Exhibit 10.3
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NONCOMPETITION AND TRADE SECRET AGREEMENT
BY
AND
AMONG
HARVEYS ACQUISITION CORPORATION
AND
THE INDIVIDUALS SIGNATORY HERETO
DATED AS OF FEBRUARY 1, 1998
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NONCOMPETITION AND TRADE SECRET AGREEMENT
NONCOMPETITION AND TRADE SECRET AGREEMENT (this "AGREEMENT"), dated
as of February 1, 1998, by and among Harveys Acquisition Corporation, a
Nevada corporation (together with its assignees or designees, "ACQ CORP"),
Xxxx X. Xxxxxxxxx ("XX. X. XXXXXXXXX"), Xxxxxxx X. Xxxxxxxxx ("XX. X.
XXXXXXXXX") and Xxxxxxx X. Xxxxxxxxx ("XX. X. XXXXXXXXX" and, collectively
with the Xx. X. Xxxxxxxxx and Xx. X. Xxxxxxxxx, the "SELLERS").
W I T N E S S E T H
WHEREAS, concurrently with the execution and delivery of this
Agreement, Harveys Casino Resorts, a Nevada corporation ("TARGET"), is
entering into an Agreement and Plan of Merger (the "MERGER AGREEMENT") with
Acq Corp, pursuant to which Acq Corp shall merge with and into Target (the
"MERGER"), upon the terms and conditions set forth therein, and in connection
therewith Target will assume the right and obligations of Acq Corp hereunder;
WHEREAS, Target is engaged in the business of owning, operating and
developing gaming and gaming-related projects, including hotel/casinos (the
"BUSINESS");
WHEREAS, the Sellers collectively own beneficially 2,924,392 shares
(through the Xxxxxxxxx Marital trust established under the will of Xxxxxxxx
X. Xxxxxxxxx) and of record an aggregate of 4,049,238 shares of common stock,
par value $.01 per share, of Target (the "COMMON STOCK"), which shares
represent approximately 40.87% of the issued and outstanding shares of Common
Stock;
WHEREAS, the Sellers have specialized knowledge of the Business,
including, without limitation, knowledge of business relationships, lines of
business, markets, key personnel, profitability and other confidential
information, substantial marketing, business and financial expertise and
extensive experience in a wide range of activities that will affect and
constitute the Business;
WHEREAS, Acq Corp would be irreparably harmed and impaired if any
of the Sellers were to engage, directly or indirectly, in any activity
competing with the Business or disclose in violation of this Agreement, or
make unauthorized use of, any confidential information concerning the
Business;
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WHEREAS, each Seller recognizes that Acq Corp is entitled to
protection from such use of the specialized knowledge of such Seller; and
WHEREAS, Acq Corp and each of the Sellers desire to provide for the
ability of Acq Corp to utilize each Seller's expertise regarding the Business;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
Certain capitalized terms used and not otherwise defined herein
have the meanings ascribed to them in the Merger Agreement. All other
capitalized terms used but not otherwise defined herein or in the Merger
Agreement have the meanings set forth below. Unless the context otherwise
requires, such terms shall include the singular and plural and the
conjunctive and disjunctive forms of the terms defined.
"CHANGE OF CONTROL" (i) Colony Capital, Inc. and its Affiliates
(including without limitation Xxxxxx Xxxxxxx and Xxxxxx Xxxxx) no longer
collectively "beneficially own," directly or indirectly, more than 50% of the
total voting power in the aggregate normally entitled to vote in the election
of directors, managers, or trustees, as applicable, of Target and (ii) any
"person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable) is or becomes the
"beneficial owner," directly or indirectly, of more of the total voting power
in the aggregate outstanding normally entitled to vote in elections of
directors of Target than is beneficially owned collectively by Colony
Capital, Inc. and its Affiliates (including without limitation Xxxxxx Xxxxxxx
and Xxxxxx Xxxxx).
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ARTICLE II
SELLERS' COVENANTS AND AGREEMENTS
SECTION 2.01. COVENANT NOT TO COMPETE.
(a) SELLERS' ACKNOWLEDGMENTS. Target is engaged in the
ownership, operation and development of hotel/casinos in the State of
Nevada and throughout the United States. Sellers hereby represent and
warrant and acknowledge and agree as follows:
(i) the market for the Business extends
throughout the State of Nevada and the rest of the United
States, and Sellers are among a limited number of people
engaged in the Business in the United States;
(ii) as part of the transactions contemplated
by this Agreement, Acq Corp shall merge with and into Target,
with Target continuing as the Surviving Corporation and assuming
the rights and obligations of Acq Corp hereunder;
(iii) the noncompetition and other covenants
contained in this Article II are an essential part of this
Agreement and the transactions contemplated hereby;
(iv) they have been fully advised by counsel
in connection with the negotiation, preparation, execution and
delivery of this Agreement and the transactions contemplated by
this Agreement, including the intent, meaning and effect of the
noncompetition and other covenants contained in this Article II;
(v) they shall be fully bound by the
noncompetition and other covenants contained in this Article II;
(vi) compliance with the noncompetition and
other covenants contained herein will not create any hardship for
Sellers, as Sellers have independent means and sufficient income,
including the payments made and to be made pursuant to this
Agreement, to be fully self-supporting without competing with Acq
Corp or
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the Company in the Business or violating the noncompetition or
other covenants contained herein; and
(vii) no reasonable Person would engage in
any of the transactions contemplated by this Agreement and the
MERGER AGREEMENT without the benefit of the noncompetition and
other covenants contained herein by Sellers.
