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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-53211
Hard Rock Hotel, Inc.
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(Exact name of registrant as specified in its charter)
California 88-0306263
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4455 Paradise Road, Las Vegas NV 89109
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 693-5000
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock outstanding by class as of May 5, 2000
Class of Common Stock Shares
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Class A Common Stock 12,000
Class B Common Stock 64,023
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HARD ROCK HOTEL, INC.
INDEX
<TABLE>
<CAPTION>
<S> <C>
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of March 31, 2000 and
November 30, 1999 (unaudited)................................................. 3
Condensed Statements of Operations for the three-
months periods ended March 31, 2000 and 1999 and the
one-month periods ended December 31, 1999 and 1998
(unaudited)................................................................... 4
Condensed Statements of Cash Flows for the three-
months periods ended March 31, 2000 and 1999 and the
one-month periods ended December 31, 1999 and 1998
(unaudited)................................................................... 5
Notes to Condensed Financial Statements............................................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................ 7
Item 3. Quantitative and Qualitative Disclosures about
Market Risk........................................................................12
PART II OTHER INFORMATION
Item 1. Legal Proceedings..................................................................13
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits......................................................................13
(b) Reports on Form 8-K...........................................................13
</TABLE>
2
<PAGE>
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
HARD ROCK HOTEL, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
ASSETS
March 31, November 30,
2000 1999
--------------- ---------------
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................................... $ 10,137 $ 2,039
Accounts receivable, net of allowance for doubtful accounts..................... 4,002 6,370
Income tax refund receivable.................................................... - 87
Inventories..................................................................... 1,268 1,580
Prepaid expenses and other current assets....................................... 1,328 1,513
Deferred income taxes........................................................... 792 792
--------------- ---------------
Total current assets.......................................................... 17,527 12,381
--------------- ---------------
Property and equipment, net of accumulated depreciation and amortization........... 178,896 181,961
Other assets....................................................................... 5,222 5,570
--------------- ---------------
TOTAL ASSETS....................................................................... $ 201,645 $ 199,912
=============== ===============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable............................................................... $ 1,710 $ 3,461
Construction payables.......................................................... - 2,745
Accrued expenses............................................................... 8,761 7,044
Interest payable............................................................... 6,230 2,603
Current obligations under capital leases....................................... 91 93
--------------- ---------------
Total current liabilities................................................... 16,792 15,946
--------------- ---------------
Deferred income taxes.......................................................... 792 792
Long-term debt................................................................. 182,000 179,000
--------------- ---------------
Total long-term liabilities................................................. 182,792 179,792
--------------- ---------------
Total liabilities....................................................... 199,584 195,738
--------------- ---------------
Commitments and contingencies
Redeemable preferred stock, 9 1/4 Series A Cumulative,
no par value 40,000 shares authorized, 28,000 shares
issued and outstanding......................................................... 29,169 28,297
--------------- ---------------
Shareholders' deficit:
Common stock, Class A voting, no par value, 40,000
shares authorized, 12,000 shares issued and
outstanding..................................................
Common stock, Class B non-voting, no par value, 160,000
shares authorized, 64,023 shares issued and
outstanding....................................................................
Paid-in capital .................................................................. 7,508 7,508
Accumulated deficit............................................................... (34,616) (31,631)
--------------- ---------------
Total shareholders' deficit.................................................... (27,108) (24,123)
--------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT....................................... $ 201,645 $ 199,912
=============== ===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
3
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HARD ROCK HOTEL, INC.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended One Month Ended
March 31, December 31,
---------------------------- ----------------------------
2000 1999 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Casino.................................................. $ 15,561 $ 8,922 $ 1,821 $ 2,950
Lodging 6,696 3,337 1,567 799
Food and beverage....................................... 7,873 4,510 2,252 1,299
Retail.................................................. 2,473 2,978 804 1,009
Other income............................................ 1,363 535 443 131
------------ ------------ ------------ ------------
Gross revenues...................................... 33,966 20,282 6,887 6,188
Less: promotional allowances...................... (2,295) (1,575) (850) (541)
------------ ------------ ------------ ------------
Net revenues........................................ 31,671 18,707 6,037 5,647
------------ ------------ ------------ ------------
Costs and expenses:
Casino.................................................. 7,780 4,936 2,589 1,431
Lodging................................................. 1,691 953 578 327
Food and beverage....................................... 4,865 2,856 1,384 852
Retail.................................................. 1,137 1,378 429 446
Other................................................... 686 245 176 55
Marketing............................................... 1,053 473 409 283
General and administrative.............................. 4,432 3,197 2,171 1,132
Depreciation and amortization........................... 3,137 1,572 1,220 525
------------ ------------ ------------ ------------
Total costs and expenses............................ 24,781 15,610 8,956 5,051
------------ ------------ ------------ ------------
Income (loss) from operations................................ 6,890 3,097 (2,919) 596
Other income (expense):
Interest expense, net................................... (4,460) (2,634) (1,539) (872)
Other, net.............................................. - - (36) -
------------ ------------ ------------ ------------
Total other income (expense)........................ (4,460) (2,634) (1,575) (872)
------------ ------------ ------------ ------------
Income (loss) before provision for income taxes.............. 2,430 463 (4,494) (276)
Provision for income taxes................................... 49 - - -
------------ ------------ ------------ ------------
