As filed with the Securities and Exchange Commission on _______ __, 1999
Registration No. 333-81613
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------------------------
Riviera Black Hawk, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Colorado 0000899647 86-0886265
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
-------------------------------------------
444 Main Street
Black Hawk, Colorado 80422
(303) 582-1000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------------------------
William L. Westerman
Chief Executive Officer and Director
Riviera Black Hawk, Inc.
444 Main Street Black Hawk,
Colorado 80422
(303) 582-1000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
---------------------------------------
With Copies to:
Fredric J. Klink
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
(212)698-3500
---------------------------------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.
If this form is filed to register additional securities or an offering
pursuant to Rule 462(b)under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
---------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------- ----------------- -------------------- ------------------- -------------------
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Offering Amount of
Securities to be Registered Registered Per Unit (1) Price (1) Registration Fee
- --------------------------------------------------- ----------------- -------------------- ------------------- -------------------
13% First Mortgage Notes due 2005 With Contingent
Interest....................................... $45,000,000 100% $45,000,000 $12,510
- --------------------------------------------------- ----------------- -------------------- ------------------- -------------------
</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for purposes of calculating the
registration fee.
---------------------------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED ________ __, 1999
PROSPECTUS
Offer to Exchange
13% First Mortgage Notes due 2005 With Contingent Interest for all outstanding
13% First Mortgage Notes due 2005 With Contingent Interest
of
RIVIERA BLACK HAWK, INC.
The exchange offer will expire at 5:00 P.M.,
New York City time, on ______________ __, 1999 (90 days after
the effective date of this Registration Statement), unless extended.
-------------------------
Terms of the exchange offer:
- We will exchange all existing notes that are validly tendered and not
withdrawn prior to the expiration of the exchange offer.
- You may withdraw tenders of existing notes at any time prior to the
expiration of the exchange offer.
- We believe that the exchange of existing notes will not be a taxable
event for U.S. federal income tax purposes, but you should see "United
States Federal Income Tax Considerations" on page 64 for more
information.
- We will not receive any proceeds from the exchange offer.
- The terms of the exchange notes are substantially identical to the
existing notes, except that the exchange notes are registered under
the Securities Act of 1933 and the transfer restrictions and
registration rights applicable to the existing notes do not apply to
the exchange notes.
- Each broker-dealer that receives exchange notes are required to
deliver a prospectus in connection with any resale of such note.
- Each broker-dealer that acquired existing notes as a result of market
making or other trading activities may use the exchange offer
prospectus, as supplemented or amended for resales of exchange notes.
- Broker-dealers that acquired the existing notes directly from the
Company in the initial offering and not as a result of market making
or trading activities cannot use the prospectus for the exchange offer
in connection with resales of the exchange notes and, absent an
exemption, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with secondary resale
of the exchange notes and cannot rely on the position of the staff in
Exxon Capital Holdings Corporation (avail. April 13, 1989).
-------------------------
See "Risk Factors" beginning on page 8 for a discussion of risks that
should be considered by holders.
-------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
-------------------------
The date of this prospectus is _______ __, 1999.
<PAGE>
TABLE OF CONTENTS
Page
Summary......................................................1
Risk Factors.................................................8
Use Of Proceeds.............................................15
Capitalization..............................................15
Selected Financial Information..............................16
Ratio Of Earnings To Fixed Charges..........................17
Management's Discussion And Analysis Of Financial Condition
And Results Of Operations...................................18
The Exchange Offer..........................................21
Business....................................................28
Gaming And Liquor Regulatory Matters........................33
.........................................37
Management..................................................39
Principal Stockholders......................................41
Relationships And Related Transactions......................43
Description Of Notes........................................44
United States Federal Income Tax Considerations.............64
Plan Of Distribution........................................67
Legal Matters...............................................68
Experts.....................................................68
Available Information.......................................68
You should rely only on the information contained in this prospectus or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This prospectus may only be used where it is
legal to sell these securities. The information in this prospectus may only be
accurate on the date of this document.
ii
<PAGE>
FORWARD-LOOKING STATEMENTS
We make "forward-looking statements" throughout this prospectus. Whenever
you read a statement that is not simply a statement of historical fact (such as
when we describe what we "believe," "expect" or "anticipate" will occur, and
other similar statements), you must remember that our expectations may not be
correct, even though we believe they are reasonable. We do not guarantee that
the transactions and events described in this prospectus will happen as
described or that they will happen at all. The forward-looking information
contained in this prospectus is generally located in the material set forth
under the headings "Summary," "Risk Factors," "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" but may be found in other locations as well. These forward-looking
statements generally relate to our plans and objectives for future operations
and are based upon our management's reasonable estimates of future results or
trends. The factors that may affect our expectations of our operations, markets
and services include, among others, the following:
- - local and regional economic and business conditions;
- - changes or developments in laws, regulations or taxes;
- - actions taken or omitted to be taken by third parties, including our
customers, suppliers, competitors and stockholders, as well as governmental
authorities;
- - competition;
- - the loss of any licenses or permits or our failure to obtain our gaming or
liquor license on a timely basis;
- - delays in completing the construction of the casino;
- - changes in our business strategy, capital improvements or development
plans;
- - the availability of additional capital to support capital improvements and
development; and
- - other factors discussed under "Risk Factors" or elsewhere in this
prospectus.
You should read this prospectus completely and with the understanding that
actual future results may be materially different from what we expect. We will
not update these forward-looking statements, even though our situation may
change in the future.
iii
<PAGE>
SUMMARY
This summary highlights selected information from this prospectus and may
not contain all the information that is important to you. You should carefully
read this entire prospectus, including any information to which we refer you,
deciding to purchase any of the notes. The terms "Company," "our
company," "we" and "us" refer to Riviera Black Hawk, Inc. and the terms "Riviera
Black Hawk" and "our casino" refer to the casino we are constructing in Black
Hawk, Colorado. The term "Riviera Holdings" refers to Riviera Holdings
Corporation, our parent company.
The Exchange Offer
On June 3, 1999, we sold $45.0 million aggregate principal amount of 13%
First Mortgage Notes due 2005 With Contingent Interest (the "existing notes").
In connection with this offering, we entered into a registration rights
agreement with the initial purchaser of the existing notes, Jefferies & Company,
Inc., in which we agreed, among other things, to deliver this prospectus to you
and to complete an exchange offer for the existing notes. We are offering to
exchange $45.0 million aggregate principal amount of our 13% First Mortgage
Notes due 2005 With Contingent Interest, which have been registered under the
Securities Act (the "exchange notes" or the "notes"), for a like aggregate
principal amount of our existing notes (the "exchange offer"). You are entitled
to exchange your existing notes for exchange notes with substantially identical
terms. We urge you to read the discussions under the headings "The exchange
offer" and "The exchange notes" in this Summary for further information
regarding the exchange offer and the exchange notes.
The Company
Our company, a wholly-owned subsidiary of Riviera Holdings, is constructing
and will own and operate a casino with entertainment and parking facilities in
Black Hawk, Colorado, approximately 40 miles west of Denver. Our casino will be
one of the largest in Colorado with approximately 1,000 slot machines and 12
blackjack tables. In Colorado, each slot machine and each table game is
considered one gaming position.
We expect to open our casino in the first quarter of 2000. The total cost
for our casino, excluding capitalized interest, is expected to be $77.1 million.
Riviera Holdings owns all of our stock as a result of a $20 million equity
investment in us (excluding capitalized interest).
Our casino will be managed by a wholly-owned subsidiary of Riviera
Holdings. Riviera Holdings owns and operates the Riviera Hotel & Casino located
on the Las Vegas Strip. Upon completion, our casino will be the only casino in
the Black Hawk/Central City market developed and operated by a Las Vegas Strip
casino company.
The Black Hawk/Central City Market
Limited stakes gaming -- a maximum single bet of $5 -- is permitted in
Colorado in three historic mining towns -- Black Hawk, Central City and Cripple
Creek. 95% of Colorado gaming revenues are attributable to slot play. The Black
Hawk/Central City market primarily caters to "day-trip" customers from Denver,
Boulder, Fort Collins and Golden as well as Cheyenne, Wyoming area.
Approximately 3.3 million people reside within a 100-mile radius of the Black
Hawk/Central City market, of which 1.9 million reside in the Denver metropolitan
area.
Strengths
We believe that the following competitive strengths will contribute to the
success of our casino:
- Our casino is located at the entrance to Black Hawk and will be one of
the first three casinos encountered when traveling from Denver to the
Black Hawk/Central City market.
- The Black Hawk/Central City market lacks adequate parking. Our casino
will feature an attached 175,000 square foot multi-level parking
facility with capacity for approximately 520 vehicles (92% of which
will be covered). In addition to valet parking, we will offer patrons
the convenience of a self-park option. We will not charge for parking.
1
<PAGE>
- Our approximately 1,000 gaming positions will be significantly larger
than the market average of 336 positions per casino as of December 31,
1998, and combined with our ability to place all gaming devices on a
single floor, we will create an atmosphere that is closer to that
found in Las Vegas casinos than that typically found in casinos in the
Black Hawk/Central City market. Unlike most other Central City/Black
Hawk casinos, we will offer food service through our 265-seat casual
dining restaurant and entertainment through our 7,000 square foot
entertainment center.
Weaknesses
- Neither we nor Riviera Holdings has managed a casino in Colorado.
- Our attempt to stress the atmosphere of a Las Vegas casino may not be
accepted in the Black Hawk/Central City market.
- Our cash flow may be insufficient to enable us to pay the $5.85
million of fixed interest per annum on the notes after the first three
years of operation.
- Our equity is limited and Riviera Holdings has made only limited
commitments related to construction and opening and to subsidize cash
flow shortfalls and interest on the notes for the first three years of
operation.
Riviera Holdings Corporation
Riviera Holdings owns the Riviera Hotel & Casino located on the Las Vegas
Strip. Riviera Holdings will be obligated under the completion capital
commitment to contribute to us up to $10.0 million of cash if at any time there
are insufficient funds available to enable our casino to be operating by May 31,
2000. In addition, if our casino is not operating by May 31, 2000, Riviera
Holdings will be obligated to contribute on that date $10.0 million in cash less
any amounts previously contributed under the completion capital commitment.
Furthermore, if (1) we do not have the necessary funds to make a payment of
fixed interest on the notes during our first three years of operations or (2)
our cash flow is less than $9.0 million in any of our first three years of
operations, Riviera Holdings will be obligated under the keep-well agreement to
contribute cash to us to make up those amounts, subject to a maximum of $5.0
million for any one operating year and $10.0 million in the aggregate. Riviera
Holdings has also deposited $5.0 million to insure a title insurance company
against potential mechanics lien claims. As of June 30, 1999, Riviera Holdings
had about $46.6 million of unrestricted cash and short term investments to
support these commitments.
The Transactions
The existing notes were issued on June 3, 1999. The proceeds from the sale
of the existing notes was approximately $45.0 million, which were used as
follows: (1) approximately $31.9 million was deposited into a construction
disbursement account, of which $10.1 million was used to reimburse Riviera
Holdings for amounts advanced to us to cover construction and development costs
incurred prior to the sale of the existing notes, and the remaining $21.8
million has been and will continue to be used to finance the cost to develop,
construct, equip and open the Riviera Black Hawk, (2) $5.0 million was deposited
into a completion reserve account to be held as a reserve in case there are
insufficient funds in the construction disbursement account to complete the
Riviera Black Hawk, (3) $5.1 million was deposited into an interest reserve
account and used to purchase government securities representing funds sufficient
to pay the first two payments of fixed interest on the notes and (4)
approximately $3.0 million was used to pay fees and expenses relating to the
foregoing as well as the sale of the existing notes.
2
<PAGE>
The Exchange Offer
Securities Offered............ Up to $45,000,000 aggregate principal amount
of 13% First Mortgage Notes due 2005 With
Contingent Interest. The terms of the
exchange notes and existing notes are
identical in all material respects, except
for transfer restrictions and registration
rights relating to the existing notes.
The Exchange Offer............. We are offering the exchange notes to you in
exchange for a like principal amount of
existing notes. Existing notes may be
exchanged only in integral multiples of
$1,000.
Expiration date; Withdrawal
of Tender................... The exchange offer will expire at 5:00 p.m.,
New York City time, on ______ __ , 1999 (90
days after the effective date of this
Registration Statement), or such later date
and time to which it may be extended by us
but in no event beyond December 31, 1999. The
tender of existing notes pursuant to the
exchange offer may be withdrawn at any time
prior to the expiration date. Any existing
notes not accepted for exchange for any
reason will be returned without expense to
the tendering holder thereof as promptly as
practicable after the expiration or
termination of the exchange offer.
Conditions to the Exchange
Offer........................ Our obligation to accept for exchange, or to
issue exchange notes in exchange for, any
existing notes is subject to customary
conditions relating to compliance with any
applicable law or any applicable
interpretation by the staff of the Securities
and Exchange Commission, the receipt of any
applicable governmental approvals and the
absence of any actions or proceedings of any
governmental agency or court which could
materially impair our ability to consummate
the exchange offer. We currently expect that
each of the conditions will be satisfied and
that no waivers will be necessary. See "The
Exchange Offer--Conditions to the exchange
offer."
Procedures for Tendering Existing
Notes......................... If you wish to accept the exchange offer and
tender your existing notes, you must
complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in
accordance with its instructions and the
instructions in this prospectus, and mail or
otherwise deliver such Letter of Transmittal,
or such facsimile, together with such
existing notes and any other required
documentation, to the exchange agent at the
address set forth herein. See "The Exchange
Offer--Procedures for Tendering existing
notes."
Use of Proceeds.................. We will not receive any proceeds from the
exchange offer.
Exchange Agent................... IBJ Whitehall Bank & Trust Company is serving
as the exchange agent in connection with the
exchange offer.
Federal Income Tax Consequences.. The exchange of Notes pursuant to the
exchange offer should not be a taxable event
for federal income tax purposes. See "United
States Federal Income Tax Considerations." We
will not receive any proceeds from the
exchange offer.
3
<PAGE>
Consequences of Exchange Offer
Based on certain interpretive letters issued by the staff of the Securities
and Exchange Commission to third parties in unrelated transactions, we are of
the view that holders of existing notes (other than any holder who is an
"affiliate" of our company within the meaning of Rule 405 under the Securities
Act) who exchange their existing notes for exchange notes pursuant to the
exchange offer generally may offer such exchange notes for resale, resell such
exchange notes and otherwise transfer such exchange notes without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided:
- the exchange notes are acquired in the ordinary course of the holders'
business;
- the holders have no arrangement with any person to participate in a
distribution of such exchange notes; and
- neither the holder nor any other person is engaging in or intends to
engage in a distribution of the exchange notes.
Each broker-dealer that receives exchange notes for its own account in
exchange for existing notes must acknowledge that it will deliver a prospectus
in connection with any resale of such exchange notes. See "Plan of
Distribution." In addition, to comply with the securities laws of certain
jurisdictions, if applicable, the exchange notes may not be offered or sold
unless they have been registered or qualified for sale in such jurisdiction or
in compliance with an available exemption from registration or qualification. We
have agreed, pursuant to the registration rights agreement and subject to
limitations specified in the registration rights agreement, to register or
qualify the exchange notes for offer or sale under the securities or blue sky
laws of such jurisdictions as any holder of the Notes reasonably requests in
writing. If a holder of existing notes does not exchange such existing notes for
exchange notes pursuant to the exchange offer, such existing notes will continue
to be subject to the restrictions on transfer contained in the legend printed on
the existing notes. In general, the existing notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. Holders of existing notes do not have any appraisal or
dissenters' rights under the Colorado Business Corporation Act in connection
with the exchange offer. See "The Exchange Offer--Consequences of Failure to
Exchange; Resales of exchange notes."
The existing notes are currently eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.
Following commencement of the exchange offer but prior to its consummation, the
existing notes may continue to be traded in the PORTAL market. Following
consummation of the exchange offer, the exchange notes will not be eligible for
PORTAL trading.
4
<PAGE>
The Exchange Notes
The terms of the exchange notes and the existing notes are identical in all
material respects, except for transfer restrictions and registration rights
relating to the existing notes.
Securities Offered.............. $45.0 million principal amount of 13% First
Mortgage Notes due 2005 With Contingent
Interest.
Maturity Date................... May 1, 2005.
Interest Payment Dates.......... May 1 and November 1 of each year, beginning
on November 1, 1999.
Fixed Interest.................. Fixed interest will be payable on the notes
at a rate of 13% per annum.
Contingent Interest............. Contingent interest will be payable on the
notes on each interest payment date after the
Riviera Black Hawk begins operating. However,
no contingent interest will accrue prior to
the date that the Riviera Black Hawk begins
operating. The amount of contingent interest
will, subject to certain limits, be equal to
5% of our cash flow for the two fiscal
quarters ending prior to the record date
applicable to the relevant interest payment
date. We may defer paying any or all of an
installment of contingent interest under
circumstances described in the section
"Description of Notes-- Principal, Maturity
and Interest."
Ranking......................... The notes will be senior secured obligations,
will rank equal in payment preference with
all of our existing and future senior
indebtedness and will rank senior in right of
payment to all of our existing and future
subordinated indebtedness. Currently, the
notes are our only outstanding senior
indebtedness and we have no existing
subordinated indebtedness.
Security........................ The notes will, with certain exceptions, be
secured by a first priority lien on
substantially all of our existing and future
assets, including, without limitation:
o a pledge of the net proceeds from the sale
of the existing notes which have been
deposited into restricted disbursement
accounts to be used to fund construction
and development of the Riviera Black Hawk
and pay the first two payments of fixed
interest on the notes;
o substantially all of the assets that will
comprise our casino, other than (1)
furniture, fixtures and equipment and (2)
the assets of our future unrestricted
subsidiaries;
o agreements pursuant to which our casino
will be constructed, operated and managed;
and
o licenses and permits relating to the
construction, operation and management of
our casino, other than our Colorado gaming
and liquor licenses.
5
<PAGE>
Completion Capital Commitment... Riviera Holdings, our parent company, will be
obligated under the completion capital
commitment to contribute to us up to $10.0
million of cash if at any time there are
insufficient funds available to enable our
casino to be operating by May 31, 2000. The
contributions will be made at the times
necessary to enable our casino to be
operating by May 31, 2000. In addition, if
our casino is not operating by May 31, 2000,
Riviera Holdings will be obligated to
contribute to us on that date $10.0 million
in cash less any amounts previously
contributed under the completion capital
commitment. See "Description of Notes--
Completion Capital Commitment."
Keep-Well Agreement............. If (1) we do not have the necessary funds to
make a payment of fixed interest on the notes
during our first three years of operations or
(2) our cash flow is less than $9.0 million
in any of our first three years of
operations, Riviera Holdings will be
obligated under the keep-well agreement to
contribute cash to us to make up those
amounts, subject to a maximum of $5.0 million
for any one operating year and $10.0 million
in the aggregate.
Optional Redemption............. On or after May 1, 2002, we may redeem some
or all of the notes at any time at the
redemption prices described in the section
"Description of Notes -- Optional
Redemption."
Prior to May 1, 2001, we may redeem up to 35%
of the notes with the proceeds of a public
offering of our equity or the proceeds
contributed to us of offerings by our parent
company of its equity at the redemption
prices listed in the section "Description of
Notes -- Optional Redemption."
Gaming Redemption............... The notes will be subject to mandatory
disposition and redemption requirements in
accordance with determinations by any gaming
authority.
Change of Control............... If we experience a change of control, we must
offer to repurchase the notes at the prices
listed in the section "Description of Notes--
Repurchase at the Option of Holders-- Change
of Control."
Asset Sales and Events of Loss.. If we sell assets or experience events of
loss, we may be required to offer to
repurchase the notes at the prices listed in
the section "Description of Notes--
Repurchase at the Option of Holders-- Asset
Sales" and "--Events of Loss."
Excess Cash Purchase Offers..... At the end of each four fiscal quarters after
our casino begins operating, we must offer to
repurchase the maximum principal amount of
notes that can be purchased with 50% of our
excess cash flow from that four fiscal
quarter period. The prices for the
repurchases are listed in the section
"Description of Notes-- Repurchase at the
Option of Holders-- Excess Cash Purchase
Offers."
6
<PAGE>
Basic Covenants of the
Indenture..................... We will issue the notes under an indenture
that will, among other things, restrict our
ability to:
borrow money;
pay dividends on or repurchase our capital
stock;
make investments;
use our assets as security in other
transactions; and
sell assets or enter into mergers or
consolidations.
7
<PAGE>
RISK FACTORS
Before you invest in the notes, you should carefully consider the following
factors, in addition to the other information contained in this prospectus.
Substantial leverage and ability to service debt
- We will be substantially leveraged. In addition to our obligation to pay
principal and interest on the notes, we will also be incurring construction and
operating expenses for the Riviera Black Hawk.
- At June 30, 1999, our total indebtedness was $45.8 million, our
stockholders' equity was $23.4 million and our debt to equity ratio was 2.0 to
1.
- The indenture will permit us to incur additional indebtedness, including
up to $15.0 million of indebtedness to finance the purchase of furniture,
fixtures and equipment which, when incurred, will rank equal in payment
preference with the notes. Our substantial indebtedness could have important
consequences to you. For example, it could: (1) make it more difficult for us to
satisfy our obligations with respect to these notes; (2) increase our
vulnerability to general adverse economic and industry conditions; (3) limit our
ability to fund future working capital, capital expenditures and other general
corporate requirements; (4) require us to dedicate a substantial portion of our
cash flow from operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital expenditures and
other general corporate purposes; (5) limit our flexibility in planning for, or
reacting to, changes in our business and the industry in which we operate; (6)
place us at a competitive disadvantage compared to our competitors that have
less debt; and (7) limit, along with the financial and other restrictive
covenants in our indebtedness, among other things, our ability to borrow
additional funds.
Completion and operation of our casino
Our ability to make payments on the notes and our other debt obligations
depends upon the timely completion and successful operation of our casino.
Successful operation will depend on prevailing economic conditions and
financial, business, regulatory and other factors beyond our control.
It is difficult for us to predict with accuracy our casino's potential
earning ability given the inherent uncertainties and variables in the factors
affecting such earning ability. The ability to generate profit from slot
machines will determine our cash flow. Table games, food and beverage and
entertainment are all loss leader adjuncts to the generation of slot machine
profits. If our casino cannot generate sufficient cash flow, we may be forced to
reduce or delay planned capital expenditures, restructure or refinance our debt
or obtain additional equity capital. We might not be able to implement any of
these alternatives on satisfactory terms or at all.
Construction and related risks
- We have entered into a construction contract with The Weitz Company, Inc.
to construct our casino and perform all necessary excavation and other site
work. The construction contract provides for our casino to be completed by
January 15, 2000 for a price of $27.6 million. The construction contract allows
for increases in this price if: (1) we make changes to the plans and
specifications; (2) work is delayed due to our actions; or (3) "force majeure"
events occur during construction. See "Business -- Design and Construction
Summary" and "Material Agreements -- Construction Contract."
- The construction of our casino involves significant risks, including cost
overruns, shortages of materials, labor disputes and work stoppages, unforeseen
environmental or engineering conditions, natural disasters, construction
scheduling problems and weather interferences. Any of these risks, if they
occurred, could delay construction or substantially increase the construction
costs of our casino. Furthermore, other items, including offsite improvements,
permit fees and independent testing, are not included in the construction
contract costs.
No loss proceeds
We have no obligation to make any purchase of notes with the net loss
proceeds, following a loss with respect to collateral with a fair market value
between $1.0 million and $20.0 million.
8
<PAGE>
Gaming licenses, permits and approvals
In general we, Riviera Holdings, the principal executive officers of us and
Riviera Holdings, and any of our employees who will be involved in our gaming
operations, will be required to be licensed by the State of Colorado. Colorado
also requires that significant stockholders of Riviera Holdings be licensed or
certified as suitable for licensure. None of such licenses have been obtained
and there can be no assurance that all necessary licenses will be obtained prior
to the time our casino is otherwise ready to open. The licensure process
involves the filling out of a form prescribed by the Colorado Gaming Commission,
an interview of the prospective licensee and an investigation of such licensee
to the extent the Staff of the Colorado Gaming Commission deems necessary. We
pay the investigation costs. If any such officer, director or employee were
found to be unsuitable for licensure by the Colorado Gaming Commission, we would
have to replace such person. If the Colorado Gaming Commission objected to
our licensure or that of Riviera Holdings or its significant stockholders, we
might be forced to sell our interest in Riviera Black Hawk and pay off the notes
to the extent of the net sale proceeds. If the objection of the Colorado Gaming
Commission related to licensure or suitability for licensure of any of Riviera
Holdings' significant stockholders, Riviera Holdings might attempt to purchase
or arrange for the purchase of the Riviera Holdings shares owned by the
stockholder to which the Colorado Gaming Commission objected, but Riviera
Holdings' ability to make such purchase is limited and it is uncertain whether
Riviera Holdings could arrange for such stock repurchase.
Competition
- The Black Hawk/Central City gaming market is characterized by intense
competition. If our casino is unable to compete effectively in this market, we
may not be able to generate sufficient cash flow to satisfy our obligations
under the notes. The primary competitive factors in the market are location,
availability and convenience of parking, number of slot machines and gaming
tables, types and pricing of non-gaming amenities, name recognition and overall
atmosphere. Our main competitors will be the larger gaming facilities,
particularly those with considerable on-site or nearby parking and established
reputations in the local market. These facilities have high-profile brand names
in the local market, including the Isle of Capri Casino, Harvey's Wagon Wheel
Casino Hotel, Colorado Central Station, Bullwhackers Black Hawk, Canyon Casino,
Fitzgeralds Casino, the Lodge at Black Hawk and Gilpin Hotel Casino. These
competitors have more gaming experience in the Black Hawk/Central City market
and some have greater financial resources than we do. Construction has also
begun on the "Mardi Gras" casino, which is expected to feature over 600 slot
machines. Other projects have also been announced, proposed, discussed or
rumored for the Black Hawk/Central City market.
- We expect that the gaming facilities near the intersection of Main and
Mill Streets will provide significant competition to our casino. Colorado
Central Station, which has been the most successful casino in Colorado, is
located across the street from our casino and has approximately 700 slot
machines, 20 gaming tables and approximately 700 valet parking spaces. The Isle
of Capri Casino, operated by Casino America, which opened in December 1998, is
located directly across the street from our casino and features approximately
1,100 slot machines, 14 table games and 1,100 parking spaces.
- Casinos offering hotel accommodations for overnight stay may have a
competitive advantage over our casino. The number of hotel rooms currently in
the Black Hawk/Central City market is approximately 170, with only two gaming
facilities providing hotel accommodations to patrons. These include Harvey's
Wagon Wheel Casino Hotel with approximately 120 rooms and the Lodge at Black
Hawk with approximately 50 rooms. In addition, the Isle of Capri Casino began
construction in 1999 of an approximately 240 room hotel on top of its recently
completed casino.
- Customers now drive through Black Hawk to reach Central City. Central
City has proposed the development of a road directly connecting Central City and
Black Hawk with Interstate 70 which would allow customers to reach Central City
without driving by or through Black Hawk.
- Currently, limited stakes gaming in Colorado is constitutionally
authorized in Central City, Black Hawk, Cripple Creek and two Native American
reservations in southwest Colorado. However, gaming could be approved in other
Colorado communities in the future. The legalization of gaming closer to Denver
would likely have a material adverse effect on our future results of operations.
We will also compete with other forms of gaming in Colorado, including lottery
gaming, and horse and dog racing as well as other forms of entertainment.
9
<PAGE>
- Our operations to date have been limited to development activities and
construction. We have had no earnings or operations. Riviera Gaming Management
of Colorado, Inc., which will manage our casino, has no experience operating a
gaming facility in Colorado. If our casino is not successfully marketed and
managed, we may not be able to generate sufficient cash flow to make payments of
principal and interest on the notes.
Dependence upon a single gaming site
We will be solely dependent upon our casino for our cash flow, (except for
the keep well agreement with Riviera Holdings as to the first three years of
operations). Therefore, we will be subject to greater risks than a
geographically diversified gaming company. These greater risks include those
caused by: (1) local economic and competitive conditions; (2) inaccessibility
due to road construction or closure on primary access routes; (3) changes in
local and state governmental laws and regulations; (4) natural and other
disasters; (5) a decline in the number of residents near or visitors to the
Black Hawk/Central City market; or (6) a decrease in gaming activities in the
Black Hawk/Central City market.
Any of such factors could have a material adverse effect on our ability to
generate sufficient cash flow to make payments on the notes.
Adverse weather and road conditions; seasonality
The City of Black Hawk is located in the Colorado Rocky Mountains, which can
be subject to inclement weather. Adverse weather conditions could delay the
construction of our casino, resulting in cost overruns or a delayed opening
date. In addition, severe weather conditions could adversely affect our
operations. The City of Black Hawk is serviced by a single lane winding mountain
road that requires cautious driving, particularly in bad weather. The road has
tunnels that are subject to closure. Congestion on the road leading to our
casino is not uncommon during the peak summer season, holidays and other times
of year and may discourage potential customers from traveling to our casino,
particularly if road construction is in process.
Limitations on the trustee's exercise of rights with respect to collateral
You may be unable to obtain the full value of your notes by foreclosing upon
collateral. The exchange notes, like the existing notes, will be secured by a
first priority lien on substantially all of our assets. Furniture, fixtures and
equipment and the assets of our future unrestricted subsidiaries are excluded.
Gaming law restrictions
Under Colorado gaming laws, the trustee could be precluded from or otherwise
limited or delayed in exercising its rights, including selling slot machines at
a foreclosure sale, since only persons licensed by the Colorado gaming
authorities may have slot machines in their possession. In addition, the trustee
may encounter difficulty in selling collateral due to various legal
restrictions. These restrictions include that the purchaser or the operator of a
gaming facility must be licensed by state authorities or that prior approval of
a sale or disposition of collateral must be obtained. If the trustee sought to
operate, or retain an operator for, our casino, the trustee or its agents would
be required to be licensed under Colorado gaming laws in order to conduct gaming
operations in the casino. Since potential purchasers who wish to operate the
casino must satisfy such requirements, the number of potential purchasers in a
sale of the casino could be less than in the sale of other types of facilities.
Additionally, these requirements may delay the sale of, and may adversely affect
the price paid for, the collateral.
State law restrictions
The ability of the trustee to repossess and dispose of collateral for the
noteholders will also be subject to the procedural and other restrictions of
state real estate and commercial law. If the holders of the notes were
undersecured, the trustee may be entitled to a deficiency judgment under certain
circumstances after application of any proceeds from any foreclosure sale. There
can be no assurance, however, that the trustee would successfully obtain a
deficiency judgment, and we cannot predict what the amount of such judgment
would be. In addition, we might not be able to satisfy any such judgment.
Bankruptcy
10
<PAGE>
- The right of the trustee to repossess and dispose of the collateral is
likely to be significantly impaired by applicable bankruptcy laws if a
proceeding under the United States Bankruptcy Code were to be commenced by or
against us prior to or possibly even after the trustee has repossessed and
disposed of the collateral. If the holders of the notes were undersecured in a
bankruptcy case, the trustee for the noteholders will be entitled to assert a
secured claim to the extent of the value of the collateral and an unsecured
claim for any deficiency. In view of the broad discretionary powers of a
bankruptcy court, we cannot predict, following commencement of and during a
bankruptcy case: (1) whether payments under the notes would be made; (2) whether
or when the trustee could foreclose upon or sell the collateral; (3) whether the
term of the notes could be altered in a bankruptcy case; or (4) whether or to
what extent holders of the notes would be compensated for any delay in payment
or loss of value of the collateral.
- In the event of a bankruptcy case, we may be able to retain collateral
over the claims of the holders of the notes as long as such holders are afforded
"adequate protection." "Adequate protection" is within the discretionary powers
of the bankruptcy court, and payments on the notes may be delayed and
compensation for such a delay is questionable.
- If a bankruptcy court were to determine that the value of the collateral
is not sufficient to repay all amounts due on the notes, the holders of the
notes would be "undersecured" to the extent of any such deficiency. Applicable
federal bankruptcy laws do not permit the payment and/or accrual of interest or
costs and attorneys' fees to the holders of "undersecured" claims against the
debtor during the debtor's bankruptcy case.
- Under the provisions contained in the indenture, we may discharge our
obligations under the indenture or have our obligations released with respect to
covenants in the indenture. To do either of these, among other things, we must
deposit with the trustee enough money or securities to make all of the required
payments on the notes through maturity or a redemption date. It is possible that
the deposit may be subject to recovery or avoidance as a preference or
fraudulent transfer by us, our creditors or a bankruptcy trustee. For example,
if the amount of the deposit exceeds the value of the collateral which has been
pledged to the holders of the notes, it is possible that the excess may be
subject to recovery or avoidance. In addition, because the holders of the notes
will release their liens at the time the funds are deposited into the account,
it is possible that a bankruptcy court would consider a payment on the notes at
redemption or maturity subject to recovery or avoidance. In addition, it is
possible that if we receive the funds for the deposit from a third party, and
that third party subsequently becomes a debtor in a bankruptcy case, the deposit
may be recoverable if the original transfer from the third party to us is a
preferential or fraudulent conveyance. Furthermore, if we were in bankruptcy
after the deposit but before redemption or maturity of the notes, it is possible
that a bankruptcy court would allow us to use the deposited funds during the
pendency of the bankruptcy case as "cash collateral," subject to the right of
the holders of the notes to request adequate protection of their interest in the
deposit.
- We have overlapping officers and directors with our affiliates. In the
event that one of our affiliates is the subject of a bankruptcy proceeding, that
affiliate, its creditors or the trustee in bankruptcy may argue that the assets
and liabilities of the various affiliated entities, including our company,
should be consolidated and our assets made available for satisfaction of claims
against the affiliate that is in bankruptcy. There can be no assurance that a
bankruptcy court would not order consolidation of our assets with those of our
affiliates.
Fraudulent conveyance considerations
In connection with the issuance of the existing notes, we granted security
interests in the collateral to the trustee. Various fraudulent conveyance and
avoidance laws have been enacted for the protection of creditors. Some of these
laws protect parties who were not creditors at the time of the challenged
transfer but who subsequently became creditors. These laws may permit a court to
nullify any transfer of a property interest or any obligation incurred by any of
the parties involved in the transactions described in this prospectus.
Generally, if a court were to find that: (1) the debtor made the challenged
transfer or obligation with the intent of hindering, delaying or defrauding its
present or future creditors; or (2) the debtor (A) received less than reasonably
equivalent value or fair consideration for incurring the challenged obligation
or making the challenged transfer and (B) (i) was insolvent or was rendered
insolvent by reason of incurring the challenged obligation or making the
challenged transfer, (ii) was engaged or about to engage in a business or
transaction for which its assets constituted unreasonably small capital or (iii)
intended to incur, or believed that it would incur, debts beyond its ability to
pay as such debts matured, the court could void the challenged obligation or
transfer in whole or in part. The court could also subordinate any claims with
respect to the challenged obligation or transfer to all other debts of the
debtor. The court's determination as to whether the above is true at any
relevant time will vary depending upon the law applied in any such proceeding.
11
<PAGE>
Generally, a debtor will be considered insolvent if: (1) the sum of its
debts was greater than the fair saleable value of all of its assets at a fair
valuation; or (2) if the present fair saleable value of its assets was less than
the amount that would be required to pay its probable liability on its existing
debts, as they become fixed in amount and nature. Also, a debtor generally will
be considered to have been left with unreasonably small capital if its remaining
capital, including its reasonably projected cash flow, was reasonably likely to
be insufficient for its foreseeable needs, taking into account its foreseeable
business operations and reasonably foreseeable economic conditions.
With respect to our company and Riviera Holdings, the transfers made by
Riviera Holdings in connection with the capitalization of our company present
the most significant possible fraudulent conveyance issues. In capitalizing our
company, Riviera Holdings has contributed $20.0 million of equity capital in
cash, comprised of (1) $15.1 million contributed in August 1997 to purchase the
land and (2) additional contributions of $4.9 million as of June 30, 1999. See
"Capitalization."
There can be no assurance that Riviera Holdings' past contributions to us
will not be found to have constituted either an actual or a constructive
fraudulent transfer. In addition, future contributions by Riviera Holdings,
including amounts contributed under the completion capital commitment and the
keep-well agreement, might also be found to be an actual or constructive
fraudulent transfer. Any such possible fraudulent transfer challenges, even if
ultimately unsuccessful, could lead to a disruption of our business and alter
the manner in which we manage our business and, ultimately, could have a
material adverse effect on our ability to meet our obligations under the notes.
Mechanic's liens
Colorado law provides architects, engineers, contractors, subcontractors
and material suppliers with a lien on real property being improved by their
services or materials in order to secure their right to be paid. These parties
may foreclose their liens if they are not paid in full. The priority of all
mechanic's liens arising out of a particular construction project relates back
to the date on which construction of the project first commenced. Construction
of our casino commenced prior to the recording of the deed of trust securing the
notes. Accordingly, all architects, engineers, contractors, subcontractors and
material suppliers who provide services or materials in connection with our
casino and otherwise comply with the applicable requirements of Colorado law
will have a lien on the project senior in priority to the lien of the deed of
trust securing the notes. Riviera Holdings has deposited $5.0 million to insure
a title insurance company against mechanics liens.
Environmental matters
The site of our casino is located in a 400-square mile watershed basin that
was designated in 1983 by the United States Environmental Protection Agency as a
"National Priorities List" Study Area under the Comprehensive Environmental
Response, Compensation and Liability Act, sometimes also called the Superfund
Act. The Study Area received this designation because of hazardous substance
contamination in the soil, groundwater and surface water caused by historical
mining activity. The EPA has identified several areas of contamination within
the Study Area and in the vicinity of our property that require remediation. The
EPA and the State of Colorado have not required remediation of any contamination
on or from our property as part of their Superfund investigation and remedial
activities. However, sampling of our property disclosed the existence of
contaminated groundwater. The EPA or the State of Colorado could require
remediation for contaminated groundwater or any remaining contaminated soil on
the property some time in the future, and, as the current owner of the property,
we could be required to pay for or perform such remediation.
Legislative issues
Additional legalization of gaming in or near any area from which our casino
is expected to draw customers would affect the profitability of our business and
lead to a failure on our part to satisfy our obligations under the notes.
Currently, Colorado law does not authorize video lottery terminals.
However, Colorado law permits the legislature, with executive approval, to
authorize new types of lottery gaming, such as video lottery terminals, at
certain locations. Video lottery terminals are games of chance, similar to slot
machines, in which the player pushes a button that causes a random set of
numbers or characters to be displayed on a video screen. The player may be
awarded a ticket, which can be exchanged for cash or credit play. This form of
gaming could compete with slot machine gaming.
12
<PAGE>
In 1997, the state legislature passed, but then Governor Romer vetoed, a
bill that would have permitted video lottery terminals in dog and horse race
tracks under certain terms and conditions. Additionally, several cities within
Colorado have active citizens' lobbies that were able to place gaming
initiatives on recent statewide ballots. Although these initiatives have failed,
new initiatives could be introduced on future statewide ballots to allow
expansion of gaming in Colorado or prohibit gaming in the gaming market our
casino would serve. Future initiatives, if passed, could significantly increase
the competition for gaming customers, thereby adversely affecting business in
the gaming market our casino would serve. There can be no assurance against
future legislation that would create additional competition or that would impose
additional restrictions or prohibitions on, or assess additional fees with
respect to our business.
In 1996, Congress created the National Gambling Impact Study Commission
(the "NGISC") to study the economic and social impact of all forms of gambling
in the United States. The NGISC was composed of both individuals who are
associated with the gaming industry and individuals opposed to it. The NGISC
commenced its hearings in June 1997, and on June 18, 1999, presented its final
report (the "Report"). The Report recommended, among other things, that the
regulation of gambling continue to be the responsibility of the states, except
for Internet and Indian issues; that Internet gambling be banned; that there be
increased federal regulation of Indian gambling; and that Congress direct other
agencies to conduct studies of gambling as part of their regular research. The
Report also called upon state and local policy makers to consider a moratorium
on new or expanded forms of gambling in their jurisdictions, pending further
study of gambling. The recommendations of the Report are not binding on any
governmental body, but portions of the report are likely to be cited, in both
Congress and in state legislatures, by those who are opposed to the presence or
expansion of gambling in their jurisdictions and who are seeking additional
limitation, regulation, or taxation of gambling facilities or operations that
may result could have an adverse impact on the gaming industry in general and on
our business or results of operations, in particular.
Additionally, from time to time, some federal legislators have proposed the
imposition of a federal tax on gaming revenues. Any such tax would reduce our
cash flow and could prevent us from fulfilling our obligations under the notes.
State gaming tax issues
The amendment to the Colorado Constitution that legalized limited gaming
also subjects casinos in Colorado to an annual gaming tax of up to 40% of the
total amounts wagered less all payouts to players. With respect to games of
poker, the tax is calculated based on the sums wagered which are retained by the
casino as compensation. Effective July 1 of each year, the Colorado Commission
establishes the gaming tax for the following 12 months. Currently, the gaming
tax is: .25% on the first $2 million of these amounts; 2% on amounts from $2
million to $4 million; 4% on amounts from $4 million to $5 million; 11% on
amounts from $5 million to $10 million; 16% on amounts from $10 million to $15
million; and 20% on amounts over $15 million. There can be no assurance that tax
rates or fees applicable to our casino will not be increased in the future,
either by the Colorado electorate, legislation or action by the Colorado
Commission, reducing the profitability of our operations.
Reliability of market data
We have based the Black Hawk/Central City market data and other information
in this prospectus, including parking data, on information supplied by the City
of Black Hawk and various public announcements and filings made by some of the
larger casinos in the Black Hawk/Central City market. However, we have not
independently verified any such information, announcements or filings.
Dependence on key personnel
Our success will largely depend upon the efforts and skills of (1) Riviera
Gaming Management of Colorado, Inc. (the "manager") with whom we have a
management contract and its Chairman of the Board of Directors and Chief
Executive Officer, William Westerman, its Chief Operating Officer, (the
"manager") Ronald Johnson, its Chief Financial Officer, Duane Krohn and (2) our
General Manager, Thomas Guth and our Director of Slot Operations, James Davey.
The loss of the services of our manager or any of our key officers could have a
material adverse effect on our operations. There can be no assurance that we
would be able to attract and hire suitable replacements in the event of any such
loss of services.
13
<PAGE>
Difficulty in attracting and retaining qualified employees
The operation of our business requires skilled employees with gaming
industry experience and qualifications to obtain the requisite licenses.
Currently there is a shortage of skilled labor in the gaming industry. We
believe this shortage will make it increasingly difficult and expensive to
attract and retain qualified employees. Increasing competition in the Black
Hawk/Central City and competing markets may lead to higher costs in order to
retain and attract qualified employees. We may incur higher labor costs to
attract qualified employees from existing gaming facilities.
No recourse against Riviera Holdings
You should not expect Riviera Holdings or any of its affiliates to
participate in servicing the principal, fixed interest, contingent interest or
other payments due on the notes. Neither Riviera Holdings nor any of its
affiliates has any obligation to make any payments of any kind to the holders of
the notes except for its limited obligations under the completion capital
commitment and the keep well agreement.
Adverse tax treatment
The notes provide for the payment of both fixed interest and contingent
interest. Contingent interest will be calculated based on a percentage of our
cash flow after we begin operating. The notes and the indenture will have terms
typically contained in instruments evidencing indebtedness and are intended to
create a debtor-creditor relationship between us and the holders of the notes.
We intend to treat the notes as indebtedness for federal income tax purposes.
However, this treatment is not binding on the Internal Revenue Service or any
court and there can be no assurance that the Internal Revenue Service will not
successfully argue that the notes should be treated as equity for federal income
tax purposes. If the notes are treated as equity rather than indebtedness, we
would not be able to deduct the interest on that portion of the notes. This
could have a material adverse effect on our after-tax cash flow and prevent us
from fulfilling our obligations under the notes. In addition, the interest
payments made on the portion of the notes that are treated as equity will be
taxable to the recipient as dividends to the extent of our current and
accumulated earnings and profits. This could adversely affect the timing,
character and amounts includible in the income of a holder of notes.
Holders may be required to include amounts in income prior to receipt of
cash payments attributable to such income.
No prior market for notes
The existing notes are currently eligible for trading in the PORTAL market.
The exchange notes are new securities for which there is no established market.
We have been informed by the initial purchaser that it intends to make a market
in these notes. However, the initial purchaser may cease its market making at
any time. In addition, the liquidity of the trading market in these notes, and
the market price quoted for these notes, may be adversely affected by changes in
the overall market for high yield securities and by changes in our financial
performance or prospects or in the prospects for companies in our industry in
general. As a result, you cannot be sure that an active trading market will
develop for these notes.
Failure to exchange existing notes for exchange notes
If you do not exchange your existing notes for exchange notes pursuant to
the exchange offer, you will not be able to resell, offer to resell or otherwise
transfer the existing notes unless they are registered under the Securities Act
or unless you resell them, offer to resell or otherwise transfer them under an
exemption from the registration requirements of, or in a transaction not subject
to, the Securities Act. We will no longer be under an obligation to register the
existing notes under the Securities Act except in the limited circumstances
provided under the registration rights agreement. In addition, if you want to
exchange your existing notes in the exchange offer for the purpose of
participating in a distribution of the exchange notes, you may be deemed to have
received restricted securities, and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
To the extent that existing notes are not tendered for exchange and
accepted in the exchange offer, the trading market for the notes could be
adversely affected because of an insufficient float of notes available for
trading.
14
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. The existing
notes were issued on June 3, 1999.
CAPITALIZATION
The following table sets forth our capitalization at June 30, 1999. This
table should be read in conjunction with the more detailed information and
financial statements, including the notes thereto, included elsewhere in this
prospectus.
At June 30, 1999
----------------
Actual
(dollars in millions)
Cash and cash equivalents................... $ 0.8
Cash, restricted (1)........................ 26.3
Short term investments, restricted (1)...... 5.1
Debt: $ 32.2
========
First Mortgage Notes...................... $ 45.0
Special Improvement District Bonds(2)..... 0.8
--------
Total debt........................ 45.8
Stockholder's equity(3)(4).................. 23.4
--------
Total capitalization.............. $ 69.2
========
- ----------
(1) Includes $21.3 million in the construction disbursement account (after
reimbursement to Riviera Holdings of $10.1 million for amounts advanced to
us to cover construction and development costs incurred as of June 30,
1999), $5.0 million in the completion reserve account and $5.1 million in
the interest reserve account at June 30, 1999.
(2) Our casino and the Isle of Capri Casino, the casino located across the
street from our casino, have entered into development agreements with the
City of Black Hawk to relocate utilities and widen a bridge to access both
properties from the highway. The total estimated cost of these improvements
is approximately $2.9 million which will be shared equally by us and the
Isle of Capri Casino. We will repay our portion of the cost of such
improvements over 10 years beginning in January 2000.
(3) Includes capitalized interest of $3.4 million associated with Riviera
Holdings' investment at June 30, 1999.
(4) Excludes Riviera Holdings' commitment to contribute to us up to $10.0
million of cash if at any time there are insufficient funds available to
enable the Riviera Black Hawk to be operating by May 31, 2000. See
"Description of Notes -- Completion Capital Commitment."
15
<PAGE>
SELECTED FINANCIAL INFORMATION
We were organized in August 1997 for the purpose of developing,
constructing, equipping and operating the Riviera Black Hawk. Since that time,
we have been in the development stage and our activities have been limited to
transactions relating to the development of the Riviera Black Hawk.
The selected financial information presented below at December 31, 1997 and
1998, for the period from August 18, 1997 (Date of Inception) to December 31,
1997, and for the year ended December 31, 1998 has been derived from our audited
financial statements included elsewhere in this prospectus. The financial
statement information at and for the six months ended June 30, 1999 has been
derived from our unaudited financial statements included elsewhere in this
prospectus. The unaudited financial statements have been prepared by us on a
basis consistent with the audited financial statements and including all normal
recurring adjustments necessary for a fair presentation of the information set
forth therein. Operating results for the six months ended June 30, 1999 are not
necessarily indicative of the results that will be achieved for future periods,
including the entire year ending December 31, 1999.
This information is qualified in its entirety by, and should be read in
conjunction with, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and the financial statements, including the notes
thereto, and other financial information included elsewhere in this prospectus.
<TABLE>
<CAPTION>
At At
June 30, December 31,
1999 1998 1997
--------------- -------------- --------------
(dollars in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash................................... $ 809 $ 543 $ 49
Total assets........................... 28,138 16,632
75,787
Long-term debt, including current 45,784 687 0
maturities.............................
Due to Riviera Holdings................ 62 6,241 0
Total liabilities...................... 52,387 8,138 7
Stockholder's equity (1)............... 23,400 20,000 16,625
</TABLE>
<TABLE>
<CAPTION>
From
For the August 18,
Six 1997 (Date
Months For the Year of Inception)
Ended Ended through
June 30, December 31, December 31,
1999 1998 1997
------------- ------------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C>
Statement of Operations:
General and administrative expenses..... $ (75) $ 0 $ 0
Interest expense, other.................
(193)
Interest income, other.................. 115
------
Loss before taxes....................... (153)
------
Tax benefit............................. 94
------
Net loss................................ 59) 0 0
======
0
</TABLE>
- ----------
(1) Includes capitalized interest of $3.4 million associated with Riviera
Holdings' investment.
16
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, December 31,
1999 1998 1998
---- ---- ----
(in thousands) (in thousands)
<S> <C> <C> <C>
Earnings:
Pre-tax income (loss) (1)............................. (59) - -
Fixed charges.......................................... 1,485 1,300 1,972
Less capitalized interest.............................. (1,485) (1,300) (1,972)
Earnings (loss) available for fixed charges............ (59) - -
Ratio of earnings to fixed charges (2)................. Note(3) Note(3) Note(3)
</TABLE>
Fixed charges include interest expense on indebtedness, plus
amortization of deferred financing costs.
(1) The Company is in the development stage and has not commenced its
intended operations. The net loss is the result of general administrative
expenses incurred prior to the opening of the Casino.
(2) For purposes of determining fixed charges, earnings (losses) are defined
as earnings (loss) before income taxes plus fixed charges.
(3) Since the Company is in the development stage and has not commenced
operations, its earnings were not sufficient to cover fixed charges by
$1,485,000 and $1,300,000 for the six months ended June 30, 1999 and 1998,
respectively, and $1,972,000 for the year ended December 31, 1998.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, our financial statements, including the notes
thereto, and the other financial information included elsewhere in this
prospectus.
Development Activities
We were organized in August 1997 and were initially capitalized with $15.1
million of cash contributions from Riviera Holdings. Since that time, our
activities have been limited to development activities with respect to the
Riviera Black Hawk. We purchased the land on which the Riviera Black Hawk is
being constructed in August 1997 and commenced construction in July 1998. We
have completed all site improvements, excavation and foundation work. Erection
of the steel structure began in April 1999, and the building is expected to be
enclosed by mid-August 1999. We will have a 300,000 square foot gaming facility
featuring (1) a 31,000 square foot casino with approximately 1,000 slot machines
and 12 blackjack tables; (2) parking for 520 vehicles (92% of which will be
covered) with convenient self-park and valet options; (3) a 265-seat casual
dining restaurant; (4) two themed bars; and (5) an entertainment center with
seating for approximately 500 customers. Subject to the delays inherent in
construction projects of the magnitude of our casino, and subject to obtaining
the necessary gaming licenses, other permits and financing, we expect to open
our casino in the first quarter of 2000.
Results Of Operations
We are in the development stage and do not have any historical operating
results other than interest income on unused loan proceeds and interest expense
(the majority of which has been capitalized) on our outstanding indebtedness to
Riviera Holdings, the receipt of capital contributions and the capitalization of
other costs and pre-opening general and administrative expenses in the first six
months of 1999 which have been expensed as required under generally accepted
accounting principles. See "-- Recently Issued Accounting Standards." The
capitalized costs have consisted primarily of license and permit applications,
design costs, construction costs and interest during development and
construction. Future operating results are subject to significant business,
economic, regulatory and competitive uncertainties and contingencies, many of
which are beyond our control. We believe that the Riviera Black Hawk, if
completed and opened, will be able to attract a sufficient number of patrons and
achieve the level of activity and revenues necessary to permit us to meet our
obligations, including with respect to the notes. However, there can be no
assurance that we will be able to achieve these results.
Liquidity And Capital Resources
Our purchase of the site and all development expenses to date were financed
by the proceeds from the sale of the existing notes and by capital contributions
and advances from Riviera Holdings. We expect to fund the remaining development
of the Riviera Black Hawk from a combination of (1) $21.8 million of the net
proceeds from the sale of the existing notes, which remained in the construction
disbursement account after reimbursing Riviera Holdings $10.1 million in cash
for advances made to us prior to the sale of the existing notes, (2) $10.1
million of the net proceeds from the sale of the existing notes, which were
deposited into the completion reserve account and the interest reserve account,
(3) furniture, fixtures and equipment financing in the amount of up to $10.6
million and (4) Special Improvement District Bonds in the amount of $1.5
million. In addition, Riviera Holdings will be obligated under the completion
capital commitment to contribute to us up to $10.0 million of cash to us if at
any time there are insufficient funds available to enable our casino to be
operating by May 31, 2000. In addition, if our casino is not operating by May
31, 2000, Riviera Holdings will be obligated to contribute on that date $10.0
million in cash less any amounts previously contributed under the completion
capital commitment. Furthermore, if (1) we do not have the necessary funds to
make a payment of fixed interest on the notes during our first three years of
operations or (2) our cash flow is less than $9.0 million in any of our first
three years of operations, Riviera Holdings will be obligated under the
keep-well agreement to contribute cash to us to make up those amounts, subject
to a maximum of $5.0 million for any one operating year and $10.0 million in the
aggregate.
After our casino opens, we expect to fund our operating and capital needs
from operating cash flow. We intend to have sufficient working capital to
provide for reasonably anticipated short-term liquidity needs. In addition,
Riviera Holdings has committed to provide us with additional financing under the
circumstances described above. However, there can be no assurance that any
additional financing, if needed to meet liquidity needs, will be available to us
on favorable terms or at all. There can be no assurance that our estimate of
foreseeable liquidity needs is accurate or that no new business developments or
other unforeseen events will not
18
<PAGE>
occur, any of which could result in the need to raise additional funds. We
expect that the adequacy of our operating cash flow will depend upon customer
acceptance of the Riviera Black Hawk, the continued development of the Black
Hawk/Central City market as a gaming destination, the intensity of our
competition, the efficiency of operations, the depth of customer demand, the
effectiveness of our marketing and promotional efforts and the performance by
Riviera Holdings of its agreements to provide capital to us pursuant to the
completion capital commitment and the keep-well agreement.
Recently Issued Accounting Standards
The American Institute of Certified Public Accountants' Accounting
Standards Executive Committee recently issued Statement of Position No. 98-5,
Reporting on the Costs of Start-Up Activities. This standard provides guidance
on the financial reporting for start-up costs and organization costs. This
standard requires costs of start-up activities and organization costs to be
expensed as incurred, and is effective for fiscal years beginning after December
15, 1998, although earlier application is encouraged. We adopted this standard
effective January 1, 1999. The impact has been to record a general expense of
$75,000 for the six months ended June 30, 1999, that we would have otherwise
deferred as pre-opening costs.
The Financial Accounting Standards Board recently issued FAS No. 137,
`Deferral of FAS 133 Accounting for Derivatives' which delays the implementation
of that pronouncement to June 15, 2000. We have not determined what effect, if
any, that FAS 133 may have on our results of operations.
Year 2000
In the past, many computer software programs were written using two digits
rather than four to define the applicable year. As a result, date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This situation is generally referred to as the "Year 2000 Problem". If
such situation occurs, the potential exists for computer system failures or
miscalculations by computer programs, which could disrupt operations.
We have conducted a comprehensive review of our computer systems and other
systems for the purpose of assessing our potential Year 2000 Problem, and we are
in the process of modifying or replacing those systems which are not Year 2000
compliant. Based upon this review, our management believes such systems will be
compliant by mid-calendar 1999. However, if modifications are not made or not
completed timely, the Year 2000 Problem could have a significant impact on our
operations.
All costs related to the Year 2000 Problem are expensed as incurred, while
the cost of new hardware and software is capitalized and amortized over its
expected useful life. The costs associated with Year 2000 compliance have not
been and are not anticipated to be material to our financial position or results
of operations. As of June 30, 1999, we have incurred costs of approximately
$2,000 (primarily for analysis by internal labor) related to the system
applications and anticipates spending an additional $2,000 to become Year 2000
compliant. The estimated completion date and remaining costs are based upon our
management's best estimates, as well as third party modification plans and other
factors. However, there can be no guarantee that such estimates will occur and
actual results could differ.
In addition, we have communicated with our major vendors and suppliers to
determine their state of readiness relative to the Year 2000 Problem and our
possible exposure to Year 2000 issues of such third parties. However, there can
be no guarantee that the systems of other companies, which our systems may rely
upon, will be timely converted or representations made to us by these parties
are accurate. As a result the failure of a major vendor or supplier to
adequately address their Year 2000 Problem could have a significant adverse
impact on our operations.
As a result of various external risk factors, we could be adversely
impacted and the effect could be material regardless of the readiness of our own
systems. The most reasonable worst case scenario - if one or more of our utility
providers (of electric, natural gas, water, sewer) experiences Year 2000
problems that impact their ability to provide their services, our operations
could be adversely impacted. Furthermore, disruption of services for any of the
markets for our customers could result in an adverse change in customer visits
from the affected market. Automobile traffic to and from the Black Hawk/Central
City market could be disrupted by Year 2000 problems, which would limit the
ability of potential customers to visit our property. The possible long term
disruption of banking services due to Year 2000 problems could ultimately impair
our daily financial transactions, including the deposit of monies and processing
of checks. Furthermore, credit card processing and customers' access to cash via
automated teller machines could also be disrupted. In the event of this type of
disruption, we intend to provide minimal services to our customers and assist
19
<PAGE>
them, if possible, with transportation to the metropolitan Denver area as hotel
facilities are extremely limited in the Black Hawk/Central City area.
We have developed, and continue to update and revise, contingency plans to
address the identified risks. However, given the nature of many of the external
risk factors, we do not believe viable alternatives would be available. For
example, we cannot develop a meaningful contingency plan to address a disruption
of utilities services. Consequently, the occurrence of any of the aforementioned
disruptions could, depending upon their severity and duration, have a material
adverse impact on our operating results.
20
<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
We issued and sold the existing notes to the Initial Purchaser on June 3,
1999 (the "Issue Date"). The Initial Purchaser subsequently sold the existing
notes to qualified institutional buyers in reliance on Rule 144A under the
Securities Act. Because the existing notes are subject to transfer restrictions,
our company and the Initial Purchaser entered into a registration rights
agreement dated June 3, 1999 (the "registration rights agreement"), pursuant to
which we agreed:
- within 45 days after the Issue Date, to prepare and file with the
Securities and Exchange Commission the Registration Statement of which
this prospectus is a part;
- within 150 days after the Issue Date, to use our best efforts to cause
the Registration Statement to become effective under the Securities
Act;
- upon the effectiveness of the Registration Statement, to offer the
exchange notes in exchange for surrender of the existing notes; and
- to keep the exchange offer open for not less than 30 days (or longer
if required by applicable law) after the date notice of the exchange
offer is mailed to the holders of the existing notes.
The Registration Statement is intended to satisfy in part our obligations with
respect to the existing notes under the registration rights agreement.
Under existing interpretations of the Securities and Exchange Commission,
the exchange notes will be freely transferable by holders other than our
affiliates after the exchange offer without further registration under the
Securities Act if the holder of the exchange notes represents that:
- it is acquiring the exchange notes in the ordinary course of its
business;
- it has no arrangement or understanding with any person to participate
in the distribution of the exchange notes;
- it is not an affiliate of the Company, as such terms are interpreted
by the Securities and Exchange Commission; and
- if such holder is not a broker-dealer, then such holder is not engaged
in and does not intend to engage in, a distribution of the exchange
notes.
However, broker-dealers ("Participating Broker-Dealers") receiving exchange
notes in the exchange offer will have a prospectus delivery requirement with
respect to resales of such exchange notes. The Securities and Exchange
Commission has taken the position that Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to exchange notes, other
than a resale of an unsold allotment from the original sale of the existing
notes, with this prospectus. Under the registration rights agreement, we are
required to allow Participating Broker-Dealers and other persons, if any, with
similar prospectus delivery requirements to use this prospectus in connection
with the resale of such exchange notes. Each broker-dealer that receives
exchange notes for its own account in exchange for existing notes, where such
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. See "Plan of
Distribution."
Terms of The Exchange Offer; Period For Tendering Existing Notes
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying Letter of Transmittal (which together constitute the
exchange offer), we will accept for exchange existing notes which are properly
tendered on or prior to the expiration date and not withdrawn as permitted
below. As used in the prospectus, the term "expiration date" means 5:00 p.m.,
New York City time, on __________ __, 1999 (90 days after the effective date of
this Registration Statement).
21
<PAGE>
However, if we, in our sole discretion, have extended the period of time for
which the exchange offer is open, the term "expiration date" means the latest
time and date to which the exchange offer is extended.
As of the date of this prospectus, $45.0 million aggregate principal amount
of the existing notes are outstanding. This prospectus, together with the Letter
of Transmittal, is first being sent on or about ___________ __, 1999, to all
holders of existing notes known to us. Our obligation to accept existing notes
for exchange pursuant to the exchange offer is subject to the conditions as set
forth under "--Conditions to the Exchange Offer" below.
We expressly reserve the right, at any time or from time to time, to extend
the period of time during which the exchange offer is open, and thereby delay
acceptance for any exchange of any existing notes, by giving notice of such
extension to the holders of existing notes as described below. During any such
extension, all existing notes previously tendered will remain subject to the
exchange offer and may be accepted for exchange by us. Any existing notes not
accepted for exchange for any reason will be returned without expense to the
tendering holder as promptly as practicable after the expiration or termination
of the exchange offer.
We expressly reserve the right to amend or terminate the exchange offer,
and not to accept for exchange any existing notes not previously accepted for
exchange, upon the occurrence of any of the conditions of the exchange offer
specified below under "--Conditions to the Exchange Offer." We will give notice
of any extension, amendment, non-acceptance or termination to the holders of the
existing notes as promptly as practicable, such notice in the case of any
extension to be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date.
Holders of existing notes do not have any appraisal or dissenters' rights
in connection with the exchange offer.
Procedures for Tendering existing notes
The tender to us of existing notes by a holder of existing notes as set
forth below and the acceptance of such tender by us will constitute a binding
agreement between the tendering holder and us upon the terms and subject to the
conditions set forth in this prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a holder who wishes to tender existing
notes for exchange pursuant to the exchange offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to IBJ Whitehall Bank & Trust Company of
New York at one of the addresses set forth below under "--Exchange Agent" on or
prior to the expiration date. In addition, the exchange agent must receive:
- certificates for such existing notes along with the Letter of
Transmittal, or
- prior to the expiration date, a timely confirmation of a book-entry
transfer (a "book-entry confirmation") of such existing notes into the
exchange agent's account at The Depository Trust Company (the
"book-entry transfer facility" or the "Depositary") pursuant to the
procedure for book-entry transfer described below, or
- the holder must comply with the guaranteed delivery procedure
described below.
The method of delivery of existing notes, Letters of Transmittal and all
other required documents is at your election and risk. If such delivery is by
mail, we recommend that you use registered mail, properly insured, with return
receipt requested. In all cases, you should allow sufficient time to assure
timely delivery. You should not send Letters of Transmittal or existing notes to
us.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the existing notes surrendered for
exchange are tendered:
- by a registered holder of the existing notes who has not completed the
box entitled "Special Issuance Instruction" or "Special Delivery
Instruction" on the Letter of Transmittal; or
- for the account of an Eligible Institution.
In the event that signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantees
must be by a firm which is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or by a
commercial bank or trust company having an office or correspondent in the
22
<PAGE>
United States (collectively, "Eligible Institutions"). If existing notes are
registered in the name of a person other than a signer of the Letter of
Transmittal, the existing notes surrendered for exchange must be endorsed by, or
be accompanied by a written instrument or instruments of transfer or exchange,
in satisfactory form as determined by us in our sole discretion, duly executed
by the registered holder with the signature on such existing notes guaranteed by
an Eligible Institution.
Any beneficial owner whose existing notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, and who wishes
to tender, should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's existing notes, either (1) make appropriate arrangements to register
ownership of the existing notes in such owner's name or (2) obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of existing notes tendered for exchange will be
determined by us in our sole discretion. This determination shall be final and
binding. We reserve the absolute right to reject any and all tenders of any
particular existing notes not properly tendered or to not accept any particular
existing notes which acceptance might, in our judgment or our counsel's
judgment, be unlawful. We also reserve the absolute right to waive any defects
or irregularities or conditions of the exchange offer as to any particular
existing notes either before or after the expiration date including the right to
waive the ineligibility of any holder who seeks to tender existing notes in the
exchange offer. The interpretation of the terms and conditions of the exchange
offer as to any particular existing notes either before or after the expiration
date, including the Letter of Transmittal and the instructions to such Letter of
Transmittal, by us shall be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of existing notes for
exchange must be cured within such reasonable period of time as we shall
determine. Neither we, the exchange agent nor any other person shall be under
any duty to give notification of any defect or irregularity with respect to any
tender of existing notes for exchange, nor shall any of them incur any liability
for failure to give such notification.
If the Letter of Transmittal or any existing notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
us, proper evidence satisfactory to us of their authority to so act must be
submitted.
By tendering, each holder of existing notes will represent to us in writing
that, among other things:
- the exchange notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of business of the holder and any
beneficial holder;
- neither the holder nor any such beneficial holder has an arrangement
or understanding with any person to participate in the distribution of
such exchange notes; and
- neither the holder nor any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act, of our company. If the
holder is not a broker-dealer, the holder must represent that it is
not engaged in nor does it intend to engage in it distribution of the
exchange notes.
If any holder or any such other person is an "affiliate," as defined under
Rule 405 of the Securities Act of ours, or is engaged in, or intends to engage
in, or has an arrangement or understanding with any person to participate in, a
distribution of such exchange notes to be acquired pursuant to the exchange
offer, such holder or any such other person (1) may not rely on the applicable
interpretations of the staff of the Securities and Exchange Commission and (2)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
If the holder is a broker-dealer, the holder must represent that it will
receive exchange notes for its own account in exchange for existing notes that
were acquired as a result of market-making activities or other trading
activities. Each broker-dealer that receives exchange notes for its own account
in exchange for existing notes, where such existing notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (an "Exchanging Dealer"), must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. See "Plan of
Distribution."
23
<PAGE>
Acceptance of existing notes for exchange; Delivery Of exchange notes
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all existing notes property
tendered, and will issue the exchange notes promptly after acceptance of the
existing notes. See "--Conditions to the Exchange Offer" below. For purposes of
the exchange offer, we shall be deemed to have accepted properly tendered
existing notes for exchange when, as and if we have given oral and written
notice to the exchange agent.
The exchange notes will bear interest from the most recent date to which
interest has been paid on the existing notes, or if no interest has been paid on
the existing notes, from June 3, 1999. Accordingly, registered holders of
exchange notes on the relevant record date for the first interest payment date
following the consummation of the exchange offer will receive interest accruing
from the most recent date to which interest has been paid or, if no interest has
been paid, from June 3, 1999. Existing notes accepted for exchange will cease to
accrue interest from and after the date of consummation of the exchange offer.
Holders of existing notes whose existing notes are accepted for exchange will
not receive any payment in respect of accrued interest on such existing notes
otherwise payable on any interest payment date the record date for which occurs
on or after consummation of the exchange offer and will be deemed to have waived
their rights to receive such accrued interest on the existing notes.
In all cases, issuance of exchange notes for existing notes that are
accepted for exchange pursuant to the exchange offer will be made only after
timely receipt by the exchange agent of (1) certificates for such existing notes
or a timely book-entry confirmation of such existing notes into the exchange
agent's account at the book-entry transfer facility, (2) a properly completed
and duly executed Letter of Transmittal and (3) all other required documents. If
any tendered existing notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if existing notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged existing notes will be returned without expense to
the tendering holder of such existing notes (or, in the case of existing notes
tendered by book-entry transfer into the exchange agent's account at the
book-entry transfer facility pursuant to the book-entry transfer procedures
described below, such non-exchanged existing notes will be credited to an
account maintained with such book-entry transfer facility) as promptly as
practicable after the expiration of the exchange offer.
Book-Entry Transfer
Any financial institution that is a participant in the book-entry transfer
facility's systems may make book-entry delivery of existing notes by causing the
book-entry transfer facility to transfer such existing notes into the exchange
agent's account at the book-entry transfer facility in accordance with such
book-entry transfer facility's procedures for transfer. However, although
delivery of existing notes may be effected through book-entry transfer at the
book-entry transfer facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the exchange agent at one of the
addresses set forth below under "--Exchange Agent" on or prior to the expiration
date, unless such holder has strictly complied with the guaranteed delivery
procedures described below.
We understand that the exchange agent has confirmed with the book-entry
transfer facility that any financial institution that is a participant in the
book-entry transfer facility's system may utilize the book-entry transfer
facility's Automated Tender Offer Program ("ATOP") to tender existing notes. We
further understand that the exchange agent will request, within two business
days after the date the exchange offer commences, that the book-entry transfer
facility establish an account with respect to the existing notes for the purpose
of facilitating the exchange offer, and any participant may make book-entry
delivery of existing notes by causing the book-entry transfer facility to
transfer such existing notes into the exchange agent's account in accordance
with the book-entry transfer facility's ATOP procedures for transfer. However,
the exchange of the existing notes so tendered will only be made after timely
confirmation (a "book-entry confirmation") of such book-entry transfer and
timely receipt by the exchange agent of an agent's message, an appropriate
Letter of Transmittal with any required signature guarantee, and any other
documents required. The term "agent's message" means a message, transmitted by
the book-entry transfer facility and received by the exchange agent and forming
part of book-entry confirmation, which states that the book-entry transfer
facility has received an express acknowledgment from a participant tendering
existing notes which are the subject of such book-entry confirmation and that
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal and that we may enforce such agreement against such participant.
24
<PAGE>
Guaranteed Delivery Procedures
If a registered holder of the existing notes desires to tender such
existing notes and the existing notes are not immediately available, or time
will not permit such holder's existing notes or other required documents to
reach the exchange agent before the expiration date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may
nonetheless be effected if:
- the tender is made through an Eligible Institution;
- prior to the expiration date, the exchange agent received from such
Eligible Institution a properly completed and duly executed Letter of
Transmittal and Notice of Guaranteed Delivery, substantially in the
form provided by us by telegram, telex, facsimile transmission, mail
or hand delivery, setting forth the name and address of the holder of
existing notes and the amount of existing notes tendered, stating that
the tender is being made thereby and guaranteeing that within five New
York Stock Exchange ("NYSE") trading days after the date of execution
of the Notice of Guaranteed Delivery, the certificates for all
physically tendered existing notes, in proper form for transfer, or a
book-entry confirmation, as the case may be, and any other documents
required by the Letter of Transmittal will be deposited by the
Eligible Institution with the exchange agent; and
- the certificates for all physically tendered existing notes, in proper
form for transfer, or a book-entry confirmation, as the case may be,
and all other documents required by the Letter of Transmittal are
received by the exchange agent within five NYSE trading days after the
date of execution of the Notice of Guaranteed Delivery.
Withdrawal Rights
Tenders of existing notes may be withdrawn at any time prior to the
expiration date. For a withdrawal to be effective, a written notice of
withdrawal must be received by the exchange agent at one of the addresses set
forth below under "--Exchange Agent." Any such notice of withdrawal must:
- specify the name of the person having tendered the existing notes to
be withdrawn;
- identify the existing notes to be withdrawn and the principal amount
of such existing notes; and
- where certificates for existing notes have been transmitted specify
the name in which such existing notes are registered, if different
from that of the withdrawing holder.
If certificates for existing notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution.
If existing notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn existing notes and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility, including time of receipt, of such notices will be determined by
us, whose determination shall be final and binding on all parties. Any existing
notes so withdrawn will be deemed not to have been validly tendered for exchange
for purposes of the exchange offer. Any existing notes which have been tendered
for exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or in the case of existing notes
tendered by book-entry transfer into the exchange agent's account at the
book-entry transfer facility pursuant to the book-entry transfer procedures
described above, such existing notes will be credited to an account maintained
with such book-entry transfer facility for the existing notes) as soon as
practicable after withdrawal, rejection of tender or termination of the exchange
offer. Properly withdrawn existing notes May be retendered by following one of
the procedures described under "--Procedures for Tendering existing notes" above
at any time on or prior to the expiration date.
25
<PAGE>
Conditions To The Exchange Offer
Notwithstanding any other provision of the exchange offer, we shall not be
required to accept for exchange, or to issue exchange notes in exchange for, any
existing notes. We may terminate or amend the exchange offer if it any time
before the acceptance of such existing notes for exchange or the exchange of
exchange notes for such existing notes, we determine that:
- the exchange offer does not comply with any applicable law or any
applicable interpretation of the staff of the Securities and Exchange
Commission;
- we have not received all applicable governmental approvals; or
- any actions or proceedings of any governmental agency or court exist
which could materially impair our ability to consummate the exchange
offer.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in its
reasonable discretion. Our failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any existing notes tendered,
and no exchange notes will be issued in exchange for any such existing notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). In any such event we are required to use every
reasonable effort to obtain the withdrawal of any stop order at the earliest
possible time.
Exchange Agent
IBJ Whitehall Bank & Trust Company has been appointed as the exchange agent
for the exchange offer. All executed Letters of Transmittal should be directed
to the exchange agent at one of the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this prospectus or of
the Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to the exchange agent addressed as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
By Hand, up to 4:30 p.m.: By Registered or Certified Mail: By Overnight Courier & By Hand after 4:30
p.m. on the expiration date only:
IBJ Whitehall Bank & IBJ Whitehall Bank & IBJ Whitehall Bank &
Trust Company Trust Company Trust Company
One State Street P.O. Box 84 One State Street
New York, New York 10004 Bowling Green Station New York, New York 10004
Attn: Securities Processing Window, New York, New York 10274-0084 Attn: Securities Processing Window,
Subcellar One, (SC-1) Subcellar One, (SC-1)
By Facsimile:
(212) 858-2611
Confirm by Telephone:
(212) 858-2103
</TABLE>
Delivery other than as set forth above will not constitute a valid delivery.
26
<PAGE>
Fees and Expenses
We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail. However, additional solicitations may be made in person or by telephone by
officers and employees of the Company.
The expenses to be incurred in connection with the exchange offer will be
paid by us. Such expenses include fees and expenses of the exchange agent and
Trustee, accounting and legal fees and printing costs, among others.
Accounting Treatment
The exchange notes will be recorded at the same carrying amount as the
existing notes, which is the principal amount as reflected in our accounting
records on the date of the exchange and, accordingly, no gain or loss will be
recognized. The debt issuance costs will be capitalized and amortized to
interest expense over the term of the exchange notes.
Transfer Taxes
Holders who tender their existing notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct us to register exchange notes in the name of, or request that existing
notes not tendered or not accepted in the exchange offer be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.
Consequences of failure to exchange; Resales of exchange notes
Holders of existing notes who do not exchange their existing notes for
exchange notes in the exchange offer will continue to be subject to the
restrictions on transfer of such existing notes as set forth in the legend
thereon as a consequence of the issuance of the existing notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of, the Securities Act and applicable state securities laws.
Existing notes not exchanged pursuant to the exchange offer will continue to
accrue interest at 13% per annum and will otherwise remain outstanding in
accordance with their terms. Holders of existing notes do not have any appraisal
or dissenters' rights under the Colorado Business Corporation Act in connection
with the exchange offer. In general, the existing notes may not be offered or
sold unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. We do not currently anticipate that we will register the
existing notes under the Securities Act. However, (1) if the Initial Purchaser
so requests with respect to existing notes not eligible to be exchanged for
exchange notes in the exchange offer and held by it following consummation of
the exchange offer or (2) if any holder of existing notes other than an
Exchanging Dealer is not eligible to participate in the exchange offer or, in
the case of any holder of existing notes other than an Exchanging Dealer that
participates in the exchange offer, does not receive exchange notes in exchange
for existing notes that may be sold without restriction under state and federal
securities laws (other than due solely to the status of such holder as an
affiliate of us within the meaning of the Securities Act), we are obligated to
file a shelf registration statement on the appropriate form under the Securities
Act relating to the existing notes held by such persons.
Based on certain interpretive letters issued by the staff of the Securities
and Exchange Commission to third parties in unrelated transactions, we are of
the view that exchange notes issued pursuant to the exchange offer may be
offered for resale, resold or otherwise transferred by holders thereof (other
than (1) any such holder which is our "affiliate" within the meaning of Rule 405
under the Securities Act or (2) any broker-dealer that purchases notes from us
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such exchange notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement or
understanding with any person to participate in the distribution of such
exchange notes. If any holder has any arrangement or understanding with respect
to the distribution of the exchange notes to be acquired pursuant to the
exchange offer, such holder (1) could not rely on the applicable interpretations
of the staff of the Securities and Exchange Commission and (2) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. A broker-dealer who holds
existing notes that were acquired for its own account as a result of
27
<PAGE>
market-making or other trading activities may be deemed to be all
"underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of exchange notes. Each such broker-dealer that
receives exchange notes for its own account in exchange for existing notes,
where such existing notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge in the
Letter of Transmittal that it will deliver a prospectus in connection with any
resale of such exchange notes. See "Plan of Distribution." We have not requested
the staff of the Securities and Exchange Commission to consider the exchange
offer in the context of a no-action letter, and there can be no assurance that
the staff would take positions similar to those taken in the interpretive
letters referred to above if we were to make such a no-action request.
In addition, the exchange notes may not be offered or sold in a
jurisdiction unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied with. We have agreed, pursuant to the registration rights
agreement and subject to the specified limitations therein, to register or
qualify the exchange notes for offer or sale under the securities or blue sky
laws of such jurisdictions in the United States as any selling holder of the
Notes reasonably requests in writing.
28
<PAGE>
BUSINESS
Riviera Black Hawk
Riviera Black Hawk, is constructing and will own and operate one of the
largest integrated casino, entertainment and parking facilities in the state of
Colorado. Located in Black Hawk, Colorado, approximately 40 miles west of
Denver, our casino will be one of the first three encountered when traveling
from Denver to the adjacent gaming cities of Black Hawk and Central City. Our
casino will feature the second largest number of gaming positions in the market
with approximately 1,000 slot machines and 12 blackjack tables. We also expect
to offer a variety of non-gaming amenities designed to further differentiate our
casino including: (1) parking for 520 vehicles (92% of which will be covered)
with convenient and free self-park and valet options, (2) a 265-seat casual
dining restaurant, (3) two themed bars and (4) an entertainment center with
seating for approximately 500 people.
The initial participants in this market were small, privately held gaming
facilities whose inability to offer convenient parking and a full range of
traditional casino amenities limited the growth of this market. Subsequently,
larger casinos offering such amenities have entered the market, have been
gaining market share and have contributed to the consistent growth in the
overall market. As of June 30, 1999, there were 29 casinos in the Black
Hawk/Central City market, with eight casinos each offering more than 400 gaming
positions. Anchor Gaming's Colorado Central Station, located across the street
from our casino with approximately 700 gaming machines and 700 valet parking
spaces, has been the market leader in terms of win per gaming device. We believe
that our casino will be successful due to our: (1) premier location; (2)
convenient, covered self-parking; and (3) superior size and amenities.
We expect to open our casino in the first quarter of 2000. The total cost
for our casino, excluding capitalized interest, is expected to be $77.1 million,
which includes (1) $15.1 million for the original purchase of the land on which
our casino is being developed, (2) $27.6 million of construction costs, (3)
$10.6 million for furniture, fixtures and equipment, (4) $8.0 million for
project development costs, fees and permits, (5) $2.7 million for pre-opening
costs, opening bankroll and other working capital requirements, (6) $10.1
million for a completion reserve and an interest reserve and (7) $3.0 million
for fees and expenses related to the sale of the existing notes. We believe the
construction budget and timetable for our casino can be achieved based on the
following:
- construction costs will be incurred pursuant to a construction
contract with a maximum price of $27.6 million, except for our changes
in specifications or delays caused by our company or "force majeure"
events;
- the foundation and external structure of the facility has been
substantially completed;
- $14.9 million (54%) of the $27.6 million construction budget had been
expended under the construction contract as of June 30, 1999;
- the construction contract provides for a completion date of January
15, 2000 with incentives for finishing early and penalties for
finishing late.
Description of the Riviera Black Hawk
General. The Riviera Black Hawk is designed to be an integrated gaming
facility, providing customers with a broad selection of gaming activities, food
and entertainment as well as convenient on-site covered parking. Our casino is
being constructed on a 71,000 square foot (1.63 acres) site zoned entirely for
gaming, providing us with the flexibility to add additional gaming space as
allowable under Colorado gaming regulations. Total square footage for the
facility will be 300,000 square feet, which includes a 175,000 square foot
parking structure. The land is not subject to any material encumbrances.
The exterior design of our casino is based on the historic Western
Victorian influence found in the Black Hawk area in the late 19th century.
Patrons will be able to enter the casino from three entrances: (1) a
glass-covered pedestrian entrance facing the Colorado Central Station on the
corner of Main and Mill Street, which will serve as the main entrance for
pedestrians coming from the Colorado Central Station and other casinos across
Mill Street as well as the west entrance of the Isle of Capri Casino; (2) a
valet and pedestrian entrance facing the Isle of Capri Casino across Main
Street, which will serve as the main entrance for our valet customers, bus
customers and pedestrians leaving the Isle of Capri Casino through the north
entrance; and (3) elevator access from our attached self-parking structure.
29
<PAGE>
The interior of the casino will blend the Western Victorian theme with the
exciting atmosphere of a modern casino, complete with state-of-the-art slot
machines and blackjack tables. The ambiance on the casino floor will be enhanced
by the view of the surrounding mountains offered through large windows. Also
adding to the Western Victorian theme will be a large, ornate bar located in the
center of the casino floor. Our casino will include 30,000 square feet of gaming
space located "Las Vegas-style" on a single floor. We expect to offer one of the
largest selections of gaming in the market with approximately 1,000
state-of-the-art slot machines and 12 blackjack tables. Each slot machine and
each gaming table is considered one gaming position. The slot machines will be
available to customers in numerous denominations, including 5(cent), 25(cent),
$1 and $5 and will be grouped together to generate an atmosphere of excitement
consistent with that typically found in Las Vegas-style casinos.
The Black Hawk/Central City Market
Gaming was first introduced to the Black Hawk/Central City market in
October 1991 following a state-wide referendum where Colorado voters approved
limited stakes gaming for three historic mining towns -- Black Hawk, Central
City and Cripple Creek. Limited stakes gaming is defined as a maximum single bet
of $5. Black Hawk and Central City are contiguous cities located approximately
40 miles west of Denver and about ten miles north of Interstate Highway 70, the
main east-west artery from Denver. Historically, these two gold mining
communities were popular tourist towns. However, since the inception of casino
gaming in October 1991, many of the former tourist-related businesses have been
displaced by gaming establishments.
The first casino in the Black Hawk/Central City market was opened in
October 1991 with 14 casinos open by the end of that year. The pace of expansion
increased further in 1992 with the number of casinos in the market peaking at 42
casinos. However, due to a trend of consolidation in the market and the
displacement of small casinos by the entry of larger, better capitalized
operators, the number of casinos has declined to 29 as of June 30, 1999.
The Black Hawk/Central City market primarily caters to "day-trip" customers
from Denver, Boulder, Fort Collins and Golden as well as Cheyenne, Wyoming.
Approximately 3.3 million people reside within this 100-mile radius of Black
Hawk. Denver provides the market with a demographic base of approximately 1.9
million residents. In addition, residents within a 100 mile radius of the City
of Black Hawk had an average household income in excess of $51,000 per annum in
1998. Daily traffic counts passing the Black Hawk/Central City market on Highway
119, as reported by the Colorado Department of Transportation, averaged over
14,000 vehicles per day in 1998.
The Black Hawk/Central City market's location has contributed to consistent
growth in the market since the legalization of gaming in 1991. Gaming revenues
have grown from $127.6 million in 1992 to $366.0 million in 1998, representing a
19% compound annual growth rate. These revenues represented approximately 76% of
total Colorado gaming revenues (excluding gaming on Native American land).
30
<PAGE>
The following table sets forth gaming statistics for the Black Hawk/Central
City market and well as the individual cities of Black Hawk and Central City:
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Black Hawk
Gaming revenues (in thousands).. $ 173,703 $195,857 $219,911 $234,631 $272,008
Number of casinos(1)............ 19 19 19 19 19
Number of slots(1).............. 4,231 4,877 5,276 5,340 7,181
Number of tables(1)............. 103 113 111 106 125
Win per slot per day(2)......... $ 97.71 $ 104.70 $ 110.68 $ 113.77 $ 122.24
Win per table per day(2)........ $ 375.06 $ 365.57 $ 365.83 $ 370.50 $ 383.69
Central City
Gaming revenues (in thousands).. $ 69,702 $ 94,468 $ 88,870 $ 87,391 $ 93,980
Number of casinos(1)............ 17 13 12 12 12
Number of slots(1).............. 4,311 3,670 3,259 3,196 3,142
Number of tables(1)............. 92 72 60 58 46
Win per slot per day(2)......... $ 54.63 $ 60.51 $ 66.96 $ 67.97 $ 81.15
Win per table per day(2)........ $ 245.32 $ 282.12 $ 244.14 $ 219.63 $ 224.21
Black Hawk/Central City Market
Gaming revenues (in thousands).. $ 243,405 $290,325 $308,781 $322,022 $365,988
Number of casinos(1)............ 36 32 31 31 31
Number of slots(1).............. 8,542 8,547 8,535 8,536 10,323
Number of tables(1)............. 195 185 171 164 171
</TABLE>
- ----------
(1) As of December 31 for each period shown.
(2) Win per gaming position per day is based on the weighted average number of
units during the period presented. Source: Colorado Division of Gaming and Urban
Systems, Inc.
Slot machines account for approximately 95% of the market's total gaming
revenues. In contrast, as of December 31, 1998, slot machines in the developed
gaming markets of Nevada and New Jersey generate between 65% and 69% of total
revenues while slot revenues in emerging markets such as Iowa and Indiana
account for approximately 78% of total revenues.
Since 1992, the number of gaming positions in the Black Hawk/Central City
market has grown approximately 44.7% from 7,252 positions in 1992 to 10,494
positions in 1998. The total number of slot machines has increased 45.8% since
1992 to 10,323 in 1998 while the total number of tables in the market has
remained relatively flat with 171 tables in the market at the end of 1998. Win
per gaming position per day has continued to grow despite the increase in the
number of gaming positions.
The City of Black Hawk has experienced more significant growth in gaming
revenues than Central City since 1992. The popularity of Black Hawk in
comparison to Central City is due primarily to Black Hawk's superior access to
major highways, as patrons must first pass through Black Hawk to access Central
City from Denver. Due to this superior location, larger casino operators have
focused on building in the City of Black Hawk. As a result, casinos in Black
Hawk now generally feature a larger average number of gaming positions, a wider
variety of high quality amenities and convenient and free parking for patrons.
These factors have contributed to growth in Black Hawk gaming revenues at a
compound annual rate of 30.1% since 1992 compared to a more moderate growth for
Central City of 4.7% over the same period. The number of slot machines and
tables in the City of Black Hawk have increased 125.0% and 50.6%, respectively
since 1992, while the number of slot machines and tables in Central City have
declined 19.1% and 49.5%, respectively over the same period.
The information contained in this discussion of the Black Hawk/Central City
market was derived from publicly available data, except where stated otherwise.
See "Risk Factors -- Competition" and "Risk Factors -- Reliability of Market
Data."
31
<PAGE>
Marketing Strategy
We plan to attract customers to our casino by implementing marketing
strategies and promotions designed specifically for this market. In doing so, we
hope to create customer loyalty and benefit from repeat visits by our customers.
We intend to capitalize on our superior facilities. Specific marketing programs
to support this strategy include the Riviera Player's Club and "V.I.P." services
offered to repeat gaming customers. The Player's Club is a promotion that
rewards casino play and repeat visits to the casino with various privileges and
amenities such as cash bonuses, logo gift items and invitations to special
events, including free slot tournaments and parties. Riviera Holdings has used
the Player's Club promotion in its casino in Las Vegas and, in its capacity as
manager of the Riviera Black Hawk, will tailor it for the Black Hawk/Central
City market and implement it at our casino. "V.I.P." services will be available
to the highest level of players and will include special valet and self-parking
services, complimentary food and entertainment offerings and special events
specifically designed for this group of customers.
We believe that we will benefit from strong "walk-in" traffic due to the
proximity of our casino to the Colorado Central Station and the Isle of Capri
Casino. We intend to develop specific marketing programs designed to attract
these "walk-in" customers. We further intend to emphasize quality food and
beverage amenities with customer friendly service as a marketing tool. In
addition, we will provide entertainment programs designed to meet the tastes of
the Black Hawk/Central City market, such as live music performances by popular
regional and national groups.
We also intend to utilize proven database marketing techniques previously
implemented by Riviera Holdings at its casino in Las Vegas. Approximately two to
three months prior to opening, we expect to begin to solicit members for our
Players Club using direct mail advertising. Once our casino is opened to the
public, the database will be primarily derived from information supplied by the
Players Club, which will help us to identify our best customers by reference to
levels of play and frequency of visits. We plan to rely on database marketing in
order to best identify target customer segments of the population and to tailor
the casino's promotions and amenities to our core group of customers. We will
use the current database maintained by Riviera Hotel & Casino in Las Vegas to
identify and stratify slot players living in Colorado (approximately 7,000 slot
players have been identified) for appropriate incentives. We will establish a
bus program that will offer bus patrons incentives directed specifically to them
with an accelerated award program based on levels of play. In addition, we plan
to promote our casino by advertising in newspapers and on billboards in the
local areas.
Competition
We believe that the primary competitive factors in the market are casino
location, availability and convenience of parking, number of slot machines and
gaming tables, types and pricing of non-gaming amenities, name recognition and
overall atmosphere. We believe our casino will compete favorably with respect to
each of these factors.
See "Risk Factors" for a description of the competitive factors that could
impact our casino's financial performance.
Design and Construction Summary
We have assembled what we believe to be a qualified team to design and
construct the Riviera Black Hawk.
- The Weitz Company, Inc. has been retained as general contractor to
build the Riviera Black Hawk. Based on industry sources, Weitz is
ranked among the top 50 building contractors in the United States
based on total revenues from general building and is the fifth largest
contractor in the State of Colorado. Weitz has extensive experience
building in mountainous terrain, including projects in Vail, Colorado
and Keystone, Colorado.
- Melick Associates, Inc. has been retained as the architects for the
Riviera Black Hawk. Melick Associates has experience with casino
projects in mountainous terrain, including projects in Black Hawk,
Central City and Cripple Creek.
- John Franzoi, Riviera Operating Corporation's Vice President of
Construction, is managing project development and construction for the
Riviera Black Hawk. Mr. Franzoi has a State of Nevada general
contractors license and has over 30 years of experience in the
construction industry.
- Phillip Harris has been retained as our representative and
construction consultant for the Riviera Black Hawk project. Mr. Harris
is assisting Mr. Franzoi in monitoring the progress of the
construction of the Riviera Black Hawk. Mr. Harris is a construction
consultant with over 30 years construction experience, most recently
as Vice President and Operations Manager for GE Johnson Construction
Company.
32
<PAGE>
We have entered into a construction contract with Weitz. The construction
contract provides that Weitz and various subcontractors will construct the
Riviera Black Hawk, including site development, excavation and construction of
the casino and parking garage. For a description of the terms of the
construction contract, see "Material Agreements -- Construction Contract."
We have also entered into an architectural contract with Melick Associates
for the architectural design of our casino. The architectural contract covers
architectural and interior design and specifications. Melick Associates will
administer the construction contract and coordinate and integrate its work with
the design build subcontractors. For a description of the terms of our contract
with Melick Associates, see "Material Agreements -- Architectural Contract."
The scope of permits and approvals required for the construction of our
casino is extensive and includes state and local land use permits, excavation,
building and zoning permits, architectural approvals and approval of street and
traffic signals. To date, we have obtained all City of Black Hawk, State of
Colorado and federal permits required to construct our casino.
Management
Riviera Gaming Management of Colorado, Inc. (the "Manager"), which is our
direct corporate parent and an indirect, wholly-owned subsidiary of Riviera
Holdings, will manage the operations of our casino. We have entered into a
management contract for the provision of these management services, which is
described in greater detail under the section "Material Agreements -- Management
Agreement."
Intellectual Property
We have entered into a license agreement with Riviera Operating
Corporation, a subsidiary of Riviera Holdings, which permits us to use the
trademark "Riviera" and other trademarks and logos in connection with our casino
on a royalty free basis. The terms of this license agreement are summarized in
greater detail in the section "Material Agreements -- Intellectual Property
License Agreement."
Property
Our casino is being constructed on a 71,000 square foot (1.63 acres) parcel
of land in Black Hawk, Colorado, which we own. We have no other properties.
Employees
We anticipate that when the Riviera Black Hawk opens, it will have an
average of approximately 350 full-time equivalent employees, with the highest
number of employees expected during the summer season.
Legal Proceedings
We are not a party to any litigation.
Riviera Holdings Corporation
Riviera Holdings, through its wholly-owned subsidiaries, owns and operates
the Riviera Hotel & Casino located on the Las Vegas Strip. Opened in 1955, the
Riviera Hotel & Casino is situated on a 26-acre site located across the Strip
from Circus Circus and across Paradise Road from the Las Vegas Hilton and the
Las Vegas Convention Center.
33
<PAGE>
GAMING AND LIQUOR REGULATORY MATTERS
Summary
In general we, Riviera Holdings, our principal executive officers and those
of Riviera Holdings, and any of our employees who will be involved in our gaming
operations, will be required to be licensed or found suitable for licensure by
the Colorado Gaming Commission. Colorado also requires that significant
stockholders of 5% or more of Riviera Holdings be certified as suitable for
licensure. The licensure process involves the filling out of a form prescribed
by the Colorado Gaming Commission, an interview of the prospective applicant and
an investigation of such applicant to the extent the Staff of the Colorado
Gaming Commission deems necessary. We pay the investigation costs. If any such
officer, director or employee were found to be unsuitable for licensure by the
Colorado Gaming Commission, we would have to replace such person. If the
Colorado Gaming Commission objected to our licensure or that of Riviera Holdings
or its significant stockholders, we might be forced to sell our interest in
Riviera Black Hawk and pay off the notes to the extent of the net sale proceeds.
If the objection of the Colorado Gaming Commission related to licensure or
suitability for licensure of any of Riviera Holdings' significant stockholders,
Riviera Holdings might attempt to purchase or arrange for the purchase of the
Riviera Holdings shares owned by the stockholder to which the Colorado Gaming
Commission objected, but Riviera Holdings' ability to make such purchase is
limited and it is uncertain whether Riviera Holdings could arrange for such
stock repurchase. At present, we have no reason to believe that we will have any
problem with respect to licensure by Colorado. See "Risk Factors -- Gaming
Licenses, Permits and Approvals."
Background
Pursuant to an amendment to the Colorado Constitution (the "Colorado
Amendment"), limited stakes gaming became lawful in the cities of Central City,
Black Hawk and Cripple Creek on October 1, 1991. Limited stakes gaming means a
maximum single bet of five dollars on slot machines and in the card games of
blackjack and poker.
The Colorado Amendment, restricts limited stakes gaming to structures that
conform to the architectural styles and designs that were common to the areas
prior to World War 1, and which conform to the requirements of applicable city
ordinances regardless of the age of the structures. No more than 35% of the
square footage of any building and no more than 50% of any one floor of any
building may be used for limited stakes gaming. The Colorado Amendment also
prohibits limited stakes gaming between the hours of 2:00 a.m. and 8:00 a.m.,
and allows limited stakes gaming to occur in establishments licensed to sell
alcoholic beverages.
Further, the Colorado Amendment provides that, in addition to any other
applicable license fees, up to a maximum of 40% of the total amounts wagered
less payouts to players may be payable by a licensee for the privilege of
conducting limited stakes gaming. Such percentage is to be established by the
Colorado Commission on July 1 annually.
Regulatory Structure
The Colorado Act subjects the ownership and operation of limited stakes
gaming facilities in Colorado to extensive regulation by the Colorado Commission
and prohibits persons under the age of 21 from participating in limited stakes
gaming. No limited stakes gaming may be conducted in Colorado unless all
appropriate gaming licenses are approved by and obtained from the Colorado
Commission. The Colorado Commission has full and exclusive authority to
promulgate, and has promulgated, rules and regulations governing the licensing,
conducting and operating of limited stakes gaming (the "Colorado Regulations").
Such authority does not require any approval by or delegation of authority from
the Colorado Department of Revenue (the "Colorado Revenue Department"). The
Colorado Act also created the Colorado Division of Gaming (the "Division of
Gaming") within the Colorado Revenue Department to license, implement, regulate
and supervise the conduct of limited stakes gaming in Colorado, which division
is supervised and administered by the Director of the Division of Gaming (the
"Division Director").
Gaming Licenses
The Colorado Commission may issue: (1) slot machine or distributor, (2)
operator, (3) retail gaming, (4) support and (5) key employee gaming licenses.
The first three licenses require annual renewal by the Colorado Commission.
Support and key employee licenses are issued for two year periods and are
renewable by the Division Director. The Colorado Commission has broad discretion
to condition, suspend for up to six months, revoke, limit or restrict a license
at any time and also has the authority to impose fines.
34
<PAGE>
An applicant for a gaming license must complete comprehensive application
forms, pay required fees and provide all information required by the Colorado
Commission and the Division of Gaming. Prior to licensure, applicants must
satisfy the Colorado Commission that they are suitable for licensing. Applicants
have the burden of proving their qualifications and must pay the full cost of
any background investigations. There is no limit on the cost of such background
investigations.
Gaming employees must hold either a support or key employee license. Every
retail gaming licensee must have a key employee licensee in charge of all
limited stakes gaming activities when limited stakes gaming is being conducted.
The Colorado Commission may determine that a gaming employee is a key employee
and, require that such person apply for a key employee license.
A retail gaming license is required for all persons conducting limited
stakes gaming on their premises. In addition, an operator license is required
for all persons who engage in the business of placing and operating slot
machines on the premises of a retailer. However, a retailer is not required to
hold an operator license. No person may have an ownership interest in more than
three retail licenses. A slot machine manufacturer or distributor license is
required for all persons who manufacture, import or distribute slot machines in
Colorado.
The Colorado Regulations require that every officer, director, and
stockholder of private corporations or equivalent office or ownership holders
for non-corporate applicants, and every officer, director or stockholder holding
either a 5% or greater interest or controlling interest of a publicly traded
corporation or owners of an applicant or licensee shall be a person of good
moral character and submit to a full background investigation conducted by the
Division of Gaming and the Colorado Commission. The Colorado Commission may
require any person having an interest in a license to undergo a full background
investigation and pay the cost of investigation in the same manner as an
applicant.
Persons found unsuitable by the Colorado Commission may be required
immediately to terminate any interest, association, or agreement with or
relationship to a licensee. A finding of unsuitability with respect to any
officer, director, employee, associate, lender or beneficial owner of a licensee
or applicant also may jeopardize the licensee's license or the applicant's
application. A license approval may be conditioned upon the termination of any
relationship with unsuitable persons.
Duties of Licensees
An applicant or licensee must report to the Division of Gaming or Colorado
Commission all leases not later than 30 days after the effective date of the
lease. Also, an applicant or a license, upon the request of the Colorado
Commission or the Division Director, must submit copies of all written gaming
contracts and summaries of all oral gaming contracts to which it is or intends
to become a party. The Division Director or the Colorado Commission may require
changes in the lease or gaming contract before an applicant is approved or
participation in such agreement is allowed or may require termination of the
lease or gaming contract.
The Colorado Amendment and the Colorado Regulations require licensees to
maintain detailed records that account for all business transactions. Records
must be furnished upon demand to the Colorado Commission, the Division of Gaming
and other law enforcement authorities. The Colorado Regulations also establish
extensive playing procedures and rules of play for poker, blackjack and slot
machines. Retail gaming licenses must adopt comprehensive internal control
procedures. Such procedures must be approved in advance by the Division of
Gaming and include the areas of accounting, surveillance, security, cashier
operations, key control and fill and drop procedures, among others. No gaming
devices may be used in limited stakes gaming without the approval of the
Division Director or the Colorado Commission.
Licensees have a continuing duty to immediately report to the Division of
Gaming the name, date of birth and social security number of all persons who
obtain an ownership, financial or equity interest in the licensee of 5% or
greater, who have the ability to control the licensee, who have the ability to
exercise significant influence over the licensee or who loan any money or other
thing of value to the licensee. Licensees must report to the Division of Gaming
all licenses, and all applications for licenses, in foreign jurisdictions.
With limited exceptions applicable to licensees that are publicly traded
entities, no person may sell, lease, purchase, convey or acquire any interest in
a retail gaming or operator license or business without the prior approval of
the Colorado Commission.
All agreements, contracts, leases, or arrangements in violation of the
Colorado Amendment, the Colorado Act or the Colorado Regulations are void and
unenforceable.
35
<PAGE>
Taxes, Fees and Fines
The Colorado Amendment requires an annual tax of up to 40% on the total
amount wagered less all payouts to players. With respect to games of poker, the
tax is calculated based on the sums wagered which are retained by the licensee
as compensation. Effective July 1 of each year, the Colorado Commission
establishes the gaming tax for the following 12 months. Currently, the gaming
tax is: .25% on the first $2 million of these amounts; 2% on amounts from $2
million to $4 million; 4% on amounts from $4 million to $5 million; 11% on
amounts from $5 million to $10 million; 16% on amounts from $10 million to $15
million; and 20% on amounts over $15 million.
The device fee of $75 has been eliminated by the Colorado Commission. The
municipality of Black Hawk assesses an annual device fee of $750 per device.
There is no statutory limit on state or city device fees, which may be increased
at the discretion of the Colorado Commission or the city. In addition, a
business improvement fee of as much as $102 per device and a transportation
authority device fee of $77 per device also may apply depending upon the
location of the licensed premises in Black Hawk. The current annual business
improvement fee is $89.04.
Black Hawk also imposes taxes and fees on other aspects of the businesses
of gaming licensees, such as parking, alcoholic beverage licenses and other
municipal taxes and fees. Significant increases in these fees and taxes, or the
imposition of new taxes and fees, may occur.
Violation of the Colorado Gaming Act or the Colorado Regulations
constitutes a class 1 misdemeanor which may subject the violator to fines or
incarceration or both. A licensee who violates the Colorado Gaming Act or
Colorado Regulations is subject to suspension of the license for a period of up
to six months, fines or both, or to license revocation.
Requirements for Publicly Traded Corporations
The Colorado Commission has enacted Rule 4.5, which imposes requirements on
publicly traded corporations holding gaming licenses in Colorado and on gaming
licenses owned directly or indirectly by a publicly traded corporation, whether
through a subsidiary or intermediary company. The term "publicly traded
corporation" includes corporations, firms, limited liability companies, trusts,
partnerships and other forms of business organizations even if created under the
laws of a foreign country. Such requirements shall automatically apply to any
ownership interest held by a publicly traded corporation, holding company or
intermediary company thereof, where such ownership interest directly or
indirectly is, or will be upon approval of the Colorado Commission, 5% or more
of the entire licensee. In any event, if the Colorado Commission determines that
a publicly traded corporation, or a subsidiary, intermediary company or holding
company has the actual ability to exercise influence over a licensee, regardless
of the percentage of ownership possessed by said entity, the Colorado Commission
may require that entity to comply with the disclosure regulations contained in
Rule 4.5.
Under Rule 4.5, gaming licensees, affiliated companies and controlling
persons commencing a public offering of voting securities must notify the
Colorado Commission within 10 days of the initial filing of a registration
statement with the Securities and Exchange Commission. Licensed publicly traded
corporations are also required to send proxy statements to the Division of
Gaming within 5 days after distribution of such statement. Licensees to whom
Rule 4.5 applies must include in their articles of organization or similar
charter documents provisions that: restrict the rights of the licensees to issue
voting interests or securities except in accordance with the Colorado Gaming Act
and the Colorado Regulations; limit the rights of persons to transfer voting
interests or securities of licensees except in accordance with the Colorado
Gaming Act and the Colorado Regulations; and provide that holders of voting
interests or securities of licensees found unsuitable by the Colorado Commission
may, within 60 days of such finding of unsuitability, be required to sell their
interests or securities back to the issuer at the lesser of the cash equivalent
of the holders' investment or the market price as of the date of the finding of
unsuitability. Alternatively, the holders may, within 60 days after the finding
of unsuitability, transfer the voting interests or securities to a suitable
person (as determined by the Colorado Commission). Until the voting interests or
securities are held by suitable persons, the issuer may not pay dividends or
interest, the securities may not be voted, they may not be included in the
voting or securities of the issuer, and the issuer may not pay any remuneration
in any form to the holders of the securities.
36
<PAGE>
Pursuant to Rule 4.5, persons who acquire direct or indirect beneficial
ownership of (1) 5% or more of any class of voting securities of a publicly
traded corporation are required to include in its articles of organization the
Rule 4.5 charter language provisions or (2) 5% or more of the beneficial
interest in a gaming licensee directly or indirectly through any class of voting
securities of any holding company or intermediary company of a licensee (all
such persons hereinafter referred to as "qualifying persons"), shall notify the
Division of Gaming within 10 days of such acquisition, are required to submit
all requested information and are subject to a finding of suitability as
required by the Division of Gaming or the Colorado Commission. Licensees also
must notify any qualifying persons of these requirements. A qualifying person
other than an institutional investor whose interest equals 10% or more must
apply to the Colorado Commission for a finding of suitability within 45 days
after acquiring such securities. Licensees must also notify any qualifying
persons of these requirements. Whether or not notified, qualifying persons are
responsible for complying with these requirements.
A qualifying person who is an institutional investor under Rule 4.5 and who
individually or in association with others, acquires, directly or indirectly,
the beneficial ownership of 15% or more of any class of voting securities must
apply to the Colorado Commission for a finding of suitability within 45 days
after acquiring such interests.
The Colorado Regulations also provide for exemption from the requirements
for a finding of suitability when the Colorado Commission finds such action to
be consistent with the purposes of the Colorado Amendment.
Pursuant to Rule 4.5, persons found unsuitable by the Colorado Commission
must be removed from any position as an officer, director, or employee of a
licensee, or from a holding or intermediary company. Such unsuitable persons
also are prohibited from any beneficial ownership of the voting securities of
any such entities. Licensees, or affiliated entities of licensees, are subject
to sanctions for paying dividends or distributions to persons found unsuitable
by the Colorado Commission, or for recognizing voting rights of, or paying a
salary or any remuneration for services to, unsuitable persons. Licensees or
their affiliated entities also may be sanctioned for failing to pursue efforts
to require unsuitable persons to relinquish their interest. The Colorado
Commission may determine that anyone with a material relationship to, or
material involvement with, a licensee or an affiliated company must apply for a
finding of suitability or must apply for a key employee license.
Alcoholic Beverage Licenses
The sale of alcoholic beverages in gaming establishments is subject to
strict licensing, control and regulation by state and local authorities and
requires a liquor license. Alcoholic beverage licenses are revocable and
nontransferable. State and local licensing authorities have full power to limit,
condition, suspend for as long as six months or revoke any such licenses.
Violation of state alcoholic beverage laws may constitute a criminal offense
resulting in incarceration or fines or both.
There are various classes of retail liquor licenses which may be issued
under the Colorado Liquor Code. A gaming licensee may sell malt, vinous or
spirituous liquors only by the individual drink for consumption on the premises.
Even though a retail gaming licensee may be issued various classes of retail
liquor licenses, such gaming licensee may only hold liquor licenses of the same
class. An application for an alcoholic beverage license in Colorado requires
notice, posting and a public hearing before the local liquor licensing authority
prior to approval of the same. The Colorado Department of Revenue's Liquor
Enforcement Division must also approve the application.
Riviera Black Hawk Licenses
Currently, no gaming license in Colorado has been granted in connection
with the Riviera Black Hawk. However, an application for a hotel and restaurant
liquor license has been approved by the local licensing authority and the State
Liquor Enforcement Division. The liquor license will issue upon the granting of
a certificate of occupancy. Applications for key employee gaming licenses have
also been made. Associated Person applications have been submitted for the
officers and directors of Riviera Holdings as well as some of the affiliated
companies as required by the Division Director. Additional Associated Person,
Key Employee and support license applications will have to be made and approved
prior to the opening of the casino.
37
<PAGE>
Before our casino can obtain the final approval of the Colorado Commission,
stockholders of Riviera Holdings who own more than 5% of its common stock and
the person(s) with investment power over the investment must be found suitable
by the Colorado Commission. Three of Riviera Holdings' largest stockholders have
submitted (and one will submit) information to the Colorado Commission for the
purpose of establishing suitability for licensing or are seeking to have the
person(s) with investment power over the investment file associated person
applications in Colorado. Based upon our discussions with the staff of the
Division of Gaming, we are optimistic such stockholders will not present a
problem with the Colorado Commission. See "Risk Factors -- Gaming Licenses,
Permits and Approvals."
MATERIAL AGREEMENTS
Construction Contract
We have entered into a construction contract for the construction of the
Riviera Black Hawk. The construction contract provides for the construction of a
casino, parking garage, associated site work and all floor coverings and food
service equipment at a price of $27.6 million, including a contingency allowance
of $0.5 million. The construction cost is fully supported by a payment and
performance bond obtained by the general contractor, Weitz, who is also required
to provide comprehensive public liability insurance, including contractual
liability coverage, in the amount of $2.0 million plus umbrella coverage in the
amount of $20.0 million. As required by the construction contract, we have
obtained builder's all risk insurance to insure against damage to the work in
place during construction. The price is subject to decrease if cost savings can
be achieved during construction, and is subject to material increase if: (1)
there are changes to the plans and specifications; (2) work is delayed due to
actions of the owner; or (3) "force majeure" events occur during construction.
Offsite improvements, permit fees and the cost of independent testing,
furnishings and finish work, and similar items, are excluded from the
construction contract and will be completed by us under separate contracts.
Work under the construction contract has commenced, and approximately $14.9
million, or 54% of the total budget, had been expended as of June 30, 1999. The
construction contract provides for substantial completion of the casino project
on or before January 15, 2000, subject to extensions due to adverse weather,
acts of God, or other causes outside of the general contractor's control as
provided in the construction contract. To discourage delays, liquidated damages
will be payable by the general contractor for each day that substantial
completion is delayed past the scheduled substantial completion date (as it may
be extended under the construction contract), as follows: (1) no penalties if
the casino project is substantially completed on or before January 31, 2000; (2)
$10,000 per day for each day from February 1, 2000, through February 15, 2000,
that the casino project is not substantially completed after January 31, 2000;
and (3) an additional $15,000 for each day from February 15, 2000, through March
31, 2000, that the casino project is not substantially completed. In addition,
to encourage early completion of the casino, incentive fees will be payable to
the general contractor. Specifically, the construction contract provides: (1) if
Weitz achieves substantial completion of the project on or after December 29,
1999, but prior to January 4, 2000, Weitz's lump sum fee shall be increased by
$10,000 for each day that the project is substantially complete prior to January
4, 2000; and (2) if Weitz achieves substantial completion of the project any
time before December 29, 1999, Weitz's lump sum fee shall be increased by
$15,000 for each day the project is substantially complete prior to December 29,
1999, and $10,000 for each day the project is substantially complete between
December 29, 1999, and January 4, 2000.
Architectural Contract
We have entered into an architectural contract with Melick Associates for
the provision of architectural and interior design and specifications for the
casino project at a fee of approximately $1.0 million. Pursuant to the
architectural contract, the architect will also provide structural and
engineering, food service design, water proofing consultants, elevator/escalator
consultants and landscape design. However, the architect is not responsible for
the work of independent electrical and mechanical design build subcontractors.
The architect will administer the construction contract and coordinate its work
with the construction subcontractors. The architect has provided professional
liability insurance in the amount of $1.0 million per occurrence, $2.0 million
aggregate with a $10,000 deductible, and damages under the architectural
contract have been limited to the amount of $1.0 million.
38
<PAGE>
Management Agreement
We have entered into a management agreement with Riviera Gaming Management
of Colorado, Inc.(the "Manager") which will end after the tenth full year
audited financial statements are available after the opening of our casino. The
Manager will have the option of extending the term for up to four additional
terms of five years each by giving 180 days written notice.
The Manager will manage the Riviera Black Hawk in a manner reasonably
consistent with the standards and procedures exercised by other casino operators
in Black Hawk, Colorado. The Manager will supervise the hiring of all personnel
employed at the casino, who will be the employees of Riviera Black Hawk.
The Manager, at its expense, will supply the level of its own staffing that is
required to carry out the supervision of a full complement of executives
employed and paid by the Riviera Black Hawk.
The Manager may provide goods and services, including centralized computer
systems, service bureau payroll/personnel systems, advertising agency services,
centralized purchasing, licensed promotions, trademarks, service marks, legal
services and other similar services on a competitive price/fee basis.
The management fees will consist of a revenue fee and a performance fee.
The revenue fee will be based on 1% of net revenues (gross revenues less food
and beverage services furnished without charge to customers, but the retail
value of which is included in revenue and is then deducted as promotional
allowances) and is payable quarterly in arrears. The performance fee will be
based on the following percentages of EBITDA (earnings before interest, taxes,
depreciation and amortization, whose components are based on generally accepted
accounting principles): (1) 10% of EBITDA from $5 million to $10 million, (2)
15% of EBITDA from $10 million to $15 million and (3) 20% of EBITDA in excess of
$15 million. The performance fee will be paid based on the preceding quarter's
EBITDA in quarterly installments subject to year-end adjustment.
If there is any default under the management agreement, the Manager will
not be entitled to receive management fees, but the Manager will still be
entitled to payment for inter-company goods and services.
Intellectual Property License Agreement
We have entered into a royalty-free license agreement with Riviera
Operating Corporation, a subsidiary of Riviera Holdings, for the licensing of
the "Riviera" and other trademarks and trade names. The licensing agreement
terminates at the same time as the management agreement or earlier upon a change
in control of the Manager and, in either case, may be extended by the trustee up
to six months thereafter upon foreclosure of the notes.
Tax Sharing Agreement
Riviera Holdings is the parent of a group of companies which includes
ourselves (the "RHC Group") and files consolidated federal income returns.
Pursuant to the tax sharing agreement, we pay Riviera Holdings an amount equal
to our "separate tax liability." Our separate tax liability is that amount of
federal income tax that we would owe if we were to file a tax return independent
of the RHC Group. If the calculation of our separate tax liability for any year
results in a net operating loss, Riviera Holdings will credit the amount of such
loss against any amount which we might otherwise have to pay to Riviera Holdings
in any future tax year, provided that we remain a part of the RHC Group. Our
obligation to make tax payments pursuant to the tax sharing agreement continues
regardless of whether there has been a default in the payment of the notes.
39
<PAGE>
MANAGEMENT
Executive Officers and Directors of the Company
Set forth below are the names, ages and position of each of our officers
and directors as of the date of this prospectus:
Name Age Position
William L. Westerman.... 67 Chairman of the Board of Directors and
Chief Executive Officer
Ronald P. Johnson....... 50 President and Director of the Company
Duane R. Krohn.......... 53 Chief Financial Officer, Secretary, Treasurer
and Director of the Company
The following information summarizes the business experience during at
least the past five years of each of our directors and executives:
William L. Westerman is our Chairman of the Board of Directors and Chief
Executive Officer and has held those positions since August 18, 1997. Mr.
Westerman has been the Chairman of the Board and Chief Executive Officer of
Riviera Holdings since February 1993. Mr. Westerman was a consultant to Riviera,
Inc., from July 1, 1991, until he was appointed Chairman of the Board and Chief
Executive Officer of Riviera, Inc., on January 1, 1992. From 1973 to June 30,
1991, Mr. Westerman was President and Chief Executive Officer of Cellu-Craft
Inc., a manufacturer of flexible packaging primarily for food products.
Alusuisse, a multi-national aluminum and chemical company, acquired Cellu-Craft
on June 30, 1989. On January 1, 1990, Mr. Westerman was appointed President of
Alusuisse Flexible Packaging (Alusuisse's wholly-owned U.S. subsidiary engaged
in the manufacture of flexible packaging for food and pharmaceutical products).
Additionally, Mr. Westerman was named a member of the team responsible for all
of Alusuisse's multi-national packaging operations with annual sales volume in
excess of $1 billion. Mr. Westerman resigned from all his positions with
Alusuisse on June 30, 1991. Mr. Westerman has undergraduate and graduate degrees
in engineering from Lehigh University and from the University of Ohio,
respectively.
Ronald P. Johnson is our President and a Director and has held those
positions since February 1999. Mr. Johnson became Vice President of Gaming
Operations of Riviera Operating Corporation in September 1994, and Executive
Vice President of Gaming Operations of Riviera Operating Corporation on July 1,
1998. Mr. Johnson became Director of Slots of Riviera Operating Corporation on
June 30, 1993, and was elected Vice President of Slot Operations and Marketing
on April 26, 1994. Mr. Johnson was Vice President -- Slot Operations and
Marketing of Riviera, Inc., from April 1991 until June 30, 1993. Prior to
joining Riviera, Inc., Mr. Johnson held slot management positions with Sands
Hotel & Casino (1989-1991) and Bally's Grand Las Vegas (1986-1989). In addition
to over 12 years of experience in casino operations, Mr. Johnson has 10 years of
experience, serving from 1976 to 1986, in various financial marketing and
administrative management positions in the slot manufacturing industry with
Bally Distributing, Co., International Game Technology and J&T, Inc.
Duane R. Krohn, CPA, is our Chief Financial Officer, Secretary, Treasurer
and a Director and has held those positions since February 1999. Mr. Krohn
assumed the position of Treasurer of Riviera Holdings and Riviera Operating
Corporation on June 30, 1993, and was elected Vice President of Finance of
Riviera Operating Corporation on April 26, 1994, and Executive Vice President of
Finance of Riviera Operating Corporation on July 1, 1998. Mr. Krohn was
initially employed by Riviera, Inc., in April 1990, as Director of Corporate
Finance and served as Vice President -- Finance from March 1992 to June 30,
1993. Mr. Krohn served as Chief Financial Officer of Imperial Palace, Inc.(a
casino/hotel operator in Las Vegas) from February 1987 to March 1990. Prior to
1987, Mr. Krohn was Chief Financial Officer of the Mint and the Dunes in Las
Vegas, Nevada, and Bally's Park Place in Atlantic City, New Jersey.
Management of the Riviera Black Hawk
We have entered into a management agreement with Riviera Gaming Management
of Colorado, Inc.(the "Manager"), under which the Manager will manage the daily
operations of Riviera Black Hawk. The Manager has hired Thomas Guth and James
Davey as the General Manager and Director of Slot Operations for Riviera Black
Hawk.
In addition, we have successfully recruited four other key executives for
the positions of Director of Finance, Director of Training and Compliance,
Facilities Director and Director of Security and Surveillance. Current
management represents a blend of seasoned management experience from both the
Black Hawk/Central City and Las Vegas markets. The following is a brief summary
of the business experience of Thomas Guth and James Davey:
40
<PAGE>
Mr. Guth is our general manager. Under a letter agreement, dated January
15, 1999, Mr. Guth will be in charge of coordinating pre-opening functions and
will be the senior manager on site after the casino opens. Mr. Guth has over 20
years of casino marketing and casino operations experience. Mr. Guth most
recently was Director of Corporate Special Event Marketing for the Boyd Group
from September 1998 to March 1999. From July 1992 to May 1998, Mr. Guth was Vice
President, Director of Marketing for the Aladdin Hotel & Casino. From 1989 to
1992, Mr. Guth was Director of Special Events/Casino Programs for the Riviera
Hotel & Casino. Mr. Guth also has 11 years of experience in casino operations
with the Sahara Tahoe, Golden Nugget and Harrah's casinos.
James Davey is our director of slot operations and reports to Mr. Guth.
Under a letter agreement, dated January 9, 1999. Mr. Davey will be in charge of
gaming operations. Mr. Davey has over 19 years of experience in slot operations
management, having served in various management positions with the Tropicana,
Imperial Palace, the Riviera Hotel & Casino and the Four Queens in Las Vegas,
Nevada and the Splash casino in Tunica, Mississippi.
Neither of such agreements has a fixed term. Both Messrs. Guth and Davey
have been reimbursed for their relocation expenses and will participate in our
life insurance, medical, 401(K) and profit-sharing employee benefit plans at our
cost.
41
<PAGE>
PRINCIPAL STOCKHOLDERS
We are an indirect wholly-owned subsidiary of Riviera Holdings. The common
stock of Riviera Holdings is traded on the American Stock Exchange. The table
below sets forth information regarding the beneficial ownership of the common
stock of Riviera Holdings as of June 30, 1999, by (1) each person who, to our
knowledge, beneficially owns more than 5% of such common stock, (2) the
directors and executive officers of our company and (3) all directors and
executive officers of Riviera Holdings and its subsidiary, Riviera Operating
Corporation. Each person listed below has sole voting and investment power for
the shares set forth opposite that person's name unless otherwise indicated.
Shares Beneficially Owned+
Name Number Percentage
- ---- ------------- ------------
William L. Westerman(1)(2)................. 504,200 9.5%
Ronald P. Johnson(1)(3).................... 47,750 *
Duane R. Krohn(1)(4)....................... 39,750 *
Robert Vannucci(1)(5)....................... 26,918 *
Jerome P. Grippe(1)(6)..................... 24,668 *
Robert R. Barengo(1)(7).................... 9,380 *
Richard L. Barovick(1)..................... 10,000 *
James N. Land, Jr.(1)...................... 1,500 *
Keyport Life Insurance Co.(8)............... 857,160 16.9
SunAmerica Life Insurance Company(9)........ 756,920 14.9
Morgens Entities:(10)
Betje Partners............................ 29,360 0.6
Morgens Waterfall Income Partners......... 43,920 0.9
Phoenix Partners, L.P..................... 79,440 1.6
Restart Partners, L.P..................... 177,997 3.5
Restart Partners II, L.P.................. 374,374 7.4
Restart Partners III, L.P................. 298,600 5.9
Endowment Restart LLC..................... 261,109 5.2
-------- ----
Total Morgens Entities................. 1,264,800 25.0
James D. Bennett(11)....................... 497,065 9.8
Allen E. Paulson(12)....................... 463,655 9.1
All executive officers and directors as a group
(11 persons)(2)(3)(4)(5)(6)(7).............. 721,563 13.4
- ----------
+ Based on the number of outstanding shares of Riviera Holdings' common stock on
April 30, 1999 and the shares beneficially owned by such persons on June 30,
1999.
* Less than 1%.
(1) The address for each director and officer of our Company or Riviera
Holdings is c/o Riviera Holdings Corporation, 2901 Las Vegas Boulevard
South, Las Vegas, Nevada 89109.
(2) Includes 240,000 shares which may be acquired within 60 days of April 30,
1999, upon the exercise of outstanding options.
(3) Includes 12,750 shares which may be acquired within 60 days of April 30,
1999, upon the exercise of outstanding options.
(4) Includes 12,750 shares which may be acquired within 60 days of April 30,
1999, upon the exercise of outstanding options.
(5) Includes 12,750 shares which may be acquired within 60 days of April 30,
1999, upon the exercise of outstanding options.
(6) Includes 10,500 shares which may be acquired within 60 days of April 30,
1999, upon the exercise of outstanding options.
(7) Includes 2,400 shares which may be acquired within 60 days of April 30,
1999, upon the exercise of outstanding options.
(8) The address for Keyport Life Insurance Company is 125 High Street, Boston,
Massachusetts 02110. Stein Roe, an affiliate of Keyport, is Keyport's
investment advisor, and, as such, has the power and authority to direct the
disposition of the securities, and accordingly, could be deemed to be a
"beneficial" owner within the meaning of Rule 13d-3 of the Exchange Act.
Stein Roe, however, disclaims actual beneficial ownership of such
securities.
42
<PAGE>
(9) The address for SunAmerica Life Insurance Company is One Sun America
Center, Century City, California 90067.
(10) The address of Morgens Waterfall is 10 East 50th Street, New York, New York
10022. Morgens Waterfall or its principals are either investment advisors
to, or trustees or general partners of, the eight entities listed in the
above table ("Morgens Entities") that are the owners of common stock of
Riviera Holdings. Morgens Waterfall or its principals have the power and
authority to direct this disposition of these securities and, accordingly,
could be deemed to be "beneficial" owners within the meaning of Rule 13d-3
of the Exchange Act. Each of Morgens Waterfall, its principals and the
Morgens Entities, however, disclaims beneficial ownership with respect to
any securities not actually beneficially owned by it.
(11) Includes (a) 323,003 shares held by Restructuring Capital Associates, L.P.
and Bennett Restructuring Fund, L.P. and (b) 161,262 shares held by Benett
Offshore Restructuring Fund, Inc. The address for Mr. Bennett is c/o
Restructuring Capital Associates, L.P. is 450 Park Avenue, New York, New
York 10022.
(12) The address for Mr. Paulson is Del Mar Country Club, 6001 Clubhouse Drive,
Rancho Santa Fe, California 92067.
43
<PAGE>
RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the sale of the existing notes, Riviera Holdings had contributed
$30.1 million to us for (1) the purchase of the land on which the Riviera Black
Hawk is being constructed and (2) for construction costs under the construction
contract. Of the $30.1 million, Riviera Holdings has advanced $20.0 million in
cash equity contributions (excluding capitalized interest) and the remaining
$10.1 million was reimbursed to Riviera Holdings from the proceeds of the sale
of the existing notes.
We have entered into a management agreement with Riviera Gaming Management
of Colorado, Inc. Under this agreement, Riviera Gaming Management of Colorado,
Inc. will manage the operations of our casino. The terms of the management
agreement are described in the section "Material Agreements -- Management
Agreement."
We have entered into a license agreement with Riviera Operating
Corporation, a subsidiary of Riviera Holdings. Under this agreement, we have the
right to use the "Riviera" name and other trademarks, copyrights and trade names
in connection with our casino. The terms of the license agreement are described
in the section "Material Agreements -- Intellectual Property License Agreement."
We have entered into a tax sharing agreement with Riviera Holdings. Under
this agreement, Riviera Holdings will file consolidated federal income tax
returns for us as part of a group of companies and we have agreed to pay Riviera
Holdings for our portion of the group's tax liability. The terms of the tax
sharing agreement are described in the section "Material Agreements -- Tax
Sharing Agreement."
44
<PAGE>
DESCRIPTION OF NOTES
We issued $45.0 million 13% First Mortgage Notes due 2005 With Contingent
Interest under an indenture with IBJ Whitehall Bank & Trust Company, as trustee.
The terms of the indenture apply to the existing notes and to the exchange notes
(the existing notes and the exchange notes being collectively referred to in
this section as the "notes"). The terms of the notes include those stated in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939. The notes are secured obligations. The collateral
documents referred to under the caption "Security" define the terms of the
collateral that will secure the notes.
The following description is a summary of the selected provisions of the
indenture, the registration rights agreement and the collateral documents which
are deemed to be important to you. It does not restate any of those agreements
in their entirety. We urge you to read such documents because they, and not this
description, define your rights as holders of the notes. Copies of such
documents are available as set forth below under the caption "-- Additional
Information." See "The Exchange Notes" for a summary of the major note terms.
Principal, Maturity and Interest
The notes issued in this offering and any additional notes subsequently
issued under the indenture will be treated as a single class for all purposes
under the indenture, including, without limitation, waivers, amendments,
redemptions and offers to purchase. We will issue notes in denominations of
$1,000 and integral multiples of $1,000.
The notes will mature on May 1, 2005. Fixed interest on the notes will
accrue at the rate of 13% per annum and will be payable semi-annually in arrears
on May 1 and November 1, commencing on November 1, 1999. We will make each fixed
interest payment to the holders of record on the immediately preceding April 15
and October 15. Fixed interest will accrue from the date of original issuance,
or be computed on the basis of a 360-day year comprised of twelve 30-day months.
The notes will bear contingent interest after we begin operating.
Installments of accrued contingent interest will be payable semi-annually in
arrears on each interest payment date to the holders on the record date
applicable to the relevant interest payment date, unless all or a portion of the
installment is permitted to be deferred. We may defer payment of contingent
interest otherwise due and may continue to defer the payment of any installment
of contingent interest which has already been deferred if, and only to the
extent that: (1) the payment of that portion of contingent interest will cause
our adjusted fixed charge coverage ratio for the four consecutive fiscal
quarters ending immediately prior to the applicable record date to be less than
1.5 to 1.0 on a pro forma basis after giving effect to the assumed payment of
the contingent interest; and (2) the principal amount of the notes corresponding
to that contingent interest has not then matured and become due and payable,
whether at stated maturity, upon acceleration, upon redemption, upon maturity of
repurchase obligation or otherwise.
Contingent interest that is deferred will become due and payable upon the
earlier of: (1) the next succeeding interest payment date on which all or a
portion of that contingent interest is not permitted to be deferred; and (2) the
maturity of the corresponding principal amount of the notes, whether at stated
maturity, upon acceleration, upon redemption, upon maturity of repurchase
obligation or otherwise.
The amount of contingent interest payable for any period will be reduced
pro rata for reductions in the outstanding principal amount of the notes prior
to the immediately preceding record date. No interest will accrue on any
contingent interest that is deferred and which does not become due and payable.
Each installment of contingent interest will be calculated to accrue: (1)
from, but not including, the most recent semiannual period for which contingent
interest has been paid or through which contingent interest had been calculated
and deferred; or (2) if no installment of contingent interest has been paid or
deferred, from and including the date on which we become operating; to, and
including, the earlier of: (a) the last day of the semiannual period immediately
following the semiannual period referred to in clause (1) above if the
corresponding principal amount of the notes has not become due and payable; or
(b) the date of payment if the corresponding principal amount of the notes has
become due and payable, whether at stated maturity, upon acceleration, upon
redemption, upon maturity of repurchase obligation or otherwise.
45
<PAGE>
Contingent interest will accrue daily on the principal amount of each note
outstanding: (1) for any portion of an accrual period which consists of all or
part of a semiannual period that ends during such accrual period, 1/180 of the
contingent interest with respect to such principal amount for such semiannual
period until fully accrued; and (2) for any other portion of an accrual period,
1/180 of the contingent interest with respect to such principal amount for the
semiannual period that began and last ended after the date on which we began
operating.
Methods of Receiving Payments on the Notes
If a holder has given wire transfer instructions to us, we will pay all
principal, interest, premium and liquidated damages, if any, on that holder's
notes in accordance with those instructions. All other payments on notes will be
made at the office or agency of the Paying Agent and Registrar within the City
and State of New York unless we elect to make interest payments by check mailed
to the holders at their addresses set forth in the register of holders.
Paying Agent and Registrar for the Notes
The trustee will initially act as paying agent and registrar. We may change
the paying agent or registrar without prior notice to the holders, and we may
act as paying agent or registrar.
Transfer and Exchange
A holder may transfer or exchange notes in accordance with the indenture.
We are not required to transfer or exchange any note selected for redemption.
Also, we are not required to transfer or exchange any note for a period of 15
days before a selection of notes to be redeemed.
Security
The notes are secured by a first priority lien on the collateral which,
subject to permitted liens, includes: (1) all funds and securities in the
construction disbursement account, the construction reserve account and the
interest reserve account; (2) all of the real property comprising the Riviera
Black Hawk; (3) all furniture, fixtures and equipment which are part of the
Riviera Black Hawk, other than furniture, fixtures and equipment acquired,
leased or refinanced through FF&E financing; (4) to the extent permitted by law,
the construction contract, the architect agreement, the completion capital
commitment, the keep-well agreement, the license agreement, the management
agreement and certain other agreements entered into us in connection with the
development, construction, ownership and operation of the Riviera Black Hawk;
(5) all licenses and permits relating to the Riviera Black Hawk, other than any
gaming license or liquor license; and (6) all of our accounts receivable,
general intangibles, inventory and other personal property, other than assets of
our future unrestricted subsidiaries.
The indenture contains a requirement that, after we are designated as a
restricted subsidiary (as that term is defined in the Riviera Holdings
Indenture) of Riviera Holdings, the stock of all our then current and future
subsidiaries and the assets of our current and future restricted subsidiaries
must be pledged to secure the debt evidenced by the Riviera Holdings indenture.
The security interests may be subordinate to mechanics' liens which may
have priority over the security interest on the real property comprising the
Riviera Black Hawk, including all additions, improvements and components related
to it. We have obtained title insurance on the property in favor of the trustee
which will insure against losses from the enforcement of mechanics' liens.
If an event of default occurs, the trustee may, in addition to any rights
and remedies available to it under the indenture and the collateral documents,
take such action as it deems advisable to protect and enforce its rights in the
collateral, including the institution of sale or foreclosure proceedings. The
proceeds received by the trustee from any sale or foreclosure will be applied
first to pay the expenses of the sale or foreclosure and fees or any other
amounts then payable to the trustee under the indenture, and thereafter to pay
amounts due and payable with respect to the notes.
The proceeds of any sale of collateral pursuant to the indenture and the
collateral documents following an event of default may not be sufficient to
satisfy payments due on the notes. In addition, the ability of the holders to
realize upon the collateral may be limited pursuant to gaming, bankruptcy and
other laws, all as described below.
46
<PAGE>
Gaming Law Limitations on Foreclosure
The trustee's ability to foreclose upon the collateral will be limited by
relevant Colorado gaming laws. Therefore, the practical value of realizing on
the collateral may, without the appropriate Colorado gaming approvals, be
limited.
Bankruptcy Limitations on Foreclosure
The right of the trustee to repossess and dispose of collateral upon the
occurrence of an event of default is likely to be significantly impaired by
applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or
us prior to the trustee having repossessed and disposed of the collateral. Under
the Bankruptcy Code, a secured creditor such as the trustee is prohibited from
repossessing its security from a debtor in a bankruptcy case, or from disposing
of security repossessed from such debtor, without bankruptcy court approval. In
addition, the Bankruptcy Code permits the debtor to continue to retain and to
use collateral (and the proceeds, products, offspring, rents or profits of such
collateral) even though the debtor is in default under the applicable debt
instruments, provided that the secured creditor is given "adequate protection."
The meaning of the term "adequate protection" may vary according to
circumstances, but it is intended in general to protect the value of the secured
creditor's interest in the collateral and may include, if approved by the
bankruptcy court, cash payments or the granting of additional security for any
diminution in the value of the collateral as a result of the stay of
repossession or the disposition or any use of the collateral by the debtor
during the pendency of the bankruptcy case. The bankruptcy court has broad
discretionary powers in all these matters, including the valuation of the
collateral or any other collateral that may be substituted for it. In addition,
since the enforcement of the lien of the trustee in the collateral consisting of
cash, deposit accounts and cash equivalents may be limited in a bankruptcy
proceeding, the holders may not have any consent rights with respect to the use
of those funds by us during the pendency of the proceeding. In view of these
considerations, it is impossible to predict how long payments under the notes
could be delayed following commencement of a bankruptcy case, whether or when
the trustee could repossess or dispose of the collateral or whether or to what
extent holders would be compensated for any delay in payment or loss of value of
the collateral.
Completion Capital Commitment
Riviera Holdings has entered into a completion capital commitment in favor
of the trustee for the benefit of the holders providing that if: (1) there are
insufficient available funds (as defined in the indenture) to complete the
development, construction, equipping and opening of the Riviera Black Hawk so
that it is operating by May 31, 2000; (2) we have provided the trustee and the
independent construction consultant with a written notice that it is unlikely
that there will be sufficient available funds to complete the development,
construction, equipping and opening of the Riviera Black Hawk so that it is
operating by May 31, 2000; or (3) (a) the independent construction consultant
has provided the trustee and us with a written notice that it is unlikely that
there will be sufficient available funds (excluding any additional revenues (as
defined in the indenture)) to complete the development, construction, equipping
and opening of the Riviera Black Hawk so that it is operating by May 31, 2000
and (b) within 10 days of our receiving the notice, we have not provided
evidence satisfactory to the independent construction consultant that there will
be sufficient additional funds (including any additional revenues) to complete
the development, construction, equipping and opening of the Riviera Black Hawk
so that it is operating by May 31, 2000; then Riviera Holdings will pay into the
construction disbursement account cash in the amounts and at such times as
determined by the independent construction consultant to be necessary to remedy
the event; provided that the maximum aggregate amount of all such payments is
$10.0 million. The independent construction consultant will set forth in a
written notice to us its determination of the amounts required to be contributed
and the basis of its determination. In addition, if the Riviera Black Hawk is
not operating by May 31, 2000, Riviera Holdings will pay $10.0 million, less any
amounts paid into the construction disbursement account pursuant to the
provisions of the previous paragraph, in cash into the construction disbursement
account. Furthermore, Riviera Holdings will be required to pay $10.0 million,
less any amounts paid into the construction disbursement account pursuant to the
provisions of the previous paragraph, in cash into the construction disbursement
account upon (1) the commencement of a voluntary bankruptcy case by us on or
prior to May 31, 2000, (2) the commencement of an involuntary bankruptcy case
against us which is not dismissed, bonded or discharged on or prior to the
earlier of (A) 60 days after the commencement and (B) May 31, 2000, or (3) the
entry of an order for relief against us on or prior to May 31, 2000, under any
bankruptcy law in effect at any time. Riviera Holdings will not assert any
defenses or setoffs to the payment of those amounts.
47
<PAGE>
Deposit Account Agreement
Pursuant to a deposit account agreement, dated as of June 3, 1999, among
Bank of America as deposit bank, Riviera Holdings and First American Title
Insurance Company, Riviera Holdings has deposited $5.0 million to insure First
American against mechanics lien claims against our Black Hawk property. If no
mechanics liens are outstanding 30 days after our casino opens, such $5.0
million deposit will be returned to Riviera Holdings.
Keep-Well Agreement
Riviera Holdings has entered into a keep-well agreement in favor of the
trustee for the benefit of the holders. The keep-well agreement provides that:
(1) if, at any time prior to the end of the fourth operating period (as defined
therein), (a) there are not sufficient funds in the interest reserve account to
make a payment of fixed interest on the notes and (b) we do not have sufficient
funds to make the payment of fixed interest, Riviera Holdings will contribute
cash to us in an amount necessary to enable us to make such payment; provided
that the amount of any such contribution will be deducted from the amounts that
Riviera Holdings is required to contribute to us pursuant to clause (2) below
until the total amount of such contributions are deducted; and (2) if our
consolidated cash flow for an operating period is less than the $9.0 million
target consolidated cash flow for such period, Riviera Holdings will contribute
cash to us in an amount equal to the difference; provided that the amount
contributed with respect to any operating period pursuant to clauses (1) and (2)
above will not exceed the contribution limitation and the amounts contributed
with respect to all operating periods will not exceed $10.0 million in the
aggregate. "Contribution limitation" means the product of (1) $1.25 million and
(2) the number of fiscal quarters of Riviera Holdings contained in the relevant
operating period.
Optional Redemption
At any time prior to May 1, 2001, we may redeem up to 35% of the aggregate
principal amount of notes issued under the indenture at a redemption price of
113% of the principal amount thereof, plus accrued and unpaid interest and
liquidated damages, if any, to the redemption date, with the net cash proceeds
of a qualified public offering (as defined in the indenture); provided that: (1)
at least 65% of the aggregate principal amount of notes issued under the
indenture remains outstanding immediately after the occurrence of such
redemption (excluding notes held by us); and (2) the redemption must occur
within 45 days of the date of the closing of such qualified public offering.
On or after May 1, 2002, we may redeem all or a part of the notes upon not
less than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of principal amount) plus accrued and unpaid interest
and liquidated damages, if any, thereon, to the applicable redemption date: if
redeemed during the twelve-month period beginning on May 1 2002 - 106.5%, the
twelve-month period beginning on May 1, 2003 - 103.25% and at any time after May
1, 2004-100%.
Gaming Redemption
If any gaming authority requires a holder or beneficial owner of notes to
be licensed, qualified or found suitable under any applicable gaming law and
such holder or beneficial owner fails to apply for a license, qualification or
finding of suitability within 30 days after being requested to do so (or such
lesser period as required by the gaming authority), or if such holder or
beneficial owner is notified by a gaming authority that it will not be licensed,
qualified or found suitable, we will have the right, at our option, to: (1)
require the holder or beneficial owner to dispose of such holder's or beneficial
owner's notes within 30 days (or such lesser period as required by the gaming
authority) of: (a) the termination of the period described above for the holder
or beneficial owner to apply for a license, qualification or finding of
suitability; or (b) receipt of the notice from the gaming authority that the
holder or beneficial owner will not be licensed, qualified or found suitable by
the gaming authority; or (2) redeem the notes of the holder or beneficial owner
at a redemption price equal to the lesser of the principal amount thereof or the
price at which the holder or beneficial owner acquired the notes, together with,
in either case, accrued and unpaid interest and liquidated damages, if any,
thereon to the earlier of the date of redemption or such earlier date as is
required by the gaming authority or the date of the finding of unsuitability by
the gaming authority, which may be less than 30 days following the notice of
redemption, if so ordered by the gaming authority. Immediately upon a
determination by a gaming authority that a holder or beneficial owner of notes
will not be licensed, qualified or found suitable, the holder or beneficial
owner will not have any further rights with respect to the notes to: (1)
exercise, directly or indirectly, through any person, any right conferred by the
notes; and (2) receive any interest or any other distribution or payment with
respect to the notes, or any remuneration in any form from us for services
rendered or otherwise, except the redemption price of the notes.
48
<PAGE>
We are not required to pay or reimburse any holder or beneficial owner of
notes who is required to apply for such license, qualification or finding of
suitability for the costs relating thereto. Those expenses will be the
obligation of the holder or beneficial owner.
Mandatory Redemption
We are not required to make mandatory redemption or sinking fund payments
with respect to the notes.
Repurchase at the Option of Holders
Change of Control
If a change of control occurs, each holder will have the right to require
us to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of that holder's notes pursuant to a change of control offer on the
terms set forth in the indenture. In the change of control offer, we will offer
a change of control payment in cash equal to 101% of the aggregate principal
amount of notes repurchased plus accrued and unpaid interest and liquidated
damages, if any, thereon, to the date of purchase. We must comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the notes as a result of a
change of control.
Change of control includes the direct or indirect sale, lease, transfer,
conveyance or other disposition of "all or substantially all" of our properties
or assets. Although there is a limited body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder of notes to require
us to repurchase such notes as a result of a sale, lease, transfer, conveyance
or other disposition of less than all of our assets may be uncertain. Change of
control also includes the consummation of any transaction the result of which is
that any person other than one or more of our existing significant stockholders
(Morgens Entities named in this prospectus, Sun America Life Insurance Company
and Keyport Life Insurance Company) and any of their affiliates, becomes the
beneficial owner, directly or indirectly, of (a) more than 35% of the
outstanding voting stock of the Riviera Holdings and (b) a greater percentage of
the outstanding voting stock of Riviera Holdings than is beneficially owned by
the existing significant holder holding the largest such percentage.
Asset Sales
We will not consummate an asset sale unless: (1) the Riviera Black Hawk is
operating; (2) we receive consideration at the time of such Asset Sale at least
equal to the fair market value of the assets or equity interests issued or sold
or otherwise disposed of; (3) such fair market value is determined by our board
and evidenced by a resolution of the board set forth in an officers' certificate
delivered to the trustee; and (4) at least 80% of the consideration therefor
received by us in the form of cash or cash equivalents which will include (a)
any liabilities (as shown on our most recent balance sheet, other than
contingent liabilities and liabilities that are by their terms subordinated to
the notes) that are assumed by the transferee of any such assets; and (b) any
securities, notes or other obligations received by us from such transferee that,
within 30 days of receipt, are converted by us into cash (to the extent of the
cash received in that conversion).
Within 180 days after the receipt of any net proceeds from an asset sale,
we may apply such net proceeds to make a capital expenditure, improve real
property or acquire long-term assets that are used or useful in a line of
business permitted by the covenant described below under the caption "--
Principal Covenants -- Line of Business"; provided that we grant to the trustee,
on behalf of the holders, a first priority perfected security interest on any
such property or assets acquired or constructed with the net proceeds of any
such asset sale.
Any such net proceeds that are not applied or invested as provided in the
preceding paragraph will constitute "excess proceeds." When the aggregate amount
of excess proceeds exceeds $5.0 million, we will make an asset sale offer to all
holders the maximum principal amount of notes that may be purchased out of the
excess proceeds. The offer price in any asset sale offer will be equal to 100%
of principal amount plus accrued and unpaid interest and liquidated damages, if
any, to the date of purchase, and will be payable in cash. If any excess
proceeds remain after consummation of an asset sale offer, the company may use
such excess proceeds for any purpose not otherwise prohibited by the indenture
and the collateral documents.
49
<PAGE>
We will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with each repurchase of notes
pursuant to an asset sale offer.
Finally, our ability to pay cash to the holders of notes upon a repurchase
may be limited by our existing financial resources.
Events of Loss
Within 360 days after any event of loss with respect to any collateral with
a fair market value (or replacement cost, if greater) in excess of $1.0 million,
we may apply the net loss proceeds from such event of loss to the rebuilding,
repair, replacement or construction of improvements to the Riviera Black Hawk,
with no concurrent obligation to make any purchase of any notes; provided that:
(1) we deliver to the trustee within 60 days of such event of loss a written
opinion from a reputable architect that the Riviera Black Hawk with at least the
minimum facilities (as defined in the indenture) can be rebuilt, repaired,
replaced or constructed and operating within 360 days of the event of loss; (2)
an officers' certificate certifying that we have available from net loss
proceeds or other sources sufficient funds to complete the rebuilding, repair,
replacement or construction described in clause (1) above; and (3) the net loss
proceeds are less than $20.0 million. If the net loss proceeds to be used for
rebuilding, repair, replacement or construction exceed $5.0 million, then the
net loss proceeds will be deposited in the construction disbursement account and
disbursed in accordance with the procedures set forth in the cash collateral and
disbursement agreement. Any Net Loss Proceeds that are not reinvested or not
permitted to be reinvested as provided in the first sentence of this paragraph
will be deemed "excess loss proceeds."
When the aggregate amount of excess loss proceeds exceeds $5.0 million, we
will make an offer to holders (an "event of loss offer") to purchase the maximum
principal amount of notes that may be purchased out of the excess loss proceeds,
at a purchase price in cash in an amount equal to 100% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages, if any,
thereon to the date of purchase. The date of purchase will not be less than 30
or more than 60 days from the date of the event of loss offer. If the aggregate
principal amount of notes tendered pursuant to an Event of Loss Offer exceeds
the excess loss proceeds, the trustee will select the notes to be purchased in
the manner described below under the caption "-- Selection and Notice." If the
aggregate amount of notes tendered pursuant to any event of loss offer is less
than the excess loss proceeds, we may, subject to the other provisions of the
indenture and the collateral documents, use any remaining excess loss proceeds
for general corporate purposes.
Pending any permitted rebuilding, repair, replacement or construction or
the completion of any event of loss offer, we will pledge to the trustee as
additional collateral any net loss proceeds or other cash on hand required for
such permitted rebuilding, repair, replacement or construction pursuant to the
terms of the collateral documents. These pledged funds will be released to us to
pay for or reimburse us for the actual cost of such permitted rebuilding,
repair, replacement or construction, or such event of loss offer, pursuant to
the terms of the collateral documents. Pending the final application of the net
loss proceeds, such proceeds will be invested in cash equivalents which will be
pledged to the trustee as security for the notes. We will grant to the trustee,
on behalf of the holders, a first priority lien, subject to permitted liens, on
any property or asset rebuilt, repaired, replaced or constructed with such net
loss proceeds on the terms set forth in the indenture and the collateral
documents.
The indenture also provides that with respect to any event of loss pursuant
to clause (4) of the definition of "event of loss" that has a fair market value
(or replacement cost, if greater) in excess of $5.0 million we will be required
to receive consideration at least (1) equal to the fair market value (evidenced
by a resolution of the board set forth in an officers' certificate delivered to
the trustee) of the assets subject to the event of loss and (2) at least 90% of
which is in the form of cash equivalents.
Excess Cash Purchase Offers
Within 120 days after each operating year, beginning with the first
operating year after the Riviera Black Hawk becomes operating, we will make an
offer to all holders (the "excess cash flow offer") to purchase the maximum
principal amount of notes that is an integral multiple of $1,000 that may be
purchased with 50% of excess cash flow in respect of the operating year then
ended (the "excess cash flow offer amount"), at a purchase price in cash equal
to 101% of the principal amount of the notes to be purchased, plus accrued and
unpaid interest and liquidated damages, if any, thereon to the date fixed for
the closing of the excess cash flow offer (the "excess cash flow purchase
price"), in accordance with the indenture. If the aggregate principal amount of
notes tendered pursuant to an excess cash flow offer exceeds the excess cash
flow offer amount with respect thereto, the trustee will select the notes to be
repurchased in the manner described below under "-- Selection and Notice." If
the aggregate amount of notes
50
<PAGE>
tendered pursuant to any excess cash flow offer is less than the excess cash
flow offer amount, we may, subject to the other provisions of the indenture and
the collateral documents, use any remaining excess cash flow for general
corporate purposes.
Excess cash flow means, with respect to our company for any operating year,
the consolidated cash flow of our company and our subsidiaries for such
operating year, minus (1) fixed interest (including the portion of any payments
associated with capital lease obligations) of our company and our subsidiaries
that is paid during such operating year and, without duplication, contingent
interest of our company and our subsidiaries that is paid or deferred in
accordance with the provisions of the indenture during such operating year, but
only to the extent that such contingent interest was not deferred in any prior
operating year, minus (2) up to $4.0 million in capital expenditures of our
company and our subsidiaries paid to maintain or improve our casino that are
actually paid during such operating year (excluding any capital expenditures
made with the proceeds from the sale of the notes), minus (3) principal payments
on indebtedness permitted to be incurred pursuant to the covenant described
above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred
Stock" and minus (4) amounts paid by us to Riviera Holdings pursuant to the tax
sharing agreement.
Selection and Notice
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows: (1) if the notes are listed, in
compliance with the requirements of the principal national securities exchange
on which the notes are listed; or (2) if the notes are not so listed, on a pro
rata basis, by lot or by such method as the trustee shall deem fair and
appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed at least 30 but not more than 60 days before the redemption date
to each holder of notes to be redeemed at its registered address. If any note is
to be redeemed in part only, the notice of redemption that relates to that note
shall state the portion of the principal amount thereof to be redeemed. A new
note in principal amount equal to the unredeemed portion of the original note
will be issued in the name of the holder thereof upon cancellation of the
original note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on notes
or portions of them called for redemption.
