SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
|_| Preliminary information statement |_| Confidential, for use of the
|X| Definitive information statement Commission only
(as permitted by Rule 14c-5(d)(2))
HARVEYS CASINO RESORTS
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|X| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
CLASS A COMMON STOCK
(2) Aggregate number of securities to which transaction applies:
40,091 SHARES OF CLASS A COMMON STOCK
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined): $57.39483. THIS IS THE
CONTRACTUALLY DEEMED VALUE OF THE SHARES OF PH CASINO
RESORTS CLASS A COMMON STOCK TO BE RECEIVED FOR EACH
SHARE OF HARVEYS CLASS A COMMON STOCK. SUCH VALUE WAS
CALCULATED BY MULTIPLYING (1) THE EXCHANGE RATIO OF
1.25379 SHARES SET FORTH IN THE HARVEYS MERGER AGREEMENT
BY (2) $45.77707, THE DEEMED PRICE PER SHARE OF PH CASINO
RESORTS CLASS A COMMON STOCK DETERMINED BY MUTUAL
AGREEMENT AMONG THE PARTIES FOR PURPOSES OF DETERMINING
THE EXCHANGE RATIOS IN THE PINNACLE MERGER AND THE
HARVEYS MERGER.
(4) Proposed maximum aggregate value of transaction:
$2,301,016.23
(5) Total fee paid:
$460.20
|X| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
HARVEYS CASINO RESORTS
HIGHWAY 50 & STATELINE AVENUE
LAKE TAHOE, NEVADA 89449
TO THE HOLDERS OF HARVEYS CASINO RESORTS
CLASS A COMMON STOCK--
ACTION TAKEN BY WRITTEN CONSENT OF STOCKHOLDERS:
On April 17, 2000, Harveys Casino Resorts agreed to acquire by merger
Pinnacle Entertainment, Inc. Following the Pinnacle merger, Pinnacle will
be a wholly owned subsidiary of PH Casino Resorts, Inc., a newly formed
wholly owned subsidiary of Harveys.
In connection with the parties entering into the Pinnacle merger
agreement, Harveys also entered into a merger agreement with PH Casino
Resorts and Harveys Acquisition Corporation, a newly formed wholly owned
subsidiary of PH Casino Resorts formed for purposes of engaging in the
Harveys merger. A copy of the Harveys merger agreement is included in this
information statement as Annex A.
In the Harveys merger, each share of your Harveys Class A common stock
will be converted into the right to receive 1.25379 shares of Class A
common stock of PH Casino Resorts.
Following the Harveys merger, Harveys Casino Resorts will be a wholly
owned subsidiary of PH Casino Resorts, and you will own an equity interest
in PH Casino Resorts.
After careful consideration, your board of directors unanimously
determined that the Harveys merger is advisable and in the best interest of
Harveys and its stockholders and unanimously approved the Harveys merger
agreement and the transactions contemplated by the Harveys merger
agreement.
This information statement is being sent to you to notify you of the
approval by Harveys stockholders of the Harveys merger agreement and the
transactions contemplated by the Harveys merger agreement. Under the Nevada
Revised Statutes and Harveys' articles of incorporation and bylaws, the
approval of a majority of the voting power of Harveys is required to
approve the Harveys merger agreement.
ON APRIL 17, 2000, COLONY HCR VOTECO, LLC, THE RECORD HOLDER AS OF
SUCH DATE OF 38,800 SHARES OF HARVEYS CLASS A COMMON STOCK, REPRESENTING AS
OF SUCH DATE APPROXIMATELY 98.0% OF THE OUTSTANDING CLASS A COMMON STOCK
AND VOTING POWER OF HARVEYS, DELIVERED TO HARVEYS ITS WRITTEN CONSENT
APPROVING THE HARVEYS MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THE HARVEYS MERGER AGREEMENT. UNDER THE NEVADA REVISED STATUTES AND
HARVEYS' ARTICLES OF INCORPORATION AND BYLAWS, NO ADDITIONAL APPROVAL BY
HARVEYS STOCKHOLDERS IS REQUIRED IN RESPECT OF THE HARVEYS MERGER OR THE
HARVEYS MERGER AGREEMENT.
This information statement contains additional information about the
Harveys merger. You are encouraged to read carefully the information
contained in this information statement. Because the Harveys merger
agreement and the transactions contemplated by the Harveys merger agreement
have been approved by the requisite stockholder vote, we are not calling a
special meeting of our stockholders with respect to the Harveys merger.
Under Nevada law, absent the waiver described below, holders of
Harveys Class A common stock would be entitled to assert dissenters' rights
in connection with the Harveys merger, provided that they otherwise
strictly complied with applicable requirements of Sections 92A.300 to
92A.500 of the Nevada Revised Statutes, a copy of which is included in this
information statement as Annex B. The information contained herein with
respect to dissenters' rights and in Annex B is being provided for
informational purposes only, to satisfy the disclosure requirements of the
federal securities laws. Each of the holders of Harveys Class A common
stock has agreed to waive such holder's right to assert dissenters' rights
in connection with the Harveys merger. As a result, none of the holders of
Harveys Class A common stock is entitled to assert dissenters' rights or to
receive a dissenter's notice in connection with the Harveys merger.
WE ARE NOT ASKING YOU FOR A PROXY OR CONSENT AND YOU ARE REQUESTED NOT
TO SEND US A PROXY OR CONSENT WITH RESPECT TO THE MATTERS SET FORTH IN THIS
INFORMATION STATEMENT.
PLEASE DO NOT SEND ANY OF YOUR STOCK CERTIFICATES AT THIS TIME.
Very truly yours,
Charles W. Scharer
President and Chief Executive Officer
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
This information statement is dated September 19, 2000
and was first mailed to stockholders on or about September 19, 2000.
HARVEYS CASINO RESORTS
HIGHWAY 50 & STATELINE AVENUE
LAKE TAHOE, NEVADA 89449
---------------------------
NOTICE OF ACTION TAKEN BY STOCKHOLDERS
---------------------------
NOTICE IS HEREBY GIVEN that on April 17, 2000, the board of
directors of Harveys Casino Resorts, a Nevada corporation, approved the
Agreement and Plan of Merger, dated as of April 17, 2000, among PH Casino
Resorts, Inc., a Delaware corporation, Harveys and Harveys Acquisition
Corporation, a Nevada corporation. A copy of the Harveys merger agreement
is included in the attached information statement as Annex A.
Section 78.320 of the Nevada Revised Statutes provides that unless
otherwise provided in the articles of incorporation or the bylaws, any
action required or permitted to be taken at a meeting of the stockholders
may be taken without a meeting if a written consent thereto is signed by
stockholders holding at least a majority of the voting power, unless a
different proportion of voting power is required for such an action at a
meeting.
On April 17, 2000, a consent in writing approving the Harveys
merger agreement and the transactions contemplated by the Harveys merger
agreement was signed by Colony HCR Voteco, LLC, the record holder as of
such date of outstanding Harveys Class A common stock having 38,800 votes,
such votes representing greater than a majority of the aggregate
outstanding voting power of Harveys, and was delivered to Harveys.
Accordingly, Harveys is notifying you of the action so taken by delivering
this Notice along with the attached information statement.
WE ARE NOT ASKING YOU FOR A PROXY OR CONSENT AND YOU ARE REQUESTED
NOT TO SEND US A PROXY OR CONSENT WITH RESPECT TO THE MATTERS SET FORTH
HEREIN.
John J. McLaughlin
Corporate Secretary
Lake Tahoe, Nevada
September 19, 2000
TABLE OF CONTENTS
SUMMARY TERM SHEET............................................................1
WHO CAN HELP ANSWER YOUR QUESTIONS?...........................................4
FORWARD-LOOKING STATEMENTS....................................................5
THE HARVEYS MERGER............................................................6
Background of and reasons for the Harveys merger............................6
Approval of the Harveys board of directors..................................6
Effects of the Harveys merger...............................................6
U.S. Federal income tax consequences of the Harveys merger..................7
Accounting treatment for the Harveys merger.................................8
Regulatory approvals........................................................8
DISSENTERS' RIGHTS...........................................................11
Dissenter's notice.........................................................11
Demand for payment.........................................................11
Payment for shares.........................................................12
Court proceeding to determine fair value...................................12
THE HARVEYS MERGER AGREEMENT.................................................13
Effective time.............................................................13
Conversion of shares.......................................................13
Exchange of shares.........................................................13
Stock options..............................................................14
Conditions to the Harveys merger...........................................14
Termination................................................................14
Amendment and waiver.......................................................14
INTERESTS OF CERTAIN PERSONS IN THE HARVEYS MERGER...........................15
Relationship with Colony Capital LLC.......................................15
Retained equity interest in PH Casino Resorts..............................15
Directors and management of PH Casino Resorts following the mergers........16
Directors and management of the surviving corporation......................17
Stockholders agreement.....................................................17
COMPARISON OF RIGHTS OF HOLDERS OF HARVEYS CLASS A COMMON STOCK AND PH CASINO
RESORTS CLASS A COMMON STOCK...............................................22
Board of directors.........................................................22
Limitation of director liability...........................................24
Indemnification of directors and officers..................................25
Stockholder meetings.......................................................27
Appraisal and dissenters' rights...........................................29
Mergers and other fundamental transactions.................................30
Dissolution................................................................30
Amendments to charter......................................................30
Amendments to bylaws.......................................................31
Authorized capital stock...................................................31
Dividends and distributions................................................32
Stock repurchases..........................................................32
Interested director and officer transactions...............................33
Control share acquisition statute..........................................33
Business combination statute...............................................34
Case law ..................................................................35
Court systems..............................................................35
Exchange Act registration..................................................35
Leverage and liquidity.....................................................35
SHARE OWNERSHIP BY
PRINCIPAL STOCKHOLDERS, MANAGEMENT AND DIRECTORS...........................37
WHERE YOU CAN FIND MORE INFORMATION..........................................38
Available information......................................................38
Information about the Pinnacle merger......................................38
ANNEX A - Agreement and Plan of Merger, dated as of April 17, 2000, among
PH Casino Resorts, Harveys Casino Resorts and Harveys
Acquisition Corporation ..........................................A-1
ANNEX B - Sections 92A.300 to 92A.500, inclusive,
of the Nevada Revised Statutes....................................B-1
SUMMARY TERM SHEET
This section summarizes information about the Harveys merger from
this information statement. This summary may not contain all of the
information that is important to you. To understand the Harveys merger
fully, we strongly encourage you to read carefully this entire information
statement, the Annexes to this information statement, the documents
incorporated by reference into this information statement and the documents
that we have filed with the Securities and Exchange Commission. We have
included a copy of the Harveys merger agreement in this information
statement as Annex A.
Q: WHAT ARE SOME OF THE REASONS FOR THE HARVEYS MERGER? (see page 6)
A: We have agreed to acquire by merger Pinnacle Entertainment, Inc.
Following the Pinnacle merger, Pinnacle will be a wholly owned
subsidiary of PH Casino Resorts, Inc., a newly formed wholly owned
subsidiary of Harveys. The Harveys merger is being consummated in
connection with the Pinnacle merger.
The purpose of the Harveys merger is to create a corporate structure
whereby following completion of both the Harveys merger and the
Pinnacle merger, both Harveys and Pinnacle will be wholly owned
subsidiaries of PH Casino Resorts.
Q: WHO ARE THE PARTIES TO THE HARVEYS MERGER?
A: HARVEYS CASINO RESORTS
Highway 50 & Stateline Avenue
Lake Tahoe, Nevada 89449
(702) 588-2411
We are a Nevada corporation that has been engaged in the gaming
industry for over 55 years. Through wholly owned subsidiaries, we own
and operate the following gaming establishments in Nevada, Iowa and
Colorado: Harveys Resort & Casino (Lake Tahoe), Harveys Casino Hotel
(Council Bluffs, Iowa); Bluffs Run Casino (Council Bluffs, Iowa); and
Harveys Wagon Wheel Hotel/Casino (Central City, Colorado).
PH CASINO RESORTS, INC.
Highway 50 & Stateline Avenue
Lake Tahoe, Nevada 89449
(702) 588-2411
PH Casino Resorts is a Delaware corporation and wholly owned
subsidiary of Harveys formed for the purpose of engaging in the
Harveys merger and the Pinnacle merger. Following the completion of
the mergers, Harveys and Pinnacle will be wholly owned subsidiaries of
PH Casino Resorts.
HARVEYS ACQUISITION CORPORATION
Highway 50 & Stateline Avenue
Lake Tahoe, Nevada 89449
(702) 588-2411
Harveys Acquisition Corporation ("Harveys Acq Corp") is a Nevada
corporation and wholly owned subsidiary of PH Casino Resorts formed
for the purpose of engaging in the Harveys merger. Following the
Harveys merger, Harveys Acq Corp will cease to exist and Harveys will
continue as the surviving corporation.
Q: WHAT WILL HOLDERS OF HARVEYS CLASS A COMMON STOCK RECEIVE IN THE
HARVEYS MERGER? (see page 13)
A: If the Harveys merger is completed, each share of Harveys Class A
common stock will be converted into the right to receive 1.25379
shares of PH Casino Resorts Class A common stock.
Based on the number of shares of PH Casino Resorts common stock to be
issued in connection with the Harveys merger and the Pinnacle merger,
immediately following the completion of the mergers (assuming no
equity investment in PH Casino Resorts by affiliates of Colony
Capital, LLC), it is currently expected that the Class A common stock
and voting power of PH Casino Resorts will be owned approximately as
follows: 82.7% by Colony HCR Voteco, 1.7% by other former holders of
Harveys Class A common stock and 15.6% by some members of Pinnacle's
senior management.
Q: WHAT WILL BE SOME OF THE EFFECTS OF THE HARVEYS MERGER? (see page 6)
A: Harveys Acq Corp will merge with and into Harveys, and Harveys will be
the surviving corporation in the Harveys merger.
Following the Harveys merger, we will be a wholly owned subsidiary of
PH Casino Resorts, and you will own an equity interest in PH Casino
Resorts.
Pursuant to the Harveys merger agreement, the directors of Harveys Acq
Corp immediately prior to the Harveys merger will be the directors of
the surviving corporation, and the officers of Harveys immediately
prior to the Harveys merger will be the officers of the surviving
corporation. The articles of incorporation and bylaws of Harveys Acq
Corp will become the articles of incorporation and bylaws of the
surviving corporation.
Q: HAS THE HARVEYS BOARD OF DIRECTORS APPROVED THE HARVEYS MERGER? (see
page 6)
A: Yes. After careful consideration, your board of directors unanimously
determined that the Harveys merger is advisable and in the best
interest of Harveys and its stockholders and unanimously approved the
Harveys merger agreement and the transactions contemplated by the
Harveys merger agreement.
Q: DOES THE HARVEYS MERGER REQUIRE STOCKHOLDER APPROVAL?
A: Yes. Under the Nevada Revised Statutes and our articles of
incorporation and bylaws, the approval of a majority of our voting
power is required to approve the Harveys merger agreement.
However, the required stockholder approval already has been obtained.
On April 17, 2000, Colony HCR Voteco, LLC, the record holder as of
such date of 38,800 shares of Harveys Class A common stock,
representing as of such date approximately 98.0% of our outstanding
Class A common stock and voting power, delivered to us its written
consent approving the Harveys merger agreement and the transactions
contemplated by the Harveys merger agreement. Under the Nevada Revised
Statutes and our articles of incorporation and bylaws, no additional
approval by our stockholders is required in respect of the Harveys
merger or the Harveys merger agreement.
Q: ARE THERE ANY CONDITIONS TO COMPLETION OF THE HARVEYS MERGER? (see
page 14)
A: Yes. The obligations of the parties to complete the Harveys merger are
subject to the prior satisfaction or waiver of conditions, including:
o receipt of necessary gaming and other
regulatory approvals, consents and findings
of suitability;
o the absence of any order or injunction preventing completion of
the Harveys merger, the Pinnacle merger or any other transactions
contemplated by the Harveys merger agreement; and
o the satisfaction or waiver of all conditions to the closing of the
Pinnacle merger and the consummation of the other transactions
contemplated by the Pinnacle merger agreement (other than the
Harveys merger).
Q: UNDER WHAT CIRCUMSTANCES CAN THE PARTIES TERMINATE THE HARVEYS MERGER
AGREEMENT? (see page 14)
A: The Harveys merger agreement may be terminated at any time prior to
the effective time of the Harveys merger by written consent of each of
the parties.
Q: ARE ANY REGULATORY APPROVALS REQUIRED FOR THE HARVEYS MERGER? (see
page 8)
A: Yes. The consummation of the Harveys merger is subject to approval of
the gaming authorities of Nevada, Colorado and Iowa.