NET INCOME (LOSS)............................................ 2,381 463 (4,494) (276)
Preferred stock dividends.................................... 654 - 218 -
------------ ------------ ------------ ------------
Income (loss) applicable to common shareholders.............. $ 1,727 $ 463 $ (4,712) $ (276)
============ ============ ============ ============
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE:
Applicable to common shareholders....................... $ 22.72 $ 6.09 $ (61.98) $ (3.63)
============ ============ ============ ============
Weighted average number of common shares outstanding......... 76,023 76,023 76,023 76,023
============ ============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
4
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HARD ROCK HOTEL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands, except supplemental schedule)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended One Month Ended
March 31, December 31,
---------------------------- ----------------------------
2000 1999 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)....................................... $ 2,381 $ 463 $ (4,494) $ (276)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization....................... 3,137 1,572 1,220 525
Amortization of loan fees........................... 210 237 70 72
Deferred income taxes............................... - - - 211
Loss on sale of property and
equipment........................................ - - 36 -
Changes in operating assets and
liabilities:
Accounts receivable............................ 444 326 1,924 641
Income tax refund receivable................... 87 (211) - 194
Inventories.................................... 436 286 (124) (373)
Prepaid expenses and other
current assets............................... 2 (63) 183 78
Accounts payable............................... (2,938) (6,021) 1,187 5,938
Accrued expenses............................... 1,286 706 431 (491)
Interest payable............................... 2,901 2,988 726 1,051
------------ ------------ ------------ ------------
Net cash provided by(used in) operating activities........... 7,946 283 1,159 7,570
------------ ------------ ------------ ------------
Cash flow from investing activities:
Purchases of property and equipment..................... (206) (24,329) (1,122) (7,867)
Construction payables................................... - - (2,745) (13,000)
Decrease (increase) in other assets..................... (42) (14) 110 1,053
------------ ------------ ------------ ------------
Net cash provided by (used in) investing activities.......... (248) (24,343) (3,757) (19,814)
------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of debt.......................... - 37,000 3,000 3,000
Principal payments on long-term debt.................... - - -
Payments on capital lease obligations................... - (25) (2) (13)
------------ ------------ ------------ ------------
Net cash provided by (used in) financing activities.......... - 36,975 2,998 2,987
------------ ------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents............................................. 7,698 12,915 400 (9,257)
Cash and cash equivalents, beginning of
Period.................................................. 2,439 (4,691) 2,039 4,566
------------ ------------ ------------ ------------
Cash and cash equivalents, end of period..................... $ 10,137 $ 8,224 $ 2,439 $ (4,691)
============ ============ ============ ============
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest (net of amount
capitalized of $960 and $257 in the three months ended
March 31, 1999 and one month ended December 31, 1998,
respectively............................................ $ 1,349 $ (591) $ 693 $ (251)
------------ ------------ ------------ ------------
Cash paid during the period for income taxes................. $ (401) $ 41 $ - $ -
------------ ------------ ------------ ------------
</TABLE>
Supplemental Schedule of Non-Cash Investing and Financing Activities:
The value of the Series A cumulative redeemable preferred stock increased
by approximately $654,000 and $218,000 in unpaid accrued dividends for the three
month period ended March 31, 2000 and the one month period ended December 31,
1999, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
5
<PAGE>
HARD ROCK HOTEL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis Of Presentation
The accompanying unaudited financial statements of Hard Rock Hotel, Inc.
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain notes and other
information have been condensed or omitted from the interim financial statements
presented in this Quarterly Report on Form 10-Q and they do not include all
information required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates. Operating results for the
three-month period ended March 31, 2000 are not necessarily indicative of future
financial results or the results that may be expected for the year ending
December 31, 2000. The unaudited interim financial statements contained herein
should be read in conjunction with the audited financial statements and
footnotes for the year ended November 30, 1999. The Company has made certain
financial statement reclassifications for the three month period ended March 31,
1999 and the one month period ended December 31, 1998 in order to classify
amounts in a manner consistent with the three month period ended March 31, 2000
and the one month period ended December 31, 1999, respectively.
2. Long-Term Debt
At March 31, 2000, the Company had $120.0 million outstanding in Senior
Subordinated Notes and $62.0 million outstanding on its $62.0 million
revolving credit facility through a group of banks.
Interest on the Notes is payable on each April 1 and October 1. The
Notes are general unsecured obligations of the Company, subordinated in right
of payment to all existing and future senior indebtedness, including all
borrowings under the credit facility. The Notes are subject to redemption at
the option of the Company, in whole or in part, at any time on or after April
1, 2002, at a premium to the face amount ($120 million) which decreases on
each subsequent anniversary date, plus accrued interest to the date of
redemption. The Notes contain covenants restricting or limiting the ability
of the Company to, among other things, pay dividends, incur additional
indebtedness, issue certain preferred stock and enter into transactions with
affiliates.
The amount available under the credit facility will begin reducing to:
$47.0 million as of November 30, 2001; $32 million as of November 30, 2002;
$16.9 million as of November 30, 2003; and will expire on March 23, 2004.
Additionally, the Company may be required, upon certain circumstances, to
make repayments on the credit facility each year beginning in April 2000.
The credit facility contains certain covenants including, among other
things, financial covenants, limitations on the Company from disposing of
capital stock, entering into mergers and certain acquisitions, incurring
liens or indebtedness, issuing dividends on stock, and entering into
transactions with affiliates. Peter Morton has entered into a make-well
agreement (as defined) pursuant to which he is required to contribute certain
amounts to the Company in the event certain financial covenants are not met.
The credit facility is secured by substantially all of the Company's property
at the Las Vegas site. Interest on the credit facility accrues on all
individual borrowings at an interest rate determined at the option of the
Company, at either the LIBOR Index plus an applicable margin (not to exceed
3.5%), or the Base Rate, defined as the higher of the Federal Funds Rate plus
.5%, or the reference rate, as defined, plus an applicable margin (not to
exceed 2.25%). The Company chose the LIBOR Index for all borrowings
outstanding at March 31, 2000. These margins are dependent upon the Company's
debt to EBITDA ratio, as defined. Interest accrued on the Base Rate
borrowings is due monthly, up to the maturity date, while interest on LIBOR
borrowings is due quarterly up to the maturity date.
