E xhibit 10.1
CONTRIBUTION
AGREEMENT
by and between
DLJ MB IV HRH, LLC
a Delaware limited liability
company
and
Morgans Hotel Group Co.
a Delaware corporation
Dated as of November 7,
2006
TABLE OF
CONTENTS
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1.
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DEFINITIONS
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2
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2.
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CLOSING
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6
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3.
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EVENTS OCCURRING ON OR PRIOR TO THE CLOSING
DATE
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6
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3.1.
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Organization of Holdings and Assignment of
Rights
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6
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3.2.
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Initial Capital Contributions
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7
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3.3.
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Deliveries by DLJMB
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7
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3.4.
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Deliveries by Morgans
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7
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3.5.
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Deliveries by Holdings
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8
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4.
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CLOSING CONDITIONS
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8
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4.1.
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Conditions Precedent to Obligations of
DLJMB
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8
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4.2.
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Conditions Precedent to Obligations of
Morgans
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9
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5.
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REPRESENTATIONS AND WARRANTIES OF
DLJMB
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10
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5.1.
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Organization, Good Standing
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10
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5.2.
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Authorization; No Breach
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10
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5.3.
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Brokerage
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10
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5.4.
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Investment Representation
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10
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5.5.
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Sufficient Funds
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11
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5.6.
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Hart-Scott-Rodino
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11
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5.7.
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Equity Commitment Letter
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11
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5.8.
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Litigation
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11
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5.9.
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No Other Representations and
Warranties
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11
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6.
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REPRESENTATIONS AND WARRANTIES OF THE MORGANS
PARTIES
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12
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6.1.
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Organization, Good Standing,
Qualification
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12
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6.2.
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Authorization; No Breach
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12
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6.3.
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No Knowledge of Misrepresentations or
Omissions
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12
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6.4.
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Litigation
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13
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6.5.
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Escrow Deposits
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13
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6.6.
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Casino Lease
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13
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6.7.
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Brokerage
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14
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6.8.
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Investment Representation
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14
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6.9.
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Credit Facility Commitment Letter
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14
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6.10.
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No Prior Activities
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14
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6.11.
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No Other Representations and
Warranties
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15
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7.
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ADDITIONAL COVENANTS
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15
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7.1.
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Access to Information
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15
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7.2.
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Payment of Expenses by Holdings
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15
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7.3.
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Actions Relating to the Acquisition
Agreements
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16
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7.4.
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Actions with Respect to Debt
Financing
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17
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7.5.
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Gaming Approvals
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18
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i
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7.6.
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Exclusivity
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18
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7.7.
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Cooperation by DLJMB
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19
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7.8.
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Actions with Respect to Equity
Financing
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19
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7.9.
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Actions with Respect to Casino Lease
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19
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8.
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TERMINATION
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19
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8.1.
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Termination
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19
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8.2.
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Effect of Termination
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20
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8.3.
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Escrow Deposits
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21
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9.
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INDEMNIFICATION
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22
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9.1.
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Survival of Representations and
Warranties
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22
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9.2.
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General Indemnification
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23
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9.3.
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Survival
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25
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10.
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MISCELLANEOUS
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25
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10.1.
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Public Statements
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25
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10.2.
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Injunctive Relief
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25
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10.3.
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Governing Law/Choice of Law and Forum
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25
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10.4.
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Entire Agreement; Amendment; Waiver
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25
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10.5.
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Binding Effect/Nonassignment
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25
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10.6.
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Invalidity of Provision
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26
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10.7.
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Notices
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26
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10.8.
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Headings; Execution in Counterparts
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27
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10.9.
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No Strict Construction
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27
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10.10.
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Survival
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27
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LIST OF EXHIBITS
Exhibits
Referenced
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A
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FORM OF LLC AGREEMENT
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B
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ACQUISITION AGREEMENTS
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C
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FORM OF MANAGEMENT AGREEMENT
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D
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MERGER AGREEMENT
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E
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FORM OF TECHNICAL SERVICES AGREEMENT
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F
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CASINO LEASE
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G
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PROPOSED TRANSACTION STRUCTURE CHART
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H
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EQUITY COMMITMENT LETTER
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ii
CONTRIBUTION
AGREEMENT
THIS CONTRIBUTION AGREEMENT (the
“ Agreement ”) is made and entered into as of
November 7, 2006 (the “ Effective Date ”) by and
between DLJ MB IV HRH, LLC, a Delaware limited liability company
(“ DLJMB ”), and Morgans Hotel Group, Co., a
Delaware corporation (“ Morgans ”). Capitalized
terms not otherwise defined in this Agreement shall have the
respective meanings specified in the form of Limited Liability
Company Agreement attached hereto as Exhibit A (the “
LLC Agreement ”).