Q: WHAT ARE SOME OF THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
THE HARVEYS MERGER? (page 7)
A: The Harveys merger has been structured with the intent that it be
tax-free to Harveys and its stockholders for Federal income tax
purposes. However, a stockholder who received solely cash in exchange
for its Harveys Class A common stock pursuant to the exercise of
dissenters' rights under the Nevada Revised Statutes, would recognize
gain or loss equal to the difference between the amount of cash
received and its tax basis in the shares of Harveys Class A common
stock surrendered.
The information contained herein with respect to dissenters' rights
and in Annex B is being provided for informational purposes only, to
satisfy the disclosure requirements of the federal securities laws.
Each of the holders of Harveys Class A common stock has agreed to
waive such holder's right to assert dissenters' rights in connection
with the Harveys merger.
Q: WHAT IS THE ACCOUNTING TREATMENT FOR THE HARVEYS MERGER? (see page 8)
A: The Harveys merger will be accounted for by Harveys as a
recapitalization in which Harveys Class A common stock will be
converted into PH Casino Resorts Class A common stock.
Q: ARE HARVEYS' STOCKHOLDERS ENTITLED TO ASSERT DISSENTERS' RIGHTS IN
CONNECTION WITH THE HARVEYS MERGER? (see page 11)
A: Under Nevada law, absent the waiver described in the immediately
following paragraph, holders of Harveys Class A common stock, other
than Colony HCR Voteco which has delivered its written consent
approving the Harveys merger agreement and the transactions
contemplated by the Harveys merger agreement, would be entitled to
assert dissenters' rights in connection with the Harveys merger and
demand payment in cash from Harveys of the fair value of their shares
of Harveys Class A common stock, provided that they otherwise strictly
complied with applicable requirements of Sections 92A.300 to 92A.500
of the Nevada Revised Statutes. A copy of Sections 92A.300 to 92A.500
of the Nevada Revised Statutes is included in this information
statement as Annex B.
The information contained herein with respect to dissenters' rights
and in Annex B is being provided for informational purposes only, to
satisfy the disclosure requirements of the federal securities laws.
Each of the holders of Harveys Class A common stock has agreed to
waive such holder's right to assert dissenters' rights in connection
with the Harveys merger. As a result, none of the holders of Harveys
Class A common stock is entitled to assert dissenters' rights or to
receive a dissenter's notice in connection with the Harveys merger.
Q: WHEN WILL THE HARVEYS MERGER BE COMPLETED?
A: The Harveys merger is expected to be completed as soon as practicable
after the necessary approvals, findings of suitability, gaming
licenses and permits are received for both the Harveys merger and the
Pinnacle merger and concurrently with the completion of the Pinnacle
merger.
Q: WHY AM I RECEIVING THIS INFORMATION STATEMENT?
A: As described above, Colony HCR Voteco has delivered its written
consent approving the Harveys merger agreement and the transactions
contemplated by the Harveys merger agreement. As a result, the Harveys
merger agreement and the transactions contemplated by the Harveys
merger agreement have been approved by the requisite stockholder vote.
Harveys is required by law to send you this information statement to
notify you of such approval.
Q: WHY IS NO MEETING OF HARVEYS STOCKHOLDERS BEING HELD?
A: Section 78.320 of the Nevada Revised Statutes provides that unless
otherwise provided in the articles of incorporation or the bylaws, any
action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting if a written consent
thereto is signed by stockholders holding at least a majority of the
voting power, unless a different proportion of voting power is
required for such an action at a meeting. Our articles of
incorporation and bylaws do not provide otherwise.
As described above, Colony HCR Voteco has delivered its written
consent approving the Harveys merger agreement and the transactions
contemplated by the Harveys merger agreement.
As a result, the Harveys merger agreement and the transactions
contemplated by the Harveys merger agreement have been approved by the
requisite stockholder vote without the holding of a stockholders'
meeting.
Q: WHAT DO I NEED TO DO NOW?
A: You are not being asked to take any actions or provide any proxies or
consents and you are requested not to send us any proxies or consents
with respect to the matters described in this information statement.
To understand the Harveys merger fully, we strongly encourage you to
read carefully this entire information statement, the Annexes to this
information statement, the documents incorporated by reference into
this information statement and the documents that we have filed with
the Securities and Exchange Commission.
DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. AFTER THE HARVEYS
MERGER IS COMPLETED, YOU WILL RECEIVE INSTRUCTIONS ON EXCHANGING YOUR
SHARES OF HARVEYS CLASS A COMMON STOCK FOR SHARES OF PH CASINO RESORTS
CLASS A COMMON STOCK.
WHO CAN HELP ANSWER YOUR QUESTIONS?
If you have questions about the Harveys merger, please
contact Harveys at:
Harveys Casino Resorts
Highway 50 and Stateline Avenue
P.O. Box 128
Lake Tahoe, Nevada 89449
Attention: Corporate Secretary
telephone: (702) 588-2411
facsimile: (702) 586-6812
FORWARD-LOOKING STATEMENTS
This information statement includes or incorporates by reference
"forward-looking statements," as defined in the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, with respect
to Harveys' financial conditions, results of operations and businesses and
Harveys' expectations or beliefs concerning future events. These statements
may be made directly in this information statement or may be made part of
this information statement by reference to other documents filed with the
Securities and Exchange Commission and may include statements for the
period following the completion of the Harveys merger. Words such as
"believes," "expects," "anticipates," "estimates" and similar expressions
are intended to identify forward-looking statements.
All forward-looking statements involve risks and uncertainties.
Actual results may differ materially from those described in the
forward-looking statements and will be affected by a variety of risks and
factors including, without limitation:
o failure to successfully consummate the mergers and
difficulties in completing the integration with Pinnacle if
the mergers are consummated;
o risks associated with substantial indebtedness, leverage and
debt service and liquidity following the mergers; o risks of
competition in existing and future markets or the opening of
new gaming jurisdictions;
o changes in gaming laws and regulations;
o a decline in the public acceptance of gaming;
o the limitation, conditioning or suspension of any of
Harveys' or its affiliates' gaming licenses;
o increases in or new taxes imposed on gaming revenues or
gaming devices;
o a finding of unsuitability by regulatory authorities with
respect to officers, directors or key employees of Harveys
or its affiliates;
o loss or retirement of key executives;
o significant increases in fuel or transportation prices;
o adverse economic conditions or severe and unusual weather
conditions in our key markets;
o the failure to complete or successfully operate planned
expansion and development projects; and
o the failure to obtain adequate financing to meet strategic
goals.
All future written and verbal forward-looking statements
attributable to Harveys or any of its affiliates or any person acting on
their behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. None of Harveys nor
any of its affiliates undertakes any obligation, and each specifically
declines any obligation, to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in or incorporated by reference into this
information statement might not occur.
THE HARVEYS MERGER
BACKGROUND OF AND REASONS FOR THE HARVEYS MERGER
The Harveys merger is being consummated in connection with the
Pinnacle merger. On April 17, 2000, we agreed to acquire by merger Pinnacle
Entertainment, Inc. Following the Pinnacle merger, Pinnacle will be a
wholly owned subsidiary of PH Casino Resorts, a newly formed wholly owned
subsidiary of Harveys. The Pinnacle merger is described in the definitive
proxy statement filed by Pinnacle with the Securities and Exchange
Commission on August 23, 2000, as supplemented by the supplement thereto
filed with the Securities and Exchange Commission on September 19, 2000.
See "Where You Can Find More Information."
The purpose of the Harveys merger is to create a corporate
structure whereby following completion of both the Harveys merger and the
Pinnacle merger, both Harveys and Pinnacle will be wholly owned
subsidiaries of PH Casino Resorts. Following the completion of the Harveys
merger and the Pinnacle merger, it is anticipated that the operations of
Pinnacle will be integrated with the operations of Harveys. The nature,
timing and other terms of this integration, if any, have not been
determined. The board of directors and management of PH Casino Resorts,
Harveys and Pinnacle, following the mergers, will continue to evaluate the
business, operations, corporate structure and organization, policies,
management and personnel of Harveys and Pinnacle over time and will
consider what changes, if any, would be desirable and, subject to the terms
of agreements governing the relationships among the parties, will make
changes as they deem appropriate. See "Interests of Certain Persons in the
Harveys Merger."
APPROVAL OF THE HARVEYS BOARD OF DIRECTORS
After careful consideration, your board of directors unanimously
determined that the Harveys merger is advisable and in the best interest of
Harveys and its stockholders and unanimously approved the Harveys merger
agreement and the transactions contemplated by the Harveys merger
agreement.
EFFECTS OF THE HARVEYS MERGER
Harveys Acq Corp will merge with and into Harveys, and Harveys
will be the surviving corporation in the Harveys merger. Following the
Harveys merger, Harveys will be a wholly owned subsidiary of PH Casino
Resorts, and you will own an equity interest in PH Casino Resorts.
If the Harveys merger is completed, each share of Harveys Class A
common stock will be exchanged for 1.25379 shares of Class A common stock
of PH Casino Resorts. Based on the number of shares of PH Casino Resorts
common stock to be issued in connection with the Harveys merger and the
Pinnacle merger, immediately following the completion of the mergers
(assuming no equity investment in PH Casino Resorts by affiliates of Colony
Capital), it is currently expected that the Class A common stock and voting
power of PH Casino Resorts will be owned approximately as follows: 82.7% by
Colony HCR Voteco, 1.7% by other former holders of Harveys Class A common
stock and 15.6% by some members of Pinnacle's senior management.
If the Harveys merger is completed, each share of Harveys Class B
common stock will be exchanged for 1.25379 shares of Class B common stock
of PH Casino Resorts. Based on the number of shares of PH Casino Resorts
common stock to be issued in connection with the Harveys merger and the
Pinnacle merger, immediately following the completion of the mergers
(assuming no equity investment in PH Casino Resorts by affiliates of Colony
Capital), it is currently expected that the Class B common stock of PH
Casino Resorts will be owned approximately as follows: 82.7% by Colony
Investors III, L.P., a Delaware limited partnership and affiliate of Colony
HCR Voteco, 1.7% by other former holders of Harveys Class B common stock
and 15.6% by some members of Pinnacle's senior management. The PH Casino
Resorts Class B common stock is identical to the PH Casino Resorts Class A
common stock, except that the PH Casino Resorts Class B common stock is
non-voting.
Upon consummation of the Harveys merger, it is expected that the
Class A common stock of PH Casino Resorts will be registered under Section
12(g) of the Exchange Act, and PH Casino Resorts will be the successor
registrant to Harveys under the Exchange Act and will assume the
obligations of Harveys under the Exchange Act.
The Harveys merger will have the effects set forth in the
applicable provisions of the Nevada Revised Statutes. Pursuant to the
Harveys merger agreement, the directors of Harveys Acq Corp immediately
prior to the Harveys merger will be the directors of the surviving
corporation, and the officers of Harveys immediately prior to the Harveys
merger will be the officers of the surviving corporation. See "Interests of
Certain Persons in the Harveys Merger-Directors and management of the
surviving corporation." The articles of incorporation and bylaws of Harveys
Acq Corp will become the articles of incorporation and bylaws of the
surviving corporation. See "Comparison of Rights of Holders of Harveys
Class A Common Stock and PH Casino Resorts Class A Common Stock."
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE HARVEYS MERGER
The following is a summary of the material U.S. Federal income tax
consequences of the Harveys merger to holders of Harveys Class A common
stock in general. This summary is based on the U.S. Federal income tax law
currently in effect, which is subject to change, possibly with retroactive
effect. This summary does not discuss all aspects of U.S. Federal income
taxation which may be important to particular stockholders in light of
their individual investment circumstances, including certain types of
holders subject to special tax rules (e.g., financial institutions,
broker-dealers, insurance companies, partnerships, tax-exempt
organizations, and foreign taxpayers), or to holders who acquired their
shares of Harveys Class A common stock through the exercise of options or
otherwise as compensation. In addition, this summary does not address
state, local or foreign tax consequences. The discussion below assumes that
stockholders hold their shares of Harveys Class A common stock as "capital
assets" (generally, property held for investment) under the Internal
Revenue Code of 1986, as amended. Stockholders are urged to consult their
tax advisors regarding the specific federal, state, local and foreign
income and other tax consequences of the Harveys merger.
The Harveys merger
The Harveys merger has been structured with the intent that it be
tax-free to Harveys and its stockholders for Federal income tax purposes.
Accordingly, as a tax-free transaction:
o no gain or loss will be recognized by stockholders who
exchange their Harveys Class A common stock solely for PH
Casino Resorts Class A common stock in the Harveys merger;
o each stockholder's tax basis in the shares of PH Casino
Resorts Class A common stock received in the Harveys merger
will be the same as its tax basis in the shares of Harveys
Class A common stock exchanged therefor;
o each stockholder's holding period for its PH Casino Resorts
Class A common stock will include his holding period for its
Harveys Class A common stock; and
o no gain or loss will be recognized by Harveys as a result of
the merger.
Dissenting stockholders
A stockholder who received solely cash in exchange for its Harveys
Class A common stock, pursuant to the exercise of dissenters' rights under
the Nevada Revised Statutes, would recognize gain or loss equal to the
difference between the amount of cash received and its tax basis in the
shares of Harveys Class A common stock surrendered. Such gain or loss would
constitute long-term capital gain or loss for Federal income tax purposes
if such shares of Harveys Class A common stock had been held by the
stockholder for more than one year at the time of the consummation of the
Harveys merger.
The information contained herein with respect to dissenters'
rights and in Annex B is being provided for informational purposes only, to
satisfy the disclosure requirements of the federal securities laws. Each of
the holders of Harveys Class A common stock has agreed to waive such
holder's right to assert dissenters' rights in connection with the Harveys
merger.
ACCOUNTING TREATMENT FOR THE HARVEYS MERGER
The Harveys merger will be accounted for by Harveys as a
recapitalization in which Harveys Class A common stock will be converted
into PH Casino Resorts Class A common stock. Based on the number of shares
of PH Casino Resorts common stock to be issued in connection with the
Harveys merger and the Pinnacle merger, immediately following the
completion of the mergers (assuming no equity investment in PH Casino
Resorts by affiliates of Colony Capital), it is currently expected that
Colony HCR Voteco will own approximately 82.7% of the Class A common stock
and voting power of PH Casino Resorts. Therefore, as the Harveys merger
will not change the controlling ownership interest in Harveys, in
accordance with generally accepted accounting principles, the assets and
liabilities of Harveys will continue to be accounted for on a historical
cost basis.
REGULATORY APPROVALS
Harveys's gaming operations are subject to extensive regulation,
and Harveys now holds gaming licenses or permits in the three jurisdictions
in which it operates gaming activities (Nevada, Colorado and Iowa). In each
such jurisdiction, regulatory requirements must be complied with,
applications filed, and/or approvals obtained in connection with the
Harveys merger.
The respective obligations to each party to effect the Harveys
merger are subject to, among other things, the condition that all licenses,
permits, registrations, authorizations, consents, waivers, orders, findings
of suitability or other approvals required to be obtained from, and all
filings, notices or declarations required to be made with, any gaming
authority to permit Harveys Acq Corp and Harveys to consummate the Harveys
merger and to permit the surviving corporation and each of its subsidiaries
to conduct their businesses in the jurisdictions regulated by such gaming
authorities after the effective time in the same manner as conducted by
Harveys and its subsidiaries prior to the effective time shall have been
obtained or made, as applicable; provided, that no such gaming approval
shall obligate Harveys Acq Corp or any of its affiliates to obtain any
consent, approval, license, waiver, order, decree, determination of
suitability or other authorization with respect to any limited partner of
any affiliate of Harveys Acq Corp.
Review of the Harveys merger by gaming regulatory authorities will
involve examination of the structure of Harveys and its financial stability
after the Harveys merger and will require the demonstration of
qualifications and suitability of key individuals associated with PH Casino
Resorts and Colony HCR Voteco. The failure to obtain the required approval
of the Harveys merger, or the failure to comply with the procedural
requirements prescribed by any applicable gaming regulatory authority, or
the failure of Harveys or such key individuals to qualify or make
disclosure or license applications as required, or a determination that
Harveys Acq Corp or any of its affiliates is required to obtain any
consent, approval, license, waiver, order, decree, determination of
suitability or other authorization with respect to any limited partner of
any affiliate of Harveys Acq Corp, may result in the loss of license or
denial of application for licensure in one or all jurisdictions. Gaming
authorities also will be reviewing the Pinnacle merger.
The following is an abbreviated description of the various gaming
regulatory requirements applicable to the Harveys merger. For a more
detailed description of these gaming regulatory requirements generally,
please see "-Regulatory Matters" in Item 1 of the Annual Report on Form
10-K of Harveys for the year ended November 30, 1999. See "Where You Can
Find More Information."
