Exhibit 10.43
STOCK OPTION
AND RESTRICTED STOCK AGREEMENT
STOCK OPTION AND RESTRICTED STOCK AGREEMENT (this
"Agreement"), dated as of February 2, 1999 (the "Effective Date"), by and
between Harveys Casino Resorts, a Nevada corporation (the "Company"), and
Xxxxxxx X. Xxxxxxx (the "Executive"), an employee of the Company or a Subsid
iary of the Company.
Pursuant to the Company's 1999 Omnibus Stock Incentive Plan
(the "Plan"), the Board of Directors of the Company (the "Board"), as the
Administra tor of the Plan, has determined that the Executive is to be granted
(i) an option (the "Option") to purchase shares of the Company's Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), and shares of the
Company's Class B Common Stock, par value $.01 per share (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Common Stock"), and
(ii) a Restricted Stock award consisting of additional shares of Class A Common
Stock and Class B Common Stock (the "Restricted Shares"), each on the terms and
conditions set forth herein, and hereby grants such Option and Restricted Stock
award. Such grants shall be deemed to satisfy in full the Company's obligations
under Section 7.03 of that certain Employment Agreement, of even date herewith,
between the Executive and the Company (the "Employment Agreement"). It is
intended that the Option shall constitute an "incentive stock option" within the
meaning of Section 422 of the Code (an "ISO") to the maximum extent permitted
under the Code. Additional provisions relating to the ISO status of the Option
are set forth in Section 1 below.
Any capitalized terms not defined herein shall have their
respective meanings set forth in the Plan.
1. TERMS OF OPTION GRANT. (a) The Option entitles the Execu
tive to purchase 360 shares of the Company's Class A Common Stock at a price
equal to $20.06 per share (the "Class A Option Exercise Price"), which the
parties acknowledge is not less than the fair market value of one share of the
Class A Common Stock as of the Effective Date. The Option also entitles the
Executive to purchase 36,000 shares of the Company's Class B Common Stock at a
price equal to $20.06 per share (the "Class B Option Exercise Price" and,
collectively with the Class A Option Exercise Price, the "Option Exercise
Price"), which the parties acknowledge is not less than the fair market value of
one share of the Class B
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Common Stock as of the Effective Date. The shares of Class A Common Stock
and Class B Common Stock subject to the Option are referred to herein as the
"Option Shares."
(b) The term of the Option (the "Option Term") shall
commence on the Effective Date (the "Date of Grant") and, unless the Option is
previously terminated pursuant to this Agreement, shall terminate upon the
expiration of ten (10) years from the Date of Grant. Upon expiration of the
Option Term, all rights of the Executive hereunder shall terminate.
(c) The Option shall vest as to 20% of the Option
Shares on each of the first five anniversaries of the Date of Grant, PROVIDED,
that
i) the Option and such vesting shall
be subject to the forfeiture provisions of Section 7(b) below (the
"Special Forfeiture Provisions"), such that any such vested portion of
the Option shall be exercisable from time to time only if and to the
extent that such vested portion shall not be subject to forfeiture
pursuant to the Special Forfeiture Provisions;
ii) upon the occurrence of a Change in
Control (as defined in Section 3 below) at any time prior to the
effective date (as determined under the Employment Agreement) of
Executive's termination of employment with the Company for any or no
reason, the Option shall immediately vest and become exercisable as to
100% of the Option Shares and the Special Forfeiture Provisions
shall immediately expire;
iii) if Executive's employment with the
Company is terminated (A) by the Company without Cause (as defined in
the Employment Agreement as in effect as of the date hereof, or as the
same may be amended from time to time, regardless of the termination
of the Employ ment Agreement prior to the effective date of
such termination) within the 12 month period immediately preceding a
Change in Control (or such longer period, not to exceed 18 months
prior to such Change in Control, during which significant
discussions or other material action regarding such Change in Control
occurred) at the request, directly or indirectly, of a third party who
has taken steps reasonably calculatedto effect a Change in Control or
otherwise in connection with, or in anticipation of a Change
in Control, or (B) by Executive for Good Reason (as defined
in the Employ-
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ment Agreement) if the grounds constituting Good Reason occur as the
result of a Change in Control or within the above-referenced time
frame at the request, directly or indirectly, of such a third party or
otherwise in connection with, or in anticipation of a Change in
Control, (i) the Option shall be deemed to have immediately vested and
become exercisable as to 100% of the Option Shares as of the effective
date of such Change in Control, (ii) the Special Forfeiture Provisions
shall be deemed to have immediately expired as of the effective date
of such Change in Control and (iii) the exercisability of the Option
shall be as determined under Section 7(a); and
iv) if Executive's employment with the
Company is terminated by the Company without Cause or by Executive
for Good Reason (as defined in the Employment Agreement), the
Option shall immediately vest and become exercisable and the Special
Forfeiture Provisions shall immediately expire as to that number of
Option Shares that would have vested pursuant to the first clause of
this Section 1(c) had Executive's employment continued without
interruption through the date that is 24 months following the
effective date of such termination as deter mined under the
Employment Agreement.