Restructure Covenants
Restricted Payments
We will not (1) declare or pay any dividend or make any other payment or
distribution on account of our equity interests (including, without limitation,
any payment in connection with any merger or consolidation or to the direct or
indirect holders of our equity interests in any capacity (other than dividends
or distributions payable in equity interests (other than disqualified stock) or
dividends or distributions payable to us); (2) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving us) any equity interests in us or any
direct or indirect parent of us; (3) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
indebtedness that is equal in right of payment preference with or subordinated
to the notes, except a payment of interest or principal at the stated maturity
thereof; or (4) make any restricted investment (all such payments and other
actions set forth in clauses (1) through (4) above being collectively referred
to as "restricted payments"), unless, at the time of and after giving effect to
such restricted payment: (1) we are operating; (2) no default or event of
default shall have occurred and be continuing or would occur as a consequence
thereof; (3) we would, at the time of such restricted payment and after giving
pro forma effect thereto as if such restricted payment had been made at the
beginning of the applicable four-quarter period, have been permitted to incur at
least $1.00 of additional indebtedness pursuant to the fixed charge coverage
ratio test set forth in the first paragraph of the covenant described below
under the caption "-- Incurrence of Indebtedness and Issuance of Preferred
Stock;" and (4) such restricted payment, together with the aggregate amount of
all other restricted payments made by us (excluding restricted payments
permitted by clauses (2) through (7) of the next succeeding paragraph), is less
than the sum, without duplication, of: (a) 50% of our consolidated net income
for the period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of the indenture to the end of our most
recently ended fiscal quarter for which internal financial statements are
available at the time of such restricted payment (or, if such consolidated net
income for such period is a deficit, less 100% of such deficit), plus (b) 100%
of the aggregate net cash proceeds received by us as a contribution to its
common equity capital (other than pursuant to the completion capital commitment,
the keep-well and any contribution to us from Riviera Holdings of the net
proceeds of a qualified public offering which are used to repurchase notes) or
from the issue or sale of equity interests in us (other than disqualified stock)
or from the issue or sale of convertible or exchangeable disqualified stock or
51
<PAGE>
convertible or exchangeable debt securities that have been converted into or
exchanged for such equity interests (other than equity interests (or
disqualified stock or debt securities) sold to a subsidiary), plus (c) to the
extent that any restricted investment that was made after the date of the
indenture is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (i) the cash return of capital with respect to such restricted
investment (less the cost of disposition, if any) and (ii) the initial amount of
such restricted investment.
With respect to any payments made pursuant to clauses (1) through (7)
below, so long as no default has occurred and is continuing or would be caused
thereby and, with respect to any payments made pursuant to clause (8) below, no
event of default or default in the payment when due of any principal, interest,
premium or liquidated damages on the notes shall have occurred or be continuing
or would occur as a consequence thereof, the preceding provisions will not
prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated indebtedness or equity
interests of the company in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to one of our subsidiaries)
of, equity interests of the company (other than disqualified stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (4)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of our
Indebtedness that is subordinate or equal in right of payment preference
with the notes with the net cash proceeds from an incurrence of permitted
refinancing indebtedness;
(4) the payment to Riviera Management of amounts owing to it (for
reimbursement of goods and services provided) and (for the payment of
management fees) of the management agreement subject to the terms of the
manager subordination agreement relating thereto between Riviera Management
and the trustee and subject to the requirement that all such payments are
made in compliance with the covenant described below under the caption
"Restriction on Payment of Management Fees;" provided, however, that
management may be made whether or not a default has occurred and is
continuing or would be caused thereby;
(5) any redemption required pursuant to the provisions of the indenture
described under the caption "-- Gaming Redemption" above;
(6) the repayment by us to Riviera Holdings of amounts that Riviera
Holdings had advanced to us prior to the consummation of the offering of the
notes;
(7) the payment by us to Riviera Holdings at any time after the Riviera
Black Hawk has been operating for 180 consecutive days equal to the amount
contained in the completion reserve account at the end of that period if our
fixed charge coverage ratio for our most recently ended four fiscal quarters
after the date on which we became operating for which internal financial
statements are available immediately preceding the date on which such
payment is to be made is at least 1.5 to 1; provided that if at the time of
such payment the Riviera Black Hawk has been operating for less than four
fiscal quarters, such fixed charge coverage ratio will be calculated with
respect to the number of full fiscal quarters (but in no event less than one
full fiscal quarter) for which internal financial statements are available
following the date the we first became operating; and
(8) the payment by us of amounts owing to Riviera Holdings pursuant to
the tax sharing agreement.
The amount of all restricted payments (other than cash) shall be the fair
market value on the date of the restricted payment of the assets or securities
proposed to be transferred or issued to or by us or such restricted subsidiary,
as the case may be, pursuant to the restricted payment. The fair market value of
any assets or securities that are required to be valued by this covenant shall
be determined by our board. Our board's determination must be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if the fair market value exceeds $5.0 million. Not
later than the date of making any restricted payment, we shall deliver to the
trustee an officers' certificate stating that such restricted payment is
52
<PAGE>
permitted and setting forth the basis upon which the calculations required by
this "restricted payments" covenant were computed, together with a copy of any
fairness opinion or appraisal required by the indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
We will not, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
acquired debt), and we will not issue any disqualified stock will not permit any
of our Subsidiaries to issue any shares of preferred stock; provided, however,
that, so long as no default or event of default has occurred and is continuing,
we may incur Indebtedness (including acquired debt) or issue disqualified stock,
if:
(1) we are operating;
(2) our fixed charge coverage ratio for our most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional indebtedness is
incurred or such disqualified stock is issued would have been at least 2.0
to 1, determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional indebtedness had been
incurred or the preferred stock or disqualified stock had been issued, as
the case may be, at the beginning of such four-quarter period; and
(3) the weighted average life to maturity of such indebtedness is
greater than the remaining weighted average life to maturity of the notes.
The first paragraph of this covenant will not prohibit the incurrence of
any of the following items of indebtedness so long as no default or event of
default has occurred and is continuing (collectively, "permitted debt"):
(1) the incurrence by us and our Subsidiaries of (a) indebtedness
represented by the notes to be issued on the date of the indenture and the
exchange notes to and (b) their respective obligations arising under the
collateral documents to the extent such obligations would represent
indebtedness;
(2) the incurrence by us of permitted refinancing indebtedness in
exchange for, or the net proceeds of which are used to refund, refinance or
replace Indebtedness (other than intercompany indebtedness) that was
permitted by the indenture to be incurred under the first paragraph of this
covenant or clauses (1), (2), (6), (8) or (10) of this paragraph;
(3) the incurrence by us of intercompany indebtedness between or among
us and any of our wholly owned restricted subsidiaries; provided, however,
that:
(a) such indebtedness must be expressly subordinated to the prior
payment in full in cash of all obligations with respect to the notes; and
(b) (i) any subsequent issuance or transfer of equity interests that
results in any such indebtedness being held by a person other than the
company or a wholly owned restricted subsidiary thereof, (ii) any sale or
other transfer of any such indebtedness to a person that is not either us
or a wholly owned restricted subsidiary thereof shall be deemed, in each
case, to constitute an incurrence of such indebtedness by the company or
such restricted subsidiary, as the case may be, that was not permitted by
this clause (3) and (iii) if any restricted subsidiary is the obligor on
such indebtedness, such indebtedness is represented by an intercompany
note that is pledged to the trustee as security for the notes;
(4) the incurrence by us of hedging obligations that are incurred for
the purpose of fixing or hedging interest rate risk with respect to any
floating rate indebtedness that is permitted by the terms of;
(5) the incurrence by us of indebtedness solely in respect of
performance or similar bonds or standby letters of credit; provided that any
such bond or standby letter of credit is incurred in the ordinary course of
our business in an aggregate amount not to exceed $2.0 million at any one
time outstanding; and provided, further, that any such bond or standby
letter of credit is incurred on terms customary for operations similar to
ours;
(6) the incurrence by us of FF&E financing; provided, however, that (a)
the principal amount of such Indebtedness does not exceed the cost
(including sales and excise taxes, installation and delivery charges and
53
<PAGE>
other direct costs of, and other direct expenses paid or charged in
connection with, such purchase) of the FF&E purchased or leased with the
proceeds thereof, (b) no Indebtedness incurred under the notes is utilized
for the purchase or lease of such FF&E and (c) the aggregate principal
amount of such indebtedness, including all permitted refinancing
indebtedness incurred to refund, refinance or replace any indebtedness
incurred pursuant to this clause, does not exceed $15.0 million outstanding
at any time;
(7) bond or surety obligations posted by us in order to prevent the loss
or material impairment of or to obtain a gaming license or as otherwise
required by an order of any gaming authority to the extent required by
applicable law and consistent in character and amount with customary
industry practice so long as such Indebtedness does not result in, and is
not secured by, a lien on any of the collateral;
(8) the incurrence by us of indebtedness solely in respect of special
assessment bonds, including all permitted refinancing indebtedness incurred
to refund, refinance or replace any Indebtedness incurred pursuant to this
clause, and standby letters of credit or surety bonds required to be issued
in connection therewith, in an aggregate amount not to exceed $400,000;
(9) the guarantee by us of indebtedness permitted to be incurred by
another provision of this covenant;
(10) the incurrence by us of additional indebtedness in an aggregate
principal amount (or accreted value, as applicable) at any time outstanding,
including all permitted refinancing indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause, not
to exceed $2.0 million; and
(11) the incurrence by our unrestricted subsidiaries of non-recourse
debt; provided, however, that if any such indebtedness ceases to be
non-recourse debt, such event shall be deemed to be an incurrence of
indebtedness by our restricted subsidiary that was not permitted by this
clause (11).
We will not incur any indebtedness (including permitted debt) that is
contractually subordinated in right of payment to any other of our indebtedness
of unless such Indebtedness is also contractually subordinated in right of
payment to the notes on substantially identical terms; provided, however, that
no Indebtedness shall be deemed to be contractually subordinated in right of
payment to any other Indebtedness of such solely by virtue of being unsecured.
Liens
We will not, directly or indirectly, create, incur, assume or suffer to
exist any lien of any kind on any asset now owned or hereafter acquired, or any
proceeds, income or profits therefrom or assign or convey any right to receive
income therefrom, except permitted liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
We will not, and will not permit any of our restricted subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of such restricted
subsidiary to:
(1) pay dividends or make any other distributions on its capital stock
to our Subsidiaries, or with respect to any other interest or participation
in, or measured by, its profits, or pay any indebtedness owed to us;
(2) make loans or advances to us; or
(3) transfer any of its properties or assets to us.
Merger, Consolidation or Sale of Assets
We may not, directly or indirectly (i) consolidate or merge with or into
another person (whether or not we are the surviving corporation) or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or our assets to another person; unless:
54
<PAGE>
(1) either (a) we are the surviving corporation or (b) the person formed
by or surviving any such consolidation or merger (if other than us) or to
which such sale, assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia;
(2) the person formed by or surviving any such consolidation or merger
(if other than us) or the person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all our
obligations under the notes, the indenture and the collateral documents;
(3) immediately after such transaction no default or event of default
exists;
(4) such transaction would not result in the loss or suspension or
material impairment of any gaming license unless a comparable replacement
gaming license is effective prior to or simultaneously with such loss,
suspension or material impairment;
(5) we or the person formed by or surviving any such consolidation or
merger (if other than us), or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made:
(a) will have consolidated net worth immediately after the
transaction equal to or greater than our consolidated net worth
immediately preceding the transaction; and
(b) will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the fixed charge coverage ratio test set forth in the first paragraph of
the covenant described above under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock"; and
(6) such transaction would not require any holder or beneficial owner of
notes to obtain a gaming license or be qualified or found suitable under the
law of any applicable gaming jurisdiction; provided that such holder or
beneficial owner would not have been required to obtain a gaming license or
be qualified or found suitable under the laws of any applicable gaming
jurisdiction in the absence of such transaction.
In addition, we may not, directly or indirectly, lease all or substantially
all of its properties or assets, in one or more related transactions, to any
other person. This covenant will not apply to a sale, assignment, transfer,
conveyance or other disposition of assets between or among us and any of our
wholly owned subsidiaries.
Transactions with Affiliates
We will not make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any affiliate (each, an "affiliate transaction"), unless: (1) such affiliate
transaction is on terms that are no less favorable than those that would have
been obtained in a comparable transaction by restricted subsidiary with an
unrelated person; and (2) we deliver to the trustee: (a) with respect to any
affiliate transaction or series of related affiliate transactions involving
aggregate consideration in excess of $1.0 million, a resolution of our board set
forth in an officers' certificate certifying that such affiliate transaction
complies with this covenant and that such affiliate transaction has been
approved unanimously by the board; and (b) with respect to any affiliate
transaction or series of related affiliate transactions involving aggregate
consideration in excess of $5.0 million, an opinion as to the fairness to the
holders of such affiliate transaction from a financial point of view issued by
an accounting, appraisal or investment banking firm of national standing.
The following items shall not be deemed to be affiliate transactions and,
therefore, will not be subject to the provisions of the prior paragraph: (1)
payments made pursuant to the completion capital commitment, the keep-well
agreement, the management agreement, the license agreement and the tax sharing
agreement; (2) purchases of goods and services in the ordinary course of
business; (3) any employment agreement entered into by us in the ordinary course
of business on terms customary in the gaming industry; (4) transactions between
or among us and/or our restricted subsidiaries; (5) restricted payments that are
permitted by the provisions of the indenture described above under the caption
"-- Restricted Payments;" and (6) reasonable fees and compensation (including,
without limitation, bonuses, retirement plans and securities, stock options and
stock ownership plans) paid or issued to and indemnities provided on behalf of
our officers, directors, employees or consultants in the ordinary course of
business. Subject to
55
<PAGE>
the clauses (1) through (6) in the immediately preceding paragraph, we will not
make any loans, advances or other payments to Riviera Holdings, except as
permitted pursuant to the provisions of the indenture, including covenant
described above under the caption "Restricted Payments."
Limitations on Use of Proceeds
We deposited $5.1 million of the net proceeds from the sale of the existing
notes into the interest reserve account, $31.9 million of the net proceeds from
the sale of the existing notes in the construction disbursement account and $5.0
million of the net proceeds from the sale of the existing notes in the
completion reserve account. The funds in the interest reserve account, the
construction disbursement account and the completion reserve account will be
invested solely in government securities. All funds in the cash collateral
accounts will be disbursed only in accordance with the cash collateral and
disbursement agreement.
Sale and Leaseback Transactions
We will not enter into any sale and leaseback transaction; provided that we
may enter into a sale and leaseback transaction if:
(1) we could have (a) incurred indebtedness in an amount equal to the
attributable debt relating to such sale and leaseback transaction under the
fixed charge ratio test in the first paragraph of the covenant described
above under the caption "-- Incurrence of Indebtedness and Issuance of
Preferred Stock" and (b) incurred a lien to secure such Indebtedness
pursuant to the covenant described above under the caption "-- Liens";
(2) the gross cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value, as determined in good faith by the
board and set forth in an officers' certificate delivered to the trustee, of
the property that is the subject of such sale and leaseback transaction; and
(3) the transfer of assets in such sale and leaseback transaction is
permitted by, and we apply the proceeds of such transaction in compliance
with, the covenant described above under the caption "-- Repurchase at the
Option of Holders -- Asset Sales."
Additional Subsidiary Guarantees
If we create another subsidiary then any such restricted subsidiary must
become a guarantor and execute a supplemental indenture and deliver an opinion
of counsel to the trustee.
Designation of Restricted and Unrestricted Subsidiaries
The board may designate any restricted subsidiary to be an unrestricted
subsidiary if that designation would not cause a default. If a restricted
subsidiary is designated as an unrestricted subsidiary, all outstanding
investments owned by the in the subsidiary so designated will be deemed to be an
Investment made as of the time of such designation and will reduce the amount
available for restricted payments under the first paragraph of the covenant
described above under the caption "-- Restricted Payments" or permitted
investments, as applicable. All such outstanding investments will be valued at
their fair market value at the time of such designation. That designation will
only be permitted if such restricted payment would be permitted at that time and
if such restricted subsidiary otherwise meets the definition of an unrestricted
subsidiary. The board may redesignate any unrestricted subsidiary to be a
restricted subsidiary if the redesignation would not cause a default.
Line of Business
We will not, and will not permit any subsidiary to, engage in any business
or investment activities other than permitted business. We will not, and will
not permit any of our Subsidiaries to, engage in any business, development or
investment activity other than at or in conjunction with the Riviera Black Hawk
until we are operating.
Restriction on Payment of Management Fees
We will not, directly or indirectly, pay to Riviera Management or any of
its affiliates any management fees if at the time of payment: (1) a default or
an event of default shall have occurred and be continuing or shall occur as a
result thereof; or (2) our fixed charge coverage ratio for our most recently
ended four full fiscal quarters for which internal financial statements are
available
56
<PAGE>
immediately preceding the date on which such management fee is proposed to be
paid would have been less than 1.5 to 1 (calculated on a pro forma basis after
deducting management fees to the extent paid in cash and not deferred and any
management fees deferred from a prior period proposed to be paid in cash during
such period, but excluding any management fees deferred or accrued and not paid
in cash during such period).
Any management fees not permitted to be paid pursuant to this covenant will
be deferred and will accrue and may be paid only at such time that they would
otherwise be permitted to be paid hereunder. The right to receive payment of the
management fee will be subordinate in right of payment to the right of the
holders to receive payments pursuant to the notes. We will not amend the
management agreement to increase amounts to be paid thereunder, or in any other
manner which would be adverse to us or the holders, including without
limitation, to amend the method of computing the management fee.
Reports
Whether or not required by the Commission, so long as any notes are
outstanding, we will furnish to the holders, within the time periods specified
in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if we were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and, with respect to the annual information only, a report on the annual
financial statements by our certified independent accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if we were required to file such reports.
If we have designated any of its subsidiaries as unrestricted subsidiaries,
then the quarterly and annual financial information required by the preceding
paragraph will include a reasonably detailed presentation, either on the face of
the financial statements or in the footnotes thereto, and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, of our
financial condition, our results of operations and our restricted subsidiaries
separate from the financial condition and results of operations of our
unrestricted subsidiaries.
In addition, following the consummation of this exchange offer, whether or
not required by the Commission, we will file a copy of all of the information
and reports referred to in clauses (1) and (2) above with the Commission for
public availability within the time periods specified in the Commission's rules
and regulations (unless the Commission will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request. In addition, we have agreed that, for so long as any notes remain
outstanding, it will furnish to the holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Cash Collateral and Disbursement Agreement
Pursuant to the cash collateral and disbursement agreement, $42.0 million
of the net proceeds from the sale of the existing notes were placed into the
cash collateral accounts and invested in government securities. All funds and
securities in the cash collateral accounts have been pledged as security for the
repayment of the notes. Funds in the cash collateral accounts will be disbursed
pursuant to the cash collateral and disbursement agreement.
Construction Disbursement Account
We deposited $31.9 million of the net proceeds from the sale of the existing
notes in the construction disbursement account, of which $10.1 million was used
to reimburse Riviera Holdings for amounts advanced to us to cover construction
and development costs. The disbursement agent will invest the remaining funds in
government securities which will be held in the construction reserve account
until the funds are needed from time to time to pay for the development,
construction and opening of the Riviera Black Hawk and our other operating
expenses. These funds will be disbursed in accordance with the cash collateral
and disbursement agreement. Subject to certain exceptions set forth in the cash
collateral and disbursement agreement, the disbursement agent will authorize the
disbursement of funds from the construction disbursement account only upon the
satisfaction of the disbursement conditions set forth in such agreement.
57
<PAGE>
Completion Reserve Account
We deposited $5.0 million of the net proceeds from the sale of the existing
notes into the completion reserve account. The disbursement agent invested these
funds in government securities which will be held in the completion reserve
account until the funds are needed from time to time to insure completion of
construction of the Riviera Black Hawk. The disbursement agent will authorize
the disbursement of funds from the completion reserve account to the
construction disbursement account only upon the satisfaction of the disbursement
conditions set forth in the cash collateral and disbursement agreement.
Interest Reserve Account
We deposited $5.1 million of the net proceeds from the sale of the existing
notes into the interest reserve account. These funds as set forth in an
officer's certificate, will provide for payment in full of the fixed interest on
the notes through May 1, 2000.
Excess Funds
If any funds remain in the construction disbursement account on the date
that the Riviera Black Hawk has been operating for at least 30 consecutive days
and (1) there is no ongoing construction (other than maintenance and repairs in
the ordinary course of business and other than construction associated with the
Riviera Black Hawk in an aggregate amount not to exceed $250,000) in connection
with the Riviera Black Hawk and (2) no default or event of default exists under
the indenture or the collateral documents, the disbursement agent will, upon our
direction, subject to certain exceptions set forth in the cash collateral and
disbursement agreement, disburse all remaining funds, if any, in the
construction disbursement account to any account or accounts specified by us.
If any funds remain in the completion reserve account on the date that the
Riviera Black Hawk has been operating for at least 180 consecutive days and (1)
there is no ongoing construction (other than maintenance and repairs in the
ordinary course of business) in connection with the Riviera Black Hawk and (2)
no default or event of default exists under the indenture or the collateral
documents, the disbursement agent will, upon our direction, subject to certain
exceptions set forth in the cash collateral and disbursement agreement, disburse
all remaining funds, if any, in the completion reserve account to any account or
accounts specified by us.
Events of Default - Cash Collateral and Disbursement Agreement
An event of default will exist under the cash collateral and disbursement
agreement if any of the following shall occur:
(1) a default or event of default occurs and is continuing under the
indenture;
(2) the disbursement agent, after appropriate consultation with us and
the independent construction consultant, does not approve a request for a
disbursement of over $50,000 or an amendment to the construction
disbursement budget where the aggregate amount that is the subject of the
amendment is over $50,000, and such failure continues for a period of 30
days;
(3) the independent construction consultant, in reviewing prior
disbursements, reports an exception in excess of $50,000 and such exception
continues for a period of ten days;
(4) if at any time the amount of available funds, together with any
funds contributed into the construction disbursement account pursuant to the
completion capital commitment, is less than the amount required in the
construction disbursement budget to cause the Riviera Black Hawk to be
operating on or before the operating deadline and such deficiency continues
for a period of 30 days from notice thereof;
(5) we fail to perform or observe any of its obligations regarding,
among other things, application of the proceeds of the notes (and such
failure continues for five days after notice thereof) or regarding, among
other things, substitution of accounts;
(6) we fail to deliver documents necessary to perfect the trustee's
security interest in the construction disbursement account, the completion
reserve account, the interest reserve account and the investments in each
and such failure continues for a period of five days;
58
<PAGE>
(7) we cease to own the property upon which the Riviera Black Hawk is to
be constructed, or we abandon the Riviera Black Hawk or otherwise ceases to
pursue the operations of the Riviera Black Hawk in accordance with standard
industry practice or sells or otherwise disposes of our interest in the
Riviera Black Hawk, except as permitted by the covenant in the indenture
described under the caption "-- Principal Covenants -- Merger, Consolidation
or Sale of Assets";
(8) any construction document relating to the Riviera Black Hawk with a
total contract amount of more than $100,000 is terminated, becomes invalid
or illegal, or otherwise ceases to be in full force and effect, provided
that with respect to any such construction document other than the
construction contract and the architect agreement, no event of default shall
be deemed to have occurred under the cash collateral and disbursement
agreement as a result of such termination if (a) we provide written notice
to the independent construction consultant immediately upon (but in no event
more than two business days after) we become aware of such construction
document ceasing to be in full force or effect that we intend to replace
such construction document (or that such replacement is not necessary) and
(b) in each case if in the reasonable judgment of the independent
construction consultant a replacement is necessary, (i) we obtain a
replacement obligor or obligors reasonably acceptable to the independent
construction consultant, and (ii) we enter into a replacement construction
document on terms no less beneficial to us and the trustee than then current
market terms within 60 days of such termination; or
(9) the independent construction consultant reasonably determines that
the Riviera Black Hawk is likely to become operating no earlier than 60 days
after the operating deadline.
If an event of default exists under the cash collateral and disbursement
agreement and the disbursement agent has received written notice thereof, the
disbursement agent will not be permitted to authorize the disbursement of funds
from the construction disbursement account or the completion reserve account,
provided that the disbursement agent may continue to disburse funds from the
construction reserve account or the completion reserve account (1) in an amount
up to $1.5 million (or such other amount as the trustee approves by written
notice to the disbursement agent) if necessary to prevent the condition of the
Riviera Black Hawk from deteriorating or to preserve work completed on the
Riviera Black Hawk, (2) to pay for work already completed or materials already
purchased, (3) to pay for retainage amounts if an event of default continues for
three consecutive months or more or (4) under certain conditions, to make
interest payments on the notes.
Events of Default and Remedies
Each of the following is an event of default under the indenture:
(1) default for 30 days in the payment when due of interest on, or
liquidated damages with respect to, the notes; provided that payments of
contingent interest that are permitted to be deferred as provided in the
indenture will not become due for this purpose until such payment is
required to be made pursuant to the terms of the indenture;
(2) default in payment when due of the principal of, or premium, if any,
on the notes;
(3) failure by us or any of our subsidiaries to comply with the
provisions described under the captions "-- Repurchase at the Option of
Holders -- Change of Control," "-- Repurchase at the Option of Holders --
Asset Sales," "-- Principal Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock," "-- Principal Covenants -- Merger,
Consolidation or Sale of Assets" or "Limitation on Use of Proceeds;"
(4) failure by us or any of our restricted subsidiaries for 30 days
after notice thereof to comply with the provisions described under the
caption "-- Principal Covenants -- Restricted Payments" and any of the other
agreements in the indenture not set forth in clause (3) above;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by us or any of our restricted subsidiaries
(or the payment of which is guaranteed by us or any of our restricted
subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of the indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default (a
"payment default"); or
59
<PAGE>
(b) results in the acceleration of such indebtedness prior to its
express maturity,
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
payment default or the maturity of which has been so accelerated, aggregates
$5.0 million or more;
(6) failure by us or any of our restricted subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days; and
(7) breach by us or any of our affiliates of any representation or
warranty in any material respect in the collateral documents or any
certificates delivered in connection therewith, failure by us or any of our
affiliates for 30 days (or such other period as specifically provided
therein) after notice thereof to comply with any covenant or agreement set
forth in the collateral documents, the repudiation by us of any of its
obligations under the collateral documents, the unenforceability of the
collateral documents against us or the loss of the perfection or priority of
the liens granted by us thereunder for any reason;
(8) certain events of bankruptcy or insolvency with respect us or any
of our restricted subsidiaries;
(9) revocation, termination, suspension or other cessation of
effectiveness for a period of more than 90 consecutive days of any gaming
license which results in the cessation or suspension of gaming operations at
any gaming facility;
(10) default by Riviera Holdings in the performance of its obligations
set forth in, or repudiation of its obligations under, the completion
capital commitment or the keep-well agreement; or
(11) failure of the Riviera Black Hawk to be operating by the operating
deadline or to remain operating thereafter, except (a) as the hours of
operation of the Riviera Black Hawk may be limited by any gaming authority
or gaming law or (b) for a period of time not to exceed 30 days during any
45-day period and not to exceed 60 days during any one-year period;
provided, however, that, in any event, there shall not be an event of
default under this clause if the failure to remain operating during such
period results from an event of loss pursuant to the terms of the indenture.
In the case of an event of default arising from certain events of
bankruptcy or insolvency with respect to us, any restricted subsidiary that is a
significant subsidiary or any group of restricted subsidiaries that, taken
together, would constitute a significant subsidiary, all outstanding notes will
become due and payable immediately without further action or notice. If any
other event of default occurs and is continuing, the trustee or the holders of
at least 25% in principal amount of the then outstanding notes may declare all
the notes to be due and payable immediately.
Holders may not enforce the indenture or the notes except as provided in
the indenture. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding notes may direct the trustee in its
exercise of any trust or power. The trustee may withhold from holders notice of
any continuing default or event of default (except a default or event of default
relating to the payment of principal or interest or liquidated damages) if it
determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the holders of all of the
notes waive any existing default or event of default and its consequences under
the indenture, except a continuing default or event of default in the payment of
interest or liquidated damages on, or the principal of, the notes.
In the case of any event of default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of us with the intention
of avoiding payment of the premium that we would have had to pay if we then had
elected to redeem the notes pursuant to the optional redemption provisions of
the indenture, an equivalent premium shall also become and be immediately due
and payable to the extent permitted by law upon the acceleration of the notes.
If an event of default occurs prior to May 1, 2002, by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of us with the
intention of avoiding the prohibition on redemption of the notes prior to May 1,
2002, then the premium specified in the indenture shall also become immediately
due and payable to the extent permitted by law upon the acceleration of the
notes.
60
<PAGE>
We are required to deliver to the trustee annually a statement regarding
compliance with the indenture. Upon becoming aware of any default or event of
default, the company is required to deliver to the trustee a statement
specifying such default or event of default.
Remedies upon Default Under the Notes
The trustee will be required to initiate a foreclosure against the
collateral in order to enforce its rights under certain of the collateral
documents. A foreclosure against the collateral will be subject to certain
notice and other procedural limitations.
No Personal Liability of Directors, Officers, Employees and Stockholders
None of our directors, officers, employees, incorporators or stockholders,
as such, shall have any liability for any of our obligations under the notes,
the indenture, the collateral documents or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each holder by
accepting a note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the notes. The waiver may not be
effective to waive liabilities under the federal securities laws.
Legal Defeasance and Covenant Defeasance
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the outstanding notes ("legal defeasance") except
for: (1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, or interest or premium and liquidated damages, if
any, on such notes when such payments are due from the trust referred to below;
(2) our obligations with respect to the notes concerning issuing temporary
notes, registration of notes, mutilated, destroyed, lost or stolen notes and the
maintenance of an office or agency for payment and money for security payments
held in trust; (3) the rights, powers, trusts, duties and immunities of the
trustee, and our obligations in connection therewith; and (4) the legal
defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have our
obligations released with respect to certain covenants that are described in the
indenture ("covenant defeasance") and thereafter any omission to comply with
those covenants shall not constitute a default or event of default with respect
to the notes. In the event covenant defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "events of default" will no longer constitute an event
of default with respect to the notes. In addition, the liens securing the
collateral will be released upon covenant defeasance or legal defeasance.
In order to exercise either legal defeasance or covenant defeasance:
(1) we must irrevocably deposit with the trustee, in trust, for the
benefit of the holders, cash in u.s. dollars, non-callable government
securities, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, and fixed interest, the maximum amount
payable as contingent interest and premium and liquidated damages, if any,
on the outstanding notes on the stated maturity or on the applicable
redemption date, as the case may be, and we must specify whether the notes
are being defeased to maturity or to a particular redemption date;
(2) in the case of legal defeasance, we must deliver to the trustee an
opinion of counsel reasonably acceptable to the trustee confirming that (a)
we have received from, or there has been published by, the Internal Revenue
Service a ruling or (b) since the date of the indenture, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of counsel shall confirm that,
the holders of the outstanding notes will not recognize income, gain or loss
for federal income tax purposes as a result of such legal defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such legal
defeasance had not occurred;
(3) in the case of covenant defeasance we shall have delivered to the
trustee an opinion of counsel reasonably acceptable to the trustee
confirming that the holders of the outstanding notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
covenant defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred;
61
<PAGE>
(4) no default or event of default shall have occurred and be continuing
on the date of such deposit (other than a default or event of default
resulting from the borrowing of funds to be applied to such deposit);
(5) such legal defeasance or covenant defeasance will not result in a
breach or violation of, or constitute a default under any material agreement
or instrument (other than the indenture) to which we or any of our
restricted subsidiaries is a party or by which we or any of our restricted
subsidiaries is bound;
(6) we must deliver to the trustee an officers' certificate stating that
the deposit was not made by us with the intent of preferring the holders
over our other creditors with the intent of defeating, hindering, delaying
or defrauding creditors or others; and
(7) we must deliver to the trustee an officers' certificate and an
opinion of counsel, each stating that all conditions precedent relating to
the legal defeasance or the covenant defeasance have been complied with.
Amendment, Supplement and Waiver
Except as provided in the next three succeeding paragraphs, the indenture
or the notes may be amended or supplemented with the consent of the holders of
at least a majority in principal amount of the notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
Without the consent of the holders of at least 66 2/3% in aggregate
principal amount of the notes then outstanding, an amendment or waiver may not
affect the liens in favor of the trustee and the holders created under the
collateral documents in a manner adverse to the holders or release all or
substantially all of the collateral, in each case, other than pursuant to the
release of collateral in accordance with the provisions of the indenture and of
the applicable collateral documents.
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to
an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the notes (other than
provisions relating to the covenants described above under the caption "--
Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any
note;
(4) waive a default or event of default in the payment of principal of,
or interest or premium, or liquidated damages, if any, on the notes (except
a rescission of acceleration of the notes by the holders of at least a
majority in aggregate principal amount of the notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to
waivers of past defaults or the rights of holders of notes to receive
payments of principal of, or interest or premium or liquidated damages, if
any, on the notes; or
(7) waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the caption
"-- Repurchase at the Option of Holders").
Notwithstanding the preceding, without the consent of any holder of notes,
we and the trustee may amend or supplement the indenture or the notes:
62
<PAGE>
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of the our obligations to holders of
notes in the case of a merger or consolidation or sale of all or
substantially all of our assets;
(4) to make any change that would provide any additional rights or
benefits to the holders of notes or that does not adversely affect the legal
rights under the indenture of any such holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the indenture under the Trust indenture Act.
Concerning the Trustee
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an event of default
shall occur and be continuing, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless such holder shall have offered to the trustee security
and indemnity satisfactory to it against any loss, liability or expense.
Anyone who receives this prospectus may obtain a copy of the indenture,
each of the collateral documents and registration rights agreement without
charge by writing to Riviera Black Hawk, Inc., Riviera Hotel & Casino, 2901 Las
Vegas Boulevard South, Las Vegas, NV 89109, Attention: Executive Vice President
of Finance.
Registration Rights; Liquidated Damages
The following description is a summary of selected provisions of the
registration rights agreement deemed important to you. It does not restate that
agreement in its entirety. We urge you to read the proposed form of registration
rights agreement in its entirety because it, and not this description, defines
your registration rights as holders. See "Available Information."
The registration rights agreement provides:
(1) we will file an exchange offer Registration Statement with the
Commission on or prior to 45 days after the sale of the existing notes;
(2) we will use its best efforts to have the exchange offer Registration
Statement declared effective by the Commission on or prior to 150 days after
the sale of the existing notes;
(3) unless the exchange offer would not be permitted by applicable law
or Commission policy, we will
(a) commence the exchange offer; and
(b) use its best efforts to issue on or prior to 30 business days,
or longer, if required by the federal securities laws, after the date on
which the exchange offer Registration Statement was declared effective by
the Commission, exchange notes in exchange for all notes tendered prior
thereto in the exchange offer; and
(4) if obligated to file the shelf registration statement, we will use
its best efforts to file the shelf registration statement with the
Commission on or prior to 45 days after such filing obligation arises and to
cause the shelf registration to be declared effective by the Commission on
or prior to 150 days after such obligation arises.
63
<PAGE>
If:
(1) we fail to file any of the registration statements required by the
registration rights agreement on or before the date specified for such
filing;
(2) any of such registration statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"effectiveness target date");
(3) we fail to consummate the exchange offer within 45 business days of
the effectiveness target date with respect to the exchange offer
Registration Statement; or
(4) the exchange offer Registration Statement or the shelf registration
statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of transfer restricted securities during
the periods specified in the registration rights agreement (each such event
referred to in clauses (1) through (4) above, a "registration default"),
then we will pay liquidated damages to each holder, with respect to the first
90-day period immediately following the occurrence of the first registration
default in an amount equal to $.05 per week per $1,000 principal amount of notes
held by such holder.
The amount of the liquidated damages will increase by an additional $.05
per week per $1,000 principal amount of notes with respect to each subsequent
90-day period until all registration defaults have been cured, up to a maximum
amount of liquidated damages for all registration defaults of $.50 per week per
$1,000 principal amount of notes.
All accrued liquidated damages will be paid by us on each interest payment
date.
Following the cure of all registration defaults, the accrual of liquidated
damages will cease.
Holders of notes will be required to make certain representations to us (as
described in the registration rights agreement) in order to participate in the
exchange offer and will be required to deliver certain information to be used in
connection with the shelf registration statement and to provide comments on the
shelf registration statement within the time periods set forth in the
registration rights agreement in order to have their notes included in the shelf
registration statement and benefit from the provisions regarding liquidated
damages set forth above. By acquiring transfer restricted securities, a holder
will be deemed to have agreed to indemnify us against certain losses arising out
of information furnished by such holder in writing for inclusion in any shelf
registration statement. Holders of notes will also be required to suspend their
use of the prospectus included in the shelf registration statement under certain
circumstances upon receipt of written notice to that effect from us.
64
<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States federal
income tax consequences of the exchange offer to a holder of existing notes that
is an individual citizen or resident of the United States or a United States
corporation that purchased the existing notes pursuant to their original issue
(a "holder"). It also summarizes the material United States income tax
consequences resulting from the ownership and disposition of the exchange notes.
This discussion is based on the Internal Revenue Code of 1986, as amended to the
date hereof (the "Code"), existing and proposed Treasury regulations, and
judicial and administrative determinations, all of which are subject to change
at any time, possibly on a retroactive basis. The following relates only to the
existing notes, and the exchange notes received in exchange for the existing
notes, that are held as "capital assets" within the meaning of Section 1221 of
the Code by holders. It does not discuss state, local or foreign tax
consequences, nor does it discuss tax consequences to subsequent purchasers
(persons who did not purchase the existing notes pursuant to their original
issue), or to categories of holders that are subject to special rules, such as
foreign persons, tax-exempt organizations, insurance companies, banks, dealers
in stocks and securities and persons holding the notes as part of a "straddle,"
"hedge," or "conversion transaction." Tax consequences may vary depending on the
particular status of an investor.
No rulings will be sought from the IRS with respect to the federal income
tax consequences of the exchange offer and the ownership and disposition of the
exchange noes. There can be no assurance that the IRS will not take positions
contrary to the federal income tax consequences discussed below. In particular,
we intend to treat the notes as indebtedness for federal income tax purposes.
However, this treatment is not binding on the IRS or any court and there can be
no assurance that the IRS will not successfully argue (or that a court will not
hold) that the notes should be treated as equity for federal income tax
purposes. If any portion of the notes is treated as equity rather than
indebtedness, we would not be able to deduct the interest on that portion of the
notes. This could have a material adverse effect on our after-tax cash flow. In
addition, the interest payments made on the portion of the notes that are
treated as equity will be taxable to the recipient as dividends to the extent of
our current and accumulated earnings and profits. This could adversely affect
the timing, character and amounts includible in the income of a holder of notes.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE EXISTING
NOTES FOR EXCHANGE NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR
CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO
ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE EXISTING NOTES
FOR EXCHANGE NOTES.
The Exchange Offer
The exchange of existing notes pursuant to the exchange offer should be
treated as a continuation of the corresponding existing notes because the terms
of the exchange notes are not materially different from the terms of the
existing notes. Accordingly, such exchange should not constitute a taxable event
to holders, and therefore:
- no gain or loss should be realized by holders upon receipt of an
exchange note;
- the holding period of an exchange note should include the holding
period of the existing note for which the exchange note was exchanged;
and
- the adjusted tax basis of the exchange note should be the same as the
adjusted tax basis of the existing note for which the exchange note
was exchanged immediately before the exchange.
Recognition of Interest Income
Certain Treasury Regulations (the "Contingent Payment Regulations") govern
the treatment of debt instruments issued on or after August 13, 1996 that
provide for one or more contingent payments. Because the notes provide for one
or more contingent payments of interest, the Contingent Payment Regulations will
apply to the notes while owned by a holder.. Under the Contingent Payment
Regulations, we must construct a projected payment schedule for the notes, and
holders generally must recognize all interest income with respect to a note on a
constant yield basis based on this projected payment schedule, subject to
adjustments if actual contingent payments differ from those projected. This
interest is treated as "original issue discount."
65
<PAGE>
In particular, the projected payment schedule will be determined by
including all noncontingent payments and the "expected value" of all contingent
payments on the notes. The projected payment schedule must produce the
"comparable yield," which is the yield at which we would issue a fixed rate debt
instrument with terms and conditions similar to those of the notes. The amount
of interest that accrues each accrual period is the product of the "comparable
yield" and the note's "adjusted issue price" at the beginning of each accrual
period. The "adjusted issue price" of a note is equal to the initial offering
price paid by the holders for a substantial amount of the notes, increased by
interest previously accrued on the note (determined without adjustments for
differences between the projected payment schedule and the actual payments on
the notes), and decreased by the amount of any noncontingent payments and the
projected amount of any contingent payments previously made on the note. Except
for adjustments made for differences between actual and projected payments, the
amount of interest included in income by a holder of a note is the sum of the
"daily portions" of interest income with respect to the note for each day during
the taxable year (or portion thereof) on which the holder held such note. The
"daily portions" of interest income are determined by allocating to each day in
any accrual period a ratable portion of the interest income allocable to that
accrual period. If actual payments differ from projected payments, then holders
will generally be required in any given taxable year either to include
additional interest in gross income (in case the actual payments exceed
projected payments in such taxable year) or to reduce the amount of interest
income otherwise accounted (in case the actual payments are less than the
projected payments in such taxable year). If the negative adjustment exceeds the
interest for the taxable year that would otherwise have been accounted for on
the notes, the excess will be treated as ordinary loss. However, the amount
treated as an ordinary loss in any taxable year is limited to the amount by
which the holder's total interest inclusions on the notes exceed the total
amount of the net negative adjustments treated as ordinary loss in prior years.
Any remaining excess will be a negative adjustment carryforward and treated as a
negative adjustment in the succeeding year. If a note is sold, exchanged, or
retired, any negative adjustment carryforward from the prior year will reduce
the holder's amount realized on the sale, exchange or retirement.
Thus, under the rules described in the preceding paragraph, depending on
the "comparable yield" and "expected value" used to determine the projected
payment schedule, holders of notes may be required to include amounts in income
prior to the receipt of cash payments attributable to such income. We will
provide to holders the projected payment schedule for the notes. The projected
payment schedule for the notes will consist of all fixed interest payments, all
scheduled principal payments and a projected amount and time for each contingent
interest payment. The yield, timing and amounts set forth on the projected
payment schedule are for federal income tax purposes only and are not assurances
by us with respect to any aspect of the notes. Holders will generally be bound
by the projected payment schedule. However, the IRS will not respect a projected
payment schedule which it determines to be unreasonable. Holders are strongly
urged to consult their tax advisors with respect to the application of the
contingent payment rules described above to the notes.
It is possible that the notes may be subject to the provisions of the
Internal Revenue Code dealing with high yield discount obligations in which case
we may not be entitled to claim a deduction with respect to a certain portion of
the interest payments (the "Disqualified Portion"). This could reduce the amount
of cash available to us to meet our obligations under the notes.
Sale, Retirement or Other Taxable Disposition
A holder of a note will generally recognize gain or loss upon the sale,
redemption, retirement, or other taxable disposition of the note in an amount
equal to the difference between (1) the amount of cash and the fair market value
of property received in exchange therefor, except to the extent attributable to
the payment of accrued interest or original issue discount, which generally will
be taxable to the holder as ordinary income, reduced by any negative adjustment
carryforward (as described above) and (2) the holder's adjusted tax basis in the
note. A holder's adjusted tax basis in a note generally will be equal to the
price paid for the note, increased by the amount of original issue discount
previously accrued on the note (determined without adjustments), and decreased
by the amount of any noncontingent payments and the projected amount of any
contingent payments previously made on the note.
If a note is sold or otherwise disposed of when there are remaining
contingent payments under the projected payment schedule, then any gain
recognized under the sale or other disposition will be ordinary interest income.
Any loss recognized will be ordinary loss to the extent the holders' total
interest inclusions on a note exceed the total amount of ordinary loss the
holder took into account under the rules described above with respect to
differences between actual payments and projected payments, and any additional
loss will generally be a capital loss. If, however, a note is sold or otherwise
disposed of after there are no remaining contingent payments due on the note
under the projected payment schedule, the resulting gain or loss will generally
be capital gain or loss and will be long-term capital gain or loss if the note
has been held for more than one year.
66
<PAGE>
Liquidated Damages
We intend to take the position that the liquidated damages described above
under "Description of Notes -- Registration Rights; Liquidated Damages" will be
taxable to the holder as ordinary income in accordance with the holder's method
of accounting for federal income tax purposes. The IRS may take a different
position, however, which could affect the timing of both the holder's income and
our deduction with respect to the liquidated damages.
Backup Withholding
A holder of notes may be subject to backup withholding at the rate of 31%
with respect to interest paid on, original issue discount accrued on and gross
proceeds from a sale or other disposition of, the notes unless (1) the holder is
a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact or (2) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A holder of notes who does not provide us with his or her
correct taxpayer identification number may be subject to penalties imposed by
the IRS.
We will report to the holders of the notes and the IRS the amount of any
"reportable payments," including any original issue discount accrued on the
notes and any amount withheld with respect to the notes during the calendar
year.
67
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes received in
exchange for existing notes where such existing notes were acquired as a result
of market-making activities or other trading activities. We have agreed that,
for a period of 180 days after the expiration date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until ___________, 1999 (90
days after the effective date of this Registration Statement), all dealers
effecting transactions in the exchange notes may be required to deliver a
prospectus.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange Noes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such exchange notes. Any broker-dealer
that resells exchange notes that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of such exchange notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of exchange
notes and any commission or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date the Company will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the exchange offer (including the expenses of one counsel for the
Holders of the Notes) other than commissions or concessions of any brokers or
dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
Each broker-dealer that receives exchange notes are required to deliver a
prospectus in connection with any resale of such note.
Each broker-dealer that acquired existing notes as a result of market
making or other trading activities may use the exchange offer prospectus, as
supplemented or amended for resales of exchange notes.
Broker-dealers that acquired the existing notes directly from the Company
in the initial offering and not as a result of market making or trading
activities cannot use the prospectus for the exchange offer in connection with
resales of the exchange notes and, absent an exemption, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with secondary resale of the exchange notes and cannot rely on the
position of the staff in Exxon Capital Holdings Corporation (avail. April 13,
1989).
68
<PAGE>
LEGAL MATTERS
The validity of the exchange notes offered hereby will be passed upon for
the Company by Dechert Price & Rhoads, New York, New York. Certain legal matters
with respect to Colorado law will be passed upon by Holme, Roberts & Owen LLP,
Denver, Colorado and Verner, Liipfert, Bernhard, McPherson & Hand, Chartered,
Washington, D.C.
EXPERTS
The financial statements of Riviera Black Hawk, Inc. (a development stage
company) as of December 31, 1997 and 1998 and for the period from August 18,
1997 (date of inception) through December 31, 1997 and for the year ended
December 31, 1998, included in this prospectus, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report included herein
(which report expresses an unqualified opinion and includes an explanatory
paragraph referring to the Company's status as a development stage entity) and
have been so included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of Riviera Holdings Corporation and
Subsidiaries as of December 31, 1997 and 1998 and for each of the three years in
the period ended December 31, 1998 incorporated in this prospectus by reference
from the Annual Report on Form 10-K of Riviera Holdings Corporation and
Subsidiaries have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report which is incorporated herein by reference and have
been so incorporated in reliance upon the report of such firm given their
authority as experts in accounting and auditing.
The Statements as to matters of law and legal conclusions concerning
Colorado gaming law included under the captions "Risk Factors--Gaming licenses,
permits and approvals," "--Legislative issues" and "--State gaming tax issues"
and "Gaming and Liquor Regulatory Matters" have been prepared by Holme, Roberts
& Owen LLP, Denver, Colorado and Edward McGrath,,Verner, Liipfert, Bernhard,
McPherson & Hand, Chartered, Washington, D.C., gaming counsel for the Company.
AVAILABLE INFORMATION
We are not currently subject to the periodic reporting and other
informational requirements of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"). We have agreed that, whether or not required to do
so by the rules and regulations of the Securities and Exchange Commission, so
long as any notes remain outstanding, we will furnish to the trustee and deliver
or cause to be delivered to holders of the notes, beginning with respect to our
fiscal quarter ending June 30, 1999, (1) all consolidated quarterly and annual
financial information that would be required to be contained in a filing with
the Securities and Exchange Commission on Forms 10-Q and 10-K if we were
required to file such forms and, with respect to the annual information only, a
report thereon by our certified independent accountants and (2) all reports that
would be required to be filed with the Securities and Exchange Commission on
Form 8-K if we were required to file such reports. From and after the time a
registration statement with respect to the notes is declared effective by the
Securities and Exchange Commission, we will file such information with the
Securities and Exchange Commission, provided the Securities and Exchange
Commission will accept such filing.
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act of 1933, covering the notes to be issued in the exchange offer.
This prospectus, which is a part of the registration statement, does not contain
all of the information included in the registration statement. Any statement
made in this prospectus concerning the contents of any contract, agreement or
other document is not necessarily complete. For further information with respect
to the Company and the notes to be issued in the exchange offer, please
reference the registration statement, including its exhibits. If we have filed
any contract, agreement or other document as an exhibit to the registration
statement, you should read the exhibit for a more complete understanding of the
documents or matter involved.
Copies of the registration statement, including all related exhibits and
schedules, may be inspected without charge at the public reference facilities
maintained by the SEC, or obtained at prescribed rates from the Public Reference
Section of the SEC at the address set forth above. In addition, you may request
a copy of any of these filings, at no cost, by writing or telephoning us at the
following address or phone number:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
(303) 582-1000
69
<PAGE>
RIVIERA BLACK HAWK, INC.
(A Development Stage Company)
- --------------------------------------------------------------------------------
Page
TABLE OF CONTENTS F-1
INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS:
Balance Sheets as of June 30, 1999 (Unaudited),
December 31, 1998 and 1997 F-3
Statements of Operations for the Six Months Ended June 30,
1999 (Unaudited)and cumulative from August 18, 1997
(Inception) through June 30, 1999 (Unaudited) F-4
Statements of Stockholder's Equity for the Six Months Ended
June 30, 1999 (Unaudited) and for the Year Ended
December 31, 1998 and for the Period from
August 18, 1997 (Inception) through December 31, 1997 F-5
Statements of Cash Flows for the Six Months Ended June 30, 1999
and 1998 (Unaudited), and for the Year Ended December 31,
1998 and for the Period from August 18, 1997 (Inception)
through December 31, 1997 and cumulative from August 18,
1997 (Inception) through June 30, 1999 (Unaudited) F-6
Notes to Financial Statements F-7-11
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Riviera Black Hawk, Inc.
(A Development Stage Company):
We have audited the accompanying balance sheets of Riviera Black Hawk, Inc.
(a Development Stage Company) (the "Company") as of December 31, 1998 and 1997,
and the related statements of operations, stockholder's equity and of cash flows
for the period from August 18, 1997 (date of inception) through December 31,
1997, and for the year ended December 31, 1998. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1998 and
1997, and the results of its cash flows for the period from August 18, 1997
(date of inception) through December 31, 1997, and for the year ended December
31, 1998, in conformity with generally accepted accounting principles.
The Company is in the development stage at December 31, 1998. As discussed
in Note 1 to the financial statements, successful completion of the Company's
development program and, ultimately, the attainment of profitable operations is
dependent upon future events, including obtaining certain regulatory approvals
and achieving a level of sales adequate to support the Company's cost structure.
Deloitte & Touche LLP
Las Vegas, Nevada
February 19, 1999
F-2
<PAGE>
RIVIERA BLACK HAWK, INC.
(A Development Stage Company)
BALANCE SHEETS
JUNE 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998 AND 1997
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June December 31,
ASSETS 1999 1998 1997
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents...................... $ 809 $ 543 $ 49
Cash, restricted............................... 26,278
Short-term investments, restricted............. 5,119
Prepaid expenses............................... 30 73 _
----------- ----------- ---------
Total current assets....................... 32,236 616 49
PROPERTY AND EQUIPMENT.............................. 39,936 27,112 16,583
DEFERRED FINANCING COSTS............................ 3,114
OTHER ASSETS........................................ 94 3
CASH, RESTRICTED.................................... 407 407 _
----------- ----------- ---------
TOTAL...................................... $ 75,787 $ 28,138 $ 16,632
=========== =========== =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities....... $ 5,897 $ 1,210 $ 7
Accrued interest expense....................... 455
Accrued expenses, other........................ 189 - -
----------- ----------- ---------
Total current liabilities...................... 6,541 1,210 7
----------- ----------- ---------
NONCURRENT LIABILITIES:
Due to Riviera Holdings Corporation............ 62 6,241
13% First Mortage Notes........................ 45,000
Special improvement district bonds, net of 784 687 -
----------- ----------- ---------
undisbursed funds of $780..................
Total noncurrent liabilities............... 45,846 6,928 -
----------- ----------- ---------
Total liabilities.......................... 52,387 8,138 7
----------- ----------- ---------
COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY:
Common stock, $.01 par value; 10,000 shares authorized;
1,000 shares issued and outstanding............
Additional paid-in capital..................... 23,459 20,000 16,625
Accumulated deficit............................ (59) - -
----------- ----------- ---------
Total stockholder's equity................. 23,400 20,000 16,625
----------- ----------- ---------
TOTAL ..................................... $ 75,787 $ 28,138 $ 16,632
=========== =========== =========
</TABLE>
See notes to financialstatements.
F-3
<PAGE>
RIVIERA BLACK HAWK, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 AND PERIOD FROM AUGUST 18, 1997
(DATE OF INCEPTION) THROUGH JUNE 30, 1999 (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Six Cumulative from
Months August 18, 1997
Ended (Date of
June 30, Inception) through
1999 June 30, 1999
--------- ------------------
<S> <C> <C>
Selling, general and administrative................. $ (75) $ (75)
OTHER INCOME (EXPENSE):
Interest expense.................................... (193) (193)
Interest income..................................... 115 115
Total other income (expense)................... (78) (78)
Loss before taxes................................... (153) (153)
Tax benefit......................................... 94 94
Net loss........................................... $ (59) $ (59)
</TABLE>
See notes to financial statements.
F-4
<PAGE>
RIVIERA BLACK HAWK, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDER'S EQUITY
PERIOD FROM AUGUST 18, 1997 (DATE OF
INCEPTION) THROUGH DECEMBER
31, 1997 AND YEAR ENDED
DECEMBER 31, 1998 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1999
(Unaudited)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
------ ------ --------- ----------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, AUGUST 18, 1997
(Date of Inception)................ - $ - $ - $ -
Common stock issued................ 1,000
Contributed capital................ - - 16,625 16,625
-------- ------ -------- --------- --------
BALANCE, DECEMBER 31, 1997.............. 1,000 16,625 16,625
Contributed capital................ - - 3,375 3,375
-------- ------ -------- --------- --------
BALANCE, DECEMBER 31, 1998.............. 1,000 20,000 20,000
Contributed capital (unaudited).... 3,459 3,459
Net loss (unaudited)............... - - - (59) (59)
-------- ------ -------- --------- --------
BALANCE, JUNE 30, 1999..................
(Unaudited)........................ 1,000 $ - $ 23,459 $ (59) $ 23,400
======== ====== ======== ========= ========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
RIVIERA BLACK HAWK, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
PERIOD FROM AUGUST 18, 1997 (DATE OF INCEPTION) THROUGH
DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998 AND
SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) AND CUMULATIVE FROM
AUGUST 18, 1997 (INCEPTION) THROUGH JUNE 30, 1999 (UNAUDITED) (In thousands)
<TABLE>
<CAPTION>
Cumulative
August 18, from August
Six Six 1997 18, 1997
Months Months (Inception) (Date of
Ended Ended to Inception)
June 30, June 30, December through June
1999 1998 1998 31, 1997 30, 1999
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
NET LOSS.................................... $ (59) $ $ $ $ (59)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment....... (6,562) (2,040) (6,667) (15,923) (29,152)
Decrease (increase) in prepaid expenses.. 43 (73) (30)
Increase in cash - restricted............ (26,278) (26,278)
Purchase of short-term investments....... (5,119) (5,119)
Deferred financing costs................. (3,114) (3,114)
Increase in restricted cash.............. (407) (407)
Increase in other assets................. (91) (3) (94)
---------- ---------- ---------- ---------- -----------
Net cash used in investing activities (41,121) (2,040) (7,150) (15,923) (64,194)
---------- ---------- ---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from (payments to) Riviera
Holding Corporation..................... (6,179) 343 6,241 62
Proceeds from long-term borrowings......... 45,000 45,000
Contribution of paid-in capital............ 2,625 2,117 1,403 15,972 20,000
---------- ---------- ---------- ---------- -----------
Net cash provided by financing 41,446 2,460 7,644 15,972 65,062
activities.........................
---------- ---------- ---------- ---------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS....... 266 420 494 49 809
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 543 49 49
---------- ---------- ---------- ---------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD....
$ 809 $ 469 $ 543 $ 49 $ 809
========== ========== ========== ========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INFORMATION:
Property and equipment purchased using
accounts payable.......................... $ 5,897 $ 1,203 $ 7 $ 5,897
========== ========== ========== ========== ===========
Property acquired using special improvement
district bonds............................ $ 97 $ 687 $ $ 784
========== ========== ========== ========== ===========
CAPITALIZED INTEREST CONTRIBUTED BY RIVIERA
HOLDINGS CORP............................. $ 834 $ 1,300 $ 1,972 $ 653 $ 3,459
========== ========== ========== ========== ===========
CAPITALIZED INTEREST, Other................. $ 644 $ $ $ $ 644
========== ========== ========== ========== ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
RIVIERA BLACK HAWK, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
PERIOD FROM AUGUST 18, 1997 (DATE OF INCEPTION) THROUGH
DECEMBER 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation - On August 18, 1997 (date of
inception), Riviera Black Hawk, Inc. (the "Company") was formed. The
Company is a wholly owned subsidiary of Riviera Holdings Corporation. The
Company is a development stage enterprise that has not commenced
operations and will not commence operations until acceptable financing is
obtained, the casino is constructed, and gaming licenses are obtained. The
principal purpose of the Company is to develop a casino and entertainment
complex in Black Hawk, Colorado, which is anticipated to open in the first
quarter of 2000. The Company has begun construction on this casino in
Black Hawk, Colorado, on a site that was purchased for $15.1 million in
August 1997.
Financial Statements at June 30, 1999 and for the Six Months Ended June
30, 1999 and 1998 - The financial information at June 30, 1999 and for the
six months ended June 30, 1999 and 1998 is unaudited. However, such
information reflects all adjustments (consisting solely of normal
recurring adjustments) that are, in the opinion of management, necessary
for a fair presentation of the financial position, results of operations,
and cash flows for the interim period. The results of operations for the
six months ended June 30, 1999 and 1998 are not necessarily indicative of
the results that will be achieved for the entire year.
Certain Significant Risks and Uncertainties:
Gaming Regulation Licensing - The Company's ability to conduct gaming
operations in the state of Colorado depends on the ability of the
Company and Riviera Holdings Corporation to obtain licensing from the
Colorado gaming authorities. Such licensing and qualifications will be
reviewed periodically by the gaming authorities in Colorado.
Competition - The Black Hawk/Central City, Colorado, market already
has many established casinos. The market is highly competitive, and
other development projects are currently being planned.
Construction Risks - Any construction project entails significant
construction risks, including, but not limited to, cost overruns,
delays in receipt of governmental approvals, shortages of materials or
skilled labor, labor disputes, unforeseen environmental or engineering
problems, work stoppages, fire and other natural disasters,
construction scheduling problems, and weather interferences, any of
which, if they occurred, could delay construction or result in a
substantial increase in costs to the Company.
Completion Capital Commitment - Riviera Holdings Corporation, will be
obligated to contribute to the Company up to $10.0 million of cash if at
any time there are insufficient funds available to enable the casino in
Black Hawk, Colorado to be operating by May 31, 2000. In addition, if the
casino is not operating by May 31, 2000, Riviera Holdings Corporation will
be obligated to contribute to the Company on that date $10.0 million in
cash less any amounts previously contributed under the Completion Capital
Commitment.
Keep-Well Agreement - The Company and Riviera Holdings Corporation will
enter into a Keep-Well Agreement wherein, if (1) the Company does not have
the necessary funds to make a payment of fixed interest on the notes
during our first three years of operations or (2) consolidated cash flow
is less than $9.0 million in any of our first three years of operations,
Riviera Holdings Corporation will be obligated to contribute cash to the
Company to make up those amounts (up to a maximum of $5.0 million for any
one operating year and $10.0 million in the aggregate).
F-7
<PAGE>
Cash and Cash Equivalents - The Company considers cash and all highly
liquid investments with a maturity at the time of purchase of three months
or less to be cash equivalents. At December 31, 1998 and 1997, there were
no cash equivalents.
Property and Equipment - Property and equipment are stated at cost, and
capitalized lease assets are stated at the present value of future minimum
lease payments at the date of lease inception. Interest incurred during
construction of new facilities or major additions to facilities is
capitalized and amortized over the life of the asset. Depreciation will be
computed, upon the commencement of gaming operations, using the
straight-line method over the shorter of the estimated useful lives or
lease terms, if applicable, of the related assets. The costs of normal
maintenance and repairs will be charged to expense as incurred. Gains or
losses on disposals will be recognized as incurred.
Other Assets - The Company is in the development stage and is currently
incurring organizational costs, which are being capitalized until
operations of the casino commence, at which time such organizational costs
will be amortized over a five-year period. Organizational costs consist
primarily of legal fees associated with establishing the gaming licenses
for business.
Restricted Cash - At December 31, 1998, the Company had a deposit with a
commercial bank in the amount of $407,000, which is restricted as to use.
This amount is required by a construction bond.
Estimates and Assumptions - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual
results may differ from estimates.
Recently Issued Accounting Standards - The American Institute of Certified
Public Accountants' Accounting Standards Executive Committee issued
Statement of Position No. 98-5, Reporting on the Costs of Start-Up
Activities. This standard provides guidance on the financial reporting for
start-up costs and organization costs. This standard requires costs of
start-up activities and organization costs to be expensed as incurred, and
is effective for fiscal years beginning after December 15, 1998, although
earlier application is encouraged. Management does not expect that the
effect of adopting this standard will have a material impact on the
Company's financial statements.
Federal Income Taxes - Riviera Holdings Corporation allocated income tax
expense or benefit to the Company as if the Company were filing separate
tax returns pursuant to a tax sharing arrangement. The Company accounts
for income taxes in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes." The Company had
no results of operation through December 31, 1998 that would have created
taxable events. Accordingly, no provision is shown in these financial
statements through December 31, 1998.
F-8
<PAGE>
2. RELATED-PARTY TRANSACTIONS
As of December 31, 1998, Riviera Holdings Corporation has contributed
$15.1 million to acquire land for the casino in Black Hawk and $4.9
million in cash for developing the land for the casino, for a total
capital contribution of $20 million.
At December 31, 1998, the Company owed approximately $6.2 million to
Riviera Holdings Corporation, representing advances made by Riviera
Holdings Corporation for costs related to the development of the Riviera
Black Hawk casino. The advances are bearing interest at 10.6 percent and
are due June 30, 2000.
The Company has entered into a management agreement in principle (the
"Management Agreement") with Riviera Gaming Management of Colorado, Inc.,
(the "Manager") a wholly owned subsidiary of Riviera Holdings Corporation,
which, in exchange for a fee, will manage the Company. The management fee
will consist of a revenue fee and a performance fee. The revenue fee will
be based on 1% of net revenues (gross revenues less complimentaries) and
is payable quarterly in arrears. The performance fee will be based on the
following percentages of EBITDA (earnings before interest, taxes,
depreciation and amortization, whose components are based on generally
accepted accounting principles): (1) 10% of EBITDA from $5 million to $10
million, (2) 15% of EBITDA from $10 million to $15 million and (3) 20% of
EBITDA in excess of $15 million. The performance fee will be based on the
preceding quarter's EBITDA, paid in quarterly installments subject to
year-end adjustment. The management fee will go into effect on the date of
the opening of the Riviera Black Hawk casino.
If there is any default under the management agreement, the manager will
not be entitled to receive management fees, but the manager will still be
entitled to inter-company service fees.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31 (amounts in
thousands):
1998 1997
Land and improvements $15,790 $15,100
Construction in progress 11,322 1,483
------- -------
Total property and equipment $27,112 $16,583
======= =======
In 1998 and 1997, $2.0 million and $.6 million, respectively, in interest
costs were capitalized on the construction project.
4. SPECIAL IMPROVEMENT DISTRICT BONDS
The City of Black Hawk, Colorado, issued Special Improvement District
bonds ("SID bonds") in the amount of $2.9 million in July 1998. The bond
proceeds will be used to finance surface, underground, and utility
improvements, widen and improve a bridge, and improve traffic signals and
other infrastructure projects that benefit the Riviera Black Hawk property
and an adjacent casino. The SID bonds contain a lien provision that
attaches to the property until the bonds are fully paid.
The Company is responsible to repay approximately 50% of the bonds. At
December 31, 1998, $1.4 million of the $2.9 million had been expended on
the designated projects. The remaining bond proceeds were in a controlled
disbursement account managed by the City of Black Hawk. The Company is
recording 50% of the costs of improvements to land improvements and a
corresponding amount to SID bonds payable. The bonds accrue interest at 5%
payable semiannually on June 1, and December 1 commencing December 1,
1998.
F-9
<PAGE>
The Company's share of the debt on the SID bonds, when the project is
complete, is payable over ten years beginning in January 2000, as follows
(amounts in thousands):
1999 $ -
2000 112
2001 120
2002 127
2003 132
Thereafter 979
------
$1,470
======
5. COMMITMENTS AND CONTINGENCIES
The Company has entered into a guaranteed maximum price construction
contract for the construction of the Riviera Black Hawk at a guaranteed
maximum price of $27.6 million, including a contingency allowance of $0.5
million, for the construction of the casino, parking garage, associated
site work and all floor coverings and food service equipment. The
construction cost is fully supported by a payment and performance bond
obtained by the general contractor, Weitz, who is also required to provide
comprehensive public liability insurance, including contractual liability
coverage, in the amount of $2.0 million plus umbrella coverage in the
amount of $20.0 million. The Company has obtained builder's all risk
insurance to insure against damage to the work in place during
construction. The guaranteed maximum price is subject to decrease if there
are changes to the plans and specifications, if the work is delayed due to
actions of the owner or, due to customary contingencies that occur during
construction.
To discourage delays, liquidated damages will be payable by the general
contractor for each day that substantial completion is delayed past the
scheduled substantial completion date (as it may be extended under the
guaranteed maximum price construction contract), as follows: (1) no
penalties if the casino project is substantially completed on or before
January 31, 2000; (2) $10,000 per day each day from February 1, 2000
through February 14, 2000 that the casino project is not substantially
completed after January 31, 2000; and (3) an additional $15,000 for each
day from February 15, 2000 through June 30, 2000. In addition, to
encourage early completion of the casino, incentive fees will be payable
to the general contractor. Specifically, the guaranteed maximum price
construction contract provides: (1) if Weitz achieves substantial
completion of the project on or after December 29, 1999, but prior to
January 4, 2000, Weitz's lump sum fee shall be increased as incentive by
$10,000 for each day that the project is substantially complete prior to
January 4, 2000; and (2) if Weitz achieves substantial completion of the
project any time before December 29, 1999, Weitz's lump sum fee shall be
increased as incentive by $15,000 for each day the project is
substantially complete prior to December 29, 1999, plus the $10,000 for
each day the project is substantially complete between December 29, 1999
and January 4, 2000.
The Company has a contract for architect services for approximately $1.0
million. Substantially all expected services have been rendered and paid
on the contract at December 31, 1998.
6. SUBSEQUENT EVENTS (UNAUDITED)
During the 6 months ended June 30, 1999, Riviera Holdings Corporation
contributed another $3.5 million of additional paid in capital.
The Financial Accounting Standards Board recently issued FAS No. 137,
`Deferral of FAS 133 Accounting for Derivatives' which delays the
implementation of that pronouncement to June 15, 2000. The Company has not
determined what effect, if any, that FAS 133 may have on its results of
operations.
The impact of adopting SOP 98-5 has been to record general expenses of
$75,000 for the first six months of 1999 that the Company would otherwise
have deferred as a pre-opening cost.
F-10
<PAGE>
On June 3, 1999, the Company closed a $45 million private placement of 13%
First Mortgage Notes. The net proceeds of the placement will be used to
fund the completion of RBH's casino project in Black Hawk, Colorado. The
Riviera Holdings Corporation has not guaranteed the $45 million RBH Notes,
but has agreed to a "Capital Completion Commitment" of up to $10 million
and a "Keep Well Agreement" of $5 million per year (or an aggregate
limited to $10 million) for the first 3 years of RBH operations to cover
if (i) the $5.85 million interest on such Notes is not paid by RBH and
(ii) the amount by which RBH cash flow is less than $7.5 million per year.
The notes were issued at a cost in the amount of $3.5 million. The
deferred financing costs are being amortized over the life of the notes on
a straight-line basis which approximates the effective interest method.
The 13% First Mortgage Note Indenture provides that, in certain
circumstances, the Company must offer to repurchase the 13% Notes upon the
occurrence of a change of control or certain other events. In the event of
such mandatory redemption or repurchase prior to maturity, the Company
would be unable to pay the principal amount of the 10% Notes without a
refinancing.
The 13% First Mortgage Note Indenture contains certain covenants, which
limit the ability of the Company and its restricted subsidiaries, subject
to certain exceptions, to: (i) incur additional indebtedness; (ii) pay
dividends or other distributions, repurchase capital stock or other equity
interests or subordinated indebtedness; (iii) enter into certain
transactions with affiliates; (iv) create certain liens; sell certain
assets; and (v) enter into certain mergers and consolidations. As a result
of these restrictions, the ability of the Company to incur additional
indebtedness to fund operations or to make capital expenditures is
limited. In the event that cash flow from operations is insufficient to
cover cash requirements, the Company would be required to curtail or defer
certain of their capital expenditure programs under these circumstances,
which could have an adverse effect on the Company's operations. At June
30, 1999, the Company believes that it is in compliance with the
covenants.
Amounts related to the Riviera Black Hawk casino project in Black Hawk,
Colorado are restricted in use to that project or for the related 13%
First Mortgage Notes interest payments.
Pursuant to a deposit account agreement, dated as of June 3, 1999, among
Bank of America as deposit bank, Riviera Holdings Corporation and First
American Title Insurance Company, Riviera Holdings Corporation has
deposited $5.0 million to insure First American against mechanics lien
claims against the Black Hawk property. If no mechanics liens are
outstanding 30 days after the casino opens, such $5.0 million deposit will
be returned to Riviera Holdings Corporation.
The Company accounts for investment securities in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." SFAS No. 115
addresses the accounting and reporting for investments in equity
securities that have readily determinable fair values and for all
investments in debt securities, and requires such securities to be
classified as either held to maturity, trading, or available for sale.
Management determines the appropriate classification of its investment
securities at the time of purchase and re-evaluates such determination at
each balance sheet date. Held-to-maturity securities are carried at
amortized cost. At June 30, 1999, securities classified as held to
maturity comprised debt securities issued by the U.S. Treasury and other
U.S. government corporations and agencies, and repurchase agreements, with
an amortized cost of $5,119,000, maturing in three months or more.
******
F-11
<PAGE>
ANNEX A
RIVIERA HOLDINGS CORPORATION
Riviera Holdings Corporation's consolidated financial statements are
incorporated by reference in this prospectus only to illustrate its ability to
service its obligations under the Completion Capital Commitment and the
Keep-Well Agreement. Neither Riviera Holdings Corporation nor any of its
affiliates will participate in servicing the principal, fixed interest,
contingent interest or other payments due on the notes. Neither Riviera Holdings
Corporation nor any of its affiliates has any obligation to make any payments of
any kind to the holders of the notes.
A-1
<PAGE>
================================================================================
We have not authorized any dealer, salesperson or other person to give any
information or represent anything to you other than the information contained in
this prospectus. This prospectus does not offer to buy or sell any notes in any
jurisdiction where it is unlawful. You must not rely on unauthorized information
or representations. The information contained in this prospectus is current only
as of its date.
----------------
TABLE OF CONTENTS
Forward-Looking Statements.................................iii
Summary......................................................1
Risk Factors.................................................8
Use Of Proceeds.............................................15
Capitalization..............................................15
Selected Financial Information..............................16
Ratio Of Earnings To Fixed Charges..........................17
Management's Discussion And Analysis Of Financial Condition
And Results Of Operations..................................18
The Exchange Offer..........................................21
Business....................................................28
Gaming And Liquor Regulatory Matters........................33
Material Agreements.........................................37
Management..................................................39
Principal Stockholders......................................41
Relationships And Related Transactions......................43
Description Of Notes........................................44
United States Federal Income Tax Considerations.............64
Plan Of Distribution........................................67
Legal Matters...............................................68
Experts.....................................................68
Available Information.......................................68
Until _____ __, 1999 (90 days after the effective date of this Registration
Statement), all dealers effecting transactions in the exchange notes,
whether or not participating in the original distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers
to deliver a prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
================================================================================
================================================================================
$45,000,000
[LOGO]
Riviera Black Hawk, Inc.
OFFER TO EXCHANGE
13% First Mortgage Notes
due 2005
With Contingent Interest
for all outstanding
13% First Mortgage Notes
due 2005
With Contingent Interest
-------------------------
PROSPECTUS
-------------------------
__________ __, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Article 109 of the Colorado Business Corporation Act provides in relevant
part that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful.
In addition, Article 109 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation.
Article 109 also provides that to the extent a director, officer, employee
or agent of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to above, or defense of any
claim issue or matter therein, he shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection therewith.
The Bylaws of the Company provide for the indemnification of any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (a "proceeding") by reason of the fact that such person is or
was a director or officer of the Company or a constituent corporation absorbed
in a consolidation or merger, or is or was serving at the request of the Company
or a constituent corporation absorbed in a consolidation or merger, as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or is or was a director or officer of the Company serving at
its request as an administrator, trustee or other fiduciary of one or more of
the employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceeding, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law. The Bylaws of the
Company also provide that such indemnification shall not be deemed exclusive of
any other rights to which those indemnified may be entitled as a matter of law
or under any by-law, agreement, vote of stockholders or otherwise.
Section 7-108-402 of the Colorado Business Corporation Act provides that a
corporation may in its articles of incorporation eliminate or limit the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director except for liability: for any
breach of the director's duty of loyalty to the corporation or its shareholders;
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; for acts specified in Section 7-108-403 of the
Colorado Business Corporation Act (pertaining to certain prohibited acts
including unlawful payments of dividends or unlawful purchases or redemptions of
the corporation's capital stock); or for any transaction from which the director
derived an improper personal benefit. The Articles of Incorporation of the
Company contains a provision so limiting the personal liability of directors of
the Company.
II-1
<PAGE>
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits:
EXHIBIT INDEX
Exhibit No. Description
- ------------- ----------------------------------------------------------------
3.01 Articles of Amendment to the Articles of Incorporation of the
Company.+
3.02 Articles of Incorporation of the Company.+
3.03 Bylaws of the Company.+
4.01 Indenture, dated as of June 3, 1999, among the Company, Riviera
Holdings and the Initial Purchaser.+
4.02 Form of 13% First Mortgage Note due 2005 with Contingent
Interest (included in Exhibit 4.01).+
4.03 Purchase Agreement, dated as of May 27, 1999, by and among the
Company, Riviera Holdings and the Initial Purchaser.+
4.04 Registration Rights Agreement, dated as of June 3, 1999, by and
between the Company and the Initial Purchaser.+
5.01 Opinion of Dechert Price & Rhoads.+
10.01 The Completion Capital Commitment, dated as of June 3, 1999, by
and between the Company and Riviera Holdings.+
10.02 The Keep-Well Agreement, dated as of June 3, 1999, by and
between the Company and Riviera Holdings.+
10.03 The Tax-Sharing Agreement, dated as of June 3, 1999, by and
between the Company and Riviera Holdings.+
10.04 The Management Agreement, dated as of June 3, 1999, by and
between the Company and Riviera Gaming Management of Colorado,
Inc.+
10.05 The Trademark License Agreement, dated as of June 3, 1999, by
and between the Company and Riviera Operating Corporation.+
10.06 The Deed of Trust, dated as of June 3, 1999, made by the Company
to the Public Trustee of the County of Gilpin, Colorado, for the
benefit of the Trustee.+
10.07 The Assignment of Rents.+
10.08 The Environmental Indemnity, dated as of June 3, 1999, between
the Company and the Trustee.+
10.09 The Cash Collateral and Disbursement Agreement, dated as of June
3, 1999, among the Company, the Trustee and Crss Constructors,
Inc.+
10.10 The Account Agreement, dated as of June 3, 1999, among the
Company, the Trustee and IBJ Whitehall Bank and Trust Company.+
10.11 The Security Agreement, dated as of June 3, 1999, made by the
Company in favor of the Trustee.+
<PAGE>
10.12 The Manager Subordination Agreement, dated as of June 3, 1999,
by Riviera Gaming Management of Colorado in favor of the
Trustee.+
10.13 The Collateral Assignment of Trademark, dated as of June 3,
1999, by and between the Company and the Trustee.+
10.14 The Collateral Assignment, dated as of June 3, 1999, by and
between the Company and the Trustee.+
10.15 The Pledge and Assignment Agreement, dated as of June 3, 1999,
by and between the Company and the Trustee.+
10.16 Deposit Account Agreement, dated as of June 1999, among Bank of
America, Riviera Holdings and First American Title Insurance
Company.+
10.17 Construction Contract, made as of December 29, 1997, among the
Company, Weitz-Cohen Construction Co. and Melick Associates,
Inc.+
23.01 Consent of Dechert Price & Rhoads.+
23.02 Consent of Deloitte & Touche LLP for Riviera Black Hawk, Inc.+
23.03 Consent of Deloitte & Touche LLP for Riviera Holdings
Corporation.+
23.04 Consent of Holme Roberts & Owen LLP.+
23.05 Consent of Verner, Lipfert, Bernhard, McPherson & Hand,
Chartered.+
99.01 Form of Letter of Transmittal.+
99.02 Form of Notice of Guaranteed Delivery.+
* Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to this
Agreement are omitted. The Exhibit contains a list identifying the
contents of all schedules and the Registrants agree to furnish
supplementally copies of such schedules to the Commission upon request.
- --------------------
+ Filed herewith.
<PAGE>
(b) Financial Statement Schedules:
Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the information required by
such omitted schedules is set forth in the financial statements or the notes
thereto.
Item 22. Undertakings
(a) Each of the undersigned registrants hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
each registrant pursuant to the foregoing provisions, or otherwise, each
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, each registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(d) Each of the undersigned registrants hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and the
corporation being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
below-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Las
Vegas, State of Nevada, on the 24th day of September, 1999.
RIVIERA BLACK HAWK, INC.
By: /s/ William L. Westerman
----------------------------------------
William L. Westerman
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities at the above-named Registrant on the 24th day of September, 1999.
By: /s/ Ronald P. Johnson
----------------------------------------
Ronald P. Johnson
President and Director
By: /s/ Duane R. Krohn
----------------------------------------
Duane R. Krohn
Secretary, Treasurer, Chief Financial Officer
and Director
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
3.01 Articles of Amendment to the Articles of Incorporation of the
Company.+
3.02 Articles of Incorporation of the Company.+
3.03 Bylaws of the Company.+
4.01 Indenture, dated as of June 3, 1999, among the Company, Riviera
Holdings and the Initial Purchaser.+
4.02 Form of 13% First Mortgage Note due 2005 with Contingent Interest
(included in Exhibit 4.01).+
4.03 Purchase Agreement, dated as of May 27, 1999, by and among the
Company, Riviera Holdings and the Initial Purchaser.+
4.04 Registration Rights Agreement, dated as of June 3, 1999, by and
between the Company and the Initial Purchaser.+
5.01 Opinion of Dechert Price & Rhoads.+
10.01 The Completion Capital Commitment, dated as of June 3, 1999, by
and between the Company and Riviera Holdings.+
10.02 The Keep-Well Agreement, dated as of June 3, 1999, by and between
the Company and Riviera Holdings.+
10.03 The Tax-Sharing Agreement, dated as of June 3, 1999, by and
between the Company and Riviera Holdings.+
10.04 The Management Agreement, dated as of June 3, 1999, by and between
the Company and Riviera Gaming Management of Colorado, Inc.+
10.05 The Trademark License Agreement, dated as of June 3, 1999, by and
between the Company and Riviera Operating Corporation.+
10.06 The Deed of Trust, dated as of June 3, 1999, made by the Company
to the Public Trustee of the County of Gilpin, Colorado, for the
benefit of the Trustee.+
10.07 The Assignment of Rents.+
10.08 The Environmental Indemnity, dated as of June 3, 1999, between the
Company and the Trustee.+
10.09 The Cash Collateral and Disbursement Agreement, dated as of June
3, 1999, among the Company, the Trustee and Crss Constructors,
Inc.+
10.10 The Account Agreement, dated as of June 3, 1999, among the
Company, the Trustee and IBJ Whitehall Bank and Trust Company.+
10.11 The Security Agreement, dated as of June 3, 1999, made by the
Company in favor of the Trustee.+
<PAGE>
10.12 The Manager Subordination Agreement, dated as of June 3, 1999, by
Riviera Gaming Management of Colorado in favor of the Trustee.+
10.13 The Collateral Assignment of Trademark, dated as of June 3, 1999,
by and between the Company and the Trustee.+
10.14 The Collateral Assignment, dated as of June 3, 1999, by and
between the Company and the Trustee.+
10.15 The Pledge and Assignment Agreement, dated as of June 3, 1999, by
and between the Company and the Trustee.+
10.16 Deposit Account Agreement, dated as of June 1999, among Bank of
America, Riviera Holdings and First American Title Insurance
Company.+
10.17 Construction Contract, made as of December 29, 1987, among the
Company, Weitz-Cohen Construction Co. and Melick Associates, Inc.+
23.01 Consent of Dechert Price & Rhoads.+
23.02 Consent of Deloitte & Touche LLP for Riviera Black Hawk, Inc.+
23.03 Consent of Deloitte & Touche LLP for Riviera Holdings Corporation.+
23.04 Consent of Holme Roberts & Owen LLP.+
23.05 Consent of Verner, Lipfert, Bernhard, McPherson & Hand,
Chartered.+
99.01 Form of Letter of Transmittal.+
99.02 Form of Notice of Guaranteed Delivery.+
* Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to this
Agreement are omitted. The Exhibit contains a list identifying the
contents of all schedules and the Registrants agree to furnish
supplementally copies of such schedules to the Commission upon request.
- -------------------
+ Filed herewith.
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
RIVIERA BLACK HAWK, INC.
Pursuant to the provisions of the Colorado Business Corporation Act,
the undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is: RIVIERA BLACK HAWK, INC.
SECOND: The following amendment to the Articles of Incorporation was
adopted on February 28, 1999. Such amendment was adopted by
unanimous vote of the sole shareholder.
THIRD: The Articles of Incorporation of the corporation filed on
August 18, 1997, are amended to add a new Article which is numbered
IX to be and read as follows:
ARTICLE IX
Required Transfer Restrictions
The corporation shall not issue any voting securities or other
voting interests except in accordance with the provisions of the Colorado
Limited Gaming Act and the regulations promulgated thereunder. The issuance of
any voting securities or other voting interests in violation thereof shall be
void and such voting securities or other voting interests shall be deemed not to
be issued and outstanding until (a) the corporation shall cease to be subject to
the jurisdiction of the Colorado Limited Gaming Control Commission, or (b) the
Colorado Limited Gaming Control Commission shall, by affirmative action,
validate said issuance or waive any defect in issuance.
No voting securities or other voting interests issued by the
corporation and no interest, claim or charge therein or thereto shall be
transferred in any manner whatsoever except in accordance with the provisions of
the Colorado Limited Gaming Act and the regulations promulgated thereunder. Any
transfer in violation thereof shall be void until (a) the corporation shall
cease to be subject to the jurisdiction of the Colorado Limited Gaming Control
commission, or (b) the Colorado Limited Gaming Control Commission shall, by
affirmative action, validate said transfer or waive any defect in said transfer.
If the Colorado Limited Gaming Control Commission at any time
determines that a holder of voting securities or other voting interests in this
corporation is unsuitable to hold such securities or other voting interests,
then the issuer of such voting securities or other voting interests may, within
sixty (60) days after the finding of unsuitability, purchase such voting
securities or other voting interests of such unsuitable person at the lesser of
<PAGE>
(i) the cash equivalent of such person's investment in the corporation, or (ii)
the current market price as of the date of the finding of unsuitability unless
such voting securities or other voting interests are transferred to a suitable
person (as determined by the Commission) within sixty (60) days after the
finding of unsuitability. Until such voting securities or other voting interests
are owned by persons found by the Commission to be suitable to own them, (a) the
corporation shall not be required or permitted to pay any dividend or interest
with regard to the voting securities or other voting interests, (b) the holder
of such voting securities or other voting interests shall not be entitled to
vote on any matter as the holder of the voting securities or other voting
interests, and such voting securities or other voting interests of the
corporation entitled to vote, and (c) the corporation shall not pay any
remuneration in any form to the holder of the voting securities or other voting
interests except in exchange for such voting securities or other voting
interests as provided in this paragraph.
RIVIERA BLACK HAWK, INC.
By:________________________________
William L. Westerman, President
2
ARTICLES OF INCORPORATION
OF
RIVIERA BLACK HAWK, INC.
The undersigned natural person, being more than 18 years of age,
hereby establishes a corporation pursuant to the Colorado Business Corporation
Act (the "Act") and adopts the following articles of incorporation:
ARTICLE I
Name
The name of the corporation is Riviera Black Hawk, Inc.
ARTICLE II
Capital; Shareholders
2.1 Authorized Capital. The aggregate number of shares that the
corporation shall have authority to issue is 10,000 shares of common stock each
having a par value of $.01.
2.2 Voting of Shares. Each shareholder of record entitled to vote
shall have one vote for each share of stock standing in his name on the books of
the corporation, except that in the election of directors he shall have the
right to vote such number of shares for as many persons as there are directors
to be elected. Cumulative voting shall not be allowed in the election of
directors or for any other purpose.
2.3 Quorum; Vote Required. At all meetings of shareholders, a
majority of the shares entitled to vote at such meeting, represented in person
or by proxy, shall constitute a quorum; and at any meeting at which a quorum is
present the affirmative vote of a majority of the votes cast on the matter
represented at such meeting and entitled to vote on the subject matter shall be
the act of the shareholders, unless the vote of a greater proportion or number
is required by the laws of Colorado.
<PAGE>
ARTICLE III
No Preemptive Rights
No shareholder of the corporation shall have any preemptive or
similar right to acquire or subscribe for any additional unissued shares of
stock, or other securities of any class, or rights, warrants or options to
purchase stock or scrip, or securities of any kind convertible into stock or
carrying stock purchase warrants or privileges.
ARTICLE IV
Board of Directors
The corporate powers shall be exercised by or under the authority
of, and the business and affairs of the corporation shall be managed under the
direction of, a board of directors.
ARTICLE V
Limitation on Liability
To the fullest extent permitted by the Act, as the same exists or
may hereafter be amended, a director of the corporation shall not be personally
liable to the corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except that this provision shall not eliminate or
limit the liability of a director to the Corporation or to its shareholders for
monetary damages otherwise existing for (i) any breach of the director's duty of
loyalty to the Corporation or to its shareholders; (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) acts specified in Section 7-108-403 of the Act relating to any
unlawful distribution; or (iv) any transaction from which the director directly
or indirectly derived any improper personal benefit. If the Act is hereafter
amended to eliminate or limit further the liability of a director, then, in
addition to the elimination and limitation of liability provided by the
preceding sentence, the liability of each director shall be eliminated or
limited to the fullest extent permitted by the Act as so amended. Any repeal or
modification of this Article by the shareholders of the corporation shall be
prospective only and shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or modification.
2
<PAGE>
ARTICLE VI
INDEMNIFICATION
The corporation shall indemnify officers, directors, employees or
agents to the extent provided in the bylaws.
ARTICLE VII
Offices
7.1 Registered Agent. The street address of the initial registered
office of the corporation is 1675 Broadway, Suite 1200, Denver, CO 80202. The
name of its initial registered agent at such address is CT Corporation Systems.
The written consent of the initial registered agent to the appointment as such
is stated below.
7.2 Principal Office. The address of the corporation's initial
principal office is 1675 Broadway, Suite 1200, Denver, CO 80202.
ARTICLE VIII
Incorporator
The name and address of the incorporator is Thomas A. Richardson,
1700 Lincoln, Suite 4100, Denver, Colorado 80203
Dated: August 7, 1997
---------------------------------
Thomas A. Richardson
3
<PAGE>
REGISTERED AGENT'S ACCEPTANCE OF APPOINTMENT
The undersigned officer of CT Corporation Systems hereby consents to the
corporation's appointment as the initial registered agent for Riviera Gaming
Management of Colorado, Inc.
CT CORPORATION SYSTEMS
By:___________________________
Its:__________________________
4
BYLAWS
OF
RIVIERA BLACK HAWK, INC.
Adopted August 18, 1997
<PAGE>
INDEX TO BYLAWS
OF
RIVIERA BLACK HAWK, INC
ARTICLE I - Offices
Section 1.01 Business Office 1
Section 1.02 Registered Office 1
ARTICLE II - Shareholders
Section 2.01 Annual Meeting 1
Section 2.02 Special Meetings 1
Section 2.03 Place of Meetings 1
Section 2.04 Notice of Meetings 2
Section 2.05 Waiver of Notice 2
Section 2.06 Fixing of Record Date 2
Section 2.07 Voting List 3
Section 2.08 Proxies 3
Section 2.09 Quorum and Voting Rights 3
Section 2.10 Extraordinary Matters; Voting Rights 4
Section 2.11 Conflicting Interest Transaction; Notice Rights 4
Section 2.12 Voting of Shares. 5
Section 2.13 Voting of Shares by Certain Holders 5
Section 2.14 Action Without a Meeting 6
ARTICLE III - Board of Directors
Section 3.01 General Powers 7
Section 3.02 Number, Tenure and Qualifications 7
Section 3.03 Resignation 7
Section 3.04 Removal 7
Section 3.05 Vacancies 7
Section 3.06 Regular Meetings 8
Section 3.07 Special Meetings 8
Section 3.08 Meetings by Telephone 8
Section 3.09 Notice of Meetings 8
Section 3.10 Waiver of Notice 9
Section 3.11 Presumption of Assent 9
Section 3.12 Quorum and Voting Rights 9
Section 3.13 Action Without a Meeting 9
Section 3.14 Executive and Other Committees 10
Section 3.15 Compensation 10
-i-
<PAGE>
ARTICLE IV - Officers
Section 4.01 Number and Qualifications 11
Section 4.02 Appointment and Term of Office 11
Section 4.03 Compensation 11
Section 4.04 Resignation 11
Section 4.05 Removal 11
Section 4.06 Vacancies 12
Section 4.07 Authority and Duties 12
Section 4.08 Surety Bonds 13
ARTICLE V - Stock
Section 5.01 Issuance of Shares 13
Section 5.02 Stock Certificates; Uncertificated Shares 13
Section 5.03 Consideration for Shares 14
Section 5.04 Lost Certificates 14
Section 5.05 Transfer of Shares 14
Section 5.06 Holders of Record 14
Section 5.07 Shares Held for Account of Another 14
Section 5.08 Transfer Agents, Registrars and Paying Agents 15
ARTICLE VI - Indemnification
Section 6.01 Definitions 15
Section 6.02 Right to Indemnification 16
Section 6.03 Advancement of Expenses 16
Section 6.04 Burden of Proof 17
Section 6.05 Notification and Defense of Claim 17
Section 6.06 Notice to Shareholders of Indemnification of
Director 18
Section 6.07 Enforcement 18
Section 6.08 Proceedings by a Party 18
Section 6.09 Subrogation 18
Section 6.10 Other Payments 19
Section 6.11 Insurance 19
Section 6.12 Indemnification of Officers, Employees,
Figuciaries and Agents 19
Section 6.13 Other Rights and Remedies 19
Section 6.14 Applicability; Effect 19
Section 6.15 Severability 20
ARTICLE VII - Miscellaneous
Section 7.01 Voting of Securities by the Corporation 20
Section 7.02 Seal 20
-ii-
<PAGE>
Section 7.03 Fiscal Year 20
Section 7.04 Amendments 20
-iii-
<PAGE>
BYLAWS
OF
RIVIERA BLACK HAWK, INC.
ARTICLE I
Offices
Section 1.01 Business Offices. The corporation may have such
offices, either within or outside Colorado, as the board of directors may from
time to time determine or as the business of the corporation may require.
Section 1.02 Registered Office. The registered office of the
corporation required by the Colorado Business Corporation Act (the "Act") to be
maintained in Colorado shall be as set forth in the articles of incorporation,
unless changed as provided by law.
ARTICLE II
Shareholders
Section 2.01 Annual Meeting. An annual meeting of the shareholders
shall be held in the month of May each year on such date and at such time as the
board of directors shall fix in the notice of meeting, beginning with the year
1998, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the day fixed for the annual
meeting is a legal holiday in Colorado, the meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the board of directors shall cause the election to be held
at a meeting of the shareholders as soon thereafter as conveniently may be.
Failure to hold an annual meeting as required by these bylaws shall not
invalidate any action taken by the board of directors or officers of the
corporation.
Section 2.02 Special Meetings. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the president or the board of directors, and shall be called by the
president or the board of directors at the written, dated and executed, demand
of the holders of not less than one-tenth of all the votes of the corporation
entitled to be cast on any proposed issue to be considered.
Section 2.03 Place of Meetings. Each meeting of the shareholders
shall be held at such place, either within or outside Colorado, as may be
designated in the notice of meeting, or, if no place is designated in the
notice, at the principal office of the corporation if in Colorado or, if the
<PAGE>
principal office is not located in Colorado, at the registered office of the
corporation in Colorado.
Section 2.04 Notice of Meetings. Except as otherwise required by
law, written notice of each meeting of the shareholders stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called shall be given, either personally
(including delivery by private courier) or by first class, certified or
registered mail, to each shareholder of record entitled to notice of such
meeting, not less than 10 nor more than 60 days before the date of the meeting,
except that if the authorized shares of the corporation are to be increased, at
least 30 days notice shall be given, and, if the sale, lease, exchange or other
disposition of all or substantially all of the property and assets of the
corporation not in the usual and regular course of business is to be voted on,
at least 20 days notice shall be given. Such notice shall be deemed to be given
in person when delivered to the shareholder by telephone, telegraph, teletype,
electronically transmitted facsimile or other form of wire or wireless
communication or by mail or private carrier. If mailed, such notice shall be
deemed to be given as to each shareholder when deposited in the United States
mail, addressed to the shareholder at the shareholder's address shown in the
corporation's current record of shareholders, with postage thereon prepaid, but,
if three successive notices mailed to the last-known address of any shareholder
of record are returned as undeliverable, no further notices to such shareholder
shall be necessary until another address for such shareholder is made known to
the corporation. If a meeting is adjourned to another time or place, notice need
not be given if the time and place thereof are announced at the meeting, unless
the adjournment is for more than 30 days or if after the adjournment a new
record date is fixed, in either of which case notice of the adjourned meeting
shall be given to each shareholder of record entitled to vote at the meeting in
accordance with the foregoing provisions of this Section 2.04.
Section 2.05 Waiver of Notice. Whenever notice is required by law,
the articles of incorporation or these bylaws to be given to any shareholder, a
waiver thereof in writing signed by the shareholder entitled to such notice,
whether before, at or after the time stated therein, shall be equivalent to the
giving of such notice. By attending a meeting, a shareholder (a) waives
objection to lack of notice or defective notice of such meeting unless the
shareholder, at the beginning of the meeting, objects to the holding of the
meeting or the transacting of business at the meeting because of lack of notice
or defective notice, and (b) waives objection to consideration at such meeting
of a particular matter not within the purpose or purposes described in the
notice of such meeting unless the shareholder objects to considering the matter
when it is presented.
Section 2.06 Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of the shareholders
or any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the board of directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than 70 days prior to the date on which the particular action, requiring
such determination of shareholders, is to be taken. A record date fixed for the
purpose of determining shareholders entitled to notice of a meeting of the
shareholders shall be fixed not less than 10 days immediately preceding such
meeting (30 days if the authorized stock is to be increased, 20 days if the
-2-
<PAGE>
sale, lease, exchange or other disposition of all or substantially all of the
property and assets of the corporation not in the usual and regular course of
business is to be considered). If no record date is so fixed, the date on which
notice of the meeting is mailed or the date on which the resolution of the board
of directors declaring the dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of the shareholders has been made
as provided in this Section, such determination shall apply to any adjournment
thereof. Notwithstanding the foregoing provisions of this Section, the record
date for determining shareholders entitled to take action without a meeting as
provided in Section 2.14 below shall be the date specified in such Section.
Section 2.07 Voting List. After fixing the record date, the officer
or agent having charge of the stock transfer books for shares of the corporation
shall make a complete record of the shareholders entitled to be given notice of
the meeting or any adjournment thereof. The list shall be arranged by voting
groups and within each voting group by class or series of shares, shall be
alphabetical within each class or series, and shall show the address of, and the
number of shares of each class and series that are held by, each shareholder.
For a period of 10 days before such meeting or two business days after notice of
the meeting is given, whichever is earlier, this record shall be kept on file at
the principal office of the corporation, whether within or outside Colorado, and
shall be subject to inspection by any shareholder or his agent or attorney for
any purpose germane to the meeting at any time during usual business hours. Such
record shall also be produced and kept open at the time and place of the meeting
and any adjournment thereof and shall be subject to the inspection of any
shareholder or his agent or attorney for any purpose germane to the meeting
during the whole time of the meeting. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to examine such
record or transfer books or to vote at any meeting of the shareholders.
Section 2.08 Proxies. At any meeting of the shareholders, a
shareholder may vote by proxy executed in writing by the shareholder or his duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 2.09 Quorum and Voting Rights. At all meetings of
shareholders, a majority of the outstanding shares of the corporation entitled
to vote on a matter, represented in person or by proxy, shall constitute a
quorum with respect to each matter. If a quorum is present, action on a matter,
other than the election of directors, by a voting group is approved if the votes
cast within the voting group favoring the action exceed the votes cast within
the voting group opposing the action, unless the vote of a greater proportion or
number is otherwise required by the Act, the articles of incorporation or these
bylaws. Notwithstanding the foregoing, an amendment to the articles of
incorporation that adds, changes or deletes a greater quorum or voting
requirement shall meet the same quorum requirement and be adopted by the same
vote and voting groups required to take action under the quorum and voting
requirements then in effect or proposed to be adopted, whichever is greater. In
the absence of a quorum on any matter, a majority of the shares so represented
may adjourn the meeting with respect to such matter from time to time for a
period not to exceed 60 days at any one adjournment. At any such adjourned
-3-
<PAGE>
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the original meeting.
Section 2.10 Extraordinary Matters; Voting Rights. Notwithstanding
the provisions of Section 2.09, the following actions shall be approved by each
voting group entitled to vote separately on the subject matter by a majority of
all of the votes entitled to be cast by such voting group: (a) adopting an
amendment or amendments to the articles of incorporation which would create
dissenters' rights; (b) authorizing the sale, lease, exchange or other
disposition of all or substantially all of the property and assets of the
corporation, with or without its goodwill, not in the usual and regular course
of business; (c) approving a plan of merger, consolidation or exchange that is
required to be approved by the shareholders; (d) adopting a resolution submitted
by the board of directors to dissolve the corporation; and (e) adopting a
resolution submitted by the board of directors to revoke voluntary dissolution
proceedings.
Section 2.11 Conflicting Interest Transaction; Notice Rights. A
conflicting interest transaction is any loan or other assistance by the
corporation to a director or to an entity in which a director of the corporation
is a director or officer or has a financial interest; a guaranty by the
corporation of an obligation of a director or of an obligation of an entity in
which a director of the corporation is a director or officer or has a financial
interest; or a contract or transaction between the corporation and a director or
between the corporation and an entity in which a director of the corporation is
a director or officer or has a financial interest.
No conflicting interest transaction shall be void or voidable or be
enjoined, set aside or give rise to an award of damages or other sanctions in a
proceeding by a shareholder or by or in the right of the corporation, solely
because the conflicting interest transaction involves a director of the
corporation or an entity in which a director of the corporation is a director or
officer or has a financial interest or solely because the director is present at
or participates in the meeting of the corporation's board of directors or of the
committee of the board of directors which authorizes, approves or ratifies the
conflicting interest transaction or solely because the director's vote is
counted for such purpose, if: (a) the material facts as to the director's
relationship or interest and as to the conflicting interest transaction are
disclosed or are known to the board of directors or the committee, and the board
of directors or committee in good faith authorizes, approves or ratifies the
conflicting interest transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors are less than a
quorum; or (b) the material facts as to the director's relationship or interest
and as to the conflicting interest transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the conflicting interest transaction
is specifically authorized, approved or ratified in good faith by a vote of the
shareholders; or (c) the conflicting interest transaction is fair as to the
corporation as of the time it is authorized, approved or ratified by the board
of directors, a committee thereof or the shareholders.
A board of directors or a committee thereof shall not authorize a
loan, by the corporation to a director of the corporation or to an entity in
which a director of the corporation is a director or officer or has a financial
interest, or a guaranty, by the corporation of an obligation of a director of
-4-
<PAGE>
the corporation or of an obligation of an entity in which a director of the
corporation is a director or officer or has a financial interest, pursuant to
(a) until at least 10 days after written notice of the proposed authorization of
the loan or guaranty has been given to the shareholders who would be entitled to
vote thereon if the issue of the loan or guaranty were submitted to a vote of
the shareholders.
Section 2.12 Voting of Shares. Subject to the provisions of Section
2.06, each outstanding share of record, regardless of class, is entitled to one
vote, and each outstanding fractional share of record is entitled to a
corresponding fractional vote, on each matter submitted to a vote of the
shareholders either at a meeting thereof or pursuant to Section 2.14, except to
the extent that the voting rights of the shares of any class or classes are
limited, increased or denied by the articles of incorporation as permitted by
the Act. In the election of directors, each record holder of stock entitled to
vote at such election shall have the right to vote the number of shares owned by
him for as many persons as there are directors to be elected, and for whose
election he has the right to vote. Cumulative voting shall not be allowed.
Section 2.13 Voting of Shares by Certain Holders.
(a) Shares Held or Controlled by the Corporation. No shares held by
another corporation shall be voted at any meeting or counted in determining a
quorum if a majority of the shares entitled to vote for the election of
directors of such other corporation is held by this corporation.
(b) Shares Held by Another Corporation. Shares standing in the name
of another corporation may be voted by such officer, agent or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provision,
as the board of directors of such corporation may determine.
(c) Shares Held by More Than One Person. Shares standing of record
in the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, voting with respect to the shares shall have the
following effects: (i) if only one person votes, his act binds all; (ii) if two
or more persons vote, the act of the majority so voting binds all; (iii) if two
or more persons vote, but the vote is evenly split on any particular matter,
each faction may vote the shares in question proportionally, or any person
voting the shares of a beneficiary, if any, may apply to any court of competent
jurisdiction in Colorado to appoint an additional person to act with the persons
so voting the shares, in which case the shares shall be voted as determined by a
majority of such persons; and (iv) if a tenancy is held in unequal interests, a
majority or even split for the purposes of subparagraph (iii) shall be a
majority or even split in interest. The foregoing effects of voting shall not be
applicable if the secretary of the corporation is given written notice of
alternative voting provisions and is furnished with a copy of the instrument or
order wherein the alternative voting provisions are stated.
(d) Shares Held in Trust or by a Personal Representative. Shares
held by an administrator, executor, guardian, conservator or other personal
-5-
<PAGE>
representative may be voted by him, either in person or by proxy, without a
transfer of such shares into his name. Shares standing in the name of a trustee
may be voted by him, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him without a transfer of such shares into his
name.
(e) Shares Held by a Receiver. Shares standing in the name of a
receiver may be voted by such receiver and shares held by or under the control
of a receiver may be voted by such receiver without the transfer thereof into
his name if authority so to do is contained in an appropriate order of the court
by which such receiver was appointed.
(f) Pledged Shares. A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
(g) Redeemable Shares Called for Redemption. Redeemable shares that
have been called for redemption shall not be entitled to vote on any matter and
shall not be deemed outstanding shares on and after the date on which written
notice of redemption has been mailed to shareholders and a sum sufficient to
redeem such shares has been deposited with a bank, trust company or other
financial institution with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of certificates
therefor.
(h) Shares Held in a Fiduciary Capacity. The corporation may vote
any shares, including its own shares, held by it in a fiduciary capacity.
Section 2.14 Action Without a Meeting. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof. Such consent (which
may be signed in counterparts) shall have the same force and effect as a
unanimous vote of the shareholders and may be stated as such in any document.
Unless the consent specifies a different effective date, action taken without a
meeting pursuant to a consent in writing as provided herein shall be effective
when all shareholders entitled to vote on the subject matter have signed the
consent. The record date for determining shareholders entitled to take action
without a meeting or entitled to be given notice is the date a writing upon
which the action is taken is first received by the corporation. All consents
signed pursuant to this Section 2.14 shall be either delivered to the
corporation or received by the corporation by electronically transmitted
facsimile or other form of wire or wireless communication providing the
corporation with a complete copy thereof, including a copy of the signatures for
inclusion in the minutes or for filing with the corporate records. Any
shareholder who has signed a writing describing and consenting to action taken
pursuant to this section may revoke such consent by a writing signed by the
shareholder describing the action and stating that the shareholder's prior
consent thereto is revoked, if such writing is received by the corporation
before the corporation has actually received consents signed by all
shareholders, regardless of the effective date reflected in the consents or at
any time before a specified effective date if the date specified in the consent
is subsequent to the date the signed consents are received. Unless otherwise
provided by the articles of incorporation, one or more shareholders may
-6-
<PAGE>
participate in a meeting of the shareholders by, or the meeting may be conducted
through the use of, any means of communication equipment by which all persons
participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at the meeting.
ARTICLE III
Board of Directors
Section 3.01 General Powers. All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
shall be managed under the direction of, the board of directors, except as
otherwise provided in the Act, the articles of incorporation or these bylaws.
Section 3.02 Number, Tenure and Qualifications. The number of
directors of the corporation shall be as fixed from time to time by resolution
of the board of directors or shareholders. Except as provided in Sections 2.01
and 3.05, directors shall be elected at each annual meeting of the shareholders.
Each director shall hold office until the next annual meeting of the
shareholders and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal. Directors must be
natural persons at least 18 years old but need not be residents of Colorado or
shareholders of the corporation.
Section 3.03 Resignation. Any director may resign at any time by
giving written notice to the corporation. A director's resignation is effective
when it is received by the corporation unless the notice specifies a later
effective date, and the acceptance of such resignation shall not be necessary to
make it effective.
Section 3.04 Removal. At a meeting called expressly for that
purpose, the entire board of directors or any lesser number may be removed, with
or without cause, only if the number of votes cast in favor of removal exceeds
the number of votes cast against removal by those shares then entitled to vote
at an election of directors; except that if the holders of shares of any class
of stock are entitled to elect one or more directors by the provisions of the
articles of incorporation, the provisions of this Section 3.04 shall apply, with
respect to the removal of a director or directors so elected by such class, to
the vote of the holders of the outstanding shares of that class and not to the
vote of the outstanding shares as a whole. Any reduction in the authorized
number of directors shall not have the effect of shortening the term of any
incumbent director unless such director is also removed from office in
accordance with this Section 3.04.
Section 3.05 Vacancies. Unless otherwise required in the articles of
incorporation, any vacancy occurring in the board of directors, including
vacancies due to an increase in the number of directors, may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum, or by the affirmative vote of two directors if there are only two
directors remaining, or by a sole remaining director, or by the shareholders if
there are no directors remaining. The term of a director elected by the
-7-
<PAGE>
directors in office to fill a vacancy expires at the next annual shareholders'
meeting at which directors are elected. The term of a director elected by the
shareholders to fill a vacancy shall be the unexpired term of his or her
predecessor in office; except that, if the director's predecessor had been
elected by the directors in office to fill a vacancy, the term of a director
elected by the shareholders shall be the unexpired term of the last predecessor
elected by the shareholders. If the vacant office was held by a director elected
by a voting group of shareholders: (a) if one or more of the remaining directors
were elected by the same voting group, only such directors are entitled to vote
to fill the vacancy if it is filled by directors, and they may do so by the
affirmative vote of a majority of such directors remaining in office; and (b)
only the holders of shares of that voting group are entitled to vote to fill the
vacancy if it is filled by the shareholders.
Section 3.06 Regular Meetings. A regular meeting of the board of
directors shall be held immediately after and at the same place as the annual
meeting of the shareholders, or as soon thereafter as conveniently may be, at
the time and place, either within or outside Colorado, determined by the board,
for the purpose of electing officers and for the transaction of such other
business as may come before the meeting. Failure to hold such meeting, however,
shall not invalidate any action taken by any officer then or thereafter in
office. The board of directors may provide, by resolution, the time and place,
either within or outside Colorado, for the holding of additional regular
meetings without other notice than such resolution.
Section 3.07 Special Meetings. Special meetings of the board of
directors may be called by or at the request of the president or any two
directors. The person or persons authorized to call special meetings of the
board of directors may fix any convenient place, either within or outside
Colorado, as the place for holding any special meeting of the board called by
them.
Section 3.08 Meetings by Telephone. Unless otherwise provided by the
articles of incorporation, one or more members of the board of directors may
participate in a meeting of the board by, or the meeting may be conducted
through the use of, any communications equipment by which all persons
participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at the meeting.
Section 3.09 Notice of Meetings. Notice of each meeting of the board
of directors (except those regular meetings for which notice is not required)
stating the place, day and hour of the meeting shall be given to each director
at least two days prior thereto by the mailing of written notice by first class,
certified or registered mail, or at least two days prior thereto by personal
delivery (including delivery by private courier to the director or delivered to
the last address of the director furnished by him to the corporation for such
purpose) of written notice or by telephone, telegraph, teletype, electronically
transmitted facsimile or other form of wire or wireless communication, except
that, in the case of a meeting to be held pursuant to Section 3.08, notice may
be given by telephone one day prior thereto. The method of notice need not be
the same to each director. Notice shall be deemed to be given at the earliest of
(a) the date received, but, if the director is no longer at the address of
record, then the date delivery was attempted; (b) five days after mailing; or
(c) the date shown on the return receipt, if mailed by registered or certified
mail, return receipt requested, and the receipt is signed by or on behalf of the
addressee. Neither the business to be transacted at nor the purpose of any
-8-
<PAGE>
meeting of the board of directors need be specified in the notice of such
meeting unless otherwise required by statute.
Section 3.10 Waiver of Notice. Whenever notice is required by law,
the articles of incorporation or these bylaws to be given to the directors, a
waiver thereof in writing signed by the director entitled to such notice,
whether before, at or after the time stated therein, shall be equivalent to the
giving of such notice. Such waiver shall be delivered to the corporation for
filing with the corporate records, but such delivery and filing shall not be
conditions of the effectiveness of the waiver. A director's attendance at, or
participation in a meeting, waives any required notice to him or her of the
meeting unless: (a) at the beginning of the meeting, or promptly upon his or her
later arrival, the director objects to holding the meeting or transacting
business at the meeting because of lack of notice or defective notice and does
not thereafter vote for or assent to action taken at the meeting; or (b) if
special notice was required of a particular purpose, the director objects to
transacting business with respect to the purpose for which such special notice
was required and does not thereafter vote for or assent to action taken at the
meeting with respect to such purpose. Neither the business to be transacted at
nor the purpose of any meeting of the board of directors need be specified in
the waiver of notice of such meeting unless otherwise required by statute.
Section 3.11 Presumption of Assent. A director of the corporation
who is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless the director: (a) objects at the beginning of the meeting, or promptly
upon his or her arrival, to holding the meeting or transacting business at the
meeting and does not thereafter vote for or assent to any action taken at the
meeting; (b) contemporaneously requests that his dissent or abstention as to any
specific action taken be entered in the minutes of such meeting; or (c) causes
written notice of his dissent or abstention as to any specific action to be
received by the presiding officer of such meeting before its adjournment or by
the corporation immediately after adjournment of such meeting. The right of
dissent or abstention as to a specific action taken at a meeting of the board is
not available to a director who votes in favor of such action.
Section 3.12 Quorum and Voting Rights. Except as otherwise may be
required by law, the articles of incorporation or these bylaws, a majority of
the number of directors fixed in accordance with these bylaws, present in
person, shall constitute a quorum for the transaction of business at any meeting
of the board of directors, and the vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the board of
directors. If less than such majority is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice other than an announcement at the meeting, until a quorum shall be
present. No director may vote or act by proxy or power of attorney at any
meeting of directors.
Section 3.13 Action Without a Meeting. Any action required or
permitted to be taken at a meeting of the directors may be taken without a
meeting and without prior notice if a consent in writing, setting forth the
action so taken, shall be signed by all of the directors. Such consent (which
-9-
<PAGE>
may be signed in counterparts) shall have the same force and effect as a
unanimous vote of the directors and may be stated as such in any document.
Unless the consent specifies a different effective date, action taken without a
meeting pursuant to a consent in writing as provided herein is effective when
all directors have signed the consent; however, the consent shall not be
effective if, before all of the directors have signed the consent, any director
has revoked his or her consent by a writing signed by the director and received
by the secretary or any other person authorized by the bylaws or the board of
directors to receive such a revocation. All consents signed pursuant to this
Section 3.13 shall be delivered to the secretary of the corporation for
inclusion in the minutes or for filing with the corporate records.
Section 3.14 Executive and Other Committees. The board of directors,
by resolution adopted by a majority of the directors in office when the action
is taken, may designate from among its members an executive committee and one or
more other committees, each of which, to the extent provided in the resolution
establishing such committee, shall have and may exercise all of the authority of
the board of directors in the management of the business and affairs of the
corporation, except that no such committee shall have the power or authority to
(a) authorize distributions, (b) approve or propose to the shareholders actions
or proposals required by law to be approved by the shareholders, (c) fill
vacancies on the board of directors or any committee thereof, including any
committee authorized by this Section 3.14, (d) adopt, amend or repeal the
bylaws, (e) approve a plan of merger not requiring shareholder approval, (f)
amend articles of incorporation to the extent permitted by law to be amended by
the full board of directors, (g) authorize or approve reacquisition of shares of
the corporation, except according to a formula or method prescribed by the board
of directors, or (h) authorize or approve the issuance or sale of shares, or any
contract for the sale of shares, or determine the designation and relative
rights, preferences and limitations of a class or series of shares; except that
the board of directors may authorize a committee or an officer to do so within
limits specifically prescribed by the board of directors. The delegation of
authority to any committee shall not operate to relieve the board of directors
or any member of the board from any responsibility imposed by law. Subject to
the foregoing, the board of directors may provide such powers, limitations and
procedures for such committees as the board deems advisable; except that each
committee shall be governed by the procedures set forth in Sections 3.06 (except
as they relate to an annual meeting) and 3.07 through 3.13 as if the committee
were the board of directors. Each committee shall keep regular minutes of its
meetings, which shall be reported to the board of directors when required and
submitted to the corporation for inclusion in the corporate records.
Section 3.15 Compensation. By resolution of the board of directors,
notwithstanding the provisions of Section 2.11, a director may be paid his
expenses, if any, of attendance at each meeting of the board of directors and
each meeting of any committee of the board of which he is a member and may be
paid a fixed sum for attendance at each such meeting or a stated salary, or both
a fixed sum and a stated salary. Subject to Section 2.11, no such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
-10-
<PAGE>
ARTICLE IV
Officers
Section 4.01 Number and Qualifications. The officers of the
corporation shall consist of a president, a treasurer and a secretary and such
other officers, including a chairman of the board, one or more vice-presidents,
and a controller, as may from time to time be appointed by the board. In
addition, the board of directors or the president may appoint such assistant and
other subordinate officers, including assistant vice-presidents, assistant
secretaries and assistant treasurers, as it or he shall deem necessary or
appropriate. Any number of offices may be held by the same person. An officer
shall be a natural person who is at least 18 years old.
Section 4.02 Appointment and Term of Office. Except as provided in
Sections 4.01 and 4.06, the officers of the corporation shall be appointed by
the board of directors annually at the first meeting of the board held after
each annual meeting of the shareholders as provided in Section 3.06. If the
appointment of officers shall not be held as provided herein, such appointment
shall be held as soon thereafter as conveniently may be. Each officer shall hold
office until his successor shall have been duly appointed and shall have
qualified, or until the expiration of his term in office if appointed for a
specified period of time, or until his earlier death, resignation or removal.
Section 4.03 Compensation. Officers shall receive such compensation
for their services as may be authorized or ratified by the board of directors
and no officer shall be prevented from receiving compensation by reason of the
fact that he is also a director of the corporation. Appointment as an officer
shall not of itself create a contract or other right to compensation for
services performed as such officer.
Section 4.04 Resignation. Any officer may resign at any time,
subject to any rights or obligations under any existing contracts between the
officer and the corporation, by giving written notice of resignation to the
corporation. A resignation of an officer is effective when the notice is
received by the corporation unless the notice specifies a later effective date.
If a resignation is made effective at a later date, the board of directors may
permit the officer to remain in office until the effective date and may fill the
pending vacancy before the effective date if the board of directors provides
that the successor does not take office until the effective date, or the board
of directors may remove the officer at any time before the effective date and
may fill the resulting vacancy. An officer's resignation shall take effect at
the time specified in such notice and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. An
officer's resignation does not affect the corporation's contract rights, if any,
with the officer.
Section 4.05 Removal. Any officer may be removed with or without
cause at any time by the board of directors or, in the case of assistant and
other subordinate officers, by the board of directors or the president (whether
or not such officer was appointed by the president) whenever in its or his
judgment, as the case may be, the best interests of the corporation will be
-11-
<PAGE>
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. The appointment of an officer shall
not in itself create contract rights.
Section 4.06 Vacancies. A vacancy in any office, however occurring,
may be filled by the board of directors or, if such office may be filled by the
president as provided in Section 4.01, by the president, for the unexpired
portion of the term.
Section 4.07 Authority and Duties. The officers of the corporation
shall have the authority and shall exercise the powers and perform the duties
specified below and as may be additionally specified by the president, the board
of directors or these bylaws (and, in all cases where the duties of any officer
are not prescribed by the bylaws or by the board of directors, such officer
shall follow the orders and instructions of the president), except that in any
event each officer shall exercise such powers and perform such duties as may be
required by law:
(a) President. The president shall, subject to the direction and
supervision of the board of directors, (i) be the chief executive officer of the
corporation and have general and active control of its affairs and business and
general supervision of its officers, agents and employees; (ii) unless there is
a chairman of the board, preside at all meetings of the shareholders and the
board of directors; (iii) see that all orders and resolutions of the board of
directors are carried into effect; and (iv) perform all other duties incident to
the office of president and as from time to time may be assigned to him by the
board of directors.
(b) Vice-Presidents. The vice-president, if any (or, if there is
more than one, then each vice-president), shall assist the president and shall
perform such duties as may be assigned to him by the president or by the board
of directors. The vice-president, if there is one (or, if there is more than
one, then the vice-president designated by the board of directors, or, if there
be no such designation, then the vice-presidents in order of their election),
shall, at the request of the president or, in his absence or inability or
refusal to act, perform the duties of the president and when so acting shall
have all the powers of and be subject to all the restrictions upon the
president. Assistant vice-presidents, if any, shall have such powers and perform
such duties as may be assigned to them by the president or by the board of
directors.
(c) Secretary. The secretary shall: (i) prepare and maintain the
minutes of the proceedings of the shareholders, the board of directors and any
committees of the board; (ii) see that all notices are duly given in accordance
with the provisions of these bylaws or as required by law; (iii) be custodian of
the corporate records and of the seal of the corporation; (iv) keep at the
corporation's registered office or principal place of business within or outside
Colorado a record containing the names and addresses of all shareholders and the
number and class of shares held by each, unless such a record shall be kept at
the office of the corporation's transfer agent or registrar; (v) have general
charge of the stock books of the corporation, unless the corporation has a
transfer agent; (vi) authenticate records of the corporation; and (vii) in
general, perform all duties incident to the office of secretary and such other
duties as from time to time may be assigned to him by the president or by the
board of directors. Assistant secretaries, if any, shall have the same duties
and powers, subject to supervision by the secretary.
-12-
<PAGE>
(d) Treasurer. The treasurer shall: (i) be the principal financial
officer of the corporation and have the care and custody of all its funds,
securities, evidences of indebtedness and other personal property and deposit
the same in accordance with the instructions of the board of directors; (ii)
receive and give receipts and acquittances for moneys paid in on account of the
corporation, and pay out of the funds on hand all bills, payrolls and other just
debts of the corporation of whatever nature upon maturity; (iii) unless there is
a controller, be the principal accounting officer of the corporation and as such
prescribe and maintain the methods and systems of accounting to be followed,
keep complete books and records of account, prepare and file all local, state
and federal tax returns, prescribe and maintain an adequate system of internal
audit and prepare and furnish to the president and the board of directors
statements of account showing the financial position of the corporation and the
results of its operations; (iv) upon request of the board, make such reports to
it as may be required at any time; and (v) perform all other duties incident to
the office of treasurer and such other duties as from time to time may be
assigned to him by the board of directors or the president. Assistant
treasurers, if any, shall have the same powers and duties, subject to the
supervision by the treasurer.
Section 4.08 Surety Bonds. The board of directors may require any
officer or agent of the corporation to execute to the corporation a bond in such
sums and with such sureties as shall be satisfactory to the board, conditioned
upon the faithful performance of his duties and for the restoration to the
corporation of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE V
Stock
Section 5.01 Issuance of Shares. The issuance or sale by the
corporation of any shares of its authorized capital stock of any class shall be
made only upon authorization by the board of directors, except as otherwise may
be provided by law. No shares shall be issued until full consideration has been
received therefor. Every issuance of shares shall be recorded on the books
maintained for such purpose by or on behalf of the corporation.
Section 5.02 Stock Certificates; Uncertificated Shares. The shares
of stock of the corporation shall be represented by certificates, except that
the board of directors may authorize the issuance of any class or series of
stock of the corporation without certificates as provided by law. If shares are
represented by certificates, such certificates shall be signed either manually
or in facsimile in the name of the corporation by one or more officers
designated in the bylaws or by the board of directors and sealed with the seal
of the corporation or with a facsimile thereof. If the issuing corporation is
authorized to issue different classes of shares or different series within a
class, the share certificate shall contain a summary, on the front or the back,
of the designations, preferences, limitations and relative rights applicable to
each class, the variations in preferences, limitations and rights determined for
each series, and the authority of the board of directors to determine variations
-13-
<PAGE>
for future classes or series. Alternatively, each certificate may state
conspicuously on its front or back that the corporation will furnish to the
shareholder this information on request in writing and without charge. If the
person who signed, either manually or in facsimile, a share certificate no
longer holds office when the certificate is issued, the certificate is
nevertheless valid. Certificates of stock shall be in such form consistent with
law as shall be prescribed by the board of directors.
Section 5.03 Consideration for Shares. Shares shall be issued for
such consideration expressed in dollars as shall be fixed from time to time by
the board of directors. Such consideration shall consist of any tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed and other securities of the corporation; however, the
promissory note of a subscriber or an affiliate of the subscriber for shares
shall not constitute consideration for the shares unless the note is negotiable
and is secured by collateral, other than the shares, having a fair market value
at least equal to the principal amount of the note. For the purposes of this
Section, "promissory note" means a negotiable instrument on which there is an
obligation to pay independent of collateral and does not include a nonrecourse
note.
Section 5.04 Lost Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, the board of directors may
direct the issuance of a new certificate in lieu thereof upon such terms and
conditions in conformity with law as it may prescribe. The board of directors
may in its discretion require a bond in such form and amount and with such
surety as it may determine before issuing a new certificate.
Section 5.05 Transfer of Shares. Upon presentation and surrender to
the corporation or to the corporation's transfer agent of a certificate of stock
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, payment of all transfer taxes, if any, and the
satisfaction of any other requirements of law, including inquiry into and
discharge of any adverse claims of which the corporation has notice, the
corporation or the transfer agent shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transfer on the
books maintained for such purpose by or on behalf of the corporation. No
transfer of shares shall be effective until it has been entered on such books.
The corporation or the corporation's transfer agent may require a signature
guaranty or other reasonable evidence that any signature is genuine and
effective before making any transfer. Transfers of uncertificated shares shall
be made in accordance with applicable provisions of law.
Section 5.06 Holders of Record. The corporation shall be entitled to
treat the holder of record of any share of stock as the holder in fact thereof,
and accordingly shall not be bound to recognize any equitable or other claim to
or interest in such share on the part of any other person whether or not it
shall have express or other notice thereof, except as may be required by the
laws of Colorado.
Section 5.07 Shares Held for Account of Another. The board of
directors, in the manner provided by the Act, may adopt a procedure whereby a
shareholder of the corporation may certify in writing to the corporation that
all or a portion of the shares registered in the name of such shareholder are
held for the account of a specified person or persons. Upon receipt by the
-14-
<PAGE>
corporation of a certification complying with such procedure, the persons
specified in the certification shall be deemed, for the purpose or purposes set
forth therein, to be the holders of record of the number of shares specified in
place of the shareholder making the certification.
Section 5.08 Transfer Agents, Registrars and Paying Agents. The
board of directors may at its discretion appoint one or more transfer agents,
registrars or agents for making payment upon any class of stock, bond, debenture
or other security of the corporation. Such agents and registrars may be located
either within or outside Colorado. They shall have such rights and duties and
shall be entitled to such compensation as may be agreed.
ARTICLE VI
Indemnification
Section 6.01 Definitions. For purposes of this Article, the
following terms shall have the meanings set forth below:
(a) "Corporation" includes any domestic or foreign entity that is a
predecessor of the Corporation by reason of a merger or other transaction in
which the predecessor's existence ceased upon consummation of the transaction.
(b) "Director" means an individual who is or was a director of the
Corporation or an individual who, while a director of the Corporation, is or was
serving at the Corporation's request as a director, officer, partner, trustee,
employee, fiduciary or agent of another domestic or foreign corporation or other
person or of an employee benefit plan. A director is considered to be serving an
employee benefit plan at the Corporation's request if his or her duties to the
Corporation also impose duties on, or otherwise involve services by, the
director to the plan or to participants in or beneficiaries of the plan.
"Director" includes, unless the context requires otherwise, the estate or
personal representative of a director.
(c) "Expenses" includes counsel fees.
(d) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine, including an excise tax
assessed with respect to an employee benefit plan, or reasonable Expenses.
(e) "Official Capacity" means, when used with respect to a Director,
the office of Director in the Corporation and, when used with respect to a
person other than a Director as contemplated in section 7-109-107 of the Act (an
officer, employee, fiduciary and agent), the office in the Corporation held by
the officer or the employment, fiduciary or agency relationship undertaken by
the employee, fiduciary or agent on behalf of the Corporation. "Official
Capacity" does not include service for any other domestic or foreign corporation
or other person or employee benefit plan.
-15-
<PAGE>
(f) "Party" includes a person who was, is or is threatened to be
made a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative and
whether formal or informal.
Section 6.02 Right to Indemnification. Subject to Section 6.04, the
Corporation shall indemnify any person made a Party because the person is or was
a Director to a Proceeding against Liability incurred in, relating to, or as a
result of, the Proceeding to the fullest extent permitted by law, including
without limitation in circumstances in which, in the absence of this Section
6.02, indemnification would be discretionary under the Act if: (a) the person
conducted himself or herself in good faith; (b) the person reasonably believed:
(I) in the case of conduct in an Official Capacity with the Corporation, that
his or her conduct was in the Corporation's best interests; and (II) in all
other cases, that his or her conduct was at least not opposed to the
Corporation's best interests; and (c) in the case of any criminal Proceeding,
the person had no reasonable cause to believe his or her conduct was unlawful. A
Director's conduct with respect to an employee benefit plan for a purpose the
Director reasonably believed to be in the interests of the participants in or
beneficiaries of the plan is conduct that satisfies the requirement of (b)(II)
above. A Director's conduct with respect to an employee benefit plan for a
purpose that the Director did not reasonably believe to be in the interests of
the participants in or beneficiaries of the plan shall be deemed not to satisfy
the requirements of (a) above. The termination of a Proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the Director did not meet the
standard of conduct described in this section. However, the Corporation may not
indemnify a Director under this section: (a) in connection with a Proceeding by
or in the right of the Corporation in which the Director was adjudged liable to
the Corporation; or (b) in connection with any other Proceeding charging that
the Director derived an improper personal benefit, whether or not involving
action in an Official Capacity, in which Proceeding the Director was adjudged
liable on the basis that he or she derived an improper personal benefit.
Indemnification permitted under this section in connection with a Proceeding by
or in the right of the Corporation is limited to reasonable Expenses incurred in
connection with the Proceeding.
In addition to the foregoing, the Corporation shall indemnify a
person who was wholly successful, on the merits or otherwise, in the defense of
any Proceeding to which the person was a Party because the person is or was a
Director, against reasonable Expenses incurred by him or her in connection with
the Proceeding.
Section 6.03 Advancement of Expenses. The Corporation may pay for or
reimburse the reasonable Expenses incurred by a Director who is a Party to a
Proceeding in advance of final disposition of the Proceeding if: (a) the
Director furnishes to the Corporation a written affirmation of the Director's
good faith belief that he or she has met the standard of conduct described in
section 6.02; (b) the Director furnishes to the Corporation a written
undertaking, executed personally or on the Director's behalf, to repay the
advance if it is ultimately determined that he or she did not meet the standard
of conduct; and (c) a determination is made that the facts then known to those
-16-
<PAGE>
making the determination would not preclude indemnification under this article.
The undertaking required by (b) of this section shall be an unlimited general
obligation of the Director but need not be secured and may be accepted without
reference to financial ability to make repayment.
Section 6.04 Burden of Proof. The Corporation may not indemnify a
Director under Section 6.02 unless authorized in the specific case after a
determination has been made that indemnification of the Director is permissible
in the circumstances because the Director has met the standard of conduct set
forth in Section 6.02. The Corporation shall not advance Expenses to a Director
under Section 6.03 unless authorized in the specific case after the written
affirmation and undertaking are received and the determination required by
Section 6.03 has been made. The determinations required by this section shall be
made: (a) by the board of directors by a majority vote of those present at a
meeting at which a quorum is present, and only those Directors not parties to
the Proceeding shall be counted in satisfying the quorum; or (b) if a quorum
cannot be obtained, by a majority vote of a committee of the board of directors
designated by the board of directors, which committee shall consist of two or
more Directors not parties to the Proceeding; except that Directors who are
parties to the Proceeding may participate in the designation of Directors for
the committee. If a quorum cannot be obtained as contemplated in (a) above, and
a committee cannot be established under (b) above, or, even if a quorum is
obtained or a committee is designated, if a majority of the Directors
constituting such quorum or such committee so directs, the determination
required to be made by this section shall be made: by independent legal counsel
selected by a vote of the board of directors or the committee or, if a quorum of
the full board cannot be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote of the full board of
directors; or by the shareholders. Authorization or indemnification and advance
of Expenses shall be made in the same manner as the determination that
indemnification or advance of Expenses is permissible; except that, if the
determination that indemnification or advance of Expenses is permissible is made
by independent legal counsel, authorization of indemnification and advance of
Expenses shall be made by the body that selected such counsel.
Section 6.05 Notification and Defense of Claim. Promptly after
receipt by a Party of notice of the commencement of any Proceeding, the Party
shall, if a claim in respect thereof is to be made against the Corporation under
this Article, notify the Corporation in writing of the commencement thereof;
provided, however, that delay in so notifying the Corporation shall not
constitute a waiver or release by the Party of any rights under this Article.
With respect to any such Proceeding: (a) the Corporation shall be entitled to
participate therein at its own expense; (b) any counsel representing the Party
to be indemnified in connection with the defense or settlement thereof shall be
counsel mutually agreeable to the Party and to the Corporation; and (c) the
Corporation shall have the right, at its option, to assume and control the
defense or settlement thereof, with counsel satisfactory to the Party. If the
Corporation assumes the defense of the Proceeding, the Party shall have the
right to employ its own counsel, but the fees and Expenses of such counsel
incurred after notice from the Corporation of its assumption of the defense of
such Proceeding shall be at the expense of the Party unless (i) the employment
of such counsel has been specifically authorized by the Corporation, (ii) the
Party shall have reasonably concluded that there may be a conflict of interest
-17-
<PAGE>
between the Corporation and the Party in the conduct of the defense of such
Proceeding, or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such Proceeding. Notwithstanding the foregoing, if an
insurance carrier has supplied directors' and officers' liability insurance
covering a Proceeding and is entitled to retain counsel for the defense of such
Proceeding, then the insurance carrier shall retain counsel to conduct the
defense of such Proceeding unless the Party and the Corporation concur in
writing that the insurance carrier's doing so is undesirable. The Corporation
shall not be liable under this Article for any amounts paid in settlement of any
Proceeding effected without its written consent. The Corporation shall not
settle any Proceeding in any manner that would impose any penalty or limitation
on a Party without the Party's written consent. Consent to a proposed settlement
of any Proceeding shall not be unreasonably withheld by either the Corporation
or the Party.
Section 6.06 Notice to Shareholders of Indemnification of Director.
If the Corporation indemnifies or advances Expenses to a Director under this
Article in connection with a Proceeding by or in the right of the Corporation,
the Corporation shall give written notice of the indemnification or advance to
the shareholders with or before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting at the instigation of the
board of directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such action.
Section 6.07 Enforcement. The right to indemnification and
advancement of Expenses granted by this Article shall be enforceable in any
court of competent jurisdiction if the Corporation denies the claim, in whole or
in part, or if no disposition of such claim is made within 90 days after the
written request for indemnification or advancement of Expenses is received. If
successful in whole or in part in such suit, the Party's Expenses incurred in
bringing and prosecuting such claim shall also be paid by the Corporation.
Whether or not the Party has met any applicable standard of conduct, been
adjudged liable to the Corporation or derived improper personal benefit, the
court in such suit may order indemnification or the advancement of Expenses as
the court deems proper (subject to any express limitation of the Act). Further,
the Corporation shall indemnify a Party from and against any and all Expenses
and, if requested by the Party, shall (within 10 business days of such request)
advance such Expenses to the Party which are incurred by the Party in connection
with any claim asserted against or suit brought by the Party for recovery under
any directors' and officers' liability insurance policies maintained by the
Corporation, regardless of whether the Party is unsuccessful in whole or in part
in such claim or suit.
Section 6.08 Proceedings by a Party. The Corporation shall
indemnify, advance or reimburse Expenses incurred by a Director in connection
with an appearance as a witness in a Proceeding at a time when he or she has not
been made a named defendant or respondent in the Proceeding.
Section 6.09 Subrogation. In the event of any payment under this
Article, the Corporation shall be subrogated to the extent of such payment to
all of the rights of recovery of the indemnified Party, who shall execute all
papers and do everything that may be necessary to assure such rights of
subrogation to the Corporation.
-18-
<PAGE>
Section 6.10 Other Payments. The Corporation shall not be liable
under this Article to make any payment in connection with any Proceeding against
or involving a Party to the extent the Party has otherwise actually received
payment (under any insurance policy, agreement or otherwise) of the amounts
otherwise indemnifiable hereunder. A Party shall repay to the Corporation the
amount of any payment the Corporation makes to the Party under this Article in
connection with any Proceeding against or involving the Party, to the extent the
Party has otherwise actually received payment (under any insurance policy,
agreement or otherwise) of such amount.
Section 6.11 Insurance. The Corporation may purchase and maintain
insurance on behalf of a person who is or was a Director, officer, employee,
fiduciary or agent of the Corporation, or who, while a Director, officer,
employee, fiduciary or agent of the Corporation, is or was serving at the
request of the Corporation as a Director, officer, partner, trustee, employee,
fiduciary or agent of another domestic or foreign corporation or other person or
of an employee benefit plan, against liability asserted against or incurred by
the person in that capacity or arising from his or her status as a Director,
officer, employee, fiduciary or agent, whether or not the Corporation would have
power to indemnify the person against the same liability under Section 6.02 or
6.12. Any such insurance may be procured from any insurance company designated
by the board of directors, whether such insurance company is formed under the
laws of Colorado or any other jurisdiction of the United States or elsewhere,
including any insurance company in which the Corporation has an equity or any
other interest through stock ownership or otherwise.
Section 6.12 Indemnification of Officers, Employees, Fiduciaries and
Agents. An officer is entitled to mandatory indemnification and to apply for
court-ordered indemnification under the Act, in each case to the same extent as
a Director. The Corporation shall indemnify and advance expenses to an officer,
employee, fiduciary or agent of the Corporation to the same extent as to a
Director. In addition, the Corporation may also indemnify and advance expenses
to an officer, employee, fiduciary or agent who is not a Director to a greater
extent than provided to a Director, if not inconsistent with public policy, and
if provided for by general or specific action of its board of directors or
shareholders, or contract.
Section 6.13 Other Rights and Remedies. The rights to
indemnification and advancement of Expenses provided in this Article shall be in
addition to any other rights to which a Party may have or hereafter acquire
under any law, provision of the articles of incorporation, any other or further
provision of these bylaws, vote of the shareholders or Directors, agreement or
otherwise. The Corporation shall have the right, but shall not be obligated, to
indemnify or advance Expenses to any agent of the Corporation not otherwise
covered by this Article in accordance with and to the fullest extent permitted
by the Act.
Section 6.14 Applicability; Effect. The rights to indemnification
and advancement of Expenses provided in this Article shall be applicable to acts
or omissions that occurred prior to the adoption of this Article, shall continue
as to any Party during the period such Party serves in any one or more of the
capacities covered by this Article, shall continue thereafter so long as the
Party may be subject to any possible Proceeding by reason of the fact that he
served in any one or more of the capacities covered by this Article, and shall
-19-
<PAGE>
inure to the benefit of the estate and personal representatives of each such
person. Any repeal or modification of this Article or of any section or
provision hereof shall not affect any rights or obligations then existing. All
rights to indemnification under this Article shall be deemed to be provided by a
contract between the Corporation and each Party covered hereby.
Section 6.15 Severability. If any provision of this Article shall be
held to be invalid, illegal or unenforceable for any reason whatsoever (a) the
validity, legality and enforceability of the remaining provisions of this
Article (including without limitation, all portions of any sections of this
Article containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Article (including, without limitation, all
portions of any section of this Article containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent of this
Article that each Party covered hereby is entitled to the fullest protection
permitted by law.
ARTICLE VII
Miscellaneous
Section 7.01 Voting of Securities by the Corporation. Unless
otherwise provided by resolution of the board of directors, on behalf of the
corporation the president or any vice-president shall attend in person or by
substitute appointed by him, or shall execute written instruments appointing a
proxy or proxies to represent the corporation at, all meetings of the
shareholders of any other corporation, association or other entity in which the
corporation holds any stock or other securities, and may execute written waivers
of notice with respect to any such meetings. At all such meetings and otherwise,
the president or any vice-president, in person or by substitute or proxy as
aforesaid, may vote the stock or other securities so held by the corporation and
may execute written consents and any other instruments with respect to such
stock or securities and may exercise any and all rights and powers incident to
the ownership of said stock or securities, subject, however, to the
instructions, if any, of the board of directors.
Section 7.02 Seal. The corporate seal of the corporation shall be in
such form as adopted by the board of directors, and any officer of the
corporation may, when and as required, affix or impress the seal, or a facsimile
thereof, to or on any instrument or document of the corporation.
Section 7.03 Fiscal Year. The fiscal year of the corporation shall
be as established by the board of directors.
Section 7.04 Amendments. The directors may amend or repeal these
bylaws unless the articles of incorporation reserve such power exclusively to
the shareholders in whole or in part or the shareholders, in amending or
-20-
<PAGE>
repealing a particular bylaw provision, provide expressly that the directors may
not amend or repeal such bylaw. The shareholders may amend or repeal the bylaws
even though the bylaws may also be amended or repealed by the directors.
(END)
-21-
THIS INDENTURE IS, FOR PURPOSES OF TITLE 38 OF THE COLORADO REVISED STATUTES,
THE "ORIGINAL EVIDENCE OF INDEBTEDNESS" SECURED BY THE DEED OF TRUST (AS DEFINED
HEREIN).
- --------------------------------------------------------------------------------
RIVIERA BLACK HAWK, INC.
$45,000,000
13% FIRST MORTGAGE NOTES DUE 2005
WITH CONTINGENT INTEREST
---------------------------
INDENTURE
Dated as of June 3, 1999
---------------------------
IBJ WHITEHALL BANK & TRUST COMPANY
Trustee
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1)................................................ 7.10
(a)(2).............................................. 7.10
(a)(3).............................................. N.A.
(a)(4).............................................. N.A.
(a)(5).............................................. 7.10
(b)................................................. 7.10
(c)................................................. N.A.
311(a)................................................... 7.11
(b)................................................. 7.11
(c)................................................. N.A.
312(a)................................................... 2.05
(b)................................................. 11.03
(c)................................................. 11.03
313(a)................................................... 7.06
(b)(1).............................................. 10.03
(b)(2).............................................. 7.07
(c)................................................. 7.06;11.02
(d)................................................. 7.06
314(a)................................................... 4.03;11.02
(b)................................................. 10.02
(c)(1).............................................. 11.04
(c)(2).............................................. 11.04
(c)(3).............................................. N.A.
(d).......................................... 10.03, 10.04, 10.05
(e)................................................. 11.05
(f)................................................. N.A.
315(a)................................................... 7.01
(b)................................................. 7.05,11.02
(c)................................................. 7.01
(d)................................................. 7.01
(e)................................................. 6.11
316(a) (last sentence)................................... 2.09
(a)(1)(A)........................................... 6.05
(a)(1)(B)........................................... 6.04
(a)(2).............................................. N.A.
(b)................................................. 6.07
(c)................................................. 2.12
317(a)(1)................................................ 6.08
(a)(2).............................................. 6.09
(b)................................................. 2.04
318(a)................................................... 11.01
(b)................................................. N.A.
(c)................................................. 11.01
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.........................................................................................1
Section 1.02. Other Definitions..................................................................................23
Section 1.03. Incorporation by Reference of Trust Indenture Act..................................................24
Section 1.04. Rules of Construction..............................................................................24
ARTICLE 2 THE NOTES
Section 2.01. Form and Dating....................................................................................25
Section 2.02. Execution and Authentication.......................................................................26
Section 2.03. Registrar and Paying Agent.........................................................................26
Section 2.04. Paying Agent to Hold Money in Trust................................................................26
Section 2.05. Holder Lists.......................................................................................27
Section 2.06. Transfer and Exchange..............................................................................27
Section 2.07. Replacement Notes..................................................................................39
Section 2.08. Outstanding Notes..................................................................................39
Section 2.09. Treasury Notes.....................................................................................40
Section 2.10. Temporary Notes....................................................................................40
Section 2.11. Cancellation.......................................................................................40
Section 2.12. Defaulted Interest.................................................................................40
Section 2.13. CUSIP Number.......................................................................................41
Section 2.14. Exchange Registration..............................................................................41
ARTICLE 3 REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.................................................................................41
Section 3.02. Selection of Notes to Be Redeemed..................................................................41
Section 3.03. Notice of Redemption...............................................................................42
Section 3.04. Effect of Notice of Redemption.....................................................................42
Section 3.05. Deposit of Redemption Price........................................................................43
Section 3.06. Notes Redeemed in Part.............................................................................43
Section 3.07. Optional Redemption................................................................................43
Section 3.08. Mandatory Redemption...............................................................................44
Section 3.09. Gaming Redemption..................................................................................44
Section 3.10. Offer to Purchase by Application of Excess Proceeds................................................45
ARTICLE 4 COVENANTS
Section 4.01. Payment of Notes...................................................................................47
Section 4.02. Maintenance of Office or Agency....................................................................47
Section 4.03. Reports............................................................................................48
Section 4.04. Compliance Certificate.............................................................................48
Section 4.05. Taxes..............................................................................................49
Section 4.06. Stay, Extension and Usury Laws.....................................................................49
Section 4.07. Restricted Payments................................................................................49
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.....................................52
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.........................................52
Section 4.10. Asset Sales........................................................................................55
Section 4.11. Transactions with Affiliates.......................................................................56
ii
<PAGE>
Section 4.12. Liens..............................................................................................57
Section 4.13. Line of Business...................................................................................57
Section 4.14. Corporate Existence................................................................................58
Section 4.15. Offer to Repurchase Upon Change of Control.........................................................58
Section 4.16. Limitation on Sale and Leaseback Transactions......................................................59
Section 4.17. Limitation on Issuances and Sales of Equity Interests in Wholly Owned Subsidiaries.................59
Section 4.18. Advances to Subsidiaries...........................................................................60
Section 4.19. Payments for Consent...............................................................................60
Section 4.20. Additional Subsidiary Guarantees...................................................................60
Section 4.21. Insurance..........................................................................................60
Section 4.22. Limitation on Status as Investment Company.........................................................62
Section 4.23. Further Assurances.................................................................................62
Section 4.24. Construction.......................................................................................62
Section 4.25. Limitation on Use of Proceeds......................................................................62
Section 4.26. Collateral Documents, Completion Capital Commitment and Keep-Well Agreement........................63
Section 4.27. Restriction on Payment of Management Fees..........................................................63
Section 4.28. Event of Loss......................................................................................64
Section 4.29. Excess Cash Purchase Offers........................................................................65
ARTICLE 5 SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets...........................................................65
Section 5.02. Successor Corporation Substituted..................................................................66
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01. Events of Default..................................................................................67
Section 6.02. Acceleration.......................................................................................69
Section 6.03. Other Remedies.....................................................................................69
Section 6.04. Waiver of Past Defaults............................................................................69
Section 6.05. Control by Majority................................................................................70
Section 6.06. Limitation on Suits................................................................................70
Section 6.07. Rights of Holders of Notes to Receive Payment......................................................70
Section 6.08. Collection Suit by Trustee.........................................................................71
Section 6.09. Trustee May File Proofs of Claim...................................................................71
Section 6.10. Priorities.........................................................................................71
Section 6.11. Undertaking for Costs..............................................................................72
ARTICLE 7 TRUSTEE
Section 7.01. Duties of Trustee..................................................................................72
Section 7.02. Rights of Trustee..................................................................................74
Section 7.03. Individual Rights of Trustee.......................................................................74
Section 7.04. Trustee's Disclaimer...............................................................................74
Section 7.05. Notice of Defaults.................................................................................75
Section 7.06. Reports by Trustee to Holders of the Notes.........................................................75
Section 7.07. Compensation and Indemnity.........................................................................76
Section 7.08. Replacement of Trustee.............................................................................77
Section 7.09. Successor Trustee by Merger, etc...................................................................78
Section 7.10. Eligibility; Disqualification......................................................................78
Section 7.11. Preferential Collection of Claims Against Company..................................................78
iii
<PAGE>
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...........................................78
Section 8.02. Legal Defeasance and Discharge.....................................................................79
Section 8.03. Covenant Defeasance................................................................................79
Section 8.04. Conditions to Legal or Covenant Defeasance.........................................................80
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions......81
Section 8.06. Repayment to Company...............................................................................81
Section 8.07. Reinstatement......................................................................................82
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes................................................................82
Section 9.02. With Consent of Holders of Notes...................................................................83
Section 9.03. Compliance with Trust Indenture Act................................................................84
Section 9.04. Revocation and Effect of Consents..................................................................84
Section 9.05. Notation on or Exchange of Notes...................................................................85
Section 9.06. Trustee to Sign Amendments, etc....................................................................85
ARTICLE 10 COLLATERAL AND SECURITY
Section 10.01. Security..........................................................................................85
Section 10.02. Recording and Opinions............................................................................86
Section 10.03. Release of Collateral.............................................................................87
Section 10.04. Certificates of the Company.......................................................................88
Section 10.05. Certificates of the Trustee.......................................................................88
Section 10.06. Authorization of Actions to Be Taken by the Trustee Under the Collateral Documents................88
Section 10.07. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents...................89
Section 10.08. Termination of Security Interest..................................................................89
Section 10.09. Cooperation Of Trustee............................................................................89
Section 10.10. Collateral Agent..................................................................................90
ARTICLE 11 MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls......................................................................90
Section 11.02. Notices...........................................................................................90
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.....................................91
Section 11.04. Certificate and Opinion as to Conditions Precedent................................................91
Section 11.05. Statements Required in Certificate or Opinion.....................................................92
Section 11.06. Rules by Trustee and Agents.......................................................................92
Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders..........................92
Section 11.08. Governing Law.....................................................................................92
Section 11.09. No Adverse Interpretation of Other Agreements.....................................................93
Section 11.10. Successors........................................................................................93
Section 11.11. Severability......................................................................................93
Section 11.12. Counterpart Originals.............................................................................93
Section 11.13. Table of Contents, Headings, etc..................................................................93
Section 11.14. Gaming and Liquor Laws............................................................................93
</TABLE>
iv
<PAGE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF INTERCOMPANY NOTE
Exhibit F FORM OF PLEDGE AGREEMENT
Exhibit G FORM OF COLLATERAL ASSIGNMENT OF PATENT
Exhibit H FORM OF COLLATERAL ASSIGNMENT OF COPYRIGHT
Exhibit I FORM OF SUPPLEMENTAL INDENTURE
v
<PAGE>
THIS INDENTURE IS, FOR PURPOSES OF TITLE 38 OF THE COLORADO REVISED STATUTES,
THE "ORIGINAL EVIDENCE OF INDEBTEDNESS" SECURED BY THE DEED OF TRUST (AS DEFINED
HEREIN).
INDENTURE dated as of June 3, 1999, between Riviera Black Hawk, Inc., a
Colorado corporation (the "Company"), and IBJ Whitehall Bank & Trust Company, as
trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders (as defined below) of the
13% Series A First Mortgage Notes due 2005 With Contingent Interest (the "Series
A Notes") and the 13% Series B First Mortgage Notes due 2005 With Contingent
Interest (the "Series B Notes" and, together with the Series A Notes, the
"Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions
"144A Global Note" means a global note substantially in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person; and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Additional Notes" means additional Notes (other than the Initial Notes)
issued under this Indenture, as part of the same series as the Initial Notes.
"Adjusted Fixed Charge Coverage Ratio" means, with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to Adjusted Fixed Charges of such Person and its
Subsidiaries for such period (calculated in the same manner as the Fixed Charge
Coverage Ratio is calculated).
"Adjusted Fixed Charges" means, with respect to any Person for any period,
the Fixed Charges of such Person and its Subsidiaries for such period plus any
Contingent Interest accrued with respect to the Consolidated Cash Flow of such
Person and its Subsidiaries for such period.