Nevada Gaming Regulations. The ownership and operation of casino
gaming facilities in Nevada are subject to the Nevada Gaming Control Act
and the regulations of the Nevada Gaming Commission and the Nevada State
Gaming Control Board (collectively, the "Nevada Act") and various local
ordinances and regulations. Harveys' gaming operations are subject to the
licensing and regulatory control of the Nevada Gaming Commission, the
Nevada State Gaming Control Board, the Clark County Liquor and Gaming
Licensing Board and Washoe County (collectively, the "Nevada Gaming
Authorities").
Regulations of the Nevada Gaming Commission provide that control
of a registered publicly traded corporation such as Harveys cannot be
acquired through a tender offer, merger, consolidation, acquisition of
assets, management or consulting agreements or any form of takeover
whatsoever without the prior approval of the Nevada Gaming Commission. PH
Casino Resorts will file applications seeking the necessary approvals with
the Nevada State Gaming Control Board and the Nevada Gaming Commission. The
Nevada State Gaming Control Board reviews and investigates applications for
approval and makes recommendations on those applications to the Nevada
Gaming Commission for final action. There can be no assurance that these
approvals will be granted or will be granted on a timely basis or without
burdensome conditions. Furthermore, any such approval, if granted, does not
constitute a finding, recommendation or approval by the Nevada State Gaming
Control Board or the Nevada Gaming Commission as to the merits of the
Harveys merger. Any representation to the contrary is unlawful. In seeking
approval to consummate the Harveys merger, PH Casino Resorts must satisfy
the Nevada Gaming Commission as to a variety of stringent standards. The
Nevada State Gaming Control Board and the Nevada Gaming Commission will
consider all relevant material facts in determining whether to grant this
approval and may consider not only the effects of the Harveys merger but
also any other facts that are deemed relevant. Such facts may include,
among others, (1) the business history of the applicant, including its
record of financial stability, integrity and success of its operations, as
well as its current business activities, (2) the adequacy of the proposed
financing, (3) the Pinnacle merger and (4) whether the Harveys merger will
create a significant risk that Harveys or its subsidiaries will not satisfy
their financial obligations as they become due or satisfy all financial and
regulatory requirements imposed by the Nevada Act.
The Nevada State Gaming Control Board and the Nevada Gaming
Commission also will consider whether the Harveys merger is in the best
interests of the State of Nevada under the multiple licensing criteria in
the Nevada Act. Among other factors set forth in such multiple licensing
criteria, they may consider whether the Harveys merger would pose problems
or create a monopoly, and what the result of the Harveys merger will be in
respect of the percentage of interest of Harveys to similarly situated
competitors on a statewide, countrywide and geographical basis in the
following categories; total number of slot machines, total number of games,
total number of tables, gross revenue, percentage tax, casino entertainment
tax, number of rooms available for the public, number of employees hired
and total payroll. Following receipt of the necessary approvals of the
Nevada Gaming Commission and completion of the Harveys merger, Harveys will
be registered by the Nevada Gaming Commission as an intermediary company of
its gaming subsidiaries.
PH Casino Resorts will file an application with the Nevada State
Gaming Control Board and the Nevada Gaming Commission to be registered as a
publicly traded corporation and to be found suitable as the sole
stockholder of Pinnacle and Harveys at the time of completion of the
mergers. In addition, certain officers, directors and key employees of PH
Casino Resorts at the time of completion of the mergers who will be
actively and directly involved in Pinnacle's and Harveys' gaming activities
may also be required to be found suitable or licensed by the Nevada Gaming
Authorities. The Nevada Gaming Authorities may deny an application for
licensing, a finding of suitability or registration for any cause that they
deem reasonable. A finding of suitability is comparable to licensing, and
both require the submission of detailed personal and financial information
followed by a thorough investigation. All individuals required to file
applications for findings of suitability as officers and directors of PH
Casino Resorts at the time of completion of the mergers will file
applications with the Nevada State Gaming Control Board and the Nevada
Gaming Commission. Approvals may also be required to be obtained in
connection with the financing for the mergers and such approvals will be
applied for. There can be no assurances that these approvals will be
granted or will be granted within this time.
Colorado Gaming Regulations. The ownership and operation of casino
gaming in Colorado is subject to the Colorado Limited Gaming Act and the
regulations promulgated thereunder (collectively, the "Colorado
Regulations") by the Colorado Limited Gaming Control Commission (the
"Colorado Commission"). Under the Colorado Regulations, Harveys Casino
Resorts is a "publicly traded corporation" since it is the reporting
company subject to Section 15(d) of the Exchange Act. Under the Colorado
Regulations, the merger transactions would need to be reported to the
Colorado Division of Gaming (the "Colorado Division") within 10 days after
their closing since they result in a new entity, PH Casino Resorts,
indirectly owning 5% or more of Harveys Wagon Wheel Hotel/Casino, the
Colorado licensed subsidiary (the "Colorado Subsidiary"). In addition,
under the Colorado Regulations, since PH Casino Resorts and R.D. Hubbard,
the current Chairman of the Board of Pinnacle, also would indirectly own
10% or more of the Colorado Subsidiary, both are required to file for
licensing as an "associated person' of the Colorado Subsidiary. Although
the prior approval of the merger transactions, and PH Casino Resorts and
Mr. Hubbard as associated persons, by the Colorado Commission is not
legally required, the post-merger failure of PH Casino Resorts to be found
suitable would jeopardize the Colorado Subsidiary's gaming license and
would require Harveys Casino Resorts and the Colorado Subsidiary to
disassociate themselves with PH Casino Resorts, including, without
limitation, refusing to pay it any dividend or recognize its vote. Hence,
if PH Casino Resorts were not found suitable, the transaction would need to
be unwound or the Colorado Subsidiary's gaming license could be revoked.
Similarly, if Mr. Hubbard were not found suitable, his stock in PH Casino
Resorts would need to be redeemed and he could not be associated with PH
Casino Resorts. An applicant must prove by clear and convincing evidence
that it is qualified in accordance with the provisions of the Colorado
Regulations, which include an investigation into its moral character, prior
activities, criminal records, financial and personal background and
associations. The Colorado Commission has informed PH Casino Resorts that,
given the time required for background investigations, it is likely that
the Colorado Commission will not be able to make a finding of suitability
for Mr. Hubbard and PH Casino Resorts any earlier than November 2000.
The Colorado regulators also reserve the right to review Pinnacle
as an affiliated company of Harveys Casino Resorts and the Colorado
Subsidiary. In the event that the Colorado regulators find Pinnacle
unsuitable, they could disapprove the ownership by PH Casino Resorts.
In addition, if there are individuals, other than Mr. Barrack and
Mr. Hubbard who are directors or officers of PH Casino Resorts, or if there
are other key employees of PH Casino Resorts, such individuals likely will
be required to be found suitable either as associated persons or key
employees. The approval of such suitability or licensing is not required
prior to the closing of the merger transactions, however, if such
individuals are not found suitable or licensed, then the Colorado
Subsidiary's license would be in jeopardy unless PH Casino Resorts, Harveys
Casino Resorts, or the Colorado Subsidiary, as applicable, terminates its
relationship with such individuals.
The Colorado regulators also reserve the right to review the
suitability of any persons or entities providing financing, directly or
indirectly, to the Colorado Subsidiary or with respect to the merger,
Harveys and PH Casino Resorts. Although the Colorado Regulations do not
require prior approval for such financing, the Colorado regulators reserve
the right to require the termination of such financing if a person or
entity is required to be found suitable and is not found suitable.
There can be no assurance that any of the approvals required of
the Colorado regulators will be granted on a timely basis or without
burdensome conditions. PH Casino Resorts and Mr. Hubbard have filed
applications to be associated persons of the Colorado Subsidiary and the
Colorado Subsidiary has filed a change in ownership application to take
into consideration PH Casino Resorts and Mr. Hubbard's indirect ownership
of the Colorado Subsidiary.
Iowa Gaming Regulations. The ownership and operation of gambling
boats in Iowa is subject to the authority of the Iowa Racing and Gaming
Commission (the "Iowa Commission"), chapters 99D and F of the Code of Iowa
and the rules and regulations promulgated thereunder and various local
regulations.
The Iowa Commission has broad statutory authority to regulate,
monitor and supervise the activities of its various licensees. Following
the issuance of a gaming license, the Iowa Commission monitors and
supervises the activities of the licensees. Material contracts (over
$50,000) to be entered into by the licensee, changes in ownership of the
licensee, management contracts and acquisitions of interest in other
gambling activities by the licensee or its owners must all be reported to
and approved by the Iowa Commission. In addition, any financing
arrangements involving the Iowa licensees as signatories must be approved
by the Iowa Commission. The Iowa Commission has been notified of the
pending mergers and filings have been made.
DISSENTERS' RIGHTS
The information contained herein with respect to dissenters'
rights and in Annex B is being provided for informational purposes only, to
satisfy the disclosure requirements of the federal securities laws. Each of
the holders of Harveys Class A common stock has agreed to waive such
holder's right to assert dissenters' rights in connection with the Harveys
merger.
Absent such a waiver, holders of Harveys Class A common stock
would be entitled to assert dissenters' rights under Nevada law in
connection with the Harveys merger and to obtain payment of the fair value
of their shares of Harveys Class A common stock, provided that they
otherwise complied with the applicable requirements of Nevada law. Fair
value means the value of the shares immediately before the effective date
of the Harveys merger, excluding any appreciation or depreciation in
anticipation of the Harveys merger unless such exclusion would be
inequitable. This right to dissent is set forth in Sections 92A.300 to
92A.500, inclusive, of the Nevada Revised Statutes, and copies of these
sections are included in this information statement as Annex B.
The description of dissenter's rights and Sections 92A.300 to
92A.500, inclusive, of the Nevada Revised Statutes contained in this
information statement does not purport to be complete and is qualified in
its entirety by reference to the text of Sections 92A.300 to 92A.500,
inclusive, of the Nevada Revised Statutes, which is incorporated in this
information statement by reference.
DISSENTER'S NOTICE
The Nevada Revised Statutes require Harveys to deliver a written
dissenter's notice to all stockholders who satisfied the requirements to
assert dissenters' rights. As stated above, each of the holders of Harveys
Class A common stock has agreed to waive such holder's right to assert
dissenters' rights in connection with the Harveys merger. As a result, none
of the holders of Harveys Class A common stock is entitled to assert
dissenters' rights or to receive a dissenter's notice in connection with
the Harveys merger.
DEMAND FOR PAYMENT
The dissenters' notice would have been required, among other
things, to supply a form for demanding payment, state where the demand for
payment must be sent and where and when certificates for shares must be
deposited and set a date by which Harveys must receive the demand for
payment.
An eligible stockholder wishing to dissent from the Harveys merger
would have been required deliver to Harveys a demand for payment for his or
her shares of Harveys Class A common stock, together with the certificates
for such shares. The form for demanding payment would have required, among
other things, a stockholder to certify whether he or she acquired
beneficial ownership of such shares of Harveys Class A common stock before
April 17, 2000, the date of the first announcement of the terms of the
Harveys merger to the news media or to Harveys stockholders.
If a stockholder did not submit the payment demand form and the
Harveys Class A common stock certificates by such deadline, the stockholder
would no longer have been a dissenting stockholder and his or her shares of
Harveys Class A common stock would have been entitled only to be converted
automatically into shares of PH Casino Resorts Class A common stock in
accordance with the Harveys merger agreement.
All references in this summary to a "stockholder" are to the
record holder of the dissenting shares. If dissenting shares were held of
record in the name of another person, such as a broker or nominee, the
dissenting stockholder would have been required to act promptly to cause
such record holder to follow properly and in a timely manner the steps
described in this summary and in Sections 92A.300 to 92A.500, inclusive, of
the Nevada Revised Statutes to perfect dissenters' rights.
PAYMENT FOR SHARES
Within 30 days after receiving a dissenting stockholder's payment
demand form and Harveys Class A common stock certificates, Harveys would
have been required to pay such dissenting stockholder, provided that such
stockholder complied with the requirements of Nevada law, in accordance
with Nevada law, Harveys' estimate of the fair value of the Harveys Class A
common stock for which certificates were submitted, plus accrued interest.
Accompanying the payment would have been financial statements for Harveys
as of and for the end of a fiscal year ending not more than 16 months
before the date of payment and the latest available interim financial
statements, if any. Also accompanying the payment would have been a
statement of Harveys' estimate of the fair value of the shares, an
explanation of how the interest was calculated and a statement of the
dissenting stockholder's rights to demand payment of such stockholder's
estimate of fair value, and a copy of Sections 92A.300 to 92A.500,
inclusive, of the Nevada Revised Statutes.
If the dissenting stockholder was not the beneficial owner of the
shares before the date the terms of the Harveys merger were first announced
to the news media or to Harveys stockholders, Harveys would have had the
right to elect to withhold payment from such dissenter. To the extent that
Harveys elected to withhold payment from such dissenter, after effecting
the Harveys merger, Harveys would have been required to estimate the fair
value of such holder's shares, plus accrued interest, and to offer to pay
this amount to each dissenter who agreed to accept it in full satisfaction
of his or her demand. Accompanying the offer would have been a statement of
Harveys' estimate of the fair value of the shares, an explanation of how
the interest was calculated and a statement of the dissenting stockholder's
rights to demand payment of such stockholder's estimate of fair value, and
a copy of Sections 92A.300 to 92A.500, inclusive, of the Nevada Revised
Statutes.
If a dissenting stockholder believed that the amount paid or
offered for such holder's shares was less than the fair value of such
holder's shares or that the interest due was incorrectly calculated, such
dissenting stockholder would have had the right to notify Harveys in
writing of his or her own estimate of the fair value of his or her shares
and the amount of interest due, and demand payment of his or her estimate,
less any prior payment for such shares. Or, if the dissenting stockholder
was only entitled to receive Harveys' offer to pay fair value as described
in the immediately preceding paragraph, the dissenting stockholder would
have had the right to reject the offer and demand payment of the dissenting
stockholder's estimate of the fair value of his or her shares and interest
due. If a dissenting stockholder did not send a notice demanding additional
payment within 30 days after Harveys made or offered payment for his or her
shares, the dissenting stockholder would not have had the right to receive
any amount in excess of the estimate of fair value, plus accrued interest,
already paid or offered by Harveys.
COURT PROCEEDING TO DETERMINE FAIR VALUE
If a demand for payment remained unsettled for 60 days following
Harveys' receipt of the payment demand, Harveys would have been required to
petition a court to determine the fair value of the shares and accrued
interest. Court costs would have been paid by Harveys unless the court
found that one or more dissenting stockholders acted arbitrarily,
vexatiously or not in good faith in demanding payment, in which case, some
or all court costs may have been allocated to such dissenting stockholder
or stockholders. Attorneys' and experts' fees may have been assessed
against Harveys if the court found that Harveys did not comply with
Sections 92A.300 to 92A.500, inclusive, of the Nevada Revised Statutes or
acted arbitrarily, vexatiously or not in good faith with respect to such
rights. Attorneys' and experts' fees also may have been assessed against
one or more dissenting stockholders if those stockholders acted
arbitrarily, vexatiously or not in good faith with respect to their rights
under Sections 92A.300 to 92A.500, inclusive, of the Nevada Revised
Statutes
Holders of Harveys Class A common stock should be aware that the
fair value of Harveys Class A common stock determined pursuant to Nevada
law could have been more than, the same as, or less than the value of the
PH Casino Resorts Class A common stock that they are entitled to receive
pursuant to the Harveys merger agreement.
Failure to comply strictly with all the conditions for asserting
rights as a dissenting shareholder, including the time limits referred to
in Sections 92A.300 to 92A.500, inclusive, of the Nevada Revised Statutes,
would have resulted in loss of such dissenters' rights, and such
dissenters' shares would have been entitled only to be converted
automatically into shares of PH Casino Resorts common stock in accordance
with the Harveys merger agreement.
THE HARVEYS MERGER AGREEMENT
The terms and conditions of the Harveys merger are contained in
the Harveys merger agreement, a copy of which is included in this
information statement as Annex A. You are urged to read the Harveys merger
agreement carefully. The descriptions of the material terms and conditions
of the Harveys merger agreement are set forth below and are qualified in
their entirety by reference to the complete text of the Harveys merger
agreement.
EFFECTIVE TIME
The Harveys merger agreement provides that the Harveys merger will
become effective at the time that the articles of merger are duly filed
with the Nevada Secretary of State or at a later time that may be agreed to
by the parties to the Harveys merger agreement. The filing of the articles
of merger will be made no later than the third business day after the date
on which all of the conditions to the parties' obligations to consummate
the Harveys merger are met. See "--Conditions to the Harveys merger."