Accordingly, Sellers agree to be bound by the noncompetition and other
covenants contained herein to the maximum extent permitted by law, it being
the intent and spirit of the parties that the noncompetition and other
covenants contained herein shall be valid and enforceable in all respects
and, subject to the terms and conditions of this Agreement, mutually
dependent upon the obligations of Acq Corp to pay Sellers the amounts set
forth in this Agreement.
(b) NONCOMPETITION. During the three (3) year period commencing
on the Closing Date (the "RESTRICTED PERIOD"), except for the Permitted
Activities (as hereinafter defined), Sellers shall not in any city, town,
county, parish or other municipality in the State of Nevada (the names of
each such city, town, county, parish or other municipality being expressly
incorporated by reference herein), in which state Target, including through
its Subsidiaries, engages in the Business, directly or indirectly,
(i) engage in the Business for Sellers' own
account;
(ii) enter the employ of, or render any
services to or for, any entity that is engaged in the Business; or
(iii) become interested in any such entity in any
capacity, including as an individual, partner, stockholder, officer,
director, principal, agent, employee, trustee or consultant;
PROVIDED, that Sellers may own, directly or indirectly, securities of, and
may serve as a member of the board of directors (but may not be employed by
or act as a consultant to) of any entity traded on any national securities
exchange or automated quotation system if Sellers, individually or in the
aggregate, are not a controlling Person of, or a member of a group which
controls, such entity and do not, directly or
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indirectly, "beneficially own" (as defined in Rule 13d-3 of the Exchange Act,
without regard to the 60 day period referred to in Rule 13d-3(d)(1)(i)) five
(5) percent or more of any class of securities of such entity. For the
purposes of this Article II, "PERMITTED ACTIVITIES" means each of Xx. X.
Xxxxxxxxx'x and Xx. X. Xxxxxxxxx'x ownership of an interest in or employment
by any Person holding convention and/or hotel/motel properties within a 60
mile radius from Stateline, Nevada, PROVIDED, that, in the case of any
hotel/motel properties (including with convention facilities), no facilities
in which Xx. X. Xxxxxxxxx or Xx. X. Xxxxxxxxx directly or indirectly holds an
interest in or are either or both employed by collectively contain more than
350 guest rooms, more than 15 table games or more than 250 slot machines in
the aggregate.
(c) NONINTERFERENCE. During the Restricted Period, Sellers
shall not, directly or indirectly, solicit, induce, or attempt to solicit
or induce any officer, director, agent, employee or consultant of Target or
any of its Subsidiaries, Affiliates, successors or assigns, to terminate
his, her or its employment or other relationship with Target or any of its
Subsidiaries, Affiliates, successors or assigns, for the purpose of
associating with any competitor of Target or any of its Subsidiaries,
Affiliates, successors or assigns, or otherwise encourage any such person
or entity to leave or sever his, her or its employment or other
relationship with Target or any of its Subsidiaries, Affiliates, successors
or assigns, for any other reason or no reason.
(d) NONSOLICITATION. During the Restricted Period, Sellers
shall not, directly or indirectly, solicit, induce, or attempt to solicit
or induce, any customers, clients, vendors, suppliers or consultants then
under contract to Target or any of its Subsidiaries, Affiliates, successors
or assigns, to terminate his, her or its relationship with Target or any of
its Subsidiaries, Affiliates, successors or assigns, for the purpose of
associating with any competitor of Target or any of its Subsidiaries,
Affiliates, successors or assigns, or otherwise encourage such customers,
clients, vendors, suppliers or consultants then under contract to terminate
his, her or its relationship with Target or any of its Subsidiaries,
Affiliates, successors or assigns, for any other reason or no reason.
SECTION 2.02. CONFIDENTIAL INFORMATION. Sellers acknowledge that
they have had access to proprietary information and confidential materials
consisting of materials relating to current and future business activities
and plans, development
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projects, marketing plans known to exist and customer lists pertaining to the
Business (the "CONFIDENTIAL INFORMATION"). Sellers agree, without limitation
in time or until such information shall become public other than by Sellers'
unauthorized disclosure, to maintain the confidentiality of the Confidential
Information and to refrain from divulging, disclosing, or otherwise using in
any respect the Confidential Information to the detriment of Target or any of
its Subsidiaries, Affiliates, successors or assigns, or for any other purpose
or no purpose.
