EXHIBIT 3
MEMORANDUM OF UNDERSTANDING
April 17, 2000
THIS MEMORANDUM OF UNDERSTANDING confirms the
agreements among the individuals listed on the signature pages hereto
(collectively, the "Executives"), and PH Casino Resorts, Inc., a Delaware
corporation ("PHCR"), a wholly owned subsidiary of Harveys Casino Resorts,
a Nevada corporation ("Harveys"), in connection with PHCR's agreement to
acquire Pinnacle Entertainment, Inc., a Delaware corporation (the
"Company"), pursuant to the Agreement and Plan of Merger (the "Merger
Agreement") by and among PHCR, Pinnacle Acquisition Corporation, a Delaware
corporation ("Pinnacle Acq Corp"), and the Company. For all purposes herein
(including the schedules attached hereto), references to the Executives'
employment agreements (including all forms of compensation due thereunder)
shall be deemed to include adjustments, amendments or restatements thereof
to the extent such adjustments, amendments or restatements are permitted by
the terms of the documents governing an Acquisition Transaction (as defined
below) or are otherwise agreed to in writing by PHCR prior to the
consummation of such Acquisition Transaction. Capitalized terms used but
not defined herein shall have the respective meanings ascribed to such
terms in the Merger Agreement.
1. General Statement of Purpose. The Executives and PHCR have
conducted discussions with respect to an acquisition by merger of
all of the outstanding shares of the Company, except for those
shares that the Company will repurchase from X.X. Xxxxxxx (as
contemplated in the Merger Agreement) and/or those which the
Executives will contribute directly to PHCR in exchange for shares
of its stock, and/or those options held by the Executives to
acquire shares of the Company, which shall be fully vested and
canceled in exchange for the issuance of options of PHCR
(collectively an "Acquisition Transaction"). The Executives and
PHCR have concluded that it would be desirable to effect an
Acquisition Transaction. To that end, the parties hereto have
executed this Memorandum of Understanding and a Voting and
Contribution Agreement to confirm their binding agreements. The
Executives and PHCR agree that this Memorandum of Understanding
shall terminate and cease to be of effect upon the termination of
the Merger Agreement or upon the execution of definitive agreements
with respect to the matters set forth herein.
2. Rollover of Equity.
(a) PINNACLE STOCK. In exchange for the shares of Pinnacle
common stock ("Pinnacle Stock") rolled over, Executives will
receive a number of shares of voting and nonvoting stock
("PHCR Stock") of PHCR equal to the product of (i) the
number of shares of Pinnacle Stock contributed to PHCR and
(ii) $24.00 per share 1, divided by $45.77707, the per share
price of PHCR Stock to be issued in exchange for all
outstanding shares of common stock of Harveys Casino
Resorts, assuming a 10 million share fully diluted PHCR
Stock capitalization before giving effect to any issuances
hereunder.
(b) PINNACLE OPTIONS. In the event that options held by the
Executives are not converted into Pinnacle Stock prior to
the consummation of the Acquisition Transaction, Executives
with options to purchase Pinnacle Stock (the "Pinnacle
Options") will exchange such options for options to purchase
PHCR Stock, with the exercise price and number of shares
adjusted appropriately to preserve the value of each
Executive's Spread. 2
-------------------
1 If the Inglewood Land is sold on or prior to the fifth Business Day
prior to the Closing Date of the Acquisition Transaction, such
number will be increased in the same manner provided for holders of
Pinnacle Stock under the Merger Agreement. If the Inglewood Land is
sold after the fifth Business Day prior to the Closing Date of the
Acquisition Transaction, Executives will receive a cash payment for
each share contributed equal to any amount paid to a holder of a
share of Pinnacle Stock upon such event pursuant to the Merger
Agree ment and one Class A CPR.
