more of the (i) voting equity interests in an entity; (ii) partnership
interests in a partnership; (iii) general partnership interests in a limited
partnership; or (iv) voting or economic benefit of any other type of entity.
1.1.3 "ANNUAL PLAN" and "ANNUAL OPERATING BUDGET" shall have the
meanings as described in the Management Agreement.
1.1.4 "ARTICLES OF INCORPORATION" shall mean the articles of
incorporation executed and acknowledged by the incorporators pursuant to the
provisions of N.R.S. Chapter 78 which shall be in the form attached hereto as
Exhibit "A."
1.1.5 "ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean the
document attached as Exhibit "D-1."
1.1.6 "BYLAWS" shall mean the bylaws of the Company which shall be
initially in the form attached hereto as Exhibit "B."
1.1.7 "CLASS A STOCK" shall mean the authorized 20,000 shares of
common stock of the Company with full voting rights.
1.1.8 "CLASS B STOCK" shall mean the authorized 80,000 shares of
non-voting common stock of the Company.
1.1.9 "COMPUTATION DATE" shall refer to the effective date of the
notice of the election of the contributing Stockholder to treat the
outstanding principal balance of the Contribution Loan (excluding accrued
interest) as a contribution to capital as provided in Section 5.1.5 of this
Agreement.
1.1.10 "CONTRIBUTION LOAN" shall refer to the advancement directly
to the Company the funds required as a loan in the event any Stockholder
fails to make an Additional Capital Contribution within the time specified as
provided in Section 5.1.3 of this Agreement.
1.1.11 "DIRECTORS" and "BOARD OF DIRECTORS" shall refer to the
board of directors of the Company.
1.1.12 "EFFECTIVE DATE" shall mean the later date upon which all
parties have properly executed this Agreement and the Articles of
Incorporation have been filed.
-2-
1.1.13 "EVENT OF DEFAULT," "DEFAULTING STOCKHOLDER," and
"NON-DEFAULTING STOCKHOLDER" shall have the meanings as described in Sections
7.1 and 7.3.1, respectively, of this Agreement.
1.1.14 "XXXXXX'X GUARANTEE" refers to Xxxxxx'x agreement to
individually guarantee up to Sixty Million Dollars ($60,000,000.00) in Loans
(as defined below) on behalf of the Company as provided in Section 3.5 of
this Agreement.
1.1.15 "IMPROVEMENTS" shall mean such buildings and other
improvements to be constructed as part of the Project (as defined below).
1.1.16 "INDEPENDENT DIRECTOR" shall mean the Director selected
jointly by Xxxxxx'x and Lily Pond, as provided in subsection 2.4(b) of this
Agreement, who shall serve subject to Section 2.8 of this Agreement.
1.1.17 "LICENSING AGREEMENT" shall mean the licensing agreement
entered into between Xxxxxx and the Licensor for the right to use the Hotel
Brand in the State of Nevada, County of Xxxxx, and other jurisdictions as
agreed to by the parties thereto.
1.1.18 "LOAN" or "LOANS" shall refer to agreements by the Company
with third party lender(s) for loan(s) to finance the construction of the
Improvements, development and operation of the Project, as provided in
Section 3.5 of this Agreement.
1.1.19 "MANAGEMENT AGREEMENT" shall mean the management agreement
entered into between Xxxxxx'x and the Company in the form set forth as
Exhibit "C" attached to this Agreement granting to Xxxxxx'x the right to
manage the Project (as defined below) and designating Xxxxxx'x as the Project
Manager (as defined below).
1.1.20 "NEVADA GAMING AUTHORITIES" shall mean, without limitation,
the Nevada Gaming Commission, the Nevada State Gaming Control Board, the City
of Las Vegas, the Xxxxx County Liquor and Gaming Licensing Board and any
other applicable governmental or administrative state, county, city,
municipal or other governmental agency involved in the regulation of gaming
and gaming activities conducted in the State of Nevada and having
jurisdiction over the Company.
1.1.21 "PERCENTAGE INTEREST" shall mean each Stockholders
percentage ownership interest in Class A Stock, Class B Stock and the Company.
1.1.22 "PROJECT" shall mean the development, construction, financing
and operation of the Property, to be comprised generally of a 305 room hotel
and 28,000 square foot
-3-
casino, two (2) restaurants and several bars, Hotel Brand retail store,
parking garage, outdoor swim park, and other amenities.
1.1.23 "PROJECT MANAGER" shall be in reference to Xxxxxx'x in its
capacity as manager of the Project pursuant to the Management Agreement.
1.1.24 "PROPERTY" shall mean certain real property situated in the
County of Xxxxx, City of Las Vegas, State of Nevada, consisting of
approximately 7.6 acres of land, located at the intersection of Paradise Road
and Xxxxxx Avenue, together with all rights, appurtenances, easements, rights
of way and other interests appertaining thereto.
1.1.25 "SHARES" shall mean the aggregate of Class A Stock and
Class B Stock held by a Stockholder in the Company at a particular time.
1.1.26 "SUBLICENSE AGREEMENT" shall mean the sublicense agreement
between Xxxxxx and Lily Pond attached hereto as Exhibit "D" which shall be
assigned to the Company pursuant to the assignment and assumption agreement
attached hereto as Exhibit "D-1."
1.1.27 "SUPERVISORY AGREEMENT" shall mean the supervisory
agreement between Xxxxxx and the Company in the form set forth as Exhibit "E"
attached to this Agreement.
1.1.28 "TRANSFERRING STOCKHOLDER," and "TRANSFER" shall have the
meanings as described in Section 4.1 of this Agreement.
1.1.29 "TRANSFEROR" and "TRANSFEREE" shall have the same meaning
as defined in Section 4.7 of this Agreement.
ARTICLE II
ORGANIZATION AND MANAGEMENT
2.1 ISSUANCE AND DISTRIBUTION OF SHARES. Upon the Effective Date, the
Company shall cause or have caused the issuance of Shares to the Stockholders
as follows (and no other Shares shall have been issued, subscribed, or
contracted):
CLASS A CLASS B
CLASS STOCK CLASS STOCK TOTAL
STOCK- A %AGE OF B %AGE OF %AGE
HOLDER STOCK INTEREST STOCK INTEREST INTEREST
------ ----- -------- ----- -------- --------
Xxxxxx'x 8,000 40% 32,000 40% 40%
Lily Pond 12,000 60% 48,000 60% 60%
-4-
2.1.1 Xxxxxx'x shall make a capital contribution to the Company
of $10,000,000 upon the Effective Date in consideration of its Shares. Lily
Pond shall be deemed to have made a capital contribution of $10,000,000 by
virtue of the transfer of the Property upon the Effective Date free and clear
of all liens and encumbrances, in consideration of its Shares.
2.2 PURPOSE OF THE AGREEMENT. The Stockholders desire to operate the
Company in corporate form to provide for centralized management, to preserve
value of assets, to protect management and control of the Company against
undesired intervention by persons not acceptable to the Stockholders.
2.3 ARTICLES AND BYLAWS. Whenever there is an inconsistency or
discrepancy between the Articles of Incorporation or Bylaws of the Company
and the terms of this Agreement, the terms of this Agreement shall control.
2.4 BOARD OF DIRECTORS. The management of the Company shall be vested
in the Board of Directors. Upon the occurrence of the Effective Date and
subject to the following provisions, Xxxxxx'x and Lily Pond shall cause the
Board of Directors of the Company to consist of seven (7) Directors,
initially designated in the manner set forth below.
(a) DESIGNATION OF DIRECTORS. Xxxxxx'x shall designate three (3)
Directors and Lily Pond shall designate three (3) Directors.
(b) INDEPENDENT DIRECTOR. In addition to the Directors designated
above, Xxxxxx'x and Lily Pond shall jointly choose an Independent Director
who shall serve as a Director subject to Section 2.8 below.
(c) COMMITTEES OF THE BOARD OF DIRECTORS. The rights to designate
directors provided in subsections 2.4(a) and (b) shall also apply,
proportionately, to any committees of the Board of Directors.
2.5 REMOVAL. If a Director designated pursuant to Section 2.4 hereof:
(a) has been designated by Xxxxxx'x and Xxxxxx'x requests that
such Director be removed by written notice thereof to the other Stockholders;
or
(b) has been designated by Lily Pond and Lily Pond requests that
such Director be removed by written notice thereof to the other Stockholders;
then each Stockholder shall take all actions required by Section 2.7 to
effect such result.
-5-
2.6 VACANCIES. In the event that a vacancy is created on the Board of
Directors at any time by the death, disability, retirement, resignation or
removal of any Director, or otherwise there shall exist or occur any vacancy
on the Board, each of Xxxxxx'x and Lily Pond hereby agrees to cause the
Director(s) to vote for that individual designated to fill such vacancy and
serve as a Director by whichever of the Stockholders that had designated
(pursuant to Section 2.4 hereof) the Director (including the Independent
Director) whose death, disability, retirement, resignation or removal
resulted in such vacancy on the Board; PROVIDED, HOWEVER, that such other
individual so designated may not previously have been a Director of the
Company who was removed for cause from the Board.