<PAGE>
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary that apply to such transfer or exchange.
"Asset Sale" means: (i) the sale, lease, conveyance or other disposition of
any assets or rights; provided that the sale, conveyance or other disposition of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by Sections 4.15 and 5.01 and not
by Section 4.10 hereof; and (ii) the issuance of Equity Interests by any of the
Company's Restricted Subsidiaries or the sale of Equity Interests by the Company
in any of its Subsidiaries. Notwithstanding the preceding, the following items
shall not be deemed to be Asset Sales: (i) any single transaction or series of
related transactions that involves assets having a fair market value of less
than $250,000; (ii) a transfer of assets between or among the Company and its
Wholly Owned Restricted Subsidiaries; (iii) an issuance of Equity Interests by a
Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned
Restricted Subsidiary; (iv) the sale, lease or exchange of equipment, inventory,
accounts receivable or other assets in the ordinary course of business; (v) the
sale or other disposition of cash or Cash Equivalents; (vi) a Restricted Payment
or Permitted Investment that is permitted by Section 4.07 hereof; and (vii) the
granting of a Permitted Lien.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
2
<PAGE>
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means: (i) with respect to a corporation, the board of
directors of the corporation; (ii) with respect to a partnership, the Board of
Directors of the general partner of the partnership; and (iii) with respect to
any other Person, the board or committee of such Person serving a similar
function.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited); and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Collateral Accounts" means, collectively, the Construction
Disbursement Account, the Interest Reserve Account, the Completion Reserve
Account and the Disbursed Funds Account (as defined in the Cash Collateral and
Disbursement Agreement).
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement among the Company, the Trustee, the Independent
Construction Consultant and the Disbursement Agent in connection with the
Riviera Black Hawk.
"Cash Equivalents" means (i) United States dollars; (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition; (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case, with any domestic commercial bank
having capital and surplus in excess of $500.0 million and a Thomson Bank Watch
Rating of "B" or better; (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (ii)
and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above; (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Rating Services and in each case maturing within six months after the
date of acquisition; and (vi) money market funds at least 95% of the assets of
which constitute Cash Equivalents of the kinds described in clauses (i) through
(v) of this definition.
3
<PAGE>
"Change of Control" means the occurrence of any of the following: (i) the
direct or indirect sale, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the properties or assets of Riviera Holdings and
its Subsidiaries taken as a whole to any "person" (as that term is used in
Section 13(d)(3) of the Exchange Act), other than one or more of the Existing
Significant Holders or any of their Related Parties; (ii) the expiration or
termination of the Management Agreement or the replacement of Riviera Management
as manager under the Management Agreement with any Person other than an
Affiliate of Riviera Management; (iii) the adoption of a plan relating to the
liquidation or dissolution, of the Company or Riviera Holdings or any successor
thereto; (iv) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than one or more of the Existing Significant
Holders and any of their respective Related Parties, becomes the Beneficial
Owner, directly or indirectly, of (a) more than 35% of the outstanding Voting
Stock of the Riviera Holdings, measured by voting power rather than number of
shares and (b) a greater percentage of the outstanding Voting Stock of Riviera
Holdings than is Beneficially Owned by the Existing Significant Holders and of
their respective Related Parties holding the largest such percentage; (v) the
first day on which a majority of the members of the Board of Directors of
Riviera Holdings are not Continuing Directors; (vi) Riviera Holdings
consolidates with, or merges with or into, any Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person consolidates with, or merges with or
into, Riviera Holdings, in any such event pursuant to a transaction in which any
of the outstanding Voting Stock of Riviera Holdings is converted into or
exchanged for cash, securities or other property, other than any such
transaction where the Voting Stock of Riviera Holdings outstanding immediately
prior to such transaction is converted into or exchanged for Voting Stock (other
than Disqualified Stock) of the surviving or transferee Person constituting a
majority of the outstanding shares of such Voting Stock of such surviving or
transferee Person (immediately after giving effect to such issuance); or (vii)
the first day on which Riviera Holdings ceases to own at least 51% of the
outstanding Equity Interests of the Company.
"Closing Date" means the closing date for the sale and original issuance of
the Series A Notes.
"Collateral" means all assets, now owned or hereafter acquired, of the
Company or any of its Subsidiaries, that are pledged or assigned, or required to
be pledged or assigned under this Indenture or the Collateral Documents, to the
Trustee, together with the proceeds thereof (including, without limitation, the
proceeds of Asset Sales), in each case excluding FF&E acquired, refinanced or
leased with FF&E Financing, gaming and liquor licenses and certain other
exceptions and assets of future unrestricted subsidiaries of the Company.
"Collateral Documents" means, collectively, the Deed of Trust, the Security
Agreement by the Company in favor of the Trustee, the Assignments of Patent,
Trademark and Copyright by the Company in favor of the Trustee (to the extent
that it is entered into following the Closing Date), the Collateral Assignments
by the Company in favor of the Trustee, the Cash Collateral and Disbursement
Agreement, the Pledge Agreement by the Company in favor of the Trustee (to the
extent that it is entered into following the Closing Date), the Pledge and
Assignment Agreement by the Company in favor of the Trustee, the Manager
Subordination Agreement,
4
<PAGE>
Uniform Commercial Code financing statements and fixture filings, and any other
agreements, instruments, documents, pledges or filings executed in connection
therewith or that otherwise evidence, set forth or limit the Lien of the Trustee
or the Disbursement Agent in the Collateral.
"Company" means Riviera Black Hawk, Inc., and any and all successors
thereto.
"Completion Capital Commitment" means the Completion Capital Commitment
dated as of the date of the indenture executed by Riviera Holdings and the
Company.
"Completion Reserve Account" means the account to be maintained by the
Disbursement Agent and pledged to the Trustee pursuant to the terms of the Cash
Collateral and Disbursement Agreement, into which approximately $5.0 million of
the proceeds of the Offering shall be deposited.
"Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus: (i)
an amount equal to any extraordinary loss plus any net loss realized by such
Person or any of its Subsidiaries in connection with an Asset Sale, to the
extent such losses were deducted in computing such Consolidated Net Income; plus
(ii) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus (iii)
consolidated interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations), to the extent that
any such expense was deducted in computing such Consolidated Net Income; plus
(iv) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense, other
than pre-opening expenses, that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus (v) non-cash items increasing such
Consolidated Net Income for such period, other than the accrual of revenue in
the ordinary course of business, in each case, on a consolidated basis and
determined in accordance with GAAP. Notwithstanding the preceding, the provision
for taxes based on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Restricted Subsidiary of the
Company shall be added to Consolidated Net Income to compute Consolidated Cash
Flow of the Company only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior governmental approval (that has not been
obtained), and without direct or indirect restriction pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Subsidiary or
its stockholders.
5
<PAGE>
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that: (i) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Wholly Owned Restricted
Subsidiary thereof; (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders; (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded; (iv) the Net Income (but not loss) of any Unrestricted Subsidiary
shall be excluded, whether or not distributed to the specified person or one of
its Subsidiaries; (v) the Net Income of any Person and its Restricted
Subsidiaries shall be calculated without any deduction for preopening expenses
determined in accordance with GAAP; and (vi) the cumulative effect of a change
in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any specified Person as of
any date, the sum of: (i) the consolidated equity of the common stockholders of
such Person and its consolidated Subsidiaries as of such date; plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock.
"Construction Disbursement Account" means the account to be maintained by
the Disbursement Agent and pledged to the Trustee pursuant to the terms of the
Cash Collateral and Disbursement Agreement, into which approximately $31.9
million of the net proceeds of the Offering shall be deposited.
"Construction Disbursement Budget" means itemized schedules setting forth
on a line item basis all of the costs (including financing costs) estimated to
be incurred in connection with the financing, design, development, construction
and equipping of the Riviera Black Hawk, as such schedules are delivered to the
Disbursement Agent on the Closing Date and as amended from time to time in
accordance with the terms of the Cash Collateral and Disbursement Agreement.
"Contingent Interest" means interest payable on each Interest Payment Date
with respect to any principal amount of outstanding Notes in an amount equal to
the product of (1) 5% of the Company's Consolidated Cash Flow for its two most
recently completed fiscal quarters prior to the Record Date applicable to that
Interest Payment Date and (2) a fraction, the numerator of which is the
principal amount of Notes outstanding on the close of business on that Record
Date and the denominator of which is $45.0 million; provided, that Contingent
Interest
6
<PAGE>
will cease to accrue during a Semiannual Period on any principal amount of
outstanding Notes if the aggregate amount of Contingent Interest in respect of
any four consecutive fiscal quarters (excluding any Contingent Interest deferred
from prior periods) exceeds the product of (a) $1.75 million and (b) a fraction,
the numerator of which is such principal amount of outstanding Notes and the
denominator of which is $45.0 million.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Riviera Holdings who: (i) was a member of such
Board of Directors on the date hereof; or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Deed of Trust" means the Deed of Trust to the Public Trustee, Security
Agreement, Fixture Filing and Assignment of Rents, Leases and Leasehold
Interests dated as of the date hereof, by the Company to the Public Trustee of
the County of Gilpin, Colorado, for the benefit of the Trustee.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, substantially
in the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disbursement Agent" means IBJ Whitehall Bank and Trust Company, as
disbursement agent.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to
7
<PAGE>
repurchase such Capital Stock upon the occurrence of a change of control or an
asset sale shall not constitute Disqualified Stock if the terms of such Capital
Stock provide that the Company may not repurchase or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or redemption complies
with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Loss" means, with respect to any property or asset (tangible or
intangible, real or personal), any of the following: (i) any loss, destruction
or damage of such property or asset; (ii) any institution of any proceedings for
the condemnation or seizure of such property or asset or for the exercise of any
right of eminent domain; (iii) any actual condemnation, seizure or taking by
exercise of the power of eminent domain or otherwise of such property or asset,
or confiscation of such property or asset or the requisition of the use of such
property or asset; or (iv) any settlement in lieu of clauses (ii) or (iii)
above.
"Excess Cash Flow" means, with respect to the Company for any Operating
Year, the Consolidated Cash Flow of the Company and its Subsidiaries for such
Operating Year, minus (i) cash interest expense (excluding any Contingent
Interest and including the portion of any payments associated with Capital Lease
Obligations) of the Company and its Subsidiaries that is paid during such
Operating Year and, without duplication, Contingent Interest of the Company and
its Subsidiaries that is paid or deferred in accordance with the provisions of
this Indenture during such Operating Year, but only to the extent that such
Contingent Interest was not deferred in any prior Operating Year, minus (ii) up
to $4.0 million in capital expenditures of the Company and its Subsidiaries paid
to maintain or improve the Riviera Black Hawk that are actually paid during such
Operating Year (excluding any capital expenditures made with the proceeds from
the sale of the Notes), minus (iii) principal payments on Indebtedness permitted
to be incurred pursuant to Section 4.09 hereof and minus (iv) amounts paid by
the Company to Riviera Holdings pursuant to the Tax Sharing Agreement as in
effect on the date hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.
"Existing Significant Holder" means the Morgens Entities named in the
Offering Circular, Sun America Life Insurance Company and Keyport Life Insurance
Company.
"FF&E" means furniture, fixtures or equipment used in the ordinary course
of the business of the Company and its Subsidiaries.
8
<PAGE>
"FF&E Financing" means the incurrence of Indebtedness, the proceeds of
which are utilized solely to finance the acquisition of (or entry into a capital
lease by the Company or a Subsidiary with respect to) FF&E.
"Final Plans" with respect to any particular work or improvement means
Plans which (i) have received final approval from all governmental authorities
required to approve such Plans prior to completion of the work or improvements
and (ii) contain sufficient specificity to permit the completion of the work or
improvement.
"Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person for
such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period. In addition, for purposes of
calculating the Fixed Charge Coverage Ratio: (i) acquisitions that have been
made by the specified Person or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be given pro
forma effect as if they had occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated on a pro forma basis in accordance with Regulation S-X under the
Securities Act, but without giving effect to clause (iii) of the proviso set
forth in the definition of Consolidated Net Income; (ii) the Consolidated Cash
Flow attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the Calculation Date,
shall be excluded; and (iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges shall not be
obligations of the specified Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Fixed Charges" means, with respect to any specified Person for any period,
the sum, without duplication, of (i) the consolidated interest expense
(excluding Contingent Interest, if any, paid or accrued) of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued, excluding
amortization of debt issuance costs and issuance discounts in connection with
the issuance of the Notes, but including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net of the effect of all payments made or received pursuant to Hedging
Obligations; plus (ii) the
9
<PAGE>
consolidated interest of such Person and its Restricted Subsidiaries that was
capitalized during such period; plus (iii) any interest expense on Indebtedness
of another Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus (iv) the product of (a) all dividends, whether paid or accrued and whether
or not in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividends on Equity Interests payable solely
in Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Interest" means the fixed interest payable on the Notes.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal government, any foreign government, any state, province or city
or other political subdivision or otherwise, whether now or hereafter in
existence, including the Colorado Limited Gaming Commission and the Colorado
Division of Gaming, and any other applicable gaming regulatory authority with
authority to regulate any gaming operation (or proposed gaming operation) owned,
managed or operated by the Company, Riviera Holdings, Riviera Management or any
of their respective Subsidiaries.
"Gaming Business" means the gaming business and includes all businesses
either licensed or unlicensed by a Gaming Authority necessary for, incident to
or connected with or arising out of the operation of a gaming establishment or
facility (including developing and operating lodging, retail and restaurant
facilities, sports or entertainment facilities, transportation services or other
related activities or enterprises and any additions or improvements thereto) and
any businesses incident and useful to the gaming business, including, without
limitation, food and beverage distribution operations to the extent that they
are operated in connection with a gaming business.
"Gaming Facility" means any tangible building or other structure used or
expected to be used to enclose space in which a gaming operation is conducted
and (i) is wholly or partially owned, directly or indirectly, by the Company or
any Restricted Subsidiary of the Company or (ii) any portion or aspect of which
is managed or used, or expected to be managed or used, by the Company or a
Restricted Subsidiary of the Company.
"Gaming Law" means the gaming laws of any jurisdiction or jurisdictions to
which the Company or any of its Subsidiaries is subject on the date hereof.
10
<PAGE>
"Gaming License" means any license, permit, franchise or other
authorization from any Gaming Authority necessary on the date hereof or at any
time thereafter to own, lease, operate or otherwise conduct the business of the
Company or any of its Restricted Subsidiaries.
"Global Notes" means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes, substantially in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii)
hereof, which is required to be placed on all Global Notes issued under this
Indenture.
"Government Securities" means securities that are: (i) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged; or (ii) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended), as custodian with respect to any such
Government Security or a specific payment of principal of or interest on any
such Government Security held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the Government Security or the specific payment of principal of or
interest on the Government Security evidenced by such depository receipt.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantor" means any Subsidiary that executes a Note Guarantee in
accordance with the provisions of the Indenture, and its respective successors
and assigns.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under: (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements; and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
11
<PAGE>
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of: (i)
borrowed money, including accrued and unpaid Contingent Interest; (ii) evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof); (iii) banker's acceptances; (iv)
representing Capital Lease Obligations; (v) the balance deferred and unpaid of
the purchase price of any property, except any such balance that constitutes an
accrued expense or trade payable; or (vi) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be: (i) the accreted value
thereof, in the case of any Indebtedness issued with original issue discount;
and (ii) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Independent Construction Consultant" means the independent construction
consultant retained in connection with the construction of the Riviera Black
Hawk, or any successor independent construction consultant appointed by the
Trustee pursuant to the terms of the Cash Collateral and Disbursement Agreement.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Initial Notes" means the $45,000,000 aggregate principal amount of Notes
issued under this Indenture on the date hereof.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Intercompany Notes" means the intercompany notes issued by Subsidiaries of
the Company in favor of the Company to evidence advances by the Company in the
form attached as Exhibit E to this Indenture.
"Interest" means Fixed Interest and Contingent Interest, if any.
"Interest Payment Date" means each May 1 and November 1 or if any such day
is not a Business Day, the next succeeding Business Day.
"Interest Reserve Account" means the account to be maintained by the
Disbursement Agent and pledged to the Trustee pursuant to the terms of the Cash
Collateral and Disbursement Agreement, into which approximately $5.1 million of
the proceeds of the Offering shall be deposited.
12
<PAGE>
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of
Section 4.07 hereof. The acquisition by the Company or any Restricted Subsidiary
of the Company of a Person that holds an Investment in a third Person shall be
deemed to be an Investment by the Company or such Restricted Subsidiary in such
third Person in an amount equal to the fair market value of the Investment held
by the acquired Person in such third Person in an amount determined as provided
in the final paragraph of Section 4.07 hereof.
"Keep-Well Agreement" means the Keep-Well Agreement dated as of the date of
this Indenture executed by Riviera Holdings and the Company.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"License Agreement" means the Trademark License Agreement as in effect on
the date of this Indenture between Riviera Operating Corporation, a Nevada
corporation, and the Company.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
13
<PAGE>
"Liquor License" means any license, permit, franchise or other
authorization from any Liquor Licensing Authority necessary on the date of this
Indenture or at any time thereafter to own, lease, operate or otherwise conduct
the retail, restaurant or other entertainment facilities of the Company or any
of its Restricted Subsidiaries in the manner described in the Offering Circular.
"Liquor Licensing Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal government, any foreign government, any state,
province or city or other political subdivision or otherwise, whether now or
hereafter in existence, including the Colorado Liquor Enforcement Division and
the City of Black Hawk Liquor Licensing Authority and any other applicable
liquor licensing regulatory authority with authority to regulate any liquor
licensed operation (or proposed liquor licensed operation) owned, managed or
operated by the Company, Riviera Holdings, Riviera Management or any of their
respective Subsidiaries.
"Management Agreement" means the Management Agreement as in effect on the
date of this Indenture between the Company and Riviera Management relating to
the management of the Riviera Black Hawk.
"Management Fees" means any amounts payable to Riviera Management pursuant
to the Management Agreement.
"Manager Subordination Agreement" means the Manager Subordination Agreement
dated as of the date of this Indenture among the Company, Riviera Management and
the Trustee.
"Minimum Facilities" means, with respect to the Riviera Black Hawk, a
casino which has in operation at least 900 slot machines and 12 table games,
related amenities (including a restaurant, a bar and an entertainment area) and
has parking for at least 442 vehicles.
"Net Income" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however: (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with: (a) any Asset Sale; or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and (ii) any extraordinary gain (but not loss),
together with any related provision for taxes on such extraordinary gain (but
not loss).
"Net Loss Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Event of Loss,
including, without limitation, insurance proceeds from condemnation awards or
damages awarded by any judgment, net of the direct costs in recovery of such Net
Loss Proceeds (including, without limitation, legal, accounting, appraisal and
insurance adjuster fees and any relocation expenses incurred as a result
thereof), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Event of
Loss, and any taxes paid or payable as a result thereof.
14
<PAGE>
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including, without limitation, legal, accounting and investment
banking fees, sales commissions, relocation expenses incurred as a result
thereof and taxes paid or payable as a result thereof, in each case, after
taking into account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness: (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise,
or (c) constitutes the lender; (ii) no default with respect to which (including
any rights that the holders thereof may have to take enforcement action against
an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any
holder of any other Indebtedness (other than the Notes) of the Company or any of
its Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (iii) as to which the lenders have been notified in writing that
they shall not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries.
"Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and on the Notes executed pursuant to
the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this Indenture.
The Initial Notes and the Additional Notes shall be treated as a single class
for all purposes under this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Series A Notes by the Company.
"Offering Circular" means the offering circular of the Company dated May
27, 1999 relating to the Series A Notes.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
15
<PAGE>
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 11.05
hereof.
"Operating" means, with respect to the Riviera Black Hawk, the first time
that: (i) all Gaming Licenses have been granted and have not been revoked or
suspended; (ii) all Liens (other than Liens created by the Collateral Documents
or Permitted Liens) related to the development, construction and equipping of,
and beginning operations at, the Riviera Black Hawk have been discharged or, if
payment is not yet due or if such payment is contested in good faith by the
Company, sufficient funds remain in the Construction Disbursement Account to
discharge such Liens and the Company has taken any action (including the
institution of legal proceedings) necessary to prevent the sale of any or all of
the Riviera Black Hawk or the real property on which the Riviera Black Hawk
shall be constructed; (iii) the Independent Construction Consultant shall
deliver a certificate to the Trustee certifying that the Riviera Black Hawk is
substantially complete in all material respects in accordance with the Final
Plans with respect to the Minimum Facilities; (iv) the Riviera Black Hawk is in
a condition (including installation of furnishings, fixtures and equipment) to
receive customers in the ordinary course of business; (v) the Minimum Facilities
are open to the general public and operating in accordance with applicable law;
and (vi) a permanent or temporary certificate of occupancy has been issued for
the Riviera Black Hawk by the appropriate governmental authorities.
"Operating Deadline" means May 31, 2000.
"Operating Year" means the four consecutive fiscal quarter period of the
Company beginning immediately after the date that the Riviera Black Hawk first
becomes Operating, and each succeeding four consecutive fiscal quarter period
thereafter that begins immediately after each anniversary of the date the
Riviera Black Hawk becomes Operating.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Participant" means, with respect to the Depositary, a Person who has an
account with the Depositary.
"Permitted Business" means (i) the gaming business; (ii) all businesses
whether or not licensed by a Gaming Authority which are necessary for, incident
to, useful to or arising out of the operation of a Gaming Facility; (iii) any
development or operation of lodging, including hotels and timeshares, retail and
restaurant facilities, sports or entertainment facilities, food and beverage
distribution operations, transportation services or other activities related to
the foregoing and any additions or improvements thereto; and (iv) any business
that is a reasonable extension, development or expansion of any of the
foregoing.
"Permitted Investments" means (i) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company that is engaged in a Permitted
Business and that is
16
<PAGE>
evidenced by Capital Stock or Intercompany Notes that are pledged to the Trustee
as Collateral; (ii) any Investment in Cash Equivalents; (iii) any Investment by
the Company or any Restricted Subsidiary of the Company in a Person that is
engaged in a Permitted Business and that is evidenced by Capital Stock or
Intercompany Notes that are pledged to the Trustee as Collateral, if as a result
of such Investment: (a) such Person becomes a Wholly Owned Restricted Subsidiary
of the Company; or (b) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Restricted Subsidiary of the
Company; (iv) Investments in any Person the primary business of which is
related, ancillary or complementary to the businesses of the Company and its
Subsidiaries; provided that the aggregate amount of such Investments does not
exceed $5.0 million; (v) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof; (vi) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Company; (vii) Hedging Obligations; and (viii) after the Riviera Black Hawk
is Operating, any purchases from time to time by the Company of Notes.
"Permitted Liens" means (i) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company or any Restricted Subsidiary; (ii) Liens on property existing at the
time of acquisition thereof by the Company or any Restricted Subsidiary of the
Company (other than materials, supplies or FF&E acquired in connection with
developing, constructing or equipping of, or commencing operations at, the
Riviera Black Hawk), provided that such Liens were in existence prior to the
contemplation of such acquisition; (iii) Liens existing on the date of this
Indenture and disclosed to the Trustee in writing or disclosed in the title
commitment for the Deed of Trust; (iv) statutory Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
like Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by an appropriate
process of law; provided that (a) a reserve or other appropriate provision as
shall be required by GAAP shall have been made therefor and (b) with respect to
such Liens arising in connection with the Riviera Black Hawk, the Company has
obtained any title insurance endorsements required by, and has otherwise
complied with the provisions relating thereto contained in, the Cash Collateral
and Disbursement Agreement; (v) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (vi) Liens
securing obligations in respect of this Indenture or the Notes; (vi) Liens on
FF&E to secure Indebtedness permitted by clause (vi) of the second paragraph of
Section 4.09 hereof; (viii) pledges or deposits in the ordinary course of
business to secure lease obligations or nondelinquent obligations under workers'
compensation, unemployment insurance or similar legislation; and (ix) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with the
business or assets of the Company or any Subsidiary incurred in the ordinary
course of business.
17
<PAGE>
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus all accrued interest thereon and the amount of all expenses and premiums
incurred in connection therewith); provided, if such Indebtedness is secured by
a Lien described in clause (vii) of the definition of "Permitted Liens," then
the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness shall not exceed the then current fair market value of
the asset so encumbered; (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred
either by the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Plans" means the plans, specifications, working drawings, change orders,
correspondence and related items that collectively (i) provide for and detail
the manner of development, construction and equipping of the Riviera Black Hawk;
(ii) call for construction which shall permit the Riviera Black Hawk to be
Operating on or prior to the Operating Deadline; (iii) call for construction
which shall cause the Riviera Black Hawk to be Operating for a total cost
consistent with its Construction Disbursement Budget (as defined in the Cash
Collateral and Disbursement Agreement) and the line items set forth therein;
(iv) to the extent such Plans are amended, in the reasonable, professional
judgment of the Independent Construction Consultant, continue to represent a
logical evolution consistent with previous Plans; and (v) together with any
amendments, are consistent with the description of the Riviera Black Hawk
contained in the Offering Circular, and are consistent with all governmental
approvals and requirements, including, without limitation, the Black Hawk
Building Department, Historical Architecture Review Commission and Gaming
Authorities.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
hereof to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
18
<PAGE>
"Qualified Public Offering" means (i) an underwritten initial public
offering of the Company's common stock that is registered under the Securities
Act and results in net proceeds to the Company of at least $25.0 million; or
(ii) a privately placed offering of Riviera Holdings' common stock that is
subject to an obligation of Riviera Holdings to register such common stock under
the Securities Act within one year of the consummation of such offering or an
underwritten public offering of Riviera Holdings' common stock, in either case
which results in net proceeds of at least $25.0 million to Riviera Holdings, but
only to the extent that the net proceeds of the offering are contributed as
equity by Riviera Holdings to the Company.
"Record Date" means the April 15 or October 15 immediately preceding an
Interest Payment Date, as applicable.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Closing Date, among the Company and the other parties named on
the signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time and, with respect to any Additional Notes, one or
more registration rights agreements between the Company and the other parties
thereto, as such agreement(s) may be amended, modified or supplemented from time
to time, relating to rights given by the Company to the purchasers of Additional
Notes to register such Additional Notes under the Securities Act.
"Related Party" means, with respect to any Existing Significant Holder: (i)
any Affiliate, spouse or immediate family member (in the case of an individual)
of such Existing Significant Holder; (ii) any trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding a majority interest of which consist of such Existing
Significant Holder and such other Persons referred to in the immediately
preceding clause (i); or (iii) any trustee, executor or receiver appointed to
manage or administer the assets of an Existing Significant Holder who is an
individual following the death of such individual.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Riviera Advance" means the amount set forth in the section entitled "Use
of Proceeds" in the Offering Circular to be repaid to Riviera Holdings with
proceeds of the Offering.
19
<PAGE>
"Riviera Black Hawk" means the project to develop, construct, equip and
operate the Riviera Black Hawk and related amenities as described in the
Offering Circular.
"Riviera Holdings" means Riviera Holdings Corporation, a Nevada
corporation.
"Riviera Holdings Indenture" means the Indenture dated as of August 13,
1997, among Riviera Holdings, the guarantors named therein and Norwest Bank
Minnesota, a National Association, as trustee, as in effect on the date of this
Indenture.
"Riviera Management" means Riviera Gaming Management of Colorado, Inc., a
Colorado corporation.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Semiannual Period" means each period that begins on April 1 and ends on
the next succeeding September 30 or each period that begins on October 1 and
ends on the next succeeding March 31.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Special Assessment Bonds" means the Special Assessment Bonds dated July
15, 1998, issued by the Black Hawk Improvement District of Gilpin County,
Colorado, Special Improvement District No. 1997-1.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person: (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and (ii) any partnership (a) the sole general partner or
the managing general
20
<PAGE>
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).
"Subsidiary Guarantee" means the Guarantee by a Subsidiary of the Company's
payment obligations under this Indenture and on the Notes, executed pursuant to
the provisions of this Indenture.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated the date of
this Indenture, between the Company and Riviera Holdings.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ssss77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note substantially in
the form of Exhibit A attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
resolution, but only to the extent that such Subsidiary (i) has no Indebtedness
other than Non-Recourse Debt; (ii) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (iii) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (a) to subscribe for additional Equity Interests or (b) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (iv) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and (v) has at least one director
on its board of directors that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries. Any designation of a Subsidiary of the Company as an
Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted by Section 4.07 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted
21
<PAGE>
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
and, if such Indebtedness is not permitted to be incurred as of such date under
Section 4.09 hereof, the Company shall be in default of such covenant. The Board
of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period and (ii) no
Default or Event of Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing: (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that shall elapse
between such date and the making of such payment; by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person.
Section 1.02. Other Definitions.
Defined
in
Term Section
---- -------
"Affiliate Transaction".......................................... 4.11
"Asset Sale Offer"............................................... 4.10
"Authentication Order............................................ 2.02
"Bankruptcy Law"................................................. 4.01
"Change of Control Offer"........................................ 4.15
"Change of Control Payment"...................................... 4.15
"Change of Control Payment Date"................................. 4.15
"Collateral Agent"............................................... 10.10
"Covenant Defeasance"............................................ 8.03
"DTC"............................................................ 2.03
"Event of Default"............................................... 6.01
"Event of Loss Offer"............................................ 4.28
"Excess Cash Flow Offer"......................................... 4.29
"Excess Cash Flow Offer Amount".................................. 4.29
22
<PAGE>
Defined
in
Term Section
---- -------
"Excess Cash Flow Purchase Price................................. 4.29
"Excess Cash Purchase Offer"..................................... 4.29
"Excess Loss Proceeds"........................................... 4.28
"Excess Proceeds"................................................ 4.10
"Excess Proceeds Offer".......................................... 3.10
"Gaming and Liquor Laws"......................................... 11.14
"incur".......................................................... 4.09
"Legal Defeasance"............................................... 8.02
"Offer Amount"................................................... 3.10
"Offer Period"................................................... 3.10
"Paying Agent"................................................... 2.03
"Permitted Debt"................................................. 4.09
"Purchase Date".................................................. 3.10
"Registrar"...................................................... 2.03
"Restricted Payments"............................................ 4.07
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligor upon the
Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
23
<PAGE>
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include the
singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules adopted
by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. However, to the extent any provision of
any Note conflicts with the express provisions of this Indenture, the provisions
of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in the
form of Exhibit A attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
Section 2.02. Execution and Authentication
An Officer shall sign the Notes for the Company by manual or facsimile
signature. If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid. A Note shall not be valid until authenticated
24
<PAGE>
by the manual signature of the Trustee. The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture. The Trustee
shall, upon a written order of the Company signed by an Officer (an
"Authentication Order"), authenticate Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof. The Trustee may appoint an
authenticating agent acceptable to the Company to authenticate Notes. An
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with Holders or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar. The Company initially
appoints The Depository Trust Company ("DTC") to act as Depositary with respect
to the Global Notes. The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.
Section 2.04. Paying Agent to Hold Money in Trust
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or Interest on the Notes, and shall
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy
or reorganization proceedings relating to the Company, the Trustee shall serve
as Paying Agent for the Notes.
Section 2.05. Holder Lists
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply
25
<PAGE>
with TIA ss 312(a). If the Trustee is not the Registrar, the Company shall
furnish to the Trustee at least seven Business Days before each Interest Payment
Date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of the Holders of Notes and the Company shall otherwise comply
with TIA ss 312(a).
Section 2.06. Transfer and Exchange
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).
26
<PAGE>
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes (which instructions may be
delivered by electronic transmission in accordance with the Applicable
Procedures). Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities Act,
the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates of Opinion of Counsel required by item
(2) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof
27
<PAGE>
for a beneficial interest in an Unrestricted Global Note or transferred to
a Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal (or pursuant to
instructions delivered by electronic transmission in accordance with
the Applicable Procedures) that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above. Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
28
<PAGE>
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(D) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) and (C) above, a certificate to the effect
set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(E) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(F) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a
29
<PAGE>
beneficial interest in a Restricted Global Note pursuant to this Section
2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for
30
<PAGE>
a Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the Persons
in whose names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iii)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(D) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) and (C) above, a certificate to the effect
set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(E) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
31
<PAGE>
(F) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, and in all other cases, the IAI Global
Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes
to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item
(4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
32
<PAGE>
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of Definitive Notes so
transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof; and
(B) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive
33
<PAGE>
Note or transferred to a Person or Persons who take delivery thereof in the form
of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates
34
<PAGE>
(as defined in Rule 144) of the Company, and accepted for exchange in the
Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal
to the principal amount of the Restricted Definitive Notes accepted for exchange
in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee
shall cause the aggregate principal amount of the applicable Restricted Global
Notes to be reduced accordingly, and the Company shall execute and the Trustee
shall authenticate and deliver to the Persons designated by the Holders of
Definitive Notes so accepted Definitive Notes in the appropriate principal
amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (the "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1)
REPRESENTS THAT (i) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (as defined in Rule
144A under the Act) (a "QIB"), (ii) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE ACT OR (iii) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (as defined in Rule 501(A)(1), (2), (3) OR
(7) of Regulation D under the Act (an "IAI"), (2) AGREES THAT IT WILL NOT RESELL
OR OTHERWISE TRANSFER THIS NOTE EXCEPT (i) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (ii) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (iii) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (iv) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (v) TO AN IAI THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (the form
of which can be obtained from the Trustee) AND, IF SUCH TRANSFER IS IN RESPECT
OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
ACT, (vi) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY) OR (vii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY
35
<PAGE>
OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who shall take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who shall take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
36
<PAGE>
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.10, 4.10, 4.15, 4.28, 4.29 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (C) to register the transfer
of or to exchange a Note between a Record Date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and Interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
37
<PAGE>
Section 2.07. Replacement Notes
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note; however, Notes held by the Company or a Subsidiary of the Company
shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof. If
a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser. If the principal amount of any Note is considered
paid under Section 4.01 hereof, it ceases to be outstanding and Interest on it
ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
Interest.
Section 2.09. Treasury Notes
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes
Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the form
38
<PAGE>
of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes. Holders of
temporary Notes shall be entitled to all of the benefits of this Indenture.
Section 2.11. Cancellation
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest
If the Company defaults in a payment of Interest on the Notes, it shall pay
the defaulted Interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted Interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted Interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
Interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
Interest to be paid.
Section 2.13. CUSIP Number
The Company in issuing the Notes may use a "CUSIP" number and if so the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders, provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
Section 2.14. Exchange Registration
In the event that the Company delivers to the Trustee a copy of an order of
effectiveness or a certification of the Company with respect to such
effectiveness with respect to the Exchange Offer, the Trustee shall, at the
Company's expense, notify the Holders of the receipt of such order of
effectiveness or certification and upon the request of any Holder shall exchange
such Holder's Notes upon the terms set forth in the Exchange Offer.
39
<PAGE>
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed
If less than all of the Notes are to be redeemed at any time, the Trustee
will select Notes for redemption as follows: (i) if the Notes are listed, in
compliance with the requirements of the principal national securities exchange
on which the Notes are listed; or (ii) if the Notes are not so listed, on a pro
rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate. No Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. Notices of redemption may not be conditional. If any Note is
to be redeemed in part only, the notice of redemption that relates to that Note
shall state the portion of the principal amount thereof to be redeemed. A new
Note in principal amount equal to the unredeemed portion of the original Note
will be issued in the name of the Holder thereof upon cancellation of the
original Note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, Interest ceases to accrue on Notes
or portions of them called for redemption.
Section 3.03. Notice of Redemption
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
40
<PAGE>
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
Interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04. Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption Price
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued Interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued Interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, Interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after a
Record Date but on or prior to the related Interest Payment Date, then any
accrued and unpaid Interest shall be paid to the Person in whose name such Note
was registered at the close of business on such Record Date. If any Note called
for redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, Interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any Interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.
41
<PAGE>
Section 3.06. Notes Redeemed in Part
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to May 1, 2002. Thereafter, the Company may redeem all or a part of the
Notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid Interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on May 1 of the years indicated below:
Year Percentage
---- ----------
2002................................................ 106.50%
2003................................................ 103.25%
2004 and thereafter................................. 100.00%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to May 1, 2001, the Company may redeem up to 35% of the aggregate
principal amount of Notes at a redemption price of 113% of the principal amount
thereof, plus accrued and unpaid Interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of a Qualified Public Offering;
provided that (i) at least 65% in aggregate principal amount of the Notes issued
under this Indenture remains outstanding immediately after the occurrence of
such redemption (excluding Notes held by the Company and its Subsidiaries) and
(ii) the redemption must occur within 45 days of the date of the closing of such
Qualified Public Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption
Except as set forth under Sections 3.09, 4.10, 4.15, 4.28 and 4.29 hereof,
the Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Section 3.09. Gaming Redemption
Notwithstanding any other provision of this Indenture, if any Gaming
Authority requires that a Holder or beneficial owner of Notes must be licensed,
qualified or found suitable under any applicable gaming law and such Holder or
beneficial owner fails to apply for a license, qualification or finding of
suitability within 30 days after being requested to do so by such Gaming
Authority (or such lesser period that may be required by such Gaming Authority),
42
<PAGE>
or if such Holder or such beneficial owner is notified by such Gaming Authority
that such Holder or beneficial owner shall not be so licensed, qualified or
found suitable, the Company shall have the right, at its option, (i) to require
such Holder or beneficial owner to dispose of such Holder's or beneficial
owner's Notes within 30 days (or such lesser period as may be required by such
Gaming Authority) of (a) the termination of the period described above for such
Holder or beneficial owner to apply for a license, qualification or finding or
suitability or (b) receipt of the notice from such Gaming Authority that such
Holder or beneficial owner shall not be licensed, qualified or found suitable by
such Gaming Authority or (ii) to redeem the Notes of such Holder or beneficial
owner at a redemption price equal to the lesser of the principal amount thereof
or the price at which such Holder or beneficial owner acquired such Notes,
together with, in either case, accrued and unpaid Interest and Liquidated
Damages, if any, thereon to the earlier of the date of redemption or such
earlier date as may be required by such Gaming Authority or the date of the
finding of unsuitability by such Gaming Authority, which may be less than 30
days following the notice of redemption, if so ordered by such Gaming Authority.
Immediately upon a determination by a Gaming Authority that a Holder or
beneficial owner of Notes shall not be licensed, qualified or found suitable by
such Gaming Authority, such Holder or beneficial owner shall have no further
rights with respect to the Notes (i) to exercise, directly or indirectly,
through any Person, any right conferred by the Notes and (ii) to receive any
Interest or any other distribution or payment with respect to the Notes, or any
remuneration in any form from the Company for services rendered or otherwise,
except the redemption price of the Notes. The Company shall not be required to
pay or reimburse any Holder or beneficial owner of Notes who is required to
apply for such license, qualification or finding of suitability for the costs
relating thereto. Such expense shall, therefore, be the obligation of such
Holder or beneficial owner.
Section 3.10. Offer to Purchase by Application of Excess Proceeds
In the event that, pursuant to Section 4.10, 4.28 and 4.29 hereof, the
Company shall be required to commence an offer to all Holders to purchase Notes
(an "Asset Sale Offer," an "Event of Loss Offer" or an "Excess Cash Purchase
Offer," respectively, and each of which is referred to herein as an "Excess
Proceeds Offer"), it shall follow the applicable procedures specified below.
The Excess Proceeds Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law or permitted by another applicable
provision of this Indenture (the "Offer Period"). No later than five Business
Days after the termination of the Offer Period (the "Purchase Date"), the
Company shall purchase the principal amount of Notes required to be purchased
pursuant to Section 4.10, 4.28 or 4.29 hereof (the "Offer Amount") or, if less
than the Offer Amount has been tendered, all Notes tendered in response to the
Excess Proceeds Offer. Payment for any Notes so purchased shall be made in the
same manner as Interest payments are made.
If the Purchase Date is on or after a Record Date and on or before the
related Interest Payment Date, any accrued and unpaid Interest shall be paid to
the Person in whose name a Note is registered at the close of business on such
Record Date, and no additional Interest shall be payable to Holders who tender
Notes pursuant to the Excess Proceeds Offer.
43
<PAGE>
Upon the commencement of an Excess Proceeds Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Excess Proceeds
Offer. The Excess Proceeds Offer shall be made to all Holders. The notice, which
shall govern the terms of the Excess Proceeds Offer, shall state:
(a) that the Excess Proceeds Offer is being made pursuant to this Section
3.10 and either Section 4.10, 4.28 or 4.29 hereof and the length of time the
Excess Proceeds Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue Interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Excess Proceeds Offer shall cease to
accrete or accrue Interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Excess
Proceeds Offer may elect to have Notes purchased in integral multiples of $1,000
only;
(f) that Holders electing to have a Note purchased pursuant to any Excess
Proceeds Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by Holders
exceeds the Offer Amount, the Trustee shall select the Notes to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Excess Proceeds
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
44
<PAGE>
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.10. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Excess Proceeds Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.10, any purchase
pursuant to this Section 3.10 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4 COVENANTS
Section 4.01. Payment of Notes
The Company shall pay or cause to be paid the principal of, premium, if
any, and Interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and Interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and Interest then due. If Interest payable on
the Notes includes Contingent Interest, the Company shall provide a calculation
of such Contingent Interest in reasonable detail to the Trustee in the form of
an Officer's Certificate at the time of depositing the amount of such Contingent
Interest with the Trustee. If Interest payable on the Notes does not include
Contingent Interest, the Company shall provide notice to the Trustee to that
effect. The Company shall pay all Liquidated Damages, if any, in the same manner
on the dates and in the amounts set forth in the Registration Rights Agreement.
If a Holder has given wire transfer instructions to the Company, the
Company will pay all principal, Interest, premium and Liquidated Damages, if
any, on that Holder's Notes in accordance with those instructions. All other
payments on notes shall be made at the office or agency of the Paying Agent and
Registrar within the City and State of New York unless the Company elects to
make Interest payments by check mailed to the Holders at their addresses set
forth in the register of Holders.
Section 4.02. Maintenance of Office or Agency
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
45
<PAGE>
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03 hereof.
Section 4.03. Reports
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all current reports that would be required to
be filed with the SEC on Form 8-K if the Company were required to file such
reports, in each case, within the time periods specified in the SEC's rules and
regulations. If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in Management's Discussion and Analysis of Financial Condition and
Results of Operations, of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company. In addition, following consummation of the Exchange Offer, whether or
not required by the rules and regulations of the SEC, the Company shall file a
copy of all such information and reports with the SEC for public availability
within the time periods specified in the SEC's rules and regulations (unless the
SEC will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. The Company shall at
all times comply with TIA ss 314(a).
(b) For so long as any Notes remain outstanding, the Company shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
46
<PAGE>
Section 4.04. Compliance Certificate
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and the Collateral Documents, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and the Collateral Documents
and is not in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture or the Collateral Documents (or, if
a Default or Event of Default shall have occurred, describing all such Defaults
or Events of Default of which he or she may have knowledge and what action the
Company is taking or proposes to take with respect thereto) and that to the best
of his or her knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal of or Interest, if any, on the
Notes is prohibited or if such event has occurred, a description of the event
and what action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default or any Default (as defined in the Cash Collateral and
Disbursement Agreement) or Event of Default (as defined in the Cash Collateral
and Disbursement Agreement), an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
47
<PAGE>
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Restricted Payments
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company or any of its
Restricted Subsidiaries) or to the direct or indirect holders of the Company's
or any of its Restricted Subsidiaries' Equity Interests in their capacity as
such (other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Company or dividends or distributions payable to
the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value (including without limitation, in
connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company; (iii)
make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is pari passu with
or subordinated to the Notes, except a payment of Interest or principal at
Stated Maturity thereof; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) the Riviera Black Hawk is Operating;
(b) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(c) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in clause (ii) of the first paragraph of Section
4.09 hereof; and
(d) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clause (ii) through (vii) of the next succeeding paragraph), is less than the
sum, without duplication, of (i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the beginning of
the first fiscal quarter commencing after the date of this Indenture to the end
of the Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
48
<PAGE>
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company since the date of this Indenture as a contribution to its common equity
capital (other than pursuant to the Completion Capital Commitment, the Keep-Well
Agreement and any contribution to the Company from Riviera Holdings of the net
proceeds of a Qualified Public Offering which are used to repurchase Notes) or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of convertible or exchangeable
Disqualified Stock or convertible or exchangeable debt securities of the Company
that have been converted into or exchanged for such Equity Interests (other than
Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary
of the Company), plus (iii) to the extent that any Restricted Investment that
was made after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment.
With respect to any payments made pursuant to clauses (i) through (vii)
below, so long as no Default has occurred and is continuing or would be caused
thereby and, with respect to any payments made pursuant to clause (viii) below,
no Event of Default or Default in the payment when due of any principal,
Interest, premium or Liquidated Damages on the Notes shall have occurred or be
continuing or would occur as a consequence thereof, the foregoing provisions
shall not prohibit (i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture; (ii) the redemption, repurchase,
retirement, defeasance or other acquisition of any pari passu or subordinated
Indebtedness or Equity Interests of the Company in exchange for, or out of the
net cash proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (d)(ii) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of
pari passu or subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness; (iv) the payment to Riviera
Management of amounts owing to it pursuant to Section 3.4 and Article 4 of the
Management Agreement as in effect on the date of this Indenture, subject to the
terms of the Manager Subordination Agreement relating thereto between Riviera
Management and the Trustee and subject to the requirement that all such payments
are made in compliance with Section 4.27 hereof; provided, however, that
payments may be made pursuant to Section 3.4 of the Management Agreement whether
or not a Default has occurred and is continuing or would be caused thereby; (v)
any redemption required pursuant to Section 3.09 hereof; (vi) the repayment by
the Company to Riviera Holdings on the date of this Indenture of the Riviera
Advance; (vii) the payment by the Company to Riviera Holdings at any time after
the Riviera Black Hawk has been Operating for 180 consecutive days equal to the
amount contained in the Completion Reserve Account at the end of that period if
the Company's Fixed Charge Coverage Ratio for its most recently ended four
fiscal quarters after the date on which the Riviera Black Hawk became Operating
for which internal financial statements are available immediately preceding the
date on which such payment is to be made is at least 1.5 to 1; provided that if
at the time of such payment the Riviera Black Hawk has been Operating for less
than four fiscal quarters, such Fixed Charge Coverage Ratio will be calculated
with respect to the number of full fiscal quarters (but in no event less than
49
<PAGE>
one full fiscal quarter) for which internal financial statements are available
following the date the Riviera Black Hawk first became Operating; and (viii) the
payment by the Company of amounts owing to Riviera Holdings pursuant to Sections
3 and 5 of the Tax Sharing Agreement as in effect on the date of this Indenture.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
Section 4.07 shall be determined by the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee, such determination to be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if such fair market value exceeds
$5.0 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, together with a copy
of any fairness opinion or appraisal required by this Indenture.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions on its capital
stock to the Company or any of its Restricted Subsidiaries or with respect to
any other interest or participation in, or measured by, its profits or pay any
indebtedness owed to the Company or any of its Restricted Subsidiaries, (b) make
loans or advances to the Company or any of its Restricted Subsidiaries or (c)
transfer any of its properties or assets to the Company or any of its Restricted
Subsidiaries, except for such encumbrances or restrictions existing under or by
reasons of (i) the Notes, this Indenture or the Collateral Documents; (ii) the
Riviera Holdings Indenture as in effect on the date of this Indenture; (iii)
applicable law; (iv) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices; (v)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced; (vi) the acquisition of the Capital Stock of
any Person, or property or assets of any Person by the Company or any Restricted
Subsidiary, if the encumbrances or restrictions (a) existed at the time of the
acquisition and were not incurred in contemplation thereof and (b) are not
applicable to any Person or the property or assets of any Person other than the
Person acquired or the property or assets of the Person acquired; or (vii)
purchase money obligations or capital lease obligations for FF&E acquired with
FF&E Financing that impose restrictions of the type described in clause (c) of
the first paragraph of this Section 4.08 on the FF&E so acquired.
50
<PAGE>
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that so
long as no Default or Event of Default has occurred and is continuing, the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if:
(i) the Riviera Black Hawk is Operating;
(ii) the Fixed Charge Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have
been at least 2.0 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or preferred stock or the Disqualified
Stock had been issued, as the case may be, at the beginning of such
four-quarter period;
(iii) the Weighted Average Life to Maturity of such Indebtedness is
greater than the remaining Weighted Average Life to Maturity of the Notes;
The provisions of the first paragraph of this Section 4.09 shall not apply
to the incurrence of any of the following items of Indebtedness so long as no
Default or Event of Default has occurred and is continuing (collectively,
"Permitted Debt"):
(i) the incurrence by the Company and its Subsidiaries of (a)
Indebtedness represented by the Notes to be issued on the date of this
Indenture and the Series B Notes to be issued pursuant to the Registration
Rights Agreement and (b) their respective obligations arising under the
Collateral Documents to the extent such obligations would represent
Indebtedness;
(ii) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that was permitted by this Indenture
to be incurred under the first paragraph of this Section 4.09 or clauses
(i), (ii), (vi), (viii) or (x) of this paragraph;
(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Wholly Owned Restricted Subsidiaries; provided, however, that:
(a) such Indebtedness must be expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the Notes;
and
51
<PAGE>
(b) (1) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other
than the Company or a Wholly Owned Restricted Subsidiary thereof, (2)
any sale or other transfer of any such Indebtedness to a Person that
is not either the Company or a Wholly Owned Restricted Subsidiary
thereof shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Company or such Restricted Subsidiary, as the
case may be, that was not permitted by this clause (iii) and (3) if
any Restricted Subsidiary is the obligor on such Indebtedness, such
Indebtedness is represented by an Intercompany Note that is pledged to
the Trustee as security for the Notes;
(iv) the incurrence by the Company or any of the Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding;
(v) the incurrence by the Company of Indebtedness solely in respect of
performance or similar bonds or standby letters of credit; provided that
any such bond or standby letter of credit is incurred in the ordinary
course of the Company's business in an aggregate amount not to exceed $2.0
million at any one time outstanding; and provided, further, that any such
bond or standby letter of credit is incurred on terms customary for
operations similar to the Company's;
(vi) the incurrence by the Company of FF&E Financing; provided,
however, that (a) the principal amount of such Indebtedness does not exceed
the cost (including sales and excise taxes, installation and delivery
charges and other direct costs of, and other direct expenses paid or
charged in connection with, such purchase) of the FF&E purchased or leased
with the proceeds thereof, (b) no Indebtedness incurred under the Notes is
utilized for the purchase or lease of such FF&E and (c) the aggregate
principal amount of such Indebtedness, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause, does not exceed $15.0 million outstanding
at any time;
(vii) bond or surety obligations posted by the Company or any of its
Subsidiaries in order to prevent the loss or material impairment of or to
obtain a Gaming License or as otherwise required by an order of any Gaming
Authority to the extent required by applicable law and consistent in
character and amount with customary industry practice so long as such
Indebtedness does not result in, and is not secured by, a Lien on any of
the Collateral;
(viii) the incurrence by the Company of Indebtedness solely in respect
of Special Assessment Bonds, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause, and standby letters of credit or surety
bonds required to be issued in connection therewith, in an aggregate amount
not to exceed $400,000;
52
<PAGE>
(ix) the Guarantee by the Company or a Restricted Subsidiary of
Indebtedness permitted to be incurred by another provision of this Section
4.09;
(x) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause, not to exceed $2.0
million; and
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of
the Company that was not permitted by this clause (xi).
The Company shall not incur any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of the Company unless such Indebtedness is also contractually subordinated in
right of payment to the Notes on substantially identical terms; provided,
however, that no Indebtedness of the Company shall be deemed to be contractually
subordinated in right of payment to any other Indebtedness of the Company solely
by virtue of being unsecured.
For purposes of determining compliance with this Section 4.09, in the event
that an item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09 and such item of Indebtedness
shall be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph of this Section 4.09.
Section 4.10. Asset Sales
The Company shall not, and shall not permit any of its Subsidiaries to:
consummate an Asset Sale, unless:
(i) the Riviera Black Hawk is Operating;
(ii) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of the assets
or Equity Interests issued or sold or otherwise disposed of;
(iii) such fair market value is determined by the Company's Board of
Directors and evidenced by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the Trustee; and
53
<PAGE>
(iv) at least 80% of the consideration received therefor by the
Company or such Restricted Subsidiary is in the form of cash or Cash
Equivalents; provided, however, that the amount of (A) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance
sheet), of the Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the
Notes) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability; and (B) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from
such transferee that, within 30 days of receipt, are converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received in that conversion), shall be deemed to be cash for purposes of
this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds to make a capital expenditure, improve
real property or acquire long-term assets that are used or useful in a line of
business permitted by Section 4.13 hereof; provided that the Company or such
Subsidiary, as the case may be, grants to the Trustee, on behalf of the Holders,
a first priority perfected security interest on any such property or assets
acquired or constructed with the Net Proceeds of any such Asset Sale on the
terms set forth in this Indenture and the Collateral Documents. Pending the
final application of any such Net Proceeds, the Company may invest such Net
Proceeds in Cash Equivalents which shall be pledged to the Trustee as security
for the Notes.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company shall make an offer to all Holders (an "Asset Sale Offer") and all
holders of other Indebtedness that is pari passu with the Notes to purchase the
maximum principal amount of Notes and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of principal amount thereof plus accrued and unpaid
Interest and Liquidated Damages, if any, to the date of purchase, and shall be
in accordance with the provisions set forth in Section 3.10 hereof. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by this
Indenture and the Collateral Documents. If the aggregate principal amount of
Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other pari passu Indebtedness to be purchased on a pro rata basis based on
the principal amount of Notes and such other pari passu Indebtedness tendered.
Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
Section 4.11. Transactions with Affiliates
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
54
<PAGE>
foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction is
on terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by the Company or such Restricted Subsidiary with an unrelated Person and (b)
the Company delivers to the Trustee (i) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $1.0 million, a resolution of the Board of Directors
set forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (a) above and that such Affiliate Transaction has been
approved unanimously by the Board of Directors and (ii) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing; provided, however, that (i) payments made pursuant to the Completion
Capital Commitment, the Keep-Well Agreement, the Management Agreement, the
License Agreement and the Tax Sharing Agreement, in each case as in effect on
the date of this Indenture; (ii) purchases of goods and services in the ordinary
course of business; (iii) any employment agreement entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business on
terms customary in the gaming industry; (iv) transactions between or among the
Company and/or its Restricted Subsidiaries; (v) Restricted Payments that are
permitted under Section 4.07 hereof; and (vi) reasonable fees and compensation
(including, without limitation, bonuses, retirement plans and securities, stock
options and stock ownership plans) paid or issued to and indemnities provided on
behalf of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary in the ordinary course of business shall not be deemed
Affiliate Transactions; provided, further, that subject to clauses (i) through
(vi) in the immediately preceding proviso, the Company will not make any loans,
advances or other payments to Riviera Holdings, except as permitted pursuant to
this Indenture, including Section 4.07 hereof.
Section 4.12. Liens
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens.
Section 4.13. Line of Business
The Company shall not, and shall not permit any Subsidiary to, engage in
any business or investment activities other than the Permitted Business. Neither
the Company nor any of its Subsidiaries may conduct a Permitted Business in any
gaming jurisdiction in which the Company or such Subsidiary is not licensed on
the date of this Indenture if the Holders of the Notes would be required to be
licensed as a result thereof; provided that the provisions described in this
sentence shall not prohibit the Company or any of its Subsidiaries from
conducting a Permitted Business in any jurisdiction that does not require the
licensing or qualification of all the Holders, but reserves the discretionary
right to require the licensing or qualification of any Holders. The Company
shall not, and shall not permit any of its Subsidiaries to, engage in any
55
<PAGE>
business, development or investment activity other than at or in conjunction
with the Riviera Black Hawk until the Riviera Black Hawk is Operating.
Section 4.14. Corporate Existence
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control
Upon the occurrence of a Change of Control, the Company shall make an offer
(a "Change of Control Offer") to each Holder to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid Interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 10 days following any
Change of Control, the Company shall mail a notice to each Holder stating: (i)
that the Change of Control Offer is being made pursuant to this Section 4.15 and
that all Notes tendered shall be accepted for payment; (ii) the purchase price
and the purchase date, which shall be no earlier than 30 days and no later than
60 days from the date such notice is mailed (the "Change of Control Payment
Date"); (iii) that any Note not tendered shall continue to accrue Interest; (iv)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue Interest after the Change of Control Payment Date; (v)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer shall be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(vi) that Holders shall be entitled to withdraw their election if the Paying
Agent receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and (vii) that Holders
whose Notes are being purchased only in part shall be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes in connection with a Change of Control.
56
<PAGE>
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered payment in an amount equal to the purchase price for the Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
Notwithstanding the foregoing, the Company shall not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in this Indenture applicable to a Change of
Control Offer made by the Company and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
Section 4.16. Limitation on Sale and Leaseback Transactions
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company may enter into a sale and leaseback transaction if (i) the Company
could have (a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof and
(b) incurred a Lien to secure such Indebtedness pursuant to the provisions of
Section 4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction and (iii) the transfer of assets in such sale and
leaseback transaction is permitted by, and the Company applies the proceeds of
such transaction in compliance with, Section 4.10 hereof.
Section 4.17. Limitation on Issuances and Sales of Equity Interests in
Wholly Owned Subsidiaries
The Company (i) shall not, and shall not permit any Restricted Subsidiary
of the Company to, transfer, convey, sell, lease or otherwise dispose of any
Equity Interests of any Wholly Owned Subsidiary of the Company to any Person
(other than the Company or a Wholly Owned Subsidiary of the Company), unless (a)
such transfer, conveyance, sale, lease or other disposition is of all the Equity
Interests of such Wholly Owned Restricted Subsidiary and (b) the cash Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with Section 4.10 hereof and (ii) shall not permit any
57
<PAGE>
Wholly Owned Restricted Subsidiary of the Company to issue any of its Equity
Interests to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
Section 4.18. Advances to Subsidiaries
All advances to Restricted Subsidiaries made by the Company after the date
of this Indenture shall be evidenced by unsecured Intercompany Notes in favor of
the Company that shall be pledged to the Trustee as Collateral to secure the
Notes. Each Intercompany Note shall be payable upon demand and shall bear
interest at the same rate as the Notes. A form of Intercompany Note is attached
as Exhibit E hereto. Repayments of principal with respect to any Intercompany
Note shall be required to be pledged to the Trustee as Collateral to secure the
Notes until such amounts are advanced to a Restricted Subsidiary in accordance
with the Indenture.
Section 4.19. Payments for Consent
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, to or for the benefit of
any Holder for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of this Indenture or the Notes unless such consideration
is offered to be paid or is paid to all Holders that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
Section 4.20. Additional Subsidiary Guarantees
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Subsidiary after the date of this Indenture, then such newly
acquired or created Restricted Subsidiary must become a Guarantor and execute a
Supplemental Indenture in the form attached as Exhibit I hereto and deliver an
Opinion of Counsel to the Trustee within ten Business Days of the date on which
it was acquired or created.
Section 4.21. Insurance
Until the Notes have been paid in full, the Company shall, and shall cause
its Restricted Subsidiaries to, maintain insurance with responsible carriers
against such risks and in such amounts as is customarily carried by similar
businesses with such deductibles, retentions, self insured amounts and
coinsurance provisions as are customarily carried by similar businesses of
similar size, including, without limitation, property and casualty, and, with
respect to insurance on the Collateral, shall have provided insurance
certificates evidencing such insurance to the Trustee on or prior to the Closing
Date and shall thereafter provide such certificates prior to the anniversary or
renewal date of each such policy, which certificate shall expressly state the
expiration date for each policy. Customary insurance coverage shall be deemed to
include the following:
(i) workers' compensation insurance to the extent required to comply
with all applicable state, territorial or United States laws and
regulations, or the laws and regulations of any other applicable
jurisdiction;
58
<PAGE>
(ii) comprehensive general liability insurance with minimum limits of
$1.0 million;
(iii) umbrella or excess liability insurance providing excess
liability coverages over and above the foregoing underlying insurance
policies up to a minimum limit of $25.0 million;
(iv) business interruption insurance at all times on and after the
Riviera Black Hawk is Operating; and
(v) property insurance protecting the property against loss or damage
by fire, lightning, windstorm, tornado, water damage, vandalism, riot,
earthquake, civil commotion, malicious mischief, hurricane and such other
risks and hazards as are from time to time covered by an "all-risk" policy
or a property policy covering "special" causes of loss; provided, that such
insurance shall provide coverage of not less than the lesser of (a) 120% of
the outstanding principal amount of the Notes plus accrued and unpaid Fixed
Interest and (b) 100% of actual replacement value (as determined at each
policy renewal based on the F.W. Dodge Building Index or some other
recognized means) of any improvements customarily insured consistent with
industry standards and, in each case, with a deductible no greater than 2%
of the insured value of the Riviera Black Hawk or such greater amount as is
available on commercially reasonable terms (other than earthquake or flood
insurance, for which the deductible may be up to 10% of such replacement
value).
All insurance required under this Indenture (except worker's compensation)
shall name the Company and the Trustee as additional insureds or loss payees, as
the case may be, with losses in excess of $1.0 million payable jointly to the
Company and the Trustee (unless a Default or Event of Default has occurred and
is then continuing, in which case all losses are payable solely to the Trustee),
with no recourse against the Trustee for the payment of premiums, deductibles,
commissions or club calls, and for at least 30 days notice of cancellation. All
such insurance policies shall be issued by carriers having an A.M. Best &
Company, Inc. rating of A or higher and a financial size category of not less
than X, or if such carrier is not rated by A.M. Best & Company, Inc., having the
financial stability and size deemed appropriate by an opinion from a reputable
insurance broker. The Company shall deliver to the Trustee on the Closing Date
and each anniversary thereafter a certificate of an insurance agent stating that
the insurance policies obtained by the Company and its Restricted Subsidiaries
comply with this Section 4.21 and the related applicable provisions of the
Collateral Documents.
Section 4.22. Limitation on Status as Investment Company
The Company and its Subsidiaries are prohibited from being required to
register as an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation under the Investment Company Act of 1940.
59
<PAGE>
Section 4.23. Further Assurances
The Company shall, and shall cause each of its Restricted Subsidiaries to
do, execute, acknowledge, deliver, record, re-record, file, re-file, register
and re-register, as applicable, any and all such further acts, deeds,
conveyances, security agreements, mortgages, assignments, estoppel certificates,
financing statements and continuations thereof, termination statements, notices
of assignment, transfers, certificates assurances and other instruments as may
be required from time to time in order to: (i) carry out more effectively the
purposes of the Collateral Documents; (ii) subject to the Liens created by any
of the Collateral Documents any of the properties, rights or interests required
to be encumbered thereby; (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby; and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Trustee any of the rights
granted now or hereafter intended by the parties thereto to be granted to the
Trustee or under any other instrument executed in connection therewith or
granted to the Company under the Collateral Documents or under any other
instrument executed in connection therewith.
Section 4.24. Construction
The Company shall construct the Riviera Black Hawk, including the
furnishing, fixturing and equipping thereof, with diligence and continuity in a
good and workmanlike manner substantially in accordance with the Plans to which
the Company is a party and in accordance with the Cash Collateral and
Disbursement Agreement.
Section 4.25. Limitation on Use of Proceeds
The Company shall deposit $5.1 million of the net proceeds of the Offering
into the Interest Reserve Account, $31.9 million of the net proceeds of the
Offering in the Construction Disbursement Account and $5.0 million of the net
proceeds of the Offering in the Completion Reserve Account. The funds in the
Interest Reserve Account, the Construction Disbursement Account and the
Completion Reserve Account shall be invested solely in Government Securities.
All funds in the Cash Collateral Accounts shall be disbursed only in accordance
with the Cash Collateral and Disbursement Agreement.
Section 4.26. Collateral Documents, Completion Capital Commitment and Keep-Well
Agreement
Neither the Company nor any of its Restricted Subsidiaries shall amend,
waive or modify, or take or refrain from taking any action that has the effect
of amending, waiving or modifying any provision of any of the Collateral
Documents, the Completion Capital Commitment or the Keep-Well Agreement, to the
extent that such amendment, waiver, modification or action could reasonably be
expected to have an adverse effect on the rights of the Trustee or the Holders;
provided that (i) the Collateral may be released or modified as expressly
provided in this Indenture and in the Collateral Documents; (ii) the Plans and
the Construction Disbursement Budget may be amended as expressly provided in the
60
<PAGE>
Cash Collateral and Disbursement Agreement; and (iii) this Indenture and any of
the Collateral Documents may be otherwise amended, waived or modified as set
forth in Article 9 hereof.
Section 4.27. Restriction on Payment of Management Fees
The Company shall not, directly or indirectly, pay to Riviera Management or
any of its Affiliates any Management Fees, except pursuant to the Management
Agreement as in effect on the date of, and in accordance with, this Indenture.
Amounts payable pursuant to the Management Agreement shall not be prepaid, and
no payment of Management Fees, either current or accrued, shall be made if at
the time of payment of such Management Fees (i) a Default or an Event of Default
shall have occurred and be continuing or shall occur as a result thereof; or
(ii) the Company's Fixed Charge Coverage Ratio for its most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such Management Fee is proposed to be
paid would have been less than 1.5 to 1 (calculated on a pro forma basis after
deducting Management Fees to the extent paid in cash and not deferred and any
Management Fees deferred from a prior period proposed to be paid in cash during
such period, but excluding any Management Fees deferred or accrued and not paid
in cash during such period). With respect to periods following the date the
Riviera Black Hawk first becomes Operating and prior to the time when internal
financial statements are available for four full fiscal quarters following the
date the Riviera Black Hawk first becomes Operating, such Fixed Charge Coverage
Ratio shall be calculated with respect to the number of full fiscal quarters
(but in no event less than one full fiscal quarter) for which internal financial
statements are available following the date the Riviera Black Hawk first becomes
Operating. Any Management Fees not permitted to be paid pursuant to this Section
4.27 shall be deferred and shall accrue and may be paid only at such time that
they would otherwise be permitted to be paid hereunder. The right to receive
payment of the Management Fee shall be subordinate in right of payment to the
right of the Holders to receive payments pursuant to the Notes. The Company
shall not amend the Management Agreement to increase amounts to be paid
thereunder, or in any other manner which would be adverse to the Company or the
Holders, including without limitation, to amend the method of computing the
Management Fee; provided, however, that the foregoing shall not prohibit any
amendment required by any Gaming Law or Gaming Authority.
Section 4.28. Event of Loss
Within 360 days after any Event of Loss with respect to any Collateral with
a fair market value (or replacement cost, if greater) in excess of $1.0 million,
the Company or the affected Restricted Subsidiary of the Company, as the case
may be, may apply the Net Loss Proceeds from such Event of Loss to the
rebuilding, repair, replacement or construction of improvements to the Riviera
Black Hawk, with no concurrent obligation to make any purchase of any Notes;
provided that (i) the Company delivers to the Trustee within 60 days of such
Event of Loss a written opinion from a reputable architect that the Riviera
Black Hawk with at least the Minimum Facilities can be rebuilt, repaired,
replaced or constructed and Operating within 360 days of the Event of Loss; (ii)
an Officers' Certificate certifying that the Company has available from Net Loss
Proceeds or other sources sufficient funds to complete the rebuilding, repair,
replacement or construction described in clause (i) above; and (iii) the Net
61
<PAGE>
Loss Proceeds are less than $20.0 million. If the Net Loss Proceeds to be used
for rebuilding, repair, replacement or construction exceed $5.0 million, then
the Net Loss Proceeds shall be deposited in the Construction Disbursement
Account and disbursed in accordance with the procedures set forth in the Cash
Collateral and Disbursement Agreement. Any Net Loss Proceeds that are not
reinvested or not permitted to be reinvested as provided in the first sentence
of this paragraph shall be deemed "Excess Loss Proceeds." When the aggregate
amount of Excess Loss Proceeds exceeds $5.0 million, the Company shall make an
offer to all Holders (an "Event of Loss Offer") to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Loss Proceeds,
at a purchase price in cash in an amount equal to 100% of the principal amount
thereof, plus accrued and unpaid Interest and Liquidated Damages, if any,
thereon to the date of purchase. The Event of Loss Offer shall be conducted in
accordance with Section 3.10. The date of purchase shall not be less than 30 or
more than 60 days from the date of the Event of Loss Offer. To the extent that
the aggregate principal amount of Notes tendered pursuant to an Event of Loss
Offer exceeds the Excess Loss Proceeds, the Trustee shall select the Notes to be
purchased in the manner described under Section 3.02 hereof. To the extent that
the aggregate amount of Notes tendered pursuant to any Event of Loss Offer is
less than the Excess Loss Proceeds, the Company may, subject to the other
provisions of this Indenture and the Collateral Documents, use any remaining
Excess Loss Proceeds for general corporate purposes. Upon completion of any such
Event of Loss Offer, the amount of Excess Loss Proceeds shall be reset at zero.
Pending any permitted rebuilding, repair, replacement or construction or the
completion of any Event of Loss Offer, the Company or the affected Restricted
Subsidiary, as the case may be, shall pledge to the Trustee as additional
Collateral any Net Loss Proceeds or other cash on hand required for such
permitted rebuilding, repair, replacement or construction pursuant to the terms
of the Collateral Documents. These pledged funds shall be released to the
Company to pay for or reimburse the Company for the actual cost of such
permitted rebuilding, repair, replacement or construction, or such Event of Loss
Offer, pursuant to the terms of the Collateral Documents. Pending the final
application of the Net Loss Proceeds, such proceeds shall be invested in Cash
Equivalents which shall be pledged to the Trustee as security for the Notes. The
Company or the applicable Restricted Subsidiary shall grant to the Trustee, on
behalf of the Holders, a first priority lien, subject to Permitted Liens, on any
property or asset rebuilt, repaired, replaced or constructed with such Net Loss
Proceeds on the terms set forth in this Indenture and the Collateral Documents.
With respect to any Event of Loss pursuant to clause (iv) of the definition of
"Event of Loss" that has a fair market value (or replacement cost, if greater)
in excess of $5.0 million, the Company (or the affected Restricted Subsidiary,
as the case may be), shall be required to receive consideration at least (i)
equal to the fair market value (evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) of the
assets subject to the Event of Loss and (ii) at least 90% of which is in the
form of Cash Equivalents.
Section 4.29. Excess Cash Purchase Offers
Within 120 days after each Operating Year of the Company, beginning with
the first Operating Year after the Riviera Black Hawk becomes Operating, the
Company shall make an offer to all Holders (the "Excess Cash Flow Offer") to
purchase the maximum principal amount of Notes that is an integral multiple of
$1,000 that may be purchased with 50% of the Company's Excess Cash Flow in
respect of the Operating Year then ended (the "Excess Cash Flow Offer Amount"),
at a purchase price in cash equal to 101% of the principal amount of the Notes
to be purchased, plus accrued and unpaid Interest and Liquidated Damages, if
62
<PAGE>
any, thereon to the date fixed for the closing of the Excess Cash Flow Offer
(the "Excess Cash Flow Purchase Price"), in accordance with this Indenture. The
Event of Loss Offer shall be conducted in accordance with Section 3.10. Upon the
expiration of the Event of Loss Offer, the Company shall apply the Excess Cash
Flow Offer Amount to the purchase of all Notes tendered at the Excess Cash Flow
Offer Purchase Price. If the aggregate principal amount of Notes tendered
pursuant to an Excess Cash Flow Offer exceeds the Excess Cash Flow Offer Amount
with respect thereto, the Trustee shall select the Notes to be repurchased in
the manner described under Section 3.02 hereof. To the extent that the aggregate
amount of Notes tendered pursuant to any Excess Cash Flow Offer is less than the
Excess Cash Flow Offer Amount, the Company may, subject to the other provisions
of this Indenture and the Collateral Documents, use any remaining Excess Cash
Flow for general corporate purposes.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets
The Company shall not, directly or indirectly, consolidate or merge with or
into (whether or not the Company is the surviving corporation), or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets of the Company and its Subsidiaries taken as a whole, in
one or more related transactions to, another Person unless (i) the Company is
the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any state
thereof or the District of Columbia, (ii) the Person formed by or surviving any
such consolidation or merger (if other than the Company) or the Person to which
such sale, assignment, transfer, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Notes, this Indenture
and the Collateral Documents pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee, (iii) immediately after such
transaction, no Default or Event of Default exists (iv) such transaction would
not result in the loss or suspension or material impairment of any Gaming
License unless a comparable replacement Gaming License is effective prior to or
simultaneously with such loss, suspension or material impairment; (v) the
Company or the Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made: (a) shall have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction; and (b) shall, on the date of such transaction after giving pro
forma effect thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in clause (ii) of the first paragraph of Section
4.09 hereof; and (vi) such transaction would not require any Holder or
63
<PAGE>
beneficial owner of Notes to obtain a Gaming License or be qualified or found
suitable under the law of any applicable gaming jurisdiction; provided that such
Holder or beneficial owner would not have been required to obtain a Gaming
License or be qualified or found suitable under the laws of any applicable
gaming jurisdiction in the absence of such transaction. In addition, the Company
shall not, directly or indirectly, lease all or substantially all of its
properties or assets, in one or more related transactions, to any other Person.
The provisions of this Section 5.01 shall not be applicable to a sale,
assignment, transfer, conveyance or other disposition of assets between or among
the Company and any of its Wholly Owned Subsidiaries.
Section 5.02. Successor Corporation Substituted
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and Interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default
An "Event of Default" occurs and is continuing under this Indenture if:
(a) the Company defaults for 30 days in the payment when due of Interest
on, or Liquidated Damages with respect to, the Notes; provided that payments of
Contingent Interest that are permitted to be deferred as provided in this
Indenture will not become due for this purpose until such payment is required to
be made pursuant to the terms of this Indenture;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes;
(c) the Company fails to comply with any of the provisions of Section 4.09,
4.10, 4.15, 4.25 or 5.01 hereof;
(d) the Company or any of its Restricted Subsidiaries for 30 days after
notice thereof fails to comply with the provisions of Section 4.07 hereof and
any of the other agreements in this Indenture not set forth in clause (c) above;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
64
<PAGE>
Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, if that default: (i) is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default"); or (ii) results
in the acceleration of such Indebtedness prior to its express maturity, and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more;
(f) the Company or any of its Restricted Subsidiaries fails to pay final
judgments aggregating in excess of $5.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; and
(g) the Company or any of its Affiliates breaches any representation or
warranty in any material respect in the Collateral Documents or any certificates
delivered in connection therewith, the Company or any of its Affiliates fails
for 30 days (or such other period as specifically provided therein) after notice
thereof to comply with any covenant or agreement set forth in the Collateral
Documents, the Company repudiates any of its obligations under the Collateral
Documents, the Collateral Documents become unenforceable against the Company or
perfection or priority of the Liens granted by the Company thereunder is lost
for any reason;
(h) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially all of the
65
<PAGE>
property of the Company or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; or
(iii) orders the liquidation of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days;
(j) the revocation, termination, suspension or other cessation of
effectiveness for a period of more than 90 consecutive days of any Gaming
License results in the cessation or suspension of gaming operations at any
Gaming Facility;
(k) Riviera Holdings defaults in the performance of its obligations set
forth in, or repudiates its obligations under, the Completion Capital Commitment
or the Keep-Well Agreement; or
(l) the Riviera Black Hawk fails to be Operating by the Operating Deadline
or fails to remain Operating thereafter, except (a) as the hours of operation of
the Riviera Black Hawk may be limited by any Gaming Authority or Gaming Law or
(b) for a period of time not to exceed 30 days during any 45-day period and not
to exceed 60 days during any one-year period; provided, however, that, in any
event, there shall not be an Event of Default under this clause if the failure
to remain Operating during such period results from an Event of Loss pursuant to
the terms of this Indenture.
Section 6.02. Acceleration
If any Event of Default (other than an Event of Default specified in clause
(h) or (i) of Section 6.01 hereof with respect to the Company, any Restricted
Subsidiary that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Upon any such declaration, the Notes shall become
due and payable immediately. Notwithstanding the foregoing, if an Event of
Default specified in clause (h) or (i) of Section 6.01 hereof occurs with
respect to the Company, any Restricted Subsidiary that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable immediately without further action or notice. In the case of any Event
of Default occurring by reason of any willful action or inaction taken or not
taken by or on behalf of the Company with the intention of avoiding payment of
the premium that the Company would have had to pay if the Company then had
elected to redeem the Notes pursuant to Section 3.07 hereof, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs prior to May 1, 2002, by reason of any willful action (or inaction) taken
66
<PAGE>
(or not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to May 1, 2002, then the premium
specified in this Indenture shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.
Section 6.03. Other Remedies
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, and
Interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or Interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of other Holders of Notes or that may involve the Trustee in
personal liability.
Section 6.06. Limitation on Suits
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
67
<PAGE>
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and Interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder;
provided that a Holder shall not have the right to institute any such suit for
the enforcement of payment if and to the extent that the institution or
prosecution thereof or the entry of judgment therein would, under applicable
law, result in the surrender, impairment, waiver or loss of the Lien of the
Indenture upon any property subject to such Lien.
Section 6.08. Collection Suit by Trustee
If an Event of Default specified in Section 6.01(a) or (b) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and Interest remaining
unpaid on the Notes and Interest on overdue principal and, to the extent lawful,
Interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
68
<PAGE>
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof and amounts due to the Trustee under the Collateral
Documents, including without limitation, the Cash Collateral and
Disbursement Agreement, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and Interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and Liquidated
Damages, if any and Interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Notes.
69
<PAGE>
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties that
are specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii)the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
70
<PAGE>
(g) Notwithstanding anything to the contrary contained in this Indenture,
or the other Collateral Documents, in the event the Trustee is entitled or
required to commence an action to foreclose on any Collateral or otherwise
exercise its remedies to acquire control or possession of any part of the
Collateral and solely to the extent that the Trustee shall have determined in
good faith that the indemnification provided to the Trustee under Section 7.07
does not or will not adequately protect and indemnify it from and against the
liability described immediately below, the Trustee shall not be required to
commence any such action or exercise any such remedy with respect to such part
of the Collateral if the Trustee has determined in good faith (and upon written
advice of outside counsel) that the Trustee is reasonably likely to incur
liability under any foreign, federal, state or local law or regulation relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants unless the Trustee has
received security or indemnity or other surety in an amount and in a form
reasonably satisfactory to the Trustee protecting the Trustee from all such
liability.
Section 7.02. Rights of Trustee
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
71
<PAGE>
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any,
Interest or Liquidated Damages on any Note, the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the
Notes.
Section 7.06. Reports by Trustee to Holders of the Notes
(a) Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss 313(a) (but if no event described in
TIA ss 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss 313(c).
(b) A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
(c) At the expense of the Company, the Trustee or, if the Trustee is not
the Registrar, the Registrar, shall report the names of record holders of the
Notes to any Gaming Authority when requested to do so by the Company.
(d) At the express direction of the Company and at the Company's expense,
the Trustee shall provide any Gaming Authority with:
(i) copies of all notices, reports and other written communications
which the Trustee gives to Holders;
72
<PAGE>
(ii) a list of all of the Holders promptly after the original issuance
of the Notes and periodically thereafter if the Company so directs;
(iii) notice of any Default under this Indenture, any acceleration of
the Indebtedness evidenced hereby, the institution of any legal actions or
proceedings before any court or governmental authority in respect of a
Default or Event of Default hereunder;
(iv) notice of the removal or resignation of the Trustee within five
Business Days of the effectiveness thereof;
(v) notice of any transfer or assignment of rights under this
Indenture known to the Trustee within five Business Days thereof; and
(vi) a copy of any amendment to the Notes or this Indenture within
five Business Days of the effectiveness thereof.
(e) To the extent requested by the Company and at the Company's expense,
the Trustee shall cooperate with any Gaming Authority in order to provide such
Gaming Authority with the information and documentation requested and as
otherwise required by applicable law.
Section 7.07. Compensation and Indemnity
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture and the
Collateral Documents, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company or any Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence or bad faith. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
73
<PAGE>
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and Interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss 313(b)(2) to the
extent applicable.
Section 7.08. Replacement of Trustee
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section; provided, however, that if the Trustee
does not receive the security, indemnity or surety described in Section 7.01(g)
in connection with any potential liability described therein, the Trustee may
resign effective upon 30 days written notice to the Holders and the Company.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
any Gaming Authority requires a Trustee to be approved, licensed or qualified
and the Trustee fails or declines to do so, such approval, license or
qualification shall be obtained upon the request of, and at the expense of, the
Company unless the Trustee declines to do so, or, if the Trustee's relationship
with the Company may, in the Company's discretion, jeopardize any material
gaming license or franchise or right or approval granted thereto, the Trustee
shall resign, and, in addition, the Trustee may at its option resign if the
Trustee in its sole discretion determines not to be as approved, licensed or
qualified.
74
<PAGE>
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder
for at least six months, fails to comply with Section 7.10 hereof, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.07
hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss310(a)(1), (2) and (5). The Trustee is subject to TIA ss310(b).
Section 7.11. Preferential Collection of Claims Against Company
The Trustee is subject to TIA ss 311(a), excluding any creditor
relationship listed in TIA ss 311(b). A Trustee who has resigned or been removed
shall be subject to TIA ss311(a) to the extent indicated therein.
75
<PAGE>
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight. Upon
either legal Defeasance or Covenant Defeasance, the security interests in
Collateral shall be terminated pursuant to Section 10.08 hereof.
Section 8.02. Legal Defeasance and Discharge
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, Liquidated Damages, if any, and Interest on
such Notes when such payments are due, (b) the Company's obligations with
respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21,
4.23, 4.24, 4.25, 4.26, 4.27, 4.28, 4.29 and 5.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04
hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
76
<PAGE>
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c) through 6.01(g), 6.01(j) through 6.01(l) hereof shall not constitute
Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, and Fixed Interest, the maximum amount payable as
Contingent Interest and premium and Liquidated Damages, if any, on the
outstanding notes on the stated maturity or on the applicable redemption date,
as the case may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (i) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (ii) since the date of this
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit);
77
<PAGE>
(e) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than the indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(f) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders over the other creditors of the Company with the intent
of defeating, hindering, delaying or defrauding creditors of the Company or
others; and
(g) the Company must deliver to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and Interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
Interest on any Note and remaining unclaimed for two years after such principal,
78
<PAGE>
and premium, if any, or Interest has become due and payable shall be paid to the
Company on its request or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining shall be repaid to the Company.
Section 8.07. Reinstatement
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or Liquidated Damages, if any, or
Interest on any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes
Notwithstanding Section 9.02 of this Indenture, without the consent of any
Holder of Notes, the Company and the Trustee may amend or supplement this
Indenture or the Notes :
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
79
<PAGE>
(f) to provide for the issuance of Additional Notes in accordance with the
limitations set forth in this Indenture as of the date hereof; or
(g) to provide for additional Subsidiary Guarantees as set forth in Section
4.20 hereof.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including Sections 3.10, 4.10, 4.15,
4.28 and 4.29 hereof) and the Notes with the consent of the Holders of at least
a majority in principal amount of the Notes (including Additional Notes, if any)
then outstanding consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or Interest on
the Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes). Without the
consent of at least 66-2/3% in aggregate principal amount of the Notes then
outstanding an amendment or waiver may not affect the Liens in favor of the
Trustee and the Holders created under the Collateral Documents in a manner
adverse to the Holders or release all or substantially all of the Collateral, in
each case, other than pursuant to the release of Collateral in accordance with
the provisions of this Indenture and of the applicable Collateral Documents.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
80
<PAGE>
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver under this Section 9.02 may not (with respect to any Notes
held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.10, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of Interest on any
Note;
(d) waive a Default or Event of Default in the payment of principal of, or
Interest or premium, or Liquidated Damages, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments of, or
Interest or premium or Liquidated Damages, if any, on the Notes; or
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.10, 4.10 and 4.15 hereof).
Section 9.03. Compliance with Trust Indenture Act
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
81
<PAGE>
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Security
The due and punctual payment of the principal of and Interest and premium,
if any, and Liquidated Damages, if any, on the Notes when and as the same shall
be due and payable, whether on an Interest Payment Date, at maturity, by
acceleration, repurchase, redemption or otherwise, and Interest on the overdue
principal of and Interest and Liquidated Damages (to the extent permitted by
law), if any, on the Notes and performance of all other obligations of the
Company to the Holders of Notes or the Trustee under this Indenture and the
Notes, according to the terms hereunder or thereunder, shall be ratably secured
by a Lien on the Collateral owned by the Company. Each Holder of Notes, by its
acceptance thereof, consents and agrees to the terms of the Collateral Documents
(including, without limitation, the provisions providing for foreclosure and
release of Collateral) as the same may be in effect or may be amended from time
to time in accordance with its terms and authorizes and directs the Trustee to
enter into the Collateral Documents and to perform its obligations and exercise
its rights thereunder in accordance therewith. The Company shall deliver to the
Trustee copies of all documents executed pursuant to this Indenture and the
Collateral Documents, and shall do or cause to be done all such acts and things
as may be necessary or proper, or as may be required by the provisions of the
Collateral Documents, to assure and confirm to the Trustee the security interest
82
<PAGE>
in the Collateral contemplated hereby, as from time to time constituted, so as
to render the same available for the security and benefit of this Indenture and
of the Notes secured hereby, according to the intent and purposes herein
expressed. The Company shall take, or shall cause its Subsidiaries to take, upon
request of the Trustee, any and all actions reasonably required to create and
maintain, as security for the Obligations of the Company hereunder, a valid and
enforceable perfected first priority Lien in and on all the Collateral, in favor
of the Trustee for the benefit of the Holders of Notes, superior to and prior to
the rights of all third Persons and subject to no other Liens than Permitted
Liens, including executing, as applicable, a Pledge Agreement in the form
attached hereto as Exhibit F, a Collateral Assignment of Patent in the form
attached hereto as Exhibit G and a Collateral Assignment of Copyright in the
form attached hereto as Exhibit H.
Section 10.02. Recording and Opinions
(a) The Company shall cause the applicable Collateral Documents including
the Deed of Trust and any financing statements, fixture filings, intellectual
property filings, all amendments or supplements to each of the foregoing and any
other similar security documents as necessary, to be registered, recorded and
filed and/or re-recorded, re-filed and renewed in such manner and in such place
or places, if any, as may be required by law or reasonably requested by the
Trustee in order fully to preserve and protect the Liens, and the priority
thereof, securing the obligations under the Notes pursuant to the Collateral
Documents.
(b) The Company shall furnish to the Trustee:
(i) promptly after the execution and delivery of this Indenture, and
promptly after the execution and delivery of any supplemental indenture or
other amendment to any Collateral Document, an Opinion of Counsel in the
United States either (A) stating that in the opinion of such counsel, this
Indenture, the Collateral Documents and all other instruments of further
assurance or amendment have been properly recorded, registered and filed to
the extent necessary to make effective the Lien intended to be created by
such Collateral Documents and other instruments and reciting the details of
such action or refer to prior Opinions of Counsel in which such details are
given, and stating that, as to such Collateral Documents and such other
instruments, such recording, registering and filing are the only
recordings, registering and filings necessary to give notice thereof and
that no re-recordings, re-registering or re-filings are necessary to
maintain such notice, and further stating that all financing statements,
continuation statements, fixture filings and intellectual property filings
have been executed and filed that are necessary fully to preserve and
protect the rights of the Holders of Notes and the Trustee hereunder and
under the Collateral Documents and other instruments or (B) stating that,
in the opinion of such counsel, no such action is necessary to make any
other Lien created under any of the Collateral Documents effective as
intended by such Collateral Documents; and
(ii) On June 1, in each year beginning with the year 2000, an Opinion
of Counsel, dated as of such date, either (A) stating that, in the opinion
of such counsel, such action has been taken with respect to the recording,
registering, filing, re-recording, re-registering and re-filing of this
Indenture and all supplemental indentures, financing statements,
continuation statements, fixture filings, intellectual property filings, or
other instruments of further assurance as is necessary to maintain the
83
<PAGE>
Liens of this Indenture, and the Collateral Documents and other instruments
until the next Opinion of Counsel is required to be rendered pursuant to
this paragraph and reciting the details of such action or referring to
prior Opinions of Counsel in which such details are given, and stating that
all financing statements, continuation statements, fixture filings,
intellectual property filings, have been executed and filed that are
necessary to preserve and protect the rights of the Holders and the Trustee
hereunder, and under the Collateral Documents and other instruments or (B)
stating that, in the opinion of such counsel, no such action is necessary
to maintain such Liens, until the next Opinion of Counsel is required to be
rendered pursuant to this paragraph.
(c) The Company shall otherwise comply with the provisions of TIA
ss314(b).
Section 10.03. Release of Collateral
(a) Subject to subsections (b), (c) and (d) of this Section 10.03,
Collateral may be released from the Lien and security interest created by this
Indenture and the Collateral Documents at any time or from time to time in
accordance with the provisions of the Collateral Documents or as provided
hereby. In addition, upon the request of the Company pursuant to an Officers'
Certificate certifying that all conditions precedent hereunder have been met and
stating whether or not such release is in connection with an Asset Sale, and the
Trustee shall release (at the sole cost and expense of the Company) (i)
Collateral that is sold, conveyed or disposed of in compliance with the
provisions of this Indenture; provided, that if such sale, conveyance or
disposition constitutes an Asset Sale, the Company shall apply the Net Proceeds
in accordance with Section 4.10 hereof. Upon receipt of such Officers'
Certificate the Trustee shall execute, deliver or acknowledge any necessary or
proper instruments of termination, satisfaction or release to evidence the
release of any Collateral permitted to be released pursuant to this Indenture or
the Collateral Documents.
(b) No Collateral shall be released from the Lien and security interest
created by the Collateral Documents pursuant to the provisions of the Collateral
Documents unless there shall have been delivered to the Trustee the certificate
required by this Section 10.03.
(c) At any time when a Default or Event of Default shall have occurred and
be continuing and the maturity of the Notes shall have been accelerated (whether
by declaration or otherwise) and the Trustee shall have delivered a notice of
acceleration to the Trustee, no release of Pledged Collateral pursuant to the
provisions of the Collateral Documents shall be effective as against the Holders
of Notes.
(d) The release of any Collateral from the terms of this Indenture and the
Collateral Documents shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms hereof. To the extent applicable,
the Company shall cause TIA ss 313(b), relating to reports, and TIA ss 314(d),
relating to the release of property or securities from the Lien and security
interest of the Collateral Documents and relating to the substitution therefor
of any property or securities to be subjected to the Lien and security interest
of the Collateral Documents, to be complied with. Any certificate or opinion
required by TIA ss 314(d) may be made by an Officer of the Company except in
84
<PAGE>
cases where TIA ss 314(d) requires that such certificate or opinion be made by
an independent Person, which Person shall be an independent engineer, appraiser
or other expert selected or approved by the Trustee in the exercise of
reasonable care.
Section 10.04. Certificates of the Company
The Company shall furnish to the Trustee, prior to each proposed release of
Collateral pursuant to the Collateral Documents, (i) all documents required by
TIA ss314(d) and (ii) an Opinion of Counsel, which may be rendered by internal
counsel to the Company, to the effect that such accompanying documents
constitute all documents required by TIA ss314(d). The Trustee may, to the
extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence
of compliance with the foregoing provisions the appropriate statements contained
in such documents and such Opinion of Counsel.
Section 10.05. Certificates of the Trustee
In the event that the Company wishes to release Collateral in accordance
with the Collateral Documents and has delivered the certificates and documents
required by the Collateral Documents and Sections 10.03 and 10.04 hereof, the
Trustee shall determine whether it has received all documentation required by
TIA ss314(d) in connection with such release and, based on such determination
and the Opinion of Counsel delivered pursuant to Section 10.04(b) hereof, shall
deliver a certificate to the Company setting forth such determination.
Section 10.06. Authorization of Actions to Be Taken by the Trustee Under the
Collateral Documents
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee may,
in its sole discretion and without the consent of the Holders of Notes, take on
behalf of the Holders of Notes, all actions it deems necessary or appropriate in
order to (a) enforce any of the terms of the Collateral Documents and (b)
collect and receive any and all amounts payable in respect of the Obligations of
the Company hereunder. The Trustee shall have power to institute and maintain
such suits and proceedings as it may deem expedient to prevent any impairment of
the Collateral by any acts that may be unlawful or in violation of the
Collateral Documents or this Indenture, and such suits and proceedings as the
Trustee may deem expedient to preserve or protect its interests and the
interests of the Holders of Notes in the Collateral (including power to
institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders of Notes or
of the Trustee).
Subject to certain gaming and bankruptcy laws, upon an Event of Default and
so long as such Event of Default continues, the Trustee may exercise in respect
of the Collateral, in addition to the other rights and remedies provided for
herein, in the Collateral Documents or otherwise available to it, all of the
rights and remedies of a secured party under the Uniform Commercial Code or
other applicable law, and the Trustee may also upon obtaining possession of the
Collateral as set forth herein, without notice to the Company, except as
85
<PAGE>
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker's board or at any of the
Trustee's offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Trustee may deem commercially reasonable. The
Company acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such a sale were a public
sale. The Company agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to the Company of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Trustee shall not be obligated to make
any sale regardless of notice of sale having been given. The Trustee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 10.07. Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents
The Trustee is authorized to receive any funds for the benefit of the
Holders of Notes distributed under the Collateral Documents, and to make further
distributions of such funds to the Holders of Notes according to the provisions
of this Indenture.
Section 10.08. Termination of Security Interest
Upon the payment in full of all Obligations of the Company under this
Indenture, the Collateral Documents and the Notes, or upon Legal Defeasance or
Covenant Defeasance, the Trustee shall, at the request of the Company, deliver a
certificate to the Company stating that such Obligations have been paid in full,
and take all actions necessary to release the Liens pursuant to this Indenture
and the Collateral Documents.
Section 10.09. Cooperation Of Trustee
In the event the Company pledges or grants a security interest in
additional Collateral, the Trustee shall cooperate with the Company in
reasonably and promptly agreeing to the form of, and executing as required, any
instruments or documents necessary to make effective the security interest in
the Collateral to be so substituted or pledged. To the extent practicable, the
terms of any security agreement or other instrument or document necessitated by
any such substitution or pledge shall be comparable to the provisions of the
existing Collateral Documents. Subject to, and in accordance with the
requirements of this Article 10 and the terms of the Collateral Documents, in
the event that the Company engages in any transaction pursuant to Section 10.3
hereof, the Trustee shall cooperate with the Company in order to facilitate such
transaction in accordance with any reasonable time schedule proposed by the
Company, including delivering and releasing the Collateral in a prompt and
reasonable manner.
Section 10.10. Collateral Agent
The Trustee may, from time to time, appoint one or more collateral agents
hereunder ("Collateral Agents"). Each of such Collateral Agents may be delegated
any one or more of the duties or rights of the Trustee hereunder or under the
Collateral Documents or that are specified in any Collateral Documents,
86
<PAGE>
including, without limitation, the right to hold any Collateral in the name of,
registered to, or in the physical possession of, such Collateral Agent, for the
ratable benefit of the Holders of the Notes. Each such Collateral Agent shall
have such rights and duties as may be specified in an agreement between the
Trustee and such Collateral Agent.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss318(c), the imposed duties shall control.
Section 11.02. Notices
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company: Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Telecopier No.: (303) 582-5693
Attention: President
With a copy to: Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
Telecopier No.: (212) 698-3599
Attention: Frederic J. Klink, Esq.
If to the Trustee: IBJ Whitehall Bank & Trust Company
One State Street, 10th Floor
New York, NY 10004
Telecopier No.: (212) 858-2956
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
87
<PAGE>
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes
Holders may communicate pursuant to TIA ss 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
ss 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss 314(a)(4)) shall comply with the provisions of TIA ss 314(e)
and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
88
<PAGE>
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Section 11.08. Governing Law
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 11.09. No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 11.11. Severability
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
89
<PAGE>
Section 11.12. Counterpart Originals
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 11.14. Gaming and Liquor Laws
The terms and provisions of this Indenture, including, but not limited to,
all rights and remedies of the Trustee and powers of attorney and appointment,
are expressly subject to all laws, statutes, regulations and orders affecting
limited gaming or the sale of liquor (collectively, the "Gaming and Liquor
Laws"), in the State of Colorado, which may include, but not be limited to, the
necessity for the Trustee to obtain the prior approval of the regulatory
agencies enforcing the Gaming or Liquor Laws before taking any action hereunder
and to be licensed by such regulatory agencies before exercising certain rights
and remedies hereunder.
[Signatures on following page]
<PAGE>
SIGNATURES
Dated as of June 3, 1999 RIVIERA BLACK HAWK, INC.
By:
--------------------------------------
Name: Duane Krohn
Title: Chief Financial Officer, Treasurer
and Secretary
Dated as of June 3, 1999 IBJ WHITEHALL BANK & TRUST
COMPANY
By:
-------------------------------------
Name: Thomas S. Moser
Title: Assistant Vice President
[Signature page to the Indenture]
<PAGE>
EXHIBIT A
[Face of Note]
- --------------------------------------------------------------------------------
CUSIP NO: 76962P AA 8
% [Series A] [Series B] First Mortgage Notes due 2005
---
With Contingent Interest
No. $
---- -------------
RIVIERA BLACK HAWK, INC.
promises to pay to
-------------------------------------------------------------
or registered assigns,
the principal sum of
-----------------------------------------------------------
Dollars on May 1, 2005.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Dated: ,
--------------- ------
RIVIERA BLACK HAWK, INC.
By:
------------------------------------
Name:
Title:
This is one of the [Global] Notes referred to
in the within-mentioned Indenture:
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By:
-----------------------------------
Authorized Signatory
A-1
<PAGE>
[Back of Note]
-----% [Series A] [Series B] First Mortgage Notes due 2005
With Contingent Interest
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Riviera Black Hawk, Inc., a Colorado corporation (the
"Company"), promises to pay Fixed Interest on the principal amount of this Note
at 13% per annum from June 3, 1999 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company shall pay Fixed Interest and Liquidated Damages
semi-annually in arrears on May 1 and November 1 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Fixed Interest on the Notes shall accrue from the most
recent date to which Fixed Interest has been paid or, if no Fixed Interest has
been paid, from the date of issuance; provided that if there is no existing
Default in the payment of Fixed Interest, and if this Note is authenticated
between a record date referred to on the face hereof (each a "Record Date") and
the next succeeding Interest Payment Date, Interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be November 1, 1999. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months.
In addition, the Notes will bear Contingent Interest after the Riviera
Black Hawk begins Operating. Installments of accrued Contingent Interest will be
payable semi-annually in arrears on each Interest Payment Date after the Riviera
Black Hawk begins Operating to the Holders on the Record Date applicable to the
relevant Interest Payment Date, unless all or a portion of the installment is
permitted to be deferred as described in the next sentence; provided, that no
Contingent Interest is payable with respect to any period prior to the date on
which the Riviera Black Hawk becomes Operating. The Company may defer payment of
all or a portion of any installment of Contingent Interest then otherwise due
and may continue to defer the payment of any installment of Contingent Interest
which has already been deferred if, and only to the extent that:
(1) the payment of that portion of Contingent Interest will cause the
Company's Adjusted Fixed Charge Coverage Ratio for the four
consecutive fiscal quarters ending immediately prior to the
applicable Record Date to be less than 1.5 to 1.0 on a pro forma
basis after giving effect to the assumed payment of the Contingent
Interest (but may not defer such portion, which, if paid, would
not cause such Adjusted Fixed Charge Coverage Ratio to be less
than 1.5 to 1.0); and
(2) the principal amount of the Notes corresponding to that Contingent
Interest has not then matured and become due and payable, whether
A-2
<PAGE>
at stated maturity, upon acceleration, upon redemption, upon
maturity of a repurchase obligation or otherwise.
Contingent Interest that is deferred will become due and payable, in whole
or in part, upon the earlier of:
(1) the next succeeding Interest Payment Date on which all or a
portion of that Contingent Interest is not permitted to be
deferred; and
(2) the maturity of the corresponding principal amount of the Notes,
whether at stated maturity, upon acceleration, upon redemption,
upon maturity of a repurchase obligation or otherwise.
However, all installments of accrued or deferred Contingent Interest will
become immediately payable with respect to any Notes that mature, whether at
stated maturity, upon acceleration, upon redemption, upon maturity of a
repurchase obligation or otherwise.
The amount of Contingent Interest payable for any period will be reduced
pro rata for reductions in the outstanding principal amount of the Notes prior
to the close of business on the Record Date immediately preceding the applicable
Interest Payment Date. No interest will accrue on any Contingent Interest that
is deferred and which does not become due and payable.
Each installment of Contingent Interest will be calculated to accrue (each
an "Accrual Period") as follows:
(1) from, but not including, the most recent Semiannual Period for
which Contingent Interest has been paid or through which
Contingent Interest had been calculated and deferred; or
(2) if no installment of Contingent Interest has been paid for or
deferred, from and including the date on which the Riviera Black
Hawk becomes Operating;
to, and including, the earlier of:
(a) the last day of the Semiannual Period immediately following the
Semiannual Period referred to in clause (1) above if the
corresponding principal amount of the Notes has not become due and
payable; or
(b) the date of payment if the corresponding principal amount of the
Notes has become due and payable, whether at stated maturity, upon
acceleration, upon redemption, upon maturity of repurchase
obligation or otherwise.
With respect to each Accrual Period, Contingent Interest will accrue daily
on the principal amount of each Note outstanding during such period as follows:
A-3
<PAGE>
(1) for any portion of an Accrual Period which consists of all or part
of a Semiannual Period that ends during such Accrual Period, 1/180
of the Contingent Interest with respect to such principal amount
for such Semiannual Period until fully accrued; and
(2) for any other portion of an Accrual Period, 1/180 of the
Contingent Interest with respect to such principal amount for the
Semiannual Period that began and last ended after the date on
which the Riviera Black Hawk becomes Operating.
2. Method of Payment. The Company shall pay Interest on the Notes (except
defaulted Interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the Record Dates next preceding the
Interest Payment Date, even if such Notes are canceled after such Record Date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted Interest. The Notes shall be payable
as to principal, premium and Liquidated Damages, if any, and Interest at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
Interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds shall be required with respect
to principal of and Interest, premium and Liquidated Damages on, all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, IBJ Whitehall Bank & Trust
Company, the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture and Collateral Documents. The Company issued the Notes under
an Indenture dated as of June 3, 1999 ("Indenture"), between the Company and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code ssss 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company that are limited in
aggregate principal amount to the amount borrowed under the Indenture and are
secured by a first lien on the Collateral, whether now owned or hereafter
acquired, subject to Permitted Liens, pursuant to the terms of the Collateral
Documents.
A-4
<PAGE>
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to May 1, 2002. On
or after such date, the Company may redeem all or a part of the Notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
Interest and Liquidated Damages thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on May 1 of the years
indicated below:
Year Percentage
---- ----------
2002.................................................... 106.50%
2003.................................................... 103.25%
2004 and thereafter..................................... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5,
at any time prior to May 1, 2001, the Company may redeem up to 35% of the
aggregate principal amount of the Notes at a redemption on price of 113% of the
principal amount thereof, plus accrued and unpaid Interest and Liquidated
Damages, if any, to the redemption date, with the net proceeds of a Qualified
Public Offering; provided that (i) at least 65% of the aggregate principal
amount of the Notes issued under the Indenture remain outstanding immediately
after the occurrence of such redemption (excluding Notes held by the Company and
its Subsidiaries); and (ii) the redemption must occur within 45 days of the date
of the closing of such Qualified Public Offering.
6. Gaming Redemption. Notwithstanding the provisions of subparagraph (a) of
Paragraph 5 above, if any Gaming Authority requires that a Holder or beneficial
owner of Notes must be licensed, qualified or found suitable under any
applicable gaming law and such Holder or beneficial owner fails to apply for a
license, qualification or finding of suitability within 30 days after being
requested to do so by such Gaming Authority (or such lesser period that may be
required by such Gaming Authority), or if such Holder or such beneficial owner
is notified by such Gaming Authority that such Holder or beneficial owner shall
not be so licensed, qualified or found suitable, the Company shall have the
right, at its option, (i) to require such Holder or beneficial owner to dispose
of such Holder's or beneficial owner's Notes within 30 days (or such lesser
period as may be required by such Gaming Authority) of (a) the termination of
the period described above for such Holder or beneficial owner to apply for a
license, qualification or finding or suitability or (b) receipt of the notice
from such Gaming Authority that such Holder or beneficial owner shall not be
licensed, qualified or found suitable by such Gaming Authority or (ii) to redeem
the Notes of such Holder or beneficial owner at a redemption price equal to the
lesser of the principal amount thereof or the price at which such Holder or
beneficial owner acquired such Notes, together with, in either case, accrued and
unpaid Interest and Liquidated Damages, if any, thereon to the earlier of the
date of redemption or such earlier date as may be required by such Gaming
Authority or the date of the finding of unsuitability by such Gaming Authority,
which may be less than 30 days following the notice of redemption, if so ordered
by such Gaming Authority.
A-5
<PAGE>
7. Mandatory Redemption.
Except as set forth in paragraph 8 below, the Company shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
8. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid Interest and Liquidated Damages thereon, if any, to the date of purchase.
Within 10 days following any Change of Control, the Company shall mail a notice
to each Holder setting forth the procedures governing the Change of Control
Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within five
days of each date on which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall commence an offer to all Holders of Notes (an "Asset
Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid Interest and Liquidated Damages thereon, if any, to the
date fixed for the closing of such offer, in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company (or such Subsidiary) may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Holders of Notes that are the subject
of an offer to purchase shall receive an Asset Sale Offer from the Company prior
to any related purchase date and may elect to have such Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Notes.
(c) Within 120 days after each Operating Year of the Company, beginning
with the first Operating Year after the Riviera Black Hawk becomes Operating,
the Company shall make an offer to all Holders (an "Excess Cash Flow Offer") to
purchase the maximum principal amount of Notes that is an integral multiple of
$1,000 that may be purchased with 50% of the Company's Excess Cash Flow in
respect of the Operating Year then ended (the "Excess Cash Flow Offer Amount"),
at a purchase price equal to 101% of the principal amount of Notes to be
purchased, plus accrued and unpaid Interest and Liquidated Damages, if any, to
the date fixed for the closing of such Excess Cash Flow Offer (the "Excess Cash
Flow Purchase Price"), in accordance with the procedures set forth in Section
3.10 of the Indenture. To the extent that the aggregate principal amount of
Notes tendered pursuant to any Excess Cash Flow Offer is less than the Excess
Cash Flow Offer Amount with respect thereto, the Company may, subject to the
other provisions of the Indenture, use any remaining Excess Cash Flow for
general corporate purposes. Holders of Notes that are the subject of an offer to
purchase shall receive an Excess Cash Flow Offer from the Company prior to any
A-6
<PAGE>
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes.
(d) If the Company or a Restricted Subsidiary suffers an Event of Loss,
then pursuant to Section 4.28 of the Indenture, when the aggregate amount of
Excess Loss Proceeds exceeds $5.0 million, the Company shall make an offer to
all Holders (an "Event of Loss Offer") to purchase the maximum principal amount
of Notes that may be purchased out of the Excess Loss Proceeds, at a purchase
price in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid Interest and Liquidated Damages, if any, thereon to the date
fixed for the closing of such offer, in accordance with the procedures set forth
in Section 3.10 of the Indenture. To the extent that the aggregate amount of
Notes tendered pursuant to any Event of Loss Offer is less than the Excess Loss
Proceeds, the Company may use any remaining Excess Loss Proceeds for general
corporate purposes. Holders of Notes that are the subject of an offer to
purchase may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
9. Notice of Redemption. Notice of redemption shall be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date Interest ceases to accrue on Notes or portions thereof
called for redemption.
10. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a Record
Date and the corresponding Interest Payment Date.
11. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
12. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
A-7
<PAGE>
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to provide for
the issuance of Additional Notes in accordance with the limitations set forth in
the Indenture.
13. Defaults and Remedies. Events of Default include: (a) default for 30
days in the payment when due of Interest or Liquidated Damages on the Notes;
provided that payments of Contingent Interest that are permitted to be deferred
as provided in this provision will not become due for this purpose until such
payment is required to be made pursuant to the terms of the Indenture; (b)
default in payment when due of principal of or premium, if any, on the Notes,
(c) failure by the Company to comply with Sections 4.09, 4.10, 4.15 or 5.01 of
the Indenture; (d) the Company or any of its Restricted Subsidiaries for 30 days
after notice thereof fails to comply with the provisions of Section 4.07 and any
of the other agreements in this Indenture not set forth in clause (c) above; (e)
a default occurs under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of this Indenture, if that default: (i) is caused by a failure to
pay principal of, or interest or premium, if any, on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness on the date of
such default (a "Payment Default"); or (ii) results in the acceleration of such
Indebtedness prior to its express maturity, and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more; (f) the
Company or any of its Restricted Subsidiaries fails to pay final judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days; and (g) the Company or any of its Affiliates
breaches any representation or warranty in any material respect in the
Collateral Documents or any certificates delivered in connection therewith, the
Company or any of its Affiliates fails for 30 days (or such other period as
specifically provided therein) after notice thereof to comply with any covenant
or agreement set forth in the Collateral Documents, the Company repudiates any
of its obligations under the Collateral Documents, the Collateral Documents
become unenforceable against the Company or perfection or priority of the Liens
granted by the Company thereunder is lost for any reason; (h) certain events of
bankruptcy or insolvency occurs with respect to the Company or any of its
Restricted Subsidiaries; (i) the revocation, termination, suspension or other
cessation of effectiveness for a period of more than 90 consecutive days of any
Gaming License results in the cessation or suspension of gaming operations at
any Gaming Facility; (j) Riviera Holdings defaults in the performance of its
obligations set forth in, or repudiates its obligations under, the Completion
Capital Commitment or the Keep-Well Agreement; or (k) the Riviera Black Hawk
fails to be Operating by the Operating Deadline or fails to remain Operating
thereafter, except (a) as the hours of operation of the Riviera Black Hawk may
be limited by any Gaming Authority or Gaming Law or (b) for a period of time not
to exceed 30 days during any 45-day period and not to exceed 60 days during any
A-8
<PAGE>
one-year period; provided, however, that, in any event, there shall not be an
Event of Default under this clause if the failure to remain Operating during
such period results from an Event of Loss pursuant to the terms of this
Indenture.
14. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee, incorporator
or stockholder, of the Company, as such, shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
16. Security. The due and punctual payment of the principal of, Interest
and premium, if any, and Liquidated Damages, if any, on the Notes when and as
the same shall be due and payable, whether on an Interest Payment Date, at
maturity, by acceleration, repurchase, redemption or otherwise, and Interest and
Liquidated Damages (to the extent permitted by law), if any, on the Notes and
performance of all other obligations of the Company to the Holders of Notes or
the Trustee under the Indenture and the Notes, according to the terms hereunder
or thereunder, shall be ratably secured by a Lien on the Collateral owned by the
Company, subject to Permitted Liens. Each Holder of Notes, by its acceptance
thereof, consents and agrees to the terms of the Collateral Documents
(including, without limitation, the provisions providing for foreclosure and
release of Collateral) as the same may be in effect or may be amended from time
to time in accordance with its terms and authorizes and directs the Trustee to
enter into the Collateral Documents and to perform its obligations and exercise
its rights thereunder in accordance therewith.
17. Authentication. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
18. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. Additional Rights of Holders of Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of June 3, 1999, between the Company and the parties named on the
signature pages thereof or, in the case of Additional Notes, Holders of
Restricted Global Notes and Restricted Definitive Notes shall have the rights
set forth in one or more registration rights agreements, if any, between the
Company and the other parties thereto, relating to the rights given by the
Company to the purchasers of any Additional Notes (collectively, the
"Registration Rights Agreement").
A-9
<PAGE>
20. CUSIP Numbers. The Company in issuing the Notes may use a "CUSIP"
number. No representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Attention: Corporate Secretary
A-10
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
-----------------------------------
(Insert assignee's legal name)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
Your Signature:
-------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee:
-----------------------
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10, 4.15, 4.28 or 4.29 of the Indenture, check the appropriate box
below:
[ ] Section 4.10 [ ] Section 4.15 [ ] Section 4.28 [ ] Section 4.29
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10, 4.15, 4.28 or 4.29 of the Indenture, state the amount
you elect to have purchased:
$
----------------
Date:
--------------
Your Signature:
---------------------------
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:
-------------------
Signature Guarantee:
-----------------
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal Amount Signature of
Amount of decrease in Amount of increase in of this Global Note authorized officer of
Principal Amount of Principal Amount following such decrease Trustee or Note
Date of Exchange this Global Note of this Global Note (or increase) Custodian
---------------- ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>
* This schedule should be included only if the Note is issued in global form.
A-13
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Telecopier No.: (303) 582-5693
Attention: President
IBJ Whitehall Bank & Trust Company
One State Street, 10th Floor
New York, NY 10004
Telecopier No.: (212) 858-2956
Attention: Corporate Trust Department
Re: 13% First Mortgage Notes due 2005 With Contingent Interest
----------------------------------------------------------
Reference is hereby made to the Indenture, dated as of June 3, 1999
(the "Indenture"), between Riviera Black Hawk, Inc., as issuer (the "Company")
and IBJ Whitehall Bank & Trust Company, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
___________________ (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] Check if Transferee will take delivery of a beneficial interest
in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
B-1
<PAGE>
2. [ ] Check and complete if Transferee will take delivery of a
beneficial interest in a Definitive Note pursuant to any provision of the
Securities Act other than Rule 144A. The Transfer is being effected in
compliance with the transfer restrictions applicable to beneficial interests in
Restricted Global Notes and Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act and any applicable blue sky securities laws
of any state of the United States, and accordingly the Transferor hereby further
certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with
the prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A or Rule 144,
and the Transferor hereby further certifies that it has not engaged in
any general solicitation within the meaning of Regulation D under the
Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption
claimed, which certification is supported by (1) a certificate executed
by the Transferee in the form of Exhibit D to the Indenture and (2) if
such Transfer is in respect of a principal amount of Notes at the time
of transfer of less than $100,000, an Opinion of Counsel acceptable to
the Company provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect
that such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of
the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Definitive Notes and in the
Indenture and the Securities Act.
3. [ ] Check if Transferee will take delivery of a beneficial interest
in an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [ ] Check if Transfer is pursuant to Rule 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any
B-2
<PAGE>
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(b) [ ] Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144 and in
compliance with the transfer restrictions contained in the Indenture and any
applicable blue sky securities laws of any State of the United States and (ii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will not be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes or Restricted
Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-----------------------------------------
[Insert Name of Transferor]
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Dated:
----------------
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] IAI Global Note (CUSIP ), or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] IAI Global Note (CUSIP ), or
(iii) [ ] Unrestricted Global Note (CUSIP ); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Telecopier No.: (303) 582-5693
Attention: President
IBJ Whitehall Bank & Trust Company
One State Street, 10th Floor
New York, NY 10004
Telecopier No.: (212) 858-2956
Attention: Corporate Trust Department
Re: 13% First Mortgage Notes due 2005 With Contingent Interest
----------------------------------------------------------
Dear Sirs:
Reference is hereby made to the Indenture, dated as of June 3, 1999
(the "Indenture"), between Riviera Black Hawk, Inc., as issuer (the "Company")
and IBJ Whitehall Bank & Trust Company, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
__________________________ (the "Owner") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
C-1
<PAGE>
(b) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [ ] Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes
(a) [ ] Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
C-2
<PAGE>
(b) [ ] Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] [ ] 144A Global Note, [ ] IAI Global Note with an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer and (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, and in compliance with any applicable blue sky securities laws of any state
of the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the beneficial interest issued will be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the relevant Restricted Global Note and in the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
-----------------------------------------
[Insert Name of Transferor]
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Dated:
----------------
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Telecopier No.: (303) 582-5693
Attention: President
IBJ Whitehall Bank & Trust Company
One State Street, 10th Floor
New York, NY 10004
Telecopier No.: (212) 858-2956
Attention: Corporate Trust Department
Re: 13% First Mortgage Notes due 2005 With Contingent Interest
----------------------------------------------------------
Dear Sirs:
Reference is hereby made to the Indenture, dated as of June 3, 1999
(the "Indenture"), between Riviera Black Hawk, Inc., as issuer (the "Company")
and IBJ Whitehall Bank & Trust Company, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to a person whom we reasonably believe to be a qualified
institutional buyer (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, in a transaction meeting the
D-1
<PAGE>
requirements of Rule 144 under the Securities Act, outside the United States in
a transaction meeting the requirements of Rule 904 under the Securities Act, or
in accordance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel if the Company so
requests), (B) to the Company or (C) pursuant to an effective registration
statement, and, in each case, in accordance with any applicable securities laws
of any State of the United States or any other applicable jurisdiction, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) and (B) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
-----------------------------------------
[Insert Name of Transferor]
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Dated:
----------------
<PAGE>
EXHIBIT E
FORM OF INTERCOMPANY NOTE
$ Black Hawk, Colorado
--------------------
,
---------------- ---
For value received, the undersigned, [INSERT NAME OF SUBSIDIARY], a
("Maker"), hereby promises to pay to the order of Riviera Black
Hawk, Inc., a Colorado corporation ("Lender"), the principal amount of
$ on , , and to pay interest thereon from the date
hereof, semiannually on and of each year (each, an
"Interest Payment Date"), commencing , at the rate of % per
annum, until the principal hereof is paid or duly made available for payment.
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. In no event shall interest be charged under
this Note which would violate any applicable law. All such payments of principal
and interest shall be payable without defense, set-off or counterclaim, in
lawful money of the United States of America, and delivered to Lender by good
and sufficient funds by wire transfer to Lender's account or by check delivered
to Lender's address or at such other place as Lender or any holder hereof shall
designate in writing for such purpose from time to time. If a payment hereunder
otherwise would become due and payable on a Saturday, Sunday or legal holiday,
the due date thereof shall be extended to the next succeeding business day.
This Note may be prepaid in whole or in part at any time. Any
prepayment shall be without penalty. Any partial principal prepayment under this
Note shall be applied against the principal due hereunder at maturity. This Note
shall be non-negotiable.
No waiver or modification of any of the terms of this Note shall be
valid or binding unless set forth in a writing specifically referring to this
Note and signed by a duly authorized officer of Lender or any holder hereof, and
then only to the extent specifically set forth therein.
If any default occurs in any payment due under this Note, Maker and all
guarantors and endorsers hereof, if any, and their successors and assigns,
promise to pay all costs and expenses, including attorneys' fees, incurred by
each holder hereof in collecting or attempting to collect the indebtedness under
this Note, whether or not any action or proceeding is commenced. None of the
provisions hereof and none of the holder's rights or remedies hereunder on
account of any past or future defaults shall be deemed to have been waived by
the holder's acceptance of any past due installments or by any indulgence
granted by the holder to Maker.
This Note shall inure to the benefit of Lender, its successors and
assigns and shall bind the heirs, executors, administrators, successors and
assigns of Maker.
E-1
<PAGE>
In the event that any one or more provisions of this Note shall be held
to be illegal, invalid or otherwise unenforceable, the same shall not affect any
other provision of this Note and the remaining provisions of this Note shall
remain in full force and effect.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Colorado.
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed the
day and year first written above.
[INSERT NAME OF SUBSIDIARY]
By:
----------------------------
Name:
Title:
E-2
<PAGE>
EXHIBIT F
FORM OF PLEDGE AGREEMENT
F-1
<PAGE>
EXHIBIT G
FORM OF COLLATERAL ASSIGNMENT OF PATENT
G-1
<PAGE>
EXHIBIT H
FORM OF COLLATERAL ASSIGNMENT OF COPYRIGHT
H-1
<PAGE>
EXHIBIT I
FORM OF SUPPLEMENTAL INDENTURE
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
______________,____, among _________________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Riviera Black Hawk, Inc. (or its permitted
successor), a Colorado corporation (the "Company"), the Company, the other
Persons (as defined in the Indenture referred to herein) that have previously
entered into a supplemental indenture pursuant to the terms of the Indenture
(each an "Existing Guarantor" and, together with the Guaranteeing Subsidiary,
each a "Guarantor") and IBJ Whitehall Bank & Trust Company, as trustee under the
Indenture (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of June 3, 1999, providing for
the issuance of an aggregate principal amount of $45,000,000 of 13% First
Mortgage Notes due 2005 With Contingent Interest (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations (as defined in the Indenture) under
the Notes and the Indenture on the terms and conditions set forth herein (the
"Note Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AMENDMENTS TO THE INDENTURE.1 (a) Section 1.01 of the Indenture is
hereby amended to add the following definitions:
"Guarantor" means any Restricted Subsidiary that executes a
Note Guarantee in accordance with the provisions of this Indenture, and
its respective successors and assigns.
"Note Guarantee" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and on the Notes,
executed pursuant to the provisions of this Indenture.
- --------------------------
1 This section should be included only the first time that this supplemental
indenture is executed.
I-1
<PAGE>
(b) The definition of "obligor" in Section 1.03 of the Indenture is
hereby amended and restated to read in its entirety as follows:
"`obligor' on the Notes and the Note Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes
and the Note Guarantees, respectively."
(c) Section 4.03(b) of the Indenture is hereby amended to include the
words "and the Guarantors" after the first time the words "the Company"
appear in such section.
(d) Section 4.04(a) of the Indenture is hereby amended to include the
words "and each Guarantor (to the extent that such Guarantor is so required
under the TIA)" after first time the words "the Company" appear in such
section.
(e) Section 4.06 of the Indenture is hereby amended to include the
words "and each of the Guarantors" after each time the words "the Company"
appear in such section.
(f) Section 6.01 of the Indenture is hereby amended to add the
following provision:
"(n) except as permitted by this Indenture, any Note Guarantee is held
in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor,
or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee."
(g) The first clause of Section 9.01 is hereby amended and restated to
read in its entirety as follows:
"Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the
Note Guarantees or the Notes without the consent of any Holder of a
Note:"
(h) Section 9.01(c) is hereby amended and restated to read in its
entirety as follows:
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes by a successor to the Company
pursuant to Article 5 or Article 12 hereof;"
(i) The last paragraph of Section 9.01 is hereby amended to include the
words "and the Guarantors" after second time the words "the Company" appear
in such paragraph.
(j) Section 9.02 of the Indenture is hereby amended to (i) include the
phrase ", the Note Guarantees" after the first parenthetical appearing in
such section and after the second time that the word "Indenture" appears in
such section and (ii) add the following clause at the end of the section:
"(h) release any Guarantor from any of its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of
this Indenture."
I-2
<PAGE>
(k) Section 11.02 of the Indenture is hereby amended to provide that
any notices to be given to a Guarantor pursuant to the Indenture shall be
given at the address of the Company and in the manner that notices are given
to the Company.
(l) Section 11.10 of the Indenture is hereby amended to add the
following"
"All agreements of each Guarantor in this Indenture shall bind its
successors, except as otherwise provided in Section 12.05."
(m) Section 10.01 is hereby amended and restated to read in its
entirety as follows:
"Section 10.01. Security
The due and punctual payment of the principal of and Interest and
premium, if any, and Liquidated Damages, if any, on the Notes when and
as the same shall be due and payable, whether on an Interest Payment
Date, at maturity, by acceleration, repurchase, redemption or
otherwise, and Interest on the overdue principal of and Interest and
Liquidated Damages (to the extent permitted by law), if any, on the
Notes and performance of all other obligations of the Company and the
Guarantors to the Holders of Notes or the Trustee under this Indenture
and the Notes and the Note Guarantees, according to the terms hereunder
or thereunder, shall be ratably secured by a Lien on the Collateral
owned by the Company and each Note Guarantee similarly shall be secured
as provided in the Collateral Documents. Each Holder of Notes, by its
acceptance thereof, consents and agrees to the terms of the Collateral
Documents (including, without limitation, the provisions providing for
foreclosure and release of Collateral) as the same may be in effect or
may be amended from time to time in accordance with its terms and
authorizes and directs the Trustee to enter into the Collateral
Documents and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company and the Guarantors
shall deliver to the Trustee copies of all documents executed pursuant
to this Indenture and the Collateral Documents, and shall do or cause
to be done all such acts and things as may be necessary or proper, or
as may be required by the provisions of the Collateral Documents, to
assure and confirm to the Trustee the security interest in the
Collateral contemplated hereby, as from time to time constituted, so as
to render the same available for the security and benefit of this
Indenture and of the Notes and the Note Guarantees secured hereby,
according to the intent and purposes herein expressed. The Company
shall take, or shall cause its Subsidiaries to take, upon request of
the Trustee, any and all actions reasonably required to create and
maintain, as security for the Obligations of the Company hereunder, a
valid and enforceable perfected first priority Lien in and on all the
Collateral, in favor of the Trustee for the benefit of the Holders of
Notes, superior to and prior to the rights of all third Persons and
subject to no other Liens than Permitted Liens, including executing, as
applicable, a Pledge Agreement in the form attached hereto as Exhibit
F, a Collateral Assignment of Patent in the form attached hereto as
Exhibit G and a Collateral Assignment of Copyright in the form attached
hereto as Exhibit H."
(n) Section 10.02(a) of the Indenture is hereby amended to add the
words "and the Guarantors" after the first time that the words "the
Company" appear in such section and to add the words "and the Note
Guarantees" after the first time the words "the Notes" appear in such
section.
I-3
<PAGE>
(o) Section 10.02(b) of the Indenture is hereby amended to add the
words "and the Guarantors" after the first time that the words "the
Company" appear in such section.
(p) Section 10.09 of the Indenture is hereby amended to add the words
"or any Guarantor" after the first and third times the words "the
Company" appear in such section and the words "or such Guarantor" after
the second and fourth times the words "the Company" appear in such
section
(m) The Indenture is hereby amended to add the following provisions:
"Section 12.01. Guarantee. Subject to this Article 12, each of the
Guarantors hereby, jointly and severally, unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Notes or the obligations of the Company hereunder or
thereunder, that: (a) the principal of and Interest on the Notes will be
promptly paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of and Interest on the
Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such other
obligations, that same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same immediately.
Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note
I-4
<PAGE>
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this Note
Guarantee. The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
Section 12.02. Limitation on Guarantor Liability. Each Guarantor, and
by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Note Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any Note Guarantee.
To effectuate the foregoing intention, the Trustee, the Holders and the
Guarantors hereby irrevocably agree that the obligations of such Guarantor will,
after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 12, result in the
obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
Section 12.03. Execution and Delivery of Note Guarantee. To evidence
its Note Guarantee set forth in Section 12.01, each Guarantor hereby agrees that
a notation of such Note Guarantee shall be endorsed by an Officer of such
Guarantor on each Note authenticated and delivered by the Trustee substantially
in the following form:
"For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of June 3, 1999 (the "Indenture")
among Riviera Black Hawk, Inc., a Colorado corporation, the Guarantors
listed on Schedule I thereto and IBJ Whitehall Bank & Trust Company, as
trustee (the "Trustee"), (a) the due and punctual payment of the
principal of, premium, if any, and Interest on the Notes (as defined in
the Indenture), whether at maturity, by acceleration, redemption or
otherwise, the due and punctual payment of interest on overdue
principal and premium, and, to the extent permitted by law, Interest,
and the due and punctual performance of all other obligations of the
Company to the Holders or the Trustee all in accordance with the terms
of the Indenture and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to the Note Guarantee and
the Indenture are expressly set forth in Article 12 of the Indenture
and reference is hereby made to the Indenture for the precise terms of
the Note Guarantee. Each Holder of a Note, by accepting the same, (a)
agrees to and shall be bound by such provisions and (b) appoints the
Trustee attorney-in-fact of such Holder for such purpose.
I-5
<PAGE>
[NAME OF GUARANTOR(S)]
By:
-------------------------------
Name:
Title:"
Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.
Section 12.04. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 12.05, no Guarantor may consolidate with
or merge with or into (whether or not such Guarantor is the surviving Person)
another Person whether or not affiliated with such Guarantor unless:
(a) subject to Section 12.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set
forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall
I-6
<PAGE>
prevent any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
Section 12.05. Releases Following Sale of Assets. In the event of a
sale or other disposition of all of the assets of any Guarantor, by way of
merger, consolidation or otherwise, or a sale or other disposition of all to the
capital stock of any Guarantor, in each case to a Person that is not (either
before or after giving effect to such transactions) a Restricted Subsidiary of
the Company, then such Guarantor (in the event of a sale or other disposition,
by way of merger, consolidation or otherwise, of all of the capital stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in accordance
with the provisions of this Indenture, including without limitation Section 4.10
hereof, the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Note
Guarantee.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and Interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 12."
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as
follows:
(a) Along with all other Guarantors, to jointly and severally Guarantee
to each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, the Notes or the obligations of the
Company hereunder or thereunder, that:
(i) the principal of and Interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and Interest on the
Notes, if any, if lawful, and all other obligations of the Company to
the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and
thereof; and
(ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid
in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect
I-7
<PAGE>
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the Indenture, and the
Guaranteeing Subsidiary accepts all obligations of a Guarantor under the
Indenture.
(e) If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantors, or any Custodian, Trustee, liquidator
or other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 6 of the Indenture for the
purposes of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
(i) Pursuant to Section 12.02 of the Indenture, as amended to date,
after giving effect to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or fraudulent
conveyance laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under Article 10
of the Indenture, this new Note Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Guarantor under this Note
Guarantee will not constitute a fraudulent transfer or conveyance.
I-8
<PAGE>
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the
Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such Guarantor
unless:
(i) subject to Sections 12.04 and 12.05 of the Indenture, as
amended to date, the Person formed by or surviving any such
consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant
to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, the Indenture and the
Note Guarantee on the terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Note Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under the Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of the
Indenture as though all of such Note Guarantees had been issued at the date of
the execution hereof.
(c) Except as set forth in Articles 4 and 5 and Section 12.05 of the
Indenture, as amended to date, and notwithstanding clauses (a) and (b) above,
nothing contained in the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all to the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transaction) a
Restricted Subsidiary of the Company, then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions
I-9
<PAGE>
of the Indenture, including without limitation Section 4.10 of the Indenture.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of the Indenture, including
without limitation Section 4.10 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Guarantor
from its obligations under its Note Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under the Indenture
as provided in Article 12 of the Indenture, as amended to date.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Collateral Documents, the Indenture or this Supplemental Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of the Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the SEC that such a
waiver is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
I-10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated:
-----------------, -----
[GUARANTEEING SUBSIDIARY]
By:
-------------------------------
Name:
Title:
[COMPANY]
By:
--------------------------------
Name:
Title:
[EXISTING GUARANTORS]
By:
------------------------------
Name:
Title:
[TRUSTEE],
as Trustee
By:
-------------------------------
Authorized Signatory
I-11
<PAGE>
Schedule I
SCHEDULE OF GUARANTORS
The following schedule lists each Guarantor under the Indenture as of
the Issue Date:
I-12
RIVIERA BLACK HAWK, INC.
$45,000,000
13% FIRST MORTGAGE NOTES DUE 2005 WITH CONTINGENT INTEREST
PURCHASE AGREEMENT
May 27, 1999
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"), proposes
to issue and sell to Jefferies & Company, Inc. (the "Initial Purchaser") an
aggregate of $45.0 million principal amount of its 13% First Mortgage Notes due
2005 With Contingent Interest (the "Series A Notes"), subject to the terms and
conditions set forth herein. The Series A Notes and the Series B Notes (as
defined below) (the Series A Notes and the Series B Notes being collectively
referred to herein as the "Notes") will be issued pursuant to an Indenture dated
as of June 3, 1999 (the "Indenture"), between the Company and IBJ Whitehall Bank
& Trust Company, as trustee (the "Trustee"). The obligations of the Company
under the Notes will be secured by security interests in or pledges of (the
"Security Interests") certain of the Company's assets (the "Collateral") as set
forth in the Indenture. Capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the Indenture.
1. Offering Circular.
The Series A Notes will be offered and sold to the Initial Purchaser
pursuant to one or more exemptions from the registration requirements under the
Securities Act of 1933, as amended (the "Act"). The Company has prepared a
preliminary offering circular dated May 14, 1999 (the "Preliminary Offering
Circular"), and a final offering circular dated May 27, 1999 (the "Final
Offering Circular" and, together with the Preliminary Offering Circular, the
"Offering Circular"), relating to the Series A Notes.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (the "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT
<PAGE>
OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (i) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (as
defined in Rule 144A under the Act)(a "QIB"), (ii) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE ACT OR (iii) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(as defined in Rule 501(A)(1), (2), (3) OR (7) of Regulation D under
the Act (an "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (i) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (ii) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (iii) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (iv) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (v) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (the form of which can be obtained from the
Trustee) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE ACT, (vi)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (vii) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2
<PAGE>
2. Agreements To Sell And Purchase.
On the basis of the representations, warranties and covenants contained in
this Purchase Agreement (this "Agreement"), and subject to its terms and
conditions, the Company agrees to issue and sell to the Initial Purchaser and
the Initial Purchaser agrees to purchase from the Company, an aggregate
principal amount of $45.0 million of Series A Notes at a purchase price equal to
96.0% of the principal amount thereof (the "Purchase Price").
3. Terms of Offering.
The Initial Purchaser has advised the Company that the Initial Purchaser
will make offers (the "Exempt Resales") of the Series A Notes purchased
hereunder on the terms set forth in the Offering Circular, as amended or
supplemented, solely to (i) persons whom the Initial Purchaser reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A under the
Act ("QIBs") and (ii) a limited number of other institutional "accredited
investors," as defined in Rule 501(a) (1), (2), (3) or (7) under the Act, that
make certain representations and agreements to the Company as set forth as Annex
A to the Offering Circular (each, an "Accredited Institution", and together with
the QIBs, the "Eligible Purchasers"). The Initial Purchaser will offer the
Series A Notes to Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement") to be dated the Closing Date (as defined
below), in substantially the form of Exhibit A hereto, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Company's 13% Series B First Mortgage Notes due 2005 With Contingent
Interest (the "Series B Notes") to be offered in exchange for the Series A Notes
and (ii) a shelf registration statement pursuant to Rule 415 under the Act (the
"Shelf Registration Statement" and, together with the Exchange Offer
Registration Statement, the "Registration Statements") relating to the resale by
certain holders of the Series A Notes, and to use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer.
The Notes will be secured obligations and the Company will enter into a
deed of trust, a security agreement, a collateral assignment, a cash collateral
and disbursement agreement, a pledge agreement, uniform commercial code
financing and fixture statements and certain other collateral agreements
(collectively the "Collateral Documents") dated as of the Closing Date in favor
of the Trustee that will provide for the grant of Security Interests in the
Collateral to the Trustee for the benefit of the holders of the Notes. The
Security Interests will secure the payment and performance when due of all the
respective obligations of the Company under the Notes, the Indenture and the
Collateral Documents. The following documents are hereinafter collectively
referred to as "Operative Documents": (i) this Agreement, (ii) the Indenture,
(iii) the Notes, (iv)
3
<PAGE>
the Registration Rights Agreement, (v) the Collateral Documents, (vi) the
Completion Capital Commitment (the "Completion Capital Commitment") to be dated
as of the Closing Date by Riviera Holdings Corporation, a Nevada corporation
("Riviera Holdings"), and the Company, (vii) the Keep-Well Agreement (the
"Keep-Well Agreement") to be dated as of the Closing Date by Riviera Holdings
and the Company, (viii) the Standard Form of Agreement Between Owner and
Contractor for the construction of the Riviera Black Hawk Casino dated December
29, 1997 (the "Construction Agreement"), executed by The Weitz Company, Inc. and
the Company (as amended, modified or supplemented from time to time), (ix) the
Standard Form of Agreement Between Owner and Architect for the design of the
Riviera Black Hawk Casino dated July 29, 1998 (the "Architect Agreement")
executed by Melick Associates, Inc. and the Company (as amended, modified or
supplemented from time to time), (x) the Management Agreement (the "Management
Agreement") to be dated as of the Closing Date between the Company and Riviera
Gaming Management of Colorado, Inc., a Colorado corporation ("Riviera Gaming
Management"), as Manager, (xi) the Manager Subordination Agreement (the "Manager
Subordination Agreement") to be dated as of the Closing Date by Riviera Gaming
Management in favor of the Trustee, (xii) the Trademark License Agreement (the
"License Agreement") to be dated as of the Closing Date between the Company and
Riviera Operating Corporation, a Nevada corporation ("Riviera Operating
Corporation") and (xiii) the Tax Sharing Agreement (the "Tax Sharing Agreement")
to be dated as of the Closing Date between the Company and Riviera Holdings.
4. Delivery and Payment.
(a) Delivery of, and payment of the Purchase Price for, the Series A Notes
(the "Closing") shall be made at 7:00 a.m., Los Angeles time, on June 3, 1999
(the "Closing Date"), at the offices of Latham & Watkins, 633 West Fifth Street,
Suite 4000, Los Angeles, California 90071, or such other time or place as the
Initial Purchaser and the Company shall designate.
(b) One or more of the Series A Notes in definitive global form, registered
in the name of Cede & Co., as nominee of the Depository Trust Company ("DTC"),
having an aggregate principal amount corresponding to the aggregate principal
amount of the Series A Notes (collectively, the "Global Note"), shall be
delivered by the Company to the Initial Purchaser (or as the Initial Purchaser
directs) in each case with any transfer taxes thereon duly paid by the Company
against payment by the Initial Purchaser of the Purchase Price therefor by wire
transfer in same day funds to the order of the Company, provided that the
Company shall give at least two business days' prior written notice of the
information required to effect such wire transfer. The Global Note shall be made
available to the Initial Purchaser for inspection not later than 10:00 a.m., Los
Angeles time, on the business day immediately preceding the Closing Date.
5. Agreements of the Company.
The Company hereby agrees with the Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by the
Initial Purchaser, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Series A Notes for
4
<PAGE>
offering or sale in any jurisdiction designated by the Initial Purchaser
pursuant to Section 5(e) hereof, or the initiation of any proceeding by any
state securities commission or other federal or state regulatory authority for
such purpose and (ii) of the happening of any event during the period referred
to in Section 5(c) hereof that makes any statement of a material fact made in
the Preliminary Offering Circular or the Final Offering Circular untrue or that
requires the making of any additions to or changes in the Preliminary Offering
Circular or the Final Offering Circular in order to make the statements therein
not misleading. The Company shall use its best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption of any of
Series A Notes under any state securities or Blue Sky laws, and if at any time
any state securities commission or other federal or state regulatory authority
shall issue an order suspending the qualification or exemption of any Series A
Notes under any state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish the Initial Purchaser and those persons identified by the
Initial Purchaser to the Company as many copies of the Preliminary Offering
Circular and the Final Offering Circular, and any amendments or supplements
thereto, as the Initial Purchaser may reasonably request. Subject to the Initial
Purchaser's compliance with its representations and warranties and agreements
set forth in Section 8 hereof, the Company consents to the use of the
Preliminary Offering Circular and the Final Offering Circular, and any
amendments and supplements thereto required pursuant hereto, by the Initial
Purchaser in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchaser an Offering Circular is required by law to be delivered in connection
with Exempt Resales by the Initial Purchaser and in connection with
market-making activities of the Initial Purchaser for so long as any Series A
Notes are outstanding, (i) not to make any amendment or supplement to the
Offering Circular of which the Initial Purchaser shall not previously have been
advised or to which the Initial Purchaser shall reasonably object after being so
advised and (ii) to prepare promptly upon the Initial Purchaser's reasonable
request, any amendment or supplement to the Offering Circular which may be
necessary or advisable in connection with such Exempt Resales or such
market-making activities.
(d) If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the judgment of
the Company or in the reasonable judgment of counsel to the Initial Purchaser,
it becomes necessary to amend or supplement the Offering Circular in order to
make the statements therein, in the light of the circumstances when such
Offering Circular is delivered to an Eligible Purchaser, not misleading, or if,
in the reasonable judgment of counsel to the Initial Purchaser, it is necessary
to amend or supplement the Offering Circular to comply with any applicable law,
forthwith to notify the Initial Purchaser and to prepare an appropriate
amendment or supplement to such Offering Circular so that the statements
therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Circular will comply with applicable law, and to furnish to the Initial
Purchaser and such other persons as the Initial Purchaser may designate such
number of copies thereof as the Initial Purchaser may reasonably request.
5
<PAGE>
(e) Prior to the sale of all Series A Notes pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchaser and counsel to the
Initial Purchaser in connection with the registration or qualification of the
Series A Notes for offer and sale to the Initial Purchaser and pursuant to
Exempt Resales under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchaser may request and to continue such qualification in effect
so long as required for Exempt Resales and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that the Company shall not be
required in connection therewith to register or qualify as a foreign corporation
in any jurisdiction in which it is not now so qualified or to take any action
that would subject it to general consent to service of process or taxation,
other than as to matters and transactions relating to the Preliminary Offering
Circular, the Final Offering Circular or Exempt Resales, in any jurisdiction in
which it is not now so subject.
(f) To apply the proceeds from the sale of the Series A Notes as set forth
under the caption "Use of Proceeds" in the Offering Circular and to comply with
the provisions of the Collateral Documents concerning disbursement of funds,
subject to such procedural modifications that are permitted under the Cash
Collateral and Disbursement Agreement (as defined in the Indenture).
(g) So long as any Notes are outstanding, (i) to mail and make generally
available as soon as practicable after the end of each fiscal year to the record
holders of the Notes a financial report of the Company and its subsidiaries on a
consolidated basis (and similar financial report of all unconsolidated
subsidiaries, if any), all such financial reports to include a consolidated
balance sheet, a consolidated statement of operations, a consolidated statement
of cash flows and a consolidated statement of shareholders' equity as of the end
of and for such fiscal year, together with comparable information as of the end
of and for the preceding year, certified by the Company's independent public
accountants and (ii) to mail and make generally available as soon as practicable
after the end of each quarterly period (except for the last quarterly period of
each fiscal year) to such holders, a consolidated balance sheet, a consolidated
statement of operations and a consolidated statement of cash flows (and similar
financial reports of all unconsolidated subsidiaries, if any) as of the end of
and for such period, and for the period from the beginning of such year to the
close of such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(h) So long as the Notes are outstanding, to furnish to the Initial
Purchaser as soon as available copies of all reports or other communications
furnished by the Company to its security holders or furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of the Company is listed and such other publicly available
information concerning the Company or its subsidiaries as the Initial Purchaser
may reasonably request.
(i) So long as any of the Series A Notes remain outstanding and during any
period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder of Series A Notes in connection with any sale thereof
and any prospective purchaser of such Series A Notes from such holder, the
information ("Rule 144A Information") required by Rule 144A(d)(4) under the Act.
6
<PAGE>
(j) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Company and accountants of the Company in connection with the sale and
delivery of the Series A Notes to the Initial Purchaser and pursuant to Exempt
Resales, and all other fees or expenses in connection with the preparation,
printing, filing and distribution of the Preliminary Offering Circular, the
Final Offering Circular and all amendments and supplements to any of the
foregoing (including financial statements) specified in Section 5(b) and 5(c)
prior to or during the period specified in Section 5(c), including the mailing
and delivering of copies thereof to the Initial Purchaser and persons designated
by it in the quantities specified herein, (ii) all costs and expenses related to
the transfer and delivery of the Series A Notes to the Initial Purchaser and
pursuant to Exempt Resales, including any transfer or other taxes payable
thereon, (iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in connection with the
offering, purchase, sale or delivery of the Series A Notes, (iv) the performance
by the Company of its other obligations under this Agreement and the other
Operative Documents, (v) all expenses in connection with the registration or
qualification of the Series A Notes for offer and sale under the securities or
Blue Sky laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky memoranda in connection therewith
(including the filing fees and fees and disbursements of counsel for the Initial
Purchaser in connection with such registration or qualification and memoranda
relating thereto), (vi) the cost of printing certificates representing the
Series A Notes, (vii) all expenses and listing fees in connection with the
application for quotation of the Series A Notes on the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") system of the National
Association of Securities Dealers, Inc. ("NASD"), (viii) the fees and expenses
of the Trustee and the Trustee's counsel in connection with the Indenture and
the Notes, (ix) the costs and charges of any transfer agent, registrar or
depositary (including DTC), (x) any fees charged by rating agencies for the
rating of the Notes, (xi) all costs and expenses of the Exchange Offer and any
Registration Statement, as set forth in the Registration Rights Agreement, (xii)
the fees and expenses of the Disbursement Agent (as defined in the Indenture)
pursuant to the Cash Collateral and Disbursement Agreement, (xiii) "roadshow"
travel and other expenses incurred in connection with the marketing and sale of
the Notes, (xiv) all fees, disbursements and out-of-pocket expenses incurred by
the Initial Purchaser (including, without limitation, the fees and disbursements
of counsel for the Initial Purchaser up to $450,000 unless otherwise agreed to
in writing by the Company, travel and lodging expenses, word processing charges,
messenger and duplicating services, facsimile expenses and other customary
expenditures) and (xv) and all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section.
(k) To use its reasonable best efforts to effect the inclusion of the
Series A Notes in PORTAL and to maintain the listing of the Series A Notes on
PORTAL for so long as any Series A Notes are outstanding.
(l) To obtain the approval of DTC for "book-entry" transfer of the Notes,
and to comply with all of its agreements set forth in the representation letters
of the Company to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
7
<PAGE>
(m) During the period beginning on the date hereof and continuing to and
including the Closing Date, not to offer, sell, contract to sell or otherwise
transfer or dispose of any debt securities of the Company or any warrants,
rights or options to purchase or otherwise acquire debt securities of the
Company substantially similar to the Notes (other than the Notes), without the
prior written consent of the Initial Purchaser.
(n) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchaser or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Series A Notes under the Act.
(o) To the extent it may lawfully do so, not to voluntarily claim, and to
actively resist any attempts to claim, the benefit of any usury laws against the
holders of any Notes.
(p) To cause the Exchange Offer to be made in the appropriate form to
permit the Series B Notes registered pursuant to the Act to be offered in
exchange for the Series A Notes and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(q) To comply with all of its agreements set forth in the Registration
Rights Agreement.
(r) To diligently seek the issuance of any Authorization (as defined
herein) which is necessary for the Company to develop, own and operate the
Riviera Black Hawk (as defined in the Indenture) to be issued, including without
limitation, any necessary Authorization to be issued by any Gaming Authority (as
defined in the Indenture) or Liquor Licensing Authority (as defined in the
Indenture).
(s) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes.
6. Representations and Warranties of the Company
As of the date hereof, the Company represents and warrants to, and agrees
with, the Initial Purchaser that:
(a) The Preliminary Offering Circular as of its date does not and the Final
Offering Circular as of its date and the date hereof does not and as of the
Closing Date will not, and any supplement or amendment to either of them will
not, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in this
paragraph (a) shall not apply to statements in or omissions from the Preliminary
Offering Circular or the Final Offering Circular (or any supplement or amendment
thereto) based upon information relating to the Initial Purchaser furnished to
the Company by the Initial Purchaser expressly for use therein. No stop order
preventing the use of the Preliminary Offering Circular or the Final Offering
Circular, or any
8
<PAGE>
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company, is contemplated.
(b) The Company is duly organized, validly existing as a corporation and in
good standing under the laws of the State of Colorado and has all corporate
power and authority to carry on its business as described in the Preliminary
Offering Circular and the Final Offering Circular and to own, lease and operate
its properties, and is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where failure to be so qualified and in good standing
would not have a material adverse effect. The Company does not have any
subsidiaries.
(c) All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights.
(d) The Company does not have any outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or purchase, any securities
or obligations convertible into, or any contracts or commitments to issue or
sell, equity interests or any such options, rights, convertible securities or
obligations.
(e) This Agreement has been duly authorized, executed and delivered by the
Company.
(f) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been validly executed and delivered by the Company. When
the Indenture has been duly executed and delivered by the Company, the Indenture
will be a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as (A) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (B) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(g) The Series A Notes have been duly authorized and, on the Closing Date,
will have been validly executed and delivered by the Company. When the Series A
Notes have been issued, executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the Closing Date,
the Series A Notes will conform to the description thereof contained in the
Offering Circular.
(h) The Series B Notes have been duly authorized by the Company. When the
9
<PAGE>
Series B Notes are issued, executed and authenticated in accordance with the
terms of the Exchange Offer and the Indenture, the Series B Notes will be
entitled to the benefits of the Indenture and will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(i) When issued, the Notes will rank pari passu in rights of payment with
all of the Company's other senior indebtedness and will rank senior in right of
payment to all subordinated indebtedness of the Company.
(j) Each of the Operative Documents to which the Company is a party has
been duly authorized by the Company and, on the Closing Date, will have been
duly executed and delivered by the Company. When each of the Operative Documents
to which the Company is a party has been duly executed and delivered, each of
them will be a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, each of the Registration Rights Agreement,
the Collateral Documents, the Completion Capital Commitment, the Keep-Well
Agreement, the Construction Agreement, the Architect Agreement, the Management
Agreement, the License Agreement and the Tax Sharing Agreement will conform in
all material respects to the description thereof contained in the Offering
Circular.
(k) The execution, delivery and performance by the Company of the Operative
Documents to which the Company is a party, compliance by the Company with all
provisions thereof and the consummation of the transactions contemplated thereby
do not and will not (i) require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky laws of the
various states, those that the Company would not customarily possess at the date
hereof but which will be obtained in the ordinary course of development of the
Riviera Black Hawk and those to be issued by any Gaming Authority or Liquor
Licensing Authority which are necessary for the Company to own and operate the
Riviera Black Hawk), (ii) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or bylaws of the
Company, or any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company, to which the Company is a party or
by which the Company or its property is bound, except to the extent such
conflict, breach or default will not have a Material Adverse Effect (as defined
below), (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company or its property (including, without
limitation, any Gaming Law), except to the extent such violation or conflict
will not have a Material Adverse Effect (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under, any agreement
or instrument to which the Company is a party or by which the Company or its
property is bound, except to the extent such imposition or creation will not
have a Material Adverse Effect or (v) result in the termination or revocation of
any Authorization of the Company
10
<PAGE>
or result in any other impairment of the rights of the holder of any such
Authorization, except to the extent such termination, revocation or impairment
will not have a Material Adverse Effect.
(l) The Company is not in violation of its charter or bylaws or in default
in the performance of any obligation, agreement, covenant or condition contained
in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company to which the Company is a party or by
which the Company or its property is bound. There does not exist any state of
facts which constitutes an event of default on the part of the Company as
defined in such documents or which, with notice or lapse of time or both, would
constitute such an event of default.
(m) There are no legal or governmental proceedings pending or threatened to
which the Company is or could be a party or to which any of its property is or
could be subject, which could reasonably be expected to (i) result, singly or in
the aggregate, in a material adverse effect on the business, financial condition
or results of operations of the Company, (ii) interfere with the issuance or
marketability of the Notes or (iii) draw into question the validity of any of
the Operative Documents (the occurrence of any events which causes a result
described in clause (i), (ii) or (iii) above is referred to herein as a
"Material Adverse Effect").
