AMENDED AND RESTATED LETTER AGREEMENT
THIS AMENDED AND RESTATED LETTER AGREEMENT (this "AMENDED AGREEMENT") is
dated as of March ___, 1998, by and among Hard Rock Hotel, Inc., a Nevada
corporation (the "COMPANY"), Xxxx X. Xxxxxxxx ("EXECUTIVE") and Lily Pond
Investments, Inc., a Nevada corporation ("LILY POND").
PRELIMINARY STATEMENTS
A. The parties hereto are parties to that certain Letter Agreement
dated as of October 8, 1997 (the "LETTER AGREEMENT"), pursuant to which the
parties agreed to modify that certain Employment Agreement dated as of
October 8, 1997 (the "EMPLOYMENT AGREEMENT") by providing an additional
inducement for Executive to enter into the Employment Agreement in the form
of an equity participation in the Company. Capitalized terms not otherwise
defined herein shall have the same meanings as set forth in the Employment
Agreement.
B. Pursuant to the Letter Agreement, Lily Pond had agreed to cause
Shares (as defined below) to be delivered to Executive on the terms and
conditions set forth therein.
C. The parties hereto desire to amend and restate the Letter Agreement
so that the Shares will be issued directly by the Company to Executive and
not from the shares of common stock of the Company held by Lily Pond.
AGREEMENT
In consideration of the mutual covenants and agreements contained in the
Employment Agreement, and intending to be legally bound, the parties hereto
stipulate and agree as follows:
1. EQUITY PARTICIPATION. As an additional inducement for Executive to
enter into the Employment Agreement, Executive shall receive Seven Hundred
Sixty-eight (768) shares of no par value non-voting common stock of the
Company as may be adjusted as set forth in subparagraph (k) below (the
"SHARES") representing, as of the Commencement Date, one percent (1%) of the
total outstanding common stock of the Company which Shares shall be delivered
to Executive by the Company and shall vest as follows: Twenty percent (20%)
of the Shares shall be issued to Executive and vest on the Commencement Date;
PROVIDED, HOWEVER, that such twenty percent (20%) portion of the Shares shall
be subject to forfeiture if Executive's employment with the Company is
terminated within twelve (12) months of the Commencement Date pursuant to
Paragraph 7.1(b) or (c) of the Employment Agreement. Provided that
Executive's employment with the Company is not terminated pursuant to
Paragraph 7.1(a), (b) or (c) of the Employment Agreement, on each anniversary
of the Commencement Date an additional twenty percent (20%) of the Shares
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shall vest; PROVIDED, HOWEVER, that each such additional twenty percent (20%)
portion of the Shares shall be subject to forfeiture if Executive's
employment with the Company is terminated prior to the fourth anniversary of
this Amended Agreement pursuant to Paragraph 7.1(b) or (c) of the Employment
Agreement within twelve (12) months of the date that such twenty percent
(20%) portion of the Shares has vested and; FURTHER PROVIDED, that in the
event that a Change of Control has occurred, the remainder of the Shares not
vested shall immediately vest. The Company agrees that it will not encumber,
transfer (except for a transfer to an affiliate of the Company, in which
event both the Company and such affiliate shall be bound by the obligations
of the Company set forth in this Amended Agreement) or otherwise alienate the
Shares during the term of the Employment Agreement. The Shares, whether
vested or not, shall (i) be subject to all restrictions necessary to comply
with the terms of applicable law including, without limitation, the Gaming
Authorities (as defined below); (ii) satisfy and be subject to the usual,
customary and reasonable criteria imposed by any underwriter for the Company
in connection with an IPO (as defined below) or such other financing events,
and (iii) be subject to the restrictions below:
a) RESTRICTIONS ON TRANSFER. No transfer or other dispositions of
the Shares on the part of Executive shall be made in contravention of the
terms of this Amended Agreement. Dispositions of the Shares shall include any
transfer, gift, sale, assignment, pledge or hypothecation/or other transfer
of the Shares except as otherwise provided herein. Any disposition of the
Shares on the part of Executive made in contravention of this Amended
Agreement shall be null, void and of no effect. The Company shall not take
any action to effectuate any disposition of the Shares in contravention of
this Amended Agreement and shall not record any such transfer on the books of
the Company.