Those Option Shares which, as of any date, have vested pursuant to the first
clause of this Section 1(c) but remain subject to the Special Forfeiture
Provisions shall be referred to herein as "Vested Option Shares."
(d) Except as otherwise provided herein, the right of the Executive to
purchase Option Shares with respect to which the Option has become exercisable
may be exercised in whole or in part at any time or from time to time prior to
expiration of the Option Term, PROVIDED, that any exercise of the Option shall
be deemed to relate in tandem to both the Class A Common Stock and the Class B
Common Stock subject to the Option, such that the ratio of (i) the number of
shares of Class A Common Stock issuable upon such exercise to (ii) the total
number of shares of Class A Common Stock outstanding on the date hereof shall be
the same as the ratio of (iii) the number of shares of Class B Common Stock
issuable upon such exercise to (iv) the total number of shares of Class B Common
Stock outstanding on the date hereof.
(e) The Option may be exercised by means of written notice of exercise
to the Company specifying the number of Option Shares to be pur-
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chased, accompanied by payment in full of the aggregate Option Exercise
Price and any applicable withholding amounts (i) in cash or by check, (ii) at
any time following the closing of the Company's Initial Public Offering (as
defined in Section 3 below) by means of a broker cashless exercise procedure,
on terms reasonably acceptable to the Company, providing proceeds sufficient
to pay the exercise price and any applicable withholding amounts, or (iii) by
any other means of exercise authorized from time to time in the Plan and/or
by the Board. In addition, with respect to any exercise of the Option that
occurs following Execu tive's termination of employment with the Company at
any time prior to the closing of the Company's Initial Public Offering, the
Option may, at Executive's election, be exercised through withholding of
shares of Common Stock otherwise issuable upon exercise of the Option having
an aggregate Fair Market Value equivalent to the aggregate Option Exercise
Price plus applicable withholding amounts.
(f) To the extent the Option is intended to constitute an ISO,
the ratio of (i) the number of shares of Class A Common Stock to which the
ISO portion of the Option relates to (ii) the total number of shares of Class A
Common Stock outstanding on the date hereof shall be the same as the ratio of
(iii) the number of shares of Class B Common Stock to which the ISO portion of
the Option relates to (iv) the total number of shares of Class B Common Stock
outstanding on the date hereof.
2. TERMS OF RESTRICTED STOCK AWARD. (a) The Restricted Stock
award entitles the Executive as of the Date of Grant to receive 270 shares of
Class A Common Stock and 27,000 shares of Class B Common Stock (the "Restricted
Shares"), subject to the terms and conditions of this Agreement.
(b) Subject to the rights and obligations of Executive
pursuant to that certain Stockholders Agreement, of even date herewith, by and
among the Company, Executive and the other parties thereto (the "Stockholders
Agreement"), and except as provided in Section 2(c) below, the Restricted Shares
may not be sold, assigned, transferred, pledged, hypothecated or otherwise dis
posed of in any manner or under any circumstances (the "Transfer Restrictions").