(n) The Company has not violated any foreign, federal, state or local law
or regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws") or any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(o) Other than as disclosed in the Offering Circular, there exists no fact,
and no event has occurred, which has or is reasonably likely to result in
material liability (including, without limitation, alleged or potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damages, personal injuries or penalties) of
the Company arising out of, based on or resulting from the presence or release
into the environment of any hazardous material (including without limitation any
pollutant or contaminant or hazardous, dangerous or toxic chemical, material,
waste or substance regulated under or within the meaning of any Environmental
Law) or any violation of any Environmental Law, except such as could not
reasonably be expected to have a Material Adverse Effect.
(p) The Company has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an "Authorization") of,
and has made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its properties and to
conduct its business in the manner described in the Offering Circular, except
for Authorizations which the Company would not customarily possess at the date
hereof but which will be obtained in the ordinary course of development of the
Riviera Black Hawk and those to be issued by any Gaming Authority or Liquor
Licensing Authority which are necessary for the Company to own and operate the
Riviera Black Hawk. No such Authorization contains, or will upon the issuance
thereof contain, a
11
<PAGE>
materially burdensome restriction. Each such Authorization is valid and in full
force and effect and the Company is in compliance with all the terms and
conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto. No event has occurred
(including, without limitation, the receipt of any notice from any authority or
governing body) which allows or, after notice or lapse of time or both, would
allow, revocation, suspension or termination of any such Authorization or
results or, after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization. The Company
has no reason to believe that any governmental body or agency is considering
limiting, suspending or revoking any such Authorization. The Company has no
reason to believe that any such Authorization necessary in the future to own or
operate the Riviera Black Hawk in the manner described in the Offering Circular,
including without limitation, any Gaming License or Liquor License, will not be
granted upon application (or, alternatively, that the necessity to obtain such
license, permit or approval will not be waived), or that any Gaming Authority or
Liquor Licensing Authority or any other governmental agencies are investigating
the Company or related parties, other than in ordinary course administrative
reviews or any ordinary course review of the transactions contemplated hereby.
(q) The accountants, Deloitte & Touche LLP, that have certified the
financial statements and supporting schedules included in the Preliminary
Offering Circular and the Final Offering Circular are independent public
accountants with respect to the Company, as required by the Act and the Exchange
Act. The historical financial statements, together with related schedules and
notes, set forth in the Preliminary Offering Circular and the Final Offering
Circular comply as to form in all material respects with the requirements
applicable to registration statements on Form S-1 under the Act.
(r) The historical financial statements, together with related schedules
and notes forming part of the Offering Circular (and any amendment or supplement
thereto), present fairly the financial position, results of operations and
changes in financial position of the Company on the basis stated in the Offering
Circular at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data set forth in the Offering
Circular (and any amendment or supplement thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company. The
forward-looking statements contained in the Offering Circular are based upon
good faith estimates and assumptions believed by the Company to be reasonable
when made.
(s) The Company is not and, after giving effect to the offering and sale of
the Series A Notes and the application of the net proceeds thereof as described
in the Offering Circular, will not be, an "investment company," as such term is
defined in the Investment Company Act of 1940, as amended.
(t) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to require the Company to include
12
<PAGE>
such securities with the Notes registered pursuant to any Registration
Statement.
(u) Neither the Company nor any agent thereof acting on the Company's
behalf has taken, and none of them will take, any action that might cause this
Agreement or the issuance or sale of the Series A Notes to violate Regulation G
(12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(v) Since the respective dates as of which information is given in the
Offering Circular other than as set forth in the Offering Circular (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there has not occurred any material adverse change in the financial
condition, or the earnings, business, management or operations of the Company,
(ii) there has not been any material adverse change in the capital stock or in
the long-term debt of the Company and (iii) the Company has not incurred any
material liability or obligation, direct or contingent which has not been
disclosed therein.
(w) Each of the Preliminary Offering Circular and the Final Offering
Circular, as of its date, contains all the information specified in, and meeting
the requirements of, Rule 144A(d)(4) under the Act.
(x) When the Series A Notes are issued and delivered pursuant to this
Agreement, the Series A Notes will not be of the same class (within the meaning
of Rule 144A under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated inter-dealer quotation system.
(y) No form of general solicitation or general advertising (as defined in
Regulation D under the Act) was used by the Company, or any of its
representatives (other than the Initial Purchaser, as to whom the Company makes
no representation) in connection with the offer and sale of the Series A Notes
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold by
the Company within the six-month period immediately prior to the date hereof.
(z) Prior to the effectiveness of any Registration Statement, the Indenture
is not required to be qualified under the TIA.
(aa) Assuming (i) that the Series A Notes are issued, sold and delivered
under the circumstances contemplated by the Offering Circular and this
Agreement, (ii) that the Initial Purchaser's representations and warranties in
Section 8 hereof are true, (iii) that the representations of the Accredited
Institutions in the form set forth in Annex A to the Offering Circular are true,
(iv) compliance by the Initial Purchaser with its covenants set forth in Section
8 hereof and (v) that each of the Eligible Purchasers is a QIB or an Accredited
Institution, the purchase of the Series A Notes by the Initial Purchaser
pursuant hereto and the initial resale of the
13
<PAGE>
Series A Notes pursuant hereto pursuant to the Exempt Resales is exempt from the
registration requirements of the Act.
(bb) No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act (i) has imposed (or
has informed the Company that it is considering imposing) any condition
(financial or otherwise) on the Company's retaining any rating assigned as of
the date hereof to the Company or any securities of the Company or (ii) has
indicated to the Company that it is considering (A) the downgrading, suspension
or withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (B) any change in
the outlook for any rating of the Company.
(cc) Each certificate signed by any officer of the Company and delivered to
the Initial Purchaser or counsel for the Initial Purchaser shall be deemed to be
a representation and warranty of the Company to the Initial Purchaser as to the
matters covered thereby.
(dd) The Company has good and marketable title in fee simple to all real
property (including, without limitation, the real property constituting the
Riviera Black Hawk) and good and marketable title to all personal property owned
by the Company which is material to the business of the Company, free and clear
of Liens and defects, except such as are described in the Offering Circular, or
such as are contemplated under the Operative Documents, or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company. Any real property
held under lease or sublease by the Company is held under valid, subsisting and
enforceable leases or subleases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property by the
Company, except as described in the Offering Circular. Except as would not,
singly or in the aggregate, have a Material Adverse Effect, the Company does not
have any notice of any default or material claim of any sort that has been
asserted by anyone adverse to the rights of the Company under any of the leases
or subleases mentioned above, or affecting or questioning the rights of the
Company to the continued possession of the leased or subleased premises under
any such lease or sublease.
(ee) The Company owns or possesses, or, upon the execution of the License
Agreement dated as of the Closing Date between the Company and Riviera Operating
Corporation, and subject to the terms thereof, will have a license for the use
of all patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names ("Intellectual Property") to be employed by it in connection with
the operation of its business in the manner described in the Offering Circular,
except where the failure to own or possess or license such intellectual property
would not, singly or in the aggregate, have a Material Adverse Effect; and the
Company has not received any notice of infringement of or conflict with asserted
rights of others with respect to any such Intellectual Property.
(ff) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged. The Company has no
reason to believe that it will not be able to renew its
14
<PAGE>
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers at a cost that would not have a Material
Adverse Effect.
(gg) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(hh) All material tax returns required to be filed by the Company in any
jurisdiction have been filed, other than those filings being contested in good
faith, and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company have been paid, other than
those being contested in good faith and for which adequate reserves have been
provided.
(ii) The contemplated operation and use of the Riviera Black Hawk,
including the construction of the Riviera Black Hawk, will be (giving effect to
any waivers or variances which may be obtained) in compliance with all
applicable municipal, county, state and federal laws, regulations, ordinances,
standards, orders, and other regulations, where the failure to comply therewith
could have a Material Adverse Effect. Under applicable zoning and use laws,
ordinances, rules and regulations, the Riviera Black Hawk may be used for the
purposes contemplated in the Offering Circular, the Indenture and the Collateral
Documents, and all necessary approvals have been obtained therefor, except for
approvals which the Company would not customarily possess at the date hereof but
which will be obtained in the ordinary course of development of the Riviera
Black Hawk.
(jj) Upon execution and delivery of the Collateral Documents (other than
the Pledge Agreement and the Pledge and Assignment Agreement) by the parties
thereto and completion of the filings and recordings contemplated thereby, the
security interests created for the benefit of the Trustee and the holders of the
Notes pursuant to the Collateral Documents (other than the Pledge Agreement and
the Pledge and Assignment Agreement) will constitute valid, perfected first
priority security interests in the collateral subject thereto subject to
"Permitted Liens" as defined in the Indenture.
(kk) All notice filings to be made pursuant to the Collateral Documents
(including without limitation all financing statements) are in proper form to be
filed in order to perfect a security interest in the collateral described
therein.
(ll) At all times after execution and delivery of the Pledge and Assignment
and the Account Agreement (as defined therein) and completion of the filings and
recordings contemplated thereby, the security interests created for the benefit
of the Trustee and the holders of the Notes pursuant to the Pledge and
Assignment Agreement will constitute valid, perfected
15
<PAGE>
first priority security interests in the collateral subject thereto.
(mm) The Initial Purchaser has been furnished with a copy of the plans and
specifications for the construction of the improvements of the Riviera Black
Hawk and other necessary expenditures. Such plans and specifications are
satisfactory to the Company. The anticipated cost of such improvements
(including interest, legal, architectural, engineering, planning, zoning and
other similar costs) does not exceed the amounts for such costs set forth under
the caption "Use of Proceeds" in the Offering Circular. The Company is not aware
of any material defects in such improvements. In addition, each of the other
amounts set forth in the section entitled "Sources and Uses of Funds" under the
caption "Use of Proceeds" in the Offering Circular are based upon reasonable
assumptions as to all matters material to the estimates set forth therein and
are not expected by the Company to exceed the amounts set forth for such items.
(nn) The Company has prepared the Construction Disbursement Budget (as
defined in the Cash Collateral and Disbursement Agreement) and the Construction
Schedule (as defined in the Cash Collateral and Disbursement Agreement) and has
developed the assumptions on which the Construction Disbursement Budget and
Construction Schedule are based. The Construction Disbursement Budget and the
Construction Schedule are, as of the Closing Date, (i) in the opinion of the
Company, based on reasonable assumptions as to all legal and factual matters
material to the estimates set forth therein, (ii) call for the construction of
the Minimum Facilities (as defined in the Indenture) on or prior to the
Operating Deadline and (iii) consistent with the provisions of the Indenture and
the other Operative Documents.
(oo) The Company acknowledges that the Initial Purchaser and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 10
hereof, counsel to the Company and counsel to the Initial Purchaser, will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
7. Representations and Warranties of Riviera Holdings
As of the date hereof, Riviera Holdings represents and warrants to, and
agrees with, the Initial Purchaser that:
(a) Each of Riviera Holdings, Riviera Gaming Management and Riviera
Operating Corporation is duly organized, validly existing as a corporation and
in good standing under the laws of its jurisdiction of incorporation and has all
corporate power and authority to carry on its business and to own, lease and
operate its properties, and is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification. Riviera Holdings indirectly owns all of the outstanding capital
stock of Riviera Gaming Management and Riviera Operating Corporation.
(b) This Agreement has been duly authorized, executed and delivered by
Riviera Holdings.
(c) Each of the Collateral Documents to which Riviera Holdings is a party,
the Completion Capital Commitment, the Keep-Well Agreement, and the Tax Sharing
Agreement has
16
<PAGE>
been duly authorized by Riviera Holdings and, on the Closing Date, will have
been validly executed and delivered by Riviera Holdings. When the Collateral
Documents to which Riviera Holdings is a party, the Completion Capital
Commitment, the Keep-Well Agreement, and the Tax Sharing Agreement have been
duly executed and delivered by Riviera Holdings, each of them will be a valid
and binding agreement of Riviera Holdings, enforceable against Riviera Holdings
in accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On the
Closing Date, each of the Completion Capital Commitment, the Keep-Well
Agreement, and the Tax Sharing Agreement will conform to the description thereof
contained in the Offering Circular.
(d) The execution, delivery and performance of this Agreement, the
Collateral Documents to which Riviera Holdings is a party, the Completion
Capital Commitment, the Keep-Well Agreement and the Tax Sharing Agreement and
compliance by Riviera Holdings with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not (i)
require any consent, approval, authorization or other order of, or qualification
with, any court or governmental body or agency (except such as may be required
under the securities or Blue Sky laws of the various states), (ii) conflict with
or constitute a breach of any of the terms or provisions of, or a default under,
the operating agreement, charter or bylaws of Riviera Holdings, or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to Riviera Holdings, to which Riviera Holdings is a party or by
which Riviera Holdings or its property is bound, (iii) violate or conflict with
any applicable law or any rule, regulation, judgment, order or decree of any
court or any governmental body or agency having jurisdiction over Riviera
Holdings or its property or (iv) result in the imposition or creation of (or the
obligation to create or impose) a Lien under, any agreement or instrument to
which Riviera Holdings is a party or by which Riviera Holdings or its property
is bound.
(e) Each of the Collateral Documents to which Riviera Gaming Management is
a party, the Management Agreement and the Manager Subordination Agreement has
been duly authorized by Riviera Gaming Management and, on the Closing Date, will
have been validly executed and delivered by Riviera Gaming Management. When each
of the Collateral Documents to which Riviera Gaming Management is a party, the
Management Agreement and the Manager Subordination Agreement has been duly
executed and delivered by Riviera Gaming Management, each of them will be a
valid and binding agreement of Riviera Gaming Management, enforceable against
Riviera Gaming Management in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the Management Agreement will
conform to the description thereof contained in the Offering Circular.
(f) The execution, delivery and performance of the Collateral Documents to
which Riviera Gaming Management is a party, the Management Agreement, and the
Manager Subordination Agreement and compliance by Riviera Gaming Management with
all provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) require any consent,
approval, authorization or other order of, or qualification
17
<PAGE>
with, any court or governmental body or agency (except such as may be required
under the securities or Blue Sky laws of the various states and as may be
required by a Gaming Authority which is necessary for Riviera Gaming Management
to perform its obligations under the Management Agreement), (ii) conflict with
or constitute a breach of any of the terms or provisions of, or a default under,
the operating agreement, charter or bylaws of Riviera Gaming Management, or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to Riviera Gaming Management, to which Riviera Gaming Management is
a party or by which Riviera Gaming Management or its property is bound, (iii)
violate or conflict with any applicable law or any rule, regulation, judgment,
order or decree of any court or any governmental body or agency having
jurisdiction over Riviera Gaming Management or its property (including, without
limitation, any Gaming Law) or (iv) result in the imposition or creation of (or
the obligation to create or impose) a Lien under, any agreement or instrument to
which Riviera Gaming Management is a party or by which Riviera Gaming Management
or its property is bound.
(g) The License Agreement has been duly authorized by Riviera Operating
Corporation and, on the Closing Date, will have been validly executed and
delivered by Riviera Operating Corporation. When the License Agreement has been
duly executed and delivered by Riviera Operating Corporation, it will be a valid
and binding agreement of Riviera Operating Corporation, enforceable against
Riviera Operating Corporation in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the License Agreement will conform
to the description thereof contained in the Offering Circular.
(h) The execution, delivery and performance of the License Agreement and
compliance by Riviera Operating Corporation with all provisions hereof and
thereof and the consummation of the transactions contemplated hereby and thereby
do not and will not (i) require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky laws of the
various states), (ii) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the operating agreement, charter or bylaws
of Riviera Operating Corporation, or any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to Riviera Operating
Corporation, to which Riviera Operating Corporation is a party or by which
Riviera Operating Corporation or its property is bound, (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
Riviera Operating Corporation or its property or (iv) result in the imposition
or creation of (or the obligation to create or impose) a Lien under, any
agreement or instrument to which Riviera Operating Corporation is a party or by
which Riviera Operating Corporation or its property is bound.
(i) Riviera Operating Corporation owns all trademarks which are to be
licensed to the Company pursuant to the terms of the License Agreement for use
by the Company at the Riviera Black Hawk and Riviera Operating Corporation has
not received any notice of, and is not otherwise aware of, any infringement of,
or conflict with, asserted rights of others with respect to the foregoing.
18
<PAGE>
(j) As of the Closing Date, neither Riviera Holdings nor any of its
subsidiaries will have any debts or liabilities other than (i) the Notes, (ii)
the Keep-Well Agreement, (iii) the Completion Capital Commitment and (iv) as
described in its Form 10-K for the fiscal year ended December 31, 1998.
(k) Set forth on Exhibit C is a schedule of the nature of and the amount of
pre-development and construction costs which have been or will be incurred by
Riviera Holdings with respect to the Riviera Black Hawk prior to the Closing
Date as described in the Offering Circular.
8. Representations and Warranties of the Initial Purchaser.
The Initial Purchaser represents and warrants to, and agrees with, the
Company that:
(a) The Initial Purchaser is either a QIB or an Accredited Institution
with such knowledge and experience in financial and business matters as are
necessary in order to evaluate the merits and risks of an investment in the
Series A Notes.
(b) The Initial Purchaser (i) is not acquiring the Series A Notes with
a view to any distribution thereof or with any present intention of offering or
selling any of the Series A Notes in a transaction that would violate the Act or
the securities laws of any State of the United States or any other applicable
jurisdiction and (ii) will be reoffering and reselling the Series A Notes only
to QIBs in reliance on the exemption from the registration requirements of the
Act provided by Rule 144A and to a limited number of Accredited Institutions
that execute and deliver a letter containing certain representations and
agreements in the form attached as Annex A to the Offering Circular.
(c) The Initial Purchaser agrees that no form of general solicitation
or general advertising (within the meaning of Regulation D under the Act) has
been or will be used by the Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Series A Notes pursuant hereto,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium, or broadcast over
television or radio, or transmitted over the internet, or communicated in any
seminar or meeting whose attendees have been invited by any general solicitation
or general advertising.
(d) The Initial Purchaser agrees that, in connection with Exempt
Resales, it will solicit offers to buy the Series A Notes only from, and will
offer to sell the Series A Notes only to, Eligible Purchasers. The Initial
Purchaser further agrees that it will offer to sell the Series A Notes only to,
and will solicit offers to buy the Series A Notes only from (i) Eligible
Purchasers that the Initial Purchaser reasonably believes are QIBs and (ii)
Accredited Institutions who make the representations contained in, and execute
and return to the Initial Purchaser, a certificate in the form of Annex A
attached to the Offering Circular, in each case, that agree that (A) the Series
A Notes purchased by them may be resold, pledged or otherwise transferred within
the time period referred to under Rule 144(k) (taking into account the
provisions of Rule 144(d) under the Act, if applicable) under the Act, as in
effect on the date of the transfer of such Series A Notes, only (1) to the
Company, (2) to a person whom the seller reasonably believes is a QIB purchasing
for its own account or for the account of a QIB in a transaction meeting the
requirements of Rule 144A under the Act, (3) in an offshore transaction (as
defined in Rule 902 under the Act) meeting the requirements of Rule 904 of the
Act, (4) in a transaction meeting the
19
<PAGE>
requirements of Rule 144 under the Act, (5) to an Accredited Institution that,
prior to such transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Series A Note (the form of which is substantially the same as Annex A to the
Offering Circular) and, if such transfer is in respect of an aggregate principal
amount of Series A Notes less than $250,000, an opinion of counsel acceptable to
the Company that such transfer is in compliance with the Act, (6) in accordance
with another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company) or (7) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
applicable jurisdiction and (B) they will deliver to each person to whom such
Series A Notes or an interest therein is transferred a notice substantially to
the effect of the foregoing.
(e) None of such Initial Purchaser nor any of its affiliates or any person
acting on its or their behalf has engaged or will engage in any directed selling
efforts within the meaning of Regulation S with respect to the Series A Notes.
The Initial Purchaser acknowledges that the Company and, for purposes of
the opinions to be delivered to the Initial Purchaser pursuant to Section 10
hereof, counsel to the Company and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchaser hereby consents to such reliance.
9. Indemnification
(a) The Company and Riviera Holdings (collectively, the "Riviera
Entities"), jointly and severally, agree to indemnify and hold harmless the
Initial Purchaser, its directors, its officers and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any legal or
other expenses incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Final Offering Circular (or
any amendment or supplement thereto), the Preliminary Offering Circular or any
Rule 144A Information provided by the Company to any holder or prospective
purchaser of Series A Notes pursuant to Section 5(i) hereof or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Initial Purchaser furnished in
writing to the Company by such Initial Purchaser.
(b) The Initial Purchaser agrees to indemnify and hold harmless each of the
Riviera Entities, and their respective directors and officers and each person,
if any, who controls (within the meaning of Section 15 of the Act or Section 20
of the Exchange Act) any of the Riviera Entities, to the same extent as the
foregoing indemnity from the Riviera Entities to the Initial
20
<PAGE>
Purchaser but only with reference to information relating to the Initial
Purchaser furnished in writing to the Company by the Initial Purchaser expressly
for use in the Preliminary Offering Circular or the Final Offering Circular,
which includes only the first sentence of the third paragraph, the third
sentence of the fourth paragraph and the fifth paragraph, in each case under the
caption "Plan of Distribution" appearing of page 98 of the Final Offering
Circular.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 9(a) or 9(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 9(a) and 9(b), the Initial Purchaser shall not be required to
assume the defense of such action pursuant to this Section 9(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchaser). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by the Initial Purchaser, in the case of the parties indemnified
pursuant to Section 9(a), and by the Riviera Entities, in the case of parties
indemnified pursuant to Section 9(b). The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes
21
<PAGE>
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 9 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchaser on the other hand from the
offering of the Series A Notes or (ii) if the allocation provided by clause
9(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
9(d)(i) above but also the relative fault of the Company, on the one hand, and
the Initial Purchaser, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand and the Initial Purchaser, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Series A Notes (after underwriting discounts
and commissions, but before deducting expenses) received by the Company, and the
total discounts and commissions received by the Initial Purchaser bear to the
total price to investors of the Series A Notes, in each case as set forth in the
table on the cover page of the Offering Circular. The relative fault of the
Company, on the one hand, and the Initial Purchaser, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or the Initial Purchaser, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Riviera Entities and the Initial Purchaser agree that it would not
be just and equitable if contribution pursuant to Section 9(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 9, the Initial
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total discounts and commissions received by such Initial Purchaser
exceeds the amount of any damages which the Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(f) The remedies provided for in this Section 9 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in
22
<PAGE>
equity.
10. Conditions of Initial Purchaser's Obligations
The obligations of the Initial Purchaser to purchase the Series A Notes
under this Agreement are subject to the satisfaction of each of the following
conditions:
(a) All the representations and warranties of the Company and Riviera
Holdings contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating of the Company
or any securities of the Company (including, without limitation, the placing of
any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any "nationally
recognized statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Act, (ii) there shall not have occurred any change,
nor shall notice have been given of any potential or intended change, in the
outlook for any rating of the Company by any such rating organization and (iii)
no such rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the Notes
were marketed.
(c) Since the respective dates as of which information is given in the
Offering Circular other than as set forth in the Offering Circular (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there shall not have occurred any change in the financial condition,
earnings, business, management or operations of the Company, (ii) there shall
not have been any change or any development involving a prospective change in
the equity interests or in the long-term debt of the Company and (iii) the
Company shall not have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 10(c)(i),
10(c)(ii) or 10(c)(iii), in your reasonable judgment, is material and adverse
and, in your reasonable judgment, makes it impracticable to market the Series A
Notes on the terms and in the manner contemplated in the Offering Circular.
(d) You shall have received on the Closing Date (A) a certificate dated the
Closing Date, signed by the President and the Chief Financial Officer of the
Company (i) stating that the representations and warranties of the Company
contained in this Agreement are true and correct with the same force and effect
as if made on and as of the Closing Date; (ii) confirming the matters set forth
in clause 10(b) and 10(c) hereof and (iii) stating that the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date and (B) a certificate dated the
Closing Date, signed by the President and the Chief Financial Officer of Riviera
Holdings (i) stating that the representations and warranties of Riviera Holdings
contained in this Agreement are true and correct with the same force and effect
as if made on and as of the Closing Date; (ii) confirming the matters set forth
in clause 10(b) and 10(c) hereof and (iii) stating that Riviera Holdings has
complied with all agreements and satisfied
23
<PAGE>
all conditions on its part to be performed or satisfied at or prior to the
Closing Date
(e) You shall have received on the Closing Date an opinion (satisfactory to
you and counsel for the Initial Purchaser), dated the Closing Date, of Dechert
Price & Rhoads, counsel for the Company, substantially the form of Exhibit C
hereto.
(f). You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Initial Purchaser), dated the Closing Date, of Holme
Roberts & Owens LLP, Colorado counsel for the Company and Riviera Holdings,
substantially the form of Exhibit D hereto.
(g) You shall have received on the Closing Date an opinion (satisfactory to
you and counsel for the Initial Purchaser), dated the Closing Date, of Schreck
Morris, Nevada counsel for the Company and Riviera Holdings, substantially the
form of Exhibit E hereto.
(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Latham & Watkins, counsel for the Initial Purchaser, in form
and substance reasonably satisfactory to the Initial Purchaser.
(i) You shall have received, at the time this Agreement is executed and at
the Closing Date, letters dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to the Initial Purchaser from
Deloitte & Touche LLP, independent public accountants, containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to the Initial Purchaser with respect to the financial
statements and certain financial information contained in the Offering Circular.
(j) The Series A Notes shall have been approved by the NASD for trading and
duly listed in PORTAL.
(k) The Company, Riviera Holdings, Riviera Operating Corporation and
Riviera Gaming Management shall each have executed and delivered the Operative
Documents to which it is a party and the Initial Purchasers shall have received
fully executed copies thereof. The Operative Documents shall be in full force
and effect. The Company shall have received the requisite governmental and
regulatory approval in connection with each of the Operative Documents and
transactions contemplated by the Offering Circular to be completed on or before
the Closing Date.
(l) Neither the Company nor Riviera Holdings shall have failed at or prior
to the Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company or
Riviera Holdings at or prior to the Closing Date.
(m) The Trustee shall have received (i) a certificate of insurance
demonstrating insurance coverages of types, in amounts, with insurers and with
other terms required by the terms of the Operative Documents and (ii) executed
copies of each UCC-1 financing statement signed by the Company, naming the
Trustee as secured party and filed in such jurisdictions as the Initial
Purchaser may reasonably require.
24
<PAGE>
(n) All documents and agreements shall have been filed, and other actions
shall have been taken, as may be required to perfect the Security Interests of
the Trustee in the Collateral, and to accord the Trustee the priorities over
other creditors of the Company as contemplated by the Offering Circular and the
Operative Documents.
(o) The Trustee shall have received irrevocable commitments for title
insurance from First American Title Company, in a form and substance reasonably
satisfactory to the Initial Purchaser, subject only to Liens permitted under the
Indenture.
11. Effective Date of Agreement and Termination.
This Agreement shall become effective upon the execution and delivery of
this Agreement by the parties hereto.
This Agreement may be terminated at any time prior to the Closing Date by
the Initial Purchaser by written notice to the Company if any of the following
has occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in the Initial
Purchaser's judgment, is material and adverse and, in the Initial Purchaser's
reasonable judgment, makes it impracticable to market the Series A Notes on the
terms and in the manner contemplated in the Offering Circular, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your reasonable opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the
Company, (v) the declaration of a banking moratorium by either federal or New
York State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
your reasonable opinion has a material adverse effect on the financial markets
in the United States.
12. Representations and Indemnities to Survive
The respective indemnities, contribution agreements, representations,
warranties and other statements of each of the Company, Riviera Holdings and the
Initial Purchaser set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of the Initial Purchaser, the officers
or directors of the Initial Purchaser, any person controlling the Initial
Purchaser, the Company, Riviera Holding, the officers or directors of each of
them, or any person controlling any of them, (ii) acceptance of the Series A
Notes and payment for them hereunder and (iii) termination of this Agreement.
25
<PAGE>
13. Notices
Any such statements, requests, notices or agreements shall take effect at
the time of receipt thereof. All statements, requests notices and agreements
(each a "Notice") hereunder shall be in writing, and:
(a) If to the Initial Purchaser, Notices shall be delivered or sent by
mail, telex or facsimile transmission to the Initial Purchaser as follows:
Jefferies & Company, Inc.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Attention: Brent Stevens
Fax: (310) 575-5166
(b) If to the Company, Notices shall be delivered or sent by mail, telex,
or facsimile transmission to the address of the Company as follows:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Attention: President
Fax: (303) 582-5693
(c) If to Riviera Holdings, Notices shall be delivered or sent by mail,
telex, or facsimile transmission to the address of Riviera Holdings as follows:
Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: President
Fax: (702) 794-9277
14. Applicable Law
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
15. Counterparts
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
16. Third Parties
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, Riviera Holdings, the
Initial
26
<PAGE>
Purchaser, the Initial Purchaser's directors and officers, any controlling
persons referred to herein, the directors of the Company and its successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" shall not include a purchaser of any of the Series
A Notes from the Initial Purchaser merely because of such purchase.
17. Other Fees and Expenses
If for any reason the Series A Notes are not delivered by or on behalf of
the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 11 hereof), the Company agrees to reimburse
the Initial Purchaser for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by it. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has agreed
to pay pursuant to Section 5(j) hereof. The Company also agrees to reimburse the
Initial Purchaser and its officers, directors and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all fees and expenses (including
without limitation the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including without
limitation its rights under Section 9 hereof).
(Signature Page Follows)
27
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Very truly yours,
RIVIERA BLACK HAWK, INC.
By:---------------------------------------
Name: Duane Krohn
Title: Chief Financial Officer, Treasurer
and Secretary
RIVIERA HOLDINGS CORPORATION
By:---------------------------------------
Name: Duane Krohn
Title: Treasurer
Accepted and Agreed to:
JEFFERIES & COMPANY, INC.
By:----------------------
Name: M. Brent Stevens
Title: Managing Director
(Signature Page to Purchase Agreement)
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
A-1
<PAGE>
EXHIBIT B
SCHEDULE OF COSTS
Through the date hereof, Riviera Holdings Corporation, a Nevada
corporation, has advanced $30,121,526 (consisting of an equity contribution of
$20,000,000 and a loan of $10,121,526) to Riviera Black Hawk, Inc., a Colorado
corporation. All of these amounts were used by Riviera Black Hawk Inc. for the
purchase of land upon which the Riviera Black Hawk Casino is being constructed
and to pay for hard and soft construction costs relating to the Riviera Black
Hawk Casino.
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement (this "Agreement") dated as of June 3, 1999,
between Riviera Black Hawk, Inc., a Colorado corporation (the "Company"), and
Jefferies & Company, Inc. (the "Initial Purchaser"), who has agreed to purchase
the Company's 13% Series A First Mortgage Notes due 2005 With Contingent
Interest (the "Series A Notes") pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement dated May 27,
1999 (the "Purchase Agreement"), among the Company, Riviera Holdings
Corporation, a Nevada corporation, and the Initial Purchaser. In order to induce
the Initial Purchaser to purchase the Series A Notes, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Initial
Purchaser set forth in Section 4 of the Purchase Agreement. Capitalized terms
used herein and not otherwise defined shall have the meaning assigned to them in
the Indenture, as amended, supplemented or otherwise modified from time to time,
(the "Indenture") between the Company and IBJ Whitehall Bank & Trust Company, as
trustee, relating to the Series A Notes and the Series B Notes (as defined
below).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Notes, as defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of
this Agreement upon the occurrence of (a) the filing and effectiveness under the
Act of the Exchange Offer Registration Statement relating to the Series B Notes
to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the period required pursuant to Section
3(b) hereof and (c) the delivery by the Company to the Registrar under the
Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
<PAGE>
Consummation Deadline: As defined in Section 3(b) hereof.
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser proposes to
sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and to certain "accredited
investors," as such term is defined in Rule 501(a)(1), (2), (3) and (7) of
Regulation D under the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holders: As defined in Section 2 hereof.
Prospectus: The prospectus included in a Registration Statement at the time
such Registration Statement is declared effective, as amended or supplemented by
any prospectus supplement and by all other amendments thereto, including
post-effective amendments, and all material incorporated by reference into such
Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company relating
to (a) an offering of Series B Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, in each case, (i) that is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Company's 13% Series B First Mortgage Notes due 2005
With Contingent Interest to be issued pursuant to the Indenture: (i) in the
Exchange Offer or (ii) as contemplated by Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
2
<PAGE>
Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture. ---
Transfer Restricted Securities: Each (A) Series A Note, until the earliest
to occur of (i) the date on which such Series A Note is exchanged in the
Exchange Offer for a Series B Note which is entitled to be resold to the public
by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (ii) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (iii) the date on which
such Series A Note is distributed to the public pursuant to Rule 144 under the
Act and each (B) Series B Note held by a Broker-Dealer until the date on which
such Series B Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company shall (i) cause the Exchange Offer Registration Statement to
be filed with the Commission as soon as practicable after the Closing Date, but
in no event later than 45 days after the Closing Date (such 45th day being the
"Filing Deadline"), (ii) use its best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 150 days after the Closing Date (such 150th day being the
"Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause it to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the Series B Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting (i)
registration of the Series B Notes to be offered in exchange for the Series A
Notes that are Transfer Restricted Securities and (ii) resales of Series B Notes
by Broker-Dealers that tendered into the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) as contemplated by Section
3(c) below.
(b) The Company shall use its best efforts to cause the Exchange Offer
Registration Statement to be effective continuously, and shall keep the Exchange
Offer open for a period
3
<PAGE>
of not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 Business Days. The Company shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Series B Notes shall be included in the
Exchange Offer Registration Statement. The Company shall use its best efforts to
cause the Exchange Offer to be Consummated on the earliest practicable date
after the Exchange Offer Registration Statement has become effective, but in no
event later than 30 business days thereafter (such 30th day being the
"Consummation Deadline").
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. See the Shearman & Sterling no-action letter (available
July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company shall
permit the use of the Prospectus contained in the Exchange Offer Registration
Statement by such Broker-Dealer to satisfy such prospectus delivery requirement.
To the extent necessary to ensure that the prospectus contained in the Exchange
Offer Registration Statement is available for sales of Series B Notes by
Broker-Dealers, the Company agrees to use its best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented, amended and
current as required by and subject to the provisions of Section 6(a) and (c)
hereof and in conformity with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of one year from the Consummation Deadline or such shorter
period as will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Company shall
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than one day after
such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Company has complied with the procedures set forth in
Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 Business Days following the Consummation
Deadline that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the Series
B
4
<PAGE>
Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Notes acquired directly from
the Company or any of its Affiliates, then the Company shall:
(x) cause to be filed, on or prior to 45 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above (such
earlier date, the "Filing Deadline"), a shelf registration statement pursuant to
Rule 415 under the Act (which may be an amendment to the Exchange Offer
Registration Statement (the "Shelf Registration Statement")), relating to all
Transfer Restricted Securities, and
(y) shall use its best efforts to cause such Shelf Registration Statement
to become effective on or prior to 120 days after the Filing Deadline for the
Shelf Registration Statement (such 120th day the "Effectiveness Deadline").
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company shall
use its best efforts to keep any Shelf Registration Statement required by this
Section 4(a) continuously effective, supplemented, amended and current as
required by and subject to the provisions of Sections 6(b) and (c) hereof and in
conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the Closing Date, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
5
<PAGE>
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself declared effective immediately (each such event referred to in clauses
(i) through (iv), a "Registration Default"), then the Company hereby agrees to
pay to each Holder of Transfer Restricted Securities affected thereby liquidated
damages in an amount equal to $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities held by such Holder for each week or portion
thereof that the Registration Default continues for the first 90-day period
immediately following the occurrence of such Registration Default. The amount of
the liquidated damages shall increase by an additional $.05 per week per $1,000
in principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 in principal
amount of Transfer Restricted Securities; provided that the Company shall in no
event be required to pay liquidated damages for more than one Registration
Default at any given time. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company to pay liquidated damages with respect to securities shall survive until
such time as such obligations with respect to such securities shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company shall (x) comply with all applicable provisions of Section
6(c) below, (y) use its best efforts to effect such exchange and to permit the
resale of Series B Notes by Broker-Dealers that tendered in the Exchange Offer
Series A Notes that such Broker-Dealer acquired for its own account as a result
of its market making activities or other trading activities (other than Series A
Notes acquired directly from the Company or any of its Affiliates) being sold in
accordance with
6
<PAGE>
the intended method or methods of distribution thereof, and (z) comply with all
of the following provisions:
(i) If, following the date hereof there has been announced a change in
Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company hereby agrees to seek a no-action
letter or other favorable decision from the Commission allowing the Company
to Consummate an Exchange Offer for such Transfer Restricted Securities.
The Company hereby agrees to pursue the issuance of such a decision to the
Commission staff level. In connection with the foregoing, the Company
hereby agrees to take all such other actions as may be requested by the
Commission or otherwise required in connection with the issuance of such
decision, including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases,
if any, upon which such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursuing a resolution (which need
not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker- Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to
the effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Series B Notes to be issued in the Exchange Offer and (C) it is acquiring
the Series B Notes in its ordinary course of business. As a condition to
its participation in the Exchange Offer, each Holder using the Exchange
Offer to participate in a distribution of the Series B Notes shall
acknowledge and agree that, if the resales are of Series B Notes obtained
by such Holder in exchange for Series A Notes acquired directly from the
Company or an Affiliate thereof, it (1) could not, under Commission policy
as in effect on the date of this Agreement, rely on the position of the
Commission enunciated in Morgan Stanley and Co., Inc. (available June 5,
1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
1993, and similar no-action letters (including, if applicable, any
no-action letter obtained pursuant to clause (i) above), and (2) must
comply with the registration and prospectus delivery requirements of the
Act in connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective registration
statement containing the selling security holder information required by
Item 507 or 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) as interpreted in the Commission's letter to
7
<PAGE>
Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action
letter obtained pursuant to clause (i) above, (B) including a
representation that the Company has not entered into any arrangement or
understanding with any Person to distribute the Series B Notes to be
received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer and (C)
any other undertaking or representation required by the Commission as set
forth in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Company shall:
(i) comply with all the provisions of Section 6(c) below and use its
best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished
to the Company pursuant to Section 4(b) hereof), and pursuant thereto the
Company will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which
form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof
within the time periods and otherwise in accordance with the provisions
hereof, and
(ii) issue, upon the request of any Holder or purchaser of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement
for this purpose and issue the Series B Notes to the purchaser(s) of
securities subject to the Shelf Registration Statement in the names as such
purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain an untrue
statement of material fact or omit to state any material fact necessary to
make the statements therein not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company shall file promptly an appropriate
amendment to such Registration Statement curing such defect, and, if
Commission review is required, use its best efforts to cause such amendment
to be declared effective as soon as practicable.
8
<PAGE>
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may be;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Act, and to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth
in such Registration Statement or supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws, the
Company shall use its best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each Holder in connection with such exchange or sale,
if any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or
9
<PAGE>
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders in connection with such
sale, if any, for a period of at least five Business Days, and the Company
will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which such
Holders shall reasonably object within five Business Days after the receipt
thereof. A Holder shall be deemed to have reasonably objected to such
filing if such Registration Statement, amendment, Prospectus or supplement,
as applicable, as proposed to be filed, contains a material misstatement or
omission or fails to comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each Holder in connection with such
exchange or sale, if any, make the Company's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as
such Holders may reasonably request;
(vii) make available, at reasonable times, for inspection by each
Holder and any attorney or accountant retained by such Holders, all
financial and other records, pertinent corporate documents of the Company
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder, attorney or accountant
in connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(viii) if requested by any Holders in connection with such exchange or
sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities; and make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(ix) furnish to each Holder in connection with such exchange or sale,
without charge, at least one copy of the Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Holder reasonably may request; the Company
hereby consents to the use (in accordance with law) of the Prospectus and
any amendment or supplement thereto by each selling Holder in connection
with the offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto;
10
<PAGE>
(xi) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any applicable Registration Statement contemplated
by this Agreement as may be reasonably requested by any Holder in
connection with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Company shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3), use its best efforts to cause to be furnished)
to each Holder, upon Consummation of the Exchange Offer or upon the
effectiveness of the Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the
Company by (x) the President or a Vice President and (y) a
principal financial or accounting officer of the Company,
confirming, as of the date thereof, the matters set forth in
Sections 6(w), 10(a) and 10(b) of the Purchase Agreement and such
other similar matters as such Holders may reasonably request;
(2) opinions, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company
covering matters similar to those set forth in paragraphs (e),
(f) and (g) of Section 10 of the Purchase Agreement and such
other matters as such Holder may reasonably request, and in any
event including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis
of the foregoing (relying as to materiality to the extent such
counsel deems appropriate upon the statements of officers and
other representatives of the Company and without independent
check or verification), no facts came to such counsel's attention
that caused such counsel to believe that the applicable
Registration Statement, at the time such Registration Statement
or any post-effective amendment thereto became effective and, in
the case of the Exchange Offer Registration Statement, as of the
date of Consummation of the Exchange Offer, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer, as
of the date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the
11
<PAGE>
statements therein, in the light of the circumstances under which
they were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the case
may be, from the Company's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 10(i) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance
with the matters covered in clause (A) above and with any customary
conditions contained in the any agreement entered into by the Company
pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the selling
Holders may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to register or
qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such sale
of Transfer Restricted Securities;
(xiv) use its best efforts to cause the disposition of the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (xii) above;
12
<PAGE>
(xv) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders with regard to any applicable Registration Statement,
as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
(xvii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee and
the Holders to effect such changes to the Indenture as may be required for
such Indenture to be so qualified in accordance with the terms of the TIA;
and execute and use its best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
13
<PAGE>
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Series B Notes
to be issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company and the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Series B Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities who are
tendering Series A Notes into in the Exchange Offer and/or selling or reselling
Series A Notes or Series B Notes pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel, who shall be Latham & Watkins, unless another firm shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder, its
directors, officers and each person, if any, who controls such Holder (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from
and against any and all losses, claims, damages, liabilities, judgments,
(including without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action that
could give rise to any such losses, claims, damages, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto) provided by the Company to any Holder
or any prospective purchaser of Series B Notes or registered Series A Notes, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Company by any of the Holders.
14
<PAGE>
(b) Each Holder of Transfer Restricted agrees, severally and not jointly,
to indemnify and hold harmless the Company and its directors and officers, and
each person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) the Company, to the same extent as the
foregoing indemnity from the Company set forth in section (a) above, but only
with reference to information relating to such Holder furnished in writing to
the Company by such Holder expressly for use in any Registration Statement. In
no event shall any Holder, its directors, officers or any person who controls
such Holder be liable or responsible for any amount in excess of the amount by
which the total amount received by such Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages that such Holder, its directors, officers or any
person who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have
15
<PAGE>
received a request from the indemnified party for reimbursement for the fees and
expenses of counsel (in any case where such fees and expenses are at the expense
of the indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement request.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in respect
of which the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Holders, on the other hand, from their sale of Transfer Restricted
Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company, on the one hand, and of the Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand,
and of the Holder, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by the Holder, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and judgments referred to above shall be deemed to include, subject
to the limitations set forth in the second paragraph of Section 8(a), any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any matter, including any action
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Holder, its
directors, its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total received by such Holder with respect to the
16
<PAGE>
sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
SECTION 9. RULE 144A and RULE 144
The Company agrees with each Holder, for so long as any Transfer Restricted
Securities remain outstanding and during any period in which the Company (i) is
not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon
request of any Holder, to such Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and
(ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Sections 3 and 4 hereof may result
in injury to the Initial Purchaser or the Holders for which monetary damages
would not be an adequate remedy at law, and that, in the event of any such
failure, the Initial Purchaser or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Sections 3 and
4 hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the date
hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding
17
<PAGE>
the foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose Transfer Restricted
Securities are being tendered pursuant to the Exchange Offer, and that does not
affect directly or indirectly the rights of other Holders whose Transfer
Restricted Securities are not being tendered pursuant to such Exchange Offer,
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party beneficiaries
to the agreements made hereunder between the Company, on the one hand, and the
Initial Purchaser, on the other hand, and shall have the right to enforce such
agreements directly to the extent they may deem such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier, or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Telecopier No.: (303) 582-5693
Attention: President
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
Telecopier No.: (212) 698-3599
Attention: Frederic J. Klink, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without
18
<PAGE>
the need for an express assignment, subsequent Holders; provided, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Transfer Restricted Securities in violation of the terms hereof or of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Transfer Restricted Securities in any manner, whether by operation of
law or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(Signature Page Follows)
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
RIVIERA BLACK HAWK, INC.
By:
---------------------------------
Name: Duane Krohn
Title: Chief Financial Officer, Treasurer
and Treasurer
JEFFERIES & COMPANY, INC.
By:
--------------------------------
Name: M. Brent Stevens
Title: Managing Director
(Signature Page to Registration Rights Agreement)
________ __, 1999
Riviera Black Hawk, Inc.
c/o Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Re: Riviera Black Hawk 13% First Mortgage Notes due 2005 With
Contingent Interest
---------------------------------------------------------
Dear Sirs:
We have acted as counsel for Riviera Black Hawk, Inc., a Colorado
corporation (the "Registrant") and Riviera Holdings Corporation, a Nevada
Corporation ("Riviera Holdings") in connection with the filing by the Registrant
of a Registration Statement on Form S-4, Registration No. 333-_____, together
with the amendments thereto (the "Registration Statement"), with the Securities
and Exchange Commission for the purpose of registering $45 million aggregate
principal amount of the Registrant's 13% First Mortgage Notes due 2005 With
Contingent Interest (the "New Notes") under the Securities Act of 1933, as
amended (the "Act"). The New Notes are to be issued in exchange for an equal
aggregate principal amount of the Registrant's outstanding 13% First Mortgage
Notes due 2005 With Contingent Interest (the "Existing Notes") pursuant to the
Registration Rights Agreement, dated as of June 3, 1999, by and between the
Registrant and Jefferies & Company, Inc., which has been filed as Exhibit 4.04
to the Registration Statement. The New Notes are to be issued pursuant to the
terms of the indenture, dated as of June 3, 1999, (the "Indenture") between the
Registrant and IBJ Whitehall Bank & Trust Company, as trustee (the "Trustee"),
which has been filed as Exhibit 4.01 to the Registration Statement. The
Indenture is to be qualified under the Trust Indenture Act of 1939, as amended
(the "TIA").
In connection with the foregoing, we have reviewed such records,
documents, agreements and certificates, and examined such questions of law, as
we have considered necessary or appropriate for the purpose of this opinion. In
making our examination of records, documents, agreements and certificates, we
have assumed the authenticity of the same, the correctness of the information
contained therein, the genuineness of all signatures, the authority of all
persons entering and maintaining records or executing documents, agreements and
certificates, and the conformity to authentic originals of all items submitted
to us as copies (whether certified, conformed, photostatic or by other
electronic means) of records, documents, agreements or certificates. In
rendering our opinion, we have relied as to factual matters upon certificates of
public officials and certificates and representations of officers of the
Registrant.
<PAGE>
We have assumed that the Indenture has been duly authorized, executed
and delivered by the Trustee and constitutes a legal, valid and binding
agreement of the Trustee. In addition, we have assumed that there will be no
changes in applicable law between the date of this opinion and the date of
issuance and delivery of the New Notes.
Based upon the foregoing and having regard for such legal
considerations as we deem relevant, we are of the opinion that:
The New Notes have been duly authorized by the Registrant. When (i) the
Registration Statement has been declared effective, (ii) the Indenture has been
duly qualified under the TIA, (iii) the New Notes have been duly executed by the
Registrant, (iv) the New Notes have been duly authenticated by the Trustee in
accordance with the terms of the Indenture, and (v) the New Notes have been
issued and delivered in exchange for the Existing Notes in accordance with the
terms set forth in the prospectus included in the Registration Statement, then
upon the occurrence of all of the foregoing, the New Notes will be the valid and
binding obligations of the Registrant.
This opinion is being delivered to the Registrant in connection with
the filing of the Registration Statement and for no other purpose. We are
members of the Bar of the State of New York, and we express no opinion as to the
laws of any jurisdiction other than the federal laws of the United States of
America and the laws of the State of New York.
We hereby consent to the filing of this opinion as Exhibit 5.01 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the prospectus which is included in the Registration Statement. In
giving the foregoing consent, we do not admit that we come within the category
of persons whose consent is required by the Act or the rules and regulations
promulgated thereunder.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
COMPLETION CAPITAL COMMITMENT
COMPLETION CAPITAL COMMITMENT (this "Commitment") dated as of June 3,
1999, between RIVIERA HOLDINGS CORPORATION, a Nevada corporation ("Riveria
Holdings"), and RIVIERA BLACK HAWK, INC., a Colorado corporation (the
"Company").
RECITALS
A. First Mortgage Notes. The Company has issued $45,000,000 aggregate
principal amount of 13% First Mortgage Notes due 2005 With Contingent Interest
(together with all notes issued in exchange or replacement therefor, the
"Notes") pursuant to an Indenture (as amended, supplemented or otherwise
modified from time to time, the "Indenture") dated as of the date hereof between
the Company and IBJ Whitehall Bank & Trust Company, a New York banking
association, as trustee (the "Trustee"), for the benefit of the holders from
time to time (the "Holders") of the Notes.
B. Proceeds of the Notes. The Company will use the proceeds of the
Notes for the development, construction, equipping and operation of the Riviera
Black Hawk (as defined in the Indenture) upon certain real property located in
Black Hawk, Colorado (the "Property") and for certain other purposes described
in the Indenture.
C. Riviera Holdings' Benefit. The Company is a wholly-owned subsidiary
of Riviera Holdings and, as a result, Riviera Holdings will significantly
benefit from the construction and operation of the Riviera Black Hawk.
D. Material Inducement. It is a condition precedent and material
inducement to the purchase of the Notes that (1) Riviera Holdings and the
Company shall have executed and delivered this Commitment whereby Riviera
Holdings has agreed that it will commit, subject to the limitations set forth
herein, for the benefit of the Company and the Holders, to make capital
contributions to the Company upon the terms, conditions and limitations provided
herein, (2) the Company shall have executed the Collateral Assignment assigning
this Commitment, among other things, to the Trustee, and (3) Riviera Holdings
shall have executed and delivered the Consent to Collateral Assignment of
Completion Capital Commitment pursuant to which, among other things, Riviera
Holdings consents to the Company's assignment of this Commitment to the Trustee.
E. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in the Indenture.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Riviera Holdings and the Company hereby agree as follows:
<PAGE>
1. Funding Amounts. Upon the occurrence of each Contribution Event (as
defined below), Riviera Holdings shall pay, after receipt of the notice
described in Sections 3 or 4 below, the applicable Funding Amounts (as defined
below) into the Construction Disbursement Account for disbursement in accordance
with the Cash Collateral and Disbursement Agreement. For the purposes of
Sections 2(i), 2(ii) and 2(iii) below, the "Funding Amounts" shall be equal to
the amount in immediately available cash determined by the Independent
Construction Consultant, based upon the Construction Disbursement Budget, to be
necessary to cause a Contribution Event to no longer exist; provided, however,
that in no event shall the aggregate amount of all Funding Amounts paid pursuant
hereto exceed $10,000,000; provided, further, that for purposes of Sections
2(iv), 2(v) and 2(vi) below, the Funding Amounts shall be equal to the
difference between $10,000,000 and the aggregate Funding Amounts, if any,
previously paid under Section 2. Such proceeds shall be used for the
development, construction, equipping and operations of the Riviera Black Hawk
pursuant to the terms of the Indenture, the Cash Collateral and Disbursement
Agreement and the other Collateral Documents.
2. Contribution Event. A "Contribution Event" means any of the
following: (i) there are insufficient Available Funds (as defined in the Cash
Collateral and Disbursement Agreement) to complete the development,
construction, equipping and opening of the Riviera Black Hawk so that it is
Operating by the Operating Deadline; (ii) the Company has provided the Trustee
and the Independent Construction Consultant with a written notice that it is
unlikely that there shall be sufficient Available Funds to complete the
development, construction, equipping and opening of the Riviera Black Hawk so
that it is Operating by the Operating Deadline; (iii) (a) the Independent
Construction Consultant has provided the Trustee and the Company with a written
notice that it is unlikely that there will be sufficient Available Funds
(excluding any Additional Revenues (as defined in the Cash Collateral and
Disbursement Agreement)) to complete the development, construction, equipping
and opening of the Riviera Black Hawk so that it is Operating by the Operating
Deadline and (b) within ten days of the Company receiving notice described in
clause (a) above, the Company has not provided evidence satisfactory to the
Independent Construction Consultant that there shall be sufficient Additional
Funds (including the amount of Additional Revenues) to complete the development,
construction, equipping and opening of the Riviera Black Hawk so that it is
Operating by the Operating Deadline; (iv) the Riviera Black Hawk is not
Operating by the Operating Deadline; (v) the commencement of any voluntary
bankruptcy case by the Company on or prior to May 31, 2000; or (vi) the
commencement of an involuntary bankruptcy case against the Company which is not
dismissed, bonded or discharged on or prior to the earlier of (A) 60 days after
the commencement and (B) May 31, 2000, or (3) the entry of an order for relief
against the Company prior to May 31, 2000, under any bankruptcy law in effect at
any time.
3. Independent Construction Consultant Certificate. Upon the
occurrence of each Contribution Event occuring under Sections 2(i), 2(ii) and
2(iii) above (after, with respect to Section 2(iii) only, the expiration of the
ten day period set forth in subsection (b) thereof), the Independent
Construction Consultant shall provide the Company and Riviera Holdings with
written notice setting forth its determination of the Funding Amounts required
to be contributed to the Company pursuant to Section 1 hereof with respect to
such Contribution Event and the basis of its determination.
2
<PAGE>
4. Company's Certificate. Upon the occurrence of each Contribution
Event occuring under Sections 2(iv), 2(v) and 2(vi) above, the Company shall
provide written notice to Riviera Holdings of such Contribution Event setting
forth its determination of the Funding Amounts required to be contributed to the
Company pursuant to Section 1 hereof with respect to such Contribution Event and
the basis of its determination.
5. Cooperation. In connection with this Agreement, Riviera Holdings
agrees, at its sole cost and expense, to fully cooperate with the Company and to
timely provide such documents, agreements and information as may be required in
connection herewith.
6. Ability to Comply With This Agreement. Riviera Holdings shall, at
all times prior to the fulfillment of all of its obligations under this
Agreement, ensure that it has the ability to fulfill all of such obligations
under all other agreements to which it is a party, including the Indenture dated
as of August 13, 1997, among Riviera Holdings, the subsidiary guarantors
identified therein and Norwest Bank Minnesota, National Association, as trustee,
relating to the issuance of $175,000,000 principal amount of 10% First Mortgage
Notes due 2004 of Riviera Holdings.
In addition, Riviera Holdings shall not, at any time prior to the
fulfillment of all of its obligations under this Agreement, permit any other
agreement to which it is a party to in any way prohibit or interfere with its
ability to fulfill its obligations under this Agreement.
7. Alteration of Obligations. Riviera Holdings acknowledges and agrees
that none of the following shall release, impair, reduce, diminish or otherwise
affect Riviera Holdings' obligations under this Commitment: (i) any alteration,
compromise, acceleration or extension of, or any change to, (a) the Company's
obligations to complete the development, construction and equipping of the
Riviera Black Hawk and to commence operation thereof or (b) the payment or
performance by the Company or any guarantor under any debt instrument or other
financing for the development, construction, equipping or operation of the
Riviera Black Hawk (the foregoing, collectively, the "Obligations"), in each
case in such manner, upon such terms and at such times as any Person (including,
without limitation, the Trustee or any Holder) (each such Person, an "Obligee")
deems best, and without notice to Riviera Holdings; (ii) the release of the
Company or any guarantor from any or all of the Obligations by acceptance of a
deed in lieu of foreclosure or otherwise, as to all or any portion of the
Obligations; (iii) the release, substitution or addition of any one or more
guarantors or endorsers of the Funding Amounts or the Obligations; (iv) the
acceptance of additional or substitute security for the Funding Amounts or the
Obligations; or (v) the release or subordination of any security for the Funding
Amounts or the Obligations. No exercise (including, without limitation,
foreclosure of the Property) or non-exercise of any right under any document
relating to the Obligations (collectively, the "Obligation Documents") by an
Obligee, no dealing by an Obligee hereunder or under any Obligation Document or
any other document with Riviera Holdings, the Company or any other guarantors or
any other Person, and no change, impairment or release of all or any portion of
the Funding Amounts or the Obligations or suspension of any right or remedy of
an Obligee against any other Person, including, without limitation, the Company
or any other such guarantor, endorser or other Person, shall in any way affect
any of the obligations of Riviera Holdings hereunder or any security furnished
by Riviera Holdings or give Riviera Holdings any recourse against an Obligee
(including, without limitation,
3
<PAGE>
the Trustee). If an Obligee has exculpated or hereafter exculpates the Company
from liability in whole or in part, or has agreed or hereafter agrees to look
solely to the Property or any other property for the satisfaction of the
Company's Obligations (including, without limitation the Company's obligations
under the Indenture, the Notes or any Collateral Document), such exculpation and
agreement shall not affect the obligations of Riviera Holdings hereunder.
Riviera Holdings further acknowledges that any such exculpation or agreement
that has been given or that is hereafter given to the Company with respect to
the Notes, the Indenture or any Collateral Document has been given or is given
in reliance upon the covenants of Riviera Holdings contained herein.
8. Obligations Absolute; Waiver. The obligations of Riviera Holdings
hereunder shall be unconditional (except as to any condition set forth under
Sections 1 and 2), absolute and continuing and, without limiting the generality
of the foregoing, shall not be released, discharged or otherwise affected by and
shall survive, and Riviera Holdings hereby waives and relinquishes all rights
and remedies accorded by applicable law to sureties or guarantors and agrees not
to assert or take advantage of any such rights or remedies, including, without
limitation, (a) any right to require any holder or recipient of the benefit of
any of the Obligations (including, without limitation, the Trustee or the
Holders) (each a "Benefited Party") to proceed against the Company or any other
Person or entity or to proceed against or exhaust any security held by a
Benefited Party at any time or to pursue any other remedy in the power of a
Benefited Party before proceeding against Riviera Holdings; (b) the defense of
the statute of limitations in any action hereunder or in any action for the
collection or performance of the Funding Amounts or the Obligations; (c) any
defense that may arise by reason of the incapacity, lack of authority, death or
disability of any other Person or the failure of a Benefited Party to file or
enforce a claim against the estate (in administration, bankruptcy or any other
proceeding) of any other Person; (d) appraisal, valuation, stay, extension,
marshaling of assets, redemption, exemption, diligence, demand, presentment,
protest and notice of any kind, including, without limitation, notice of the
existence, creation or incurring of any new or additional indebtedness or
obligation or of any action, non-action, performance or failure to perform on
the part of a Benefited Party, the Company, any endorser or creditor of the
Company or Riviera Holdings or on the part of any other Person under this or any
other instrument in connection with any obligation or evidence of indebtedness
held by a Benefited Party as collateral or in connection with the Funding
Amounts or the Obligations; (e) any defense based upon any exercise of remedies,
including without limitation, foreclosure of the Property, or upon an election
of remedies by a Benefited Party, including, without limitation, an election to
proceed by non-judicial rather than judicial foreclosure, which destroys or
otherwise impairs the subrogation rights of Riviera Holdings, the right of
Riviera Holdings to proceed against the Company or any other person for
reimbursement, or both; (f) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (g) any duty
on the part of a Benefited Party to disclose to Riviera Holdings any facts a
Benefited Party may now or hereafter know about the Company or any other Person,
regardless of whether a Benefited Party has reason to believe that any such
facts materially increase the risk beyond that which Riviera Holdings intends to
assume, or has reason to believe that such facts are unknown to Riviera
Holdings, or has a reasonable opportunity to communicate such facts to Riviera
Holdings, since Riviera Holdings acknowledges that Riviera Holdings is fully
responsible for being and keeping informed of the financial condition of the
Company or any other Person and of all
4
<PAGE>
circumstances bearing on the risk of non-payment of any Funding Amounts; (h) any
defense arising because of the election of a Benefited Party, in any proceeding
instituted under the Federal Bankruptcy Code, of the application of Section
1111(b)(2) of the Federal Bankruptcy Code; (i) any defense based upon any
borrowing or grant of a security interest under Section 364 of the Federal
Bankruptcy Code; (j) any claim or other rights which it may now or hereafter
acquire against the Company or any other Person that arises from the existence
or performance of Riviera Holdings' obligations under this Commitment or any
other Obligation Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy by a Benefited Party against the
Company or any collateral which a Benefited Party now has or hereafter acquires,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, by any payment made hereunder or otherwise, including,
without limitation, the right to take or receive from the Company or any other
Person or entity, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim or
other rights; (k) any rights which it may acquire by way of contribution under
this Commitment or any Obligation Document, by any payment made hereunder or
otherwise, including, without limitation, the right to take or receive from any
other Person, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such contribution rights;
(l) any defense based on one-action laws and any other anti-deficiency
protections granted to guarantors by applicable law; (m) any merger or
consolidation of the Company into or with any other Person, or any sale, lease
or transfer of any or all of the assets of the Company to any other Person; (n)
any circumstance which might constitute a defense available to, or a discharge
of, the Company, Riviera Holdings or a surety; (o) any lack of genuiness,
validity, regularity, enforceability or value of any Funding Amounts, this
Commitment or any Obligation Document; and (p) any other fact or circumstance,
including, without limitation, any construction delays or any contests or claims
relating to the construction of the Riviera Black Hawk. Any proceeds of a
foreclosure or similar sale may be applied first to any obligations of the
Company that do not also constitute Funding Amounts or Obligations. Riviera
Holdings acknowledges and agrees that any nonrecourse or exculpation provided
for in any Obligation Document, or any other provision of an Obligation Document
limiting each respective Benefited Party's recourse to specific collateral or
limiting such Benefited Party's right to enforce a deficiency judgment against
the Company, shall have absolutely no application to Riviera Holdings's
liability under this Commitment. To the extent that any Benefited Party
(including, without limitation, the Trustee) collects or receives any sums or
payments from the Company or from any guarantor, endorser or other Person under
any Obligation Document or realized from any security, such Benefited Party
shall have the right, but not the obligation, to apply such amounts first to
that portion of the Company's indebtedness and obligations, if any, to such
Benefited Party that is not covered by this Commitment, regardless of the manner
in which any such payments or amounts are characterized by the Person making
payment. Nothing herein shall be construed to be a waiver by Riviera Holdings of
any defense based on the occurrence or non-occurrence of a Contribution Event or
as to the Funding Amount.
5
<PAGE>
9. Bankruptcy and Related Proceedings. The obligations of Riviera
Holdings under this Commitment shall not be altered, limited or affected by or
as a result of any action taken by the Company in any proceeding, voluntary or
involuntary, involving the bankruptcy, reorganization, insolvency, receivership,
or liquidation of the Company, or by any defense which the Company may have by
reason of any order, decree or decision of any court or administrative body
resulting from any such proceeding.
10. Interest. If Riviera Holdings fails to pay all or any portion of
the Funding Amounts in accordance with the provisions hereof, the amount of such
Funding Amounts and all other sums payable by Riviera Holdings hereunder shall
bear interest from the date of demand at the highest rate applicable to the
principal balance of the Notes.
11. Independent Obligations. The obligations of Riviera Holdings
hereunder are independent of the obligations of the Company or any other Person,
and, in the event of any default hereunder, a separate action or actions may be
brought and prosecuted against Riviera Holdings, whether or not the Company or
such other Person is joined therein or a separate action or actions are brought
against the Company.
12. Notices. Whenever Riviera Holdings or the Company shall desire to
give or serve any notice, demand, request or other communication with respect to
this Commitment, each such notice shall be in writing and shall be effective
only if the same is delivered by hand-delivery, first-class mail (registered or
certified, return receipt requested), telecopier or air courier guaranteeing
overnight delivery, addressed as follows:
To Riviera Holdings:
Riviera Holdings Corporation
2701 Las Vegas Boulvard South
Las Vegas, Nevada 89109
Attention: Executive Vice President of Finance
Telephone: (702) 734-5110
Facsimile: (702) 734-9277
To the Company:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Attention: Executive Vice President of Finance
Telephone: (702) 734-5110
Facsimile: (702) 734-9277
6
<PAGE>
and, in either case, with a copy to the Trustee at:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Thomas S. Moser
Telephone: (212) 858-2558
Facsimile: (212) 858-2956
Any such notice delivered personally shall be deemed to have been received upon
delivery. Any such notice sent by telegram shall be presumed to have been
received by the addressee one business day after its acceptance for sending by
an authorized carrier thereof. Any such notice sent by mail shall be presumed to
have been received by the addressee three business days after posting in the
United States mail. Riviera Holdings or the Company may change its address by
giving the other and the Trustee a written notice of the new address as herein
provided.
13. Successors and Assigns. This Commitment shall inure to the benefit
of the Company, its successors and assigns, and shall bind the successors and
assigns of Riviera Holdings.
14. Termination. This Commitment shall expire upon the later of (i)
the final disbursement of amounts in the Cash Collateral Accounts in accordance
with the Cash Collateral and Disbursement Agreement and (ii) May 31, 2000.
15. No Guarantee. Nothing contained in this Commitment shall be deemed
to be a guarantee by Riviera Holdings of any obligations of the Company under
the Notes.
16. Miscellaneous Provisions.
16.1 This Commitment shall be governed by and construed in
accordance with the laws of the State of New York. Riviera Holdings
hereby consents to the jurisdiction of the courts of the State of New
York and consents to service of process by any means authorized by New
York law in any action brought under or arising from this Commitment.
16.2 Riviera Holdings acknowledges that it is aware of the
Indenture entered into by the Company and the Trustee, the Notes
issues thereunder and the Collateral Documents executed in connection
therewith and is generally familiar with the terms and provisions
thereof.
16.3 This Commitment shall constitute the entire agreement of
Riviera Holdings with the Company with respect to the subject matter
hereof, and no representation, understanding, promise or condition
concerning the subject matter hereof shall be binding upon the Company
unless expressed herein.
7
<PAGE>
16.4 Should any term, covenant, condition or provision of this
Commitment be determined to be illegal or unenforceable, all other
terms, covenants, conditions and provisions hereof shall nevertheless
remain in full force and effect.
16.5 When the context and construction so require, all words used
in the singular herein shall be deemed to include the plural, the
masculine shall include the feminine and neuter, and vice versa.
16.6 No provision of this Commitment or right granted to the
Company hereunder can be waived in whole or in part, nor can Riviera
Holdings be released from its obligations hereunder, except by a
writing duly executed by an authorized officer of the Company.
16.7 The headings of this Commitment are inserted for convenience
only and shall have no effect upon the construction or interpretation
hereof.
(Signature Page Follows)
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Commitment as of
the date first written above.
RIVIERA HOLDINGS CORPORATION,
a Nevada corporation
By:
--------------------------
Name:
Title:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
--------------------------
Name:
Title:
[Signature Page to Completion Capital Commitment]
KEEP-WELL AGREEMENT
Keep-Well Agreement (this "Agreement") dated as of June 3, 1999,
between Riviera Holdings Corporation, a Nevada corporation ("Riviera Holdings"),
and RIVIERA BLACK HAWK, INC., a Colorado corporation (the "Company").
R E C I T A L S
A. First Mortgage Notes. The Company has issued $45,000,000 aggregate
principal amount of 13% First Mortgage Notes due 2005 With Contingent Interest
(together with all notes issued in exchange or replacement therefor, the
"Notes") pursuant to an Indenture (as amended, supplemented or otherwise
modified from time to time, the "Indenture") dated as of the date hereof between
the Company and IBJ Whitehall Bank & Trust Company, a New York banking
association, as trustee (the "Trustee"), for the benefit of the holders from
time to time (the "Holders") of the Notes.
B. Proceeds of the Notes. The Company will use the proceeds of the
Notes for the development, construction, equipping and operation of the Riviera
Black Hawk (as defined in the Indenture) upon certain real property located in
Black Hawk, Colorado (the "Property") and for certain other purposes described
in the Indenture.
C. Riviera Holdings' Benefit. The Company is a wholly-owned subsidiary
of Riviera Holdings and, as a result, Riviera Holdings will significantly
benefit from the construction and operation of the Riviera Black Hawk.
D. Material Inducement. It is a condition precedent and material
inducement to the purchase of the Notes that (1) Riviera Holdings and the
Company shall have executed and delivered this Agreement whereby Riviera
Holdings has agreed that it will commit, subject to the limitations set forth
herein, for the benefit of the Company and the Holders, to make capital
contributions to the Company upon the terms, conditions and limitations provided
herein, (2) the Company shall have executed the Collateral Assignment assigning
this Agreement, among other things, to the Trustee, and (3) Riviera Holdings
shall have executed and delivered the Consent to Collateral Assignment of
Keep-Well Agreement pursuant to which, among other things, Riviera Holdings
consents to the Company's assignment of this Agreement to the Trustee.
E. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in the Indenture.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Riviera Holdings and the Company hereby agree as follows:
1. Definitions.
"Contribution Limitation" means the product of (i) $1.25 million and
(ii) the
<PAGE>
number of fiscal quarters of Riviera Holdings contained in the relevant
Operating Period.
"First Operating Period" means the period beginning on the first day
of Riviera Holdings' first full fiscal quarter after the Riviera Black Hawk
becomes Operating through and including the last day of the fiscal year of which
such fiscal quarter is a part.
"Fourth Operating Period" means the period beginning immediately
following the end of the Third Operating Period through and including the last
day of the full fiscal quarter of Riviera Holdings ending after the third
anniversary of the date on which the Riviera Black Hawk became Operating.
"Funding Amounts" means the Interest Contribution Amount (as defined
below) and the Cash Flow Contribution Amount (as defined below).
"Operating Period" means any of the First Operating Period, Second
Operating Period, Third Operating Period or Fourth Operating Period.
"Second Operating Period" means the first fiscal year of Riviera
Holdings after the First Operating Period.
"Target Consolidated Cash Flow" means, for any Operating Period, the
product of (i) $2.25 million and (ii) the number of fiscal quarters of Riviera
Holdings contained in such Operating Period.
"Third Operating Period" means the first fiscal year of Riviera
Holdings after the Second Operating Period.
2. Riviera Holdings' Commitments.
2.1. Fixed Interest Contribution Commitment. Subject to Section
2.3 below, at least ten days prior to each date on which the Company
is required to pay the fixed interest payable on the Notes (the "Fixed
Interest Payment") which occurs before the end of the Fourth Operating
Period (each an "Fixed Interest Payment Date"), if the Company does
not have sufficient funds to make the required Fixed Interest Payment
on the Notes, the Company shall deliver to Riviera Holdings (with a
copy to the Trustee) a certificate stating:
(i) the amount of the Fixed Interest Payment required to be made;
(ii) the amount of funds the Company has available to make the
Fixed Interest Payment (after taking into account amounts on deposit
in the Interest Reserve Account); and
(iii) the amount of additional cash that is needed in order for
the Company to make the Fixed Interest Payment (the "Fixed Interest
Contribution Amount").
2
<PAGE>
Subject to Section 2.3 below, Riviera Holdings hereby unconditionally and
irrevocably agrees that, at least one business day prior to the relevant Fixed
Interest Payment Date, Riviera Holdings will make a capital contribution in cash
to the Company in an amount equal to any Fixed Interest Contribution Amount.
2.2. Cash Flow Commitment. Subject to Section 2.3 below, within
30 days after the end of each Operating Period, the Company shall
deliver to Riviera Holdings (with a copy to the Trustee) a certificate
stating:
(i) the amount of the Target Consolidated Cash Flow for such
Operating Period;
(ii) the Company's estimate, through its regular internal
accounting procedures, of its Consolidated Cash Flow for such
Operating Period (the "Applicable Consolidated Cash Flow"); and
(iii) the amount of the Target Consolidated Cash Flow for
such Operating Period less the Applicable Consolidated Cash Flow
for such period determined as set forth in clause (ii) above (the
"Cash Flow Contribution Amount").
Subject to Section 2.3 below, Riviera Holdings hereby unconditionally
and irrevocably agrees that, within 45 days of the end of each
Operating Period, if the Cash Flow Contribution Amount for such
Operating Period is a positive number, Riviera Holdings will make a
capital contribution in cash to the Company in an amount equal to such
Cash Flow Contribution Amount, less any amounts previously contributed
by Riviera Holdings to the Company during such Operating Period
pursuant to Section 2.1 hereof.
2.3. Contribution Limitations. Notwithstanding any other terms of
this Agreement to the contrary, (i) the aggregate amount that Riviera
Holdings shall be required to contribute to the Company in any
Operating Period pursuant to Section 2.1 hereof and with respect to
any such Operating Period pursuant to Section 2.2 hereof will not
exceed the applicable Contribution Limitation for such Operating
Period and (ii) the aggregate amount that Riviera Holdings shall be
required to contribute to the Company in and with respect to all
Operating Periods pursuant to Sections 2.1 and 2.2 hereof will not
exceed $10.0 million.
3. Cooperation. In connection with this Agreement, Riviera Holdings
agrees, at its sole cost and expense, to fully cooperate with the Company and to
timely provide such documents, agreements and information as may be required in
connection herewith.
4. Ability to Comply With This Agreement. Riviera Holdings shall, at
all times prior to the fulfillment of all of its obligations under this
Agreement, ensure that it has the ability to fulfill all of such obligations
under all other agreements to which it is a party, including the Indenture dated
as of August 13, 1997, among Riviera Holdings, the subsidiary guarantors
identified therein and Norwest Bank Minnesota, National Association, as trustee,
relating to the
3
<PAGE>
issuance of $175,000,000 principal amount of 10% First Mortgage Notes due 2004
of Riviera Holdings.
In addition, Riviera Holdings shall not, at any time prior to the
fulfillment of all of its obligations under this Agreement, permit any other
agreement to which it is a party to in any way prohibit or interfere with its
ability to fulfill its obligations under this Agreement.
5. Alteration of Obligations. Riviera Holdings acknowledges and agrees
that none of the following shall release, impair, reduce, diminish or otherwise
affect Riviera Holdings' obligations under this Agreement: (i) any alteration,
compromise, acceleration or extension of, or any change to, (a) the Company's
obligations to complete the development, construction and equipping of the
Riviera Black Hawk and to commence operation thereof or (b) the payment or
performance by the Company or any guarantor under any debt instrument or other
financing for the development, construction, equipping or operation of the
Riviera Black Hawk (the foregoing, collectively, the "Obligations"), in each
case in such manner, upon such terms and at such times as any Person (including,
without limitation, the Trustee or any Holder) (each such Person, an "Obligee")
deems best, and without notice to Riviera Holdings; (ii) the release of the
Company or any guarantor from any or all of the Obligations by acceptance of a
deed in lieu of foreclosure or otherwise, as to all or any portion of the
Obligations; (iii) the release, substitution or addition of any one or more
guarantors or endorsers of the Funding Amounts or the Obligations; (iv) the
acceptance of additional or substitute security for the Funding Amounts or the
Obligations; or (v) the release or subordination of any security for the Funding
Amounts or the Obligations. No exercise (including, without limitation,
foreclosure of the Property) or non-exercise of any right under any document
relating to the Obligations (collectively, the "Obligation Documents") by an
Obligee, no dealing by an Obligee hereunder or under any Obligation Document or
any other document with Riviera Holdings, the Company or any other guarantors or
any other Person, and no change, impairment or release of all or any portion of
the Funding Amounts or the Obligations or suspension of any right or remedy of
an Obligee against any other Person, including, without limitation, the Company
or any other such guarantor, endorser or other Person, shall in any way affect
any of the obligations of Riviera Holdings hereunder or any security furnished
by Riviera Holdings or give Riviera Holdings any recourse against an Obligee
(including, without limitation, the Trustee). If an Obligee has exculpated or
hereafter exculpates the Company from liability in whole or in part, or has
agreed or hereafter agrees to look solely to the Property or any other property
for the satisfaction of the Company's Obligations (including, without limitation
the Company's obligations under the Indenture, the Notes or any Collateral
Document), such exculpation and agreement shall not affect the obligations of
Riviera Holdings hereunder. Riviera Holdings further acknowledges that any such
exculpation or agreement that has been given or that is hereafter given to the
Company with respect to the Notes, the Indenture or any Collateral Document has
been given or is given in reliance upon the covenants of Riviera Holdings
contained herein.
6. Obligations Absolute; Waiver. The obligations of Riviera Holdings
hereunder shall be unconditional (in accordance with the terms hereof), absolute
and continuing and, without limiting the generality of the foregoing, shall not
be released, discharged or otherwise affected by, and shall survive, and Riviera
Holdings hereby waives and relinquishes all rights and remedies accorded by
applicable law to sureties or guarantors and agrees not to assert or take
advantage of
4
<PAGE>
any such rights or remedies, including, without limitation, (a) any right to
require any holder or recipient of the benefit of any of the Obligations
(including, without limitation, the Trustee or the Holders) (each a "Benefited
Party") to proceed against the Company or any other Person or entity or to
proceed against or exhaust any security held by a Benefited Party at any time or
to pursue any other remedy in the power of a Benefited Party before proceeding
against Riviera Holdings; (b) the defense of the statute of limitations in any
action hereunder or in any action for the collection or performance of the
Funding Amounts or the Obligations; (c) any defense that may arise by reason of
the incapacity, lack of authority, death or disability of any other Person or
the failure of a Benefited Party to file or enforce a claim against the estate
(in administration, bankruptcy or any other proceeding) of any other Person; (d)
appraisal, valuation, stay, extension, marshaling of assets, redemption,
exemption, diligence, demand, presentment, protest and notice of any kind,
including, without limitation, notice of the existence, creation or incurring of
any new or additional indebtedness or obligation or of any action, non-action,
performance or failure to perform on the part of a Benefited Party, the Company,
any endorser or creditor of the Company or Riviera Holdings or on the part of
any other Person under this or any other instrument in connection with any
obligation or evidence of indebtedness held by a Benefited Party as collateral
or in connection with the Funding Amounts or the Obligations; (e) any defense
based upon any exercise of remedies, including, without limitation, foreclosure
of the Property, or upon an election of remedies by a Benefited Party,
including, without limitation, an election to proceed by non-judicial rather
than judicial foreclosure, which destroys or otherwise impairs the subrogation
rights of Riviera Holdings, the right of Riviera Holdings to proceed against the
Company or any other person for reimbursement, or both; (f) any defense based
upon any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome than that
of the principal; (g) any duty on the part of a Benefited Party to disclose to
Riviera Holdings any facts a Benefited Party may now or hereafter know about the
Company or any other Person, regardless of whether a Benefited Party has reason
to believe that any such facts materially increase the risk beyond that which
Riviera Holdings intends to assume, or has reason to believe that such facts are
unknown to Riviera Holdings, or has a reasonable opportunity to communicate such
facts to Riviera Holdings, since Riviera Holdings acknowledges that Riviera
Holdings is fully responsible for being and keeping informed of the financial
condition of the Company or any other Person and of all circumstances bearing on
the risk of non-payment of any Funding Amounts; (h) any defense arising because
of the election of a Benefited Party, in any proceeding instituted under the
Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code; (i) any defense based upon any borrowing or grant of a security
interest under Section 364 of the Federal Bankruptcy Code; (j) any claim or
other rights which it may now or hereafter acquire against the Company or any
other Person that arises from the existence or performance of Riviera Holdings'
obligations under this Agreement or any other Obligation Document, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
by a Benefited Party against the Company or any collateral which a Benefited
Party now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, by any payment made
hereunder or otherwise, including, without limitation, the right to take or
receive from the Company or any other Person or entity, directly or indirectly,
in cash or other property or by set-off or in any other manner, payment or
security on account of such claim or other rights; (k) any rights which it may
acquire by way of contribution
5
<PAGE>
under this Agreement or any Obligation Document, by any payment made hereunder
or otherwise, including, without limitation, the right to take or receive from
any other Person, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such
contribution rights; (l) any defense based on one-action laws and any other
anti-deficiency protections granted to guarantors by applicable law; (m) any
merger or consolidation of the Company into or with any other Person, or any
sale, lease or transfer of any or all of the assets of the Company to any other
Person; (n) any circumstance which might constitute a defense available to, or a
discharge of, the Company, Riviera Holdings or a surety; (o) any lack of
genuiness, validity, regularity, enforceability or value of any Funding Amounts,
this Agreement or any Obligation Document; and (p) any other fact or
circumstance, including, without limitation, any fact or circumstance having an
impact on the cash flow of or the availability of funds to the Company. Any
proceeds of a foreclosure or similar sale may be applied first to any
obligations of the Company that do not also constitute Funding Amounts or
Obligations. Notwithstanding the foregoing, nothing in this Section 6 shall be
deemed to impair or modify the rights or obligations otherwise expressly given
to or agreed to by Riviera Holdings in any of the Loan Documents. Riviera
Holdings acknowledges and agrees that any nonrecourse or exculpation provided
for in any Obligation Document, or any other provision of an Obligation Document
limiting each respective Benefited Party's recourse to specific collateral or
limiting such Benefited Party's right to enforce a deficiency judgment against
the Company, shall have absolutely no application to Riviera Holdings's
liability under this Agreement. To the extent that any Benefited Party
(including, without limitation, the Trustee) collects or receives any sums or
payments from the Company or from any guarantor, endorser or other Person under
any Obligation Document or realized from any security, such Benefited Party
shall have the right, but not the obligation, to apply such amounts first to
that portion of the Company's indebtedness and obligations, if any, to such
Benefited Party that is not covered by this Agreement, regardless of the manner
in which any such payments or amounts are characterized by the Person making
payment.
7. Bankruptcy and Related Proceedings. The obligations of Riviera
Holdings under this Agreement shall not be altered, limited or affected by or as
a result of any action taken by the Company in any proceeding, voluntary or
involuntary, involving the bankruptcy, reorganization, insolvency, receivership,
or liquidation of the Company, or by any defense which the Company may have by
reason of any order, decree or decision of any court or administrative body
resulting from any such proceeding.
8. Interest. If Riviera Holdings fails to pay all or any portion of
the Funding Amounts in accordance with the provisions hereof, the amount of such
Funding Amounts and all other sums payable by Riviera Holdings hereunder shall
bear interest from the date of demand at the highest rate applicable to the
principal balance of the Notes or, if the Notes have been fully repaid, at the
highest rate that would be applicable if the Notes had not been fully repaid.
6
<PAGE>
9. Independent Obligations. The obligations of Riviera Holdings
hereunder are independent of the obligations of the Company or any other Person
and, in the event of any default hereunder, a separate action or actions may be
brought and prosecuted against Riviera Holdings, whether or not the Company or
such other Person is joined therein or a separate action or actions are brought
against the Company.
10. Notices. Whenever Riviera Holdings or the Company shall desire to
give or serve any notice, demand, request or other communication with respect to
this Agreement, each such notice shall be in writing and shall be effective only
if the same is delivered by hand-delivery, first-class mail (registered or
certified, return receipt requested), telecopier or air courier guaranteeing
overnight delivery, addressed as follows:
To Riviera Holdings:
Riviera Holdings Corporation
2701 Las Vegas Boulvard South
Las Vegas, Nevada 89109
Attention: Executive Vice President of Finance
Telephone: (702) 734-5110
Facsimile: (702) 734-9277
To the Company:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Attention: Executive Vice President of Finance
Telephone: (702) 734-5110
Facsimile: (702) 734-9277
and, in either case, with a copy to the Trustee at:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Thomas S. Moser
Telephone: (212) 858-2558
Facsimile: (212) 858-2956
Any such notice delivered personally shall be deemed to have been received upon
delivery. Any such notice sent by telegram shall be presumed to have been
received by the addressee one business day after its acceptance for sending by
an authorized carrier thereof. Any such notice sent by mail shall be presumed to
have been received by the addressee three business days after posting in the
United States mail. Riviera Holdings or the Company may change its address by
giving the other and the Trustee a written notice of the new address as herein
provided.
7
<PAGE>
11. Successors and Assigns. This Agreement shall inure to the benefit
of the Company, its successors and assigns, and shall bind the successors and
assigns of Riviera Holdings.
12. No Guarantee. Nothing contained in this Agreement shall be deemed
to be a guarantee by Riviera Holdings of any obligations of the Company under
the Notes.
13. Miscellaneous Provisions.
13.1. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Riviera Holdings
hereby consents to the jurisdiction of the courts of the State of New
York and consents to service of process by any means authorized by New
York law in any action brought under or arising from this Agreement.
13.2. Riviera Holdings acknowledges that it is aware of the
Indenture entered into by the Company and the Trustee, the Notes
issues thereunder and the Collateral Documents executed in connection
therewith and is generally familiar with the terms and provisions
thereof.
13.3 This Agreement shall constitute the entire agreement of
Riviera Holdings with the Company with respect to the subject matter
hereof, and no representation, understanding, promise or condition
concerning the subject matter hereof shall be binding upon the Company
unless expressed herein.
13.4 Should any term, covenant, condition or provision of this
Agreement be determined to be illegal or unenforceable, all other
terms, covenants, conditions and provisions hereof shall nevertheless
remain in full force and effect.
13.5. When the context and construction so require, all words
used in the singular herein shall be deemed to include the plural, the
masculine shall include the feminine and neuter, and vice versa.
13.6. No provision of this Agreement or right granted to the
Company hereunder can be waived in whole or in part, nor can Riviera
Holdings be released from its obligations hereunder, except by a
writing duly executed by an authorized officer of the Company.
13.7. The headings of this Agreement are inserted for convenience
only and shall have no effect upon the construction or interpretation
hereof.
(Signature Page Follows)
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RIVIERA HOLDINGS CORPORATION,
a Nevada corporation
By:
--------------------------------
Name:
Title:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
--------------------------------
Name:
Title:
[Signature Page to Keep-Well Agreement]
TAX SHARING AGREEMENT
Tax Sharing Agreement (the "Agreement"), dated as of June 3, 1999, by
and among RIVIERA HOLDINGS CORPORATION, a Nevada corporation ("RHC"), and
RIVIERA BLACK HAWK, INC., a Colorado corporation ("RBH").
WHEREAS, RHC is the common parent of an affiliated group of
corporations within the meaning of Section 1504(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and RBH, a wholly-owned subsidiary of RHC, is
a member of said affiliated group (the "RHC Group");
WHEREAS, the RHC Group, to the extent permitted by applicable law, will
file consolidated federal income tax returns under the Code;
WHEREAS, RHC and RBH wish to provide for the allocation of the
consolidated deferral income tax liability for the RHC Group;
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereto agree as follows:
1. DEFINITIONS.
(a) Terms used in this Agreement shall have the meanings ascribed to
them in, and shall be interpreted in accordance with, the relevant provisions of
the Code and the regulations and rulings issued thereunder, as from time to time
in effect.
(b) Tax - Regular federal/corporate income tax or federal/corporate
alternative minimum tax, together with any and all interest, additions to tax,
fines and penalties payable with respect thereto.
<PAGE>
2. FILING OF CONSOLIDATED RETURNS AND PAYMENT OF TAX.
RHC shall, on a timely basis, file or cause to be filed consolidated
federal income tax returns and estimated tax returns for the RHC Group for each
taxable year and shall pay in full any Tax shown due on such returns. RHC, in
its sole discretion, shall make all elections relating to the filing of such
returns, and shall compute the consolidated federal income tax liability of the
RHC Group. RBH shall execute such consents and other documents as are necessary
in connection therewith.
3. ALLOCATION OF CONSOLIDATED FEDERAL INCOME TAX LIABILITY
(a) Except as otherwise provided in paragraphs 3(c) and 3(d), RHC and
RBH agree that RBH shall pay to RHC shall pay to RHC an amount (not less than
zero) equal to the Separate Tax Liability of RBH. The "Separate Tax Liability"
of RBH shall be the federal tax liability of RBH for the taxable period,
determined as if RBH were at all times subject to federal income taxation as a
separate taxpayer, not included or includable in the RHC Group (or in any other
consolidated group); provided, however, that such determination shall be made
without regard to any carrybacks or carryforwards of any tax attributes of RBH
(including, without limitation, net operating losses) that would be available to
it if it, at all times, had filed a separate federal income tax return, but
which in fact are not available under applicable federal income tax law as a
result of its inclusion in the RHC Group; provided, further, that: (i) such
determination shall be made giving effect to the modifications listed in
Treasury Regulation Section 1.1552-1(a) (2)(ii);(ii) such determination shall be
computed using the highest marginal corporate Tax rate in effect for such
taxable period; (iii) if, for any taxable period, a Tax would be imposed on RBH
pursuant to Section 55 of the Code, the Separate Tax Liability of RBH shall be
increased by the
2
<PAGE>
amount of Tax that would be imposed on RBH under such Code section, computed
using the alternative minimum tax rate set forth in Section 55(b) (1) of the
code and taking into account items specified in Section 55(b) (2) of the Code
attributable to RBH; (iv) such determination shall be made using the same
elections and methods of accounting as are used in determining the consolidated
deferral income tax liability of the RHC Group for such taxable period; and (v)
notwithstanding any provision herein to the contrary, in no event shall RBH be
required to make any payment hereunder to the extent that such payment would
cause (or increase) a violation of any "minimum bankroll requirement," or other
applicable gaming obligation, except to the extent such payment constitutes
RBH's share of the RHC Group's federal income tax liability based on its
contribution to the RHC Group's consolidated taxable income (as such
contribution would be determined under Treasury Regulation Section
1.1552-1(a)(1), regardless of whether such regulation is actually applicable to
the RHC Group for any purpose) or is otherwise required of RBH under applicable
federal income tax law.
(b) Not less than fifteen (15) days prior to the day the RHC Group's
consolidated federal income tax return is required to be filed in respect of any
taxable year (taking account of any extensions thereof), RHC shall provide RBH a
schedule that sets forth in reasonable detail the calculation of the Separate
Tax Liability for such taxable year. The amount required to be paid by RBH to
RHC pursuant to paragraph 3(a) of this Agreement for such taxable year shall be
paid not later than five (5) days prior to the date on which the RHC Group's
consolidated federal income tax return is required to be filed for such taxable
year (taking account of any extension thereof).
3
<PAGE>
(c) If the RHC Group is required to make payments of estimated federal
income tax, then, no later than five (5) days from the date the RHC Group would
be required to make such payments, RBH shall make payments to RHC in an amount
equal to the Estimated Tax Liability of RBH. The "Estimated Tax Liability" of
RBH shall be the federal estimated Tax liability of RBH for the taxable period,
determined as if the RBH were at all times subject to federal income taxation as
a separate taxpayer, not included or includable in the RHC Group (or in any
other consolidated group); provided, however, that such determination shall be
made without regard to any carrybacks or carryforwards of any tax attributes of
RBH (including, without limitation, net operating losses) that would be
available under applicable federal income tax law as a result of its inclusion
in the RHC Group; provided, further, that: (i) such determination shall be made
by giving effect to the modifications listed in Treasury Regulation Section
1.1552-1(a)(2)(ii); (ii) such determination shall be computed using the highest
marginal corporate Tax rate in effect for such taxable period; (iii) if, for any
taxable period, a Tax would be imposed on RBH pursuant to Section 55 of the
Code, the Estimated tax Liability of RBH shall be increased by the amount of Tax
that would be imposed on RBH under such Code section, computed using the
alternative minimum tax rate set forth in Section 55(b)(1) of the Code and
taking into account items specified in Section 55(b) (2) of the Code
attributable to RBH (iv) such determination shall be made using the same
elections and methods of accounting as are used in determining the consolidated
federal income tax liability for the RHC Group for such taxable period; and (v)
notwithstanding any provision herein to the contrary, in no event shall RBH be
required to make any payment hereunder to the extent that, prior to giving
effect to the Operating Agreement, such payment would cause (or increase) a
violation of any "minimum bankroll
4
<PAGE>
requirement" or other applicable gaming obligation, except to the extent such
payment constitutes RBH's share of the RHC Group's consolidated taxable income
(as such contribution would be determined under Treasury Regulation Section
1.1552-1(a)(1), regardless of whether such regulation is actually applicable to
the RHC Group for any purpose) or is required of RBH under applicable federal
income tax law.
Any payment made by RBH to RHC pursuant to this paragraph 3(c) shall be
applied to reduce the amount, if any, owing by RBH to RHC for the corresponding
taxable year pursuant to paragraphs 3(a) and 3(b). Any excess of the aggregate
of payments made by RBH pursuant to this paragraph 3(c) during a taxable year
over the payment, if any, owing by RBH to RHC for such taxable year pursuant to
paragraphs 3(a) and 3(b), shall be repaid to RBH by RHC: (i) to the extent such
excess (or part thereof) represents all or a part of a tax refund to be received
by the RHC Group, such repayment to be made not later than five (5) days after
the receipt of such refund; (ii) to the extent such excess (or part thereof)
represents all or part of a credit against the RHC Group's estimated Tax for a
succeeding taxable year, not later than five (5) days after an estimated Tax
payment against which such excess is credited otherwise is to be paid by RHC; or
(iii) to the extent clauses (i) of this paragraph 3(c) and (ii) of this
paragraph 3(c) do not apply to such excess (or a portion thereof), not later
than the date on which the RHC Group's consolidated federal income tax return is
required to be filed (taking into account any extension thereof).
(d) If the calculation of the Separate Tax Liability of RBH for any tax
year results in a net operating loss ("BH NOL"), RHC shall credit the RBH NOL
against the amount which RBH would otherwise have to pay to RHC in the next
succeeding tax year or years until
5
<PAGE>
the RBH NOL is used up but only so long as RBH remains part of the RHC Group for
federal income tax purposes. When RBH ceases to be part of the RHC Group for
federal income tax purposes it shall have no further right of any kind against
RHC as to any unused portion of the RBH NOL.
4. CHANGES IN TAX LIABILITY FOR A TAXABLE YEAR.
(a) If any RHC Group consolidated federal income tax for a taxable year
is changed or otherwise adjusted (including, without limitation, by reason of
(i) a "determination" within the meaning of Section 1313(a) of the Code, (ii)
the RHC Group's filing an amended federal income tax return, or (iii) any of the
events specified in Section 6213(b) or (d) of the Code), then the amount of the
payments required from RBH to RHC under paragraphs 3(a) and (c), or RHC to RBH
under paragraph 3(c), as the case may be, shall be recomputed by substituting
the Separate Tax Liability of RBH, or the loss, deduction or credit of RBH as
computed after giving effect to the changes or adjustments described above in
place of the Separate Tax Liability of RBH, or the loss, deduction or credit of
RBH as previously computed hereunder. No later than (i) five (5) days before the
due date for any additional payment of Tax by the RHC Group, (ii) five (5) days
after the receipt of a refund by the RHC Group or (iii) five (5) days after the
determination becomes final, the amended return is filed or other event giving
rise to the recomputation (if such determination, amended return or other event
does not result in any additional tax due or the receipt of a refund), RBH shall
pay to RHC or RHC shall pay to RBH, as the case may be, without interest, the
difference between (x) the amounts as recomputed by substituting the Separate
Tax Liability of RBH, or the loss, deduction or credit or RBH as determined
after giving effect to the change or adjustment, and (y) the amounts previously
paid
6
<PAGE>
hereunder. The parties recognize that such recomputation for a taxable year does
not necessarily reflect the final Tax liability for such year, and, hence, the
amount of payments due hereunder may be recomputed under this paragraph more
than once.
(b) Payments made pursuant to subparagaph (a) shall include an
allocable portion of any interest paid or credited by the Internal Revenue
Service (net of tax; provided, such interest shall not be treated as an item of
income of RBH). RHC, in its sole discretion, shall determine the amount of any
allocable portion of interest under this subparagraph 4(b).
5. ALLOCATION OF STATE AND LOCAL INCOME TAX LIABILITY
For purposes of state and local consolidated, combined and unitary
income Taxes (if any), principles analogous to those in Sections 3, 4, 5, 6, 7
and 8 shall be used to determine the liability therefor and the payments to be
made. All Nevada or Colorado gaming, business, employee, license and other taxes
incurred by RHC or RBH, respectively, that are not described in the preceding
sentence shall be solely the responsibility of RHC or RBH, respectively.
6. EARNINGS AND PROFITS.
Any election under Section 1552 of the Code of a method of allocating
the tax liability of the RHC Group for purposes of determining the earnings and
profits of the members of the RHC Group, including, but not limited to, an
election of a method prescribed in Treasury Regulation Section 1.1502-33 (or any
successor provision, including Proposed Regulation Section 1.1502-33(d)), and
including, but not limited to, a decision not to elect any such method, shall be
made by RHC in its sole discretion, and RBH agrees to take whatever action may
be necessary to effect any such election.
7. TERMINATION OF AFFILIATION
7
<PAGE>
(a) The parties recognize that at some future date RBH may cease to be
included in the RHC Group ("Deconsolidation") but continue to be a corporation
subject to federal income tax ("Former Member"). In such event, RHC and RBH
shall consult and shall furnish each other with information required to prepare
accurately (i) the consolidated federal income tax return of the RHC Group for
the last taxable year in which RBH was included in the RHC Group, and (ii) the
federal income tax returns for all taxable years thereafter of RBH and RHC,
respectively, in which the tax liability of either may be affected by their
former affiliation (including, for example, the apportionment of any
consolidated net operating loss or capital loss or investment or foreign tax
credit to RBH), and (iii) any other consolidated federal income tax return of
the RHC Group for a taxable year in which RBH was included in the RHC Group,
including information necessary to make the final determination of any tax
liability payable with respect to such return to the extent such determination
is based on the operations of RBH.
(b) In connection with any audit by any taxing authority for any period
ending on or prior to the date on which RBH is no longer included with RHC in
filing a consolidated federal income tax return (the "Deconsolidation Date"),
RBH will make available to RHC and its representatives such records and
documents in their possession as may be requested by such taxing authority or
reasonably requested by RHC to defend against such audit. RBH will cause its
employees to (i) cooperate with and assist such taxing authority as requested by
such taxing authority in the completion of such audit (except as otherwise
instructed by RHC within the bounds of applicable law), and (ii) cooperate with
an assist ax personnel and tax counsel of RHC, as may be reasonably requested by
RHC in the conduct of all tax audits of tax returns, and also
8
<PAGE>
with respect to a claim for refund or amended return for any period ending on or
prior to the Deconsolidation Date to the extent that such audit, claim for
refund or amended return, may involve the operations of the RBH. RHC shall have
the sole right to represent the interests of RBH in any tax audit or
administrative or court proceeding relating to taxable periods of which end on
or before the Deconsolidation Date, including the sole right to enter into a
settlement of such audit or proceeding on behalf of RBH. RBH shall forward to
RHC any notice it receives of any tax audit for any taxable period ending on or
prior to the Deconsolidation Date.
(c) RHC, upon request, will furnish RBH a complete and accurate
statement of the information which pertains to RBH and which relates to any
consolidated federal income tax return filed by the RHC Group for a period, or
portion of any period, in which RBH was included in the RHC Group presented in a
pro forma separate return format.
(d) RBH agrees that it will elect or exercise any option then available
to it under the Code (or any analogous or similar, state, local or foreign law)
to forego the carryback of any net operating loss, net capital loss, or other
tax benefit arising in a taxable year beginning on or after the Deconsolidation
Date to a taxable year of the RHC Group ending on or prior to the
Deconsolidation Date. If the Code requires such item first to be carried back
(and such item cannot, by the making of an election or otherwise, be carried
forward without first being carried back), then RBH may file an application with
the appropriate taxing authority for a carryback adjustment or the tax for a
taxable year in which RBH was included in the RHC Group and a consolidated
federal income tax return was filed and shall be entitled to that portion of the
actual refund that is attributable to the RBH under the consolidated return
regulations; provided, that RBH shall not be entitled to all or a portion of
such refund to the extent the items giving rise to
9
<PAGE>
such carryback have been previously utilized to reduce Separate Tax Liability or
RBH or previously give rise to a payment to RBH under this Agreement.
(e) Payments that would have been required under this Agreement to or
by RBH were RBH still a member of the RHC Group, and with respect to taxable
years for which RBH was a member of the RHC Group, shall be made in accordance
with principles analogous to those set forth in the above paragraph(s) of this
Agreement and at the time(s) set forth therein.
(f) Whether in contemplation of or pending a deconsolidation or
otherwise, RHC shall have the following unilateral rights:
(i) to determine whether and when to report a worthless stock
deduction under Section 165(g) of the Code;
(ii) to determine the allocation of any consolidated Code Section
382 limitation of the RHC Group;
(iii) to file all consolidated federal income tax returns (and to
amend such returns) and to compute the tax due with respect thereto
(including, without limitation, determining the deductibility of
interest during any taxable period for purpose of this Agreement), and
to control, in its sole discretion, all tax audits and controversies
affecting the RHC Group;
(iv) to determine whether to elect under Treasury Regulation
Section 1.1502-20(g) to reattribute the losses of RBH to RHC; and
(v) to determine whether a bad debt deduction may be claimed with
respect to any liability of RBH to RHC.
10
<PAGE>
8. RESOLUTION OF DISPUTES.
Any disputes between or among the parties with respect to this
Agreement shall be resolved by a nationally recognized public accounting firm or
a nationally recognized law firm, which accounting firm or law firm shall be
reasonably satisfactory to the disputing parties, and whose fees and expenses
shall be shared equally by the disputing parties. Such determination shall be
binding and conclusive on the disputing parties for the purposes hereof.
9. TERM.
This Agreement shall be deemed to be in effect from the date of
incorporation of RBH, and shall remain in effect indefinitely.
10. MISCELLANEOUS.
(a) The Agreement constitutes the entire agreement of the parties
concerning the subject matter hereof and supersedes all other agreements,
whether or not written, in respect of any tax between or among RHC and RBH. This
Agreement may not be amended except by an agreement n writing, signed by the
parties thereto.
(b) This Agreement has been made in and shall be construed in
accordance with the laws of the State of Nevada.
(c) This Agreement shall be binding upon and inure to the benefit of
each party thereto and its respective successors and assigns.
(d) All notices and other communications hereunder shall be in writing
and shall be delivered by hand or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses and shall be deemed
given on the date on which such notice is received:
11
<PAGE>
If to RHC:
Riviera Hotel & Casino
2901 South Las Vegas Boulevard
Las Vegas, Nevada 89109
If to RBH:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not constitute a part hereof.
(g) If any term or provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable, to any
extent, the remainder of this Agreement, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be effected thereby, and each term and
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
(h) RBH will continue to make the payments to RHC under the Agreement,
despite the occurrence and continuation of any Default or Event of Default under
the Indenture, dated as of June 3, 1999, between RBH as Issuer, and IBJ
Whitehall Bank & Trust Company, as Trustee, pursuant to which $45 million Senior
Notes due 2006 were issued. The payments due
12
<PAGE>
from RBH to RHC are not subordinate to the amounts payable on the Notes or under
the Indenture.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
RIVIERA HOLDINGS CORPORATION
By:
----------------------------------------
Its:
----------------------------------------
RIVIERA BLACK HAWK, INC.
By:
----------------------------------------
Its:
----------------------------------------
MANAGEMENT AGREEMENT (this "Agreement") dated as of June 1, 1999, by
and between Riviera Black Hawk, Inc., a Colorado corporation (the "Company") and
Riviera Gaming Management of Colorado Inc., a Colorado corporation ("Manager").
The Company is constructing a gaming casino and related facilities in
Black Hawk, Colorado and has requested that Manager manage the casino on the
terms hereinafter set forth.
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties to this Agreement hereby agree as
follows:
ARTICLE I. DEFINITIONS
The following defined terms are used in this Agreement:
"Affiliate" shall mean a person that directly or indirectly, or through
one or more intermediaries, controls, is controlled by, or is under common
control with the person in question and any stockholder or partner of any person
referred to in the preceding clause owning 10% or more of such entity.
"Audit Day" is defined in Section 3.7(a).
"Audited Statements" is defined in Section 3.7(a).
"Business Days" shall mean all weekdays except those that are official
holidays of the State of Colorado or the U.S. Government. Unless specifically
stated as "Business Days," a reference to "days" means calendar days.
"Capital Budget" is defined in Section 3.10.
"Casino" shall mean the Riviera(R) Black Hawk Casino in Black Hawk,
Colorado, including (i) those areas reserved for the operation of slot machines,
table games and any other legal forms of gaming permitted under applicable law,
and such additional ancillary service areas including reservations and
admissions, cage, vault, count room, surveillance room and any other room or
area or activities therein regulated or taxed by the Colorado Gaming Authorities
by reason of gaming operations and (ii) all necessary ancillary facilities to
the Casino, including, but not limited to, vehicular parking area, entertainment
facilities, hotel, restaurants, waiting areas, restrooms, administrative offices
for, but not limited to, accounting, purchasing, and management information
services (including offices for Manager management personnel) and other areas
utilized in support of the operations of the Casino.
"Casino Bankroll" shall mean an amount reasonably determined by Manager
as funding required to bankroll the Casino Gaming Activities but in no case less
than the amount required by Colorado gaming law or Colorado Gaming Authorities.
In no event shall such Casino Bankroll include any amount necessary to cover
Operating Expenses or Operating Capital. Casino Bankroll
<PAGE>
shall include the funds located on the casino tables, in the gaming devices,
cages, vault, counting rooms, or in any other location in the Casino where funds
may be found and funds in a bank account identified by the Company for any
additional amount required by Colorado gaming law or Colorado Gaming Authorities
or such other amount as is reasonably determined by Manager and the Company.
"Casino Gaming Activities" shall mean the Casino cage, table games,
slot machines, video machines, and other forms of gaming managed by Manager in
the Casino.
"Casino Operating Expenses" shall mean expenses incurred in the
management of the Casino, including, but not limited to, gaming supplies,
maintenance of the Casino area, gaming marketing materials, uniforms,
complimentaries, Casino employee training, Casino employee compensation and
entitlements, and Gaming Taxes.
"Colorado Gaming Authorities" shall mean the Colorado Gaming
Commission, State Gaming Control Board and all other gaming regulatory bodies,
including, but not limited to, any municipality, political subdivision, board,
commission, agency or other public body now in existence or hereafter created to
regulate gaming in the State of Colorado.
"Company's Advances" is defined in Section 3.12.
"Covered Services" shall mean the services furnished by Manager or its
Affiliates pursuant to Section 3.3.
"Default" or "Event of Default" is defined in Section 5.1.
"EBITDA" shall mean revenues derived from the operation of the Casino,
less all costs of operating the Casino (including the Quarterly Fee) excluding
(i) any expenses of the Company over which Manager has no control and (ii) the
Performance Fee, all before (a) interest on indebtedness, (b) all taxes on
income other than Gaming Taxes, (c) depreciation of tangible assets and (d)
amortization of goodwill and other intangible assets, all as determined by the
independent certified public accountant of the Company in accordance with
generally accepted accounting principles applied on a consistent basis, subject,
however, to the dispute provisions of Section 3.7(b).
"Extended Term" is defined in Section 2.3.
"Extension Option" is defined in Section 2.3.
"Gaming Taxes" shall mean any tax imposed by the Colorado Gaming
Authorities on Gross Gaming Revenues.
"Governmental Authorities" shall mean the United States, the State of
Colorado and any court or political subdivision agency, commission, board or
instrumentality or officer thereof, whether federal, state or local, having or
exercising jurisdiction over the Company, Manager or the Casino.
"Gross Gaming Revenues" shall mean all of the revenue from the
operation of the Casino (which is taxed by the Colorado Gaming Authorities) from
all business conducted upon, related to
2
<PAGE>
or from the Casino in accordance with generally accepted accounting principles
and shall include, but not be limited to, the net win from gaming activities,
which is the difference between gaming wins and losses before deducting Gaming
Taxes, and plus or minus, as appropriate, deposits made in respect of
progressive slot machines and other similar games.
"Gross Revenues" shall mean Gross Gaming Revenues, plus all other
revenues resulting from the operation of the Casino.
"Inter-Company Services" shall mean those services furnished by Manager
or its Affiliates to the Company on a cost reimbursement basis pursuant to
Section 3.4.
"Lender" shall mean the party or parties who shall have lent the
Company money pursuant to the Project Financing.
"Management Fee" shall mean the Quarterly Fee and the Performance Fee,
if any.
"Manager Conduct Standard" is defined in Section 3.1.
"Monthly Financial Statements" is defined in Section 3.8.
"Net Revenues" shall mean Gross Revenues minus complimentaries.
"Opening Date" shall mean the date the Casino opens for gaming by the
public.
"Operating Bank Accounts" is defined in Section 3.11.
"Operating Budget" is defined in Section 3.10.
"Operating Capital" shall mean such amount in the Operating Bank
Accounts as will be reasonably sufficient to assure the timely payment of all
current liabilities of the Casino, including the operations of the Casino,
during the term of this Agreement, and to permit Manager to perform its
management responsibilities and obligations hereunder, with reasonable reserves
for unanticipated contingencies and for short term business fluctuations
resulting from monthly variations from the Operating Budget.
"Operating Expenses" shall mean actual expenses incurred in operating
the Casino, including the Casino Operating Expenses, employee compensation and
entitlements, Operating Supplies, maintenance costs, fuel costs, utilities,
taxes and the Quarterly Fee.
"Operating Supplies" shall mean gaming supplies, paper supplies,
cleaning materials, marketing materials, maintenance supplies, uniforms and all
other materials used in the operation of the Casino.
"Performance Fee" is defined in Section 4.1(a).
"Performance Fee Statement" is defined in Section 3.7(a).
"Project Financing" shall mean the issuance of $45.0 million of First
Mortgage Notes
3
<PAGE>
pursuant to the Indenture date as of June 1, 1999, between the Company and IBJ
Whitehall Bank & Trust Company
"Quarterly Fee" is defined in Section 4.1(a).
"Selected Arbitrator" is defined in Section 8.1.
"Term" is defined in Section 2.2.
ARTICLE II: ENGAGEMENT OF MANAGER AND TERM OF AGREEMENT
Section 2.1 Engagement of Manager. The Company hereby engages and
employs Manager to act as its exclusive agent for the supervision and control of
the management of the Casino and to provide certain Covered Services and
Inter-Company Services to the Company as detailed in Sections 3.3 and 3.4 of
this Agreement in connection with the Casino, and Manager hereby accepts such
engagement and employment, on the terms and conditions hereinafter set forth.
Section 2.2 Term. Manager shall manage the Casino from the period (the
"Term") commencing on the date hereof and ending 60 days after the tenth full
year's audited results of the Company after the Opening Date are available,
subject to termination prior to the end of such period as hereinafter specified
or extension as hereinafter provided.
Section 2.3 Options to Extend Term. The Term may be extended at the
option (the "Extension Option") of Manager for up to four additional terms of
five years each (the "Extended Term")(or a total of up to 20 years of Extended
Term). Manager shall give written notice of its exercise of an Extension Option
no later than 180 days prior to the expiration of the Term or a prior five year
Extended Term.
ARTICLE III: RESPONSIBILITIES OF THE PARTIES.
Section 3.1 Standards. With respect to the operation of the Casino
pursuant to this Agreement, Manager shall manage and maintain the Casino in a
manner reasonably consistent with the average of standards and procedures
exercised by other casino/hotel operators in the management of other
casino/hotels of the same or similar type, class and quality as the Casino and
located in Black Hawk, Colorado ("Manager Conduct Standard").
Section 3.2 No Interference; Board Representation. In order for Manager
to meet its responsibilities under Section 3.1 of this Agreement in a
professional manner, and to comply with any legal requirements and the terms of
this Agreement, the Company hereby agrees that during the Term and Extended Term
(i) Manager shall have uninterrupted control of and responsibility for the
operation of the Casino and (ii) the Company will not interfere or be involved
with the operation of the Casino and that Manager may operate the Casino free of
molestation, eviction or disturbance by the Company or any third party claiming
by, through or under the Company. Notwithstanding the foregoing, during normal
business hours and upon reasonable notice to Manager, the Company's Board of
Directors and/or officers and their agents may visit the Casino and may ask the
Manager about various aspects of the Company's business, operations and
financial results. Examples of the matters which Manager shall determine from
time to time hereunder include, but are not limited to
4
<PAGE>
food and beverage menu prices, gaming, commercial purposes (if applicable) and
entertainment, entertainment policies and specific entertainment obligations,
the labor policies of the Casino and the type and character of publicity and
promotion. Manager agrees, however, that it will in good faith use its best
efforts to perform its obligations and discharge its responsibilities in the
control and operation of the Casino. Nothing contained in this Section 3.2 shall
prohibit the Company's management from exercising its fiduciary duties if
Manager shall default in its obligations under this Agreement pursuant to
Section 6.2 and such default shall continue after any required notice and/or
cure period.
Section 3.3 Covered Services. Manager covenants and agrees to perform,
or cause to be performed, the following services in connection with the Casino
at no additional charge to the Company:
(a) Permits. Manager, on behalf of and with the cooperation of
the Company, shall oversee obtaining and maintaining all necessary
licenses, findings of suitability, approvals and permits required by
any law, rule or regulation of the Colorado Gaming Authorities, as may
be required for the operation of the Casino, including, without
limitation, gaming, liquor, bar, restaurant, signage and hotel licenses
(if applicable). Manager shall comply with the rules, regulations and
orders of the Colorado Gaming Authorities and with any conditions set
out in any such licenses and permits issued by any such authorities
and, with the cooperation of the Company, shall provide any
information, report or access to records reasonably required by the
Colorado Gaming Authorities.
(b) Personnel. Manager shall maintain such level of staffing
as shall be required to carry out its duties hereunder.
(i) Except as otherwise expressly provided in paragraph (iv)
of this Section 3.3(b), all personnel employed at the Casino shall be
employees of the Company. Manager shall hire, terminate, advance,
demote, supervise, direct the work of and determine the compensation
and other benefits of all personnel working at the Casino, and the
Company shall not interfere with or give orders or instructions to
personnel employed at the Casino. The parties hereto agree that all
wages, bonuses, compensation and benefits (including, without
limitation, severance and termination pay) of personnel at the Casino
are the exclusive obligation of the Company.
(ii) All wages, salaries, benefits, compensation and
entitlements of the Casino employees, including the General Manager,
and any consultants and independent contractors approved by the Company
and Manager, shall be paid from the Operating Bank Accounts by Manager.
Notwithstanding the foregoing, Manager shall not be liable to any of
the Company's personnel for wages, compensation or other employee
benefit including without limitation to health care, insurance
benefits, worker's compensation, severance or termination pay.
(iii) Manager shall be responsible for the training of all
personnel and shall cooperate with all personnel in an effort to obtain
and maintain all required licenses issued by the Colorado Gaming
Authorities, and will hire only persons with valid employee licenses,
if under the rules and regulations of the Colorado Gaming Authorities,
such employee licenses are a condition of employment.
5
<PAGE>
(iv) The employees necessary to discharge Manager's
obligations and responsibilities hereunder shall be employees of
Manager (or its Affiliates) and shall be hired, paid and discharged by
Manager in its sole and absolute discretion. Manager shall in good
faith determine the number of employees necessary to discharge
Manager's obligations and responsibilities hereunder, the salaries and
other compensation arrangements of such employees shall be the
responsibility of Manager and Manager shall not have any right of
reimbursement from the Company in respect thereof.
Section 3.4 Inter-Company Services. The parties agree that Affiliates
of the Manager will supply services to the Company on a cost reimbursement basis
(some of which are part of the budgeted costs for construction, equipment and
start-up of the Casino) including, but not limited to, the following:
(a) Benefits administration, including 401(K) plan, health
plan, workmen's compensation and profit-sharing.
(b) Computer systems, including (i) JD Edwards, based on a
charge per terminal, (ii) InfoGenesis, (iii) casino system, and (iv)
special programs.
(c) Computer hardware, including (i) centralized buying, (ii)
initial installation, and (iii) phone support to on-site tech.
(d) Administration, including (i) Human Resources, (ii)
payroll, (iii) general ledger, and (iv) accounts payable.
(e) Purchase of Goods for (i) 40-for-20 and similar marketing
programs and (ii) gift shops.
(f) Insurance coverage under umbrella policy.
(g) Services and Payments pursuant to the Tax-Sharing
Agreement of even date herewith.
It is expressly understood that the Company shall continue to make
payment to the Manager for Inter-Company Services despite the occurrence and
continuation of any Default or Event of Default under the Project Financing,
including a failure to make any payment due thereunder.
Section 3.5 Sales and Promotions. Manager shall formulate, coordinate
and implement promotion, marketing and sales programs, and shall cause the
Casino to participate in promotional, marketing and sales campaigns and, as
appropriate, activities involving complimentary rooms (if applicable) and food
and beverages to bona fide travel agents, tourist officials and airlines
representatives, and to all other individuals and entities whatsoever which, in
the exercise of good management practice, is deemed to be beneficial to the
Casino.
Credit facilities shall be granted by Manager in its reasonable
discretion and in accordance with good management practices and Manager's and
its Affiliates standard procedures; provided
6
<PAGE>
that except for extending credit for the purchase of goods, services, gaming or
entertainment at the Casino and except as otherwise permitted herein, Manager
shall not be authorized to make any loans or extensions of credit for or on
behalf of the Company without the prior approval of the Company's management.
Section 3.6 Books and Records. Manager shall maintain, or cause to be
maintained, a complete accounting system for and on behalf of the Company in
connection with Manager's management of the Casino. The books and records shall
be kept in accordance with generally accepted accounting principles consistently
applied and in accordance with the uniform system of accounts for casinos. Such
books and records shall be kept on the basis of a calendar year. Books and
accounts shall be maintained at the Casino or at the principal office of Manager
with a duplicate copy thereof at the Casino. The Company shall have the right
and privilege of examining and copying said books and records, including all
daily reports prepared by Manager for internal use at the Casino, during regular
business hours. Manager shall comply with all requirements with respect to
internal controls and accounting and shall prepare and provide all required
reports under the rules and regulations of the Colorado Gaming Authorities.
Section 3.7 Audits. Manager shall engage Deloitte & Touche LLP, unless
a different auditor is agreed upon by the Company and Manager ("Regular
Auditor"), to audit the operations of the Casino, (i) for the purpose of
calculating the Performance Fee ("Performance Fee Statements") and (ii) as of
and at the end of each year occurring after the Opening Date (the "Audited
Statements"). A sufficient number of copies of the Performance Fee Statements
and the Audited Statements shall be furnished to the Company and Manager as soon
as available, but in no event later than ninety (90) days following the end of
each year (such 90th day to be the "Audit Day").
Any cost of such statements shall be deemed an Operating Expense.
Section 3.8 Monthly and Quarterly Financial Statements. On or before
the 20th day of each month, Manager shall prepare an unaudited operating
statement for the preceding calendar month detailing the Gross Revenues, Net
Revenues, Gaming Taxes and expenses incurred in the Casino's operation (the
"Monthly Financial Statements"). The Monthly Financial Statements shall include
a statement detailing drop figure accounts on all Gross Gaming Revenues. On or
before the 45th day after the end of each quarter, Manager shall prepare an
unaudited report for the preceding quarter detailing the capitalized
expenditures and marketing expenses incurred in the Casino's operation.
Section 3.9 Expenses. All costs, expenses, funding or operating
deficits and Operating Capital, real property and personal property taxes,
insurance premiums and other liabilities incurred due to the gaming and
nongaming operations of the Casino shall be the sole and exclusive financial
responsibility of the Company.
Section 3.10 Budgets.
(a) Manager shall prepare and submit to the Company at least
60 days before the start of each new year for its approval a capital
budget for the expenditure of capital improvements ("Capital Budget").
To the extent practical, a reserve shall be established for this
purpose. The parties agree that any "material" expenditure not
contemplated by the Capital Budget shall require the consent of both
Manager and the Company. For the foregoing purposes, "material" shall
mean $20,000 in the case of any such individual item
7
<PAGE>
and an aggregate of $250,000 in the case of all such items. Manager
shall also prepare and submit to the Company at least 60 days before
the start of each new year for its approval an operating budget
projecting revenues, expenses and EBITDA for the next year ("Operating
Budget"). Manager shall have the responsibility to manage the Casino
in accordance with the Operating Budget except for expenses
necessitated by circumstances beyond Manager's reasonable control. Any
dispute as to the Capital Budget or the Operating Budget shall be
resolved solely by arbitration pursuant to Article VIII.
(b) At least 30 days prior to the Opening Date Manager will
prepare a Capital Budget and an Operating Budget for the remainder of
the year after the Opening Date.
Section 3.11 Operating and Other Bank Accounts.
(a) Manager shall establish bank accounts that are necessary
for the operation of the Casino, including an account for the Casino
Bankroll, at various banking institutions chosen by Manager (such
accounts are hereinafter collectively referred to as the "Operating
Bank Accounts"). The Operating Bank Accounts shall be named in such a
manner as to identify the Casino and particular uses for the account as
the Company and Manager may determine. All instructions to and checks
drawn on the Operating Bank Accounts shall be signed only by
representatives of the Company or Manager who are covered by fidelity
insurance and designated the Company or Manager personnel may be the
only authorizing signing persons on checks drawn on the Operating Bank
Accounts. All checks shall be drawn only in accordance with established
normal and customary accounting policies and procedures. The Operating
Bank Accounts shall be interest bearing accounts if such accounts are
reasonably available and all interest thereon shall be credited to the
Operating Bank Accounts. All Gross Revenues (excluding noncash items)
shall be deposited in the Operating Bank Accounts, and Manager shall
pay out of the Operating Bank Accounts, to the extent of the funds
therein, from time to time, all Operating Expenses and other amounts
required by Manager to perform its obligations under this Agreement.
All funds in the Operating Bank Accounts shall be separate from any
other funds of any of Manager's Affiliates and the Company's Affiliates
and neither the Company nor Manager may commingle such funds in the
Operating Bank Accounts with the funds of any other bank accounts.
(b) Manager agrees that it will not use any Operating Bank
Accounts as compensating balances related to the extension of credit to
Manager or grant any right of set-off or bankers' lien on any such
accounts in respect of any amounts owed by Manager to such
depositories. Manager shall seek to obtain reasonable rates of interest
for the Operating Bank Accounts, with due regard to the financial
stability of and services offered by the depositories with which such
accounts are kept. The parties to this Agreement agree that all funds
held from time to time in the Operating Bank Accounts are solely the
property of the Company, and upon the expiration or Termination (as
defined below) of this Agreement for any reason, Manager shall cease to
withdraw funds from all Operating Bank Accounts and shall take such
steps as shall be necessary to (1) remove Manager's designees as
signatories to the Operating Bank Accounts and (2) authorize the
Company's designees to become the sole signatories to the Operating
Bank Accounts. This provision shall survive Termination. It is
understood and agreed that Manager may maintain petty cash funds at the
Casino and make payments therefrom as the same are customarily made in
the
8
<PAGE>
casino/hotel business.
(c) Any funds which are generated from the Casino and are not
required for the operation of the Casino or for reserves as Manager
shall reasonably determine are necessary to cover liabilities or
obligations of the Casino, will be transferred to such bank account as
the Company shall designate. Any dispute as to whether funds should be
so transferred will be resolved solely by arbitration pursuant to
Article VIII.
Section 3.12 Payment of Expenses.
(a) Manager shall pay from the Gross Revenues the following
items in the order of priority listed below, on or before their
applicable due date: (i) required payments to the Governmental
Authorities, including federal, state or local payroll taxes ("Payroll
Taxes"), (ii) Operating Expenses, including taxes (other than Payroll
Taxes) and the Management Fee, and (iii) emergency expenditures to
correct a condition of an emergency nature, including structural
repairs, which require immediate repairs to preserve and protect the
Casino. In the event that funds are not available for payment of the
Operating Expenses in their entirety, all Payroll Taxes or withholding
taxes shall be paid first from the available funds.
(b) During the Term of this Agreement, within five (5)
Business Days after receipt of written notice from Manager, the Company
shall fund the Operating Bank Accounts designated by Manager (the
"Company's Advances") in such a fashion so as to adequately insure that
the Operating Capital set forth in the Operating Budget as revised is
sufficient to support the uninterrupted and efficient ongoing operation
of the Casino. The written request for any additional Operating Capital
shall be submitted by Manager to the Company on a monthly basis based
on the interim statements and the Operating Budget, as revised.
Section 3.13 Cooperation of the Company and Manager. The Company and
Manager shall cooperate fully with each other during the Term and the Extended
Term to facilitate the performance by Manager of Manager's obligations and
responsibilities set forth in this Agreement.
9
<PAGE>
Section 3.14 Financing Matters.
(a) In no event may either party represent that the other
party or any Affiliate of such party is or in any way may be liable for
the obligations of such party in connection with (i) any financing
agreement, or (ii) any public or private offering or sale of
securities. If the Company, or any Affiliate of the Company shall, at
any time, sell or offer to sell any securities issued by the Company or
any Affiliate of the Company through the medium of any prospectus or
otherwise and which relates to the Casino or its operation, it shall do
so only in compliance with all applicable laws, and shall clearly
disclose to all purchasers and offerees that (i) neither Manager nor
any of its Affiliates, officers, directors, agents or employees shall
in any way be deemed to be an issuer of such securities, and (ii)
Manager and its Affiliates, officers, directors, agents and employees
have not assumed and shall not have any liability arising out of or
related to the sale or offer of such securities, including without
limitation, any liability or responsibility for any financial
statements, projections or other information contained in any
prospectus or similar written or oral communication. Manager shall have
the right to approve any description of Manager or its Affiliates, or
any description of this Agreement or of the Company's relationship with
Manager hereunder, which may be contained in any prospectus or other
communications (unless such information is furnished to the Company by
Manager in writing), and the Company agrees to furnish copies of all
such materials to Manager for such purposes within a reasonable time
prior to the delivery thereof to any prospective purchaser or offeree.
The Company agrees to indemnify, defend or hold Manager and its
Affiliates, officers, directors, agents and employees, free and
harmless from any and all liabilities, costs, damages, claims or
expenses arising out of or related to the breach of the Company's
obligations under this Section 3.14. Manager agrees to reasonably
cooperate with the [Companies] in the preparation of such agreements
and offerings.
(b) Notwithstanding the above restrictions, subject to
Manager's right of review set forth in this Section 3.14, the Company
may represent that the Casino is managed by Manager and Manager may
represent that it manages the Casino and both may describe the terms of
this Agreement and the physical characteristics of the Casino in
regulatory filings and public or private offerings. Moreover, nothing
in this Section shall preclude the disclosure of (i) already public
information, or (ii) audited or unaudited financial statements from the
Casino required by the terms of this Agreement or (iii) any information
or documents required to be disclosed to or filed with the Colorado
Gaming Authorities. Both parties shall use their best efforts to
consult with the other concerning disclosures as to the Casino. The
Company and Manager shall cooperate with each other in providing
financial information concerning the Casino and Manager that may be
required by any lender or required by any Governmental Authority.
Section 3.15 Taxes and Insurance. Throughout the Term and the Extended
Term, the Company shall furnish Manager with copies of all tax statements and
insurance policies and all financing documents (including notes and mortgages)
relating to the Company. Manager shall cause all federal and state income and
sales tax returns of the Company to be prepared and shall cooperate with taxing
authorities in connection with any inquiries or audits that relate to the
Company. Manager will also assist the Company in procuring and maintaining
liability, property and such other insurance in at least such amounts and
covering such risks as is currently maintained
10
<PAGE>
with respect to the Company and in such additional amounts and covering such
additional risks, if any, as Manager and the Company determine is necessary in
connection with the operation of the Company, with responsible and reputable
insurance companies or associations. All such insurance policies shall name
Manager as an additional insured and all insurers thereon shall be required to
issue to Manager a certificate of insurance providing that such insurer shall
deliver to Manager reasonable prior notice of termination of any such policy or
the coverage provided thereby and, if and to the extent the same shall be
available without adversely affecting the Company's coverage and without
additional premiums or charges, waiving the rights of such insurer, if any, of
subrogation against Manager. Without in any way diminishing the Company's
responsibility hereunder, Manager is hereby authorized and directed to pay from
the Operating Bank Accounts all taxes and insurance fees including, without
limitation, withholding taxes and insurance premiums, and all other items of
expense relating to the ownership or operation of the Company.
Section 3.16 Concessions.Manager shall consummate, if in Manager's
reasonable discretion it deems the same to be in the best interest of the
Casino, in the name of and for the benefit of the Company, reasonable
arms-length arrangements and leases with concessionaires, licensees, tenants and
other intended users of any facilities related to the Casino. Copies of all such
arrangements shall be furnished to the Company.
Section 3.17 Material Agreements. Manager, as exclusive agent for the
Company, is authorized to make and enter into any agreements (including, without
limitation, agreement with Manager's Affiliates, provided such agreements
represent the equivalent of reasonable arms, length negotiations) as are, in
Manager's opinion, necessary or desirable for the operation, supply and
maintenance of the Casino, as required by this Agreement. Manager shall be
required to obtain the prior written approval of the Company before entering
into any agreement not contemplated by the approved Annual Budget. Manager shall
not enter into any agreement involving the incurrence of debt obligations on
behalf of the Company, or for Manager's own account, with respect to the
operations of the Casino, over any amounts therefor set forth in the approved
Annual Budget.
Section 3.18 Trademarks. The Company acknowledges that its rights to
use the trademark and trade name Riviera(R) in reference to the Casino arise
solely out of the trademark license agreement between Riviera Holdings
Corporation and the Company.
ARTICLE IV: MANAGEMENT FEE
Section 4.1 Fees Payable to Manager.
(a) Subject to Section 4.3, Manager shall be paid a fee of 1%
of Net Revenues of the Casino, payable quarterly in arrears, promptly
following each quarter (or portion thereof) after the Opening Date
("Quarterly Fee").
(b) Manager shall be paid within 30 days following the receipt
of quarterly financial statements (subject to appropriate adjustment
upon receipt of the Audited Statements) a fee ("Performance Fee") equal
to the following percentages of EBITDA for the preceding year (subject
to annualization on a quarterly basis):
Percentage EBITDA
11
<PAGE>
0% up to $5 million
10% from $5 million to $10 million
15% from $10 million to $15 million
20% more than $15 million
Section 4.2 Interest on Overdue Amounts; Collection Costs. If for any
reason the Management Fee (both the Quarterly Fee or Performance Fee) or any
other amount due to Manager under this Agreement is not paid on a timely basis,
such amount shall bear interest at the rate of 12% per annum until paid in full.
Manager shall also be entitled to reimbursement for the costs of collection,
including counsel fees and disbursements, with respect to amounts due to it
under this Agreement but which are unpaid.
Section 4.3 Deferred payment of Management Fee. Manager hereby agrees
that, after receipt from the Lender of notice that the Company has failed to pay
any amount due to the Lender under the Project Financing ("Payment Default") and
for so long as a Payment Default shall continue, Manager will not be entitled to
receive payment of either the Quarterly Fee or the Performance Fee but the same
will (i) accrue, (ii) bear interest as specified in Section 4.2, and (iii)
become payable when the Payment Default shall be cured.
ARTICLE V. DEFAULT
Section 5.1 Definition. The occurrence of any one or more of the events
described in the Sections 5.2, 5.3, 5.4 or 5.5 which is not cured within the
time permitted, shall constitute a default under this Agreement (hereinafter
referred to as a "Default" or an "Event of Default") as to the party failing in
the performance or effecting the breaching act.
Section 5.2 Manager's Defaults. If Manager shall (a) fail to perform or
materially comply with any of the covenants, agreements, terms or conditions
contained in this Agreement applicable to Manager and such failure shall
continue for a period of thirty (30) days after written notice thereof from the
Company to Manager specifying in detail the nature of such failure, or, in the
case such failure is of a nature that it cannot, with due diligence and good
faith, be cured within thirty (30) days, if Manager fails to proceed promptly
and with all due diligence and in good faith to cure the same and thereafter to
prosecute the curing of such failure to completion with all due diligence within
ninety (90) days thereafter, or (b) take or fail to take any action to the
extent required of Manager by the Colorado Gaming Authorities unless Manager
cures such default or breach prior to the expiration of applicable notice, grace
and cure periods, if any, provided, however, that Manager shall only be required
to cure any defaults with respect to which Manager has a duty hereunder.
Section 5.3 The Company's Default. If the Company shall (a) fail to
make any monetary payment required under this Agreement, including, but not
limited to, the Company's Advances, on or before the due date recited herein and
said failure continues for five (5) Business Days after written notice from
Manager specifying such failure, or (b) fail to perform or materially comply
with any of the other covenants, agreements, terms or conditions contained in
this Agreement applicable to the Company (other than monetary payments) and
which failure shall continue for a period of thirty (30) days after written
notice thereof from Manager to the Company specifying in detail the nature of
such failure, or, in the case such failure is of a nature that it cannot, with
due diligence and good faith, cure within thirty (30) days, if the Company fails
to proceed promptly and
12
<PAGE>
with all due diligence and in good faith to cure the same and thereafter to
prosecute the curing of such failure to completion with all due diligence within
ninety (90) days thereafter.
Section 5.4 Bankruptcy. If either party (a) applies for or consents to
the appointment of a receiver, trustee or liquidator of itself or any of its
property, (b) makes a general assignment for the benefit of creditors, (c) is
adjudicated a bankrupt or insolvent, or (d) files a voluntary petition in
bankruptcy or a petition or an answer seeking reorganization or an arrangement
with creditors, takes advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law, or admits the material
allegations of a petition filed against it in any proceedings under any such
law.
Section 5.5 Reorganization/Receiver. If an order, judgment or decree is
entered by any court of competent jurisdiction approving a petition seeking
reorganization of Manager or the Company, as the case may be, or appointing a
receiver, trustee or liquidator of Manager or the Company, as the case may be,
or of all or a substantial part of any of the assets of Manager or the Company,
as the case may be, and such order, judgment or decree continues unstayed and in
effect for a period of sixty (60) days from the date of entry thereof.
Section 5.6 Delays and Omissions. No delay or omission as to the
exercise of any right or power accruing upon any Event of Default shall impair
the non-defaulting party's exercise of any right or power or shall be construed
to be a waiver of any Event of Default or acquiescence therein.
Section 5.7 Disputes in Arbitration. Notwithstanding the provisions of
this Article V, any occurrence which would otherwise constitute an Event of
Default hereunder shall not constitute an Event of Default for so long as such
dispute is in arbitration pursuant to the arbitration provisions of Article
VIII.
ARTICLE VI. TERMINATION
Section 6.1 Termination Events. This Agreement may be terminated by the
non-defaulting party upon the occurrence of an Event of Default and the lapsing
of the time to cure.
Section 6.2 Notice of Termination. In the event of the occurrence and
continuation for the relevant cure period of an Event of Default, either Manager
or the Company, as appropriate, may terminate ("Termination") this Agreement by
giving ten (10) days written notice, and the Term or the Extended Term of this
Agreement shall expire by limitation at the expiration of said last day
specified in the notice as if said date was the date herein originally fixed for
the expiration of the Term or the Extended Term hereof.
Section 6.3 Payments Upon Termination. The Company shall pay to Manager
all accrued but unpaid Management Fees and expenses of Manager and any other sum
owed Manager pursuant to this Agreement.
Section 6.4 Post Termination. Upon a Termination:
(a) Manager shall promptly deliver to the Company any books,
records, instruments or other documentation relating to the Casino and
the Company in Manager's possession or under Manager's control;
13
<PAGE>
(b) Manager and its Affiliates shall release and waive all
rights, claims, interests and relationships they may have to control,
retain, or discharge any matter of management with respect to the
Casino, or any other benefit thereunder or in connection therewith,
except as specified in Section 6.3 and for the provisions of Article
VII which shall survive Termination; and
(c) Manager shall peacefully vacate and surrender possession
to the Company, and shall fully cooperate in the prompt and efficient
transfer of the management of the Casino from Manager to the Company or
a person or entity designated by the Company. In connection with the
foregoing, Manager shall act in good faith to avoid any breach or
disruption of any contract involving the Casino or the lapse of any
insurance policy covering or pertaining to the Casino.
Section 6.5 Transfer of Permits and Gaming Licenses Upon Termination.
To the fullest extent permissible under applicable law, upon termination or
expiration of this Agreement, Manager shall cooperate in the transfer of any and
all permits, licenses or similar authorizations issued by any governmental body
(including, without limitation, the Colorado Gaming Authorities) relating to the
operation or management of any or all of the Casino to the new manager.
ARTICLE VII: EXCULPATION AND INDEMNIFICATION.
Section 7.1 Exculpation. Manager, its Affiliates and each of their
respective officers, partners, directors, employees and agents shall not be
liable to the Company or any person who has acquired an interest in the Company
for any losses sustained or liabilities incurred, including monetary damages, as
a result of any act or omission of Manager, its Affiliates or any of their
respective officers, partners, directors, employees or agents, if the conduct of
Manager or such other person did not constitute actual fraud, gross negligence
or willful or wanton misconduct ("Manager Conduct Standard"). The negative
disposition of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not, of
itself, create a presumption that Manager, its Affiliates or any of their
respective officers, partners, directors, employees or agents acted in a manner
contrary to the Manager Conduct Standard. Nothing contained in this Agreement
shall exculpate or limit Manager's liability for unlawful misappropriation of
the Company's assets.
14
<PAGE>
Section 7.2 Indemnification.
(a) Subject to the provisions of Section 7.2(b) hereof, the
Company shall indemnify and hold harmless Manager, its Affiliates and
any of their respective officers, partners, directors, employees and
agents (each individually, an "Indemnitee"), from and against any and
all losses, claims, damages, liabilities, expenses (including
reasonable legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative, in
which an Indemnitee may be involved, or threatened to be involved, as a
party or otherwise, which relates to, or arises out of, the performance
of any duties and services for or on behalf of the Company pursuant to
the terms and within the scope of this Agreement, regardless of whether
the liability or expense accrued at or relates to, in whole or in part,
any time before, on or after the date hereof. The negative disposition
of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall
not, of itself, create a presumption that an Indemnitee acted in a
manner contrary to the Manager Conduct Standard.
(b) An Indemnitee shall not be entitled to indemnification
under this Section 7.2 with respect to any claim, issue or matter in
which it has been finally adjudged in a nonappealable order that such
Indemnitee has breached the Manager Conduct Standard unless and only to
the extent that the court in which such action was brought, or another
court of competent jurisdiction, determines upon application that,
despite the adjudication of liability, in view of all of the
circumstances of the case, the Indemnitee is fairly and reasonably
entitled to indemnification for such liabilities and expenses as the
court may deem proper. In addition, notwithstanding anything to the
contrary contained in this Article VII, an Indemnitee shall not be
entitled to indemnification under this Section 7.2 against losses
sustained or liabilities incurred if such losses or liabilities are
finally determined by a court of competent jurisdiction to have been
the direct result of the Manager Conduct Standard.
(c) In the event that any legal proceedings shall be
instituted or any claim or demand shall be asserted by any person in
respect of which payment may be sought by an Indemnitee under the
provisions of this Section 7.2, the Indemnitee shall promptly cause
written notice of the assertion of any such proceeding or claim of
which it has actual knowledge to be forwarded to the Company. Upon
receipt of such notice, the Company shall have the right, at their
option and expense, to be represented by counsel of their choice, and
to defend against, negotiate, settle or otherwise deal with any
proceeding, claim or demand which relates to any loss, liability,
damage or deficiency indemnified against hereunder; provided, however,
that no settlement shall be made without prior written consent of the
Indemnitee which shall not be unreasonably withheld; and provided
further, that the Indemnitee may participate in any such proceeding
with counsel of its choice and at its expense. The Indemnitee and the
Company agrees to cooperate fully with each other in connection with
the defense, negotiation or settlement of any such legal proceeding,
claim or demand.
After any final judgment or award shall have been rendered by
a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement shall have been consummated, or the
Indemnitee
15
<PAGE>
and the Company shall have arrived at a mutually binding agreement
with respect to each separate matter indemnified by the Company
hereunder, the Indemnitee shall forward to the Company notice of any
sums due and owing by it pursuant to this Agreement with respect to
such matter and the Company shall be required to pay all of the sums
so owing to the Indemnitee in immediately available funds, thirty (30)
days after the date of such notice.
(d) The indemnification provided by this Section 7.2 shall be
in addition to any other rights to which an Indemnitee may be entitled
under any agreement, bylaw or vote of Managing Members of the Company,
or as a matter of law or otherwise, both as to action in the
Indemnitee's capacity as Manager, an Affiliate thereof or an officer,
partner, director, employee or agent of Manager or its Affiliates and
as to action in any other capacity, shall continue as to an Indemnitee
who has ceased to serve in such capacity and shall inure to the benefit
of the heirs, successors, assigns and administrators of an Indemnitee.
ARTICLE VIII: ARBITRATION
Section 8.1 Appointment of Arbitrators. All disputes arising out of or
connected with the subject matter of this Agreement are to be referred first to
a committee of four (4) persons who shall meet in an attempt to resolve said
dispute or open issue. The committee shall consist of two (2) persons appointed
by the Company and two (2) persons appointed by Manager. If an agreement cannot
be reached to resolve the dispute by the committee, the dispute or open issue
will be resolved by binding arbitration. Any award of the arbitrators may be
filed in a court of law as a final judgment. Any such arbitration shall be
conducted in Denver, Colorado in accordance with the rules and regulations
adopted by the American Arbitration Association. Either party may serve upon the
other party a written notice of the dispute to be resolved pursuant to this
Article VIII. Within thirty (30) days after the giving of such notice, each of
the parties hereto shall nominate and appoint an arbitrator and shall notify the
other party in writing of the name and address of the arbitrator so chosen. Upon
the appointment of the two (2) arbitrators as hereinabove provided, said two (2)
arbitrators shall forthwith, within fifteen (15) days after the appointment of
the second arbitrator, and before exchanging views as to the question at issue,
appoint in writing a third arbitrator who shall be experienced in the operation
of a gaming casino (the "Selected Arbitrator") and give written notice of such
appointment to each of the parties hereto. In the event that the two (2)
arbitrators shall fail to appoint or agree upon the Selected Arbitrator within
said fifteen (15) day period, the Selected Arbitrator shall be selected by the
parties themselves if they so agree upon such Selected Arbitrator within a
further period of ten (10) days. If a Selected Arbitrator shall not be appointed
or agreed upon within the time herein provided, then either party on behalf of
both may request such appointment by the American Arbitration Association (or
its successor or similar organization if the American Arbitration Association is
no longer in existence). Said arbitrators shall be sworn faithfully and fairly
to determine the question at issue. The arbitrators shall afford to the Company
and Manager a hearing and the right to submit evidence, with the privilege of
cross-examination, on the question at issue, and shall with all possible speed
make their determination in writing and shall give notice to the parties hereto
of such determination. The concurring determination of any two (2) of said three
(3) arbitrators shall be binding upon the parties, or, in case no two (2) of the
arbitrators shall render a concurring determination, then the determination of
16
<PAGE>
the Selected Arbitrator shall be binding upon the parties hereto. Each party
shall pay the fees of the arbitrator appointed by it, and the fees of the
Selected Arbitrator shall be divided equally between the Company and Manager.
Section 8.2 Inability to Act. In the event that an arbitrator appointed
as aforesaid shall thereafter die or become unable or unwilling to act, his
successor shall be appointed in the same manner provided in this Article VIII
for the appointment of the arbitrator so dying or becoming unable or unwilling
to act.
ARTICLE IX: NOTICES
Notice given by a party under this Agreement shall be in writing and
shall be deemed duly given (i) when delivered by hand, (ii) when three (3) days
have elapsed after its transmittal by registered or certified mail, postage
prepaid, return receipt requested, or two (2) days have elapsed after its
transmittal by nationally recognized air courier service; or (iii) when
delivered by telephonic facsimile transmission (with a copy thereof so delivered
by hand, mail or air courier if recipient does not acknowledge receipt of the
transmission). Notices shall be sent to the addresses set forth below, or
another as to which that party has given notice, in each case with a copy
provided in the same manner and at the same time to the persons shown below
if to the Company to:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Facsimile No: (303) 582-5469
if to Manager to:
Riviera Gaming Management of Colorado, Inc.
c/o William L. Westerman
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109-1935
Facsimile No: (702) 794-9277
Any party may change the name and/or address by written notice given in
each instance to the other parties.
ARTICLE X: MISCELLANEOUS
Section 10.1 Colorado Gaming Control Act and Colorado Gaming
Authorities. Notwithstanding anything to the contrary contained in this
Agreement, this Agreement shall be deemed to include all provisions required by
the Colorado Gaming Control Act, as amended, and the regulations promulgated
thereunder (the "Act"), and shall be conditioned upon the approval of the
Colorado Gaming Authorities as required by the Act. To the extent that any term
or provision contained in this Agreement shall be inconsistent with the Act, the
provisions of the Act shall govern. All provisions of the Act, to the extent
required by law to be included in this Agreement,
17
<PAGE>
are incorporated herein by reference as if fully restated in this Agreement.
Section 10.2 Entire Agreement. This Agreement contains the entire
understanding of the parties to this Agreement in respect of its subject matter
and supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
Section 10.3 Amendment; Waiver. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all of the parties to this Agreement. No failure to exercise, and no
delay in exercising, any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision,
nor shall any waiver be implied from any course of dealing between or among the
parties. No extension of time for performance of any obligations or other acts
hereunder or under any other agreement shall be deemed to be an extension of the
time for performance of any other obligations or any other acts.
Section 10.4 Binding Effect; Assignment. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties (including
their respective officers, directors, employees, agents and Affiliates) and
their respective heirs, executors, successors and assigns. No party to this
Agreement shall have the right to assign this Agreement and its respective
rights and obligations hereunder without the consent of each other party to this
Agreement.
Section 10.5 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
Section 10.6 Terminology. The headings contained in this Agreement are
for convenience of reference only and are not to be given any legal effect and
shall not affect the meaning or interpretation of this Agreement.
Section 10.7 Governing Law. This Agreement shall be construed in
accordance with and governed for all purposes by the laws and public policy of
the State of Colorado applicable to contracts executed and to be wholly
performed within such State.
Section 10.8 Severability. If any provision of this Agreement, or the
application of any such provision to any person or circumstance, is held to be
inconsistent with any present or future law, ruling, rule or regulation of any
court or governmental or regulatory authority having jurisdiction over the
subject matter of this Agreement, such provision shall be deemed to be modified
to the minimum extent necessary to comply with such law, ruling, rule or
regulation, and the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
inconsistent, shall not be affected. If any provision is determined to be
illegal, unenforceable, or void, which provision does not relate to any payments
made hereunder and the payments made hereunder shall not be affected by such
determination and this Agreement is capable of substantial performance, then
such void provision shall be deemed rescinded and each provision not so affected
shall be enforced to the extent permitted by law.
Section 10.9 No Third Party Benefits. This Agreement is for the benefit
of the parties
18
<PAGE>
hereto and their respective permitted successors and assigns. The parties
neither intend to confer any benefit hereunder on any person, firm or
corporation other than the parties hereto, nor shall any such third party have
any rights hereunder.
Section 10.10 Drafting Ambiguities. Each party to this Agreement and
its counsel have had an opportunity to review and revise this Agreement. The
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement or of any amendments or exhibits to this Agreement.
Section 10.11 Attorneys' Fees. Should either party institute an
arbitration, action or proceeding to enforce any provisions hereof or for other
relief due to an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to receive from the other party all costs of
the action or proceeding and reasonable attorneys' fees.
Section 10.12 Limitations on Responsibilities of Manager. Manager shall
use its best efforts to render the services contemplated by this Agreement in
good faith to the Company, but notwithstanding anything to the contrary which
may be expressed or implied in this Agreement, Manager hereby explicitly
disclaims any and all warranties, express or implied, including but not limited
to the success or profitability of the Casino. In the performance of the
services contemplated by this Agreement, Manager shall not be liable to the
Company for any acts or omissions in connection therewith, except acts or
omissions which constitute a breach of the Manager Conduct Standard and then
only to the extent of the Management Fees actually received by Manager.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by an authorized representative thereof, all as of the day and
year first above written.
RIVIERA BLACK HAWK, INC.
By:______________________________
Name:
Title:
MANAGER:
RIVIERA GAMING OF COLORADO, INC.
By:__________________________________
Name:
Title:
20
TRADEMARK LICENSE AGREEMENT
This is a TRADEMARK LICENSE AGREEMENT (the "Agreement"), dated as of
June 3, 1999 by and between RIVIERA OPERATING CORPORATION, a Nevada corporation
with offices at 2910 Las Vegas Boulevard South, Las Vegas, Nevada 89109
("Licensor"), and RIVIERA BLACK HAWK, INC., a Colorado corporation with offices
at 444 Main Street, Blackhawk, Colorado 80422 ("Licensee").
Background
WHEREAS, Licensee is a wholly owned indirect subsidiary of Licensor.
Licensor is the owner of the mark RIVIERA (the "Riviera Mark") and the other
marks listed on Schedule A (collectively the "Marks");
NOW, THEREFORE, for good and valuable consideration and intending to
be legally bound hereby, the parties agree as follows:
Terms
1. Grant of License. Licensor hereby grants to Licensee, for the
duration of the term of this Agreement, a non-exclusive, non-transferable
royalty-free, worldwide right and license (i) to use the Riviera Mark as part of
the corporate name and tradename "Riviera Blackhawk Inc." (the "Tradename") and
(ii) to use the Marks listed in the attached Schedule A (which may be amended
from time to time) in such logotypes and trade dress as Licensor may from time
to time specify in connection with the operation of a casino, hotel,
restaurants, and meeting and convention facilities at Black Hawk, Colorado and
the distribution and sale of approved merchandise at such location
(collectively, the "Licensed Business"). Licensees will not directly or
indirectly use, or authorize the use of, any Mark or Tradename in connection
with any product, service, or business other than the Licensed Business.
2. Use of the Marks.
(a) Licensee's use of the Marks and Tradename will comply with all
style sheets, corporate identity manuals, and other guidelines for the use of
the Marks and Tradename provided by Licensor to Licensee from time to time.
Licensee will submit to Licensor for Licensor's approval prior to use
representative samples of all merchandise, advertisements, brochures, displays,
and other advertising or promotional materials bearing any Mark or Tradename,
and all merchandise, advertisements, brochures, displays, and other advertising
and promotional materials created and used thereafter will not materially vary
in quality, content, or design from those originally approved by Licensor.
<PAGE>
(b) The quality of the goods and services provided by Licensee in
connection with any Mark or Tradename shall equal or exceed the quality of
similar goods and services provided by Licensor or its designees at its
casino/hotel at 2910 Las Vegas Boulevard South and at such other locations as
Licensor or its designees may operate casino or hotel facilities under the
Riviera Mark. Licensee shall submit to Licensor such copies of internal and
external quality control reports as Licensor may request, including without
limitation all reports on the Licensed Business submitted to regulatory
authorities. Licensee will permit duly authorized representatives or agents of
Licensor at any time to visit and inspect Licensee's premises and meet with
Licensee's personnel regarding the quality of goods and services rendered under
the Marks or Tradename, and to inspect all books and records relating to
Licensee's use of the Marks and Tradename, the operation of the Licensed
Business, and the quality of goods and services rendered in connection with the
Marks and Tradename.
