Exhibit 2.1
STOCK PURCHASE AGREEMENT
DATED AS OF APRIL 24, 2001
AMONG
XXXXXX'X ENTERTAINMENT, INC.
COLONY HCR VOTECO, LLC,
COLONY INVESTORS III, L.P.
AND
HARVEYS CASINO RESORTS
TABLE OF CONTENTS
PAGE
ARTICLE I. SALE AND TRANSFER OF SHARES; CLOSING..............................1
Section 1.1 Basic Transaction..........................................1
Section 1.2 Closing....................................................1
Section 1.3 Purchase Price.............................................1
Section 1.4 Closing Deliveries.........................................4
ARTICLE II. EFFECT OF THE CLOSING ON OPTIONS OF HARVEYS......................4
Section 2.1 Harveys Option Plan........................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF HARVEYS.......................5
Section 3.1 Organization of Harveys and its Subsidiaries...............5
Section 3.2 Capitalization.............................................6
Section 3.3 Authority; No Conflict; Required Filings and Consents......7
Section 3.4 Public Filings; Financial Statements.......................8
Section 3.5 No Undisclosed Liabilities.................................9
Section 3.6 Absence of Certain Changes or Events.......................9
Section 3.7 Taxes.....................................................10
Section 3.8 Real Property.............................................12
Section 3.9 Title to Personal Property; Liens.........................14
Section 3.10 Intellectual Property....................................14
Section 3.11 Agreements, Contracts and Commitments....................14
Section 3.12 Litigation...............................................15
Section 3.13 Environmental Matters....................................15
Section 3.14 Employee Benefit Plans...................................17
Section 3.15 Compliance with Gaming Laws..............................20
Section 3.16 Information Statement....................................21
Section 3.17 Labor Matters............................................21
Section 3.18 Insurance................................................21
Section 3.19 Nevada Takeover Statute..................................22
Section 3.20 Brokers..................................................22
Section 3.21 Transactions With Affiliates.............................22
ARTICLE IV. Representations and Warranties of Sellers.......................22
Section 4.1 Organization of Certain Sellers...........................22
Section 4.2 Authority.................................................22
Section 4.3 No Conflict; Required Filings and Consents................23
Section 4.4 Brokers...................................................23
Section 4.5 Harveys Shares............................................23
Section 4.6 All Harveys Capital Stock.................................24
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF XXXXXX'X.......................24
Section 5.1 Organization..............................................24
i
PAGE
Section 5.2 Authority; No Conflict; Required Filings and Consents.....24
Section 5.3 Intentionally Omitted.....................................25
Section 5.4 Brokers...................................................25
Section 5.5 Financing.................................................25
Section 5.6 Compliance with Gaming Laws...............................26
ARTICLE VI. COVENANTS.......................................................27
Section 6.1 Conduct of Business of Harveys............................27
Section 6.2 Cooperation; Notice; Cure.................................31
Section 6.3 No Solicitation...........................................31
Section 6.4 Employee Matters..........................................31
Section 6.5 Written Consent and Information Statement.................32
Section 6.6 Access to Information.....................................32
Section 6.7 Governmental Approvals....................................33
Section 6.8 Publicity.................................................34
Section 6.9 Indemnification...........................................34
Section 6.10 Stockholder Litigation...................................35
Section 6.11 Further Assurances and Actions...........................35
Section 6.12 Transfer Taxes...........................................35
Section 6.13 Harveys Stockholders.....................................36
ARTICLE VII. CONDITIONS TO CLOSING..........................................36
Section 7.1 Conditions to Each Party's Obligation to Effect the Closing36
Section 7.2 Additional Conditions to Obligations of Harveys...........36
Section 7.3 Additional Conditions to Obligations of Xxxxxx'x..........37
ARTICLE VIII. TERMINATION AND AMENDMENT.....................................38
Section 8.1 Termination...............................................38
Section 8.2 Effect of Termination.....................................39
Section 8.3 Fees and Expenses.........................................39
Section 8.4 Sellers' Representative...................................39
Section 8.5 Amendment.................................................39
Section 8.6 Extension; Waiver.........................................39
ARTICLE IX. MISCELLANEOUS...................................................40
Section 9.1 Survival of Certain Matters Following Termination or
Closing...................................................40
Section 9.2 Notices...................................................40
Section 9.3 Interpretation............................................41
Section 9.4 Counterparts..............................................42
Section 9.5 Entire Agreement; No Third Party Beneficiaries............42
Section 9.6 Governing Law.............................................42
Section 9.7 Assignment................................................42
Exhibit 1.3(b) Illustration of Calculation of Total Transaction
Consideration
ii
PAGE
Exhibit 6.13 Form of Joinder
iii
TABLE OF DEFINED TERMS
CROSS REFERENCE
TERMS IN AGREEMENT
----- ------------
Accountants Section 1.3(d)
Acquisition Proposal Section 6.3(a)
Agreement Preamble
Benefit Arrangement Section 3.14(a)
"best knowledge" Section 9.3
Budget Section 6.1
Class A Consideration Section 1.3(a)
Class B Consideration Section 1.3(a)
Closing Section 1.2
Closing Date Section 1.2
Closing Schedule Section 1.3(c)
Code Section 3.7(g)
Colony III Preamble
Confidentiality Agreement Section 6.6
Determination Date Section 1.3(b)
Employee Plans Section 3.14(a)
Environmental Condition Section 3.13
Environmental Laws Section 3.13
Environmental Liabilities and Costs Section 3.13
ERISA Section 3.14(a)
ERISA Affiliate Section 3.14(a)
Exchange Act Section 3.4(a)
Foreign Plan Section 3.14(a)
GAAP Section 3.4(b)
Governmental Approvals Section 6.7(a)
Governmental Entity Section 3.3(c)
Xxxxxx'x Preamble
Xxxxxx'x Disclosure Schedule Article V
Xxxxxx'x Gaming Laws Section 5.6(b)
Xxxxxx'x Material Adverse Effect Section 5.1
Xxxxxx'x Permits Section 5.6(a)
Harveys Preamble
Harveys Balance Sheet Section 3.4(b)
Harveys Class A Section 3.2(a)
Harveys Class B Section 3.2(a)
Harveys Common Stock Section 3.2(a)
Harveys Disclosure Schedule Article III
Harveys Gaming Laws Section 3.15(b)
Harveys Leased Property Section 3.8(a)
Harveys Material Adverse Effect Section 3.1
Harveys Material Contracts Section 3.11(a)
iv
CROSS REFERENCE
TERMS IN AGREEMENT
----- ------------
Harveys Owned Property Section 3.8(a)
Harveys Permits Section 3.15(a)
Harveys Preferred Stock Section 3.2(a)
Harveys Real Property Section 3.8(a)
Harveys SEC Reports Section 3.4(a)
Harveys Stock Option Plan Section 2.1
HSR Act Section 3.3(c)
Indebtedness Section 3.11(a)
Indemnified Parties Section 6.9(a)
Information Statement Section 3.16
Iowa West Letter of Credit Section 1.3(b)
IRS Section 3.7(h)
Joinder Section 6.13
Lease Documents Section 3.8(c)
Multiemployer Plan Section 3.14(a)
Net Working Capital Section 1.3(b)
Notifying Party Section 6.7(a)
NRS Section 3.19
Option Settlement Amount Section 2.1
Options Section 2.1
Pension Plan Section 3.14(a)
Pinnacle Transaction Section 3.11(c)
SEC Section 3.3(c)
Securities Act Section 3.4(a)
Seller Disclosure Schedule Article IV
Sellers Preamble
Sellers' Representative Section 8.4
Sellers' Representative Certificate Section 1.3(a)
Shares Preamble
Special Flood Hazard Area Section 3.8(f)
Subsidiary Section 3.1
Tax Return Section 3.7(h)
Taxes Section 3.7(h)
Third Party Section 6.3(a)
Total Transaction Consideration Section 1.3(a)
Voteco Preamble
Voting Debt Section 3.2(b)
Welfare Plan Section 3.14(a)
v
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of April 24, 2001,
by and among XXXXXX'X ENTERTAINMENT, INC., a Delaware corporation ("Xxxxxx'x"),
COLONY HCR VOTECO, LLC, a Delaware limited liability company ("Voteco"), COLONY
INVESTORS III, L.P., a Delaware limited partnership ("Colony III"), those other
persons executing a Joinder hereto pursuant to Section 6.13 hereof (collectively
with Voteco and Colony III, "Sellers") and HARVEYS CASINO RESORTS, a Nevada
corporation ("Harveys").
WHEREAS, Voteco and Colony III own, in the aggregate, at least 95% of all
of the outstanding capital stock of Harveys;
WHEREAS, Sellers desire to sell, and Xxxxxx'x desires to purchase, all of
the issued and outstanding shares of capital stock of Harveys (the "Shares"),
for the consideration and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
SALE AND TRANSFER OF SHARES; CLOSING
Section 1.1 Basic Transaction. On and subject to the terms and conditions
of this Agreement, Xxxxxx'x agrees to purchase from each of the Sellers, and
each of the Sellers agrees to sell to Xxxxxx'x, all of his or its Shares for the
consideration specified below in this Article I.
Section 1.2 Closing. The purchase and sale (the "Closing") provided for in
this Agreement will take place at such time and place to be agreed upon by
Xxxxxx'x, Harveys and the Sellers' Representative, on a date to be specified by
Xxxxxx'x, Harveys and the Sellers' Representative, which shall be no later than
the fifth business day after satisfaction or, if permissible, waiver of the
conditions set forth in Article VII (the "Closing Date"), unless another date is
agreed to by Xxxxxx'x, Harveys and the Sellers' Representative.
Section 1.3 Purchase Price.
(a) The Sellers shall be entitled to a total transaction consideration
(the "Total Transaction Consideration") to be calculated pursuant to this
Section 1.3, to be allocated among them pursuant to the direction of Colony III,
as evidenced by a certificate signed by the general partner thereof in the form
set forth as Exhibit 1.3(a) hereto (the "Sellers' Representative Certificate"),
certifying as to the allocation of such consideration and indicating the per
share allocation for each of the Harveys Class A and the Harveys Class B (the
"Class A Consideration" and the "Class B Consideration," respectively). Payment
of the Total Transaction Consideration shall be made in the manner described in
this Section 1.3.
(b) The "Total Transaction Consideration" shall equal: (i) $625 million,
MINUS (ii) the sum of (A) the amount, as set forth on the balance sheet of
Harveys as of the last day of
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the month immediately preceding the Closing Date (the "Determination Date"), in
accordance with GAAP, without duplication, of indebtedness for borrowed money
(long-term and short-term (including current portion of long-term debt)),
capitalized lease obligations, synthetic lease obligations, obligations with
respect to letters of credit (other than letters of credit with respect to up to
$3.75 million of workers compensation obligations and the letter of credit for
$45 million established pursuant to, and any other amounts payable under (to the
extent the same are set forth on the balance sheet), the Purchase and Sale
Agreement and Joint Escrow Instructions, dated as of August 31, 1999, as amended
October 6, 1999, by and between HBR Realty Company, Inc. and Iowa West Racing
Association (the "Iowa West Letter of Credit")), (B) other guarantees of
indebtedness to third parties of the types set forth in clause (ii)(A) and (C)
all payments due to Xxxxxxx X. Xxxxxxx pursuant to the Separation Agreement,
dated as of January 4, 2001, by and between Harveys and Xxxxxxx X. Xxxxxxx,
calculated as of and fully satisfied on the Closing Date, MINUS (iii) an amount
equal to $20,155,000 (reflecting the agreed upon appropriate amount of cash and
cash equivalents to be on hand at the Determination Date), PLUS (iv) the amount
of cash and cash equivalents actually on hand as of the Determination Date, PLUS
(v) the proceeds (net of any amounts required to be withheld for related taxes)
of the exercise of any stock option exercises from the date hereof to and
including the Determination Date, PLUS (vi) any increase in the amount of Net
Working Capital between that set forth on Schedule 1.3(b) hereto and the Net
Working Capital as of the Determination Date, PLUS (vii) any payments up to
$8,100,000 made pursuant to the Vision Iowa Project Memorandum of Understanding,
dated as of December 19, 2000, substantially in accordance with the Budget,
MINUS (viii) any decrease in the amount of Net Working Capital between that set
forth on Exhibit 1.3(b) hereto and the Net Working Capital as of the
Determination Date, PLUS (ix) the amount of any unbudgeted expenditures made by
Harveys after the date hereof and on or prior to the Determination Date that
require Xxxxxx'x' consent under this Agreement and that have been made with the
consent of Xxxxxx'x, MINUS (x) any amounts payable upon or after the Closing to
investment bankers and financial advisors of Harveys with respect to services
rendered in connection with the transactions contemplated hereby in excess of
$4,000,000, MINUS (xi) any amounts payable upon or after the Closing to counsel
of Harveys with respect to the transactions contemplated hereby in excess of
$1,000,000 MINUS (xii) the amount paid in cancellation of Options, together with
any related holdback, pursuant to Section 2.1, including any amounts required to
be withheld therefrom for related taxes, PLUS (xiii) the unamortized premium of
Harveys' 10 5/8% Senior Subordinated Notes, PLUS (xiv) $110,000 per day
following the Determination Date up to but not including the Closing Date, MINUS
(xv) the amount of any budgeted capital expenditures provided in the Budget that
Harveys fails to make (such expenditures to be calculated as $42,500 per day
from the date hereof to but not including the Closing Date), MINUS (xvi) the
amount of any obligation to make any payment (whether in cash or other property)
agreed or committed to by Harveys or any of its Subsidiaries, whether existing
on the date hereof or incurred thereafter, through the Closing Date, MINUS
(xvii) for the purpose of paying out the total consideration due to the
stockholders of Harveys at the Closing, without duplication, the pro rata amount
of Total Transaction Consideration as determined in (i) through (xvi) above to
be paid at or after the Closing to other Harveys stockholders as of the Closing
Date that have not executed Joinders in accordance with Section 6.13 prior to
the Closing Date. "Net Working Capital" shall equal (x) the sum of all current
assets (other than cash and cash equivalents), MINUS (y) the sum of all current
liabilities (other than short-term debt indebtedness (including current portion
of long-term debt) and other obligations referred to in clause (ii) above), it
being expressly agreed for purposes of avoiding
2
any double counting that any amount or item which would otherwise be included in
the calculation of Net Working Capital but is otherwise an addition or deduction
pursuant to the calculation of Total Transaction Consideration shall be excluded
from the calculation of Net Working Capital, both as of the Determination Date
and as of February 28, 2001. By way of example only and for purposes of
clarification, Exhibit 1.3(b) sets forth a calculation of the Total Transaction
Consideration using the Harveys balance sheet as of February 28, 2001.