b) OFFER. Executive shall not dispose of the Shares or any portion
thereof to any person or entity until Executive shall first have offered such
Shares to the Company by notice in writing to the Company (the "OFFER
NOTICE") and shall otherwise have complied with this Paragraph 1. Any Offer
Notice under this Paragraph 1 shall specify (i) the person or entity to which
the Shares are proposed to be transferred (the "THIRD PARTY OFFEROR"), (ii)
the price, other consideration and other material terms and conditions of the
transaction which Executive proposes to undertake with the Third Party
Offeror and (iii) the number of Shares proposed to be included in or affected
by the disposition to the Third Party Offeror. The Company shall have the
right to acquire all (but not less than all) of the Shares offered by
Executive on the terms and conditions set forth in the Offer Notice. Such
right shall be exercisable by the Company within ten (10) business days after
the Offer Notice is given by Executive. Such right shall be deemed to be
exercised when written notice of such exercise is given by the Company within
said ten (10) day period. The Company shall have the ability to assign the
rights granted to it by this Paragraph 1.
c) TRANSFER TO THIRD PARTY. If all of the Shares are not acquired
by the Company or its assignee as provided for in this Paragraph 1 within the
applicable notice
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period provided for therein, then Executive may transfer or otherwise dispose
of such Shares only to the Third Party Offeror for the consideration and only
on the terms and conditions set forth in the Offer Notice that was given to
the Company, provided that the Third Party Offeror agrees in writing to be
bound by all of the terms of this Amended Agreement other than any terms
related to employment with the Company, before the effectuation of any
transfer of the Shares or interests therein to the Third Party Offeror and
provided that a written instrument evidencing such agreement is delivered to
the Company before any such transfer is effected.
d) REVIVAL OF FIRST REFUSAL RIGHT. If a transfer or other
disposition of the Shares or interests therein to a Third Party Offeror is
not consummated within ninety (90) days after receipt by the Company of the
Offer Notice, then any transfer or other disposition proposed to be made to
such Third Party Offeror shall again be subject to the rights and options of
the Company and subject to the notice requirements provided for in this
Paragraph 1.
e) CLOSING. The closing of any disposition of the Shares under
this Paragraph 1 shall take place at the principal offices of the Company or
at the offices of the attorneys of the Company, or at such other place as may
be agreed upon by the parties to such transaction, within thirty (30) days
after the last written notice that is timely hereunder given by the Company.
Such closing shall take place at a time during regular business hours
specified by Executive on fifteen (15) days' prior written notice to the
persons or entities acquiring the Shares. At the closing, the Shares to be
disposed of under this Paragraph 1 shall be delivered by the transferring
party to the party entitled to acquire such Shares, duly endorsed in blank or
accompanied by duly executed stock powers, with transfer stamps attached, if
required by applicable law. The acquirer of any Shares transferred under this
Paragraph 1 shall at the closing of such disposition, pay the acquisition
price for the Shares in accordance with the Offer Notice that was delivered
in connection with the disposition of such Shares.
f) EXEMPTED TRANSFER. The provisions of this Paragraph 1 shall not
apply to any of the following dispositions of Shares by Executive, provided
that the transferee or acquirer of the Shares disposed of under this
Paragraph 1 agrees in writing to be bound by the terms of this Paragraph 1:
(i) any disposition by will or intestacy and any other disposition to an
heir, executor, estate, committee, guardian or other legal representative of
Executive upon the death or legal incapacity of Executive, or (ii) any
disposition to a Family Transferee of Executive (as hereinafter defined). As
used in this Amended Agreement, a "FAMILY TRANSFEREE" shall mean (A) a
spouse, child, parent, grandchild or sibling of Executive or (B) a trust
established by Executive, or a trustee, fiduciary, custodian or foundation
designated by Executive, that will hold the Shares for the benefit of
Executive or for the benefit of any of the persons described in item (A)
above in this sentence.