2.7 COVENANT TO VOTE. Xxxxxx'x and Lily Pond hereby agree to take all
actions necessary to call, or cause the Company or the appropriate officers
or Directors of the Company to call, a special or annual meeting of
Stockholders of the Company and to vote all Class A Stock owned or held of
record at any such annual or special meeting in favor of, or to consent by
written consent in lieu of any such meeting to, the election of a Board of
Directors consistent with, and the taking of any other action to effect the
intent of, this Article II. In addition, Xxxxxx'x and Lily Pond agree to
vote, or consent with respect to, the Class A Stock owned or held of record
upon any other matter arising under this Agreement submitted to a vote or
consent of the Company's Stockholders in a manner so as to implement the
terms of this Agreement.
2.8 REPLACEMENT OF INDEPENDENT DIRECTOR. Upon the occurrence of any
event which results in the release of the Xxxxxx'x Guarantee, the
Stockholders shall take all necessary action as to cause the Independent
Director to resign and Lily Pond shall have the right, in its sole
discretion, to select a replacement Director.
2.9 VOTING REQUIREMENTS. Except as provided otherwise in this
Agreement, the Company shall not, without the prior written unanimous consent
of all of the Directors:
(a) voluntarily dissolve the Company or voluntarily adopt a plan
of liquidation of the Company;
(b) make any decisions relating to the financing or refinancing of
the Property, the Project and Improvements, future capital acquisitions and
improvements excluded from the Annual Plan or Annual Operating Budget (as
defined in the Management Agreement);
(c) enter into transactions between the Company and Affiliates of
either Xxxxxx'x or Lily Pond; or
(d) approve the Annual Plan and Annual Operating Budget.
-6-
2.10 OTHER DECISIONS. All other decisions of the Company, except as
otherwise specified in this Agreement, shall be determined by a simple
majority vote of the Directors.
2.11 PREEMPTIVE RIGHTS. Each Stockholder shall have preemptive rights
to purchase or subscribe additional Shares on a proportional basis. Preemptive
rights granted hereby are untransferable, in whole or in part, by the
Stockholder. Neither the Company's remaining Stockholders nor any third party
may exercise such Stockholder's rights to subscribe if any such Stockholder
waives exercise of its preemptive rights. The preemptive rights shall
terminate upon the decision of Lily Pond to engage in a public offering of
stock of the Company pursuant to Section 4.5 below.
2.12 CERTIFICATES TO BE LEGENDED. Each Stockholder understands and
agrees that each certificate representing Shares will bear a legend on the
face thereof (or on the reverse thereof with a reference to such legend on
the face thereof) in substantially the form set forth below, which legend
restricts the sale, transfer or other disposition of Shares in accordance
with this Agreement of which this Section 2.12 is a part:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
"EACH STOCKHOLDER ALSO UNDERSTANDS AND AGREES THAT EACH CERTIFICATE
REPRESENTING SHARES MAY ALSO CONTAIN ANY OTHER LEGEND REQUIRED BY THE LAWS
AND REGULATIONS OF THE STATE OF NEVADA WHICH MAY FURTHER RESTRICT TRANSFERS
OF SUCH SHARES.
"THESE SHARE(S) ARE SUBJECT TO A STOCKHOLDER'S AGREEMENT, DATED
AUGUST ____, 1933 AMONG THE STOCKHOLDERS AND THE COMPANY WHEREIN, AMONG OTHER
MATTERS, THE TRANSFER, SALE, HYPOTHECATION, PLEDGE OR OTHER DISPOSITION OF
SHARES IS SUBSTANTIALLY RESTRICTED. ANY VIOLATION OF THE AGREEMENT IS NULL
AND VOID AB INITIO. THIS AGREEMENT IS AUTOMATICALLY BINDING UPON ANY PERSON
OR ENTITY WHO ACQUIRES THE SHARES. A COPY OF THE AGREEMENT IS AVAILABLE FOR
INSPECTION AT THE COMPANY'S PRINCIPAL OFFICE DURING NORMAL BUSINESS HOURS."
ARTICLE III
COVENANTS AND WARRANTIES
3.1 SUBLICENSE AGREEMENT. Prior to the Effective Date, Xxxxxx shall
enter into the Licensing Agreement with Licensor for the right to use the Hotel
Brand in the State of Nevada, County of Xxxxx, and other jurisdictions as
agreed to therein. On the Effective Date, Xxxxxx shall enter into a
Sublicense Agreement with Lily Pond which will be assigned to the Company by
the Assignment and Assumption Agreement, incorporating by reference the terms
of the Licensing Agreement, for a term of
-7-
fifty-five (55) years to transfer the exclusive right to use the Hotel Brand
for the Project to the Company or its successors in interest for the sum of
One Hundred Dollars ($100.00) annually upon the terms and conditions set
forth therein.
3.2 MANAGEMENT AGREEMENT. On the Effective Date, the Stockholders shall
cause the Company to enter into (i) the Management Agreement with Xxxxxx'x,
granting to Xxxxxx'x the right to manage the Project and designating Xxxxxx'x
as the Project Manager and (ii) the Supervisory Agreement with Xxxxxx,
regarding certain supervisory and oversight rights and duties with respect to
the Project.
3.2.1 During any period of time in which there shall not be a
Project Manager actively serving in such capacity, the Directors shall carry
out all responsibilities otherwise imposed on the Project Manager pursuant to
the Management Agreement.
3.3 OTHER OPPORTUNITIES. Xxxxxx and Xxxxxx'x agree to jointly pursue
expansion opportunities for the Hotel Brand in markets other than Las Vegas,
by the use of or apart from the Company, to be established and operated as
set forth herein. In consideration of the duties and obligations of Xxxxxx'x
as described herein, Xxxxxx hereby grants to Xxxxxx'x the right to jointly
participate with Xxxxxx, with respect to both equity ownership and management,
in additional "Hard Rock Hotel" projects which include as a source of revenue
a casino operation as distinct from new "Hard Rock Hotels" that do not
include a source of revenue a casino operation, in the event Xxxxxx in his
sole discretion pursues such projects. Xxxxxx'x right to participate in
future projects consists of those locations anywhere within the United States
where Xxxxxx has or may have in the future the right to the use of "Hard
Rock" tradename xxxxx, xxxx and logo and those foreign locations within the
geographical area where Xxxxxx has the current right to use the "Hard Rock"
tradename, xxxxx, xxxx and logo as set forth in the Licensing Agreement, in
each case solely in connection with the operation of a hotel and casino as
provided above. Any such future projects between Xxxxxx and Xxxxxx'x shall be
based upon similar capital contributions, equity ownership ratio, guaranty of
debt, and otherwise on the terms and conditions as set forth in this
Agreement, unless agreed otherwise by Xxxxxx and Xxxxxx'x. In the event that
Xxxxxx and Xxxxxx'x cannot agree upon the terms and conditions of the
ownership structure of such future projects, if any, the dispute shall be
settled by arbitration administered by the American Arbitration Association
in accordance with its Commercial Arbitration Rules in Las Vegas, Nevada.
Xxxxxx grants to Xxxxxx'x the right to jointly participate in any expansion
of the Hard Rock Cafe (the restaurant) to any locations in the Reno/Tahoe
area, on the same equity percentage as described herein, in the event that
Xxxxxx in his sole discretion pursues the same. The rights and obligations
described in this Section 3.3. shall cease if (i) Xxxxxx'x
-8-
ceases to be the Project Manager (due to a default of Xxxxxx'x pursuant to
Article VI of the Management Agreement or a termination of the Management
Agreement pursuant to Sections 7.4, 7.5, or 7.7 thereof or otherwise agreed
by the unanimous consent of the Stockholders); (ii) this Agreement is
terminated due to a default of Xxxxxx'x; or (iii) Xxxxxx'x reduces its total
Percentage Interest below twenty percent (20%). After thirty (30) days prior
written notice by Xxxxxx, if Xxxxxx'x does not accept such opportunity in
writing to participate in any such future ventures, Xxxxxx may pursue such
opportunities with other parties. If the current shareholders of Xxxxxx'x
cease to own forty percent (40%) or more of the overall voting power of
Xxxxxx'x (including without limitation, the right to elect directors),
participation by Xxxxxx'x in future ventures is subject to Xxxxxx'x approval.
3.4 PRINCIPAL OFFICE. The principal office of the Company in the State
of Nevada shall be located at Xxxxxx'x Resort Hotel/Casino, Highway 50, City
of Stateline, County of Xxxxxxx, State of Nevada until the Project is
Opening (as defined in the Management Agreement), at which time the
principal office shall be the Project premises. The parties may have such
other offices, either within or without the State of Nevada, as the
Stockholders may designate, or as the business of the Company may from time
to time require. In order to comply with Nevada gaming regulations, the
Company shall maintain an office on the Project premises.