CONVERSION OF SHARES
As of the effective time of the Harveys merger, each share of
Harveys Class A common stock issued and outstanding immediately prior to
the effective time (other than shares held by Harveys, Harveys Acq Corp or
Harveys' other subsidiaries) will be converted into and will become 1.25379
shares of PH Casino Resorts Class A common stock, and each share of Harveys
Class B common stock, outstanding immediately prior to the effective time
(other than shares held by Harveys, Harveys Acq Corp or Harveys' other
subsidiaries) will be converted into and will become 1.25379 shares of PH
Casino Resorts Class B common stock. All shares of Harveys common stock
held by Harveys or any of its subsidiaries will be canceled and retired,
and each issued and outstanding share of common stock of Harveys Acq Corp
will be converted into and become one share of common stock of Harveys, as
the surviving corporation in the Harveys merger.
EXCHANGE OF SHARES
Immediately prior to the effective time, Harveys Acq Corp will
designate a bank or trust to act as exchange agent in the Harveys merger.
DO NOT SEND YOUR STOCK CERTIFICATES AT THIS TIME. YOU WILL RECEIVE
A LETTER OF TRANSMITTAL AND FURTHER INSTRUCTIONS AS SOON AS PRACTICABLE
AFTER THE EFFECTIVE TIME OF THE HARVEYS MERGER.
Each holder of shares of Harveys common stock that have been
converted into the right to receive shares of PH Casino Resorts common
stock will be entitled to receive such shares of PH Casino Resorts common
stock upon surrender of such holder's certificate or certificates
representing such holder's shares of Harveys common stock, together with a
duly executed letter of transmittal and such other documents as may
reasonably be required by the exchange agent. The Harveys stock certificate
or certificates surrendered will be canceled.
All shares of PH Casino Resorts common stock delivered upon
surrender of the Harveys stock certificates will be deemed to have been
paid in full satisfaction of all rights pertaining to the shares of Harveys
common stock previously represented by such certificates, and there will be
no further registration of transfers on the stock transfer books of the
surviving corporation of shares of capital stock which were outstanding
immediately prior to the effective time. If, after the effective time,
certificates are presented to the surviving corporation or the exchange
agent for any reason, they will be canceled and exchanged for shares of PH
Casino Resorts common stock pursuant to the terms of the Harveys merger
agreement, except as otherwise provided by law.
STOCK OPTIONS
At the effective time, all outstanding employee stock options of
Harveys will be canceled and exchanged for options to purchase the number
of shares of PH Casino Resorts Class A common stock or PH Casino Resorts
Class B common stock, as applicable, equal to the product determined by
multiplying (1) the number of Harveys stock options times (2) 1.25379. The
PH Casino Resorts stock options will have an exercise price per share equal
to the quotient of (1) the exercise price of the Harveys stock options
prior to the Harveys merger divided by (2) 1.25379. The PH Casino Resorts
options otherwise will have terms identical to those of the Harveys stock
options.
CONDITIONS TO THE HARVEYS MERGER
The respective obligations of each party to effect the Harveys
merger are subject to the satisfaction or waiver on or prior to the closing
date of the Harveys merger of a number of conditions, including:
o no statute, rule, regulation, order, decree or injunction
preventing consummation of the Harveys merger, the Pinnacle
merger or the transactions contemplated by the Harveys
merger agreement shall be in effect;
o all licenses, permits, registrations, authorizations,
consents, waivers, orders, findings of suitability or other
approvals required to be obtained from, and all filings,
notices or declarations required to be made with, any gaming
authority to permit Harveys Acq Corp and Harveys to
consummate the Harveys merger and to permit the surviving
corporation and each of its subsidiaries to conduct their
businesses in the jurisdictions regulated by such gaming
authorities after the effective time in the same manner as
conducted by Harveys and its subsidiaries prior to the
effective time shall have been obtained or made, as
applicable; provided, that no such gaming approval shall
obligate Harveys Acq Corp or any of its affiliates to obtain
any consent, approval, license, waiver, order, decree,
determination of suitability or other authorization with
respect to any limited partner of any affiliate of Harveys
Acq Corp;
o all consents, waivers, orders, approvals, authorizations,
registrations, findings of suitability and action of any
governmental entity shall have been obtained or made, free
of any condition;
o all conditions to the closing of the Pinnacle merger shall
have been satisfied or waived, and the other transactions
contemplated by the Pinnacle merger agreement (other than
the Harveys merger) shall have been consummated; and
o Harveys shall have received any and all consents necessary
from the Harveys compliance committee.
TERMINATION
The Harveys merger agreement may be terminated at any time prior
to the effective time by written consent of each of the parties.
AMENDMENT AND WAIVER
The Harveys merger agreement may be amended at any time by an
instrument in writing signed on behalf of each of the parties.
At any time prior to the effective time, the parties may (1)
extend the time for performance of any of the obligations or other acts of
the other parties, (2) waive any inaccuracies in the representations and
warranties of the other party contained in the Harveys merger agreement or
in any document delivered pursuant to the Harveys merger agreement or waive
compliance by the other party with any of the agreements or conditions
contained in the Harveys merger agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
INTERESTS OF CERTAIN PERSONS IN THE HARVEYS MERGER
RELATIONSHIP WITH COLONY CAPITAL LLC
The capital stock of Harveys is owned by Colony Investors III,
L.P., Colony HCR Voteco, LLC and members of Harveys senior management. Such
members of Harveys senior management are referred to herein as the "Harveys
management stockholders." See "-Directors and management of the surviving
corporation."
As of August 18, 2000, the Class A common stock and voting power
of Harveys was owned approximately 96.8% by Colony HCR Voteco and
approximately 3.2% by the Harveys management stockholders, and the non-
voting Class B common stock of Harveys was owned approximately 96.8% by
Colony Investors III and approximately 3.2% by the Harveys management
stockholders. Harveys also has outstanding shares of Series A preferred
stock and shares of Series B preferred stock. Each share of preferred stock
is convertible into shares of the corresponding class of Harveys common
stock. Colony HCR Voteco owns all of the shares of Harveys Series A
preferred stock, and Colony Investors III owns all of the shares of Harveys
Series B preferred stock.
In connection with, and immediately prior to the consummation of
the mergers, Colony HCR Voteco and Colony Investors III each intends to
convert all of the shares of Harveys preferred stock owned by it into
shares of Harveys common stock. As a result of the conversion, the Harveys
preferred stock will be converted in the aggregate into approximately
2,873,092 shares of Harveys common stock. In connection with the
conversion, the accrued and unpaid dividends on the shares of Harveys
preferred stock will be paid in additional shares of Harveys common stock
at an implied price per share of $43.17, which price takes into account the
issuance of shares of PH Casino Resorts common stock pursuant to the
Pinnacle merger. It is estimated that at the time of the conversion the
aggregate amount of such accrued and unpaid dividends on the Harveys
preferred stock will be approximately $16 million. As a result, immediately
prior to the Harveys merger, Colony HCR Voteco and Colony Investors III
will receive in the aggregate approximately 370,630 shares of PH Casino
Resorts common stock in payment of the accrued and unpaid dividends.
Following the mergers, PH Casino Resorts and its subsidiaries will
be supported by Colony Capital LLC and its affiliates. Upon the
consummation of the mergers (assuming no additional equity investment by
affiliates of Colony Capital), Colony HCR Voteco will own approximately
82.7% of the issued and outstanding Class A common stock and voting power
of PH Casino Resorts and the remainder of the outstanding Class A common
stock and voting power of PH Casino Resorts will be owned by the Harveys
management stockholders (approximately 1.7%) and members of Pinnacle senior
management (referred to herein as the "Pinnacle management stockholders")
(approximately 15.6%). See "-Retained equity interest in PH Casino
Resorts."
RETAINED EQUITY INTEREST IN PH CASINO RESORTS
As discussed above, Colony Investors III, Colony HCR Voteco, the
Harveys management stockholders and the Pinnacle management stockholders
will have a continuing ownership interest in PH Casino Resorts following
the mergers. Based on the number of shares of PH Casino Resorts common
stock to be issued in connection with the mergers, immediately following
the completion of the mergers (assuming no equity investment in PH Casino
Resorts by affiliates of Colony Capital), it is currently expected that the
Class A common stock and voting power of PH Casino Resorts will be owned
approximately as follows:
o 82.7% by Colony HCR Voteco
o 1.7% by the Harveys management stockholders
o 15.6% by the Pinnacle management stockholders, including
R.D. Hubbard, the current Chairman of the Pinnacle board of
directors
Based on the number of shares of PH Casino Resorts common stock to
be issued in connection with the mergers, immediately following the
completion of the mergers (assuming no equity investment in us by
affiliates of Colony Capital), it is currently expected that the Class B
common stock of PH Casino Resorts will be owned approximately in the same
proportions by the same persons, except that Colony Investors III instead
of Colony HCR Voteco will be the Colony Capital affiliate owning
approximately 82.7% of PH Casino Resorts Class B common stock.
In addition, Colony Capital has advised the Louisiana Gaming
Control Board of Colony Capital's willingness to make a $50 million equity
investment in PH Casino Resorts to the extent necessary to support the
fifteenth and final gaming license to be issued by the Louisiana Gaming
Control Board should such license be awarded to Pinnacle and should the
Pinnacle merger close. In November 1999, Pinnacle filed an application for
such license, seeking approval to operate a cruising riverboat casino,
hotel and golf course resort complex in Lake Charles, Louisiana. Colony
Capital has advised Pinnacle that it is Colony Capital's intention to make
such an equity investment at the closing of the mergers even if the
fifteenth license is not awarded to Pinnacle. Such equity investment would
be on the same terms as the equity investments being made in PH Casino
Resorts by Pinnacle management and Harveys management, respectively,
pursuant to their exchange of Pinnacle common stock and Harveys common
stock for PH Casino Resorts common stock pursuant to the Pinnacle merger
and the Harveys merger. However, Colony Capital and its affiliates are
under no obligation to make such equity investment or any other investment
in PH Casino Resorts or its subsidiaries, and no assurances can be given
that any such equity investment will be made. If such equity investment is
made, each of the Harveys management stockholders and each of the Pinnacle
management stockholders has the right to contribute to PH Casino Resorts an
additional amount up to his pro rata share of such equity investment in
order to prevent the dilutive effect of such equity investment. None of the
Harveys management stockholders or Pinnacle management stockholders has yet
decided whether he will make such an additional contribution.
In addition, the Harveys merger agreement provides that at the
effective time, all outstanding employee stock options of Harveys will be
canceled and exchanged for options to purchase the number of shares of PH
Casino Resorts Class A common stock or PH Casino Resorts Class B common
stock, as applicable, equal to the product determined by multiplying (1)
the number of Harveys stock options times (2) 1.25379. The PH Casino
Resorts stock options will have an exercise price per share equal to the
quotient determined by dividing (1) the exercise price of the Harveys stock
options prior to the Harveys merger by (2) 1.25379. The PH Casino Resorts
options otherwise will have terms identical to those of the Harveys stock
options.
DIRECTORS AND MANAGEMENT OF PH CASINO RESORTS FOLLOWING THE MERGERS
Upon consummation of the mergers, subject to licensing and
regulatory requirements and in accordance with agreements among the
parties, it is currently contemplated that the PH Casino Resorts board of
directors will include Thomas J. Barrack, Jr. and, as Chairman, R.D.
Hubbard. Mr. Barrack is the current Chairman of the board of directors of
Harveys and also owns a membership interest in Colony HCR Voteco. See
"Share Ownership by Principal Stockholders, Management and Directors." Mr.
Hubbard is the current Chairman of the board of directors of Pinnacle. The
PH Casino Resorts board of directors also may include other nominees
determined by Colony Investors III or otherwise in accordance with
agreements among the parties. The size of the PH Casino Resorts board
following the mergers has not been determined and no other determinations
have been made as to board composition following the mergers.
In accordance with agreements among the parties, it also is
currently expected that Mr. Hubbard will be a member of, and Mr. Barrack
will be designated Chairman of, the executive committee of the PH Casino
Resorts board of directors. The PH Casino Resorts board of directors will
delegate to the executive committee substantially all of its powers to
govern the business and affairs of Pinnacle. Affiliates of Colony Investors
III designated for the PH Casino Resorts board of directors (other than PH
Casino Resorts and its subsidiaries) also shall constitute a majority of
the compensation committee, if any, of the PH Casino Resorts board of
directors.
DIRECTORS AND MANAGEMENT OF THE SURVIVING CORPORATION
The Harveys merger agreement provides that the directors of
Harveys Acq Corp immediately prior to the Harveys merger will be the
directors of the surviving corporation. The sole director of Harveys Acq
Corp is Mr. Barrack.
The Harveys merger agreement provides that the officers of Harveys
immediately prior to the Harveys merger will be the officers of the
surviving corporation. The officers of Harveys as of the date of this
information statement are as follows:
NAME POSITION
------------------ ------------------------------------------------------
Charles W. Scharer President and Chief Executive Officer
John J. McLaughlin Chief Financial Officer, Treasurer and Secretary
Gary D. Armentrout Senior Vice President-Business Development and
Government Relations
Gary D. Armentrout Senior Vice President-Business Development and
Government Relations
James J. Rafferty Senior Vice President-Corporate Marketing
Edward B. Barraco Senior Vice President and General Manager of Harveys
Wagon Wheel
William R. Stephens Senior Vice President and General Manager of Harveys
Resort
Verne H. Welch, Jr. Senior Vice President and General Manager of Harveys
Casino Hotel
John R. Bellotti Corporate Vice President of Human Resources
Such officers are referred to in this information statement as the
"Harveys management stockholders." See "-Relationship with Colony Capital
LLC."
STOCKHOLDERS AGREEMENT
The Harveys management stockholders are parties to a stockholders
agreement, dated as of February 2, 1999, with Harveys, Colony HCR Voteco
and Colony Investors III. This section summarizes the material terms of the
stockholders agreement, as it will govern the relationships among Harveys
management, Colony HCR Voteco and Colony Investors III as stockholders of
PH Casino Resorts (collectively, the "PHCR stockholders"). This summary is
qualified in its entirety by reference to the stockholders agreement which
has been filed as an exhibit to Harveys' Annual Report on Form 10-K for the
period ended November 30, 1998 and which is incorporated in this
information statement by reference. See "Where You Can Find More
Information."
Restrictions on transfer of PH Casino Resorts common stock
The stockholders agreement will prohibit any Harveys management
stockholder from directly or indirectly selling, assigning, hypothecating
or otherwise transferring any shares of PH Casino Resorts common stock
owned by it, except following the closing of a registered public offering
of PH Casino Resorts's common stock (an "IPO"), and except for transfers
expressly permitted by the stockholders agreement, without the express
written consent of Colony HCR Voteco, which consent may be granted or
denied in Colony HCR Voteco's sole and absolute discretion. Neither PH
Casino Resorts nor any of the PHCR stockholders has any current plans with
respect to a registered public offering of PH Casino Resorts common stock,
Harveys common stock or Pinnacle common stock. However, an IPO is one of
the many alternatives which the board of directors and management of PH
Casino Resorts, Harveys and Pinnacle will continue to evaluate following
the Harveys merger and Pinnacle merger.
Transfers expressly permitted by the stockholders agreement
include:
o the transfer of PH Casino Resorts common stock by any
Harveys management stockholder to PH Casino Resorts, Colony
HCR Voteco, Colony Investors III or their respective
affiliates, provided that the transferee has all necessary
gaming approvals and agrees in writing to be bound by the
provisions of the stockholders agreement,
o the transfer by any PHCR stockholder to its respective
controlling stockholder, 80% or more owned subsidiary or, in
the case of an individual stockholder, spouse or immediate
family member, provided that the transferee has all
necessary gaming approvals, and
o any sale or other disposition by a Harveys management
stockholder pursuant to his or her tag-along rights
described below. See "--Tag-along rights of Harveys
management stockholders."
In addition, the stockholders agreement will prohibit a Harveys
management stockholder from transferring any of his or her shares of PH
Casino Resorts common stock if, after giving effect to and as a result of
that transfer, that Harveys management stockholder would hold a different
proportion of voting and non-voting PH Casino Resorts common stock.
Right of first offer by Harveys management stockholders
Each time that a Harveys management stockholder proposes to
transfer any shares of PH Casino Resorts common stock owned by him or her,
that Harveys management stockholder must first offer the shares of PH
Casino Resorts common stock he or she proposes to transfer (the "offered
shares") to PH Casino Resorts. In the event that PH Casino Resorts does not
elect to purchase any or all of the offered shares within the time period
specified in the stockholders agreement, the right to purchase the offered
shares passes automatically from PH Casino Resorts to Colony HCR Voteco and
Colony Investors III. If all of the offered shares are not purchased by PH
Casino Resorts, Colony HCR Voteco or Colony Investors III within the time
period specified in the stockholders agreement, then such Harveys
management stockholder has the right, for a specified period of time, to
sell or otherwise dispose of the remaining offered shares at the price, and
upon terms and conditions not materially more favorable to the proposed
purchaser in the aggregate than the terms and conditions, at which the
offered shares were offered to PH Casino Resorts, Colony HCR Voteco and
Colony Investors III.