2 The Spread for each Pinnacle Option is equal to the product of (i)
the number of unexercised shares subject to a Pinnacle Option and
(ii) the difference between (A) $24.00 per share (subject to
adjustment in the event that the Inglewood Land is sold on or prior
to the fifth Business Day prior to the Closing Date of the
Acquisition Transaction as set forth in the first sentence of
footnote 1) and (B) the per share option exercise price. If the
Inglewood Land is sold after the fifth Business Day prior to the
Closing Date of the Acquisition Transaction, Executives will
receive a cash payment for each share of Pinnacle Stock subject to
the exchanged Pinnacle Option equal to any amount paid to a holder
of a share of Pinnacle Stock upon such event pursuant to the Merger
Agreement and one Class A CPR.
(i) Executives who so chose may, immediately following
the Acquisition Transaction, perform a cashless
exercise of their options to purchase PHCR Stock.
(ii) PHCR will make available to the Executives (other
than Messrs. Xxxxxxx, Xxxxxxxx and Xxxxxx) loans, in
an aggregate amount not to exceed $2.5 million, to
pay taxes incurred by the Executives in connection
with the cashless exercise of their options either
before or after the Acquisition Transaction. Such
loans would be made upon the following terms:
(1) secured by all present and future equity
interests in PHCR,
(2) interest rate of 8%, with interest to be
compounded and payable annually, with bonus
payments (net of taxes on such bonus payments)
earned by Executive to be offset by such
interest payments due,
(3) 4 year maturity, with respect to the entire
principal balance, and any accrued but unpaid
interest,
(4) prepayable without penalty,
(5) will accelerate upon the termination of the
Executive's employment.
(iii) PHCR will represent and warrant that it has no
present plan or intention to liquidate either the
Company or Harveys, and PHCR will not liquidate
Pinnacle or Harveys within two (2) years after the
Closing Date unless it provides to the Executives an
opinion of its representing counsel, based on
customary assumptions but otherwise substantially
unqualified that the liquidation would not cause the
contributions of Pinnacle Stock to PHCR pursuant to
the Voting Agreement to fail to qualify as exchanges
under Section 351 of the Internal Revenue Code of
1986, as amended (the "Code"). The immediately
foregoing representations, warranties or covenants
shall survive any transfer of the ownership of 51% of
Colony's (as defined in Section 4) total equity
interest in PHCR (whether voting or nonvoting) held
by Colony (or an affiliate of Colony).
(iv) PHCR shall deliver or cause to be delivered to each
Stockholder at the Closing a letter dated as of the
Closing Date from Colony Investors III, L.P. and each
other investment vehicle used by Colony Capital, Inc.
that holds an interest in PHCR immediately following
the Harveys Merger (each a "Colony LP") representing
and warranting to such Stockholder that such Colony
LP has no present intention or plan to sell, exchange
or otherwise dispose of any of its interests in PHCR.
(v) When making future infusions of funds to Pinnacle Acq
Corp and/or the Pinnacle Surviving Corporation, if
any, PHCR shall endeavor in good faith to provide
such funds to Pinnacle Acq Corp and/or the Pinnacle
Surviving Corporation by means of intercompany loans
unless PHCR determines in its reasonable judgment
that to do so would be inadvisable.
(c) RIGHTS OF REPURCHASE/PUT RIGHTS.