(c) Licensee acknowledges that the purpose of the inspections
conducted and quality control standards prescribed by Licensor in this Agreement
is to maintain the reputation and the goodwill of the Marks and Tradename and
the public's perception and awareness of the Marks and Tradename. Licensor shall
not bear or assume any responsibility or liability to third parties or
regulatory authorities as a result of setting or enforcing such standards or for
any failure of the Licensed Business to conform to such standards. Licensee
shall indemnify, defend and hold Licensor harmless against any and all claims,
losses, liabilities, damages, costs and expenses (including attorneys' fees and
expenses) arising from or relating to Licensee's conduct of the Licensed
Business or any other activities conducted by Licensee under any of the Marks or
the Tradename.
3. Ownership and Maintenance of the Marks; Infringement Claims.
(a) Licensee acknowledges that the ownership of all right, title and
interest in and to the Marks and Tradename is vested solely in Licensor.
Licensee agrees not to challenge the validity of this license or of Licensor's
ownership or registration of any Mark or Tradename, and agrees that Licensee's
use of the Marks and Tradename shall inure to the exclusive benefit of Licensor
for all purposes. Licensee shall take no action that would prejudice or
interfere with the validity of or Licensor's ownership of any Mark or Tradename,
and Licensee shall not enter into any agreement with any third party which in
any way alters, diminishes or restricts the rights of Licensor in any Mark or
Tradename or places any restrictions or conditions upon the use or appearance of
any Mark or Tradename.
(b) Licensor shall have the sole responsibility in its sole discretion
for maintaining and defending the validity of the Marks and the Tradename and
Licensor's ownership of the Marks and the Tradename as Licensor deems advisable,
for seeking and maintaining in Licensor's name such registrations of the
2
<PAGE>
Marks as Licensor deems advisable, and for taking such steps as Licensor deems
advisable to protect the Marks and the Tradename against infringement. Licensee
shall fully cooperate with Licensor at Licensee's expense in the taking of any
such actions. Licensee shall promptly notify Licensor of (i) any unauthorized
use or infringement by any third party of any Mark or Tradename and (ii) any
assertion by any third party that Licensee's use of any Mark or Tradename
constitutes trademark, service mark, trade dress or trade name infringement,
unfair competition or any other tortious act (collectively, "Claims"). If
Licensor chooses to initiate or defend any legal action with regard to any
Claims, Licensee shall cooperate fully with Licensor in the prosecution or
defense of such action. Licensor will bear the expenses of any such action
(including legal fees) and will be entitled to retain all amounts recovered.
Upon Licensor's written request, Licensee shall prosecute or defend any such
action under Licensor's direction at Licensor's expense. Licensee shall not
otherwise prosecute any application for registration, or prosecute or defend any
action involving any Mark or Tradename without the prior written consent of
Licensor. If Licensor notifies Licensee that the use of any Mark or Tradename is
adjudicated infringing or that Licensor has determined in its reasonable
judgment to modify or cease the use of any Mark or Tradename, Licensee will
immediately cease the use of such Mark or Tradename or modify such Mark or
Tradename consistent with Licensor's instructions at Licensee's expense.
4. Representations and Warranties. Licensor represents and warrants
that it is the owner of the federal trademark registrations listed in the
attached Schedule A, that it is the applicant of record in the applications for
federal trademark registration listed in the attached Schedule A, and that to
the best of its knowledge it is entitled to use the registered Marks in commerce
in connection with the Licensed Business. Licensor makes no representations or
warranties concerning the Marks and the Tradename other than the foregoing, and
disclaims any and all other representations and warranties concerning the Marks
and the Tradename. Except as otherwise specifically provided in this Agreement,
Licensor has no obligation to indemnify Licensee (or any assignee or other
person claiming rights through Licensee) in the event that Licensee's use of a
Mark or Tradename infringes, dilutes or otherwise violates, or is claimed to
infringe, dilute, or otherwise violate, the rights of any third party, and in no
event will Licensor be liable to Licensee (or any assignee or other person
claiming rights through Licensee) for incidental, special, or consequential
damages of any kind.
5. Term and Termination.
(a) Unless this Agreement is terminated earlier pursuant to Section
5(b) below, this Agreement shall terminate at such time as the Management
Agreement of even date between Licensee and Riviera Gaming Management of
Colorado, Inc. ("Gaming") terminates in accordance with its terms or at such
time as
3
<PAGE>
Licensor ceases to have a controlling equity or voting interest in Gaming,
whichever occurs first , provided that in the event that this Agreement has been
assigned to a third party or parties (collectively the "Secured Parties") as
part of the security for indebtedness incurred by Licensee and the Secured
Parties shall request in writing an extension of the term of this Agreement for
a specified period not to exceed six months ("Extended Term") and shall agree in
writing to terminate all use of the Marks by the end of the Extended Term, and
shall abide by the provisions of Section 6(b), the term shall be extended for
the period of the Extended Term.
(b) Licensor may terminate this Agreement at any time in the event of
a material breach of any of its terms by Licensee. In such event, Licensor shall
deliver written notice of such breach to Licensee and allow Licensee sixty (60)
days after the delivery of such notice in which to cure such breach. If the
breach is not cured to the reasonable satisfaction of Licensor, then this
Agreement shall terminate 60 days after the date of delivery of notice.
(c) Licensor's failure to terminate this Agreement for any one or more
acts or instances constituting a breach shall in no way be construed as a
waiver, express or implied, of Licensor's right to terminate for any other act
or instance of like or different nature.
6. Effect of Termination. Upon the termination of this Agreement for
whatever reason:
(a) the license of the Marks and Tradenames to Licensee, all of
Licensee's rights under this Agreement, and the rights under any sublicenses of
the Marks granted by Licensee, shall cease;
(b) Licensee shall (i) immediately cease all use of the Marks and all
materials bearing the Marks, (ii) shall reasonably promptly cease all use of the
Tradename and all materials bearing the Tradename and shall file with the
appropriate state governments to change its corporate name to delete the word
RIVIERA, and (iii) shall not adopt or use any similar marks or tradenames; and
(c) all of the other rights, duties and obligations of the parties
hereunder shall terminate except Licensees' covenants or obligations under
Sections 2(c) and 3.
7. Assignment; Sublicensing. Except for an assignment to the Secured
Parties as contemplated by that certain Collateral Agreement, dated as of June
3, 1999, made by the Licensor in favor of certain secured parties. Licensee may
not, without prior written consent of Licensor which may be granted or withheld
in
4
<PAGE>
Licensor's discretion, assign, sublicense or transfer to any third party any or
all part of their rights or duties under this Agreement. Licensor may freely
assign any or all of its rights and obligations under this Agreement (and any
successor or assign of Licensor shall enter into a Consent to Collateral
Assignment of License substantially in the form of that certain Consent to
Collateral Assignment of License entered into by Licensor for the benefit of
certain secured parties).
8. Miscellaneous.
(a) Any notice or consent required to be given under this Agreement
shall be in writing and shall be deemed given if personally delivered, sent by
facsimile transmission with confirmation of receipt, sent by overnight courier,
or sent by first class mail to the parties at the following addresses:
If to Licensor:
Riviera Operating Corporation
2910 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Fax: (702) 794-9277
Attention: President
If to Licensee:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Fax: (303) 582-5469
Attention: President
or to such other addresses as each party may designate in writing from time to
time.
(b) This Agreement is governed by and shall be construed in accordance
with the law of the state of New York, excluding any conflict-of-laws rule or
principle that might refer the governance or the construction of this Agreement
to the law of another jurisdiction. This Agreement may be amended or modified
only by a writing executed by all parties, and shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns.
(c) This Agreement sets forth all of the promises and undertakings
between the parties relating to the subject matter hereof and supersedes
5
<PAGE>
all prior and contemporaneous agreements and understandings, express or implied,
oral or written with respect to the subject matter hereof.
[Signatures continued on the next page]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
RIVIERA OPERATING CORPORATION
By:________________________________
Name:
Title:
RIVIERA BLACKHAWK, INC.
By:________________________________
Name:
Title:
7
<PAGE>
SCHEDULE A
REGISTRATIONS
Mark Reg. No. Reg. Date
RIVIERA 2,090,347 8/26/97
APPLICATIONS
Mark Serial No. Filing Date
$40 FOR $20 75/194.182 11/6/96
BONUS 21 PLUS 75/152,286 8/19/96
JACK POTS 75/567,371 10/8/98
JACK POTS 75/567,372 10/8/98
JACK POTS 75/367,373 10/8/98
LOOSIE SLOTS 75/567,368 10/8/98
LOOSIE SLOTS 75/567/369 10/8/98
LOOSIE SLOTS 75/567/370 10/8/98
NICKEL HEAVEN 75/423,123 1/26/98
NICKEL TOWN 75/421,961 1/22/98
RIVIERA 74/646,349 3/13/95
TABLE OF CONTENTS
ARTICLE 1. GRANT OF DEED OF TRUST.............................................2
1.1. Grant of Deed of Trust..........................................2
1.2. Status of Title; Defense of Actions and Costs...................8
1.3. Obligations Secured.............................................8
1.4. After-Acquired Property........................................10
1.5. Security Agreement; Fixture Filing.............................10
ARTICLE 2. COVENANTS CONCERNING THE TRUST PROPERTY...........................11
2.1. Taxes and Governmental Impositions.............................11
2.2. Mechanic's and Other Liens; Subrogation........................13
2.3. Utilities......................................................14
2.4. Insurance......................................................14
2.5. Condemnation...................................................14
2.6. Restoration....................................................14
2.7. Care of the Trust Property.....................................14
2.8. Future Tenant Leases...........................................15
2.9. Further Encumbrance............................................16
2.10. Partial Releases of Trust Property.............................17
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS....................................18
3.1. Assignment of Leases and Rent..................................18
3.2. Trustor's Limited License......................................18
3.3. Limitation.....................................................19
3.4. Performance by Trustor.........................................19
3.5. No Merger of Leases............................................19
3.6. Remedies.......................................................19
i
<PAGE>
3.7. Application of Income..........................................22
3.8. Term...........................................................22
3.9. Actions of Trustee.............................................22
ARTICLE 4. DEFAULTS AND REMEDIES.............................................22
4.1. Events of Default..............................................22
4.2. Performance of Defaulted Acts..................................22
4.3. Remedies.......................................................23
4.4. Foreclosure....................................................25
4.5. Rescission of Notice of Default................................25
4.6. Appointment of Receiver........................................26
4.7. Remedies Not Exclusive; Waiver.................................26
4.8. Casino.........................................................27
4.9. Multiple Collateral............................................27
4.10. Extensions and Partial Payments................................29
4.11. Protective Advances............................................29
4.12. Environmental Matters..........................................30
4.13. Appointment as Attorney-in-Fact................................30
ARTICLE 5. GENERAL PROVISIONS................................................31
5.1. Extension; Release.............................................31
5.2. Trustor........................................................31
5.3. Additional Documents...........................................31
5.4. Statute of Limitations.........................................31
5.5. Severability...................................................32
5.6. Interaction with Indenture.....................................32
5.7. Other Collateral...............................................32
5.8. Notices........................................................33
ii
<PAGE>
5.9. No Waiver of Remedies..........................................33
5.10. Trustee's Powers...............................................33
5.11. Beneficiary's Powers...........................................33
5.12. Additional Security............................................34
5.13. Captions.......................................................34
5.14. Trust Irrevocable; No Offset...................................34
5.15. Corrections....................................................34
5.16. Attorneys' Fees................................................34
5.17. Amendments.....................................................34
5.18. Acceptance by Trustee..........................................34
5.19. Authorization to Rely..........................................35
5.20. GOVERNING LAW..................................................35
5.21. Time of Essence................................................35
5.22. Future Advances................................................35
5.23. Actions by Beneficiary to Preserve.............................35
5.24. Reimbursement..................................................36
5.25. Usury Savings Clause...........................................36
5.26. Jurisdiction and Venue.........................................36
5.27. Waiver of Jury Trial...........................................37
5.28. Waiver of Homestead and Other Exemptions.......................37
5.29. Construction Deed of Trust.....................................37
5.30. Gaming Laws....................................................37
iii
<PAGE>
Recording at the Request of and
when Recorded Mail Original to:
Latham & Watkins
633 W. Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Carl A. Lux, Esq.
DEED OF TRUST TO PUBLIC TRUSTEE,
SECURITY AGREEMENT, FIXTURE FILING AND
ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS
(GILPIN COUNTY, COLORADO)
THIS DEED OF TRUST TO PUBLIC TRUSTEE, SECURITY AGREEMENT, FIXTURE
FILING AND ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS (as the same may
be amended, supplemented or otherwise modified from time to time, this "Deed of
Trust") is made and entered into as of May 29, 1999 by RIVIERA BLACK HAWK, INC.,
a Colorado corporation (the "Company"), whose address is 444 Main Street, Black
Hawk, Colorado 80422 and whose federal taxation identification number is
86-0886265 ("Trustor"), to the PUBLIC TRUSTEE OF THE COUNTY OF GILPIN, COLORADO
("Trustee"), for the benefit of IBJ Whitehall Bank & Trust Company, having an
office at One State Street, New York, New York 10004, in its capacity as trustee
under the Indenture referred to below (together with its successors and assigns,
"Beneficiary") for its benefit and the benefit of the Holders.
RECITALS
A. Beneficiary and Trustor are the parties to that certain Indenture
dated as of June 3, 1999 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Indenture"). Unless otherwise defined herein,
capitalized terms used in this Deed of Trust shall have the meanings given such
terms in Annex A attached hereto.
B. Trustor has, under the Indenture, issued its First Mortgage Notes
Due 2005 (together with any amendments, supplements, modifications, renewals or
extensions thereof and any notes issued in replacement thereof or exchange
therefor from time to time, the "Notes") in the original principal amount of
$45,000,000. The Notes, the Indenture, the Collateral Documents, the Completion
Capital Commitment, the Keep-Well Agreement and all other documents, agreements
and instruments (in each case, as amended, supplemented or otherwise modified
from time to time) now or hereafter executed and delivered in connection with
<PAGE>
the Indenture and the transactions described therein are collectively
hereinafter referred to as the "Transaction Documents."
C. The Indenture requires that the obligations of Trustor under the
Notes, the Indenture and the other Transaction Documents be secured by liens and
security interests covering certain property of Trustor. In connection
therewith, Trustor is executing and delivering this Deed of Trust in accordance
with the Indenture.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Trustor agrees as follows:
ARTICLE 1.
GRANT OF DEED OF TRUST
1.1. Grant of Deed of Trust. Trustor does hereby irrevocably grant, assign,
bargain, convey, transfer, warrant and set over unto Trustee, IN TRUST, WITH
POWER OF SALE, under and subject to the terms and conditions hereof, for the
benefit and security of Beneficiary and for the ratable benefit and security of
the Holders, all of Trustor's right, title and interest in and to all of the
following property, to the extent assignable under applicable law, whether now
owned or hereafter acquired (collectively, the "Trust Property"):
(a) the real property described in Exhibit A attached hereto and by
this reference incorporated herein, including without limitation all air rights
with respect thereto (the "Land");
(b) any and all buildings, constructions, facilities and fixtures,
pipelines and all other improvements now on, or hereafter located or constructed
on or in, the Land or any portion thereof (collectively, the "Improvements"),
and all fixtures, construction materials, goods (including without limitation
consumer goods, equipment and inventory) and other articles of real and personal
property which are now or hereafter affixed to, placed upon or used in
connection with the Trust Property;
(c) any and all tenements and hereditaments of whatever kind or
description and wherever situated and all of Trustor's right, title and interest
in and to any land lying within the right of way of any street, open or
proposed, adjoining the Land, any and all sidewalks, and any land lying between
the boundaries of the Land and the center line of any adjacent street, road,
avenue or alley, whether existing, vacated or proposed;
(d) any and all furniture, fittings and fixtures (whether actually or
constructively attached, and including all trade fixtures), equipment, machinery
(including without limitation any and all equipment, machinery and apparatus
used for or in connection with maintaining and operating gaming facilities,
gaming devices including slot machines, poker tables and blackjack tables,
lodging, restaurants, bars or entertainment facilities), appliances,
construction materials, personal property, supplies, tools, paintings,
sculptures, murals, art work,
2
<PAGE>
books, now or hereafter or from time to time situated on, in or under the Land
and/or any the Improvements or used or usable in connection with any present or
future use of the Land, whether or not affixed to the realty, including, but not
limited to, power, lighting, heating, electrical, ventilating, air conditioning,
gas, electricity, water sprinkling and sprinkler protection, mechanical and
plumbing materials, waste removal, refrigeration, ventilation, freezing,
laundry, incinerating and power equipment; fixtures and supplies; fences and
fencing; water and power systems; irrigation systems and equipment; plumbing,
lifting, cleaning, fire prevention, fire extinguishing, ventilating, cooling and
communication apparatus and equipment; engines; boilers; furnaces; elevators;
escalators; pipes; pumps; tanks; switchboards; ducts; conduits; conveyor belts;
motors; refrigeration facilities plants; vacuum cleaning systems; awnings;
shrubbery, trees, vines and other plants of every kind and nature; ranges;
furnaces; ovens; burners; refrigerators; cabinets; dishwashers; disposals;
shades; awnings; blinds; drapes; attached floor coverings, including carpeting;
screens, storm doors and windows; rugs and carpets; draperies; beds, bureaus,
chests, desks, lamps, bookcases, tables, chairs and couches; radios and
television sets; china, glassware, silverware, tableware, linens, towels,
bedding and blankets; kitchen equipment and utensils; bars and bar fixtures;
uniforms; safes, vaults, cash registers, accounting and duplicating machines;
statuary, hangings, mirrors, decorations, pictures and ornaments;
(e) any and all contract rights of whatever nature, whenever acquired,
relating to the Trust Property described in this Section 1.1, including without
limitation architectural and engineering plans, plans and specifications,
drawings, tests, reports or studies relating to the construction and the
Improvements on or to the Land, contracts for goods or services and management
contracts, all warranties and guaranties under such contracts and all rights
under architects' contracts, construction contracts, supply contracts,
completion bonds, performance bonds and payment bonds, all accounts, general
intangibles, documents, instruments and chattel paper arising from or in
connection with such Trust Property, including all books and records in
connection therewith, all rights, claims, suits or demands that Trustor now has
or may hereafter acquire with respect to any damage to the Trust Property;
(f) any and all rights of Trustor under any leases or other agreements
entered into by Trustor (as a "landlord," "sublandlord," "lessor," "sublessor"
or similar capacity) now in existence or hereafter arising and providing for the
use and occupancy of all or any portion of the Trust Property (each, as amended,
supplemented or otherwise modified from time to time, a "Tenant Lease" and,
collectively, the "Tenant Leases");
(g) any and all additions, betterments and improvements hereafter
acquired or constructed upon or in connection with any other property, real or
personal, now or at any time hereafter subject to the lien of this Deed of
Trust;
(h) any and all easements, rights of way, servitudes, surface rights,
interests in land, permits, licenses, grants affecting land, and all amendments
thereof, relating or appurtenant to the Land and/or any of the Improvements,
fixtures, personal property, easements, rights, interests and/or other items
described in this Section 1.1, now or hereafter belonging or pertaining to the
Land, including without limitation all franchises, privileges, reservations,
allowances, immunities, powers, rights, ordinances, permits, licenses, grants,
leases, consents, possessory and prescriptive rights of Trustor in, on, over,
under, across and through lands, roads, highways,
3
<PAGE>
railroads, canals, channels, waterways, ditches, bridges or structures, or
elsewhere, together with Trustor's interest (now owned or hereafter acquired) in
all fixtures, the Improvements and personal property now or hereafter from time
to time situated on, in, over, under, across or through, attached to or used in
connection with such Trust Property and all rights and appurtenances incident
thereto;
(i) any and all rights, powers, franchises, privileges, immunities,
permits and licenses now or hereafter owned or possessed by Trustor that now or
at any time hereafter may be necessary or useful for, or appurtenant to, the
use, operation, management, maintenance, renewal, alteration or improvement of
any of the other Trust Property;
(j) any and all income, rents, receipts, security or similar deposits,
revenues, issues, royalties, profits, earnings, products and proceeds from any
and all of the Land or any buildings or other the Improvements, now owned or
hereafter acquired (collectively, the "Rents, Issues and Profits"), together
with the right to collect and apply the same to any indebtedness secured
hereunder, subject, however, to the right hereafter given to Trustor to collect
the Rents, Issues and Profits as long as Trustor is not in default hereunder;
(k) any and all rights and estates in reversion or remainder;
(l) any and all oil and gas or other mineral rights in or pertaining
to the Land and all royalty, leasehold and other rights of Trustor pertaining
thereto, now owned or hereafter acquired;
(m) any and all monies in the possession of Beneficiary or any Holder
(including without limitation retainages and deposits for taxes and insurance),
and all refundable utility, tenant, escrow and governmental fees and deposits,
and all refundable fees and deposits of every other nature, now owned or
hereafter acquired;
(n) any and all rights to obtain water, sewer and other services from
municipalities and service districts;
(o) any and all water and water rights, ditches and ditch rights,
reservoirs and storage rights, wells and well rights, springs and spring rights,
groundwater rights (whether tributary, nontributary or not-nontributary), water
contracts, water allotments, water taps, shares in ditch or reservoir companies,
and all other rights of any kind or nature in or to the use of water, which are
appurtenant to, historically used on or in connection with, or located on or
under the Land, including without limitation shares of stock evidencing the
foregoing and all deposits made with or other security given to utility
companies by Trustor with respect to the Land or any buildings or other the
Improvements, together with any and all easements, rights of way, fixtures,
personal property, contract rights, permits or decrees associated with or used
in connection with any such rights;
(p) any and all shrubbery, trees, vines, flowers, plants and
landscaping features of every kind and nature and all crops of every type and
nature, annual and perennial, now or hereafter located on, under or above the
Land, all harvested crops wherever stored and any
4
<PAGE>
document of title or other document representing a storage obligation,
including, but not limited to, warehouse receipts, negotiable or nonnegotiable,
which may be received for crops in which Trustor has any right, title or
interest wherever stored;
(q) any and all claims or demands relating to insurance which Trustor
now has or may hereafter acquire with respect to any Trust Property, including
without limitation all advance payments of insurance premiums made by Trustor
with respect thereto;
(r) any and all awards and payments, including without limitation
interest payments, resulting from the exercise of any right of condemnation or
eminent domain or from any other public or private taking of, injury to or
decrease in the value of, any of the Land or the Improvements, or any agreement
or conveyance in lieu of any such action;
(s) and and all goods, inventory, equipment, building and other
materials, supplies, and other tangible personal property of every nature now
owned or hereafter acquired by Trustor and used or intended for use in the
construction, development, or operation of the Land or any the Improvements
(including without limitation all opened and unopened food and liquor supplies);
(t) any and all of the records and books, computer programs, tapes,
discs, software and other like records and information now or hereafter
maintained by or on behalf of Trustor in connection with the use of the Land,
the Improvements, the Tenant Leases and Rents, Issues and Profits;
(u) any and all franchise, operating and management agreements, liquor
and gaming licenses (in each case, to the full extent legally assignable),
restaurant, occupancy, hotel, motel and other licenses, permits and
authorizations relating to the operation of the Improvements;
(v) any and all deposit accounts and other bank or similar accounts of
Trustor (together with all amounts in any such accounts), monies, accounts,
accounts receivable, contract rights and general intangibles (whether now owned
or existing or hereafter created or acquired, and including proceeds thereof)
relating in any way to, or arising in any manner from, Trustor's ownership, use,
operation, leasing, or sale of all or any part of the property, rights and
interests described in this Section 1.1 (including without limitation all
monies, rents, receipts, proceeds and compensation of every kind whatsoever
received by or on behalf of Trustor and produced from (i) the use or occupancy
of all or any part of the Improvements by the public or others, for lodging,
dwelling, office or residential purposes, (ii) gains arising from the sale or
other disposition of capital assets, including furniture, fixtures and
equipment, (iii) compensation awards, or proceeds in lieu thereof, (iv) all food
and beverage sales, (v) garage and parking rentals, (vi) meeting space rental,
(vii) telephone, telecopy and telex income, (viii) income from vending machines
and newsstands, (ix) recreational fees, (x) hotel rentals; and (xi)
entertainment revenues;
(w) any and all other real property acquired by Trustor after the date
hereof whether or not it is adjacent or contiguous to the Land, and is acquired
by Trustor as a continuation, completion, correction or supplement to the Land;
5
<PAGE>
(x) any and all other rights and interests of every name and nature in
all property, whether real, personal or mixed, tangible or intangible, now or
hereafter owned or leased by Trustor, forming a part of or used in connection
with or relating to the Land and the construction, operation and convenience of
the Improvements (including without limitation any excavation permits and other
permits issued by governmental authorities);
(y) subject to the provisions and limitations contained in the
Indenture, any and all proceeds of any sales or other dispositions of the
property or rights described in the foregoing clauses to this Section 1.1 or any
part thereof, whether voluntary or involuntary; provided, however, that the
foregoing shall not be deemed to permit such sales, transfers or other
dispositions except as specifically permitted herein;
(z) to the extent permitted by applicable law, any and all of
Trustor's right, title, and interest in and to any and all licenses, permits,
variances, special permits, franchises, certificates, rulings, certifications,
validations, exemptions, filings, registrations, authorizations, consents,
approvals, waivers, orders, rights and agreements (including without limitation
options, option rights and contract rights) now or hereafter obtained by Trustor
from any governmental authority having or claiming jurisdiction over the Land,
the FF&E, the Project or any other element of the Trust Property or providing
access thereto, or the operation of any business on, at, or from the Land, other
than any Gaming Licenses (except for any registrations, licenses, findings of
suitability or approvals issued by the Gaming Authority or any other gaming
licenses which are non-assignable) and the Liquor License; provided that, upon
an Event of Default hereunder or under (and as defined in) the Indenture, if
Beneficiary is not qualified under the Gaming Laws (as defined below) to hold
such Gaming Licenses, then Beneficiary shall designate an appropriately
qualified third party to which an assignment of such Gaming Licenses can be made
in compliance with the Gaming Laws;
(aa) any and all monies and other property, real or personal, which
may from time to time be subjected to the lien hereof by Trustor or by anyone on
its behalf or with its consent, or which may come into the possession or be
subject to the control of Beneficiary pursuant to this Deed of Trust or any
Collateral Document, including without limitation any protective advances under
this Deed of Trust;
(bb) any and all of Trustor's rights further to assign, sell, lease,
encumber or otherwise transfer or dispose of the property described in the
foregoing clauses of this Section 1.1, for debt or otherwise, or to evidence or
secure a Permitted Lien or Permitted Disposition;
(cc) any and all after-acquired property in the same categories as any
of the foregoing clauses of this Section 1.1, and all additions and/or
accessions to, and all renewals, substitutions and replacements of, any of the
foregoing, and all other things of whatsoever kind and in any way or at any time
belonging or appurtenant to, or used in connection with, any of the Trust
Property described in this Section 1.1; and
(dd) to the extent not otherwise included in the foregoing, any and
all proceeds and products of any and all of the foregoing and, to the extent
permitted by applicable law, proceeds of any and all Gaming and Liquor Licenses
even if such Gaming and Liquor Licenses are
6
<PAGE>
not subject to the liens granted hereunder and all collateral security and
guarantees given by any person with respect to any of the foregoing, and in any
event including without limitation any and all (i) proceeds of any insurance,
indemnity, warranty or guarantee payable to Beneficiary or to Trustor from time
to time with respect to any of the Trust Property, (ii) payments (in any form
whatsoever) made or due and payable to Trustor from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Trust Property by any governmental authority (or any person
acting under color of a governmental authority), (iii) products of the Trust
Property, (iv) other amounts from time to time paid or payable under or in
connection with any of the Trust Property, and (v) subject to the provisions and
limitations contained in the Indenture, whatever is now or hereafter receivable
or received by Trustor upon the sale, exchange, collection or other disposition
of any item of Trust Property, whether voluntary or involuntary, including
without limitation the proceeds of a Permitted Disposition.
Notwithstanding the foregoing, the Trust Property shall not include
any of the following assets (the "Excluded Assets"): (i) Gaming Licenses and
Liquor Licenses, (ii) any other governmental approval or permit to the extent
that, under the terms and conditions of such approval or under applicable law,
it cannot be subjected to a Lien in favor of the Trustee without the approval of
the relevant Governmental Authority, but only to the extent that such approval
has not been obtained; (iii) any Trust Property that is exclusively subject to
any agreement with a third party that, pursuant to its terms, prohibits the
grant of a lien on such Trust Property; provided that Trustor shall use its best
efforts to obtain such third party's consent to assignment of all such
agreements; and (iv) FF&E to the extent financed or refinanced by, or the
proceeds of, an FF&E Financing to the extent that (A) the purchase or lease of
such FF&E was not financed or refinanced with the proceeds of the Notes but with
the proceeds of an FF&E Financing in place at the time of such purchase or lease
and (B) Trustor is permitted to enter into such FF&E Financing for such FF&E
under the Indenture; provided further that any such FF&E Financing shall
encumber only that FF&E specifically subject to such FF&E Financing; and
provided further that, upon the repayment, satisfaction or termination of such
FF&E Financing, all FF&E financed thereby shall no longer be deemed an Excluded
Asset and shall be subject to the lien of this Deed of Trust.
TO HAVE AND TO HOLD the Trust Property unto Trustee, its successors
and assigns forever, FOR THE PURPOSE OF SECURING, in such order of priority as
Trustee and Beneficiary may elect, the indebtedness and obligations described in
Section 1.3 hereof.
Trustor, for itself and its successors and assigns, covenants and
agrees to and with Beneficiary that, at the time or times of the execution of
and delivery of these presents or any instrument of further assurance with
respect thereto, Trustor has good right, full power and lawful authority to
assign, grant, convey, warrant, transfer, bargain or sell its interests in the
Trust Property in the manner and form as aforesaid, and that the Trust Property
is free and clear of all Liens and encumbrances whatsoever, except the Permitted
Liens, and Trustor shall warrant and forever defend the Trust Property in the
quiet and peaceable possession of Beneficiary and its successors and assigns
against all and every Person or Persons lawfully or otherwise claiming or to
claim the whole or any part thereof, except for the Permitted Liens.
7
<PAGE>
Trustor agrees that any greater title to the Trust Property hereafter acquired
by Trustor during the term hereof shall be automatically subject hereto.
1.2. Status of Title; Defense of Actions and Costs. Trustor has the right
to mortgage and convey the Trust Property to Trustee and Beneficiary and will
warrant and defend the same to Trustee and Beneficiary and their respective
successors and assigns against the lawful claims and demands of every Person or
whomsoever claiming or to claim the same. Trustor agrees to protect, preserve
and defend Trustee's and Beneficiary's interests in the Trust Property and title
thereto; to appear and defend this Deed of Trust in any action or proceeding
affecting or purporting to affect the Trust Property, the Lien or security
interest of this Deed of Trust thereon, or any of the rights of Trustee or
Beneficiary hereunder, and to pay all reasonable costs and expenses incurred by
Trustee or Beneficiary in or in connection with any such action or proceeding,
including reasonable attorneys' fees, whether or not any such action or
proceeding progresses to judgment and whether or not brought by or against
Trustee or Beneficiary. Trustee and Beneficiary shall be reimbursed for any such
reasonable costs and expenses in accordance with the provisions of this Deed of
Trust and the other Transaction Documents. Trustee or Beneficiary may, but shall
not be under any obligation to, appear or intervene in any such action or
proceeding, retain counsel therein, defend the same or otherwise take such
action therein as it be advised and may settle or compromise the same. In
connection therewith Beneficiary or Trustee, as the case may be, in that behalf
and for any of such purposes, but without obligation, may expend and advance
such sums of money as it reasonably may deem necessary, and shall be reimbursed
therefor in accordance with the provisions of this Deed of Trust and the other
Transaction Documents.
1.3. Obligations Secured. This Deed of Trust is given for the purpose of
securing the payment and performance in full when due (whether at stated
maturity, upon redemption or required repurchase, by acceleration or otherwise)
of all obligations of every type and nature of Trustor to Trustee, any other
trustee under any other Deed of Trust, Beneficiary or any Holder (including
without limitation any and all amounts which may at any time be or become due
and payable and any and all interest accruing after the maturity of the Notes
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
Trustor, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding and interest, to the extent permitted by law, on the
unpaid interest), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Indenture, the Notes, the Completion Capital
Commitment, the Keep-Well Agreement, this Deed of Trust, the other Collateral
Documents, or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, premium, interest,
fees, Liquidated Damages, indemnities, costs, expenses or otherwise (including
without limitation all fees and disbursements of counsel to Trustee or to the
Holders that are required to be paid by Trustor pursuant to the terms of the
Indenture, the Notes, the Completion Capital Commitment, the Keep-Well
Agreement, this Deed of Trust, any other Collateral Document, or any other
document entered into by Trustor, or either of them, in connection with any of
the foregoing) (the foregoing, collectively, the "Obligations"). Notwithstanding
the scope of such definition, for purposes of any provision of Title 38 of the
Colorado Revised Statutes, the only "original evidence of debt"
8
<PAGE>
secured by this Deed of Trust is the single counterpart of the Indenture which
bears a legend in the following form:
The counterpart of the Indenture on which this legend appears is, for
purposes of Title 38 of the Colorado Revised Statutes, the "original
evidence of debt" secured by the Deed of Trust, as defined herein.
In no event shall Trustee require Beneficiary to produce any or all of the Notes
or other Transaction Documents, other than the single counterpart of the
Indenture referred to above, to support Beneficiary's written request for full
or partial release of this Deed of Trust or for the sale of the Trust Property
by Trustee, and Trustor hereby waives any defense that such single counterpart
of the Indenture is not, for purposes of Title 38 of the Colorado Revised
Statutes, the "original evidence of debt" secured by this Deed of Trust. Trustor
shall pay and perform the Obligations at the times and places and in the manner
specified in the Notes, the Indenture and the other Transaction Documents. This
Deed of Trust shall secure unpaid balances of all loans and other such
extensions of credit made to Trustor under the Transaction Documents, whether
made pursuant to an obligation of Beneficiary or any Holder to make such loans
or extensions or otherwise. Such Obligations and other extensions of credit may
or may not be evidenced by notes executed pursuant to the Indenture. All future
advances will have the same priority as the original advance. Any agreement
hereafter made by Trustor and Beneficiary pursuant to this Deed of Trust shall
be superior to the rights of the holder of any intervening Lien or encumbrance
to the extent allowed by law.
PROVIDED, HOWEVER, that if the principal and interest and all other
sums due or to become due under the Notes shall have been indefeasibly paid in
full at the time and in the manner stipulated herein and all other sums payable
hereunder and all other indebtedness secured hereby shall have been indefeasibly
paid in full, then, in such case, the estate, right, title and interest of
Trustee and Beneficiary in the Trust Property shall cease, and upon written
notice from Beneficiary that all of the indebtedness secured hereby has been
indefeasibly paid in full, cancellation of the Notes secured hereby, surrender
of this Deed of Trust and the Indenture to Trustee and payment by Trustor of
Trustee's fees and costs, all other amounts payable to Trustee hereunder and all
recording costs, Trustee shall release this Deed of Trust and the Trust Property
shall become wholly free of the liens, security interests, conveyances and
assignments created and evidenced hereby.
1.4. After-Acquired Property. If Trustor hereafter acquires (a) any
property that is of the kind or nature described in Section 1.1 hereof and is or
is intended to become a part thereof, or (b) an interest in any of the Trust
Property greater than the interest now held, then such property or interest
shall, immediately upon such acquisition, become subject to the lien of this
Deed of Trust as fully and completely and with the same effect as though now
owned by Trustor and specifically described herein, without need for the
delivery and/or recording of a supplement to this Deed of Trust or any other
instrument, all to the extent permitted by applicable law; provided, however,
Trustor shall from time to time, if requested by Beneficiary and at Trustor's
expense, execute and deliver any and all such further assurances, conveyances
and assignments
9
<PAGE>
thereof as Beneficiary may reasonably require for the purpose of expressly and
specifically subjecting to the lien of this Deed of Trust any and all such
property or interest.
1.5. Security Agreement; Fixture Filing. As additional security for the
Obligations, Trustor grants to Beneficiary a security interest in the Trust
Property. This Deed of Trust shall also, as to any part of the Trust Property
that may or might now or hereafter be deemed to be personal property, fixtures
or other property covered by Article 9 of the Colorado Uniform Commercial Code
(the "Personal Property"), be deemed to constitute a security agreement, and
Trustor, as debtor, hereby grants to Beneficiary, as secured party, a security
interest therein pursuant to the Colorado Uniform Commercial Code. To the extent
that any Personal Property has been or may be acquired with funds advanced under
the Transaction Documents, this security interest granted hereunder is a
purchase money security interest. Trustor agrees, upon request of Beneficiary,
and at Trustor's expense, to execute any supplements to this Deed of Trust, any
separate security agreement and any financing statements and continuation
statements in order to include specifically the Personal Property or otherwise
to perfect the security interest granted hereby. Upon the occurrence and
continuance of any Event of Default, Beneficiary shall have all of the rights
and remedies therein provided or otherwise provided by law or by this Deed of
Trust, including but not limited to the right to require Trustor to assemble the
Personal Property and make it available to Beneficiary at a place to be
designated by Beneficiary which is reasonably convenient to both parties, the
right to take possession of such Personal Property with or without demand and
with or without process of law and the right to sell and dispose of such
Personal Property and distribute the proceeds according to law. The parties
hereto agree that any requirement of reasonable notice shall be met if
Beneficiary sends such notice to Trustor at least ten (10) days prior to the
date of sale, disposition or other event giving rise to the required notice, and
that the proceeds of any disposition of any such Personal Property may be
applied by Beneficiary first to the reasonable expenses in connection therewith,
including reasonable attorneys' fees and legal expenses incurred, and then to
payment of the other Obligations. The parties hereto further agree that any sale
of the Personal Property held contemporaneously with any sale of the Land or
other Trust Property and upon the same notice as required in the Colorado
Uniform Commercial Code shall be deemed to be a public sale conducted in a
commercially reasonable manner. With respect to any Personal Property that has
become so attached to the real property covered hereby that an interest therein
arises under the real property law of the State of Colorado, this Deed of Trust
shall also constitute a financing statement and a fixture filing under Sections
4-9-313 and 4-9-402(6) of the Colorado Uniform Commercial Code.
ARTICLE 2.
COVENANTS CONCERNING THE TRUST PROPERTY
2.1. Taxes and Governmental Impositions.
(a) Payment. Subject to Section 2.1(c), Trustor will pay, or cause to
be paid, prior to delinquency, all taxes, assessments, charges, fees (including
without limitation gaming and Liquor License fees), fines and impositions of
every nature whatsoever charged, imposed, levied or assessed or to be charged,
imposed, levied or assessed upon or against the Trust Property or any part
thereof, or upon the interest of Trustee or Beneficiary in the Trust Property,
including without limitation (i) all income taxes (excluding income taxes of
Trustee or Beneficiary),
10
<PAGE>
assessments and other governmental charges lawfully levied and imposed by the
United States or any state, county, municipality or other taxing or assessing
authority in respect of the Trust Property or any part thereof, (ii) all
non-governmental levies or assessments, such as maintenance charges, owner's
association dues, charges or fees, levies or charges resulting from covenants,
conditions and restrictions affecting the Trust Property or any part thereof,
and (iii) any other charge that, if unpaid, would or could become a Lien or
charge upon the Trust Property, or any part thereof (all of which are
hereinafter collectively referred to as the "Impositions").
(b) Alternative Impositions. If at any time after the date hereof
there shall be assessed or imposed (i) a tax or assessment on Trustor's interest
in the Trust Property in lieu of or in addition to the Impositions payable by
Trustor pursuant to subparagraph (a) above, or (ii) a license fee, tax or
assessment imposed on Trustee or Beneficiary and measured by or based in whole
or in part upon the amount of the outstanding Obligations secured hereby (but
excluding any state or federal income or franchise tax), then all such taxes,
assessments, or fees shall be deemed to be included within the term
"Impositions" as defined in Section 2.1(a) above, and Trustor shall pay and
discharge the same as herein provided with respect to the payment of
Impositions.
(c) Contests. Trustor shall have the right, before the occurrence of
any delinquency of any Imposition, to contest or object to the amount or
validity of any such Imposition by appropriate legal proceedings, but such right
shall not be deemed or construed in any way as relieving, modifying or extending
Trustor's covenant to pay any such Imposition at the time and in the manner
provided in Section 2.1(a) hereof, unless Trustor has given thirty (30) days'
prior written notice to Beneficiary of Trustor's intent so to contest or object
to such Imposition, and unless: (i) the legal proceedings shall operate
conclusively to prevent the sale of the Trust Property, or any part thereof, to
satisfy such Imposition prior to final determination of such proceedings and
Trustor shall furnish a good and sufficient bond, surety or cash resources in
the amount of the Imposition that is being contested, plus any interest and
penalty that may be imposed thereon and that could become a Lien against the
Trust Property and in a manner to stay or prevent the sale of the Trust
Property, or other security satisfactory to Beneficiary; or (ii) Trustor shall
have paid such Imposition under protest and is suing to recover any refunds
thereof. Subject to the foregoing, within thirty (30) days after the date when
an Imposition is due and payable, Trustor shall deliver to Beneficiary evidence
reasonably acceptable to Beneficiary showing the payment of such Imposition. In
the event that Trustor contests or objects to an Imposition in accordance with
the foregoing, then Trustor shall promptly and diligently proceed to resolve the
dispute concerning the Imposition in a manner not prejudicial to Beneficiary or
its rights hereunder or under the other Transaction Documents.
(d) Payment by Beneficiary. Beneficiary shall have the right to pay
any Imposition after the date such Imposition shall have become delinquent if
Trustor's failure to pay such Imposition constitutes or would constitute, with
or without the giving of notice by Beneficiary or the passage of time, an Event
of Default (unless Trustor shall be contesting such Imposition pursuant to
Section 2.1(c) hereof), and to add to the Obligations the amount so paid,
together with interest thereon from the date of such payment at the then
applicable interest rate on the Notes plus 2% per annum (the "Default Rate") and
nothing herein contained shall affect such right and such remedy. Any amounts
paid by Beneficiary or Trustee in discharge of any
11
<PAGE>
Impositions shall be (i) a future advance hereunder and a lien on the Trust
Property secured hereby prior to any right or title to, interest in, or claim
upon the Trust Property subordinate to the lien of this Deed of Trust, and (ii)
payable on demand.
(e) No Credit. Trustor shall not claim, demand or be entitled to
receive any credit or credits towards the satisfaction of this Deed of Trust or
on any interest payable thereon for any taxes assessed against the Trust
Property or any part thereof, and shall not claim any deduction from the taxable
value of the Trust Property by reason of this Deed of Trust.
(f) Deposits for Impositions or Insurance Premiums.
(i) At any time after the occurrence of an Event of Default, upon
request by Beneficiary, Trustor shall deposit with Beneficiary or to such
account as Beneficiary may direct (1) on the first day of each month following
such request an amount equal to 1/12 of the annual Impositions and/or annual
insurance premiums (as required by Beneficiary) reasonably estimated by
Beneficiary to become due with respect to the Trust Property for the ensuing
year, and (2) thirty (30) days prior to the next due date of any Impositions or
insurance premiums, an additional amount equal to the aggregate amount of such
Impositions or insurance premiums (as applicable), less the sum of the amounts
on deposit and the amounts to be deposited pursuant to clause (1) of this
subsection (f)(i). If the amounts on deposit under this Section 2.1(f) shall
exceed the amounts required, the excess shall be credited to the subsequent
deposits to be made by Trustor. If the amounts on deposit under this Section
2.1(f) shall be insufficient to pay such Impositions or insurance premiums (as
applicable), upon request, Trustor shall immediately deposit an amount equal to
the deficiency with Beneficiary (or to such account as Beneficiary may direct).
Except as required under applicable law, the deposits under this Section 2.1(f)
shall be for the exclusive benefit of Beneficiary and all right, title and
interest in and to such deposits shall be subject to the exclusive dominion and
control of Beneficiary. In no event will Beneficiary be liable for any interest
on any amount so deposited. Beneficiary shall have no responsibility to ensure
the adequacy of the amounts deposited hereunder. At any time Beneficiary may
notify Trustor that it need no longer make deposits under this Section 2.1(f),
whereupon Trustor shall cease making such deposits; provided that any such
notice shall be without prejudice to Beneficiary's right to require thereafter
that Trustor make deposits under and in accordance with this Section 2.1(f).
(ii) If deposits are made under this Section 2.1(f), Beneficiary
shall make payments of the Impositions or insurance premiums for which such
deposits are made as the same become due, but only following actual receipt by
Beneficiary of the bills therefor, which Trustor shall furnish to Beneficiary
not later than ten (10) Business Days prior to the due date thereof, and only to
the extent that the amounts on deposit with Beneficiary at the time are
sufficient to make such payments. Notwithstanding the foregoing or the fact any
amounts deposited under this Section 2.1(f) may be deposited with respect to
certain Impositions or insurance premiums, Beneficiary may use any amounts on
deposit under this Section 2.1(f) to pay any Impositions or insurance premiums
as the same become due and in whatever order as Beneficiary, in its sole
discretion, may determine.
(iii) If an Event of Default or Default has occurred is
continuing,
12
<PAGE>
Beneficiary shall have the right, but not the obligation, to apply the deposits
held under this Section 2.1 toward the cure of such Event of Default or Default.
2.2. Mechanic's and Other Liens; Subrogation. Trustor will not suffer any
mechanic's, laborer's, materialmen's, statutory or other Lien or any security
interest or encumbrance (including without limitation any deed of trust or
mortgage) to be created or to remain outstanding (other than Permitted Liens) on
any of the Trust Property. Trustor will promptly pay and discharge any and all
amounts which are now or hereafter become Liens against the Trust Property,
which Liens are not Permitted Liens, whether or not superior to the lien hereof
or to any assignment of rents and leases given to Beneficiary. The lien
covenants of this Section 2.2 shall survive any foreclosure and sale of the
Trust Property and any conveyance thereof by deed in lieu of foreclosure with
respect to any such Liens in existence as of the date of transfer of title. To
the extent that proceeds of the Notes and any other advances representing the
Obligations are used to pay indebtedness secured by any outstanding Lien or
prior encumbrance against the Trust Property, such proceeds have been advanced
at Trustor's request and Beneficiary shall be subrogated to any and all rights,
security interests and Liens owned by any owner or holder of such outstanding
Liens or encumbrances, irrespective of whether such Liens or encumbrances are
released, and it is expressly understood that in consideration of the payment of
such indebtedness, Trustor, with respect to the Beneficiary, hereby waives and
releases all demands and causes of action for offsets, payments and rentals to,
upon and in connection with such indebtedness. Notwithstanding the foregoing,
Trustor will not be deemed to be in default under this Section 2.2 if and so
long as Trustor (a) promptly notifies Beneficiary in writing of Trustor's
intention to contest such Lien together with a reasonably detailed description
of the Lien, (b) contests in good faith the validity or amount of any asserted
Lien and diligently prosecutes or defends an action appropriate to obtain a
binding determination of the disputed matter, and (c) provides Beneficiary with
such security as Beneficiary may in its reasonable discretion require to protect
Beneficiary against all loss, damage and expense, including without limitation
attorneys' fees, which Beneficiary might incur if the asserted Lien is
determined to be valid.
2.3. Utilities. Trustor will pay, or cause to be paid, prior to delinquency
any charges for utilities, whether public or private, with respect to the Trust
Property or any part thereof.
2.4. Insurance.
(a) Maintenance. Trustor will obtain and maintain insurance with
respect to the Trust Property in accordance with the provisions of the
Indenture. From and after the entry of judgment of foreclosure, all rights and
powers of Beneficiary hereunder and under the Indenture to settle or participate
in the settlement of losses under policies of insurance or to hold and disburse
or otherwise control use of insurance proceeds shall continue in full force and
effect in Beneficiary as judgment creditor or mortgagee until confirmation of
sale.
(b) Proceeds. If the Trust Property is materially damaged or
destroyed, Trustor shall give prompt notice thereof to Beneficiary and all
insurance proceeds shall be paid to Trustor, subject to the terms of Section
4.28 of the Indenture.
2.5. Condemnation. Immediately upon obtaining knowledge of the institution
of any
13
<PAGE>
proceedings for the condemnation of the Trust Property or any material portion
thereof, Trustor will notify Beneficiary of the pendency of such proceedings.
All condemnation proceeds shall be applied in accordance with the provisions of
Section 4.28 of the Indenture.
2.6. Restoration. Restoration of any of the Trust Property after partial or
complete casualty or condemnation shall be performed in accordance with the
applicable provisions of the Indenture.
2.7. Care of the Trust Property.
(a) Preservation and Maintenance.
(i) Trustor will preserve and maintain the Trust Property in
accordance with the applicable provisions of the Indenture. Further, Trustor
shall keep all of the Trust Property in good condition and repair and expressly
agrees that it will neither permit nor commit any waste upon the Trust Property,
nor do any other act or suffer or permit any act to be done, whereby the Lien
hereof may be impaired. Trustor shall comply in all material respects with all
zoning laws, building codes, subdivision laws, gaming and liquor laws (including
without limitation the Colorado Liquor Code and the Colorado Limited Gaming Act
and their respective regulations), and other applicable laws, and Trustor shall
not become involved in conduct that would cause either the Gaming or Liquor
Licenses relating to the Trust Property to be suspended or revoked. Trustor
agrees not to initiate or acquiesce in any zoning variance or reclassification
which would prohibit the use of the Trust Property for its intended purposes.
Trustor shall at all times comply in all material respects with applicable
restrictive covenants and the terms and conditions of all other Permitted Liens
relating to the Trust Property. Notwithstanding anything above to the contrary,
to the extent expressly permitted by the Indenture, Trustor may remove or sell
any fixture, equipment, machinery or appliance in or on the Trust Property
incident to the replacement of such items with replacements leased or purchased
by Trustor with the proceeds of FF&E Financing.
(ii) Without granting to Trustor any right to incur Indebtedness
or Liens not expressly permitted by the Indenture, Trustor may make alterations
or construct other improvements on the Land to the extent not prohibited by the
Indenture or under any other documents creating a Permitted Lien on the Trust
Property (any of the foregoing are called herein a "Permitted Alteration");
provided that such work shall be performed in a good and workmanlike manner and
in compliance with all laws including without limitation the Colorado Liquor
Code and the Colorado Limited Gaming Act.
(b) Notice of Damage. If the Trust Property or any part thereof is
materially damaged by fire or any other cause, Trustor shall give prompt written
notice thereof to Beneficiary.
(c) Right to Inspect. Beneficiary or its representative is hereby
authorized, with reasonable advance notice to Trustor, to enter upon and inspect
the Trust Property at any time during normal business hours and at any other
reasonable time.
14
<PAGE>
2.8. Future Tenant Leases.
(a) Any future Tenant Leases permitted by the Indenture must be
subordinate to the lien of this Deed of Trust, unless otherwise permitted by the
Indenture. Each future Tenant Lease must contain a provision that, at
Beneficiary's election, upon notice to tenant by Beneficiary, such Tenant Lease
shall become superior, in whole or in part, to the lien of this Deed of Trust.
Further, each future Tenant Lease of real property shall obligate the tenant
thereunder to attorn, at the option of the purchaser of the Trust Property, to
any purchaser at foreclosure or other successor owner of the Trust Property.
(b) Trustor shall furnish to Beneficiary a true and complete copy of
each Tenant Lease, and any amendment, modification, extension or renewal of any
Tenant Lease hereafter made by Trustor, within thirty (30) days after execution
of each such Tenant Lease, amendment, modification, extension, or renewal by the
parties thereto.
(c) Trustor shall, at Trustor's sole cost and expense, perform each
and every material covenant, condition, promise and obligation on the part of
the lessor to be performed pursuant to the terms of each and every Tenant Lease
existing on the date hereof or hereafter made with respect to the Trust Property
or any part or parts thereof.
(d) Trustor shall promptly furnish to Beneficiary any and all material
information which Beneficiary may request concerning the performance and
observance of all covenants, agreements and conditions contained in the Tenant
Leases by the lessor thereunder to be kept, observed and performed and
concerning the compliance with all terms and conditions of the Tenant Leases.
(e) In the event of any failure by Trustor to keep, observe or perform
any material covenant, agreement or condition contained in the Tenant Leases or
to comply with the terms and conditions of any Tenant Leases, any performance,
observance or compliance by Beneficiary pursuant to this Deed of Trust on behalf
of Trustor shall not remove or waive, as between Trustor and Beneficiary, the
corresponding Default or Event of Default under the terms of this Deed of Trust.
(f) Any proceedings or other steps taken by Beneficiary to foreclose
this Deed of Trust, or otherwise to protect the interests of Beneficiary
hereunder, shall not automatically operate to terminate the rights of any
present or future tenant under any Tenant Lease, notwithstanding that such
rights may be subject and subordinate to the lien of this Deed of Trust. The
failure to make any such tenant a defendant in any such foreclosure proceeding
and to foreclose such tenant's rights will not be asserted by Trustor or any
other defendant in such foreclosure proceeding as a defense to any proceeding
instituted by or on behalf of Beneficiary to foreclose this Deed of Trust or
otherwise protect the interests of Beneficiary hereunder.
2.9. Further Encumbrance.
(a) Trustor covenants that at all times prior to the discharge of the
Indenture, except for Permitted Liens, Permitted Dispositions and dispositions
permitted under Section 2.10,
15
<PAGE>
Trustor shall neither make nor suffer to exist, nor enter into any agreement
for, any sale, assignment, exchange, mortgage, transfer, Lien, hypothecation or
encumbrance of all or any part of the Trust Property, including without
limitation the Rents, Issues and Profits. As used herein, "transfer" includes
the actual transfer or other disposition, whether voluntary or involuntary, by
law, or otherwise, except those transfers specifically permitted herein;
provided, however, that "transfer" shall not include the granting of utility or
other beneficial easements with respect to the Trust Property which have been
granted by Trustor and are reasonably necessary to the construction, maintenance
or operation of the Project.
(b) Trustor agrees that in the event the ownership of the Trust
Property or any part thereof becomes vested in a Person other than Trustor,
Beneficiary may, without notice to Trustor, deal in any way with such successor
or successors in interest with reference to this Deed of Trust, the Notes and
other Obligations hereby secured without in any way vitiating or discharging
Trustor's or any guarantor's, surety's or endorser's liability hereunder or
under the Obligations hereby secured. No sale of the Trust Property, no
forbearance to any Person with respect to this Deed of Trust and no extension to
any Person of the time for payment of the Notes and other sums secured hereby
given by Beneficiary shall operate to release, discharge, modify, change or
affect the original liability of Trustor, or such guarantor, surety or endorser,
either in whole or in part.
(c) This Deed of Trust, shall not extend to (i) FF&E to the extent the
purchase or lease thereof has been financed or refinanced by, or with the
proceeds of, an FF&E Financing permitted under the Indenture and (ii) any future
or further advances made under such FF&E Financing and to any modifications,
renewals, extensions or refinancings thereof to which the lien of this Deed of
Trust would otherwise attach, in each case to the extent such FF&E Financing is
permitted under the Indenture; provided that any such FF&E Financing shall
encumber only that FF&E specifically subject to the FF&E Financing; and provided
further that, upon the repayment, satisfaction or termination of such FF&E
Financing, all FF&E financed thereby shall no longer be deemed an Excluded Asset
and shall be subject to the lien of this Deed of Trust. The Beneficiary shall,
if requested by the Trustor, execute and deliver, at Trustor's sole expense, any
instruments reasonably necessary or appropriate to release the lien of this Deed
of Trust with respect to or otherwise confirm that the lien of this Deed of
Trust does not apply to any of such Excluded Assets; Trustor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing with respect to which Beneficiary has taken a Lien hereunder. If
Trustor shall fail to make any payment of principal of or interest on the sums
secured by such security interest or any payment in order to perform or observe
any other term, covenant, condition or agreement of any FF&E Financing on
Trustor's part to be performed or observed, except where Trustor is diligently
contesting such payment in good faith, then Beneficiary may make such payment of
the principal of or interest on the sums secured by such security interest or
may make any payment in order to perform or observe any other term, covenant,
condition or agreement of any FF&E Financing on Trustor's part to be performed
or observed, and any and all sums so expended by Beneficiary shall be part of
the Obligations and shall be secured by this Deed of Trust and shall be repaid
by Trustor upon demand, together with interest thereon at the Default Rate from
the date of advance.
16
<PAGE>
2.10. Partial Releases of Trust Property.
(a) Trustor may from time to time (i) transfer a portion of the Trust
Property (including any temporary taking) to any Person legally empowered to
exercise the power of eminent domain, (ii) make a Permitted Disposition, or
(iii) grant utility easements reasonably necessary for the construction and
operation of the Project, which grant or transfer is for the benefit of the
Trust Property. In each such case, and at Trustor's sole expense, Beneficiary
shall execute and deliver any instruments necessary or appropriate to effectuate
or confirm any such transfer or grant, free from the lien of this Deed of Trust;
provided, however, that Beneficiary shall execute a lien release or
subordination agreement, as appropriate, for matters described in clauses (i)
and (iii) above only if:
(A) Beneficiary shall have received an Officers'
Certificate or Opinion of Counsel required or authorized by
Section 10.04 of the Indenture;
(B) No Default or Event of Default shall have
occurred and be continuing and the conditions of this Section
2.10 have been fulfilled, and such transfer, grant or release
is permitted by the Indenture;
(C) Beneficiary shall have received a counterpart of
the instrument pursuant to which such transfer, grant or
release is to be made, and each instrument which Beneficiary
is requested to execute in order to effectuate or confirm such
transfer, grant or release, and each shall be acceptable to
Beneficiary in form and substance; and
(D) Beneficiary shall have received such other
instruments, certificates (including evidence of authority)
and opinions as Beneficiary may reasonably request or as
required or authorized under the Indenture, including, but not
limited to, opinions that the proposed release is permitted by
this Section 2.10.
(b) Any consideration received for a transfer to any Person empowered
to exercise the right of eminent domain shall be subject to Section 2.5 hereof.
ARTICLE 3.
ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment of Leases and Rent. As additional consideration for the
Obligations, Trustor hereby absolutely and unconditionally assigns and transfers
to Beneficiary the following:
(a) the Tenant Leases;
(b) any and all guaranties of the obligations of the tenants (the
"Tenants") under any of such Tenant Leases; and
(c) unless and until the Event of Default has occurred, the immediate
and continuing right to collect and receive all of the Rents, Issues and Profits
now due or that may
17
<PAGE>
become due or to which Trustor may now or hereafter (whether during any
applicable period of redemption or otherwise) become entitled or may demand or
claim, arising or issuing from or out of the Tenant Leases, or from or out of
the Trust Property or any part thereof.
3.2 Trustor's Limited License. Provided that no Event of Default
hereunder exists, Trustor shall have the right under a license granted hereby
and Beneficiary hereby grants to Trustor a license to collect, but not more than
one month in advance, all of the Rents, Issues and Profits arising from or out
of the Tenant Leases or any renewals or extensions thereof, or from or out of
the Trust Property or any part thereof, but only as trustee for the benefit of
Beneficiary. Trustor shall apply the Rents, Issues and Profits so collected
first to payment of any and all amounts due and payable under the Indenture.
Thereafter, so long as no Event of Default hereunder exists, Trustor may use the
Rents, Issues and Profits in any manner not inconsistent with the Indenture. The
license granted hereby shall be revoked automatically upon the occurrence of an
Event of Default hereunder.
3.3 Limitation. The acceptance by Beneficiary of the assignment
provided in this Article 3, together with all of the rights, powers, privileges
and authority created in this Article 3 or elsewhere in this Deed of Trust,
shall not, prior to entry upon and taking possession of the Trust Property by
Beneficiary, be deemed or construed to constitute Beneficiary a "mortgagee in
possession," nor thereafter or at any time or in any event obligate Beneficiary
to appear in or defend any action or proceeding relating to the Tenant Leases,
the Rents, Issues and Profits or the Trust Property or to take any action
hereunder or to expend any money or incur any expenses or perform or discharge
any obligation or responsibility for any security deposits or other deposits
delivered to Trustor by any Tenant and not assigned and delivered to
Beneficiary, nor shall Beneficiary be liable in any way for any injury or damage
to person or property sustained by any person or persons, firm or corporation in
or about the Trust Property.
3.4 Performance by Trustor. Trustor shall perform its obligations under
the Tenant Leases in accordance with their terms. Trustor shall not default in
the performance of any obligation of Trustor under any Tenant Lease if, by
reason of such default, the Tenant or other party thereunder has the right to
cancel such Tenant Lease or to claim any diminution or offset against future
Rents, Issues or Profits.
3.5 No Merger of Leases. If the estates of all parties to any Tenant
Lease shall at any time become vested in one owner, this Deed of Trust and the
lien created hereby shall not be destroyed or terminated by application of the
doctrine of merger, and in such event, Beneficiary shall continue to have and
enjoy all of the rights and privileges of Beneficiary as to the separate
estates. In addition, upon the foreclosure of the lien created by this Deed of
Trust, any Tenant Leases then existing and affecting all or any portion of the
Trust Property shall not be destroyed or terminated by application of the law of
merger or as a matter of law or as a result of such foreclosure, unless
Beneficiary or any purchaser at any such foreclosure sale shall so elect in
writing. No act by or on behalf of Beneficiary or any such purchaser shall
constitute a termination of any Tenant Lease or sublease unless Beneficiary or
such purchaser shall give written notice thereof to the lessee or sublessee
under such Tenant Lease.
3.6 Remedies. If an Event of Default has occurred and is continuing, in
addition to all
18
<PAGE>
other rights and remedies of Beneficiary as set forth under Article 4 hereof,
Beneficiary shall have the following rights and remedies:
(a) Possession and/or Collection of Rent. Beneficiary, without first
being required to (i) foreclose, (ii) take any actions to foreclose, (iii)
institute any legal proceedings of any kind whatsoever or (iv) exercise any
other actions or remedies hereunder or at law or in equity, shall have the
exclusive right and power (but not the obligation) (A) to enter upon and take
possession of the Trust Property or any part thereof, (B) to rent or re-rent the
same, either in the name of Beneficiary or Trustor, and/or (C) to receive all
Rents, Issues and Profits from the Trust Property. Beneficiary shall apply any
Rents, Issues and Profits received by Beneficiary first, to the costs and
expenses incurred by Beneficiary in protecting and operating the Trust Property,
and next, to the payment of the Obligations in such manner and in such order of
priority as Beneficiary shall determine consistent with the provisions of the
Indenture. Any such action by Beneficiary shall not operate as a waiver of the
Event of Default in question, or as an affirmance of any Tenant Leases or of the
rights of any Tenants in the event title to that part of the Trust Property
covered by the Tenant Leases or held by the Tenants should be acquired by
Beneficiary or other purchaser at a foreclosure sale. The right of Beneficiary
to receive all Rents, Issues and Profits from the Trust Property upon the
occurrence and during the continuance of any Event of Default shall be
applicable whether or not Beneficiary has entered upon, foreclosed, taken any
actions to foreclose or taken possession of the Trust Property, whether or not
Beneficiary has instituted any legal proceedings of any kind whatsoever, or
whether or not Beneficiary has otherwise attempted to exercise any other actions
or remedies hereunder or at law or in equity. If any such Rents, Issues and
Profits are paid to or received by Trustor, Trustor shall hold same in trust for
Beneficiary and immediately pay the same to Beneficiary (in the form received,
except for any necessary endorsement), without the necessity of any request or
demand therefor. Until receipt from Beneficiary of notice of the occurrence of
an Event of Default hereunder and during the continuance thereof, all Tenants of
the Tenant Leases and any successors to the leasehold interest of such Tenants
may pay Rents, Issues and Profits directly to Trustor, but after notice of the
occurrence of any Event of Default and during the continuance of same, Trustor
covenants to and shall hold all Rents, Issues and Profits paid to Trustor in
trust for Beneficiary. Trustor hereby authorizes and directs all Tenants of the
Tenant Leases herein described, and any successors to the leasehold interest of
such Tenants, upon receipt of any notice from Beneficiary stating that an Event
of Default hereunder has occurred, to pay to Beneficiary the Rents, Issues and
Profits due and to become due under such Tenant Leases. Trustor agrees that such
Tenants shall have the right to rely upon any such notice and request by
Beneficiary without any obligation or right to inquire as to whether an Event of
Default actually exists and notwithstanding any notice from or claim of Trustor
to the contrary, and Trustor shall have no right or claim against the Tenants
for any such Rents, Issues and Profits so paid by the Tenants to Beneficiary. In
such event, receipt by Beneficiary of Rents, Issues and Profits from such
Tenants or their successors shall be a release of such Tenants or their
successors to the extent of all amounts so received by Beneficiary.
(b) Management. Beneficiary, at its option, but subject to the
provisions of Sections 4.8 and 5.30 hereof, may take over and assume the
management, operation and maintenance of the Trust Property and perform all acts
necessary and proper and expend such sums out of the income of the Trust
Property as may be needful in connection therewith, including without limitation
applying for appropriate approvals from the Liquor License Authorities
19
<PAGE>
and Gaming Authorities, in the same manner and to the same extent as Trustor
theretofore might do, including without limitation the right to enter into new
leases, to cancel or surrender existing Tenant Leases, to alter or amend the
terms of existing Tenant Leases, to renew existing Tenant Leases, or to make
concessions to Tenants. Trustor hereby releases all claims against Beneficiary
arising out of such management, operation and maintenance, including without
limitation such claims as may arise from the negligence of Beneficiary, but not
the gross negligence or willful misconduct of Beneficiary and not any liability
of Beneficiary to account as hereinafter set forth.
(c) Receiver. Upon or at any time after the occurrence of an Event of
Default, but subject to the provisions of Sections 4.8 and 5.30 hereof,
Beneficiary shall at once become entitled to the possession, use and enjoyment
of the Trust Property and the Rents, Issues and Profits, from the date of such
occurrence and continuing during the pendency of any proceedings for sale by the
public trustee or foreclosure proceedings, and the period of redemption, if any.
Beneficiary shall be entitled to a receiver for the Trust Property, and of the
Rents, Issues and Profits, after any such default, including without limitation
the time covered by any proceedings for sale by the public trustee or
foreclosure proceedings and the period of redemption, if any. Beneficiary shall
be entitled to such receiver as a matter of right, without regard to the
solvency or insolvency of Trustor, or of the then owner of the Trust Property,
and without regard to the value thereof, and such receiver may be appointed by
any court of competent jurisdiction upon ex parte application, and without
notice, notice being hereby expressly waived. All Rents, Issues and Profits,
income and revenue therefrom shall be applied by such receiver to the payment of
the Obligations according to the orders and directions of the court, or in the
absence of such orders or directions, in the manner set forth in Section 3.7
below.
20
<PAGE>
3.7 Application of Income. Beneficiary shall, after payment of all proper
charges and expenses, including reasonable compensation to any managing agent as
it shall select and employ, and after the accumulation of a reserve to meet
taxes, assessments and insurance as herein required in requisite amounts, credit
the net amount of income received by it from the Trust Property by virtue of
this absolute assignment to any amounts due and owing to it by Trustor under the
terms hereof, but the manner of the application of such net income and what
items shall be credited shall be determined pursuant to the Indenture, or
otherwise in the sole discretion of Beneficiary. Without impairing its rights
hereunder, Beneficiary may, at its option, at any time and from time to time,
release to Trustor Rents, Issues and Profits received by Beneficiary, or any
portion of such Rents, Issues and Profits. Beneficiary shall not be liable for
its failure to collect, or its failure to exercise diligence in the collection
of Rents, Issues and Profits, but shall be accountable only for Rents, Issues
and Profits that Beneficiary shall actually receive.
3.8 Term. This absolute assignment shall remain in full force and effect so
long as the Obligations or any part thereof to Beneficiary remains unpaid or
unsatisfied, in whole or in part.
3.9 Actions of Trustee. All provisions hereof shall inure to the benefit of
and all actions authorized hereunder shall be exercisable by Trustee or any
substitute of Trustee at Beneficiary's request.
ARTICLE 91.
DEFAULTS AND REMEDIES
4.1 Events of Default. An Event of Default shall mean the occurrence of any
Event of Default set forth in Annex A attached hereto.
4.2 Performance of Defaulted Acts. From and after the occurrence of an
Event of Default, Beneficiary may (without prejudice to its other rights and
remedies), but need not, make any payment or perform any act required of Trustor
herein, in the Indenture or in any other Transaction Document, in each case in
any form and manner deemed expedient, including without limitation making full
or partial payments of principal or interest on prior encumbrances, if any, and
purchasing, discharging, compromising or settling any tax Lien or other prior
Lien or title or claim thereof, or redeeming from any tax sale or forfeiture
affecting the Trust Property or contesting any tax or assessment. All monies
paid for any of the purposes herein authorized and all expenses paid or incurred
in connection therewith, including reasonable attorneys' fees (including
reasonable fees of in-house counsel), shall be included among the Obligations
and shall be due and payable upon demand and with interest thereon from the date
of such payment or expense at the Default Rate. Inaction of Beneficiary shall
never be considered as a waiver of any right accruing to it hereunder on account
of any default on the part of Trustor. Beneficiary, in making any payment hereby
authorized relating to taxes or assessments, may do so according to any bill,
statement or estimate procured from the appropriate public office without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax Lien or title or claim
thereof.
4.3 Remedies. Upon the occurrence of any Event of Default, Beneficiary may,
at its option (in each case, subject to and in accordance with any applicable
terms of the Indenture):
21
<PAGE>
(a) declare all sums secured hereby to be immediately due and payable,
and the same shall thereupon become immediately due and payable without any
presentment, demand, protest or notice of any kind;
(b) terminate Trustor's right and license to collect the Rents, Issues
and Profits and either in person or by agent, with or without bringing any
action or proceeding, or by a receiver appointed by a court, and without regard
to the adequacy of its security, enter upon and take possession of the Trust
Property, or any part thereof, in its own name or in the name of Trustee, and do
any acts which it deems necessary or desirable to preserve the value,
marketability or rentability of the Trust Property, or any part thereof or
interest therein, make, modify, enforce, cancel or accept the surrender of any
Tenant Lease, take actions which may affect the income therefrom or protect the
security hereof, and with or without taking possession of the Trust Property,
sue for or otherwise collect the Rents, Issues and Profits, including without
limitation those past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including without limitation attorneys'
fees (including fees of in-house counsel), upon any Obligations secured hereby,
all in such order as Beneficiary may determine. From and after receipt of
written notice from Beneficiary to pay Rents, Issues and Profits directly to
Beneficiary or another party designated by Beneficiary, each Tenant shall pay
all such payments under its Tenant Lease in the manner instructed by
Beneficiary. The entering upon and taking possession of the Trust Property or
any portion thereof, the collection of the Rents, Issues and Profits and the
application thereof as aforesaid, or any of such acts, shall not cure or waive
any default or notice of default hereunder or invalidate any act done in
response to such default or pursuant to such notice, and notwithstanding the
continuance in possession of the Trust Property or the collection, receipt and
application of the Rents, Issues and Profits, Trustee or Beneficiary shall be
entitled to exercise every right provided for in any of the Indenture, the
Notes, the other Transaction Documents or by law upon the occurrence of any
Event of Default, including without limitation the right to exercise the power
of sale provided herein;
(c) notwithstanding the availability of legal remedies, obtain
specific performance, mandatory or prohibitory injunctive relief, or other
equitable relief requiring Trustor to cure or refrain from repeating any
default;
(d) with or without accelerating the maturity of the Obligations, sue
from time to time for any payment due under any of the Indenture, the Notes or
the other Transaction Documents, or for money damages resulting from any
Trustor's default under any of the Indenture, the Notes or the other Transaction
Documents;
(e) exercise all rights and remedies set forth in Section 1.5 and all
rights of a secured party under the Uniform Commercial Code;
(f) foreclose this Deed of Trust, insofar as it encumbers the Trust
Property, by way of a trustee's sale pursuant to the provisions of Title 38,
Article 38, Colorado Revised Statutes, as currently in effect, as amended, or in
any other manner then permitted by law. If this Deed of Trust encumbers more
than one parcel of real estate, foreclosure may be by separate parcel or en
masse, as Beneficiary may elect in its sole discretion. Foreclosure through
Trustee will be initiated by Beneficiary's filing of its notice of election and
demand for sale with Trustee.
22
<PAGE>
Upon the filing of such notice of election and demand for sale, Trustee shall
promptly comply with all notice and other requirements of the laws of the State
of Colorado then in force with respect to such sales, and shall give four weeks'
public notice of the time and place of such sale by advertisement weekly in some
newspaper of general circulation then published in the County or City and County
in which the Trust Property is located. The right to foreclose this Deed of
Trust as a mortgage by appropriate proceedings in any court of competent
jurisdiction is also hereby given;
(g) exercise all other rights and remedies provided herein, in the
Indenture, the Notes, the other Transaction Documents or in any other document
or agreement now or hereafter securing all or any portion of the Obligations, or
at law or in equity, or any combination of any such rights or remedies, to the
extent permitted by law.
Upon request by Beneficiary, Trustor shall assemble and make available
to Beneficiary at the Land any of the Trust Property which is not located on the
Land or which has been removed therefrom.
4.4 Foreclosure.
(a) All fees, costs and expenses of any kind incurred by Beneficiary
in connection with foreclosure of this Deed of Trust, including without
limitation the costs of any appraisals of the Trust Property obtained by
Beneficiary, all costs of any receivership for the Trust Property advanced by
Beneficiary, and all reasonable attorneys' fees and consultants' fees incurred
by Beneficiary (including charges of in-house counsel), appraisers' fees,
outlays for documentary and expert evidence, stenographers' charges, publication
costs and costs (which may be estimates as to items to be expended after entry
of the decree) of procuring all such abstracts of title, title searches and
examination, title insurance policies and similar data and assurances with
respect to title, as Trustee or Beneficiary may reasonably deem necessary either
to prosecute such suit or to evidence to bidders at the sales that may be had
pursuant to such proceedings the true conditions of the title to or the value of
the Trust Property, together with and including a reasonable compensation to
Trustee, shall constitute a part of the Obligations and may be included as part
of the amount owing from Trustor to Beneficiary at any foreclosure sale.
(b) The proceeds of foreclosure sale of the Trust Property shall be
distributed and applied in the following order of priority: first, on account of
all costs and expenses incident to the foreclosure proceedings, including
without limitation all such items as are mentioned in Section 4.4(a) hereof;
second, to the payment of all sums expended under the terms hereof not then
repaid, with accrued interest at the Default Rate; third, to the payment of all
other Obligations; and lastly, the remainder, if any, to the person or persons
legally entitled thereto.
(c) In case of an insured loss after judicial foreclosure or Trustee's
sale proceedings have been instituted, the proceeds of any insurance policy or
policies, if not applied to rebuilding or restoring the buildings or
improvements, shall be used to pay the amount due upon the Obligations. In the
event of judicial foreclosure or Trustee's sale, Beneficiary or Trustee is
hereby authorized, without the consent of Trustor, to assign any and all
insurance policies to the purchaser at the sale, or to take such other steps as
Beneficiary or Trustee may deem
23
<PAGE>
advisable to cause the interest of such purchaser to be protected by any of the
such insurance policies.
(d) To the fullest extent allowable by law, Trustor hereby expressly
waives any right which it may have to direct the order in which any Trust
Property shall be sold in the event of any sale or sales pursuant to this Deed
of Trust.
(e) Nothing in this
4.4 dealing with foreclosure procedures or specifying particular
actions to be taken by Beneficiary or by Trustee or any similar officer shall be
deemed to contradict or add to the requirements and procedures now or hereafter
specified by Colorado law, and any such inconsistency shall be resolved in favor
of Colorado law applicable at the time of foreclosure.
4.5 Rescission of Notice of Default. Beneficiary may from time to time
withdraw any notice of election and demand for sale in accordance with Section
38-38-101(11) of the Colorado Revised Statutes. The exercise by Beneficiary of
such right shall not constitute a waiver of any breach or default then existing
or subsequently occurring, or impair the right of Beneficiary to execute and
deliver to Trustee, as above provided, other declarations or notices of default
to satisfy the Obligations under this Deed of Trust or the other Obligations,
nor otherwise affect any provision, covenant or condition of any of the
Indenture, the Notes or the other Transaction Documents or any of the rights,
obligations or remedies of Trustee or Beneficiary hereunder or thereunder.
4.6 Appointment of Receiver. Trustor waives any right to any hearing or
notice of hearing prior to the appointment of a receiver. Such receiver and its
agents shall be empowered (a) to take possession of the Trust Property and any
businesses conducted by Trustor or any other person (excluding the business of
tenants of Trustor) thereon and any business assets used in connection therewith
and, if the receiver deems it appropriate, to operate the same, (b) to exclude
Trustor and Trustor's agents, servants, and employees from the Trust Property,
(c) to collect the rents, issues, profits, and income therefrom, (d) to complete
any construction which may be in progress, (e) to do such maintenance and make
such repairs and alterations as the receiver deems reasonably necessary, (f) to
use all stores of materials, supplies and maintenance equipment on the Trust
Property, (g) to pay all taxes and assessments against the Trust Property and
all premiums for insurance thereon, (h) to pay all utility and other operating
expenses, and all sums due under any prior or subsequent encumbrance, and (i)
generally to do anything which Trustor could legally do if Trustor were in
possession of the Trust Property. All expenses incurred by the receiver or his
agents shall constitute a part of the Obligations, including without limitation
reasonable attorneys' fees. Any revenues collected by the receiver shall be
applied first to the expenses of the receivership, including reasonable
attorneys' fees incurred by the receiver and by Beneficiary (including charges
of in-house counsel), together with interest thereon at the Default Rate from
the date incurred until repaid, and the balance shall be applied toward the
Obligations or in such other manner as the court may direct. Unless sooner
terminated with the express consent of Beneficiary, any such receivership will
continue until the Obligations have been discharged in full, or until title to
the Trust Property has passed after foreclosure sale and all applicable periods
of redemption have expired.
24
<PAGE>
4.7 Remedies Not Exclusive; Waiver. Trustee and Beneficiary, and each of
them, shall be entitled to enforce the payment and performance of any
Obligations and to exercise all rights and powers under this Deed of Trust or
under any other Transaction Document or other agreement or any laws now or
hereafter in force, notwithstanding the fact that some or all of the Obligations
may now or hereafter be otherwise secured, whether by mortgage, deed of trust,
pledge, Lien, assignment or otherwise. Neither the acceptance of this Deed of
Trust nor its enforcement, whether by court action or pursuant to the power of
sale or other powers contained herein, shall prejudice or in any manner affect
Trustee's or Beneficiary's right to realize upon or enforce any other rights or
security now or hereafter held by Trustee or Beneficiary. Trustee and
Beneficiary, and each of them, shall be entitled to enforce this Deed of Trust
and any other rights or security now or hereafter held by Beneficiary or Trustee
in such order and manner as they or either of them may in their absolute
discretion determine. No remedy herein or by law provided or permitted shall be
exclusive of any other remedy, but each shall be cumulative and in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity. Every power or remedy given by any of the Transaction Documents to
Trustee or Beneficiary, or to which either of them may be otherwise entitled,
may be exercised, concurrently or independently, from time to time and as often
as may be deemed expedient by Trustee or Beneficiary, and either of them may
pursue inconsistent remedies. By exercising or by failing to exercise any right,
option or election hereunder, Beneficiary shall not be deemed to have waived any
provision hereof or to have released Trustor from any of the Obligations secured
hereby unless such waiver or release is in writing and signed by Beneficiary.
The waiver by Beneficiary of Trustor's failure to perform or observe any term,
covenant or condition referred to or contained herein to be performed or
observed by Trustor shall not be deemed to be a waiver of such term, covenant or
condition on any other occasion or any subsequent failure of Trustor to perform
or observe the same or any other such term, covenant or condition referred to or
contained herein, and no custom or practice which may develop between Trustor
and Beneficiary during the term hereof shall be deemed a waiver of or in any way
affect the right of Beneficiary to insist upon the performance by Trustor of the
Obligations secured hereby in strict accordance with the terms hereof or any
other Transaction Document.
4.8 Casino. Trustor acknowledges that part of the Trust Property consists
of a casino and gaming property (the "Casino") which is subject to Gaming Laws
and the jurisdiction of the Gaming Authorities and that, under the applicable
Gaming Laws, the operation of the Casino by a person other than a person
properly licensed by the Gaming Authorities to operate a casino and gaming
business (a "Licensee") is prohibited and may result in the closing of the
Casino, the loss of customers, employees, revenues and good will, and the severe
diminution in the value of the Trust Property, all to the economic jeopardy and
extreme detriment of Beneficiary. In order to mitigate such adverse
consequences, Trustor agrees that, if an Event of Default has occurred, either
before or after seeking an appointment of a receiver, in addition to any other
right or remedy available to Beneficiary hereunder or under applicable law (but
subject to any applicable requirements of the applicable Gaming Laws), (a)
Beneficiary shall have the right (but not the obligation) to solicit any
Licensee or other person with the capacity to become a Licensee to purchase,
lease and/or operate the Casino as a receiver of the Trust Property, as a
supervisor of the Casino, as a purchaser of the Trust Property or Casino at any
foreclosure sale, or in any other appropriate capacity permitted under the
applicable Gaming Laws; (b) any such Licensee or other
25
<PAGE>
person and Beneficiary may, to the extent permitted under the applicable Gaming
Laws, apply to and appear before the Gaming Authorities and any other
appropriate authority for a license or a finding of suitability to permit such
Licensee or other person to operate the Casino; and (c) Trustor shall cooperate
fully with any action taken by Beneficiary and any such Licensee or other person
pursuant to this Section 4.8.
4.9 Multiple Collateral.
(a) No recovery of any judgment by Trustee or Beneficiary and no levy
of an execution under any judgment upon the Trust Property or upon any property
of Trustor encumbered by any other Collateral Document shall affect in any
manner or to any extent the lien of this Deed of Trust upon the Trust Property
or any part thereof, and any Liens, rights, powers and remedies of Trustee or
Beneficiary shall continue unimpaired until all of the Obligations have been
satisfied and indefeasibly paid in full.
(b) Trustor agrees that it shall not at any time insist upon, plead,
seek or in any manner whatever claim or take any benefit or advantage of a
judgment, declaration or a determination that:
(i) the Trust Property or any other property of Trustor
encumbered by a Transaction Document represents, on an individual basis, an
allocable portion of the then outstanding aggregate principal amount of the
Notes or the Obligations;
(ii) the lien of this Deed of Trust or of any other
Transaction Document has been released, unless the Obligations have been
satisfied and indefeasibly paid in full;
(iii) a deficiency judgment with respect to any action taken
by Trustee or Beneficiary against the Trust Property or any other property of
Trustor encumbered by a Transaction Document extinguishes all or any portion of
the remaining Obligations, or precludes Trustee or Beneficiary from proceeding
against the Trust Property or to satisfy such remaining Obligations; or
(iv) Trustee's or Beneficiary's commencement, prosecution,
or taking to judgment of any action (including without limitation Trustee's or
Beneficiary's acceptance of a deed in lieu of foreclosure) or Trustee's or
Beneficiary's application for or use of any remedy (including without limitation
the appointment of a receiver for the Trust Property or any other property of
Trustor encumbered by a Transaction Document) against the Trust Property or any
other property of Trustor encumbered by a Transaction Document precludes or bars
Trustee or Beneficiary (under a "single action" rule, "security first" rule or
similar rule) from commencing, prosecuting or taking to judgment any other
action or applying for or using any remedy against the Trust Property or any
other property of Trustor encumbered by a Transaction Document.
(c) Beneficiary may, at its option, in such order, and utilizing such
combinations of remedies with respect to the Trust Property and/or any other
property of Trustor
26
<PAGE>
encumbered by a Transaction Document as Beneficiary shall so elect, pursue its
remedies against (i) the Trust Property, individually, or any other property of
Trustor encumbered by a Transaction Document, individually; (ii) the Trust
Property and any combination of any other property of Trustor encumbered by a
Transaction Document; (iii) the Trust Property and all of the other property of
Trustor encumbered by a Transaction Document; or (iv) all or any combination of
any other property of Trustor encumbered by a Transaction Document, in separate
proceedings or in one proceeding in any order which Beneficiary deems
appropriate.
4.10 Extensions and Partial Payments. Trustor agrees that, without
affecting the liability of any person for payment of the Obligations or
affecting the lien of this Deed of Trust upon the Trust Property or any part
thereof, Beneficiary may at any time and from time to time, on request of
Trustor, without notice to any person liable for payment of any Obligations,
extend the time or agree to alter the terms of payment of all or any part of
such Obligations. Acceptance by Beneficiary of any payment in an amount less
than the amount then due on the Obligations shall be deemed an acceptance on
account only, and the failure to pay the entire amount then due shall continue
to be an Event of Default hereunder. At any time thereafter and until the entire
amount then due on the Obligations has been paid, Beneficiary shall be entitled
to exercise all rights conferred upon it in this Deed of Trust upon the
occurrence of an Event of Default hereunder.
4.11 Protective Advances. All advances, disbursements and expenditures made
or incurred by Beneficiary before and during a foreclosure, and before and after
judgment of foreclosure, and at any time prior to sale and, where applicable,
after sale, and during the pendency of any related proceedings, for the
following purposes, in addition to those otherwise authorized by this Deed of
Trust or by applicable law (collectively "Protective Advances"), shall have the
benefit of all applicable provisions of law, including without limitation those
referred to below:
(a) all advances by Beneficiary in accordance with the terms of this
Deed of Trust to: (i) preserve, maintain or repair any Trust Property, or
restore or rebuild the improvements upon the Trust Property; (ii) preserve the
lien of this Deed of Trust or the priority hereof; or (iii) enforce this Deed of
Trust;
(b) payments by Beneficiary of: (i) principal, interest or other
obligations in accordance with the terms of any prior Lien or encumbrance on the
Trust Property; (ii) real estate taxes and assessments, general and special and
other taxes and assessments of any kind or nature whatsoever that are assessed
or imposed upon the Trust Property or any part thereof; (iii) amounts in
connection with any Tenant Lease pursuant to Section 4.3 hereof; (iv) other
obligations authorized by this Deed of Trust; or (v) any other amounts in
connection with other Liens, encumbrances or interests reasonably necessary to
preserve the status of title to the Trust Property;
(c) advances by Beneficiary in settlement or compromise of any claims
asserted by claimants under any prior Liens;
(d) reasonable attorneys' fees and other costs incurred (including
charges for
27
<PAGE>
in-house counsel): (i) in connection with a judicial foreclosure or trustee's
sale; (ii) in connection with any action, suit or proceeding brought by or
against Beneficiary for the enforcement of this Deed of Trust or arising from
the interest of Beneficiary hereunder; or (iii) in preparation for or in
connection with the commencement, prosecution or defense of any other action
that could materially adversely affect the lien of this Deed of Trust or the
Trust Property;
(e) expenses deductible from proceeds of sale; and
(f) expenses incurred and expenditures made by Beneficiary for any one
or more of the following: (i) premiums for casualty and liability insurance paid
by Beneficiary (whether or not Beneficiary or a receiver is in possession) and
all renewals thereof; (ii) repair or restoration of damage or destruction in
excess of available insurance proceeds or condemnation awards; (iii) payments
deemed by Beneficiary to be required for the benefit of the Trust Property or
required to be made by the owner of the Trust Property under any grant or
declaration of easement, easement agreement, agreement with any adjoining land
owners or instruments creating covenants or restrictions for the benefit of or
affecting the Trust Property; (iv) shared or common expense assessments payable
to any association or corporation in which the owner of the Trust Property is a
member in any way affecting the Trust Property; and (v) any costs incurred in
connection with obtaining approvals and licenses from Gaming Authorities
including investigation costs.
All Protective Advances shall be additional Obligations secured by
this Deed of Trust and shall become immediately due and payable upon demand and
with interest thereon from the date of the advance until paid at the Default
Rate. This Deed of Trust shall be a lien for all Protective Advances as to
subsequent purchasers and judgment creditors from the time this Deed of Trust is
recorded.
All Protective Advances shall, except to the extent, if any, that any
of the same is clearly contrary to or inconsistent with the applicable
provisions of law, apply to and be included in: (a) any determination of the
amount of indebtedness secured by this Deed of Trust at any time; (b) the
indebtedness found due and owing to Beneficiary in the judgment of foreclosure
and any subsequent supplemental judgments, orders, adjudications or findings by
the court of any additional indebtedness becoming due after such entry of
judgment, it being agreed that in any foreclosure judgment, the court may
reserve jurisdiction for such purpose; and (c) application of income in the
hands of any receiver or mortgagee in possession.
4.12 Environmental Matters. The provisions of that certain Environmental
Indemnity, dated as of the date hereof, by Trustor in favor of Beneficiary are
hereby incorporated by reference herein with the same force and effect as if set
forth herein.
4.13 Appointment as Attorney-in-Fact. Trustor constitutes and appoints
Beneficiary as Trustor's attorney-in-fact, at Beneficiary's election, with full
authority in the place and stead of Trustor and in the name of Trustor,
Beneficiary or otherwise, from time to time after the occurrence of an Event of
Default, to perform any action and to execute and record any instrument deemed
necessary, advisable or incidental to accomplish the purposes of this Deed of
Trust, including without limitation in connection with exercising remedies and
effectuating the
28
<PAGE>
actions described in this Article 4, in each instance only to the extent Trustor
has failed to comply with the provisions of this Deed of Trust. Such appointment
is irrevocable and coupled with an interest until payment in full and complete
performance of all the Obligations. Beneficiary may appoint a substitute
attorney-in-fact. Trustor ratifies all actions taken by the attorney-in-fact
but, nevertheless, if Beneficiary requests, Trustor will specifically ratify any
action taken by the attorney-in-fact by executing and delivering to the
attorney-in-fact or to any entity designated by the attorney-in-fact all
documents necessary to effect such ratification.
ARTICLE 5.
GENERAL PROVISIONS
5.1 Extension; Release. The lien hereof shall remain in full force and
effect during any postponement or extension of the time of payment of the
Obligations, or of any part thereof, and any number of extensions or
modifications hereof, or any renewals, modifications, extensions, replacements
or substitutions of the Notes or any additional notes taken by Beneficiary or
any Holder, shall not affect the lien hereof or the liability of Trustor or of
any subsequent obligor to pay the Obligations, unless and until such lien or
liability shall have been expressly released in writing by Beneficiary by proper
instrument in accordance with the terms of the Indenture. Upon written request
from Beneficiary, Trustee shall fully reconvey, without warranty, this Deed of
Trust and the lien hereof by proper instrument in accordance with the terms of
the Indenture. The recitals in any such reconveyance of any matters or facts
shall be conclusive proof of the truthfulness thereof. The grantee in such
reconveyance may be described as "the person or persons legally entitled
thereto." Beneficiary shall have no obligation to record any release instrument.
5.2 Trustor. This Deed of Trust and all provisions hereof, shall extend to
and be binding upon Trustor and all persons claiming under or through Trustor.
Whenever in this Deed of Trust there is reference made to any of the parties
hereto, such reference shall be deemed to include, wherever applicable, a
reference to the heirs, executors and administrators or successors and assigns
(as the case may be) of Trustor, Trustee and Beneficiary. Trustor's successors
and assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for such Trustor.
5.3 Additional Documents. Trustor agrees that upon request of Beneficiary
it will from time to time and at its expense execute, acknowledge and deliver
all such additional instruments and further assurances of title and will do or
cause to be done all such further acts and things as may be reasonably necessary
or desirable to fully protect, preserve, perfect and maintain the security of
Beneficiary hereunder and otherwise effectuate the intent of this Deed of Trust.
5.4 Statute of Limitations. To the fullest extent allowed by law, the right
to plead, use or assert any statute of limitations as a plea or defense or bar
of any kind, or for any purpose, to any debt, demand or obligation secured or to
be secured hereby, or to any complaint or other pleading or proceeding filed,
instituted or maintained for the purpose of enforcing this Deed of Trust or any
rights hereunder, is hereby waived by Trustor.
5.5 Severability. The invalidity of any one or more covenants, phrases,
clauses,
29
<PAGE>
sentences or paragraphs of this Deed of Trust shall not affect the remaining
portions of this Deed of Trust or any part thereof, and the same shall be
construed as if such invalid covenants, phrases, clauses, sentences or
paragraphs, if any, had not been inserted herein. If the lien of this Deed of
Trust is invalid or unenforceable as to any part of the Obligations secured
hereby, or if the lien is invalid or unenforceable as to any part of the Trust
Property, the unsecured or partially secured portion of such Obligations shall
be completely paid prior to the payment of the remaining and secured or
partially secured portion of such Obligations, and all payments made on such
Obligations, whether voluntary or under foreclosure, trustee's sale, or other
enforcement action or procedure, shall be considered to have been first paid on
and applied to the full payment of that portion of such indebtedness which is
not secured or fully secured by the lien of this Deed of Trust.
5.6 Interaction with Indenture.
(a) Incorporation by Reference. Any capitalized term used in this Deed
of Trust without definition, but defined in the Indenture, shall have the same
meaning here as in the Indenture.
(b) Conflicts. Notwithstanding any other provision of this Deed of
Trust to the contrary, the terms and provisions of this Deed of Trust shall be
subject and subordinate to the terms of the Indenture. To the extent that the
Indenture provides Trustor with a particular cure or notice period, or
establishes any limitations or conditions on Beneficiary's actions with regard
to a particular set of facts, Trustor shall be entitled to the same cure periods
and notice periods, and Beneficiary shall be subject to the same limitations and
conditions, under this Deed of Trust, as under the Indenture, in place of the
cure periods, notice periods, limitations and conditions provided for under this
Deed of Trust; provided, however, that such cure periods, notice periods,
limitations and conditions shall not be cumulative as between the Indenture and
this Deed of Trust. In the event of any conflict or inconsistency between the
provisions of this Deed of Trust and those of the Indenture, including without
limitation any conflicts or inconsistencies in any definitions herein or
therein, the provisions or definitions of the Indenture shall govern.
5.7 Other Collateral. This Deed of Trust is one of a number of security
agreements to secure the debt delivered by or on behalf of Trustor pursuant to
the Indenture and the other Collateral Documents and securing the Obligations
secured hereunder. All potential junior Lien claimants are placed on notice
that, under any of the Collateral Documents or otherwise (such as by any
separate future unrecorded agreement between Trustor and Beneficiary), other
collateral for the Obligations secured hereunder (i.e., collateral other than
the Trust Property) may, under certain circumstances, be released without a
corresponding reduction in the total principal amount secured by this Deed of
Trust. Such a release would decrease the amount of collateral securing the same
indebtedness, thereby increasing the burden on the remaining Trust Property
created and continued by this Deed of Trust. No such release shall impair the
priority of the lien of this Deed of Trust. By accepting its interest in the
Trust Property, each and every junior Lien claimant shall be deemed to have
acknowledged the possibility of, and consented to, any such release. Nothing in
this paragraph shall impose any obligation upon Beneficiary.
5.8 Notices. All notices and other communications under this Deed of Trust
shall be
30
<PAGE>
in writing, except as otherwise provided in this Deed of Trust. A notice, if in
writing, shall be considered as properly given if given in accordance with the
provisions of Annex B attached hereto.
5.9 No Waiver of Remedies. By accepting payment of any amount secured
hereby after its due date, or an amount which is less than the amount then due,
or performance of any obligation required hereunder after the date required for
such performance, Beneficiary does not waive its right to require prompt payment
or performance when due of all other amounts or obligations so secured or to
declare a default by reason of the failure to so pay or perform.
5.10 Trustee's Powers. At any time or from time to time without liability
therefor and without notice to Trustor, upon written request of Beneficiary and
presentation of the original or certified copies of this Deed of Trust, and
without affecting the personal liability of any person for payment of the
Obligations secured hereby or the effect of this Deed of Trust upon the
remainder of the Trust Property, Trustee may (a) release any part of the Trust
Property, (b) consent in writing to the making of any map or plat of all or any
part of the Property, (c) join in granting any easement on any part of the Trust
Property, or (d) join in any extension agreement or any agreement subordinating
the lien or charge of this Deed of Trust.
5.11 Beneficiary's Powers. Without affecting the liability of Trustor or
any other person liable for the payment of any Obligation secured hereby, and
without affecting the lien or charge of this Deed of Trust upon any portion of
the Trust Property not then or theretofore released as security for the full
amount of all unpaid Obligations, Beneficiary may, from time to time and without
notice (a) release any person so liable, (b) extend the maturity or alter any of
the terms of any such obligation, or join in any agreement modifying the terms
of the Indenture or any Transaction Document, (c) waive any provision hereof or
grant other indulgences, (d) release or reconvey, or cause to be released or
reconveyed, at any time at Beneficiary's option, all or any part of the Trust
Property, (e) take or release any other or additional security for any
obligation herein mentioned, (f) make compositions or other arrangements with
debtors in relation thereto, or (g) subordinate the lien or charge of this Deed
of Trust.
5.12 Additional Security. If Beneficiary at any time holds additional
security for any of the Obligations secured hereby, all such security shall be
taken, considered and held as cumulative, and Beneficiary may enforce the sale
thereof or otherwise realize upon the same, at its option, either before or
concurrently with the exercise of any of its rights or remedies hereunder or
after a sale is made hereunder. The taking of additional security, execution of
partial releases of the security, or any extension of the time of payment of the
indebtedness secured hereby shall not diminish the force, effect or impair the
liability of any maker, surety or endorser for the payment of any such
indebtedness.
5.13 Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties and are not to be construed as a
part of this Deed of Trust.
5.14 Trust Irrevocable; No Offset. The Trust created hereby is irrevocable
by Trustor. No offset or claim that Trustor now has or may in the future have
against Beneficiary or Trustee shall relieve Trustor from paying the amounts or
performing the Obligations contained herein or
31
<PAGE>
secured hereby.
5.15 Corrections. Trustor shall, upon request of Trustee, promptly correct
any defect, error or omission which may be discovered in the contents of this
Deed of Trust or in the execution or acknowledgment hereof, and will execute,
acknowledge and deliver such further instruments and do such further acts as may
be necessary or as may be reasonably requested by Trustee to carry out more
effectively the purposes of this Deed of Trust, to subject to the lien and
security interest hereby created any of Trustor's properties, rights or interest
covered or intended to be covered hereby, and to perfect and maintain such lien
and security interest.
5.16 Attorneys' Fees. All references to "attorneys' fees" in this Deed of
Trust shall include, without limitation, such reasonable amounts as may then be
charged by Beneficiary for legal services furnished by attorneys in the employ
of Beneficiary (including reasonable charges for in-house counsel).
5.17 Amendments. This Deed of Trust cannot be waived, changed, discharged
or terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, discharge or termination is
sought.
5.18 Acceptance by Trustee. Trustee accepts this Trust when this Deed of
Trust, duly executed and acknowledged, is made a public record as provided by
law.
5.19 Authorization to Rely. Trustee, upon presentation to it of an
affidavit signed by or on behalf of Beneficiary setting forth any fact or facts
showing a default by Trustor under any of the terms or conditions of this Deed
of Trust, is authorized to accept as true and conclusive all facts and
statements in such affidavit and to act hereunder in complete reliance thereon.
5.20 GOVERNING LAW. THIS DEED OF TRUST, THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO, AND ANY CLAIMS OR DISPUTES RELATING THERETO, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCEPT
THAT, FOR PURPOSES OF DETERMINING THE CREATION, VALIDITY, PRIORITY AND
ENFORCEMENT OF THE LIEN CREATED HEREBY AND THE EXERCISE OF REMEDIES HEREUNDER IN
CONNECTION WITH SUCH LIEN, THE LAWS OF THE STATE OF COLORADO SHALL GOVERN.
5.21 Time of Essence. Time is of the essence of this Deed of Trust and of
every part hereof of which time is an element.
5.22 Future Advances. To the extent Beneficiary may make advances pursuant
hereto or to the terms of the Indenture, the parties hereto acknowledge and
intend that all such advances, if any, whenever hereafter made, shall be secured
by this Deed of Trust with the same priority as the initial amounts advanced and
secured by this Deed of Trust.
5.23 Actions by Beneficiary to Preserve. Should an Event of Default occur,
Beneficiary, in its own discretion, without obligation so to do and without
further notice to or demand upon Trustor and without releasing Trustor from any
Obligation, may make or do the
32
<PAGE>
same in such manner and to such extent as it may deem necessary or desirable to
protect the security hereof. In connection therewith (without limiting
Beneficiary's general powers), Beneficiary shall have and is hereby given the
right, but not the obligation (a) to enter upon and take possession of the Trust
Property, (b) to make additions, alterations, repairs and improvements to the
Trust Property which it may consider necessary, desirable or proper to keep the
Trust Property in good condition and repair the same as needed, (c) to appear
and participate in any action or proceeding affecting or which may affect the
security hereof or the rights or powers of Beneficiary hereunder, (d) to pay,
purchase, contest or compromise any encumbrance, claim, charge, Lien or debt
which in the judgment of Beneficiary may affect or appear to affect the security
of this Deed of Trust or be or appear to be prior or superior hereto, and (e) in
exercising such powers, to pay necessary expenses and employ necessary or
desirable consultants including without limitation in connection with applying
for gaming approvals under applicable Gaming Laws and approvals for transfers of
ownership for any Liquor License.
5.24 Reimbursement. Trustor shall pay immediately upon demand all sums
expended for expenses paid or incurred by Beneficiary, including without
limitation court costs, expenses for evidence of title, appraisals and surveys,
license fees, trustees' fees and reasonable attorneys' fees (including charges
for in-house counsel), under any of the terms of this Deed of Trust, including
without limitation the provisions of Section 5.22 hereof, together with interest
on the amount of each expenditure from the date of such expenditure at the
Default Rate.
5.25 Usury Savings Clause. It is the intention of the parties to conform
strictly to the usury laws, whether state or federal, that are applicable to the
transaction of which this Deed of Trust is a part. All agreements between
Trustor, or either of them, and Beneficiary, whether now existing or hereafter
arising and whether oral or written, are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be paid by
Trustor for the use, forbearance or detention of the money to be loaned or
advanced under the Indenture, the Notes, the Completion Capital Commitment, the
Keep-Well Agreement, this Deed of Trust, any other Collateral Document, or any
other agreement or instrument relating thereto, or for the payment or
performance of any covenant or obligation contained herein or therein, exceed
the maximum amount permissible under applicable federal or state usury laws. If
under any circumstances whatsoever fulfillment of any such provision, at the
time performance of such provision shall be due, shall involve exceeding the
limit of validity prescribed by law, then the obligation to be fulfilled shall
be reduced to the limit of such validity. If under any circumstances Trustor
shall have paid an amount deemed interest by applicable law, which would exceed
the highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal amount
owing in respect of the Obligations and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal and any other
amounts due hereunder, the excess shall be refunded to Trustor. All sums paid or
agreed to be paid for the use, forbearance or detention of the principal under
any extension of credit or advancement of funds by Beneficiary or any Holder
shall, to the extent permitted by applicable law, and to the extent necessary to
preclude exceeding the limit of validity prescribed by law, be amortized,
prorated, allocated and spread from the date of the Indenture until payment in
full of the Obligations so that the actual rate of interest on account of such
principal amounts is uniform throughout the term hereof.
33
<PAGE>
5.26 Jurisdiction and Venue. At the sole option of Beneficiary, any action
concerning this Deed of Trust or any other Transaction Document may be brought
in the Colorado District Court for the County in which the Beneficiary is
located or in the United States District Court for the District of Colorado, and
Trustor consents to venue and personal jurisdiction with respect thereto.
5.27 Waiver of Jury Trial. Trustor hereby waives any right to jury trial of
any claim, cross-claim or counter-claim relating to or arising out of or in
connection with this Deed of Trust and/or any of the other Transaction
Documents.
5.28 Waiver of Homestead and Other Exemptions. To the extent permitted by
law, Trustor hereby waives all rights to any homestead or other exemption to
which Trustor would otherwise be entitled under any present or future
constitutional, statutory, or other provision of applicable state or federal
law.
5.29 Construction Deed of Trust. This Deed of Trust secures indebtedness
for construction purposes as described in Section 4-9-313, Colorado Revised
Statutes (1973), as amended.
5.30 Gaming Laws. The grant of, and terms and provisions of, this Deed of
Trust, including, but not limited to, all rights and remedies of Beneficiary and
powers of attorney and appointment, are expressly subject to all laws, statutes,
regulations and orders affecting limited gaming or the sale of liquor
(collectively, the "Gaming Laws"), in the State of Colorado, which may include,
but not be limited to, the necessity for Beneficiary to obtain the prior
approval of the regulatory agencies enforcing the Gaming Laws before taking any
action hereunder and to be licensed by such regulatory agencies before
exercising certain rights and remedies hereunder.
34
<PAGE>
IN WITNESS WHEREOF, Trustor has duly executed and delivered this Deed
of Trust to Public Trustee, Security Agreement, Fixture Filing and Assignment of
Rents, Leases and Leasehold Interests (Gilpin County, Colorado) as of the day
and year first written above.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:______________________________
Name: Duane Krohn
Title: Executive Vice President of Finance and
Treasurer
[Signature Page to Deed of Trust]
35
<PAGE>
ACKNOWLEDGMENT
STATE OF ______________ )
) ss.
COUNTY OF _____________ )
The foregoing instrument was acknowledged before me this __
day of ________, 1999, by _______________ and _______________ as _______________
and _______________, respectively, of _______________, a _______________.
WITNESS my hand and official seal.
My commission expires _________________________________.
<PAGE>
Exhibit A
(Attached to and forming a part of the Deed of Trust to
Public Trustee, Security Agreement, Fixture Filing and Assignment
of Rents, Leases and Leasehold Interests, dated May 29,1999 to the
Public Trustee of the County of Gilpin, Colorado, from
Riviera Black Hawk, Inc., for the benefit of
IBJ Whitehall Bank & Trust Company)
LEGAL DESCRIPTION
<PAGE>
ANNEX A
(Attached to and forming a part of the Deed of Trust to Public
Trustee, Security Agreement, Financing Statement and Assignment
of Rents and Leases, dated May 29, 1999 to the Public Trustee of
the County of Gilpin, Colorado, from
Riviera Black Hawk, Inc.
for the benefit of IBJ Whitehall Bank & Trust Company)
DEFINED TERMS
"Business Day" means any day other than Saturday, Sunday or any other day
on which banks in Denver, Colorado are permitted or required to be closed by law
or any Governmental Authority.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement among the Company, the Trustee, the Independent
Construction Consultant and the Disbursement Agent in connection with the
Riviera Black Hawk.
"Collateral Documents" means, collectively, the Deed of Trust to Public
Trustee, Security Agreement, Fixture Filing and Assignment of Rents, Leases and
Leasehold Interests by the Company to the Public Trustee of Gilpin, Colorado,
the Security Agreement by the Company in favor of the Trustee, the Assignments
of Patent, Trademark and Copyright made by the Company in favor of the Trustee,
the Collateral Assignments by the Company in favor of the Trustee, the Cash
Collateral and Disbursement Agreement, the Pledge Agreement by the Company in
favor of the Trustee, the Pledge and Assignment by the Company in favor of the
Trustee, the Manager Subordination Agreement, Uniform Commercial Code financing
statements and fixture filings, and any other agreements, instruments,
documents, pledges or filings that evidence, set forth or limit the Lien of the
Trustee in the Collateral (as such terms are defined in the Indenture).
<PAGE>
"Completion Capital Commitment" means the Completion Capital Commitment
dated as of the date of the Indenture executed by Riviera Holdings in favor of
the Trustee for the benefit of the Holders.
"Construction Disbursement Account" means the account to be maintained by
the Disbursement Agent and pledged to the Trustee pursuant to the terms of the
Cash Collateral and Disbursement Agreement, into which approximately $31.4
million of the net proceeds of the Offering will be deposited.
"Construction Disbursement Budget" means itemized schedules setting forth
on a line item basis all of the costs (including financing costs) estimated to
be incurred in connection with the financing, design, development, construction
and equipping of the Riviera Black Hawk, as such schedules are delivered to the
Disbursement Agent on the Closing Date and as amended from time to time in
accordance with the terms of the Cash Collateral and Disbursement Agreement.
"Deed of Trust" has the meaning given in the introductory paragraph.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Disbursement Agent" means IBJ Whitehall Bank & Trust Company, as
disbursement agent.
"Environmental Indemnity" means the Environmental Indemnity, dated as of
the date of the Indenture, by the Trustors in favor of the Beneficiary.
"Event of Default" shall have the meaning given in the Indenture.
"FF&E" means furniture, fixtures or equipment used in the ordinary course
of the business of the Company and its Subsidiaries.
"FF&E Financing" means the incurrence of Indebtedness, the proceeds of
which are utilized solely to finance or refinance the acquisition of (or entry
into a capital lease by the Company or a Subsidiary with respect to) FF&E.
"Final Plans" with respect to any particular work or improvement means
Plans which (i) have received final approval from all governmental authorities
required to approve such Plans prior to completion of the work or improvements
and (ii) contain sufficient specificity to permit the completion of the work or
improvement.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
<PAGE>
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal government, any foreign government, any state, province or city
or other political subdivision or otherwise, whether now or hereafter in
existence, including the Colorado Limited Gaming Commission and the Colorado
Division of Gaming, and any other applicable gaming regulatory authority with
authority to regulate any gaming operation (or proposed gaming operation) owned,
managed or operated by the Company, Riviera Holdings, Riviera Management or any
of their respective Subsidiaries.
"Gaming License" means any license, permit, franchise or other
authorization from any Gaming Authority necessary on the date of the Indenture
or at any time thereafter to own, lease, operate or otherwise conduct the
business of the Company or any of its Wholly Owned Restricted Subsidiaries.
"Governmental Authority" means any nation or government, any state,
municipality or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including without limitation the Colorado Division of
Gaming and the Colorado Limited Gaming Control Commission.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including without limitation by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Holders" means the record holders from time to time of the Notes.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations; or
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.
<PAGE>
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Independent Construction Consultant" means the independent construction
consultant retained in connection with the construction of the Riviera Black
Hawk, or any successor independent construction consultant appointed by the
Trustee pursuant to the terms of the Cash Collateral and Disbursement Agreement.
"Keep-Well Agreement" means the Keep-Well Agreement dated as of the date of
the Indenture executed by Riviera Holdings in favor of the Trustee for the
benefit of the Holders.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Liquor License" means any license, permit, franchise or other
authorization from any Liquor Licensing Authority necessary on the date of the
Indenture or at any time thereafter to own, lease, operate or otherwise conduct
the retail, restaurant or other entertainment facilities of the Company or any
of its Wholly Owned Restricted Subsidiaries in the manner described in the
Offering Circular.
"Liquor Licensing Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal government, any foreign government, any state,
province or city or other political subdivision or otherwise, whether now or
hereafter in existence, including the Colorado Liquor Enforcement Division and
the City of Black Hawk Liquor Licensing Authority and any other applicable
liquor licensing regulatory authority with authority to regulate any Liquor
Licensed operation (or proposed Liquor Licensed operation) owned, managed or
operated by the Company, Riviera Holdings, Riviera Management or any of their
respective Subsidiaries.
"Manager Subordination Agreement" means the Manager Subordination Agreement
dated as of the date of the Indenture among the Company, Riviera Management and
the Trustee.
"Minimum Facilities" means, with respect to the Riviera Black Hawk, a
casino which has in operation at least 900 slot machines and 12 table games,
related amenities (including a restaurant, a bar and an entertainment area) and
has parking for at least 442 vehicles.
<PAGE>
"Obligations" shall have the meaning attributed to it in Section 1.3.
"Offering Circular" means the Offering Circular of Jefferies & Company,
Inc. dated May 27, 1999.
"Operating" means, with respect to the Riviera Black Hawk, the first time
that:
(1) all Gaming Licenses have been granted and have not been revoked or
suspended;
(2) all Liens (other than Liens created by the Collateral Documents or
Permitted Liens) related to the development, construction and
equipping of, and beginning operations at, the Riviera Black Hawk have
been discharged or, if payment is not yet due or if such payment is
contested in good faith by the Company, sufficient funds remain in the
Construction Disbursement Account to discharge such Liens and the
Company has taken any action (including the institution of legal
proceedings) necessary to prevent the sale of any or all of the
Riviera Black Hawk or the real property on which the Riviera Black
Hawk will be constructed;
(3) the Independent Construction Consultant, the general contractor and
the architect of the Riviera Black Hawk shall deliver a certificate to
the Trustee certifying that the Riviera Black Hawk is substantially
complete in all material respects in accordance with the Final Plans
with respect to the Minimum Facilities and all applicable building and
other laws, ordinances and regulations;
(4) the Riviera Black Hawk is in a condition (including installation of
furnishings, fixtures and equipment) to receive customers in the
ordinary course of business;
(5) the Minimum Facilities are open to the general public and operating in
accordance with applicable law;
(6) a permanent or temporary certificate of occupancy has been issued for
the Riviera Black Hawk by the appropriate governmental authorities;
and
(7) a notice of completion of the Riviera Black Hawk has been recorded.
"Operating Deadline" means May 31, 2000.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 10.04 of the
Indenture. The counsel may be an employee of or counsel to either the Issuers or
the Trustee.
"Permitted Dispositions" means the sale, transfer, lease or other
disposition of assets in the Trust Property, in the ordinary course of business,
of inventory held in the ordinary course of business and other sales, transfers,
or other dispositions of assets in the Trust Property in the ordinary course of
business; provided that all provisions of the Indenture are complied with,
including, without limitation, Sections 4.10 and 4.16.
<PAGE>
"Permitted Liens" means:
(1) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Wholly Owned
Restricted Subsidiary of the Company; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation
and do not extend to any assets other than those of the Person merged
into or consolidated with the Company or any Wholly Owned Restricted
Subsidiary;
(2) Liens on property existing at the time of acquisition thereof by the
Company or any Wholly Owned Restricted Subsidiary of the Company
(other than materials, supplies or FF&E acquired in connection with
developing, constructing or equipping of, or commencing operations at,
the Riviera Black Hawk), provided that such Liens were in existence
prior to the contemplation of such acquisition;
(3) Liens existing on the date of the Indenture and previously disclosed
to the Trustee in writing;
(4) statutory Liens of landlords and carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other like Liens arising in the
ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by an appropriate process
of law; provided that (a) a reserve or other appropriate provision as
shall be required by GAAP shall have been made therefor and (b) with
respect to such Liens arising in connection with the Riviera Black
Hawk, the Company has obtained any title insurance endorsements
required by, and has otherwise complied with the provisions relating
thereto contained in, the Cash Collateral and Disbursement Agreement;
(5) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded;
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(6) Liens securing obligations in respect of the Indenture or the Notes;
(7) Liens on FF&E to secure Indebtedness permitted by clause (6) of the
second paragraph of the covenant described under "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock"
in the Offering Circular;
(8) pledges or deposits in the ordinary course of business to secure lease
obligations or nondelinquent obligations under workers' compensation,
unemployment insurance or similar legislation; and
(9) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business or assets of the
Company or any Subsidiary incurred in the ordinary course of business.
<PAGE>
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Plans" means the plans, specifications, working drawings, change orders,
correspondence and related items that collectively:
(1) provide for and detail the manner of development, construction and
equipping of the Riviera Black Hawk;
(2) call for construction which will permit the Riviera Black Hawk to be
Operating on or prior to the Operating Deadline;
(3) call for construction which will cause the Riviera Black Hawk to be
Operating for a total cost consistent with its Construction
Disbursement Budget (as defined in the Cash Collateral and
Disbursement Agreement) and the line items set forth therein;
(4) to the extent such Plans are amended, in the reasonable, professional
judgment of the Independent Construction Consultant, continue to
represent a logical evolution consistent with previous Plans; and
(5) together with any amendments, are consistent with the description of
the Riviera Black Hawk contained in the Offering Circular, and are
consistent with all governmental approvals and requirements, including
without limitation the Black Hawk Building Department, Historical
Architecture Review Commission and Gaming Authorities.
"Project" means the Riviera Black Hawk as described in the Offering
Circular, as the Plans may be amended pursuant to the Collateral Documents and
the Indenture, but excluding the Excluded Assets defined in Section 1.
"Riviera Black Hawk" means the project to develop, construct, equip and
operate the Riviera Black Hawk and related amenities as described in the
Offering Circular.
"Riviera Holdings" means Riviera Holdings Corporation, a Nevada
corporation.
"Riviera Management" means Riviera Gaming Management of Colorado, Inc., a
Colorado corporation.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the
<PAGE>
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
<PAGE>
ANNEX B
(Attached to and forming a part of the Deed of Trust to Public
Trustee, Security Agreement, Fixture Filing and Assignment
of Rents, Leases and Leasehold Interests, dated May 29,1999 to the
Public Trustee of the County of Gilpin, Colorado, from
Riviera Black Hawk, Inc., and
for the benefit of IBJ Whitehall Bank & Trust Company)
NOTICE PROVISION
Any notice or communication by any party to the others is duly given if in
writing and delivered in Person or mailed by first class mail (registered or
certified, return receipt requested), telex, telecopier or nationally recognized
overnight air courier guaranteeing next day delivery, to the others' address:
If to Trustor:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Telecopier No.: (702) 794-9277
Attention: Duane Krohn
With a copy to:
Dechert, Price & Rhodes
4000 Bell Atlantic Tower
Philadelphia, PA 19103-2793
Telecopier No.: (215) 884-2222
Attention: Marc Friedman
If to Beneficiary:
IBJ WHITEHALL BANK & TRUST COMPANY,
One State Street, 10th Floor
New York, New York 10004
Telecopier No.: (212) 858-2956
Attention: Thomas S. Moser
Any party, by notice to the others, may designate additional or different
addresses for subsequent notices or communications.
<PAGE>
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five (5) Business Days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by nationally
recognized overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is deemed duly given, whether or not the addressee
receives it.
Recording at the Request of
and when Recorded Mail Original to:
Latham & Watkins
633 W. Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Carl A. Lux, Esq.
ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS
THIS ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS (as the same
may be amended, supplemented or otherwise modified from time to time, this
"Assignment") is made and entered into as of May 29, 1999, by RIVIERA BLACK
HAWK, INC., a Colorado corporation ("Assignor"), whose address is c/o Riviera
Holdings Corporation, 2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109,
and whose federal taxation identification number is 86-0886265, for the benefit
of IBJ WHITEHALL BANK & TRUST COMPANY, a New York banking association, having an
office at One State Street, 10th Floor, New York, New York 10004, in its
capacity as trustee under the Indenture referred to below (together with its
successors and assigns, "Assignee") for its benefit and the benefit of the
Holders (as defined herein).
RECITALS
A. Assignee and Assignor are the parties to that certain Indenture
dated as of June 3, 1999 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Indenture"). Unless otherwise defined herein,
capitalized terms used in this Assignment shall have the meanings given such
terms in the Indenture.
B. Assignor has, under the Indenture, issued its First Mortgage Notes
Due 2005 in the original principal amount of $45,000,000 (together with any
amendments, supplements, modifications, renewals or extensions thereof and any
notes issued in replacement thereof or exchange therefor from time to time, the
"Notes"). The Notes, the Indenture, the Collateral Documents and all other
documents, agreements and instruments (in each case, as amended, supplemented or
otherwise modified from time to time) now or hereafter executed and delivered in
connection with the Indenture and the transactions described therein are
collectively hereinafter referred to as the "Transaction Documents".
C. The Indenture requires that the obligations of Assignor under the
Notes,
<PAGE>
the Indenture and the other Transaction Documents be secured by liens and
security interests covering certain property of Assignor. In connection
therewith, Assignor is executing and delivering, among other things, (i) that
certain Deed of Trust to Public Trustee, Security Agreement, Fixture Filing and
Assignment of Rents, Leases and Leasehold Interests, of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "Deed of
Trust"), from Assignor to the Public Trustee of the County of Gilpin, Colorado,
for the benefit of Assignee encumbering the Property (as defined below), and
(ii) this Assignment.
D. Assignor, as landlord, may enter into certain leases or subleases of
portions of the Property. Such leases and subleases, and any other lease,
sublease, leases or subleases or agreement for the use and occupancy of all or
any portion(s) of the Property hereafter entered into by Assignor, together with
any and all guarantees, amendments, modifications, extensions and renewals
thereof, are hereinafter referred to as the "Tenant Leases".
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Assignor agrees as follows:
1. Definitions. As used herein, capitalized terms shall have the
following meanings:
"Improvements" means any and all buildings, constructions, facilities
and fixtures, pipelines and all other improvements now on, or hereafter located
or constructed on or in, the Land or any portion thereof.
"Land" means the real property described in Exhibit A attached hereto
and by this reference incorporated herein, including without limitation all air
rights with respect thereto.
"Property" means collectively the Land and the Improvements.
2. Assignment of Leases and Rents. Assignor hereby irrevocably,
absolutely, presently, unconditionally, and not merely as additional security
for the payment and performance of the Obligations, sells, assigns, sets over
and transfers to Assignee the following property, rights, interests and estates
now or in future owned or held by Assignor (collectively, the "Assigned
Property"):
2
<PAGE>
(a) any and all rights, title and interest of Assignor in, to and under
the Tenant Leases;
(b) any and all guaranties of the obligations of the tenants, licensees
or other occupants of the Property (the "Tenants") under any of the Tenant
Leases, or any other credit enhancements given to Assignor in connection with
any Tenant's performance under any of the Tenant Leases;
(c) the right to the use and possession of the Property and all of the
income, rents, receipts, security or similar deposits, revenues, issues,
royalties, profits, earnings, products and proceeds from any and all of the Land
or Improvements, now owned or hereafter acquired (collectively, the "Rents,
Issues and Profits") now due or that may become due or to which Assignor may now
or hereafter (whether during any applicable period of redemption, or otherwise)
become entitled or may demand or claim, arising out of or issuing from the
Tenant Leases, or from or out of the Property or any part thereof, including
without limitation liquidated damages following a default under a Tenant Lease,
any termination, cancellation, modification or other fee or premium payable by a
Tenant to Assignor for any reason and the proceeds of rental insurance;
(d) the right to the use and possession of any or all of the furniture,
furnishings, fittings, attachments, appliances, machinery, equipment, devices
and appurtenances of every kind and description now or hereafter affixed to,
located in or on the Property or available for the use of the Tenants or the
operation of the Property and in or to which Assignor has any right, title or
interest; and
(e) all rights or causes of action that Assignor mow of hereafter may
have against any Tenant.
Assignor further assigns, transfers and sets over to Assignee all of
Assignor's right, title and interest in and to all claims and rights to the
payment of money at any time arising in connection with any rejection or breach
of any of the Tenant Leases by a Tenant or trustee of the Tenant under Section
365 of the Bankruptcy Code, 11 U.S.C. Section 365, including without limitation
all rights to recover damages arising out of such breach or rejection, all
rights to charges payable by the Tenant or trustee in respect of the leased
premises following the entry of an order for relief under the Bankruptcy Code in
respect of such lessee and all rentals and other charges outstanding under the
Tenant Lease as of the date of entry of such order for relief.
3. Assignor Limited License. Provided that no Event of Default exists,
Assignor shall have the right under a license granted hereby and Assignee hereby
grants to Assignor a license to collect, but not more than one month in advance,
all of the Rents, Issues and Profits arising from or out of the Tenant Leases or
any renewals or extensions thereof, or from or out of the Property or any part
thereof, but only as trustee for the benefit of Assignee. Thereafter,
3
<PAGE>
so long as no Event of Default exists, Assignor may use the Rents, Issues and
Profits in any manner not inconsistent with the Indenture. The license granted
hereby shall be revoked automatically upon the occurrence of an Event of
Default. If Assignor nevertheless collects any Rents, Issues and Profits after
the license granted hereby is revoked, Assignor shall hold the same in trust for
Assignee and shall immediately pay the same to Assignee (in the form received,
except for any necessary endorsement), without the necessity of any request or
demand therefor.
4. Limitation. The acceptance by Assignee of the assignment provided
herein, together with all of the rights, powers, privileges and authority
created herein or elsewhere in this Assignment, shall not, prior to entry upon
and taking possession of the Property by Assignee, be deemed or construed to
constitute Assignee a "mortgagee in possession," nor thereafter or at any time
or in any event obligate Assignee to appear in or defend any action or
proceeding relating to the Tenant Leases, the Rents, Issues and Profits or the
Property or to take any action hereunder or to expend any money or incur any
expenses or perform or discharge any obligation or responsibility for any
security deposits or other deposits delivered to Assignor by any Tenant and not
assigned and delivered to Assignee, nor shall Assignee be liable in any way for
any injury or damage to person or property sustained by any person or persons,
firm or corporation in or about the Property.
5. Performance by Assignor. Assignor covenants and agrees that it shall
perform its obligations under the Tenant Leases in accordance with their terms.
Assignor shall not default in the performance of any obligation of Assignor
under any Tenant Lease if, by reason of such default, the Tenant or other party
thereunder has the right to cancel such Tenant Lease or to claim any diminution
or offset against future Rents, Issues or Profits.
6. Remedies. Upon the occurrence of any Event of Default, Assignee may,
at its option (in each case, subject to and in accordance with any applicable
terms of the Indenture):
(a) declare all sums secured hereby and by the Transaction Documents to
be immediately due and payable, and the same shall thereupon become immediately
due and payable without any presentment, demand, protest or notice of any kind;
(b) terminate Assignor's right and license to collect the Rents, Issues
and Profits and either in person or by agent, with or without bringing any
action or proceeding, or by a receiver appointed by a court, and without regard
to the adequacy of its security, enter upon and take possession of the Property
or any part thereof, and do any acts which it deems necessary or desirable to
preserve the value, marketability or rentability of the Property, or any part
thereof, and do any acts which it deems necessary or desirable to preserve the
value, marketability or rentability of the Property, or any part thereof or
interest therein, make, modify, enforce, cancel or accept the surrender of any
Tenant Lease, take actions which may affect the income therefrom or protect the
security hereof, and with or without taking possession of the Property, sue for
or otherwise collect the Rents, Issues and Profits, including without limitation
those past due and
4
<PAGE>
unpaid, and apply the same, less costs and expenses of operation and collection,
including without limitation reasonable attorney's fees (including reasonable
charges for in-house counsel), upon any indebtedness evidenced by the Notes or
any other Transaction Documents, all in such order as Assignee may determine.
From and after receipt of prior written notice Assignee to pay Rents, Issues and
Profits directly to Assignee or another party designated by Assignee, each
Tenant shall pay all such payments under its respective Tenant Lease in the
manner instructed by Assignee. The entering upon and taking possession of the
Property or any portion thereof, the collection of the Rents, Issues and Profits
and the application thereof as aforesaid, or any of such acts, shall not cure or
waive any default or notice of default or invalidate any act done in response to
such default or pursuant to such notice, and notwithstanding the continuance in
possession of the Property or the collection, receipt and application of the
Rents, Issues and Profits, Assignee shall be entitled to exercise every right
provided for in any of the Indenture, the Notes, or the other Transaction
Documents or by law upon the occurrence of any Event of Default, including
without limitation the right to exercise the power of sale provided herein;
(c) notwithstanding the availability of legal remedies, obtain specific
performance mandatory or prohibitory injunctive relief, or other equitable
relief requiring Assignor to cure or refrain from repeating any default;
(d) with or without accelerating the maturity of the Obligations, sue
from time to time for any payment due under any of the Indenture, the Notes or
the other Transaction Documents, or for money damages resulting from Assignor's
default under any of the Indenture, the Notes or the other Transaction
Documents; and/or
(e) exercise all other rights and remedies provided herein, in the
Indenture, the Notes, the other Transaction Documents or in any other document
or agreement now or hereafter securing all or any portion of the Obligations, or
at law or in equity, or any combination of any such rights or remedies, to the
extent permitted by law.
Upon request by Assignee, Assignor shall assemble and make available to
Assignee at the Land any of the Property which is not located on the Land or
which has been removed therefrom.
7. Additional Remedies. If an Event of Default has occurred and is
continuing, in addition to all other rights and remedies of Assignee as set
forth under Section 6 hereof, Assignee shall have the following rights and
remedies (together with the remedies set forth under Section 6 hereof, the
"Assignment Remedies"):
(a) Possession and/or Collection of Rent. Assignee, without first being
required to (i) foreclose, (ii) take any actions to foreclose, (iii) institute
any legal proceedings of any kind whatsoever or (iv) exercise any other actions
or remedies hereunder or at law or in equity, shall have the exclusive right and
power (but not the obligation) (A) to enter upon and
5
<PAGE>
take possession of the Property or any part thereof, (B) to rent or re-rent the
same, either in the name of Assignee or Assignor, or either of them, and/or (C)
to receive all Rents, Issues and Profits from the Property. Assignee shall apply
any Rents, Issues and Profits received by Assignee first, to the costs and
expenses incurred by Assignee in protecting and operating the Property, and
next, to the payment of the Obligations in such manner and in such order of
priority as Assignee shall determine consistent with the provisions of the
Indenture. Any such action by Assignee shall not operate as a waiver of the
Event of Default in question, or as an affirmation of any Tenant Leases or of
the rights of any Tenant in the event title to that part of the Property covered
by the Tenant Leases or held by the Tenant should be acquired by Assignee or any
other purchaser at a foreclosure sale. The right of Assignee to receive all
Rents, Issues and Profits from the Property upon the occurrence and during the
continuance of any Event of Default shall be applicable whether or not Assignee
has entered upon, foreclosed, taken any actions to foreclose or taken possession
of the Property, whether or not Assignee has instituted any legal proceedings of
any kind whatsoever, or whether or not Assignee has otherwise attempted to
exercise any other actions or remedies hereunder or at law or in equity. If any
such Rents, Issues and Profits are paid to or received by Assignor, Assignor
shall hold the same in trust for Assignee and immediately pay the same to
Assignee (in the form received, except for any necessary endorsement), without
the necessity of any request or demand therefor. Until receipt from Assignee of
notice of the occurrence of an Event of Default hereunder and during the
continuance thereof, all Tenants of the Tenant Leases and any successors to the
leasehold interest of such Tenants may pay Rents, Issues and Profits directly to
Assignor, but after notice of the occurrence of any Event of Default and during
the continuance of same, Assignor covenants to and shall hold all Rents, Issues
and Profits paid to Assignor in trust for Assignee and shall immediately pay the
same to Assignee (in the form received, except for any necessary endorsement),
without the necessity of any request or demand therefor. Assignor hereby
authorizes and directs all Tenants of the Tenant Leases herein described, and
any successors to the leasehold interest of such Tenants, upon receipt of any
notice from Assignee stating that an Event of Default hereunder has occurred, to
pay to Assignee the Rents, Issues and Profits due and to become due under such
Tenant Leases. Assignor agrees that such Tenants shall have the right to rely
upon any such notice and request by Assignee without any obligation or right to
inquire as to whether an Event of Default actually exists and notwithstanding
any notice from or claim of Assignor to the contrary, and Assignor shall have no
right or claim against such Tenants for any such Rents, Issues and Profits so
paid by the Tenants to Assignee. In such event, receipt by Assignee of Rents,
Issues and Profits from such Tenants or their successors shall be a release of
such Tenants or their successors to the extent of all amounts so received by
Assignee.
(b) Management. Subject to the provisions of Section 14, Assignee, at
its option, may take over and assume the management, operation and maintenance
of the Property and perform all acts necessary and proper and expend such sums
out of the income of the Property as may be needed in connection therewith
including applying for appropriate approvals from the Liquor and Gaming License
Authorities, in the same manner and to the same extent as Assignor theretofore
might do, including without limitation the right to enter into new leases, to
6
<PAGE>
cancel or surrender existing Tenant Leases, to alter or amend the terms of
existing Tenant Leases, to renew existing Tenant Leases, or to make concessions
to Tenants. Assignor hereby releases all claims against Assignee arising out of
such management, operation and maintenance, including without limitation such
claims as may arise from the negligence of Assignee, but not the gross
negligence or willful misconduct of Assignee.
(c) Receiver. Upon or at any time after the occurrence of any Event of
Default, Assignee shall at once become entitled to the possession, use and
enjoyment of the Property and the Rents, Issues and Profits from the date of
such occurrence and continuing during the pendency of any proceedings for sale
by the public trustee or foreclosure proceedings and the period of redemption,
if any. Assignee shall be entitled to a receiver for the Property, and of the
Rents, Issues and Profits, after any such Event of Default, including without
limitation the time covered by any proceedings for sale by the public trustee or
foreclosure proceedings and the period of redemption, if any. Assignee shall be
entitled to such receiver as a matter of right, without regard to the solvency
or insolvency of Assignor, or of the then owner of the Property, and without
regard to the value thereof, and such receiver may be appointed by any court of
competent jurisdiction upon ex parte application, and without notice, notice
being hereby expressly waived. All Rents, Issues and Profits, income and revenue
therefrom shall be applied by such receiver to the payment of the Obligations
according to the orders and directions of the court, or in the absence of such
orders or directions, in the manner set forth in Section 8 below.
(d) Attorney-in-Fact. Assignor appoints Assignee as Assignor's
attorney-in-fact, with full authority in the place and stead of Assignor and in
the name of Assignor, Assignee or otherwise, from time to time after the
occurrence of an Event of Default, to perform, at Assignee's election, any
action and to execute and record any instrument deemed necessary, advisable or
incidental to accomplish the purposes of this Assignment, including without
limitation in connection with exercising any Assignment Remedies and
effectuating the actions described in this Section 7 and in Section 6 hereof, in
each instance only to the extent Assignor has failed to comply with the
provisions of this Assignment. Such appointment is irrevocable and coupled with
an interest until payment in full and complete performance of all the
Obligations. Assignee may appoint a substitute attorney-in-fact. Assignor
ratifies all actions taken by the attorney-in-fact but, nevertheless, if
Assignee requests, Assignor will specifically ratify any action taken by the
attorney-in-fact by executing and delivering to the attorney-in-fact or to any
entity designated by the attorney-in-fact all documents necessary to effect such
ratification.
8. General Provision Pertaining to Remedies.
(a) The Assignment Remedies are cumulative and may be pursued
concurrently or otherwise, at such time and in such order as Assignee may
determine, in its sole discretion, and without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by Assignor.
7
<PAGE>
(b) The enumeration in the Indenture and the other Transaction
Documents of specific rights and powers will not be construed to limit any
general rights or powers or impair Assignee's rights with respect to the
Assignment Remedies.
(c) If Assignee exercises any of the Assignment Remedies, Assignee will
not be deemed a mortgagee-in-possession.
(d) Assignee will not be liable for any act or omission of Assignee in
connection with the exercise of the Assignment Remedies except as a result of
its gross negligence or willful misconduct.
(e) Assignee's right to exercise any Assignment Remedy will not be
impaired by Assignee's delay in exercising or failure to exercise the Assignment
Remedies and will not be construed as extending any cure period or constitute a
wavier of the default or Event of Default.
(f) If an Event of Default occurs, Assignee's or a receiver's payment
or performance of acceptance of payment or performance will not be deemed a
waiver or cure of the Event of Default.
(g) Assignee's or a receiver's acceptance of partial payment will not
extend or affect any grace period or constitute a waiver of a default or Event
of Default but will be credited against the unpaid Obligations.
(h) If Assignee or a receiver exercises any of the Assignment Remedies,
such action will not cure or waive any default, will not waive, modify or affect
any notice of default under the Transaction Documents and will not invalidate
any act done pursuant to a notice of default under the Transaction Documents.
Once Assignee exercises the Assignment Remedies, Assignee's enforcement will
continue for so long as Assignee elects, notwithstanding that the collection and
application of the Rents, Issues and Profits may have cured the original
default. If Assignee elects to discontinue the exercise of the Assignment
Remedies, the Assignment Remedies may be reasserted at any time and from time to
time following a subsequent Event of Default.
(i) A demand by Assignee or a receiver on any Tenant to pay Rents,
Issues and Profits to Assignee or the receiver by reason of an Event of Default
will be sufficient notice to such Tenant to make future payments of Rents,
Issues and Profits to Assignee or the receiver without the necessity for consent
by Assignor.
9. Application of Income. Assignee shall, after payment of all proper
charges and expenses, including reasonable compensation to any managing agent as
it shall select and employ, and after the accumulation of a reserve to meet
taxes, assessments and insurance as herein required or under the Indenture or
the other Transaction Documents in requisite amounts,
8
<PAGE>
credit the net amount of income received by it from the Property by virtue of
this absolute assignment to any amounts due and owing to it by Assignor under
the terms hereof, but the manner of the application of said net income and what
items shall be credited shall be determined pursuant to the Indenture, or
otherwise in the sole discretion of Assignee. Without impairing its rights
hereunder, Assignee may, at its option, at any time and from time to time,
release to Assignor Rents, Issues and Profits received by Assignee, or any
portion of such Rents, Issues and Profits. Assignee shall not be liable for its
failure to collect, or its failure to exercise diligence in the collection of
Rents, Issues and Profits, but shall be accountable only for Rents, Issues and
Profits that Assignee shall actually receive. Assignee shall not be accountable
for more monies than it actually receives from the Property nor shall it be
liable for failure to collect Rents, Issues and Profits.
10. Term. This absolute assignment shall remain in full force and
effect so long as the Obligations or any part thereof to Assignee remains unpaid
or unsatisfied, in whole or in part.
11. Actions of Trustee. All provisions hereof shall inure to the
benefit of and all actions authorized hereunder shall be exercisable by Trustee
or any substitute Trustee at Assignee's request.
12. Duty to Defend. If Assignor or any of its trustees, officers,
participants, employees, agents or affiliates is a party in any proceeding
relating to this Assignment or the Tenant Leases and the Rents Issues and
Profits, Assignor will defend and hold harmless such party with attorneys and
other professionals retained by Assignor and approved by Assignee. At its
option, Assignee may engage its own attorneys and other professionals, at
Assignor's expense, to defend or assist such party. In any event, such
proceeding will be controlled by Assignee.
13. Payment of Expenses. Assignor is obligated to pay all reasonable
expenses incurred by Assignee or any receiver or that are otherwise payable in
connection with this Assignment or the Tenant Leases and the Rents, Issues and
Profits, including without limitation expenses relating to (i) any proceeding or
other claim asserted against Assignee arising under this Assignment and (ii) the
preservation of Assignee's security and the exercise of any Assignment Remedies.
14. Gaming Laws. The grant of, and terms and provisions of, this
Assignment, including, but not limited to, all rights and remedies of Assignee
and powers of attorney and appointment, are expressly subject to all laws,
statutes, regulations and orders affecting limited gaming or the sale of liquor
(collectively, the "Gaming Laws"), in the State of Colorado, which may include,
but not be limited to, the necessity for Assignee to obtain the prior approval
of the regulatory agencies enforcing the Gaming Laws before taking any action
hereunder and to be licensed by such regulatory agencies before exercising
certain rights and remedies hereunder.
15. Supplementary Assignment. This Assignment is intended to be
9
<PAGE>
supplementary to and not in substitution for or in derogation of any assignment
of rents contained in the Deed of Trust. Failure of Assignee to avail itself of
any of the terms, covenants or conditions of this Assignment for any period of
time or for any reason shall not constitute a waiver thereof.
16. Notices. All notices and other communications under this Assignment
shall be in writing, except as otherwise provided in this Assignment. A notice,
if in writing, shall be considered as properly given if given in accordance with
the provisions of Section 5.8 of the Deed of Trust.
17. No Waiver of Remedies. By accepting payment of any amount secured
hereby after its due date, or an amount which is less than the amount then due,
or performance of any obligation required hereunder after the date required for
such performance, Assignee does not waive its right to require prompt payment or
performance when due of all other amounts or obligations so secured or to
declare a default by reason of the failure to so pay or perform.
18. Captions. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties and are not to be construed as a
part of this Assignment.
19. Corrections. Assignor shall, upon request of Trustee, promptly
correct any defect, error or omission which may be discovered in the contents of
this Assignment or in the execution or acknowledgement hereof, and will execute,
acknowledge and deliver such further instruments and do such further acts as may
be necessary or as may be reasonably requested by Trustee to carry out more
effectively the purposes of this Assignment, to subject to the lien and security
interest hereby created any of Assignor's properties, rights or interest covered
or intended to be covered hereby, and to perfect and maintain such lien and
security interest.
20. Further Assurances. Assignor will execute, acknowledge and deliver
to Assignee, a receiver or any other entity Assignee designates, any additional
or replacement documents and perform any additional actions that Assignee or
such receiver determines are reasonably necessary to evidence, perfect or
protect Assignee's interest in the Assigned Property or to carry out the intent
or facilitate the performance of the provisions of this Assignment.
21. Attorneys' Fees. All references to "attorneys' fees" in this
Assignment shall include, without limitation, such reasonable amounts as may
then be charged by Assignee for legal services furnished by attorneys in the
employ of Assignee (including reasonable charges for in-house counsel).
22. Amendments. This Assignment cannot be waived, changed, discharged
or terminated orally, but only by an instrument in writing signed by the parties
hereto.
23. No Further Assignment. Assignor will not further assign or
otherwise transfer or encumber its interest in the Assigned Property without
Assignee's prior written consent, which may be withheld in Assignee's sole
discretion.
10
<PAGE>
24. GOVERNING LAW. THIS ASSIGNMENT, THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO, AND ANY CLAIMS OR DISPUTES RELATING THERETO, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCEPT
THAT, FOR PURPOSES OF DETERMINING THE CREATION, VALIDITY, PRIORITY AND
ENFORCEMENT OF THE LIEN CREATED HEREBY AND THE EXERCISE OF REMEDIES HEREUNDER IN
CONNECTION WITH SUCH LIEN, THE LAWS OF THE STATE OF COLORADO SHALL GOVERN.
25. Time of Essence. Time is of the essence of this Assignment and of
every part hereof of which time is an element.
26. Jurisdiction and Venue. At the sole option of Assignee, any action
concerning this Assignment or any other Transaction Document may be brought in
the Colorado District Court for the County in which Assignee is located or in
the United States District Court for the District of Colorado, and Assignor
consents to venue and personal jurisdiction with respect thereto.
27. Waiver of Jury Trial. Assignor hereby waives any right to jury
trial of any claim, cross-claim or counter-claim relating to or arising out of
or in connection with this Assignment and/or any of the other Transaction
Documents.
28. Waiver of Exemptions. To the extent permitted by law, Assignor
hereby waives all rights to any exemption to which Assignor would otherwise be
entitled under any present or future constitutional, statutory, or other
provision of applicable state or federal law.
29. Release. The recording of a full release of the Deed of Trust shall
automatically constitute a full release of this Assignment.
[Remainder of page intentionally blank]
11
<PAGE>
IN WITNESS WHEREOF, Assignor has duly executed and delivered this
Assignment of Rents, Leases and Leasehold Interests as of the day and year first
above written.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:______________________________
Name: Duane Krohn
Title: Executive Vice President of Finance and Treasurer
ENVIRONMENTAL INDEMNITY
This Environmental Indemnity (as amended, modified or otherwise
supplemented from time to time, this "Indemnity") is made and entered into as of
June 3, 1999, by and between Riviera Black Hawk, Inc., a Colorado corporation
(the "Company"), as indemnitor ("Indemnitor"), and IBJ WHITEHALL BANK & TRUST
COMPANY, a New York banking association, having an office at One State Street,
10th Floor, New York, New York 10004, as trustee (in such capacity, together
with its successors and assigns in such capacity, the "Trustee") under the
Indenture referred to below for the holders from time to time (the "Holders") of
the First Mortgage Notes due 2005 (together with any amendments, supplements,
modifications, renewals or extensions thereof and any notes issued in
replacement thereof or exchange therefor from time to time, the "Notes"), in the
original aggregate principal amount of $45,000,000, issued by Indemnitor.
RECITALS
A. Indemnitor is the present owner or lessee of the real property
included in the Collateral (together with all other property at any time owned,
leased or managed by Indemnitor and (i) subject to a Lien in favor of the
Trustee or (ii) on which any equipment subject to a Lien in favor of the Trustee
is located (the "Trust Property")).
B. Indemnitor and the Trustee are, contemporaneously with the execution
and delivery of this Indemnity, entering into a certain Indenture, dated as of
June 3, 1999, between Indemnitor and the Trustee (as the same may be
supplemented, amended, restated or otherwise modified from time to time, the
"Indenture") pursuant to which Indemnitor is issuing the Notes.
C. The Holders have required, as a condition precedent to entering into
the Indenture, that Indemnitor shall have executed and delivered this Indemnity
for the benefit of the Trustee and the ratable benefit of the Holders.
NOW, THEREFORE, the parties hereto agree as follows:
1. Recitals. The Recitals are incorporated herein by this reference.
2. Definitions. Capitalized terms used herein but not otherwise defined
shall have the meanings assigned to such terms in the Indenture. For purposes of
this Indemnity, the following terms have the meanings set forth below.
"Adjacent Property" means any property so situated as to pose a
risk that a Hazardous Material could spread onto the Trust Property.
"Environmental Laws" collectively means and includes any and all
applicable present and, other than with respect to Section 3, future local,
state and federal law relating to the environment and environmental conditions,
including, without limitation, the Colorado Air Quality Control Act, Colo. Rev.
Stat. ssss 25-7-101 et seq.; the Colorado Water Quality Control Act, Colo. Rev.
Stat. ssss 25-8-101 et seq.; the Hazardous Waste Statute, Colo. Rev. Stat.
<PAGE>
ssss 25-15-101 et seq.; the Hazardous Waste Sites Cleanup Statute, Colo. Rev.
Stat. ssss 25-16-101 et seq.; the Petroleum Storage Tank Statute, Colo. Rev.
Stat. ssss 8-20.5-101 et seq.; the Radiation Control Act, Colo. Rev. Stat. ssss
25-11-101 et seq.; the Colorado Hazardous Substance Incidents Statute, Colo.
Rev. Stat. ssss 29-22-101 et seq.; the Colorado Hazardous Substances Act of
1973, Colo. Rev. Stat. ssss 25-5-501 et seq.; the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. ss 6901 et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42
U.S.C. ssss 9601-9657, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Hazardous Materials Transportation
Act, 49 U.S.C. ss 6901, et seq.; the Federal Water Pollution Control Act, 33
U.S.C. ssss 1251 et seq.; the Clean Air Act, 42 U.S.C. ssss 741 et seq.; the
Clean Water Act, 33 U.S.C. ss 7401 et seq.; the Toxic Substances Control Act, 15
U.S.C. ssss 2601-2629, the Safe Drinking Water Act, 42 U.S.C. ssss 300f-300j, or
any other similar federal, state or local law of similar effect, each as
amended, and any and all regulations, orders, and decrees now or hereafter
promulgated thereunder or any and all common law requirements, rules and bases
of liability regulating, relating to or imposing liability or standards of
conduct concerning pollution or protection of human health or the environment,
as now or may at any time hereafter be in effect.
"Hazardous Materials" means (i) those substances deemed hazardous,
toxic, contaminating or polluting under any Environmental Law or by any
governmental agency pursuant to any Environmental Law, including, without
limitation, asbestos, petroleum products or by-products (including, without
limitation, crude oil or any fraction thereof), the group of organic compounds
known as polychlorinated biphenyls, radon gas, urea formaldehyde, radioactive
materials, toxic, infectious, reactive, corrosive, ignitable or flammable
chemicals and chemicals known to cause cancer or adverse health effects; and
(ii) any items included in the definition of hazardous or toxic waste, materials
or substances under any Environmental Law.
"Material Adverse Effect" means any event, matter, condition or
circumstance which (i) has or would reasonably be expected to have a material
adverse effect on the business, properties, results of operations, or financial
condition of Indemnitor and its Subsidiaries, taken as a whole; or (ii) would
materially impair the ability of Indemnitor or any other Person to perform or
observe its obligations under or in respect of the Indenture, this Indemnity,
any Collateral Document, or any other document entered into by Indemnitor in
connection with the foregoing (collectively, the "Transaction Documents"), in
whole or part, or (iii) affects the legality, validity, binding effect or
enforceability of any of the Indenture or any other Transaction Document, in
whole or in part, or the perfection or priority of, or the ability to exercise
remedies with respect to, the Liens granted to the Trustee.
"Premises" means the real property, together with any additional
real property hereafter encumbered by the Lien of the Deed of Trust, and all
improvements now or hereafter located thereon, and all rights and interests of
the Company therein.
3. Representations and Warranties. Except as would not constitute a
Material Adverse Effect or except as otherwise set forth on Schedule 1,
Indemnitor represents and warrants that (1) no Hazardous Material has been
installed, used, generated, manufactured, treated, handled, refined, produced,
processed, stored or disposed of in, on or under the Trust Property, including,
without limitation, the surface and subsurface waters of the Trust Property,
2
<PAGE>
except in compliance in all material respects with Environmental Laws; (2) no
activity has been undertaken on the Trust Property by Indemnitor, its agents,
employees or contractors or to its knowledge any other Person, which would
cause, or has caused, (i) the Trust Property to become a hazardous waste
treatment, storage or disposal facility within the meaning of, or otherwise
violate, any currently effective Environmental Law, (ii) a release or threatened
release of Hazardous Materials from the Trust Property within the meaning of, or
otherwise violate, any currently effective Environmental Law, or (iii) the
discharge or emission of Hazardous Materials which would require a permit under
any currently effective Environmental Law that has not been obtained and is in
full force and effect; (3) no conditions caused by Indemnitor, its agents,
employees or contractors or, to its knowledge, any other Person, with respect to
the Trust Property cause a violation or support a claim under any currently
effective Environmental Law; (4) to the best of Indemnitor's knowledge after due
inquiry, no underground storage tanks are located on the Trust Property or have
been located on the Trust Property and subsequently removed or filled; (5) with
respect to the Trust Property, Indemnitor has not received any notice at any
time that it is or was claimed to be in violation of or in non-compliance with
the conditions of any currently effective Environmental Law; and (6) there is
not now pending or threatened any action, judgment, claim, consent decree,
judicial or administrative orders or agreements, or governmental liens with
respect to Indemnitor or the Trust Property relating to any currently effective
Environmental Law.
4. Covenants. Indemnitor covenants: (i) that no Hazardous Materials
shall be installed, used, generated, manufactured, treated, handled, refined,
produced, processed, stored or disposed of in, on or under the Trust Property,
except in all material respects in compliance with all applicable rules,
regulations and laws; (ii) that no activity shall be undertaken on the Trust
Property which would cause (A) the Trust Property to become a hazardous waste
treatment, storage or disposal facility, as such terms are defined and
classified under any Environmental Law, (B) a release or threatened release of
Hazardous Materials on or from the Trust Property within the meaning of, or
otherwise violate, any Environmental Law (except as expressly permitted in
writing by a governmental authority), or (C) the discharge of Hazardous
Materials into any watercourse, body of surface or subsurface water or wetland,
or the discharge into the atmosphere of any Hazardous Materials, that would
require a permit under any Environmental Law and for which no such permit has
been issued; (iii) that no activity shall be undertaken or permitted to be
undertaken by Indemnitor on the Trust Property which would reasonably be
expected to result in a violation under any Environmental Law; (iv) that soils
excavated during construction and groundwater generated during dewatering
activities on the Trust Property shall be handled and disposed of in compliance
with Environmental Laws in all material repects; and (v) promptly following
completion of any remedial actions imposed upon Indemnitor under any
Environmental Law by a governmental agency in response to a violation of
Environmental Laws or any environmental permits, licenses, approvals or
authorizations or a release of Hazardous Materials at or from the Trust
Property, Indemnitor shall obtain and deliver to the Trustee, either (x) an
environmental report in form and substance reasonably acceptable to the Trustee
from an environmental consultant reasonably acceptable to the Trustee, stating
that all required action has been taken, and that upon completion of such
action, the Trust Property is, to the knowledge of such professional, then in
compliance with applicable Environmental Laws, or (y) a statement
3
<PAGE>
from the governmental agency that required such action to the effect that all
required action has been taken to its satisfaction.