(c) On or prior to the Closing Date, Harveys shall deliver a calculation
of the Total Transaction Consideration as of the Closing Date, using the form of
calculation thereof as illustrated in Exhibit 1.3(b) hereto (the "Closing
Schedule"). The Total Transaction Consideration shall be paid by Xxxxxx'x to
Sellers in accordance with this Section 1.3 on the Closing Date. Notwithstanding
any change with respect to Harveys' accounting policies or procedures subsequent
to the date hereof, the accounting policies and procedures used to calculate
Total Transaction Consideration or to produce the Closing Statement shall be the
same as those in effect on the date hereof.
(d) Post-Closing Adjustment. If within twenty days following the Closing
Date Xxxxxx'x has not given to the Sellers' Representative notice of its
objection to the Closing Schedule (such notice must contain a statement of the
basis of Xxxxxx'x' objection), then the Total Transaction Consideration as
calculated pursuant to the foregoing shall be deemed accepted. If Xxxxxx'x gives
such notice of objection, then the issues in dispute will be submitted to
Deloitte & Touche LLP, certified public accountants (the "Accountants"), for
resolution and the Accountants shall issue a report with respect to such issue
not later than 20 days after such submission. If issues in dispute are submitted
to the Accountants for resolution, (i) each party will furnish to the
Accountants such workpapers and other documents and information relating to the
disputed issues as the Accountants may request and are available to that party
or its Subsidiaries (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (ii)
the determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; and
(iii) Xxxxxx'x and the Sellers will each bear 50% of the fees of the Accountants
for such determination; PROVIDED, HOWEVER, that if the Accountants determine
that the Total Transaction Consideration should be adjusted downward by an
amount in excess of $5.0 million or upward by an amount in excess of $5.0
million, then Sellers, in the case of a downward adjustment, or Xxxxxx'x, in the
case of an upward adjustment, shall bear the fees of such Accountants.
(e) On the third business day following the earlier of (i) the final
determination by the Accountants of the amount of the Total Transaction
Consideration pursuant to Section 1.3(d), if such Total Transaction
Consideration is greater than the aggregate of the payments made pursuant to
Section 1.3(b), Xxxxxx'x will pay the difference to Sellers and holders of
Options cashed out pursuant to Section 2.1 and other Harveys stockholders that
have not executed Joinders and whose shares have been repurchased by Harveys at
Closing, to be allocated on a per share basis consistent with the manner
utilized at Closing, and if such Total Transaction Consideration is less than
such aggregate amount, Sellers and holders of Options cashed out pursuant to
Section 2.1 and other Harveys stockholders that have not executed Joinders and
whose shares have been repurchased by Harveys at Closing, on a per share basis
consistent with
3
the manner utilized at Closing, will pay the difference to Xxxxxx'x. All
payments will be made together with interest at 7.0% compounded daily beginning
on the Closing Date and ending on the date of payment. Payments must be made in
immediately available funds. Payments to Xxxxxx'x must be made by wire transfer
to such bank account as Xxxxxx'x will specify.
Section 1.4 Closing Deliveries.
(a) Sellers will deliver to Xxxxxx'x on the Closing Date:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank, for transfer to Xxxxxx'x;
(ii) the resignation of Xxxxxx X. Xxxxxxx, Xx. as the sole director
of Harveys and each of its Subsidiaries;
(iii) FIRPTA certificates in form and substance reasonably
satisfactory to Xxxxxx'x;
(iv) a certificate executed by each Seller to the effect that such
Seller's representations and warranties set forth in this Agreement were true
and correct in all material respects as of the date of this Agreement and are
accurate in all material respects as of the Closing Date as though made on and
as of the Closing Date, except for changes contemplated or permitted by this
Agreement; and
(b) Xxxxxx'x will deliver to Sellers on the Closing Date:
(i) the Total Transaction Consideration as determined in Section
1.3, via wire transfer as directed by the Sellers' Representative in writing;
and
(ii) the certificates required by Sections 7.2(a) and 7.2(b).
(c) Xxxxxx'x will deliver to Harveys on the Closing Date:
(i) the capital contribution to Harveys as specified in Section 2.1;
and
(ii) any amounts required to repurchase shares of other Rabbit
stockholders that have not executed Joinders pursuant to Section 6.13 that are
being repurchased at Closing.
ARTICLE II.
EFFECT OF THE CLOSING ON OPTIONS OF HARVEYS
Section 2.1 Harveys Option Plan. Concurrently with the Closing, each
unexpired and unexercised outstanding option, whether or not then vested or
exercisable in accordance with its terms, to purchase shares of Harveys Common
Stock ("Options") previously granted by Harveys or its Subsidiaries under
Harveys' 1999 Omnibus Incentive Plan (the "Harveys Stock Option Plan") will
become exercisable in full and each holder of an Option shall be entitled to
receive from Harveys in cancellation thereof a payment (subject to applicable
income tax withholding,
4
employer taxes and a holdback amount set forth in the Sellers' Representative
Certificate) in an amount equal to (i) the excess, if any, of the applicable
Class A Consideration or Class B Consideration, as the case may be, over the per
share exercise price of such Option, multiplied by (ii) the number of shares of
Harveys Common Stock subject to such Option (the "Option Settlement Amount").
The Option Settlement Amount, less the holdback amount set forth in the Sellers'
Representative Certificate, shall be paid in cash concurrently with the Closing.
In order to facilitate such payment, Xxxxxx'x concurrently with the Closing
shall acquire shares of capital stock from Harveys for an aggregate purchase
price equal to the aggregate Option Settlement Amount (plus applicable income
tax withholding, employer taxes and heldback amounts) payable to all such
Harveys Option holders. The Option Settlement Amount shall be paid in cash
concurrently with the Closing. From and after the Closing, there shall be no
outstanding and exercisable Options. The surrender of an Option shall be deemed
a release of any and all rights the holder had or may have in respect of such
Option. The Harveys Stock Option Plan and any and all other agreements, plans,
programs or arrangements of Harveys and its Subsidiaries that provide for the
issuance or grant of Options or any other interest in respect of the capital
stock of Harveys or capital stock of or other ownership interest in any of its
Subsidiaries shall terminate as of the Closing. Immediately following the
Closing, no holder of an Option or any participant in the Harveys Stock Option
Plan or any other agreement, plan, program or arrangement of Harveys shall have
any right thereunder to acquire equity securities or other ownership interests
of Harveys or any Subsidiary thereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF HARVEYS
Harveys represents and warrants to Xxxxxx'x that the statements contained
in this Article III are true and correct except as set forth herein and in the
disclosure schedule delivered by Harveys to Xxxxxx'x on or before the date of
this Agreement (the "Harveys Disclosure Schedule"). The Harveys Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article III and the disclosure in any
paragraph shall qualify other paragraphs in this Article III.
Section 3.1 Organization of Harveys and its Subsidiaries. Each of Harveys
and its Subsidiaries (as defined below) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and has
all requisite corporate, partnership or limited liability company power and
authority to carry on its business as now being conducted and as proposed to be
conducted prior to the Closing. Each of Harveys and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so qualified, licensed or in good standing would
not have a material adverse effect on the business, properties, condition
(financial or otherwise), results of operations or prospects of Harveys and its
Subsidiaries, taken as a whole, or any of the three separate businesses operated
as the Harveys Resort & Casino -- Lake Tahoe, Harveys Casino/Hotel Council
Bluffs and Bluffs Run Casino (a "Harveys Material Adverse Effect"); PROVIDED,
HOWEVER, that the following, individually and in the aggregate, shall be
excluded from the definition of "Harveys Material Adverse Effect" and from any
determination as to whether any Harveys Material Adverse Effect has occurred or
may occur: any
5
reduction, in and of itself, in historic or prospective revenues, net income or
EBITDA of Harveys C.C. Management Company, Inc. or Harveys Wagon Wheel
Hotel/Casino. Harveys has delivered to Xxxxxx'x a true and correct copy of the
Articles of Incorporation and Bylaws of Harveys and each of its Subsidiaries, in
each case as amended to the date of this Agreement. Assuming compliance by
Xxxxxx'x, its Subsidiaries and their key employees with all Harveys Gaming Laws
(as defined in Section 3.15(b)) (including obtaining all necessary consents and
approvals), the respective organizational documents of Harveys' Subsidiaries do
not contain any provision that would limit or otherwise restrict the ability of
Xxxxxx'x, following the Closing, from owning or operating such Subsidiaries on
the same basis as Harveys. Except as set forth in Harveys SEC Reports (as
defined in Section 3.4(a)) filed prior to the date hereof or as disclosed in
Section 3.1 of the Harveys Disclosure Schedule, neither Harveys nor any of its
Subsidiaries directly or indirectly owns (other than ownership interests in
Harveys or in one or more of its Subsidiaries) any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association or entity.
As used in this Agreement, the word "Subsidiary" means, with respect to any
party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party is
a general partner or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries.
Section 3.2 Capitalization.
(a) The authorized capital stock of Harveys consists of 20,000,000
shares of Harveys common stock, consisting of 10,000,000 shares of Harveys Class
A Common Stock, par value $0.01 per share ("Harveys Class A"), and 10,000,000
shares of Harveys Class B Common Stock, par value $0.01 per share ("Harveys
Class B" and, together with Harveys Class A, "Harveys Common Stock"), and
1,000,000 shares of preferred stock, $0.01 par value per share ("Harveys
Preferred Stock"). As of the date hereof, (i) 68,876 shares of Harveys Class A
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) 7,268,427 shares of Harveys Class B were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
(iii) no shares of Harveys Preferred Stock are issued and outstanding. Section
3.2(a) of the Harveys Disclosure Schedule sets forth the number of shares of
Harveys Common Stock reserved for issuance upon exercise of Options granted and
outstanding as of the date hereof. Section 3.2(a) of the Harveys Disclosure
Schedule also sets forth, for the Harveys Stock Option Plan, the dates on which
Options under the plan were granted, the number of Options granted on each such
date and the exercise price thereof. Since February 28, 2001, Harveys has not
made any grants under the Harveys Stock Option Plan. As of the date of this
Agreement, Harveys has not granted any stock appreciation rights or any other
contractual rights the value of which is derived from the financial performance
of Harveys or the value of shares of Harveys Common Stock. There are no
obligations, contingent or otherwise, of Harveys or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Harveys Common Stock or
the capital stock or ownership interests of any Subsidiary or to provide funds
to or make any material investment (in the form of a loan, capital contribution
or otherwise) in any such Subsidiary or any other entity other than guarantees
of bank obligations or
6
indebtedness for borrowed money entered into in the ordinary course of business.
All of the outstanding shares of capital stock (including shares which have been
issued upon exercise of outstanding options) or other ownership interests of
each of Harveys' Subsidiaries are duly authorized, validly issued, fully paid
and nonassessable and, except as disclosed in Section 3.2(a) of the Harveys
Disclosure Schedule, all such shares and ownership interests are owned by
Harveys or another Subsidiary of Harveys free and clear of all security
interests, liens, claims, pledges, agreements, limitations on Harveys' voting
rights, charges or other encumbrances or restrictions on transfer of any nature,
other than imposed by applicable gaming laws.
(b) There are no bonds, debentures, notes or other indebtedness of
Harveys or any of its Subsidiaries having voting rights (or convertible into
securities having such rights) ("Voting Debt") issued and outstanding. Except as
set forth in Section 3.2(b) of the Harveys Disclosure Schedule or as reserved
for future grants of options or restricted stock under the Harveys Stock Option
Plan as of the date hereof, (i) there are no shares of capital stock of any
class of Harveys, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding; (ii) there are
no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which Harveys or any of its Subsidiaries is a
party or by which it is bound obligating Harveys or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other ownership interests (including Voting Debt) of
Harveys or any of its Subsidiaries or obligating Harveys or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, call, right, commitment or agreement; and
(iii) there are no voting trusts, proxies or other voting agreements or
understandings to which Harveys or any of its Subsidiaries is a party or by
which it or they are bound with respect to the shares of capital stock of
Harveys. All shares of Harveys Common Stock subject to issuance as specified in
this Section 3.2(b) are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable. Harveys shall have the
right at the Closing pursuant to the Harveys stock option and restricted stock
agreements to repurchase all of the outstanding shares of Harveys Common Stock,
other than those held by any Seller, for the same price per share as the price
to be paid to Sellers.
(c) Section 3.2(c) of the Harveys Disclosure Schedule sets forth all
stockholders of Harveys and the number of shares of Harveys Common Stock owned
by each.
Section 3.3 Authority; No Conflict; Required Filings and Consents.
(a) Harveys has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions to which it is a party
that are contemplated by this Agreement. The execution and delivery of this
Agreement by Harveys and the consummation by Harveys of the transactions to
which it is a party that are contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Harveys. This
Agreement has been duly executed and delivered by Harveys and, assuming this
Agreement constitutes the valid and binding obligation of the other parties
hereto, constitutes the valid and binding obligation of Harveys, enforceable
against Harveys in accordance with its terms, subject, as to enforcement, to (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereinafter in effect affecting creditors' rights generally and (ii)
general principles of equity.
7
(b) Other than as disclosed in Section 3.3(b) of the Harveys Disclosure
Schedule, the execution and delivery of this Agreement by Harveys does not, and
the consummation by Harveys of the transactions to which it is a party that are
contemplated by this Agreement will not, (i) conflict with, or result in any
violation or breach of, any provision of the Articles of Incorporation or Bylaws
of Harveys or the comparable charter or bylaws of any of its Subsidiaries, (ii)
result in any violation or breach of, or constitute (with or without notice or
lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require a consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Harveys or any of its Subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound, or (iii) subject to the governmental filings and other matters referred
to in Section 3.3(c), conflict with or violate any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Harveys or any of its Subsidiaries or any of its or
their properties or assets, except in the case of clauses (ii) and (iii) for any
such breaches, conflicts, violations, defaults, terminations, cancellations,
accelerations, losses or failures to obtain any such consent or waiver which (x)
are not, individually or in the aggregate, reasonably likely to have a Harveys
Material Adverse Effect or (y) would not materially impair or materially delay
the Closing.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission, gaming
authority or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Harveys or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Harveys or the
consummation by Harveys or such Subsidiaries of the transactions to which it is
or they are a party that are contemplated hereby, except for (i) the filing of
the pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("HSR Act"), (ii) the filing of the
Information Statement (as defined in Section 3.16 below) with the Securities and
Exchange Commission (the "SEC") in accordance with the Exchange Act, (iii) any
approvals and filing of notices required under the Harveys Gaming Laws (as
defined in Section 3.15(b)), (iv) such consents, approvals, orders,
authorizations, permits, filings, declarations or registrations related to, or
arising out of, compliance with statutes, rules or regulations regulating the
consumption, sale or serving of alcoholic beverages or the renaming or
rebranding of the operations of Harveys and its Subsidiaries, (v) such consents,
approvals, orders, authorizations, permits, registrations, declarations and
filings as may be required under applicable state securities laws, (vi) such
filings and consents as may be required under any environmental health or safety
law or regulation pertaining to any notification, disclosure or required
approval triggered by the Closing or the transactions contemplated by this
Agreement, the failure of which to make or obtain, respectively, would not be
reasonably likely to result in a Harveys Material Adverse Effect, (vii) such
other filings, consents, approvals, orders, authorizations, permits,
registrations and declarations as may be required under the laws of any
jurisdiction in which Harveys or any of its Subsidiaries conducts any business
or owns any assets the failure of which to make or obtain would not be
reasonably likely to have a Harveys Material Adverse Effect and (viii) any
consents, approvals, orders, authorizations, registrations, permits,
declarations or filings required by Xxxxxx'x, any of its Subsidiaries,
affiliates or key employees (including, without limitation, under the Xxxxxx'x
Gaming Laws (as defined in Section 5.6(b)).