g) RESTRICTIVE LEGEND. The certificates representing the Shares
shall bear the following legend:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE
ACT, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS
OF ANY STATE WITH RESPECT THERETO, OR IN ACCORDANCE
WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
h) PUT OPTION. In the event that Executive's employment with the
Company is terminated for any reason other than as set forth in Paragraph
7.1(b) or (c) of the Employment Agreement (including, the expiration of the
term of the Employment Agreement or the death of Executive), the Company
shall, upon the written demand of Executive or his personal representative as
the case may be (the "DEMAND"), purchase all, but not less than all, of the
Shares, for a purchase price of the lesser of One Thousand Nine Hundred Fifty
three and 13/100 Dollars ($1,953.13) per Share (which multiplied by seven
hundred sixty-eight (768) Shares would equal One Million Five Hundred
Thousand Seven and 10/100 Dollars ($1,500,007.10)) or, in the event an IPO
(as defined below) has occurred, the IPO Price (the "PURCHASE PRICE") to be
paid in immediately available funds on or before the later of (i) ninety (90)
days of receipt of the Demand or (ii) receipt of all requisite approvals from
the appropriate Gaming Authorities to transfer the Shares, PROVIDED, HOWEVER,
that the Shares shall be good and marketable, free and clear of all liens and
encumbrances and Executive shall warrant and indemnify the Company with
respect to same; and FURTHER, PROVIDED, in the event of a dividend or
distribution made by the Company with respect to the Shares, the Purchase
Price shall be correspondingly adjusted downward to reflect the fair market
value of such dividend or distribution.
i) PARTIAL PUT OPTION. Executive shall have the right (the
"PARTIAL PUT OPTION") for a period of thirty (30) days from the second
anniversary of the Commencement Date to require the Company, upon receipt of
a Demand, to purchase one-half (1/2) of all of the Shares then vested and not
subject to forfeiture pursuant to this Paragraph 1 for a per Share price
equal to the Purchase Price to be paid in immediately available funds on or
before the later of (x) ninety (90) days of receipt of the Demand or (y)
receipt of all requisite approvals from the appropriate Gaming Authorities to
transfer the Shares; PROVIDED, HOWEVER, that the Shares shall be good and
marketable, free and clear of all liens and encumbrances and Executive shall
warrant and indemnify the Company with respect to same; and FURTHER,
PROVIDED, in the event of a dividend or distribution made by the Company with
respect to the Shares, the Purchase Price shall be correspondingly adjusted
downward to reflect the fair market value of such dividend or distribution.
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j) IPO PUT RIGHTS. Notwithstanding anything contained in this
Amended Agreement to the contrary, in the event that the Company (or the
immediate parent of the Company or a wholly-owned subsidiary of the Company,
in which case Executive shall be entitled to participate to the same extent
as if undertaken by the Company) has, prior to the date of receipt of the
Demand, undertaken an equity securities offering in the public market (an
"IPO") and Executive has had a reasonable opportunity to sell the Shares then
vested in the public market at a price equal to or greater than the IPO Price
(as defined below), then the Company shall have no obligation to repurchase
the Shares then vested. For the purposes hereof, the parties shall mutually
determine whether Executive was provided a "reasonable opportunity" to sell
any Shares, and if they cannot mutually agree, then such determination shall
be made by the independent board members of the Company. In all cases, the
obligation of the Company to repurchase the Shares shall be subject to the
receipt of all appropriate governmental approvals, including, without
limitation, the requisite approvals of the Gaming Authorities, which the
Company and Executive covenant to each other that they shall use their
reasonable best efforts to obtain. In the event Executive does not have a
reasonable opportunity to sell the Shares then vested in the IPO and
provided that Executive is employed with the Company, then Executive shall
have the right to put up to fifty percent (50%) of the Shares then vested and
not subject to forfeiture pursuant to Paragraph 1 of this Amended Agreement
to the Company at the initial public offering price less underwriters
discounts and commissions (the "IPO PRICE") per Share multiplied by the
number of Shares then vested and not subject to forefeiture pursuant to
Paragraph 1 of this Amended Agreement so put after taking into consideration
any adjustment to the number of Shares as provided in paragraph 1.k) below. In
order to exercise the put right set forth in the immediately preceding
sentence, Executive shall deliver a Demand to the Company on or before the
date that is thirty (30) days prior to the effective date of the IPO. In the
event of a Change of Control, the Company's obligation to repurchase the
Shares shall expire unless they have received a demand within thirty (30)
days following the date of such Change of Control.