The right of first offer does not apply to:
o any repurchase of equity securities by PH Casino Resorts
upon the retirement or termination of a Harveys management
stockholder except as described below, or
o any transfers by Harveys management stockholders expressly
permitted by the stockholders agreement.
The right of first offer provision terminates following the
consummation of an IPO.
Termination of employment of Harveys management stockholders
If a Harveys management stockholder ceases to be employed by PH
Casino Resorts and the repurchase by PH Casino Resorts of PH Casino Resorts
common stock owned by that Harveys management stockholder is not governed
by any other agreement between PH Casino Resorts and that Harveys
management stockholder, then all of the shares of PH Casino Resorts common
stock owned by that the Harveys management stockholder become subject to
the right of first offer described above at a proposed offer price equal to
the "fair market value" of such shares on the date of termination of the
Harveys management stockholder's employment with PH Casino Resorts. "Fair
market value"' means the closing sale price of such shares if PH Casino
Resorts common stock of the same class is publicly traded or, if PH Casino
Resorts common stock of the same class is not publicly traded, then fair
market value will be determined by negotiation between the PH Casino
Resorts board of directors and the Harveys management stockholder or, in
the event that the PH Casino Resorts board of directors and the Harveys
management stockholder cannot agree, by arbitration.
Tag-along rights of Harveys management stockholders
If Colony HCR Voteco or Colony Investors III proposes to offer a
certain percentage of the shares of PH Casino Resorts common stock owned by
Colony HCR Voteco or Colony Investors III to any non-affiliate, then each
of the Harveys management stockholders has the right to elect to include,
at his or her sole option, in that offer the same relative percentage of
shares of PH Casino Resorts common stock owned by such Harveys management
stockholder; provided that Colony HCR Voteco and Colony Investors III will
have the right to acquire any shares of PH Casino Resorts common stock
which any Harveys management stockholder elects to include in the offer on
the same terms and at the same times as such shares would otherwise be sold
to the non-affiliate.
However, Harveys management stockholders have no tag-along rights
if:
o after the consummation of the offer Colony HCR Voteco,
Colony Investors III and their respective affiliates will
own in the aggregate at least 80% of the outstanding common
equity of PH Casino Resorts, if on or before an IPO,
o after the consummation of the offer Colony HCR Voteco,
Colony Investors III and their respective affiliates will
own in the aggregate at least 50% of the outstanding common
equity of PH Casino Resorts, if after an IPO, or
o if the number of shares of PH Casino Resorts common stock to
be offered by Colony HCR Voteco, Colony Investors III or any
of their respective affiliates represents in the aggregate
no greater than 20% of the aggregate shares of PH Casino
Resorts common stock held by Colony HCR Voteco or Colony
Investors III as of the closing of the transactions
contemplated by the Harveys merger agreement and the other
transaction documents.
Sale of PH Casino Resorts or Public Offering of PH Casino Resorts
Common Stock
If Colony HCR Voteco, Colony Investors III or any of their
respective affiliates proposes at any time to sell to a non-affiliate
shares of PH Casino Resorts common stock representing 90% or more of the
outstanding common equity of PH Casino Resorts or proposes to undertake an
IPO, the Harveys management stockholders agree to consent to and raise no
objections (including, without limitation, asserting appraisal or similar
rights) against:
o any sale by Colony HCR Voteco, Colony Investors III or their
respective affiliates to a non-affiliate having all
requisite gaming law approvals of shares of PH Casino
Resorts common stock representing 90% or more of the
outstanding common equity of PH Casino Resorts, or
o any IPO which Colony HCR Voteco, Colony Investors III or any
of their respective affiliates proposes to undertake.
In addition, each of the Harveys management stockholders agrees to
take additional actions to facilitate such sale or IPO, including:
o voting all of the shares of PH Casino Resorts common stock
held by him or her, if a vote of stockholders is required,
to approve such sale,
o selling all of the shares of PH Casino Resorts common stock
held by him or her at the price and on the terms and
conditions upon which Colony HCR Voteco, Colony Investors
III or their respective affiliates propose to sell or
otherwise dispose of the shares of PH Casino Resorts common
stock held by them,
o if requested by Colony HCR Voteco, Colony Investors III or
their respective affiliates, consenting to and raising no
objections to any recapitalization or reclassification of
the equity securities of PH Casino Resorts, including any
related amendment to the certificate of incorporation of PH
Casino Resorts, required to facilitate such sale or IPO,
provided that with respect to each class of PH Casino
Resorts common stock all shares of that class are treated
identically in the recapitalization, reclassification and
amendment, as applicable, and
o taking all other actions in his or her capacity as a
stockholder that Colony HCR Voteco, Colony Investors III or
their respective affiliates reasonably deem necessary or
desirable in connection with the consummation of such sale
or IPO.
Such actions include agreeing to be subject to "lock-up"
restrictions in the case of an IPO that are no more restrictive than those
to which the other Harveys management stockholders having commensurate job
duties and responsibilities are subject (or if such Harveys management
stockholder is not employed by PH Casino Resorts at such time, then no more
restrictive than those to which any other PHCR stockholder is subject) and
in the case of a sale that are no more restrictive than those to which any
other PHCR stockholder is subject.
Registration rights
Holders of PH Casino Resorts common stock will have incidental
registration rights if, after an IPO, PH Casino Resorts proposes to
register any of its common stock under the Securities Act of 1933, as
amended, in connection with a public offering solely for cash, other than
by a registration in connection with an acquisition or in a manner which
would not permit registration of shares of PH Casino Resorts common stock
held by the PHCR stockholders.
Termination of stockholders agreement
The stockholders agreement will terminate upon the earliest to
occur of:
o termination by written agreement of Colony HCR Voteco,
Colony Investors III and the other PHCR stockholders party
to the stockholders agreement,
o Harveys management stockholders or any of their respective
controlling stockholders, 80% or more owned subsidiaries or,
in the case of an individual Harveys management stockholder,
spouses or immediate family members, no longer beneficially
own any shares of PH Casino Resorts common stock (except if
the foregoing results from a transfer in violation of the
stockholders agreement), or
o Colony HCR Voteco, Colony Investors III or their respective
affiliates own shares of PH Casino Resorts common stock
representing less than 25% of the outstanding common equity
of PH Casino Resorts (except if the foregoing results from a
transfer in violation of the stockholders agreement).
In addition, a management stockholder will cease to be a party or
have any rights under the stockholders agreement if and when that
management stockholder ceases to beneficially own any shares of PH Casnio
Resorts common stock.
COMPARISON OF RIGHTS OF HOLDERS OF
HARVEYS CLASS A COMMON STOCK AND PH CASINO RESORTS CLASS A COMMON STOCK
We currently are incorporated under the laws of the State of
Nevada. The rights of our stockholders currently are governed by the Nevada
Business Corporation Law and our articles of incorporation and bylaws. PH
Casino Resorts will be incorporated under the laws of the State of
Delaware. Following the Harveys merger, stockholders of Harveys will become
stockholders of PH Casino Resorts and their rights will be governed by the
Delaware General Corporation Law and the certificate of incorporation and
bylaws of PH Casino Resorts.
The following is a summary of the principal differences between
the current rights of Harvey stockholders and the rights which such persons
would have as PH Casino Resorts stockholders. This summary is not intended
to be complete and is qualified in its entirety by reference to the
relevant provisions of our articles of incorporation and bylaws, the
certificate of incorporation and bylaws of PH Casino Resorts, and Nevada
and Delaware law.
<TABLE>
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HARVEYS CASINO RESORTS PH CASINO RESORTS
(NEVADA) (DELAWARE)
BOARD OF DIRECTORS
<S> <C> <C>
Number of directors Nevada law requires that a corporation Delaware law also provides that the
have at least one director. A number of directors shall be fixed by or
corporation may provide in its articles of in the manner provided by the bylaws.
incorporation or bylaws for a fixed
number of directors or a variable number If the number is fixed in the bylaws, the
of directors within a fixed minimum and board acting alone may change the
maximum, and for the manner in which number of directors, unless the directors
the number of directors may be are not authorized to amend the bylaws.
increased or decreased. Delaware law also permits fixing the
number in the certificate of
If the number is fixed in the bylaws, the incorporation. If the number is fixed in
board acting alone may change the the certificate of incorporation, however,
number of directors, unless the directors the number of directors may be changed
are not authorized to amend the bylaws. only in the manner specified in the
If the number is fixed in the articles of certificate of incorporation or by
incorporation, however, the number of amendment of the certificate of
directors may be changed only in the incorporation, which amendment would
manner specified in the articles of require stockholder and board approval.
incorporation or by amendment of the
articles of incorporation, which The bylaws and certificate of
amendment would require stockholder incorporation of PH Casino Resorts
and board approval. contain provisions identical to those in
the articles of incorporation and bylaws,
Our bylaws provide that the board of respectively, of Harveys with respect to
directors shall consist of at least one the number of directors. The sole
individual and that subject to any director of PH Casino Resorts currently
limitation in Nevada law, the articles of is Thomas J. Barrack, Jr.
incorporation or the bylaws, the number
of directors may be changed from time In accordance with agreements among
to time by resolution adopted by the the parties, upon consummation of the
board of directors. Our articles of Pinnacle merger and subject to licensing
incorporation provide that the number of and regulatory requirements, it is
directors shall be as from time to time currently contemplated that the PH
fixed by, or in the manner provided in, Casino Resorts board of directors will
the bylaws. The Harveys board of include R.D. Hubbard as Chairman and
directors currently consists of three Mr. Barrack. The PH Casino Resorts
directors. board of directors also may include
other nominees determined by Colony
Investors III or otherwise in accordance
with agreements among the parties. See
"Interest of Certain Persons in the
Harveys Merger-Directors and
management of PH Casino Resorts."
The size of the PH Casino Resorts board
following the Pinnacle merger has not
been determined and no other
determinations have been made as to
board composition following the Pinnacle
merger.
Removal of directors Nevada law provides that any director or Delaware law provides that directors or
one or more incumbent directors may be the entire board may be removed with or
removed, with or without cause, by the without cause by holders of a majority
vote of stockholders representing not of the shares entitled to vote at an
less than two-thirds of the voting power election of directors, unless the board is
of the issued and outstanding stock classified (which the board of PH Casino
entitled to voting power, unless the Resorts is not), in which case
articles of incorporation require a greater stockholders may remove directors only
vote or unless the corporation has for cause unless the certificate of
cumulative voting. Our articles of incorporation provides otherwise.
incorporation do not require a greater
vote and we do not have cumulative In addition, if a director is elected by a
voting. class or series of capital stock, only that
class or series may remove such director
In addition, any director elected by a class without cause.
or series of capital stock may be removed
only by the requisite proportion of votes of The bylaws of PH Casino Resorts contain
that class or series, and not the votes of an identical provision.
the outstanding shares as a whole.
Our bylaws provide that subject to any rights
of holders of preferred stock, any director
may be removed from office by the affirmative
vote of the holders of at least two-thirds of
the voting power of all shares of the
corporation entitled to vote generally in the
election of directors (voting as a single
class).
Vacancies Nevada law provides that any vacancy Delaware law provides that vacancies
on the board of directors, including a and newly created directorships may be
vacancy resulting from an increase in filled by a majority of the directors then
the number of directors, may be filled by in office (even if less than a quorum),
a majority of the remaining directors unless otherwise provided in the
(even if less than a quorum), unless certificate of incorporation or bylaws.
otherwise provided by the articles of The certificate of incorporation and
incorporation. Our articles of bylaws of PH Casino Resorts do not
incorporation do not provide otherwise. provide otherwise.
Our bylaws similarly provide that The bylaws of PH Casino Resorts
subject to the rights of holders of contain an identical provision.
preferred stock, any vacancies on the board
of directors may be filled only by a majority
of the vote of directors then in office
(though less than a quorum) or by a sole
remaining director.
Cumulative voting Nevada law provides that the articles of Delaware law does not permit
incorporation may provide for cumulative voting for directors unless
cumulative voting for directors. Our expressly authorized by the certificate of
articles of incorporation expressly incorporation. The certificate of
prohibit cumulative voting. incorporation of PH Casino Resorts
expressly prohibits cumulative voting.
LIMITATION OF Nevada law permits a corporation to limit Delaware law permitsna corporation to
DIRECTOR LIABILITY a director's personal liability, with limit a director's personal liability, with
specified exceptions, provided that the specified exceptions, provided that the
corporation's articles of incorporation must corporation's certificate of incorporation
set forth any such limitation. must set forth any such limitation.
The specified exceptions are The specified exceptions are liability
(1) for acts or omissions which
involve intentional misconduct, (1) for monetary damages for
fraud or a knowing violation of breach of the director's duty of
law, or loyalty,
(2) for the payment of unlawful (2) for acts or omissions not in
distributions (which is defined good faith or which involve
to include the declaration or intentional misconduct or a
payment of a dividend, a knowing violation of law,
purchase, redemption or other
acquisition of shares, a (3) for the payment of unlawful
distribution of indebtedness, or dividends to stockholders or
otherwise) to stockholders. unlawful stock repurchases or
redemptions,or
Our articles of incorporation contain
such a limitation. (4) for any transaction from which
the director derived an
improper personal benefit.
The certificate of incorporation of PH Casino
Resorts contains such a limitation.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Discretionary Nevada law permits a corporation to Delaware has a similar provision.
indemnification indemnify any person who was or is a
party or is threatened to be a party to
any proceeding, because of such person's
service as an officer, director,
employee or agent of the corporation,
against liability incurred if such
person:
o acted in good faith, and
o in a manner such person
reasonably believed to be in,
or not opposed to, the best
interests of the corporation.
In a criminal proceeding, such person
also is required not to have had
reasonable cause to believe that his or
her conduct was unlawful.
Mandatory A corporation must indemnify any Delaware has a similar requirement with
indemnification director, officer, employee or agent respect to present or former officers and
against expenses actually and directors.
reasonably incurred by such person in
defense of a proceeding in which such
person is successful on the merits or
otherwise.
Advancement Nevada law provides that the Delaware has a similar provision
of expenses articles of incorporation, bylaws or although such provision is not required
an agreement made by the corporation to be set forth in the articles, bylaws or
may permit a corporation to advance an agreement made by the corporation.
expenses incurred in defending any
proceeding upon receipt of an
undertaking by or on behalf of the
director or officer to repay
the amount advanced if it is ultimately
determined that such person is not
entitled to indemnification by the
corporation. Our articles of
incorporation contain a provision
permitting the corporation to advance
expenses.
Indemnification for Nevada law provides that a corporation Delaware has a similar provision
derivative actions may indemnify a person in a derivative although it does not expressly include
action for expenses reasonably and amounts paid in settlement.
actually incurred by such person and for
amounts paid in settlement if:
o the standard of conduct
described above for non-
derivative actions is met, and
o such person is not adjudged
liable to the corporation or for
amounts paid in settlement.
Nevada law also provides that even if
a person is adjudged liable to the
corporation, the court deciding the
proceeding may make a special
determination that such person is
fairly and reasonably entitled to
indemnification in view of all of the
circumstances, despite such
adjudication of liability.
Determination of Under Nevada law, a corporation may Under Delaware law,a similar
indemnification not indemnify a person unless a determination must be made that the
"determination" is made that person to be indemnified has met the
indemnification is proper under the applicable standard of conduct.
circumstances. Such determination must However, there is no requirement of
be made: a quorum of disinterested directors.
o by the stockholders,
o by the affirmative vote of a
majority of disinterested
directors, or
o if the board cannot make the
determination because of a lack
of a quorum of disinterested
directors or if the board
otherwise directs, by
independent legal counsel in a
written opinion.
Expansion of statutory Under Nevada law, the statutory Delaware has a similar provision
indemnification provisions for indemnification may be although Delaware law does not
expanded by the articles of expressly permit expansion by the
incorporation, bylaw, agreement, vote of certificate of incorporation and does not
stockholders, vote of disinterested have a similar limitation on discretionary
directors or otherwise, though indemnification or advancement of
limitations could be imposed by a court expenses.
on grounds of public policy.
In addition, Nevada law provides that
neither discretionary indemnification
nor advancement of expenses may be
made to or on behalf of any director
or officer if a final adjudication
establishes that such person's acts or
omissions involved intentional
misconduct, fraud or knowing violation
of the law and were material to the
cause of action.