8
Section 3.4 Public Filings; Financial Statements.
(a) Harveys has filed all forms, reports and documents required to be
filed by Harveys with the SEC since February 28, 1999 (collectively, the
"Harveys SEC Reports"). The Harveys SEC Reports (including any financial
statements filed as a part thereof or incorporated by reference therein) (i) at
the time filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such subsequent filing), complied in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and
(ii) did not, at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such subsequent
filing), contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Harveys SEC Reports or necessary in
order to make the statements in such Harveys SEC Reports, in the light of the
circumstances under which they were made, not misleading. None of Harveys'
Subsidiaries is required to file forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) of Harveys contained in the Harveys SEC Reports filed
prior to the date hereof complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto in
effect at the time of such filing, was prepared in accordance with generally
accepted accounting principles ("GAAP") in effect at the time of such
preparation applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes to such financial statements or, in the
case of unaudited statements, as permitted by Form 10-Q under the Exchange Act)
and fairly presented in all material respects the consolidated financial
position of Harveys and its consolidated Subsidiaries as of the dates, and the
consolidated results of its operations and cash flows for the periods,
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which, with respect to
interim periods since November 30, 2000, were not or are not expected to be
material in amount. The unaudited balance sheet of Harveys as of February 28,
2001 is referred to herein as the "Harveys Balance Sheet."
Section 3.5 No Undisclosed Liabilities. Except as disclosed in the Harveys
SEC Reports filed prior to the date hereof or in Section 3.5 of the Harveys
Disclosure Schedule, and except for liabilities and obligations incurred since
November 30, 2000 in the ordinary course of business consistent with past
practices, Harveys and its consolidated Subsidiaries do not have any
indebtedness, obligations or liabilities of any kind, whether accrued,
contingent or otherwise (whether or not required to be reflected in financial
statements in accordance with GAAP), and whether due or to become due, which
would be reasonably likely to have a Harveys Material Adverse Effect. Neither
Harveys nor its Subsidiaries has any financial obligation in respect of its or
their interest in the City of South Lake Tahoe redevelopment plan pursuant to
the Memorandum of Understanding, dated as of January 3, 1995, by and between the
South Tahoe Redevelopment Agency, and Harveys Resort Hotel/Casino - Lake Tahoe,
as amended by that certain Addendum No. 1, dated January 2, 1996, as further
amended by that certain Addendum No. 2, dated as of January 7, 1997, as further
amended by that certain Addendum No. 3, dated as
9
of January 19, 1999, and as further amended by that certain Addendum No. 4,
dated as of January 16, 2001
Section 3.6 Absence of Certain Changes or Events. As of the date hereof,
except as disclosed in the Harveys SEC Reports filed prior to the date hereof or
in Section 3.6 of the Harveys Disclosure Schedule, since the date of the Harveys
Balance Sheet, Harveys and its Subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice and, since
such date, there has not been (i) any event, development, state of affairs or
condition, or series or combination of events, developments, states of affairs
or conditions, which, individually or in the aggregate, has had or is reasonably
likely to have a Harveys Material Adverse Effect; (ii) any damage, destruction
or loss (whether or not covered by insurance) with respect to Harveys or any of
its Subsidiaries which is reasonably likely to have a Harveys Material Adverse
Effect; (iii) any material change by Harveys in its accounting methods,
principles or practices of which Xxxxxx'x has not previously been informed; (iv)
any revaluation by Harveys of any of its assets which is reasonably likely to
have a Harveys Material Adverse Effect; (v) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of Harveys or of any of its
Subsidiaries, or any redemption, purchase or other acquisition by Harveys or any
of its Subsidiaries of any securities of Harveys or any of its Subsidiaries;
(vi) any split, combination or reclassification of any of Harveys' capital stock
or any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for, shares of Harveys' capital stock;
(vii) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees of
Harveys or any Subsidiary other than increases which would not be material,
individually or in the aggregate, with respect to such officers or employees
receiving such benefit or compensation (based on a comparison to benefits and
compensation received in the year ended November 30, 2000); (viii) any entry
into, renewal, modification or extension of, any material contract, arrangement
or agreement between Harveys or its Subsidiaries, on the one hand, and with any
other party, on the other hand, except for contracts, arrangements or agreements
made in the ordinary course of business or as contemplated by this Agreement; or
(ix) any settlement of pending or threatened litigation involving Harveys or any
of its Subsidiaries (whether brought by a private party or a Governmental
Entity) other than any settlement which is not reasonably likely to have a
Harveys Material Adverse Effect.
Section 3.7 Taxes.
(a) Each of Harveys and its Subsidiaries has timely filed with the
appropriate taxing authorities all material Federal, state and local income Tax
Returns (as defined in Section 3.7(h)) and all other material Tax Returns
required to be filed through the date hereof and will timely file any such
returns required to be filed on or prior to the Closing Date. Such Tax Returns
and other information filed are (and, to the extent they will be filed prior to
the Closing, will be) complete and accurate in all material respects. None of
Harveys or its Subsidiaries has pending any request for an extension of time
within which to file federal, state or local income Tax Returns. Harveys has
provided to Xxxxxx'x copies of Harveys' Federal and state income Tax Returns for
the taxable years ended November 30, 1997, November 30, 1998 and November 30,
1999.
10
(b) All Taxes (as defined in Section 3.7(h)) in respect of periods
beginning before the Closing Date have been paid or will be timely paid, or an
adequate reserve has been or will be established therefor in accordance with
GAAP by each of Harveys and its Subsidiaries subject to such exceptions as are
not likely to have a Harveys Material Adverse Effect.
(c) No Federal, state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending with regard to any
material Taxes or material Tax Returns of any of Harveys or its Subsidiaries
subject to such exceptions as are not likely to have a Harveys Material Adverse
Effect. Neither Harveys nor any of its Subsidiaries has received a written
notice of any such pending audits or proceedings. There are no outstanding
waivers extending the statutory period of limitation relating to the payment of
Taxes due from Harveys or any of its Subsidiaries.
(d) Neither the IRS nor any other taxing authority (whether domestic or
foreign) has asserted in writing, or to the best knowledge of Harveys, is
threatening to assert, against Harveys or any of its Subsidiaries any material
deficiency or material claim for Taxes in excess of the reserves established
therefor except as which is not likely to have a Harveys Material Adverse
Effect.
(e) There are no liens for Taxes upon any property or assets of Harveys or
any Subsidiary thereof, except for liens for Taxes not yet due and payable and
liens for Taxes that are being contested in good faith by appropriate
proceedings as set forth in the Harveys Disclosure Schedule and as to which
adequate reserves have been established in accordance with GAAP except as which
would not be reasonably likely to have a Harveys Material Adverse Effect.
(f) Neither Harveys nor any of its Subsidiaries has any obligation under
any Tax sharing agreement or similar arrangement with any other person or entity
with respect to Taxes of such other person or entity.
(g) Neither Harveys nor any of its Subsidiaries has, with regard to any
assets or property held or acquired by any of them, filed a consent to the
application of Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code"), or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by Harveys or any of its Subsidiaries, except as
which would not be reasonably likely to have a Harveys Material Adverse Effect;
(h) "Taxes" shall mean any and all taxes, charges, fees, levies, duties,
liabilities, impositions or other assessments, including, without limitation,
income, gross receipts, profits, excise, real or personal property,
environmental, recapture, sales, use, value-added, withholding, social security,
retirement, employment, unemployment, occupation, service, license, net worth,
payroll, franchise, gains, stamp, transfer and recording taxes, fees and
charges, imposed by the Internal Revenue Service ("IRS") or any other taxing
authority (whether domestic or foreign including, without limitation, any state,
county, local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies, duties, liabilities, impositions or other
11
assessments. For purposes of this Agreement, "Taxes" also includes any
obligations under any agreements or arrangements with any other person or entity
with respect to Taxes of such other person or entity (including pursuant to
Treas. Reg. ss. 1.1502-6 or comparable provisions of state, local or foreign tax
law) and including any liability for Taxes of any predecessor entity. "Tax
Return" shall mean any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including attachments
thereto and amendments thereof, and including, without limitation, information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
Section 3.8 Real Property.
(a) Section 3.8(a) of the Harveys Disclosure Schedule identifies all real
property owned by Harveys and its Subsidiaries (the "Harveys Owned Property")
and all real property leased or operated by Harveys and its Subsidiaries (the
"Harveys Leased Property"). The Harveys Owned Property and the Harveys Leased
Property is referred to herein collectively as the "Harveys Real Property."
(b) Harveys and its Subsidiaries have good and marketable fee simple title
to the Harveys Owned Property, and a valid leasehold interest in the Harveys
Leased Property, free and clear of any and all liens, encumbrances,
restrictions, leases, options to purchase, options to lease, covenants,
assessments, defects, claims or exceptions, except for the exceptions described
in the Lease Documents (as defined below) or the exceptions described in the
Harveys SEC Reports or such other liens or exceptions that do not and would not,
individually or in the aggregate, materially interfere with the use of the
Harveys Real Property as currently used or would not be reasonably likely to
have a Harveys Material Adverse Effect.
(c) True and correct copies of the documents under which the Harveys
Leased Property is leased or operated (the "Lease Documents") have been
delivered or made available for review to Xxxxxx'x. The Lease Documents are
unmodified and in full force and effect, and there are no other agreements,
written or oral, between Harveys or any of its Subsidiaries in the Harveys
Leased Property or otherwise relating to the use and occupancy of the Harveys
Owned Property or Harveys Leased Property. None of Harveys, its Subsidiaries or,
to the best knowledge of Harveys and its Subsidiaries, any other party, is in
material default under the Lease Documents, and, to the best knowledge of
Harveys, no defaults (whether or not subsequently cured) by Harveys, its
Subsidiaries or any other party have been alleged thereunder. To the best
knowledge of Harveys and its Subsidiaries: (i) each landlord named in any of the
Lease Documents is not in material default thereunder, and (ii) no material
defaults (whether or not subsequently cured) by such landlord have been alleged
thereunder.
(d) Except as disclosed in Section 3.8(d) of the Harveys Disclosure
Schedule, (i) except as otherwise disclosed in written materials made available
to Xxxxxx'x or in Section 3.13 of the Harveys Disclosure Schedule, to the best
knowledge of Harveys and its Subsidiaries, no land or property adjacent to the
Harveys Real Property is in material violation of any applicable laws,
regulations or Restrictions, except for such violations which, individually or
in the aggregate, would not be reasonably likely to result in a Harveys Material
Adverse Effect; and
12
(ii) there are no material defects in the physical condition of the Harveys Real
Property or the improvements located on the Harveys Real Property, except for
defects which, individually or in the aggregate, would not be reasonably likely
to have a Harveys Material Adverse Effect.
(e) Except as disclosed in Section 3.8(e) of the Harveys Disclosure
Schedule, neither Harveys nor any of its Subsidiaries has received written
notice of, or has any actual knowledge of, any action, proceeding or litigation
pending (and, to the best knowledge of Harveys and its Subsidiaries, overtly
contemplated or threatened) (i) to take all or any portion of the Harveys Real
Property, or any interest therein, by eminent domain; (ii) to modify the zoning
of, or other governmental rules or restrictions applicable to, the Harveys Real
Property or the use or development thereof; (iii) for any street widening or
changes in highway or traffic lanes or patterns in the immediate vicinity of the
Harveys Real Property; or (iv) otherwise relating to the Harveys Real Property
or the interests of Harveys and its Subsidiaries therein, which would be
reasonably likely to interfere with the use, ownership, improvement, development
and/or operation of the Harveys Real Property; in each case except for such
actions, proceedings or litigation which, individually or in the aggregate,
would not be reasonably likely to have a Harveys Material Adverse Effect.
(f) Except as disclosed in Section 3.8(f) of the Harveys Disclosure
Schedule, no portion of the Harveys Real Property or the roads immediately
adjacent to and currently utilized to access the Harveys Real Property: (i) is
situated in a "Special Flood Hazard Area," as set forth on a Federal Emergency
Management Agency Flood Insurance Rate Map or Flood Hazard Boundary Map; (ii)
except as otherwise disclosed in written materials made available to Xxxxxx'x or
in Section 3.13 of the Harveys Disclosure Schedule, to the best knowledge of
Harveys and its Subsidiaries, was the former site of any public or private
landfill, dump site, retention basin or settling pond; (iii) except as otherwise
disclosed in written materials made available to Xxxxxx'x or in Section 3.13 of
the Harveys Disclosure Schedule, to the best knowledge of Harveys and its
Subsidiaries, was the former site of any oil or gas drilling operations; or (iv)
except as otherwise disclosed in written materials made available to Xxxxxx'x or
in Section 3.13 of the Harveys Disclosure Schedule, to the best knowledge of
Harveys and its Subsidiaries, was the former site of any experimentation,
processing, refining, reprocessing, recovery or manufacturing operation for any
petrochemicals.
(g) The parcels constituting the Harveys Owned Property are assessed
separately from all other adjacent property not constituting Harveys Owned
Property for purposes of real property taxes and except as disclosed in Section
3.8(g) of the Harveys Disclosure Schedule to the best knowledge of Harveys and
its Subsidiaries the property leased to the applicable Harveys Subsidiary
pursuant to each applicable Lease Document and each of the Parcels of the
Harveys Owned Real Property complies with all applicable subdivision, land
parcelization and local governmental taxation or separate assessment
requirements, without reliance on property not constituting Harveys Real
Property.
(h) Except as disclosed in Section 3.8(h) of the Harveys Disclosure
Schedule, the Harveys Real Property is connected to and serviced by adequate
water, sewage disposal, gas and electricity facilities and all material systems
(including, without limitation, heating, air conditioning, electrical, plumbing
and fire/life safety systems) for the basic operation of the
13
Harveys Real Property are operable and in good condition (ordinary wear and tear
excepted), except as would not be reasonably likely to have a Harveys Material
Adverse Effect.
(i) There are no material commitments to or agreements with any
governmental authority or agency (federal, state or local) affecting the use or
ownership of the Harveys Real Property which are not listed in Section 3.8(i) of
the Harveys Disclosure Schedule or described in the Harveys SEC Reports.
(j) There are no contracts or other obligations outstanding for the sale,
exchange, material encumbrance, lease or transfer of any of the Harveys Real
Property, or any portion of it, or the businesses operated by Harveys or any of
its Subsidiaries thereon, except as disclosed in Section 3.8(j) of the Harveys
Disclosure Schedule and other than contracts and obligations entered into after
the date of this Agreement in compliance with Section 6.1.