(i) Each of the Executives who is also an employee of the
Company regardless of whether he is a party to a
written employment agreement with the Company (other
than Messrs. Xxxxxxxx and Xxxxxxx) will have the
right, individually, to require PHCR to repurchase
his shares of PHCR stock and PHCR will have the right
acquire such shares, each in accordance with the
provisions set forth in this paragraph (i), upon the
termination of an Executive's employment with PHCR
for any reason other than one specified in
subparagraph (ii) below. The repurchase price shall
be paid 1/3 upon exercise, and 1/3 on the first and
second anniversary of such termination. For purposes
of such repurchase, the fair market value of the
shares of PHCR stock to be repurchased shall be
calculated based upon the following formula: 6.45
times the 12 month trailing EBITDA of PHCR (including
the combined EBITDAs of Harveys and the Company for
an appropriate number of months in the event that
there are less than twelve months of EBITDA for the
operating subsidiaries of PHCR following the closing
of the Acquisition Transaction), minus net debt (or
other liabilities that would customarily be treated
as debt for valuation purposes), divided by the total
number of shares of PHCR stock outstanding, times the
number of shares of PHCR stock to be repurchased. For
purposes of calculating net debt, the amount of
capital invested in any uncompleted development
projects, including expansions of existing
properties, shall be included in the calculation of
cash on hand. For purposes of calculating EBITDA and
net debt, such calculation will be made in a manner
substantially consistent with the past practices of
Harveys and the Company including in connection with
equity valuations for this transaction. The unpaid
purchase price will bear interest at the rate of 12%
per year, compounded annually. The right to trigger
such repurchase process shall constitute an absolute
right and obligation of the Executives and PHCR,
respectively, in accordance with the terms hereof. No
other claims (other than repayment of the loans
described in Section 2(b)(ii) above) shall either:
(A) be asserted by either party in such repurchase
process; or (B) be deemed to have been waived as a
result of such repurchase.
(ii) In the event that an Executive described in
subsection (i) above either: (x) is terminated for
cause 3; or (y) voluntarily terminates (1) in the
case of an Executive who is a party to an effective
employment agreement with the Company that defines
good reason or a similar standard, without good
reason as defined in his employment agreement or (2)
in the case of any other Executive (other than
Messrs. Xxxxxxx and Xxxxxxxx), for any reason, then
PHCR will have the right to acquire, and the
Executive will have the right to require PHCR to
repurchase such shares on the same terms and
conditions set forth in subparagraph (ii) above,
except such repurchase shall be paid 20% upon
exercise and 20% on each of the first four
anniversaries of such termination and will bear
interest at the rate of 8% per annum (rather than
12%), compounded annually from date of termination to
the date of repurchase by PHCR.
-------------------
3 In the case of an Executive who is a party to a written employment
agreement with the Company, the determination of whether he has
been terminated for cause shall be governed by the terms of his
employment agreement, to the extent specified therein. In the case
of an Executive who is a party to a written employment agreement
with the Company but where the standard is not so specified, and in
the case of an Executive who is not a party to a written employment
agreement with the Company, such Executive shall be deemed to have
been terminated for cause if the Company had the right to terminate
such Executive's employment for "gross misconduct" as such term is
used for purposes of determining an employee's right to
continuation of health coverage under Section 4980B(f)(3)(B) of the
Code.
3. Incentive Grants of Restricted Stock and Stock Options. If the
Acquisition Transaction is consummated, then, at the Closing PHCR
shall grant 604,464 shares of restricted PHCR Common Stock (the
"PHCR Restricted Stock"), to the Executives in accordance with
Schedule A hereto. The agreements evidencing the PHCR Restricted
Stock will, except as otherwise provided herein, contain
substantially the same terms (with respect to the issuance of
restricted stock only) as that certain management stock option and
restricted stock agreement, dated February 2, 1999, by and between
Harveys and Xxxx XxXxxxxxxx. An additional 530,223 shares of PHCR
Common Stock shall be reserved for issuance of stock options (the
"New Options") pursuant to a stock option plan for the benefit
members of senior management of the Company (the "Key Managers").
The division of such New Options among the Key Managers shall
reasonably be determined by Xx. Xxxxxx, consistent with industry
standards and subject to the approval of PHCR. The per share
exercise price of the New Options shall be at $43.17, the implied
share value determined in accordance with the Bear Xxxxxxx model.
As set forth above, the incentive grants of PHCR Restricted Stock
will, except as otherwise provided herein, contain substantially
the same terms (with respect to the issuance of restricted stock
only) as that certain management stock option and restricted stock
agreement, dated February 2, 1999, by and between Harveys and Xxxx
XxXxxxxxxx, which is intended to defer the imposition of federal
and state tax to the extent set forth therein or, subject to the
terms of Section 5(f) below, the termination of the Executive's
employment with PHCR (either as a member of management or a
director) occurs for whatever reason. At all times following the
date the incentive grants of PHCR Restricted Stock are awarded the
Executive shall be fully vested in such awards and the stock
represented by such incentive grant shall, except as set forth in
Section 5(f) below, be fully includable in the stock to be
repurchased by PHCR pursuant to the terms set forth in Section 2
above. Except as specifically set forth above, shares issued or
issuable under this Section 3 (except to Messrs. Xxxxxxx and
Xxxxxxxx) shall be subject to a right of repurchase by PHCR
pursuant to the terms of the Stockholders Agreement (as defined in
Section 4).