k) DILUTION. If, during the term of the Employment Agreement, the
Company (i) issues a stock dividend, (ii) subdivides its outstanding shares
of common stock, (iii) combines its outstanding shares of common stock into a
smaller number of shares of common stock or (iv) issues any shares of capital
stock in a reclassification of the Company's common stock or (v) such other
similar event (each, a "DILUTION EVENT"), then the remaining number of Shares
which the Company will thereafter be obligated to deliver to Executive
(determined immediately prior to the record date for such Dilution Event)
shall be adjusted so that Executive shall be entitled to receive from the
Company the number of shares of common stock of the Company (or such other
securities of the Company which thereafter enjoy the rights which the Shares
enjoyed as of the date of this Amended Agreement) that Executive would have
received after the Dilution Event, had all of the Shares been delivered to
Executive immediately prior to the record date of such Dilution Event.
Whenever the number of Shares which the Company is obligated to deliver to
Executive is adjusted pursuant to the preceding sentence, the Purchase Price
shall be adjusted by multiplying such Purchase Price, immediately prior to
such adjustment by a fraction, the numerator of which shall be the total
number of Shares immediately prior to
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such adjustment, and the denominator of which shall be the total number of
Shares immediately after such adjustment.
1) LOAN FOR TAX LIABILITY. The Company shall loan Executive an
amount equal to Executive's federal income tax liability (including Medicare,
if applicable) due to the vesting of the Shares (the "LOAN"). The Loan
proceeds shall be made available to Executive on or before the date that
payment for such tax liability is due and payable. The Loan shall be
evidenced by promissory notes bearing interest at seven and one-half percent
(7-1/2%) per annum and shall be due and payable on the earlier of (i) the
date that the Employment Agreement is terminated pursuant to Paragraph 7.1(b)
or (c) thereof, (ii) the date that is ninety (90) days subsequent to the
effective date of termination in the event the Employment Agreement is
terminated pursuant to Paragraph 7.1(a) thereof, or (iii) ninety (90) days
after the Termination Date; PROVIDED, HOWEVER, that if Executive or his
personal representative validly exercises the put option set forth in
Paragraph 1.b) above, the Loan shall not be due until the closing of the put
option as provided in such Paragraph 1.b). At Executive's option, interest
shall accrue through maturity. The Loan shall be fully non-recourse to
Executive but shall be secured by the Shares and Executive agrees to pledge
the Shares to the Company and pursuant thereto, execute and deliver to the
Company a Pledge Agreement in form and substance acceptable to the Company
and its legal counsel. Notwithstanding the foregoing to the contrary, in the
event the Employment Agreement is terminated pursuant to Paragraph 7.1(a)
thereof and the personal representative of Executive makes a Demand, the Loan
shall not be due and payable until the date that the Purchase Price has been
paid.
2. REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. Executive represents
and warrants to the Company that (i) Executive is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act of
1933, as amended and (ii) Executive has had the opportunity to obtain all
such information pertaining to the Company as Executive has requested.
3. GAMING AUTHORITY'S APPROVAL. Notwithstanding anything contained in
this Amended Agreement to the contrary, the transfer of the Shares and each
and every other term and condition of this Amended Agreement shall be
contingent upon (i) the receipt of the requisite approvals of all applicable
state, county or other governmental authorities having jurisdiction over the
gaming operations of the Company and (ii) the final closing of the sale of
Harveys' equity interest in the Company to the Company or its designee and
the termination of the Management Agreement and any Employment Agreement
between Harveys and Executive.
4. APPLICABLE LAW. This Amended Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Nevada without giving effect to the principles of conflicts of laws.
5. EFFECT ON EMPLOYMENT AGREEMENT AND LETTER AGREEMENT. This Amended
Agreement shall amend and supplement the Employment Agreement to the extent
of the
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terms hereof. The Employment Agreement, except as amended and superseded
hereby, is and shall remain in full force and effect. This Amended
Agreement shall amend and supersede the Letter Agreement in its entirety.
6. SURVIVAL. Except as otherwise stated herein, the terms and
conditions of this Amended Agreement shall survive the termination of the
Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amended
Agreement as of the date first above written.
Hard Rock Hotel, Inc., a Nevada
corporation
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx, President
/s/ Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx 2/3/98
Lily Pond Investment, Inc., a Nevada
corporation
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx, President
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