SECTION 2.03. RIGHTS AND REMEDIES UPON BREACH. If Sellers breach,
or threaten to commit a breach of, any of the provisions of Section 2.01 or
2.02, Acq Corp and any of its Subsidiaries, Affiliates, successors or
assigns, shall have the following rights and remedies, each of which shall be
independent of the others and severally enforceable, and each of which shall
be in addition to, and not in lieu of, any other rights or remedies available
to Acq Corp or any of its Subsidiaries, Affiliates, successors or assigns, at
law or in equity, under this Agreement or otherwise:
(a) SPECIFIC PERFORMANCE AND/OR INJUNCTIVE RELIEF. The right
and remedy to have each of the covenants contained herein specifically
enforced and the right and remedy to obtain injunctive relief preventing or
prohibiting the breach or threatened breach of any of the covenants
contained herein in an arbitration proceeding pursuant to Section 5.04
hereof, it being agreed that any breach or threatened breach of any of the
covenants contained in this Article II would cause irreparable injury to
Acq Corp and its Subsidiaries, Affiliates, successors or assigns, and that
remedies at law, including money damages, would not provide an adequate
remedy to Acq Corp or its Subsidiaries, Affiliates, successors or assigns;
(b) ACCOUNTING. The right and remedy to require Sellers,
jointly and severally, to account for and pay over to Acq Corp or its
Subsidiaries, Affiliates, successors or assigns, as the case may be, all
compensation, profits, monies, accruals, increments or other benefits
derived or received by Sellers that result from any transaction or activity
constituting a breach of the covenants contained herein;
(c) SEVERABILITY OF COVENANTS. Sellers acknowledge and agree
that the noncompetition and other covenants contained in this Article II
are reasonable and valid in geographic and temporal scope and in all other
respects based on current Nevada law. If, however, any arbitration panel
subse-
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quently determines that the noncompetition or other covenants, or any
part thereof, are invalid or unenforceable, the remainder of the
noncompetition and other covenants shall not thereby be affected and shall
be given full effect without regard to the invalid portions;
(d) BLUE-PENCILING. If any arbitration panel determines that
the noncompetition or other covenants contained herein, or any part
thereof, are unenforceable because of the duration or geographic scope of
such provision(s), such arbitration panel shall have the power to reduce
the duration or scope of such provision(s), as the case may be, and, in its
reduced form, such provision(s) shall then be enforceable to the maximum
extent permitted by applicable law.
SECTION 2.04. RIGHT OF SUCCESSOR TO ENFORCE AGREEMENT. Any Person
whom all or part of the Business is sold, if this Agreement is assigned
pursuant to Section 5.09, shall be entitled to enforce each of the covenants
contained in Sections 2.01, 2.02 and 2.03.
ARTICLE III
AGREEMENTS OF ACQ CORP
SECTION 3.01. EMPLOYMENT AND RETIREMENT CONTRACTS.
(a) XX. X. XXXXXXXXX.
(i) Xx. X. Xxxxxxxxx'x employment with Target
shall be terminated on the Closing Date, whereupon he shall resign
from and he shall cease to hold any office of Target and he shall
resign from and cease to be a member of Target's Board of Directors
and any committee thereof. From and after the date of such
termination of employment, Acq Corp and Target shall have no further
obligation to provide wages, benefits or other services to Xx. X.
Xxxxxxxxx, except as set forth herein;
(ii) As of the Closing Date, each option to
purchase Common Stock held by Xx. X. Xxxxxxxxx, whether vested or
unvested, will be cancelled in exchange for a payment in cash
equal
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to the product of the number of shares of Common Stock subject
to such option and the excess, if any, of the price per share
of Common Stock to be paid by Acq Corp in the Acquisition
Transaction over the exercise price per share of Common Stock
of such option; and
(iii) Acq Corp shall cause Target to maintain
its Senior Supplemental Executive Retirement Plan ("S-SERP") for
Xx. X. Xxxxxxxxx and to provide the perquisites described in Xx.
X. Xxxxxxxxx'x Employment Agreement executed November 12, 1993
at Section 10.9 until the earlier of age 80 or death even if the
S-SERP benefits are prepaid by Target. Target shall provide for
the continued employment of the employee functioning as a
secretary to Xx. X. Xxxxxxxxx at such employee's current level of
compensation and benefits, PROVIDED that Target shall terminate
such employee at Xx. X. Xxxxxxxxx'x reasonable request unless
doing so would violate any agreement to which Target or any of
its subsidiaries is a party or by which it may be bound, and
PROVIDED FURTHER that in no event shall target be required
to violate any Law.
(b) XX. X. XXXXXXXXX.
(i) Xx. X. Xxxxxxxxx shall resign from
and she shall cease to hold any office of Target and, except
as provided herein, she shall resign from and cease to serve
as a member of Target's Board of Directors and any committee
thereof on the Closing Date. Acq Corp shall cause Target to
pay to Xx. X. Xxxxxxxxx at the Closing Date all amounts due to
her as a Director of Target pursuant to the severance compensation
provisions of the Company's Change of Control Plan in effect on
the date hereof, as such amounts are set forth in Schedule 3.01(b).
Acq Corp and its Affiliates shall cause Target or its Board of
Directors to designate Xx. X. Xxxxxxxxx as a Director Xxxxxxx
of Target as promptly as practicable following the Closing Date.
(ii) As of the Closing Date, each option to
purchase Common Stock held by Xx X. Xxxxxxxxx, whether vested or
unvested, will be cancelled in exchange for a payment in cash
equal to the product of (A) the number of shares of Common Stock
subject to such option and (B) the excess, if any, of the price
per share of
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Common Stock to be paid by Acq Corp in the Acquisition Transaction
over the exercise price per share of Common Stock of such option
(c) XX. X. XXXXXXXXX.
(i) Xx. X. Xxxxxxxxx'x employment with Target
shall be terminated on the Closing Date, whereupon Xx. X. Xxxxxxxxx
shall resign from and he shall cease to hold any office of Target
and he shall resign from and he shall cease to be a member of
Target's Board of Directors and any committee thereof. From and
after the Closing Date, Acq Corp and Target shall have no
obligation to provide wages, benefits or other services to Xx. X.
Xxxxxxxxx, except as set forth herein.
(ii) Acq Corp shall cause Target to pay Xx. X.