3. Legal Proceedings
On August 27, 1999, Hard Rock Hotel, Inc. and Lily Pond Investments,
Inc. filed a Complaint for Declaratory Judgment against Gary Selesner in the
Eighth Judicial District of Clark County, Nevada, Case No. A407499, based on
the termination of Gary Selesner's employment. On September 16, 1999, Gary
Selesner filed an Answer and Counterclaim seeking damages alleging breach of
contract and breach of implied covenant of good faith and fair dealing.
Discovery in this matter is proceeding.
4. Fiscal Year
In February 2000, the Company changed its financial reporting year-end to
December 31 of each year. Previously, the fiscal year ended on November 30. As a
result of this change the Company is disclosing interim financial results for
the one-month periods ended December 31, 1999 and 1998.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the company's financial statements, including
the notes thereto, and the other financial information appearing elsewhere
herein and by the audited financial statements and footnotes for the year
ended November 30, 1999, which appear in our Annual Report on Form 10-K filed
with the SEC on February 28, 2000.
MANAGEMENT CHANGES
During the three month period ended March 31, 2000, Tjeerd Brink the
former Vice President Finance, Chief Financial Officer and Treasurer of the
Company, resigned his employment relationship with the Company.
During the month of April 2000, Jim Bowen was appointed to the position
of Vice President Finance, Chief Financial Officer and Treasurer of the
Company. Mr. Bowen held the position of Vice President Finance for Lady Luck
Gaming Corp. from 1995 to 2000. Prior to 1995, he worked for five years for
KPMG, LLC, two years for the Dunes Hotel, Casino and Country Club and five
years for Arthur Andersen, LLP.
OVERVIEW
Hard Rock Hotel, Inc.'s (the "Company") sole business is the operation of
the Hard Rock Hotel and Casino in Las Vegas, Nevada, which commenced operations
on March 9, 1995.
During the month of May 1999, the Company completed construction of its
expansion of the resort (the "Expansion"). The Expansion included 318 additional
rooms, 4 new restaurants, 6,000 square feet of ballroom/banquet facilities, new
retail space, an 8,000 square foot spa/salon/fitness center and a significantly
enlarged swimming pool area featuring, among other things, swim-up blackjack.
Results of operations for periods prior to the completion of the Expansion
may not be comparable to results of operations for periods after we completed
the Expansion.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements contained herein that are not historical facts, including
but not limited to, statements regarding our business strategies and
expectations concerning future operations, margins, profitability, liquidity,
capital expenditures and capital resources, are based on current
expectations. These statements are forward-looking in nature and involve a
number of risks and uncertainties. Generally, the words "anticipates,"
"believes," "estimates," "expects" and similar expressions as they relate to
the Company and its management are intended to identify forward-looking
statements. Although management believes that the expectations in such
forward-looking statements are reasonable, it can give no assurance that any
forward looking statements will prove to be correct and actual results may
differ materially. Among the factors that could cause actual results to
differ materially are the following: competition in Las Vegas, government
regulation related to the gaming industry, uncertainty of casino customer
spending and vacationing in casino resorts in Las Vegas, occupancy rates and
average room rates in Las Vegas, the popularity of Las Vegas as a convention
and trade show destination, the completion of infrastructure improvements in
Las Vegas, and general economic and business conditions that may affect
levels of disposable income and pricing of hotel rooms, and other factors
described at various times in the Company's reports filed with the Securities
and Exchange Commission. The Company wishes to caution readers not to place
undue reliance on any forward-looking statements, which statements are made
pursuant to the Private Litigation Reform Act of 1995. The forward-looking
statements contained in this quarterly report Form 10-Q speak only as of the
date that we have filed the report. We expressly disclaim any obligation or
undertaking to disseminate any updates or revisions to any forward-looking
statement contained in this report, including to reflect any change in our
expectations with regard to that forward-looking statement or any change in
events, conditions or circumstances on which that forward-looking statement
is based. For more information regarding risks inherent in an investment in
the Company, see the section "Business - Risk Factors" in our annual Report
on Form 10-K filed on February 28, 2000.
7
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 And 1999
NET REVENUES. Net revenues increased 69% for the three months ended March
31, 2000 to $31.7 million compared to $18.7 million for the corresponding period
of the prior year. The increase in revenues is primarily attributable to a $6.6
million or 74% increase in casino revenue, a $3.4 million or 101% increase in
lodging revenue, and a $3.4 million or 75% increase in food and beverage
revenue. It is also due to an increase in other income offset partially by a
decrease in retail revenues and an increase in promotional allowances related to
items furnished to customers on a complimentary basis.
CASINO REVENUES. The $6.6 million increase in casino revenues was primarily
due to a $4.9 million or 86% increase in table games revenue and a $1.6 million
or 50% increase in slot machine revenues. The increase in table games revenues
was due to increases in both table games drop and hold percentage. Table games
drop increased 53% to $61.3 million from $40.2 million. Average drop per table
per day increased 17% despite a 28% increase in the average number of table
games in operation to 76 from 59. Table games hold percentage increased 3.1
percentage points to 17.2% from 14.1%. Slot machine revenues increased due to an
increase in handle offset partially by a decrease in win percentage. Slot
machine handle increased 81% to $114.5 million from $63.4 million. Slot machine
win percentage decreased 0.8 percentage points to 4.1% from 4.9%. The Company
decreased the average number of slot machines in operation to 656 from 723, a
decrease of 67 or 9% between comparative periods. The net result of these
changes in slot machine handle, win percent and average number of slot machines
in operation was an increase in average win per slot machine per day to $78 from
$48, an increase of $30 or 64%.
LODGING REVENUES. The $3.4 million increase in lodging revenues was
primarily due to an increase in average daily rooms available to 657 from 339 in
conjunction with the 318 room expansion which opened in May 1999 and an increase
in the average daily room rate ("ADR") to $108 from $104, an increase of $4 or
4%. The effects of increased ADR were partially offset by a decrease in
occupancy to 95% from 97%, a decrease of 2 percentage points.