5. Indemnities. Indemnitor hereby agrees to unconditionally indemnify,
defend, and hold the Trustee and the Holders harmless against: (1) any loss,
fines, penalties, actions, suits, proceedings, liability, damage, expense or
claim incurred in connection with, arising out of, resulting from or incident to
the application of any Environmental Law with respect to the Trust Property; (2)
any breach of any representation or warranty or the inaccuracy of any
representation made by Indemnitor in or pursuant to this Indemnity; (3) any
breach of any covenant or agreement made by Indemnitor in or pursuant to this
Indemnity; (4) any liability or obligation arising out of CERCLA, any equivalent
state statute or any other Environmental Law which may be incurred or asserted
against the Trustee or the Holders, directly or indirectly, under Environmental
Laws, with respect to the Trust Property; and (5) any other loss, liability,
damage, expense or claim which may be incurred by or asserted against the
Trustee or the Holders, directly or indirectly, resulting from the presence of
Hazardous Material on the Trust Property. Notwithstanding anything herein to the
contrary, this Indemnity shall not be construed to impose liability on
Indemnitor for Hazardous Materials placed, released or disposed of on the Trust
Property or any obligation or liability under Environmental Law (except to the
extent of Indemnitors' or its agents', employees' or contractors' fault) (i)
after the date of foreclosure, assignment (other than an assignment by the
Trustee to a successor trustee under the Indenture) or sale, (ii) after the
acceptance by the Trustee of a deed in lieu of foreclosure, (iii) during any
period during which a receiver appointed upon the request or petition of the
Trustee is in possession of the Trust Property or the Trustee operates the Trust
Property as a mortgagee in possession, or (iv) to the extent such liability
arises from the gross negligence or willful misconduct of the Trustee or any
indemnitee hereunder.
6. Duration of Indemnity. The duration of Indemnitor's obligations
hereunder shall cease upon repayment of the Notes and/or the release of the Deed
of Trust; provided, however, that Indemnitor's obligations with respect to
Sections 5 and 9 shall not cease until the expiration of the statute of
limitations period applicable to the subject matter of the underlying claim.
7. Notices from Indemnitor. Indemnitor shall, promptly after obtaining
knowledge thereof, advise the Trustee in writing of (i) any governmental or
regulatory actions instituted or threatened in writing under any Environmental
Law affecting the Trust Property or this Indemnity or any requirement by a
government or regulatory agency to take material response action with respect to
the presence of Hazardous Materials on the Trust Property, including, without
limitation, any notice of inspection (other than routine inspections), abatement
or noncompliance; (ii) all claims made or threatened in writing by any third
party against Indemnitor or the Trust Property relating to any Hazardous
Material or a violation of an Environmental Law with respect to the Trust
Property; and (iii) Indemnitor's discovery of any occurrence or condition on the
Trust Property or any Adjacent Property that would reasonably be expected to
subject Indemnitor or the Trust Property to (A) a material claim under any
Environmental Law or (B) any restriction on ownership, occupancy,
transferability or material change in use of the Trust Property under any
Environmental Law. Indemnitor shall deliver to the Trustee such documentation or
records as the Trustee may reasonably request and that are susceptible of being
obtained by Indemnitor relating
4
<PAGE>
to the Trust Property in relation to any Environmental Law without undue cost or
expense and without the necessity for initiating legal proceedings to obtain the
same.
8. Notice of Claims Against Indemnitees. The Trustee agrees that it
shall provide Indemnitor with written notice of any claim or demand that the
Trustee has determined could give rise to a right of indemnification under this
Indemnity; provided that the failure to give any such notice shall not limit
Indemnitor's obligations hereunder. Such notice shall be given a reasonable time
after the Trustee becomes aware of the relevant facts and shall specify, to the
best of the Trustee's knowledge, the facts giving rise to the alleged claim, and
the amount, to the extent determinable, of liability for which indemnity is
asserted. Indemnitor agrees that in any action, suit or proceeding brought
against the Trustee or any Holder of a Note, the Trustee or such Holder, as the
case may be, may be represented by counsel chosen by the Trustee or such Holder,
as the case may be, without affecting or otherwise impairing this Indemnity and,
to the extent fees and disbursements to such counsel are reasonably incurred in
protecting the Trustee's or such Holder's interests, to pay such fees and
disbursements. The Trustee agrees that, as to any action, suit or proceeding for
which Indemnitor has acknowledged in writing and undertaken its obligation to
indemnify, defend and hold the Holders harmless with respect thereto, the
Trustee will not settle or otherwise compromise any such action, suit or
proceeding without the prior written consent of Indemnitor, which consent shall
not be unreasonably withheld or delayed. If, as to any such action, suit or
proceeding for which Indemnitor has acknowledged in writing and undertaken their
obligation to indemnify, defend and hold the Holders harmless with respect
thereto, without obtaining the prior written consent in writing of Indemnitor,
the Trustee compromises or otherwise settles such action, suit or proceeding,
any such compromise or settlement without the consent of Indemnitor shall not be
binding upon Indemnitor. Indemnitor agrees that it will not settle or compromise
such action, suit or proceeding without the Trustee's prior written consent,
which consent shall not be unreasonably withheld or delayed.
9. Payment of the Trustee's Expenses. If i) after notice of claim under
Section 8 the Trustee retains counsel for advice or other representation in any
litigation, contest, dispute, suit or proceeding (whether instituted by the
Trustee, Indemnitor, or any other party, including any governmental agency
charged with enforcement of any Environmental Law) in any way relating to this
Indemnity, or ii) pursuant to efforts initiated in good faith to enforce this
Indemnity, then all of the reasonable attorneys' fees arising from such services
and all related expenses and court costs shall be payable by Indemnitor within
thirty (30) days after demand.
10. Environmental Inspections. With written notice during regular
business hours (or with such notice and upon such terms as are reasonable in
light of the circumstances), the Trustee may enter the Trust Property to
ascertain its environmental condition and with the reasonable belief that there
has been, or could be, a release or threatened release of Hazardous Materials or
a violation of Environmental Laws may sample building materials, take soil
samples and/or test borings, and otherwise inspect the Trust Property. The
Trustee shall conduct such inspection in a reasonable manner so as to not unduly
disrupt the operation of Indemnitor and its contractors.
11. Obligations Absolute; Waivers. Except as otherwise provided in
Sections 5, 6, and 8, the obligations of Indemnitor hereunder shall remain in
full force without regard to, and shall not be impaired by the following, any of
which may be taken in such manner, upon such terms and
5
<PAGE>
at such times as the Trustee, in accordance with the terms of the Indenture,
this Indemnity, any Collateral Document, or any other document entered into by
Indemnitor in connection with the foregoing, deems advisable, without the
consent of, or notice to, Indemnitor (except to the extent that it may be
entitled to consent or notice, in its capacity as an Issuer), nor shall any of
the following give Indemnitor any recourse or right of action against the
Trustee or any holder of a Note: (i) any express amendment, modification,
renewal, addition, supplement, extension or acceleration of or to the Notes or
the Indenture, this Indemnity, any Collateral Document, or any other document
entered into by Indemnitor in connection with the foregoing (including, without
limitation, this Indemnity, unless expressly agreed by the parties hereto in
writing); (ii) any exercise or non-exercise by the Trustee of any right or
privilege under the Indenture, this Indemnity, any Collateral Document, or any
other document entered into by Indemnitor in connection with the foregoing;
(iii) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Indemnitor, or any
affiliate of Indemnitor, or any action taken with respect to this Indemnity by
any trustee or receiver, or by any court, in any such proceeding, whether or not
Indemnitor shall have had notice or knowledge of any of the foregoing; (iv) any
release, waiver or discharge of Indemnitor (other than under this Indemnity) or
any endorser or other guarantor from liability under any of the Indenture, this
Indemnity, any Collateral Document, or any other document entered into by
Indemnitor in connection with the foregoing or Indemnitor's grant to the Trustee
of a security interest, Lien or encumbrance in any of Indemnitor's property; (v)
unless expressly agreed by the parties hereto in writing, any subordination,
compromise, settlement, release (by operation of law or otherwise), discharge,
compound, collection, or liquidation of the Indenture, this Indemnity (unless
expressly agreed to by the parties hereto in writing), any Collateral Document,
or any other document entered into by Indemnitor in connection with the
foregoing or any collateral described in the Indenture, this Indemnity, any
Collateral Document, or any other document entered into by Indemnitor in
connection with the foregoing or otherwise, or any substitution with respect
thereto; (vi) any assignment or other transfer of the Indenture, this Indemnity,
any other Collateral Document, or any other document entered into by Indemnitor
in connection with the foregoing, in whole or in part; (vii) any acceptance of
partial performance of any of the obligations of Indemnitor under the Indenture,
this Indemnity, any other Collateral Document, or any other document entered
into by Indemnitor in connection with the foregoing; (viii) any consent to the
transfer of any collateral described in the Indenture, this Indemnity, any
Collateral Document, or any other document entered into by Indemnitor in
connection with the foregoing or otherwise; and (ix) any bid or purchase at any
sale of the collateral described in the Indenture, this Indemnity, any
Collateral Document, or any other document entered into by Indemnitor in
connection with the foregoing.
Except as otherwise provided in Sections 5, 6, and 8, the Indemnitor
unconditionally waives any defense to the enforcement of this Indemnity,
including, without limitation: (1) all presentments, demands (except as provided
herein and in the Transaction Documents), demands for performance, notices of
nonperformance, protests, notices of protest, dishonor, nonpayment, partial
payment or default, notices of acceptance of this Indemnity and all other
notices and formalities to which the Indemnitor may be entitled; (2) any right
to require the Trustee to proceed against any guarantor or to proceed against or
exhaust any collateral described in the Indenture, this Indemnity, any
Collateral Document, or any other document entered into by
6
<PAGE>
Indemnitor in connection with the foregoing or to pursue any other remedy
whatsoever; (3) the defense of any statute of limitations affecting the
liability of Indemnitor hereunder, the liability of Indemnitor or any guarantor
under the Indenture, any Collateral Document, or any other document entered into
by Indemnitor in connection with the foregoing, or the enforcement hereof, to
the extent permitted by law; (4) any defense arising by reason of any invalidity
or unenforceability of the Indenture, any Collateral Document, or any other
document entered into by Indemnitor in connection with the foregoing or any
guarantor or of the manner in which the Trustee has exercised its remedies under
the Indenture, this Indemnity, any Collateral Document, or any other document
entered into by Indemnitor in connection with the foregoing; (5) any defense
based upon any election of remedies by the Trustee, including, without
limitation, any election to proceed by judicial or nonjudicial foreclosure of
any security, whether real property or personal property security, or by deed in
lieu thereof, and whether or not every aspect of any foreclosure sale is
commercially reasonable, or any election of remedies (including, but not limited
to, remedies relating to real property or personal property security) that
destroys or otherwise impairs the rights of Indemnitor to proceed against any
other indemnitor or any other guarantor for reimbursement, or both; (6) any duty
of the Trustee to advise Indemnitor of any information known to the Trustee
regarding the financial condition of any guarantor or of any other circumstance
affecting any guarantor's ability to perform its obligations to the Trustee, it
being agreed that Indemnitor assumes the responsibility for being and keeping
informed regarding such condition or any such circumstances; (7) any right of
subrogation and any rights to enforce any remedy that the Trustee now has or may
hereafter have against any guarantor and any benefit of, and any right to
participate in, any security now or hereafter held by the Holders, until all
obligations under the Indenture, this Indemnity, any Collateral Document, or any
other document entered into by Indemnitor in connection with the foregoing have
been fully paid and indefeasibly performed; and (8) to the extent permitted by
law, any right to assert against the Trustee or any holder of a Note any legal
or equitable defense, counterclaim, set-off or crossclaim that it may now or at
any time or times hereafter have against any other indemnitor.
12. No Waiver. Indemnitor's obligations hereunder shall in no way be
impaired, reduced or released by reason of the Trustee's omission or delay to
exercise any right described herein or in connection with any notice (except for
notices required of the Trustee pursuant to this Indemnity), demand, warning or
claim regarding violations of any Environmental Laws governing the Trust
Property, except as expressly provided in Section 5 hereof.
13. Recourse.
(a) Indemnitor agrees that the obligations of Indemnitor hereunder
are separate, independent of and in addition to Indemnitor's obligations under
the Indenture or any other Transaction Document.
(b) Indemnitor agrees that a separate action may be brought to
enforce the provisions of this Indemnity, which shall in no way be deemed to be
an action on the Notes, whether or not the Trustee would be entitled to a
deficiency judgment following a judicial foreclosure or sale under any Deed of
Trust. Indemnitor waives any right to require that any action be brought by the
Trustee or any holder of a Note against Indemnitor or any other Person, or that
any other remedy under the Indenture, this Indemnity, any other Collateral
Document, or
7
<PAGE>
any other document entered into by Indemnitor in connection with the foregoing
be exercised. The Trustee may, at its option, proceed against Indemnitor in the
first instance to collect monies when due or to obtain performance under this
Indemnity, without first proceeding against Indemnitor or any other indemnitor
or any other Person and without first resorting to any other indemnity, the
Indenture, this Indemnity, any Collateral Document, or any other document
entered into by Indemnitor in connection with the foregoing or any other remedy
under the Indenture, this Indemnity, any Collateral Document, or any other
document entered into by Indemnitor in connection with the foregoing.
(c) This Indemnity is not given as additional security for the
Notes and is entirely independent of the Notes (except as provided in Section
5), and shall not be measured or affected by any amounts at any time owing under
the other Transaction Documents, the sufficiency or insufficiency of any
collateral (including without limitation the Premises) given to the Trustee to
secure repayment of the Notes, or the consideration given by the Trustee or any
other party in order to acquire the Premises or any portion thereof. None of the
obligations of Indemnitor hereunder shall be in any way secured by the lien of
the Deed of Trust or any other Transaction Document.
14. Successors and Assigns. Subject to the provisions of Sections 5 and
6, this Indemnity shall be continuing, irrevocable and binding on Indemnitor and
its successors and assigns, and this Indemnity shall be binding upon and shall
inure to the benefit of the Trustee and each Holder and their respective
successors and assigns. The death or dissolution of Indemnitor shall not affect
this Indemnity or any of Indemnitor's obligations hereunder. It is agreed by
Indemnitor that its liabilities hereunder are not contingent on the signature of
any other indemnitor under any other indemnity.
15. Notices. All notices, demands and other communications under this
Indemnity shall be given in accordance with Section 11.2 of the Indenture.
16. Entire Agreement. This Indemnity constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter contained in this Indemnity.
17. Amendment and Waiver. This Indemnity may not be amended except by a
writing signed by all the parties, nor shall observance of any term of this may
be waived except with the written consent of the Trustee.
18. Governing Law. This Indemnity shall be governed and construed as to
interpretation, enforcement, validity, construction, effect and in all other
respects by the laws, statutes and decisions of the State of New York, without
regard to the principles of conflict of laws thereof.
19. Counterparts. This Indemnity may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same agreement.
8
<PAGE>
20. Severability. All provisions contained in this Indemnity are
severable and the invalidity or unenforceability of any provision shall not
affect or impair the validity or enforceability of the remaining provisions of
this Indemnity.
21. Headings. The descriptive headings of the Sections of this
Indemnity are inserted for convenience only and do not constitute a part of this
Indemnity.
[remainder of page intentionally left blank]
9
<PAGE>
IN WITNESS WHEREOF, this Environmental Indemnity has been executed as
of the date first above written.
TRUSTEE: IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking association,
By:
---------------------------------
Name:
Title:
INDEMNITOR: RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
---------------------------------
Name:
Title:
[Signature page to Environmental Indemnity]
<PAGE>
SCHEDULE 1
[Company to Provide]
Schedule 1-1
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
among
IBJ WHITEHALL BANK & TRUST COMPANY,
as the Disbursement Agent,
IBJ WHITEHALL BANK & TRUST COMPANY,
as the Trustee,
CRSS CONSTRUCTORS, INC.,
as the Independent Construction Consultant,
and
RIVIERA BLACK HAWK, INC.,
as the Company and Issuer
Dated as of June 3, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
1. Definitions....................................................................................................2
1.1 Defined Terms........................................................................................2
1.2 Additional Defined Terms.............................................................................9
1.3 Rules of Interpretation.............................................................................10
2. Establishment of Accounts.....................................................................................10
2.1 Appointment of Disbursement Agent...................................................................10
2.2 Establishment of Accounts...........................................................................10
2.3 Pledge Agreement....................................................................................11
2.4 Investment of Funds in Accounts.....................................................................11
2.5 Agency..............................................................................................11
2.6 Waiver of Setoff Rights.............................................................................12
3. Disbursements from Accounts...................................................................................12
3.1 Conditions to Disbursement..........................................................................12
3.2 Method of Disbursement..............................................................................12
3.3 Disbursement of Compensation........................................................................12
3.4 Transfer of Funds to the Trustee....................................................................13
4. Agreements of the Company, the Independent Construction Consultant, the Disbursement Agent and the Trustee....13
4.1 Disbursement Requests and Disbursements.............................................................13
4.2 Periodic Review of Riviera Black Hawk...............................................................14
4.3 Insufficient Available Funds........................................................................15
5. Interest Reserve..............................................................................................15
5.1 Interest Disbursements..............................................................................15
5.2 Interest Reserve Account Amounts....................................................................16
6. Completion Reserve............................................................................................16
6.1 Conditions Precedent to Completion Reserve Disbursements............................................16
6.2 Disbursement to the Interest Reserve Account........................................................16
7. Construction Disbursement Account.............................................................................16
7.1 Conditions to Initial Disbursements.................................................................16
7.2 Conditions to Subsequent Disbursements..............................................................16
7.3 Advance Disbursements...............................................................................17
7.4 Disbursements After Event of Default................................................................17
7.5 Final Disbursement of Funds Following Operating Date................................................18
8. Amendments to Construction Disbursement Budget; Entering into Amendments to Contracts; Amendments to Project Cost
Schedule and Cost Overruns..............................................................................20
8.1 Construction Disbursement Budget Amendment Process..................................................20
8.2 Contract Amendment Process..........................................................................20
i
<PAGE>
8.3 Contracts Entered into after the Issuance Date......................................................21
8.4 Project Cost Schedule and Cost Overruns.............................................................21
9. Events of Default.............................................................................................22
9.1 Indenture...........................................................................................22
9.2 Failure to Approve Disbursement Request.............................................................22
9.3 Exception to Prior Disbursement.....................................................................22
9.4 Insufficent Funds...................................................................................22
9.5 Performance of Certain Obligations..................................................................22
9.6 Failure to Deliver Collaterral Documents............................................................22
9.7 Abandonment of Project..............................................................................22
9.8 Termination or Invalidity of Construction Documents.................................................23
9.9 Schedule of Operations..............................................................................23
10. Disbursed Funds Account......................................................................................23
10.1 Rights of the Company to Disbursed Funds Account...................................................23
10.2 Right to Substitute Disbursed Funds Account........................................................23
11. Limitation of Liability......................................................................................24
11.1 Disbursement Agent's Limitation of Liability.......................................................24
11.2 Independent Construction Consultant's Limitation of Liability......................................24
12. Indemnity and Insurance......................................................................................25
12.1 Indemnity..........................................................................................25
12.2 Insurance..........................................................................................25
13. Termination..................................................................................................25
14. Substitution or Resignation..................................................................................26
15. Account Statement............................................................................................26
16. Notice.......................................................................................................27
17. Miscellaneous................................................................................................27
17.1 Waiver.............................................................................................27
17.2 Invalidity.........................................................................................27
17.3 No Authority.......................................................................................27
17.4 Assignment.........................................................................................27
17.5 Benefit............................................................................................27
17.6 Time...............................................................................................27
17.7 Choice of Law......................................................................................27
17.8 Entire Agreement; Amendments.......................................................................27
17.9 Notices............................................................................................28
17.10 Counterparts......................................................................................28
17.11 Captions..........................................................................................28
17.12 Arbitration.......................................................................................29
</TABLE>
ii
<PAGE>
EXHIBITS
Exhibit A Form of Initial Disbursements Certificate
Exhibit B-1 Form of Company's Closing Certificate
Exhibit B-2 Form of Independent Construction Consultant's Closing
Certification
Exhibit B-3 Form of Disbursement Agent's Closing Certification
Exhibit B-4 Form of Trustee's Closing Certification
Exhibit C Form of Interest Disbursement Request
Exhibit D-1 Form of Completion Reserve Disbursement Request and
Certificate
Exhibit D-2 Form of Post-Final CDA Disbursement Completion Reserve
Disbursement Request and Certificate
Exhibit E-1 Form of Construction Disbursement Request and Certificate
Exhibit E-2 Form of Advance Disbursement Request and Certificate
Exhibit F Form of Construction Disbursement Budget Amendment Certificate
Exhibit G-1 Form of Contract Amendment Certificate
Exhibit G-2 Form of Additional Contract Certificate
Exhibit H Form of Consent to Collateral Assignment of Contract
Exhibit I Form of Pro Forma Title Policy
iii
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
THIS CASH COLLATERAL AND DISBURSEMENT AGREEMENT (as amended, supplemented
or otherwise modified from time to time, the "Agreement") is dated as of June 3,
1999, by and among IBJ WHITEHALL BANK & TRUST COMPANY, a New York banking
association, having an office at One State Street, New York, New York 10004, as
trustee (together with its successors and assigns, the "Trustee") under the
Indenture (as defined below), IBJ WHITEHALL BANK & TRUST COMPANY, a New York
banking association, as disbursement agent (together with its successors and
assigns, the "Disbursement Agent"), CRSS CONSTRUCTORS, INC., a Delaware
corporation, as independent construction consultant under the Indenture
(together with its successors and assigns, the "Independent Construction
Consultant"), and RIVIERA BLACK HAWK, INC., a Colorado corporation (the
"Company" or the "Issuer").
RECITALS
A. Notes. The Issuer has issued Forty-Five Million Dollars ($45,000,000) in
aggregate principal amount of its 13% First Mortgage Notes due 2005 With
Contingent Interest (the "Original Notes" and, together with any new notes
issued in exchange therefor, the "Notes") concurrently herewith. The Notes have
been issued pursuant to the provisions of an Indenture (as amended, supplemented
or otherwise modified from time to time, the "Indenture") dated the date hereof,
between the Issuer and the Trustee, on behalf of itself and the holders of the
Notes. Proceeds from the issuance of Notes in the amount of Thirty One Million
Nine Hundred Thousand Dollars ($31,900,000) (the "Construction Proceeds") will
be deposited contemporaneously with the execution of this Agreement into Account
No. 630000038.1 ("Riviera Black Hawk, Inc. Construction Disbursement Account")
held at the Disbursement Agent (said account, or any substitute account selected
in accordance with the terms of this Agreement, is sometimes referred to herein
as the "Construction Disbursement Account"), to be maintained by the
Disbursement Agent pursuant to Section 2 of this Agreement. Proceeds from the
issuance of Notes in the amount of Five Million One Hundred Thousand Dollars
($5,100,000) (the "Interest Reserve Proceeds"), will be deposited
contemporaneously with the execution of this Agreement into Account No.
630000038.2 ("Riviera Black Hawk, Inc. Interest Reserve Account"), held at the
Disbursement Agent (said account, or any substitute account selected in
accordance with the terms of this Agreement, is sometimes referred to herein as
the "Interest Reserve Account"), to be maintained by the Disbursement Agent
pursuant to Section 2 of this Agreement. Proceeds from the issuance of Notes in
the amount of Five Million Dollars ($5,000,000.00) (the "Completion Reserve
Proceeds," which, together with the Construction Proceeds and the Interest
Reserve Proceeds, shall be referred to herein as the "Proceeds"), will be
deposited contemporaneously with the execution of this Agreement into Account
No. 630000038.3 ("Riviera Black Hawk, Inc. Completion Reserve Account"), held at
the Disbursement Agent (said account, or any substitute account selected in
accordance with the terms of this Agreement, is sometimes referred to herein as
the "Completion Reserve Account"), to be maintained by the Disbursement Agent
pursuant to Section 2 of this Agreement.
B. Collateral and Collateral Assignment. As security for its
obligations under the Notes and the Indenture, the Issuer has granted security
interests to the Trustee, on behalf of itself and the holders of Notes, in
certain assets and has collaterally assigned certain contracts to the Trustee.
As further security for its obligations under the Notes and the Indenture, the
Issuer also has granted, and hereby grants, a security interest to the Trustee,
on behalf of itself and the holders of the Notes, in all of the Issuer's right,
1
<PAGE>
title and interest in the Construction Disbursement Account, the Completion
Reserve Account, the Interest Reserve Account, the Disbursed Funds Account (as
defined herein) and any Proceeds or other amounts held in any such accounts.
C. Purpose. The parties intend that portions of the Proceeds and the other
amounts deposited from time to time in the Construction Disbursement Account
(including without limitation pursuant to the Completion Capital Commitment, as
defined herein) be used to develop, design, construct, equip and operate the
Riviera Black Hawk (as defined herein) and provide for working capital and
operating funds for the Company, all in accordance with the Indenture. The
parties have entered into this Agreement in order to set forth the conditions
upon which, and the manner in which, funds will be disbursed in order to permit
the Company to develop, design, construct, equip and operate the Riviera Black
Hawk (as defined herein), and to permit the Company to conduct its operations.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions
1.1 Defined Terms. In this Agreement, the terms defined in this Section
1 shall have the meanings herein specified, such definitions to be equally
applicable to both the singular and plural forms of any of the terms defined:
"Account Agreement" means that certain Account Agreement dated as
of even date herewith by and among the Trustee, the Company, and IBJ
Whitehall Bank & Trust Company, as securities intermediary.
"Accounts" means the Interest Reserve Account, the Completion
Reserve Account and the Construction Disbursement Account.
"Additional Contract Certificate" means an Additional Contract
Certificate in the form of Exhibit G-2 attached hereto.
"Additional Revenue" means revenue (including, without limitation,
investment income (loss), less any losses or costs associated
therewith, earned on amounts in the Construction Disbursement Account
and the Completion Reserve Account) generated by the Company (other
than from disposition of its assets), but only to the extent that such
revenue is held by the Company, free and clear of any claims of any
other parties whatsoever, other than claims of the Trustee and holders
of the Notes; provided, however, that as of any date of measurement,
Additional Revenue also shall include investment income (loss), less
any losses or costs associated therewith, which the Company reasonably
determines (with the reasonable concurrence of the Disbursement Agent
(acting in its sole discretion exercised in good faith)) will be earned
on funds in the Construction Disbursement Account and the Completion
Reserve Account through the anticipated date that the Riviera Black
Hawk becomes Operating, taking into account the current and future
anticipated rates of return on Government Securities in the
Construction Disbursement Account and the Completion Reserve Account
and the anticipated times and amounts of draws therefrom for the
payment of Construction Expenses or in connection with permitted
amendments to the Construction Disbursement Budget (as applicable).
2
<PAGE>
"Advance Disbursements" means a disbursement from the Construction
Disbursement Account to the Company in accordance with the Construction
Disbursement Budget, notwithstanding the fact that not all
certifications and lien releases have been obtained nor other
disbursement conditions have been satisfied; provided that the
aggregate amount of Advance Disbursements outstanding at any time shall
not exceed an amount greater than One Million Five Hundred Thousand
Dollars ($1,500,000).
"Affiliate" has the meaning given in the Indenture.
"Architect" means Melick Associates, Inc., and its successors
identified by notice from the Company to the Disbursement Agent.
"Architect Agreement" means the Standard Form of Agreement Between
Owner and Architect for the design of the Riviera Black Hawk executed
by the Architect and the Company dated July 29, 1998 (as amended,
modified or supplemented from time to time).
"Available Funds" means, at any given time, (a) the Proceeds
deposited in the Construction Disbursement Account and the Completion
Reserve Account, together with all amounts previously deposited in the
Construction Disbursement Account pursuant to the Completion Capital
Commitment, less disbursements theretofore made from the Construction
Disbursement Account, (b) so long as there is no Default or Event of
Default, Additional Revenue, and (c) actual or anticipated FF&E
Financing to the extent permitted under the Indenture.
"Business Day" means any day other than Saturday, Sunday or any day
on which banking institutions in New York, New York, are authorized or
required by law or other government action to close.
"Collateral" has the meaning given in the Indenture.
"Collateral Documents" has the meaning given in the Indenture.
"Company's Closing Certificate" means an Officers' Certificate in
the form attached hereto as Exhibit B-1.
"Completion Capital Commitment" has the meaning given in the
Indenture.
"Construction Contract" means the Standard Form of Agreement
Between Owner and Contractor for the construction of the Riviera Black
Hawk executed by the General Contractor and the Company, dated December
29, 1997 (as amended, modified or supplemented from time to time).
"Construction Disbursement Budget" means the Initial Construction
Disbursement Budget, as the same may be amended from time to time
pursuant to this Agreement.
"Construction Disbursement Budget Amendment Certificate" means a
Construction Disbursement Budget Amendment Certificate in the form of
Exhibit F attached hereto.
"Construction Documents" means the Construction Contract, the
Architect Agreement, and any other Contract entered into on, prior to
or after the Issuance Date (other than the Financing
3
<PAGE>
Agreements), as the same may be amended from time to time as permitted
thereunder and in accordance with this Agreement.
"Construction Expenses" means expenses incurred in connection with
the design, development, engineering, construction, installation,
equipping, commencement of operations and operating of the Riviera
Black Hawk in accordance with the Construction Disbursement Budget,
excluding, however (a) any such expenses paid on or prior to the Issue
Date, (b) any Debt Financing Costs and (c) any Issuance Fees and
Expenses.
"Construction Schedules" mean, collectively, schedules describing
the sequencing of the components of work to be undertaken in connection
with the Riviera Black Hawk, which schedules (as the same may be
amended to the extent permitted herein) demonstrate that the Riviera
Black Hawk will be Operating prior to the Operating Deadline.
"Contract" means a contract pertaining to the design, development,
engineering, installation or construction of the Riviera Black Hawk to
which the Company is a party, including, without limitation, any
contract, license and performance and payment bond or guarantee, if
any.
"Contractor" means a party to a Contract other than the Company.
"Debt Financing Costs" means all principal, interest, premium fees
and other amounts payable or accrued from time to time under the Notes.
"Deed of Trust" means the Deed of Trust to Public Trustee, Security
Agreement, Fixture Filing and Assignment of Rents, Leases and Leasehold
Interests and Assignment of Leases and Rents dated as of even date
herewith made by the Issuer in favor of the Trustee, on behalf of
itself and the holders of the Notes.
"Default" means any event, omission or failure of a condition that
is, or with the passage of time or the giving of notice or both could
be, an Event of Default herein.
"Dewatering Well Easement" means that certain Non-Exclusive
Dewatering Well Easement Agreement dated as of May 1, 1999, between the
City of Black Hawk and the Company.
"Disbursed Funds Account" means Account No. 630000038.4 ("Riviera
Black Hawk, Inc. Disbursed Funds Account"), held at IBJ Whitehall Bank
& Trust Company in the name of the Company, or any substitute account
selected in accordance with this Agreement, which account shall be
funded from disbursements from the Construction Disbursement Account
pursuant to this Agreement and shall be pledged as collateral to the
Trustee, for the benefit of itself and the holders of the Notes, and
from which the Company shall have general check writing authority.
"Disbursement Request" means any Initial Disbursement Request,
Construction Disbursement Request, Completion Reserve Disbursement
Request, Interest Disbursement Request, Advance Disbursement Request
and any other request for disbursement from the Accounts made pursuant
to this Agreement.
"Drainage Line Easement" means that certain Drainage Line Easement
dated as of December 29, 1997, made by the Company in favor of the City
of Black Hawk.
4
<PAGE>
"FF&E Financing" has the meaning given in the Indenture.
"Final Plans" means Plans which (i) have received final approval
from all Governmental Instrumentalities required to approve such Plans
prior to completion of the work or improvements and (ii) contain
sufficient specificity to permit the completion of the Riviera Black
Hawk.
"Financing Agreements" means, collectively, this Agreement, the
Indenture, the Collateral Documents, the Notes, the Completion Capital
Commitment, the Keep-Well Agreement and any other loan or security
agreement entered into on, prior to or after the Issue Date with or for
the benefit of the Trustee to finance the Riviera Black Hawk, as each
of the same may be amended from time to time as permitted thereunder
and in accordance with the terms and conditions of this Agreement.
"Gaming Authorities" has the meaning given in the Indenture.
"Gaming Licenses" has the meaning given in the Indenture.
"General Contractor" means The Weitz Company, Inc., and its
successors identified by notice from the Company to the Disbursement
Agent.
"Government Securities" has the meaning given in the Indenture.
"Governmental Instrumentality" means any national, state or local
government (whether domestic or foreign), any political subdivision
thereof or any other governmental, quasi-governmental, judicial, public
or statutory instrumentality, authority, body, agency, bureau or entity
(including any Gaming Authority, any zoning authority, the FDIC, the
Comptroller of the Currency or the Federal Reserve Board, any central
bank or any comparable authority) or any arbitrator with authority to
bind a party at law.
"Hard Costs" means the costs and expenses in respect of supplying
goods, materials and labor for the construction of improvements
relating to the Riviera Black Hawk or other amounts payable pursuant to
the Construction Contract.
"Independent Construction Consultant" means CRSS Constructors,
Inc., and its successors, or any substitute Independent Construction
Consultant appointed by the Trustee in accordance with the terms of
this Agreement.
"Initial Construction Disbursement Budget" means, collectively, the
itemized schedule setting forth on a line item-basis all of the costs
which the Company anticipates to expend from and after the Issue Date
in connection with the design, development, engineering, construction,
installation, equipping and commencement of operations of the Riviera
Black Hawk and the conduct of the business of the Company, attached as
Exhibit 1 to the Company's Closing Certificate, which costs in the
aggregate, to the extent they are anticipated to be funded from the
Accounts (other than the Interest Reserve Account), shall not exceed
the Construction Proceeds (together with the proceeds of all actual or
anticipated FF&E Financing to the extent permitted under the
Indenture).
"Initial Disbursements Certificate" means an Officers' Certificate
from the Company in the form attached hereto as Exhibit A, together
with the schedules attached thereto.
5
<PAGE>
"Interest Payment Date" means each of November 1, 1999, and May 1,
2000.
"Issuance Fees and Expenses" means fees and expenses incurred on or
before the Issue Date by the Company or for which the Company is liable
in connection with the offering of the Notes.
"Issue Date" means the date of the closing of the offering of the
Notes.
"Keep-Well Agreement" has the meaning given in the Indenture.
"Lien" has the meaning given in the Indenture.
"Material Construction Document" means any of the Construction
Contract, the Architect Agreement, and without duplication, any other
Construction Document with a total contract amount in excess of
$100,000.
"Minimum Facilities" means, with respect to the Riviera Black Hawk,
a casino which has in operation at least 900 slot machines and 12 table
games, related amenities (including a restaurant, a bar and an
entertainment area) and has parking for at least 442 vehicles.
"Net Loss Proceeds" has the meaning given in the Indenture.
"Obligations" means (a) all loans, advances, debts, liabilities and
obligations, howsoever arising, owed by the Company and its direct and
indirect Subsidiaries under the Indenture or otherwise to the Trustee
or any holder of the Notes of every kind and description (whether or
not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, pursuant to the terms
of this Agreement, any of the other Financing Agreements or any of the
other Operative Documents, including all interest, fees, charges,
expenses, attorney's fees and accountants fees chargeable to the
Company in connection with its dealings with the Company and payable by
the Company hereunder or thereunder; (b) any and all sums advanced by
the Disbursement Agent or the Trustee in order to preserve the
Collateral or preserve the Disbursement Agent's or the Trustee's
security interest in the Collateral, including all advances pursuant to
Section 7.4(ii) of this Agreement; and (c) in the event of any
proceeding for the collection or enforcement of the Obligations after
an Event of Default shall have occurred and be continuing, the
reasonable expenses of retaking, holding, preparing for sale or lease,
selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Disbursement Agent or the Trustee of its respective
rights under the Collateral Documents, together with reasonable
attorney's fees and court costs.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Executive Vice
President or Vice President of such Person.
"Officers' Certificate" means a certificate signed by one of the
following Officers of the Company on whose behalf or for whose benefit
the certificate is being executed or delivered: the Chairman of the
Board, Chief Executive Officer, President, Chief Financial Officer,
Executive Vice President, Vice President, Treasurer or Assistant
Treasurer.
6
<PAGE>
"Operating" means, with respect to the Riviera Black Hawk, the
first time that: (i) all Gaming Licenses have been granted and have not
been revoked or suspended; (ii) all Liens (other than Liens created by
the Collateral Documents or Permitted Liens) related to the
development, construction and equipping of, and beginning operations
at, the Riviera Black Hawk have been discharged or, if payment is not
yet due or if such payment is contested in good faith by the Company,
sufficient funds remain in the Construction Disbursement Account to
discharge such Liens and the Company has taken any action (including
the institution of legal proceedings) necessary to prevent the sale of
any or all of the Riviera Black Hawk or the real property on which the
Riviera Black Hawk shall be constructed; (iii) the Independent
Construction Consultant shall deliver a certificate to the Trustee
certifying that the Riviera Black Hawk is substantially complete in all
material respects in accordance with the Final Plans with respect to
the Minimum Facilities; (iv) the Riviera Black Hawk is in a condition
(including installation of furnishings, fixtures and equipment) to
receive customers in the ordinary course of business; (v) the Minimum
Facilities are open to the general public and operating in accordance
with applicable law; and (vi) a permanent or temporary certificate of
occupancy has been issued for the Riviera Black Hawk by the appropriate
governmental authorities.
"Operating Deadline" means May 31, 2000.
"Operative Documents" means the Financing Agreements and the
Construction Documents.
"Permits" means all authorizations, consents, decrees, permits,
waivers, privileges, approvals from and filings with all Governmental
Instrumentalities necessary for the construction and operation of the
Riviera Black Hawk in accordance with the Operative Documents.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
"Plans" means the plans, specifications, working drawings, design
documents, change orders, correspondence and related items, which may
be amended by the Company as necessary or appropriate, that
collectively: (a) provide for and detail the manner of construction of
improvements for the Riviera Black Hawk; (b) call for construction
which will permit the Riviera Black Hawk to be Operating on or prior to
the Operating Deadline; (c) call for construction which will cause the
Riviera Black Hawk to be completed for a total cost consistent with the
Construction Disbursement Budget and the line items set forth therein,
taking into consideration the availability of Available Funds,
including Realized Savings; and (d) to the extent such Plans are
amended, such Plans continue to represent a logical evolution
consistent with previous Plans, as the same may be amended or
supplemented form time to time.
"Pledge and Assignment Agreement" means that certain Pledge and
Assignment Agreement dated as of even date herewith, made by the
Company in favor of the Trustee.
"Pledge Agreement" means each of the Pledge and Assignment
Agreement and/or Account Agreement among any of the Disbursement Agent,
the Trustee and the Issuer relating to the Trustee's security interest
in the Accounts and the Disbursed Funds Account and the proceeds
thereof.
7
<PAGE>
"Project Cost Schedule" means an itemized schedule in the form of
Schedule 1 to a Disbursement Request, a form of which is attached
hereto as Schedule 1 to Exhibit E.
"Property" means the real property located in Black Hawk, Colorado,
on which the Company will construct the Riviera Black Hawk.
"Property Documents" means each of the Subdivision Agreement, the
Subterranean Easement, the Drainage Line Easement, the Dewatering Well
Easement, the Shoring and Tie-Back Easement and each other easement or
material agreement affecting the Property or the Company's use thereof.
"Realized Savings" means the excess of the amount budgeted in the
Construction Disbursement Budget for a line item over the amount of
funds expended or owed by the Company to complete the tasks set forth
in such line item and for the materials and services used to complete
such tasks, so long as the terms for such tasks are final and
unconditional (other than the satisfactory completion of such tasks),
including without limitation the execution of fixed price purchase
orders to acquire the materials that are the subject of such line item
(as applicable); provided, however, that Realized Savings for any line
item shall be (i) deemed to be zero if such savings are obtained in a
manner that materially detracts from the overall value, quality and
amenities of the Riviera Black Hawk and (ii) reduced to the extent
previously reallocated in the Construction Disbursement Budget.
"Reserved Construction Amount" means the amount (exclusive of any
Retainage Amounts) necessary as of the date of the Final CDA
Disbursement to complete the Riviera Black Hawk in accordance with the
Final Plans, including punch list items.
"Retainage Amounts" means, at any given time, amounts which have
accrued and are owing under the terms of a Contract for work or
services already provided but which at such time (and in accordance
with the terms of the Contract) are being withheld from payment to the
respective Contractor until certain subsequent events (e.g., completion
benchmarks) have been achieved under the Contract.
"Riviera Black Hawk" means the pending project to develop,
construct, equip and operate the Riviera Black Hawk Casino and related
amenities, which are required to be Operating as of the Operating
Deadline.
"Sanitation District Easement" means that certain Easement
Agreement dated as of December 29, 1997, granted by the Company in
favor of the Black Hawk/Central City Sanitation District.
"Shoring and Tie-Back Easement" means that certain Non-Exclusive
Shoring and Tie Back Easement Agreement dated as of May 1, 1998, by the
City of Black Hawk, the Company and the Isle of Capri Black Hawk, LLC.
"Soft Costs" means all costs and expenses (other than Hard Costs,
but including Working Capital Expenses) set forth in the Construction
Disbursement Budget, including without limitation pre-opening costs.
8
<PAGE>
"Subdivision Agreement" means that certain Subdivision dated as of
December 29, 1997, by and between the City of Black Hawk and the
Company (as the same may be amended, supplemented or otherwise modified
from time to time).
"Subterranean Easement" means that certain Permanent Subterranean
Easement Agreement dated as of December 29, 1997, and re-recorded May
26, 1999, made by the City of Black Hawk in favor of the Company.
"Title Insurer" means First American Title Insurance Company.
"Title Policy" means the lender's policy or policies of title
insurance to be provided by the Title Insurer to the Trustee with
respect to the Property, together with all endorsements thereto, in the
form attached as Exhibit I.
"Working Capital Expenses" means operating expenses and other
working capital requirements of the Company in connection with the
Riviera Black Hawk, limited, prior to when the Riviera Black Hawk is
first Operating, as contemplated in and to the extent permitted by the
Construction Disbursement Budget.
1.2 Additional Defined Terms. In addition, the terms listed below in
the left column below shall have the respective meanings assigned to such terms
in the Section of this Agreement listed opposite such terms in the right column
below. All other capitalized terms not defined herein, but defined in the
Indenture, shall have the meanings ascribed to them in the Indenture.
Defined Terms Section
------------- -------
Advance Disbursement Request..................... 4.1
Agreement........................................ Introduction
Company.......................................... Introduction
Completion Reserve Account....................... A of Recitals
Completion Reserve Disbursement Request.......... 4.1
Completion Reserve Proceeds...................... A of Recitals
Construction Disbursement Account................ A of Recitals
Construction Disbursement Request................ 4.1
Construction Proceeds............................ A of Recitals
Disbursement Agent............................... Introduction
Event of Default................................. 9
Final CDA Disbursement........................... 7.5.1
Final CRA Disbursement........................... 7.5.2
Indenture........................................ A of Recitals
Independent Construction Consultant.............. Introduction
Initial Disbursements............................ 7.1
Interest Disbursement Request.................... 4.1
Interest Reserve Account......................... A of Recitals
Interest Reserve Proceeds........................ A of Recitals
Issuer........................................... Introduction
Notes............................................ A of Recitals
Original Notes................................... A of Recitals
Proceeds......................................... A of Recitals
Trustee.......................................... Introduction
9
<PAGE>
1.3 Rules of Interpretation. The following rules of interpretation
shall apply herein.
1.3.1 The singular includes the plural and the plural includes the
singular.
1.3.2 The word "or" is not exclusive.
1.3.3 A reference to a Person includes its permitted successors and
permitted assigns.
1.3.4 Accounting terms have the meanings assigned to them by U.S.
GAAP (as defined in the Indenture), as applied by the accounting entity to which
they refer.
1.3.5 The words "include," "includes" and "including" are not
limiting.
1.3.6 A reference in a document to an Article, Section, Exhibit,
Schedule is to the Article, Section, Exhibit, Schedule, Annex or Appendix of
such document unless otherwise indicated. Exhibits, Schedules, Annexes or
Appendices to any document shall be deemed incorporated by reference in such
document.
1.3.7 References to any document, instrument or agreement (a) shall
include all exhibits, schedules and other attachments thereto, (b) shall include
all documents, instruments or agreements issued or executed in replacement
thereof, and (c) shall mean such document, instrument or agreement, or
replacement or predecessor thereto, as amended, modified and supplemented from
time to time and in effect at any given time.
1.3.8 The words "hereof," "herein" and "hereunder" and words of
similar import when used in any document shall refer to such document as a whole
and not to any particular provision of such document.
1.3.9 References to "days" shall mean calendar days, unless the
term "Business Days" shall be used.
2. Establishment of Accounts.
2.1 Appointment of Disbursement Agent. The Trustee and the Company
hereby appoint the Disbursement Agent, and the Disbursement Agent hereby accepts
appointment, as disbursement agent hereunder upon the terms and conditions set
forth in this Agreement. The Disbursement Agent agrees to act in good faith at
all times herein.
2.2 Establishment of Accounts. Concurrently with the execution and
delivery hereof, the Disbursement Agent shall establish the Accounts at the
Disbursement Agent and credit thereto, in accordance with the provisions of
Recital A hereof, the Proceeds. All funds in the Accounts shall be held in trust
and not commingled with any deposit or commercial bank account. The Disbursement
Agent hereby waives any and all liens, claims, encumbrances and rights of set
off which it may have in the Accounts, including all rights of offset,
deductions and liens, whether statutory or otherwise afforded by law, agreement
or otherwise set forth herein. All funds accepted by the Disbursement Agent
pursuant to this Agreement shall be held in the appropriate Account for the
benefit of the Company subject to the terms and conditions of this Agreement and
any Pledge Agreement (including, without limitation, the rights of the Trustee
hereunder and thereunder). The Disbursement Agent may, upon the request of the
Company,
10
<PAGE>
establish sub-accounts for accounting purposes within the Accounts, it being
understood and agreed that the creation of such sub-accounts shall in no way
affect the pledge in favor of the Trustee in the accounts hereunder.
2.3 Pledge Agreement. Pursuant to the Pledge and Assignment Agreement,
the Company has granted to the Trustee, for the benefit of the holders of the
Notes, a first priority security interest in the Accounts and all funds and
assets from time to time deposited therein, and all products and proceeds
thereof. The Disbursement Agent shall note in its records that all funds and
other assets in the Accounts have been pledged to the Trustee and that the
Disbursement Agent is holding such items as agent for the Trustee, as secured
party. The Disbursement Agent shall maintain dominion and control over the
Accounts and the funds and assets therein solely for the benefit of the Trustee,
as secured party, and for no other parties or Persons; provided, however, that
the Company shall be able to obtain disbursements from the Accounts in
accordance with the terms hereof. Accordingly, it is the intention of the
parties that all such funds and assets shall not be within the bankruptcy
"estate" (as such term is used in 11 U.S.C. ss 541, as amended) of the
Disbursement Agent. All such funds and all earnings accruing from time to time
thereon shall be held in the applicable Account until disbursed or transferred
in accordance with the terms hereof or until transferred to such other account
as the Trustee and the Company may direct the Disbursement Agent to establish.
2.4 Investment of Funds in Accounts. All funds from time to time
credited to and contained in each of the Construction Disbursement Account
(other than those to be disbursed pursuant to the Initial Disbursement Request,
which shall be so disbursed on the Issue Date), the Completion Reserve Account
and the Interest Reserve Account shall be invested only in Government Securities
from time to time by written instructions by the Company delivered to the
Disbursement Agent, pending disbursement of such funds pursuant to this
Agreement; provided, however, that the Disbursement Agent shall have concluded
that such investments conform with the requirements of the Indenture and each
Pledge Agreement and that appropriate steps have been taken with respect to each
such investment so as to assure the continuing perfection of the Trustee's first
priority security interest in such investment. For purposes of determining the
steps to be taken in order to achieve and maintain such perfection, the
Disbursement Agent shall have the right to require the delivery of, and to rely
upon, an opinion of counsel to the Company or the Disbursement Agent (the
expense of which shall be paid by the Company) specifying (A) that the counsel
is familiar with the laws applicable to the perfection of security interests in
said investments and (B) the steps required to perfect and maintain a first
priority security interest in favor of the Trustee in such investments. If no
such investment instructions are received by the Disbursement Agent after
request or after the occurrence of a Default or Event of Default, such funds
shall be invested in Government Securities selected by the Disbursement Agent in
conformity with the requirements of the Indenture and the Pledge Agreement.
Subject to Section 4.2(a) hereof, the Disbursement Agent shall not be liable for
any investment or similar losses or for the availability or liquidity of funds
in the Accounts as a result of any investments made or reduced to cash in
accordance with this Agreement, and the Disbursement Agent is hereby authorized
to direct the Securities Intermediary (as defined in the Pledge and Assignment
Agreement) in writing (i) to purchase Government Securities in accordance
herewith and (ii) to reduce to cash any Government Securities (without regard to
maturity) in any Account in order to make any application or disbursement
required hereunder.
2.5 Agency. The Disbursement Agent shall act solely as the Trustee's
agent in connection with its duties under this Agreement, notwithstanding any
other provision contained herein, without any authority to obligate the Trustee
or to compromise or pledge its security interest hereunder; provided, however,
that the Disbursement Agent is authorized to make disbursements from the
Accounts on behalf of the Trustee pursuant to the terms of this Agreement. The
Company acknowledges and agrees that in no
11
<PAGE>
event shall the Trustee or the holders of the Notes be liable for, nor shall the
obligations of the Company under the Indenture, the Notes or the other
Collateral Documents be affected or diminished as a consequence of, any action
or inaction of the Disbursement Agent with respect to the Accounts or any funds
or other assets credited thereto or deposited herein.
2.6 Waiver of Setoff Rights. The Disbursement Agent hereby acknowledges
the Trustee's security interest as set forth herein and waives any security
interest or other lien in the Accounts or any funds or other assets credited
thereto or deposited herein and further waives any right to set off said funds,
assets or investments now or in the future against any indebtedness of the
Company to the Disbursement Agent. The waivers set forth in this Section are of
rights which may exist now or hereafter in favor of the Disbursement Agent in
its individual capacity, and not of any such rights which may exist now or
hereafter in favor of the Disbursement Agent in its capacity as agent for the
Trustee. Nothing in this Section shall be construed as waiving, limiting or
diminishing any rights of the Trustee vis-a-vis the Company.
3. Disbursements from Accounts.
3.1 Conditions to Disbursement. The Disbursement Agent shall disburse
funds from the Accounts only upon satisfaction of the applicable conditions to
disbursement set forth herein.
3.2 Method of Disbursement. Upon satisfaction of the applicable
conditions to disbursement set forth herein, the Disbursement Agent shall
disburse funds from the applicable Account as specified in the applicable
Disbursement Request.
3.3 Disbursement of Compensation.
3.3.1 Disbursement Agent's Compensation. So long as the Trustee
also serves as Disbursement Agent hereunder, the Disbursement Agent shall not,
except as otherwise provided in Section 13, be entitled to an additional fee for
its services hereunder, but shall be entitled to reimbursement for its
reasonable expenses (including, without limitation, the reasonable fees and
expenses of the Disbursement Agent's counsel) as compensation for services to
performed under this Agreement, unless the Company or the Trustee has sent
written notice to the Disbursement Agent that it is in default under this
Agreement. The Disbursement Agent shall receive such payments without the
requirement of obtaining any further consent or action on the part of the
Company with respect to the payment; provided, however, that, without limiting
the foregoing, the Disbursement Agent shall provide written itemization of
requested reimbursement of such expenses within thirty (30) days of receiving a
written request therefor from the Company. Disbursements for each calendar month
shall be made on the first day of the subsequent calendar month. Until such time
as the Company provides written notice to the contrary to the Disbursement Agent
and the Independent Construction Consultant in accordance with the terms hereof,
all amounts payable to the Disbursement Agent shall be deducted from the
applicable working capital line item in the Construction Disbursement Budget.
3.3.2 Independent Construction Consultant's Compensation. The
Company covenants and agrees to pay to the Independent Construction Consultant
from time to time, and the Independent Construction Consultant shall be entitled
to, the fees and reimbursements set forth in that certain letter agreement
between the Company and the Independent Construction Consultant dated as of June
2, 1999, such amounts to be paid in accordance with and at the times set forth
in such letter. Until such time as the Company provides written notice to the
contrary to the Disbursement Agent and the Independent Construction Consultant
in accordance with the terms hereof, all amounts payable to the Independent
12
<PAGE>
Construction Consultant shall be deducted from the applicable working capital
line item in the Construction Disbursement Budget.
3.4 Transfer of Funds to the Trustee. Upon the receipt of written
notice executed by the Trustee, which certifies that an Event of Default
hereunder has occurred and is continuing and that the Trustee is entitled to the
funds in the Accounts, the Disbursement Agent shall, without need for further
authorization or notice to the Company, deliver to the Trustee all funds in the
Accounts, other than amounts then permitted to be disbursed under clauses (i),
(ii), (iii) and (iv) of Section 7.4 hereof.
4. Agreements of the Company, the Independent Construction Consultant, the
Disbursement Agent and the Trustee. The Company, the Independent Construction
Consultant, the Disbursement Agent and the Trustee severally agree as follows:
4.1 Disbursement Requests and Disbursements.
(a) The Company shall concurrently with the execution and delivery
of this Agreement submit or cause to be submitted to the Disbursement Agent with
a copy to the Trustee and the Independent Construction Consultant, a request for
the disbursement of funds from the Construction Disbursement Account for the
Initial Disbursements to be made as of the date hereof, in the form of Exhibit A
attached hereto (an "Initial Disbursement Request"), together with all documents
necessary for the making of the Initial Disbursements.
(b) The Company or, as set forth in Article 5, the Trustee, shall
have the right to submit to the Disbursement Agent, with a copy to the Trustee,
a request for the disbursement of funds from the Interest Reserve Account to pay
the interest due on the Notes, each in the form of Exhibit C attached hereto (an
"Interest Disbursement Request").
(c) The Company shall have the right from time to time during the
course of this Agreement (but no more often than semi-monthly, unless otherwise
permitted by the Disbursement Agent), to submit to the Disbursement Agent, with
a copy to Trustee and the Independent Construction Consultant, a request for the
disbursement of funds (i) up to and including the Final CDA Disbursement, from
the Completion Reserve Account to the Construction Disbursement Account, each in
the form of Exhibit D-1 attached hereto and (ii) after the Final CDA
Disbursement, from the Completion Reserve Account to the Disbursed Funds Account
or as otherwise directed in such Disbursement Request, in the form of Exhibit
D-2 attached hereto (each a "Completion Reserve Disbursement Request"), in each
case together with the exhibits attached thereto.
(d) The Company shall have the right from time to time during the
course of this Agreement (but no more often than semi-monthly (other than
disbursements related to the Initial Disbursements Certificate), unless
otherwise permitted by the Disbursement Agent), to submit to the Disbursement
Agent, with a copy to the Trustee and the Independent Construction Consultant, a
request for the disbursement of funds from the Construction Disbursement Account
to the Disbursed Funds Account or as otherwise directed in such Disbursement
Request, in the form of Exhibit E-1 attached hereto (a "Construction
Disbursement Request"), or in the form of Exhibit E-2 attached hereto (an
"Advance Disbursement Request"), in each case together with the exhibits
attached thereto.
(e) The Disbursement Agent shall (i) review each Disbursement
Request submitted pursuant to Sections 4.1(a) through (d) above to determine
that they conform in form to the requirements of Exhibits A through E-2,
respectively, including all attachments, exhibits and certificates required
13
<PAGE>
thereby (as the case may be), and (ii) have no actual knowledge of any material
error, inaccuracy, misstatement or omission of fact in such Disbursement Request
or an attachment, exhibit or certificate attached thereto or information
provided by the Company upon the request of the Disbursement Agent. Except as to
the Initial Disbursement, which shall be made on the Issue Date, the
Disbursement Agent shall notify the Company as soon as reasonably possible (and
in any event within two (2) Business Days after the Disbursement Agent receives
the required documents) if any Disbursement Request, or any portion thereof, is
disapproved and the reason(s) therefor.
(f) Provided that a Disbursement Request submitted pursuant to
Sections 4.1(a) through (d) above is not disapproved by the Disbursement Agent,
then, within two (2) Business Days following submission of such Disbursement
Request, the Disbursement Agent shall disburse the funds requested in such
Disbursement Request (other than those to be disbursed pursuant to (i) the
Initial Disbursement Request, which shall be disbursed on the Issue Date, or
(ii) an Interest Disbursement Request, which shall be disbursed on the
respective Interest Payment Date), or such portion thereof as is approved by the
Disbursement Agent.
4.2 Periodic Review of Riviera Black Hawk.
(a) Subject to the limitations in Section 11.1, the Disbursement
Agent shall exercise commercially reasonable efforts and utilize commercially
prudent practices in the performance of its duties hereunder consistent with
those of similar institutions holding similar collateral, administering similar
construction loans and disbursing similar disbursement control funds. Commencing
upon execution and delivery hereof, the Disbursement Agent shall have the right,
but shall have no obligation, to meet periodically at reasonable times upon
reasonable advance notice with representatives of the Company, the Independent
Construction Consultant and such other employees, consultants or agents as the
Disbursement Agent shall reasonably request to be present for such meetings. In
addition, the Disbursement Agent shall have the right, but shall have no
obligation, at reasonable times during customary business hours and at
reasonable intervals upon prior notice to review, to the extent it deems
reasonably necessary or appropriate to permit it to perform its duties
hereunder, all information (including Contracts) supporting the Disbursement
Requests and any certificates in support of any of the foregoing. The
Disbursement Agent shall be entitled to examine, copy and make extracts of the
books, records, accounting data and other documents of the Company which are
reasonably necessary or appropriate to permit it to perform its duties
hereunder, including, without limitation, bills of sale, statements, receipts,
contracts or agreements, which relate to any materials, fixtures or articles
incorporated into the Riviera Black Hawk. The rights of the Disbursement Agent
under this Section shall not be construed as an obligation, it being understood
that the Disbursement Agent's duty is limited to act upon certificates and draw
requests submitted by the Company and the Trustee hereunder.
(b) Subject to the limitations in Section 11.2, the Independent
Construction Consultant shall exercise commercially reasonable efforts and
utilize commercially prudent practices in the performance of its duties
hereunder consistent with those of similar institutions disbursing disbursement
control funds and reviewing construction progress. Commencing upon execution and
delivery hereof, the Independent Construction Consultant shall have the right to
meet periodically at reasonable times during customary business hours and at
reasonable intervals, however no less frequently than monthly, with
representatives of the Company, the General Contractor, the Architect and such
other employees, consultants or agents as the Independent Construction
Consultant shall reasonably request to be present for such meetings. The
Independent Construction Consultant may perform such inspections of the Property
then owned by the Company and the Riviera Black Hawk as it deems reasonably
necessary or appropriate in the performance of its duties hereunder, however no
less frequently than monthly. In addition, the
14
<PAGE>
Independent Construction Consultant shall have the right at reasonable times
during customary business hours upon prior notice to review, to the extent it
deems reasonably necessary or appropriate to permit it to perform its duties
hereunder, all information (including Contracts) supporting the amendments to
the Construction Disbursement Budget, amendments to any Contracts, the
Disbursement Requests and any certificates in support of any of the foregoing,
to inspect materials stored on the Property then owned by the Company and at
off-site facilities where materials designated for use in the Riviera Black Hawk
are stored, to review the insurance required pursuant to the terms of the
Indenture, and to examine the Plans and all shop drawings relating to the
Riviera Black Hawk. Upon and during the continuance of a Default or an Event of
Default, or otherwise with the Company's prior written consent (which shall not
be unreasonably withheld or delayed), the Independent Construction Consultant is
authorized to contact any payee for purposes of confirming receipt of progress
payments. The Independent Construction Consultant shall be entitled to examine,
copy and make extracts of the books, records, accounting data and other
documents of the Company relating to the construction of the Riviera Black Hawk,
including, without limitation, bills of sale, statements, receipts, conditional
and unconditional lien releases, contracts or agreements, which relate to any
materials, fixtures or articles incorporated into the Riviera Black Hawk. From
time to time, at the request of the Independent Construction Consultant, the
Company shall make available to the Independent Construction Consultant a
Riviera Black Hawk Cost Schedule and/or a Construction Schedule for the Riviera
Black Hawk. The Company agrees to reasonably cooperate with the Independent
Construction Consultant in assisting the Independent Construction Consultant to
perform its duties hereunder and to take such further steps as the Independent
Construction Consultant reasonably may request in order to facilitate the
Independent Construction Consultant's performance of its obligations hereunder.
4.3 Insufficient Available Funds. The Company shall promptly, and in no
event later than two (2) Business Days following knowledge thereof, notify the
Trustee, the Disbursement Agent and the Independent Construction Consultant in
writing if at any time the Company reasonably believes that there are
insufficient Available Funds (a) to permit the Riviera Black Hawk to be
Operating on or before the Operating Deadline or (b) to complete construction of
the Riviera Black Hawk in accordance with the Plans and/or the Construction
Disbursement Budget (as in effect at such time). Such notice shall specify in
reasonable detail (i) the amount of such deficiency and (ii) the steps which the
Company intends to take to cure such deficiency and the anticipated timing
thereof.
5. Interest Reserve.
5.1 Interest Disbursements. Ten (10) days prior to each Interest
Payment Date, the Company shall deliver to the Disbursement Agent an Interest
Disbursement Request in the form of Exhibit C attached hereto, describing the
amount required to be paid and the Interest Payment Date upon which such payment
is due and payable. On the Interest Payment Date, the Disbursement Agent shall
liquidate Government Securities (to the extent required) held in the Interest
Reserve Account and disburse to the Trustee the amounts described in the
Interest Disbursement Request as due and payable on that date; provided,
however, that the Trustee may direct the Disbursement Agent to liquidate the
Government Securities (to the extent required) and disburse to the Trustee the
amounts necessary to pay the amounts required to be paid on the Notes in the
event that the Company fails to timely deliver the Interest Disbursement
Request. In the event there are insufficient funds in the Interest Reserve
Account to pay any amount due pursuant to an Interest Disbursement Request or
direction so given by the Trustee, the Company shall, not less than three (3)
Business Days prior to the applicable Interest Payment Date, deposit in cash
into the Interest Reserve Account an amount equal to such deficiency; provided,
however, that the Trustee shall direct the Disbursement Agent to disburse an
amount equal to such deficiency, or the unsatisfied portion thereof, from the
Completion Reserve Account to the Interest Reserve Account one (1) Business Day
prior to the applicable Interest Payment Date in the event such amounts are not
timely
15
<PAGE>
received from the Company. The Company acknowledges that the Company's failure
to provide notice or deposit funds referenced in this Section shall not in any
way exonerate or diminish the Company's obligation to make all payments under
the Notes as and when due.
5.2 Interest Reserve Account Amounts. Upon payment in full of all
interest payments due on the Notes on the final Interest Payment Date, the
Disbursement Agent shall transfer any funds and/or Government Securities in the
Interest Reserve Account to the Construction Disbursement Account and such funds
and/or Government Securities shall be deemed Additional Revenue.
6. Completion Reserve.
6.1 Conditions Precedent to Completion Reserve Disbursements. The
Disbursement Agent shall disburse funds from the Completion Reserve Account to
the Construction Disbursement Account, the Disbursed Funds Account or as
otherwise directed in the respective Completion Reserve Disbursement Request (as
applicable) in an amount equal to that specified in such Disbursement Request
upon satisfaction of the following conditions:
(a) The Completion Reserve Disbursement Request on its face has
been completed as to the information required therein, and the required exhibits
and attachments, if any, are attached; and
(b) The Disbursement Agent shall not have received written notice
from any parties hereto that a Default or Event of Default exists.
6.2 Disbursement to the Interest Reserve Account. Notwithstanding the
foregoing, disbursements may be made from the Completion Reserve Account
pursuant to Sections 5.1, 7.4 and 7.5 hereof.
7. Construction Disbursement Account.
7.1 Conditions to Initial Disbursements. Upon satisfaction of the
conditions described below in this Section, on the Issue Date the Disbursement
Agent shall make the disbursements described in the Initial Disbursements
Certificate in the form of Exhibit A attached hereto (the "Initial
Disbursements"). The conditions to the Initial Disbursements shall consist of
the following:
(a) The Disbursement Agent shall have received the Proceeds;
(b) The Disbursement Agent shall have received the Initial
Disbursements Certificate, Closing Certification from the Company in the form of
Exhibit B-1 attached hereto, the Closing Certification from the Independent
Construction Consultant in the form of Exhibit B-2 attached hereto and the
Closing Certification from the Trustee in the form of Exhibit B-4 attached
hereto, in each case together with all exhibits thereto. Each such document on
its face shall have been completed as to the information required therein, and
the required exhibits and attachments, if any, shall be attached; and
(c) The Disbursement Agent shall have received confirmation from
the Trustee that it has received the Initial Disbursement Certificate, the
Closing Certification from the Company in the form of Exhibit B-1 attached
hereto, the Closing Certification from the Independent Construction Consultant
in the form of Exhibit B-2 attached hereto and the Closing Certification from
the Disbursement Agent in the form of Exhibit B-3 attached hereto, in each case
together with all exhibits and attachments thereto.
16
<PAGE>
7.2 Conditions to Subsequent Disbursements. Upon satisfaction of the
conditions described below in this Section, the Disbursement Agent shall make
the disbursements described in the corresponding Construction Disbursement
Request (provided that the conditions set forth in Section 7.1 above shall have
previously been satisfied) from the Construction Disbursement Account to the
Disbursed Funds Account or as otherwise directed in such Construction
Disbursement Request:
(a) The Company shall have submitted to the Disbursement Agent, the
Trustee, and the Independent Construction Consultant, a Construction
Disbursement Request in the form set forth in Exhibit E-1 attached hereto
pertaining to the amounts requested for disbursement, together with a completed
Schedule 1 in the form contemplated thereby and the certifications of the
Independent Construction Consultant in the form of Exhibit 1 attached thereto,
and in the event that the requested disbursement includes Hard Costs, the
certifications of the General Contractor, in the form of Exhibit 2 attached
thereto.
(b) The Construction Disbursement Request on its face shall have
been completed as to the information required therein, and the required exhibits
and attachments, if any, shall be attached.
(c) The Disbursement Agent shall not have received written notice
from any party hereto that a Default or Event of Default exists.
(d) The Company certifies that any amounts deposited into the
Disbursed Funds Account pursuant to any previous Construction Disbursement
Requests (other than Advance Disbursements permitted to be outstanding under
this Agreement) shall have been paid to the respective parties identified on the
Schedule 1 of each such previous Disbursement Request, except for such limited
payments as the Independent Construction Consultant reasonably determines to
have been withheld for good cause.
(e) With respect to a Disbursement Request immediately following
completion of any foundation for any building within the Riviera Black Hawk, the
Independent Construction Consultant shall have received from the Title Insurer
and certified to the Disbursement Agent, on a building-by-building basis, its
foundation endorsement insuring that such foundation is constructed wholly
within the boundaries of the Property then owned in fee simple or leased by the
Company, and does not encroach on any easement or violate any covenants,
conditions or restrictions of record.
7.3 Advance Disbursements. The Company shall have the right from time
to time (but no more frequently than once per calendar month, unless otherwise
permitted by the Disbursement Agent) to deliver to the Disbursement Agent an
Advance Disbursement Request in the form of Exhibit E-2 attached hereto,
together with the certification of the Independent Construction Consultant in
the form of Exhibit 1 attached thereto, which Disbursement Request shall not be
required to include or attach the supporting documentation required for all
other Disbursement Requests; provided, however, that (i) within thirty (30) days
after any Advance Disbursement is made (or, if earlier, promptly following the
occurrence of a Default or an Event of Default), the Company shall, with respect
to such Advance Disbursement, provide the same supporting documentation as is
required under the Agreement with respect to other Construction Disbursement
Requests (which documentation may be included in a subsequent Construction
Disbursement Request) and (ii) in no event shall the outstanding balance of
undocumented Advance Disbursements from the Construction Disbursement Account at
any one time exceed the sum of $1,500,000. The Disbursement Agent shall approve
any Advance Disbursement Request, so long as:
17
<PAGE>
(a) The Advance Disbursement Request on its face has been completed
as to the information required therein.
(b) The Disbursement Agent shall not have received written notice
by any party hereto that a Default or an Event of Default exists and is
continuing.
7.4 Disbursements after an Event of Default. In the event that the
Disbursement Agent receives notice from any party hereto (which notice has not
been revoked or cancelled by the Trustee) that a Default or Event of Default
exists and is continuing, the Disbursement Agent shall not approve any
disbursement of funds for the Riviera Black Hawk from the Construction
Disbursement Account or the Completion Reserve Account; provided, however, that,
with the consent of the Trustee, the following payments can be made at the
discretion of the Trustee:
(i) if all other conditions in Section 7.2 (including those
stated in Section 7.1 hereof) are met, funds from the
Construction Disbursement Account, as approved by the
Independent Construction Consultant in writing, for work
completed or materials purchased on or prior to the date
that such Default or Event of Default first occurred;
(ii) payments not to exceed One Million Five Hundred Dollars
($1,500,000) in the aggregate to prevent the condition of
the Riviera Black Hawk from deteriorating or to preserve any
work completed on the Riviera Black Hawk, certified to the
Disbursement Agent and the Trustee in writing by the
Independent Construction Consultant to be reasonably
necessary or advisable; provided, however, that the
foregoing limitation may be increased or decreased by the
Trustee by written notice to the Disbursement Agent;
(iii) if such condition continues for a period of three (3)
consecutive months or more, at the written request of the
Company, Retainage Amounts for work completed; provided that
the Company and the Independent Construction Consultant
certify to the Disbursement Agent and the Trustee in writing
the amount required to be paid for such Retainage Amounts
and that the conditions for paying such amounts (other than
that the Riviera Black Hawk will be Operating) are met; and
(iv) at the direction of the Trustee, disbursements from the
Completion Reserve Account in accordance with Section 5.1.
7.5 Final Disbursement of Funds Following Operating Date.
7.5.1 Construction Disbursement Account. If any funds remain in the
Construction Disbursement Account and (a) the Riviera Black Hawk is Operating
and has been Operating for at least the preceding thirty (30) days
uninterrupted, (b) there is no ongoing construction in connection with the
Riviera Black Hawk (other than maintenance and repairs in the ordinary course of
business and other than construction associated with the Riviera Black Hawk,
including all punch list items, in an aggregate amount (excluding Retainage
Amounts) not to exceed $250,000), and (c) there exists no Default or Event of
Default, then the Company shall have the right to request that the Disbursement
Agent disburse to the Company all remaining funds in the Construction
Disbursement Account. Upon receipt by the Disbursement Agent of (i) a written
certification from the Company that (A) the Riviera Black Hawk is Operating and
has been Operating for at least the preceding thirty (30) days uninterrupted,
(B) there is no
18
<PAGE>
ongoing construction in connection with the Riviera Black Hawk (other than
maintenance and repairs in the ordinary course of business and other than
construction associated with the Riviera Black Hawk, including all punch list
items, in an aggregate amount (excluding Retainage Amounts) not to exceed
$250,000), and (C) the Disbursement Agent has not received written notice by any
party hereto that a Default or Event of Default exists, and (ii) a written
certification from the Independent Construction Consultant concurring with the
certifications set forth in subsections (i)(A) and (B) hereof, then the
Disbursement Agent shall disburse all remaining funds in the Construction
Disbursement Account as directed by the Company (the "Final CDA Disbursement");
provided, however, that the Disbursement Agent shall first disburse funds to the
Disbursed Funds Account in amounts certified in writing by the Independent
Construction Consultant as sufficient to pay any then unpaid Retainage Amounts
due and owing as of the date of such disbursement (which shall be applied
accordingly) or thereafter (and the Company shall disburse such funds to pay
such Retainage Amounts as the same became due an payable), and no additional
sums shall be distributed until the Disbursement Agent shall have received a
certificate from the Independent Construction Consultant certifying that it has
received (x) unconditional lien waivers from all contractors, subcontractors,
materialmen or suppliers relating to construction of the Riviera Black Hawk to
the extent each has been paid in accordance with its respective Contract prior
to the date of such Final CDA Disbursement, and (y) conditional lien waivers
from all such parties to be paid with the proceeds of the Final CDA Disbursement
(if any); provided, further, that an amount representing the Reserved
Construction Amount shall also be deposited in the Disbursed Funds Account from
the proceeds of the Final CDA Disbursement and the Company shall disburse such
funds to pay Construction Expenses to complete the Riviera Black Hawk in
accordance with the Final Plans; and provided, further, that all funds disbursed
to the Company pursuant to this Section shall be used by the Company as required
pursuant to the Indenture and this Agreement, including without limitation
Section 7.5.3 hereof.
7.5.2 Completion Reserve Account. If any funds remain in the
Completion Reserve Account and (a) (i) the Riviera Black Hawk is Operating and
has been Operating for at least the preceding one-hundred-eighty (180) days
uninterrupted and (ii) no filings of any notice of mechanic's lien or notice of
extension of time for filing of mechanic's lien have been made against the
Property during or prior to such 180-day period which have not otherwise been
released of record, (b) there is no ongoing construction in connection with the
Riviera Black Hawk (other than maintenance and repairs in the ordinary course of
business), and (c) there exists no Default or Event of Default, then the Company
shall have the right to request that the Disbursement Agent disburse to the
Company all remaining funds in the Completion Reserve Account. Upon receipt by
the Disbursement Agent of (i) a written certification from the Company that (A)
(1) the Riviera Black Hawk is Operating and has been Operating for at least the
preceding one-hundred-eighty (180) days uninterrupted and (2) no filings of any
notice of mechanic's lien or notice of extension of time for filing of
mechanic's lien have been made against the Property during or prior to such
180-day period which have not otherwise been released of record, (B) there is no
ongoing construction in connection with the Riviera Black Hawk (other than
maintenance and repairs in the ordinary course of business), and (C) the
Disbursement Agent has not received written notice by any party hereto that a
Default or Event of Default exists, and (ii) a written certification from the
Independent Construction Consultant concurring with the certifications set forth
in subsections (i)(A)(1) and (B) hereof, then the Disbursement Agent shall
disburse all remaining funds in the Completion Reserve Account, as directed by
the Company (the "Final CRA Disbursement"); provided, however, that no sums
shall be distributed to the Company pursuant to this Section until the
Disbursement Agent shall have received a certificate from the Independent
Construction Consultant certifying that it has received unconditional lien
waivers from all contractors, subcontractors, materialmen or suppliers relating
to construction of the Riviera Black Hawk; provided, further, that all funds
disbursed to the Company pursuant to this Section shall be used by the Company
as required pursuant to the Indenture and this Agreement, including without
limitation Section 7.5.3 hereof.
19
<PAGE>
7.5.3 Use of Funds. To the extent that any work performed, services
rendered or materials provided in connection with the Riviera Black Hawk as
contemplated under the Construction Disbursement Budget then in effect remain
unpaid on or after the date of the Final CDA Disbursement, the Company shall
apply all funds disbursed to the Company pursuant to, first, Section 7.5.1
(including without limitation amounts representing the Reserved Construction
Amount) and, second, Section 7.5.2, to pay all amounts due and owing under any
Contracts in accordance therewith prior to utilizing any other funds otherwise
available to the Company for such purposes, including without limitation
pursuant to the Completion Capital Commitment (as applicable); provided that
after the Riviera Black Hawk is Operating (but prior to the making of the Final
CRA Disbursement), the Company shall have the right to use funds in the
Completion Reserve Account for working capital or other construction purposes in
connection with the Riviera Black Hawk (to the extent permitted under the
Indenture) by submitting a Completion Reserve Disbursement Request to the
Disbursement Agent in accordance with Section 4.1(c) hereof, and the
Disbursement Agent shall disburse funds from the Completion Reserve Account to
the Disbursed Funds Account or as otherwise directed in the respective
Completion Reserve Disbursement Request in an amount equal to that specified in
such Disbursement Request upon satisfaction of the conditions set forth in
Section 6.1(a) and (b) hereof; provided further that, after the Riviera Black
Hawk is Operating, the Company may replenish the Completion Reserve Account on a
revolving basis by depositing excess cash flow of the Company in the Completion
Reserve Account for all such amounts thereafter disbursed for Working Capital
Expenses.
8. Amendments to Construction Disbursement Budget; Entering into, Amendments to
Contracts; Amendments to Project Cost Schedule and Cost Overruns.
8.1 Construction Disbursement Budget Amendment Process. The
Construction Disbursement Budget may be amended from time to time in the manner
set forth herein. Subject to Section 8.2 below, the Company shall have the right
from time to time to amend the Construction Disbursement Budget to change the
amounts allocated for specific line item components of the work required to
complete the Riviera Black Hawk, including Soft Costs, and to reallocate
Realized Savings from one line item to another. Any such amendment shall be in
writing and shall identify with particularity the line items to be changed and
the amount of such change, and shall be submitted to the Disbursement Agent and
the Independent Construction Consultant by an Officers' Certificate in the form
of Exhibit F attached hereto, together with the Independent Construction
Consultant's certification, as provided in Exhibit 1 to the Construction
Disbursement Budget Amendment Certificate, and (if and to the extent such
amendment relates to Hard Costs) the General Contractor's certification, as
provided in Exhibit 2 to the Construction Disbursement Budget Amendment
Certificate, and the Architect's certification, as provided in Exhibit 3 to the
Construction Disbursement Budget Amendment Certificate. Upon receipt by the
Disbursement Agent of an Officers' Certificate in the form of Exhibit F and the
attachments, all of which must be completed as to the information required
therein, such amendment shall become effective hereunder and the Construction
Disbursement Budget shall thereafter be as so amended.
8.2 Contract Amendment Process. The Company shall have the right from
time to time to amend any Contract to which it is a party to change the scope of
the work and the Company's payment obligations thereunder. Any such amendment
that (i) results in a cost increase in excess of Twenty-Five Thousand Dollars
($25,000) in a Material Construction Document (or, with respect to the
Construction Contract only, in excess of Seventy-Five Thousand Dollars
($75,000)), (ii) results in a material lessening of the scope or quality of the
work constituting the design or construction of the Riviera Black Hawk, the
value of which is in excess of Twenty-Five Thousand Dollars ($25,000) in a
Material Construction Document (or, with respect to the Construction Contract
only, in excess of Seventy-Five Thousand Dollars ($75,000)), or (iii) results in
the likely addition of no less than one week of construction (or such
20
<PAGE>
amendments, in the aggregate, result in the likely addition of no less than four
weeks of construction), shall be in writing and shall identify with
particularity all changes being made. The Company shall deliver to the
Disbursement Agent (a) an executed copy of the Contract amendment (the
effectiveness of which will be subject only to satisfaction of the conditions in
this Section 8.2); and (b) an Officers' Certificate in the form attached hereto
as Exhibit G-1, together with the Independent Construction Consultant's
certification as provided in Exhibit 1 to the Contract Amendment Certificate,
and in the event that such Contract relates to Hard Costs, the General
Contractor's certification as provided in Exhibit 2 to the Contract Amendment
Certificate and the Architect's certification as provided in Exhibit 3 to the
Contract Amendment Certificate, in each case completed as to the information
required therein. The Contract Amendment shall be deemed approved upon receipt
by the Company of the Disbursement Agent's acknowledgment of receipt of items
required under this Section 8.2.
8.3 Contracts Entered into after the Issuance Date. The Company may
from time to time enter into Contracts constituting Construction Documents
consistent with the Plans and Specifications and the Construction Disbursement
Budget, as each is in effect from time to time. Each such Contract shall be in
writing and, if a Material Construction Document, shall become effective when
and only when: (i) the Company and the Contractor have executed and delivered
the Contract (with the effectiveness thereof subject only to satisfaction of the
conditions in clauses (ii), (iii) and (iv) below); (ii) the Company has
submitted to the Disbursement Agent an Additional Contract Certificate, together
with all exhibits, attachments and certificates required thereby (including the
Independent Construction Consultant's Certificate), each duly completed and
executed; (iii) if entering into such Contract will result in an amendment to
the Construction Disbursement Budget, the Company has complied with the
requirements of Section 8.1; and (iv) if entering into such Contract will cause
the Available Funds to be less than the amount required to cause the Riviera
Black Hawk to become Operating on or before the Operating Deadline, the Company,
treating such difference as a cost overrun, has complied with the requirements
of Section 8.4.
8.4 Project Cost Schedule and Cost Overruns.
(a) The Company covenants to promptly (and in any event within ten
(10) days of notice or knowledge thereof) cure any cost overrun for any line
item (taking into account any applicable reserves) by (i) providing sufficient
funds to cover in full such cost overrun from (A) previously unallocated
Available Funds or other Additional Revenue as permitted in this Agreement (but
in each case only to the extent that the same have not previously been expended
or dedicated (including Retainage Amounts) to the payment of line items
contained in the Construction Disbursement Budget) or (B) if the conditions
precedent to a disbursement from the Completion Reserve Account are satisfied,
from funds in the Completion Reserve Account; and/or (ii) effecting a
Construction Disbursement Budget Amendment.
(b) Each Project Cost Schedule shall set forth (i) the actual
investment income (loss), less any losses or costs associated therewith, earned
on the Construction Disbursement Account and the Completion Reserve Account
through the date of such Project Cost Schedule, and (ii) the additional amount
of investment income which the Company reasonably anticipates will be earned in
the Construction Disbursement Account and the Completion Reserve Account from
such date through the earlier of the Operating Deadline and the anticipated date
on which the Riviera Black Hawk first will be Operating. If at any time the
Company submits a Project Cost Schedule pursuant to this Section and the Company
can no longer reasonably anticipate that the Additional Revenue earned (and
anticipated to be earned as determined above) from investments of funds in the
Construction Disbursement Account and the Completion Reserve Account will equal
the amount of such Additional Revenue anticipated as set forth in
21
<PAGE>
the Construction Disbursement Budget then in effect, then, so long as the
Disbursement Agent has no actual knowledge that a Default or Event of Default
exists and is continuing:
(i) if the total amount of such Additional Revenue at such date
earned or anticipated to be earned is less than the total
amount of such Additional Revenue anticipated as of the date
of the most recent disbursement from the Construction
Disbursement Account, then the Available Funds shall be
deemed reduced by the amount of such deficiency and the
Company (as a condition to the next Construction
Disbursement Request) shall provide or allocate additional
Available Funds or, if necessary, disburse funds from the
Completion Reserve Account (so long as the conditions
precedent are satisfied), and/or otherwise amend the
Construction Disbursement Budget, if necessary, so that the
total costs to cause the Riviera Black Hawk to be Operating
prior to the Operating Deadline do not exceed the total
Available Funds; or
(ii) if the total amount of such Additional Revenue at such date
earned or anticipated to be earned is greater than the total
amount of such Additional Revenue anticipated as of the date
of the most recent disbursement from the Construction
Disbursement Account, then the Available Funds shall be
deemed increased by the amount of such excess.
9. Events of Default. The occurrence of any of the following specified events
shall be an "Event of Default" hereunder:
9.1 Indenture. A default or an event of default under the Indenture (as
such terms are defined therein) has occurred and is continuing.
9.2 Failure to Approve Disbursement Request. The Disbursement Agent,
after appropriate consultation with the Company and the Independent Construction
Consultant, is unable to approve a Disbursement Request in excess of $50,000 or
an amendment to the Construction Disbursement Budget where the aggregate amount
that is the subject of such amendment exceeds $50,000 due to the failure of the
Company to satisfy the conditions precedent thereto set forth herein, including,
without limitation, the condition precedent that the Independent Construction
Consultant, the General Contractor and/or the Architect (in each case after
appropriate consultation with the Company) deliver the respective certificates
required under this Agreement, and such failure continues for thirty (30) days.
9.3 Exception to Prior Disbursement. The Independent Construction
Consultant reports to the Disbursement Agent, the Trustee and the Company an
exception to a prior disbursement relating to the Riviera Black Hawk in excess
of $50,000 which is not remedied within ten (10) days.
9.4 Insufficient Funds. Any time that the amount of Available Funds is
less than the amount required in the Construction Disbursement Budget to cause
the Riviera Black Hawk to become Operating on or before the Operating Deadline,
and such deficiency continues for a period of thirty (30) days after notice of
such deficiency.
9.5 Performance of Certain Obligations. The Company shall fail to
perform, observe or comply with any of its obligations under Sections 10.1 (and
such failure continues for a period of five (5) days after notice thereof) or
10.2 of this Agreement.
22
<PAGE>
9.6 Failure to Deliver Collateral Documents. The failure of the Company
to deliver any documents as and when required by the Pledge Agreement and such
failure continues for a period of five (5) days.
9.7 Abandonment of Project.
(a) Except as and to the extent permitted under the Indenture, the
Company shall cease to own the Property and all parcels and subdivisions
comprising any portion thereof or located thereon or the buildings, fixtures and
other improvements to be situated on the Property for the purpose of owning,
constructing, maintaining and operating the Project in the manner contemplated
by the Operative Documents; or
(b) Except as and to the extent permitted under the Indenture, the
Company shall abandon the Riviera Black Hawk or otherwise cease to pursue the
operations of the Riviera Black Hawk in accordance with standard industry
practice or shall sell or otherwise dispose of its interest in the Riviera Black
Hawk.
9.8 Termination or Invalidity of Construction Documents. Any of the
Material Construction Documents shall have terminated, become invalid or
illegal, or otherwise ceased to be in full force and effect (except in
accordance with its terms upon completion of the respective work or delivery of
the respective materials); provided that with respect to any Material
Construction Document other than the Construction Contract and the Architect
Agreement, no Event of Default shall be deemed to have occurred as a result of
such termination so long as (a) the Company provides written notice to the
Independent Construction Consultant (immediately upon, but in no event more than
two (2) Business Days after, the Company's becoming aware of such Construction
Document's ceasing to be in full force or effect) that the Company intends to
replace such Construction Document (or that replacement is not necessary), and
(b) in each case if, in the reasonable judgment of the Independent Construction
Consultant, a replacement is necessary, the Company (i) obtains a replacement
obligor or obligors reasonably acceptable to the Independent Construction
Consultant) for the affected party and (ii) enters into a replacement
Construction Document in accordance with Section 8.3, on terms no less
beneficial to the Company and the Trustee than then current market terms, within
sixty (60) days of such termination.
9.9 Schedule of Operations. The Independent Construction Consultant, if
it becomes so aware, reasonably determines (based on its experience, familiarity
and review of the Riviera Black Hawk and the information and schedule provided
by the Company and the General Contractor) that the Riviera Black Hawk is likely
to first be Operating no earlier than sixty (60) days after the Operating
Deadline, which determination the Independent Construction Consultant may make
at any time after the date hereof.
10. Disbursed Funds Account.
10.1 Rights of the Company to Disbursed Funds Account. All amounts
disbursed from the Construction Disbursement Account shall either be paid
directly to a Person described in and pursuant to a Construction Disbursement
Request or to the Disbursed Funds Account. After the Final CDA Disbursement, all
amounts disbursed from the Completion Reserve Account pursuant to Section 7.5.3
of this Agreement shall either be paid directly to a Person described in and
pursuant to the respective Completion Reserve Disbursement Request or to the
Disbursed Funds Account. The Disbursed Funds Account shall be maintained in the
name of the Company and all funds deposited or held in such account shall belong
to the Company, against which the Company may draw for permitted expenditures
from time to time. All funds deposited and held in the Disbursed Funds Account
shall, pending disbursement in
23
<PAGE>
accordance with this Agreement, be invested in cash or Government Securities as
directed by the Company, except as otherwise provided herein or in the Pledge
Agreement. Pursuant to the Pledge and Assignment Agreement, the Company has
granted to the Trustee (for the benefit of itself and the holders of the Notes)
a first priority security interest in its Disbursed Funds Account. Funds in the
Disbursed Funds Account shall be disbursed solely in accordance with the terms
and conditions of, and solely for the purposes permitted under, this Agreement
and the Indenture. Further, the Company shall note in its records that all funds
and other assets in the Disbursed Funds Account have been pledged to the
Trustee.
10.2 Right to Substitute Disbursed Funds Account. The Company from time
to time shall have the right to designate a substitute account to serve as the
Disbursed Funds Account; provided that no such substitute account shall become
the "Disbursed Funds Account" until (a) the depository financial institution at
which the substitute account is located shall have acknowledged in a manner
satisfactory to the Trustee that such institution has waived its right of set
off in such account or any liens thereto, statutory or otherwise, and will have
entered into an agreement substantially similar to a Pledge Agreement, and (b)
the Trustee shall have received notice of the location and account number of
such new substitute account.
11. Limitation of Liability.
11.1 Disbursement Agent's Limitation of Liability. The Disbursement
Agent's responsibility and liability under this Agreement shall be limited as
follows: (a) the Disbursement Agent does not represent, warrant or guaranty to
the Trustee or the holders of the Notes the performance of the Company, the
Independent Construction Consultant, the General Contractor, the Architect or
any contractor, subcontractor or provider of materials or services in connection
with construction of the Riviera Black Hawk; (b) the Disbursement Agent shall
have no responsibility to the Company, the Trustee or the holders of the Notes
as a consequence of performance by the Disbursement Agent hereunder, except for
any gross negligence or willful misconduct of the Disbursement Agent; (c) the
Company shall remain solely responsible for all aspects of its business and
conduct in connection with its Property and the Riviera Black Hawk, the accuracy
of all applications for payment, and the proper application of all
disbursements; (d) the Disbursement Agent is not obligated to supervise, inspect
or inform the Company, the Trustee or any third party of any aspect of the
construction of the Riviera Black Hawk or any other matter referred to above;
and (e) the Disbursement Agent owes no duty of care to the Company, to protect
against, or to inform the Company of, any negligent, faulty, inadequate or
defective design or construction of the Riviera Black Hawk or otherwise. The
Disbursement Agent shall have no duties or obligations hereunder, except as
expressly set forth herein, shall be responsible only for the performance of
such duties and obligations, shall not be required to take any action otherwise
than in accordance with the terms hereof and shall not be in any manner liable
or responsible for any loss or damage arising by reason of any act or omission
to act by it hereunder or in connection with any of the transactions
contemplated hereby, including, but not limited to, any loss that may occur by
reason of forgery, false representations, the exercise of its discretion, or any
other reason, except for its gross negligence or willful misconduct.
11.2 Independent Construction Consultant's Limitation of Liability. The
Independent Construction Consultant's responsibility and liability under this
Agreement shall be limited as follows: (a) the Independent Construction
Consultant does not represent, warrant or guaranty to the Trustee or the holders
of the Notes the performance of the Company, the Disbursement Agent, the General
Contractor, the Architect or any contractor, subcontractor or provider of
materials or services in connection with construction of the Riviera Black Hawk;
(b) except to the extent the Independent Construction Consultant has actual
knowledge, the Independent Construction Consultant shall not be responsible for,
and shall not be obligated to make any specific inquiry with respect to, matters
pertaining to: historical architecture review, Gaming Authorities, Gaming
Licenses, Liens against the Riviera Black Hawk (except in connection
24
<PAGE>
with the responsibilities of the Independent Construction Consultant set forth
herein), and whether the Riviera Black Hawk is in a condition to receive
customers in the ordinary course of business; (c) in connection with a request
for disbursement to pay Soft Costs, the Independent Construction Consultant
shall only be responsible for certifying that there is adequate availability in
the applicable line item under the Construction Disbursement Budget with respect
to such Soft Cost Disbursement Request and the other certifications contained in
the Certificate of Independent Construction Consultant for Disbursement Request
for Construction Expenses, substantially as set forth in Exhibit 1 to Exhibit
E-1 attached hereto; and (d) the Company shall remain solely responsible for all
aspects of its business and conduct in connection with its Property and the
Riviera Black Hawk, the accuracy of all applications for payment, and the proper
application of all disbursements. The Independent Construction Consultant shall
have no duties or obligations hereunder, except as expressly set forth herein,
shall be responsible only for the performance of such duties and obligations,
shall not be required to take any action otherwise than in accordance with the
terms hereof and shall not be in any manner liable or responsible for any loss
or damage arising by reason of any act or omission to act by it hereunder or in
connection with any of the transactions contemplated hereby, including, but not
limited to, any loss that may occur by reason of forgery, false representations,
the exercise of its discretion, or any other reason, except for its gross
negligence or willful misconduct. The Independent Construction Consultant shall
have the right to rely (so long as such reliance is reasonable and in good
faith) on certificates received from the Company, the Architect and the General
Contractor. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Independent Construction Consultant be liable to any party
hereto for any form of special, indirect or consequential damages, including,
without limitation, damages for economic loss (such as business interruption or
loss of profits, however the same may be caused).
12. Indemnity and Insurance.
12.1 Indemnity. The Company indemnifies, protects, holds harmless and
agrees to defend each of the Independent Construction Consultant and the
Disbursement Agent and each of their respective officers, directors, agents and
employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including defense costs, investigative fees and costs,
legal fees, and claims for damages, arising from the performance by the
Independent Construction Consultant or the Disbursement Agent, as applicable,
under this Agreement, except to the extent that such liability, expense or claim
is attributable to the gross negligence or willful misconduct of the Independent
Construction Consultant or the Disbursement Agent, as applicable.
12.2. Insurance. The Disbursement Agent, at its sole cost and expense,
shall purchase and maintain throughout the term of this Agreement, the following
insurance policies:
(a) Comprehensive general liability insurance, with minimum limits
of Two Million Dollars ($2,000,000) combined single limit per occurrence,
covering all property damage arising out of its operation under this Agreement.
(b) Workers' compensation insurance covering all of its employees
and volunteers.
Said policies shall provide for thirty (30) days' prior written notice to the
Trustee and the Company of cancellation or material change. If any of such
insurance is written on a claims made form, following termination of this
Agreement, coverage shall survive for the maximum reporting period available at
each anniversary date of such insurance, or not less than five (5) years,
whichever is greater. The limits of coverage required under subparagraph (a)
above shall not in any way limit the liability of the Company under this
Agreement.
25
<PAGE>
13. Termination. This Agreement shall terminate automatically thirty (30) days
following such time as all amounts in the Accounts have been distributed
pursuant to and in accordance with the terms hereof and the Riviera Black Hawk
is Operating; provided, however, that (a) the obligations of the Company under
Section 12 of this Agreement shall survive termination of this Agreement and (b)
if, following an Event of Loss, there exist Net Loss Proceeds that (in
accordance with the Indenture) are deliverable to the Trustee and are eligible
for distribution to the Company for rebuilding, repair, replacement or
construction, then the Company, the Disbursement Agent and the Independent
Construction Consultant shall execute and deliver to the Trustee such
documentation as the Trustee reasonably deems appropriate in order to cause (i)
the Trustee to possess a first priority perfected security interest in said
funds, and (ii) the Disbursement Agent and the Independent Construction
Contractor to administer the disbursement of said funds for such rebuilding,
repair, replacement or construction pursuant to disbursement control procedures
substantially akin to those set forth herein. In the event that the Net Loss
Proceeds are so distributed, the Disbursement Agent shall be paid a sum not to
exceed $1,000.00 per month until all such funds are disbursed.
14. Substitution or Resignation.
14.1 The Trustee shall have the right, upon the expiration of thirty
(30) days following delivery of written notice of substitution to the
Disbursement Agent, the Independent Construction Consultant, and the Company, to
cause the Disbursement Agent to be relieved of its duties hereunder and to
select a substitute disbursement agent to serve hereunder. The Disbursement
Agent may resign at any time upon thirty (30) days' written notice to all
parties hereto. Such resignation shall take effect upon receipt by the
Disbursement Agent of an instrument of acceptance executed by a successor
disbursement agent and consented to by the other parties hereto. Upon selection
of such substitute disbursement agent, the Trustee, the Company (so long as
there is no Default or Event of Default) and the substitute disbursement agent
shall enter into an agreement substantially identical to this Agreement and,
thereafter, the Disbursement Agent shall be relieved of its duties and
obligations to perform hereunder, except that at the Company's expense the
Disbursement Agent shall transfer to the substitute disbursement agent upon
request therefor originals of all books, records, and other documents in the
Disbursement Agent's possession relating to this Agreement. The Independent
Construction Consultant acknowledges and agrees that the Trustee and the Company
(so long as there is no Default or Event of Default) shall have the right to
change the party acting as the "Disbursement Agent" pursuant to this Agreement,
and the Trustee and the Company agree to provide written notice to the
Independent Construction Consultant of any such change.
14.2 The Trustee shall have the right, upon the expiration of thirty
(30) days following delivery of written notice of substitution to the
Disbursement Agent, the Independent Construction Consultant, and the Trustee, to
cause the Independent Construction Consultant to be relieved of its duties
hereunder and to select a substitute independent construction consultant to
serve hereunder. The Independent Construction Consultant may resign at any time
upon thirty (30) days' written notice to all parties hereto. Such resignation
shall take effect upon receipt by the Independent Construction Consultant of an
instrument of acceptance executed by a successor independent construction
consultant and consented to by the other parties hereto. Upon selection of such
substitute independent construction consultant, the Trustee, the Disbursement
Agent and the substitute independent construction consultant shall enter into a
side letter wherein the substitute independent construction consultant agrees to
perform the duties of the independent construction consultant pursuant to the
terms hereof and for the benefit of the Trustee and the holders of the Notes
and, thereafter, the Independent Construction Consultant shall be relieved of
its duties and obligations to perform hereunder, except that the Independent
Construction Consultant shall transfer to the substitute independent
construction consultant upon request therefor originals of all books, records,
and other documents in the Independent Construction Consultant's possession
relating to this Agreement. The substitute independent construction consultant
selected by the Trustee shall be recognized nationally or in
26
<PAGE>
Colorado as an expert in connection with the oversight of construction practices
and construction disbursement procedures for construction projects of similar
size and scope. The Disbursement Agent and the Company acknowledge and agree
that the Trustee shall have the right to change the party acting as the
"Independent Construction Consultant" pursuant to this Agreement, and the
Trustee agrees to provide written notice to the Disbursement Agent and the
Company of any such change.
15. Account Statement. Upon the request of the Trustee, the Company or the
Independent Construction Consultant, the Disbursement Agent shall deliver to the
Company, the Independent Construction Consultant and Trustee a statement
prepared by the Disbursement Agent in a form reasonably satisfactory to the
Independent Construction Consultant, the Trustee and the Company, setting forth
with reasonable particularity the balance of funds then in the Interest Reserve
Account, the Completion Reserve Account, the Construction Disbursement Account
and/or the Disbursed Funds Account and the manner in which such funds are
invested; provided, however, that the Disbursement Agent shall not be required
to provide such statements more often than weekly.
16. Notice. The parties hereto irrevocably instruct the Disbursement Agent that
on the first date upon which the balance in any of the Completion Reserve
Account and/or the Construction Disbursement Account is reduced to zero, the
Disbursement Agent shall deliver to the Trustee, the Independent Construction
Consultant and the Company a notice that the balance in such account(s) has been
reduced to zero.
17. Miscellaneous.
17.1 Waiver. Any party hereto may specifically waive any breach of this
Agreement by any other party, but no such waiver shall be deemed to have been
given unless such waiver is in writing, signed by the waiving party and
specifically designates the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
17.2 Invalidity. If, for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
17.3 No Authority. Neither the Disbursement Agent nor the Independent
Construction Consultant shall have any authority to, and neither shall, make any
warranty or representation or incur any obligation on behalf of, or in the name
of, the Trustee.
17.4 Assignment. This Agreement is personal to the parties hereto, and
the rights and duties of any party hereunder shall not be assignable except with
the prior written consent of the other parties. In any event, this Agreement
shall inure to and be binding upon the parties and their successors and
permitted assigns.
17.5 Benefit. The parties hereto, the holders from time to time of the
Notes, and their respective successors and assigns, but no others, shall be
bound hereby and entitled to the benefits hereof.
17.6 Time. Time is of the essence of each provision of this Agreement.
27
<PAGE>
17.7 Choice of Law. The existence, validity, construction, operation
and effect of any and all terms and provisions of this Agreement shall be
determined in accordance with and governed by the substantive laws of the State
of New York, without giving effect to its conflicts of law principles.
17.8 Entire Agreement; Amendments. This Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, understandings and commitments, whether
oral or written. This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties.
17.9 Notices. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received, regardless of when and whether
received, either (a) on the day of hand delivery; (b) on the date of
confirmation of receipt of electronic facsimile transmission; or (c) on the
third day after sent, when sent by United States certified mail, postage and
certification fee prepaid, return receipt requested, addressed as follows:
To the Disbursement Agent:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York, 10004
Attention: Thomas S. Moser
Telecopier No.: 212-858-2956
To the Trustee:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Thomas S. Moser
Telecopier No.: 212-858-2956
To the Company:
Riviera Black Hawk, Inc.
c/o Riviera Holdings Corp.
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: President
Telecopier No.: 702-794-9277
To the Independent Construction Consultant:
CRSS Constructors, Inc.
1670 Broadway, Suite 3200
Denver, Colorado 80202
Attention: Richter J. Schneider
Telecopier No.: 303-830-6887
or at such other address as the specified entity most recently may have
designated in writing in accordance with this paragraph to the others. Any
notice to the Disbursement Agent or the Trustee under this Agreement shall be
deemed effective only upon receipt.
28
<PAGE>
17.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17.11 Captions. Captions in this Agreement are for convenience only and
shall not be considered or referred to in resolving questions of interpretation
of this Agreement.
17.12 Arbitration. (a) Any disagreement with respect to the release of
funds from the Completion Reserve Account or the Construction Disbursement
Account, or any related disagreement with respect to the construction, meaning
or effect of this Agreement, or any other controversy between the parties hereto
arising out of this Agreement or concerning the rights or obligations of the
parties hereunder (including matters relating to any certificates required to be
delivered under this Agreement) shall be submitted to arbitration, one
arbitrator to be chosen by the Company, one by the Trustee, and a third to be
chosen by the first two arbitrators before they enter into arbitration. The
arbitrators shall be impartial and shall be active or retired persons with
experience in construction, development and /or construction lending.
(b) In the event that either party should fail to choose an
arbitrator within fifteen (15) days following a written request by the other
party to enter into arbitration, the requesting party may choose two arbitrators
who shall, in turn, choose the third arbitrator. If the first two arbitrators
have not chosen a third arbitrator at the end of fifteen (15) days following the
last day of the selection of the first two arbitrators, each of the first two
arbitrators shall name three candidates, of whom the other arbitrator shall
eliminate two, and the determination of the third arbitrator shall be made from
the remaining two candidates by drawing lots. Each party shall present its case
to the arbitrators within fifteen (15) days following the date of the
appointment of the third arbitrator. The decision of a majority of the three
arbitrators shall be final and binding upon both parties. Judgment may be
entered upon the arbitration award in any court having jurisdiction. Any such
arbitration shall take place in New York, unless some other location is mutually
agreed upon by the parties. The arbitrators shall resolve any dispute arising
hereunder in a manner consistent with the intent of the parties as expressed in
this Agreement. The arbitrators shall not award any punitive, consequential or
exemplary damages or any amount in excess of the amount to be released from the
relevant Account.
(c) The parties shall use their best efforts to resolve the
dispute as soon as practicable and to comply, if available, with the fast track
procedures specified in the American Arbitration Association's Construction
Industry Arbitration Rules. Judgment on the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof.
(d) Notwithstanding any provisions contained herein to the
contrary, the provisions contained in this Section shall not prohibit the
Trustee from exercising any of its rights or remedies set forth in the
Indenture, the Notes or the other Collateral Documents.
29
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Cash
Collateral and Disbursement Agreement as of the day first above written.
DISBURSEMENT AGENT IBJ WHITEHALL BANK & TRUST COMPANY
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
TRUSTEE IBJ WHITEHALL BANK & TRUST COMPANY
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
INDEPENDENT CONSTRUCTION CRSS CONSTRUCTORS, INC.
CONSULTANT
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
COMPANY RIVIERA BLACK HAWK, INC.
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
[Signature Page to Cash Collateral and Disbursement Agreement]
<PAGE>
IBJ Whitehall Bank & Trust Company, acting in its capacity as Securities
Intermediary under (and as defined in) the Pledge and Assignment Agreement,
hereby acknowledges its agreement to be bound by the provisions set forth in
Section 2.4 of this Agreement to the extent any written direction of the
Disbursement Agent delivered to the Securities Intermediary pursuant thereto is
not inconsistent with any written direction of the Trustee delivered to the
Securities Intermediary pursuant to the Pledge and Assignment Agreement.
IBJ WHITEHALL BANK & TRUST COMPANY
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
[Signature Page to Cash Collateral and Disbursement Agreement]
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT A
Form of Initial Disbursements Certificate
June 3, 1999
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
IBJ Whitehall Bank & Trust Company,
as Trustee
One State Street,
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Riviera Black Hawk, Inc., a Colorado corporation
Cash Collateral and Disbursement Agreement
Initial Disbursements
------------------------------------------------
Ladies and Gentlemen:
This Initial Disbursements Certificate is delivered to you pursuant to
that certain Cash Collateral and Disbursement Agreement dated as of June 3, 1999
(the "Disbursement Agreement"), by and among IBJ Whitehall Bank & Trust Company,
a New York banking association, as Disbursement Agent, IBJ Whitehall Bank &
Trust Company, a New York banking association, as Trustee, CRSS Constructors,
Inc., a Delaware corporation, as Independent Construction Consultant, and
Riviera Black Hawk, Inc., a Colorado corporation, as issuer (the "Company").
Capitalized terms used and not otherwise defined herein shall have the meanings
given in the Disbursement Agreement.
A-1
<PAGE>
The Company hereby irrevocably instructs the Disbursement Agent to
disburse funds from the Construction Disbursement Account to the Disbursed Funds
Account or the accounts otherwise indicated for the amounts set forth on
Schedule A attached hereto.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
A-2
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE A
Initial Disbursements
To Riviera Black Hawk, Inc.
for Working Capital Loan Draw #1 $ 500,000
Riviera Holdings Corporation
Bank of America Account for Title Indemnity $5,000,000
Riviera Holdings Corporation
Bank of America Account
for return of loans in
excess of $20 million equity $5,121,526
A-3
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT B-1
Form of Company's Closing Certificate
June 3, 1999
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street,
New York, New York 10004
IBJ Whitehall Bank & Trust Company
as Trustee
One State Street,
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Riviera Black Hawk, Inc., a Colorado corporation
Cash Collateral and Disbursement Agreement
Company's Closing Certificate
Ladies and Gentlemen:
This Closing Certificate is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), by and among IBJ Whitehall Bank & Trust Company, a New York banking
association, as Disbursement Agent, IBJ Whitehall Bank & Trust Company, a New
York banking association, as Trustee, CRSS Constructors, Inc., a Delaware
corporation, as Independent Construction Consultant, and Riviera Black Hawk,
Inc., a Colorado corporation, as issuer (the "Company"). Capitalized terms used
and not otherwise defined herein shall have the meanings given in the
Disbursement Agreement.
The Company hereby certifies to each of you as follows:
1. As of the date hereof, the Company reasonably believes that the date
on which the Riviera Black Hawk will become Operating will occur on or prior to
the Operating Deadline.
2. The Initial Construction Disbursement Budget attached hereto as
Exhibit 1 constitutes the Construction Disbursement Budget presently in effect
for the Riviera Black Hawk.
B-1
<PAGE>
3. The Initial Construction Disbursement Budget accurately and
completely sets forth (i) the anticipated Construction Expenses through the date
that the Riviera Black Hawk is Operating and (ii) the various components of the
Riviera Black Hawk identified thereon as line items, all within the respective
line item amounts listed.
4. As of the date hereof, there are sufficient Available Funds to pay
for (i) the anticipated costs described in paragraph 3 above in accordance with
the Disbursement Agreement and (ii) any other expenses that the Company believes
will need to be incurred in order to cause the Riviera Black Hawk to be
Operating on or before its Operating Deadline (in each case after giving effect
to the Initial Disbursements and excluding interest to be paid on each of the
Interest Payment Dates).
5. Immediately prior to and upon giving effect to the Initial
Disbursements, there is no and will not be any Default or Event of Default.
6. Attached hereto as Exhibit 2 is (i) a list of all contractors,
subcontractors, suppliers and materialmen that have provided work, supplies
and/or labor in connection with the Riviera Black Hawk to date, (ii) a list of
all contractors, subcontractors, suppliers and materialmen that have provided
work, supplies and/or labor in connection with the Riviera Black Hawk that will
receive payment pursuant to the Initial Disbursements Certificate, and (iii)
lien releases (unconditional if such contractors, subcontractors, suppliers and
materialmen have been paid to date and conditional if such contractors,
subcontractors, suppliers and materialmen have not been paid to date) from all
such contractors, subcontractors, suppliers and materialmen described in clause
(ii) (except as to Retainage Amounts and such amounts as the Independent
Construction Consultant determines to have been reasonably withheld) for all
disbursements identified in the Initial Disbursements Certificate. All work
performed and materials delivered to date with respect to the Riviera Black Hawk
which could result in a lien against the Property have been previously paid by
the Company or will be timely paid with the proceeds of the Initial
Disbursements (in each case subject to withheld Retainage Amounts), and no lien,
notice of lien, or notice of extension of time for filing of lien has been filed
against the Property in favor of any contractor, subcontractor, supplier or
materialman which has not been removed of record prior to the date hereof.
7. The Company is not and, to the Company's knowledge, no other party
to any Operative Document (other than any Construction Document not in existence
as of the Issuance Date) or any Property Document is, or (but for the passage of
time or the giving of notice or both) will be, in breach of any material
obligation thereunder.
8. With respect to the Shoring and Tie Back Easement, based on the
present placement of the shoring and tie-backs for the Riviera Black Hawk
covered by such easement, if the City of Black Hawk were to excavate for access
to existing utilities in Main Street, Black Hawk, as permitted under the Shoring
and Tie-Back Easement Agreement, such excavation would have no impact on the
improvements constituting the Riviera Black Hawk but would only limit vehicle
access to the building for delivery of materials. It is currently anticipated
that the General Contractor will follow normal de-tensioning of the tie-backs
and the related piles and lagging will be removed below grade in accordance with
the Shoring and Tie Back Easement and the construction schedule for the Riviera
Black Hawk.
9. Each representation and warranty of (a) the Company and its
Affiliates set forth in the Disbursement Agreement or in any of the other
Operative Documents, or in any certificates delivered in connection with any of
the foregoing, is true, correct and complete in all material respects as if made
on the date hereof (except that any representation and warranty that relates
expressly to an earlier date shall be deemed made only as of such earlier date),
and (b) to the Company's knowledge, the General Contractor,
B-2
<PAGE>
the Architect and each other party (other than the Company or its Affiliates) to
a Material Construction Document set forth in any of the Operative Documents is
true, correct and complete in all material respects as if made on the date
hereof (except that any representation and warranty that relates expressly to an
earlier date shall be deemed made only as of such earlier date).
10. As of the date hereof, the estimated date on which the Riviera
Black Hawk will become Operating is on or prior to May 31, 2000.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Initial Disbursements.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:--------------------------
Name:------------------------
Title:-----------------------
B-3
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 to EXHIBIT B-1
Initial Construction Disbursement Budget for Riviera Black Hawk
CONSTRUCTION DISBURSEMENT BUDGET
See Attached.
B-4
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 to EXHIBIT B-1
Mechanic's Liens for Riviera Black Hawk
(i)
List of contractors, subcontractors, suppliers and materialmen
that have provided work, supplies and/or labor to date
See attached.
(ii)
List of contractors, subcontractors, suppliers and materialmen
to receive payment pursuant to the Initial Disbursements Certificate
None.
(iii)
Lien releases for parties identified in (ii)
None.
B-5
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 3 to EXHIBIT B-1
General Contractor's Closing Certification
June 3, 1999
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
IBJ Whitehall Bank & Trust Company,
as Trustee
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Riviera Black Hawk, Inc., a Colorado corporation (the "Company")
Cash Collateral and Disbursement Agreement
General Contractor's Closing Certificate
Ladies and Gentlemen:
The undersigned (the "General Contractor") hereby certifies to each of
you as follows:
1. The General Contractor has reviewed the above referenced Closing
Certification from the Company and the Cash Collateral and Disbursement
Agreement dated June 3, 1999, to which the Company is a party (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to the extent necessary to understand the defined terms contained
herein and in the Company's Closing Certificate that are incorporated by
reference from the Disbursement Agreement, and to provide the certification
contained herein. Capitalized terms used and not otherwise defined herein shall
have the meanings given in the Disbursement Agreement.
2. The General Contractor hereby certifies and confirms the accuracy of
the certifications in paragraphs 1, 2 and 3 of the above-referenced Closing
Certificate as if made by and on behalf of the General Contractor directly;
provided that the General Contractor makes no certification or confirmation
relating to the status of Gaming Licenses or compliance with Gaming Laws with
respect to whether the Riviera Black Hawk will be Operating on or prior to the
Operating Deadline.
3. The General Contractor hereby certifies that, to the best of its
knowledge, the work comprising the Riviera Black Hawk as described in the
Construction Contract may be completed in accordance with the line item
breakdown in the Initial Construction Disbursement Budget identified in the
Company's Closing Certificate, taking into consideration the possible allocation
of Realized Savings and other Available Funds in accordance with the
Disbursement Agreement.
B-6
<PAGE>
4. The General Contractor is not and, to the best of the General
Contractor's knowledge, no other party to any Construction Document in existence
as of the date hereof is, or (but for the passage of time or the giving of
notice or both) will be, in breach of any material obligation thereunder.
5. The General Contractor hereby certifies that the dewatering wells
constructed in connection with the Riviera Black Hawk pursuant to that certain
Non-Exclusive Dewatering Well Easement Agreement dated as of May 1, 1998 (the
"Dewatering Easement") by and among the City of Black Hawk, Colorado, the
Company and Isle of Capri Black Hawk, LLC, and recorded in Gilpin County Records
at Reception No. 627998 in Book 642, page 372, have been abandoned and are no
longer in use in connection with the Riviera Black Hawk, and the pumps from the
well casing and the piping, controls and wiring from well to well have been
removed prior to the date hereof. The General Contractor acknowledges that the
well casings have not yet been removed but confirms that such well casings shall
be removed in accordance with the requirements of the Dewatering Easement.
6. With respect to the Shoring and Tie Back Easement, the General
Contractor confirms that it will follow normal de-tensioning of the tie-backs
covered by such easement, and the related piles and lagging will be removed
below grade in accordance with the Shoring and Tie Back Easement and the
construction schedule for the Riviera Black Hawk.
The foregoing representations, warranties and certifications are true
and correct and each of you is entitled to rely on the foregoing in connection
with the Initial Disbursements.
THE WEITZ COMPANY, INC.,
as General Contractor
By:--------------------------
Name:------------------------
Title:-----------------------
B-7
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 4 to EXHIBIT B-1
Architect's Closing Certification
June 3, 1999
IBJ Whitehall Bank & Trust Company
as Disbursement Agent
One State Street
New York, New York 10004
IBJ Whitehall Bank & Trust Company
as Trustee
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Riviera Black Hawk, Inc., a Colorado corporation (the "Company")
Cash Collateral and Disbursement Agreement
Architect's Closing Certificate
Ladies and Gentlemen:
The undersigned (the "Architect") hereby certifies to each of you as
follows:
1. The Architect has reviewed the above referenced Closing
Certification from the Company and the Cash Collateral and Disbursement
Agreement dated June 3, 1999, to which the Company is a party (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to the extent necessary to understand the defined terms contained
herein and in the Company's Closing Certificate that are incorporated by
reference from the Disbursement Agreement, and to provide the certification
contained herein. Capitalized terms used and not otherwise defined herein shall
have the meanings given in the Disbursement Agreement.
2. The Architect hereby certifies that, to the best of its knowledge
and belief, based on its limited visual observation and the information provided
to the Architect, the construction to date is substantially in compliance with
the intent of the Plans as prepared by the Architect.
3. The Architect hereby certifies that the current Plans for the
Riviera Black Hawk comport with the Subdivision Agreement with respect to the
setback and sidewalk requirements set forth therein applicable to the Riviera
Black Hawk.
B-8
<PAGE>
The foregoing representations, warranties and certifications are true
and correct and each of you is entitled to rely on the foregoing in connection
with the Initial Disbursements.
MELICK ASSOCIATES, INC.,
as Architect
By:--------------------------
Name:------------------------
Title:-----------------------
B-9
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT B-2
Form of Independent Construction Consultant's Closing Certification
June 3, 1999
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York, 10004
IBJ Whitehall Bank & Trust Company,
as Trustee
One State Street
New York, New York, 10004
Re: Riviera Black Hawk, Inc., a Colorado corporation
Cash Collateral and Disbursement Agreement
Independent Construction Consultant's Closing Certification
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), by and among IBJ Whitehall Bank & Trust Company, a New York banking
association, as Disbursement Agent, IBJ Whitehall Bank & Trust Company, a New
York banking association, as Trustee, CRSS Constructors, Inc., a Delaware
corporation, as Independent Construction Consultant, and Riviera Black Hawk,
Inc., a Colorado corporation (the "Company"). Capitalized terms used and not
otherwise defined herein shall have the meanings given in the Disbursement
Agreement.
The Independent Construction Consultant hereby certifies to each of you
as follows as contemplated by the Disbursement Agreement:
1. The Independent Construction Consultant has received certified
copies of all Plans and Contracts applicable to the construction of the Riviera
Black Hawk and described on Schedule A hereto and, in the Independent
Construction Consultant's professional opinion, such Plans and Contracts will
permit the Riviera Black Hawk to be substantially completed in all material
respects in accordance therewith on or prior to the Operating Deadline.
B-10
<PAGE>
2. The Initial Construction Disbursement Budget accurately sets forth
the anticipated costs of constructing the Riviera Black Hawk so that the Riviera
Black Hawk is substantially completed in all material respects in accordance
therewith and with the Plans and Contracts prior to the Operating Deadline.
3. The Independent Construction Consultant has received (a) an executed
Initial Disbursements Certificate in the form attached to the Disbursement
Agreement as Exhibit A, together with all attachments thereto, and (b) an
executed Company's Closing Certificate in the form attached to the Disbursement
Agreement as Exhibit B-1, together with all attachments thereto.
4. The Independent Construction Consultant has reviewed the Initial
Disbursements Certificate and the Company's Closing Certificate and the
Independent Construction Consultant has no actual knowledge that the
certifications set forth in such certificates are not true, correct and complete
in all material respects; provided that the Independent Construction Consultant
makes no certification or confirmation relating to the status of Gaming Licenses
or compliance with Gaming Laws with respect to whether the Riviera Black Hawk
will be Operating on or prior to the Operating Deadline.
5. [For Hard Costs Only With Respect to the Initial Disbursements:] The
Independent Construction Consultant has received duly executed conditional or
unconditional (as applicable) lien releases from all contractors,
subcontractors, suppliers and materialmen having provided work, materials and/or
services constituting completed construction or stored materials relating to the
Riviera Black Hawk (except as to Retainage Amounts and such amounts as the
Independent Construction Consultant determines to have been reasonably withheld)
for all disbursements identified on the Initial Disbursements Certificate.
6. The Independent Construction Consultant has reviewed the duly
executed acknowledgments of payment and unconditional lien releases from all
contractors, subcontractors, suppliers and materialmen having provided work,
materials and/or services constituting completed construction or stored
materials relating to the Riviera Black Hawk (except as to Retainage Amounts and
such amounts as the Independent Construction Consultant determines to have been
reasonably withheld), separately provided by the Company prior to the date
hereof (other than those relating to payments to be made with the Initial
Disbursements, if any), which releases are in form and substance reasonably
satisfactory to the Independent Construction Consultant and are in accordance
with payments for construction of the Riviera Black Hawk prior to the date
hereof.
7. In the Independent Construction Consultant's professional opinion,
the construction performed as of the date hereof is in accordance with the Plans
and the payments made therefor prior to the date hereof, together with the
Initial Disbursements (if any) to be made for work, supplies and/or labor
provided in connection with the Riviera Black Hawk to date, are appropriate in
light of the percentage of construction completed and the amount of stored
materials and/or invoices submitted, as applicable. Further, all disbursements
under the Initial Disbursements that are for Hard Costs have been incurred for
work consistent with the Plans.
8. The Independent Construction Consultant has reviewed all payments
made prior to the date hereof for work, supplies and/or labor provided in
connection with the Riviera Black Hawk to contractors, subcontractors, suppliers
and materialmen and compared the invoices or other documentation supporting such
payments with the respective Construction Disbursement Budget category and
confirms that the total payments to date in such category do not exceed the
budgeted amount for such category.
B-11
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Initial Disbursements.
CRSS Constructors, Inc.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
B-12
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE A TO EXHIBIT B-2
List of Plans and Contracts
See attached.
B-13
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT B-3
Form of Disbursement Agent's Closing Certification
June 3, 1999
IBJ Whitehall Bank & Trust Company,
as Trustee
One State Street
New York, New York, 10004
Re: Riviera Black Hawk, Inc., a Colorado corporation
Cash Collateral and Disbursement Agreement
Disbursement Agent's Closing Certification
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), by and among IBJ Whitehall Bank & Trust Company, a New York banking
association, as Disbursement Agent, IBJ Whitehall Bank & Trust Company, a New
York banking association, as Trustee, CRSS Constructors, Inc., as Independent
Construction Consultant, a Delaware corporation, and Riviera Black Hawk, Inc., a
Colorado corporation, (the "Company"). Capitalized terms used and not otherwise
defined herein shall have the meanings given in the Disbursement Agreement.
The Disbursement Agent hereby certifies to you as follows as
contemplated by the Disbursement Agreement:
1. The Accounts and the Disbursed Funds Account have been established
as contemplated by the Disbursement Agreement.
2. The Disbursement Agent has reviewed (a) an executed Initial
Disbursements Certificate from the Company in the form attached to the
Disbursement Agreement as Exhibit A, (b) an executed Closing Certificate from
the Company in the form attached to the Disbursement Agreement as Exhibit B-1,
(c) an executed Closing Certificate from the Independent Construction Consultant
in the form attached to the Disbursement Agreement as Exhibit B-2, and (d) an
executed Closing Certificate from the Trustee in the form attached to the
Disbursement Agreement as Exhibit B-4, in each case with any exhibits attached
and executed (as applicable) by the parties thereto.
B-14
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and you are entitled to rely on the foregoing in connection
with the Initial Disbursements.
IBJ WHITEHALL BANK & TRUST COMPANY,
as Disbursement Agent
By:--------------------------
Name:------------------------
Title:-----------------------
B-15
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT B-4
Form of Trustee's Closing Certification
June 3, 1999
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Riviera Black Hawk, Inc., a Colorado corporation
Cash Collateral and Disbursement Agreement
Trustee's Closing Certification
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), by and among IBJ Whitehall Bank & Trust Company, a New York banking
association, as Disbursement Agent, IBJ Whitehall Bank & Trust Company, a New
York banking association, as Trustee, CRSS Constructors, Inc., a Delaware
corporation, as Independent Construction Consultant, and Riviera Black Hawk,
Inc., a Colorado corporation, as an issuer (the "Company"). Capitalized terms
used and not otherwise defined herein shall have the meanings given in the
Disbursement Agreement.
The Trustee hereby certifies to you as follows as contemplated by the
above-referenced Disbursement Agreement:
1. The Trustee has received (a) an executed Initial Disbursements
Certificate from the Company in the form attached to the Disbursement Agreement
as Exhibit A, (b) an executed Closing Certification from the Company in the form
attached to the Disbursement Agreement as Exhibit B-1 and (c) an executed
Closing Certification from the Disbursement Agent in the form attached to the
Disbursement Agreement as Exhibit B-3, in each case with all exhibits and
attachments attached and executed (as applicable) by the parties thereto.
2. The Trustee has received from the Title Insurer the Title Policy, or
a pro forma of the Title Policy with a letter agreement from the Title Insurer
agreeing to issue title in the form of such pro forma.
B-16
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and you are entitled to rely on the foregoing in connection
with the Initial Disbursements.
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By:--------------------------
Name:------------------------
Title:-----------------------
B-17
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT C
Form of Interest Disbursement Request
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
IBJ Whitehall Bank & Trust Company,
as Trustee
One State Street
New York, New York 10004
Re: Riviera Black Hawk, Inc., a Colorado corporation
Cash Collateral and Disbursement Agreement
Interest Disbursement Request
Date: ----------------1
Ladies and Gentlemen:
This Interest Disbursement Request is delivered to you pursuant to that
certain Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), among IBJ Whitehall Bank & Trust Company, a New York banking
association, as Disbursement Agent, IBJ Whitehall Bank & Trust Company, a New
York banking association, as Trustee, CRSS Constructors, Inc., a Delaware
corporation, as Independent Construction Consultant, and Riviera Black Hawk,
Inc., a Colorado corporation, (the "Company"). Capitalized terms used and not
otherwise defined herein shall have the meanings given in the Disbursement
Agreement.
Pursuant to Sections 4.1 and 5.1 of the Disbursement Agreement, the
Disbursement Agent is hereby directed to liquidate Government Securities (to the
extent required) in the Interest Reserve Account and to pay to the Trustee on
_____________ (the "Interest Payment Date") $_____________ of funds from the
Interest Reserve Account. The undersigned hereby certifies that payments in an
amount equal to such sums will be due and payable on the Notes on the Interest
Payment Date.
- -----------------
1 To be delivered no less than ten (10) days prior to the respective Interest
Payment Date.
C-1
<PAGE>
Please confirm the transfer described above by returning a notice of
confirmation to the undersigned at the address set forth above.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:--------------------------
Name:------------------------
Title:-----------------------
[address for purposes of notice of confirmation]
C-2
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT D-1
Form of Completion Reserve Disbursement Request and Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Completion Reserve Disbursement Request No. _____________ under
Cash Collateral and Disbursement Agreement
Amount Requested: $
Ladies and Gentlemen:
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"),
hereby submits this Completion Reserve Disbursement Request and Certificate
(this "Request") pursuant to that certain Cash Collateral and Disbursement
Agreement dated as of June 3, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Disbursement Agreement"), to which you are a
party. Capitalized terms used and not otherwise defined herein shall have the
meanings given in the Disbursement Agreement.
The Company hereby requests that you, in your capacity under the
Disbursement Agreement, disburse $___________________ (the "Disbursement") from
the Completion Reserve Account to the Construction Disbursement Account to
permit the Company to use the funds so disbursed to complete the construction of
the Riviera Black Hawk so that it may be Operating prior to the Operating
Deadline and/or to commence or continue operations thereof.
In connection with the requested Disbursement, the Company represents,
warrants and certifies as follows:
1. The funds disbursed pursuant to this requested Disbursement will be
used in accordance with the terms of the Indenture, the Disbursement Agreement
and the other Collateral Documents.
2. [For Disbursements Prior to Operating:] The funds disbursed pursuant
to this Request shall be used, upon disbursement from the Construction
Disbursement Account, solely for the payment of approved Hard Costs and Soft
Costs (as applicable) relating to the design, development, engineering,
construction, installation, completion of construction and commencement of
operations of the Riviera Black Hawk, and such funds are reasonably necessary to
permit completion of construction and commencement of operations of the Riviera
Black Hawk in accordance with the Final Plans so that it may be Operating on or
prior to the Operating Deadline.
3. [For Post-Operating Disbursements Prior To And Including The Final
CDA Disbursement:] The Riviera Black Hawk has previously commenced Operating.
The funds disbursed
D-1
<PAGE>
pursuant to this Request shall be used, upon disbursement from the Construction
Disbursement Account, solely for the payment of approved Hard Costs and Soft
Costs (as applicable) relating to the completion of construction, commencement
of operations and the operation of the Riviera Black Hawk and working capital or
other construction purposes permitted under the Indenture, and such funds are
reasonably necessary to permit completion of construction in accordance with the
Final Plans, commencement of operations and/or operation of the Riviera Black
Hawk.
4. The following circumstances resulted in the cost to [complete]
[commence operations of] [operate] the Riviera Black Hawk to exceed (as
applicable) the Initial Construction Disbursement Budget or, if the Initial
Construction Disbursement Budget has previously been amended, the Construction
Disbursement Budget:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
5. The circumstances described in the preceding paragraph were not
reasonably anticipated by the Company in preparing (as applicable) the Initial
Construction Disbursement Budget or, if the Initial Construction Disbursement
Budget has been amended, in preparing the latest amendment to the Construction
Disbursement Budget, for the following reasons:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
6. [For Disbursements Prior to Operating:] After giving effect to the
above requested Disbursement, there will be sufficient Available Funds to pay
for the anticipated costs to complete the Riviera Black Hawk in accordance with
the Construction Disbursement Budget, as amended pursuant to the attached
Construction Disbursement Budget Amendment Certificate, on or prior to the
Operating Deadline, and the Company does not believe that any other expenses
will need to be incurred by the Company in order to cause the Riviera Black Hawk
to be Operating on or prior to the Operating Deadline.
7. [For Disbursements Prior to Operating:] The Company reasonably
believes that the Riviera Black Hawk will be Operating on or prior to the
Operating Deadline.
8. Immediately prior and upon giving effect to the above requested
Disbursement, there is no Default or Event of Default.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in making the Disbursement.
D-2
<PAGE>
Attached to this Request is (i) a certificate from the Independent
Construction Consultant, (ii) a certificate from the General Contractor and
(iii) a Construction Disbursement Budget Amendment Certificate.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:--------------------------
Name:------------------------
Title:-----------------------
Received and Reviewed:
RIVIERA HOLDINGS CORP.
By:--------------------------
Name:------------------------
Title:-----------------------
CRSS CONSTRUCTORS, INC.,
as the Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
D-3
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT D-1
Form of Certificate of Independent Construction Consultant
Completion Reserve Disbursement Request
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Completion Reserve Disbursement Request No. _________________ under
Cash Collateral and Disbursement Agreement of Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "Independent Construction Consultant") hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the
above-referenced Completion Reserve Disbursement Request (the "Request") and the
Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to which Riviera Black Hawk, Inc., a Colorado corporation (the
"Company"), is a party. Capitalized terms used and not otherwise defined herein
shall have the same meanings given in the Request.
2. [For Disbursements Prior to Operating:] The Independent Construction
Consultant represents, warrants and certifies that (a) the funds requested to
fund both Hard Costs and Soft Costs (as applicable) under the Request are
reasonably necessary to permit completion of construction of the Riviera Black
Hawk in accordance with the Final Plans so that it may be Operating prior to the
Operating Deadline, (b) after giving effect to the requested Disbursement, there
will be sufficient Available Funds to pay for the anticipated costs to complete
the Riviera Black Hawk in accordance with the Construction Disbursement Budget,
as amended to date (after giving effect to the Construction Disbursement Budget
Amendment Certificate delivered in connection with the Request), on or prior to
the Operating Deadline, and the Independent Construction Consultant is not aware
at this time of any other expenses that the Company will need to incur in order
to cause the Riviera Black Hawk to be Operating prior to the Operating Deadline,
(c) nothing has come to the attention of the Independent Construction Consultant
that would cause it to reasonably believe the Riviera Black Hawk will not be
Operating on or prior to the Operating Deadline, and (d) the Independent
Construction Consultant has no actual knowledge of (i) any Default or Event of
Default that exists or which may occur as a result of the making of the
Disbursement, or (ii) any material errors, inaccuracies, misstatements or
omissions of fact in the Request or any exhibit or attachment thereto.
D-4
<PAGE>
3. [For Post-Operating Disbursements Other Than The Final CRA
Disbursement:] The Independent Construction Consultant represents, warrants and
certifies that (a) the funds requested to fund both Hard Costs and Soft Costs
(as applicable) under the Request are reasonably necessary to permit completion
of construction of the Riviera Black Hawk in accordance with the Final Plans,
(b) after giving effect to the requested Disbursement, there will be sufficient
Available Funds to pay for the anticipated costs to complete the Riviera Black
Hawk in accordance with the Construction Disbursement Budget, as amended to date
(after giving effect to the Construction Disbursement Budget Amendment
Certificate delivered in connection with the Request), and the Independent
Construction Consultant is not aware at this time of any other expenses that the
Company will need to incur in order to complete the Riviera Black Hawk in
accordance with the Final Plans, and (c) the Independent Construction Consultant
has no actual knowledge of (i) any Default or Event of Default that exists or
which may occur as a result of the making of the Disbursement, or (ii) any
material errors, inaccuracies, misstatements or omissions of fact in the Request
or any exhibit or attachment thereto; provided that no certification is made
herein with respect to any matters relating to the status of Gaming Licenses or
compliance with Gaming Laws.
4. Pursuant to its duties under the Disbursement Agreement, the
Independent Constructor Consultant has inspected the Riviera Black Hawk within
the previous four weeks of the date of this certificate.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
D-5
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT D-1
Form of Certificate of General Contractor
Completion Reserve Disbursement Request
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Completion Reserve Disbursement Request No. _______________ under Cash
Collateral and Disbursement Agreement of Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "General Contractor") hereby certifies as follows:
1. The General Contractor has reviewed the above referenced Completion
Reserve Disbursement Request (the "Request") and the Cash Collateral and
Disbursement Agreement dated as of June 3, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Disbursement Agreement"), to which
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"), is a party, to
the extent necessary to understand the defined terms contained herein and in the
Request that are incorporated by reference from the Disbursement Agreement and
to provide the certification contained herein. Capitalized terms used and not
otherwise defined herein shall have the meanings given in the Disbursement
Agreement
2. [For Disbursements Prior To Operating:] The General Contractor
hereby represents, warrants and certifies that (a) the funds requested under the
Request are reasonably necessary to permit completion of construction of the
Riviera Black Hawk in accordance with the Final Plans so that it will be
Operating on or prior to the Operating Deadline, (b) after giving effect to the
requested Disbursement (as defined in the Request), there will be sufficient
Available Funds to pay for the anticipated costs to complete the Riviera Black
Hawk in accordance with the Construction Disbursement Budget, as amended to date
(after giving effect to the Construction Disbursement Budget Amendment
Certificate delivered in connection with the Request), on or prior to the
Operating Deadline, and the General Contractor is not aware at this time of any
other expenses that the Company will need to incur in order to cause the Riviera
Black Hawk to be Operating on or before the Operating Deadline, and (c) the
General Contractor reasonably believes that the Riviera Black Hawk will be
Operating on or prior to the Operating Deadline;
D-6
<PAGE>
provided that the foregoing representations, warranties and certifications do
not include any matters relating to the status of Gaming Licenses or compliance
with Gaming Laws with respect to whether the Riviera Black Hawk will be
Operating on or prior to the Operating Deadline.
3. [For Post-Operating Disbursements Other Than The Final CRA
Disbursement:] The General Contractor hereby represents, warrants and certifies
that (a) the funds requested under the Request are reasonably necessary to
permit completion of construction of the Riviera Black Hawk in accordance with
the Final Plans and (b) after giving effect to the requested Disbursement (as
defined in the Request), there will be sufficient Available Funds to pay for the
anticipated costs to complete the Riviera Black Hawk in accordance with the
Construction Disbursement Budget, as amended to date (after giving effect to the
Construction Disbursement Budget Amendment Certificate delivered in connection
with the Request), and the General Contractor is not aware at this time of any
other expenses that the Company will need to incur in order to complete the
Riviera Black Hawk in accordance with the Final Plans.
The foregoing representations, warranties and certifications are true,
complete and correct and each of the Disbursement Agent and the Independent
Construction Consultant is entitled to rely on the foregoing in authorizing and
making the Disbursement.
THE WEITZ COMPANY, INC.,
as General Contractor
By:--------------------------
Name:------------------------
Title:-----------------------
D-7
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 3 TO EXHIBIT D-1
Construction Disbursement Budget Amendment Certificate
[To be attached]
D-8
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT D-2
Form of Post-Final CDA Disbursement
Completion Reserve Disbursement Request and Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Completion Reserve Disbursement Request No. _____________ under
Cash Collateral and Disbursement Agreement
Amount Requested: $
Ladies and Gentlemen:
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"),
hereby submits this Completion Reserve Disbursement Request and Certificate
(this "Request") pursuant to that certain Cash Collateral and Disbursement
Agreement dated as of June 3, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Disbursement Agreement"), to which you are a
party. Capitalized terms used and not otherwise defined herein shall have the
meanings given in the Disbursement Agreement.
The Company hereby requests that you, in your capacity under the
Disbursement Agreement, make a disbursement of [$______________ for Hard Costs]
[and] [$____________ for Soft Costs] (collectively, the "Disbursement") from the
Completion Reserve Account to the Disbursed Funds Account so that the Company
may distribute checks or issue wire transfers drawn on the Disbursed Funds
Account to the parties identified on Schedule 1 attached hereto in the
respective amounts listed for such parties therein (the "Project Cost Schedule")
to permit the Company to use the funds so disbursed for working capital and
other permitted construction purposes in connection with the Riviera Black Hawk.
In connection with the requested Disbursement, the Company represents,
warrants and certifies as follows:
1. The funds disbursed pursuant to this requested Disbursement will be
used in accordance with the terms of the Indenture, the Disbursement Agreement
and the other Collateral Documents.
2. [For Hard Cost Disbursements Only:] With respect to Hard Cost
disbursements, Schedule 1 accurately lists each party for whom payment is
requested and, for each line item and for each party to whom payment is
requested with respect to such line item, the following: (a) the name of the
payee to be paid; (b) the current payment requested; (c) the increase or
decrease in accrued but unpaid Retainage
D-9
<PAGE>
Amount, if any, for such payee since the last Disbursement Request (after giving
effect to the payment contemplated by this Disbursement Request); (d) the total
amount contemplated to be payable to such payee under the terms of its
applicable Contract through completion of all work and delivery of all materials
contemplated by the Contract (i.e., the total contract amount); (e) the total
payments made to such payee under its applicable Contract as of the Issue Date;
(f) the total payments made to such payee since the Issue Date (after giving
effect to the payment contemplated by this Disbursement Request); (g) the sum of
all payments made to such payee (after giving effect to the payment contemplated
by this Disbursement Request) (i.e., the sum of (e) and (f) above); (h) the
aggregate accrued Retainage Amounts which shall continue to be owed with respect
to such Contract (after giving effect to the payment contemplated by this
Disbursement Request); and (i) the percentage of the work actually completed, or
the materials actually delivered, under the Contract through the date for which
payment is made hereunder (expressed as a percentage of the total work and
materials contemplated by the Contract through completion), or, if payment is to
be made based on invoice, confirmation that a copy of the applicable invoice is
attached, and a description of the purpose of such payment, specifying the line
item relating to each such payment. In the event that any Advance Disbursements
have been made and have not otherwise been documented as required hereunder and
under the Disbursement Agreement, Schedule 1 also includes each party to whom
payment was made from such Advance Disbursement and a description of the purpose
of such payments, specifying the line item relating to each such payment. The
information set forth in Schedule 1 is true, correct and complete.
3. [For Soft Cost Disbursements Only:] With respect to Soft Cost
disbursements, Schedule 1 accurately lists each party and/or purpose for which
payment is requested and, for each line item and for each party and/or purpose
for which payment is requested with respect to such line item, the following:
(a) the name of the payee to be paid or if it is for Working Capital Expenses,
(b) the current payment requested, and (c) a description of the purpose of such
payment, specifying the line item relating to each such payment. In the event
that any Advance Disbursements have been made and have not otherwise been
documented as required hereunder and under the Disbursement Agreement, Schedule
1 also includes each party to whom payment was made from such Advance
Disbursement and a description of the purpose of such payments specifying the
line item relating to each such payment. The information set forth in Schedule 1
is true, correct and complete.
4. [For Hard Cost Disbursements Only:] With respect to Hard Cost
disbursements, the Company has delivered or caused to be delivered to the
Independent Construction Consultant (a) true and complete invoices that have
been tendered for all Hard Costs for which disbursement is requested hereunder,
(b) duly executed conditional or unconditional (as applicable) lien releases
from all contractors, subcontractors, suppliers and materialmen having provided
work, materials and/or services relating to the Riviera Black Hawk (except as to
Retainage Amounts and such amounts as the Independent Construction Consultant
determines to have been reasonably withheld) for all disbursements identified on
this Disbursement Request, and (c) duly executed acknowledgments of payment and
unconditional lien releases, in form and substance satisfactory to the
Independent Construction Consultant, from all payees identified on the previous
Disbursement Request for payment of Hard Costs and acknowledging the receipt by
such payee of all sums payable to such Contractor from previous Disbursement
Requests (except as to Retainage Amounts and such amounts as the Independent
Construction Consultant determines to have been reasonably withheld).
5. The Construction Disbursement Budget presently in effect for the
Riviera Black Hawk is dated _________________ and includes all amendments
through Construction Disbursement Budget Amendment No. ____. Said Construction
Disbursement Budget accurately sets forth the anticipated costs to complete the
Riviera Black Hawk construction in accordance with the Final Plans. The total
payments
D-10
<PAGE>
by the Company with respect to each line item component described in the
Construction Disbursement Budget (plus any Retainage Amounts held for such line
item) after giving effect to the requested Disbursement shall not exceed the
amount budgeted on the Construction Disbursement Budget for such line item.
Further, to the extent the work or payment required in connection with any line
item has not yet been completed, the Company reasonably believes that the
estimated cost to complete such work or payment will not exceed the difference
between (a) the amount budgeted for such line item on the Construction
Disbursement Budget and (b) the sum of (i) the total payments theretofore
disbursed from the Disbursed Funds Account with respect to such line item and
(ii) any Retainage Amounts then held with respect to such line item.
6. After giving effect to the requested disbursement from the
Completion Reserve Account and the payments contemplated from the Disbursed
Funds Account in connection therewith, there will be sufficient Available Funds
to pay for the anticipated costs described in paragraph 5 above (and the
component parts thereof) in accordance with the aggregate amounts (and line
items) set forth in the Construction Disbursement Budget, and the Company does
not believe that any other expenses will need to be paid or incurred by the
Company in order to cause the Riviera Black Hawk to be completed in accordance
with the Final Plans.
7. [For Disbursements Other Than The Final CRA Disbursement:] The
Riviera Black Hawk has previously commenced Operating. The funds disbursed
pursuant to this Request shall be used, upon disbursement from the Completion
Reserve Account, solely for the payment of approved Hard Costs and Soft Costs
(as applicable) relating to the completion of construction, commencement of
operations and the operation of the Riviera Black Hawk, and such funds are
reasonably necessary to permit completion of construction in accordance with the
Final Plans, commencement of operations and operation of the Riviera Black Hawk.
8. [If Amending The Construction Disbursement Budget:] The following
circumstances resulted in the cost to [complete] [commence operations of] the
Riviera Black Hawk to exceed (as applicable) the Initial Construction
Disbursement Budget or, if the Initial Construction Disbursement Budget has
previously been amended, the Construction Disbursement Budget:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
9. [If Amending The Construction Disbursement Budget:] The
circumstances described in the preceding paragraph were not reasonably
anticipated by the Company in preparing (as applicable) the Initial Construction
Disbursement Budget or, if the Initial Construction Disbursement Budget has been
amended, in preparing the latest amendment to the Construction Disbursement
Budget, for the following reasons:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
10. [Hard Costs Only:] As of the date hereof, the Company has submitted
to the Independent Construction Consultant all Plans applicable to the
Disbursement requested herein which, as of the date hereof, constitute Final
Plans. Further, all disbursements requested under this Disbursement Request are
for the payment of Construction Expenses incurred for work consistent with the
Plans which the Company reasonably believes are, or ultimately will become,
Final Plans. The construction performed as of the date
D-11
<PAGE>
hereof is of first quality and in accordance with the Plans for the Riviera
Black Hawk and the Disbursement is appropriate in light of the percentage of
construction completed, the amount of stored materials and advance deposits
required for materials provided for in the Construction Disbursement Budget
presently in effect.
11. All disbursements previously requested by the Company and made by
the Disbursement Agent into the Disbursed Funds Account prior to the date hereof
(other than Advance Disbursements permitted to be outstanding under the
Disbursement Agreement) have been disbursed by the Company in substantially the
manner certified by the Company in the applicable Disbursement Request.
12. The Company has previously delivered to the Independent
Construction Consultant copies of all Contracts to which the Company is a party
for the Riviera Black Hawk with payment obligations of at least Thirty Thousand
Dollars ($30,000) and, with respect to each such Contract: (a) if it is a
Material Construction Document, a Consent to Collateral Assignment of Contract
in the form attached as Exhibit H to the Disbursement Agreement, executed by the
third-party Contractor under each such Contract; and (b) copies of such
performance and/or payment bonds (naming the Company and the Trustee as
additional insureds), if any, as the Company may require to be provided to the
Company pursuant to any Contract. Each such bond continues to be enforceable and
has not been terminated or canceled (except in accordance with its terms upon
completion of the respective work or delivery of the respective materials).
13. Immediately prior and upon giving effect to the above requested
Disbursement, there is no Default or Event of Default.
14. [For the Final CRA Disbursement:] The Riviera Black Hawk is
completed in accordance with the Final Plans and all applicable building and
other laws, ordinances and regulations. The Riviera Black Hawk has been
Operating for at least the previous one-hundred-eighty (180) days uninterrupted,
and no lien, notice of lien, or notice of extension of time for filing of lien
has been filed against the Property in favor of any contractor, subcontractor,
supplier or materialman which have not been released or removed of record prior
to the date hereof. There is no ongoing construction in connection with the
Riviera Black Hawk (other than maintenance and repairs in the ordinary course of
business).
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in making the Disbursement.
D-12
<PAGE>
Attached to this Request is (i) [For Hard Cost Disbursements, Soft Cost
Disbursements (Other Than Working Capital) And/Or The Final CRA Disbursement
Only:] a certificate from the Independent Construction Consultant, (ii) [For
Hard Cost Disbursements Or Construction Disbursement Budget Amendments Only:] a
certificate from the General Contractor, (iii) [For Hard Cost Disbursements Or
Construction Disbursement Budget Amendments Only:] a certificate from the
Architect and (iv) [For Construction Disbursement Budget Amendments Only:] if
applicable, a Construction Disbursement Budget Amendment Certificate.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:--------------------------
Name:------------------------
Title:-----------------------
Received and Reviewed:
RIVIERA HOLDINGS CORP.
By:--------------------------
Name:------------------------
Title:-----------------------
D-13
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 1 TO EXHIBIT D-2
Project Cost Schedule for Completion Reserve Disbursement Request No. ______
[To be attached]
D-14
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT D-2
Form of Certificate of Independent Construction Consultant
Post-Final CDA Disbursement Completion Reserve Disbursement Request
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Completion Reserve Disbursement Request No. _________________ under
Cash Collateral and Disbursement Agreement of Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "Independent Construction Consultant") hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the
above-referenced Completion Reserve Disbursement Request (the "Request") and the
Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to which Riviera Black Hawk, Inc., a Colorado corporation (the
"Company"), is a party. Capitalized terms used and not otherwise defined herein
shall have the same meanings given in the Request.
2. The Independent Construction Consultant represents, warrants and
certifies that (a) the funds requested to fund Hard Costs and Soft Costs other
than Working Capital Expenses (as applicable) under the Request are reasonably
necessary to permit completion of construction of the Riviera Black Hawk in
accordance with the Final Plans, (b) after giving effect to the requested
Disbursement and the payments contemplated from the Disbursed Funds Account in
connection therewith, there will be sufficient Available Funds to pay for the
anticipated costs to complete the Riviera Black Hawk in accordance with the
Construction Disbursement Budget, as amended to date (after giving effect to the
Construction Disbursement Budget Amendment Certificate delivered in connection
with the Request, if any), and the Independent Construction Consultant is not
aware at this time of any other expenses that the Company will need to incur in
order to complete the Riviera Black Hawk in accordance with the Final Plans, and
(c) the Independent Construction Consultant has no actual knowledge of (i) any
Default or Event of Default that exists or which may occur as a result of the
making of the Disbursement, or (ii) any material errors, inaccuracies,
misstatements or omissions of fact in the Request or any exhibit or attachment
thereto; provided that no certification is made herein with respect to any
matters relating to the status of Gaming Licenses or compliance with Gaming
Laws.
D-15
<PAGE>
3. [For Hard Costs Only:] The Independent Construction Consultant has
received from the Company all Plans applicable to the Disbursement requested
pursuant to (and as defined in) the Disbursement Request and, in the Independent
Construction Consultant's professional opinion, the construction performed as of
the date hereof is in accordance with the Plans, and the Disbursement is
appropriate in light of the percentage of construction completed and the amount
of stored materials, and/or invoices submitted, as applicable. Further, all
disbursements requested under this Disbursement Request that are for the payment
of Hard Costs have been incurred for work consistent with the Plans.
4. The Independent Construction Consultant has reviewed all
disbursements made prior to the date hereof from the Construction Disbursement
Account and, after the Final CDA Disbursement, the Completion Reserve Account
(other than disbursements for Working Capital Expenses), and compared the
invoices or other documentation supporting such disbursements with the
respective Construction Disbursement Budget category presently in effect and
confirms that the total disbursements to date in such category do not exceed the
budgeted amount for such category, taking into account amounts reimbursed by the
Company to the Completion Reserve Account after the Final CDA Disbursement for
Working Capital Expenses.
5. The Independent Construction Consultant does not dispute the
appropriateness of any item or items the value of which exceeds Fifty Thousand
Dollars ($50,000) funded with the proceeds of a previous Disbursement Request.
6. The Construction Disbursement Budget accurately sets forth the
anticipated costs of completion of the Riviera Black Hawk in accordance with the
Final Plans.
7. Pursuant to its duties under the Disbursement Agreement, the
Independent Constructor Consultant has inspected the Riviera Black Hawk within
the previous four weeks of the date of this certificate.
8. [For Hard Costs Only] The Independent Construction Consultant has
received (a) duly executed conditional or unconditional (as applicable) lien
releases from all contractors, subcontractors, suppliers and materialmen having
provided work, materials and/or services constituting completed construction or
stored materials relating to the Riviera Black Hawk (except as to Retainage
Amounts and such amounts as the Independent Construction Consultant determines
to have been reasonably withheld) for all disbursements identified on the
Disbursement Request, and (b) duly executed acknowledgments of payment and
unconditional lien releases, in form and substance satisfactory to the
Independent Construction Consultant, from all payees identified on the previous
Disbursement Request for payment of Hard Costs and acknowledging the receipt by
such payee of all sums payable to such Contractor from previous Disbursement
Requests (except as to Retainage Amounts and such amounts as the Independent
Construction Consultant determines to have been reasonably withheld).