Xxxxxxxxx on the Closing Date an amount in cash equal to the present
value (discounted at the prime rate of Xxxxx Fargo Bank, National
Association in effect on the Closing Date) of the sum of $65,000 in
cash on each of the Closing Date and the first and second
anniversaries thereof. Until the tenth anniversary of the Closing
Date, Acq Corp shall cause Target to maintain Target's current
group term life insurance policy for Xx. X. Xxxxxxxxx, providing
for a death benefit of $232,000 per year, or provide for a term
life insurance policy that provides for an equivalent benefit,
with Xx. Xxxxxxxxx to designate a beneficiary.
(iii) As of the Closing Date, each phantom Common
Stock instrument held by Xx. X. Xxxxxxxxx, whether vested or
unvested, will be cancelled in exchange for a payment in cash
calculated in accordance with the agreement pursuant to which
such instruments were granted as in effect at the time of grant,
PROVIDED that such payment may not exceed 110% of the amount equal
to what Xx. X. Xxxxxxxxx would have been entitled had he received
Common Stock options and been entitled to the product of the
number of shares of Common Stock subject to such option and the
excess, if any, of the price per share of Common Stock to be paid
by Colony in the Acquisition Transaction over the exercise price
per share of Common Stock of such option.
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(iv) Acq Corp shall cause Target to pay to
Xx. X. Xxxxxxxxx at the Closing Date all amounts due to him as a
Director of Target pursuant to the severance compensation provisions
of the Company's Change of Control Plan as in effect on the date
hereof, as such amounts are set forth in Schedule 3.01(c).
(v) Target's Management Incentive Plan (the
"MIP") as in effect as of the date hereof shall be terminated at the
Closing Date, and Acq Corp shall cause Target to pay to Xx. X.
Xxxxxxxxx $19,500 in cash, in full satisfaction of his rights under
the MIP.
SECTION 3.02. MEDICAL BENEFITS. Notwithstanding Section 3.01, Acq
Corp shall cause Target to maintain in effect the medical, dental and vision
insurance coverage (equal to Class I coverage, and as amended from time to
time for members of the Board and senior officers, including without
limitation annual executive physicals) maintained by Target covering Xx. X.
Xxxxxxxxx, Xx. X. Xxxxxxxxx and Xx. X. Xxxxxxxxx'x spouse and children until
the earlier to occur of the tenth anniversary of the Closing Date and, in the
case of Xx. X. Xxxxxxxxx'x children, the 20th anniversary of each of their
births or, as long as any such child is enrolled as a full-time student in a
college or university, until the 24th anniversary of each of their births, to
the extent that such policies are available; PROVIDED, that Target may
substitute therefor policies with at least the same coverage containing terms
and conditions which are no less advantageous to the coverage provided to the
insureds at the date hereof (as the same may be modified in accordance with
the terms of the Merger Agreement). True, correct and complete summaries of
the aforementioned policies are set forth on Schedule 3.02.
SECTION 3.03. FAMILY MEMORABILIA. Acq Corp agrees that Xx. X.
Xxxxxxxxx and Xx. X. Xxxxxxxxx own the items set forth in Schedule 3.03 (the
"FAMILY MEMORABILIA") which are located in the facilities of Target. Xx. X.
Xxxxxxxxx and Xx. X. Xxxxxxxxx each agree to permit Target, in its sole
discretion, to display the Family Memorabilia at such facilities at which
they are currently displayed until the earlier of the tenth anniversary of
the Closing Date or a Change of Control of Target. For so long as Target
elects to display Family Memorabilia in accordance with the preceding
sentence, Target shall maintain casualty insurance coverage on such items at
their full insurable value, subject to customary deductible amounts.
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SECTION 3.04. COMPLIMENTARY SERVICES. Acq Corp shall cause
Target to issue a credit card providing "Level I" benefits (a "PLATINUM
CARD") to Xx. X. Xxxxxxxxx, Xx. X. Xxxxxxxxx and members of Xx. X.
Xxxxxxxxx'x immediate family designated by him. During each of the twelve
month periods commencing on the Closing Date and continuing thereafter until
the tenth anniversary thereof, Xx. X. Xxxxxxxxx and members of the immediate
family of Xx. X. Xxxxxxxxx shall be permitted to purchase food, beverage and
lodging services at prevailing retail prices at Target's current and any
future facilities utilizing the Platinum Card with benefits not less than
current Level I benefits. Xx. X. Xxxxxxxxx shall be liable for charges on
any Cards issued to her, and Xx. X. Xxxxxxxxx shall be liable for charges on
any Cards issued to him or his designees, PROVIDED, that Xx. X. Xxxxxxxxx and
Xx. X. Xxxxxxxxx shall not be liable for such charges not exceeding $8,000 in
any yearly period referred to in the previous sentence.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each
of the Sellers severally and not jointly represents and warrants to Acq Corp
as follows:
(a) NO CONFLICT. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (i) require
notice to, or the consent of, any party to any Contract to which such
Seller is a party or by which it is bound, or the consent, approval, order
or authorization of, or the registration, declaration or filing with, any
governmental authority, (ii) violate any Law, or (iii) result in a breach
or violation of any provision of, constitute a default under, or result in
the termination of, or an acceleration of indebtedness or creation of any
Lien under, any material contract to which such Seller is a party or by
which it is bound.