Charter and bylaw Our articles of incorporation are silent The certificate of incorporation of PH
provisions with respect to indemnification. Casino Resorts provides that the
corporation shall indemnify its
directors and officers to the
fullest extent permitted by Delaware
law.
STOCKHOLDER MEETINGS
Special meeting Nevada law provides that a meeting of Delaware law provides that a special
stockholders may be held in the manner meeting of stockholders may be called
provided by the bylaws and requires that by:
notice of the meeting be signed by the
president or a vice president, or the o the board of directors or
secretary, or an assistant secretary, or
by such other natural person as the bylaws o any other person authorized to
prescribe or permit the board of directors do so in the certificate of
to designate. incorporation or bylaws.
Our bylaws provide that special meetings
may be called by: The bylaws of PH Casino Resorts have
an identical provision.
o the board of directors pursuant
to a resolution approved by a
majority of the entire board,
o the chief executive officer, or
o the president.
Action by written consent Under Nevada law, stockholders may act Delaware law permits a majority of
without a meeting by written consent stockholders to act by written consent,
signed by the proportion of voting without a meeting, unless a
power required to take action at a corporation's certificate of incorporation
meeting, unless the articles of provides otherwise. The certificate of
incorporation or bylaws provide incorporation of PH Casino Resorts
otherwise. Our articles of incorporation does not provide otherwise.
and bylaws do not provide otherwise.
Quorum Unless otherwise stated in the articles, Under Delaware law, unless stated
the presence in person or by proxy otherwise in the certificate of
(regardless of whether the proxy has incorporation or bylaws, the presence in
authority to vote on all matters) of a person or by proxy of a majority of the
majority of the voting power constitutes outstanding shares entitled to vote
a quorum at any meeting of constitutes a quorum at any meeting of
stockholders. There is no statutory stockholders. However, a quorum
lower limit on a quorum. Our bylaws cannot be specified to be less than 1/3
provide for a quorum of a majority of the of the outstanding shares entitled to
voting power. vote. The bylaws of PH Casino Resorts
provide for a quorum of a majority of the
shares entitled to vote.
Rights of inspection Under Nevada law, any stockholder of Under Delaware law, a stockholder may
record who owns, or who has been inspect a corporation's stock ledger,
authorized in writing by holders of, at stockholder list and other books and
least 15% of all of the issued and records during normal business hours
outstanding shares of stock, upon at as long as such inspection is for a
least five days' written demand, is proper purpose and as long as the
entitled to inspect in person or by agent stockholder has made proper written
or attorney, during normal business demand under oath stating the purpose
hours, the books of account and all of the inspection. A "proper purpose"
financial records of the corporation, to is a purpose reasonably related to the
make extracts therefrom and to conduct interests of the inspecting person as a
an audit of such records. stockholder.
These rights may be denied to any
stockholder upon his or her refusal to
furnish the corporation an affidavit that
such inspection, extracts or audit is not
desired for any purpose not related to his
or her interest in the corporation as a
stockholder.
Preemptive rights Our articles of incorporation provide that The certificate of incorporation of PH
no stockholders of Harveys shall have any Casino Resorts contains an identical
preemptive rights. provision.
APPRAISAL AND DISSENTERS' Nevada law provides that stockholders Delaware law provides for appraisal
RIGHTS have dissenters' rights, subject to some rights, subject to some exceptions, in
exceptions, in the event of: the event of:
o a merger, o a merger or consolidation, or
o an exchange, or o if the certificate of
incorporation so provides, an
o if otherwise provided by the amendment to its certificate
articles, bylaws or board of incorporation, any merger or
resolution. consolidation in which the
corporation is a constituent
However, a stockholder is not entitled to corporation or the sale of all
dissenters' rights if such stockholder or substantially all of the assets
owns shares of a class that either is of the corporation.
listed on a national securities exchange
or included in the national market system Delaware law does not recognize a
of Nasdaq or is held of record by more concept comparable to an exchange
than 2,000 stockholders unless: under Nevada law.
o the articles provide otherwise, Delaware law has a similar exception
or with respect to publicly traded or widely
held securities.
o stockholders are required to
accept anything other than
(1) cash, (2) equity interests in
the surviving or acquiring
entity or (3) equity interests in
any other entity which are
listed on a national securities
exchange or included in the
national market system of
Nasdaq or held of record by
more than 2,000 stockholders.
The corporation must pay stockholders The corporation pays stockholders
exercising dissenters' rights the exercising appraisal rights only after
corporation's estimation of fair value final court resolution of any dispute as
prior to final court resolution of any to the fair value of the shares.
dispute as to the fair value of the
shares.
Legal fees and expenses may be allocated Legal fees and expenses are
to the corporation as well as the allocated among the dissenting
dissenting stockholders. stockholders and not to the
corporation.
The court is prohibited from taking into The court is statutorily prohibited
account any appreciation in the fair value from taking into account any
of the shares in anticipation of the appreciation in the fair value of
corporate action unless exclusion would be the shares attributable to the
inequitable. accomplishment or expectation of the
transaction giving rise to appraisal
rights.
MERGERS AND OTHER Nevada law provides that a majority of Delaware law provides that a majority of
FUNDAMENTAL TRANSACTIONS the voting power must approve any the outstanding stock entitled to vote,
fundamental corporate transaction such voting as a single class, must approve
as a merger, exchange or sale of all or any fundamental corporate transaction
substantially all of the corporation's such as a merger or sale of all or
assets unless the articles of substantially all of the corporation's
incorporation or the board requires a assets.
greater vote or a vote by classes of
stockholders.
DISSOLUTION Under Nevada law, a resolution to Under Delaware law, unless the board of
dissolve must be approved by the board directors adopts a resolution to dissolve
of directors and the dissolution must be the corporation, the dissolution must be
recommended to the stockholders for approved by 100% of the voting power
approval. The dissolution must be of the corporation. If the board adopts a
approved by a majority of the voting resolution to dissolve the corporation,
power. the dissolution must be approved by a
majority of the shares entitled to vote.
AMENDMENTS TO CHARTER Nevada law provides that an amendment to Delaware law provides that an
the articles of incorporation must be amendment to the certificate of
approved by a majority of the voting incorporation must be approved by a
power, unless the articles of majority of the outstanding stock
incorporation require a greater vote. entitled to vote thereon, and a majority
of the outstanding stock of each
However, the holders of outstanding shares class entitled to vote thereon,
of a class are entitled to vote as a voting as a single class.
separate class upon a proposed amendment
if the amendment would: However, the holders of outstanding
shares of a class are entitled to
o increase or decrease the vote as a separate class upon a
aggregate number of authorized proposed amendment, whether or not
shares of such class, or entitled to vote thereon by the
certificate of incorporation, if the
o alter or change any preference amendment would:
or any relative or other right
given to that class. o increase or decrease the
aggregate number of authorized
shares of such class,
o increase or decrease the par
value of the shares of such
class, or
o alter or change the
powers, preferences or
special rights of the
shares of such class so as
to affect them adversely.
AMENDMENTS TO BYLAWS Nevada law provides that subject to any Under Delaware law, only
bylaws adopted by the stockholders, the stockholders have the power to amend
board of directors may make the bylaws. the bylaws unless the certificate
of incorporation gives the
board of directors the power to
amend the bylaws. In such a case,
Delaware law does not limit the
board's power to make changes in the
bylaws. The fact that power is
conferred on the board also does not
limit the power of the stockholders
to amend the bylaws.
Our bylaws provide that the bylaws or The certificate of incorporation of PH
any provision of the bylaws may be Casino Resorts has an identical provision.
amended, altered or repealed:
o by the board of directors, or
o by the affirmative vote of at
least 66 2/3% of the voting
power of the outstanding
shares of capital stock.
Our bylaws also provide that additional
bylaws not inconsistent with the existing
bylaws may be adopted by the board of
directors, subject to alteration, amendment
or repeal by the stockholders as described
above.
AUTHORIZED CAPITAL STOCK Our authorized capital consists of: PH Casino Resorts'authorized capital
consists of:
o 20,000,000 shares of common
stock, par value $0.01 per share, o 40,000,000 shares of common
consisting of 10,000,000 shares stock, par value $0.01 per
of Class A common stock and share, consisting of
10,000,000 shares of Class B 20,000,000 shares of Class
common stock, and A common stock and
20,000,000 shares of Class
B common stock, and
o 1,000,000 shares of preferred
stock, par value $0.01 per share. o 1,000,000 shares of preferred
stock, par value $0.01 per share.
Our Class A common stock and Class B PH Casino Resorts Class A common
common stock are identical except that stock and PH Casino Resorts Class B
our Class B common stock is no-voting. common stock are identical except
that PH Casino Resorts Class B
common stock is non-voting.
The terms of the PH Casino Resorts
Class A common stock and Class B
common stock are identical to the
terms of the Harveys Class A common
stock and Class B common stock,
respectively.
DIVIDENDS AND Nevada law does not have statutory Delaware law permits a corporation to
DISTRIBUTIONS definitions of capital or surplus. pay dividends out of surplus, which is
the excess of net assets of the
Instead, Nevada law provides that a corporation over capital, or, if the
corporation may make a distribution corporation does not have adequate
(which is defined to include the surplus, out of net profits for the current
declaration or payment of a dividend, a or immediately preceding fiscal year,
purchase, redemption or other unless the net assets are less than the
acquisition of shares, a distribution of capital of any outstanding preferred
indebtedness, or otherwise) to stock.
stockholders if after giving effect to
such distribution the corporation would
be able to pay its debts as they become
due in the usual course of business, or
the corporation satisfies a solvency test.
STOCK REPURCHASES Nevada law does not have statutory Under Delaware law, a corporation
definitions of capital or surplus. may not purchase or redeem its own
shares if its capital is impaired
Instead, Nevada law permits a corporation (i.e., the value of its net assets
to purchase or redeem its own shares if is less than the amount designated
after giving effect thereto it would be as capital) or if the purchase or
able to pay its debts as they become due redemption would cause its capital
in the usual course of business or if it to be impaired. However, a Delaware
satisfies a statutory solvency test. corporation may purchase or redeem
preferred shares out of capital if
the shares will then be retired,
reducing the capital of the
corporation.
INTERESTED DIRECTOR AND Nevada law provides that a contract or Delaware has a similar provision
OFFICER TRANSACTIONS transaction with an interested director with respect to any contract or
or officer transaction is not void or transaction with an interested
voidable if: director or officer.
o the existence of the interest is
know to the board of directors
or committee and the board of
directors authorizes the
contract or transaction in good
faith by a sufficient vote, not
counting the vote of any
interested directors,
o the fact of the interest is know
to the stockholders and the
stockholders approve the
contract or transaction in good
faith by a majority of the voting
power,
o the fact of the interest is known
to the director or officer at the
time the transaction is brought
before the board of directors
for action, or
o the contract or transaction is
fair to the corporation at the
time it is authorized or
approved.
CONTROL SHARE ACQUISITION Nevada has a "control share acquisition Delaware does not have a control share
STATUTE statute" which limits the voting rights of acquisition statute.
shares acquired by a person when that
person acquires a controlling interest in
a corporation. A "controlling interest"
means an interest that entitles a person
to exercise voting power in the election
of directors equal to (1) 1/5 or more but
less than 1/3, (2) 1/3 or more but less
than 1/2, or (3) a majority or more of all
the voting power of the corporation.
An acquiring person obtains voting rights
in the control shares only if holders of a
majority of the voting power
(or in some cases, a majority of the
voting power of each class) approve a
resolution granting voting rights in the
control shares.
BUSINESS COMBINATION Nevada law precludes a corporation Delaware law has a similar provision but
STATUTE from engaging in any "combination" defines an interested stockholder as any
with any person that owns 10% or more person that owns 15% or more of the
of its outstanding voting stock (an corporation's outstanding voting stock.
"interested stockholder") for a period of
three years following the time that such In addition, under Delaware law, board
stockholder became an interested approval is not the only means to avoid
stockholder, subject to some exceptions, application of the three-year waiting
unless the combination or the purchase period. Delaware law provides that the
of shares made by the interested three-year waiting period also does not
stockholder was approved by the board apply if:
of directors.
o once the transaction which
A "combination" includes, among other resulted in the stockholder
things: owning 15% or more of the
outstanding voting stock of the
o mergers or consolidations, corporation is completed, such
stockholder owns at least 85%
o some sales, leases, mortgages, of the voting stock of the
pledges or other dispositions corporation outstanding at the
of assets having specified time that the transaction
relative market values, commenced; or
o some transactions which would o at or after the time the
result in increasing the stockholder obtains 15% or
proportionate shares of the more of the outstanding voting
corporation owned by the stock of the corporation, the
interested stockholder, and business combination is
approved by the board of
o the receipt of benefits, except directors and authorized at an
proportionately as a annual or special meeting of
stockholder, by the interested stockholders (and not by
stockholder. written consent) by the
affirmative vote of at
least 66 2/3% of the
outstanding voting stock
that is not owned by the
acquiring stockholder.
Following the three-year waiting Unlike Nevada law, Delaware law does
period, a combination with an not impose any additional requirements
interested stockholder is on business combinations after the
permitted only if specified board and three-year waiting period.
stockholder approval or minimum
consideration requirements are met.
CASE LAW Nevada does not have a body of judicial A substantial body of case law exists
interpretation comparable to that of interpreting the corporation laws of
Delaware. Delaware.
COURT SYSTEMS Nevada has not established a special Delaware has established a system of
system of courts equivalent to the Chancery Courts to adjudicate matters
Delaware Chancery Courts. Matters arising under the Delaware General
arising under the Nevada Business Corporation Law.
Corporation Law are adjudicated by
general state courts.
EXCHANGE ACT Our Harveys Class A common stock is Upon consummation of the Harveys
REGISTRATION registered under Section 12(g) of the merger, it is executed that the Class
Exchange Act. A common stock of PH Casino Resorts will be
registered under Section 12(g) of the Exchange
Act and PH Casino Resorts will be the
successor registrant to Harveys under
the Exchange Act and will assume the
obligations of Harveys under the
Exchange Act.
</TABLE>
LEVERAGE AND LIQUIDITY
Harveys. As of May 31, 2000, we had outstanding long-term
indebtedness (excluding any property level indebtedness) consisting of $150
million of our 10 5/8% Senior Subordinated Notes due 2006 (plus unamortized
premium thereon of approximately $6.1 million) and approximately $233.0
million of outstanding borrowings under our existing credit facility (with
approximately $48.5 million in letters of credit exposure).
PH Casino Resorts. Upon completion of the mergers, it is expected
that PH Casino Resorts will have outstanding a substantial amount of
consolidated debt in relation to its stockholders' equity. PH Casino
Resorts or its affiliates expect to enter into new financing arrangements
in connection with the Pinnacle merger, the Harveys merger and the other
transactions contemplated by the merger agreements. The amount and terms of
financing and the use of the proceeds of any such financing will be
determined by the PH Casino Resorts board of directors. The PH Casino
Resorts board of directors has not determined with certainty the amount,
terms or use of proceeds of the financing. However, PH Casino Resorts has
received a commitment letter with respect to a $900 million aggregate
principal amount senior secured credit facility and PH Casino Resorts and
certain of its affiliates have received "highly confident letters" with
respect to $550 million aggregate principal amount of senior subordinated
debt. The senior secured credit facility is expected to be secured by a
security interest in substantially all of the assets of PH Casino Resorts
and the assets of PH Casino Resorts' direct and indirect domestic
subsidiaries, including Harveys and Pinnacle, and 65% of the stock of its
foreign subsidiaries. In addition, if all of Harveys' and Pinnacle's
currently outstanding debt is not repaid or redeemed prior to the closing
of the mergers, PH Casino Resorts may have additional indebtedness upon
completion of the mergers. It is a condition to the consummation of the
Pinnacle merger that, to the extent required in connection with the
transactions contemplated by the Pinnacle merger agreement, a subsidiary of
PH Casino Resorts shall have received valid consents and related tenders
under the outstanding principal amount of debt of Harveys and Pinnacle
pursuant to tender offers for such debt.
Immediately following completion of the mergers, PH Casino
Resorts' only material assets will be its ownership interests in its
subsidiaries, including Harveys and Pinnacle. Consequently, PH Casino
Resorts will depend on distributions or other intercompany transfers of
funds from its subsidiaries to meet its debt service and other obligations.