RECITALS
A.
Hard Rock Holdings, LLC, a Delaware limited liability company
(“ Holdings ”), will be formed to effect the
acquisition of the Hard Rock Hotel & Casino (the “
Hotel/Casino ”) in Las Vegas, Nevada, including (a)
the capital stock of Hard Rock Hotel, Inc.; (b) the approximately
twenty-three (23) acres of land adjacent thereto and all related
entitlements; (c) the land under the Hard Rock Café site
located adjacent to the Hotel/Casino; (d) certain intellectual
property and trademarks; and (e) any other assets being acquired by
the Morgans Parties under the Merger Agreement or any related
agreements with Peter Morton, PM Realty, LLC, Red, White and Blue
Pictures, Inc. and HR Condominium Investors (Vegas), LLC, as
applicable (collectively, as more specifically described in the
Acquisition Agreements (as defined below) the “ Acquired
Assets ”). Upon the acquisition of the Acquired
Assets (the “ Acquisition ”), Holdings will own,
manage, renovate and develop such Acquired Assets.
B.
The Morgans Parties (as defined below) previously entered into
agreements for the purchase of the Acquired Assets (together with
all documents, instruments, certificates, schedules and exhibits
attached or related thereto, as each may be amended, modified or
supplemented from time to time in accordance with the provisions of
this Agreement, the “ Acquisition Agreements ,”
each of which is set forth on Exhibit B ).
C.
As set forth in, and subject to the terms of, this Agreement, the
Morgans Parties intend to assign all of their right, title and
interest in the Acquisition Agreements and the Acquired Assets to
Holdings, and Holdings will assume the Acquisition
Agreements.
D.
On the Closing Date, and subject to the terms of this Agreement,
(a) DLJMB will contribute, and will cause DLJMB LLC to contribute
the DLJMB Initial Capital Commitment to Holdings and (b) Morgans
will be deemed to have contributed the Morgans Initial Capital
Commitment to Holdings, in each case in exchange for the respective
Percentage Interest, as adjusted from time to time, and on the
terms and subject to the conditions set forth in the LLC
Agreement.
E.
Following the consummation of the transactions contemplated by this
Agreement and the Acquisition Agreements, and subject to the terms
of this Agreement, Morgans Management shall manage the Hard Rock
Hotel and Casino pursuant to the terms and conditions of the form
of Management Agreement attached hereto as Exhibit C
.
1
AGREEMENT
NOW, THEREFORE, for and in
consideration of the foregoing premises, and the mutual
representations, warranties, covenants, agreements and undertakings
herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1.
DEFINITIONS
For purposes of this
Agreement:
“Acquired
Assets” has the
meaning specified in the Recitals.
“Acquisition”
has the meaning specified in the
Recitals.
“Acquisition
Agreements” has the
meaning specified in the Recitals.
“Affiliate” means, as to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under
common control with such first Person. For the purposes of
this Agreement, a Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management, policies and/or
decision making of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
“Agreement” has the meaning specified in the
Preamble.
“Assignment
Agreements” has the
meaning set forth in Section 3.1(b) .
“Breach”
means, with respect to a
representation, warranty, covenant, obligation or other provision,
any inaccuracy in or breach of, or any failure to comply with or
perform, such representation, warranty, covenant, obligation or
other provision.
“Break Up
Amount” means (a)
for the period beginning on the termination date of the Merger
Agreement through the second anniversary thereof, an amount, not to
exceed Twenty Five Million Dollars ($25,000,000), equal to fifty
percent (50%) of the aggregate amount of funds released to the
Selling Parties from the escrows established under the Escrow
Agreements; and (b) for the period after the second anniversary of
the termination date of the Merger Agreement, Twenty Five Million
Dollars ($25,000,000), less fifty percent (50%) of any amounts
released from such escrows to the Morgans Parties, in each case,
exclusive of any interest or other investment income earned thereon
from and after May 11, 2006.