The New Options granted to each of Messrs. Alanis, Allen, Ostrow
and Kortman shall vest in accordance with the following schedule:
20% on each of the first five anniversaries of the Closing;
provided, however, that if prior to the expiration of the current
term of his existing employment agreement with the Company (or upon
the earlier replacement or extension, as the case may be) (i) he is
terminated without cause (as defined in his employment agreement,
if defined, or if not defined, as defined in footnote 3 hereof);
(ii) he voluntarily terminates his employment for good reason (as
defined in his employment agreement, if defined); or (iii) the
Company does not offer to renew his employment agreement on
reasonable terms (provided, however, that for purposes of this
Memorandum of Understanding, no offer shall be deemed unreasonable
solely because it offers vesting and forfeiture provisions with
respect to incentive equity that are on substantially the same
terms as other employees) and such agreement is allowed to expire,
then such New Options shall become fully vested and exercisable
immediately upon such termination or expiration and the all of
shares subject to the New Options shall be subject to the
repurchase rights set forth in Section 2 above. In the event of
termination of employment for any other reason (or failure to renew
an employment agreement following a reasonable offer by the
Company), then such New Options as have not become vested and
exercisable in accordance with the schedule set forth above shall
be forfeited and only the shares subject to the New Options that
have become vested and exercisable in accordance with such schedule
shall be subject to the repurchase rights set forth in Section 2
above.
All other New Options shall vest 20% on each of the first five
anniversaries of the Closing and shall otherwise have the same
terms as options issued under Harveys' current plan.
4. Stockholders Agreement. Any PHCR Stock or options issued hereunder
shall be subject to a stockholders agreement (the "Stockholders
Agreement") with substantially the same provisions as the
Stockholders Agreement in effect at Harveys on the date hereof,
except to the extent that the provisions of the Stockholders
Agreement are inconsistent with the provisions hereof, in which
case the provisions set forth herein shall govern and control, and
be deemed to supercede such contrary provisions in the Stockholders
Agreement.
In connection with the Stockholders Agreement, Colony Investors
III, L.P. ("Colony") shall enter into an appropriate agreement with
Xx. Xxxxxxx which shall grant to Xx. Xxxxxxx the following rights:
(1) the right to sell or dispose of his Tag-Along Shares (as
defined in the Stockholders Agreement) pursuant to Subsection
2.5(a) of the Stockholders Agreement without giving effect to
Subsection 2.5(b) of the Stockholders Agreement; (2) a "lock-up"
restriction pursuant to Section 2.6 of the Stockholders Agreement
which shall be co- extensive with that of Colony; and (3) one
demand registration right, subject to customary terms and
conditions and any lockup required in connection with an IPO. So
long as Xx. Xxxxxxx beneficially owns at least 50% of the
outstanding PHCR Stock (including PHCR Restricted Stock and New
Options, if any) owned by him immediately following the Effective
Time, without Xx. Xxxxxxx'x approval (which approval shall not be
unreasonably withheld or delayed), Colony shall not consent to any
waiver of the Stockholders Agreement or the Memorandum of
Understanding or any of the agreements contemplated by either of
them that would materially adversely affect Xx. Xxxxxxx'x rights
under the Stockholders Agreement.