3.5 PROJECT LOANS. The Company may enter into agreement(s) with third
party lenders(s) for loan(s) (the "Loan" or "Loans") to finance the
construction of the Improvements and development and operation of the
Project, if the amount and terms of any such Loan are approved by the
unanimous consent of the Directors. Xxxxxx'x agrees to individually guarantee
up to Sixty Million Dollars ($60,000,000.00) in Loans on behalf of the
Company ("Xxxxxx'x Guarantee"). However, after the Xxxxxx'x Guarantee has
been retired, refinanced, or released, Xxxxxx'x shall have no further
obligation to incur or guarantee debt on behalf of the Company. Xxxxxx'x
represents and warrants that the Loans will not contain any covenants or
conditions enabling the lender to hold the Company in default by virtue of
any act or omission of Xxxxxx'x in its capacity solely as guarantor
including, without limitation, any violation of a financial covenant which
results in an acceleration of the Loan. If the Company is unable to obtain
the Loans within six (6) months of the Effective Date, then this Agreement
shall terminate, the Company shall be dissolved and each Stockholder shall be
responsible for its own predevelopment and construction costs, except for
those out of pocket expenses that uniquely benefit the Company, including but
not limited to, the preparation and drafting of organizational and
development documents, financing fees, and loan commitment costs. Payment of
such expenses shall be shared in proportion to the Stockholder's Percentage
Interest. Notwithstanding anything contained herein to the contrary,
-9-
Lily Pond and Xxxxxx'x agree to vote their Class A Stock to approve a
refinancing designed to release the Xxxxxx'x Guarantee provided such a
refinancing is on terms no less favorable to the Company.
3.6 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS.
3.6.1 XXXXXX'X REPRESENTATIONS AND WARRANTIES.
Xxxxxx'x represents and warrants that the following are true and
correct as of the date this Agreement is entered into:
(a) ORGANIZATION AND GOOD STANDING.
Xxxxxx'x is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, with all requisite power and
authority to carry on the business in which it is engaged, to own the
properties it owns and to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
(b) AUTHORIZATION AND VALIDITY. The execution, delivery
and performance by Xxxxxx'x of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby, have been duly authorized by the governing board of Xxxxxx'x.
(c) NO VIOLATION. Neither the execution and performance of
this Agreement, or the other agreements contemplated hereby, nor the
transactions contemplated herein, will (i) conflict with, or result in a
breach of the terms of, or constitute a default under any agreement,
contract, commitment, letter of intent, indenture or other instrument under
which Xxxxxx'x is bound, or (ii) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public body
having jurisdiction over the properties or assets of Xxxxxx'x.
3.6.2 LILY POND'S AND XXXXXX'X REPRESENTATIONS AND WARRANTIES.
Lily Pond and Xxxxxx represent and warrant that the following are true and
correct as of the date this Agreement is entered into:
(a) ORGANIZATION AND GOOD STANDING. Lily Pond is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, with all requisite power and authority to carry
on the business in which it is engaged, to own the properties it owns and to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
(b) AUTHORIZATION AND VALIDITY. The execution, delivery
and performance by Lily Pond and Xxxxxx of this Agreement and the other
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby, have been
-10-
duly authorized by the governing board of Lily Pond and by Xxxxxx.
(c) NO VIOLATION. Neither the execution and performance of
this Agreement, or the other agreements contemplated hereby, nor the
transactions contemplated herein, will (i) conflict with, or result in a
breach of the terms of, or consitute a default under any agreement, contract,
commitment, letter of intent, indenture or other instrument under which Lily
Pond or Xxxxxx are bound, or (ii) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public body
having jurisdiction over Lily Pond or Xxxxxx or the properties or assets of
Lily Pond or Xxxxxx.
3.6.3 SCHEDULES AND INFORMATION PROVIDED. Lily Pond, Morton, and
Xxxxxx'x represent and warrant that as of the date of execution of this
Agreement, each has provided the information as required in subsections (a)
through (e) below, and as attached hereto as Exhibits "F" to "J," and that
such information as provided is true and accurate to the best of the
knowledge of the party furnishing such information.
(a) Each material contract or agreement, whether written or
oral between either Stockholder and any third party, relating to the
Property, Hotel Brand and the Project, including those entered into prior to
this Agreement.
(b) Each permit, license or other evidence of approval in
connection with the Project, or any predecessor.
(c) Each claim or proceeding now pending, or to the
knowledge of either Stockholder, threatened against, or in any way involving
the Project, or any predecessor, the Hotel Brand or the Property.
(d) All correspondence with governmental authorities
concerning compliance with applicable laws and regulations including toxic or
hazardous substance surveys of the Property.
(e) Such other information concerning the financial and
business condition of each of the Stockholders, as the Stockholders or their
representatives may reasonably request.
3.7 MODIFICATION OF EXISTING PLANS. Xxxxxx'x and Lily Pond shall use
their best efforts to secure the rights for the Company to acquire a 2.2 acre
(more or less) portion of vacant land contiguous to the Property for the
purpose of expanding the Project footprint, on terms mutually acceptable to
Xxxxxx'x and Lily Pond. The Directors, by unanimous consent, shall make such
changes to existing plans to improve the facility layout and enhance
operational effectiveness, in the event the 2.2. acre parcel is obtained.
-11-
3.8 EQUITY PARTICIPATION. It is the intention of the Stockholders that
the management personnel and other representatives of the Stockholders be
given certain incentives to promote the success of the Project, including
equity participation interests in the Company or in any successor corporation
of the Company. If approved, such interests shall be distributed to the
representatives of each Stockholder as unanimously agreed upon by the
Directors acting in their discretion at a future date, but in no event later
than an initial public offering of stock in the Company (or any successor
corporation). The equity interest shall be divided among all Stockholder(s)
based upon their total Percentage Interest.
3.9 CONTRACTS WITH RELATED PARTIES. Except for those agreements
described herein, neither the Project Manager, nor the Company shall
knowingly enter into any agreement or other arrangement for the furnishing to
or by the Company of goods or services with any Affiliates of either
Stockholder unless such agreement or arrangement has been fully approved by
the Stockholder after the relationship or affiliation has been fully
disclosed in writing. Further, unless unanimously agreed otherwise by the
Stockholders, neither the Company nor Xxxxxx'x shall be permitted to do
business directly or indirectly with Rank, P.L.C., or Planet Hollywood.
3.10 OTHER BUSINESS ACTIVITIES. Each of the Stockholders understands
that the other Stockholder(s) or its Affiliates may be interested, directly
or indirectly, in various other businesses or undertakings not included in
the business of the Company. The Stockholders hereby agree that the creation
of the Company shall not affect their rights (or the rights of their
Affiliates) to have such other interests and activities and to receive
profits or compensation therefrom. Each Stockholder waives any rights to
share or participate in such other existing interests or activities of the
other Stockholder(s) or its Affiliates, except as provided for herein. The
Stockholders may engage in or possess any interest in any other business
venture of any nature or description, independently or with others, and
neither the Company nor the other Stockholders shall have any right by virtue
of this Agreement in and to such business venture of the income or profits
derived therefrom, with the exception of the rights of Xxxxxx'x to
participate in future projects as described in Section 3.3.
3.11 TRANSFER TO TRUST. In the event the Company and Xxxxxx'x (as
Project Manager) receive all necessary licenses and permits to commence
Project operations before Xxxxxx or Lily Pond qualify for final Nevada Gaming
Authorities' approval, the Stockholders agree to set aside in trust or by
such other arrangement as may be mutually acceptable to the Stockholders and
the Nevada Gaming Authorities any and all rights and interests the
Stockholders may have in the Company and the Project until all necessary
licenses and permits have been issued.
-12-
ARTICLE IV
SALE, TRANSFER OR MORTGAGE
4.1 RESTRICTION ON TRANSFER. Except as expressly permitted in Section
4.2 below, no Stockholder (the "Transferring Stockholder") shall sell,
assign, transfer, mortgage, charge or otherwise encumber, or suffer any third
party to sell, assign, transfer, mortgage, charge or otherwise encumber, or
contract to do or permit any of the foregoing, whether voluntarily or by
operation of law (herein sometimes collectively called a "transfer"), any
part or all of its Shares.
4.2 PERMITTED TRANSFERS. Notwithstanding the restrictions set forth in
Section 4.1 above, the following transfers shall be permitted, subject to the
provisions of this Article IV:
(a) Transfer of a Stockholder's Class A Stock or Class B Stock to
the Company.
(b) Transfer of Class A Stock or Class B Stock between Xxxxxx'x,
Xxxxxx or Lily Pond.
(c) Transfer by Lily Pond of its Shares to (i) Xxxxxx'x spouse,
lineal descendants or his spouse's lineal descendants; (ii) to an affiliate
of Xxxxxx which Xxxxxx controls directly or indirectly by virtue of having
ownership of fifty percent (50%) or more of voting equity interests in the
entity, partnership interests in a partnership, general partnership interests
in a limited partnership, or voting or economic interests of any other type
of entity; (iii) Xxxxxx'x personal representative appointed in the event of
his disability; or (iv) to a revocable living trust for the benefit of Xxxxxx
and/or any of the parties described in (i) or (ii) above to the extent
allowed by law. The trustee of any such trust shall hold an equity interest
of the Company subject to the provisions of this Agreement. In the event of a
transfer or transfers to any such party or parties set forth above, the
transferee(s) shall be subject to the identical rights and restrictions of
transfer as Xxxxxx, as if Xxxxxx has retained such interest;
(d) Except as provided above, the transfer of the Class A Stock by
Lily Pond or Xxxxxx'x to a third party, provided that Lily Pond or Xxxxxx'x
promptly notifies the other in writing of the terms of such transfer, and the
non-transferring party shall have the right and option, exercisable within
thirty (30) days after receipt of such written notification to send written
notice to the other that it intends to purchase the interest to be conveyed
by the transferring party on the same terms and conditions offered by the
thirty party transferee. The written notification of the transferring party
-13-
to the non-transferring party shall include (i) the name, address, and
taxpayer identification number of the proposed transferee; (ii) the amount
of Class A Stock to be transferred; (iii) the amount, type, and terms of
consideration for such transfer (iv) the qualifications and licensing of the
proposed transferee, if any; and (v) a copy of a true and correct offer,
signed by the proposed transferee. Notwithstanding the foregoing to the
contrary, such right of first refusal of Xxxxxx'x shall terminate at such
time as Xxxxxx'x disposes of its Shares;
(e) Transfer by Xxxxxx'x of its Shares to an affiliate, which
Xxxxxx'x controls directly or indirectly by virtue of having ownership of
fifty percent (50%) or more of voting equity interests in the entity,
partnership interests in a partnership, general partnership interests in a
limited partnership, or voting or economic interests of any other type of
entity; and
(f) Transfer of Class B Stock to any third party, whether or not
an original or existing Stockholder of the Company.