“Casino
Lease” means that
certain Casino Sublease attached hereto as Exhibit F , dated
as of November 6, 2006, among Merger Sub, Morgans and Golden HRC,
LLC or, in the event that Golden HRC, LLC does not receive the
Gaming Approvals before Closing, such other casino lease as
Holdings or an Affiliate of Holdings enters into with another
lessee on terms taken as a whole no less favorable to Holdings or
such Affiliate in any material respect, as amended, modified or
supplemented in accordance with the terms of this
Agreement.
“Claim”
has the meaning specified in
Section 9.2(d) .
2
“Closing”
has the meaning specified in
Section 2 .
“Closing
Date” has the
meaning specified in Section 2 .
“Credit Facility Commitment
Letter” means the
commitment letter from Column Financial, Inc., dated as of May 11,
2006, pursuant to which Column Financial committed to provide a
credit facility with an aggregate principal amount equal to the
lesser of Seven Hundred Million Dollars ($700,000,000) and
eighty-two and one half percent (82.5%) of the capitalized cost of
the Acquisition, as amended, modified or supplemented from time to
time in accordance with this Agreement, or any substitute
commitment letter or definitive agreement, entered into by the
Morgans Parties or Holdings in accordance with Section 7.4
.
“Debt
Financing” has the
meaning specified in Section 6.9 .
“DLJMB”
has the meaning specified in the
Preamble.
“DLJMB Condition
Failure” has the
meaning specified in Section 8.1(c) .
“DLJMB
Expenses” has the
meaning specified in Section 7.2 .
“DLJMB Initial Capital
Commitment” has the
meaning specified in Section 3.2(a) .
“DLJMB
LLC” means the
entity identified as DLJMB VoteCo, LLC, a Delaware limited
liability company, in the LLC Agreement.
“DLJMB Termination
Notices” has the
meaning specified in Section 7.3 .
“DLJMB’s
Cap” has the
meaning set forth in Section 9.2(b) .
“Effective
Date” has the
meaning set forth in the Preamble.
“Encumbrance”
means any lien, pledge,
hypothecation, charge, mortgage, security interest, encumbrance,
equity, trust, equitable interest, claim, preference, right of
possession, lease, tenancy, license, encroachment, covenant,
infringement, interference, Order, proxy, option, right of first
refusal, preemptive right, community property interest, legend,
defect, impediment, exception, reservation, limitation, impairment,
imperfection of title, condition or restriction of any nature
(including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset,
any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of
ownership of any asset).
“Entity”
means any corporation (including any
nonprofit corporation), general partnership, limited partnership,
limited liability partnership, joint venture, estate, trust or
company (including any limited liability company or joint stock
company).
“Equity Commitment
Letter” means the
commitment letter attached hereto as Exhibit H from DLJ
Merchant Banking Partners IV, L.P. and certain of its affiliated
entities dated as of November 7, 2006, pursuant to which such
entities committed to provide One
3
Hundred Million Dollars
($100,000,000) of equity capital to DLJMB in connection with the
transactions contemplated by this Agreement.
“Escrow
Agreements” means,
collectively, the Escrow Agreement dated May 11, 2006 by and among
Lily Pond Investments, Inc., Morgans, and Chicago Title Agency of
Nevada, Inc. and the Escrow Agreement dated May 11, 2006 by and
among PM Realty, LLC, Red, White and Blue Pictures, Inc., Peter A.
Morton, 510 Development Corporation, Morgans Group LLC, and Chicago
Title Agency of Nevada, Inc.
“Escrow
Deposits” means the
aggregate amount of Fifty Million Dollars ($50,000,000) deposited
into escrow by the Morgans Parties pursuant to the Acquisition
Agreements, plus any interest accrued thereon from and after the
date of such deposit in accordance with the Acquisition
Agreements.
“Financing Waiver
Date” has the
meaning specified in Section 4.1(f) .
“Gaming
Approvals” means
all licenses, permits, approvals, authorizations, registrations,
findings of suitability, franchises, entitlements, waivers and
exemptions issued by any Gaming Authority required to permit the
parties hereto to consummate the transactions contemplated by this
Agreement, including for the avoidance of doubt, all liquor
licenses and all such approvals issued by a Gaming Authority as may
be required to permit the operation under the Casino Lease of the
casino at the Hotel/Casino.