In connection with the Stockholders Agreement, Colony also shall
enter into an appropriate agreement with Xx. Xxxxxxxx which shall
grant to Xx. Xxxxxxxx the following rights: (1) the right to sell
or dispose of his Tag-Along Shares (as defined in the Stockholders
Agreement) pursuant to Subsection 2.5(a) of the Stockholders
Agreement without giving effect to Subsection 2.5(b) of the
Stockholders Agreement; and (2) a "lock-up" restriction pursuant to
Section 2.6 of the Stockholders Agreement which shall be
co-extensive with that of Colony.
5. Non-Competition Agreements.
(a) Each of the Executives who is a party to an employment
agreement, in addition to entering into the Stockholders
Agreement, shall enter into a non-competition agreement with
the Company, pursuant to which such person shall agree, on
the terms set forth herein, not to: (i) engage in owning,
operating and developing casinos, hotels or race track
interests associated or materially competitive with casinos,
hotels or race track interests owned directly or indirectly
by PHCR (or where PHCR has announced its present intention
to develop such properties or interests), (ii) solicit any
employee, agent or consultant of the Company to terminate
such person's relationship with the Company or (iii) solicit
any counterparty to any contract with the Company to
terminate such counterparty's contract or other relationship
with the Company. Notwithstanding the foregoing, in the case
of Xx. Xxxxxxx, (A) the restrictions of subsections 5(a)(i),
(ii) and (iii) shall be effective during the period that he
serves as a member of the Board of Directors and shall
continue, in the case of subsection 5(a)(i), for a period of
one year, and in the case of subsection 5(a)(ii) and (iii),
for a period of two years, from the date that Xx. Xxxxxxx
ceases to be a member of the Board of Directors, (B) the
restrictions of subsections 5(a)(i), (ii) and (iii) shall
not restrict Xx. Xxxxxxx'x ownership, operation and
development of casinos, hotels or race track interests in
New Mexico so long as PHCR or any of its affiliates does not
own any casinos, hotels or race track interests in New
Mexico or in a market outside of New Mexico that competes
directly with the markets inside New Mexico, and (C) if PHCR
or any of its Affiliates acquires a material interest in or
otherwise develops any casinos, hotels or race track
interests in New Mexico or in a market outside of New Mexico
that competes directly with the markets inside New Mexico,
Xx. Xxxxxxx shall be permitted to continue to operate and
develop casinos, hotels or race track interests, located in
New Mexico and owned or operated in whole or in part by him
on the date of such acquisition or development or as to
which Xx. Xxxxxxx has announced a present intention to
acquire or develop. Notwithstanding the foregoing, in the
case of Xx. Xxxxxxxx, the restrictions of subsection 5(a)(i)
shall only be effective during the period that he serves as
an employee of the Company.
(b) In the case of each of the Executives (other than Xx.
Xxxxxxxx) who is a party to an employment agreement with the
Company, the restrictions of subsections 5(a)(i), (ii) and
(iii) shall be effective during the period that he serves as
an employee of the Company and shall continue to be
effective following his termination of employment (i) in the
event he is terminated for cause (as determined in his
employment agreement) or voluntarily resigns without good
reason (if and as defined in his employment agreement) for a
period of one year, in the case of subsection 5(a)(i), and,
in the case of subsections 5(a)(ii) and (iii) for a period
of two years, following such date of termination; or (ii) in
the event he is terminated other than for cause or
voluntarily terminates employment for good reason, or if the
Company does not offer to renew his then existing employment
agreement on reasonable terms and such agreement is allowed
to expire, then the provisions of subsection 5(a)(i) shall
not apply and subsections 5(a)(ii) and (iii) shall apply for
a period of two years following the Executive's termination
of employment.
(c) Each of the Executives (other than Xx. Xxxxxxx) who is not a
party to an employment agreement, in addition to entering
into the Stockholders Agreement, shall enter into a
non-competition agreement with the Company, pursuant to
which such persons shall agree not to: (i) engage in owning,
operating and developing casinos, hotels or race track
interests associated or materially competitive with casinos,
hotels or race track interests owned directly or indirectly
by PHCR (or where PHCR has announced its intention to
develop such properties or interests), (ii) solicit any
employee, agent or consultant of the Company to terminate
such person's relationship with the Company or (iii) solicit
any counterparty to any contract with the Company to
terminate such counterparty's contract or other relationship
with the Company.