4.3 RESTRAINING ORDER. In the event that any Stockholder shall at any
time transfer or attempt to transfer its Shares in violation of the
provisions of this Agreement and any rights hereby granted, then any other
Stockholder shall, in addition to all rights and remedies at law and
in equity, be entitled to a decree or order restraining and enjoining such
transfer and the offending Stockholder shall not plead in defense thereto
that there would be an adequate remedy at law; it being hereby expressly
acknowledged and agreed that damages at law will be an inadequate remedy for
a breach or threatened breach of the violation of the provisions concerning
transfer set forth in this Agreement.
4.4 GAMING COMMISSION APPROVAL. Notwithstanding any other provision of
this Article IV, no sale, assignment, transfer, pledge or other disposition
of any interest in the Company shall be permitted, if the Company holds a
Nevada State gaming license, unless approved in advance by the applicable
Nevada Gaming Authorities. Every transferee of Shares must be individually
licensed as required by the Nevada Gaming Authorities, as long as the Company
is subject to its jurisdiction. Furthermore, all persons required by
applicable gaming law or regulations who are required to be licensed or found
suitable for licensing shall timely submit all applications and other
information required for such licensing or approval.
4.5 PUBLIC OFFERINGS. Notwithstanding anything contained herein to the
contrary, any Stockholder may, at any time, engage in a public offering of
equity ownership of such entity which holds the Shares or other transfer of
equity ownership in the Stockholders without triggering a default under this
Agreement or the application of this Article IV regarding restrictions on
-14-
transfer subject, in all events, to compliance with Section 4.4 above. Any
such transfer may be made without the consent of any other Stockholder. If
Xxxxxx'x engages in a public offering, Lily Pond shall have the right to
review any "Hard Rock" material used by Xxxxxx'x in its prospectus, "road
show," or annual securities reporting obligations. The determination as to
whether the Company may make a public offering of equity ownership shall be
made in the sole discretion of Lily Pond and, in the event Lily Pond decides
to take the Company public, Xxxxxx'x shall support such decision and do all
things reasonably necessary to effectuate a public offering including without
limitation, an amendment of the Articles of Incorporation deleting the
preemptive rights.
4.6 TERMINATION OF OBLIGATIONS. As of the effective date of any
transfer not prohibited hereunder by a Stockholder of its of its Shares in
the Company, such Stockholder's rights and obligations hereunder shall
terminate except as to items accrued as of such date and except as to any
indemnity obligations of such Stockholder attributable to acts or events
occurring prior to such date. Thereupon, except as limited by the preceding
sentence, this Agreement shall terminate as to the transferring Stockholder,
but shall remain in effect as to the remaining Stockholders, provided there
are at least two (2) remaining Stockholders.
4.7 AGREEMENTS WITH TRANSFEREES. In the event that pursuant to the
provisions of this Article IV, any Stockholder (the "Transferor") shall
transfer its Shares to any person or entity other than any remaining
Stockholder ("Transferee"), no such transfer shall be made or shall be
effective to make such Transferee a Stockholder or entitle such Stockholder
to any benefits or rights hereunder until the proposed Transferee agrees in
writing to assume and be bound by all the obligations of the Transferor and
be subject to all the restrictions to which the Transferor is subject under
the terms of this Agreement, the Management Agreement, Supervisory Agreement
and any further agreement with respect to the Project contemplated by this
Agreement to which the Transferor is then subject or is then required to be a
party. In the event a Stockholder's Shares are transferred by operation of
law and the Transferee fails to sign such a writing within ninety (90) days
of the date it is determined such transfer has been made, such failure shall
entitle the other Stockholder(s) (i) to treat such failure as an Event of
Default under this Agreement, or (ii) if the Stockholder(s) elects not to
treat such failure to sign as an Event of Default hereunder, nonetheless to
invoke the dissolution procedures as set forth in Article VII hereof or the
appraisal as set forth in Article VIII hereof, and in such event, such
Transferee shall be treated in the same manner as a "Defaulting Stockholder"
under Section 7.3. Except as provided in Section 4.2 above, in no event may a
Transferee become a Stockholder, or have the right to participate in the
business
-15-
and affairs of the Company, except with the unanimous written consent of the
remaining Stockholder(s)
ARTICLE V
ADDITIONAL CAPITAL CONTRIBUTIONS AND DIVIDENDS
5.1 ADDITIONAL CAPITAL CONTRIBUTIONS.
5.1.1 GENERAL. To the extent the Company requires funds in
addition to the capital contributions provided for above in Section 2.1, and
any loan or other third party financing unanimously approved by the Directors
pursuant to Section 2.9, the Stockholder's agree to make Additional Capital
Contributions from time to time in such amounts as are sufficient to enable
the Company to carry out the purposes of this Agreement upon the unanimous
consent of the Stockholders, in return for the issuance of additional Class B
Stock by the Company to the contributing Stockholders. Any such Additional
Capital Contributions shall be made in proportion to the total Percentage
Interest in the Company unless agreed otherwise by the unanimous consent of
the Stockholders.
5.1.2 NOTICE BY COMPANY. If Additional Capital Contributions are
required to be made pursuant to this Section 5.1, the Company shall give
notice to each Stockholder, in the manner provided in Section 9.2. Any such
notice shall specify the amount and purpose of such Additional Capital
Contributions. The Stockholders shall, within thirty (30) days after receipt
of such notice from the Company, deposit the Additional Capital Contribution
required by such notice in the Company's bank account(s).
5.1.3 CONTRIBUTION LOANS.
(a) In the event any Stockholder fails to make an Additional
Capital Contribution within the time specified, each other Stockholder shall
have the right, but shall have no obligation whatsoever, to advance directly
to the Company the funds required as a loan to the other Stockholder
("Contribution Loan").
(b) In the event such other Stockholder(s) does not elect to
advance the full amount of the additional funds required as a Contribution
Loan, then such other Stockholder(s) shall be entitled to treat the failure
to make the Additional Capital Contribution as an Event of Default, or,
alternatively, may pursue the remedies as set forth in subsection 5.1.4.
5.1.4 REPAYMENT THROUGH DISTRIBUTIONS. In the event a Stockholder
elect to make a Contribution Loan, then the Contribution Loan shall bear
interest at a rate equal to the grater of (a) the prime rate in effect from
time to time at
-16-
First Interstate Bank of Nevada, N.A., plus three (3) percentage points, or
(b) eighteen percent (18%) and, except as set forth in subsection 5.1.5,
shall be repaid out of any subsequent distributions made pursuant to this
Agreement to which the noncontributing Stockholder would otherwise be
entitled, which amounts shall be applied first to interest and then to
principal, until the Contribution Loan is paid in full. Repayment of the
Contribution Loan shall be secured by the noncontributing Stockholder's
Shares, and each noncontributing Stockholder hereby grants a security
interest in its Shares to the Stockholder(s) making the Contribution Loan and
appoints such Stockholder(s), and any of its agents, officers or employees,
as its attorneys-in-fact with full power and authority to prepare and execute
any documents, instruments and agreements, including but not limited to, any
Note evidencing the Contribution Loan, and such Uniform Commercial Code
financing and continuation statements, and other security instruments as may
be appropriate to perfect and continue such security interest.
5.1.5 REMEDIES. In the event any Contribution Loan has not been
repaid in full within ninety (90) days after the date the Contribution Loan
is made, then, in addition to any other rights or remedies available to the
Stockholder at law or in equity, at any time thereafter, the Stockholder may
elect to proceed under subparagraph (a) or (b) below.