Section 3.9 Title to Personal Property; Liens. To the best knowledge of
Harveys, Harveys and each of its Subsidiaries has sufficiently good and valid
title to, or an adequate leasehold interest in, its material tangible personal
properties and assets (including all riverboats operated by Harveys and its
Subsidiaries) in order to allow it to conduct, and continue to conduct, its
business as and where currently conducted. Such material tangible personal
assets and properties are sufficiently free of liens to allow each of Harveys
and its Subsidiaries to conduct, and continue to conduct, its business as and
where currently conducted and, to the best knowledge of Harveys, the
consummation of the transactions contemplated by this Agreement will not alter
or impair such ability in any respect which, individually or in the aggregate,
would be reasonably likely to have a Harveys Material Adverse Effect. There are
no defects in the physical condition or operability of such material tangible
personal assets and properties which would impair the use of such assets and
properties as and where such assets and properties are currently used, except
for such defects which, individually or in the aggregate, would not be
reasonably likely to have a Harveys Material Adverse Effect.
Section 3.10 Intellectual Property. Section 3.10 of the Harveys Disclosure
Schedule lists all (i) trademark and service xxxx registrations and applications
and web domain urls owned by Harveys or any of its Subsidiaries and (ii)
trademark, service xxxx and trade name license agreements to which Harveys or
any of its Subsidiaries is a party. Except as disclosed in Section 3.10 of the
Harveys Disclosure Schedule, Harveys and its Subsidiaries own or possess
adequate and enforceable rights to use all material trademarks, trademark
applications, trade names, service marks, trade secrets (including customer
lists and customer databases), copyrights, patents, licenses, know-how and other
proprietary intellectual property rights as are necessary in connection with the
businesses of Harveys and its Subsidiaries as currently conducted without
material restrictions or material conditions on use, and, to the best knowledge
of Harveys, there is no conflict with the rights of Harveys and its Subsidiaries
therein or any conflict by them with the rights of others therein which,
individually or in the aggregate would be reasonably likely to have a Harveys
Material Adverse Effect.
Section 3.11 Agreements, Contracts and Commitments.
(a) Except as disclosed in the Harveys SEC Reports filed prior to the date
of this Agreement, as disclosed in Section 3.11(a) of the Harveys Disclosure
Schedule or as
14
contemplated by this Agreement, neither Harveys nor any of its Subsidiaries is a
party to any oral or written (i) agreement, contract, indenture or other
instrument relating to Indebtedness (as defined below) in an amount exceeding
$500,000, (ii) partnership, joint venture or limited liability or management
agreement with any person (other than as between Harveys and its wholly-owned
Subsidiaries), (iii) agreement, contract, or other instrument relating to any
merger, consolidation, business combination, share exchange, business
acquisition, or for the purchase, acquisition, sale or disposition of any assets
of Harveys or any of its Subsidiaries outside the ordinary course of business,
(iv) other contract, agreement or commitment to be performed after the date
hereof which would be a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC), (v) agreement, contract, or other instrument
relating to any "strategic alliances" (i.e., cross-marketing, affinity
relationships, etc.), (vi) contract, agreement or commitment which materially
restricts (geographically or otherwise) the conduct of any line of business by
Harveys or any of its Subsidiaries (collectively, the "Harveys Material
Contracts"). "Indebtedness" means any liability in respect of (A) borrowed
money, (B) capitalized lease obligations, (C) the deferred purchase price of
property or services (other than trade payables in the ordinary course of
business) and (D) guarantees of any of the foregoing incurred by any other
person other than Harveys or any of its Subsidiaries.
(b) Except as disclosed in the Harveys SEC Reports or as disclosed in
Section 3.11(b) of the Harveys Disclosure Schedule, (i) each of the Harveys
Material Contracts is valid and binding upon Harveys or any of its Subsidiaries,
as the case may be (and, to Harveys' best knowledge, on all other parties
thereto), in accordance with its terms and is in full force and effect, (ii)
there is no material breach or violation of or default by Harveys or any of its
Subsidiaries under any of the Harveys Material Contracts, whether or not such
breach, violation or default has been waived, and (iii) no event has occurred
with respect to Harveys or any of its Subsidiaries which, with notice or lapse
of time or both, would constitute a material breach, violation or default of, or
give rise to a right of termination, modification, cancellation, foreclosure,
imposition of a lien, prepayment or acceleration under, any of the Harveys
Material Contracts, which breach, violation, default, termination, modification,
cancellation, foreclosure, imposition of a lien, prepayment or acceleration
referred to in clause (ii) or (iii), alone or in the aggregate with other such
breaches, violations, defaults, terminations, modifications, cancellations,
foreclosures, impositions of a lien, prepayments or accelerations referred to in
clause (ii) or (iii), would be reasonably likely to have a Harveys Material
Adverse Effect.
(c) Except as disclosed in Section 3.11(c) of the Harveys Disclosure
Schedule, Harveys and its Subsidiaries have terminated, and have no continuing
liabilities or obligations under, any agreement, contract or arrangement with
any person or entity relating to (i) the unconsummated acquisition of Pinnacle
Entertainment, Inc. (the "Pinnacle Transaction") or (ii) the proposed resort in
Salisbury Beach, Massachusetts.
Section 3.12 Litigation. Except as disclosed in the Harveys SEC Reports
filed prior to the date of this Agreement or in Section 3.12 of the Harveys
Disclosure Schedule, (a) there is no action, suit or proceeding, claim,
arbitration or investigation against Harveys, or any of its Subsidiaries
pending, or as to which Harveys, or any of its Subsidiaries has received any
written notice of assertion or, to the best knowledge of Harveys, threatened
against, Harveys or any of its Subsidiaries or any property or asset of Harveys
or any of its Subsidiaries, before any court,
15
arbitrator, or administrative, governmental or regulatory authority or body,
domestic or foreign, that, individually or in the aggregate, would be reasonably
likely to (i) have a Harveys Material Adverse Effect or (ii) prevent the
consummation of the transactions contemplated by this Agreement; and (b) there
is no judgment, order, injunction or decree of any Governmental Entity
outstanding against Harveys or any of its Subsidiaries that would be reasonably
likely to have any effect referred to in clauses (i) or (ii) above. Harveys has
received no notice of any pending or current SEC investigation of Harveys
related to the Pinnacle Transaction.
Section 3.13 Environmental Matters.
Except as disclosed in Section 3.13 of the Harveys Disclosure Schedule or
as would not be reasonably likely to have a Harveys Material Adverse Effect, (a)
Harveys is in compliance with all applicable Environmental Laws and to Harveys'
knowledge holds all permits, registrations and licenses necessary under
Environmental Laws, (b) to Harveys' knowledge there are no Environmental
Liabilities and Costs of Harveys and its Subsidiaries, (c) to Harveys' knowledge
there are no Environmental Conditions, (d) none of Harveys and its Subsidiaries
has received any notices from any governmental agency or other third party
alleging liability under or violation of any Environmental Law, or alleging
responsibility for the removal, clean-up, or remediation of any Environmental
Condition, (e) Harveys is not subject to any enforcement or investigatory action
by any governmental agency regarding an Environmental Condition with respect to
any Harveys Real Property or any other property related in any way to Harveys or
its Subsidiaries (f) to Harveys' knowledge no asbestos containing materials or
polychlorinated biphenyls (i.e., PCBs) are contained in or stored on any of the
Harveys Real Properties, and (g) to Harveys' knowledge there have been no leaks,
releases, spills or discharge of fluids from any underground or above-ground
storage tanks located on any of the Harveys Real Properties. As used herein, the
terms "toxic" or "hazardous" wastes, substances or materials shall include,
without limitation, all those so designated and all those in any way regulated
by any Environmental Laws. The representations and warranties in this Section
3.13 and in Sections 3.8(d) and 3.8(f), constitute the sole and exclusive
representations and warranties made by Harveys concerning Environmental Laws.
For purposes of this Section 3.13, the following definitions shall apply:
"ENVIRONMENTAL LAWS" means all applicable and legally enforceable foreign,
federal, state and local statutes or laws, common law, judgments, orders,
regulations, licenses, permits, rules and ordinances relating to pollution or
protection of health, safety or the environment, including, but not limited to
the Federal Water Pollution Control Act (33 U.S.C.ss.1251 ET SEQ.), Resource
Conservation and Recovery Act (42 U.S.C.ss.6901 ET SEQ.), Safe Drinking Water
Act (42 U.S.C.ss.3000(f) ET SEQ.), Toxic Substances Control Act (15
U.S.C.ss.2601 ET SEQ.), Clean Air Act (42 U.S.C.ss.7401 ET SEQ.), Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.ss.9601 ET
SEQ.) and other similar state and local statutes, in effect as of the date
hereof.
"ENVIRONMENTAL CONDITION" means the release into the environment of any
pollution, including without limitation any contaminant, pollutant, hazardous or
toxic waste, substance or material as a result of which Harveys (1) has or may
become liable to any person, (2) is or was in violation of any Environmental
Law, (3) has or may be required to incur response costs for
16
investigation or remediation, or (4) by reason of which any of the Properties or
other assets of Harveys, may be subject to any lien under Environmental Laws.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities, obligations,
responsibilities, obligations to conduct cleanup, losses, damages, deficiencies,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigations and
feasibility studies and responding to government requests for information or
documents), fines, penalties, restitution and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, resulting from any claim or demand, by any person or entity, under any
Environmental Law, or arising from Environmental Conditions.
Section 3.14 Employee Benefit Plans.
(a) DEFINITIONS. The following terms, when used in this Section 3.14
shall have the following meanings. Any of these terms may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
(i) BENEFIT ARRANGEMENT. "Benefit Arrangement" shall mean any
employment, consulting, severance or other similar contract, arrangement or
policy and each plan, program or agreement providing for workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, life insurance, health, accident benefits (including
without limitation any "voluntary employees' beneficiary association" as defined
in Section 501(c)(9) of the Code providing for the same or other benefits),
deferred compensation, profit-sharing bonuses, stock options, stock appreciation
rights, stock purchases or other forms of incentive compensation which (1) is
not a Welfare Plan, Pension Plan, Foreign Plan or Multiemployer Plan under which
Harveys or ERISA Affiliate may incur any liability, and (2) covers any employee
or former employee of Harveys or any ERISA Affiliate (with respect to their
relationship with such entities).
(ii) CODE. "Code" shall have the meaning set forth in Section
3.7(g).
(iii) EMPLOYEE PLANS. "Employee Plans" shall mean all Benefit
Arrangements, Multiemployer Plans, Foreign Plans, Pension Plans and Welfare
Plans.
(iv) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(v) ERISA AFFILIATE. "ERISA Affiliate" shall mean any entity which
is (or at any relevant time was) a member of a "controlled group of
corporations" with, under "common control" with, or a member of an "affiliated
service group" with, Harveys as defined in Section 414(b), (c), (m) or (o) of
the Code or any partnership of which Harveys or any of its Subsidiaries is a
general partner.
(vi) FOREIGN PLAN. "Foreign Plan" shall mean any employee benefit
plan covering employees or former employees of any Subsidiary of Harveys or any
ERISA Affiliate which is organized under the laws of any country other than the
U.S. (with respect to such
17
employees' relationship with such entities) which if maintained or administered
in or otherwise subject to the laws of the United States would constitute a
Pension Plan, a Multiemployer Plan or Welfare Plan.
(vii) MULTIEMPLOYER PLAN. "Multiemployer Plan" shall mean any
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA, under which
Harveys or any ERISA Affiliate may incur any liability.
(viii) PENSION PLAN. "Pension Plan" shall mean any "employee pension
benefit plan" as defined in Section 3(2) of ERISA (other than a Multiemployer
Plan) under which Harveys or any ERISA Affiliate may incur any liability.
(ix) WELFARE PLAN. "Welfare Plan" shall mean any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA, under which Harveys or any
ERISA Affiliate may incur any material liability.
(b) DISCLOSURE; DELIVERY OF COPIES OF RELEVANT DOCUMENTS AND OTHER
INFORMATION. Section 3.14(b) of the Harveys Disclosure Schedule contains a
complete list of the Employee Plans. True and complete copies of each of the
following documents (if applicable) have been made available by Harveys to
Xxxxxx'x: (i) each Employee Plan (other than any Multiemployer Plan) and, if
applicable, related trust agreements, and all amendments, (ii) the most recent
determination letter issued by the IRS or analogous ruling under foreign law
with respect to each Employee Plan, (iii) for the three most recent plan years,
Annual Reports on Form 5500 Series required to be filed with any governmental
agency for each Pension Plan and Welfare Plan, and (iv) all actuarial reports
prepared for the last three plan years for each Pension Plan.
(c) REPRESENTATIONS.
(i) Employee Plans
(A) No Pension Plan is subject to Title IV of ERISA or
the minimum funding requirements of Section 412 of the Code. Each
Pension Plan and each related trust that is intended to qualify
under the provisions of Code Section 401(a) and 501(a) has so
qualified during the period from its adoption to date.
(B) Each Employee Plan has been maintained in material
compliance with its terms and, both as to form and in operation,
with the requirements prescribed by any and all applicable laws,
including without limitation ERISA and the Code to the extent
applicable.
(C) (i) The methodologies used by Harveys to determine
participants' benefits and Harveys' liabilities under Harveys'
Supplemental Executive Retirement Plan, Senior Supplemental
Executive Retirement Plan and Section 7 of the Change of Control
Plan, as such methodologies have been disclosed to Xxxxxx'x, are a
reasonable application of the terms of such plans, (ii) Harveys'
calculation of the participants' benefits and Harveys' liabilities
18
thereunder as disclosed to Xxxxxx'x are accurate and consistent with
such methodologies and (iii) Harveys has consistently applied such
methodologies in the past. The seven participants in Harveys' Change
of Control Plan listed in that certain Resolution 2001-9 of the
Board of Directors of Harveys Casino Resorts Reaffirming
Participants in Harveys Casino Resorts Change of Control Plan,
attached hereto as Exhibit 3.14(c) are the only participants under
Harveys' Change of Control Plan.
(ii) Multiemployer Plans
(A) Neither Harveys nor any ERISA Affiliate has, at any
time, withdrawn from a Multiemployer Plan in a "complete withdrawal"
or a "partial withdrawal" as defined in Sections 4203 and 4205 of
ERISA, respectively, so as to result in a liability, contingent or
otherwise (including without limitation the obligations pursuant to
an agreement entered into in accordance with Section 4204 of ERISA),
of Harveys or any ERISA Affiliate which has not been fully
satisfied. Neither Harveys nor any ERISA Affiliate has engaged in,
or is a successor or parent corporation to an entity that has
engaged in, a transaction described in Section 4212(c) of ERISA. If,
as of the Closing Date, Harveys (and all ERISA Affiliates) were to
withdraw from all Multiemployer Plans to which it (or any of them)
has contributed or been obligated to contribute, it (and they) would
incur no material liabilities to such plans under Title IV of ERISA.