FOOD AND BEVERAGE REVENUES. The $3.4 million increase in food and beverage
revenues was primarily due to revenues from the 4 new restaurants and 6,000
square feet of ballroom/banquet facilities which opened in conjunction with the
Expansion.
RETAIL REVENUES. Retail revenues decreased to $2.5 million from $3.0
million, a decrease of $0.5 million or 17%. The decrease in retail revenues is
due in part to a general market decline in the themed restaurant merchandise
segment and an expansion of other retail operations in Las Vegas.
OTHER INCOME. Other income increased to $1.4 million from $0.5 million, an
increase of $0.9 million or 155%. The increase is partially due to the opening
of new facilities, including the Rock Spa, Arcade and Beach Club, which had
combined revenues for the three months ended March 31, 2000 of $0.4 million.
Additionally, the Company recorded $0.2 million revenue related to chip float,
representing commemorative and other chips and tokens in public circulation
management believes will never be redeemed.
PROMOTIONAL ALLOWANCES. Promotional allowances increased to $2.3 million
from $1.6 million, an increase of $0.7 million or 46%. The increase is due to
increases in casino customers and a greater array of available amenities as a
result of the Expansion. As a percentage of casino revenues; however,
promotional allowances decreased from 18% to 15%, a decrease of 3 percentage
points as a result of focusing offerings on premium customers.
CASINO EXPENSES. Casino expenses as a percentage of casino revenues
decreased to 50% from 55%, a decrease of 5 percentage points. The decrease was
primarily due to decreases in labor costs and the cost of rooms, food and
beverage furnished to customers on a complimentary basis in relation to casino
revenues offset partially by cash incentives to slot machine customers which
began being offered in January 2000 pursuant to changes in the slot club
program.
8
<PAGE>
LODGING EXPENSES. Lodging expenses, prior to reclassifying the cost of
complimentaries, decreased as a percentage of lodging revenues to 32% from 38%,
a decrease of 6 percentage points. The decrease is due primarily to decreases in
administrative, telephone operator and concierge labor costs in relation to
lodging revenues.
FOOD AND BEVERAGE COSTS AND EXPENSES. Food and beverage costs and expenses
in relation to food and beverage revenues, prior to reclassifying the cost of
complimentaries, decreased to 70% from 74%, a decrease of 4 percentage points.
The decrease is primarily due to decreases in administrative and banquet labor
costs in relation to food revenues and a decrease in the cost of beverages in
relation to beverage revenues.
RETAIL COSTS AND EXPENSES. Retail costs and expenses in relation to retail
revenues, prior to reclassifying the cost of complimentaries, increased to 50%
from 47%, an increase of 3 percentage points. The increase is due primarily to
increases in labor costs and the cost of retail items in relation to retail
revenues.
OTHER COSTS AND EXPENSES. Other costs and expenses in relation to other
income, prior to reclassifying the cost of complimentaries, increased to 50%
from 46%, an increase of 4 percentage points. The increase is primarily due to
relative labor percentages at new facilities, including the Rock Spa and Beach
Club, being higher than relative labor percentages in other operating
departments.
MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and
administrative expenses in relation to gross revenues decreased to 16% from 18%,
a decrease of 2 percentage points. The relative decrease is primarily due to
fixed costs related to the Expansion increasing at a lower rate than revenues.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased to $3.1 million from $1.6 million, an increase of 100% primarily due
to the increased capital expenditures associated with the Expansion.
NET INTEREST EXPENSE. Net interest expense increased to $4.5 million from
$2.6 million, an increase of $1.9 million or 69%. The increase is primarily due
to the increase in borrowings associated with the Expansion.
INCOME APPLICABLE TO COMMON SHAREHOLDERS. As a result of the factors
described above, the Company increased income applicable to common
shareholders to $1.7 million from $0.5 million, an increase of $1.2 million
or 273%. The net increase explained in the preceding paragraphs was offset
partially by $0.7 million of preferred dividends declared on $28.0 million of
Series A Cumulative Redeemable Preferred Stock issued between the comparative
quarters.
One Month Ended December 31, 1999 And 1998
NET REVENUES. Net revenues increased 7% to $6.0 million compared to $5.6
million for the corresponding period of the prior year. The increase in
revenues is primarily attributable to a $1.0 million or 73% increase in food
and beverage revenues and a $0.8 million or 96% increase in lodging revenue
which were offset partially by a $1.1 million or 38% decrease in casino
revenues. This net increase was also due to an increase in other income
offset partially by a decrease in retail revenues and an increase in
promotional allowances related to items furnished to customers on a
complimentary basis.
CASINO REVENUES. The $1.1 million decrease in casino revenues was
primarily due to a $1.0 million or 55% decrease in table games revenue. The
decrease in table games revenues was due to a decrease in hold percentage
offset partially by an increase in table games drop. Table games hold
percentage decreased 13.4 percentage points to 4.7% from 18.1%. Table games
drop increased 73% to $17.6 million from $10.2 million. Average drop per
table per day increased 36% despite a 27% increase in the average number of
table games in operation to 75 from 59. Slot machine revenues remained
approximately constant as increased handle offset a decrease in win
percentage. Slot machine handle increased 71% to $37.3 million from $21.7
million. Slot machine win percentage decreased 2.1 percentage points to 2.5%
from 4.6%. The Company decreased the average number of slot machines in
operation to 641 from 717, a decrease of 76 or 11% between comparative
periods. The net result of these changes in slot machine handle, win percent
and average number of slot machines in operation was a slight increase in
average win per slot machine per day to $46 from $45, an increase of $1 or 3%.