(a) Upon thirty (30) days' prior written notice to the
noncontributing Stockholder, the Stockholder may elect to treat the
outstanding principal balance of the Contribution Loan (excluding accrued
interest) as a contribution to capital, and the Class B Stock Percentage
Interest of each Stockholder shall thereupon be recalculated (except that any
such recalculation shall not otherwise impair or affect the Class A Stock
Percentage Interest of each Stockholder which shall remain unchanged) as of
the effective date of the notice of such election (the "Computation Date"),
as follows:
(i) The numerator of each Stockholder's Class B Stock
Percentage interest shall equal the sum of the fair market value of the at
Stockholder's Shares as determined pursuant to subsection 5.1.5(c) and the
amount, if any, of that Stockholder's Additional Capital Contribution; and
(ii) the denominator of each Stockholder's Class B Stock
Percentage Interest shall equal the sum of all of the amounts determined for
each Stockholder pursuant to subsection 5.1.5(c) and all Additional Capital
Contributions;
(b) The Stockholders may elect to make written demand upon
the noncontributing Stockholder for payment in full of the Contribution Loan,
including accrued interest attributable to the Contribution Loan. Upon
failure to pay the
-17-
Contribution Loan and interest in full upon demand, the Stockholder may elect
(i) to treat such failure to pay as an Event of Default as provided in
Section 7.1 hereof, or (ii) to enforce its security interest in the
noncontributing Stockholder's Class B Stock.
(c) the fair market value of each Stockholder's Class B Stock
for purposes of subsection 5.1.5 (a) immediately prior to the date the
Additional Capital Contribution is made to the Company, shall be equal to (i)
the Net Fair Market Value of the Company as of the close of the calendar
month in which the Additional Capital Contribution occurred, multiplied by
(ii) such Stockholder's Class B Stock Percentage Interest. For purposes of
Section 8.1, to arrive at the value of such assets, the Stockholders shall
attempt in good faith to reach agreement as to the value of such assets. If,
within a period of fifty (50) days after the date of the Additional Capital
Contribution (or such later date as is agreed to between the Stockholders) an
agreement has not been reached with respect to the value of such assets, then
the Stockholders shall select, and pay for, an appraisal of such assets,
pursuant to the provisions set forth in Section 8.2, and the value of such
assets shall be based upon such appraisal.
(d) In exercising its rights under this subsection 5.1.5, the
Stockholder shall be entitled to transfer to or encumber in favor of a third
party, without complying with the provisions of Article IV or other
provisions of this Agreement, a portion of such Stockholder's Class B Stock
in the Company in order to finance the Contribution Loan, but such third
party shall have no right to become admitted as a Stockholder with voting
rights under any circumstances.
(e) Until the Stockholder has elected to proceed under
subparagraph (a) or (b) above or has elected to pursue any other remedy
available to it at law or in equity, the Contribution Loan shall remain in
place and shall bear interest and be repaid as provided in subsections 5.1.4
above. The rights of the Stockholders under subparagraph (a) or (b) above
shall be mutually exclusive, and by electing to proceed under subparagraph
(a) or (b) above a Stockholder shall waive its rights to proceed under the
subparagraph not so elected as to that particular Contribution Loan.
5.1.6 NO THIRD PARTY RIGHTS. The rights of the Company or the
Stockholders to require any contributions or payments under the terms of this
Agreement shall not be construed as conferring any rights or benefits to or
upon any party not a party to this Agreement, including, but not limited to,
any holder of an obligation secured by a mortgage, deed of trust, security
interest or other lien or encumbrance upon or affecting the Company or any
interest of a Stockholder therein or the Property or Improvements or the
Project, or any part thereof or interest therein.
-18-
5.2 INTEREST ON CAPITAL.
5.2.1 No Stockholder shall be entitled to interest on its
capital contributions, except for those Contribution Loans as described under
subsection 5.1.3.
5.2.2 Except as provided in subsection 5.1.3 with respect to
the payment of interest on a Contribution Loan, interest earned on Company
funds shall inure solely to the benefit of the Company, and no other interest
shall be paid upon any contributions or advances to the capital of the
Company nor upon any undistributed or reinvested income or profits of the
Company.
5.3 DIVIDENDS. The Board of Directors may, from time to time in their
sole discretion make a distribution of dividends to the Stockholders.
ARTICLE VI
ACCOUNTING AND TAX PREPARATION
6.1 BOOKS AND RECORDS.
6.1.1 GENERAL. The Company shall maintain the books and records
of the Company, including the information and records required pursuant to
N.R.S. Chapter 78 and the gaming statutes and regulations, or any amended or
successor regulations, at the principal place of business of the Company,
including, without limitation, the following:
(a) A current list of the full name and last known
business, residence or mailing address of each Stockholder, both past and
present;
(b) A copy of the filed Articles of Incorporation and
all amendments thereto, together with executed copies of any powers of
attorney pursuant to which any document has been executed;
(c) Copies of the Company's federal, state and local
income tax returns and reports, if any, for the three (3) most recent years;
(d) Copies of any currently effective written operating
agreements and of any financial statements of the Company for the three (3)
most recent years; and
(e) Other books and records normally kept in the
ordinary course of business.
-19-
6.1.2 ACCOUNTING BASIS. The Company shall have its books of
account and other financial and accounting records maintained on the accrual
basis.
6.1.3 INFORMATION TO STOCKHOLDER. Each Stockholder shall be
entitled to any additional information necessary for the Stockholder to
adjust its financial basis statement to a tax basis as the Stockholder's
individual needs may dictate.
6.2 RIGHTS OF INSPECTION. Each Stockholder, or its authorized
representative, shall have the right to inspect, examine and copy, at its own
expenses and during normal business hours, the books, records and files of
the Company. All such books, records and files, including that information
described in Section 6.1, shall be available for inspection by the applicable
Nevada Gaming Authorities, and their authorized agents, at all reasonable
times and without notice.
6.3 FISCAL YEAR. The fiscal year of the Company shall end on November
30 of each year.
6.4 AUDIT. The Company shall engage as independent auditors for the
Company a nationally recognized Big 6 accounting firm of independent
certified public accountants, with expertise in gaming. Such independent
auditors shall be determined in the sole discretion of Lily Pond and each
Stockholder shall vote their Shares accordingly. The independent auditors
shall at the end of each fiscal year (a) audit the records and accounts of
the Company, (b) render their opinion on the statement of financial condition
of the Company as of the end of each fiscal year and of the results of its
operations, the changes in its financial, condition and its income and new
cash flow for each fiscal year, (c) render their opinion on the annual net
cash flow computations, and (d) prepare and file all necessary reports as
required by the Nevada Gaming Authorities.
6.5 BANK ACCOUNTS. Funds of the Company shall be deposited in an
account or accounts of a type, in form and name and in a bank or banks
approved by the Board of Directors. Withdrawals from bank accounts shall be
made by the Project Manager and such parties as may be approved by the
Stockholders.
6.6 OTHER ACCOUNTING DECISIONS. All accounting decisions for the
Company (other than those specifically provided for in this Agreement or the
Management Agreement) shall be approved by the Board of Directors.
6.7 PREPARATION OF TAX RETURNS. Federal, state and local income tax
returns of the Company shall be prepared under the direction of the Project
Manager, reviewed by the independent auditors, and approved by the Board of
Directors. Copies of all tax returns of the Company shall be furnished for
review and approval at least ten (10) days prior to the statutory date for
filing, including extensions thereof, if any. If the Board of
-20-
Directors shall fail to approve any such return, applications for extension
of time to file shall be timely filed by the Company.
6.8 TAX DECISIONS NOT SPECIFIED. Tax decisions and elections for the
Company not provided for herein must be approved by the Board of Directors.
ARTICLE VII
DEFAULT AND DISSOLUTION
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an event of default ("Event of Default") hereunder on the
part of the Stockholder ("Defaulting Stockholder") with respect to whom such
event occurs if within thirty (30) days following notice of such default from
the other Stockholder (ten (10) days if the default is due solely to the
nonpayment of monies), the Defaulting Stockholder fails to pay such monies,
or in the case of non-monetary defaults, fails to commence substantial
efforts to cure such default or thereafter fails within a reasonable time to
prosecute to completion with diligence and continuity the curing of such
default for a period not to exceed ninety (90) days; PROVIDED, HOWEVER, that
the occurrence of any of the events described in subparagraphs (b) and (c)
below shall constitute an Event of Default immediately upon such occurrence
without any requirement of notice or passage of time except as specifically
set forth in any such subparagraph.
(a) The failure by a Stockholder to make any Additional
Capital Contribution to the Company as required pursuant to the provisions of
Section 5.1 unless any other Stockholder(s) elects to make a Contribution
Loan.
(b) The violation by a Stockholder of any of the
restrictions set forth in Article IV of this Agreement regarding the right of
a Stockholder to transfer its interest in the Company;
(c) Notification of the Company by the Nevada Gaming
Commission that a Stockholder is unsuitable to hold an interest in the
Company or unable to perform the duties required of them in the Management
Agreement;
(d) Default in performance of or failure to comply with
any other agreements, obligations or undertakings of a Stockholder herein
contained; and
(e) Any other matter specifically deemed an Event of
Default hereunder.
7.2 CAUSES OF DISSOLUTION. The Company shall be dissolved in the event
all of the Stockholders mutually agree in writing to dissolve the Company.
-21-
7.3 ELECTION OF NON-DEFAULTING STOCKHOLDER.
7.3.1 PURCHASE OF INTEREST. Upon the occurrence of an Event
of Default by a Stockholder ("Defaulting Stockholder"), the non-Defaulting
Stockholder ("Non-Defaulting Stockholder") shall have the right to acquire
the Shares of the Defaulting Stockholder for cash, except as provided in
subsection 7.3.2 hereof, at a price determined pursuant to the appraisal
procedure set forth in Article VIII. In furtherance of such right, the
Non-Defaulting Stockholder may notify the Defaulting Stockholder at any time
following an Event of Default of its election to institute the appraisal
procedure set forth in Article VIII. Within fifteen (15) days of receipt of
notice of determination of the net fair market value of the Company, the
Non-Defaulting Stockholder may notify the Defaulting Stockholder of its
election to purchase the interest of the Defaulting stockholder.