(b) BROKERS, FINDERS, ETC. No broker, investment banker,
financial advisor, finder or other person (other than Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation in connection with the Merger, the fees and
expenses of which will not be the responsibility of Acq Corp) is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in
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connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Sellers.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF ACQ CORP. Acq
Corp hereby represents and warrants to each of the Sellers as follows:
(a) ORGANIZATION AND STANDING. Acq Corp is duly organized,
validly existing and in good standing under the laws of its state of
incorporation, and has all requisite power and authority to enter into and
perform its obligations under this Agreement.
(b) AUTHORITY. The execution and delivery of this Agreement,
and the performance by Acq Corp of its obligations hereunder, have been
duly authorized by all necessary action on the part of Acq Corp. This
Agreement has been duly executed and delivered on behalf of Acq Corp and,
assuming the due execution and delivery hereof by the Sellers and assuming
that approval of this Agreement by Target remains effective, this Agreement
constitutes a valid and binding obligation of Acq Corp, enforceable against
Acq Corp in accordance with its terms.
(c) NO CONFLICT. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (i) require
notice to, or the consent of, any party to any Contract to which Acq Corp
or any of its Affiliates is a party or by which any of them is bound, or
the consent, approval, order or authorization of, or the registration,
declaration or filing with, any governmental authority, (ii) violate any
Laws, (iii) result in a breach or violation of any provision of, or
constitute a default under, any contract to which Acq Corp is a party or by
which it is bound or (iv) conflict with any provision of the certificate of
incorporation or bylaws of Acq Corp.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of
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delivery) 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 Acq Corp or Target, to:
x/x Xxxxxx Xxxxxxx, Xxx.
0000 Xxxxxx of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxx
and
c/o Colony Capital Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxx Xxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 213-687-5600
(b) if to Mr. K. Kedbetter, to:
000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
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Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
and with a copy to:
Walther, Key, Maupin, Oats, Cox, Klaich & LeGoy
Lakeside Professional Plaza
0000 Xxxxxxxx Xxxxx
Xxxx, Xxxxxx 00000
Attention: X. Xxxxxx Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
and with a copy to:
Xxxxxxx Xxxxxx Xxxx, Esq.
0000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx, Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
(c) if to Xx. X. Xxxxxxxxx, to:
Thunderbird Ranch
000 Xxxxxxx 00
Xxxxxxxxxxxx, Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
and with a copy to:
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
and with a copy to:
Walther, Key, Maupin, Oats, Cox, Klaich & LeGoy
Lakeside Professional Plaza
0000 Xxxxxxxx Xxxxx
Xxxx, Xxxxxx 00000
Attention: X. Xxxxxx Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
and with a copy to:
Xxxxxx X. Xxxx, Esq.
000 Xxxxx Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxx, Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
(d) if to Xx. X. Xxxxxxxxx, to:
X.X. Xxx 000
Xxxxxxxxx, Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
and with a copy to:
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
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and with a copy to:
Walther, Key, Maupin, Oats, Xxx, Klaich & LeGoy
Lakeside Professional Plaza
0000 Xxxxxxxx Xxxxx
Xxxx, Xxxxxx 00000
Attention: X. Xxxxxx Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
and with a copy to:
Xxxxxxx X. Xxxxxxx, Xx., Esq.
000 X. Xxxxxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx, Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
SECTION 5.02. INTERPRETATION. When a reference is made in this
Agreement to a Section or Schedule, such reference shall be to a Section of
or a Schedule to 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 Merger Agreement and the consummation of the transactions
contemplated by the Merger Agreement also are transactions contemplated by
this Agreement. If any provision of this Agreement is illegal or
unenforceable under any Gaming Law, such provision shall be void and of no
force or effect.
SECTION 5.03. SEVERABILITY. In addition to the remedies specified
in Section 2.03, if any provision of this Agreement or the application of any
such provision shall be held invalid, illegal or unenforceable in any respect
by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof. In lieu of any
such invalid, illegal or unenforceable provision, the parties hereto intend
that there shall be added as part of this Agreement a valid, legal and
enforceable provision as similar in terms to such invalid, illegal or
unenforceable provision as may be possible or practicable under the
circumstances.
16
SECTION 5.04. ARBITRATION OF DISPUTES. Any dispute arising out of
or relating to this Agreement, Sellers' employment or other relationship with
the Target or the termination of any such employment or other relationship,
or any other dispute arising by and among Sellers, or any of them, and
Target, Acq Corp, or their officers, directors, agents, employees or
consultants, or their successors and assigns, shall be submitted to binding
arbitration by three arbitrators, at least one of which shall have
substantial business experience with the gaming industry in Nevada, under the
then-existing Commercial Arbitration Rules of the American Arbitration
Association in arbitration proceedings conducted in Reno, Nevada. Acq Corp
and Sellers shall each select one arbitrator, and these two arbitrators shall
select the third arbitrator. The arbitrators shall have the power to
specifically enforce or to enjoin the breach of this Agreement. Judgment
upon the award of the arbitrator shall be binding upon the parties and may be
entered in any court having jurisdiction. The arbitrator shall award to the
prevailing party reasonable attorneys' fees and expenses from the other
party, including any expert fees, which fees and expenses shall be in
addition to any other relief which may be awarded.
SECTION 5.05. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 5.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement, and the Schedules and Exhibits hereto, and the Merger
Agreement, and the Schedules and Exhibits thereto, constitute the entire
agreements, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of
these agreements.