“Gaming
Authorities” means
any governmental authority or agency with regulatory control or
jurisdiction over the conduct of lawful gaming or gambling,
including the Nevada Gaming Commission, the Nevada State Gaming
Control Board and the Clark County Liquor and Gaming Licensing
Board.
“Governmental
Body” means any (a)
nation, principality, state, province, territory, county,
municipality, district or other jurisdiction of any nature; (b)
Federal, state, local, municipal, foreign or other government; or
(c) individual, Entity or body exercising, or entitled to exercise,
any executive, legislative, judicial, administrative, regulatory,
police, military or taxing authority or power of any
nature.
“Holdings”
has the meaning specified in the
Recitals.
“Hotel/Casino”
has the meaning specified in the
Recitals.
“Indemnitee” has the meaning specified in Section
9.2(d) .
“Indemnitor” has the meaning specified in Section
9.2(d) .
“Initial Capital
Commitments” means
the DLJMB Initial Capital Commitment and the Morgans Initial
Capital Commitment as set forth in Section 3.2(a)
.
“ Knowledge ”
means the actual knowledge of Edward Scheetz, Marc Gordon, David
Smail, Jennifer Nellany, Matt Armstrong, Arthur Blee and Ana
Nekhamkin after
4
reasonable inquiry; and the
knowledge of no other Person shall be imputed to any such
individual.
“LLC
Agreement” has the
meaning specified in the Preamble.
“Loss”
or “Losses” means
any loss, liability, demand, claim, action, cause of action, cost,
damage, diminution in value, deficiency, tax, penalty, fine or
expense, whether or not arising out of third party claims
(including interest, penalties, reasonable attorneys’ fees
and expenses and all amounts paid in investigation, defense or
settlement of any of the foregoing and the enforcement of any
rights hereunder).
“Management
Agreement” means
that certain Hotel Management Agreement in substantially the form
attached hereto as Exhibit C to be entered into at the
Closing by Morgans Management, Holdings and the other parties
thereto.
“Material Adverse
Effect” has the
meaning specified in the Merger Agreement.
“Merger
Agreement” means
that certain Agreement and Plan of Merger, dated May 11, 2006, by
and among Morgans, MHG HR Acquisition Corp., Hard Rock Hotel, Inc.
and Peter H. Morton as attached to this Agreement as Exhibit
D , as amended, modified or supplemented from time to time in
accordance with this Agreement.
“Merger
Sub” has the
meaning specified in Section 6.6 .
“Morgans”
has the meaning specified in the
Preamble.
“Morgans Condition
Failure” has the
meaning specified in Section 8.1(b) .
“Morgans
Expenses” has the
meaning specified in Section 7.2 .
“Morgans Initial Capital
Commitment” shall
have the meaning specified in Section 3.2(b) .
“Morgans
Management” shall
mean Morgans Hotel Group Management LLC, a Delaware limited
liability company.
“Morgans
Parties” means,
collectively, Morgans and any Affiliate of Morgans that is a party
to any of the Acquisition Agreements or any of the Exhibits to this
Agreement; provided , however , that Holdings shall
not be deemed to be a Morgans Party.
“Order”
means any (a) order, judgment,
injunction, edict, decree, ruling, subpoena, writ or award that is
or has been issued, made, entered, rendered or otherwise put into
effect by or under the authority of any court, administrative
agency or other Governmental Body or any arbitrator or arbitration
panel; or (b) contract or agreement with any Governmental Body that
is or has been entered into in connection with any
proceeding.
“Percentage
Interest” means the
percentage interests in Holdings specified in Exhibit E of the LLC
Agreement.
5
“Person”
means any individual, Entity or
Governmental Body.
“Proposed Transaction
Structure Chart” means the Proposed Transaction Structure Chart
attached hereto as Exhibit G , as may be modified from time
to time by Morgans with the prior written consent of DLJMB, which
consent shall not be unreasonably withheld, delayed or
conditioned.
“Securities
Act” means the
Securities Act of 1933, as amended.