(B) To the best of Harveys' knowledge, with respect to
each Multiemployer Plan: (1) no such Multiemployer Plan has been
terminated or is in reorganization under ERISA so as to result,
directly or indirectly, in any liability, contingent or otherwise,
of Harveys or any ERISA Affiliate under Title IV of ERISA; and (2)
no proceeding has been initiated by any person (including the
Pension Benefit Guaranty Corporation) to terminate any Multiemployer
Plan.
(iii) WELFARE PLANS. None of Harveys, any ERISA Affiliate or any
Welfare Plan has any present or future obligation to make any payment to, or
with respect to any present or former employee of Harveys or any ERISA Affiliate
pursuant to, any retiree medical benefit plan, or other retiree Welfare Plan,
except to the extent required by the Code or ERISA. Harveys and its ERISA
Affiliates have performed all of their obligations with respect to all
self-funded and self-administered Welfare Plans and have made appropriate
entries in their financial statements for all obligations and liabilities under
such Welfare Plans that have accrued but are not yet due, including without
limitation, reserves for incurred but unreported claims. All required
contributions to, and payments from each Welfare Plan have been made on a timely
basis. No event has occurred and no circumstances exist that could result in a
material increase in premium costs of any Welfare Plans that are insured or in a
material increase in benefit costs of any Welfare Plans that are self-insured.
(iv) DEDUCTIBILITY OF PAYMENTS. There is no contract, agreement,
plan or arrangement covering any employee or former employee of Harveys (with
respect to its relationship with such entities) that, individually or
collectively, provides for the payment by
19
Harveys of any amount (i) that is not deductible under Section 162 or 404 of the
Code or (ii) that is an "excess parachute payment" pursuant to Section 280G of
the Code.
(v) LITIGATION. There is no material action, order, writ,
injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding, arbitral action, governmental audit or investigation, relating to or
seeking benefits under any Employee Plan that or to the best knowledge of
Harveys, is pending against Harveys, any ERISA Affiliate or any Employee Plan
(other than routine claims for benefits).
(vi) NO ACCELERATION OR CREATION OF RIGHTS. Except as provided in
Section 2.1 or disclosed in Section 3.14 of the Harveys Disclosure Schedule
neither the execution and delivery of this Agreement by Harveys nor the
consummation of the transactions contemplated hereby will result in the
acceleration or creation of any rights of any current or former employee of
Harveys or any of its Subsidiaries to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any benefits
under any Pension Plan or the acceleration or creation of any rights under any
severance, parachute or change in control agreement).
Section 3.15 Compliance with Gaming Laws.
(a) Each of Harveys and its Subsidiaries, and each of their respective
directors (but with respect to non-employee directors, only to Harveys' best
knowledge), officers, persons performing management functions similar to
officers and, to Harveys' best knowledge, partners hold all permits,
registrations, findings of suitability, licenses, variances, exemptions,
certificates of occupancy, orders and approvals of all Governmental Entities
(including all authorizations under Harveys Gaming Laws, the Merchant Marine Act
of 1920 and the Shipping Act of 1916 and Certificates of Inspection issued by
the U.S. Coast Guard), necessary to conduct the business and operations of
Harveys and each of its Subsidiaries, each of which is in full force and effect
in all material respects, except for such permits, registrations, findings of
suitability, licenses, variances, exemptions, certificates of occupancy, orders
and approvals the failure of which to hold would not, individually or in the
aggregate, be reasonably likely to have a Harveys Material Adverse Effect (the
"Harveys Permits") and no event has occurred which permits, or upon the giving
of notice or passage of time or both would permit, revocation, non-renewal,
modification, suspension, limitation or termination of any Harveys Permit that
currently is in effect the loss of which either individually or in the aggregate
would be reasonably likely to have a Harveys Material Adverse Effect. Each of
Harveys and its Subsidiaries, and each of their respective directors (but with
respect to non-employee directors, only to Harveys' best knowledge), officers,
persons performing management functions similar to officers and, to Harveys'
best knowledge, partners, are in compliance with the terms of the Harveys
Permits, except for such failures to comply, which singly or in the aggregate,
would not, individually or in the aggregate, be reasonably likely to have a
Harveys Material Adverse Effect. Except as disclosed in the Harveys SEC Reports
filed prior to the date of this Agreement, the businesses of Harveys and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity (including, without limitation, any
Harveys Gaming Laws), except for possible violations which individually or in
the aggregate do not and would not be reasonably likely to have a Harveys
Material Adverse Effect. Harveys has received no notice of any
20
investigation or review by any Governmental Entity with respect to Harveys or
any of its Subsidiaries that is pending, and, to the best knowledge of Harveys,
no investigation or review is threatened, nor has any Governmental Entity
indicated any intention to conduct the same, other than those the outcome of
which would not, individually or in the aggregate, be reasonably likely to have
a Harveys Material Adverse Effect.
(b) The term "Harveys Gaming Laws" means any Federal, state, local or
foreign statute, ordinance, rule, regulation, permit, consent, registration,
finding of suitability, approval, license, judgment, order, decree, injunction
or other authorization, including any condition or limitation placed thereon,
governing or relating to the current or contemplated casino and gaming
activities and operations and manufacturing and distributing operations of
Harveys or any of its Subsidiaries, including, without limitation, the Nevada
Gaming Control Act and the rules and regulations promulgated thereunder, the
Xxxxxxx County, Nevada Code and the rules and regulations promulgated
thereunder, the Iowa Parimutuel Wagering Act, Chapter 99D of the Code of Iowa,
the Riverboat Gambling Act, Chapter 99F of the Code of Iowa and the rules and
regulations of the Iowa Racing and Gaming Commission promulgated under Chapters
99D and 99F, the Colorado Division of Gaming and the rules and regulations
promulgated thereunder and any applicable state gaming law and any federal or
state laws relating to currency transactions.
(c) Except as disclosed in Section 3.15(c) of the Harveys Disclosure
Schedule, neither Harveys nor any of its Subsidiaries, nor any of their
respective directors (but with respect to non-employee directors, only to
Harveys' best knowledge), officer, key employee or persons performing management
functions similar to officers or, to Harveys' best knowledge, partners of
Harveys or any of its Subsidiaries has received any written claim, demand,
notice, complaint, court order or administrative order from any Governmental
Entity in the past three years under, or relating to any violation or possible
violation of any Harveys Gaming Laws which did or would be reasonably likely to
result in fines or penalties of $50,000 or more. To Harveys' best knowledge,
there are no facts, which if known to the regulators under the Harveys Gaming
Laws would be reasonably likely to result in the revocation, limitation or
suspension of a license, finding of suitability, registration, permit or
approval of it or them, or of any officer, director, other person performing
management functions similar to an officer or partner, under any Harveys Gaming
Laws. Neither Harveys nor any of its Subsidiaries has suffered a suspension or
revocation of any Harveys Permit held under the Harveys Gaming Laws.
Section 3.16 Information Statement. Neither the Information Statement to
be sent to the stockholders of Harveys in connection with the action taken by
written consent of Harveys' stockholders with respect to approval of "excess
parachute payments" pursuant to Section 280G of the Code (the "Information
Statement"), nor any amendment thereof or supplement thereto, will, as of the
date thereof, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Information Statement will comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations thereunder in effect as of the filing date thereof; provided,
however, that Harveys makes no representation with respect to any information
supplied or to be supplied by Xxxxxx'x for inclusion in the Information
Statement or any amendment thereof or supplement thereto.
21
Section 3.17 Labor Matters. Except as disclosed in Section 3.17 of the
Harveys Disclosure Schedule or as would not be reasonably likely to have a
Harveys Material Adverse Effect, (i) to the best knowledge of Harveys, there are
no activities or proceedings of any labor union to organize any non-unionized
employees; (ii) neither Harveys nor any of its Subsidiaries has breached or
otherwise failed to comply with any provision of any collective bargaining
agreement or contract and there are no grievances outstanding against Harveys or
any of its Subsidiaries under any such agreement or contract; (iii) there are no
unfair labor practice complaints pending against Harveys or any of its
Subsidiaries before the National Labor Relations Board, or any similar foreign
labor relations governmental bodies, or any current union representation
questions involving employees of Harveys or any of its Subsidiaries; and (iv)
there is no strike, slowdown, work stoppage or lockout, or, to the best
knowledge of Harveys, threat thereof, by or with respect to any employees of
Harveys or any of its Subsidiaries. Harveys and its Subsidiaries are not parties
to any collective bargaining agreements.
Section 3.18 Insurance. Harveys has provided to Xxxxxx'x accurate and
complete copies of all material fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by Harveys or any of its Subsidiaries. All such insurance
policies are with reputable insurance carriers and provide coverage as is
reasonably prudent to cover normal risks incident to the business of Harveys and
its Subsidiaries and their respective properties and assets.
Section 3.19 Nevada Takeover Statute. As of the date hereof and at all
times on or prior to the Closing, the provisions of Sections 78.378 through
78.3793 of the Nevada Revised Statutes (the "NRS") are, and shall be,
inapplicable to the transactions contemplated by this Agreement.
Section 3.20 Brokers. None of Harveys, any of its Subsidiaries, or, to the
best knowledge of Harveys, any of their respective officers, directors or
employees have employed any broker, financial advisor or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement, except that Harveys has
retained Bear, Xxxxxxx & Co. Inc. and Xxxxxxx Xxxxx & Co., Inc. as its financial
advisors, the arrangements with which have been disclosed to Xxxxxx'x prior to,
and will not be modified in a manner adverse to Xxxxxx'x subsequent to, the date
of this Agreement.
Section 3.21 Transactions With Affiliates. Other than the transactions
contemplated by this Agreement and except to the extent disclosed in the Harveys
SEC Reports or as disclosed in Section 3.21 of the Harveys Disclosure Schedule,
from February 2, 1999 through the date of this Agreement, there have been no
transactions, agreements, arrangements or understandings between Harveys or any
of its Subsidiaries, on the one hand, and Harveys' affiliates or other persons,
on the other hand, that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act.
22
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each Seller represents and warrants to Xxxxxx'x, severally and not
jointly, as to itself that the statements contained in this Article IV are true
and correct except as set forth herein and in the disclosure schedule delivered
by Sellers' Representative to Xxxxxx'x on or before the date of this Agreement
(the "Seller Disclosure Schedule"). The Seller Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article IV and the disclosure in any paragraph shall qualify
other paragraphs in this Article IV.
Section 4.1 Organization of Certain Sellers. If such Seller is a
corporation, limited liability company or limited partnership, it is duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization.
Section 4.2 Authority. Such Seller has the requisite power and authority
to enter into this Agreement (or any Joinder hereto) and to consummate the
transactions to which it is a party that are contemplated by this Agreement and
to perform his or its obligations hereunder. This Agreement (or any Joinder
hereto) has been duly executed and delivered by such Seller and, assuming this
Agreement (or any Joinder hereto) constitutes the valid and binding obligation
of the other parties hereto, constitutes the valid and binding obligation of
such Seller, enforceable against such Seller in accordance with its terms,
subject, as to enforcement, to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereinafter in effect
affecting creditors' rights generally and (ii) general principles of equity.
Section 4.3 No Conflict; Required Filings and Consents
(a) Neither the execution and delivery of this Agreement by such Seller,
nor the consummation by such Seller of the transactions to which it is a party
that are contemplated by this Agreement will, (i) if such Seller is a
corporation, limited liability company or limited partnership, conflict with, or
result in any violation or breach of, any provision of the certificate of
incorporation, limited liability or operating agreement or partnership agreement
of such Seller, (ii) result in any violation or breach of, or constitute a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which such Seller is a party or by which such Seller or any of its
properties or assets may be bound, or (iii) subject to the governmental filings
and other matters referred to in Section 4.3(b) conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to such Seller or any of its properties
or assets, except in the case of clauses (ii) and (iii) for any such breaches,
conflicts, violations, defaults, terminations, cancellations, accelerations,
losses or failures to obtain any such consent or waiver which would not
materially impair or materially delay the Closing.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to such Seller in connection with the execution and delivery of this
Agreement or the consummation by such Seller of the transactions to which it is
a party that are contemplated hereby, except for (i) filings under the
23
Exchange Act, the HSR Act or the Harveys Gaming Laws or (ii) such consents,
approvals, orders, authorizations, registrations, declarations, or filings
required by or with respect to Xxxxxx'x or Harveys or any of its Subsidiaries
(including, without limitation, under the HSR Act, the Harveys Gaming Laws and
the Xxxxxx'x Gaming Laws).
Section 4.4 Brokers. Such Seller has not employed any broker, financial
advisor or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement, except that Harveys has retained Bear, Xxxxxxx & Co. Inc. and Xxxxxxx
Xxxxx & Co., Inc. as its financial advisors.
Section 4.5 Harveys Shares. Such Seller holds of record and owns
beneficially the number of Harveys Shares set forth next to such Seller's name
in Section 3.2(c) of the Harveys Disclosure Schedule, free and clear of all
security interests, liens, claims, pledges, agreements, limitations on such
Seller's voting rights, charges or other encumbrances or restrictions on
transfer of any nature, other than those imposed by the Securities Act, state
securities laws or applicable gaming laws. Sellers are not parties to any
option, warrant, purchase right, or other contract or commitment (other than
this Agreement) obligating such Seller to sell, transfer, or otherwise dispose
of any capital stock of Harveys. Such Seller is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the voting of any
capital stock of Harveys.
Section 4.6 All Harveys Capital Stock. Upon the Closing, Xxxxxx'x shall
own all of such Seller's shares of capital stock of Harveys.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF XXXXXX'X
Xxxxxx'x represents and warrants to Harveys that the statements contained
in this Article V are true and correct except as set forth herein and in the
disclosure schedule delivered by Xxxxxx'x to Harveys on or before the date of
this Agreement (the "Xxxxxx'x Disclosure Schedule"). The Xxxxxx'x Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article V and the disclosure in any
paragraph shall qualify other paragraphs in this Article V only to the extent
that it is reasonable from a reading of such disclosure that it also qualifies
or applies to such other paragraphs.
Section 5.1 Organization. Each of Xxxxxx'x and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate, partnership
and limited liability company power and authority to carry on its business as
now being conducted and as proposed to be conducted prior to the Closing. Each
of Xxxxxx'x and its Subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified, licensed or in good standing would not have a material adverse effect
on the business, properties, condition (financial or otherwise), results of
operations or prospects of Xxxxxx'x and its Subsidiaries, taken as a whole (a
"Xxxxxx'x Material Adverse Effect"). Xxxxxx'x has delivered to Harveys a true
and correct copy of the Certificate of Incorporation and Bylaws of Xxxxxx'x, as
amended to the date of this Agreement.
24
Section 5.2 Authority; No Conflict; Required Filings and Consents.
(a) Xxxxxx'x has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation by
Xxxxxx'x of the transactions to which it is a party that are contemplated by
this Agreement by Xxxxxx'x have been duly authorized by all necessary corporate
action on the part of Xxxxxx'x. This Agreement has been duly executed and
delivered by Xxxxxx'x and constitutes the valid and binding obligation of
Xxxxxx'x, enforceable against Xxxxxx'x in accordance with its terms, subject, as
to enforcement, to (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereinafter in effect affecting creditors'
rights generally and (ii) general principles of equity.