As a result, the substantial amount of debt expected to be incurred by PH
Casino Resorts in connection with the mergers and the other transactions
contemplated by the merger agreements, as well as the guarantees of and
security interests in the assets of Harveys, could have important
consequences for holders of PH Casino Resorts common stock and for Harveys,
including, but not limited to:
o limiting PH Casino Resorts' ability to satisfy its
obligations with respect to the new notes and Harveys'
ability to satisfy its obligations with respect to its
existing debt;
o increasing PH Casino Resorts' and Harveys' vulnerability
to general and local adverse economic and industry
conditions;
o limiting the ability of PH Casino Resorts and Harveys to
obtain additional financing to fund future working
capital, capital expenditures and other general corporate
requirements;
o requiring a substantial portion of PH Casino Resorts' and
its subsidiaries' (including Harveys') cash flow from
operations to be used for the payment of principal and
interest on the debt, reducing PH Casino Resorts' and its
subsidiaries' ability to use their cash flow to fund
working capital, capital expenditures and general
corporate requirements;
o limiting PH Casino Resorts' and Harveys' flexibility in
planning for, or reacting to, changes in their business
and the industry; and
o disadvantaging PH Casino Resorts compared to competitors
with less debt or greater resources.
Subject to the terms of the senior secured credit facility and the
other debt of PH Casino Resorts following the completion of the mergers, PH
Casino Resorts may be able to borrow additional debt in the future and, as
a result, could face additional or increased risks related to its leverage
and liquidity or otherwise.
SHARE OWNERSHIP BY
PRINCIPAL STOCKHOLDERS, MANAGEMENT AND DIRECTORS
The following table sets forth as of August 18, 2000, beneficial
ownership of Harveys' Class A common stock, Harveys' only class of voting
securities, by (1) all persons who are beneficial owners of more than 5% of
Harveys Class A common stock, (2) each director and officer of Harveys, and
(3) all directors and executive officers of Harveys, as a group. Except as
otherwise indicated, Harveys believes that the beneficial owners of the
Harveys Class A common stock listed below, based on information furnished
by such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable. Unless
otherwise indicated, the business address of each person listed below is
Highway 50 and Stateline Avenue, P.O. Box 128, Lake Tahoe, Nevada 89449. As
of August 18, 2000, there were 40,091 shares of Harveys Class A common
stock outstanding.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENT OF
CLASS A COMMON CLASS A
STOCK BENEFICIALLY COMMON
NAME OF BENEFICIAL OWNER OWNED STOCK
------------------------ ------------------- ----------
Colony HCR Voteco, LLC
1999 Avenue of the Stars, Suite 1200
<S> <C> <C>
Los Angeles, California 90067............................ 38,800(1), (2) 96.8%
Thomas J. Barrack, Jr. (3)
1999 Avenue of the Stars, Suite 1200
Los Angeles, California 90067............................. 38,800 96.8%
Kelvin L. Davis (3),(4)
345 California Street, Suite 3300
San Francisco, California 94014........................... 38,800 96.8%
Charles W. Scharer * *
John J. McLaughlin * *
Gary D. Armentrout * *
James J. Rafferty * *
Verne H. Welch, Jr. * *
All directors and executive officers as a group (10 40,351 100.0%
persons) (3),(5)
</TABLE>
________________________________
* Less than one percent.
(1) Does not include shares of Harveys Class A common stock issuable upon
conversion of the shares of Harveys Series A preferred stock owned by
Colony HCR Voteco.
(2) Pursuant to the Transfer Restriction Agreement, by and among Colony
HCR Voteco, Colony Investors III, Mr. Barrack and Mr. Davis, dated as
of February 2, 1999, Colony Investors III has the right to acquire
shares of Harveys Class A common stock owned by Colony HCR Voteco on
each occasion that Colony Investors III proposes to transfer any
shares of Harveys Class B common stock held by it to a proposed
purchaser who, in connection with such proposed transfer, has obtained
all licenses, permits, registrations, authorizations, consents,
waivers, orders, findings of suitability or other approvals required
to be obtained from, and has made all filings, notices or declarations
required to be made with, all gaming authorities under all applicable
gaming laws (an "Approved Sale"). In such event, Colony Investors III
shall have an option to purchase from Colony HCR Voteco the number of
shares Harveys Class A common stock equal to the product of (a) the
number of shares of Harveys Class A common stock held by Colony HCR
Voteco and (b) the fraction whose numerator is the number of shares of
Harveys Class B common stock proposed to be sold by Colony Investors
III in the Approved Sale and whose denominator is the number of shares
of Harveys Class B common stock held by Colony Investors III.
(3) Messrs. Barrack and Davis are the Managers of Colony HCR Voteco, and
thereby each may be deemed to have beneficial ownership of the Harveys
Class A common stock owned of record by Colony HCR Voteco. Messrs.
Barrack and Davis disclaim beneficial ownership of such shares of
Harveys Class A common stock.
(4) Mr. Davis' membership interest in Colony HCR Voteco is anticipated to
be redeemed, subject to the receipt of applicable regulatory
approvals, either prior to or following the closing of the Harveys
merger.
(5) Includes options held by members of Harveys management and which are
exercisable within 60 days of the date of this table to purchase 260
shares of Harveys Class A common stock.
WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
We are subject to the information requirements of the Exchange Act
and in accordance therewith file reports and other information with the
Securities and Exchange Commission. Such reports and other information may
be read and copied at the following locations:
Public Reference Room New York Regional Office Chicago Regional Office
Room 1024 7 World Trade Center Citicorp Center
Judiciary Plaza Suite 1300 Suite 1400
450 Fifth Street, N.W. New York, NY 10048 500 West Madison Street
Washington, D.C. 20549 Chicago, IL 60661
You also may obtain copies of this information by mail from the
Public Reference Room of the Securities and Exchange Commission at
prescribed rates. Further information on the operation of the Securities
and Exchange Commission's Public Reference Room can be obtained by calling
the Securities and Exchange Commission at 1-800-SEC-0330.
The Securities and Exchange Commission also maintains an Internet
web site that contains reports, proxy statements and other information
about issuers, such as Harveys, who file electronically with the Securities
and Exchange Commission. The address of that site is http://www.sec.gov.
INFORMATION ABOUT THE PINNACLE MERGER
Information relating to the Pinnacle merger and the Pinnacle
merger agreement is contained in the definitive proxy statement of
Pinnacle, which was filed by Pinnacle with the Securities and Exchange
Commission on August 23, 2000, as supplemented by the supplement thereto
filed with the Securities and Exchange Commission on September 19, 2000.
This document may be inspected and copied at the Securities and Exchange
Commission's public reference facilities listed above or accessed
electronically by means of the Securities and Exchange Commission's
Internet web site referenced above.
ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 17, 2000
AMONG
PH CASINO RESORTS, INC.
HARVEYS CASINO RESORTS
AND
HARVEYS ACQUISITION CORPORATION
AGREEMENT AND PLAN OF MERGER dated as of April 17, 2000
(this "Agreement"), among PH CASINO RESORTS, INC., a Delaware corporation
("PHCR"), HARVEYS CASINO RESORTS, a Nevada corporation ("Harveys"), and
HARVEYS ACQUISITION CORPORATION, a Nevada corporation ("Harveys Acq Corp").
W I T N E S S E T H
WHEREAS, PHCR is a wholly-owned subsidiary of Harveys and
Harveys Acq Corp is a wholly-owned subsidiary of PHCR;
WHEREAS, the respective Boards of Directors of Harveys
and Harveys Acq Corp have determined that the merger of Harveys Acq Corp
with and into Harveys (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, is advisable and in the best
interests of their respective corporations and stockholders, and have
approved this Agreement;
WHEREAS, the entry into this Agreement and the
consummation of the transactions herein described are expressly conditional
on the simultaneous entry into an agreement and plan of merger (the
"Pinnacle Merger Agreement") among Pinnacle Entertainment, Inc., a Delaware
corporation ("Pinnacle"), Pinnacle Acquisition Corporation, a Delaware
corporation ("Pinnacle Acq Corp") and PHCR;
WHEREAS, for Federal income tax purposes, the parties
intend that the Merger and the merger of Pinnacle Acq Corp with and into
Pinnacle (the "Pinnacle Merger") pursuant to the Pinnacle Merger Agreement,
viewed as a single transaction or as a series of transactions pursuant to a
single plan, qualifies as an exchange under section 351 of the Internal
Revenue Code of 1986 (the "Code");
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
Capitalized and certain other terms used in this
Agreement and not otherwise defined have the meanings set forth in the
Pinnacle Merger Agreement. Unless the context otherwise requires, such
terms shall include the singular and plural and the conjunctive and
disjunctive forms of the terms defined.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to
the conditions set forth in this Agreement and the articles of merger or
other appropriate documents (in any such case, the "Articles of Merger")
required by law in connection with the Merger, and in accordance with the
applicable provisions of the Nevada Revised Statutes, as amended (the
"NRS"), Harveys Acq Corp shall be merged with and into Harveys. Following
the Merger, Harveys shall continue as the surviving corporation (the
"Harveys Surviving Corporation") and the separate existence of Harveys Acq
Corp will cease.
SECTION 2.02. Closing. The closing (the "Closing") of the
Merger will take place at 10:00 a.m., Los Angeles time, on a date (the
"Closing Date") to be specified by PHCR, which may be on, but shall be no
later than the third business day after, the day on which there shall have
been satisfaction or waiver of the conditions set forth in
Article VIII, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
300 South Grand Avenue, Los Angeles, California 90071, unless another time
date or place is agreed to in writing by the parties hereto.
SECTION 2.03. Effective Time. On the Closing Date, or as
soon as practicable thereafter, the parties shall file the Articles of
Merger with the Secretary of State of the State of Nevada, in accordance
with the provisions of NRS section 92A.005 et seq. (the "Nevada Merger
Law"), and make all other filings or recordings required by law in
connection with the Merger. The Merger shall become effective at such time
as the Articles of Merger are duly filed with the Secretary of State of the
State of Nevada, or at such other later time as the parties shall agree and
specify in the Articles of Merger (the time the Merger becomes effective
being the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall
have the effects set forth in the Nevada Merger Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time,
all the properties, rights, privileges, powers and franchises of Harveys
and Harveys Acq Corp shall vest in the Harveys Surviving Corporation, and
all debts, liabilities and duties of Harveys and Harveys Acq Corp shall
become the debts, liabilities and duties of the Harveys Surviving
Corporation.
SECTION 2.05. Corporate Governance Documents. The
Articles of Incorporation of Harveys Acq Corp, as in effect immediately
prior to the Effective Time of the Merger, shall become the Articles of
Incorporation of the Harveys Surviving Corporation after the Effective
Time, except that such Articles of Incorporation shall be amended to
provide that the name of the Harveys Surviving Corporation shall be
"Harveys Casino Resorts," and thereafter may be amended in accordance with
its terms and as provided by law. The By-laws of Harveys Acq Corp as in
effect immediately prior to the Effective Time shall become the By-laws of
the Harveys Surviving Corporation and thereafter may be amended in
accordance with their terms and as provided by law.
SECTION 2.06. Directors. The directors of Harveys Acq
Corp immediately prior to the Effective Time shall become the directors of
the Harveys Surviving Corporation, and shall serve in such capacity until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of Harveys
immediately prior to the Effective Time shall become the officers of the
Harveys Surviving Corporation, and shall serve in such capacity until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.08. Further Actions. At and after the Effective
Time, Harveys Surviving Corporation shall take all action as shall be
required in connection with the Merger, including, but not limited to, the
execution and delivery of any further deeds, assignments, instruments or
documentation as are necessary or desirable to carry out the provisions of
this Agreement.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.01. Effect on Capital Stock of Harveys and
Harveys Acq Corp. As of the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of capital stock
of Harveys or any shares of capital stock of Harveys Acq Corp:
(a) Capital Stock of Harveys
(i) Each share of Class A
Common Stock, par value $.01 per share, of Harveys (the "Harveys
Class A Common Stock") (other than shares canceled in accordance
with Section 3.01(c)) issued and outstanding immediately prior to
the Effective Time shall be converted into and become 1.25379
fully paid and nonassessable shares of Class A Common Stock, par
value $.01 per share, of PHCR (the "PHCR Class A Common Stock").
(ii) Each share of Class B
Common Stock, par value $.01, of Harveys (the "Harveys Class B
Common Stock") (other than shares canceled in accordance with
Section 3.01(c)) issued and outstanding immediately prior to the
Effective Time shall be converted into and become 1.25379 fully
paid and nonassessable shares of Class B Common Stock, par value
$.01 per share, of PHCR (the "PHCR Class B Common Stock").
(b) Capital Stock of Harveys Acq Corp. Each
share of common stock, par value $.01 per share, of Harveys Acq
Corp (the "Harveys Acq Corp Common Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable shares of common
stock, par value $.01 per share, of Harveys Surviving Corporation
(the "Harveys Surviving Corporation Common Stock").
(c) Cancellation of Treasury Stock and Harveys
Acq Corp Owned Stock. Each share of Harveys Class A Common Stock
and Harveys Class B Common Stock that is owned by Harveys or by
any Subsidiary of Harveys and each share of Harveys Class A Common
Stock and Harveys Class B Common Stock that is owned by Harveys
Acq Corp shall automatically be canceled and retired and shall
cease to exist.
SECTION 3.02. Exchange of Certificates.
(a) Exchange Agent. Immediately prior to the
Effective Time, Harveys Acq Corp shall designate a bank or trust
to act as exchange agent in the Merger (the "Exchange Agent").
(b) Exchange Procedure. As soon as reasonably
practicable after the Effective Time, the Harveys Surviving
Corporation shall cause the Exchange Agent to mail to each holder
of record of a certificate or certificates representing which
immediately prior to the Effective Time represented outstanding
shares of Harveys Class A Common Stock or Harveys Class B Common
Stock (the "Certificates") whose shares were converted into the
right to receive PHCR Class A Common Stock or PHCR Class B Common
Stock, as applicable, pursuant to Section 3.01 (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as the Harveys
Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the
Certificates in exchange for PHCR Class A Common Stock or PHCR
Class B Common Stock, as applicable. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in
exchange therefor the number of shares into which the shares of
capital stock theretofore represented by such Certificate shall
have been converted pursuant to Sections 3.01 and 3.02, and the
Certificate so surrendered shall forthwith be cancelled.
(c) No Further Ownership Rights in Capital
Stock. All shares delivered upon the surrender of Certificates in
accordance with the terms of this Article III shall be deemed to
have been paid in full satisfaction of all rights pertaining to
the shares of capital stock theretofore represented by such
Certificates, and there shall be no further registration of
transfers on the stock transfer books of the Harveys Surviving
Corporation of the shares of capital stock which were outstanding
immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Harveys Surviving
Corporation or the Exchange Agent for any reason, they shall be
cancelled and exchanged as provided in this Article III, except as
otherwise provided by law.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.01. Registration Statement.
(a) PHCR shall as promptly as possible after the
Closing, and in no event later than 30 days after the date
thereof, prepare and file with the SEC an amendment (the
"Amendment") to Harveys' registration statement on Form 10. PHCR
shall cause the Amendment to comply as to form in all material
respects with the applicable provisions of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"). PHCR agrees
that the Amendment at the time it is filed shall not include an
untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made,
not misleading.
(b) As promptly as practicable, each party
hereto shall properly prepare and file any other filings required
under the Exchange Act, the Securities Act of 1933, as amended
(the "Securities Act") or any other Laws relating to the Merger or
the Amendment (collectively, "Other Filings").
SECTION 4.02. Reasonable Efforts. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken
(including through its officers and directors and other appropriate
personnel), all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger, the Pinnacle Merger, the Voting and Contribution
Agreement and the other transactions contemplated by this Agreement,
including (a) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making
of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as
may be necessary to obtain Permits or waivers from, or to avoid an action
or proceeding by, any Governmental Entity (including in respect of any
Gaming Law), (b) the obtaining of all necessary consents, approvals or
waivers from third parties, (c) the defending of any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of any of the transactions contemplated by
this Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed
and (d) the execution and delivery of any additional instruments necessary
to consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.
SECTION 4.03. At the Effective Time, all outstanding
employee stock options of Harveys (the "Harveys Options") shall be canceled
and shall be exchanged for options to purchase an number of shares of PHCR
Class A Common Stock or PHCR Class B Common Stock, as applicable (the
"Replacement Options"), equal to the product of (A) the number of Harveys
Options, multiplied by (B) 1.25379. Such Replacement Options shall have an
exercise price per share equal to (A) the exercise price of the Harveys
Options prior to the Merger, divided by (B) 1.25379. Such Replacement
Options shall otherwise have terms identical with those of the Harveys
Options.
SECTION 4.04. Tax Treatment. Each of Harveys, PHCR and
Harveys Acq Corp shall use its reasonable best efforts to cause the Merger
to qualify as an exchange governed by section 351 of the Code.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. Conditions to Each Party's Obligation To
Effect the Merger. The respective obligations of each party to effect the
Merger is subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) No Injunctions or Restraints. No statute,
rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction or other order enacted,
entered, promulgated, enforced or issued by any Governmental
Entity or other legal restraint or prohibition preventing the
consummation of the Merger or the transactions contemplated
thereby (including the Pinnacle Merger) shall be in effect;
provided, in the case of a decree, injunction or other order, each
of the parties shall have used their best efforts to prevent the
entry of any such injunction or other order and to appeal as
promptly as possible any decree, injunction or other order that
may be entered.