“Selling
Parties” means,
collectively, Hard Rock Hotel, Inc., Peter H. Morton, PM Realty,
LLC, Red, White and Blue Pictures, Inc. and HR Condominium
Investors (Vegas), L.L.C.
“Technical Services
Agreement” means
that certain Technical Services Agreement in substantially the form
attached hereto as Exhibit E to be entered into at Closing
by Morgans Management, Holdings and the other parties thereto with
such changes and modifications as may be mutually agreed in
writing.
2.
CLOSING
If the conditions in Article
4 have been satisfied or waived, then the closing of the
contribution of assets provided for in this Agreement (the “
Closing ”) shall be held at the offices of Wachtell,
Lipton, Rosen & Katz, 51 West 52 nd Street, New York, New York 10019, on the
same date as the closing of the transactions contemplated by the
Merger Agreement, at 9:00 a.m. New York time, or at such other time
and place as may be fixed by mutual agreement of all the parties
hereto (the “ Closing Date ”).
3.
EVENTS OCCURRING ON OR PRIOR TO THE CLOSING DATE
3.1.
Organization of Holdings and
Assignment of Rights .
On or prior to the Closing
Date:
(a)
Morgans shall cause Holdings to be formed as a limited liability
company under the laws of the State of Delaware, and shall take
such other steps as may be necessary to form the subsidiaries
contemplated in the Proposed Transaction Structure
Chart.
(b)
The Morgans Parties shall assign all of their right, title and
interest in the Acquisition Agreements to Holdings and Morgans and
DLJMB shall cause Holdings to (i) assume all of the obligations of
the Morgans Parties thereunder and (ii) indemnify the Morgans
Parties from and against any Losses in connection therewith (except
to the extent Morgans has indemnity or other contractual
obligations to DLJMB with respect to such Losses under this
Agreement) pursuant to one or more assignment, transfer and
conveyance agreements in form and substance reasonably satisfactory
to the Morgans Parties and DLJMB (collectively, the “
Assignment Agreements ”). At the Closing, the
Escrow Deposits shall be credited towards the purchase price of the
Acquisition (as described in the Acquisition Agreements) and DLJMB
and Morgans shall cause Holdings to pay to Morgans the entire
amount by which the amount of the Escrow Deposits exceeds the
amount of the Morgans Initial Capital Commitment.
6
3.2.
Initial Capital
Contributions .
(a)
DLJMB Initial Capital Contribution . At the
Closing, DLJMB and DLJMB LLC shall contribute to Holdings an
aggregate of One Hundred Million Dollars ($100,000,000) in cash
(the “ DLJMB Initial Capital Commitment ”) via
wire transfer of immediately available funds to a bank account of
Holdings designated by Morgans at least three (3) business days
before Closing.
(b)
Morgans Initial Capital
Contribution . At the Closing, Morgans shall
contribute to Holdings an aggregate of Fifty Million Dollars
($50,000,000) in cash (the “ Morgans Initial Capital
Commitment ”); provided , however , that
the amount to be contributed by Morgans at Closing pursuant to this
Section 3.2(b) shall be deemed satisfied by the application
of the Escrow Deposits as contemplated by Section 3.1(b) ,
to the extent that the amount of the Escrow Deposits credited is
equal to or greater than Fifty Million Dollars
($50,000,000).
3.3.
Deliveries by DLJMB . On the Closing Date,
DLJMB shall execute and deliver, or cause to be executed and
delivered, as applicable, the following:
(a)
LLC Agreement . Two originals of the LLC Agreement to
Morgans, each duly executed by DLJMB and DLJMB LLC, substantially
in the form attached hereto as Exhibit A .
(b)
DLJMB Initial Capital Commitment . The DLJMB Initial Capital
Commitment to Holdings.
(c)
Officer’s Certificate . An officer of DLJMB
shall deliver to Morgans an officer’s certificate confirming,
with respect to DLJMB, the items set forth in (a) and (b) of
Section 4.2 .
3.4.
Deliveries by Morgans . On the Closing Date,
Morgans shall execute and deliver, or cause to be executed and
delivered, as applicable, the following:
(a)
LLC Agreement . Two originals of the LLC Agreement to
DLJMB, each duly executed by Morgans.
(b)
Management Agreement . Two originals of the Management
Agreement to DLJMB, each duly executed by Morgans
Management.