(b) Other than as disclosed in Section 5.2(b) of the Xxxxxx'x Disclosure
Schedule, the execution and delivery of this Agreement by Xxxxxx'x does not, and
the consummation by Xxxxxx'x of the transactions to which it is a party that are
contemplated by this Agreement will not, (i) conflict with, or result in any
violation or breach of, any provision of the Certificate of Incorporation or
Bylaws of Xxxxxx'x or the comparable charter or organizational documents of any
of its Subsidiaries, (ii) result in any violation or breach of, or constitute
(with or without notice or lapse of time, or both) a default (or give rise to a
right of termination, cancellation or acceleration of any obligation or loss of
any material benefit) under, or require a consent or waiver under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which Xxxxxx'x or any
of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) subject to the governmental filings
and other matters referred to in Section 5.2(c), conflict with or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Xxxxxx'x or any of its Subsidiaries
or any of its or their properties or assets, except in the case of clauses (ii)
and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which (x) are not, individually or in the
aggregate, reasonably likely to have a Xxxxxx'x Material Adverse Effect or (y)
would not impair or delay the Closing.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Xxxxxx'x or any of its Subsidiaries in connection with the execution
and delivery of this Agreement by Xxxxxx'x or the consummation by Xxxxxx'x or
such Subsidiaries of the transactions to which it is or they are a party that
are contemplated hereby or thereby, except for (i) the filing of the pre-merger
notification report under the HSR Act, (ii) any approvals and filing of notices
required under the Xxxxxx'x Gaming Laws (as defined in Section 5.6(b)) or the
Harveys Gaming Laws, (iii) such consents, approvals, orders, authorizations,
permits, filings, or registrations related to, or arising out of, compliance
with statutes, rules or regulations regulating the consumption, sale or serving
of alcoholic beverages, (iv) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws, (v) such filings and consents as may be required under
any environmental health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Closing or the
transactions contemplated by this Agreement, the failure of which to make or
obtain, respectively, would not be reasonably likely to result in a Xxxxxx'x
Material Averse Effect, and
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(vi) such other filings, consents, approvals, orders, registrations and
declarations as may be required under the laws of any jurisdiction in which the
Company or any of its Subsidiaries conducts any business or owns any assets the
failure of which to make or obtain would not be reasonably likely to have a
Xxxxxx'x Material Adverse Effect.
Section 5.3 Intentionally Omitted.
Section 5.4 Brokers. None of Xxxxxx'x, any of its Subsidiaries, or any of
their respective officers, directors or employees have employed any broker,
financial advisor or finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement, except that Xxxxxx'x has retained Deutsche Banc Alex. Xxxxx Inc.
and CIBC World Markets as financial advisors, the arrangements with which have
been disclosed in writing to Harveys prior to the date hereof.
Section 5.5 Financing. Xxxxxx'x will have available on the Closing Date
sufficient funds to enable Xxxxxx'x to (i) pay the Total Transaction
Consideration (exclusive of the deduction set forth in clauses (xii) and (xvii)
of Section 1.3(b)), (ii) purchase any of Harveys' outstanding 105/8 % Senior
Subordinated Notes due 2006 required to be purchased pursuant to the change of
control provisions contained in the instruments governing such indebtedness,
(iii) repay all outstanding amounts under the Second Amended and Restated Credit
Agreement, dated as of October 5, 1999, as amended, among Harveys and certain of
its Subsidiaries, as Borrowers, the Lenders herein named, Xxxxx Fargo Bank,
National Association, as Swingline Lender, L/C Issuer and Agent Bank, Credit
Lyonnais Los Angeles Branch, as Syndication Co-Agent, Deutsche Bank Securities,
as Documentation Agent, Societe Generale and Bank One, N. A. as Co-Managing
Agents and (iv) replace, assume or substitute in full the Iowa West Letter of
Credit.
Section 5.6 Compliance with Gaming Laws.
(a) Each of Xxxxxx'x and its Subsidiaries, and each of their respective
directors (but with respect to non-employee directors, only to Xxxxxx'x' best
knowledge), officers, persons performing management functions similar to
officers and, to Xxxxxx'x' best knowledge, partners, hold all permits,
registrations, findings of suitability, licenses, variances, exemptions,
certificates of occupancy, orders and approvals of all Governmental Entities
under the Xxxxxx'x Gaming Laws necessary to conduct the business and operations
of Xxxxxx'x and each of its Subsidiaries, each of which is in full force and
effect in all material respects, except for such permits, registrations,
findings of suitability, licenses, variances, exemptions, certificates of
occupancy, orders and approvals the failure of which to hold would not,
individually or in the aggregate, be reasonably likely to have a Xxxxxx'x
Material Adverse Effect (the "Xxxxxx'x Permits") and no event has occurred which
permits, or upon the giving of notice or passage of time or both would permit,
revocation, non-renewal, modification, suspension, limitation or termination of
any Xxxxxx'x Permit that currently is in effect the loss of which either
individually or in the aggregate would be reasonably likely to have a Xxxxxx'x
Material Adverse Effect. Each of Xxxxxx'x and its Subsidiaries, and each of
their respective directors (but with respect to non-employee directors, only to
Xxxxxx'x' best knowledge), officers, persons performing management functions
similar to officers and, to Xxxxxx'x' best knowledge, partners, are in
compliance with the terms of the Xxxxxx'x Permits, except for such failures to
comply, which singly or in the aggregate, would not,
26
individually or in the aggregate, be reasonably likely to have a Xxxxxx'x
Material Adverse Effect. Except as disclosed in the forms, reports, and
documents required to be filed by Xxxxxx'x with the SEC filed prior to the date
of this Agreement, the businesses of Xxxxxx'x and its Subsidiaries are not being
conducted in violation of any Xxxxxx'x Gaming Law, except for possible
violations which individually or in the aggregate do not and would not be
reasonably likely to have a Xxxxxx'x Material Adverse Effect. Xxxxxx'x has
received no notice of any investigation or review by any Governmental Entity
under any Xxxxxx'x Gaming Law with respect to Xxxxxx'x or any of its
Subsidiaries that is pending, and, to the best knowledge of Xxxxxx'x, no
investigation or review is threatened, nor has any Governmental Entity indicated
any intention to conduct the same, other than those the outcome of which would
not, individually or in the aggregate, be reasonably likely to have a Xxxxxx'x
Material Adverse Effect.
(b) The term "Xxxxxx'x Gaming Laws" means any Federal, state, local or
foreign statute, ordinance, rule, regulation, permit, consent, registration,
finding of suitability, approval, license, judgment, order, decree, injunction
or other authorization, including any condition or limitation placed thereon,
governing or relating to the current or contemplated casino and gaming
activities and operations of Xxxxxx'x or any of its Subsidiaries, including,
without limitation, the Nevada Gaming Control Act and the rules and regulations
promulgated thereunder, the Xxxxx County, Nevada Code and the rules and
regulations promulgated thereunder, the Xxxxxxx County, Nevada Code and the
rules and regulations promulgated thereunder, the Louisiana Economic Development
and Gaming Act and the rules and regulations promulgated thereunder, the
Louisiana Riverboat Economic Gaming Control Act and the rules and regulations
promulgated thereunder, the New Jersey Casino Control Act and the rules and
regulations promulgated thereunder, and the rules and regulations promulgated
thereunder, the Illinois Riverboat Gambling Act and the rules and regulations
promulgated thereunder, the Mississippi Gaming Control Act and the rules and
regulations promulgated thereunder, the Missouri Riverboat Gambling Act and the
rules and regulations promulgated thereunder, the Indian Gaming Regulatory Act
of 1988 and the rules and regulations promulgated thereunder, any state-tribal
gaming compact and any applicable state gaming law and any federal or state laws
relating to currency transactions.
(c) Except as disclosed in Section 5.6(c) of the Xxxxxx'x Disclosure
Schedule, neither Xxxxxx'x nor any of its Subsidiaries, nor any director (but
with respect to non-employee directors, only to Xxxxxx'x' best knowledge),
officer, key employee or, to Xxxxxx'x' best knowledge, partners of Xxxxxx'x or
any of its Subsidiaries has received any written claim, demand, notice,
complaint, court order or administrative order from any Governmental Entity in
the past three years under, or relating to any violation or possible violation
of any Xxxxxx'x Gaming Laws which did or would be reasonably likely to result in
fines or penalties of $50,000 or more. To Xxxxxx'x' best knowledge, there are no
facts, which if known to the regulators under the Xxxxxx'x Gaming Laws could
reasonably be expected to result in the revocation, limitation or suspension of
a license, finding of suitability, registration, permit or approval of it or
them, or of any officer, director, person performing management functions
similar to an officer or partner, under any Xxxxxx'x Gaming Laws. Neither
Xxxxxx'x nor any of its Subsidiaries has suffered a suspension or revocation of
any Xxxxxx'x Permit held under the Xxxxxx'x Gaming Laws.
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ARTICLE VI.
COVENANTS
Section 6.1 Conduct of Business of Harveys. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Closing, subject to the limitations set forth below,
Harveys agrees as to itself and each of its Subsidiaries (except to the extent
that Xxxxxx'x shall otherwise consent in writing) to carry on its business in
the usual, regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts and Taxes when due subject to good faith
disputes over such debts or Taxes, to pay or perform its other obligations when
due, and, to the extent consistent with such business, use all reasonable
efforts consistent with past practices and policies to preserve intact its
present business organization, keep available the services of its present
officers and key employees and preserve its relationships with customers,
suppliers, distributors, and others having business dealings with it. Harveys
has delivered concurrently herewith its operating budget (the "Budget"). Harveys
shall make in all material respects the capital expenditures reflected in the
Budget. Without limiting the generality of the foregoing and except as expressly
contemplated by this Agreement, and except as disclosed on Section 6.1 of the
Harveys Disclosure Schedule, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Closing, without the written consent of Xxxxxx'x, Harveys shall not and shall
not permit any of its Subsidiaries to:
(i) adopt any amendment to its Articles of Incorporation or Bylaws
or comparable charter or organizational documents;
(ii) (A) issue, pledge or sell, or authorize the issuance, pledge or
sale of additional shares of capital stock of any class (other than upon
exercise of Options outstanding on the date of this Agreement), or securities
convertible into capital stock of any class, or any rights, warrants or options
to acquire any convertible securities or capital stock, or any other securities
in respect of, in lieu of, or in substitution for, shares of Harveys Common
Stock outstanding on the date hereof or (B) amend, waive or otherwise modify any
of the terms of any employee option, warrant or stock option plan of Harveys or
any of its Subsidiaries, including without limitation, the Options or the
Harveys Stock Option Plan, except that Harveys may make such amendments, waivers
and modifications that (i) will not impair in any respect Xxxxxx'x' ability to
consummate the transactions contemplated hereby and (ii) will not result in any
cost, liability or obligation to Xxxxxx'x or any of its Subsidiaries either
before or after Closing or any cost, liability or obligation to Harveys or its
Subsidiaries that adversely affects Xxxxxx'x or its Subsidiaries in any respect
whatsoever; provided, however, that Harveys shall be permitted to grant options
and issue stock or restricted stock to employees of Harveys and its
Subsidiaries, so long as such employees accept and agree to the terms of that
certain Stockholders Agreement, dated as of February 2, 1999, by and among
Harveys, Voteco, Colony III, and stockholders party thereto or, in the case of
any employee to be issued stock or restricted stock, such employee executes a
Joinder;
(iii) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock other than between any wholly-owned
Subsidiary of Harveys and Harveys or any other wholly-owned Subsidiary of
Harveys;
28
(iv) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(v) except as permitted by paragraph (ii) above, increase the
compensation or fringe benefits payable or to become payable to its directors,
officers or employees (whether from Harveys or any of its Subsidiaries), or pay
any benefit not required by any existing plan or arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units) or grant any severance or termination pay
to (except pursuant to existing agreements or policies, which shall be
interpreted and implemented in a manner consistent with past practice), or enter
into any employment or severance agreement with, any director, officer or
employee of Harveys or any of its Subsidiaries or establish, adopt, enter into,
or amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, savings, welfare, deferred
compensation, employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or welfare of any
directors, officers or current or former employees, including any Benefit
Arrangement, Pension Plan or Welfare Plan, except (i) to the extent required by
applicable law or regulation, (ii) pursuant to any collective bargaining
agreements or Employee Plan as in effect on the date of this Agreement
consistent with past practices or (iii) for salary and other benefit increases,
grants, payments or modifications in the ordinary course of business consistent
with past practice to employees other than executive officers of Harveys, (iv)
to extend the term of any existing employment agreements to a date not later
than the day following the Closing Date on the same terms as such previous
employment agreements, or (v) to pay bonuses to employees not otherwise
permitted pursuant to this Section 6.1 so long as the Total Transaction
Consideration is reduced in an amount equal to the aggregate amount of such
bonuses;
(vi) (A) sell, pledge, lease, dispose of, grant, encumber, or
otherwise authorize the sale, pledge, disposition, grant or encumbrance of any
of the properties or assets of Harveys or any of its Subsidiaries, except for
(1) sales of current assets in the ordinary course of business and consistent
with past practice in connection with Harveys' hotel, casino and related
operations, (2) sales of equipment and other non-current assets in the ordinary
course of business and consistent with past practice in connection with Harveys'
hotel, casino and related operations in an amount not to exceed $250,000
individually or $1,000,000 in the aggregate or (3) other sales which,
individually do not exceed $50,000 or which, in the aggregate, do not exceed
$125,000 or (B) acquire (including, without limitation, by merger,
consolidation, lease or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof (or a
substantial portion of the assets thereof) or any other assets, except for (1)
acquisitions of current assets in the ordinary course of business and consistent
with past practice in connection with Harveys' hotel, casino and related
operations, (2) acquisitions of equipment and other non-current assets in the
ordinary course of business and consistent with past practice in connection with
Harveys' hotel, casino and related operations in an amount individually not to
exceed $250,000 or (3) other acquisitions which, individually, do not exceed
$50,000 or which, in the aggregate, do not exceed $125,000; provided, however,
that neither Harveys nor any of its Subsidiaries shall enter into any agreement
with a term of greater than one
29
year which is not terminable within 30 days without cost (other than a de
minimis cost) to Harveys or such Subsidiary;
(vii) (A) incur, assume or pre-pay any Indebtedness, except that
Harveys and its Subsidiaries may incur or pre-pay debt in the ordinary course of
business under existing lines of credit, (B) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except in the ordinary course
of business consistent with past practice, or (C) except as contractually
required to do so as of the date of this Agreement, make any loans, advances or
capital contributions to, or investments in, any other person (including
advances to employees) except in the ordinary course of business consistent with
past practice and except for loans, advances, capital contributions or
investments between any wholly-owned Subsidiary of Harveys and Harveys or
another wholly-owned Subsidiary of Harveys; PROVIDED, however, that neither
Harveys nor any of its Subsidiaries shall enter into any agreement with a term
of greater than one year which is not terminable within 30 days without cost
(other than a de minimis cost) to Harveys or such Subsidiary;
(viii) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of Harveys or any
of its Subsidiaries;
(ix) make or rescind any material express or deemed election
relating to Taxes, settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or except as may be required by applicable law, make any
change to any of its material methods of reporting income or deductions for
Federal income tax purposes from those employed in the preparation of its
Federal income tax return for the taxable year ending November 30, 1999,
provided, however, that Xxxxxx'x shall not unreasonably withhold its consent to
any such matter that would preclude Harveys from timely filing its Tax Returns
or timely paying its Taxes;
(x) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted, unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities reflected or reserved
against in the consolidated financial statements of Harveys;
(xi) other than in the ordinary course of business and consistent
with past practice, waive any rights of substantial value or make any payment,
direct or indirect, of any material liability (other than debt subject to
paragraph (vii) above) of Harveys or of any of its Subsidiaries before the same
comes due in accordance with its terms;
(xii) fail to maintain its existing insurance coverage of all types
in effect (however, in the event any such coverage shall be terminated or lapse,
to the extent available at reasonable cost, Harveys may procure substantially
similar substitute insurance policies which in all material respects are in at
least such amounts and against such risks as are currently covered by such
policies);
(xiii) enter into any collective bargaining agreement or any
successor collective bargaining agreement;
30
(xiv) make any change with respect to accounting policies or
procedures, unless required by GAAP or the SEC, other than reasonable and usual
actions in the ordinary course of business and consistent with past practice;
(xv) modify, amend or terminate any of the Harveys Material
Contracts or waive, release or assign any material rights or claims, except in
the ordinary course of business and consistent with past practice;
(xvi) take, or agree to commit to take, any action that would make
any representation or warranty of Harveys contained herein inaccurate in any
respect at, or as of any time prior to, the Closing so as to cause the
conditions to Xxxxxx'x to consummate the transactions contemplated herein not to
be satisfied;
(xvii) except for employment arrangements permitted by this
Agreement, engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of Harveys'
affiliates (other than Harveys' wholly-owned Subsidiaries) which involves the
transfer of consideration or has a financial impact on Harveys, other than
pursuant to such agreements, arrangements, or understandings existing on the
date of this Agreement;
(xviii) close, shut down, or otherwise eliminate any of the casinos
owned or operated by Harveys or any of its Subsidiaries, except for such
closures, shutdowns or eliminations which are (i) required by action, order,
writ, injunction, judgment or decree or otherwise required by law, or (ii) due
to acts of God or other force majeure events;
(xix) substantially change the manner in which it administers the
Welfare Plans or make any changes that would materially impact the cost of
administration of the Welfare Plans; or
(xx) enter into an agreement, contract, commitment or arrangement to
do any of the foregoing, or to authorize or announce an intention to do any of
the foregoing.