9
<PAGE>
LODGING REVENUES. The $0.8 million increase in lodging revenues was
primarily due to an increase in average daily rooms available to 657 from 339 in
conjunction with the 318 room expansion which opened in May 1999 and an increase
in the average daily room rate ("ADR") to $99 from $77, an increase of $22 or
29%. The effects of increased ADR were partially offset by a decrease in
occupancy to 72% from 92%, a decrease of 20 percentage points.
FOOD AND BEVERAGE REVENUES. The $1.0 million increase in food and beverage
revenues was primarily due to revenues from the 4 new restaurants and 6,000
square feet of ballroom/banquet facilities which opened in conjunction with the
Expansion.
RETAIL REVENUES. Retail revenues decreased to $0.8 million from $1.0
million, a decrease of $0.2 million or 20%. The decrease in retail revenues is
due in part to a general market decline in the themed restaurant merchandise
segment and an expansion of other retail operations in Las Vegas.
OTHER INCOME. Other income increased to $0.4 million from $0.1 million, an
increase of $0.3 million or 238%. In addition to increases in each of the
existing other operations, the increase is partially due to the opening of new
facilities, including the Rock Spa and Arcade, which had combined revenues for
the one month ended December 31, 1999 of $0.1 million.
PROMOTIONAL ALLOWANCES. Promotional allowances increased to $0.9 million
from $0.5 million, an increase of $0.4 million or 57%. The increase is due to
increases in casino customers and a greater array of available amenities as a
result of the Expansion.
CASINO EXPENSES. Casino expenses as a percentage of casino revenues
increased to 142% from 49%, an increase of 93 percentage points. The increase in
these percentages was primarily due the decrease in table games revenues
described above.
LODGING EXPENSES. Lodging expenses, prior to reclassifying the cost of
complimentaries, decreased as a percentage of lodging revenues to 46% from 55%,
a decrease of 9 percentage points. The decrease is due primarily to decreases in
administrative, telephone operator, reservations and concierge labor costs in
relation to lodging revenues.
FOOD AND BEVERAGE COSTS AND EXPENSES. Food and beverage costs and expenses
in relation to food and beverage revenues, prior to reclassifying the cost of
complimentaries, decreased to 73% from 76%, a decrease of 3 percentage points.
The decrease is primarily due to decreases in beverage labor costs and the cost
of beverages in relation to beverage revenues.
RETAIL COSTS AND EXPENSES. Retail costs and expenses in relation to retail
revenues, prior to reclassifying the cost of complimentaries, increased to 60%
from 45%, an increase of 15 percentage points. The increase is due primarily to
increases in the cost of retail items in relation to retail revenues.
OTHER COSTS AND EXPENSES. Other costs and expenses in relation to other
income, prior to reclassifying the cost of complimentaries, decreased to 40%
from 42%, a decrease of 2 percentage points. The decrease is primarily due to
lower cost of goods sold.
MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and
administrative expenses in relation to gross revenues increased to 38% from
23%, an increase of 15 percentage points. The relative increase is primarily
due to the decrease in table games revenue as described above, additional
expenses related to claims by third parties and losses on an entertainment
event.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased to $1.2 million from $0.5 million, an increase of 132% primarily due
to the increased capital expenditures associated with the Expansion.
NET INTEREST EXPENSE. Net interest expense increased to $1.5 million from
$0.9 million, an increase of $0.6 million or 76%. The increase is primarily due
to the increase in borrowings associated with the Expansion.
LOSS APPLICABLE TO COMMON SHAREHOLDERS. As a result of the factors
described above, the Company incurred a greater loss applicable to common
shareholders of $4.7 million from $0.3 million, a change of $4.4 million. The
net decrease explained in the preceding paragraphs was added to by $0.2
million of preferred dividends declared on $28.0 million of Series A
Cumulative Redeemable Preferred Stock issued between the comparative months.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 2000, the Company's principal
source of funds was cash provided by operating activities of $7.9 million.
The primary use of funds was replacement capital expenditures of $0.2
million. As a result, as of March 31, 2000 the Company had cash and cash
equivalents of $10.1 million. The Company believes that its current cash
balances and cash flow from operations will be sufficient to provide
operating liquidity during the remainder of 2000. The Company also expects to
pay down a $20 million portion of its credit facility with the proceeds from
a planned $20.0 million issuance of additional shares of preferred stock. The
Company also plans to reduce the total commitment under the Credit Facility
by $17.0 million. The Company cannot assure, however, that these amounts will
be available or sufficient or that we will issue the additional preferred
shares.
We expect that the additional preferred shares to be sold will pay
dividends and mature in a manner substantially consistent with the Company's
outstanding shares of Series A Preferred stock, however, the terms of any
future issuance have not been finalized.
11
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risks relating to our operations result primarily from changes in
short-term LIBOR interest rates. We do not have any foreign exchange or other
significant market risk. We did not have any derivative financial instruments
at March 31, 2000.
Our exposure to market risk for changes in interest rates relates
primarily to our current credit facility. In accordance with the credit
facility, we enter into variable rate debt obligations to support general
corporate purposes, including capital expenditures and working capital needs.
We continuously evaluate our level of variable rate debt with respect to
total debt and other factors, including assessment of the current and future
economic environment.
We had $62.0 million and $59.0 million in variable rate debt
outstanding at March 31, 2000 and November 30, 1999, respectively. Based upon
these variable rate debt levels, a hypothetical 10% adverse change in
interest rates would increase interest expense by approximately $0.6 million
on an annual basis, and likewise decrease our earnings and cash flows. We
cannot predict market fluctuations in interest rates and their impact on our
variable rate debt, nor can there be any assurance that fixed rate long-term
debt will be available to us at favorable rates, if at all. Consequently,
future results may differ materially from the estimated adverse changes
discussed above.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
On August 27, 1999, Hard Rock Hotel, Inc. and Lily
Pond Investments, Inc. filed a Complaint for
Declaratory Judgment against Gary Selesner in the
Eighth Judicial District of Clark County, Nevada,
Case No. A407499, based on the termination of Gary
Selesner's employment. On September 16, 1999, Gary
Selesner filed an Answer and Counterclaim seeking
damages alleging breach of contract and breach of
implied covenant of good faith and fair dealing.