(c) The Transfer Restrictions shall lapse as to 20%
of the Restricted Shares on each of the first five anniversaries of the Date of
Grant, PROVIDED, that
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i) the Restricted Shares and such lapse
shall be subject to the Special Forfeiture Provisions of Section 7(b),
such that the Transfer Restrictions shall continue to apply to the
Restricted Shares for so long and to the extent that the Restricted
Shares shall be subject to forfeiture pursuant to the Special
Forfeiture Provisions;
ii) upon the occurrence of a Change in
Control at any time prior to the effective date (as determined under
the Employment Agreement) of Executive's termination of employment
with the Company for any or no reason, the Transfer Restrictions shall
immediately lapse as to 100% of the Restricted Shares and the Special
Forfeiture Provisions shall immediately expire;
iii) if Executive's employment with the
Company is terminated under the circumstances set forth in
Section 1(c)(iii) above, (i) the Transfer Restrictions shall be
deemed to have immediately lapsed as to 100% of the Restricted Shares
as of the effective date of such Change in Control, and (ii) the
Special Forfeiture Provisions shall be deemed to have immediately
expired as of the effective date of the Change in Control; and
iv) if Executive's employment with the
Company is terminated by the Company without Cause or by Executive for
Good Reason (each as defined above), the Transfer Restrictions shall
immediately lapse and the Special Forfeiture Provisions shall
immediately expire as to that number of Restricted Shares as to which
the Transfer Restrictions would have lapsed pursuant to the first
clause of this Section 2(c) had Executive's employment continued
without interruption through the date that is 24 months following the
effective date of such termination as determined under the Employment
Agreement.
Those Restricted Shares as to which, as of any date, the Transfer Restrictions
have lapsed pursuant to the first clause of this Section 2(c) but which remain
subject to the Special Forfeiture Provisions shall be referred to herein as
"Lapsed Restricted Shares."
(d) From and after the Date of Grant and for so long
as the Restricted Shares are held by or for the benefit of the Executive, except
as limited by the Stockholders Agreement, the Transfer Restrictions and the
Special Forfeiture Provisions, the Executive shall have all the rights of a
stockholder of the Company
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with respect to the Restricted Shares, including but not limited to the right to
receive dividends on and the right to vote such shares.
3. CERTAIN DEFINITIONS. (a) For purposes of this Agreement,
"Initial Public Offering" shall mean the closing of a public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering shares of the Company's Common Stock,
which shares are approved for listing or quotation on the New York Stock
Exchange, American Stock Exchange or Nasdaq National Market.
(b) For purposes of this Agreement, "Change in Control"
means the occurrence of one or more of the following events:
i) the sale, lease, transfer,
conveyance or other disposition, in one or a series of related
transactions, of all or substantially all of the assets of the Company
and its Subsidiaries, taken as a whole;
ii) the adoption by the Company's
stockholders of a plan of liquidation or dissolution of the Company;
iii) prior to the time the Company or any
Parent Corporation completes an Initial Public Offering, the
Company becomes aware (by way of a report or any other filing pursuant
to Section 13(d of the Exchange Act, proxy vote, written notice or
otherwise) of the acquisi tion by any "Person" or related group
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provision to either of the foregoing,
including any group" acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act), other than a group consisting of the Principals and
their Related Parties, in a single transaction or in a related series
of transactions, by way of merger, consolidation or other business
combination or purchase of direct or indirect beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the total voting power entitled
to vote in the election of the Board of Directors of the Company or
such other Person surviving the transaction;
iv) subsequent to the time the Company or
any Parent Corporation completes an Initial Public Offering, the
Principals and
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their Related Parties shall directly or indirectly beneficially
own shares of capital stock representing less than 25% of the total
voting power entitled to vote in the election of the Board of
Directors of the Company and either (A) any other Person directly or
indirectly beneficially owns shares of capital stock representing
voting power in excess of the voting power represented by shares of
capital stock owned by the Principals and their Related Parties or (B)
individuals who were the voting members of the Company's Board of
Directors at the beginning of any two year period commencing
subsequent to the Initial Public Offering (together with any new
voting directors whose election or appointment by such board or whose
nomination for election by the shareholders of the Company was
approved by a vote of a majority of the directors then still in office
who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Company's Board of
Directors then in office.