Section 6.2 Cooperation; Notice; Cure. Subject to compliance with
applicable law (including, without limitation, antitrust laws and Harveys Gaming
Laws), from the date hereof until the Closing, each of Xxxxxx'x and Harveys
shall confer on a regular and frequent basis with one or more representatives of
the other party to report on the general status of ongoing operations. Each of
Xxxxxx'x and Harveys shall promptly notify the other in writing of, and will use
all commercially reasonable efforts to cure before the Closing Date, any event,
transaction or circumstance, as soon as practical after it becomes known to such
party, that causes or will cause any covenant or agreement of Xxxxxx'x or
Harveys under this Agreement to be breached in any material respect or that
renders or will render untrue in any material respect any representation or
warranty of Xxxxxx'x or Harveys contained in this Agreement. Nothing contained
in Section 6.1 above shall prevent Harveys from giving such notice, using such
efforts or taking any action to cure or curing any such event, transaction or
circumstance. No notice given pursuant to this paragraph shall have any effect
on the representations, warranties, covenants or agreements contained in this
Agreement for purposes of determining satisfaction of any condition contained
herein.
31
Section 6.3 No Solicitation.
(a) Prior to the earlier of the Closing and the termination of this
Agreement in accordance with Section 8.1, Harveys shall not, directly or
indirectly, through any officer, director, employee, financial advisor,
representative or agent of such party (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, an Acquisition Proposal, (ii) engage in negotiations or discussions with any
person (or group of persons) other than Xxxxxx'x or its respective affiliates (a
"Third Party") concerning, or provide any non-public information to any person
or entity relating to, any Acquisition Proposal, or (iii) agree to or recommend
any Acquisition Proposal. "Acquisition Proposal" means any proposal or offer
from any person relating to any direct or indirect acquisition or purchase of
assets (including capital stock) of Harveys or any of its Subsidiaries
comprising 25% or more of Harveys' consolidated assets (by book or by fair
market value) or of over 25% of any class of equity securities of Harveys or any
of its material Subsidiaries or (b) any tender offer or exchange offer that if
consummated would result in any person beneficially owning 25% or more of any
class of equity securities of Harveys or any of its material Subsidiaries, or
(c) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Harveys (or any of its
material Subsidiaries) and a third party in each case other than the
transactions contemplated by this Agreement.
(b) Harveys shall notify Xxxxxx'x immediately after receipt by Harveys (or
any of their advisors) of any Acquisition Proposal or any request for non-public
information in connection with an Acquisition Proposal or for access to the
properties, books or records of such party by any person or entity that informs
such party that it is considering making, or has made, an Acquisition Proposal.
Such notice shall be made orally and in writing and shall indicate the identity
of the offeror and the terms and conditions of such proposal, inquiry or
contact.
Section 6.4 Employee Matters.
(a) Harveys shall promptly pay or provide when due all compensation and
benefits earned prior to the Closing Date as provided pursuant to the terms of
any Employee Plans in existence as of the date hereof and as otherwise set forth
in Section 3.14(b) of the Harveys Disclosure Schedule for all employees (and
former employees) and directors (and former directors) of Harveys. Xxxxxx'x and
Harveys agree that Harveys shall pay promptly or provide when due all
compensation and benefits required to be paid pursuant to the terms of any
agreement with any employee, former employee, director or former director in
effect as of the Closing.
(b) (i) Harveys shall use its reasonable best efforts prior to the Closing
to obtain from each of the Harveys employees that would have amounts payable to
them, or subject to accelerated payments or vesting, under all plans and
agreements which would constitute "parachute payments" within the meaning of
Section 280G of the Code an agreement in writing to limit amounts payable to
them to those amounts that would be fully deductible pursuant to Section 280G of
the Code unless the stockholders of Harveys approve such amounts pursuant to
Section 280G(B)(5)(B) of the Code (the "Waivers");
32
(ii) Following execution of the Waivers, Harveys shall use its
reasonable best efforts to obtain written consent pursuant to Section
280G(b)(5)(B) of the Code to the amounts waived pursuant to the Waivers from
stockholders of Harveys owning at least 75% of the outstanding voting stock of
Harveys. Such consent shall by its terms become effective on the 20th calendar
day following mailing of the Information Statement (or such later time as may be
required by the Exchange Act).
Section 6.5 Written Consent and Information Statement. Following the date
hereof, Harveys shall use its reasonable efforts to obtain the written consent
of at least 75% of the voting power of Harveys approving the compensation
arrangements with certain of Harveys' employees, including "excess parachute
payments" pursuant to Section 280G of the Code. Harveys shall, as promptly as
practicable after the execution of this Agreement, prepare and file with the SEC
the Information Statement, and any amendments or supplements thereto, to be
mailed to all holders of Harveys Class A.
Section 6.6 Access to Information.
(a) Upon reasonable notice, subject to applicable law, including without
limitation, antitrust laws and Harveys Gaming Laws, Harveys shall (and shall
cause its Subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of Xxxxxx'x, reasonable access, during normal
business hours during the period from the date hereof to the Closing, to all its
personnel, properties, books, contracts, commitments and records and, during
such period, Harveys shall, and shall cause its Subsidiaries to, furnish
promptly to the other (i) copies of monthly financial reports and development
reports, (ii) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal securities laws and (iii) all other information concerning its
business, properties and personnel as Xxxxxx'x may reasonably request. Xxxxxx'x
will hold any such information furnished to it by Harveys, which is nonpublic in
confidence in accordance with the Confidentiality Agreement dated November 23,
1999, between Xxxxxx'x and Colony Capital LLC, as extended by the letter
agreement dated February 12, 2001 (the "Confidentiality Agreement"). No
information or knowledge obtained in any investigation pursuant to this Section
6.6 shall affect or be deemed to modify any representation or warranty contained
in this Agreement or the conditions to the obligations of the parties to
consummate the transactions contemplated herein.
(b) For purposes of complying with Section 1.3(d), the Sellers'
Representative and its officers, directors, managers, member, partners,
employees, financial advisors, legal advisors, accountants, representatives and
agents shall have reasonable access, during normal business hours during the
period of any dispute of the amount of Total Transaction Consideration in
Section 1.3(d) following the Closing, to Harveys' and its Subsidiaries'
applicable personnel, properties, books and records and Harveys shall, and shall
cause its Subsidiaries to, promptly furnish to the Sellers' Representative and
its officers, managers, members, partners, employees, financial advisors, legal
advisors, accountants, other representatives and agents all information as may
be reasonably required for the purposes specified in Section 1.3(d).
33
Section 6.7 Governmental Approvals.
(a) The parties hereto shall cooperate with each other and use their
reasonable best efforts (and, with respect to the Harveys Gaming Laws, the
Xxxxxx'x Gaming Laws and antitrust laws, if applicable, shall use their
reasonable best efforts to cause their respective directors and officers to do
so) to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, registrations, licenses, findings of suitability,
consents, variances, exemptions, orders, approvals and authorizations of all
third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement, including, without
limitation, all filings required under the HSR Act, the Harveys Gaming Laws and
the Xxxxxx'x Gaming Laws ("Governmental Approvals"), and to comply (and, with
respect to the Harveys Gaming Laws and the Xxxxxx'x Gaming Laws, to cause their
respective directors and officers to so comply) with the terms and conditions of
all such Governmental Approvals. The parties hereto and their respective
officers, directors and affiliates shall use their reasonable best efforts to
file within 30 days after the date hereof, and in all events shall file within
60 days after the date hereof, all required initial applications and documents
in connection with obtaining the Governmental Approvals (including without
limitation under applicable Harveys Gaming Laws and Xxxxxx'x Gaming Laws) and
shall act reasonably and promptly thereafter in responding to additional
requests in connection therewith. The parties hereto acknowledge that this
Agreement is subject to the review and approval of the Iowa Racing and Gaming
Commission. Harveys and Xxxxxx'x shall have the right to review in advance, and
to the extent practicable each will consult the other on, in each case subject
to applicable laws relating to the exchange of information (including, without
limitation, antitrust laws and Harveys Gaming Laws), all the information
relating to Harveys or the Xxxxxx'x, as the case may be, and any of their
respective Subsidiaries, directors, officers and stockholders which appear in
any filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. Without limiting the foregoing, each of Harveys and Xxxxxx'x (the
"Notifying Party") will notify the other promptly of the receipt of comments or
requests from Governmental Entities relating to Governmental Approvals, and will
supply the other with copies of all correspondence between the Notifying Party
or any of its representatives and Governmental Entities with respect to
Governmental Approvals; provided, however, that it shall not be required to
supply the other party with copies of all communication relating to the personal
applications of individual applicants except for evidence of filing.
(b) Harveys and Xxxxxx'x shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to reasonably believe that there is a reasonable
likelihood that such consent or approval from such Governmental Entity will not
be obtained or that the receipt of any such approval will be materially delayed.
Harveys and Xxxxxx'x each shall use its reasonable best efforts to take, or
cause to be taken, all actions reasonably necessary to defend any lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated by this Agreement, seeking to prevent the entry by any
Governmental Entity of any decree, injunction or other order challenging this
Agreement or the consummation of the transactions
34
contemplated by this Agreement, appealing as promptly as possible any such
decree, injunction or other order and having any such decree, injunction or
other order vacated or reversed.
(c) Notwithstanding the foregoing or any other provision of this
Agreement, Xxxxxx'x shall have no obligation or affirmative duty under this
Section 6.7 to dispose of any of its assets or properties, disassociate itself
from any person or entity, or agree to do any of the foregoing at any time in
the future, in connection with seeking any Governmental Approval.
Section 6.8 Publicity. Xxxxxx'x and Harveys shall agree on the form and
content of the initial press release regarding the transactions contemplated
hereby and thereafter shall consult with each other before issuing, provide each
other the opportunity to review and comment upon and use all reasonable efforts
to agree upon, any press release or other public statement with respect to any
of the transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation and prior
to considering in good faith any such comments, except as may be required by
applicable law.
Section 6.9 Indemnification.
(a) From and after the Closing, Xxxxxx'x agrees that it will, and will
cause Harveys to, indemnify and hold harmless each present and former director
and officer of Harveys (the "Indemnified Parties"), against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Closing, whether asserted or claimed
prior to, at or after the Closing, to the fullest extent that Harveys would have
been permitted under Nevada law, its Articles of Incorporation, its Bylaws and
any indemnification agreements or arrangements in effect on the date hereof to
indemnify such Indemnified Party.
(b) For a period of six years after the Closing, Xxxxxx'x shall maintain
or shall cause Harveys to maintain in effect a directors' and officers'
liability insurance policy covering those persons who are currently covered by
Harveys' directors' and officers' liability insurance policy (copies of which
have been heretofore delivered by Harveys to Xxxxxx'x) with coverage in amount
and scope at least as favorable as Harveys' existing coverage; provided that in
no event shall Xxxxxx'x or Harveys be required to expend in the aggregate
annually in excess of 200% of the annual premium currently paid by Harveys for
such coverage; and if such annual premium would at any time exceed 200% of the
such amount, then Xxxxxx'x or Harveys shall maintain insurance policies which
provide the maximum and best coverage available at an annual premium equal to
200% of such amount.
(c) In the event that Harveys or Xxxxxx'x or any of its respective,
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of Harveys or Xxxxxx'x
will assume the obligations thereof set forth in this Section 6.9.
35
(d) The provisions of this Section 6.9 are intended to be an addition to
the rights otherwise available to the current officers and directors of Harveys
by law, charter, statute, bylaw or agreement, and shall operate for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
Section 6.10 Stockholder Litigation. Harveys shall give Xxxxxx'x the
reasonable opportunity to participate in the defense of any stockholder
litigation against Harveys and its directors relating to the transactions
contemplated hereby.
Section 6.11 Further Assurances and Actions.
(a) Subject to the terms and conditions herein, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, (i) using their respective reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts with
each party hereto as are necessary for consummation of the transactions
contemplated by this Agreement, and (ii) to fulfill all conditions precedent
applicable to such party pursuant to this Agreement.