Discovery in this matter is proceeding.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3. CERTIFICATE OF INCORPORATION AND BY-LAWS
*3.1 Second Amended and Restated Articles of Incorporation of the Company.
**3.2 Certificate of Amendment of Second Amended and Restated Articles of Incorporation.
**3.3 Certificate of Designation of 9 1/4% Series A Cumulative Preferred Stock, no par value per share.
*3.4 Second Amended and Restated By-Laws of the Company.
10. MATERIAL CONTRACTS.
10.1 Form of Employment Agreement, dated April 3, 2000, between the Company and Jim Bowen.
27. FINANCIAL DATA SCHEDULE.
27.1 Financial Data Schedule for the three month period ended March 31, 2000 and one month period ended
December 31, 1999.
</TABLE>
* Incorporated by reference to designated exhibit to the Company's
Registration Statement on Form S-4, filed with the Securities and
Exchange Commission on May 21, 1998 (File No. 333-53211).
** Incorporated by reference to designated exhibit to our Report on
Form 10-Q, filed with the Securities and Exchange Commission for the
quarter ended August 31, 1999 (File No. 333-53211).
(b) Reports on Form 8-K
None
12
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This document includes various "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Sections
21E of the Securities Exchange Act of 1934, as amended, which represent the
Company's expectations or beliefs concerning future events. Statements
containing expressions such as "believes," "anticipates" or "expects" used in
the Company's press releases and periodic reports on Forms 10-K and 10-Q filed
with the Securities and Exchange Commission are intended to identify
forward-looking statements. All forward-looking statements involve risks and
uncertainties. Although the Company believes its expectations are based upon
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurances.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
HARD ROCK HOTEL, INC.
Date: May 15, 1999 By: /s/ JONATHAN SWAIN
-------------------------------------
Jonathan Swain
DULY AUTHORIZED OFFICER
/s/ JAMES D. BOWEN
-------------------------------------
James D. Bowen
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
14
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of
April 3rd, 2000, between Hard Rock Hotel, Inc., a Nevada corporation (the
"Company"), and Jim Bowen, an individual ("Executive").
PRELIMINARY STATEMENTS
A. The Company currently operates that certain hotel/casino resort known as the
"Hard Rock Hotel" located at 4455 Paradise Road, Las Vegas, Nevada.
B. The Company desires to employ Executive, and Executive desires to be so
employed, on the terms and conditions herein contained.
AGREEMENT
NOW, THEREFORE, in consideration of the various covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby employs Executive and
Executive accepts such employment commencing on the date of this Agreement
(the "Commencement Date") and terminating on the first anniversary of the
Commencement Date, unless sooner terminated as hereinafter provided;
PROVIDED, HOWEVER, that this Agreement may be extended for successive one (1)
year terms upon the mutual agreement of the parties hereto.
2. SERVICES TO BE RENDERED.
2.1. DUTIES OF EXECUTIVE. Executive shall be employed to serve in
the capacity of Vice President of Finance and Chief Financial Officer of the
Company. Executive shall be responsible for the overall supervision,
direction, and control of the financial and accounting operations of the Hard
Rock Hotel facility. In addition, Executive will be responsible for the MIS
and Purchasing departments. Executive shall devote his full business time,
attention and ability to the affairs of the Company during the term of this
Agreement; PROVIDED, HOWEVER, that Employee shall not be precluded from
involvement in charitable or civic activities or his personal financial
investments provided that the same do not interfere with his time and
attention to the affairs of the Company. Executive will report directly to
the General Manager or such other persons designated by the Board of
Directors of the Company (the "Board").
3. COMPENSATION AND BENEFITS. The Company shall pay the following
compensation and benefits to Executive during the term hereof; and Executive
shall accept the same as payment in full for all services rendered by
Executive to or for the benefit of the Company:
3.1. BASE SALARY. Commencing on the Commencement Date, a base salary
(the "Base Salary") of $125,000 per annum. The Base Salary shall accrue in
equal bi-weekly installments in arrears and shall be payable in accordance
with the payroll practices of the Company in effect from time to time.
1
<PAGE>
3.2. ANNUAL BONUS. Executive shall be eligible to receive an annual
bonus (the "Annual Bonus") to be determined by the Board based upon the
achievement of the financial performance and other objectives of the Company
and Executive's contribution to such performance.
3.3. STOCK. Executive shall be entitled to participate in stock
option plans that the Company provides to its comparable senior executive
officers to the extent such plans are established by the Company.
3.4. EXPENSES. The Company shall reimburse Executive for reasonable
out-of-pocket expenses incurred in connection with the performance of his
duties hereunder, subject to (i) such policies as the Board may from time to
time establish and (ii) Executive furnishing the Company with evidence in the
form of receipts satisfactory to the Company substantiating the claimed
expenditures.
3.5. VACATION. Executive shall be entitled to the number of paid
vacation days in each calendar year determined by the Company from time to
time for its comparable senior executive officers. Executive shall also be
entitled to all paid holidays given to the Company's comparable senior
executive officers.
3.6. BENEFITS. Executive shall be entitled to participate in the
Company's group insurance, hospitalization, and group health and benefit
plans and all other benefits and plans as the Company provides to its
comparable senior executive officers to the extent such plans are established
by the Company and to the extent that Executive is eligible to participate in
such plans.
3.7. WITHHOLDING AND OTHER DEDUCTIONS. All compensation payable to
Executive hereunder shall be subject to such deductions as the Company is
from time to time required to make pursuant to law, governmental regulation
or order.