SECTION 5.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA, WITHOUT
REGARD TO ANY APPLICABLE CONFLICTS OF LAW.
SECTION 5.08. GAMING LAWS. Each of the provisions of this
Agreement is subject to and shall be enforced in compliance with the Gaming
Laws.
SECTION 5.09. ASSIGNMENT. Neither this Agreement nor any of any
Seller's rights, interests or obligations hereunder shall be assigned, in
whole or in
17
part, by operation of law or otherwise by any Seller without the prior
written consent of Acq Corp. Prior to the Closing, Acq Corp may assign, in
its sole discretion, any of or all its rights, interests and obligations
under this Agreement to any controlled Affiliate of Colony Capital, Inc., a
Delaware corporation, PROVIDED, that such Affiliate assumes all covenants,
duties and responsibilities of Acq Corp hereunder. 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.
SECTION 5.10. AMENDMENTS. This Agreement and the Schedules and
Exhibits hereto may not be amended except by an instrument or instruments in
writing signed and delivered on behalf of each of the parties hereto. At any
time prior to the Closing Date, any party hereto which is entitled to the
benefits hereof may (a) extend the time for the performance of any of the
obligations or other acts of any other party, (b) waive any inaccuracy in the
representations and warranties of any other party contained herein, in any
Schedule and Exhibit hereto, or in any document delivered pursuant hereto,
and (c), subject to applicable law, waive compliance with any of the
agreements of any other party hereto or any conditions contained herein. Any
agreement on the part of any of the parties hereto to any such extension or
waiver (i) shall be valid only if set forth in an instrument in writing
signed and delivered on behalf of each such party, and (ii) shall not be
construed as a waiver or extension of any subsequent breach or time for
performance hereunder.
SECTION 5.11. ENFORCEMENT. In addition to the remedies specified
in Section 2.03, the parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in an arbitration proceeding as
set forth in Section 5.04.
[SIGNATURE PAGES FOLLOW]
18
IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized officers to execute this Agreement as of the date first above
written.
HARVEYS ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
/s/ Xxxx X. Xxxxxxxxx
----------------------------------------
XXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
XXXXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
XXXXXXX X. XXXXXXXXX
SCHEDULE 3.01(b)
SEVERANCE COMPENSATION
Average Payout
Retirement Strike Amount
Severance Payout Total # Options Price at $28
---------- ---------- -------- --------- ------- --------
X. Xxxxxxxxx $ 90,000(1) $250,000 $340,000 9,000 $15.466 $112,806
-----------------
(1) Assumes that Xxxxxxx X. Xxxxxxxxx will be reelected for a three-year
term as a Director at the upcoming annual shareholder meeting, which is
likely to occur prior to the Closing Date.
SCHEDULE 3.01(c)
SEVERANCE COMPENSATION
Average Payout
Retirement Strike Amount
Severance Payout Total # Options Price at $28
--------- ---------- -------- ------------ ------- ------
X. Xxxxxxxxx $30,000 $250,000 $280,000 Stock
Appreciation
Rights
SCHEDULE 3.02
MEDICAL BENEFITS
1. See Executive Medical Plan description attached, specifically Class 1.
2. See Harveys Casino Resorts Summary Schedule of Benefits attached.
3. See Summary of Dental Benefits attached.
4. See Vision Benefits Schedule attached.
5. See Harveys Policy No. HR101 attached (Executive physical examinations).
EXECUTIVE MEDICAL PLAN
I. ELIGIBILITY
- CLASS 1
Chairman of the Board, Board of Directors (including outside
directors), President/Chief Executive Officer, Chief Operating
Officer, and all Vice Presidents.
- CLASS 2
Directors with Hay points of 700 or more.
II. COVERAGE
- CLASS 1
100% reimbursement for medical, dental, and vision care expenses not
reimbursed through the standard benefit program. Covered expenses
include deductibles, co-payments and coinsurance. Reimbursement for
eligible expenses will be made regardless of a provider's
participation in the preferred Provider Network. Benefits are limited
to expenses covered under the Plan (outlined in the Group Health
Benefit booklet), and all Plan limits, maximums and exclusions remain
in effect.
- CLASS 2
100% reimbursement for medical, dental, and vision care deductibles,
co-payments and coinsurance ONLY when using preferred providers.
Services provided by non-plan providers will be reimbursed according
to the schedule outlined in the Group Health Plan booklet. For
example, the annual deductible will be applied, and reimbursement will
be at least 80% of the usual, customary and reasonable limits. All
Plan limits, maximums and exclusions remain in effect.
As there are currently no contracted or preferred vision care
providers, reimbursement will continue to be 100%.
EXECUTIVE MEDICAL PLAN
MEDICAL
- Includes well-baby/child care
- Mammograms
- Prostate exams
- Spouse physicals - $200 limit
VISION
- Eye exam @ actual cost
- $250 per year for lenses & frames
DENTAL
- Yearly maximum of $3,000
HARVEYS CASINO RESORTS
SUMMARY
SCHEDULE OF BENEFITS
This is an outline only to provide a quick overview of benefits. It does not
constitute the group policy and is not a contract of insurance. It explains
in simple language the essential features of the group benefits provided.
All rights with respect to the benefits of an insured person will be governed
solely by the group plan document.