7.3.2 CLOSING. Closing of the purchase shall take place as
agreed to between the parties; PROVIDED, HOWEVER, that upon the closing of
such purchase the Non-Defaulting Stockholder may elect to offset against the
purchase price the amount of any loss, damage or injury, the amount of which
has been established by a final non-appealable judgment, caused to it by the
default of the Defaulting Stockholder.
7.3.3 UNSUITABILITY. Notwithstanding any other provision of
this Section 7.3, if the Event of Default occurs pursuant to subsection
7.1(c), then the Company, within ten (10) days within which it receives
notice from the Nevada Gaming Authorities as to the unsuitability of a
Stockholder, shall return to that Stockholder, in cash, the amount of that
Stockholder's capital contribution, [which in the case of cash contributions
will be the amount of such contribution, and in the case of a property
contribution will be the fair market value of such property at the time of
contribution]. Beginning on the date upon which the Company is served with
notice by the Navada Gaming Authorities of a determination of the
unsuitability of the Stockholder, it shall be unlawful for the unsuitable
Stockholder:
(a) To receive any share of the dividends or other
distributions of profits of the Company or any payments upon dissolution of
the Company;
(b) To exercise any voting rights conferred by the Class A
Stock;
(c) To participate in the management of the Company; or
(d) To receive any remuneration in any form from the Company
for services rendered or otherwise.
-22-
7.4 DISPOSITION OF DOCUMENTS AND RECORDS. All documents and
records of the Company, including, without limitation, all financial records,
vouchers, canceled checks and bank statements, shall be delivered to Xxxxxx'x
upon dissolution of the Company, with a copy of all documents to Lily Pond
upon Lily Pond's request and at Lily Pond's expense. Unless otherwise
approved by any other Stockholder, Xxxxxx'x shall retain such documents and
records for a period of not less than seven (7) years at its principal place
of business, and shall make such documents and records available during
normal business hours to the other Stockholders for inspection and copying at
the other Stockholder's cost and expense.
ARTICLE VIII
APPRAISAL
8.1 GENERAL. Other than as provided for specifically in this
Agreement, whenever this Agreement expressly provides for the valuation of an
interest in the Company to be purchased or sold, the value of such interest
in the Company shall be determined as follows: The parties shall first
attempt to agree upon the "net fair market value" of the Company. The "net
fair market value" of the Company shall mean the cash price which a
sophisticated purchaser would pay on the effective date of the appraisal for
all tangible and intangible assets of the Company in excess of the financing
and any other liabilities then encumbering the Company assets. Such
valuation is to be made on the assumption that such assets of the Company are
subject to any agreements, including, without limitation, leases, management,
supervisory and service agreements then in effect, except this Agreement. A
sophisticated purchaser shall be one who would take into account the nature,
extent, maturity date, and other terms of the liabilities of the Company,
whether fixed or contingent, including the favorable or unfavorable nature of
any financing then encumbering the Project or other Company assets, and the
prospects that the income from the Project would be sufficient to satisfy
such liabilities when due, excluding any liability under any financing
already taken into account. The "net fair market value" of a Stockholder's
Shares shall mean the amount such Stockholder would receive if the Company
were sold for such net fair market value and the proceeds distributed in
liquidation in accordance with N.R.S. Chapter 78.
8.2 APPRAISAL PROCEDURE. In the event the Stockholders are unable to
mutually agree upon the net fair market value of the Company within thirty
(30) days of the date the appraisal procedure of this Article VIII is
instituted as provided in this Agreement, the Stockholders shall then attempt
to agree upon the appointment of an appraiser who shall be a member of the
American Institute of Real Estate Appraisers within seventy-five (75) days
of the date the appraisal procedure is instituted as provided in this
Agreement, then a petition may be made by any
-23-
Stockholder to the presiding judge of the Eighth Judicial District, County of
Xxxxx, State of Nevada, for such selection. Each Stockholder shall have the
right to submit the names of two (2) appraisers so qualified and the judge
shall select the appraiser from the names so submitted. The appraiser so
selected shall furnish the Stockholders and the certified public accountants
for the Company with a written appraisal within ninety (90) days of his or
her selection, setting forth his determination of the net fair market value
of the Project and other tangible and intangible assets owned by the Company
as of the date of the application to the District Court. Such appraisal
shall assume that the Project shall be the highest and best use of the
Property. Determination of the appraiser shall be final and binding on the
Stockholders. The cost of the appraisal shall be an expense of the Company.
ARTICLE IX
GENERAL PROVISIONS
9.1 COMPLETE AGREEMENT; AMENDMENT. This Agreement constitutes the
entire agreement between the Lily Pond, Morton and Xxxxxx'x and supersedes
all agreements, letters of intent, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof, and neither party hereto shall be bound by nor charged
with any oral or written agreements, representations, warranties, statements,
promises or understandings not specifically set forth in this Agreement, the
exhibits hereto, or any other agreement referred to herein. This Agreement
may not be amended, altered or modified except by a writing signed and
approved by both the Lily Pond and Xxxxxx'x.
9.2 NOTICES.
9.2.1 ADDRESSES. All notices under this Agreement shall be
in writing and shall be delivered by personal service, reputable overnight
courier, or by certified or registered mail, postage prepaid, return receipt
requested, to the Stockholders at the addresses herein set forth and to the
Company at its principal place of business.
The addresses for notices are as follows:
XXXXXX'X: LILY POND:
XXXXXX'X WAGON WHEEL, INC. LILY POND INVESTMENTS, INC.
X.X. Xxx 000 a Nevada corporation
Highway 50 000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxx 00000 Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: President/
Chief Executive Officer
-24-
with copies to: with copies to:
XXXXXXXXX & XXXXXX XXXXXX & SILVER, LTD.
X.X. Xxx 0000 0000 Xxxxxx Xxxxxx Xxxxxxx
276 Xxxxxxxxx Grade Xxxxxxxxxx Xxxxx
Xxxxx 0000 Xxx Xxxxx, Xxxxxx 00000
Xxxxxxxxx, Xxxxxx 00000-0000
and to:
Xxxxxxx X. Xxxxx
LEEDS GROUP, INC.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
9.2.2 NOTICE EFFECTIVE DATE. All notices, demands and requests
shall be effective upon being deposited with any reputable overnight courier
or in the United States mail. However, the time period in which a response to
any such notice, demand or request must be given shall commence to run from
the date of receipt of the return receipt of the notice, demand or request by
the addressee thereof. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as
provided in subsection 9.2.3 shall be deemed to be receipt of the notice,
demand or request sent.
9.2.3 CHANGES. By giving to the other parties at least thirty
(30) day's written notice thereof, the parties hereto and their respective
permitted successors and assigns shall have the right from time to time and
at any time during the term of this Agreement to change of their respective
addresses for notice and each shall have the right to specify as its address
for notices any other address within the United States of America.
9.3 ATTORNEY FEES. Should any litigation be commenced between the
parties hereto or their representatives or should any party institute any
proceeding in a bankruptcy or similar court which has jurisdiction over any
other party hereto or any or all of its property or assets concerning any
provision of this Agreement or the rights and duties of any person or entity
in relation thereto, the party or parties prevailing in such litigation shall
be entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its or their attorney fees and court costs in such
litigation which shall be determined by the court in such litigation or in a
separate action brought for that purpose.
9.4 VALIDITY. In the event that any provision of this Agreement shall
be held to be invalid or unenforceable, the same shall not affect in any
respect whatsoever the validity or enforceability of the remainder of this
Agreement.
9.5 SURVIVAL OF RIGHTS. Except as provided herein to the contrary,
this Agreement shall be binding upon and inure to the benefit of the parties
signatory hereto, their respective heirs,
-25-
executors, legal representatives and permitted successors and assigns.
9.6 GOVERNING LAW AND VENUE. This Agreement has been entered into in
the State of Nevada and all questions with respect to this Agreement and the
rights of the parties hereto shall be governed by the laws of the State of
Nevada. The parties agree that venue for any action related to this Agreement
shall be in any state or federal court in Xxxxx County, Nevada having
jurisdiction.
9.7 WAIVER. No consent or waiver, express or implied, by a
Stockholder to or of any breach or default by the other Stockholder in the
performance by such other Stockholder of its obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such other Stockholder of the same or any other
obligations of such other Stockholder hereunder. Failure on the part of a
Stockholder to complain of any act or failure to act of the other Stockholder
or to declare the other Stockholder in default, irrespective of how long such
failure continues, shall not constitute a waiver by such Stockholder of its
rights hereunder. The giving of consent by a Stockholder in any one instance
shall not limit or waive the necessity to obtain such consent in any future
instance.