4. FACILITIES. Executive shall be furnished with an office, supplies
and personnel which are necessary or appropriate for the adequate performance
by Executive of his duties as set forth in this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. Executive represents
and warrants to the Company that (i) Executive is under no contractual or
other restriction or obligation which is inconsistent with the execution of
this Agreement, the performance of his duties hereunder, or the other rights
of the Company hereunder and (ii) Executive is under no physical or mental
disability that would hinder the performance of his duties under this
Agreement.
6. NON-DISCLOSURE; NON-SOLICITATION. During the term of this Agreement
and thereafter, Executive shall hold in a fiduciary capacity for the benefit
of the Company all secret or confidential information, knowledge or data
relating to the Company or its affiliates, and their respective businesses,
which shall not be public knowledge (other than information which becomes
public as a result of acts of Executive or his representatives in violation
of this Agreement), including, without limitation, customer/ client lists,
matters subject to litigation, and
2
<PAGE>
technology or financial information of the Company or its subsidiaries,
without the prior written consent of the Company. In addition, during the
term of this Agreement and for a two (2) year period thereafter, Executive
shall not, directly or indirectly, solicit or contact any employee of the
Company or any affiliate of the Company, with a view to inducing or
encouraging such employee to leave the employ of the Company or its
affiliates, for the purpose of being employed by Executive, an employer
affiliated with Executive or any competitor of the Company or any affiliate
thereof. Executive acknowledges that the provisions of this Article 6 are
reasonable and necessary for the protection of the Company and that the
Company will be irrevocably damaged if such provisions are not specifically
enforced. Accordingly, Executive agrees that, in addition to any other relief
to which the Company may be entitled in the form of actual or punitive
damages, the Company shall be entitled to seek and obtain injunctive relief
from a court of competent jurisdiction (without posting a bond therefor) for
the purpose of restraining Executive from any actual or threatened breach of
such provisions.
7. TERMINATION.
7.1. DEATH OR TOTAL DISABILITY OF EXECUTIVE. If Executive dies or
becomes totally disabled during the term of this Agreement, Executive's
employment hereunder shall automatically terminate. For these purposes
Executive shall be deemed totally disabled if Executive shall become
physically or mentally incapacitated or disabled or otherwise unable fully to
discharge Executive's essential duties hereunder for a period of ninety (90)
consecutive calendar days or for one hundred twenty (120) calendar days in
any one hundred eighty (180) calendar-day period.
7.2. TERMINATION FOR GOOD CAUSE. Executive's employment hereunder
may be terminated by the Company for "good cause." The term "good cause is
defined as any one or more of the following occurrences:
(a) Executive's breach of any of the covenants contained in
Article 6 of this Agreement;
(b) Executive's conviction by, or entry of a plea of guilty
or nolo contendere in, a court of competent and final jurisdiction for any
crime involving moral turpitude or punishable by imprisonment in the
jurisdiction involved;
(c) Executive's commission of an act of fraud, whether prior
to or subsequent to the date hereof upon the Company;
(d) Executive's continuing repeated willful failure or
refusal to perform Executive's duties as required by this Agreement
(including, without limitation, Executive's inability to perform Executive's
duties hereunder as a result of drug or alcohol related misconduct and/or as
a result of any failure to comply with any laws, rules or regulations of any
governmental entity with respect to Executive's employment by the Company);
(e) Executive's gross negligence, insubordination or material
violation of any duty of loyalty to the Company or any other material
misconduct on the part of Executive;
3
<PAGE>
(f) Executive's commission of any act which is detrimental to
the Company's business or goodwill;
(g) the failure of Executive to obtain any requisite license,
permit or approval based on suitability from any state, county, or other
governmental authority having jurisdiction over the gaming operations of the
Company (the "Gaming Authorities") which would preclude Executive from
carrying out his duties as set forth in this Agreement;
(h) if, after the initial receipt by Executive of any
requisite license, permit or approval from the Gaming Authorities, the
execution of Executive's duties as set forth in this Agreement will, as
evidenced by communications from any senior official of any of the Gaming
Authorities, materially preclude or unduly delay the issuance of, or result
in the imposition of unduly burdensome terms and conditions on, or revocation
of, any liquor, gaming or other license, permit or approval, necessary or
appropriate to the proposed, contemplated or actual operations of the
Company; PROVIDED, HOWEVER, that this Section 7.2(h) shall not be applicable
if Executive shall, within a reasonable period of time after receipt of
written notice from the Board specifying the nature of the issues involved
hereunder, remedy the situation to the satisfaction of the applicable Gaming
Authorities; or
(i) Executive's breach of any other provision of this
Agreement, provided that termination of Executive's employment pursuant to
this subsection (i) shall not constitute valid termination for good cause
unless Executive shall have first received written notice from the Board
stating with specificity the nature of such breach and affording Executive at
least fifteen (15) days to correct the breach alleged.
7.3. RESIGNATION OF EXECUTIVE. The Company shall have the right to
terminate this Agreement and Executive's employment hereunder due to the
voluntary resignation of Executive, provided that Executive shall deliver no
less than sixty (60) days prior written notice of such resignation to the
Board, which notice may be waived by the Company in its sole discretion.
7.4. SEVERANCE COMPENSATION. Notwithstanding anything contained in this
Agreement, upon a termination of this Agreement and Executive's employment
hereunder due to the occurrence of any of the events referred to in Section
7.1, 7.2 or 7.3 of this Agreement, Executive (or Executive's heirs or
representatives) shall be entitled to receive only such portion (if any) of
the Base Salary as may theretofore have accrued but be unpaid on the date on
which the termination shall take effect.