(c) For purposes of this Agreement, the following
terms shall have the meanings as set forth below:
i) "Exchange Act" means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated there under;
ii) "Principals" means Colony
Investors III, L.P., Colony Capital, Inc. and any of their respective
affiliates and any of the Company's officers and directors; and
iii) "Related Party" with respect to any
Principal means (A) any controlling stockholder, 80% (or more) owned
Subsidiary, or spouse or immediate family member (in the case of an
individual) of such Principal or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (A).
(d) For purposes of this Agreement, "Fair Market
Value"(when capitalized, unless the context clearly indicates otherwise) means,
as of any given date, (A) if the Common Stock is publicly traded, the closing
sale price of the
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Common Stock on such date (or the nearest preceding date on which the Common
Stock was traded) as reported in the Western Edition of THE WALL STREET JOURNAL,
or (B) if the Common Stock is not publicly traded, the fair market value of the
Common Stock as determined in accordance with the procedures set forth below, in
each case based on the per share value of the Company as a whole as of the
relevant date, without any discount for the sale of a minority interest and
without considering lack of liquidity, including transfer and other restrictions
on the Common Stock:
i) The Board shall determine the fair market
value of the Common Stock in good faith, using commercially reasonable
methods and at the Company's sole expense, PROVIDED, that if Executive
is a member of or non-voting observer on the Board, Executive shall
recuse himself from all deliberations of the Board regarding such
determination, and except as otherwise provided herein shall not be
entitled to receive or be provided access to any minutes or other
records of the Board with respect to such determination. The Board
shall communicate the per share valuation as so determined in writing
to Executive within 20 business days following the date written notice
is provided or the Board takes cognizance of the need to determine the
Fair Market Value of the Common Stock, and upon Execu tive's request,
the Board shall provide Executive appropriate supporting documentation
regarding the methods, assumptions and other bases used in arriving at
such valuation. If acceptable to Executive, the fair market value of
the Common Stock shall be as so determined.
ii) If the fair market value as determined
under (i) is not acceptable to Executive, Executive shall determine the
fair market value of the Common Stock in good faith, using
commercially reasonable methods and at Executive's sole expense, and
shall communicate the per share valuation as so determined in writing
to the Board within 20 business days following the Board's
communication to Executive of the per share valuation pursuant to (i)
above and, upon the Board's request, Executive shall provide to the
Board appropriate supporting documentation regarding the methods,
assumptions and other bases used in arriving at such valuation. If
acceptable to the Board, the fair market value of the Common Stock
shall be as so determined.
iii) If the fair market value as determined
under (ii) is not acceptable to the Board, the Board and Executive
shall then
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negotiate in good faith to agree upon the fair market value of the
Common Stock, based on the valuations under (i) and (ii) above.
iv) If the Board and Executive shall be unable by
the foregoing means to agree upon the fair market value of the Common
Stock within ten business days after the Board has been advised of
Execu tive's valuation, the issue shall then be submitted to binding
arbitration in Las Vegas, Nevada according to the rules and procedures
of the American Arbitration Association. The Company and Executive
shall each submit to the arbitrator their valuations under (i) and (ii)
above, together with all supporting documentation regarding the
methods, assumptions and other bases used in arriving at such
valuation. The arbitrator shall then be instructed to choose which of
the two valuations more closely reflects the fair market value of the
Common Stock, and shall not have the right to choose a third valuation
as the appropriate fair market value of the Common Stock. The party
whose valuation is not so chosen by the arbitrator shall pay any and
all costs and expenses of the arbitration (but not the initial
valuation of the other party), including without limitation reasonable
attor neys' fees and other fees incurred by the prevailing party in
such arbitration. Judgment may be entered on the arbitrator's
determination and award.
4. DEFERRED COMPENSATION ARRANGEMENT WITH RESPECT TO
RESTRICTED SHARES. Notwithstanding anything herein to the contrary, at any time
prior to the occurrence of a Distribution Event (as defined in the Deferred
Compen sation Agreement, of even date herewith, between Executive and the
Company (the "Deferred Compensation Agreement")) that the Transfer Restrictions
and Special Forfeiture Restrictions would otherwise lapse with respect to any
portion of the Restricted Shares and result in the recognition of income by
Executive, such Restricted Shares (the "Deferred Shares") shall be cancelled and
an equivalent number of Deemed Deferred Shares (as defined in the Deferred
Compensation Agreement) shall be added to the Restricted Stock Sub-Account under
the Deferred Compensation Agreement.