(c)
Technical Services Agreement . Two originals of the
Technical Services Agreement to DLJMB, each duly executed by
Morgans Management.
(d)
Morgans Initial Capital Commitment . Officers of the
Morgans Parties shall deliver to DLJMB an officers’
certificate confirming that the Morgans Initial Capital Commitment
has been credited to the purchase price of the
Acquisition.
7
(e)
Officer’s Certificate . An officer of Morgans
shall deliver to DLJMB an officer’s certificate confirming,
with respect to Morgans, the items set forth in (a) and (b) of
Section 4.1 .
(f)
Assignment Agreements . Two originals of each
Assignment Agreement to DLJMB, each duly executed by the applicable
Morgans Parties, as assignors.
3.5.
Deliveries by Holdings . On the Closing Date,
Morgans and DLJMB shall cause Holdings to execute and deliver the
following:
(a)
Assignment Agreements . Two originals of each
Assignment Agreement to DLJMB and Morgans, each duly executed by
Holdings, as assignee.
(b)
LLC Agreement . Two originals of the LLC Agreement to
each of DLJMB and Morgans, each duly executed by
Holdings.
(c)
Management Agreement . Two originals of the Management
Agreement to each of DLJMB, Morgans, and Morgans Management, each
duly executed by Holdings.
(d)
Technical Services Agreement . Two originals of the
Technical Services Agreement to each of DLJMB, Morgans, and Morgans
Management, each duly executed by Holdings.
4.
CLOSING CONDITIONS
4.1.
Conditions Precedent to Obligations of DLJMB .
The
obligations of DLJMB to execute and deliver the LLC Agreement and
to pay the DLJMB Initial Capital Commitment in accordance with
Section 3.2(a) shall be subject to the satisfaction on or
prior to the Closing Date, of the following conditions, any of
which may be waived, in writing, by DLJMB in its
discretion:
(a)
All of the representations and warranties of the Morgans Parties
contained in Article 6 of this Agreement shall be true and
correct in all material respects on the date of this Agreement and,
in the case of the representations and warranties contained in
Sections 6.1 , 6.2 , 6.5 , 6.6 ,
6.7 , 6.8 , 6.9 , 6.10 and 6.11
of this Agreement only, on the Closing Date (other than with
respect to matters consented to in writing by DLJMB in accordance
with this Agremeent) as if made at and as of such date (or, in the
case of representations and warranties which address matters only
as of a particular date, as of such date);
(b)
The Morgans Parties shall have complied with and performed in all
material respects all of their respective covenants contained
herein which are to be performed by them on or prior to the Closing
Date;
(c)
All of the conditions to the obligations of the Morgans Parties to
close under the Merger Agreement (as set forth in Section 5.1 and
5.2 of the Merger Agreement) shall have been satisfied and the
transactions contemplated by such agreements shall occur
concurrently with the Closing hereunder;
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(d)
There shall be no temporary restraining order or preliminary or
permanent injunction of any court or administrative agency of
competent jurisdiction prohibiting the consummation of any
transactions contemplated by this Agreement;
(e)
Either (i) Golden HRC, LLC or one of its Affiliates shall have
obtained the Gaming Approvals or (ii) Holdings (or a direct or
indirect subsidiary of Holdings) shall have entered into a Casino
Lease with another casino operator and such other casino operator
shall have obtained the Gaming Approvals such that the casino at
the Hard Rock Hotel & Casino is able to be open for business on
the date following the Closing Date; and
(f)
DLJMB in its sole and absolute discretion shall have been satisfied
based on one or more financing proposals, term sheet or other
discussions with lenders that there will be available on or prior
to the Outside Date the proceeds from one or more bank, mezzanine,
CMBS or other debt facilities in an amount sufficient (as
determined by DLJMB in its sole and absolute discretion based on
its anticipated requirements concerning the sources and uses of
funds) to permit Holdings to (i) consummate the Acquisition and pay
all expenses related thereto, (ii) finance the ongoing operations
of Holdings and its subsidiaries, (iii) finance the development and
construction of the proposed Expansion Project (as defined in the
LLC Agreement), including any modifications thereto contemplated by
DLJMB, in the manner which DLJMB considers appropriate, and (iv) to
pay all such other costs, liabilities and amounts as DLJMB
considers necessary or appropriate, in each case, on terms and
conditions (including, without limitation, as to required equity
amounts, guarantees and similar matters) which are acceptable to
DLJMB in its sole and absolute discretion; provided ,
however , that, notwithstanding anything in this Agreement
that would otherwise require notice, the condition contained in
this clause (f) shall be deemed to have been permanently satisfied
automatically and with no further action being required by any of
the parties for all purposes hereunder if DLJMB has not notified
Morgans of its election to terminate this Agreement pursuant to
Section 8.1(c) hereof on or prior to 5:00 p.m. Eastern
Standard Time on Monday, November 20, 2006 (the “
Financing Waiver Date ”).