9.8 REMEDIES IN EQUITY. The rights and remedies of either of the
Stockholders hereunder shall not be mutually exclusive, i.e., the exercise of
one or more of the provisions hereof shall not preclude the exercise of any
other provisions hereof. Each of the Stockholders confirms that damages at
law will be an inadequate remedy for a breach or threatened breach of this
Agreement and agree that, in the event of a breach or threatened breach of
any provision hereof, the respective rights and obligations hereunder shall
be enforceable by specific performance, injunction or other equitable remedy,
but nothing herein contained is intended to, nor shall it, limit or affect
any rights at law or by statute or otherwise of any party aggrieved as
against the other for a breach or threatened breach of any provision hereof,
it being the intention of this Section 9.8 to make clear the agreement of the
Stockholders that the respective rights and obligations of the Stockholders
hereunder shall be enforceable in equity as well as at law or otherwise.
9.9 TERMINOLOGY. All personal pronouns used in this Agreement,
whether used in the masculine, feminine, or neuter gender, shall include all
other genders; and the singular shall include the plural and vice versa.
Titles of Articles, Sections and Subsections are for convenience only, and
neither limit nor amplify the provisions of this Agreement itself. The use
herein of the word "including," when following any general statement, term or
matter, shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or
-26-
matters, whether or not non-limiting language (such as "without limitation,"
or "but not limited to," or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters
that could reasonably fall within the broadest possible scope of such general
statement, term or matter.
9.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same agreement.
9.11 SURVIVAL OF INDEMNITY OBLIGATIONS, EXCLUSIVE RIGHTS, AND
REPRESENTATIONS AND WARRANTIES. Any and all indemnity obligations of either
party hereto shall survive any termination of the Company or this Agreement.
The representations and warranties as set forth in Section 3.6 shall survive
until all applicable statutes of limitation have expired.
9.12 FEES AND COMMISSIONS. Each Stockholder hereby represents and
warrants that as of the date of this Agreement there are no known claims for
brokerage or other commissions or finder's or other similar fees in
connection with the transactions covered by this Agreement insofar as such
claims shall be based on actions, arrangements or agreements taken or made by
or on its behalf, and each Stockholder hereby agrees to indemnify and hold
harmless the other Stockholder from and against any liabilities, costs,
damages, and expenses from any party making any such claims through such
Stockholder.
9.13 FURTHER ASSURANCES. Each party hereto agrees to do all acts and
things and to make, execute and deliver such written instruments, as shall
from time to time be reasonably required to carry out the terms and
provisions of this Agreement.
9.14 REIMBURSEMENT OF EXPENSES. Lily Pond and Xxxxxx'x shall each pay
all of their own costs, including attorney fees, in connection with the
formation of the Company and legal representation in connection with the
transactions contemplated by this Agreement. Notwithstanding the above, the
Company reserves the right to reimburse the Stockholders for expenses
incurred for the benefit of the Company, in the discretion of the Company as
determined by the Directors. This Agreement shall not be deemed to create a
general partnership between the Stockholders with respect to any activities.
9.15 SEVERABILITY. The provisions of this Agreement are severable. If
any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision, to the extent enforceable, shall,
nevertheless, be binding and enforceable.
-27-
9.16 SPOUSAL CONSENTS. Any natural person to whose benefit this
Agreement may now or hereafter inure shall obtain the acknowledgment and
consent of his spouse, whether such party is now married or marries or
remarries hereafter, in the form attached hereto following the signature page.
9.17 RESTRICTIONS TO RUN WITH SHARES. The covenants, conditions and
restrictions herein shall be and constitute covenants, conditions and
restrictions running with all Shares now or hereafter owned by any
stockholder at any time, directly or indirectly, whether the same have been
issued or not, and none of the Shares shall be sold, assigned, transferred,
encumbered, pledged, Bypothecated, given as a gift or otherwise disposed of
or alienated in any way by any person except in accordance with this
Agreement. The parties agree that stop order instructions prohibiting
transfer of certificates for Shares will be issued and filed by the Company
on its records or with the Company's transfer agent to prevent any disposition
otherwise than strictly in accordance with this Agreement and agree to cause
the officers of the Company to refuse to record on the books of the Company
any assignments or transfers made or attempted to be made except in
accordance with this Agreement and to cause said officers to refuse to cancel
certificates, or issue or deliver new certificates therefor, where the
purchaser, assignee, pledgee, donee or other transferee has acquired
certificates or any shares represented thereby otherwise strictly in
accordance with this Agreement. Any person who acquires any Shares or any
interest therein shall hold such Shares or interest subject to this Agreement
and shall be deemed to be a Stockholder for all purposes of this Agreement.
9.18 ADDITIONAL STOCKHOLDERS. If the Company shall at a future time
desire to issue or reissue Shares to any person or firm (including any
Stockholder's), all such issues shall become parties to this Agreement and
their spouses shall acknowledge and consent thereto as provided in Section
9.16), with respect to such Shares by executing a writing agreeing to be
bound hereby.
9.19 TERMINATION. This Agreement shall terminate on the earliest of (i)
the written agreement of the Company and of all Shareholders owning voting
stock of the Company, or (ii) the dissolution, bankruptcy, insolvency, or
receivership of the Company
-28-
IN WITNESS WHEREOF, the Stockholders have executed this Agreement as of
the date and year first above set forth.
XXXXXX'X: LILY POND:
XXXXXX'X WAGON WHEEL, INC. a LILY POND INVESTMENTS, INC.
Nevada corporation a Nevada corporation
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------------- -------------------------------
XXXXXXX XXXXXX, XX. XXXXX X. XXXXXX, President
Chairman of the Board
By: /s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxxx X. Xxxxxx
----------------------------- -------------------------------
XXXXXXX XXXXXXXXX, President XXXXX X. XXXXXX, individually
as to Sections 3.3 and 3.6.2
and any other provision of
By: /s/ Xxxxxxxx Xxxxxxxxx this Agreement pertaining
----------------------------- specifically to Xxxxxx
XXXXXXXX XXXXXXXXX, Secretary
COMPANY:
HARD ROCK HOTEL, INC., a
Nevada Corporation
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
XXXXX X. XXXXXX, President
By: /s/ Xxx Xxxxxxxx
-------------------------------
XXX XXXXXXXX, Secretary
-29-
SPOUSAL CONSENT
The undersigned hereby consent to the terms and provisions of the
foregoing Agreement and agree to be bound thereby.
------------------------------------ -----------------------------------
------------------------------------ -----------------------------------
EXHIBIT "A"
ARTICLES OF INCORPORATION
-30-
EXHIBIT "B"
BY-LAWS
-31-
EXHIBIT "C"
MANAGEMENT AGREEMENT
-32-
EXHIBIT "D"
SUBLICENSE AGREEMENT
-33-
EXHIBIT "D-1"
ASSIGNMENT AND ASSUMPTION AGREEMENT
-34-
EXHIBIT "E"
SUPERVISORY AGREEMENT
-35-
EXHIBIT "F"
MATERIAL CONTRACT DISCLOSURE SCHEDULE
Reference: 1.8.3 SCHEDULES AND INFORMATION PROVIDED: (a) Each material
contract agreement or understanding whether written or oral between either
Stockholder and any third party, relating to the Property and the Project,
including those entered into prior to this Agreement, and which may have
expired.
1. Agreement between and among Hard Rock Cafe, Xxxxx X. Xxxxxx, and
Xxxxxx Xxxxxxxx & Associates, on or about___________, 1991, covering Xx.
Xxxxxxxx'x provision of certain design, development and approval consulting
services on the Project. (See also attached list of Project Consultants,
provided by Xxxxxx Xxxxxxxx & Associates to Xxxxxx'x Wagon Wheel, Inc. in
February 1993.)
2. Construction and Term Senior Bank Financing Commitment Letter from
First Interstate Bank of Nevada, N.A., to Hard Rock Hotel & Casino, Inc. (c/o
Promus Companies), dated September 15, 1992.
3. DRAFT Construction and Term Senior Bank Financing Commitment Letter
from First Interstate Bank of Nevada, N.A., to Hard Rock Hotel [& Casino,
Inc.], LLC, (c/o Harvey's Wagon Wheel, Inc.), dated July 27, 1993.
4. Hard Rock Hotel & Casino Private Placement Memorandum, prepared by
Xxxxxxxxx Lufkin & Xxxxxxxx, and dated June 1991.
5. Management Agreement between Hard Rock Hotel & Casino, L.P. and
Xxxxxx'x, Inc., dated November 6, 1990.
6. Financing Proposal/Package, dated June 1993 and revised July 15,
1993, presented by Project developers and Stockholders to First Interstate
Bank of Nevada, N.A., in support of financing activities and commitments (see
# 3 above), and to officers, executives and financial associates of
Stockholders. (Ninety (90) original packages traced by numbers 1 through 90.)
7. Fair Market value appraisal on Xxxxxx'x Resort Hotel/Casino at Lake
Tahoe, dated July 19, 1993, and completed by Xxxxxxx X. Xxxxx and Associates
in support of financing activities of the Stockholders. (See # 3 above.)
8. Fair market value appraisal on Hard Rock Hotel (and Casino) in Las
Vegas, dated July 30, 1993, and completed by Xxxxx Xxxxxx, Inc. in support of
financing activities of the Stockholders. (See # 3 above.)