LIFETIME MAXIMUM - $1,000,000
------------------------------------------------------------------------------
DESCRIPTION PARTICIPATING NON-PARTICIPATING
------------------------------------------------------------------------------
DEDUCTIBLE
Individual $0 $ 400
Family $0 $1,000
------------------------------------------------------------------------------
CO-INSURANCE 80% of $12,500 per 70% of $16,667 per
person, then 100% person, then 100%
------------------------------------------------------------------------------
MAXIMUM ANNUAL OUT-OF- $2,500 $5,000
-------------------------------------------------
POCKET EXPENSE - individual After co-pay/deductible has been satisfied.
------------------------------------------------------------------------------
HOSPITAL
-Inpatient $400 co-pay, then 80% After deductible,
(El Dorado and Xxxxxxx $600 co-pay, then 70%
County residents; (Based on Plan Document
Designated participating per diem rates)
hospitals are Xxxxxx
Memorial Hospital and
St. Mary's)
------------------------------------------------------------------------------
MANDATORY PRE-AUTHORIZATION, OTHERWISE $350 PENALTY PER DAY,
(HOSPITAL - INPATIENT ONLY)
------------------------------------------------------------------------------
SURGEON 100% Second Opinion After deductible, 70%
INPATIENT & OUTPATIENT NOT required
------------------------------------------------------------------------------
HOSPITAL $50 co-pay then 80% After deductible
-Outpatient Surgery, (All residents OTHER than $400 co-pay, then 70%
Ambulatory Xxxxxxx and El Dorado
Surgical Center county residents may
use Xxxxxx Ambulatory
Surgical Center, Xxxxxx
Tahoe Hospital, St.
Mary's Xxxxxx Memorial
Hospital).
------------------------------------------------------------------------------
HOSPITAL OUTPATIENT
SERVICES
X-RAY'S (EXCEPT- $15 co-pay each x-ray. After deductible, 70%.
CAT/MRI) LAB $5 co-pay each test.
ALL OTHER (EXCEPT $50 co-pay per visit,
SURGERY) then 80%.
Xxxxxx Memorial Hospital
& St. Mary's are
designated hospitals for
residents of Xxxxxxx & El
Dorado Counties
------------------------------------------------------------------------------
EMERGENCY ROOM CARE $125 co-pay, then 80%. After deductible,
To qualify for reduced $75, then 80%. $125 co-pay,
co-pay* or $75 then 70%.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
DESCRIPTION PARTICIPATING NON-PARTICIPATING
------------------------------------------------------------------------------
CAT/MRI $100 co-pay each test. After deductible, 70%.
------------------------------------------------------------------------------
PAP SMEAR (only one $5 co-pay NOT COVERED
routine pap smear
allowed per year)
------------------------------------------------------------------------------
PODIATRY AFTER CO-PAY, 100% After deductible, 70%.
Treatment of foot
disorders
$100 maximum per calendar
year.
Surgery 100%
(see benefit book for
exclusions)
------------------------------------------------------------------------------
PRESCRIPTION DRUGS $10 co-pay for Generic
30-day supply for 100 brand up to $100
tabs $15 co-pay for Brand name
(RX AMERICA) up to $100
20% co-pay $100 or more
------------------------------------------------------------------------------
MAIL-IN PRESCRIPTION $15-Generic (three month N/A
PROGRAM supply)
$30-Brand Name (three
month supply)
------------------------------------------------------------------------------
PHYSICIAN OR CLINIC $20 co-pay for general After deductible, 70%.
VISITS practitioner,
$20 co-pay for
specialist.
------------------------------------------------------------------------------
SPINAL MANIPULATION 50% maximum $60 per After deductible,
(CHIROPRACTIC) visit; 50% maximum $60 per visit
$500 maximum per $500 maximum per calendar
calendar year. year.
------------------------------------------------------------------------------
MENTAL & NERVOUS $400 co-pay per After deductible,
DISORDERS/SUBSTANCE ABUSE admission, then 80%. $600 co-pay per
admission,
then 50%.
------------------------------------------------------------------------------
INPATIENT $10,000 lifetime maximum.+
------------------------------------------------------------------------------
OUTPATIENT ** Plan pays $20 per visit. After deductible, plan
Professional pays $20 per visit.
------------------------------------------------------------------------------
$1,000 calendar year
maximum.
------------------------------------------------------------------------------
INPATIENT HOSPITAL 100% After deductible, 70%.
VISITS.
------------------------------------------------------------------------------
ALL BENEFITS ARE SUBJECT TO ONE OR ALL OF THE FOLLOWING:
ALL BENEFITS ARE SUBJECT TO A "PRE-EXISTING LIMITATION"
* If Emergency Room visit results in hospital admit or if visit is for any
of the following conditions: heart conditions, head injury, open wounds,
presence of foreign bodies, toxic effects, xxxxx or fractures.
** Our HPPO network allows $82.50 maximum for Psychologist/Psychiatrist and
$75.00 maximum for Marriage and Family Counseling.
+ Mental and nervous benefits are exempt from the maximum out-of-pocket
expense.
SUMMARY OF DENTAL BENEFITS
PRO PROVIDER NON-PPO PROVIDER
1. CALENDAR YEAR MAXIMUM $1,000 calendar year maximum payable for all
dental plan services. PPO and Non-PPO Providers.
2. CALENDAR YEAR DEDUCTIBLE
Per Covered Person None $ 50.00
Per Covered Family None $150.00
3. CO-PAY PER PROCEDURE $5.00 to $190.00 N/A
based on the
procedure involved.