9. [For Soft Costs Only] With respect to Soft Cost disbursements (other
than for Working Capital Expenses), the Independent Construction Consultant has
reviewed Schedule 1 to the Disbursement Request and hereby certifies that there
is adequate availability in the applicable line item under the Construction
Disbursement Budget presently in effect with respect to each such Soft Cost
disbursement requested under the Disbursement Request.
10. The Independent Construction Consultant has previously received
from the Company copies of all Contracts to which the Company is a party for the
Riviera Black Hawk with payment obligations of at least Thirty Thousand Dollars
($30,000) and, with respect to each such Contract: (a) if it
D-16
<PAGE>
is a Material Construction Document, a Consent to Collateral Assignment of
Contract in the form attached as Exhibit H to the Disbursement Agreement,
executed by the third-party Contractor under each such Contract; and (b) copies
of such performance and/or payment bonds (naming the Company and the Trustee as
additional insureds), if any, as the Company may require to be provided to the
Company pursuant to any Contract. To the knowledge of the Independent
Construction Consultant, each such bond continues to be enforceable and has not
been terminated or canceled (except in accordance with its terms upon completion
of the respective work or delivery of the respective materials).
11. The Independent Construction Consultant has reviewed (a) all
disbursements (other than disbursements for Working Capital Expenses) made from
the Completion Reserve Account in excess of $100,000 and (b) a sampling of at
least twenty percent (20%) of those disbursements from the Completion Reserve
Account individually less than $100,000, and has compared the documentation
supporting such disbursements with the respective Construction Disbursement
Budget category presently in effect to confirm that the total disbursements to
date in such category do not exceed the budgeted amount for such category.
12. [For the Final CRA Disbursement:] The Riviera Black Hawk is
complete in accordance with the Final Plans. The Riviera Black Hawk has been
Operating for at least the previous one-hundred-eighty (180) days uninterrupted,
and no lien, notice of lien, or notice of extension of time for filing of lien
has been filed against the Property by any contractor, subcontractor, supplier
or materialman which have not otherwise been released or removed of record prior
to the date hereof; provided that no certification is made herein with respect
to any matters relating to the status of Gaming Licenses or compliance with
Gaming Laws. To the Independent Construction Consultant's actual knowledge, (i)
immediately prior to and after giving effect to the Disbursement, there is no
and will not be any Default or Event of Default, and (ii) there are no material
errors, inaccuracies, misstatements or omissions of fact in the Request or any
exhibit or attachment thereto. There is no ongoing construction in connection
with the Riviera Black Hawk (other than maintenance and repairs in the ordinary
course of business).
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
D-17
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT D-2
Form of Certificate of General Contractor
Post-Final CDA Disbursement Completion Reserve Disbursement Request
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Completion Reserve Disbursement Request No. _______________ under Cash
Collateral and Disbursement Agreement of Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "General Contractor") hereby certifies as follows:
1. The General Contractor has reviewed the above referenced Completion
Reserve Disbursement Request (the "Request") and the Cash Collateral and
Disbursement Agreement dated as of June 3, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Disbursement Agreement"), to which
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"), is a party, to
the extent necessary to understand the defined terms contained herein and in the
Request that are incorporated by reference from the Disbursement Agreement and
to provide the certification contained herein. Capitalized terms used and not
otherwise defined herein shall have the meanings given in the Disbursement
Agreement
2. The General Contractor hereby certifies and confirms the accuracy of
the certifications in paragraphs 2, 4, 5, 6, 9 and 10 of the above-referenced
Disbursement Request as if made by and on behalf of the General Contractor
directly; provided that the General Contractor makes no certification or
confirmation relating to the status of Gaming Licenses or compliance with Gaming
Laws with respect to whether the Riviera Black Hawk is or has been Operating.
D-18
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and each of the Disbursement Agent and the Independent
Construction Consultant is entitled to rely on the foregoing in authorizing and
making the Disbursement.
THE WEITZ COMPANY, INC.,
as General Contractor
By:--------------------------
Name:------------------------
Title:-----------------------
D-19
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 3 TO EXHIBIT D-2
Form of Certificate of Architect
Post-Final CDA Disbursement Completion Reserve Disbursement Request
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Completion Reserve Disbursement Request No. _______________ under Cash
Collateral and Disbursement Agreement of Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "Architect") hereby certifies as follows:
1. The Architect has reviewed the above referenced Completion Reserve
Disbursement Request (the "Request") and the Cash Collateral and Disbursement
Agreement dated as of June 3, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Disbursement Agreement"), to which Riviera
Black Hawk, Inc., a Colorado corporation (the "Company"), is a party, to the
extent necessary to understand the defined terms contained herein and in the
Request that are incorporated by reference from the Disbursement Agreement and
to provide the certification contained herein. Capitalized terms used and not
otherwise defined herein shall have the meanings given in the Disbursement
Agreement
2. The Architect has inspected the Riviera Black Hawk within the
preceding week and hereby certifies that, to the best of its knowledge and
belief, based on its limited visual observation at the time of such inspection
and the information provided to the Architect, the construction as of such date
is substantially in compliance with the intent of the Plans as prepared by the
Architect.
D-20
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and each of the Disbursement Agent and the Independent
Construction Consultant is entitled to rely on the foregoing in authorizing and
making the Disbursement.
MELICK ASSOCIATES, INC.,
as Architect
By:--------------------------
Name:------------------------
Title:-----------------------
D-21
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 4 TO EXHIBIT D-2
Construction Disbursement Budget Amendment Certificate
[To be attached]
D-22
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT E-1
Form of Construction Disbursement Request and Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
IBJ Whitehall Bank & Trust Company,
as Trustee
One State Street
New York, New York, 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Construction Disbursement Request No. ____________ under
Cash Collateral and Disbursement Agreement
Amount Requested: $
Ladies and Gentlemen:
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"),
hereby submits this Construction Disbursement Request and Certificate (the
"Disbursement Request") pursuant to that certain Cash Collateral and
Disbursement Agreement dated as of June 3, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Disbursement Agreement"), to which
each of you are a party. Capitalized terms used and not otherwise defined herein
shall have the meanings given in the Disbursement Agreement.
The Company hereby requests the Disbursement Agent, and requests the
Independent Construction Consultant to authorize the Disbursement Agent, to make
a disbursement of [$______________ for Hard Costs] [and] [$____________ for Soft
Costs] (collectively, the "Disbursement") from the Construction Disbursement
Account to the Disbursed Funds Account so that the Company may distribute checks
or issue wire transfers drawn on the Disbursed Funds Account to the parties
identified on Schedule 1 attached hereto in the respective amounts listed for
such parties therein (the "Project Cost Schedule").
In connection with the requested Disbursement, the Company represents,
warrants and certifies as follows:
E-1
<PAGE>
1. [For Hard Cost Disbursements Only:] With respect to Hard Cost
disbursements, Schedule 1 accurately lists each party for whom payment is
requested and, for each line item and for each party to whom payment is
requested with respect to such line item, the following: (a) the name of the
payee to be paid; (b) the current payment requested; (c) the increase or
decrease in accrued but unpaid Retainage Amount, if any, for such payee since
the last Disbursement Request (after giving effect to the payment contemplated
by this Disbursement Request); (d) the total amount contemplated to be payable
to such payee under the terms of its applicable Contract through completion of
all work and delivery of all materials contemplated by the Contract (i.e., the
total contract amount); (e) the total payments made to such payee under its
applicable Contract as of the Issue Date; (f) the total payments made to such
payee since the Issue Date (after giving effect to the payment contemplated by
this Disbursement Request); (g) the sum of all payments made to such payee
(after giving effect to the payment contemplated by this Disbursement Request)
(i.e., the sum of (e) and (f) above); (h) the aggregate accrued Retainage
Amounts which shall continue to be owed with respect to such Contract (after
giving effect to the payment contemplated by this Disbursement Request); and (i)
the percentage of the work actually completed, or the materials actually
delivered, under the Contract through the date for which payment is made
hereunder (expressed as a percentage of the total work and materials
contemplated by the Contract through completion), or, if payment is to be made
based on invoice, confirmation that a copy of the applicable invoice is
attached, and a description of the purpose of such payment, specifying the line
item relating to each such payment. In the event that any Advance Disbursements
have been made and have not otherwise been documented as required hereunder and
under the Disbursement Agreement, Schedule 1 also includes each party to whom
payment was made from such Advance Disbursement and a description of the purpose
of such payments, specifying the line item relating to each such payment. The
information set forth in Schedule 1 is true, correct and complete.
2. [For Soft Cost Disbursements Only:] With respect to Soft Cost
disbursements, Schedule 1 accurately lists each party and/or purpose for which
payment is requested and, for each line item and for each party and/or purpose
for which payment is requested with respect to such line item, the following:
(a) the name of the payee to be paid or if it is for Working Capital Expenses,
(b) the current payment requested, and (c) a description of the purpose of such
payment, specifying the line item relating to each such payment. In the event
that any Advance Disbursements have been made and have not otherwise been
documented as required hereunder and under the Disbursement Agreement, Schedule
1 also includes each party to whom payment was made from such Advance
Disbursement and a description of the purpose of such payments specifying the
line item relating to each such payment. The information set forth in Schedule 1
is true, correct and complete.
3. [For Hard Cost Disbursements Only:] With respect to Hard Cost
disbursements, the Company has delivered or caused to be delivered to the
Independent Construction Consultant (a) true and complete invoices that have
been tendered for all Hard Costs for which disbursement is requested hereunder,
(b) duly executed conditional or unconditional (as applicable) lien releases
from all contractors, subcontractors, suppliers and materialmen having provided
work, materials and/or services relating to the Riviera Black Hawk (except as to
Retainage Amounts and such amounts as the Independent Construction Consultant
determines to have been reasonably withheld) for all disbursements identified on
this Disbursement Request, and (c) duly executed acknowledgments of payment and
unconditional lien releases, in form and substance satisfactory to the
Independent Construction Consultant, from all payees identified on the previous
Disbursement Request for payment of Hard Costs and acknowledging the receipt by
such payee of all sums payable to such Contractor from previous Disbursement
Requests (except as to
E-2
<PAGE>
Retainage Amounts and such amounts as the Independent Construction Consultant
determines to have been reasonably withheld).
4. The Construction Disbursement Budget presently in effect for the
Riviera Black Hawk is dated _________________ and includes all amendments
through Construction Disbursement Budget Amendment No. ____. Said Construction
Disbursement Budget accurately sets forth the anticipated costs to complete the
Riviera Black Hawk construction [[For Disbursements Prior To Operating:] through
the date that the Riviera Black Hawk is Operating and] in accordance with the
Plans. The total payments by the Company with respect to each line item
component described in the Construction Disbursement Budget (plus any Retainage
Amounts held for such line item) after giving effect to the requested
Disbursement shall not exceed the amount budgeted on the Construction
Disbursement Budget for such line item. Further, to the extent the work or
payment required in connection with any line item has not yet been completed,
the Company reasonably believes that the estimated cost to complete such work or
payment will not exceed the difference between (a) the amount budgeted for such
line item on the Construction Disbursement Budget and (b) the sum of (i) the
total payments theretofore disbursed from the Disbursed Funds Account with
respect to such line item and (ii) any Retainage Amounts then held with respect
to such line item.
5. After giving effect to the requested disbursement from the
Construction Disbursement Account and the payments contemplated from the
Disbursed Funds Account in connection therewith, together with, in the event any
Advance Disbursements have been made on or prior to the date hereof and have not
otherwise been documented as required under the Disbursement Agreement, each
such Advance Disbursement from the Construction Disbursement Account, there will
be sufficient Available Funds to pay for the anticipated costs described in
paragraph 4 above (and the component parts thereof) in accordance with the
aggregate amounts (and line items) set forth in the Construction Disbursement
Budget, and the Company does not believe that any other expenses will need to be
paid or incurred by the Company in order to cause the Riviera Black Hawk to be
[[For Disbursements Prior To Operating:] Operating on or prior to the Operating
Deadline and] completed in accordance with the Plans.
6. Immediately prior to and upon giving effect to this Disbursement
Request, there is no and will not be any Default or Event of Default.
7. [Hard Costs Only:] As of the date hereof, the Company has submitted
to the Independent Construction Consultant all Plans applicable to the
Disbursement requested herein which, as of the date hereof, constitute Final
Plans. Further, all disbursements requested under this Disbursement Request are
for the payment of Construction Expenses incurred for work consistent with the
Plans which the Company reasonably believes are, or ultimately will become,
Final Plans [[For Disbursements Prior To Operating:] and which will permit the
Company to complete construction of the Riviera Black Hawk on or prior to the
Operating Deadline]. The construction performed as of the date hereof is of
first quality and in accordance with the Plans for the Riviera Black Hawk and
the Disbursement is appropriate in light of the percentage of construction
completed, the amount of stored materials and advance deposits required for
materials provided for in the Construction Disbursement Budget presently in
effect.
8. [For Disbursements Prior To Operating:] As of the date hereof, the
Company reasonably believes that the date on which the Riviera Black Hawk will
become Operating will occur on or prior to the Operating Deadline.
9. All disbursements previously requested by the Company and made by
the Disbursement Agent into the Disbursed Funds Account prior to the date hereof
(other than Advance Disbursements
E-3
<PAGE>
permitted to be outstanding under the Disbursement Agreement) have been
disbursed by the Company in substantially the manner certified by the Company in
the applicable Construction Disbursement Request or Advance Request (as
applicable).
10. This Disbursement Request, as well as the Disbursement requested,
is, and such Disbursement will be used, in compliance with the Disbursement
Agreement and the Indenture.
11. The Company has previously delivered to the Independent
Construction Consultant copies of all Contracts to which the Company is a party
for the Riviera Black Hawk with payment obligations of at least Thirty Thousand
Dollars ($30,000) and, with respect to each such Contract: (a) if it is a
Material Construction Document, a Consent to Collateral Assignment of Contract
in the form attached as Exhibit H to the Disbursement Agreement, executed by the
third-party Contractor under each such Contract; and (b) copies of such
performance and/or payment bonds (naming the Company and the Trustee as
additional insureds), if any, as the Company may require to be provided to the
Company pursuant to any Contract. Each such bond continues to be enforceable and
has not been terminated or canceled (except in accordance with its terms upon
completion of the respective work or delivery of the respective materials).
12. [For Disbursements Immediately Following Completion Of Any
Foundation For Any Building Within The Riviera Black Hawk:] The Company has
delivered to the Independent Construction Consultant, on a building-by-building
basis, a foundation endorsement from the Title Company insuring that the
foundations for each building within the Riviera Black Hawk are constructed
wholly within the boundaries of the Property then owned in fee simple by the
Company and does not encroach on any easements or violate any covenants,
conditions or restrictions of record.
13. [For the Final CDA Disbursement Only:] The Riviera Black Hawk is
substantially complete in all material respects in accordance with the Final
Plans with respect to the Minimum Facilities and all applicable building and
other laws, ordinances and regulations. The Riviera Black Hawk has been
Operating for at least the previous thirty (30) days uninterrupted. There is no
ongoing construction in connection with the Riviera Black Hawk (other than
maintenance and repairs in the ordinary course of business and other than
construction associated with the Riviera Black Hawk, including all punch list
items (exclusive of Retainage Amounts), in an aggregate amount (exclusive of
Retainage Amounts) not to exceed $250,000). As of the date hereof, the amount
necessary to complete the Riviera Black Hawk in accordance with the Final Plans,
including all punch list items, is $_______ (the "Reserved Construction
Amount"). The Company represents, warrants and covenants that an amount equal to
the sum of (i) the Reserved Construction Amount and (ii) any unpaid Retainage
Amounts due and owing as of the date hereof or hereafter shall be deposited in
the Disbursed Funds Account from the proceeds of the Final CDA Disbursement and
the Company shall use such funds to pay Construction Expenses (including such
Retainage Amounts as the same become due and payable) to complete the Riviera
Black Hawk in accordance with the Final Plans, including all punch list items.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
E-4
<PAGE>
[For Hard Cost Disbursements Only:] Attached to this Disbursement
Request are certificates of the General Contractor and the Architect.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:--------------------------
Name:------------------------
Title:-----------------------
Received and Reviewed:
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
E-5
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 1 TO EXHIBIT E-1
Project Cost Schedule for Construction Disbursement Request No. ______
[To be attached]
E-6
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT E-1
Form of Certificate of Independent Construction Consultant for
Disbursement Request for Construction Expenses
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Disbursement Request No. __________ under
Cash Collateral and Disbursement
Agreement of Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "Independent Construction Consultant") hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the
above-referenced Disbursement Request and the Cash Collateral and Disbursement
Agreement dated as of June 3, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Disbursement Agreement"), to which Riviera
Black Hawk, Inc., a Colorado corporation (the "Company"), is a party. All
capitalized terms used and not otherwise defined herein shall have the meanings
given in the Disbursement Agreement.
2. The Independent Construction Consultant has received from the
Company all Plans applicable to the Disbursement requested pursuant to (and as
defined in) the Disbursement Request and, in the Independent Construction
Consultant's professional opinion, the construction performed as of the date
hereof is in accordance with the Plans, and the Disbursement is appropriate in
light of the percentage of construction completed and the amount of stored
materials, and/or invoices submitted, as applicable. Further, all disbursements
requested under this Disbursement Request that are for the payment of Hard Costs
have been incurred for work consistent with the Plans[[For Disbursements Prior
To Operating:], which will permit the Company to complete construction of the
Riviera Black Hawk on or prior to the Operating Deadline].
3. The Independent Construction Consultant has reviewed all
disbursements made prior to the date hereof from the Construction Disbursement
Account and compared the invoices or other documentation supporting such
disbursements with the respective Construction Disbursement Budget category
presently in effect and confirms that the total disbursements to date in such
category do not exceed the budgeted amount for such category.
E-7
<PAGE>
4. The Independent Construction Consultant does not dispute the
appropriateness of any item or items the value of which exceeds Fifty Thousand
Dollars ($50,000) funded with the proceeds of a previous Construction
Disbursement Request.
5. The Construction Disbursement Budget accurately sets forth the
anticipated costs of completion of the Riviera Black Hawk [For Disbursements
Prior To Operating:] [through the date that the Riviera Black Hawk is Operating
and] in accordance with the Plans.
6. [For Disbursements Prior To Operating:] After giving effect to the
requested disbursement from the Construction Disbursement Account and the
payments contemplated from the Disbursed Funds Account in connection therewith,
there will be sufficient Available Funds to pay for the anticipated costs to
complete construction of the Riviera Black Hawk (and component parts thereof) in
accordance with the aggregate amounts (and line items) set forth in the
Construction Disbursement Budget presently in effect, and the Independent
Construction Consultant is not aware of any other expenses that will be needed
to be paid or incurred by the Company in order to cause the Riviera Black Hawk
to be Operating prior to the Operating Deadline. The Independent Construction
Consultant reasonably believes that the Riviera Black Hawk will be Operating
prior to the Operating Deadline; provided that the Independent Construction
Consultant makes no certification or confirmation relating to the status of
Gaming Laws with respect to whether the Riviera Black Hawk will be Operating on
or prior to the Operating Deadline.
7. [For Post-Operating Disbursements Prior To The Final CDA
Disbursement:] After giving effect to the requested disbursement from the
Construction Disbursement Account and the payments contemplated from the
Disbursed Funds Account in connection therewith, there will be sufficient
Available Funds to pay for the anticipated costs to complete construction of the
Riviera Black Hawk (and component parts thereof) in accordance with the
aggregate amounts (and line items) set forth in the Construction Disbursement
Budget presently in effect, and the Independent Construction Consultant is not
aware of any other expenses that will be needed to be paid or incurred by the
Company in order to complete the Riviera Black in accordance with the Final
Plans.
8. Pursuant to its duties under the Disbursement Agreement, the
Independent Construction Consultant has inspected the Riviera Black Hawk within
the previous four weeks of the date of this certificate.
9. [For The Final CDA Disbursement Only:] The Riviera Black Hawk is
substantially complete in all material respects in accordance with the Final
Plans with respect to the Minimum Facilities. The Riviera Black Hawk has been
Operating for at least the previous thirty (30) days uninterrupted; provided
that no certification is made herein with respect to any matters relating to the
status of Gaming Licenses or compliance with Gaming Laws. To the Independent
Construction Consultant's actual knowledge, (a) immediately prior to and after
giving effect to this requested Disbursement, there is no and will not be any
Default or Event of Default, and (b) there are no material errors, inaccuracies,
misstatements or omissions of fact in the Disbursement Request or any exhibit or
attachment thereto. There is no ongoing construction in connection with the
Riviera Black Hawk (other than maintenance and repairs in the ordinary course of
business and other than construction associated with the Riviera Black Hawk,
including all punch list items, in an aggregate amount not to exceed $250,000).
The Independent Construction Consultant reasonably believes that the amount
necessary as of the date hereof to complete the Riviera Black Hawk in accordance
with the Final Plans, including all punch list items (exclusive of Retainage
Amounts), should not exceed the Reserved Construction Amount as set forth and
defined in the above-referenced Disbursement Request of the Company.
E-8
<PAGE>
10. [For Hard Costs Only] The Independent Construction Consultant has
received (a) duly executed conditional or unconditional (as applicable) lien
releases from all contractors, subcontractors, suppliers and materialmen having
provided work, materials and/or services constituting completed construction or
stored materials relating to the Riviera Black Hawk (except as to Retainage
Amounts and such amounts as the Independent Construction Consultant determines
to have been reasonably withheld) for all disbursements identified on the
Disbursement Request, and (b) duly executed acknowledgments of payment and
unconditional lien releases, in form and substance satisfactory to the
Independent Construction Consultant, from all payees identified on the previous
Disbursement Request for payment of Hard Costs and acknowledging the receipt by
such payee of all sums payable to such Contractor from previous Disbursement
Requests (except as to Retainage Amounts and such amounts as the Independent
Construction Consultant determines to have been reasonably withheld).
11. [For Soft Costs Only] With respect to Soft Cost disbursements, the
Independent Construction Consultant has reviewed Schedule 1 to the Disbursement
Request and hereby certifies that there is adequate availability in the
applicable line item under the Construction Disbursement Budget presently in
effect with respect to each Soft Cost disbursement requested under the
Disbursement Request.
12. The Independent Construction Consultant has previously received
from the Company copies of all Contracts to which the Company is a party for the
Riviera Black Hawk with payment obligations of at least Thirty Thousand Dollars
($30,000) and, with respect to each such Contract: (a) if it is a Material
Construction Document, a Consent to Collateral Assignment of Contract in the
form attached as Exhibit H to the Disbursement Agreement, executed by the
third-party Contractor under each such Contract; and (b) copies of such
performance and/or payment bonds (naming the Company and the Trustee as
additional insureds), if any, as the Company may require to be provided to the
Company pursuant to any Contract. To the knowledge of the Independent
Construction Consultant, each such bond continues to be enforceable and has not
been terminated or canceled (except in accordance with its terms upon completion
of the respective work or delivery of the respective materials).
13. The Independent Construction Consultant has reviewed (a) all
disbursements made from the Construction Disbursement Account in excess of
$100,000 and (b) a sampling of at least twenty percent (20%) of those
disbursements from the Construction Disbursement Account individually less than
$100,000, and has compared the documentation supporting such disbursements with
the respective Construction Disbursement Budget category presently in effect to
confirm that the total disbursements to date in such category do not exceed the
budgeted amount for such category.
14. [For Disbursements Immediately Following Completion Of Any
Foundation For Any Building Within The Riviera Black Hawk:] The Independent
Construction Consultant has received a copy of a foundation endorsement, on a
building-by-building basis, from the Title Company insuring that the foundations
for each building within the Riviera Black Hawk are constructed wholly within
the boundaries of the Property then owned in fee simple by the Company and that
such foundation(s) does not encroach on any easements or violate any covenants,
conditions or restrictions of record.
E-9
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
E-10
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT E-1
Form of Certificate of General Contractor for
Disbursement Request for Construction Expenses
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Disbursement Request No. ____________ under
Cash Collateral and Disbursement
Agreement of Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "General Contractor") hereby certifies as follows:
1. The General Contractor has reviewed the above referenced
Disbursement Request and the Cash Collateral and Disbursement Agreement dated as
of June 3, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Disbursement Agreement"), to which Riviera Black Hawk, Inc., a
Colorado corporation (the "Company") is a party, to the extent necessary to
understand the defined terms contained herein and in the Disbursement Request
that are incorporated by reference from the Disbursement Agreement and to
provide the certification contained herein. Capitalized terms used and not
otherwise defined herein shall have the meanings given in the Disbursement
Agreement.
2. The General Contractor hereby certifies and confirms the accuracy of
the certifications in paragraphs 1, 3, 4, 5 and 7 of the above-referenced
Disbursement Request as if made by and on behalf of the General Contractor
directly; provided that the General Contractor makes no certification or
confirmation relating to the status of Gaming Licenses or compliance with Gaming
Laws with respect to whether the Riviera Black Hawk will be Operating on or
prior to the Operating Date.
3. [For Disbursements Prior To Operating:] The General Contractor
hereby certifies that, to the best of its knowledge, the Riviera Black Hawk may
be constructed prior to the Operating Deadline in accordance with the
Construction Disbursement Budget presently in effect.
E-11
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and each of the Disbursement Agent and the Independent
Construction Consultant is entitled to rely on the foregoing in authorizing and
making the Disbursement.
THE WEITZ COMPANY, INC.,
as General Contractor
By:--------------------------
Name:------------------------
Title:-----------------------
E-12
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 3 TO EXHIBIT E-1
Form of Certificate of Architect for
Disbursement Request for Construction Expenses
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Disbursement Request No. _____________ under
Cash Collateral and Disbursement
Agreement of Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "Architect") hereby certifies as follows:
1. The Architect has reviewed the above referenced Disbursement Request
and the Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to which Riviera Black Hawk, Inc., a Colorado corporation (the
"Company") is a party, to the extent necessary to understand the defined terms
contained herein and in the Disbursement Request that are incorporated by
reference from the Disbursement Agreement and to provide the certification
contained herein. Capitalized terms used and not otherwise defined herein shall
have the meanings given in the Disbursement Agreement.
2. The Architect has inspected the Riviera Black Hawk within the
preceding week and hereby certifies that, to the best of its knowledge and
belief, based on its limited visual observation at the time of such inspection
and the information provided to the Architect, the construction as of such date
is substantially in compliance with the intent of the Plans as prepared by the
Architect.
E-13
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and each of the Disbursement Agent and the Independent
Construction Consultant is entitled to rely on the foregoing in authorizing and
making the Disbursement.
MELICK ASSOCIATES, INC.,
as Architect
By:--------------------------
Name:------------------------
Title:-----------------------
E-14
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT E-2
Form of Advance Disbursement Request and Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Advance Disbursement Request No. __________
under Cash Collateral and Disbursement Agreement
Amount Requested: $
Ladies and Gentlemen:
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"),
hereby submits this Advance Disbursement Request and Certificate (the
"Disbursement Request") pursuant to that certain Cash Collateral and
Disbursement Agreement dated as of June 3, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Disbursement Agreement"), to which
each of you is a party. Capitalized terms used and not otherwise defined herein
without definition shall have the meanings given in the Disbursement Agreement.
The Company hereby requests that the Disbursement Agent make a
disbursement of $_________ [aggregate Advance Disbursements not to exceed
$1,500,000] from the Construction Disbursement Account to the Disbursed Funds
Account.
The Company hereby represents, warrants and certifies as follows:
1. Amounts disbursed pursuant to this Disbursement Request shall be
used solely for the following purposes in connection with the Riviera Black
Hawk:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
2. Prior to and after giving effect to this disbursement, there is and
there will be no Default or Event of Default.
E-15
<PAGE>
3. In the event that any Advance Disbursements have previously been
made, the Company has provided (or will provide within the period specified
under the Disbursement Agreement) the same supporting documentation as is
required under the Disbursement Agreement with respect to Construction
Disbursement Requests within thirty (30) days after each such Advance
Disbursement was made.
4. The amount of the requested Disbursement hereunder, together with
Advance Disbursements previously made to the Company which have not otherwise
been documented as required in the Disbursement Agreement, do not exceed the
amount of One Million Five Hundred Thousand Dollars ($1,500,000).
5. The Construction Disbursement Budget presently in effect for the
Riviera Black Hawk is dated _____________ and includes all amendments through
Construction Disbursement Budget Amendment No. _____. Said Construction
Disbursement Budget accurately sets forth the anticipated costs to complete the
Riviera Black Hawk construction [[For Disbursements Prior To Operating:] through
the date that the Riviera Black Hawk is Operating and] in accordance with the
Plans.
6. [For Disbursements Prior To Operating:] As of the date hereof, the
Company reasonably believes that the Riviera Black Hawk will be Operating on or
prior to the Operating Deadline.
7. The total payments by the Company with respect to each line item
component described on the Construction Disbursement Budget (plus any Retainage
Amounts held for such line item), after giving effect to the requested Advance
Disbursement, shall not exceed the amount budgeted on the Construction
Disbursement Budget for such line item. Further, to the extent the work or
payment required in connection with any line item has not yet been completed,
the Company reasonably believes that the estimated cost to complete such work or
payment will not exceed the difference between: (a) the amount budgeted for such
line item on the Construction Disbursement Budget and (b) the sum of (i) the
total payments theretofore disbursed from the Disbursed Funds Account with
respect to such line item and (ii) any Retainage Amounts then held with respect
to such line item.
E-16
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the disbursement requested hereunder.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:--------------------------
Name:------------------------
Title:-----------------------
Received and Reviewed:
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
E-17
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT E-2
Form of Certificate of Independent Construction Consultant for
Advance Disbursement Request for Construction Expenses
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Advance Disbursement Request No. __________ under
Cash Collateral and Disbursement Agreement of
Riviera Black Hawk, Inc.
Ladies and Gentlemen:
The undersigned (the "Independent Construction Consultant") hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the
above-referenced Advance Disbursement Request and the Cash Collateral and
Disbursement Agreement dated as of June 3, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Disbursement Agreement"), to which
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"), is a party.
All capitalized terms used and not otherwise defined herein shall have the
meanings given in the Disbursement Agreement.
2. The Independent Construction Consultant has no actual knowledge
(from the facts set forth in any Disbursement Request or any certificate,
exhibit or attachment attached thereto or any other notice) that a Default or an
Event of Default under the Indenture or the Disbursement Agreement exists and is
continuing. The Independent Construction Consultant has no actual knowledge of
any material errors, misstatements or omissions of fact in the above-referenced
Advance Disbursement Request or any certificate, exhibit or attachment thereto,
or information otherwise provided by the Company.
3. [For Disbursements Prior To Operating:] The Construction
Disbursement Budget presently in effect accurately sets forth the anticipated
costs to complete the Riviera Black Hawk through the date that the Riviera Black
Hawk is Operating.
4. After giving effect to the requested disbursement from the
Construction Disbursement Account and the payments contemplated from the
Disbursed Funds Account in connection therewith, there will be sufficient
Available Funds to pay for the anticipated costs to complete construction of the
Riviera Black Hawk (and the component parts thereof) in accordance with the
aggregate amounts (and line items) set forth in the Construction Disbursement
Budget [[For Disbursements Prior To Operating:] and the Independent Construction
Consultant is not aware of any other expenses that will be needed to be paid or
incurred by the Company in order to cause the Riviera Black Hawk to be Operating
on or prior to the
E-18
<PAGE>
Operating Deadline; provided that the Independent Construction Consultant makes
no certification or confirmation relating to the status of Gaming Licenses or
compliance with Gaming Laws with respect to whether the Riviera Black Hawk will
be Operating on or prior to the Operating Deadline].
5. [For Disbursements Prior To Operating:] The Independent Construction
Consultant reasonably believes that the Riviera Black Hawk will be Operating on
or prior to the Operating Deadline; provided that the Independent Construction
Consultant makes no certification or confirmation relating to the status of
Gaming Licenses or compliance with Gaming Laws with respect to whether the
Riviera Black Hawk will be Operating on or prior to the Operating Deadline.
5. Pursuant to its duties under the Disbursement Agreement, the
Independent Construction Consultant has inspected the Riviera Black Hawk within
the previous four weeks of the date of this certificate.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
E-19
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT F
Form of Construction Disbursement Budget Amendment Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Riviera Black Hawk, Inc., Amendment No. ___________
to Construction Disbursement Budget for the Riviera Black Hawk
Ladies and Gentlemen:
Riviera Black Hawk, Inc., a Colorado corporation ("the Company"),
requests that the Construction Disbursement Budget for the Riviera Black Hawk
(the "Construction Disbursement Budget") be amended as set forth on Schedule 1
to this certificate. This certificate is delivered pursuant to that certain Cash
Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to which you are a party. Capitalized terms used and otherwise not
defined herein shall have the meanings given in the Disbursement Agreement. In
connection with the requested Construction Disbursement Budget amendment, the
Company hereby represents, warrants and certifies as follows:
1. The proposed amendment is set forth in Schedule 1 hereto. The
proposed amendment is reasonably necessary in order to complete
the work represented by any line item or line items in the
Construction Disbursement Budget presently in effect (prior to
giving effect to the proposed amendment) and will not result in a
material lessening of the scope or quality of the work
constituting the design or construction of the Riviera Black
Hawk.
2. The following circumstances resulted in the reasonable necessity
of the proposed amendment:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
F-1
<PAGE>
3. The circumstances described in paragraph 2 above were not
reasonably anticipated by the Company in preparing the Initial
Construction Disbursement Budget, and if the Initial Construction
Disbursement Budget has been previously amended, as of the date
of the last such amendment, for the following reasons:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
4. The Construction Disbursement Budget in effect immediately prior
to the proposed amendment is attached to this Construction
Disbursement Budget Amendment Certificate as Schedule 2, and the
Construction Disbursement Budget which will be in effect upon the
effectiveness of the proposed amendment is attached to this
Construction Disbursement Budget Amendment as Schedule 3.
5. Immediately following the proposed amendment: (i) the
Construction Disbursement Budget will include all costs to be
incurred in causing the Riviera Black Hawk to be [[For Amendments
Prior To Operating:] Operating on or prior to the Operating
Deadline and] completed in accordance with the Plans; (ii) the
Available Funds will be sufficient to cause the Riviera Black
Hawk (and the component parts thereof) to be [[For Amendments
Prior To Operating:] Operating on or prior to the Operating
Deadline and] completed in accordance with the Plans in
accordance with the aggregate amounts (and line items) set forth
in the Construction Disbursement Budget; and (iii) the
Construction Disbursement Budget will continue to reasonably
establish the line item components of the work required to be
undertaken in order to complete construction of the Riviera Black
Hawk, and will continue to reasonably establish the cost of
completing each line item component of such work.
6. After giving effect to the proposed amendment, the Construction
Disbursement Budget accurately sets forth in all material
respects the anticipated Construction Expenses through completion
of the construction of the Riviera Black Hawk and the various
line item components thereof identified on the Construction
Disbursement Budget, all within the line item allocations
established for those components set forth in the Construction
Disbursement Budget.
7. [If Any Line Item On The Construction Disbursement Budget Is
Reduced:] The Company reasonably expects that the work
represented by the line item entitled ______________ will be
completed for a total cost of $________, which amount is less
than $___________ [should correspond to $ amount set forth in the
Construction Disbursement Budget prior to proposed amendment] and
such savings will be reallocated, pursuant to the amendment, to
another line item in the Construction Disbursement Budget,
whether Hard Costs or Soft Costs.
8. The construction performed as of the date hereof is of first
quality and in accordance with the Plans. [For Amendments Prior
To Operating:] The Company reasonably believes that the date on
which the Riviera Black Hawk will become Operating will occur on
or prior to the Operating Deadline.
F-2
<PAGE>
9. Immediately prior to and upon giving effect to the Construction
Disbursement Budget Amendment, there is and will be no Default or
Event of Default.
The undersigned certifies that the Construction Disbursement Budget
Amendment contemplated hereby is permitted pursuant to the Disbursement
Agreement and the Indenture, and all conditions precedent thereto have been met.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent and the Independent Construction
Consultant are entitled to rely on the foregoing.
Attached to this Construction Disbursement Budget Amendment Certificate
is a certificate from the Independent Construction Consultant.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:--------------------------
Name:------------------------
Title:-----------------------
F-3
<PAGE>
Received and Reviewed:
RIVIERA HOLDINGS CORP.
By:--------------------------
Name:------------------------
Title:-----------------------
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
F-4
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 1 TO EXHIBIT F
Proposed Construction Disbursement Budget Amendment
Amendment No. __ to Construction Disbursement Budget.
I. Increases To Line Items:
The Following Line Item Is Increased: _______________________________
Old Amount of Line Item: _______________________________
Amount of Increase: _______________________________
New Total For Line Item: _______________________________
Source of Funds For Increase:
Source Amount
Realized Savings _______________1
Additional Revenue _______________
Allocation of Funds from
Completion Reserve Account _______________
Total _______________
- --------------------
1 Source and documentation (e.g., receipts for purchased goods or invoices
for services) for Realized Savings are attached.
F-5
<PAGE>
II. Decreases To Line Items:
The Following Line Item Is
Decreased: _______________________________
Old Amount of Line Item: _______________________________
Amount of Decrease: _______________________________
New Amount of Line Item: _______________________________
Reason For Decrease of Line Item:
Source Amount
Realized Savings _______________1
III. New Construction Disbursement Budget Totals
a. The total Construction Disbursement Budget
for the Riviera Black Hawk is now: $_____________
b. The amount disbursed to date for the
Riviera Black Hawk is: $_____________
c. Remaining amounts to be spent: $_____________
d. Available Funds for the Riviera Black Hawk: $_____________2
- --------------------
1 Source and documentation (e.g., receipts for purchased goods or invoices
for services) for Realized Savings are attached.
2 Item III.d should be greater than or equal to item III.c.
F-6
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 2 TO EXHIBIT F
Existing Construction Disbursement Budget1
[To be attached by the Company]
- --------------------
1 (or portion thereof being amended)
F-7
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 3 TO EXHIBIT F
Proposed Revised Construction Disbursement Budget
[To be attached by the Company]
F-8
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT F
Form of Certificate of Independent Construction Consultant
Construction Disbursement Budget Amendment
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Amendment No. _________ to Construction Disbursement Budget
for the Riviera Black Hawk
Ladies and Gentlemen:
The undersigned (the "Independent Construction Consultant"), hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the
above-referenced Construction Disbursement Budget Amendment Certificate and the
Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement") to which Riviera Black Hawk, Inc., a Colorado corporation (the
"Company"), is a party. Capitalized terms used and not otherwise defined herein
shall have the meanings given in the Disbursement Agreement.
2. Pursuant to its duties under the Disbursement Agreement, the
Independent Construction Consultant has inspected the Riviera Black Hawk within
the previous four weeks of the date of this certificate.
3. The Independent Construction Consultant hereby certifies and
confirms the accuracy of the certifications contained in the above-referenced
Construction Disbursement Budget Amendment Certificate; provided that the
Independent Construction Consultant makes no certification or confirmation
relating to the status of Gaming Licenses or compliance with Gaming Laws with
respect to whether the Riviera Black Hawk will be Operating on or prior to the
Operating Deadline.
F-9
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the amendment to the Construction
Disbursement Budget.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
F-10
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT G-1
Form of Contract Amendment Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway,, Suite 3200
Denver, Colorado 80202
Re: Amendment No. ___ to Contract dated ________, ____ (the "Contract"),
between Riviera Black Hawk, Inc., a Colorado corporation (the
"Company"), and ("Contractor")
Ladies and Gentlemen:
The Company requests that the above-referenced Contract be amended as
set forth on Schedule 1 to this certificate. This certificate is delivered
pursuant to that certain Cash Collateral and Disbursement Agreement dated as of
June 3, 1999 (as amended, supplemented or otherwise modified from time to time,
the "Disbursement Agreement"), to which you are a party. Capitalized terms used
and not otherwise defined herein shall have the meanings given in the
Disbursement Agreement. In connection with the requested Contract amendment, the
Company hereby represents, warrants and certifies as follows:
1. The proposed Contract amendment is attached as Schedule 1 hereto.
The amendment is reasonably necessary in order to complete the development,
construction, equipping and operation of the Riviera Black Hawk so that it is
Operating prior to the Operating Deadline.
2. The following circumstances resulted in the necessity of the
proposed amendment:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
3. After giving effect to such amendment (and any related amendment to
the Construction Disbursement Budget for the Riviera Black Hawk):
(a) The Construction Disbursement Budget will continue to call
for construction of improvements constituting the Riviera Black Hawk;
G-1
<PAGE>
(b) The amendment will not materially affect the scope,
quality or value of the Riviera Black Hawk for the following reasons:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
(c) If the amendment will effect a reduction in the scope of
the work to be performed by Contractor, then the work eliminated from the scope
of work either (i) is not necessary to complete the Riviera Black Hawk as a
first quality improvement in accordance with the Plans and all applicable
building laws, ordinances and regulations, or (ii) to the extent necessary for
the completion of the Riviera Black Hawk as a first quality improvement in
accordance with the Plans and all applicable building laws, ordinances and
regulations, will be completed by the contractors set forth below under the new
or amended contracts described below. Each such contractor is competent to
perform the work called for by the new or amended contract in exchange for the
payments contemplated thereby, and each such contract or amendment thereto
complies with all applicable provisions of Article 8 of the Disbursement
Agreement.
Work Contractor Contract
----------------- ----------------- -----------------
----------------- ----------------- -----------------
(d) The Company will continue to be able to complete the work
within the line items pertaining to the Contract: (i) in a timely manner so as
to permit the date on which the Riviera Black Hawk becomes Operating to occur on
or prior to the Operating Deadline; and (ii) within the aggregate amounts
specified for the line items on the Construction Disbursement Budget.
4. After giving effect to the proposed amendment (and any related
amendment to the Construction Disbursement Budget), the Construction
Disbursement Budget accurately sets forth the anticipated Construction Expenses
through completion of the construction of the Riviera Black Hawk and the various
components of the Riviera Black Hawk, all within the line item allocations
established for those components set forth in the Construction Disbursement
Budget.
5. Prior to and after giving effect to the amendment, there is and will
be no Default or Event of Default.
The undersigned certifies that this Contract Amendment Certificate is
authorized hereby and is permitted pursuant to the Disbursement Agreement and
the Indenture, and all conditions precedent thereto have been met.
G-2
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and each of the Disbursement Agent and the Independent
Construction Consultant is entitled to rely on the foregoing.
Attached to this Contract Amendment Certificate is a certificate from
the Independent Construction Consultant [for Contracts relating to Hard Costs
only:] and a certificate from the General Contractor.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
Name:
Title:
Received and Reviewed:
RIVIERA HOLDINGS CORP.
By:--------------------------
Name:------------------------
Title:-----------------------
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
G-3
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 1 TO EXHIBIT G-1
Copy of Executed Contract Amendment
[To be attached by the Company]
G-4
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT G-1
Form of Certificate of Independent Construction Consultant
Contract Amendment
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Amendment No. ___ to Contract dated __________ (the "Contract")
between Riviera Black Hawk, Inc., a Colorado corporation
and _____________________ ("Contractor")
Ladies and Gentlemen:
The undersigned (the "Independent Construction Consultant") hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the
above-referenced Contract, as well as the above-referenced Contract Amendment
Certificate and the Cash Collateral and Disbursement Agreement dated as of June
3, 1999 (as amended, supplemented or otherwise modified from time to time, the
"Disbursement Agreement"), to which the Company is a party. Capitalized terms
used and not otherwise defined herein shall have the meanings given in the
Disbursement Agreement.
2. The Independent Construction Consultant hereby certifies and
confirms the accuracy of the certifications in the above-referenced Contract
Amendment Certificate; provided that the Independent Construction Consultant
makes no certification or confirmation relating to the status of Gaming Licenses
or compliance with Gaming Laws with respect to whether the Riviera Black Hawk
will be Operating on or prior to the Operating Deadline.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing relative to the amendment to the Contract.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
G-5
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT G-1
Form of Certificate of General Contractor
Contract Amendment
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Amendment No. ___ to Contract dated __________ (the "Contract")
between Riviera Black Hawk, Inc., a Colorado corporation,
and _____________________ ("Contractor")
Ladies and Gentlemen:
The undersigned (the "General Contractor") hereby certifies as follows:
1. The General Contractor has reviewed the above-referenced Contract,
as well as the above-referenced Contract Amendment Certificate and the Cash
Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to which the Company is a party, to the extent necessary to
understand the defined terms contained herein and in the Contract Amendment
Certificate that are incorporated by reference from the Disbursement Agreement,
and to provide the certification contained herein.
2. The General Contractor hereby certifies and confirms the accuracy of
the certifications in the above-referenced Contract Amendment Certificate, as
such certifications relate to Hard Costs; provided that the General Contractor
makes no certification or confirmation relating to the status of Gaming Licenses
or compliance with Gaming Laws with respect to whether the Riviera Black Hawk
will be Operating on or prior to the Operating Date.
The foregoing representations, warranties and certifications are true,
complete and correct and each of the Independent Construction Consultant and the
Disbursement Agent is entitled to rely on the foregoing relative to the
amendment to the Contract.
G-6
<PAGE>
THE WEITZ COMPANY, INC.,
as General Contractor
By:--------------------------
Name:------------------------
Title:-----------------------
G-7
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT G-2
Form of Additional Contract Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Riviera Black Hawk, Inc., [name of contract] dated ________ (the
"Contract"), between Riviera Black Hawk, Inc., a Colorado corporation
(the "Company"), and __________________("Contractor")
Ladies and Gentlemen:
The Company requests that the above-referenced Contract, a copy of
which is attached hereto as Schedule 1 (together with a Consent to Collateral
Assignment of Contract in the form of Exhibit H to the Disbursement Agreement
duly executed by Contractor, a copy of which is attached hereto as Schedule 2),
be approved and made effective. This certificate is delivered pursuant to that
certain Cash Collateral and Disbursement Agreement dated as of June 3, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to which you are a party. Capitalized terms used and not otherwise
defined herein shall have the meanings given in the Disbursement Agreement.
In connection with entering into the Contract, the Company hereby
represents, warrants and certifies as follows:
1. The work to be performed under the Contract relates to the following
line item under the Construction Disbursement Budget presently in effect and
consists of the following:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Such work conforms to the Plans.
2. The Contract will permit the Company to complete the work within the
line items of the Construction Disbursement Budget presently in effect
pertaining to the Contract: (i) in a timely manner so as to permit the date on
which the Riviera Black Hawk (and its various components) becomes Operating to
occur on or prior to the Operating Deadline; and (ii) within the aggregate
amounts specified for the line
G-8
<PAGE>
item in the Construction Disbursement Budget presently in effect. The Contractor
is competent to perform the work called for by the Contract.
3. Prior to and after giving effect to the Contract, there is and will
be no Default or Event of Default.
4. The entering into the Contract and the performance of the work
thereunder [will/will not] require an amendment to the Construction Disbursement
Budget. [if it will, add: Attached hereto is a duly completed and executed
Construction Disbursement Budget Amendment Certificate accurately describing
such amendment].
5. After giving effect to the Contract (and any related amendment to
the Construction Disbursement Budget) and the performance of the work under the
Contract the funds in the Construction Disbursement Account (together with any
actual or anticipated FF&E Financing to the extent permitted under the
Indenture) will be sufficient to cause the Riviera Black Hawk to become
Operating on or prior to the Operating Deadline.
6. The Company's entering into the proposed Contract is permitted under
Section 8.3 of the Disbursement Agreement and all conditions precedent thereto
have been met.
The undersigned certifies that this Additional Contract Certificate is
authorized hereby and is permitted pursuant to the Disbursement Agreement and
the Indenture, and all conditions precedent thereto have been met.
G-9
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and each of the Disbursement Agent and the Independent
Construction Consultant is entitled to rely on the foregoing.
Attached to this Contract Amendment Certificate is a certificate from
the Independent Construction Consultant [for Contracts relating to Hard Costs
only:] and a certificate from the General Contractor.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:--------------------------
Name:------------------------
Title:-----------------------
Received and Reviewed:
RIVIERA HOLDINGS CORP.
By:--------------------------
Name:------------------------
Title:-----------------------
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
G-10
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 1 TO EXHIBIT G-2
Copy of Executed Contract
[To be attached by the Company]
G-11
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 2 TO EXHIBIT G-2
Copy of Executed Consent to Collateral Assignment of Contract
[To be attached by the Company]
G-12
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT G
Form of Certificate of Independent Construction Consultant
Additional Contract Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
Re: Additional Contract Certificate dated ________, ____, relating to
[name of contract] dated __________, _____ (the "Contract") between
Riviera Black Hawk, Inc., a Colorado corporation, and
_____________________ ("Contractor")
Ladies and Gentlemen:
The undersigned (the "Independent Construction Consultant"), hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the
above-referenced Contract, as well as the above-referenced Additional Contract
Certificate and the Cash Collateral and Disbursement Agreement dated as of June
3, 1999 (as amended, supplemented or otherwise modified from time to time, the
"Disbursement Agreement"), to which the Company is a party. Capitalized terms
used and not otherwise defined herein shall have the meanings given in the
Disbursement Agreement.
2. The Independent Construction Consultant hereby certifies and
confirms the accuracy of the certifications in paragraphs 1 and 2 of the
above-referenced Additional Contract Certificate. The Independent Construction
Consultant is not aware of any material errors in the information contained in
any other paragraph of the Additional Contract Certificate.
3. The Independent Construction Consultant [concurs/does not concur]
with the Company's certification that the entering into the Contract and the
performance of work thereunder [will/will not] cause the Available Funds to be
less than the amount required to cause the Riviera Black Hawk to become
Operating on or before the Operating Deadline; provided that the Independent
Construction Consultant makes no certification or confirmation relating to the
status of Gaming Licenses or compliance with Gaming Laws with respect to whether
the Riviera Black Hawk will be Operating on or prior to the Operating Deadline.
G-13
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing relative to authorizing the Company to enter into the Contract.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:--------------------------
Name:------------------------
Title:-----------------------
G-14
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT G-2
Form of Certificate of General Contractor
Additional Contract Certificate
[Date]
IBJ Whitehall Bank & Trust Company,
as Disbursement Agent
One State Street
New York, New York 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, Colorado 80202
Re: Additional Contract Certificate dated ________, ____, relating to
[name of contract] dated __________, _____ (the "Contract")
between Riviera Black Hawk, Inc., a Colorado corporation,
and _____________________ ("Contractor")
Ladies and Gentlemen:
The undersigned (the "General Contractor") hereby certifies as follows:
1. The General Contractor has reviewed the above-referenced Contract,
as well as the above-referenced Additional Contract Certificate and the Cash
Collateral and Disbursement Agreement dated as of June 3, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Disbursement
Agreement"), to which the Company is a party, to the extent necessary to
understand the defined terms contained herein and in the Additional Contract
Certificate that are incorporated by reference from the Disbursement Agreement,
and to provide the certification contained herein.
2. The General Contractor hereby certifies and confirms the accuracy of
the certifications in paragraphs 1 and 2 of the above-referenced Additional
Contract Certificate, as such certifications relate to the Hard Costs; provided
that the General Contractor makes no certification or confirmation relating to
the status of Gaming Licenses or compliance with Gaming Laws with respect to
whether the Riviera Black Hawk will be Operating on or prior to the Operating
Date.
G-15
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Independent Construction Consultant and the
Disbursement Agent are entitled to rely on the foregoing relative to authorizing
the Company to enter into the Contract.
THE WEITZ COMPANY, INC.,
as General Contractor
By:--------------------------
Name:------------------------
Title:-----------------------
G-16
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT H
Form of Consent to Collateral Assignment of Contract
THIS CONTRACTING PARTY'S CONSENT TO COLLATERAL ASSIGNMENT OF CONTRACT
(the "Consent") is made as of ____________, ____, by _________________________,
a ________________ [corporation] ("Contracting Party"), whose address is
____________________________, for the benefit of IBJ Whitehall Bank & Trust
Company, a New York banking association, having an office at One State Street,
New York, New York 10004, as trustee for the benefit of the holders of the Notes
(the "Trustee").
RECITALS
A. Notes. Pursuant to that certain Indenture dated as of June 3, 1999
(as amended, supplemented or otherwise modified from time to time, the
"Indenture"), by and between Riviera Black Hawk, Inc., a Colorado corporation,
as issuer (the "Company"), and the Trustee, as trustee, the Company has issued
$45,000,000 principal amount of its 13% First Mortgage Notes due 2005 With
Contingent Interest (the "Original Notes" and, together with any new notes
issued in exchange therefor, the "Notes"). All defined terms used and not
otherwise defined herein shall have the meanings given in the Indenture. The
proceeds of the Notes, minus certain debt financing costs, have been deposited
into an escrow account pursuant to a Cash Collateral and Disbursement Agreement
(the "Disbursement Agreement") of even date with the Indenture among IBJ
Whitehall Bank & Trust Company, as disbursement agent (the "Disbursement
Agent"), the Trustee, CRSS Constructors, Inc., as independent construction
consultant, and the Company.
B. Security. The Company must use the proceeds of the Notes disbursed
pursuant to the Disbursement Agreement for the construction of the Riviera Black
Hawk (as defined in the Disbursement Agreement). Contracting Party and the
Company are parties to that certain [name of contract] dated as of
______________, ____ (the "Contract") relating to the design, construction
and/or operation of the Riviera Black Hawk. The Company has executed a
Collateral Assignment dated of even date with the Indenture (as amended,
supplemented or otherwise modified from time to time, the "Collateral
Assignment"), in favor of the Trustee, collaterally assigning all of the
Company's right, title and interest in and to, among other things, the Contract,
in order to secure the obligations of the Company under, among other documents,
the Notes and the Indenture (the "Obligations").
CONSENT
NOW THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Contracting Party agrees as follows:
1. Consent to Assignment. Pursuant to the Contract, Contracting Party
has performed or supplied, or agreed to perform or supply, certain services,
materials or documents in connection with the Riviera Black Hawk. Contracting
Party hereby consents to the assignment thereof by the Company to the Trustee as
provided in the Collateral Assignment and this Consent.
H-1
<PAGE>
2. The Company's Default under Contract. If the Company defaults under
the Contract, before exercising any remedy, Contracting Party shall deliver to
the Trustee at its address set forth above with a copy to the Independent
Construction Consultant at 1670 Broadway, Suite 3200, Denver, CO 80202,
Attention: Richter J. Schneider (or such other address provided thereby in
writing to the Company), by registered or certified mail, postage prepaid,
return receipt requested, written notice of such default, specifying the nature
of the default and the steps necessary to cure the same, and clearly marked as a
notice of default pursuant to this Paragraph 2. If the Company fails to cure the
default within the time permitted under the Contract, then the Trustee shall
have an additional thirty (30) days after the expiration of the time permitted
under the Contract (but in no event less than an additional thirty (30) days
after the receipt by the Trustee of said notice from Contracting Party) within
which the Trustee shall have the right, but not the obligation, to cure such
default; provided, however, that, with respect to payment defaults only, the
Trustee shall have thirty (30) days from receipt of notice of such default
within which the Trustee shall have the right, but not the obligation, to cure
such default. Contracting Party's delivery of such a notice of default to the
Trustee and the Trustee's failure to cure the same within the said additional
period shall be conditions precedent to the exercise of any right or remedy of
Contracting Party arising by reason of such default, except that Contracting
Party shall not be required to continue performance under the Contract for the
said additional period, unless and until the Trustee agrees to pay Contracting
Party for that portion of the work, labor and materials rendered during the said
additional period.
3. Certificate of Default Status. Upon the written request of the
Trustee at any time and from time to time, Contracting Party shall furnish to
the Trustee, within five (5) days of receipt of such request, a certificate
stating whether, as of such request receipt date, the Company is in default on
the Contract and, if so, the nature of the default and the steps necessary to
cure the same. Such certificate shall not constitute a written notice of default
pursuant to Paragraph 2 hereof unless clearly marked as such.
4. Company's Default under Obligations. If the Trustee gives written
notice to Contracting Party that the Company has defaulted under the Obligations
and requests that Contracting Party continue its performance under the Contract,
Contracting Party shall thereafter perform for the Trustee under the Contract in
accordance with its terms, so long as Contracting Party shall be paid pursuant
to the Contract for all work, labor and materials rendered or supplied
thereunder, including payment of any sums due to Contracting Party for work
performed or materials supplied up to and including the date of the Company's
default.
5. Performance for the Trustee. If the Trustee (a) cures any default
by the Company pursuant to Paragraph 2 above, (b) gives written notice to
Contracting Party that the Company has defaulted under the Collateral Documents
pursuant to Paragraph 4 above, (c) becomes the owner of the Riviera Black Hawk,
(d) undertakes to complete the construction of the Riviera Black Hawk pursuant
to its rights under the Collateral Documents, or (e) following a Default or an
Event of Default under (and as defined in) either the Indenture or the Cash
Collateral and Disbursement Agreement, otherwise requires the performance of
Contracting Party's obligations under the Contract or the use of any plans and
specifications, drawings, surveys or other materials or documents previously
prepared or provided by Contracting Party pursuant to the Contract, then in any
such event, so long as Contracting Party has received and continues to receive
the compensation required under the Contract related thereto, the Trustee shall
have the right to obtain performance from Contracting Party of all of its
obligations under the Contract, and to use all such plans and specifications,
drawings, surveys and other materials and documents, and the ideas, designs and
concepts contained therein, in connection with the completion of the Riviera
Black Hawk, without the payment of any additional fees or charges to Contracting
Party.
H-2
<PAGE>
6. Amendments and Change Orders. Contracting Party agrees that it will
not modify, amend, supplement or in any way join in the release or discharge of
Contracting Party's obligations under the Contract unless (a) such change is
commercially reasonable, and (b) the Independent Construction Consultant
consents to such change in writing, or such change is otherwise expressly
permitted by the Disbursement Agreement, and Contracting Party agrees that it
will not perform any work pursuant to any change order or directive unless the
same is issued and executed in accordance with the foregoing and the terms and
conditions of the Contract.
7. List of Subcontracting Parties. Upon the written request of the
Trustee at any time and from time to time, Contracting Party shall furnish to
the Trustee a current list of all Persons with whom Contracting Party has
entered into subcontracts or other agreements related to the rendering of work,
labor or materials under the Contract, together with a statement as to the
status of each such subcontract or agreement, and the respective amounts, if
any, owed by Contracting Party related thereto.
8. Compliance with Laws. Contracting Party shall comply with, and
shall report to the Trustee any failure known to the Contracting Party of the
Company, the Riviera Black Hawk or any Person or entity furnishing materials or
services in connection with the construction of the Riviera Black Hawk to
comply, with all applicable laws, ordinances, regulations and governmental
requirements relating to the construction of the Riviera Black Hawk.
9. Contracting Party's Records. At the Trustee's request, Contracting
Party shall promptly submit to the Trustee such payroll vouchers, receipts, lien
releases and waivers, progress surveys, inspection reports and other documents
and papers relating to construction of the Riviera Black Hawk as the Trustee may
require to protect the priority of the Deed of Trust in favor of the Trustee on
the real property constituting the Riviera Black Hawk or to verify compliance
with the provisions of this Consent and the Cash Collateral and Disbursement
Agreement.
10. Trustee Inspections. The Trustee and its agents and
representatives shall have the right at any time to enter the site of the
Riviera Black Hawk and inspect the work of construction and all materials,
plans, specifications and other matters relating to the Riviera Black Hawk or
the construction thereof. From time to time, at Contracting Party's place of
business during customary business hours and upon reasonable prior notice, the
Trustee and its agents and representatives shall also have the right to examine,
copy and audit the books, records and accounting data and other documents of
Contracting Party relating to the Riviera Black Hawk. Any inspection of the
Riviera Black Hawk by the Trustee or any examination, acceptance or approval by
the Trustee of documents relating to the Riviera Black Hawk, including, but not
limited to, plans, specifications, books, records and vouchers, is for the sole
purpose of protecting the Trustee's rights under the Cash Collateral and
Disbursement Agreement and the other Collateral Documents and its security for
the Obligations. Contracting Party shall not rely on any such inspection,
examination, acceptance or approval by the Trustee. In no event shall the
Trustee or any of its agents be obligated to disclose to Contracting Party or to
the Company the results of any such inspection or examination.
11. Security of Property and Equipment. Contracting Party agrees to
cooperate with the Company and the Trustee in preserving their respective
ownership and security interests in all personal property relating to the
Riviera Black Hawk, including without limitation building materials, machinery
and appliances acquired by Contracting Party with the proceeds of the Notes and
held or stockpiled on or off the site of the Riviera Black Hawk for
incorporation into or use in connection with the Riviera Black Hawk.
H-3
<PAGE>
12. Representations and Warranties. Contracting Party represents and
warrants to the Trustee that (a) it is duly licensed to conduct its business in
the jurisdiction contemplated by the Contract, and will at all times maintain
its license in full force and effect throughout the term thereof, (b) the
Contract has not been amended, modified or supplemented except as set forth
therein, (c) the Contract constitutes a valid and binding obligation of
Contracting Party and is enforceable against Contracting Party in accordance
with its terms, (d) there have been no prior assignments of the Contract, and
(e) all covenants, conditions and agreements of the Company and Contracting
Party contained in the Contract have been performed as required therein, except
for those that are not due to be performed until after the date hereof.
13. Application of Funds. Nothing herein imposes or shall be construed
to impose upon the Trustee any duty to direct the application of any proceeds of
the Notes, and Contracting Party acknowledges that the Trustee is not obligated
to Contracting Party or any of its subcontracting parties, materialmen,
suppliers or laborers.
14. Acknowledgment of Inducement. Contracting Party is executing this
Consent to induce the purchasers of the Notes to purchase the Notes. Contracting
Party understands that the purchasers of the Notes would not advance such funds
and make such purchases but for Contracting Party's execution and delivery
hereof.
15. Irrevocability. The provisions hereof shall be irrevocable and
remain in full force and effect until the Company has fully paid and performed
all of the Obligations.
16. Notices. Except for notices sent pursuant to Paragraph 2 above,
any notices to the Trustee hereunder shall be sent to its address set forth
above, by U.S. Mail, postage prepaid.
17. Governing Law. This Consent shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, Contracting Party has executed this Consent as of
the date first above written.
CONTRACTING PARTY:
-------------------------------
By:----------------------------
Name:--------------------------
Title:-------------------------
H-4
<PAGE>
CASH COLLATERAL AND DISBURSEMENT ACCOUNT
EXHIBIT I
Form of Pro Forma Title Policy
See Attached.
I-1
ACCOUNT AGREEMENT
THIS ACCOUNT AGREEMENT, dated as of June 3, 1999 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Agreement"), by and among RIVIERA BLACK HAWK, INC., a Colorado corporation
("Owner"), IBJ WHITEHALL BANK & TRUST COMPANY, a New York banking association,
having an office at One State Street, New York, New York 10004, as trustee (in
such capacity, together with its successors and assigns, the "Trustee") pursuant
to the Indenture referred to below, and IBJ WHITEHALL BANK & TRUST COMPANY, a
New York banking association (together with its successors and assigns, the
"Company"), upon the following terms and conditions:
RECITALS
A. Owner desires that the Company hold certain financial assets and
perform certain services as a securities intermediary.
B. The Company is willing to hold such assets and to perform such
services, subject to the terms and conditions of this Agreement and the Pledge
Agreement (as hereinafter defined).
C. Owner and the Trustee have heretofore entered into that certain
Pledge and Assignment Agreement of even date herewith (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Pledge Agreement"), which has in turn been acknowledged by the Company.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Custody of Property. Owner hereby authorizes, appoints and directs
Company to act as custodian of the financial assets in Account Nos. 630000038.1,
630000038.2, 630000038.3 and 630000038.4 at the Company (the "Accounts"),
subject to the Pledge Agreement. The Company agrees to maintain the Accounts at
its office in New York, New York (One State Street, New York, New York 10004),
hold these assets in the Accounts and serve as custodian for the Accounts in
accordance with this Agreement and the Pledge Agreement.
2. Title to Securities. Title to the assets held in the Accounts shall
be held in accordance with the provisions set forth in the Pledge Agreement.
3. Company's Duties Regarding Investments. The Company shall have no
responsibility for supervision or management of any property at any time in the
Accounts except as provided in this Agreement or the Pledge Agreement. The
Company's responsibility with regard to the sale, purchase or exchange of
investments shall be limited to following the written orders of the Trustee,
without the need for further consent by Owner.
4. Collection of Income and Principal. The Company shall collect
income and principal becoming due on the assets in the Accounts but shall be
under no responsibility or duty
<PAGE>
to undertake collection efforts or to instigate or participate in any legal
proceedings or to retain counsel in an effort to accomplish such collection. The
Company shall advise Owner and the Trustee within a reasonable time of any
non-payment of principal or income. Any income received shall be disposed of as
set forth in the Pledge Agreement.
5. Instructions: Signatures. Instructions to the Company must be in
writing, with copies of such instructions sent to Owner. All instructions and
directions for the Accounts must be signed by a person or persons duly
authorized to sign on behalf of the Trustee in such form as the Company may
reasonably require. Specimen signatures of all persons to whom authority has
been delegated shall be furnished. The following employees of the Trustee are
authorized to deliver instructions to the Company hereunder:
Name Title
- ---------------- ------------------ ---------------------
Specimen Signature
- ---------------- ------------------ ---------------------
Specimen Signature
6. Accounting. The Company shall keep complete and accurate books of
account showing all receipts, disbursements and transactions in the Accounts and
shall prepare and deliver to Owner and the Trustee periodic reports summarizing
the activity in the Accounts. Owner agrees that it retains the obligation to
prepare and file all required state and federal tax reports and returns and to
pay any taxes related to its ownership of the assets in the Accounts.
7. Authority. Any person executing this agreement in a fiduciary or
other representative capacity represents that they have full power and authority
to do so and that any applicable or required court, partnership, corporate or
other authority has been duly and properly given and continues as of the date
hereof.
8. Fees and Costs. So long as the Company serves as Trustee under the
Indenture, the Company shall not receive additional compensation for its
services hereunder. Owner agrees to pay all costs incurred by the Company in
connection with the Accounts. Such costs will be paid by Owner directly to the
Company upon demand.
9. Applicable Law; Venue; Attorneys' Fees. The internal laws of the
State of New York apply to this Agreement and shall be binding upon the Company,
Owner and the Trustee and their respective successors and assigns. The parties
hereto irrevocably submit to the non-exclusive jurisdiction of any state or
federal court sitting in the City of New York over any suit, action or
proceeding arising out of or relating to this Agreement. In the event of any
dispute regarding this Agreement, the parties agree that the prevailing party
shall be entitled to such costs and attorneys' fees as the court may adjudge
reasonable.
(Authorized Signers page to Account Agreement)
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OWNER:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:_______________________________________
Name:_____________________________________
Title:____________________________________
COMPANY:
IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking association
By:_______________________________________
Name:_____________________________________
Title:____________________________________
TRUSTEE:
IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking association
By:_______________________________________
Name:_____________________________________
Title:____________________________________
[Signature Page to Account Agreement]
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of June 3, 1999 (as the same may be
amended, supplemented or otherwise modified from time to time, this
"Agreement"), is made by RIVIERA BLACK HAWK, INC., a Colorado corporation
("Grantor" or the "Company"), having an office 444 Main Street, Black Hawk,
Colorado 80422 in favor of IBJ WHITEHALL BANK & TRUST COMPANY, a New York
banking association, having an office at One State Street, New York, New York
10004, as trustee (in such capacity, together with its successors and assigns,
the "Trustee") pursuant to the Indenture referred to below.
RECITALS
A. Grantor and the Trustee are, contemporaneously with the execution
and delivery of this Agreement, entering into that certain Indenture dated as of
even date herewith (as the same may be amended, supplemented or otherwise
modified from time to time, the "Indenture"), pursuant to which Grantor is
issuing its 13% First Mortgage Notes due 2005 With Contingent Interest (such
notes, together with any notes issued in replacement thereof or in exchange
therefor, the "Securities"), in the original aggregate principal amount of
$45,000,000.
B. It is a condition precedent to the purchase of the Securities that
Grantor shall have executed and delivered this Agreement to the Trustee for
itself and the ratable benefit of the holders from time to time of the
Securities (the "Holders" and, together with the Trustee, the "Secured Parties")
to secure the payment and performance of the Obligations (as hereinafter
defined).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and in order
to induce the Trustee to enter into the Indenture and to induce the Holders to
purchase the Securities, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor hereby agrees,
for the benefit of the Trustee and for the ratable benefit of the Holders as
follows:
SECTION 1. Definitions.
1.1. Defined Terms. (a) Capitalized terms used but not other-
wise defined herein shall have the meanings given in the Indenture.
Unless the context indicates otherwise or the terms are otherwise
defined herein or in the Indenture, definitions in the UCC apply to
words and phrases in this Agreement. The term "Grantor," as used with
respect to any Person, includes without limitation such Person, such
Person's heirs, successors and assigns, such Person as a
debtor-in-possession, and any receiver, trustee, liquidator,
conservator, custodian or similar party appointed for such Person or
all or substantially all of its assets under any law.
(b) The following terms which are defined in the
Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined:
<PAGE>
Accounts, Chattel Paper, Documents, Fixtures, Instruments, Inventory
and Proceeds.
(c) The following terms shall have the following
meanings:
"Collateral" has the meaning set forth in Section 2
hereof.
"Completion Capital Commitment" means the Completion
Capital Commitment dated s of the date hereof by Riviera Holdings
Corporation in favor of the Trustee, as the same may be amended,
supplemented or otherwise modified from time to time.
"Contracts" means (i) any and all contracts and
agreements relating to gaming including without limitation any
agreement in which a Person does business with or on the premises of an
entity licensed pursuant to applicable Gaming Laws and any resource or
product used or useful in the business of Grantor, and (ii) any and all
other contracts and agreements of Grantor, in each case as such may be
amended, modified or otherwise supplemented from time to time, and in
each case including without limitation (x) all rights to receive monies
due and to become due to Grantor thereunder or in connection therewith,
(y) all rights to damages arising out of or for breach or default in
respect thereof, and (z) all rights to perform and exercise all
remedies thereunder.
"Copyrights" means (i) all copyrights in all works,
whether published or unpublished, registered or unregistered, all
registrations and recordings thereof, and all applications in
connection therewith, including without limitation registrations,
recordings and applications in the United States Copyright Office or in
any other country, including without limitation those listed on Exhibit
A, and (ii) all renewals of the foregoing.
"Copyright License" means any and all agreements,
whether written or oral, providing for the grant by or to Grantor of
any right to reproduce, copy, publish or otherwise use any Copyright,
including without limitation the agreements set forth on Exhibit A, but
excluding any such agreement that prohibits the granting of a security
interest therein.
"Default Rate" shall have the meaning set forth in
Section 6.15 hereof.
"Equipment" means "equipment" as defined in the
Uniform Commercial Code in effect in the State of New York on the date
hereof, including without limitation all machinery (including without
limitation any and all equipment and machinery used for or in
connection with maintaining and operating gaming facilities, lodging
and restaurants), apparatus, implements, office machinery, computers,
furniture, furnaces, conveyors, tools, parts, accessories, automobiles,
trailers, tractors, trucks, forklifts, other motor vehicles and all
other equipment of any kind or nature, wherever located, and all
modifications, alterations, repairs, substitutions, additions and
accessions thereto and all replacements and all other parts therefor.
2
<PAGE>
"General Intangibles" means "general intangibles" as
defined in the Uniform Commercial Code in effect in the State of New
York on the date hereof, including without limitation claims of Grantor
in respect of litigation and claims for tax and other refunds from,
inter alia, any city, county, state, or federal government or any
agency or authority or other subdivision thereof.
"Governmental Authority" means any nation or
government, any state, municipality or other political subdivision
thereof, and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including without limitation the Colorado Division of Gaming and the
Colorado Limited Gaming Control Commission.
"Investment Property" means "investment property" as
defined in the Uniform Commercial Code in effect in the State of New
York on the date hereof.
"Intellectual Property" means, collectively, Copy-
rights, Patents, Trademarks, Trade Secrets and Licenses.
"Licenses" means, collectively, Copyright Licenses,
Patent Licenses and Trademark Licenses.
"Material Adverse Effect" means a material adverse
effect on (i) the business, operations, property, condition (financial
or otherwise) of Grantor and its respective Subsidiaries, taken as a
whole, (ii) the Collateral, or (iii) the validity or enforceability of
(x) this Agreement, any of the Securities, the Indenture, the
Completion Capital Commitment, the Keep-Well Agreement or any
Collateral Document, or (y) the rights or remedies of the Trustee (or
any other trustee) hereunder or thereunder.
"Obligations" has the meaning set forth in Section 3
hereof.
"Patents" means all patents and patent applications,
and the inventions and improvements described and claimed therein, and
patentable inventions and the reissues, divisions, continuations,
renewals, extensions and continuations-in-part of any of the foregoing,
including without limitation those set forth on Exhibit B.
"Patent Licenses" means any and all agreements,
whether written or oral, providing for the grant by or to Grantor of
any right to manufacture, use or sell any invention covered by a
Patent, including, without limitation, those set forth on Exhibit B,
but excluding any such agreement that prohibits the granting of a
security interest therein.
"Project" has the meaning given in Section 2(m).
"Trademarks" means (i) all registered and
unregistered trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
logos, slogans and other source or business identifiers, and the
goodwill and general intangibles associated therewith, all
registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent
3
<PAGE>
and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including without limitation those
set forth on Exhibit C, and (ii) all renewals of the foregoing.
"Trademark License" means any and all agreements,
whether written or oral, providing for the grant by or to Grantor of
any right to use any Trademark, including without limitation those set
forth on Exhibit C, but excluding any such agreement that prohibits the
granting of a security interest therein.
"Trade Secret" means any proprietary technology,
process or system which is owned or licensed by the Grantor, including
without limitation manufacturing processes or methods, all formulae,
processes, procedures, compounds, drawings, designs, blueprints,
surveys, reports, manuals and operating standards relating to or used
in the operation of Grantor's business.
"Transaction Documents" has the meaning given in
Section 3.
"UCC" means the Uniform Commercial Code as from time
to time in effect in the State of New York.
"Works" means any work which is or may be subject to
copyright protection pursuant to Title 17 of the U.S. Code.
1.2. Other Definitional Provisions.
(a) The words "hereof," "herein," "hereto" and
"hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section, subsection and Exhibit
references are to this Agreement, unless otherwise specified.
(b) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such
terms.
SECTION 2. Grant of Security Interest. To the fullest extent permitted by
applicable law, Grantor hereby grants, pledges, assigns and transfers to the
Trustee, for the Trustee's individual benefit and the ratable benefit of the
Holders, as security for the prompt and complete payment and performance when
due (whether at stated maturity, upon redemption or required repurchase, by
acceleration or otherwise) of all the Obligations of Grantor, a continuing first
priority security interest in and lien on all of the right, title and interest
of Grantor in, to and under the following property, in each case wherever
located, whether now owned or at any time hereafter acquired by Grantor, whether
now existing or hereafter coming into existence, or in which Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"):
(a) the Cash Collateral Accounts, the Interest
Reserve Account, the Completion Reserve Account, the Construction
Disbursement Account, the Disbursed Funds Account (in each case, as
defined in the Disbursement Agreement), any other
4
<PAGE>
related accounts and all Trust Monies, other monies, securities,
certificates, items and other property on deposit therein;
(b) all Accounts;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures;
(h) all General Intangibles;
(i) all Instruments;
(j) all Intellectual Property;
(k) all Inventory;
(l) all Investment Property;
(m) to the extent not otherwise included in the
foregoing, all of Grantor's personal property, goods, furnishings,
fixtures and equipment, supplies, building and other materials of every
nature whatsoever and all other personal property, including, but not
limited to, communication systems, visual and electronic surveillance
systems and transportation systems and including all property and
materials stored therein in which Grantor has an interest, and all
tools, utensils, food and beverage, liquor, uniforms, linens,
housekeeping and maintenance supplies, vehicles, fuel, advertising and
promotional material, blueprints, surveys, plans and other documents
relating to the Riviera Black Hawk (the "Project"), all gaming and
general equipment and devices which are or are to be installed and used
in connection with the operation of the Project, all computer
equipment, calculators, adding machines, and gaming tables, video game
and slot machines and any other electronic equipment, all furniture,
fixtures, equipment, gaming equipment, appurtenances and personal
property now or in the future contained in, used in connection with,
attached to, or otherwise useful or convenient to the use, operation,
or occupancy of, or placed on, but unattached to, any part of the
Project or the land upon which the Project will be constructed,
including without limitation all removable window and floor coverings,
all furniture and furnishings, heating, lighting, plumbing,
ventilating, air conditioning, refrigerating, incinerating and elevator
and escalator plants, cooking facilities, vacuum cleaning systems,
public address and communications systems, sprinkler systems and other
fire prevention and extinguishing apparatus and materials, motors,
machinery, pipes, appliances, equipment, fittings, fixtures, and
building materials, together with all venetian blinds, shades,
draperies, drapery and curtain rods, brackets, bulbs,
5
<PAGE>
cleaning apparatus, mirrors, lamps, ornaments, cooling apparatus and
equipment, ranges and ovens, garbage disposals, dishwashers, mantels,
and any and all such property which is at any time installed in affixed
to or placed upon the land upon which the Project will be constructed,
all fixtures for generating or distributing air, water, heat,
electricity, light, fuel or refrigeration, or for ventilating or
sanitary purposes, or for the exclusion of vermin or insects, or for
the removal of dust, refuse or garbage, all specifically designed
installations and furnishings, and all other personal property,
furniture, fixtures and equipment of every nature used or located at
the Project;
(n) to the extent not otherwise included in the
foregoing, all of Grantor's accounts and accounts receivable, including
without limitation all rights to payment for goods sold or leased or
for services rendered which are not evidenced by an instrument or
chattel paper, all other present or future rights for money due or to
become due, all of Grantor's chattel paper, instruments, promissory
notes (including without limitation all inter-company notes), markers
and general intangibles for money due or to become due of any kind, in
each case whether now existing or hereafter arising and wherever
arising and whether or not earned by performance, and all royalties,
earnings, income, proceeds, products, rents, revenues, reversions,
remainders, issues, profits, avails, and other benefits directly or
indirectly derived or otherwise arising from any of the foregoing,
other general intangibles, documents of title, warehouse receipts,
leases, money, tax refund claims, partnership interests,
indemnification and other similar claims and contract rights, permits
and licenses, including without limitation any licenses held or to be
held by Grantor necessary to operate the Project (including without
limitation licenses in favor of Grantor granted pursuant to the
Management Agreement or otherwise), franchises, variances, special
permits, rulings, validations, exemptions, filings, registrations,
authorizations, consents, approvals, waivers, orders, rights and
agreements (including without limitation options, option rights and
contract rights) certificates, stock, any and all books, records,
customer lists, concession agreements, supply or service contracts,
documents, unearned premiums, rebates, deposits, refunds, including,
but not limited to, income tax refunds, prepaid expenses, rebates, tax
and insurance escrow and impound accounts, if any, and all rights in,
to and under all, leases and other agreements or contracts relating to
any of the foregoing or now or hereafter obtained by Grantor from any
Person or from any Governmental Authority having or claiming
jurisdiction over the Project, and all things in action, rights
represented by judgments, awards of damages, settlements and claims
arising out of tort, warranty or contract (including without limitation
the right to assert and otherwise be the proper party of interest to
commence, control, prosecute and/or settle such actions, whether as
claims, counterclaims or otherwise, and whether involving matters
arising from casualty, condemnation, indemnification, negligence,
strict liability, other tort, contract, warranty or in any other
manner), and all securities of any Subsidiary, whether now in existence
or hereafter incorporated or formed;
(o) to the extent not otherwise included in the
foregoing, all computer programs of Grantor and all intellectual
property rights therein and all other proprietary information owned by
Grantor, or in which Grantor has an interest, including but not limited
to Trade Secrets;
6
<PAGE>
(p) all of Grantor's right, title and interest in,
and to and under any and all maps, plans, preliminary plans,
specifications, surveys, studies, tests, reports, data and drawings
relating to the development of the Project, including without
limitation all marketing plans, feasibility studies, soils tests,
design contracts and all contracts and agreements of Grantor relating
thereto including, without limitation, architectural, structural,
mechanical and engineering plans and specifications, studies, data and
drawings prepared for or relating to the development of the Project or
the construction, renovation or restoration of the Project each as
finalized, amended, supplemented or otherwise modified from time to
time, or the extraction of minerals, sand, gravel or other valuable
substances from the land upon which the Project will be constructed and
purchase contracts or any agreement granting Grantor a right to acquire
any land situated within Gilpin County, Colorado;
(q) to the extent not otherwise included in the
foregoing, (i) all other rights to the payment of money, including
subsidy, reserve and deficiency payments, rents (including room rents)
and other sums payable to Grantor under leases, rental agreements and
insurance proceeds; (ii) all books, ledgers, files, correspondence,
credit files, records, invoices, bills of lading, and other documents
relating to any of the foregoing, including without limitation all
tapes, cards, disks, computer software, computer runs, and other papers
and documents in the possession or control of Grantor or any computer
bureau from time to time acting for Grantor; (iii) all rights and
rights to use or access any resource or product used or useful in the
business of Grantor; and (iv) all accessions and additions to, parts
and appurtenances of, substitutions for and replacements of any of the
foregoing; and
(r) to the extent not otherwise included in the
foregoing, all Net Loss Proceeds, Net Proceeds, Proceeds and products
of any and all of the foregoing and all collateral security, guarantees
and other credit enhancements given by any person with respect to any
of the foregoing, and in any event, including without limitation any
and all (i) proceeds of any insurance (including without limitation all
Net Insurance Proceeds), surety bonds, tax and other refunds
(including, without limitation, any city, county, state, or federal
government or any agency or authority or other subdivision thereof),
indemnity, warranty or guarantee payable to the Trustee or to Grantor
from time to time with respect to any of the Collateral, (ii) payments
(in any form whatsoever) made or due and payable to Grantor from time
to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any person acting under color of a
Governmental Authority), (iii) payments made or due and payable to
Grantor in respect of litigation and other claims, (iv) products of the
Collateral, (v) subject to the provisions and limitations contained in
the Indenture, whatever is now or hereafter receivable or received by
Grantor upon the sale, exchange, collection or other disposition of any
item of Collateral, whether voluntary or involuntary including, without
limitation, the proceeds of a permitted Asset Sale in accordance with
the Indenture, (vi) to the extent permitted by law, whatever is now or
hereafter receivable or received by Grantor upon the sale, exchange,
collection or other disposition of any Gaming License, regardless of
whether such Gaming License is
7
<PAGE>
Collateral or an Excluded Asset, and (vii) other amounts from time to
time paid or payable under or in connection with any of the Collateral.
Notwithstanding the foregoing, the Collateral shall not include any of
the following assets (the "Excluded Assets"): (i) Gaming Licenses and Liquor
Licenses, (ii) any other governmental approval or permit to the extent that,
under the terms and conditions of such approval or under applicable law, it
cannot be subjected to a Lien in favor of the Trustee without the approval of
the relevant Governmental Authority, but only to the extent that such approval
has not been obtained; (iii) any Collateral that is exclusively subject to any
agreement with a third party that, pursuant to its terms, prohibits the grant of
a lien on such Collateral; provided that Grantor shall use its reasonable best
efforts to obtain such third party's consent to assignment of all such
agreements; (iv) FF&E to the extent financed or refinanced by, or the proceeds
of, an FF&E Financing to the extent that (A) the purchase or lease of such FF&E
was not financed with the proceeds of the Notes but with the proceeds of an FF&E
Financing and (B) Grantor is permitted to enter into such FF&E Financing for
such FF&E under the Indenture; and (v) any Collateral sold pursuant to a sale
and leaseback transaction permitted under the Indenture, but will include the
Grantor's leasehold interest in such property; provided that the Trustee shall,
if requested by Grantor, execute and deliver, at Grantor's sole expense, any
instruments reasonably necessary or appropriate to release the lien of this
Agreement with respect to or otherwise confirm that the lien of this Agreement
does not apply to any of such Excluded Assets; provided further that any such
FF&E Financing shall encumber only that FF&E specifically subject to such FF&E
Financing; and provided further that any such Excluded Asset now or hereafter
acquired by Grantor shall automatically become part of the Collateral when and
to the extent it may subsequently be made subject to such a lien and/or such
approval is obtained and/or such FF&E Financing has been repaid, satisfied or
terminated (as applicable) and/or such Collateral sold pursuant to a sale and
leaseback transaction has been released.
SECTION 3. Obligations. This Agreement secures with respect to Grantor, and
the Collateral of Grantor is collateral security for, the payment and
performance in full when due (whether at stated maturity, upon redemption or
required repurchase, by acceleration or otherwise) of all obligations of every
type and nature of Grantor to the Trustee, any other trustee under the Deed of
Trust, or any Holder (including without limitation any and all amounts which may
at any time be or become due and payable and any and all interest accruing after
the maturity of the Securities and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to Grantor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and interest, to the extent
permitted by law, on the unpaid interest), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of or in connection with the Indenture, the
Securities, the Completion Capital Commitment, the Keep-Well Agreement, this
Agreement, the other Collateral Documents, or any other document made, delivered
or given by Grantor in connection with any of the foregoing (collectively, the
"Transaction Documents"), in each case whether on account of principal, premium,
interest, fees, Liquidated Damages, indemnities, costs, expenses or otherwise
(including without limitation all reasonable fees and disbursements of counsel
(including without limitation in-house counsel) to the Trustee or to the Holders
that are required to be paid by Grantor pursuant to the terms of the Indenture,
the Securities, the Completion Capital Commitment, the
8
<PAGE>
Keep-Well Agreement, this Agreement or any other Transaction Document) (the
foregoing, collectively, the "Obligations").
SECTION 4. Special Provisions Relating to Contracts
4.1 Grantor Remains Liable under Contracts. Anything herein
to the contrary notwithstanding, Grantor shall remain liable under each
of the Contracts to which it is a party to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms and provisions of each
such Contract, except as otherwise provided herein. Neither the Trustee
(nor any other trustee under the Deed of Trust) nor any Holder shall
have any obligation or liability under any such Contract by reason of
or arising out of this Agreement or the receipt by the Trustee (or any
such other trustee) or any such Holder of any payment relating to any
such Contract pursuant hereto, nor shall the Trustee (or any such other
trustee) or any Holder be obligated in any manner to perform any of the
obligations of Grantor under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by
any party under any Contract, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be
entitled at any time or times.
4.2. Communication with Contracting Parties. The Trustee, in
its own name or in the name of others, may, (i) after the occurrence
and continuance of an Event of Default, (ii) with the prior written
consent of Grantor (which shall not be unreasonably withheld or
delayed) or (iii) as otherwise permitted under the Collateral
Documents, communicate with parties to the Contracts to verify with
them to the Trustee's satisfaction the existence, amount and terms of
any Contract.
SECTION 5. Maintenance of Perfected Security Interests; Further Assurances.
5.1. Perfection Maintenance. Grantor agrees that it shall
maintain the security interests created by this Agreement as perfected
first priority security interests, except with respect to (i) Permitted
Liens and (ii) Collateral exclusively subject to a certificate of title
statute and listed on Schedule A hereto, and shall defend such security
interests against the claims and demands of all Persons whomsoever.
5.2. Further Assurances. At the Trustee's request, Grantor
agrees that at any time and from time to time, at the sole cost and
expense of Grantor, Grantor shall promptly, and in any event, in no
less than ten (10) days, execute, deliver and, where applicable, file
all further instruments and documents, including without limitation all
financing, continuation or amendment statements under the Uniform
Commercial Code in effect in any applicable jurisdiction with respect
to the security interests created hereby, and take all further action
that may be necessary or that the Trustee may reasonably request for
the purpose of obtaining, maintaining or preserving the full benefits
of this Agreement and the rights and powers herein granted, or for the
purpose of creating, preserving, perfecting or otherwise protecting the
liens and security interests created or
9
<PAGE>
purported to be created hereby and the priority thereof. Without
limiting Grantor's obligation to make such filings, Grantor hereby
authorizes the Trustee (subject to the following sentence) to take all
action (including without limitation the filing of any UCC financing
statements or continuation statements or amendments thereto without the
signature of Grantor as set forth in Section 15.4 hereof) which the
Trustee may deem necessary or desirable to perfect or otherwise protect
the liens and security interests created or purported to be created
hereunder and to obtain the benefits of this Agreement. Subject to the
Trustee's obligations under the Indenture during the continuance of an
Event of Default, the Trustee shall not be responsible for perfecting
or maintaining the perfection of any security interest granted to it
under this Agreement or for filing, refiling, recording or re-recording
any document, financing statement, notice or instrument in any public
office at any time or times and shall not be responsible for seeing to
the provision of insurance on or the payment of any taxes with respect
to any property subject to this Agreement. In accordance with the
Indenture, in the event of an Asset Sale or an Event of Loss, the Net
Proceeds or the Net Loss Proceeds thereof shall be deposited into an
account, if reasonably requested, in which, at the time of such
deposit, the Trustee shall have a perfected first priority security
interest and in respect of which account the Trustee shall have
received an Opinion of Counsel to Grantor, in form and substance
satisfactory to the Trustee, stating that the Trustee has a perfected
first priority security interest in such account.
SECTION 6. Representations, Warranties and Covenants. Grantor hereby
represents and warrants to, and covenants and agrees with, the Trustee (for the
benefit of the Trustee and the ratable benefit of the Holders), as follows:
6.1. Title; No Other Liens. Grantor is as of the date hereof
and, as to Collateral acquired by it from time to time after the date
hereof, Grantor shall be, the owner of each item of Collateral of
Grantor (or in the case of Collateral held by Grantor as lessee under a
lease or licensee under a license, Grantor has and will have a valid
and subsisting leasehold interest or license, as applicable, in such
Collateral), in each case free and clear from any and all Liens, claims
or other right, title or interest of any Person other than Permitted
Liens. No financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public
office, except (a) financing statements related to Permitted Liens and
(b) financing statements which have been filed in favor of the Secured
Parties pursuant to this Agreement. Without the prior written consent
of the Trustee or as otherwise expressly permitted by the Indenture,
Grantor will not in any way encumber, or hypothecate, or create or
permit to exist, any lien, security interest, charge or encumbrance or
adverse claim upon or other interest in the collateral, except for
Permitted Liens, including without limitation encumbrances permitted by
the Indenture and the liens created by this Agreement, and Grantor will
defend the Collateral against all claims and demands of all Persons at
any time claiming the same or any interest therein (other than holders
of Permitted Liens), except as expressly provided herein. Grantor will
not permit any notices of Lien to exist or be on file in any public
office with respect to all or any portion of the Collateral except, in
each case, for notices of Lien of holders of Permitted Liens or except
as may have been filed by or for the benefit of the Secured Parties
relating to this Agreement or the other Transaction Documents. Grantor
shall
10
<PAGE>
promptly notify the Trustee of any attachment or other legal process
levied against any of the Collateral and any information received by
Grantor relative to the Collateral, which may in any material way
affect the value of the Collateral or the rights and remedies of the
Secured Parties in respect thereof. Except as expressly permitted by
the Indenture, Grantor will pay and discharge all taxes, assessments
and governmental charges or levies against the Collateral prior to
delinquency thereof and will keep the Collateral free of all unpaid
claims and charges (including claims for labor, materials and supplies)
whatsoever.
6.2. Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) constitute perfected security
interests in the Collateral in favor of the Trustee, as collateral
security for the Obligations (other than Collateral exclusively subject
to a certificate of title statute and listed on Schedule A hereto), and
(b) are prior to all other Liens on the Collateral in existence on the
date hereof, other than Permitted Liens.
6.3. Necessary Filings. The filings, registrations and
recordings described on Schedule B hereto constitute the only filings,
registrations and recordings necessary or appropriate to create,
preserve, protect and perfect the security interests granted by Grantor
to the Trustee pursuant to this Agreement in respect of the Collateral.
All such filings, registrations and recordings have been accomplished
as of the date hereof.
6.4. Other Financing Statements. Grantor shall not execute or
authorize or permit to be filed in any public office or elsewhere any
financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) relating to the Collateral, except
financing statements filed or to be filed (a) in respect of Permitted
Liens and (b) in favor of the Secured Parties pursuant to this
Agreement.
6.5. Chief Executive Office; Location of Collateral and
Records. Grantor's chief executive office is located at the address set
forth for Grantor on Schedule C. Grantor represents and warrants that
it has no place of business, offices where Grantor's books of account
and records are kept, or places where the Collateral is used, stored or
located, and all Collateral is in its sole possession and control,
except (i) as set forth on Schedule C hereto, and (ii) except as set
forth in Section 6.9. Grantor further covenants that it will not store,
use or locate any of the Collateral at any place other than as set
forth on Schedule C (or, upon forty-five (45) days' prior written
notice to the Trustee, at such other location in a jurisdiction where
all action required by Sections 5 and 6.6 (if applicable) shall have
been taken).
6.6. Changes in Locations, Name, etc. Grantor represents and
warrants that it currently uses no business or trade names, except as
set forth on Schedule C hereto. Grantor shall not (a) change the
location of its chief executive office from that specified in Schedule
C, (b) change its name, identity or corporate structure or (c) change
the location where it maintains its books and records from the
addresses set forth on Schedule C, unless (i) it shall have given the
Trustee not less than forty-five (45) days' prior written notice of its
intention to do so, clearly describing such new location, name,
identity or corporate structure and providing such other information in
connection therewith as the Trustee may reasonably request, and (ii)
with respect to such new location, name, identity
11
<PAGE>
or corporate structure, Grantor shall have taken all action which is
necessary or appropriate or which is reasonably requested by the
Trustee to maintain the perfection and proof of the security interest
of the Trustee for the benefit of the Secured Parties in the Collateral
intended to be granted hereby and shall have delivered to the Trustee
an Officer's Certificate as to compliance with this clause (ii).
6.7. Delivery of Instruments, Investment Property and Chattel
Paper. If any amount payable under or in connection with any of the
Collateral, or any Collateral itself, shall be or become evidenced by
any Instrument, Investment Property or Chattel Paper, such Instrument,
Investment Property or Chattel Paper shall be promptly delivered to the
Trustee, duly endorsed in a manner satisfactory to the Trustee, to be
held as Collateral pursuant to this Agreement (except as otherwise
specifically provided in the Pledge and Assignment Agreement and the
Cash Collateral and Disbursement Agreement).
6.8. Information and Inspection. Upon reasonable notice to
Grantor, Grantor shall (a) allow the Trustee to inspect and copy all
records relating to the Collateral and the Obligations and (b) furnish
to the Trustee such information as the Trustee may reasonably request
from time to time with respect to the Collateral, any distributions
thereon and any proceeds thereof.
6.9. Location of Equipment. All Equipment held on the date
hereof by Grantor is located at one of the locations shown for Grantor
on Schedule C. All Equipment now held or subsequently acquired by
Grantor shall be kept at one or more of the locations shown for Grantor
on Schedule C hereto, or such new location as Grantor may establish if
(a) it shall have given to the Trustee at least forty-five (45) days'
prior written notice of its intention to do so, clearly describing such
new location and providing such other information in connection
therewith as the Trustee may reasonably request, and (b) with respect
to such new location, Grantor shall have taken all action which is
necessary or appropriate or which is reasonably requested by the
Trustee to maintain the perfection and priority of the security
interest of the Trustee for the benefit of the Secured Parties in the
Collateral granted or purported to be granted hereby and shall have
delivered to the Trustee an Officer's Certificate as to compliance with
this clause (b). Schedule A contains a true, complete and correct
listing of all of the motor vehicles and other Equipment of Grantor
subject to a certificate of title statute in any jurisdiction and the
jurisdiction in which such Collateral is subject to a certificate of
title statute.
6.10.Copyrights, Patents and Trademarks.
(a) (i) Exhibit A contains a list of all
registrations and applications for Copyrights owned by Grantor in its
own name on the date hereof; (ii) Exhibit B contains a list of all
registrations and applications for Patents owned by Grantor in its own
name on the date hereof; (iii) Exhibit C contains a list of all
registrations and applications for Trademarks owned by Grantor in its
own name on the date hereof; (iv) Exhibit D contains a list of each
Copyright License, Patent License and Trademark License to which
Grantor is a party; (v) each Copyright, Patent and Trademark set forth
on Exhibit A, Exhibit B, and Exhibit C is on the date hereof valid,
subsisting, unexpired, enforceable and has not
12
<PAGE>
been cancelled or abandoned; (vi) except as set forth in any of
Exhibit A, Exhibit B or Exhibit C, none of such Copyrights, Patents and
Trademarks set forth therein is on the date hereof the subject of any
licensing or franchise agreement pursuant to which Grantor is the
licensor or franchisor (except as set forth on Exhibit D); (vii) to the
best of Grantor's knowledge after due inquiry, no holding, decision or
judgment has been rendered by any Governmental Authority which would
limit, cancel or question the validity of any Copyright, Patent or
Trademark in any respect that could reasonably be expected to have a
Material Adverse Effect; and (viii) to the best of Grantor's knowledge
after due inquiry, no action or proceeding is pending on the date
hereof (x) seeking to limit, cancel or question the validity of any
Copyright, Patent or Trademark, or (y) which, if adversely determined,
could reasonably be expected have a Material Adverse Effect on the
value of any Copyright, Patent or Trademark.
(b) Grantor (either itself or through licensees or
sublicensees) will (i) continue to use each material Trademark to the
extent it has rights to such Trademark on each and every trademark
class of goods or services applicable to its current line as reflected
in its current catalogs, brochures and price lists, if any, in order to
maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) employ each
material Trademark with the appropriate notice of registration, (iv)
not adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Trustee, for the ratable benefit
of the Holders, shall obtain a perfected first priority security
interest in such mark pursuant to this Agreement, and (v) not do (and
not permit any licensee or sublicensee thereof to do) any act or
knowingly omit to do any act whereby such Trademark may reasonably be
expected to become invalidated unless the Grantor determines in its
prudent business judgment that such Trademark is no longer useful in
the operation of its business.
(c) Grantor will not do any act, or omit to do any
act, whereby any Patent may become abandoned or dedicated if such
abandonment or dedication could reasonably be expected have a Material
Adverse Effect.
(d) Grantor will notify the Trustee immediately if it
knows, or has reason to know, that any application or registration
relating to any material Patent or Trademark may become abandoned or
dedicated, or of any adverse determination or development (including
without limitation the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country) regarding
Grantor's ownership of any Patent or Trademark material to the business
of Grantor or its right to register the same or to keep and maintain
the same and of any action Grantor is taking in respect of such event.
(e) Whenever Grantor, either by itself or through any
agent, employee, licensee or designee, shall file an application for
the registration of any Patent or Trademark with the United States
Patent and Trademark Office or any similar office or agency in any
other country or any political subdivision thereof, Grantor shall
report such filing to the Trustee within thirty (30) days after the
last day of the fiscal quarter in which
13
<PAGE>
such filing occurs. Grantor shall execute and deliver any and all
agreements, instruments, documents, and papers as may be necessary or
appropriate or as the Trustee may reasonably request to evidence,
perfect and/or maintain the perfection of the Trustee's and the
Holders' security interest in any Patent or Trademark and the goodwill
and general intangibles of Grantor relating thereto or represented
thereby and shall deliver to the Trustee an Officer's Certificate as to
compliance with this subparagraph (e).
(f) Consistent with Grantor's reasonable business
judgment, Grantor will take all reasonable and necessary steps,
including without limitation in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in any
other country or any political subdivision thereof, as applicable, to
maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of the Patents and
Trademarks material to the business of Grantor, including without
limitation filing of applications for renewal, affidavits of use and
affidavits of incontestability and, as to Patents, the payment of
maintenance fees, except where the failure to take such action could
not have a Material Adverse Effect.
(g) In the event that any Patent or Trademark is
infringed, misappropriated or diluted by a third party, which
infringement, misappropriation or dilution could reasonably be expected
to have a Material Adverse Effect, Grantor shall upon receipt of
knowledge of such infringement, misappropriation or dilution, promptly
(i) take such actions as Grantor shall reasonably deem appropriate
under the circumstances to protect such Patent or Trademark and (ii) if
such Patent or Trademark is of material economic value, promptly notify
the Trustee after it learns thereof and, consistent with Grantor's
reasonable business judgment, sue for infringement, misappropriation or
dilution, seek injunctive relief where appropriate and recover any and
all damages for such infringement, misappropriation or dilution.
(h) Grantor (either itself or through licensees or
sublicensees) will (i) employ the appropriate notice of copyright for
each published Work subject to copyright protection to the extent
necessary to protect the Copyright relating to such Work and (ii) not
do (and not permit any licensee or sublicensee thereof to do) any act
or knowingly omit to do any act whereby any material Copyright may
become invalidated, except where the failure to take any such action
could not reasonably be expected to have a Material Adverse Effect.
(i) Grantor will not (either itself or through
licensees) do any act, or omit to do any act, whereby any material
Copyright may reasonably be expected to become injected into the public
domain, except where the failure to take any such action could not
reasonably be expected to have a Material Adverse Effect.
(j) Grantor will notify the Trustee immediately if it
knows, or has reason to know, that any Copyright may become injected
into the public domain or of any adverse determination or development
(including without limitation the institution of, or any such
determination or development in, any proceeding in any court or
tribunal in any
14
<PAGE>
country) regarding Grantor's ownership of any such Copyright or its
validity and of any action Grantor is taking in respect of such event.
(k) Whenever Grantor, either by itself or through any
agent, employee licensee, sublicensee or designee, shall file an
application for the registration of any Copyright with the United
States Copyright Office or any similar office in any other country or
political subdivision thereof, Grantor shall report such filing to the
Trustee within thirty (30) days after the last day of the fiscal
quarter in which such filing occurs. Grantor shall execute and deliver
any and all agreements, instruments, documents and papers as shall be
necessary or appropriate or as the Trustee reasonably may request to
evidence, perfect and/or maintain the perfection of the Trustee's and
the Holders' security interest in such Copyright and shall deliver to
the Trustee an Officer's Certificate as to compliance with this
subparagraph (k).
(l) Consistent with the Grantor's reasonable business
judgment, Grantor will take all reasonable and necessary steps in
accordance with its reasonable business judgment to maintain and pursue
each application (and to obtain the relevant registration) and to
maintain to the extent permitted by law each registration of each
material Copyright owned by Grantor including without limitation filing
of applications for renewal, where necessary.
(m) Grantor will promptly notify the Trustee of any
material infringement of any Copyright owned by it of which Grantor
becomes aware and which infringement could reasonably be expected to
have a Material Adverse Effect, and Grantor shall upon receipt of
knowledge of such infringement take all actions it reasonably deems
appropriate under the circumstances to protect such Copyright,
including, where appropriate, the bringing of suit or the settling of
actual or potential suits for infringement, seeking injunctive relief
and seeking to recover any and all damages for such infringement.
6.11. Authorization, Enforceability. Grantor has the requisite
power, authority and legal right to grant a security interest in all
the Collateral of Grantor pursuant to this Agreement, and this
Agreement has been duly authorized, executed and delivered by, and
constitutes the legal, valid and binding obligation of Grantor,
enforceable against Grantor in accordance with its terms. Each Contract
to which Grantor is a party is in full force and effect and constitutes
a valid and legally enforceable obligation of Grantor, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (whether considered in a proceeding in equity or
at law).
6.12. No Consents. Except for the filings, registrations and
recordings contemplated in Section 6.3, no consent of any Person
(including without limitation any stockholders or creditors of Grantor)
and no consent, authorization, approval, or other action by, and no
notice to or filing with, any Governmental Authority or regulatory body
or other Person is required (a) for the grant by Grantor of a security
interest in the Collateral pursuant to this Agreement, (b) for the
perfection or maintenance of such
15
<PAGE>
security interest created hereby, including the first priority nature
of such security interest, or the exercise of rights and remedies
provided for herein, (c) for the enforceability of such security
interest against third parties, including judgment lien creditors, (d)
for the authorization, execution, delivery or performance of this
Agreement by Grantor, or (e) for the exercise by the Trustee of the
remedies in respect of the Collateral pursuant to this Agreement.
6.13. Collateral. All information set forth herein (including
without limitation the information set forth in the Schedules and
Exhibits annexed hereto, as they may be amended from time to time)
relating to the Collateral is accurate and complete in all material
respects.
6.14. Ownership and Control of Collateral. Except as may
otherwise be permitted by the Indenture, Grantor at all times will be
the sole legal and beneficial owner or lessee of the Collateral of
Grantor.
6.15. [Intentionally Omitted].
6.16. Representations Regarding Contracts.
(a) Each Contract to which Grantor is a party is in
full force and effect and constitutes a valid and legally enforceable
obligation of Grantor, except as the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles (whether considered in a proceeding in equity or at law).
(b) Except as could not reasonably be expected to
have a Material Adverse Effect, Grantor or (to the best of Grantor's
knowledge) any other party to any Contract to which Grantor is a party
is not in default in the performance or observance of any of the terms
thereof and Grantor is not aware of any fact that, with notice or lapse
of time, could reasonably be expected to result in such a default.
(c) Except as could not reasonably be expected to
have a Material Adverse Effect, Grantor has fully performed all of its
obligations required as of the date hereof under each Contract to which
Grantor is a party.
(d) No defense, offset, counterclaim or claim which
could reasonably be expected to (i) materially adversely affect the
value of the Contract to which it relates as Collateral or (ii)
otherwise have a Material Adverse Effect has been asserted or alleged
against Grantor as to any Contract to which Grantor is a party.
(e) No amount constituting Collateral and payable to
Grantor under or in connection with any Contract to which Grantor is a
party is evidenced by any Instrument, Chattel Paper or Investment
Property which has not been delivered to the Trustee.
16
<PAGE>
(f) None of the parties to any Contract is a
Governmental Authority except as set forth on Schedule D.
6.17. Covenants Regarding Contracts.
(a) Grantor shall perform and comply in all material
respects with all its obligations under the Contracts to which Grantor
is a party where failure to comply, individually or in the aggregate,
would have a Material Adverse Effect.
(b) Except as expressly permitted by the Indenture,
the Cash Collateral and Disbursement Agreement or any other Collateral
Document, Grantor shall not amend, modify, terminate or waive any
provision of any Contract to which Grantor is a party in any manner
which could reasonably be expected to materially adversely affect the
value of such Contract as Collateral or which could otherwise
reasonably be expected to have a Material Adverse Effect; provided
that, except as otherwise required under the Cash Collateral and
Disbursement Agreement, Grantor may replace a Contract (the "Initial
Contract") so long as the contract entered into to replace the Initial
Contract (the "Replacement Contract") is subject to the security
interest created by this Agreement.
(c) Except as expressly permitted by the Indenture,
Grantor shall exercise promptly and diligently each and every material
right which it may have under each material Contract to which Grantor
is a party; provided that Grantor may amend, modify, terminate or waive
rights subject to Section 6.17(b) above.
(d) Except as expressly permitted by the Indenture or
any other Collateral Document, Grantor shall deliver to the Trustee a
copy of each material demand, notice of default or other written
material notification received by it relating in any way to any
material Contract to which Grantor is a party.
(e) Except as expressly permitted in the Indenture,
in any suit, proceeding or action brought by or on behalf of the
Trustee under any Contract to which Grantor is a party which the
Trustee is entitled to bring after an Event of Default has occurred,
Grantor will defend, save, indemnify and keep the Trustee and the
Holders harmless from and against any and all expenses, losses, claims,
liabilities and damages, as incurred, suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction or liability
whatsoever of the obligor thereunder, arising out of a breach by
Grantor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor
of such obligor or its successors from Grantor; provided that the
indemnity provided under this Section 6.17(e) shall not apply to the
extent such liability arises from the gross negligence or willful
misconduct of the Trustee or Holders.
(f) The covenants set forth at Sections 6.17(a) and
(c) shall terminate on, and be of no further force or effect from and
after, the date that the Riviera Black Hawk (as defined in the
Indenture) is Operating (as defined in the Indenture).
17
<PAGE>
6.18. Further Actions and Identification of Collateral. At any
time upon the occurrence of an Event of Default, or otherwise no more
than two times in any twelve-month period, Grantor shall, at its sole
cost and expense, make, execute, endorse, acknowledge, file and/or
deliver to the Trustee from time to time such lists, descriptions and
designations of the Collateral of Grantor, copies of warehouse
receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices and schedules relating
to the Collateral of Grantor, as the Trustee may reasonably request,
all in reasonable detail. Grantor will promptly notify the Trustee in
writing of any event, or change of law, regulation, business practice,
or business condition of which Grantor has knowledge that could
reasonably be expected to materially adversely affect the value of the
Collateral.
6.19. Records of Collateral; Notation on Books and Records.
Grantor shall keep full and accurate books and records relating to the
Collateral of Grantor, and stamp or otherwise mark such books and
records in such manner as may be necessary or as the Trustee may
reasonably require in order to reflect the security interests granted
by this Agreement.
6.20. Notices. Grantor shall promptly notify the Trustee, in
reasonable detail, of any Lien (other than security interests created
hereby or Permitted Liens) or any attachment or other legal process
levied against any of the Collateral and any information received by
the Grantor relative to the Collateral, which may in any material way
affect the value of the Collateral or the rights and remedies of the
Secured Parties in respect thereof.
6.21. Collateral Maintenance. Grantor shall keep and maintain
the Collateral in good operating condition, working order and repair,
ordinary wear and tear excepted, and from time to time will make or
cause to be made all repairs, replacements and other improvements in
connection therewith that are necessary or desirable toward such end.
Grantor shall not misuse or abuse the Collateral, or waste or allow it
to deteriorate, except for the ordinary wear and tear of its normal and
expected use in Grantor's business in accordance with Grantor's
policies as then in effect (provided that no changes are made to
Grantor's policies as in effect on the date hereof that would be
materially adverse to the interests of any of the Secured Parties), and
Grantor shall comply with all laws, statutes and regulations pertaining
to the use or ownership of the Collateral where failure to comply could
reasonably be expected to result in a Material Adverse Effect.
6.22. After-Acquired Intellectual Property. If Grantor shall
(a) obtain any ownership rights to any new invention (whether or not
patentable), know-how, trade secret, design, process, procedure,
formula, diagnostic test, service mark, trademark, trademark
registration, trade name, copyright or license, or (b) become entitled
to the benefit of any patent, service mark or trademark application,
trademark, trademark registration, license renewal, copyright renewal
or extension, or patent for any reissue, division, continuation,
renewal extension, or continuation-in-part of any patent or any
improvement on any patent, excluding as to (a) and (b) any right,
interest or benefit received by Grantor which by the terms of any
agreement exclusively conferring such right, interest or benefit
prohibits the granting by Grantor of a security interest therein, the
18
<PAGE>
provisions of this Agreement shall automatically apply thereto and any
item enumerated in clause (a) or (b) of this sentence shall
automatically constitute Collateral and shall be subject to the
assignment, lien and security interest created hereby without further
action by any party. Grantor promptly shall (i) give to the Trustee
written notice of its acquisition of or entitlement to any of the
rights subject to federal registration set forth in clauses (a) or (b)
of the immediately preceding sentence and (ii) confirm the attachment
of the lien and security interest created hereby to any of such rights
by execution of an appropriate instrument delivered to the Trustee
and/or to make such recordings and filings as may be necessary or
appropriate or as the Trustee may reasonably request to evidence,
confirm, perfect and/or maintain the perfection of such security
interest, including without limitation an amendment to Exhibits A, B, C
and D (as applicable) to include any such rights and appropriate
filings with the applicable federal office.
SECTION 7. Special Provisions Relating to Intellectual Property.
7.1. Modifications. Grantor and the Trustee may modify this
Agreement, without the consent of Holders, by amending Exhibits A, B, C
and/or D to include any future Intellectual Property of Grantor in
accordance with Section 6.10 or Section 6.22 or to reflect any
disposition of Intellectual Property made in compliance with the
provisions of this Agreement and the Indenture.
7.2. Applications. Except in the ordinary course of business
consistent with prudent business practice or as Grantor, in its
reasonable business judgment, deems appropriate or as may otherwise be
permitted by the Indenture, Grantor shall not abandon any registration
of any Intellectual Property or any right to file an application with
respect to Intellectual Property or any pending application, unless
refused by the Patent and Trademark Office Examiner where such
abandonment, in each case, could reasonably be expected to have a
Material Adverse Effect, without the prior written consent of the
Trustee.
7.3. Restriction on Licensing Intellectual Property. Grantor
shall not license the Intellectual Property or any portion thereof, or
amend or permit the amendment of any of the Licenses, in either case in
a manner that adversely affects the right to receive any material
amount of payments thereunder or, except as otherwise permitted under
the Indenture, in any manner materially adverse to the interests of the
Trustee in the Intellectual Property, in each case without the prior
written consent of the Trustee.
7.4. Use of Intellectual Property Prior to Event of Default.
Subject to Section 7.3 but notwithstanding any other provision herein
to the contrary, so long as no Event of Default shall have occurred and
be continuing, Grantor shall be permitted to exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take any
other actions with respect to the Intellectual Property in the ordinary
course of the business of Grantor or in the exercise of Grantor's
reasonable business judgment. In furtherance of the foregoing, unless
an Event of Default shall have occurred and be continuing, the Trustee
shall, from time to time upon the request of Grantor, execute and
deliver to Grantor any instruments, certificates or other documents, in
the form so requested, which Grantor shall have
19
<PAGE>
certified are appropriate to allow Grantor to take any action permitted
above (including relinquishment of the license provided as to any
specific Intellectual Property).
SECTION 8. Transfers and Other Liens. Except as permitted by the Indenture,
Grantor shall not sell, convey, assign or otherwise dispose of, or grant any
option with respect to, any of the Collateral. Grantor shall not create or
permit to exist any Lien upon or with respect to any of the Collateral other
than Permitted Liens or Liens in favor of the Secured Parties pursuant to this
Agreement.
SECTION 9. Reasonable Care. Beyond the duties set forth in Section 15.3 and
the exercise of reasonable care in custody thereof, the Trustee shall have no
duty as to the collection of any Collateral in its possession or control or in
the possession or control of any agent or nominee of the Trustee, or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Trustee shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if such Collateral is accorded treatment substantially equivalent to
that which the Trustee, in its individual capacity, accords its own property, it
being understood that the Trustee shall not have responsibility for taking any
necessary steps to preserve rights against any Person with respect to any
Collateral.
SECTION 10. Remedies Upon Event of Default.
10.1. Notice to Obligors and Contract Parties. At any time
after the occurrence and during the continuance of an Event of
Default, the Trustee may, and, if requested by the Trustee, Grantor
shall, notify parties to the Contracts and account debtors in respect
of any General Intangibles or Accounts constituting Collateral that
such Collateral has been assigned to the Trustee for the ratable
benefit of the Holders and that payments in respect thereof shall be
made directly to the Trustee.
10.2. Proceeds to be Turned Over to Trustee. If an Event of
Default shall have occurred and be continuing, all amounts and proceeds
(including instruments) received by Grantor in respect of any
Collateral shall be held by Grantor in trust for the Trustee and the
Holders, segregated from other funds of Grantor, and shall, forthwith
upon receipt by Grantor, be turned over to the Trustee in the exact
form received by Grantor (duly endorsed by Grantor to the Trustee, if
required or requested) and held by the Trustee in the Collateral
Account, which shall be maintained under the sole dominion and control
of the Trustee. All Proceeds while held by the Trustee in the
Collateral Account (or by Grantor in trust for the Trustee and the
Holders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as
provided in Section 11.
10.3. Obtaining Possession of theCollateral.If an Event
of Default shall have occurred and be continuing, then and in every
such case, the Trustee may, but shall not be obligated to, in addition
to any other action permitted by law (and not limited in any manner to
the remedies contained in the Securities and the Indenture) take one or
more of the following actions:
20
<PAGE>
(a) personally, or by agents or attorneys,
immediately take possession of the Collateral or any part thereof, from
Grantor or any other Person who then has possession of any part
thereof, with or without notice or process of law, and for that purpose
may enter upon Grantor's premises where any of the Collateral is
located and remove such Collateral and use in connection with such
removal any and all services, supplies, aids and other facilities of
Grantor;
(b) sell, assign or otherwise liquidate, or direct
Grantor to sell, assign or otherwise liquidate, any or all investments
made in whole or in part with the Collateral or any part thereof, and
take possession of the proceeds of any such sale, assignment or
liquidation; and
(c) take possession of the Collateral or any part
thereof by directing Grantor in writing to deliver the same to the
Trustee at any place or places which the Trustee shall reasonably
select, in which event Grantor shall at its own expense: (i) forthwith
cause the same to be moved to the place or places so designated by the
Trustee and there delivered to the Trustee; (ii) store and keep any
Collateral so delivered to the Trustee at such place or places pending
further action by the Trustee; and (iii) while the Collateral shall be
so stored and kept, provide such guards and maintenance services as
shall be reasonably necessary to protect the same and to preserve and
maintain them in good condition. Grantor's obligation to deliver the
Collateral is of the essence of this Agreement. Upon application to a
court of equity having jurisdiction, the Trustee shall, to the extent
permitted by law, be entitled to a decree requiring specific
performance by Grantor of such obligation.
10.4. Use and Preservation of the Collateral. Upon and during
the existence of an Event of Default, the Trustee may, in its sole
discretion, use or manage the Collateral to preserve the Collateral or
its value, or to pay the Obligations which includes, without
limitation, the right to take possession of Grantor's premises and
property, to exclude Grantor and any third parties (whether or not
claiming under Grantor) from such premises and property, to make
repairs, replacements, alterations, additions and improvements to or
take any acts to preserving the Collateral, and to dispose of all or
any portion of the Collateral.
10.5. Remedies under UCC. In addition to the rights and
remedies provided in this Agreement or otherwise available to it, the
Trustee shall have all the rights and remedies of a secured party under
the UCC or under the Uniform Commercial Code of any other relevant
jurisdiction.
10.6. Additional Remedies. Upon the occurrence and during the
continuance of an Event of Default, the Trustee, without demand of
performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to
below) to or upon Grantor or any other person (all and each of which
demands, defenses, advertisements and notices are, to the extent
permitted by law, hereby waived), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give
21
<PAGE>
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales,
at any exchange, broker's board or office of the Trustee or elsewhere
upon such terms and conditions as the Trustee may deem advisable and at
such prices as it may elect, for cash or on credit or for future
delivery without assumption of any credit risk. The Trustee or any
Holder shall have the right, to the extent permitted by law, upon any
such public sale or sales or upon any such private sale or sales, to
purchase for cash the whole or any part of the Collateral so sold (but
any such purchase may not, in whole or in part, be in the form of
cancellation of indebtedness without the consent of each Holder).
Grantor further agrees, at the Trustee's request, to assemble the
Collateral of Grantor and make it available to the Trustee at places
which the Trustee shall reasonably select, whether at Grantor's
premises or elsewhere. The Trustee shall apply the net proceeds of any
action taken by it pursuant to this Agreement, after deducting all
reasonable costs and expenses of every kind incurred by the Trustee in
connection therewith or incidental to the care or safekeeping of any of
the Collateral or in any way relating to the Collateral or the rights
of the Trustee and the Holders hereunder, including without limitation
reasonable attorneys' fees and disbursements, as provided in Section 11
hereof, and only after such application and after the payment by the
Trustee of any other amount required by any provision of law, including
without limitation Section 9-504(1)(c) of the UCC, need the Trustee
account for the surplus, if any, to Grantor. To the extent permitted by
law, Grantor waives all claims, damages and demands it may acquire
against the Trustee (or any other trustee under the Deed of Trust) or
any Holder arising out of the exercise by any of them of any rights
hereunder. If any notice of proposed sale or other disposition of
Collateral shall be required by law, such notice shall, to the extent
permitted by law, be deemed reasonable and proper if given at least ten
(10) days before such sale or other disposition. Notwithstanding the
foregoing, the Trustee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Trustee
may, without notice or publication, adjourn any public or private sale,
or cause the same to be adjourned from time to time by announcement at
the time and place fixed for sale or, with respect to a private sale,
after which such sale may take place, and any such sale may, without
further notice, be made at the time and place to which it was so
adjourned or, with respect to a private sale, after which such sale may
take place. Each purchaser at any such sale shall hold the property
sold free from any claim or right on the part of Grantor, and Grantor
hereby waives, to the full extent permitted by law, all rights of
redemption, stay and/or appraisal which Grantor now has or may at any
time in the future have under any rule of law or statute now existing
or hereafter enacted. To the extent permitted by law, Grantor also
hereby waives any claims against the Trustee arising by reason of the
fact that the price at which any Collateral may have been sold at a
private sale was less than the price which might have been obtained at
a public sale, even if the Trustee accepts the first offer received and
does not offer such Collateral to more than one offeree. In case any
sale of all or any part of the Collateral is made on credit or for
future delivery, the Collateral so sold may be retained by the Trustee
until the sale price is paid by the purchaser or purchasers thereof,
and the Trustee shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the
Collateral purchased. In case of any such failure, such Collateral may
be sold again upon like notice. The parties
22
<PAGE>
hereto agree that the notice provisions, method, manner and terms of
any sale, transfer or disposition of any Collateral in compliance with
the terms set forth herein or any other provision of this Agreement are
commercially reasonable.
10.7. Certain Sales of Collateral.
(a) Grantor recognizes that, by reason of certain
prohibitions contained in law, rules, regulations or orders of any
Governmental Authority, the Trustee may be compelled, with respect to
any sale of all or any part of the Collateral, to limit purchasers to
those who meet the requirements of such Governmental Authority. Grantor
acknowledges that any such sales may be at prices and on terms less
favorable to the Trustee than those obtainable through a public sale
without such restrictions, and, notwithstanding such circumstances,
agrees that any such restricted sale shall be deemed to have been made
in a commercially reasonable manner.
(b) With respect to the sale of securities
constituting Collateral, to the extent the Trustee deems it advisable
to do so, in its sole discretion or as may be required by applicable
law, the Trustee may restrict the prospective bidders or purchasers to
Persons who, in the Trustee's sole judgment, are sufficiently
sophisticated and who will represent and agree that they are purchasing
the securities constituting Collateral then being sold for their own
account and not with a view to the distribution or resale thereof, and
upon consummation of any such sale, the Trustee shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
securities constituting Collateral so sold.
10.8. Certain Remedies in Respect of Intellectual Property. If
an Event of Default shall have occurred and shall be continuing, in
addition to the other rights and remedies provided for herein or
otherwise available to it, the Trustee may license or sublicense
(whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis) all or any portion of the Intellectual Property
throughout the world for such term or terms, on such conditions and in
such manner as the Trustee shall determine. Upon request by the
Trustee, Grantor shall execute and deliver to the Trustee any powers of
attorney, in form and substance reasonably satisfactory to the Trustee
for the implementation of any assignment, license, sublicense, grant of
option, sale or other disposition of any Intellectual Property. In the
event of any sale, assignment, or other disposition of any of the
Intellectual Property, the goodwill and general intangibles connected
with and symbolized by the Intellectual Property subject to such
disposition shall be included, and Grantor shall supply to the Trustee
or its designee, for inclusion in such sale, assignment or other
disposition, all Intellectual Property relating to such Intellectual
Property. Notwithstanding the foregoing or any other provision hereof,
the provisions of this Security Agreement, including this Section 10.8,
are subject to the Trademark License Agreement, dated as of June 3,
1999, between Riviera Operating Corporation and Grantor, and the use
and enjoyment by the Trustee of the license rights thereunder shall be
subject to the limitations contained therein.
23
<PAGE>
10.9. Specific Performance. In addition to any of the other
rights and remedies hereunder, the Trustee shall have the right to
institute a proceeding seeking specific performance in connection with
any of the agreements or obligations hereunder.
10.10. Receivership. Upon and during the continuance of an
Event of Default, the Trustee may, to the fullest extent permitted by
law, have a court having jurisdiction appoint a receiver, which
receiver shall take charge and possession of and protect, preserve,
replace and repair the Collateral or any part thereof, and manage and
operate the same, and receive and collect all rents, income, receipts,
royalties, revenues, issues and profits therefrom. Except to the extent
prohibited by law, Grantor shall irrevocably consent and shall be
deemed to have hereby irrevocably consented to the appointment thereof,
and upon such appointment, Grantor shall immediately deliver possession
of such Collateral to the receiver. Except to the extent prohibited by
law, Grantor also irrevocably consents to the entry of an order
authorizing such receiver to invest interest upon any funds held or
received by the receiver in connection with such receivership. The
Trustee shall be entitled to such appointment as a matter of right, if
it shall so elect, without the giving of notice to any party and
without regard to the adequacy of the security of the Collateral.
SECTION 11. Application of Proceeds. All cash proceeds received by the
Trustee upon any sale of, collection of, or other realization upon, all or any
part of the Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket expenses
incurred by the Trustee in connection with the sale of, collection of
or other realization upon Collateral, including reasonable attorneys'
fees and disbursements and court costs, if applicable;
Second: To the payment of the Obligations in such manner
consistent with applicable law and the Indenture as the Trustee in its
discretion shall decide; and
Third: To the extent of the balance (if any) of such proceeds,
to payment to Grantor or other Person legally entitled thereto.
Non-cash proceeds of any disposition by the Trustee of Collateral
available to satisfy the Obligations shall be applied to the Obligations in such
order and in such manner consistent with applicable law and the Indenture as the
Trustee in its discretion shall decide.
SECTION 12. Expenses. Grantor will immediately upon demand pay to the
Trustee the amount of any and all reasonable expenses, including the reasonable
fees and expenses of the Trustee's counsel and the fees and expenses of any
experts and agents which the Trustee may incur in connection with (a) the
collection of the Obligations, (b) the enforcement and administration of this
Agreement or any other Collateral Document, (c) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the
Collateral, (d) the exercise or enforcement of any of the rights of the Trustee
or any Secured Party hereunder, (e) the failure by Grantor to perform or observe
any of the provisions hereof, (f) the preparation and filing or recording of
financing statements and other documents (including all taxes in
24
<PAGE>
connection therewith) in public offices necessary or desirable to create and
maintain first priority perfected security interests in the Collateral in favor
of the Trustee, (g) the payment or discharge of any taxes, insurance premiums
required or permitted under any Collateral Document or encumbrances with respect
to the Collateral, (h) defending or prosecuting any actions or proceedings
arising out of or related to the transactions to which this Agreement relates
(other than actions by Grantor for breach of the Indenture or any Collateral
Documents determined by a court of competent jurisdiction pursuant to a
non-appealable order), or (i) otherwise protecting, maintaining or preserving
the Collateral and the perfection and priority of the security interests granted
or purported to be granted hereunder, or the enforcing, foreclosing, retaking,
holding, storing, processing, selling or otherwise realizing upon the Collateral
and the Trustee's security interest therein, whether through judicial
proceedings or otherwise. All amounts payable by Grantor under this Section 12
shall be due upon demand and shall be secured hereby and shall be part of the
Obligations. Grantor's obligations under this Section 12 shall survive the
termination of this Agreement and the discharge of Grantor's other obligations
hereunder.
SECTION 13. Amendments in Writing; No Waiver, Cumulative Remedies; Reinstate-
ment; Additional Grantor.
13.1. Amendments Subject to the provisions of Article 9 of the
Indenture, none of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified, except by a
written instrument executed by Grantor (except as otherwise provided in
Section 13.4) and the Trustee; provided that any provision of this
Agreement imposing obligations on Grantor may be waived by the Trustee
in a written instrument executed solely by the Trustee.
13.2. No Waiver; Remedies Cumulative. To the maximum extent
permitted by law, (a) no failure on the part of the Trustee to
exercise, no course of dealing with respect to, and no delay on the
part of the Trustee in exercising, any right, power, privilege or
remedy hereunder shall operate as a waiver thereof or constitute an
acquiescence to any Default or Event of Default; (b) no single or
partial exercise of any such right, power, privilege or remedy
hereunder nor any taking, exchange, release or non-perfection of any
other collateral, nor any release or amendment of or consent to any
departure from any guarantees for all or any of the Obligations,
preclude any other or future exercise thereof or the exercise of any
other right, power or remedy, and (c) the Trustee's acceptance of
partial payment or performance will not extend or affect any grace
period or constitute a waiver of a Default or Event of Default. A
waiver by the Trustee or any Holder of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy
which the Trustee or such Holder would otherwise have on any future
occasion. To the maximum extent permitted by law, the remedies herein
provided are cumulative and are not exclusive of any remedies provided
by law.
13.3. Reinstatement. In the event the Trustee shall have
instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Trustee, then and in every
such case, Grantor, the Trustee and each Holder shall be restored to
their respective
25
<PAGE>
former positions and rights hereunder with respect to the Collateral,
and all rights, remedies and powers of the Trustee and the Secured
Parties shall continue as if no such proceeding had been instituted.
13.4. Additional Grantors. If Grantor shall acquire or create
a Restricted Subsidiary after the date of this Agreement, then such
newly acquired or created Restricted Subsidiary (each such Restricted
Subsidiary, an "Additional Grantor") shall (i) become a party to this
Agreement by executing and delivering to the Trustee an Amendment to
Security Agreement (Additional Grantor) in substantially the form of
Annex I hereto (each, an "Amendment to Security Agreement (Additional
Grantor)"), and (ii) shall enter into such documents as shall be
necessary, in the Trustee's opinion, to create a perfected, first
priority security interest in the capital stock (to the extent
required to be pledged under the Indenture) and all property of such
Restricted Subsidiary (including without limitation any real property
and all personal property of such Restricted Subsidiary) and the
proceeds and products thereof. Upon the execution and delivery to the
Trustee by any Additional Grantor of an Amendment to Security
Agreement (Additional Grantor), which Amendment to Security Agreement
(Additional Grantor) need not be executed by Grantor, and the
acceptance thereof by the Trustee, such Additional Grantor shall be
and become a Grantor hereunder, and each reference in this Agreement
to the "Grantor" shall include such Additional Grantor and each
reference in the Indenture, the Securities and any other Transaction
Document to the "Grantor" shall include such Person.
SECTION 14. Appointment as the Trustee. The actions of the Trustee hereunder
are subject to the provisions of the Indenture. The Trustee shall have the right
hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including
without limitation the release or substitution of Collateral), in each case in
accordance with this Agreement and the Indenture. The Trustee may resign and a
successor Trustee may be appointed in the manner provided in the Indenture. Upon
the acceptance of any appointment as the Trustee by a successor Trustee, such
successor Trustee shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Trustee under this
Agreement, and the retiring Trustee shall thereupon be discharged from its
duties and obligations under this Agreement. After any retiring Trustee's
resignation, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while it was
the Trustee.
SECTION 15. The Trustee Appointed Attorney-in-Fact; the Trustee May Perform.
15.1. The Trustee Appointed as Attorney-in-Fact. Grantor
hereby irrevocably constitutes and appoints the Trustee and any
officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of Grantor and in the name of Grantor, or in
its own name, for the purpose of carrying out the terms of this
Agreement to take any and all appropriate action and to execute any
and all documents and instruments which may be necessary or desirable
to accomplish the purposes of this Agreement. Without limiting the
generality of the foregoing, Grantor hereby gives the Trustee and any
officer or agent of the Trustee the
26
<PAGE>
power and right, on behalf of Grantor, without notice to or assent by
Grantor, to do any or all of the following:
(a) in the name of Grantor or its own name, or
otherwise, take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Contract or with respect to any other Collateral
and file any claim or take any other action or proceeding in any court
of law or equity or otherwise deemed appropriate by the Trustee for the
purpose of collecting any and all such monies due under any Contract or
with respect to any other Collateral whenever payable;
(b) in the case of any Copyright, Patent or
Trademark, execute and deliver any and all agreements, instruments,
documents and papers as the Trustee may determine appropriate to
evidence the Trustee's security interest in such Copyright, Patent or
Trademark and the goodwill and general intangibles of Grantor relating
thereto or represented thereby;
(c) pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, effect any repairs or
any insurance called for by the terms of this Agreement and pay all or
any part of the premiums therefor and the costs thereof;
(d) execute, in connection with any sale provided
for in Sections 10.3, 10.4 or 10.5 or any other sale of Collateral
pursuant to this Agreement, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral;
and
(e) (i) direct any party liable for any payment
under any of the Collateral to make payment of any and all monies due
or to become due thereunder directly to the Trustee or as the Trustee
shall direct; (ii) ask or demand for, collect, receive payment of and
receipt for, any and all monies, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(iii) sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection
with any of the Collateral; (iv) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (v) defend any suit,
action or proceeding brought against Grantor with respect to any
Collateral; (vi) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, to give such discharges or
releases as the Trustee may deem appropriate; and (vii) generally,
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though the Trustee were the absolute owner thereof for all purposes,
and do, at the Trustee's option and Grantor's expense, at any time, or
from time to time, all acts and things which the Trustee deems
necessary to protect, preserve or realize upon the Collateral and the
Trustee's and the Holders' security interests therein and to effect the
intent of this Agreement, all as fully and effectively as Grantor might
do.
27
<PAGE>
The foregoing grant of authority is a power of attorney
coupled with an interest and such appointment shall be irrevocable
until this Agreement is terminated and the security interests created
hereby are released. Grantor hereby ratifies all that such attorneys
shall lawfully do or cause to be done by virtue and in accordance with
the terms hereof. Anything in this Section 15.1 to the contrary
notwithstanding, the Trustee agrees that it will not exercise any
rights under the power of attorney provided for in this Section 15.1
unless an Event of Default shall have occurred and be continuing.
15.2. The Trustee May Perform. If Grantor shall fail to do any
act or thing that it has covenanted to do hereunder or under the
Indenture within any applicable grace period with respect thereto or if
any representation or warranty on the part of Grantor contained herein
or under the Indenture shall be breached, the Trustee or any Secured
Party may (but shall not be obligated to), after providing Grantor with
at least ten days' notice, do the same or cause it to be done or remedy
any such breach, and may expend funds for such purpose. Any and all
amounts so expended by the Trustee or such Secured Party shall be paid
by Grantor promptly upon demand therefor, with interest at the Default
Rate during the period from and including the date on which such funds
were so expended to the date of repayment. Grantor's obligations under
this Section shall survive the termination of this Agreement and the
discharge of Grantor's other obligations under this Agreement.
15.3. Duty of the Trustee. The Trustee's sole duty with
respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the UCC, Section
9 hereof or otherwise, shall be to deal with it in the same manner as
the Trustee deals with similar property for its own account. Neither
the Trustee, any Holder nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of Grantor or any other person or
to take any other action whatsoever with regard to the Collateral or
any part thereof. The powers conferred on the Trustee and the Holders
hereunder are solely to protect the Trustee's and the Holders'
interests in the Collateral and shall not impose any duty upon the
Trustee or any Holder to exercise any such powers. The Trustee and the
Holders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, employees or agents shall be
responsible to Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct. Except for the
safe custody of any Collateral in its possession and the accounting
for monies actually received by it hereunder, the Trustee shall have
no duty as to any Collateral, as to ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Trustee has or
is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against prior parties or any
other rights pertaining
28
<PAGE>
thereto. Nothing contained in this Agreement shall be
construed as requiring or obligating the Trustee or the Holders, and
neither the Trustee nor the Holders shall be required or obligated, to
(a) present or file any claim or notice or take any action with respect
to any Collateral or in connection therewith or (b) notify Grantor of
any decline in the value of any Collateral.
15.4. Execution of Financing Statements. Pursuant to Section
9-402(2)(e) of the UCC, Grantor authorizes the Trustee (subject to the
last sentence of Section 5.2) to file financing statements and
continuation statements with respect to the Collateral without the
signature of Grantor in such form and in such filing offices as the
Trustee reasonably determines appropriate to perfect, and maintain
perfected, the security interests of the Trustee under this Agreement.
A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any jurisdiction. At
the time the Riviera Black Hawk is first Operating (as such terms are
defined in the Indenture), so long as Grantor's place of business
(within the meaning of the UCC) at such time is located in the State of
Colorado, the Trustee shall, at Grantor's expense, execute such
termination statements prepared by Grantor, and as Grantor may
reasonably request, to terminate any financing statements previously
filed in the State of Nevada in connection with the Collateral
Documents on the basis that Grantor's place of business at the time of
such filings was located in the State of Nevada (and the parties hereto
acknowledge that the financing statement filed in the State of Nevada
in connection with the execution and delivery of the Collateral
Documents was so filed on the theory that Grantor's place of business
at such time was in the State of Nevada); provided that nothing in this
sentence shall prohibit or impair the Trustee's right to file or direct
the filing of any financing statements in future in any jurisdiction in
accordance with the provisions of this Agreement.
15.5. Authority of the Trustee. Grantor acknowledges that the
rights and responsibilities of Grantor under this Agreement with
respect to any action taken by the Trustee or the exercise or
non-exercise by the Trustee of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Trustee and the
Holders, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as
between the Trustee and Grantor, the Trustee shall be conclusively
presumed to be acting as agent for the Holders with full and valid
authority so to act or refrain from acting, and Grantor shall be under
no obligation, or entitlement, to make any inquiry respecting such
authority. The Trustee may exercise its rights under this Agreement
through an agent or other designee.
SECTION 16. Notices. All notices, requests, demands and other communication
shall be given in the manner set forth in Section 11.02 of the Indenture and
shall be given or delivered at the following respective addresses and facsimile
and telephone numbers and to the attention of the following individuals or
departments: (i) if to Grantor, at its address specified pursuant to the
Indenture; (ii) if to the Trustee, at its address specified pursuant to the
Indenture; or (iii) as to any such party, at such other address, facsimile or
telephone number, or to the attention of such other
29
<PAGE>
individual or department, as the party to which such information pertains may
hereafter specify for the purpose in a notice to the other specifically
captioned "Notice of Change of Address."
SECTION 17. Continuing Security Interest; Assignment. This Agreement shall
create a continuing security interest in the Collateral and shall (a) be binding
upon Grantor, its successors and assigns, and (b) inure, together with the
rights and remedies of the Trustee hereunder, to the benefit of the Trustee
(and, to the extent provided herein, any other trustee under the Deed of Trust)
and the other Secured Parties and each of their respective successors,
transferees and assigns; and no other Persons (including without limitation any
other creditors of Grantor) shall have any interest herein or any right or
benefit with respect hereto. Without limiting the generality of the foregoing
clause (b), any Secured Party may assign or otherwise transfer any security or
guarantee held by it secured by this Agreement to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Secured Party, herein or otherwise, subject, however, to
the provisions of the Indenture.
SECTION 18. Release of Collateral. Reference is hereby made to Article 10 of
the Indenture for provisions which discuss the release of the Collateral from
the Liens created by this Agreement.
SECTION 19. Termination. When all Obligations have been indefeasibly paid in
full, this Agreement shall terminate (except as to those provisions which it is
provided herein shall survive such termination) and the Trustee shall forthwith
cause to be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or to the order of Grantor, and to be
released and canceled, all licenses and rights referred to in Section 7.4
hereof; provided, however, that any licenses or sublicenses granted by the
Trustee pursuant to Section 10.8 shall continue to be in full force and effect
in accordance with their terms. The Trustee shall also execute and deliver to
Grantor upon such termination such UCC termination statements and such other
documentation as shall be reasonably requested by Grantor to effect the
termination and release of the security interests in the Collateral.
SECTION 20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW) WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF, EXCEPT TO THE
EXTENT THAT THE PERFECTION AND ENFORCEMENT OF THE SECURITY INTERESTS HEREUNDER
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION.
SECTION 21. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
30
<PAGE>
SECTION 22. Interaction with Indenture.
(a) Incorporation by Reference. All terms,
covenants, conditions, provisions and requirements of the Indenture are
incorporated by reference in this Agreement.
(b) Conflicts. Notwithstanding any other provision
of this Agreement, the terms and provisions of this Agreement shall be
subject and subordinate to the terms of the Indenture. To the extent
that the Indenture provides Grantor with a particular cure or notice
period, or establishes any limitations or conditions on the Trustee's
actions with regard to a particular set of facts, Grantor shall be
entitled to the same cure periods and notice periods, and the Trustee
shall be subject to the same limitations and conditions, under this
Agreement, as under the Indenture, in place of the cure periods, notice
periods, limitations and conditions provided for under this Agreement;
provided, however, that such cure periods, notice periods, limitations
and conditions shall not be cumulative as between the Indenture and
this Agreement. In the event of any conflict or inconsistency between
the provisions of this Agreement and those of the Indenture, including
without limitation any conflicts or inconsistencies in any definitions
herein or therein, the applicable provisions or definitions of the
Indenture shall govern.
SECTION 23. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other Person, then the Trustee shall have the
right in its sole discretion to pursue, relinquish, subordinate, modify or take
any other action with respect thereto, without in any way modifying or affecting
any of the Trustee's or any Holder's rights and remedies hereunder.
SECTION 24. Execution in Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all
such counterparts together shall constitute one and the same agreement.
SECTION 25. Headings. The Section and subsection headings used in this
Agreement are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
SECTION 26. Additional Grantor Obligations Absolute. All obligations of any
Additional Grantor hereunder shall be absolute and unconditional irrespective
of:
(a) any Bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of the
Company or any Additional Grantor;
(b) any lack of validity or enforceability of the
Indenture, the Completion Capital Commitment, the Securities or any
other Transaction Document;
(c) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or
any other amendment or waiver of or any
31
<PAGE>
consent to any departure from the Indenture, the Completion Capital
Commitment, the Securities or any other Transaction Document (except to
the extent specified in such change, amendment or waiver);
(d) any taking, exchange, release or non-perfection
of any other collateral, or any release or amendment or waiver of or
consent to any departure from any guarantees, for all or any of the
Obligations;
(e) any exercise or non-exercise, or any waiver of
any right, remedy, power or privilege under or in respect of this
Agreement, the Indenture, the Completion Capital Commitment, the
Securities or any other Transaction Document, except as specifically
set forth in a waiver granted pursuant to the provisions of the
Indenture;
(f) any manner of application of collateral, or
proceeds thereof, to all or any of the Obligations, or any manner of
sale or other disposition of any collateral for all or any of the
Obligations or any other obligations of the Company or any Additional
Grantor under the Indenture, the Securities or any other Transaction
Document or any other assets of the Company, any Additional Grantor or
any of their respective Subsidiaries;
(g) any change, restructuring or termination of the
organizational structure or existence of the Company, any Additional
Grantor or any of their respective Subsidiaries;
(j) any failure of the Trustee or any Secured Party
to disclose to Grantor any information relating to the business,
condition (financial or otherwise), operations, properties or prospects
of the Company or any other Additional Grantor now or in the future
known to the Trustee or any other Secured Party (such Additional
Grantor hereby waiving any duty on the part of the Trustee and any
other Secured Party to disclose such information); or
(i) any other circumstance (including without
limitation any statute of limitations) or any existence of or reliance
on any representation by the Trustee or any other Secured Party that
might otherwise constitute a defense available to, or a discharge of,
the Company or any Additional Grantor or any guarantor or surety.
Notwithstanding the foregoing, nothing in this Section 26 shall be
deemed to impair or modify the rights or obligations otherwise expressly given
to or agreed to by the Additional Grantor in any of the Loan Documents.
SECTION 27. Waiver of Marshaling. Grantor, for itself and for all Persons
hereafter claiming through or under it or who may at any time hereafter become
holders of liens junior to the liens granted under this Agreement, hereby
expressly waives and releases all rights to direct the order in which any of the
Collateral shall be sold in the event of any sale or sales pursuant hereto and
to have any of the Collateral and/or any other property now or hereafter
constituting security for any of the obligations secured hereunder marshaled
upon the exercise of any remedies
32
<PAGE>
under this Agreement or any other agreement granting security for the
obligations secured hereunder.
SECTION 28. Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a default if such action is taken or condition
exists.
SECTION 29. Savings Clause. It is the intention of the parties to conform
strictly to the usury laws, whether state or federal, that are applicable to the
transaction of which this Agreement is a part. All agreements between Grantor
and the Trustee, whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no contingency or event
whatsoever shall the amount paid or agreed to be paid by Grantor for the use,
forbearance or detention of the money to be loaned or advanced under the
Indenture, the Securities, the Completion Capital Commitment, the Keep-Well
Agreement, this Agreement or any other Transaction Document, or for the payment
or performance of any covenant or obligation contained herein or therein, exceed
the maximum amount permissible under applicable federal or state usury laws. If
under any circumstances whatsoever fulfillment of any such provision, at the
time performance of such provision shall be due, shall involve exceeding the
limit of validity prescribed by law, then the obligation to be fulfilled shall
be reduced to the limit of such validity. If under any circumstances Grantor
shall have paid an amount deemed interest by applicable law, which would exceed
the highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal amount
owing in respect of the Obligations and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal and any other
amounts due hereunder, the excess shall be refunded to Grantor. All amounts paid
or agreed to be paid for the use, forbearance or detention of the principal
under any extension of credit or advancement of funds by the Trustee or any
Holder shall, to the extent permitted by law and to the extent necessary to
preclude exceeding the limit of validity prescribed by law, be amortized,
prorated, allocated and spread from the date of this Agreement until payment in
full of the Obligations so that the actual rate of interest on account of such
principal amounts is uniform throughout the term hereof.
SECTION 30. Certain Waivers by Grantor. Grantor waives (a) any claim that,
as to any part of the Collateral, a public sale, should the Trustee elect so to
proceed, is, in and of itself, not a commercially reasonable method of sale for
such Collateral, (b) except as otherwise provided in this Agreement, to the
fullest extent not prohibited by applicable laws, notice or judicial hearing in
connection with the Trustee's disposition of any of the Collateral, including
any and all prior notice and hearing for any pre-judgment remedy or remedies,
and all other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Trustee's rights hereunder,
(c) all rights of redemption, appraisal or valuation, and (d) all rights and
defenses arising out of an election of remedies by any Secured Party, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed Grantor's rights of
subrogation and reimbursement against the principal.
33
<PAGE>
SECTION 31. WAIVER OF JURY TRIAL. THE TRUSTEE AND GRANTOR HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
SECTION 32. Gaming Laws. Notwithstanding any provision herein to the
contrary, the grant of security interest and the terms and provisions of this
Agreement, including, but not limited to, all rights and remedies of the Trustee
and powers of attorney and appointment, are expressly subject to all laws,
statutes, regulations and orders affecting limited gaming or the sale of liquor
(collectively, the "Gaming Laws"), in the State of Colorado, which may include,
but not be limited to, the necessity for the Trustee to obtain the prior
approval of the regulatory agencies enforcing the Gaming Laws before taking any
action hereunder and to be licensed by such regulatory agencies before
exercising certain rights and remedies hereunder.
SECTION 33. Entire Agreement. This written agreement represents the final
agreement between the parties with respect to the subject matter hereof and may
not be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties with respect to the subject matter hereof. There are
no unwritten oral agreements among the parties with respect to the subject
matter hereof.
34
<PAGE>
IN WITNESS WHEREOF, Grantor and the Trustee have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
RIVIERA BLACK HAWK, INC.
a Colorado corporation
By:
-------------------------------------
Name:
Title:
IBJ WHITEHALL BANK & TRUST
COMPANY, a New York banking association,
as Trustee
By:
-------------------------------------
Name:
Title:
[Signature Page to Security Agreement]
<PAGE>
EXHIBIT A
TO THE SECURITY AGREEMENT
-------------------------
COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
Title Date Filed Registration No. Effective Date
- ----- ---------- ---------------- --------------
None.
A-1
<PAGE>
EXHIBIT B
TO THE SECURITY AGREEMENT
-------------------------
PATENTS AND PATENT APPLICATIONS
File Patent Country Registration No. Date
- ---- ------ ------- ---------------- ----
None.
B-1
<PAGE>
EXHIBIT C
TO THE SECURITY AGREEMENT
-------------------------
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
Under the Trademark License Agreement dated June 3, 1999, Grantor is a licensee
of the marks listed below for use at the Riviera Black Hawk.
Application (A)
Registration (R) Registration
Mark or Series No.(S) or Filing Date
- ---- --------------- --------------
Riviera (R)2,090,347 8/26/97
$40 for $20 (S)75/194,182 11/6/96
Bonus 21 Plus (S)75/152,286 8/19/96
Jack Pots (S)75/567,371 10/8/98
Jack Pots (S)75/567,372 10/8/98
Jack Pots (S)75/367,373 10/8/98
Loosie Slots (S)75/567,368 10/8/98
Loosie Slots (S)75/567/369 10/8/98
Loosie Slots (S)75/567/370 10/8/98
Nickel Heaven (S)75/423,123 1/26/98
Nickel Town (S)75/421,961 1/22/98
Riviera (S)74/646,349 3/13/95
C-1
<PAGE>
EXHIBIT D
TO THE SECURITY AGREEMENT
-------------------------
COPYRIGHT LICENSES
Title Date Filed Registration No. Effective Date Owner of Record
- ----- ---------- ---------------- -------------- ---------------
None.
PATENT LICENSES
[For each License Agreement, separately identified]
Title Date Filed Registration No. Effective Date Owner of Record
- ----- ---------- ---------------- -------------- ---------------
None.
TRADE NAME, TRADEMARK AND SERVICE MARK LICENSES
Under the Trademark License Agreement dated June 3, 1999, Grantor is a licensee
of the marks listed below for use at the Riviera Black Hawk.
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
- ---- ----------------- --------------
Riviera (R)2,090,347 8/26/97
$40 for $20 (S)75/194,182 11/6/96
Bonus 21 Plus (S)75/152,286 8/19/96
Jack Pots (S)75/567,371 10/8/98
D-1
<PAGE>
Jack Pots (S)75/567,372 10/8/98
Jack Pots (S)75/367,373 10/8/98
Loosie Slots (S)75/567,368 10/8/98
Loosie Slots (S)75/567/369 10/8/98
Loosie Slots (S)75/567/370 10/8/98
Nickel Heaven (S)75/423,123 1/26/98
Nickel Town (S)75/421,961 1/22/98
Riviera (S)74/646,349 3/13/95
D-2
<PAGE>
SECURITY AGREEMENT
Schedule A
Motor Vehicles and Other Equipment Subject to Certificates of Title
-------------------------------------------------------------------
None
Schedule A-1
<PAGE>
SECURITY AGREEMENT
Schedule B
Filings
-------
1. UCC-1 Financing Statements describing the Collateral and naming Grantor
as a debtor and the Trustee as secured party to be filed with:
(a) the Secretary of State of the State of Colorado
(b) the Secretary of State of the State of Nevada
(c) the Secretary of State of the State of New York
2. With respect to the interests granted in Trademark Licenses, (a) a
notice filing with United States Patent and Trademark Office, and (b)
UCC-1 Financing Statements describing the security interest and naming
Grantor as debtor and the Trustee as secured party to be filed with (i)
the Secretary of State of the State of Colorado and (ii) the Secretary
of State of the State of Nevada.