(b) In case at any time after the Closing any further action is necessary
to carry out the purposes of this Agreement or to vest Xxxxxx'x with full title
to all properties, assets, rights, approvals, immunities, franchises of any of
the parties to the Closing, the proper officers and/or directors of Xxxxxx'x and
the particular Seller shall take all such necessary action and such individual
Seller shall bear the cost of any such necessary action; PROVIDED, that if such
action is necessary due to events or circumstances particular to Xxxxxx'x,
Xxxxxx'x shall bear the cost of such action.
Section 6.12 Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes (including all applicable real estate transfer
or gains Taxes) and related fees (including any penalties, interest and
additions to Tax) incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the Harveys stockholders, and
Harveys, the Harveys stockholders and Xxxxxx'x shall cooperate in preparing and
filing all Tax Returns and other documentation on a timely basis as may be
required to comply with the provisions of such Tax laws.
Section 6.13 Harveys Stockholders. Voteco and Colony III shall exercise
their rights pursuant to Section 2.6 of the Stockholders Agreement and shall use
their reasonable best efforts to cause the other holders of Harveys Common Stock
to execute a joinder hereto in substantially the form of Exhibit 6.13 hereto (a
"Joinder") and each of such other holders of Harveys Common Stock shall have
executed such a Joinder; PROVIDED HOWEVER, that the foregoing shall be deemed to
be satisfied if Harveys, concurrently with the Closing, shall have the right to
repurchase the Shares of any such stockholder for the same price per share as
other holders of Harveys Common Stock; PROVIDED FURTHER, that in such event, the
amount of Total Transaction Consideration shall be reduced by the amount payable
to such stockholders upon Harveys' exercise of such right.
36
ARTICLE VII.
CONDITIONS TO CLOSING
Section 7.1 Conditions to Each Party's Obligation to Effect the Closing.
The respective obligations of each party to this Agreement to effect the Closing
shall be subject to the satisfaction or waiver by each party prior to the
Closing of the following conditions:
(a) NO INJUNCTIONS. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction or statute, rule, regulation which is in effect and which
has the effect of making the Closing illegal or otherwise prohibiting
consummation of the Closing.
(b) GOVERNMENTAL APPROVALS. All Governmental Approvals required to
consummate the transactions contemplated hereby shall have been obtained
(including, without limitation, under the Harveys Gaming Laws and the Xxxxxx'x
Gaming Laws), all such approvals shall remain in full force and effect, all
statutory waiting periods in respect thereof (including, without limitation,
under the HSR Act) shall have expired and no such approval or expiration shall
contain any conditions, limitations or restrictions, except, in each case where
the failure of such to be the case would not be reasonably likely to have a
Harveys Material Adverse Effect or a Xxxxxx'x Material Adverse Effect or require
Xxxxxx'x to take any of the actions listed in Section 6.7(c).
Section 7.2 Additional Conditions to Obligations of Harveys. The
obligation of Harveys to effect the Closing is subject to the satisfaction of
each of the following conditions prior to the Closing, any of which may be
waived in writing exclusively by Harveys:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Xxxxxx'x set forth in this Agreement shall be true and correct in all material
respects (except for those qualified as to materiality or a Xxxxxx'x Material
Adverse Effect, which shall be true and correct) as of the date of this
Agreement and, except to the extent such representations speak as of an earlier
date, as of the Closing Date as though made on and as of the Closing Date,
except for changes contemplated by this Agreement. Harveys shall have received a
certificate signed on behalf of Xxxxxx'x by the chief executive officer and the
chief financial officer of Xxxxxx'x to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF XXXXXX'X. Xxxxxx'x shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and Harveys shall have received
a certificate signed on behalf of Xxxxxx'x by the chief executive officer and
the chief financial officer of Xxxxxx'x to such effect.
(c) THIRD-PARTY CONSENTS. Xxxxxx'x shall have received all third-party
consents and approvals required to be obtained by Xxxxxx'x in connection with
the transactions contemplated hereby under any contract to which Xxxxxx'x or any
of its Subsidiaries may be a party, except for such third-party consents and
approvals as to which the failure to obtain, individually or in the aggregate,
would not reasonably be expected to impair or delay the consummation of the
Closing.
37
(d) LETTER OF CREDIT. Xxxxxx'x shall have replaced, assumed or substituted
in full the Iowa West Letter of Credit.
Section 7.3 Additional Conditions to Obligations of Xxxxxx'x. The
obligations of Xxxxxx'x to effect the Closing are subject to the satisfaction of
each of the following conditions prior to the Closing, any of which may be
waived in writing exclusively by Xxxxxx'x:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Harveys set forth in this Agreement shall be true and correct in all material
respects (except for those qualified as to materially or a Harveys Material
Adverse Effect, which shall be true and correct) as of the date of this
Agreement and, except to the extent such representations and warranties speak as
of an earlier date, as of the Closing Date as though made on and as of the
Closing Date, except for changes contemplated or permitted by this Agreement
including Section 6.1 hereof; PROVIDED that, with respect to the truth and
correctness of such representations and warranties as of the Closing Date, with
respect to the use of the term "Harveys Material Adverse Effect" in such
representations and warranties the following, both individually and in the
aggregate, shall be excluded from the definition of "Harveys Material Adverse
Effect" and from any determination as to whether any Harveys Material Adverse
Effect has occurred or may occur: (i) the fact, in and of itself, that Harveys
fails to meet projections (whether by Harveys or independent third parties) of
earnings, revenues or other financial performance measures, (ii) the effects of
changes that are applicable to the gaming industry or to the financial, banking,
currency or capital markets in general, in and of themselves, and (iii) any
reduction, in and of itself, in historic or prospective revenues, net income or
EBITDA of Harveys C.C. Management Company, Inc. or Harveys Wagon Wheel
Hotel/Casino. Xxxxxx'x shall have received a certificate signed on behalf of
Harveys by the chief executive officer and the chief financial officer of
Harveys to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF HARVEYS AND SELLERS. Harveys and Sellers
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Xxxxxx'x shall have received a certificate signed on behalf of Harveys by the
chief executive officer and the chief financial officer of Harveys to such
effect.
(c) NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and the
Closing, there shall have been no material adverse change in the business,
properties, assets, liabilities, operations, condition (financial or otherwise)
or prospects of Harveys and its Subsidiaries, taken as a whole, or of any of the
three separate businesses operated as the Harveys Resort & Casino - Lake Tahoe,
Harveys Casino/Hotel Council Bluffs and Bluffs Run Casino; PROVIDED, HOWEVER,
that the following, both individually and in the aggregate, shall be excluded
from any determination as to whether any material adverse change has occurred or
may occur: (i) the fact, in and of itself, that Harveys fails to meet
projections (whether by Harveys or independent third parties) of earnings,
revenues or other financial performance measures, (ii) the effects of changes
that are applicable to the gaming industry or to the financial, banking,
currency or capital markets in general, in and of themselves and (iii) any
reduction, in and of itself, in historic or prospective revenues, net income or
EBITDA of Harveys C.C. Management Company, Inc. or Harveys Wagon Wheel
Hotel/Casino.
38
(d) THIRD-PARTY CONSENTS. Xxxxxx'x and Harveys shall have received all
third-party consents and approvals required to be obtained by Xxxxxx'x or
Harveys in connection with the transactions contemplated hereby (including any
consents required for the renaming or rebranding of any Harveys or its
subsidiaries' gaming operations), under any contract to which Xxxxxx'x or
Harveys (or any of their respective Subsidiaries) may be a party, other than
consents related to Indebtedness listed on Section 3.3(b) of the Harveys
Disclosure Schedule, consents related solely to Xxxxxx'x agreements and
arrangements that are unrelated to Harveys, and except for such third-party
consents and approvals as to which the failure to obtain, either individually or
in the aggregate, would not be reasonably likely to result in (i) a material
adverse change in the business, properties, assets, liabilities, operations,
condition (financial or otherwise) or prospects of Harveys and its Subsidiaries,
taken as a whole or (ii) a Xxxxxx'x Material Adverse Effect, as the case may be.
(e) NO DISPOSITION REQUIRED. No disposition of any Harveys Subsidiary or
operation thereof prior to or upon consummation of the Closing shall be required
as a condition of any Governmental Approval.
(f) ADVISORY COMMITTEE APPROVAL. The Colony III Advisory Committee shall
have approved the sale of Colony III's shares of Harveys Common Stock to
Xxxxxx'x.
(g) TAX WITHHOLDING FORMS AND CERTIFICATES. Xxxxxx'x shall have received a
statement (in form and substance reasonably satisfactory to Xxxxxx'x) that
satisfies Xxxxxx'x' obligations under Treasury Regulation Section
1.1445-2(b)(2), state tax clearance certificates or any other document(s) which
may be required by any taxing authority in order to relieve Xxxxxx'x of any
obligation to withhold any portion of the payments to the Harveys stockholders
pursuant to this Agreement.
ARTICLE VIII.
TERMINATION AND AMENDMENT
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Closing (with respect to Sections 8.1(b) and 8.1(c), by written
notice by the terminating party to the other party), whether before or after
approval of the matters presented in connection with the Closing by the
stockholders of Harveys:
(a) by mutual written consent of Harveys and Xxxxxx'x; or
(b) by either Xxxxxx'x or Harveys if the transactions contemplated hereby
shall not have been consummated on or prior to December 31, 2001 (provided that
the right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such date); or
(c) by either Xxxxxx'x or Harveys if a court of competent jurisdiction or
other Governmental Entity shall have issued a nonappealable final order, decree
or ruling or taken any other nonappealable final action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Closing and the transactions contemplated hereby.
39
Section 8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Xxxxxx'x or
Harveys, or their respective officers, directors, stockholders or Affiliates,
except as set forth in Sections 8.3, 9.2, 9.3, 9.5 and 9.6 and except that such
termination shall not limit liability for a willful breach of this Agreement;
provided that, the provisions of Sections 8.3, 9.2, 9.3, 9.5 and 9.6 of this
Agreement and the Confidentiality Agreement shall remain in full force and
effect and survive any termination of this Agreement.
Section 8.3 Fees and Expenses.
(a) Except as set forth in Section 8.3(b), all fees and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the Closing is
consummated.
(b) If (provided that Harveys is not then in material breach of its
obligations under this Agreement) Xxxxxx'x fails to obtain any permits,
registrations, licenses, findings of suitability, consents, variances,
exemptions, orders, approvals or authorizations which are necessary pursuant to
Harveys Gaming Laws or the Xxxxxx'x Gaming Laws to consummate the transactions
contemplated by this Agreement and this Agreement is thereafter terminated
pursuant to Section 8.1(b) solely due to such failure, then Xxxxxx'x shall
promptly, but in no event later than two business days following written demand
therefor, pay to Harveys by wire transfer an amount equal to $5.0 million, which
amount shall be inclusive of any fees or expenses incurred by Harveys and shall
represent Harveys' sole and exclusive remedy against Xxxxxx'x and any of its
Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment.
Section 8.4 Sellers' Representative. Sellers hereby appoint Colony III to
act as representative for all Sellers (the "Sellers' Representative"). Colony
III shall act on behalf of and shall bind all Sellers as their representative in
all matters related to this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, in any amendment or
supplement hereto.
Section 8.5 Amendment. This Agreement may be amended by Xxxxxx'x, Harveys
and the Sellers' Representative. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of Xxxxxx'x, Harveys and the
Sellers' Representative.
Section 8.6 Extension; Waiver. At any time prior to the Closing, Xxxxxx'x,
Harveys and the Sellers' Representative, by action taken or authorized by their
respective Boards of Directors (in the case of the Sellers' Representative, or
comparable governing body, may, to the extent legally allowed (i) extend the
time for or waive the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained here.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party (or, in the case of Sellers, by the Sellers' Representative).
40
ARTICLE IX.
MISCELLANEOUS
Section 9.1 Survival of Certain Matters Following Termination or Closing.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Closing,
except for the agreements contained in Sections 1.3(d) and (e), 6.6(b), 6.9 and
6.11(b) and Article IX. The Confidentiality Agreement shall survive the
execution and delivery of this Agreement. At the Closing, the rights and
obligations under the Confidentiality Agreement of the parties thereto shall
terminate.
Section 9.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Harveys, to
Harveys Casino Resorts
Xxxxxxx 00 & Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Colony Capital, LLC
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
AND TO:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to Sellers, to
Colony Investors III, L.P.
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
41
Attn: Xxxxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(c) if to Xxxxxx'x, to
Xxxxxx'x Entertainment, Inc.
Xxx Xxxxxx'x Xxxxx
Xxx Xxxxx, XX 00000-0000
Attn: Corporate Secretary
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Section 9.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to April
24, 2001. As used in this Agreement, "best knowledge" means with respect to a
person other than an individual, the knowledge of any executive officer,
director or key employee of such person. Any such individual will be deemed to
have "knowledge" of a particular fact or other matter if: (i) such individual is
actually aware of such fact or other matter or (ii) such individual could be
expected to discover or otherwise become aware of such fact or other matter in
the ordinary course of performing such individual's employment duties in a
prudent manner.
Section 9.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement.
42
Section 9.5 Entire Agreement; No Third Party Beneficiaries. This Agreement
and all documents and instruments referred to herein (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Section 6.9 are not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder; provided that
the Confidentiality Agreement shall remain in full force and effect until the
Closing. Each party hereto agrees that, except for the representations and
warranties contained in this Agreement and the respective Disclosure Schedules,
none of Xxxxxx'x or Harveys makes any other representations or warranties, and
each hereby disclaims any other representations and warranties made by itself or
any of its officers, directors, employees, agents, financial and legal advisors
or other representatives, with respect to the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to any of them or their respective representatives of any
documentation or other information with respect to any one or more of the
foregoing.
Section 9.6 Governing Law. This Agreement shall be governed and construed
in accordance with the laws applicable to contracts made and to be performed in
of the State of Nevada, without regard to any applicable conflicts of law.
Section 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of Xxxxxx'x, Harveys and the Sellers' Representative. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
43
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
signed by their respective duly authorized officers as of the date first written
above.
XXXXXX'X ENTERTAINMENT, INC.
/s/ XXXXXX X. XXXXX
--------------------------------------
By: Xxxxxx X. Xxxxx
Its: Chairman of the Board and CEO
HARVEYS CASINO RESORTS
/s/ XXXX XXXXXXX
--------------------------------------
By: Xxxx Xxxxxxx
Its: Executive Vice President
COLONY HCR VOTECO, LLC
/s/ XXXXXX X. XXXXXXX, XX.
--------------------------------------
By: Xxxxxx X. Xxxxxxx, Xx.
Its:
COLONY CAPITAL III, L.P.
/s/ XXXXXX X. XXXXXXX, XX.
--------------------------------------
By: Xxxxxx X. Xxxxxxx, Xx.
Its:
S-1
EXHIBIT 1.3(a)
Sellers Representative Certificate
[Exhibit to be Attached]
Exhibits
EXHIBIT 1.3(b)
Illustration of Calculation of Total Transaction Consideration
[Exhibit to be Attached]
Exhibits
EXHIBIT 6.13
Joinder
[Exhibit to be Attached]