4. REIMBURSEMENT
Basic Dental 100% after Co-pay 80% of scheduled amount after
deductible.
Major Dental 80% after Co-pay 50% of scheduled amount after
deductible.
5. PREDETERMINATION OF BENEFITS
Non-emergency services exceeding $200 must be approved in advance by the
Contract Administrator. Your dentist will probably have the "treatment
plan" forms needed. If not, forms are available in the Compensation and
Benefits Office.
VISION BENEFITS
As of May 1, 1990, Harveys' vision benefit was changed to include the
coverage of CONTACT LENSES with no exclusions.
The Summary of Benefits is as follows:
1. Calendar Year Deductible:
$25 per covered person
2. VISION EXAMINATION:
After deductible. Plan pays 80% of usual, customary, and reasonable fee
(plan allows up to $68.25). Coverage is limited to one examination in any
12-month period.
3. LENSES AND FRAMES:
LENSES - After deductible. Plan pays 80% of usual, customary and
reasonable fee (plan allows up to $50 for regular lenses, $75 for bifocals,
$90 for trifocals and $125 for contact lenses). Coverage is limited to one
pair of any lenses in any 12-month period, if warranted by a prescription
change.
FRAMES - After deductible. Plan pays 80% of usual, customary, and
reasonable fee (plan allows up to $75). Coverage is limited to one pair
within any 24-month period.
You may select any optometrist you choose, as the vison plan does not function
under our PPO Plan.
STANDARD POLICY AND
PROCEDURES
HARVEYS
POLICY NUMBER: HR101
IMPLEMENTATION DATE: 12/1/92
REVISION DATE: Approved 12/2/92
TITLE: EXECUTIVE PHYSICAL EXAMINATIONS PAGE 1 OF 2
------------------------------------------------------------------------------
POLICY
It is the policy of Xxxxxx'x that all employed executives and officers with
the title of Director, Vice President or Board of Directors Member will be
permitted to take an annual physical examination at company expense, the
results of which will remain strictly confidential between themselves and the
examining health care professional. This privilege is also extended to
spouses of members of the Board of Directors. Xxxxxx'x strongly urges those
eligible to take advantage of this opportunity.
PROCEDURE
1. The Saint Mary's Health Promotion Center will be the provider of executive
physical examinations.
2. The staff member is to contact the Coordinator of Executive Physical
Examinations by calling (000) 000-0000.
3. At a mutually agreeable appointment time, the St. Mary's representative
will meet with the staff member at Xxxxxx'x to conduct an interview,
determine the appropriate tests and procedures to be performed during the
examination. Additionally, blood samples will be taken and all factors
preliminary to the actual examination will be taken care of.
4. At a mutually agreeable appointment time the staff member will travel to
the St. Mary's facility where the examination and a consultation will take
place.
5. The cost of the physical examination will be paid by Harveys' and, since
this is a part of the employer/staff member agreement and a condition of
the staff relationship, it will be non-taxable to the staff member. The
payment will be made from the Xxxxxx'x Accounts Payable operation in the
Corporate Controller's office. A central record for budgeting will be
kept.
TITLE: EXECUTIVE PHYSICAL EXAMINATIONS PAGE 2 OF 2
------------------------------------------------------------------------------
6. The results or the physical examination and the physician consultation will
remain strictly confidential between the staff member and the examination
provider, and will not be available for review by any other entity or
individual.
7. The year during which this examination will take place will be considered
our fiscal year as established by the Board of Directors. In order to
spread the cost out over the fiscal year, eligible persons are asked to
schedule their exam in the time frame from one month before to one month
after their anniversary of hire date.
8. The provision for full payment for the physical examination shall not be
construed as applying to any treatments or remedial services which are
subsequent to the examination or which result from the examination; any
resulting required diagnostic or treatment services will be covered
consistent with the provisions of our Health Benefits Plan as detailed in
the Group Health and Short Term Disability Plans description, and as
applying to the particular classes of employees detailed therein.
EXCEPTIONS
Exemptions from this requirement or from utilizing the St. Mary's facility will
require the approval of the Vice President of Human Resources and the Executive
Vice President/Chief Operating Officer.
SCHEDULE 3.03
All photographs of Harveys interior and exterior, various photos of
historical events, people, signs, planes, boats, the bombing and other
historical photos that have sentimental value to the family. All photographs
of Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxxx and other family
members. These items are located in the Collection Storage Room, across from
the executive offices and consist of approximately 3 full boxes of
photographs. The family would like to retain the originals of these
photographs but they are willing to allow Acq Corp to make copies of any
photographs they would like to copy.
All paintings of Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx and Xxxxxxxx Xxxxxxxxx,
including the framed painting of Xxxxxx X. Xxxxx hanging outside the entrance
to X. Xxxxxxxxx'x office, Xxxxxx and Xxxxxxxxx Xxxxx "Founders" oil painting
at the bottom of the escalator in the main hotel lobby, Xxxxxx, Xxxxxxxxx and
Xxxxxxxx felt paintings in the Sage Room, and Xxxxxxxx Xxxxxxxxx in the
Council Bluff, Iowa facility.
Brass established 1944 plaque with Wagon Wheel and Cow Skull which was
mounted outside at the hotel valet lobby entrance on the center beam; the
location of this plaque is unknown, Property Department is looking for it.
Large brass Wagon Wheel sign labeled "A-108" located in the Collection
Storage Room.