-36-
9. Preliminary Title Report of Nevada Title Company, dated October 7,
1992 on the property, in which title is currently held by Red, White & Blue
Pictures, Inc. with copies of title exceptions, the most notable being a
Parking Easement in favor of Hard Rock Cafe and a Trust Deed in favor of
Security Pacific National Bank.
10. Engagement letter for financial services between Xxxxxxxxx Lufkin &
Xxxxxxxx and Hard Rock Hotel & Casino, Inc., dated July 18, 1991.
11. Sales agency letter regarding financial services rendered between
Xxxxxxxxx Lufkin & Xxxxxxxx and Hard Rock Hotel & Casino, Inc., dated July 1,
1991.
12. Ancillary agreements, referenced herein, will be executed
concurrently with this Agreement and will be incorporated by reference with
this Agreement and as Exhibits to the Management Agreement (2.2.1.):
Sub-Licensing Agreement (1.1.4.); and Supervisory Agreement (Recital G).
-37-
EXHIBIT "G"
PROJECT APPROVAL DISCLOSURE SCHEDULE
Reference: 1.8.3. SCHEDULES AND INFORMATION PROVIDED: (b) Each permit,
license or other evidence of approval in connection with the Project, or any
predecessor.
1. Blueline copies (two sets) of existing construction drawings,
provided by Xxxxxx Xxxxxxxx & Associates.
2. Color copies of renderings, site plan, floor plan, design concepts,
memorabilia and aerial photograph of neighborhood, contained in original
Private Placement Memorandum by Xxxxxxxxx Xxxxxx & Xxxxxxxx, dated June 1991.
3. Hard Rock Hotel & Casino internal construction and pre- opening
budget, dated November 4, 1992.
4. Hard Rock Hotel & Casino Cost Estimate Proposal, submitted to
Xxxxxx'x Wagon Wheel, Inc. by Xxxxx Corporation, dated May 24, 1993.
5. Private report prepared by Xxxxxx Xxxxxxxx & Associates for
Xxxxxx'x Wagon Wheel, Inc., dated February 1993, and detailing status of
agency approvals and contract documents for the Project, including but not
limited to: local and Xxxxx County planning and zoning agencies; McCarran
Airport and Federal Aviation authorities; and local and regional utility and
transportation districts. [See also attached list of Project approvals and
documents, provided by Xxxxxx Xxxxxxxx & Associates to Xxxxxx'x Wagon Wheel,
Inc. in February 1993.]
-38-
EXHIBIT "H"
LITIGATION AND OTHER CLAIM DISCLOSURE
Reference: 1.8.3. SCHEDULES AND INFORMATION PROVIDED; (c) Each claim or
proceeding now pending, or to the knowledge of either Stockholder, threatened
against, or in any way involving the Project, or any predecessor, the Hotel
Brand or the Property.
1. Settlement Agreement, dated May 23, 1985 between and among Xxxxx
Xxxxxxx, Xxxxxxx Affiliates, Xxxxx X. Xxxxxx and Xxxxxx Affiliates,
referencing XXXXXX VS M.L. INTERNATIONAL, LTD., ETC. ET AL USDC, case No.
83-1086, together with exhibits, including but not limited to Exhibit H-2,
License Agreement between Hard Rock Cafe Licensing Corporation and Xxxxxx,
dated May 23, 1985.
2. KOAR, INC. AND KOAR-LAS VEGAS, L.P. VS XXXXX XXXXXX, HARD ROCK
HOTEL & CASINO INVESTORS LIMITED PARTNERSHIP AND HARD ROCK CAFE AND HOTEL I,
INC., case No. BC 050 781: This action was filed in Los Angeles Superior
Court on March 13, 1992. The operative facts are set out in a Fifth Amended
Complaint ("Complaint") filed on March 4, 1993. The Complaint alleges that
(1) In November 1990, Koar, Inc. formed a California limited partnership
designated Koar-Las Vegas, L.P. (2) Pursuant to the terms of the Partnership,
Koar-Las Vegas, L.P., had a sixteen and two-thirds percent (16.667%) interest
in the Partnership. (3) The remainder of the Partnership was owned by Hard
Rock Cafe & Hotel I, Inc. (4) Plaintiffs expended ."..effort, time and
money..." to fulfill the purpose of the Partnership Agreement which
."..effort, time and Money..." were not reimbursed. Xxxxxx disputes these
allegations. Based upon these facts, Plaintiffs filed for instant action
seeking: (1) An accounting between Defendants and Plaintiffs; (2) A judgment
for breach of oral contract or unjust enrichment in the sum of Three hundred
Seventeen Thousand, Four Hundred Twenty-Two Dollars and Sixty-Eight Cents
($317,422.68); (3) Alternatively, a judgment for the reasonable value of
Plaintiffs' services (quantum merit); and (4) Damages for the alleged
wrongful dissolution of the Partnership in violation of California
Corporations Code Section 15038. (The Court assigned to this matter has
previously determined that Defendants had the unfettered right to terminate
the Partnership. Consequently, this Cause of Action for violation of
California Corporations Code Section 15038 is apparently without merit.) In
conclusion, this action involves claims for damages only for settlement of
accounts and the approximate amount of Three Hundred Thousand Dollars
($300,000.00).
3. XXXXXX XXXX VS XXXXX XXXXXX ET AL, case No. C540970: Litigation is
pending between Xxxxxx Xxxx and Xxxxx Xxxxxx, et al, in the Superior Court of
the State of California for the County of Los Angeles. Each party is
asserting rights against the other to define and refine their respective
relationships
-39-
with respect to business opportunities utilizing the name "Hard Rock Cafe" or
similar name. Xxxx has asserted that he is entitled to a twenty percent (20%)
share of any business opportunity or business venture of Xxxxx Xxxxxx,
including, but not limited to ownership of the property and of predecessors
of the Project. Xxxxxx vigorously opposes Xxxx'x contention and has
affirmatively filed his own action to declare that Xxxxxx'x rights and
ownership of the Property, the Project, or any predecessor, are owned one
hundred percent (100%) by Xxxxxx free and clear of any right of participation
by Xxxx particularly, where, as here, Xxxx has been offered opportunities to
participate in predecessor projects and expressly rejected or refused any
such opportunity. The gravamen of the litigation is not Xxxx'x right to
acquire the ownership interest in the Project or Property, but whether Xxxx
has a right to share in Xxxxxx'x interest in a twenty percent/eighty percent
(20%/80%) basis.
-40-
EXHIBIT "I"
REGULATORY COMPLIANCE DISCLOSURE SCHEDULE
Reference: 1.8.3. SCHEDULES AND INFORMATION PROVIDED: (d) All correspondence
with governmental authorities concerning compliance with applicable laws and
regulations, including toxic or hazardous substance surveys of the Property.
1. Soils and Foundation Investigation (Report) on Hard Rock Hotel &
Casino, prepared by Converse Consultants Southwest, Inc. and dated June 30,
1993.
2. Private report prepared by Xxxxxx Xxxxxxxx & Associates for Xxxxxx'x
Wagon Wheel, Inc., dated February 1993, detailing status of and providing
correspondence with various city, county, state and federal agencies on
required project permits and approvals.
3. Private report prepared by Xxxxxx Xxxxxxxx & Associates for
Stockholders, dated April 5, 1993, and research reports prepared by The Xxxx
Xxxxxx Group, dated May 13, and June 10, 1993, detailing status of, detailed
communications and correspondence with McCarran Airport and the Federal
Aviation authorities on approvals requested for the rooftop guitar monument.
4. Phase I Environmental Site Assessment, dated September 27, 1989, on
the subject Property, prepared by Western Technologies, Inc. for predecessor
developers, Dimension Development, Inc.
-41-
EXHIBIT "J"
FINANCIAL AND BUSINESS DISCLOSURE SCHEDULES
Reference: 1.8.3. SCHEDULES AND INFORMATION PROVIDED: (e) Such other
information concerning the financial and business condition of each of the
Stockholders, as the Stockholders and their representatives may reasonably
request.
1. Hard Rock Cafe America, L.P., Consolidated Audited Financial
Statements and Other Financial Information, year ended December 27, 1992 with
Report of Independent Auditors, Ernst & Young.
2. Hard Rock Cafe Investors, Ltd., Consent Solicitation/Offering
Memorandum for Hard Rock Cafe America, L.P., dated May 14, 1992.
3. Xxxxxx'x Wagon Wheel, Inc. and Subsidiary, Consolidated Financial
Statements and Report of Independent Certified Public Accountants, Xxxxx
Xxxxxxxx, as of November 30, 1992 and 1991.
4. Hard Rock Cafe Operations Manuals.
5. Hard Rock Cafe - Las Vegas Hourly Benefits Package and Employee
Handbook.
6. Hard Rock Cafe America Management Benefit Package and Employee
Handbook (Main Office and Managers).
7. Xxxxxx'x Resort Hotel/Casino Lake Tahoe facility food and beverage
manuals by outlet (25).
8. Xxxxxx'x Resort Hotel/Casino Lake Tahoe facility Employee Handbook,
benefit and other employment program manuals.
9. Xxxxxx'x Resort Hotel/Casino Lake Tahoe facility Hotel Procedures
and Training program.
10. Xxxxxx'x Resort Hotel/Casino Lake Tahoe facility Operating and
Service Standards (by department and position).
-42-