7.5. TERMINATION FOR NO CAUSE. In addition to the right to terminate
this Agreement pursuant to Sections 7.1, 7.2 and 7.3 of this Agreement, the
Company shall have the right to terminate this Agreement and Executive's
employment hereunder for any other reason or for no reason prior to the
expiration of the term of this Agreement. In the event that the Company
terminates this Agreement and Executive's employment hereunder pursuant to
this Section 7.5, the Company shall give ten (10) days prior written notice
to Executive and pay a termination fee to Executive in an amount equal to the
lesser of (i) Sixty-two Thousand Five Hundred Dollars ($62,500) or (ii) the
remainder of the Base Salary which would otherwise be
4
<PAGE>
due Executive pursuant to this Agreement but for such termination, to be paid
in the manner and at the rate Executive had received immediately prior to
such termination pursuant to Section 3.1 of this Agreement and the Company
shall have no further obligation to Executive under this Agreement.
7.6. TERMINATION OBLIGATIONS OF EXECUTIVE. In the event that this
Agreement and Executive's employment hereunder is terminated, Executive, or
his legal representative in case of termination by death or Executive's
physical or mental incapacity to serve, shall:
(a) by the close of the effective date of termination, resign
from all corporate positions held in the Company and any of its subsidiary
and affiliated companies;
(b) promptly return to a representative designated by the
Company all property, including but not limited to, keys, identification
cards and credit cards of the Company or any of its subsidiaries or
affiliated companies; and
(c) incur no further expenses or obligations on behalf of the
Company, or any of its subsidiaries and affiliated companies.
8. ARBITRATION. Any claim or controversy arising out of or relating to
this Agreement shall be settled by arbitration in Las Vegas. Nevada, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction. There shall be three arbitrators,
one to be chosen directly by each party at will, and the third arbitrator to
be selected by the two arbitrators so chosen. Each party shall pay the fees
of the arbitrator it selects and of its own attorneys, the expenses of its
witnesses and all other expenses connected with presenting its case. Other
costs of the arbitration, including the cost of any record or transcripts of
the arbitration, administrative fees, the fee of the third arbitrator, and
all other fees and costs, shall be borne equally by the parties hereto.
9. GENERAL RELATIONSHIP. Executive shall be considered an employee of
the Company within the meaning of all federal, state and local laws and
regulations including, but not limited to, laws and regulations governing
unemployment insurance, workers' compensation, industrial accident, labor and
taxes.
10. GENERAL PROVISIONS.
10.1. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns and
Executive, his assignees, and his estate. Neither Executive, his designees,
nor his estate shall commute, pledge, encumber, sell or otherwise dispose of
the rights to receive the payments provided in this Agreement, which payments
and the rights thereto are expressly declared to be nontransferable and
nonassignable (except by death or otherwise by operation of law).
10.2. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Nevada from time to time in effect.
5
<PAGE>
10.3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same Agreement.
10.4. NO WAIVER. Except as otherwise expressly set forth herein, no
failure on the part of either party hereto to exercise and no delay in
exercising any right, power or remedy hereunder shall operate as a waiver
hereof nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.
10.5. HEADINGS. The headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference only and shall in
no way restrict any of the terms or provisions hereof.
10.6. NOTICES. Any notice under this Agreement shall be given in
writing and delivered in person or mailed by certified or registered mail,
addressed to the respective party at the address as set out below, or at such
other address as either party may elect to provide in advance in writing, to
the other party:
EXECUTIVE:
Jim Bowen
8910 Rio Verde Ave
Las Vegas, Nevada 89147
COMPANY:
Hard Rock Hotel, Inc.
510 North Robertson Boulevard
Los Angeles, California 90048
Attn: Peter Morton
WITH A COPY TO:
Gordon & Silver
3960 Howard Hughes Parkway
Ninth Floor
Las Vegas, Nevada 89101
Attn: Jeff Silver
10.7. SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, or unenforceable by
reason of any rule of law or public policy, all other provisions of this
Agreement shall nevertheless remain in effect. No provision of this Agreement
shall be deemed dependent on any other provision unless so expressed herein.
6
<PAGE>
10.8. COMPLIANCE WITH LAWS; GAMING AUTHORITIES APPROVAL. Nothing
contained in this Agreement shall be construed to require the commencement of
any act contrary to law, and when there is any conflict between any provision
of this Agreement and any statute, law, ordinance, or regulation, contrary to
which the parties have no legal right to contract, then the latter shall
prevail; but in such an event, the provisions of this Agreement so affected
shall be curtailed and limited only to the extent necessary to bring it
within the legal requirements. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement and the terms and conditions
contained herein shall be contingent upon receipt of all requisite approvals
of the applicable Gaming Authorities.
10.9. NO WAIVER. The several rights and remedies provided for in this
Agreement shall be construed as being cumulative, and no one of them shall be
deemed to be exclusive of the others or of any right or remedy allowed by
law. No waiver by the Company or Executive any failure of Executive or the
Company, respectively, to keep or perform any provision of this Agreement
shall be deemed to be a waiver of any preceding or succeeding breach of the
same or other provision.
10.10. MERGER. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of Executive by the Company.
10.11. NO REPRESENTATIONS. Each party to this Agreement acknowledges
that no representations, inducements, promises or other agreements, oral or
otherwise, have been made by any party, anyone acting on behalf of any party,
which are not embodied herein and that no other agreement, statement or
promise not contained in this Agreement shall be valid or binding. Any
addendum to or modification of this Agreement shall be effective only if it
is in writing and signed by the parties to be charged.
10.12. DRAFTING AMBIGUITIES. Each party to this Agreement has been
afforded an opportunity to have this Agreement reviewed by his or its
respective counsel. The normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or of any amendments or
exhibits to this Agreement.
10.13. SURVIVAL. The terms and conditions of Article 6 and Section
10.6 of this Agreement shall survive the termination of this Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date hereinabove set forth.
COMPANY: EXECUTIVE:
Hard Rock Hotel, Inc., a Nevada corporation
By: ____________________________________ _________________
Peter A. Morton, President Jim Bowen
8
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