4.2.
Conditions Precedent to Obligations of Morgans .
The
obligations of Morgans to execute and deliver the LLC Agreement and
to pay the Morgans Initial Capital Commitment in accordance with
Section 3.2(a) shall be subject to the satisfaction on or
prior to the Closing Date, of the following conditions, any of
which may be waived, in writing, by Morgans in its
discretion:
(a)
The representations and warranties of DLJMB contained in Article
5 of this Agreement shall be true and correct in all material
respects both on the date of this Agreement and the Closing Date as
if made at and as of such date (or, in the case of representations
and warranties which address matters only as of a particular date,
as of such date);
(b)
DLJMB shall have complied with and performed in all material
respects, its covenants contained herein which are to be performed
by DLJMB on or prior to the Closing Date;
(c)
All of the conditions to the obligations of any of the Morgans
Parties to close under the Merger Agreement (as set forth in
Section 5.1 and 5.2 of the Merger Agreement)
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shall have been
satisfied and the transactions contemplated by such agreements
shall occur concurrently with the Closing hereunder;
and
(d)
There shall be no temporary restraining order or preliminary or
permanent injunction of any court or administrative agency of
competent jurisdiction prohibiting the consummation of any
transactions contemplated by this Agreement.
5.
REPRESENTATIONS AND WARRANTIES OF DLJMB
Except as specifically set forth in
certain schedules provided by DLJMB to Morgans and attached to this
Agreement, which are numbered to correspond to the Section numbers
of this Agreement, DLJMB hereby represents and warrants to Morgans
as of the Effective Date and as of the Closing Date as
follows:
5.1.
Organization, Good Standing . DLJMB is a Delaware
limited liability company, duly organized, validly existing and in
good standing under the laws of its jurisdiction of
organization. DLJMB has the requisite power and authority
necessary to carry out the transactions contemplated by this
Agreement.
5.2.
Authorization; No Breach . This Agreement has
been duly authorized, executed and delivered by DLJMB.
Assuming that this Agreement is a valid and binding obligation of
Morgans, this Agreement constitutes a valid and binding obligation
of DLJMB, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy laws, other similar
laws affecting creditors’ rights and general principles of
equity affecting the availability of specific performance and other
equitable remedies. The execution, delivery and performance
by DLJMB of this Agreement does not and shall not (i) conflict with
any of the provisions of the articles of incorporation, bylaws or
similar organizational documents of DLJMB (ii) conflict with,
result in a breach of the terms, conditions or provisions of, or
constitute a default under (whether with or without the passage of
time, the giving of notice or both) any agreement, contract or
instrument to which DLJMB is subject, (iii) result in the
creation of any lien or Encumbrance upon Holdings’ equity
interests or assets or any equity interests or assets that comprise
part of the Acquired Assets, other than as contemplated herein or
by the Credit Facility Commitment Letter, (iv) result in a
violation of any law, statute, rule, regulation, order, judgment or
decree to which DLJMB is subject or (v) require any
authorization, consent, approval, exemption or other action by or
notice or declaration to, or filing with, any third party or any
Governmental Body.
5.3.
Brokerage . There are no claims
for brokerage commissions, finders’ fees or similar
compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on
behalf of DLJMB or any of its respective Affiliates.
5.4.
Investment Representation . Each of DLJMB and
DLJMB LLC is making the DLJMB Initial Capital Commitment for its
own account with the present intention of holding its interests in
Holdings for investment purposes and not with a view to or for sale
in connection with any public distribution of such interests in
violation of any federal or state securities laws. Each of
DLJMB and DLJMB LLC is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act.