(d) In the case of each of the Executives (other than Xx.
Xxxxxxx) who is not a party to an employment agreement with
the Company, the restrictions of subsections 5(c)(i), (ii)
and (iii) shall be effective during the period that he
serves as an employee of the Company and shall continue to
be effective following his termination of employment as
follows:
(i) in the event he is terminated for cause (as defined
in footnote 3 above) or he voluntarily resigns on or
prior to December 31, 2001, the provisions of
subsection 5(c)(i) shall apply for a period of one
year following such date of termination and the
provisions of , subsections 5(c) (ii) and (iii) shall
apply for a period of two years following such date
of termination.
(ii) in the event he is terminated other than for cause
after December 31, 2001, the provisions of subsection
5(c)(i) shall not apply and the provisions of
subsections 5(c)(ii) and (iii) shall apply for a
period of two years following such date of
termination.
(iii) in the event he is terminated for any reason or he
resigns after December 31, 2001, the provisions of
subsection 5(c)(i) shall not apply and the provisions
of subsections 5(c)(ii) and (iii) shall apply for a
period of two years following such date of
termination.
(e) In the event that any Executive (other than Xx. Xxxxxxx)
that does not have an employment agreement with the Company
is terminated or resigns under the circumstances described
in Section 5(d)(i) above, then such Executive shall not be
entitled to payout of his PHCR Restricted Stock upon
termination of employment, but will continue to hold such
PHCR Restricted Stock in accordance with the terms thereof.
(f) Key Managers who are not Executives and who receive New
Options, shall, as a condition to receiving such New
Options, shall be required to agree not to (i) engage in
owning, operating and developing casinos, hotels or race
track interests within 100 miles of the principal gaming
facility at which such Key Manager was employed, (ii)
solicit any employee, agent or consultant of the Company to
terminate such person's relationship with the Company or
(iii) solicit any counterparty to any contract with the
Company to terminate such counterparty's contract or other
relationship with the Company. The restrictions contained in
this Section 5(f) shall continue for a period of one year
from the date of termination of such Key Manager's
employment.
(g) Except to the extent of the specific exceptions applicable
to any individual in subsections 5(a) and 5(f) above,
reasonable exceptions to the non-competition restrictions
will be provided in respect of (i) activities not materially
competitive with the specific gaming properties or interests
owned directly or indirectly by PHCR (or where PHCR has
announced its intention to develop such properties or
interests) and (ii) passive ownership of less than 5% of
public companies.
6. Employment Agreements. The employment agreements of the Executives
that have employment agreements as of the date hereof shall be
assumed without modification except to the extent necessary to
reflect the terms of this transaction and the structure of the
Company and its affiliates. The employment agreements assumed by
the Company shall terminate on the respective dates set forth
therein. There shall be no obligation, express or implied, of PHCR
or the Executives to renew such contracts, and any such renewal
shall be on such reasonable terms and conditions as shall be agreed
to by the Executive and PHCR.
7. Certain Governance Matters. Subject to licensing and regulatory
restrictions, the Board of Directors of PHCR upon consummation of
the Merger (the "PHCR Board") shall include X. X. Xxxxxxx, Chairman
of the PHCR Board, and Xxxx Xxxxxx as well as Xxxxxx X. Xxxxxxx,
Xx. and other nominees determined by Colony (the "Colony
Nominees"), provided that if affiliates of Colony designated for
the board of directors (other than employees of PHCR and its
subsidiaries) would cease to constitute a majority of the board,
Messrs. Xxxxxxx and Xxxxxx shall resign from the Board (and any
committee thereof) and become non-voting observers until such time
as Colony may legally appoint additional Board members under
applicable law; provided further that prior thereto, PHCR will take
such action as is reasonably necessary to avoid triggering the end
of deferral under the Deferred Compensation Agreements between PHCR
and Xx. Xxxxxxx and Xx. Xxxxxx, respectively. Xx. Xxxxxxx shall be
a member of, and Xx. Xxxxxxx shall be designated as the chairman
of, the Executive Committee of the PHCR Board. The PHCR Board shall
delegate to the Executive Committee (to the extent permitted under
applicable law) substantially all of its powers to govern the
business and affairs of the Company. Affiliates of Colony
designated for the board of directors (other than PHCR and its
subsidiaries) shall also constitute a majority of the compensation
committee of the board, if any. Unless otherwise determined by the
Colony Nominees, members of the PHCR Board shall not be entitled to
any compensation for services as members of the PHCR Board.