5. ADJUSTMENTS. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or similar change
affecting the Common Stock, an equitable substitution or proportionate
adjustment shall be made in the kind and number of Restricted Shares and in the
kind, number and option price of shares of Common Stock subject to the Option,
as may be determined by the Board in good faith.
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6. NONTRANSFERABILITY OF OPTION AND OPTION SHARES; OPTION
SHARES AND RESTRICTED SHARES SUBJECT TO STOCKHOLDERS AGREEMENT. (a) The Option
and this Agreement shall not be transferable and, during the lifetime of
Executive, the Option may be exercised only by Executive; PROVIDED, HOWEVER,
that the Executive shall be permitted to transfer the Option and this Agreement
to a trust controlled by the Executive during the Executive's lifetime for
estate planning purposes, and provided, further, that the limited
transferability provisions set forth in the immediately preceding proviso shall
apply to any portion of the Option that constitutes an ISO only to the extent
such provisions are consistent with Section 422(b) of the Code. Without limiting
the generality of the foregoing, except as otherwise provided herein, the Option
may not be assigned, transferred, pledged or hypothecated in any way, shall not
be assignable by operation of law, and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon the
Option shall be null and void and without effect.
(b) The Executive, the Restricted Shares and, upon
exercise of the Option, the Option Shares, shall at all times and in all
respects be subject to the Stockholders Agreement, the provisions of which
shall be deemed to be incorporated into this Agreement.
7. EFFECT OF TERMINATION OF EMPLOYMENT; SPECIAL FORFEITURE
PROVISIONS. (a) Upon the termination of Executive's employment with the Com pany
under any circumstances and for any or no reason (including without limita tion
by reason of the death or Disability of the Executive or the sale of such
Subsidiary), the Option shall immediately terminate as to all Option Shares that
shall not have vested as of the effective date (as determined under the
Employment Agreement) of such termination of employment, and the Executive shall
forfeit all Restricted Shares as to which the Transfer Restrictions have not
lapsed as of such date of termination, in each case taking into account any
additional vesting and/or lapse that shall have occurred by reason of the
provisions of Sections 1(c)(iv) and 2(c)(iv). Notwithstanding the foregoing, to
the extent the provisions of Sections 1(c)(iii) and 2(c)(iii) shall apply in
connection with a Change in Control, (i) the Option shall be deemed to have been
vested and exercisable in full as of the effective date of Executive's
termination of employment, (ii) the Transfer Restric tions shall be deemed to
have lapsed in full and the Special Forfeiture Provisions shall be deemed to
have expired as of the effective date of such Change in Control
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and (iii) the exercise provisions of Section 7(c) shall apply as if Executive's
employment had been terminated as of the date of such Change in Control.
(b) In addition, in the event the Executive's
employment with the Company is terminated prior to the Forfeiture Provision
Expiration Date (as defined below) (i) at any time prior to the fifth
anniversary of the Date of Grant by the Executive other than for Good Reason or
(ii) at any time by the Company for Cause (each as defined above), Executive
shall thereupon forfeit that portion of the Vested Option Shares and Lapsed
Restricted Shares equal to the Applicable Reduction Percentage (as defined
below).
i) The "Applicable Reduction Percentage" shall
mean (A) at all times prior to the occurrence of an Initial Public
Offering, two-thirds and (B) at all times following an Initial Public
Offering but prior to the occurrence of a 50% Colony Sell-Down,
one-third.
ii) The Special Forfeiture Provisions shall expire
in their entirety as of the date of (x) the Company's Initial Public
Offering, if such Initial Public Offering occurs subsequent to a 50%
Colony Sell-Down, (y) a 50% Colony Sell-Down that occurs at any time
subsequent to the Company's Initial Public Offering or (z) a Change in
Control (the "Forfeiture Provision Expiration Date").
iii) A "50% Colony Sell-Down" shall be deemed
to occur when the Principals and their affiliates (excluding officers
and employees of the Company who are Principals or affiliates merely by
reason of their being such an officer or employee) shall, directly or
indirectly, beneficially own shares of capital stock of the Company
representing less than 50% of the largest total number of such shares
theretofore owned by such persons.