Each of DLJMB and DLJMB LLC acknowledges that it
10
is informed as to
the risks of the transactions contemplated hereby and of ownership
of interests in Holdings. Each of DLJMB and DLJMB LLC
acknowledges that the interests in Holdings have not been
registered under the Securities Act or any state or foreign
securities laws and that such interests may not be sold,
transferred, offered for sale, pledged hypothecated or otherwise
disposed of unless such transfer, sale, assignment, pledge,
hypothecation or other disposition is pursuant to the terms of an
effective registration statement under the Securities Act and are
registered under any applicable state or foreign securities laws or
pursuant to an exemption from registration under the Securities Act
and any applicable state or foreign securities laws.
5.5.
Sufficient Funds . DLJMB and DLJMB LLC
have (and at Closing will have) sufficient unrestricted cash
available to enable them to satisfy their respective obligations
hereunder on and after the Closing Date.
5.6.
Hart-Scott-Rodino . Neither DLJMB nor DLJMB LLC
is required to make a filing under Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “ HSR Act
”), in connection with the Acquistion or the performance of
DLJMB’s obligations under this Agreement.
5.7.
Equity Commitment Letter . A true and correct
copy of the Equity Commitment Letter is attached hereto as
Exhibit H . Pursuant to the Equity Commitment Letter,
DLJ Merchant Banking Partners IV, L.P. and certain of its
affiliated entities have agreed to provide DLJMB an aggregate
amount of equity financing for the transactions contemplated by
this Agreement equal to One Hundred Million Dollars
($100,000,000). The Equity Commitment Letter has not been
amended, modified or supplemented and is in full force and effect
and no event has occurred which, with or without notice, the lapse
of time or both, would constitute a default on the part of DLJMB
under the Equity Commitment Letter. There are no conditions
precedent or other contingencies related to the funding of the full
amount of such equity, other than as set forth in the Equity
Commitment Letter.
5.8.
Litigation . There are no actions,
suits, proceedings, orders or claims pending, or to the knowledge
(after reasonable inquiry) of DLJMB, threatened in writing against
DLJMB or DLJMB LLC at law or in equity, by any Person or before or
by any Governmental Body which would reasonably be expected to
materially adversely affect DLJMB’s performance under this
Agreement, which relate to the transactions contemplated by this
Agreement or which would reasonably be expected to materially
adversely affect the consummation of the transactions contemplated
by this Agreement.
5.9.
No Other Representations and Warranties .
Other
than the representations and warranties expressly set forth in this
Article 5 , DLJMB shall not be deemed to have made any
other representation or warranty to Morgans in connection with this
Agreement or the transactions contemplated hereby, and no other
Person shall be deemed to have made any representation or warranty
to Morgans in connection with this Agreement or the transactions
contemplated hereby.
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6.
REPRESENTATIONS AND WARRANTIES OF THE MORGANS
PARTIES
Except as specifically set forth in
certain schedules provided by the Morgans Parties to DLJMB and
attached to this Agreement, which are numbered to correspond to the
Section numbers of this Agreement, Morgans hereby represents and
warrants to DLJMB as of the Effective Date as follows (provided,
that the representations and warranties set forth in
Sections 6.3 and 6.4 shall be true and correct
only as of the Effective Date and shall not be deemed to be made as
of the Closing Date:
6.1.
Organization, Good Standing, Qualification
. Morgans is a Delaware
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization. Morgans
has the requisite power and authority necessary to carry out the
transactions contemplated by this Agreement.
6.2
Authorization; No Breach . This Agreement has been duly authorized,
executed and delivered by Morgans. No vote of the
shareholders of Morgans is required for Morgans to authorize,
execute, deliver and perform this Agreement. Assuming that
this Agreement is a valid and binding obligation of DLJMB, this
Agreement constitutes a valid and binding obligation of Morgans,
enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy laws, other similar laws affecting
creditors’ rights and general principles of equity affecting
the availability of specific performance and other equitable
remedies. Except as set forth on Schedule 6.2 , the
execution, delivery and performance by Morgans of this Agreement
(including, without limitation, the assignment of the Morgans
Parties’ rights under the Acquisition Agreements to Holdings)
does not and shall not (i) conflict with any of the provisions of
the articles of incorporation or bylaws of Morgans
(ii) conflict with, result in a