8. Disclosure Requirements. In connection with their execution and
delivery of this Memorandum of Understanding, the Executives
acknowledge and agree to comply with all applicable disclosure
requirements relating thereto imposed under Federal and state
securities laws.
9. Form of PHCR Common Stock. All issuances hereunder of PHCR Common
Stock, including options therefor, shall be comprised of a
combination of voting and non-voting securities so that each such
class of security constitutes the applicable percentage of all such
shares of such class of security outstanding at the time of
issuance.
10. Fees and Expenses. The Executives, on the one hand (jointly and
severally), and PHCR, on the other hand, shall each be responsible
for their respective expenses incurred in connection with the
consideration of the contemplated Acquisition Transaction.
11. Binding Agreement; Standard of Conduct. The terms of the agreements
herein shall be more fully set forth in definitive documentation,
which each of the parties hereto agrees to negotiate in good faith.
Subject to the negotiation and execution of such definitive
documentation and the reaching of agreement on other matters
contemplated but not specifically addressed herein, each of the
parties hereto acknowledges and agrees that this Memorandum of
Understanding is intended as a binding agreement among them with
respect to the matters set forth herein.
12. Parties in Interest. This Memorandum of Understanding shall be
binding upon and inure solely to the benefit of each party hereto,
and nothing in this Memorandum of Understanding, express or
implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this
Memorandum of Understanding. Neither this Memorandum of
Understanding nor any of the rights, interests or obligations
hereunder shall be assigned, in whole or in part, by operation of
law or otherwise by any of the parties without the prior written
consent of the other parties, except that PHCR may assign, in its
sole discretion, any or all of its rights, interests and
obligations under this Memorandum of Understanding to any
controlled affiliate of Colony. Subject to the preceding sentence,
this Memorandum of Understanding shall be binding upon, inure to
the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
13. Equitable Adjustment. References herein to numbers of securities to
be issued shall be deemed to include such equitable adjustments, if
any, as may be required in the event of any subdivision, split,
combination or reclassification of such securities or securities
into which such securities are exercisable so that the parties
hereto entitled to receive such securities shall receive the number
of such securities that such parties would have owned or been
entitled to receive after the happening of any the events described
above had it owned such securities immediately prior to such time.
14. Governing Law. THIS MEMORANDUM OF UNDERSTANDING SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAW.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Memorandum of Understanding as of the date first above written.
PH CASINO RESORTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
STOCKHOLDERS
/s/ X.X. Xxxxxxx
-------------------------
X. X. XXXXXXX
/s/ X. Xxxxxxx Xxxxxxxx
-------------------------
X. XXXXXXX XXXXXXXX
/s/ Xxxx Xxxxxx
-------------------------
XXXX XXXXXX
/s/ Xxxxx Xxxxxx
-------------------------
XXXXX XXXXXX
/s/ X. Xxxxxxx Xxxxx
-------------------------
X. XXXXXXX XXXXX
/s/ Xxxxx Xxxxxxx
-------------------------
XXXXX XXXXXXX
/s/ Xxxxx X. Xxxxxxxx
-------------------------
XXXXX X. XXXXXXXX
/s/ Xxxxxxx Xxxxxxx
-------------------------
XXXXXXX XXXXXXX
/s/ Xxxxx Xxxxx
-------------------------
XXXXX XXXXX
/s/ Xxxxxx Xxxxxxxx
-------------------------
XXXXXX XXXXXXXX