(b) Gaming Authority Approval. All licenses,
permits, registrations, authorizations, consents, waivers, orders,
findings of suitability or other approvals required to be obtained
from, and all filings, notices or declarations required to be made
with, any Gaming Authority to permit Harveys Acq Corp and Harveys
to consummate the Merger and to permit the Harveys Surviving
Corporation and each of its Subsidiaries to conduct their
businesses in the jurisdictions regulated by such Gaming
Authorities after the Effective Time in the same manner as
conducted by Harveys and its Subsidiaries prior to the Effective
Time (collectively, the "Gaming Approvals") shall have been
obtained or made, as applicable; provided that no such Gaming
Approval shall obligate Harveys Acq Corp, or any of its Affiliates
to obtain any consent, approval, license, waiver, order, decree,
determination of suitability or other authorization with respect
to any limited partner of any Affiliate of Harveys Acq Corp.
(c) Consents. All consents, waivers, orders,
approvals, authorizations, registrations, findings of suitability
and action of any Governmental Entity shall have been obtained or
made, free of any condition.
SECTION 5.02. Conditions to Obligations of Harveys Acq
Corp. The obligations of Harveys Acq Corp to effect the Merger are further
subject to the satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Contribution by Stockholders. The
transactions contemplated by the Voting and Contribution Agreement
shall have been consummated immediately prior to the Effective
Time.
SECTION 5.03. Conditions to Obligations of Harveys. The
obligations of Harveys to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
condition:
(a) Compliance Committee. Harveys shall have
received any and all consents necessary from the Harveys Casino
Resorts Compliance Committee.
(b) Pinnacle Merger Agreement. All conditions to
closing contained in the Pinnacle Merger Agreement shall have been
satisfied or waived by the appropriate party thereto.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time by written consent of
each of the parties.
SECTION 6.02. Amendment. This Agreement may be amended by
the mutual agreement of the parties at any time. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
SECTION 6.03. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement or waive compliance by the other party with any of the agreements
or conditions contained in this Agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. 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 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 Harveys, Harveys Acq Corp or PHCR, to:
c/o Harveys Casino Resorts
Highway 50 & Stateline Avenue
Lake Tahoe, Nevada 89449
Attention: Charles W. Scharer
and
c/o Colony Capital, Inc.
1999 Avenue of the Stars, Suite 1200
Los Angeles, California 90067
Telephone: 310-282-8820
Facsimile: 310-282-8813
Attention: Jonathan H. Grunzweig
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Nick P. Saggese, Esq.
Telephone: 213-687-5550
Facsimile: 213-687-5600
SECTION 7.02. Interpretation. When a reference is made in
this Agreement to an Article, Section or Schedule, such reference shall be
to an Article or 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 Pinnacle
Merger Agreement and the consummation of the transactions contemplated by
the Pinnacle Merger Agreement and the Voting and Contribution Agreement and
the consummation of the transactions contemplated by such Voting and
Contribution Agreement are transactions contemplated by this Agreement. To
the extent any restriction on the activities of Harveys or its Subsidiaries
under the terms of this Agreement requires prior approval under any Gaming
Law, such restriction shall be of no force or effect unless and until such
approval is obtained. 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 7.03. 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 7.04. Entire Agreement; No Third-Party
Beneficiaries. This Agreement and the Voting and Contribution Agreement
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 and are not intended to confer upon
any Person other than the parties any rights or remedies hereunder.
SECTION 7.05. 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 7.06. Gaming Laws. Each of the provisions of this
Agreement is subject to and shall be enforced in compliance with the Gaming
Laws.
SECTION 7.07. Assignment. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of
the parties without the prior written consent of the other parties.
[signature pages follow]
IN WITNESS WHEREOF, PHCR, Harveys, and Harveys Acq Corp
have caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
PH CASINO RESORTS, INC.
By: /s/ Charles W. Scharer
-------------------------------------
Name: Charles W. Scharer
Title: President
HARVEYS CASINO RESORTS
By: /s/ Charles W. Scharer
-------------------------------------
Name: Charles W. Scharer
Title: President
HARVEYS ACQUISITION CORPORATION
By: /s/ Charles W. Scharer
-------------------------------------
Name: Charles W. Scharer
Title: President
ANNEX B
SECTIONS 92A.300 TO 92A.500, INCLUSIVE,
OF THE NEVADA REVISED STATUTES
NRS 92A.300 DEFINITIONS.-- As used in NRS 92A.300 to 92A.500,
inclusive, unless the context otherwise requires, the words and terms
defined in NRS 92A.305 to 92A.335, inclusive, have the meanings ascribed to
them in those sections.
NRS 92A.305 "BENEFICIAL STOCKHOLDER" DEFINED. -- "Beneficial
stockholder" means a person who is a beneficial owner of shares held in a
voting trust or by a nominee as the stockholder of record.
NRS 92A.310 "CORPORATE ACTION" DEFINED.-- "Corporate action" means
the action of a domestic corporation.
NRS 92A.315 "DISSENTER" DEFINED. -- "Dissenter" means a
stockholder who is entitled to dissent from a domestic corporation's action
under NRS 92A.380 and who exercises that right when and in the manner
required by NRS 92A.400 to 92A.480, inclusive.
NRS 92A.320 "FAIR VALUE" DEFINED. -- "Fair value," with respect to
a dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
NRS 92A.325 "STOCKHOLDER" DEFINED.-- "Stockholder" means a
stockholder of record or a beneficial stockholder of a domestic
corporation.
NRS 92A.330 "STOCKHOLDER OF RECORD" DEFINED.-- "Stockholder of
record" means the person in whose name shares are registered in the records
of a domestic corporation or the beneficial owner of shares to the extent
of the rights granted by a nominee's certificate on file with the domestic
corporation.
NRS 92A.335 "SUBJECT CORPORATION" DEFINED.-- "Subject corporation"
means the domestic corporation which is the issuer of the shares held by a
dissenter before the corporate action creating the dissenter's rights
becomes effective or the surviving or acquiring entity of that issuer after
the corporate action becomes effective.
NRS 92A.340 COMPUTATION OF INTEREST. -- Interest payable pursuant
to NRS 92A.300 to 92A.500, inclusive, must be computed from the effective
date of the action until the date of payment, at the average rate currently
paid by the entity on its principal bank loans or, if it has no bank loans,
at a rate that is fair and equitable under all of the circumstances.
NRS 92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED
PARTNERSHIP.-- A partnership agreement of a domestic limited partnership
or, unless otherwise provided in the partnership agreement, an agreement of
merger or exchange, may provide that contractual rights with respect to the
partnership interest of a dissenting general or limited partner of a
domestic limited partnership are available for any class or group of
partnership interests in connection with any merger or exchange in which
the domestic limited partnership is a constituent entity.
NRS 92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC
LIMITED-LIABILITY COMPANY. -- The articles of organization or operating
agreement of a domestic limited-liability company or, unless otherwise
provided in the articles of organization or operating agreement, an
agreement of merger or exchange, may provide that contractual rights with
respect to the interest of a dissenting member are available in connection
with any merger or exchange in which the domestic limited-liability company
is a constituent entity.
NRS 92A.370 RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT
CORPORATION.-- 1. Except as otherwise provided in subsection 2, and unless
otherwise provided in the articles or bylaws, any member of any constituent
domestic nonprofit corporation who voted against the merger may, without
prior notice, but within 30 days after the effective date of the merger,
resign from membership and is thereby excused from all contractual
obligations to the constituent or surviving corporations which did not
occur before his resignation and is thereby entitled to those rights, if
any, which would have existed if there had been no merger and the
membership had been terminated or the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or
bylaws, no member of a domestic nonprofit corporation, including, but not
limited to, a cooperative corporation, which supplies services described in
chapter 704 of NRS to its members only, and no person who is a member of a
domestic nonprofit corporation as a condition of or by reason of the
ownership of an interest in real property, may resign and dissent pursuant
to subsection 1.
NRS 92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE
ACTIONS AND TO OBTAIN PAYMENT FOR SHARES. -- 1. Except as otherwise
provided in NRS 92A.370 and 92A.390, a stockholder is entitled to dissent
from, and obtain payment of the fair value of his shares in the event of
any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic
corporation is a party:
(1) If approval by the stockholders is required for the merger by
NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation and he
is entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is merged with
its parent under NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic
corporation is a party as the corporation whose subject owner's interests
will be acquired, if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the
stockholders to the event that the articles of incorporation, bylaws or a
resolution of the board of directors provides that voting or nonvoting
stockholders are entitled to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment
under NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate
action creating his entitlement unless the action is unlawful or fraudulent
with respect to him or the domestic corporation.
NRS 92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF
CERTAIN CLASSES OR SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF
MERGER. -- 1. There is no right of dissent with respect to a plan of merger
or exchange in favor of stockholders of any class or series which, at the
record date fixed to determine the stockholders entitled to receive notice
of and to vote at the meeting at which the plan of merger or exchange is to
be acted on, were either listed on a national securities exchange, included
in the national market system by the National Association of Securities
Dealers, Inc., or held by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the
shares provide otherwise; or
(b) The holders of the class or series are required under the plan
of merger or exchange to accept for theshares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu
of fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan of
merger or exchange, were either listed on a national securities exchange,
included in the national market system by the National Association of
Securities Dealers, Inc., or held of record by a least 2,000 holders of
owner's interests of record; or
(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of
paragraph (b).
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require
action of the stockholders of the surviving domestic corporation under NRS
92A.130.
NRS 92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO
PORTIONS ONLY TO SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL
STOCKHOLDER.-- 1. A stockholder of record may assert dissenter's rights as
to fewer than all of the shares registered in his name only if he dissents
with respect to all shares beneficially owned by any one person and
notifies the subject corporation in writing of the name and address of each
person on whose behalf he asserts dissenter's rights. The rights of a
partial dissenter under this subsection are determined as if the shares as
to which he dissents and his other shares were registered in the names of
different stockholders. 2. A beneficial stockholder may assert dissenter's
rights as to shares held on his behalf only if: (a) He submits to the
subject corporation the written consent of the stockholder of record to the
dissent not later than the time the beneficial stockholder asserts
dissenter's rights; and (b) He does so with respect to all shares of which
he is the beneficial stockholder or over which he has power to direct the
vote.
NRS 92A.410 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF
DISSENT.-- 1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting
must state that stockholders are or may be entitled to assert dissenters'
rights under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a
copy of those sections.
2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders,
the domestic corporation shall notify in writing all stockholders entitled
to assert dissenters' rights that the action was taken and send them the
dissenter's notice described in NRS 92A.430.
NRS 92A.420 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.-- 1.
If a proposed corporate action creating dissenters' rights is submitted to
a vote at a stockholders' meeting, a stockholder who wishes to assert
dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is
taken, written notice of his intent to demand payment for his shares if the
proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of
subsection 1 and NRS 92A.400 is not entitled to payment for his shares
under this chapter.
NRS 92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED
TO ASSERT RIGHTS; CONTENTS.-- 1. If a proposed corporate action creating
dissenters' rights is authorized at a stockholders' meeting, the subject
corporation shall deliver a written dissenter's notice to all stockholders
who satisfied the requirements to assert those rights.
2. The dissenter's notice must be sent no later than 10 days after
the effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and
when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates
to what extent the transfer of the shares will be restricted after the
demand for payment is received;
(c) Supply a form for demanding payment that includes the date of
the first announcement to the news media or to the stockholders of the
terms of the proposed action and requires that the person asserting
dissenter's rights certify whether or not he acquired beneficial ownership
of the shares before that date;
(d) Set a date by which the subject corporation must receive the
demand for payment, which may not be less than 30 nor more than 60 days
after the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
NRS 92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES;
RETENTION OF RIGHTS OF STOCKHOLDER.-- 1. A stockholder to whom a
dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms
of the notice.
2. The stockholder who demands payment and deposits his
certificates, if any, before the proposed corporate action is taken retains
all other rights of a stockholder until those rights are canceled or
modified by the taking of the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter.
NRS 92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER
AFTER DEMAND FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.-- 1. The
subject corporation may restrict the transfer of shares not represented by
a certificate from the date the demand for their payment is received.
2. The person for whom dissenter's rights are asserted as to
shares not represented by a certificate retains all other rights of a
stockholder until those rights are canceled or modified by the taking of
the proposed corporate action.
NRS 92A.460 PAYMENT FOR SHARES: GENERAL REQUIREMENTS.-- 1. Except
as otherwise provided in NRS 92A.470, within 30 days after receipt of a
demand for payment, the subject corporation shall pay each dissenter who
complied with NRS 92A.440 the amount the subject corporation estimates to
be the fair value of his shares, plus accrued interest. The obligation of
the subject corporation under this subsection may be enforced by the
district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its
registered office in this state, of the county where the dissenter resides
or has its registered office. The court shall dispose of the complaint
promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of payment, a
statement of income for that year, a statement of changes in the
stockholders' equity for that year and the latest available interim
financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair
value of the shares; (c) An explanation of how the interest was
calculated; (d) A statement of the dissenter's rights to demand
payment under NRS 92A.480; and (e) A copy of NRS 92A.300 to
92A.500, inclusive.
NRS 92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE
OF DISSENTER'S NOTICE. -- 1. A subject corporation may elect to withhold
payment from a dissenter unless he was the beneficial owner of the shares
before the date set forth in the dissenter's notice as the date of the
first announcement to the news media or to the stockholders of the terms of
the proposed action.
2. To the extent the subject corporation elects to withhold
payment, after taking the proposed action, it shall estimate the fair value
of the shares, plus accrued interest, and shall offer to pay this amount to
each dissenter who agrees to accept it in full satisfaction of his demand.
The subject corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the
interest was calculated, and a statement of the dissenters' right to demand
payment pursuant to NRS 92A.480.
NRS 92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF
SUBJECT CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE.-- 1. A dissenter may
notify the subject corporation in writing of his own estimate of the fair
value of his shares and the amount of interest due, and demand payment of
his estimate, less any payment pursuant to NRS 92A.460, or reject the offer
pursuant to NRS 92A.470 and demand payment of the fair value of his shares
and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of
his shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for
his shares.
NRS 92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF
SUBJECT CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.-- 1. If a demand
for payment remains unsettled, the subject corporation shall commence a
proceeding within 60 days after receiving the demand and petition the court
to determine the fair value of the shares and accrued interest. If the
subject corporation does not commence the proceeding within the 60-day
period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.
2. A subject corporation shall commence the proceeding in the
district court of the county where its registered office is located. If the
subject corporation is a foreign entity without a resident agent in the
state, it shall commence the proceeding in the county where the registered
office of the domestic corporation merged with or whose shares were
acquired by the foreign entity was located.
3. The subject corporation shall make all dissenters, whether or
not residents of Nevada, whose demands remain unsettled, parties to the
proceeding as in an action against their shares. All parties must be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
4. The jurisdiction of the court in which the proceeding is
commenced under subsection 2 is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
a decision on the question of fair.
5. Each dissenter who is made a party to the proceeding is
entitled to a judgment:
(a) For the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the subject
corporation; or
(b) For the fair value, plus accrued interest, of his
after-acquired shares for which the subject corporation elected to withhold
payment pursuant to NRS 92A.470.
NRS 92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT
OF COSTS AND FEES. -- 1. The court in a proceeding to determine fair value
shall determine all of the costs of the proceeding, including the
reasonable compensation and expenses of any appraisers appointed by the
court. The court shall assess the costs against the subject corporation,
except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously or not in good faith in
demanding payment.
2. The court may also assess the fees and expenses of the counsel
and experts for the respective parties, in amounts the court finds
equitable:
(a) Against the subject corporation and in favor of all dissenters
if the court finds the subject corporation did not substantially comply
with the requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor
of any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously or not in good
faith with respect to the rights provided by NRS 92A.300 to 92A.500,
inclusive.
3. If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be assessed
against the subject corporation, the court may award to those counsel
reasonable fees to be paid out of the amounts awarded to the dissenters who
were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court
may assess the costs against the subject corporation, except that the court
may assess costs against all or some of the dissenters who are parties to
the proceeding, in amounts the court finds equitable, to the extent the
court finds that such parties did not act in good faith in instituting the
proceeding.
5. This section does not preclude any party in a proceeding
commenced pursuant to NRS 92A.460 or 92A.490 from applying the provisions
of N.R.C.P. 68 or NRS 17.115.