(c) Subject to the Company's call rights set forth in
Section 8, any portion of the Option that, pursuant to Section 1(c) above, shall
be vested and exercisable as of the effective date of Executive's termination of
employment (the "Termination Date") shall be exercisable in whole or in part for
a period of 90 days following the Termination Date (180 days in the event of
termination by reason of disability, and one year in the event of termination by
reason of death). All Option Shares with respect to which the Option shall be so
vested and exercis able shall be referred to herein as "Vested and Exercisable
Option Shares." Upon
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expiration of such period, any unexercised portion of the Option shall terminate
in full; provided, however, that if the Company provides notice to the Executive
of its intent to exercise the Call pursuant to Section 8, any portion of the
Option subject to such exercise shall terminate as of the closing of the Call.
8. CALL RIGHTS. In the event of (I) the termination of the
Executive's employment with the Company at any time, under any circumstances and
for any or no reason, (II) a Change in Control or (III) any transfer of any
Option Shares or Restricted Shares by the Executive under any circumstances
(other than to a trust controlled by Executive for estate planning purposes, the
trustee of which agrees in writing to be subject in all events and for all
purposes to the Company's Call as set forth herein), including pursuant to any
arrangement, proceeding, decree, judgement, order or application of law relating
to the division of property for domestic relations purposes, for a period
commencing on the date of such event and expiring upon the Company's Initial
Public Offering (the "Call Exercise Period"), the Company shall have the right
to purchase from the Execu tive, by giving written notice to the Executive
pursuant hereto and in accordance with the terms and conditions of Section 8(a)
below (the "Call") (x) any or all of such portion of the Option as shall relate
to Vested and Exercisable Option Shares as of the date such written notice is
given (the "Call Exercise Date"), (y) any or all Option Shares owned by the
Executive as of the end of business on the Call Exercise Date and/or (z) any or
all Restricted Shares as of the end of business on the Call Exercise Date as to
which the Transfer Restrictions shall have lapsed pursuant to Section 2(c) and
which shall not theretofore have been forfeited by Executive pursuant to Section
7(b).
(a) The following terms and conditions shall apply to the
exercise of the Call:
i) If exercising its rights under (x) above, the
Company shall pay the Executive an amount in cash equal to the product
of (A) the excess, if any, of the Fair Market Value of a share of Class
A Common Stock or Class B Common Stock, as applicable, as of the
Termina tion Date (the "Call Price") over the Class A Option Exercise
Price or Class B Option Exercise Price, as applicable, and (B) the
number of shares of Class A Common Stock or Class B Common Stock, as
applicable, that the portion of the Option being purchased by the
Company pursuant to the Call would otherwise entitle the Executive to
purchase.
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ii) If exercising its rights under (y) or (z) above,
the Company shall pay the Executive an amount equal to the product of
(A) the Call Price and (B) the number of Option Shares or Restricted
Shares, as applicable, being purchased pursuant thereto.
(b) The closing with respect to the exercise of the Call
shall take place at the Company's executive offices within 30 days following the
Call Exercise Date (the "Scheduled Closing Date").
(c) Notwithstanding any other provision hereof, the
Company may assign, without the consent of the Executive, its rights under this
Section 8; provided, that no such assignment shall release the Company from its
obligations hereunder.
(d) The Call shall terminate upon the closing of the
Company's Initial Public Offering.
9. INVESTMENT REPRESENTATION. The Executive hereby represents
and warrants to the Company that the Executive, by reason of the Executive's
business or financial experience (or the business or financial experience of the
Executive's professional advisors who are unaffiliated with and who are not
compensated by the Company or any affiliate or selling agent of the Company,
directly or indirectly), has the capacity to protect the Executive's own
interests in connection with the transactions contemplated under this Agreement.
10. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by first class mail, certified
or registered with return receipt requested, or by a nationally recognized
overnight delivery service to the respective parties named below:
If to Company: Harveys Casino Resorts
Highway 50 and Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx Xxxxx, Xxxxxx 00000
Attention: Xxxx X. XxXxxxxxxx
Facsimile: 000-000-0000
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with a copy to: Colony Capital, Inc.
1999 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: 000-000-0000
and a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Facsimile: 213-687-5600
If to the Executive: Xxxxxxx X. Xxxxxxx
X.X. Xxx 0000
000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Facsimile: 000-000-0000
with a copy to: Xxxxxxx Xxxxxx
Xxxxx, Harrison, Harvey, Branzburg &
Xxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: 000-000-0000
Either party hereto may change such party's address for notices by notice duly
given pursuant hereto.
11. SECURITIES LAWS REQUIREMENTS. The Option shall not be
exercisable to any extent, and the Company shall not be obligated to transfer
any Option Shares to the Executive upon exercise of the Option, if such
exercise, in the opinion of counsel for the Company, would violate the
Securities Act (or any other federal or state statutes having similar
requirements as may be in effect at that time). Further, the Company may require
as a condition of transfer of any Option Shares pursuant to any exercise of the
Option that the Executive furnish a written representation that he is purchasing
or acquiring the Option Shares for investment and not with a view to resale or
distribution to the public, and the Executive hereby represents and warrants
that he is acquiring the Restricted Shares for investment and not with a view to
resale or distribution to the public. The Executive hereby represents and
warrants that he understands that the Option Shares and the Re-
14
stricted Shares are "restricted securities," as defined in Rule 144 under
the Securi ties Act, and that any resale of the Option Shares or the Restricted
Shares must be in compliance with the registration requirements of the
Securities Act or an exemp tion therefrom. Each certificate representing Option
Shares or Restricted Shares shall bear the legend set forth below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, HYPOTHECATED OR OTH ERWISE DISPOSED OF (A "TRANSFER")
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THAT CERTAIN STOCKHOLDERS
AGREEMENT, DATED AS OF FEBRUARY 2, 1999, BY AND AMONG HARVEYS CASINO
RESORTS, A NEVADA CORPORATION, AND CERTAIN OF ITS STOCKHOLDERS AND THAT
CERTAIN STOCK OPTION AND RESTRICTED AWARD AGREEMENT, OF EVEN DATE
HEREWITH, BETWEEN THE COMPANY AND ONE OF ITS SENIOR EXECUTIVES. ANY
TRANSFEREE OF THESE SECURITIES SHALL TAKE SUBJECT TO THE TERMS OF SUCH
AGREEMENTS, COPIES OF WHICH ARE ON FILE WITH THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES
LAWS, AND NO TRANS FER OF THESE SECURITIES MAY BE MADE EXCEPT (A) PURSU
ANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B)
PURSUANT TO AN EXEMPTION THEREFROM WITH RESPECT TO WHICH THE COMPANY
MAY, UPON REQUEST, REQUIRE A SATISFACTORY OPINION OF COUNSEL FOR THE
HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF THE ACT.
Further, if the Company determines that the listing or qualification of the
Option Shares under any securities or other applicable law is necessary in order
to avoid a violation of any securities laws, the Option shall not be
exercisable, in whole or in part, unless and until such listing or
qualification, or a consent or approval with respect thereto, shall have been
effected or obtained free of any conditions not acceptable to the Company,
PROVIDED, that the Company shall pursue such listing or qualification diligently
and in good faith.
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12. NO OBLIGATION TO REGISTER SHARES. Except as provided in
the Stockholders Agreement, the Company shall be under no obligation to register
the Restricted Shares or the Option Shares.
13. PROTECTIONS AGAINST VIOLATIONS OF AGREEMENT. No purported
sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift,
transfer in trust (voting or other) or other disposition of, or creation of a
security interest in or lien on, any of the Restricted Shares or Option Shares
by any holder thereof in violation of the provisions of this Agreement, the
Stockholders Agree ment or the Certificate of Incorporation or the Bylaws of the
Company, will be valid, and the Company will not transfer any of said Restricted
Shares or Option Shares on its books nor will any of the Restricted Shares or
Option Shares be entitled to vote, nor will any dividends be paid thereon,
unless and until there has been full compliance with such provisions to the
satisfaction of the Company. The foregoing restrictions are in addition to and
not in lieu of any other remedies, legal or equitable, available to enforce such
provisions.
14. WITHHOLDING REQUIREMENTS. Executive shall, no later than
the date as of which the value of any award hereunder becomes includable in his
gross income (after taking into account the provisions of Section 4 hereof), pay
to the Company, or make arrangements satisfactory to the Company regarding
payment of, any federal, state, or local taxes or other amounts of any kind
required by law to be withheld with respect thereto. The obligations of the
Company hereunder shall be conditional on the making of such payments or
arrangements, and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
Executive.
15. FAILURE TO ENFORCE NOT A WAIVER. The failure to enforce at
any time any provision of this Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.
16. GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Nevada without regard to its
principles of conflict of laws.
17. INCORPORATION OF PLAN. The Plan is hereby incorporated by
reference and made a part hereof, and the Option, the Restricted Stock award and
this Agreement shall be subject to all terms and conditions of the Plan;
provided,
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however, that in the event of a conflict between the terms of this Agreement and
the Plan, the terms of this Agreement shall govern.
18. AMENDMENTS. This Agreement may be amended or modified at
any time only by an instrument in writing signed by each of the parties hereto.
19. RIGHTS AS A STOCKHOLDER. Neither the Executive nor any of
the Executive's successors in interest shall have any rights as a stockholder of
the Company with respect to any shares of Common Stock subject to the Option
until the date of issuance of a stock certificate for such shares of Common
Stock.
20. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. Neither the Plan,
the granting of the Restricted Stock award and the Option, this Agreement nor
any other action taken pursuant to the Plan shall constitute or be evidence of
any agreement or understanding, express or implied, that the Executive has a
right to continue as an employee of the Company or any Subsidiary or affiliate
of the Company for any period of time or at any specific rate of compensation.
21. AUTHORITY OF THE BOARD. The Board shall have full
authority to interpret and construe the terms of the Plan and this Agreement,
and shall do so in good faith.
22. DISPUTE RESOLUTION. Any dispute arising under this
Agreement shall be resolved in accordance with the arbitration provisions of the
Employment Agreement as in effect as of the date hereof, or as the same may be
amended from time to time, regardless of the expiration of the Employment
Agreement prior to the resolution of such dispute, and such arbitration
provisions shall be deemed to be incorporated herein by this reference.
23. MARKET STAND-OFF. In connection with any underwritten
public offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act for such period as the
Company or its underwriters may request (such period not to exceed 180 days
following the date of the applicable offering), the Executive shall not,
directly or indirectly, sell, make any short sale of, loan, hypothecate, pledge,
offer, grant or sell any option or other contract for the purchase of, purchase
any option or other contract for the sale of, or otherwise dispose of or
transfer, or agree to engage in any of the foregoing transactions with respect
to, any Restricted Shares or Option Shares acquired under this Agreement without
the prior written consent of the Company or its underwrit-
17
ers, provided, that the Executive shall not be required to be subject to
"lock-up" restrictions that are more restrictive than such restrictions to which
any other Employee Stockholder (as defined in the Stockholders Agreement) having
commen surate job duties and responsibilities in the Company is subject, or that
would prevent the Executive from effectuating a sale pursuant to Section 2.5 of
the Stockholders Agreement or Section 3.1 of the Stockholders Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the day and year first above written.
HARVEYS CASINO RESORTS
By: /s/ Xxxx X. XxXxxxxxxx
--------------------------------
Name: Xxxx X. XxXxxxxxxx
Title: Chief Financial Officer
The undersigned hereby accepts and agrees
to all the terms and provisions of the
foregoing Agreement and to all the terms
and provisions of the Plan and the
Stockholders Agreement herein
incorporated by reference.
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------
XXXXXXX X. XXXXXXX
Address: X.X. Xxx 0000
000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
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