3. With respect to the interests granted in Patent Licenses, (a) a notice
filing with United States Patent and Trademark Office, and (b) UCC-1
Financing Statements describing the security interest and naming the
Grantor as debtor and the Trustee as secured party to be filed with (i)
the Secretary of State of the State of Colorado and (ii) the Secretary
of State of the State of Nevada.
4. With respect to the interests granted in Copyright Licenses, (a) a
notice filing with United States Copyright Office, and (b) UCC-1
Financing Statements describing the security interest and naming the
Grantor as debtor and the Trustee as secured party to be filed with (i)
the Secretary of State of the State of Colorado and (ii) the Secretary
of State of the State of Nevada.
Schedule B-1
<PAGE>
SECURITY AGREEMENT
Schedule C
Executive Office; Collateral Location; Trade Names
--------------------------------------------------
1. The chief executive office of Grantor is located at: 444 Main Street,
Black Hawk, Colorado 80422.
2. All Collateral is located at Black Hawk, Colorado.
3. The Company uses, and has used in the previous five (5) years, only the
following business or trade names:
(a) Riviera Black Hawk, Inc.
Schedule C-1
<PAGE>
SECURITY AGREEMENT
Schedule D
Governmental Authorities Party to Contracts
-------------------------------------------
<TABLE>
<CAPTION>
Governmental Authority Other Parties Contract Date
- ---------------------- ------------- -------- ----
<S> <C> <C> <C>
Black Hawk Business Isle Of Capri Special Improvement July 15, 1998
Improvement District, Black Hawk LLC District No. 1997
Gilpin County, Colorado Special Assessment
Bonds
</TABLE>
Schedule D-1
<PAGE>
ANNEX I
FORM OF
AMENDMENT TO SECURITY AGREEMENT
(ADDITIONAL GRANTOR)
This Amendment to Security Agreement (Additional Grantor) (this
"Amendment"), dated as of ___________, ____, relates to the Security Agreement
dated as of June 3, 1999, as amended, modified and supplemented to date (as so
amended, supplemented or modified, the "Agreement") executed by Riviera Black
Hawk, Inc., a Colorado corporation ("Grantor") in favor of IBJ Whitehall Bank &
Trust Company, as trustee (in such capacity, together with its successors and
assigns, the "Trustee"), for the benefit of the Secured Parties (as defined in
the Agreement). Capitalized terms used but not otherwise defined herein shall
have the meanings given in the Agreement.
In compliance with Section 4.20 of the Indenture dated as of June 3,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Indenture") between Grantor and the Trustee, [NAME OF RESTRICTED SUBSIDIARY]
("Additional Grantor") and the Trustee hereby agree as follows:
1. Amendment. The Agreement is hereby amended to add as a party, and
more specifically, as a Grantor thereunder, Additional Grantor.
2. Representations and Warranties. Additional Grantor represents and
warrants to the Trustee and each other Secured Party that each of the
representations and warranties of Grantor contained in the Agreement is hereby
made by Additional Grantor on and as of the date hereof and is true and correct
as to Additional Grantor.
3. Grant of Security Interest. Additional Grantor hereby grants,
pledges, assigns and transfers to the Trustee, for the Trustee's individual
benefit and the ratable benefit of the Holders, as security for the prompt and
complete payment and performance when due (whether at stated maturity, upon
redemption or required repurchase, by acceleration or otherwise) of all the
Obligations of Additional Grantor, a continuing first priority perfected
security interest in and lien on all of the right, title and interest of
Additional Grantor in, to and under all types and items of property of
Additional Grantor within the definition of Collateral (as defined in the
Agreement), in each case wherever located, whether now owned or at any time
hereafter acquired by Additional Grantor, whether now existing or hereafter
coming into existence, or in which Additional Grantor now has or at any time in
the future may acquire any right, title or interest.
4. Schedule Supplements. Additional Grantor has attached hereto
supplements to Schedules A through D to the Agreement, and Additional Grantor
hereby represents and warrants that such supplements have been prepared by
Additional Grantor in
Annex I-1
<PAGE>
substantially the form of the Schedules to the Agreement and are true, accurate
and complete as of the date first above written.
5. Assumption of Rights, Obligations and Liabilities. Additional
Grantor assumes all of the rights, obligations and liabilities of a Grantor
under the Agreement and agrees to be bound thereby as if Additional Grantor were
an original party to the Agreement. Without limiting the generality of the
foregoing, Additional Grantor waives notice of the creation, advance, increase,
existence, extension, or renewal of, or of any indulgence with respect to, the
Obligations; waives presentment, demand, notice of dishonor, and protest; waives
notice of the amount of the Obligations outstanding at any time, notice of any
change in financial condition of Grantor, notice of any default or Event of
Default, and all other notices respecting the Obligations (except for any such
notices that are required to be given to Additional Grantor pursuant to the
other provisions of this Agreement or the provisions of the Securities, the
Indenture or any other Transaction Document); and agrees that maturity of the
Obligations and any part thereof may be accelerated, extended, or renewed one or
more times by the Holders, in its or their discretion, without notice to
Additional Grantor.
6. Effectiveness. This Amendment shall become effective on the date
hereof upon the execution hereof by Additional Grantor and the Trustee and
delivery hereof to the Trustee.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT LAWS THEREOF,
EXCEPT TO THE EXTENT THAT THE PERFECTION AND ENFORCEMENT OF THE SECURITY
INTERESTS HEREUNDER IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF ANOTHER JURISDICTION.
Annex I-2
<PAGE>
IN WITNESS WHEREOF, Additional Grantor and the Trustee have caused this
Amendment to Security Agreement (Additional Grantor) to be duly executed and
delivered as of the date first written above.
[ADDITIONAL GRANTOR]
By:
------------------------------------------
Name:
Title:
Address for Notice:
---------------------------------------------
---------------------------------------------
Attn: ---------------------------------------
Telephone: ----------------------------------
Telecopy: -----------------------------------
IBJ WHITEHALL BANK & TRUST
COMPANY, a New York banking association, as
Trustee
By:
-----------------------------------------
Name:
Title:
Annex I-3
MANAGER SUBORDINATION AGREEMENT
This MANAGER SUBORDINATION AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Agreement") is made as of June 3,
1999, by and among IBJ WHITEHALL BANK & TRUST COMPANY, a New York banking
association, having an office at One State Street, 10th Floor, New York, New
York 10004, as trustee (in such capacity, together with its successors and
assigns, the "Trustee"), for the benefit of itself and the holders of the Notes
(as defined below), Riviera Gaming Management of Colorado, Inc., a Colorado
corporation (the "Manager"), and Riviera Black Hawk Inc., a Colorado corporation
(the "Company").
Recitals
A. The Company shall issue its 13% First Mortgage Notes due 2005 With
Contingent Interest (the "Original Notes" and together with any new notes issued
in replacement of and exchange therefor, the "Notes"), in the aggregate
principal amount of $45,000,000, pursuant to that certain Indenture dated as of
even date herewith (as amended, supplemented or otherwise modified from time to
time, the "Indenture"), by and between the Company and the Trustee. All terms
used and not otherwise defined herein shall have the meanings given in the
Indenture.
B. The Manager and the Company are parties to that certain Management
Agreement dated as of June 3, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Management Agreement"), pursuant to which the
Company shall pay the Manager a management fee in consideration of the Manager's
services relating to the management and operation of the Riviera Black Hawk and
reimburse the Manager for services supplied to the Company on a cost
reimbursement basis.
C. As a condition to the purchase of the Notes, the parties have
agreed to enter into this Agreement.
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals and the
provisions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Trustee, the
Manager and the Company agree as follows:
1. Subordination to Senior Debt. Notwithstanding any other provision
of the Management Agreement, all payment obligations of the Company to the
Manager arising under the Management Agreement, now existing or hereafter
arising (other than reimbursement of expenses permitted thereunder)
(collectively, the "Subordinated Obligations") are and shall be subordinate and
junior in right of payment, to the extent and in the manner hereinafter set
forth, to the prior indefeasible payment in full of all Senior Debt (as defined
below).
<PAGE>
"Senior Debt" means (a) all indebtedness, liabilities and obligations
of every kind or nature, absolute or contingent, now existing or hereafter
arising, of the Company, its successors and assigns, under the Indenture, the
Notes, any Collateral Documents or any other documents, instruments or
agreements executed in connection with any of the foregoing (the foregoing,
collectively, the "Transaction Documents"), to the Trustee or any holder of
Notes and their successors and assigns and any Person who extends credit to the
Company for the purpose of refunding any such indebtedness, liabilities or
obligations, including without limitation the principal of, and interest on
(including any interest accruing after the commencement of any bankruptcy,
insolvency or similar proceeding with respect to the Company and any interest
which would have accrued but for the commencement of any such proceeding whether
or not allowed as a claim in that proceeding), and all premiums, fees, charges,
expenses and indemnities arising under or in connection with the Indenture, the
Notes or any other Transaction Document; and (b) any modifications, amendments,
refundings, renewals or extensions of any indebtedness or obligation described
in clause (a) above. Except as and to the extent provided hereinafter, the
Manager will not ask, demand, sue for, take or receive from the Company, by
set-off or in any other manner, direct or indirect payment (whether in cash or
property), of the whole or any part of the Subordinated Obligations, or any
transfer of any property in payment of or as security therefor, so long as there
exists an Event of Default under the Indenture.
2. Distributions in Liquidation and Bankruptcy. In the event of any
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of the Company or the proceeds thereof (including any assets now or hereafter
securing any Subordinated Obligations) to creditors of the Company or upon any
indebtedness of the Company, by reason of the liquidation, dissolution or other
winding up, partial or complete, of the Company, or any receivership, insolvency
or bankruptcy proceeding, or assignment for the benefit of creditors or
marshalling of assets, or any proceeding by or against the Company for any
relief under any bankruptcy or insolvency law or laws relating to the relief of
debtors, readjustment of indebtedness, arrangements, reorganizations,
compositions or extensions, or sale of all or substantially all of the assets of
Borrower, then and in any such event:
(a) The holders of Senior Debt shall be entitled to receive
payment in full in cash of all Senior Debt before the Manager shall be
entitled to receive any payment or other distributions on, or with
respect to, the Subordinated Obligations;
(b) Any payment or distribution of any kind or character,
whether in cash, securities or other property, which but for these
provisions would be payable or deliverable upon or with respect to the
Subordinated Obligations shall instead be paid or delivered directly
to the Trustee for the benefit of the holders of the Senior Debt for
application on the Senior Debt, whether then due or not due, until the
Senior Debt shall have first been fully and indefeasibly paid in cash;
(c) The Manager hereby irrevocably authorizes and empowers
the Trustee, and appoints the Trustee as attorney-in-fact, to demand,
sue for, collect and receive every such payment or distribution and
give acquittance therefor, and to file and vote claims (in bankruptcy
proceedings or otherwise) and take such other actions, in the
2
<PAGE>
Trustee's own name or otherwise, as the Trustee may deem necessary or
advisable for the enforcement of these provisions. The Manager shall
duly and promptly take such action as may be reasonably requested by
the Trustee to assist in the collection of the Subordinated
Obligations for the account of any holder of the Senior Debt, and to
file appropriate proofs of claim with respect to the Subordinated
Obligations and to vote the same, and to execute and deliver to the
Trustee on demand such powers of attorney, proofs of claim,
assignments of claim or other instruments as may be reasonably
requested by the Trustee to enable the Trustee or any other holder of
the Senior Debt to enforce any and all claims upon or with respect to
the Subordinated Obligations and to collect and receive any and all
payments or distributions which may be payable or deliverable at any
time upon or with respect to the Subordinated Obligations. In
addition, the Manager shall take no action (whether oral, written or
otherwise) in contravention of any action of the Trustee duly taken
and permitted hereunder. Such appointment as attorney-in-fact pursuant
to this Section 2(c) is irrevocable and coupled with an interest until
payment in full and complete performance of all the Senior Debt. The
Trustee may appoint a substitute attorney-in-fact. The Manager
ratifies all actions taken by the attorney-in-fact but, nevertheless,
if the Trustee requests, the Manager will specifically ratify any
action taken by the attorney-in-fact by executing and delivering to
the attorney-in-fact or to any entity designated by the
attorney-in-fact all documents necessary to effect such ratification;
(d) Should any direct or indirect payment be made to the
Manager upon or with respect to the Subordinated Obligations prior to
the payment in full of the Senior Debt in accordance with these
provisions, the Manager will forthwith deliver the same to the Trustee
in precisely the form received (except for the endorsement or
assignment of the Manager where necessary) for application on the
Senior Debt, whether then due or not due. Until so delivered, the
payment or distribution shall be held in trust by the Manager as
property of the holders of the Senior Debt. In the event of the
failure of the Manager to make any such endorsement or assignment, the
Trustee, or any of its officers or employees, are hereby irrevocably
authorized to make the same; and
(e) Each of the parties hereby agrees that it shall be bound
by the terms and provisions hereof, notwithstanding the confirmation
of a plan of reorganization of the Company under Section 1129(b) of
the Bankruptcy Code.
3. Permitted Payments. Subject to the provisions of Paragraphs 2 and 4
of this Agreement, the Company may pay to and the Manager may accept payment of
amounts due under the Management Agreement, a true and correct copy of which is
attached hereto as Exhibit A. Except as otherwise expressly provided in the
Indenture, the Company and the Manager shall not change, alter, amend, waive or
otherwise modify the Management Agreement without the Trustee's prior written
consent.
4. Default on Senior Debt. In the event that any Default or Event of
Default shall occur and be continuing with respect to any Senior Debt, or if any
payment of Subordinated Obligations would create a Default or Event of Default,
unless and until all Senior Debt shall have been indefeasibly paid in full in
cash, the right of the Manager to receive any payments or other
3
<PAGE>
distributions with respect to Subordinated Obligations shall be suspended during
the continuance of such Default or Event of Default; provided, that payments may
be made pursuant to Section 3.4 of the Management Agreement whether or not a
Default has occurred and is continuing or would be caused thereby. If,
notwithstanding the foregoing, the Manager shall receive any payment or
distribution of any kind with respect to Subordinated Obligations (whether from
any collateral securing such obligations or otherwise), such payment or
distribution shall be received in trust for, and shall be delivered to the
Trustee promptly in precisely the form received (except for the endorsement or
assignment of the Manager where necessary) for application on the Senior Debt,
whether then due or not due. Until so delivered, the payment or distribution
shall be held in trust by the Manager as property of the holders of Senior Debt.
5. No Acceleration or Exercise of Remedies. So long as any Senior Debt
remains unpaid, the Manager will not (a) cause any portion of the Subordinated
Obligations to become due prior to the due date for such Subordinated
Obligations as set forth in the Management Agreement; (b) accept any payment,
prepayment or defeasance of any portion of the Subordinated Obligations prior to
the due date for such Subordinated Obligations as set forth in the Management
Agreement or in violation of this Agreement; (c) modify or alter in any way the
provisions of the Management Agreement if the effect of such is to accelerate
the payments of Subordinated Obligations due thereon; or (d) exercise any
remedies with respect to the Subordinated Obligations or any collateral at any
time securing payment or performance thereof unless and until, in each such
case, all of the Senior Debt shall have indefeasibly paid in full in cash, or
the Trustee shall have otherwise consented in writing.
6. Bankruptcy. Until the Senior Debt shall have been indefeasibly paid
in full in cash, the Manager will not, without the prior consent of the Trustee,
commence, or join with any other person in commencing, any proceeding against
any Person with respect to the Subordinated Obligations under any bankruptcy,
reorganization, readjustment of debt, dissolution, receivership, liquidation or
insolvency law or statute now or hereafter in effect in any jurisdiction.
7. Continuing Subordination. The subordination effected by these
provisions is a continuing subordination and may not be modified or terminated
by the Manager or any other holder of any Subordinated Obligations until all of
the Senior Debt shall have been indefeasibly paid in full in cash. At any time
and from time to time, without consent of or notice to the Manager or any other
holder of Subordinated Obligations, and without impairing or affecting the
obligations of any of them hereunder:
(a) The time for the Company's performance of, or compliance
with, any of its agreements contained in the Indenture, the Notes or
the other Transaction Documents, or any other agreement, instrument or
document relating to the Senior Debt, may be modified or extended or
such performance or compliance may be waived;
(b) The Trustee may exercise or refrain from exercising any
rights under the Indenture, the Notes or the other Transaction
Documents, or any other agreement, instrument or document relating to
the Senior Debt;
(c) The Indenture, the Notes or the other Transaction
Documents, or
4
<PAGE>
any other agreement, instrument or document relating to the Senior
Debt, may be revised, amended or otherwise modified for the purpose of
adding or changing any provisions thereof (including, but not limited
to, an increase in the interest charges), or changing in any manner
the rights of the Trustee or the Company;
(d) Payment of the Senior Debt or any portion thereof may be
extended or refunded or any notes evidencing such Senior Debt may be
renewed in whole or in part;
(e) The maturity of the Senior Debt may be accelerated, and
any collateral security therefor or any other rights of the Trustee
may be exchanged, sold, surrendered, released or otherwise dealt with
in accordance with the terms of any present or future agreement with
the Company and any other agreement of subordination (and the debt
covered thereby) may be surrendered, released or discharged, or the
terms thereof modified or otherwise dealt with in any manner;
(f) Any person liable in any manner for payment of the
Senior Debt may be released by holders of Senior Debt; and
(g) Notwithstanding the occurrence of any of the foregoing,
these subordination provisions shall remain in full force and effect
with respect to the Senior Debt, as the same shall have been extended,
renewed, modified or refunded.
8. Waivers. The Manager hereby waives, and agrees not to assert (a)
any right, now or hereafter existing, to require the Trustee to proceed against
or exhaust any collateral at any time securing the Senior Debt, or to marshal
any assets in favor of the Manager or any other holder of any Subordinated
Obligations; (b) any notice of the incurrence of Senior Debt, it being
understood advances may be made under the Indenture, or any other agreement,
document or instrument now or hereafter relating to the Senior Debt, without
notice to or authorization of the Manager in reliance upon these subordination
provisions.
It is not the intent of this Agreement to cause the Manager to become
a surety. However, in the event this Agreement may cause the Manager to be
deemed a surety, the following provisions apply; provided, however, that nothing
contained herein shall be deemed to be a guarantee by the Obligor of any
obligations for the payment of principal and interest of the Issuers under the
Notes. The Manager hereby waives and relinquishes all rights and remedies
accorded by applicable law to sureties or guarantors and agrees not to assert or
take advantage of any such rights or remedies, including, without limitation,
(a) any right to require the Trustee or any of the Holders (each a "Benefitted
Party") to proceed against the Company or any other Person or to proceed against
or exhaust any security held by a Benefitted Party at any time or to pursue any
other remedy in the power of a Benefitted Party before proceeding against the
Manager with respect to the Subordinated Obligations or other Person, (b) the
defense of the statute of limitations in any action with respect to the
Subordinated Obligations hereunder or in any action for the collection or
performance of the Senior Obligations, (c) any defense that may arise by reason
of the incapacity, lack of authority, death or disability of any Person or the
failure of a Benefitted Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any Person, (d)
appraisal, valuation, stay, extension, marshalling of
5
<PAGE>
assets, redemption, exemption, demand, presentment, protest and notice of any
kind, including, without limitation, notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of a Benefitted Party, the Company, any endorser,
guarantor or creditor of the Company or on the part of any Person under this or
any other instrument or document in connection with any Obligation or evidence
of Indebtedness held by a Benefitted Party as collateral or in connection with
the Note Obligations, (e) any defense based upon an election of remedies by a
Benefitted Party, including, without limitation, an election to proceed by
non-judicial rather than judicial foreclosure, which destroys or otherwise
impairs the subrogation rights of the Manager, the right of the Manager to
proceed against the Company or any other Person for reimbursement, or both, (f)
any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal, (g) any duty on the part of a
Benefitted Party to disclose to the Manager any facts a Benefitted Party may now
or hereafter know about the Company or any other Person, regardless of whether a
Benefitted Party has reason to believe that any such facts materially increase
the risk beyond that which the Manager intends to assume, or has reason to
believe that such facts are unknown to the Manager, or has a reasonable
opportunity to communicate such facts to the Manager, because the Manager
acknowledges that the Manager is fully responsible for being and keeping
informed of the financial condition of the Company of any other Person and of
all circumstances bearing on the risk of non-payment of any Senior Obligations,
(h) any defense arising because of the election of a Benefitted Party, in any
proceeding instituted under the Federal Bankruptcy Code, of the application of
Section 1111(b)(2) of the Federal Bankruptcy Code, (i) any defense based upon
any borrowing or grant of a security interest under Section 364 of the Federal
Bankruptcy Code, (j) any claim or other rights which it may now or hereafter
acquire against the Company or any other Person that arises from the existence
of performance obligations under the Indenture, the Notes or any Collateral
Document, including, without limitation, any right of subrogation,
reimbursement. Notwithstanding the foregoing, nothing in this Section 8 shall be
deemed to impair the rights otherwise expressly given to the Manager in any of
the Loan Documents. No failure or delay on the Trustee's part in exercising any
power, right or privilege under this Agreement shall impair or waive any such
power, right or privilege. The Manager acknowledges and agrees that any
nonrecourse or exculpation provided for in the Indenture, the Notes or any
Collateral Document, or any other provision of this Indenture, the Notes or any
Collateral Document, limiting the Benefitted Parties' recourse to specific
collateral, or limiting the Benefitted Parties' right to enforce a deficiency
judgment against the Company, shall have absolutely no application to the
Manager's or the Company's liability under the Indenture, the Notes or any
Collateral Documents.
9. Lien Subordination. Any Lien, security interest, encumbrance,
charge or claim of the Manager on any assets or property of the Company or any
proceeds or revenues therefrom which the Manager may have at any time as
security for any Subordinated Obligations shall be, and hereby is, subordinated
to all Liens, security interests, or encumbrances now or hereafter granted to
the Trustee by the Company or by law, notwithstanding the date or order of
attachment or perfection of any such Lien, security interest, encumbrance or
claim or charge or the provision of any applicable law. Until all holders of
Senior Debt have received payment in full in cash of the Senior Debt, the
Manager agrees that the Manager will not assert or seek to enforce
6
<PAGE>
against the Company the Subordinated Obligations or any interest of the Manager
in any collateral for any portion of the Subordinated Obligations and that the
Trustee may dispose of any or all of the collateral for the Senior Debt free of
any and all Liens, including, but not limited to, Liens created in favor of the
Manager, through judicial or non-judicial proceedings, in accordance with
applicable law including taking title, after five (5) days written notice to the
Manager. The Manager hereby acknowledges that such notice if given five (5) days
prior to such disposition of any of all of the collateral for the Senior Debt is
sufficient and commercially reasonable. The Manager hereby agrees that any such
sale or other disposition of so much of the collateral for the Senior Debt as is
necessary to satisfy in full in cash all of the Senior Debt shall be free and
clear of any security interest granted to the Manager; provided that the entire
proceeds (after deducting reasonable expenses of sale) are applied in reduction
of the Senior Debt. Upon the Trustee's request, the Manager shall execute and
deliver any releases or other documents and agreements that the Trustee in its
reasonable discretion deems necessary to dispose of the collateral for the
Senior Debt free of the Manager's interest in same. The Manager retains all of
its rights as a junior secured creditor with respect to the surplus, if any,
arising from any such disposition of the collateral for the Senior Debt.
10. Subrogation. The Manager hereby subordinates all rights of
subrogation to the rights of the holders of Senior Debt to receive payments or
distributions, and any rights of subrogation to any collateral for the Senior
Debt, until the Senior Debt shall have been indefeasibly paid in full in cash.
Upon such payment in full, the Manager shall be subrogated to all rights of the
holders of Senior Debt.
11. Subordination Not Impaired by the Company. No right of any holder
of Senior Debt to enforce the subordination of the Subordinated Obligations
shall be impaired by any act or failure to act by the Company or by its failure
to comply with these provisions.
12. No Third Party Beneficiaries. This Agreement is not intended to
give or confer any rights to any Person other than the holders of the Senior
Debt. No other party, including the Company, is intended to be a third party
beneficiary of this Agreement.
13. Legend on Note. If any portion of the Subordinated Obligations is
evidenced by a promissory note, stock certificate or other instrument, the
Manager agrees to promptly add a legend thereto stating that the rights of any
holder thereof are subject to this Agreement.
14. Representations and Warranties. The Manager hereby represents and
warrants that (a) the execution and delivery of this Agreement and the
performance by the Manager of its obligations hereunder have received all
necessary approvals and do not and will not contravene or conflict with any
provision of law or of any indenture, instrument or other agreement to which the
Manager is a party or by which it or its property may be bound or affected or
result in or require the creation or imposition of any mortgage, Lien, pledge,
security interest, charge or other encumbrance in, upon or of any of its
properties or assets under any such indenture, instrument or other agreement,
(b) the Manager has full power, authority and legal right to make and perform
this Agreement, (c) the Manager has not assigned or transferred any indebtedness
owing by the Company or any of the collateral for the Subordinated Obligations
and
7
<PAGE>
that the Manager will not assign or transfer same, (d) this Agreement is the
legal, valid and binding obligation of the Manager, enforceable against the
Manager in accordance with its terms, and (e) the Subordinated Obligations are
not subject to any other subordination agreement.
15. No Waiver. No failure on the part of the Trustee to exercise, no
delay in exercising, and no course of dealing with respect to, any right or
remedy hereunder will operate as a waiver thereof; nor will any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right or remedy. This Agreement
may not be amended or modified except by written agreement of the Trustee, the
Manager, and the Company, and no consent or waiver hereunder shall be valid
unless in writing and signed by the Trustee.
16. Successors and Assigns. This Agreement, and the terms, covenants
and conditions hereof, shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and assigns.
17. GOVERNING LAW. THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
CHOICE OF LAW PRINCIPLES.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. Severability. The invalidity, illegality or unenforceability in
any jurisdiction of any provision in or obligation under this Agreement shall
not affect or impair the validity, legality or enforceability of the remaining
provisions or obligations under this Agreement or of such provision or
obligation in any other jurisdiction.
8
<PAGE>
IN WITNESS WHEREOF, this Manager Subordination Agreement has been duly
executed as of the day and year first above written.
RIVIERA GAMING MANAGEMENT
OF COLORADO, INC.,
a Colorado corporation
By:_________________________________
Name:
Title:
IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking association
By:_________________________________
Name:
Title:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:_________________________________
Name:
Title:
[Signature Page to Manager Subordination Agreement]
<PAGE>
MANAGER SUBORDINATION AGREEMENT
Exhibit A
Management Agreement
See attached.
A-1
COLLATERAL ASSIGNMENT OF TRADEMARK
WHEREAS, RIVIERA BLACK HAWK, INC., a Colorado corporation ("Grantor")
and IBJ Whitehall Bank & Trust Company, a New York banking association, having
an office at One State Street, 10th Floor, New York, New York 10004, as trustee
(in such capacity, together with its successors and assigns, the "Trustee"), are
entering into that certain Indenture dated as of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "Indenture"), pursuant
to which Grantor shall issue its 13% First Mortgage Notes due 2005 With
Contingent Interest (such Notes, together with any notes issued in replacement
thereof or in exchange therefor, the "Securities"), in the original aggregate
principal amount of $45,000,000;
WHEREAS, pursuant to the terms of the Security Agreement dated as of
even date herewith (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"; capitalized terms used and not otherwise defined
herein have the meanings given in the Security Agreement), between Grantor and
the Trustee (in such capacity, "Grantee"), Grantor has assigned and granted to
Grantee for Grantee's benefit and the ratable benefit of the holders from time
to time of the Securities (the "Holders") a security interest in substantially
all the assets of Grantor, including without limitation all right, title and
interest of Grantor in, to and under all now owned and hereafter acquired
Trademarks, Trademark registrations, Trademark applications and Trademark
Licenses, together with the goodwill of the business symbolized by Grantor's
Trademarks, and all proceeds thereof, to secure the payment of the Obligations;
and
WHEREAS, Grantor owns the Trademarks, Trademark registrations and
Trademark applications, and is a party to the Trademark Licenses, listed for the
Grantor on Schedule 1 annexed hereto;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor hereby assigns and conveys
to Grantee a a continuing security interest in all of Grantor's its right, title
and interest in and to the following (all of the following items or types of
property being herein collectively referred to as the "Trademark Collateral"),
whether presently existing or hereafter created or acquired:
1. (a) all registered and unregistered trademarks, trade names,
corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos, slogans and
other source or business identifiers, and the related goodwill
throughout the world and general intangibles associated
therewith, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise,
including without limitation those set forth on Schedule 1
hereto, and (b) all renewals thereof;
<PAGE>
2. any and all agreements, written or oral, providing for the grant
by or to the Grantor of any right to use any Trademark, including
without limitation those set forth on Schedule 1 hereto, but
excluding any such agreement that prohibits the granting of a
security interest therein, provided that the Grantor shall use
its best efforts to obtain consent to the assignment of any such
agreement; and
3. all products and proceeds of the foregoing, including without
limitation any claim by the Grantor against third parties for
past, present or future (a) infringement or dilution of any
Trademark or Trademark registration including without limitation
the Trademarks and Trademark registrations referred to in
Schedule 1 hereto, the Trademark registrations issued with
respect to the trademark applications referred to in Schedule 1
hereto, and the Trademarks licensed under each Trademark License
referred to in Schedule 1 hereto (subject to the terms of such
Trademark License), or (b) injury to the goodwill associated with
any Trademark, Trademark registration or Trademark licensed under
any Trademark License.
Grantee hereby accepts and receives a continuing security interest in
all of Grantor's right, title and interest in and to the Trademark Collateral.
The rights assigned and conveyed hereby shall include, but shall not be limited
to, all rights to use, copy, modify and exploit Trademark Collateral; the right
to exclude others from using Trademark Collateral; the right to license, assign,
convey, and pledge Trademark Collateral to others; the right to sue others and
to collect damages for past, present and future infringements of Trademark
Collateral; the right to create derivatives of Trademark Collateral and to
retain full ownership of such derivatives; and the right to file and prosecute
applications to protect trademark rights in Trademark Collateral.
This assignment and grant of security interest is granted in
conjunction with the security interests granted to Grantee pursuant to the
Security Agreement. Grantor hereby acknowledges and affirms that the rights and
remedies of Grantee with respect to the assignment and security interest in the
Trademark Collateral made and granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
[remainder of page intentionally left blank]
2
<PAGE>
IN WITNESS WHEREOF, Grantor has caused this Collateral Assignment of
Trademark to be duly executed as of the 3rd day of June, 1999.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking association, as
trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
[Signature Page to Collateral Assignment of Trademark]
<PAGE>
ACKNOWLEDGMENT
State of ____________________
County of ___________________
On __________, before me, ____________, Notary Public, personally
appeared ___________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s) or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature __________________ (Seal)
<PAGE>
ACKNOWLEDGMENT
State of _____________________
County of ____________________
On __________, before me, ____________, Notary Public, personally
appeared __________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s) or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature __________________ (Seal)
<PAGE>
ASSIGNMENT OF TRADEMARK
Schedule 1
TRADEMARKS
TRADEMARK REGISTRATIONS
Under the Trademark License Agreement dated June 3, 1999, Grantor is a
licensee of the marks listed below for use at the Riviera Black Hawk.
MARK REGISTRATION NO. DATE
Riviera 2,090,347 8/26/97
TRADEMARK APPLICATIONS
Under the Trademark License Agreement dated June 3, 1999, Grantor is a
licensee of the marks listed below for use at the Riviera Black Hawk.
MARK SERIAL NO. DATE
$40 for $20 75/194,182 11/6/96
Bonus 21 Plus 75/152,286 8/19/96
Jack Pots 75/567,371 10/8/98
Jack Pots 75/567,372 10/8/98
Jack Pots 75/567,373 10/8/98
Loosie Slots 75/567,368 10/8/98
Loosie Slots 75/567/369 10/8/98
Loosie Slots 75/567/370 10/8/98
Nickel Heaven 75/423,123 1/26/98
Nickel Town 75/421,961 1/22/98
Riviera 74/646,349 3/13/95
Schedule 1-1
<PAGE>
TRADEMARK LICENSES
Name of Agreement Parties Date of Agreement
Trademark License Riviera Black Hawk, Inc. June 3, 1999
Agreement Riviera Operating Corporation
Schedule 1-2
COLLATERAL ASSIGNMENT
THIS COLLATERAL ASSIGNMENT (as amended, supplemented or otherwise modified
from time to time, this "Assignment") is made as of June 3, 1999, by and between
RIVIERA BLACK HAWK, INC., a Colorado corporation, (the "Company"), in favor of
IBJ WHITEHALL BANK & TRUST COMPANY, a New York banking association, having an
office at One State Street, 10th Floor, New York, New York 10004, as trustee (in
such capacity, together with its successors and assigns, the "Trustee") for the
benefit of itself and the holders of the Notes (as defined below).
Recitals
A. Notes. Pursuant to that certain Indenture dated as of even date herewith
(as amended, supplemented or otherwise modified from time to time, the
"Indenture"), by and between the Company and the Trustee, the Company shall
issue its 13% First Mortgage Notes due 2005 With Contingent Interest (the
"Original Notes," and together with any notes issued in replacement thereof or
exchange therefor, the "Notes"), in the original aggregate principal amount of
$45,000,000. Capitalized terms used and not otherwise defined herein shall have
the meanings given in the Indenture.
B. Purpose. In order to induce the holders of the Notes to enter into the
transactions contemplated by the Indenture, the parties have entered into this
Assignment to evidence the Company's collateral assignment for security of
certain contracts and documents related to the design, construction and
operation of the Riviera Black Hawk.
Agreement
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and in order to induce the holders of the Notes to purchase the
Notes, the Company agrees as follows:
1. Assignment. As security for the due and punctual payment and performance
of all indebtedness and obligations of the Company, now or hereafter due under
the Indenture, the Notes, the Collateral Documents and all other documents,
agreements and instruments (in each case, as amended, supplemented or otherwise
modified from time to time) now or hereafter executed and delivered in
connection with the Indenture, collectively, the "Transaction Documents"),
whether or not arising after the commencement of a proceeding under Bankruptcy
Law (including post-petition interest) and whether or not recovery of any such
obligation or liability may be barred by a statute of limitations or
prescriptive period or such obligation or liability may otherwise be
unenforceable (collectively, the "Obligations"), the Company hereby assigns and
transfers to the Trustee, and hereby grants to the Trustee a security interest
in, all of the Company's right, title and interest, to the extent assignable and
transferable, whether now existing or hereafter arising and whether now owned or
hereafter acquired, wherever located, in, to and under the following
(collectively, the "Assigned Collateral"):
<PAGE>
(a) all contracts (including without limitation construction contracts
and architectural design, engineering and development contracts and
agreements, subcontracts, service agreements, supply agreements and other
such contracts and agreements) between the Company and other persons, and
all amendments, modifications, additions and changes thereto, in each case
relating to the Riviera Black Hawk;
(b) all plans, specifications, engineering reports, soil and
environmental reports, site plans, surveys, working drawings, shop
drawings, other reports, drawings and plans and other such documents, and
all amendments, modifications, supplements, general conditions, addenda,
additions and changes thereto, in each case relating to the Riviera Black
Hawk;
(c) all other contracts, agreements, documents and instruments now
existing or hereafter arising relating to the Riviera Black Hawk, including
without limitation any and all construction, architectural and engineering
contracts, plans and specifications, drawings, and surveys, bonds, permits,
licenses and other governmental approvals and all other Plans (all of the
foregoing in subsections (a) - (c), collectively, the "Contracts and
Documents"); and
(d) all proceeds of the foregoing, including without limitation (i)
whatever is now or hereafter receivable or received upon the sale,
exchange, collection or other disposition of any of the Contracts and
Documents, whether voluntary or involuntary, (ii) any such items which are
now or hereafter acquired with any proceeds of Contracts and Documents, and
(iii) any insurance or payments under any indemnity, warranty or guaranty
now or hereafter payable by reason of loss or damage or otherwise with
respect to any Contracts and Documents or any proceeds thereof.
Notwithstanding the foregoing, the Assigned Collateral shall not include
any of the following (collectively, the "Excluded Assets"): (A) Gaming Licenses
and Liquor Licenses, any other license, permit or other approval of or by any
Governmental Authority to the extent that, under the terms and conditions of
such approval or under applicable law, it cannot be subjected to a Lien in favor
of the Trustee without the approval of the relevant Governmental Authority, but
only to the extent that such approval has not been obtained, (B) any Contract or
Document that is exclusively subject to an agreement with a third party that,
pursuant to its terms, cannot be pledged as security; provided that the Company
shall use its best efforts to obtain such third party's consent to assignment of
all such material agreements; and (C) any Contract or Document exclusively
relating to (including the respective FF&E Financing documentation) FF&E to the
extent financed or refinanced by, or the proceeds of, an FF&E Financing to the
extent that (i) the purchase or lease of such FF&E was not financed with the
proceeds of the Notes but with the proceeds of an FF&E Financing in place at the
time of such purchase and (ii) the Company is permitted to enter into such FF&E
Financing for such FF&E under the Indenture; provided further that (x) any such
Excluded Asset now or hereafter acquired by the Company shall automatically
become part of the Assigned Collateral when and to the extent it may
subsequently be made subject to such a lien and/or such approval has been
obtained and/or such FF&E has been repaid, satisfied or terminated (as
applicable), and (y) all proceeds of any Excluded Assets shall nevertheless be
subject to the assignment hereunder. The Assigned Collateral includes,
2
<PAGE>
without limitation, those certain contracts and agreements described in Exhibit
"A" attached hereto and made a part hereof.
2. Rights of the Company. This Assignment is an assignment for security
purposes only. Accordingly, notwithstanding anything to the contrary set forth
herein, the Company shall retain all rights with respect to the Contracts and
Documents, including without limitation the right to enforce all rights of such
Company thereunder, except during a period when an "Event of Default" (as such
term is defined in the Indenture) has occurred and is continuing.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Trustee as of the date hereof that (a) none of the Contracts
and Documents has been amended or modified except as set forth herein or as
previously disclosed in writing to the Trustee, (b) the Company has not assigned
or granted a security interest in any of the Contracts and Documents or the
proceeds thereof to anyone other than the Trustee, and (c) the Company is not in
material default, and no event has occurred that with notice or lapse of time or
both would constitute a material default by the Company, or, to its knowledge
any other party, under any of the Contracts and Documents.
4. Covenants of the Company. The Company covenants and agrees in favor of
the Trustee that (a) the Company will not further assign, encumber or suffer the
assignment or encumbrance of any of the Contracts and Documents or the proceeds
thereof without the prior written consent of the Trustee pursuant to or as
expressly permitted under the Indenture; (b) the Company will perform and
discharge each material obligation, covenant and agreement to be performed by
the Company under each Contract and Document, at no cost or expense to the
Trustee; (c) the Company will use its commercially reasonable best efforts to
enforce or secure the performance of each material obligation, covenant or
agreement of the counterparty to each Contract and Document; and (d) the Company
will not modify, amend, supplement or in any way join in the release of any
rights of the Company under any of the Contracts and Documents or modify, amend,
supplement or in any way join in the discharge of any obligations of any
counterparty under any Contract or Document, that is in any material way adverse
to the holders of the Notes, except with the Trustee's written consent.
5. Limitation of Trustee's Obligations. Nothing in this Assignment shall
constitute an assumption of any obligation by the Trustee under the Contracts
and Documents. The Company shall continue to be liable for all obligations
thereunder and hereby agrees to perform all such obligations, to comply with all
terms and conditions of the Contracts and Documents, and to take such steps as
may be necessary or appropriate to secure performance by all other parties
thereto. The Company shall defend, indemnify and hold the Trustee harmless from
and against all losses, costs, liabilities and expenses, including attorneys'
fees, arising from or related to any failure by the Company to perform any
obligation of the Company under any of the Contracts and Documents, such
indemnity and hold harmless agreement to survive the payment and performance of
the Obligations.
6. Cure by Trustee. At any time upon and during the continuation of an
Event of Default, the Trustee shall have the right, but shall have no
obligation, to take all actions that the Trustee may determine to be necessary
or appropriate to cure any default under any of the
3
<PAGE>
Contracts and Documents and to protect the rights of the Company or the Trustee
thereunder, and may do so in the Trustee's name, in the name of the Company or
otherwise. If any such action taken by the Trustee shall prove to be inadequate
or invalid in whole or in part, the Trustee shall not incur any liability on
account thereof, and the Company hereby agrees to defend, indemnify and hold the
Trustee harmless from and against all losses, costs, liabilities and expenses,
including reasonable attorneys' fees, which the Trustee may incur or to which it
may become subject in exercising any of its rights under this Assignment, except
for those arising from the gross negligence or willful misconduct of the
Trustee, such indemnity and hold harmless agreement to survive the payment and
performance of the Obligations.
7. Rights and Remedies. Upon the occurrence of an Event of Default under
the Indenture, irrespective of whether a notice of default has been given with
respect to such Event of Default (unless required by the Indenture), and with or
without bringing any action or proceeding, the Trustee may, at its option,
succeed to and proceed to enforce all of the rights, interests and remedies of
the Company under the Contracts and Documents, amend, modify, cancel, terminate
or replace the same, reassign the Company's right, title and interest therein to
any other person, and exercise any and all other rights of the Company under the
Contracts and Documents, either in person or through an agent, receiver or
keeper, without further notice to or consent by the Company, and without regard
to the adequacy of security for the Obligations or the availability of any other
remedies. The exercise of any of the foregoing rights or remedies shall not cure
or waive any Default under the Indenture or any other Transaction Document, or
waive, modify or affect any notice of default thereunder, or invalidate any act
done pursuant to any such notice. In addition to the rights and remedies of the
Trustee as set forth in this Assignment, the Trustee shall be entitled to the
benefit of all other rights and remedies set forth in the Indenture and the
other Transaction Documents, at law or in equity. Without limiting the
foregoing, the Company hereby irrevocably constitutes and appoints the Trustee,
upon the occurrence and during the continuance of an Event of Default, as its
attorney-in-fact to demand, receive and enforce the Company's rights with
respect to the Contracts and Documents, to give appropriate receipts, releases
and satisfactions for and on behalf of the Company, and to do any and all acts
in the name of the Company with the same force and effect as the Company could
do if this Assignment had not been made. Such appointment is irrevocable and
coupled with an interest until payment in full and complete performance of all
the Obligations. The Trustee may appoint a substitute attorney-in-fact. The
Company ratifies all actions taken by the attorney-in-fact but, nevertheless, if
the Trustee requests, the Company will specifically ratify any action taken by
the attorney-in-fact by executing and delivering to the attorney-in-fact or to
any entity designated by the attorney-in-fact all documents necessary to effect
such ratification.
8. Additional Instruments. With respect to both existing and future
Contracts and Documents, the Company hereby agrees to execute and deliver, at
its sole cost and expense, such additional assignments and other documents as
the Trustee may reasonably request in order to implement the provisions of this
Assignment.
9. Miscellaneous; Governing Law. This Assignment shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns. In any action or proceeding arising
from or related to this Assignment, the prevailing party shall be entitled to
recover its reasonable costs and attorneys' fees. The reference to
4
<PAGE>
"attorneys' fees" in this Assignment shall include, without limitation, such
reasonable amounts as may then be charged by the Trustee for legal services
furnished by in-house attorneys in the employ of the Trustee, at rates not
exceeding such reasonable rates that would be charged by outside attorneys for
comparable services. This Assignment shall be governed by the internal laws of
the State of New York, except to the extent that perfection and enforcement of
the security interests and assignment hereunder are governed by the laws of
another jurisdiction.
10. Gaming Laws and Regulations. The Company acknowledges that, to the
extent required under applicable law, the consummation of the transactions
contemplated hereby and the exercise of remedies hereunder may be subject to the
Colorado Limited Gaming Act and the regulations promulgated pursuant to each
such law, all as amended from time to time. The parties hereto further
acknowledge that the Gaming License held by the Company is not part of the
collateral of this Assignment and that, under the above described legislation
and rules promulgated thereunder, the Trustee may be precluded from or otherwise
limited in taking possession of or in selling the collateral of this Assignment
under the rights and remedies provisions of this Assignment and the other
Transaction Documents. The parties hereto also acknowledge that due to various
legal restrictions, including without limitation licensing of operators of
gaming facilities and prior approval of the sale or disposition of assets of a
licensed gaming operation, the sale of collateral may be denied by Gaming
Authorities or delayed pending approval of Gaming Authorities.
11. Severability. If any provision or obligation of this Assignment should
be found to be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions and
obligations or any other agreement executed in connection herewith, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby and shall nonetheless remain in full force and
effect to the maximum extent permitted by law.
12. Conflicts with Indenture. Notwithstanding any other provision of this
Assignment, the terms and provisions of this Assignment shall be subject and
subordinate to the terms of the Indenture. To the extent that the Indenture
provides the Company with a particular cure or notice period, or establishes any
limitations or conditions on the Trustee's actions with regard to a particular
set of facts, the Company shall be entitled to the same cure periods and notice
periods, and the Trustee shall be subject to the same limitations and conditions
in place of the cure periods, notice periods, limitations and conditions
provided for under the Indenture; provided, however, that such cure periods,
notice periods, limitations and conditions shall not be cumulative as between
the Indenture and this Assignment. In the event of any conflict between the
provisions of this Assignment and those of the Indenture, including without
limitation any conflicts or inconsistencies in any definitions herein or
therein, the applicable provisions or definitions of the Indenture shall govern.
13. Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
5
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Collateral Assignment as
of the date first above written.
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
--------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED
IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking association,
By:
--------------------------------------
Name:
Title:
[Signature Page to Collateral Assignment]
<PAGE>
COLLATERAL ASSIGNMENT
EXHIBIT "A"
CONTRACTS AND DOCUMENTS
-----------------------
1. Trademark License Agreement, dated June 3, 1999, between Riviera Operating
Corporation and the Company.
2. Subdivision Agreement, dated February 20, 1998 (as amended), entered into
between the City of Black Hawk and the Company.
3. Standard Form of Agreement Between Owner and Contractor, dated December 29,
1997 (as amended), between The Weitz Company, Inc., and the Company.
4. Performance Bond No. 19-30-19, dated December 24, 1997, among American Home
Assurance Company, The Weitz Company, Inc., and the Company.
5. Management Agreement, dated June 3, 1999, between Riviera Gaming Management
of Colorado, Inc., and the Company.
6. Standard Form of Agreement Between Owner and Architect, dated July 29,
1998, between Melick Associates, Inc., and the Company.
7. The Completion Capital Commitment, dated June 3, 1999, between Riviera
Holdings Corporation and the Company.
8. The Keep-Well Agreement, dated June 3, 1999, between Riviera Holdings
Corporation and the Company.
A-1
PLEDGE AND ASSIGNMENT AGREEMENT
THIS PLEDGE AND ASSIGNMENT AGREEMENT, dated as of June 3, 1999 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the "Agreement"), is made by RIVIERA BLACK HAWK, INC., a Colorado
corporation, as pledgor ("Pledgor"), having an office at 444 Main Street, Black
Hawk,Colorado 80422, in favor of IBJ Whitehall Bank & Trust Company, a New York
banking association, having an office at One State Street, New York, New York
10004, as trustee (in such capacity, together with its successors and assigns,
the "Trustee") pursuant to the Indenture referred to below, on behalf of the
Secured Parties (as defined below).
RECITALS
A. Pledgor and the Trustee are, contemporaneously with the execution
and delivery of this Agreement, entering into (i) that certain Indenture dated
as of even date herewith (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Indenture"), pursuant to which
Pledgor is issuing its 13% First Mortgage Notes due 2005 With Contingent
Interest (such notes, together with any notes issued in replacement thereof or
in exchange therefor, the "Notes"), in the original aggregate principal amount
of $45,000,000, and (ii) that certain Cash Collateral and Disbursement Agreement
dated as of even date herewith (as amended, restated, supplemented or otherwise
modified from time to time, the "Disbursement Agreement") pursuant to which the
net proceeds of the Notes (the foregoing, collectively, the "Note Proceeds")
will be administered and maintained, including the investment of certain
portions of such proceeds in Government Securities in accordance with the
Indenture.
B. It is a condition precedent to the purchase of the Notes that
Pledgor shall have executed and delivered this Agreement to the Trustee for
itself and the ratable benefit of the holders from time to time of the Notes
(the "Holders" and, together with the Trustee, the "Secured Parties") to secure
the payment and performance of the Obligations (as hereinafter defined).
C. Pledgor is the legal and beneficial owner of the securities listed
in Schedule I hereto and will be the legal and beneficial owner of all
securities purchased by or on behalf of Pledgor from time to time with the Note
Proceeds and/or other amounts deposited or accruing in the Pledged Collateral
Accounts, as defined below (all of the foregoing securities, collectively, the
"Securities").
AGREEMENT
Pledgor and the Trustee agree as follows:
Section 1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings given in the Indenture. In addition the
following terms shall have the following meanings when used herein.
<PAGE>
"Account Agreement" means that certain Account Agreement dated as of
even date herewith by and among Pledgor, the Trustee, and IBJ Whitehall Bank &
Trust Company, as Securities Intermediary.
"Book-Entry Securities" means securities issued by the United States
of America or any agency or instrumentality thereof maintained through
registration on the books of a Federal Reserve Bank pursuant to applicable
Federal book-entry regulations.
"Governmental Authority" means any federal, state, local or foreign
court, agency, authority, board, bureau, commission, department, office or
instrumentality of any nature whatsoever or any governmental or
quasi-governmental unit, whether now or hereafter in existence, or any officer
or official thereof.
"Obligor" means any and all Persons obligated to pay money or to
perform some other act under or in respect of the Pledged Collateral.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof and any fiduciary acting in such capacity on behalf of any
of the foregoing.
"Securities Intermediary" means a "securities intermediary" within the
meaning of 31 C.F.R. Section 357.2 and Section 8-102 of the Uniform Commercial
Code as in effect in the State of New York.
"Transaction Documents" means the Indenture, the Notes, the Collateral
Documents and all other documents, instruments, financing statements and other
agreements executed in connection herewith and therewith from time to time, as
each of the same may be amended, restated, supplemented or modified from time to
time.
"Unmatured Surviving Obligation" means, as of any date, an Obligation
(as defined in Section 3 hereof) which is contingent and unliquidated and not
due and owing on such date and which, pursuant to provisions of any Transaction
Document, survives termination of such Transaction Document and the repayment in
full or defeasance of the Notes.
Section 2. Pledge. As collateral security for the payment and
performance when due of the Notes and all other Obligations, Pledgor hereby
pledges, assigns, transfers and grants to the Trustee a continuing first
priority lien on all of the right, title and interest of Pledgor in, to and
under the following property (collectively, the "Pledged Collateral"):
(a) the Securities and the certificates, if any, evidencing
the Securities and any interest of Pledgor in the entries on the books
of any Securities Intermediary pertaining to the Securities;
(b) all Proceeds (as defined under the Uniform Commercial
Code as in effect in any relevant jurisdiction (the "Code") or under
other relevant law) of the Securities, and in any event including,
without limitation, any and all (i) proceeds of any
2
<PAGE>
insurance (except payment made to a Person which is not a party to
this Agreement), indemnity, warranty or guarantee payable to Pledgor
from time to time with respect to any of the Securities, (ii) payments
(in any form whatsoever) made or due and payable to Pledgor from time
to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the
Securities by any Governmental Authority (or any person acting on
behalf of a Governmental Authority), and (iii) other amounts from time
to time paid or payable under or in connection with any of the
Securities; and
(c) any and all (i) funds and assets now or hereafter
deposited in Account Nos.
630000038.1 (Riviera Black Hawk, Inc. Construction Disbursement Account),
630000038.2 (Riviera Black Hawk, Inc. Interest Reserve Account),
630000038.3 (Riviera Black Hawk, Inc. Completion Reserve Account) and
630000038.4 (Riviera Black Hawk, Inc. Disbursed Funds Account)
at IBJ Whitehall Bank & Trust Company (each, a "Pledged Collateral
Account" and, collectively, the "Pledged Collateral Accounts"),
including interest that accrues either before or after the commencement
of any bankruptcy or insolvency proceeding by or against Pledgor, (ii)
present and future accounts, general intangibles, chattel paper,
contract rights, deposit accounts, instruments and documents (as
defined under the Code as in effect in any relevant jurisdiction) now
or hereafter relating or arising with respect to the Pledged Collateral
Accounts and/or the use thereof, and (iii) cash and noncash proceeds
and products of the items described in subparagraphs (i) and (ii)
above.
Section 3. Secured Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the payment and performance in
full when due, whether at stated maturity, by acceleration or otherwise
(including without limitation the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy
(whether or not a claim is allowed against Pledgor for such interest or other
amounts in any such bankruptcy proceeding) or the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss 362(a)), of all
obligations of Pledgor under the Transaction Documents (collectively, the
"Obligations").
Section 4. No Release. Nothing set forth in this Agreement shall
relieve Pledgor from the performance of any term, covenant, condition or
agreement on Pledgor's part to be performed or observed under or in respect of
any of the Pledged Collateral or from any liability to any Person under or in
respect of any of the Pledged Collateral or shall impose any obligation on the
Trustee or any other Secured Party to perform or observe any such term,
covenant, condition or agreement on Pledgor's part to be so performed or
observed or shall impose any liability on the Trustee or any Secured Party for
any act or omission on the part of Pledgor relating thereto or for any breach of
any representation or warranty on the part of Pledgor contained in this
Agreement, under or in respect of the Pledged Collateral or made in connection
herewith or therewith. The provisions set forth in this Section 4 shall survive
the termination of this Agreement and the discharge of Pledgor's obligations
under this Agreement or any other agreement constituting Pledged Collateral.
3
<PAGE>
Section 5. Further Assurances. Pledgor agrees that, at any time and
from time to time, it will make, execute, endorse, acknowledge and file and
refile, or permit the Trustee to file and refile, such lists, descriptions and
designations of the Pledged Collateral, copies of documents of title, vouchers,
invoices, schedules, confirmatory assignments, supplements, additional security
agreements, conveyances, financing statements, amendments thereto, continuation
statements, transfer endorsements, powers of attorney and other documents
(including without limitation this Agreement), in form reasonably satisfactory
to the Trustee in such offices as the Trustee may deem reasonably necessary or
appropriate, wherever required or permitted by law in order to perfect, protect
and preserve the rights and interests granted to the Trustee hereunder. Pledgor
hereby authorizes the Trustee and appoints the Trustee as its attorney-in-fact
to file such financing statements, continuation statements, amendments thereto
and other documents, without the signature of Pledgor to the fullest extent
permitted by applicable law, and Pledgor agrees to do such further acts and
things, and to execute and deliver to the Trustee such additional assignments,
agreements, powers and instruments, as the Trustee may reasonably require to
carry into effect the purposes of this Agreement, to preserve or protect the
lien on the Pledged Collateral created by this Agreement or to assure and
confirm unto the Trustee its rights, powers and remedies hereunder. The
foregoing grant of authority is a power of attorney coupled with an interest and
such appointment shall be irrevocable for the term of this Agreement. All of the
foregoing shall be at the sole cost and expense of Pledgor.
Section 6. Representations, Warranties and Covenants. Pledgor
represents, warrants and covenants as follows:
(a) Delivery; Perfection. To the extent that any of the
Pledged Collateral constitutes certificated securities, Pledgor has
delivered to the Trustee all certificates representing the Pledged
Collateral relating to the Securities identified on Schedule I hereto
(and will immediately deliver to the Trustee all certificates
representing such Pledged Collateral acquired after the date hereof),
accompanied in each case by undated bond powers duly executed in
blank, and has caused to be filed with the Secretary of State of the
State of Colorado, the principal place of business of Pledgor, UCC-1
financing statements evidencing the lien or pledge created by this
Agreement, and, together with the book entries described in Section
6(h) below and the execution and delivery of this Agreement, such
delivery, filing, pledge, transfer and control of the Pledged
Collateral pursuant to this Agreement creates a valid and perfected
first priority security interest in the Pledged Collateral pursuant to
the Code in effect in the State of New York securing the payment and
performance in full of the Obligations.
(b) No Liens. Pledgor is as of the date hereof, and, as to
Pledged Collateral acquired by it from time to time after the date
hereof, Pledgor will be, the owner of all of the Pledged Collateral
free and clear of any lien (other than the lien granted to the Trustee
under this Agreement or any other Transaction Document and Permitted
Liens), and Pledgor shall defend the Pledged Collateral against all
claims and demands of all Persons at any time claiming any interest
therein adverse to the Trustee or any Secured Party.
4
<PAGE>
(c) Other Financing Statements. There is no financing
statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any
interest of any kind in the Pledged Collateral and, so long as any
Obligations are outstanding, Pledgor shall not execute or authorize to
be filed in any public office any financing statement (or similar
statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Pledged Collateral, except
financing statements filed or to be filed in respect of and covering
the lien granted by Pledgor pursuant to this Agreement or any other
Transaction Document.
(d) Chief Executive Office; Records. The chief executive
office of Pledgor is located at 2901 Las Vegas Boulevard, South Las
Vegas, Nevada 89109, and has been located there for at least four (4)
months preceding the date hereof. In addition, Pledgor's name has not
been changed in the four (4) months preceding the date hereof. Pledgor
shall not establish a new location for such office nor shall it change
its name unless (i) it shall have given the Trustee not less than
thirty (30) days' prior written notice of its intention so to do,
clearly describing such new location or locations or name and
providing such other information in connection therewith as the
Trustee may request, and (ii) with respect to such new location or
name, Pledgor shall have taken all action satisfactory to the Trustee
to maintain the perfection, priority and validity of the lien of the
Trustee in the Pledged Collateral intended to be granted by this
Agreement.
(e) Authorization Enforceability. Pledgor has full power,
authority and legal right to enter into this Agreement and to pledge
and grant a lien on all the Pledged Collateral owned by it pursuant to
this Agreement, and this Agreement has been duly authorized, executed
and delivered by Pledgor and constitutes the legal, valid and binding
obligation of Pledgor, enforceable against Pledgor in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
credits' rights generally and by general principles of equity.
(f) No Consents, Etc. No authorization, consent, approval,
license, qualification or formal exemption from, nor any filing,
declaration or registration with, any court, governmental agency or
regulatory authority, or with any securities exchange or any other
Person, is required in connection with (i) the due execution, delivery
or performance by Pledgor of this Agreement, (ii) the assignment of,
and the grant of a lien on (including the priority thereof), the
Pledged Collateral by Pledgor in the manner and for the purpose
contemplated by this Agreement, or (iii) the exercise of the rights
and remedies of the Trustee created hereby, except those that have
been obtained or made concurrently with the execution hereof or that
shall be obtained or made at the time new collateral is added,
including without limitation filings in the appropriate offices under
the Code and the execution and delivery of the Account Agreement.
(g) No Breach. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or
result in a breach of (i) any applicable law or regulation, (ii) any
order, writ, injunction or decree of any court or governmental
authority or agency, (iii) any agreement or instrument to which
Pledgor is a party or by which
5
<PAGE>
Pledgor or any of the Pledged Collateral is bound or to which Pledgor
is subject, or (iv) result in the creation or imposition of any Lien
upon Pledgor's earnings or assets pursuant to the terms of any such
agreement or instrument.
(h) Book-Entry Securities. With respect to the Book-Entry
Securities identified in Schedule I hereto and the Book-Entry
Securities acquired by or on behalf of Pledgor from time to time with
the Note Proceeds and/or other amounts deposited or accruing in the
Pledged Collateral Accounts, Pledgor shall promptly cause (i) such
Book-Entry Securities to be credited to a Securities Intermediary's
trust/custody account maintained at the Federal Reserve Bank at which
such Securities Intermediary maintains a Participant's Securities
Account (as such term is defined in 31 C.F.R. ss 357.2) (and to be
identified on the records of such Federal Reserve Bank as being held
for the sole and exclusive account of such Securities Intermediary),
(ii) such Securities Intermediary to credit by book-entry such
Book-Entry Securities as being held for the account of the Trustee and
for the benefit of the Trustee, and (iii) such Securities Intermediary
to send a confirmation to the Trustee that such Securities
Intermediary is holding such Book-Entry Securities for the account of
the Trustee and for the benefit of the Trustee. With respect to the
Pledged Collateral, Pledgor and the Trustee hereby acknowledge and
agree that IBJ Whitehall Bank & Trust Company ("IBJ") is the
Securities Intermediary at which the securities accounts for the
Pledged Collateral is maintained, and IBJ hereby agrees to maintain
each of the Pledge Collateral Accounts as a "securities account"
within the meaning of Article 8 of the Code in effect in the state of
New York. IBJ hereby acknowledges that (i) it has by book-entry
credited the Book-Entry Securities to the Trustee and the Trustee is
the entitlement holder with respect to the security entitlements
therein, (ii) it shall, as Securities Intermediary, comply with all
written entitlement orders originated by the Trustee without the need
for further consent by Pledgor, and (iii) the Trustee shall have
control over the Book-Entry Securities and the security entitlements
and securities accounts relating thereto.
(i) Pledged Collateral. All information set forth herein
(including the exhibits hereto) relating to the Pledged Collateral is
accurate and complete in all material respects.
Section 7. Provisions Concerning the Pledged Collateral.
(a) Protection of the Trustee's Security. Pledgor shall not
take any action that impairs the rights of the Trustee in the Pledged
Collateral.
(b) Payments. So long as no Event of Default shall have
occurred and be continuing, all distributions, cash, interest, return
of capital or other payments made in respect of the Pledged Collateral
shall be deposited in the applicable Pledged Collateral Account and
utilized in accordance with the provisions of the Indenture and the
Disbursement Agreement (which utilization shall include, without
limitation, the payment of any installment due under the Notes). Upon
the occurrence and during the continuation of an Event of Default, all
rights to enforce and collect payments in respect of the Pledged
Collateral or to direct the disposition thereof shall be exercised
exclusively by the Trustee
6
<PAGE>
and the proceeds of any such exercise shall be applied to Pledgor's
obligations under and in accordance with the Transaction Documents.
Section 8. Transfers and Other Liens. Pledgor shall not (i) sell,
convey, assign or otherwise dispose of, or grant any option, right or warrant
with respect to, any of the Pledged Collateral except as permitted under the
Indenture, the Disbursement Agreement and this Agreement, or (ii) create or
permit to exist any Lien upon or with respect to any Pledged Collateral, except
for the lien of this Agreement and the other Transaction Documents.
Section 9. Remedies Upon Default; Obtaining the Pledged Collateral
Upon Event of Default.
(a) If an Event of Default shall have occurred and be
continuing, then and in every such case, the Trustee may:
(i) instruct the obligor or obligors on any
agreement, instrument or other obligation constituting
Pledged Collateral to make any payment required by the terms
of such instrument or agreement directly to or as directed
by the Trustee; provided, however, that in the event that
any such payments are made directly to Pledgor prior to
receipt by any such obligor of such instruction or
notwithstanding such instruction, Pledgor shall hold such
amounts as agent and trustee for the Trustee, segregate all
amounts received pursuant thereto in a separate account and
pay such amounts promptly to or as directed by the Trustee;
and
(ii) proceed to exercise all rights, privileges
and remedies of Pledgor under the Pledged Collateral, and
may exercise such rights and remedies either in the name of
the Trustee or in the name of Pledgor for the use and
benefit of the Trustee to the fullest extent permitted by
applicable law.
(b) Upon the occurrence and during the continuance of an
Event of Default, the Trustee may from time to time exercise in
respect of the Pledged Collateral, in addition to the other rights and
remedies provided herein or otherwise available to it, all the rights
and remedies of a secured party under the Code. The proceeds of the
exercise by the Trustee of any remedy hereunder shall be paid to and
applied as follows:
FIRST: to the payment of reasonable costs and
expenses of any suit and of all proper compensation,
expenses, liabilities and advances, including without
limitation reasonable legal expenses and attorneys' fees,
owed to, incurred or made by the Trustee and all taxes,
assessments or liens superior to the lien hereof,
SECOND: to the payment of all amounts due and
owing under the Transaction Documents (including without
limitation the Notes) and all other Obligations; and
7
<PAGE>
THIRD: the balance, if any, to Pledgor or to the
Person lawfully entitled thereto as determined by a court of
competent jurisdiction.
(c) Upon the occurrence and during the continuance of an
Event of Default, the Trustee may, upon ten (10) business days' prior
written notice to Pledgor of the time and place, with respect to the
Pledged Collateral or any part thereof that shall then be or shall
thereafter come into the possession, custody or control of the Trustee
or any of its agents, sell, lease, assign or otherwise dispose of all
or any part of the Pledged Collateral, at such place or places as the
Trustee deems best, and for cash or for credit or for future delivery,
at public or private sale, without demand of performance or notice of
intention to effect any such disposition or of the time or place
thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Trustee or anyone else may be
the purchaser, lessee, assignee or recipient of any or all of the
Pledged Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind,
including any right or equity of redemption (statutory or otherwise),
of Pledgor, any such demand, notice (other than the notice specified
above) and right or equity being hereby expressly waived and released.
The Trustee may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so
adjourned. Notwithstanding the first sentence of this Section 9(c) to
the contrary, with respect to that portion of the Pledged Collateral
consisting of Book-Entry Securities, the parties acknowledge and agree
that such Pledged Collateral is sold on a recognized market and,
accordingly, the Trustee need not furnish Pledgor with notice of its
intention to sell such Pledged Collateral. The proceeds of each
collection, sale or other disposition under this Section 9(c) shall be
applied in accordance with Section 9(b) hereof.
(d) Private Sale. The Trustee shall incur no liability as a
result of the sale of the Pledged Collateral, or any part thereof, at
any private sale pursuant to Section 9(c) hereof conducted in a
commercially reasonably manner. Pledgor hereby waives any claims
against the Trustee arising by reason of the fact that the price at
which the Pledged Collateral may have been sold at such private sale
was less than the price that might have been obtained at a public sale
or was less than the aggregate amount owed by Pledgor under the
Transaction Documents, even if the Trustee accepts, the first offer
received and does not offer the Pledged Collateral to more than one
offeree.
Section 10. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Trustee to exercise, no
course of dealing with respect to, and no delay on the part of the
Trustee in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof. No single or partial exercise of any such
right, power or remedy hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
The remedies provided herein and in the other Transaction Documents
are cumulative and are not exclusive of any remedies provided by law.
8
<PAGE>
(b) In the event the Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement,
and such proceeding shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Trustee, then,
and in every such case, Pledgor, the Trustee and each obligor under
the Notes shall be restored to their respective former positions and
rights hereunder with respect to the Pledged Collateral, and all
rights, remedies and powers of the Trustee shall continue as if no
such proceeding had been instituted.
Section 11. The Trustee May Perform; the Trustee Appointed
Attorney-In-Fact. If Pledgor fails to do any act or thing that it has covenanted
to do hereunder or if any warranty on the part of Pledgor contained herein shall
be breached, the Trustee may (but shall not be obligated to), upon notice to
Pledgor specifying the action to be taken, do the same or cause it to be done or
remedy any such breach, and may expend funds for such purpose. Any and all
amounts so expended by the Trustee (including, but not limited to, reasonable
legal expenses and disbursements) shall be paid by Pledgor promptly upon demand
therefor, with interest at the Default Rate during the period from the date on
which such payment is made to and including the date of repayment. Pledgor
hereby authorizes the Trustee and appoints the Trustee its attorney-in-fact,
with full authority in the place and stead of Pledgor and in the name of
Pledgor, or otherwise, from time to time in the Trustee's reasonable discretion
to take any action and to execute any instrument which is consistent and in
accordance with the terms of this Agreement and the Transaction Documents and
which the Trustee may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement. The foregoing grant of authority is a power of
attorney coupled with an interest and such appointment shall be irrevocable for
the term of this Agreement. Pledgor hereby ratifies all actions that such
attorney shall lawfully take or cause to be taken in accordance with this
Section 11.
Section 12. Modification in Writing. This Agreement, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by an act or failure to act on the part of Pledgor, but
only by an agreement in writing and signed by the Trustee. Any amendment,
modification or supplement of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure by Pledgor
from the terms of any provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or demand
on Pledgor in any case shall entitle Pledgor to any other or further notice or
demand in similar or other circumstances.
Section 13. Termination; Release. When all Obligations of Pledgor
(other than any Unmatured Surviving Obligations) under the Transaction Documents
have been released or performed in full, this Agreement shall terminate. Upon
termination of this Agreement, the Trustee shall upon the request and at the
sole cost and expense of Pledgor forthwith assign, transfer and deliver, and
shall direct IBJ, as Securities Intermediary, to assign, transfer and deliver,
to Pledgor against receipt and without express or implied recourse to or
warranty by the Trustee, such of the Pledged Collateral to be released as may be
in possession of the Trustee or IBJ (as applicable) and as shall not have been
sold or otherwise applied pursuant to the terms hereof, and proper instruments
(including Code termination statements) acknowledging the termination of this
Agreement and the release of such Pledged Collateral, as the case may be.
9
<PAGE>
Section 14. Notices. All notices, requests, demands and other
communication shall be given in the manner set forth in Section [13.02] of the
Indenture and shall be given or delivered at the following respective addresses
and facsimile and telephone numbers and to the attention of the following
individuals or departments: (i) if to Pledgor, at its address specified pursuant
to the Indenture; (ii) if to the Trustee, at its address specified pursuant to
the Indenture; (iii) if to the Securities Intermediary, at its address specified
on the signature page hereto; and (iv) as to any such party, at such other
address, facsimile or telephone number, or to the attention of such other
individual or department, as the party to which such information pertains may
hereafter specify for the purpose in a notice to the other specifically
captioned "Notice of Change of Address."
Section 15. Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) be binding upon Pledgor and each of its successors and assigns, and (ii)
inure to the benefit of the Trustee and its successors and assigns. Without
limiting the generality of the foregoing clause (ii), the Trustee may assign or
otherwise transfer any indebtedness or obligations held by it and secured by
this Agreement to any other Person in accordance with the Indenture, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Trustee, herein or otherwise. Pledgor may not assign any
of its rights under this Agreement without the prior written consent of the
Trustee, which consent may be granted or withheld in the Trustee's sole and
absolute discretion, and any attempted assignment in violation of this Section
15 shall be null and void.
Section 16. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO CALIFORNIA'S PRINCIPLES OF CONFLICTS OF LAW), AND EACH
OF THE PARTIES HERETO, TOGETHER WITH THE SECURITIES INTERMEDIARY, EXPRESSLY
AGREES THAT FOR PURPOSES OF SECTION 8-110 OF THE CODE IN EFFECT IN THE STATE OF
NEW YORK, THE SECURITIES INTERMEDIARY'S JURISDICTION IS NEW YORK. THE PARTIES
HERETO IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT SITTING IN THE CITY OF NEW YORK OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
Section 17. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 18. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts shall constitute one and the same Agreement.
Section 19. Headings. The Section headings used in this Agreement are
for convenience of reference only and shall not affect the construction of this
Agreement.
10
<PAGE>
Section 20. Entire Agreement. This Agreement, together with those
other agreements referenced herein, constitutes the entire agreement and
understanding of the parties hereto with respect to the matters and transaction
contemplated hereby and supersedes all prior agreements and understandings
whatsoever relating to such matters and transactions.
Section 21. Limitation on Duty of the Trustee in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, the Trustee shall
have no duty as to any Pledged Collateral in its possession or control or in the
possession or control of any agent or bailee or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. The Trustee shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that which the
Trustee accords its own property, and shall not be liable or responsible for any
loss or damage to any of the Pledged Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any agent or bailee selected
by the Trustee in good faith.
Section 22. Indemnification. Pledgor agrees to indemnify the Trustee
and hold the Trustee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind or nature whatsoever, including without
limitation the reasonable fees and disbursements of counsel, which may be
incurred by the Trustee in connection with its actions hereunder or in
connection with any investigative, administrative or judicial proceeding
(whether or not the Trustee shall be designated a party thereto) relating to or
arising out of this Agreement or the Pledged Collateral (including without
limitation any such proceeding by Pledgor against the Trustee or the Trustee
against Pledgor); provided that the Trustee shall not have the right to be
indemnified hereunder for its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction.
[Signature Page Follows]
11
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer as of the
date first above written.
PLEDGOR:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:-----------------------------------
Name:---------------------------------
Title:--------------------------------
THE TRUSTEE:
IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking association
By:-----------------------------------
Name:---------------------------------
Title:--------------------------------
IBJ Whitehall Bank & Trust Company, acting in its capacity as Securities
Intermediary, hereby acknowledges its agreement to be bound by the provisions
set forth in Sections 6(h) and 16 of this Agreement.
IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking association
By:-----------------------------------
Name:---------------------------------
Title:--------------------------------
One State Street, 10th Floor
New York, New York 10004
Attention: Thomas S. Moser
Facsimile: (212) 858-2956
[Signature page to Pledge and Assignment Agreement]
DEPOSIT ACCOUNT AGREEMENT
DEPOSIT ACCOUNT AGREEMENT (this "Agreement") dated as of June 1999
among BANK OF AMERICA, having an office at [ ] (the "Deposit Bank"), RIVIERA
HOLDING S CORPORATION, a Nevada corporation, having an office c/o Riviera Hotel
& Casino, 2901 Las Vegas Blvd. So., Las Vegas, Nevada 89109 ("Riviera"), and
FIRST AMERICAN TITLE INSURANCE COMPANY, having an office at 602 Park Point
Drive, Suite #270, Golden, Colorado 80401 (together with its successors and
assigns, "First American").
W I T N E S E T H:
WHEREAS, Riviera Black Hawk, Inc. ("Riviera Black Hawk") is
constructing a casino and hotel in Black Hawk, Colorado and in connection
therewith has obtained from First American a mortgagee's title insurance policy
(the "Title Policy") insuring the construction mortgage against mechanics' lien
claims; and
WHEREAS, pursuant to an "Indemnity Agreement I
(Construction-Mechanics' Liens)" executed by Riviera, Riviera Black Hawk and
First American, Riviera and Riviera Black Hawk agree to indemnify First American
against claims made against First American under the Title Policy on account of
such mechanics' lien claims ("Claims"); and
WHEREAS, First American requires additional security for the
Indemnity Agreement in the form of a deposit account (the "Deposit Account") to
be held at the Deposit Bank; and
WHEREAS, First American and Riviera desire to retain the Deposit
Bank to provide the services described herein.
NOW THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
<PAGE>
Section 1. Duties of the Deposit Bank and First American.
a. Riviera has deposited the sum of $5,000,000.00 into the Deposit
Account which is entitled "Deposit Account for First American Title Company as
Indemnitee of Riviera Holdings, Corporation." The Deposit Bank shall hold
amounts deposited in the Deposit Account in trust for First American and shall
not commingle such amounts with any other amounts held on behalf of First
American or any other person.
b. If a Claim is made, First American after providing notice to, and
a right to cure by, Riviera and Riviera Black Hawk pursuant to the provisions of
the Indemnification Agreement, may, if such claim is not cured within the time
period specified in the Indemnification Agreement, withdraw from the Deposit
Account such funds as First American reasonably determines are required to
satisfy such Claim by directing the Deposit Bank to disburse such amounts from
the Deposit Account pursuant to disbursement instructions substantially in the
form of Schedule 2 attached hereto ("Disbursement Instructions").
c. Riviera may direct Deposit Bank to invest amounts held in the
Deposit Account in Permitted Investments (as defined below). All earnings on
Permitted Investments shall be for the benefit of Riviera and credited to the
Deposit Account. Riviera may withdraw funds from the Deposit Account, provided
the balance thereof does not fall below $5,000,000.00. Any actual losses
sustained on a liquidation of a Permitted Investment (which cause the balance in
the Deposit Account to fall below $5,000,000.00) shall promptly be deposited by
Riviera into the Deposit Account.
d. A "Permitted Investment" means obligations of, or obligations
fully guaranteed as to payment of principal and interest by, the United States
or any agency or instrumentality thereof provided such obligations are backed by
the full faith and credit of the United States of America or such other
obligations as are acceptable as Permitted Investments to First American.
Section 2. Fees.
Riviera hereby agrees to pay the fees and expenses of the Deposit
Bank and any successor thereto, for performing the herein-described services.
Section 3. Termination.
The Deposit Bank may resign from its obligations under this
Agreement at any time after thirty (30) days' prior written notice to the other
parties hereto, but in no event shall the Deposit Bank be released of its
obligations hereunder unless and until a substitute bank has been designated and
assumed the obligations hereunder. Riviera shall designate a substitute Deposit
Bank promptly after receipt of notice of resignation by the Deposit Bank and
shall take all reasonable actions necessary to cause such designated successors
promptly to assume the obligations of the Deposit Bank hereunder. First American
may terminate this Agreement at any time after thirty (30) days' prior written
notice to the other parties hereto. This Agreement shall be terminated upon the
Deposit Bank's receipt of notice from both Riviera and First American that the
"Final CDA Disbursement", as such term is defined in a certain Cash Collateral
and Disbursement Agreement dated June 3, 1999, has been made.
2
<PAGE>
Section 4. Set-off
The Deposit Bank waives any right to offset any claim against
Riviera which it might have against any account maintained hereunder.
Section 5. Indemnification.
The Deposit Bank shall not be liable for any claims, suits, actions,
costs, damages, liabilities or expenses or for any interruption of services, or
incidental, consequential, special or punitive damages ("Liabilities") in
connection with the subject matter of this Agreement other than Liabilities
caused by the negligence or willful misconduct of the Deposit Bank, and Riviera
hereby agrees to indemnify and hold harmless the Deposit Bank and its Affiliates
and the directors, officers, employees and agents of any of them, and the
respective successors and assigns of the Deposit Bank from and against any and
all Liabilities arising from or in connection with any acts or omissions taken
by the Deposit Bank or any Affiliate or any director, officer, employee or agent
of any of them in connection with this Agreement, other than those Liabilities
caused by the negligence or willful misconduct of the Deposit Bank.
Section 6. Successors and Assigns, Assignments.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Deposit Bank, Riviera and First American and their respective
successors and assigns.
Section 7. Amendment.
This Agreement may be amended from time to time in writing by all
parties hereto.
Section 8. Notices.
Notices to the Deposit Bank should be sent to the address
first-above written or by telecopy to [( ) ___-___], Attention: ____________;
notices to Riviera should be sent to the address first-above written or by
telecopy to ( ) ___-____, Attention: ___________; and notices to First American
should be sent to the address first-above written or by telecopy to
(___)___-____, Attention: ___________; or, in each case, to such other address
as shall be designated in writing by the respective party to the other parties
hereto. Unless otherwise expressly provided herein, all such notices, to be
effective, shall be in writing (including by facsimile), and shall be deemed to
have been duly given or made (a) when delivered by hand or by nationally
recognized overnight carrier, (b) upon receipt after being deposited in the
mail, certified mail and postage prepaid or (c) in the case of facsimile notice,
when sent and electronically confirmed, addressed as set forth above.
3
<PAGE>
Section 9. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
APPLIED IN NEW YORK).
Section 10. Certain Matters Affecting the Deposit Bank.
a. The Deposit Bank may rely and shall be protected in acting or
refraining from acting upon any notice (including but not limited to
electronically confirmed facsimiles of such notice) believed by it to be genuine
and to have been signed or presented by the proper party or parties; and
b. The duties and obligations of the Deposit Bank shall be
determined solely by the express provisions of this Agreement. The Deposit Bank
shall not be liable except for the performance of such party's duties and
obligations as are specifically set forth in this Agreement, and except as set
forth in Section 6 hereof, no implied covenants or obligations shall be read
into this Agreement against the Deposit Bank.
Section 11. Interpleader.
If at any time the Deposit Bank, in good faith, is in doubt as to
the action it should take under this Agreement, the Deposit Bank shall have the
right to commence an interpleader action in the United States District Court for
the Southern District of New York and to take no further action except in
accordance with joint instructions from First American and Riviera or in
accordance with the final order of the court in such action.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT
in several counterparts (each of which shall be deemed an original) as from the
date first above written.
BANK OF AMERICA
By: _________________________________
Name:
Title:
4
<PAGE>
RIVIERA HOLDINGS CORPORATION
By: _________________________________
Name:
Title:
FIRST AMERICAN TITLE COMPANY
By: _________________________________
Name:
Title:
5
<PAGE>
SCHEDULE 1
Bank Account Information
<PAGE>
SCHEDULE 2
Disbursement Instructions
[FIRST AMERICAN LETTERHEAD]
, 1999
Bank of America
Gentlemen:
Reference is made to the Deposit Account Agreement (the "Deposit
Account Agreement") dated as of ________ __, 1999, among Bank of America (the
"Deposit Bank"), Riviera Holdings Corporation (the "Riviera") and the
undersigned. Capitalized terms not defined herein have the meanings set forth
for such terms in the Deposit Account Agreement.
As of the day of 5 1999, we hereby authorize and direct the Deposit
Bank to withdraw $ from the Deposit Account and wire such funds to the
undersigned's account at:
[Describe First American's Account]
-----------------------------
-----------------------------
Account of:
Account #:
Such funds are being withdrawn pursuant to the terms of the Deposit
Account Agreement.
Very truly yours,
First American Title Insurance Company
By: ____________________________
Name:
Title:
- --------------------------------------------------------------------------------
AIA Document A III
Standard Form of Agreement
Between Owner and Contractor
where the basis of payment is the
COST OF THE WORK PLUS A FEE
with or without a Guaranteed Maximum Price
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN
ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
The 1987 Edition of AJA Document A201, General Conditions of the Contract for
Construction, is adopted in this document by reference. Do not use with other
general conditions unless This document is modified. This document has been
approved and endorsed by The Associated General Contractors of America.
- --------------------------------------------------------------------------------
AGREEMENT
made as of the twenty-ninth (29th) day of December in the year of Nineteen
Hundred and Ninety-Seven (1997).
BETWEEN the Owner: Riviera Black Hawk, Inc.
(Name and address) 2901 Las Vegas Boulevard South
Las Vegas, NV 89109
and the Contractor: Weitz-Cohen Construction Co.
(Name and address) 899 Logan Street, Suite 600
Denver, CO 80203
the Project is: Riviera Black Hawk Casino
(Name and address) 444 Main Street
Black Hawk, CO 80422
the Architect is: Melick Associates, Inc.
(Name and address) Suite Four West
1620 Market Street
Denver, CO 80202
The Owner and Contractor agree as set forth below.
- --------------------------------------------------------------------------------
Copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978. (C) 1987 by The
American Institute of Architects, 1735 New York Avenue, N.W., Washington, D.C.
20006. Reproduction of the material herein or substantial quotation of its
provisions without written permission of the AIA violates the copyright laws of
the United States and will be subject to legal prosecution.
- --------------------------------------------------------------------------------
<PAGE>
ARTICLE 1
THE CONTRACT DOCUMENTS
1.1. The Contract Documents consist of this Agreement, Conditions of the
Contract (General. Supplementary and other Conditions), Drawings,
Specifications, addenda issued prior to execution of this Agreement, other
documents listed in this Agreement and Modifications issued after execution of
this Agreement; these form the Contract, and are as fully a part of the Contract
as if attached to this Agreement or repeated herein. The Contract represents the
entire and integrated agreement between the parties hereto and supersedes prior
negotiations, representations or agreements, either written or oral. An
enumeration of the Contract Documents. other than Modifications. appears in
Article 16. If anything in the other Contract Documents is inconsistent with
this Agreement, this Agreement shall govern.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1. The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract Documents
to be the responsibility of others. or as follows:
The Contractor will perform all services for site development, parking garage,
casino, and associated areas, as further defined by the Plans and
Specifications.
See Exhibit B, Add Paragraph 2.2 and 2.3.
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1. The Contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with the Architect
and utilize the Contractor's best skill, efforts and judgment in furthering the
interests of the Owner. to furnish efficient business administration and
supervision; and supervision to make best efforts to furnish at all times an
adequate supply of workers and materials; and to perform the Work in the best
way and most expeditious and economical manner consistent with the interests of
the Owner. The Owner agrees to exercise best efforts to enable the Contractor to
perform the Work in the best way and most expeditious manner by furnishing and
approving in a timely way information required by the Contractor and making
payments to the Contractor in accordance with requirements of the Contract
Documents.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1. The date of commencement is the date from which the Contract Time of
Subparagraph 4.2 is measured: it shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice for proceed)
2
<PAGE>
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the contractor shall notify the Owner in writing not less than five
days before commencing the Work to permit the timely filing of mortgages,
mechanic's liens and other security interests.
4.2. The Contractor shall 2chieve Substantial Completion of the entire Work not
later than
(Insert the calendar date or number of calendar days after the date of
commencement. Also insert any requirements for earlier Substantial Completion of
certain portions of the Work, if not stated elsewhere in the Contract
Documents.)
See Exhibit B, Paragraph 4.2.
,subject to adjustments of this Contract Time as provided in the Contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time.)
ARTICLE 5
CONTRACT SUM
5.1. The Owner shall Pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum consisting of the Cost of the Work
as defined in Article 7 and the Contractor's Fee determined as follows:
(State a lump sum percentage of Cost of the Work or other provision for
determining the Contractor's Fee, and explain how the Contractor's Fee is to be
adjusted for changes in the Work.)
See Exhibit B, Subparagraph 5.1.
5.2. GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1. The sum of the Cost of the Work and the Contractor's Fee is guaranteed by
the Contractor not to exceed Twenty-four Million Five Hundred Thousand and
00/000 ________ Dollars ($24,500,000.00 ), subject to additions and deductions
by Change Order as provided in the Contract Documents. Such maximum sum is
referred to in the Contract Documents as the Guaranteed Maximum Price. Costs
which would cause the Guaranteed Maximum Price to be exceeded shall be paid by
the Contractor without reimbursement by the Owner.
(Insert specific provisions if the Contractor is to participate in any savings.)
All savings on the project will be returned to the Owner.
5.2.2. The Guaranteed Maximum Price is based upon the following alternates, if
any, which are described in the Contract Documents and are hereby accepted by
the Owner:
Exhibit F, Paragraph #1, is the basis for the guaranteed maximum price.
5.2.3. The amounts agreed to for unit prices, if any, are as follows:
(State unit prices only if a Guaranteed Maximum Price is inserted in
Subparagraph 5.2.1.)
Does Not Apply.
3
<PAGE>
ARTICLE 6
CHANGES IN THE WORK
6.1. CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1. Adjustment to the Guaranteed Maximum Price on account of changes in the
Work may be determined by any of the methods listed in Subparagraph 7.3.3. of
the General Condition.
6.1.2. In calculating adjustments to subcontracts (except those awarded with the
Owner's prior consent on the basis of cost plus a fee) the terms "cost" and
"fee" as used in Clause 7.3.3.3. of the General Conditions and the terms "costs"
and "a reasonable allowance for overhead and profit" as used in Subparagraph
7.3.6 of the General Conditions, shall have the meanings assigned to them in the
General Conditions and shall not be modified by Articles 5 and 8 of this
Agreement. Adjustments to subcontracts awarded with the Owner's prior consent on
the basis of cost plus a fee shall be calculated in accordance with the terms of
those subcontracts
6.1.3. In calculating adjustments to this Contract, the terms "cost" and "costs"
as used in the above-referenced provisions of the General Conditions shall mean
the Cost of the Work as defined in Article ___ of this Agreement and the terms
"fee" and "a reasonable allowance for overhead and profit" shall mean the
Contractor's Fee a, defined in Paragraph 5.1 of this Agreement.
ARTICLE 7
COSTS TO BE REIMBURSED
7.1. The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at rates
not higher than the standard paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the items set
forth in this Article 7.
7.1.1. LABOR COSTS
See Exhibit B , Paragraph 7.1.1.1.
See Exhibit B, Paragraph 7.1.1.2.
(If it is intended that the wages or salaries of certain personnel stationed at
the Contractor's principal or other offices shall be included in the Cost of the
Work, identify in Article 14 the personnel to be included and whether for all or
only part of their time.)
See Exhibit B, paragraph 7.1.1.3.
7.1.2. SUBCONTRACT COSTS
See Exhibit B. Paragraph 7.1.2.
7.1.3. COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1. Costs, including transportation, of materials and equipment
incorporated or to be incorporated in the completed construction.
4
<PAGE>
7.1.3.2. Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials. if any, shall be handed over to
the Owner at the completion of the Work or, at the owner's option, shall be sold
by the Contractor; amounts realized, if any, from such sales shall be credited
to the Owner as a deduction from the Cost of the Work.
7.1.4. COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED
ITEMS
7.1.4.1. Costs. including transportation, installation. maintenance. dismantling
and removal of materials, supplies, temporary facilities, machinery, equipment,
and hand tools not customarily owned by the construction workers, which are
provided by the Contractor at the site and fully consumed in the performance of
the Work; and cost less salvage value on such items if not fully consumed,
whether sold to others or retained by the Contractor. Cost for items previously
used by the Contractor shall mean fair market value.
7.1.4.2. Rental charges for temporary facilities, machinery, equipment, and hand
tools not customarily owned by the construction workers. which are provided by
the Contractor at the site, whether rented from the Contractor or others, and
costs of transportation, installation, minor repairs and replacements,
dismantling and removal thereof.
See Exhibit B, Paragraph 7.1.4.2.
7.1.4.3. Costs of removal of debris from the site.
See Exhibit B, Paragraph 7.1.4.4.
7.1.4.4. That portion of the reasonable travel and subsistence expenses of the
Contractor's personnel incurred while traveling in discharge of duties connected
with the Work.
7.1.5. MISCELLANEOUS COSTS
7.1.5.1. That portion directly attributable to this Contract of premiums for
insurance and bonds.
See Exhibit B, Paragraph
7.1.5.2. Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3. Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Contractor is required by the Contract
Documents to pay.
7.1.5.4. Fees of testing laboratories for tests required by the Contract
Documents, except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or
other provisions of the Contract Documents and which do not fall within the
scope of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5. Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlement made with the
5
<PAGE>
Owner's consent; provided, however, that such costs of legal defenses, judgment
and settlements shall not be included in the calculation of the Contractor's Fee
or of a Guaranteed Maximum Price, if any, and provided that such royalties, fees
and costs are not excluded by the last sentence of Subparagraph 3.17.1 of the
General Conditions or other provisions of the Contract Documents.
7.1.5.6. Deposits lost for causes other than the Contractor's fault or
negligence.
7.1.6. OTHER COSTS
7.1.6.1. Other costs incurred in the performance of the Work if and to the went
approved in advance in writing by the Owner.
See Exhibit B, Add Paragraphs 7.1.6.2 and 7.1.6.3.
7.2. EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1. In taking action to prevent threatened damage, injury or loss in case of
an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions.
7.2.2. In repairing or correcting Work damaged or improperly executed by
construction workers in the employ of the Contractor, provided such damage or
improper execution did not result from the fault or negligence of the Contractor
or the Contractor's foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Contractor.
Exhibit B, Paraqraph.7.2.2.
7.2.3. In repairing damaged Work other man that described in Subparagraph 7.2.2.
provided such damage did not result from the fault or negligence of the
Contractor or the Contractor's personnel, and only to the extent that the cost
of such repairs is not recoverable by the Contractor from others and the
Contractor is not compensated therefor by insurance or otherwise.
7.2.4. In correcting defective or nonconforming Work performed or supplied by a
Subcontractor or Material supplier and not corrected by them. provided such
defective or nonconforming Work did not result from the fault or neglect of the
Contractor or the Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor or material supplier, and only to the extent that the
cost of correcting the defective or nonconforming Work is not recoverable by the
Contractor from the Subcontractor or Material supplier.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1. The Cost of the Work shall not include:
8.1.1. Salaries and other compensation of the Contractor's personnel stationed
at the Contractor's principal office or offices other than the site office,
except as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may be
provided in Article 14 .
6
<PAGE>
8.1.2. Expenses of the Contractor's principal office and offices other than the
site office.
8.1.3. Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4. The Contractor's capital expenses, including interest on the Contractor's
capital employed for the Work.
8.1.5. Rental costs of machinery and equipment, except as specifically provided
in Clause 7.1.4.2.
8.1.6. Except as provided in Subparagraphs 7.2.2 through 7.2.4 and Paragraph
13.5 of this Agreement, costs due to the fault or negligence of the Contractor.
Subcontractors, anyone directly or indirectly employed by any of them, or for
whose acts any of them may be liable, including but not limited to costs for the
correction of damaged, defective or nonconforming Work, disposal and replacement
of materials and equipment incorrectly ordered or supplied, and making good
damage to property not forming part of the Work.
8.1.7. Any cost not specifically and expressly described in Article 7.
8.1.8. Costs which would cause the Guaranteed maximum Price, if any, to be
exceeded.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1. Cash discounts obtained on payments made by the Contractor shall accrue to
the Owner if (1) before making the payment, the Contractor included them in an
Application for Payment and received payment therefor from the Owner, or (2) the
Owner has deposited funds with the Contractor with which to make payments;
otherwise, cash discounts shall accrue to the Contractor. Trade discounts,
rebates, refunds and amounts received from sales of surplus materials and
equipment shall accrue to the Owner, and the Contractor shall make provisions so
that they can be secured.
9.2. Amounts which accrue to the Owner in accordance with the provisions of
Paragraph 9.1 shall be credited to the Owner as deduction from the Cost of the
Work.
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1. Those portions of the Work that the Contractor does riot customarily
perform with the Contractor's own personnel shall be performed under
subcontracts or by other appropriate agreements with the Contractor. The
Contractor shall obtain bids from Subcontractors and from suppliers of materials
or equipment fabricated especially for the Work which bids will be accepted. The
Owner may designate specific persons or entities from whom the Contractor shall
obtain bids; however, if a Guaranteed Maximum Price has been established, the
Owner may not prohibit the Contractor from obtaining bids from others. The
Contractor shall not be required to contract with anyone to whom the Contractor
has reasonable objection.
See Exhibit B, Paragraph 10.1.
10.2. If a Guaranteed Maximum Price has been established and a specific bidder
among those whose bids are delivered by the Contractor to the Architect (1) is
recommended to the Owner by the Contractor; (2) is qualified to perform that
portion of the Work; and (3) has submitted a bid which conforms to the
7
<PAGE>
requirements of the Contract Documents without reservations or exceptions, but
the Owner requires that another bid be accepted; then the Contractor may require
that a Change Order be issued to adjust the Guaranteed Maximum Price by the
difference between the bid of the person or entity recommended to the Owner by
the Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity designated by the Owner.
10.3. Subcontracts or other agreements shall conform to the payment provisions
of Paragraphs 12.7 and 12.8. and shall not be awarded on the basis of cost plus
a fee without the prior consent of the Owner.
See Exhibit B, Add Paragraph 10.4
ARTICLE 11
ACCOUNTING RECORDS
11.1. The Contractor shall keep hill and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract; the accounting and control systems shall be satisfactory to the Owner.
The Owner and the Owner's accountants shall be afforded 2CCCSS to the
Contr2ctor's records, books. correspondence, instructions, drawings. receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
this Contract, and the Contractor shall preserve these for a period of three
VC2rS after final p2vmcnE, or for such longer period as m2% be required b'- law.
ARTICLE 12
PROGRESS PAYMENTS
12.1. Based upon Applications for Payment submitted to the Architect by the
Contractor and Certificates for Payment issued by the Architect, the Owner shall
make progress payments on account of the Contract Sum to the Contractor as
provided below and elsewhere in the Contract Documents.
12.2. The period covered by each Application for Payment shall be one calendar
month ending on the last day of the month, or as follows:
12.3. Provided an Application for Payment is received by the Architect not later
than the tenth (10th) day of a month, the Owner shall make payment to the
Contractor not later than the thirtieth (30th) day of the same month. If an
Application for Payment is received by the Architect after the application date
fixed above, payment shall be made by the Owner not later than twenty (20) days
after the Architect receives the Application for payment.
12.4. With each Application for Payment the Contractor shall submit payrolls,
petty cash accounts, receipted invoices or invoices with check vouchers
attached, and any other evidence required by the Owner or Architect to
demonstrate that cash disbursements already made by the Contractor on account of
the Cost of the Work equal or exceed (1) progress payments already received by
the Contractor; less (2) that portion of those payments attributable to the
Contractor's Fee; plus (3) payrolls for the period covered by the present
Application for Payment; plus (4) retainage provided in Subparagraph 12.5.4, if
any, applicable to prior progress payments.
12.5. CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
8
<PAGE>
12.5.1. Each Application for Payment shall be based upon the most recent
schedule of values submitted by the Contractor in accordance with the Contract
Documents. The schedule of values shall allocate the entire Guaranteed Maximum
Price among the various portions of the Work, except that the Contractor's Fee
shall be shown as a single separate item. The schedule of values shall be
prepared in such form and supported by such data to substantiate its accuracy as
the Architect may require. This schedule, unless objected to by the Architect,
shall be used as a basis for reviewing the Contractor's Applications for
Payment.
12.5.2. Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the lesser of (1) the percentage of
that portion of the Work which has actually been completed or (2) the percentage
obtained by dividing (a) the expense which has actually been incurred by the
Contractor on account of that portion of the Work for which the Contractor has
made or intends to make actual payment prior to the next Application for Payment
by (b) the share of the Guaranteed Maximum Price allocated to that portion of
the Work in the schedule of values.
12.5.3. Subject to other provisions of the Contract Documents, the amount of
each progress payment shall be computed as follows:
12.5.3.1. Take that portion of the Guaranteed Maximum Price properly allocable
to completed Work as determined by multiplying the percentage completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to
that portion of the Work in the schedule of values. Pending final determination
of cost to the Owner of changes in the Work, amounts not in dispute may be
included as provided in Subparagraph 7.3.7 of the General Conditions, even
though the Guaranteed Maximum Price has not yet been adjusted by Change Order.
12.5.3.2. Add that portion of the Guaranteed Maximum Price properly allocable to
materials and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing.
12.5.3.3. Add the Contractor's Fee, less retainage of ten percent (10%). The
Contractor's Fee shall be computed upon the Cost of the Work described in the
two preceding Clauses at the rate stated in Paragraph 5.1 or, if the
Contractor's Fee is stated as a fixed sum in that Paragraph, shall be an amount
which bears the same ratio to that fixed-sum Fee as the Cost of the Work in the
two preceding Clauses bears to a reasonable estimate of the probable Cost of the
Work upon its completion.
12.5.3.4. Subtract the aggregate of previous Payments Made by the Owner.
12.5.3.5. Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment. or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.5.3.6. Subtract amounts, if any, for which the Architect has withheld or
nullified a Certificate for Payment as provided in Paragraph 9.5 of the General
Conditions.
12.5.4. Additional retainage, if any, shall be as follows:
(If it is intended to retain additional amounts from progress payments to the
Contractor beyond (1) the retainage from the Contractor's Fee provided in Clause
12.5.3.3(2) the retainage from Subcontractors provided in Paragraph 12.7 below;
and (3) the retainage, if any, provided by other provisions of the Contract,
insert provision for such additional retainage here. Such
9
<PAGE>
provision, if made, should also describe any arrangement for limiting or
reducing the amount retained after the Work reaches a certain state of
completion.).
NONE
12.5.4.1. Subtract amounts, if any, for which the Architect has withheld or
withdrawn a Certificate for Payment as provided in the Contract Documents.
12.5.5. Additional retainage, if any, shall be as follows:
NONE
12.6. Except with the Owner's prior approval, payments to Subcontractors
included in the Contractor's Applications for Payment shall not exceed an amount
for each Subcontractor calculated as follows:
12.6.1. Take that portion of the Subcontract Sum properly allocable to completed
Work as determined by multiplying the percentage completion of each portion of
the Subcontractor's Work by the share of the total Subcontract Sum allocated to
that portion in the Subcontractor's schedule of values, less retainage of TEN
percent (10%). Pending final determination of amounts to be paid to the
Subcontractor for changes in the Work, amounts not in dispute may be included as
provided in Subparagraph 7.3.7 of the General Conditions even though the
Subcontract Sum has not yet been adjusted by Change Order.
12.6.2. Add that portion of the Subcontract Sum properly allocable to materials
and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the Site at a location agreed upon in writing, less retainage of TEN
percent (10%).
12.6.3. Subtract the aggregate of previous payments made by the Contractor to
the Subcontractor.
12.6.4. Subtract amounts, if any, for which the Architect has withheld or
nullified a Certificate for payment by the Owner to the Contractor for reasons
which are the fault of the Subcontractor.
12.6.5. Add, upon Substantial Completion of the entire Work of the Contractor, a
sum sufficient to increase the total payments to the Subcontractor to One
Hundred percent( 100%) of the Subcontract Sum, less amounts, if any, for
incomplete Work and unsettled claims; and, if final completion of the entire
Work is thereafter materially delayed through no fault of the Subcontractor in
accordance with Subparagraph 9.10.3 of the General Conditions.
(if it is intended, prior to Substantial Completion of the entire Work of the
Contractor, to reduce or limit the retainage from Subcontractors resulting from
the percentages inserted in Subparagraphs 12.7.1 and 12/7.2 above, and this is
not explained elsewhere in the Contract Documents, insert here provisions for
such reduction or limitation.)
See Exhibit B. Add paragraphs 1.2.7.6, 12.7.7 and 12.71.8.
The Subcontract Sum is the total amount stipul2ted in the subcontract to be paid
by the Contractor to the Subcontractor for the Subcontractor's performance of
the subcontract.
12.7. Except with the Owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site.
12.8. In taking action on the Contractor's Applications for Payment, the
Architect shall be entitled to rely on the accuracy and completeness of the
information furnished by the Contractor and shall not be
10
<PAGE>
deemed to represent that the Architect has made a detailed examination, audit or
arithmetic verification of the documentation submitted in accordance with
Paragraph 12.4 or other supporting data: that the Architect has made exhaustive
or continuous on-site inspections or that the Architect has made examinations to
ascertain how or for what purposes the Contractor has used amounts previously
paid on account of the Contract. Such examinations, audits and verifications, if
required by the Owner, will be performed by the Owner's accountants acting in
the sole interest of the Owner.
ARTICLE 13
FINAL PAYMENT
13.1. Final payment shall be made by the Owner to the Contractor when (1) the
Contract has been fully performed by the contractor except for the contractor's
responsibility to correct defective or nonconforming Work, as provided in
Subparagraph 12.2.2 of the General Conditions, and to satisfy other
requirements, if any, which necessarily survive final payment: (2) a final
Application for Payment and a final accounting for the Cost of the Work have
been submitted by the Contractor and reviewed by the Owner's accountants; and
(3) a final Certificate for Payment has then been issued by the Architect; such
final payment shall be made by the Owner not more than 30 days after the
issuance of the Architect's final Certificate for Payment:
13.2. The amount of the final Payment shall be calculated as follows:
13.2.1. Take the sum of the Cost of the Work substantiated by the Contractor's
final accounting and the Contractor's Fee; but not more than the Guaranteed
Maximum Price, if any.
13.2.2. Subtract amounts, if any, for which the Architect withholds, in whole or
in part, a final Certificate for Payment as provided in Subparagraph 9.5.1 of
the General Conditions or other provisions of the Contract Documents.
13.2.3. Subtract the aggregate of previous Payments made by the Owner.
If the aggregate Of Previous payments made by the Owner exceeds the amount due
the Contractor, the Contractor shall reimburse the difference to the Owner.
13.3. The Owner's accountants will review and report in writing on the
Contractor's final Accounting within 30 days after delivery of the final
accounting to the Architect by the Contractor. Based upon such Cost of the Work
as the Owner's accountants report to be substantiated by the Contractor's final
accounting, and provided the other conditions of Paragraph 13.1 have been met,
the Architect will, within seven days after receipt of the written report of the
Owner's accountants, either issue to the Owner a final Certificate for Payment
with a copy to the Contractor, or notify the Contractor and Owner in writing of
the Architect's reasons for withholding a Certificate as provided in
Subparagraph 9.5.1 of the General Conditions. The time periods stated in this
Paragraph 13.3 supersede those stated in Subparagraph 9.4.1 of the General
Conditions.
13.4. If the Owner's accountants report the Cost of the Work as substantiated by
the Contractor's final accounting to be less than claimed by the Contractor, the
Contractor shall be entitled to demand arbitration of the disputed amount
without a further decision of the Architect. Such demand for arbitration shall
be made by the Contractor within 30 days after the Contractor's receipt of a
copy of the Architect's final Certificate for Payment; failure to demand
arbitration within this 30-day period shall result in the substantiated amount
reported by the Owner's accountants becoming binding on the
11
<PAGE>
Contractor. Pending a final resolution by arbitration. the Owner shall pay the
Contractor the amount certified in the Architect's final Certificate for
Payment.
13.5. If, subsequent to final payment and at the Owner's request, the Contractor
incurs costs described in Article 7 and not excluded by Article 8 to correct
defective or nonconforming Work, the Owner shall reimburse the Contractor such
costs and the Contractor's FCC applicable thereto on the same basis as if such
costs had been incurred prior to final payment, but not in excess of the
Guaranteed Maximum Price, if any. If the Contractor has participated in savings
as provided in Paragraph 5.2, the amount of such savings shall be recalculated
and appropriate credit given to the Owner in determining the net amount to be
paid by the Owner to the Contractor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1. Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Document. the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
14.2. Payments due and unpaid under the Contract shall bear interest from the
date Payment is due at the rate stated below, or in the absence thereof. at the
legal rate prevailing from time to time at the place where the Project is
located.
If the Owner fails to make timely payments, The Contractor shall receive
interest at the Prime Lending Rate plus three percent (3%) for all days the
payments are late. The Prime Rate will be that of the Norwest Bank of Denver as
it is published from time to time, at its current rate.
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal laces of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
14.3. Other provisions:
See Exhibit B, Add Paragraph 14.3.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1. The Contract may be terminated by the Contractor as provided in Article 14
of the General Conditions; however, the amount to be paid to the Contractor
under Subparagraph 14.1.2 of the General Conditions shall not exceed the amount
the Contractor would be entitled to receive under Paragraph 15.3 below, except
that the Contractor's Fee shall be calculated as if the Work had been fully
completed by the Contractor, including a reasonable estimate of the Cost of the
Work for Work not actually completed.
15.2. If a Guaranteed Maximum Price is established in Article 5, the Contract
may be terminated by the Owner for cause as provided in Article 14 of the
General Conditions; however, the amount, if any, to be paid to the Contractor
under Subparagraph 14.2.4 of the General Conditions shall not cause the
Guaranteed Maximum Price to be exceeded, nor shall it exceed the amount the
Contractor would be entitled to receive under Paragraph 15.3 below.
12
<PAGE>
15.3. If no Guaranteed Maximum Price is established in Article 5, the Contract
may be terminated by the Owner for cause provided in Article 14 of the General
Conditions; however, the Owner shall then pay the Contractor an amount
calculated as follows:
15.3.1. Take the Cost of the Work incurred by the Contractor to the date of
termination.
15.3.2. Add the Contractor's Fee computed upon the Cost of the Work to the date
of termination 21 the rate stated in Paragraph 5.1 or, if the Contractor's Fee
is stated as a fixed sum in that Paragraph, an amount which bears the same ratio
to that fixed-sum Fee as the Cost of the Work at the time of termination bears
to a reasonable estimate of the probable Cost of the Work upon its completion.
15.3.3. Subtract the aggregate of previous payments made by the Owner.
The Owner shall also pay the Contractor fair compensation, either by purchase or
rental at the election of the Owner, for any equipment owned by the Contractor
which the Owner elects to retain and which is not otherwise included in the Cost
of the Work under Subparagraph 15.3. 1. To the extent that the Owner elects to
take legal assignment of subcontracts and purchase orders (including rental
agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 15, execute and deliver all such papers and take all
such steps, including the legal assignment of such subcontracts and other
contractual rights of the Contractor. as the Owner may require for the purpose
of fully vesting in the Owner the rights and benefits of the Contractor under
such subcontracts or purchase orders.
15.4. The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions; in such case the Guaranteed Maximum Price, if any, shall be
increased as provided in Subparagraph 14.3.2 of the General Conditions except
that the term "cost of performance of the Contract" in that Subparagraph shall
be understood to mean the Cost of the Work and the term "profit" shall be
understood to mean the Contractor's Fee as described in Paragraphs 5.1 and 6.3
of this Agreement.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1. The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
16.1.1. The Agreement is this executed Standard Form of Agreement Between Owner
and Contractor. AIA Document A111, 198 Edition.
16.1.2. The General Conditions are the General Conditions of the Contract for
Construction, AIA Document A201, 198 Edition.
16.1.3. The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated ___________ and are as follows:
Document Title Pages
TO BE DETERMINED BY CHANGE ORDER.
16.1.4. The Specifications are those contained in the Project Manual dated as in
Paragraph 16.1.3. and are as follows:
13
<PAGE>
(Either list the Specifications here or refer to an exhibit attached to the
Agreement.)
Section Title Pages
TO BE DETERMINED BY CHANGE ORDER.
16.1.5. The Drawings are as follows, and are dated __________ unless a different
date is show below:
Number Title Date
Reference Exhibit A.
16.1.6. The addenda, if any, are as follows:
Number Date Pages
TO BE ADDED BY FUTURE CHANGE ORDER AS NEEDED.
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in this
Article 16.
16.1.7. Other Documents, if any, forming part of the Contract Documents are as
follows:
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, instructions to Bidders, same forms
and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only if intended to be
part of the contract Documents.)
Exhibit A - Drawing List
Exhibit B - Supplementary Conditions to AIA A111, Standard Form of Agreement
Between Owner and Contractor
Exhibit C - Supplementary conditions to the AIA A201 General Conditions
for the Agreement Between Owner and Contractor
Exhibit D - Contractor's Project Schedule
Exhibit E - Contractor's Project Budget
Exhibit F - Contractor's Qualifications to the Drawings and Specifications
Exhibit G - Small Tools Defined
Exhibit H - Contractor's Equipment Rental Rates
Exhibit I - Data for Basis of Weather Assumptions
Exhibit J - Contractor's Standard Subcontract Agreement Form; Purchase Order
Form; Interim and Final Lien Waivers.
14
<PAGE>
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
OWNER-RIVIERA BLACK HAWK, INC. CONTRACTOR - WEITZ-COHEN
CONSTRUCTION CO.
- ---------------------------------- -------------------------------------
(Signature) (Signature)
William L. Westerman, President Gary D. Meggison, Vice President
- ---------------------------------- -------------------------------------
(Printed name and title) (Printed name and title)
15
<PAGE>
EXHIBIT A
Drawings List
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 1 of 2
1. Preliminary/schematic architectural drawings prepared by Melick Associates,
Denver, Colorado.
A0.2 General Information Dated October 8, 1997
A1.1 Site/Development Plan "
A2.1 Parking Level 1 Floor Plan "
A2.2 Parking Level 2 Floor Plan "
A2.3 Parking Level 3 Floor Plan "
A2.4 Casino & Parking Level 4 Floor Plan "
A2.5 Parking Levels 5 & 7 Floor Plan "
A2.6 Upper & Parking Level 6 Floor Plan "
A2.7 Not Used "
A2.8 Not Used "
A2.9 Roof Plan "
A4.1 South Elevations "
A4.2 North Elevation "
A4.3 East & West Elevations "
A5.1 East-West Section "
A5.2 North-South Section Dated October 8, 1997
2. Preliminary/schematic structural drawings prepared by Monroe Newell
Consulting Engineers, Denver, Colorado
<TABLE>
<S> <C> <C>
Unnumbered Foundation Plan - Schematic Design Dated October 13, 1997
Unnumbered Foundation Plan & 2nd Level Framing Plan "
Unnumbered Valet Parking Level Framing Plan "
Unnumbered Parking Level 3 Framing Plan "
Unnumbered Casino Framing Plan Dated October 13, 1997
Unnumbered Casino Level Framing Plan - Steel (Revised) Dated October 20, 1997
Unnumbered Level 4 Framing Plan Dated October 13, 1997
Unnumbered Upper Framing Plan "
Unnumbered Parking Level 6 "
Unnumbered Upper & Parking Level 6 Framing Dated October 13, 1997
Unnumbered Upper Framing Plans - Steel (Revised) Rec.'d October 20, 1997
Unnumbered Roof Plan Dated October 13, 1997
</TABLE>
16
<PAGE>
EXHIBIT A
Drawings List
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 2 of 2
3. Preliminary/schematic drawings prepared by Martin/Martin Consulting
Engineers, Wheat Ridge, Colorado.
<TABLE>
<S> <C> <C>
C1.1 Main Street Site Plan Undated - Received October 20, 1997
C2.1 Main Street Overall Grading Plan "
C2.2 Main Street Grading Plan "
C2.3 Main Street Grading Plan "
C3.1 Main Street Overall Utility Plan "
C3.2 Main Suva Utility Plan "
C3.3 Main Street Utility Plan "
C4.1 Main Street Plan/Profile "
C4.2 Main Street Plan/Profile "
C5.1 Main Street Drainage Plans "
C5.2 Main Street - Erosion Control Plans Undated - Received October 20, 1997
</TABLE>
4. Soil Mitigation Plan, dated October 1997, prepared by Stewart Environmental
Consultants, Inc., Ft. Collins, Colorado.
Letter describing construction dewatering plan, dated October 22, 1997,
prepared by Groundwater Specialists, Boulder, Colorado.
6. Request for Proposal, dated August 19, 1997, prepared by Melick Associates,
Denver, Colorado.
7. The budget assumes that the project will be designed and built under the
1991 UBC.
17
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 1 of 9
These Supplementary Contract Terms modify, change, delete from, or add to those
terms set forth in the "Standard Form of Agreement Between Owner and Contractor,
AIA Document A111, Tenth Edition, 1987, and shall supersede such
Owner/Contractor Agreement to the extent inconsistent or in conflict therewith.
Where any Article, Paragraph, Subparagraph or Clause of the Owner/Contractor
Agreement is modified or deleted by these Supplementary Contract Terms, the
unaltered provisions of that Article, Paragraph, Subparagraph or Clause shall
remain in effect:
o Paragraph 2.2, add the following new paragraph:
"2.2 The Guaranteed maximum Price may be arrived at on the basis of the
Contractor preparing and submitting for the Owners approval certain value
engineering items. The Owner acknowledges that the value engineering
services provided by the Contractor are advisory in nature and are not
professional design services. Should incorporation of any value engineering
item into the drawings and specifications materially affect other aspects
of the work the Contractor will promptly notify the Owner in writing of the
impact and indicate if any adjustment in the Guaranteed Maximum Price or
further refinement of the drawings and specifications is anticipated.
"2.2.1 The Contractor agrees to provide consulting services as listed in
this Paragraph 2.2 to further the interests of the Owner by furnishing the
Contractor's skill and judgment in cooperation with, and in reliance upon,
the services of the Architect. The Contractor agrees to furnish business
administration and management services and to perform preconstruction
services in an expeditious and economical manner consistent with the
interests of the Owner."
"2.2.2 Provide cost evaluations of alternative materials and systems during
the construction period."
"2.2.3 Review designs during creation of construction drawings. Provide
recommendations with respect to minimizing the cost of the work on relative
feasibility of construction methods, availability of materials and labor,
time requirements for procurement, installation and construction, and
factors related to cost including, but not limited to, costs of alternative
designs or materials, preliminary budgets and possible economies."
"2.2.4 Provide for the Architects and the Owner's review and acceptance,
and monthly update, a project schedule that coordinates and integrates the
Contractor's services, the Architects services and the Owner's
responsibilities with the original construction schedule."
"2.2.5 Prepare a detailed cost breakdown of the Guaranteed Maximum Price
based on Design Development Documents prepared by the Architect. Update and
refine this cost breakdown periodically as the Architect prepares
Construction Documents."
18
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 2 of 9
"2.2.6 Review Construction Documents as they are being prepared and
recommend alternative solutions whenever design details affect construction
feasibility, or the design is likely to exceed the Project budget or
schedule. Make recommendations for corrective action"
"2.2.7 Advise on the method to be used for selecting Subcontractors and
awarding Subcontracts. Review the drawings and specifications and make
recommendations as required to provide that (1) the Work of Subcontractors
is coordinated, (2) the likelihood of jurisdictional disputes has been
minimized, and (3) proper coordination has been provided for phased
construction."
"2.2.8 Make recommendations for pre-qualification criteria for Subcontract
Bidders and develop Subcontract Bidders' interest in the Project. Establish
bidding schedules. Assist the Architect with the receipt of questions from
Subcontract Bidders, and with the issuance of Addenda."
"2.2.9 Assist in obtaining preconstruction building permits, approvals and
special permits."
"2.2.10 If requested, assist the Owner in selecting and retaining the
professional services of surveyors, special consultants and testing
laboratories. Coordinate their services."
o Paragraph 2.3, add the following new paragraph:
"The Work is clarified by Exhibit F, Contractor's Qualifications to the
Drawings and Specifications."
o Paragraph 4.2 is deleted and the following substituted:
"4.2 After the commencement date is fixed in a Notice to Proceed, the
Contractor shall prepare and issue within 10 days a construction schedule
for the Work. The schedule shall establish the time limits for the Work, to
be revised as required by the conditions of the Work and Project. The
Contractor shall achieve Substantial Completion of the entire Work not
later than (To be Determined by Change Order) calendar days from the actual
start of construction, subject to adjustments of this Contract Time as
provided in the Contract Documents. The data in Exhibit I, Weather Data,
shall be the basis for claims due to adverse weather."
o Paragraph 5.1 is deleted and the following substituted:
"5.1 The Owner shall pay the Contractor in current funds for the
Contractor's performance of the Contract the Contract Sum consisting of the
Cost of the Work as defined in Article 7 and a Lump Sum Fee of $805,610.
5.1.2 For any changes to the scope of work, a Fee of 3.4% will be charged
for the sum of the Cost of the Work plus General Conditions costs
chargeable for the revision. Deductive Change Orders will be credited only
the Cost of the Work, there shall be no change in Contractor's Fee or
General Conditions for deleted items."
19
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 3 of 9
o Subparagraphs 7.1.1.1, 7.1.1.2, 7.1.1.3 and 7.1.1.4 are deleted and the
following substituted:
"7.1.1.1 Wages plus fringe benefit charges of construction workers directly
employed by the Contractor to perform the construction of the Work at the
site or at off-site workshops and to make deliveries or pickups for the
Project."
"7.1.1.2 The Contractor's supervisory and administrative personnel at the
following charging rates, no matter where stationed, with adjustments for
staff as assigned to the project:
Construction Manager $85.00/hour
Project Manager $65.00/hour
Chief Estimator $53.00/hour
Estimator $41.64/hour
Project Engineer #1 $43.00/hour
Project Engineer #2 $38.00/hour
Assistant Project Engineer $19.84/hour
Project Superintendent $2,200/week
Assistant Superintendent $1,310/week
Project Accountant $23.00/hour
Project Secretary/Coordinator $23.00/hour
Jobsite Secretary $15.00/hour
Safety Director Included in Contractor's Fee"
"7.1.1.3 Labor burden of 39% for FICA taxes, Workers Compensation Insurance
and unemployment contributions shall be added to costs in 7.1.1.1. Burden
has been included in the charging rates in Subparagraph 7.1.1.2."
o Subparagraph 7.1.2, is deleted and the following substituted:
"7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of the subcontracts and the costs of subcontractor bonds
required by the Owner or Contractor. For the purposes of this Subparagraph,
Subcontractors and subcontracts shall include engineering consultants
engaged by the Contractor or Subcontractor."
o Subparagraph 7.1.4.2, is revised by deleting the last sentence and
inserting in lieu thereof, the following:
"Rental charges for equipment owned by the Contractor shall be as indicated
in Exhibit H, Contractor's Equipment Rental Rates The cost for providing
Small Tools, as defined in Exhibit G, Small Tools Defined, are included in
the Contractor's hourly labor rate for any self performed work."
20
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 4 of 9
o Subparagraph 7.1.4.4, is deleted and the following substituted:
"The costs of telegrams, fax, and long-distance calls; postage, delivery
and express charges; telephone service at the site; printing and copy
charges; petty cash expenses at the site; data processing and computer
usage charges at $1.70 per thousand dollars of the Guaranteed Maximum
Price; photography; computerized scheduling charges; office furniture,
equipment and supplies for the site office; and other similar expenses
related to the Work."
o Subparagraph 7.1.5.1, is deleted and the following substituted:
"7.1.5.1 That portion directly attributable to this Contract of premiums
for insurance and bonds. The Owner and Contractor agree to the following
stipulated rates of costs reimbursement: (i) Contractor's commercial
general liability insurance at the rate of $6.00 per thousand dollars of
the Guaranteed Maximum Price plus the cost of O.C.P. coverage, if required;
(ii) Contractor's Subguard insurance at the rate of $7.50 per thousand
dollars of subcontract sum; and (iii) Contractor's other insurance or
payment bond and performance bond, if required, at actual premium cost.
o Subparagraphs 7.1.6.2, and 7.1.6.3, add the following new subparagraphs:
"7.1.6.2 Utility fees, including but not limited to water, steam, gas, oil,
electricity, snow removal, weather protection, and temporary toilets;
protection and altering of public utilities; protection and repairs of
existing or adjoining property; rental property for storage of materials
and equipment or parking."
"7.1.6.3 That portion of Contractor's AGC dues based on the Contract Sum of
this Project."
o Paragraph 7.2.2, insert "employees, agents, or subcontractors..." in the
third sentence after "...Contractor's foreman..." and before "...engineers
or superintendents..."
o Paragraph 10.1, delete the last eight words of the second sentence, delete
third sentence and add:
"The Contractor shall review bids and proposed subcontract awards and
amendments in excess of $10,000 with the Owner prior to award. Additional
subcontracts (below $10,000) will also be reviewed if required by Owner's
lenders."
21
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 5 of 9
o Paragraph 10.4, add the following new paragraph:
"10.4 Major categories of trade work commonly subcontracted in the location
of the Project shall only be performed by Contractor's own personnel if
approved in advance in writing by the Owner. This paragraph shall not
prevent the Contractor from performing incidental trade work estimated at
less than $10,000 that due to the size or scope of the trade work does not
represent an attractive package for competitive subcontract bidding and
general conditions work with his own personnel."
o Paragraph 12.4, is revised by adding the following after the last sentence:
"The Contractor will present interim lien waivers from subcontractors and
major material suppliers as condition for payment. Samples of Interim Lien
Waivers, Final Lien Waivers and Contractors standard Purchase Order and
Subcontract forms have been included in Exhibit `J'."
o Subparagraph 12.7.6, add the following new subparagraph:
"12.7.6 Notwithstanding Paragraphs 12.7.1 and 12.7.2 above, at such times
as each portion of the Work as set forth in the schedule of values has been
fifty percent (50%) completed to the mutual satisfaction of Owner and
Contractor, Owner may cease further retainage from the progress payments
with respect to such portion of the Work."
o Subparagraph 12.7.7, add the following new subparagraph:
"12.7.7 Upon mutual agreement by Owner and Contractor, payment in full may
be made to those subcontractors whose Work is fully completed during the
early stages of the Project, or any retained amounts reduced with respect
to subcontractors at such times as the parties may mutually agree.
Agreement to any such reduction in retained amounts will not constitute a
waiver of or otherwise prejudice the Owner's right to subsequently
reinstate full retainage, as to that subcontractor, should circumstances
justify such action in the Owner's sole judgment."
o Paragraph 12.7.8, add the following new paragraph:
"12.7.8 The Contractor's Fee; general conditions costs; insurance charges,
bond costs, if any; taxes and costs of permits, fees, testing, inspections
and similar items, if paid by the Contractor, shall not be subject to
retainage."
22
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 6 of 9
o Paragraph 14.3, add the following new paragraphs:
"14.3.1 Owner and Architect are to be listed as `Additional Insured' for
all liability insurance policies purchased by the Contractor. Limits of
liability of insurance required to be carried by the Contractor shall be:"
"14.3.1.1 Workers Compensation: statutory limits, including employer's
liability limits $1,000,000 each accident, $1,000,000 disease policy limit,
$1,000,000 disease each employee."
"14.3.1.2 Comprehensive Public Liability including operations, premises,
products, completed operations, premises, products, completed operations,
independent contractors, contractual, personal injury, and broad form
property damage endorsement: limits $2,000,000 bodily injury and property
damage combined."
"14.3.1.3 Automobile Liability: including owned, hired and non-owned,
limits $1,000,000 bodily injury and property damage combined."
"14.3.1.4 Excess Liability Umbrella policy in the amount normally carried
by the Contractor, but in any event not less than $16,000,000 to cover all
items required to be covered under Subparagraphs 14.3.1.2 and 14.3.1.3."
"14.3.1.5 Thirty days written cancellation notice stating a firm 30 days'
written notice will be furnished to the holder of the certificate."
"14.3.1.6 XCU coverage (required from Subcontractors who have demolition,
excavation, shoring, underpinning, connection with existing utilities or
work in or adjacent to any buildings included in the scope of the Work) to
provide protection for explosion, collapse and underground damage
exposure."
"14.3.2 The Contractor will obtain for the duration of the construction
"builder's risk/all risk" insurance for the Work, with deductibles of
$1,000 for each occurrence, $25,000 for losses due to earthquakes or
$25,000 for losses due to flood. Any deductible amount paid by the
Contractor will be considered a Cost of the Work." The "builder's risk/all
risk" policy is to be presented to the Owner for approval."
"14.3.3 The Owner hereby designates John `Chip' Franzoi as its
representative, with authority to approve Modifications and other changes
in the Work. Such representative shall be available when needed during
working hours at the site of the Work and, in all cases, such
representative's signature shall be final and binding on the Owner."
"14.3.4 Notices required or desired to be made under this Agreement shall,
if mailed, be mailed to the party at the address set forth as follows:
23
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 7 of 9
Riviera Hotel and Casino Weitz-Cohen Construction Company
2901 Las Vegas Boulevard South 899 Logan Street, Suite 600
Las Vegas, NV 89109 Denver, CO 80203
Attention: John `Chip' Franzoi Attention: Gary Meggison
Vice President Construction Vice President
"14.3.5 The Owner and Contractor recognize that, in performing the Work
covered by the Contract Documents, property of the Owner and of the Owner's
separate contractors, including the Work, may be damaged or destroyed. The
loss in such case may or may not be within the coverage or may exceed the
limits of liability under any insurance carried by the Owner or others. It
is agreed by the parties hereto that notwithstanding anything contained in
the Contract Documents to the contrary, the Owner and the Owner's separate
contractors assume all risk of loss or damage to their interest in any and
all of their property and the use and occupancy thereof and hereby release
the Contractor and its agents, employees and Subcontractors ("Released
Parties") from all claims on account of loss or damage thereto, except to
the extent negligently or willfully caused by such released parties."
"14.3.6.1 The following scopes of work ("Design/Build Work") include design
services to be performed as part of this Agreement:
a) Mechanical Systems/HVAC, Plumbing and Temperature Controls
Design services to be performed by Southland Industries, Inc. will be
a Cost of the Work included in the Contract.
b) Fire Protection
Design services to be performed by Frontier Fire Protection, Inc. will
be a Cost of the Work included in the Contract.
c) Electrical Systems/Power, Lighting, Fire Detection and Miscellaneous
Systems
Design services to be performed by Riviera Electric, Inc. will be a
Cost of the Work included in the Contract.
d) Dewatering system and water treatment facility
Design services to be performed by IT Corporation, Inc. will be a Cost
of the Work included in the Contact.
24
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 8 of 9
e) Earth retention and shoring system
Design services to be performed by Coggins and Son, Inc. will be a
Cost of the Work included in the Contract.
14.3.6.2 The Design/Build Work subcontracts shall include:
a) The Subcontractor shall furnish a certificate of insurance to Owner,
which evidences the following minimal professional errors and omission
(or comparable) coverages:
Single Occurrence $1,000,000
Aggregate Limit $2,000,000
b) The Subcontractor shall agree to defend, indemnify and hold Owner
harmless from and against any design errors or omissions of the
Subcontractor and shall grant the Owner the right to pursue such
claims directly against the Subcontractor.
14.3.6.3 The Contractor agrees to administer performance of such
Design/Build Work design services, including (i) administration of the
Design/Build Work subcontracts in the normal course including payment
administration, and (ii) coordination of the Design/Build Work contract
documents prepared by its subcontractors, with the design services of the
Owner's design professionals, including site, architectural, structural,
civil and geotechnical.
14.3.6.4 Owner and Contractor agree to look solely to the Design/Build Work
subcontractors for any design errors or omissions arising out of their
Design/Build Work, and hereby release each other (but not the
subcontractor) therefrom.
14.3.7 The parties acknowledge that Owner may obtain financing for all or a
portion of the amounts payable under this Contract, and that the lender
providing such financing (the "Lender") may seek certain protections to
assure its ability to complete the Work and preserve the value of the
property upon which the Project is located in the event of a default by
Owner. The parties agree to negotiate modifications to this contract in
good faith as may be necessary to provide reasonable Lender protection,
including but not limited to: a) the assignment of this Contract and
subcontracts to Lender and assurances that (contingent upon the continued
performance by Lender under such contracts) Contractor and subcontractors
will continue to perform the Work following default by Owner and acceptance
of the contracts by Lender; b) agreements that Lender or its agents or
consultants may inspect the Work at any reasonable time upon the same terms
as can the Owner and/or Architect under the Contract Documents; c)
providing periodic reports to Lender regarding the percentage completion of
the Work, budgetary matters, payments to subcontractors or materialmen and
similar items; d) making Lender an additional insured under all policies of
insurance maintained by Contractor; or e) reasonable limitations upon the
recourse of Contractor or subcontractors against Lender for defaults by
Owner under the Contract Documents."
25
<PAGE>
EXHIBIT B
Supplementary Contract Terms to the AIA Document A111 Agreement
Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction Co.
for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 9 of 9
END OF SUPPLEMENTARY CONTRACT TERMS
26
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 1 of 5
These Supplementary General Conditions modify, change, delete from or add to the
"General Conditions of the Contract For Construction," AIA Document A201,
Fourteenth Edition, 1987, and shall supersede the General Conditions to the
extent inconsistent or in conflict therewith. Where any Article of the General
Conditions is modified, or any Paragraph, Subparagraph or Clause thereof is
modified or deleted by these Supplementary General Conditions, the unaltered
provisions of that Article, Paragraph, Subparagraph or Clause shall remain in
effect:
o Subparagraph 2.4.1, is revised by changing "seven" in lines 3, 6 and 8 to
"three":
o Subparagraph 3.10.3, delete in its entirety.
o Subparagraph 4.2.1, is revised by deleting Item 1, `during construction"
and Item 2 `until final payment is due'.
o Subparagraph 4.5.8, add as a new subparagraph:
"4.5.8 Procedural Issues. The arbitration shall be held in Denver,
Colorado. Each party shall bear its own direct costs, including attorney's
fees, but general costs of the arbitration shall be shared by both parties
equally; provided, the arbitrator may choose to award the general costs of
arbitration against the losing party if the arbitrator determines that the
proposed resolution urged by the losing party was not reasonable.
Notwithstanding anything in the Contract Documents to the contrary, each
party shall be required to submit its proposed resolutions of each Claim to
the arbitrator, and the arbitrator shall be required to render a decision
adopting in full either one or the other of such proposed resolutions, and
no compromises or alternative resolutions shall be allowed or considered by
the arbitrator. Each party shall be entitled to full discovery and the
process, proceedings, practices and procedures provided for under the
Federal Rules of Civil Procedure in effect at the time notice of demand for
arbitration is filed. Either party may request the selection of up to 3
arbitrators."
27
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 2 of 5
o Subparagraph 4.5.9, add as a new subparagraph:
"4.5.9 Limitations on Arbitration. Notwithstanding anything in the Contract
Documents to the contrary, if the (1) Claims involve a proposed, net
aggregate payment or reimbursement in an amount greater than $500,000, or
(2) the Claims involve an interested person or entity (including the
Architect) who has not consented to be joined in the arbitration, then
arbitration shall apply only if both parties consent to arbitration. For
this purpose an "interested person or entity" means any person or entity if
(1) in such interested person or entity's absence, complete relief cannot
be accorded among those already parties, or (2) the interested person or
entity is so situated that the disposition of the Claim without the joinder
of such interested person or entity may leave any of those already parties
subject to a substantial risk of incurring double, multiple or otherwise
inconsistent obligations. If both parties do not consent to arbitration for
such Claim as described herein, then all requirements, conditions, and
conditions precedent pertaining to arbitration shall be deemed
appropriately adjusted to permit either party to pursue such Claims as
otherwise permitted by the Contract Documents or by law."
o Subparagraph 5.2.1, change "promptly" to "within 10 days" in lines 7 and
11.
o Subparagraph 7.3.4, add at the end.
"Notwithstanding the foregoing, if the evidence required by Subparagraph
2.2.1 indicates the Owner will not have sufficient funds to make timely
payment for the Construction Change Directive, the Contractor shall not be
required to proceed with the change in work."
o Subparagraph 8.2.2, delete the third sentence.
o Subparagraph 8.3.1, add at the end:
"Any delay caused by lack of permit or governmental approval, beyond
control of Contractor, shall be grounds for a time extension."
o Paragraph 9.3.1, is revised by adding "and Owner after "Architect" in the
second line.
o Subparagraph 9.3.1.2, insert "within thirty days" in the second sentence
after "...Contractor does not intend to pay..."
28
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 3 of 5
o Paragraph 9.3.3, is revised by adding the following sentence:
To the extent that the Owner has paid to Contractor all amounts then due and
payable from Owner to Contractor under the Contract Documents, Contractor shall
save and keep Owner, Owner's loan proceeds and Owner's property free from all
mechanics' liens and materialmen's liens and all other liens and claims, legal
or equitable, arising out of the Work performed by Contractor, its employees or
subcontractors on all tiers. If Owner has paid to Contractor amounts due on
account of work performed or materials provided by a claimant, Contractor shall
remove and discharge any lien, or obtain the release of any Notice to Disburser,
filed by such claimant within thirty days after the same was filed. Samples of
Interim Lien Waivers, Final Lien Waivers and Contractors standard Purchase Order
and Subcontract forms have been included in Exhibit `J'."
o Paragraph 9.6.1, is revised by adding the following at the end of the
Section:
"Notwithstanding the foregoing, if the Contractor is in breach under the
Contract Documents on the date on which the Owner receives the Certificate of
Payment from the Architect, or if the Owner otherwise disputes any amount shown
as due on the Certificate of Payment, the Owner may withhold from the payment
certified by the Architect the amount that the Owner reasonably deems necessary
to cure the Contractor's breach or the amount otherwise disputed, on the
condition that the Owner delivers written notice of the basis for such
withholding and pays to the Contractor all undisputed amounts shown as due on
the Certificate of Payment within the time provided in the Contract Documents
for the payment of progress payments to the Contractor. Except as provided in
Section 14.2.3, any amount so withheld shall promptly be paid over to Contractor
upon the cure of the breach or resolution of the dispute. Notwithstanding any
provision hereof to the contrary, Owner's withholding of payment to the
Contractor pursuant to the terms of this Section shall not be considered the
failure of Owner to pay any amounts certified for payment by the Architect or
constitute a default by Owner under the terms of this Contract"
o Subparagraph 9.7.1, is revised by changing "seven" in lines 2, 4 and 7 to
"three" and change line 6 as follows:
"tified by the Architect or awarded by arbitration, or if the Owner does not
promptly furnish evidence as required by Subparagraph 2.2.1, then the Con-."
o Subparagraphs 10.1.2 through 10.1.6, delete in its entirety and substitute
the following:
10.1.2 If reasonable precautions will be inadequate to prevent foreseeable
bodily injury or death to persons resulting from a material or substance,
including but not limited to asbestos or polychlorinated biphenyl (PCB),
encountered on the site by the Contractor, the Contractor shall, upon
recognizing the condition, immediately stop Work in the affected area and report
the condition to the Owner and Architect in writing.
29
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 4 of 5
10.1.3 The Owner shall obtain the services of a licensed laboratory to verify
the presence or absence of the material or substance reported by the Contractor
and, in the event such material or substance is found to be present, to verify
that it has been properly remediated. Unless otherwise required by the Contract
Documents, the Owner shall furnish in writing to the Contractor and Architect
the names and qualifications of persons or entities who are to perform tests
verifying the presence or absence of such material or substance or who are to
perform the task of removal or safe containment of such material or substance.
The Contractor and the Architect will promptly reply to the Owner in writing
stating whether or not either has reasonable objection to the persons or
entities proposed by the Owner. If either the Contractor or Architect has an
objection to a person or entity proposed by the Owner, the Owner shall propose
another whom the Contractor and the Architect have no reasonable objection. When
the material or substance has been reduced to acceptable limits, as determined
by local, state or federal regulations and by Owner's consultant, Work in the
affected area shall resume upon written agreement of the Owner and Contractor.
The Contract Time shall be extended appropriately and the Contract Sum shall be
increased in the amount of the Contractor's reasonable additional costs
shut-down, delay and start-up, which adjustments shall be accomplished as
provided in Article 7.
10.1.4 To the fullest extent permitted by law, the Owner shall indemnify and
hold harmless the Contractor, Subcontractors, Architect, Architect's consultants
and agents and employees of any of them from and against claims, damages, losses
and expenses, including but not limited to attorneys' fees, arising out of or
resulting from performance of the Work in the affected area if in fact the
material or substance presents the risk of bodily injury or death as described
in Subparagraph 10.1.2 and has not been properly remediated, provided that such
claim, damage, loss or expense is attributable to bodily injury, sickness,
disease or death, or to injury to or destruction of tangible property (other
than the Work itself) and provided that such damage, loss or expense is not due
to the sole negligence of a party seeking indemnity.
10.1.5 The Owner shall not be responsible under Paragraph 10.1.4 for materials
and substances brought to the site by the Contractor unless such materials or
substances were required by the Contract Documents.
10.1.6 If, without negligence or wilful misconduct on the part of the
Contractor, the Contractor is held liable for the cost of remediation of a
hazardous material or substance solely by reason of performing Work as required
by the Contract Documents, the Owner shall indemnify the Contractor for all cost
and expense thereby incurred. The obligations of the Owner as set forth in this
paragraph shall survive the termination of the Contract."
o Subparagraph 13.2.1, add at the end:
"Notwithstanding the foregoing, nothing contained in the this Section 13.2.1
shall prohibit or restrict Owner from assigning all or part of its interest
and/or rights under the Contract for the purpose of obtaining project financing
from a bank or other financing source and, accordingly, Contractor's consent
shall not be required for same."
30
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29,1997
Page 5 of 5
o Subparagraph 13.7, delete in its entirety.
o Subparagraph 14.2.1.1, is revised by deleting "persistently or
repeatedly..." and replacing with "on more than one occasion...":
o Subparagraph 14.2.1.3, is revised by deleting "persistently..." and
replacing with "on more than one occasion
o Subparagraph 14.3.4, add as a new subparagraph:
"14.3.4 The Owner may, at its option, terminate this Contract in whole or
abandon a part of the project by written notice thereof to the Contractor at any
time. Upon any such termination, Contractor agrees to waive any claims for
damages, including loss of anticipated profits, on account thereof, and as sole
right and remedy of Contractor, Owner shall pay Contractor in accordance with
(c) below.
The Provisions of the Contract, which by their nature survive final acceptance
of the Work, shall remain in full force and effect after termination to the
extent provided in such provisions.
a) Upon receipt of such notice, Contractor shall, unless the notice directs
otherwise, immediately discontinue the Work on that date and to the extent
specified in the notice; place no further orders or subcontracts for materials,
equipment, services, or facilities, except as may be necessary for completion
for such portion of the Work as is not discontinued; promptly make every
reasonable effort to procure cancellation upon terms satisfactory to Owner of
all orders and subcontracts to the extent they relate to the performance of the
discontinued portion of the Work and shall thereafter do only such work already
in progress and to protect materials, plants and equipment on the Site or in
transit thereto.
b) Upon such termination, the obligation of the Contract shall continue as to
portions of the Work already performed and as to bona fide obligations assumed
by Contractor prior to date of termination.
c) Upon termination, Contractor shall be entitled to be paid the full cost of
all Work property done by the Contractor to the date of termination not
previously paid for, less sums already received by Contractor on account of the
portion of the Work performed. If at the date of such termination Contractor has
property prepared or fabricated off the Site any goods for subsequent
incorporation in the Work, and if Contractor delivers such goods to the Site or
to such other place as the Owner shall reasonably direct, then Contractor shall
be paid for such goods or materials. Contractor shall also be paid a prorated
portion of the Contractor's Fee based upon percentage completion of the Work as
of the date of termination, minus prior payments to Contractor.
END OF SUPPLEMENTARY GENERAL CONDITIONS
31
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29, 1997
Page 1 of 4
These Supplementary General Conditions modify, change, delete from or add to the
"General Conditions of the Contract For Construction," AIA Document A201,
Fourteenth Edition, 1987, and shall supersede the General Conditions to the
extent inconsistent or in conflict therewith. Where any Article of the General
Conditions is modified, or any Paragraph, Subparagraph or Clause thereof is
modified or deleted by these Supplementary General Conditions, the unaltered
provisions of that Article, Paragraph, Subparagraph or Clause shall remain in
effect:
o Subparagraph 2.2.1, add at the end:
"This contract is not binding on the Contractor until evidence of financial
arrangements satisfactory to the Contractor is delivered to the Contractor."
o Subparagraph 3.2.1, delete lines 7-15, beginning in line 7 after the term
"Contract Documents."
o Subparagraph 3.10.3, delete in its entirety.
o Subparagraph 4.5.8, add as a new subparagraph:
"4.5.8 Procedural Issues. The arbitration shall be held in Denver, Colorado.
Each party shall bear its own direct costs, including attorney's fees, but
general costs of the arbitration shall be shared by both parties equally;
provided, the arbitrator may choose to award the general costs of arbitration
against. the losing party if the arbitrator determines that the proposed
resolution urged by the losing party was not reasonable. Notwithstanding
anything in the Contract Documents to the contrary, each party shall be required
to submit its proposed resolutions of each Claim to the arbitrator, and the
arbitrator shall be required to render a decision adopting in full either one or
the other of such proposed resolutions, and no compromises or alternative
resolutions shall be allowed or considered by the arbitrator. Each party shall
be entitled to full discovery and the process, proceedings, practices and
procedures provided for under the Federal Rules of Civil Procedure in effect at
the time notice of demand for arbitration is filed. Either party may request the
selection of up to 3 arbitrators."
32
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29, 1997
Page 2 of 4
o Subparagraph 4.5.9, add as a new subparagraph:
"4.5.9 Limitations on Arbitration. Notwithstanding anything in the Contract
Documents to the contrary, if the (1) Claims involve a proposed, net aggregate
payment or reimbursement in an amount greater than $500,000, or (2) the Claims
involve an interested person or entity (including the Architect) who has not
consented to be joined in the arbitration, then arbitration shall apply only if
both parties consent to arbitration. For this purpose an "interested person or
entity" means any person or entity if (1) in such interested person or entity's
absence, complete relief cannot be accorded among those already parties, or (2)
the interested person or entity is so situated that the disposition of the Claim
without the joinder of such interested person or entity may leave any of those
already parties subject to a substantial risk of incurring double, multiple or
otherwise inconsistent obligations. If both parties do not consent to
arbitration for such Claims as described herein, then all requirements,
conditions, and conditions precedent pertaining to arbitration shall be deemed
appropriately adjusted to permit either party to pursue such Claims as otherwise
permitted by the Contract Documents or by law."
o Subparagraph 5.2.1, change "promptly" to "within 10 days" in lines 7 and
11.
o Subparagraph 7.3.4, add at the end:
"Notwithstanding the foregoing, if the evidence required by Subparagraph 2.2.1
indicates the Owner will not have sufficient funds to make timely payment for
the Construction Change Directive, the Contractor shall not be required to
proceed with the change in work."
o Subparagraph 8.2.2, delete the third sentence.
o Subparagraph 8.3.1, add at the end:
"Any delay caused by lack of permit or governmental approval shall be grounds
for a time extension."
o Subparagraph 9.3.1.2, delete in its entirety.
o Subparagraph 9.7.1, is revised by changing "seven" in lines 2, 4 and 7 to
"three" and change line 6 as follows:
"tified by the Architect or awarded by arbitration, or if the Owner does not
promptly furnish evidence as required by Subparagraph 2.2.1, then the Con-."
33
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29, 1997
Page 3 of 4
o Subparagraphs 10.1.2 through 10.1.4, delete in its entirety and substitute
the following:
10.1.2 If reasonable precautions will be inadequate to prevent foreseeable
bodily injury or death to persons resulting from a material or substance,
including but not limited to asbestos or polychlorinated biphenyl (PCB),
encountered on the site by the Contractor, the Contractor shall, upon
recognizing the condition, immediately stop Work in the affected area and report
the condition to the Owner and Architect in writing.
10.1.3 The Owner shall obtain the services of a licensed laboratory to verify
the presence or absence of the material or substance reported by the Contractor
and, in the event such material or substance is found to be present, to verify
that it has been rendered harmless. Unless otherwise required by the Contract
Documents, the Owner shall furnish into the Contractor and Architect the names
and qualifications of persons or entities who are to performing tests verifying
the presence or absence of such material or substance or who are to perform the
task of removal or safe, containment material or substance. The Contractor and
the Architect will promptly reply to the Owner in writing stating whether or not
either has reasonable objection to the persons or entities proposed by the
Owner. If either the Contract or Architect has an objection to a person or
entity proposed by the Owner, the Owner shall propose another whom the
Contractor and the Architect have no reasonable objection. When the material or
substance has been rendered harmless, Work in the affected area shall resume
upon written agreement of the Owner and Contractor. The Contract Time shall be
extended appropriately and the Contract Sum shall be increased in the amount of
the Contractor's reasonable additional costs of shut-down, delay and start-up,
which adjustments shall be accomplished as provided in Article 7.
10.1.4 To the fullest extent permitted by law, the Owner shall indemnify and
hold harmless the Contractor, Subcontractors, Architect, Architect's consultants
and agents and employees of any of them from and against claims, damages, losses
and expenses, including but not limited to attorneys' fees, arising out of or
resulting from performance of the Work in the affected area if in fact the
material or substance presents the risk of bodily injury or death as described
in Subparagraph 10.1.2 and has not been rendered harmless, provided that such
claim, damage, loss or expense is attributable to bodily injury, sickness,
disease or death, or to injury to or destruction of tangible property (other
than the Work itself) and provided that such damage, loss or expense is not due
to the sole negligence of a party seeking indemnity.
10.1.5 The Owner shall not be responsible under Paragraph 10.1.4 for materials
and substances brought to the site by the Contractor unless such materials or
substances were required by the Contract Documents.
10.1.6 If, without negligence on the part of the Contractor, the Contractor is
held liable for the cost of remediation of a hazardous material or substance
solely by reason of performing Work as required by the Contract Documents, the
Owner shall indemnify the Contractor for all cost and expense thereby incurred.
The obligations of the Owner as set forth in this paragraph shall survive the
termination of the Contract."
34
<PAGE>
EXHIBIT C
Supplementary Conditions to the AIA Document A201 General Conditions
for the Agreement Between Riviera Black Hawk, Inc. and Weitz-Cohen Construction
Co. for the Riviera Black Hawk Casino project, Black Hawk, Colorado
Dated: December 29, 1997
Page 4 of 4
o Subparagraph 14.1.1, change line 5 as follows:
"of the Work under contract with the Contractor, or for any of the..."
END OF SUPPLEMENTARY GENERAL CONDITIONS
35
<PAGE>
EXHIBIT D
Contractor's Project Schedule
for the Riviera Black Hawk Casino Project, Black Hawk, Colorado
Dated: December 29, 1997
Page 1 of 1
To be added by change order. Reference Exhibit "B", Paragraph 4.2 for procedures
establishing the commencement date and establishing a construction schedule for
the Work.
36
<PAGE>
EXHIBIT E
Contractor's Project Schedule
for the Riviera Black Hawk Casino Project, Black Hawk, Colorado
Dated: December 29, 1997
Page 1 of 1
The Contractor's Project Budget of $24,500,000 has been established by the two
following documents:
Document E-1
o Weitz-Cohen `Schematic Estimate Summary', two pages and Weitz-Cohen
`Detailed Schematic Estimate', 19 pages, each dated October 28, 1997.
o Weitz-Cohen `Schematic Design Phase: Outline Specifications', 110 pages,
dated October 28, 1997
Document E-2
Weitz-Cohen `Value Engineering Options, 8 pages, dated December 29, 1997
37
September 24, 1999
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, CO 80422
Ladies and Gentlemen:
As counsel to Riviera Black Hawk, Inc., a Colorado corporation (the
"Company"), in connection with the issuance of $45,000,000 aggregate principal
amount of 13% First Mortgage Notes due 2005 With Contingent Interest of the
Company, it it our opinion that the discussion in the Form S-4 to which this
opinion is filed as an exchibit (the "Registration Statement") under the heading
"United States Federal Income Tax Considerations" is a fair and accurate summary
of the matters therein discussed.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. By giving the foregoing consent, we do not admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Dechert Price & Rhoads
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-81613 of Riviera Black Hawk, Inc. of our report dated February 19, 1999,
(which report expresses an unqualified opinion and includes an explanatory
paragraph referring to Riviera Black Hawk, Inc.'s' status as a development stage
company) appearing in the Prospectus, which is a part of such Registration
Statement, and to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
September 24, 1999
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement No. 333-81613 on Form S-4 of Riviera Black Hawk, Inc. of
our report dated February 19, 1999, appearing in the Annual Report on Form 10-K
of Riviera Holdings Corporation for the year ended December 31, 1998, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
such Registration Statement.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
September 24, 1999
September 20, 1999
Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, NV 89109
RE: Riviera Holdings Corporation
13% First Mortgage Notes due 2005
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-4, Registration No.
333-81613, together with the amendments thereto (the "Registration Statement")
filed by Riviera Holdings Corporation, and the additional registrants specified
in Registration Statement.
We hereby consent to the use of my name and to being named as experts under the
captions "Risk Factors - Gaming licenses, permits and approvals", "Legislative
Issues" and "State gaming tax issues" and "Gaming and Liquor Regulatory Matters"
pertaining to matters of law and legal conclusions concerning Colorado gaming
laws in the prospectus which is included in the Registration Statement.
Very truly yours,
HOLME ROBERTS & OWEN L.L.P.
By: /s/Thomas A. Richardson, Partner
---------------------------------------
Thomas A. Richardson, Partner
September 22, 1999
Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, NV 89109
RE: Riviera Holdings Corporation
13% First Mortgage Notes due 2005
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-4,
Registration No. 333-81613, together with the amendments thereto (the
"Registration Statement") filed by Riviera Holdings Corporation, and the
additional registrants specified in Registration Statement.
I hereby consent to the use of my name and to being named as an expert
under the captions "Risk Factors - Gaming licenses, permits and approvals",
"Legislative Issues" and "State gaming tax issues" and "Gaming and Liquor
Regulatory Matters" pertaining to matters of law and legal conclusions
concerning Colorado gaming laws in the prospectus which is included in the
Registration Statement.
Very truly yours,
Edward J. McGrath
Verner, Lipfert, Bernhard, McPherson & Hand
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _____, 1999,
UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF EXISTING NOTES MAY
BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE EXPIRATION DATE
RIVIERA BLACK HAWK, INC.
LETTER OF TRANSMITTAL
13% FIRST MORTGAGE NOTES DUE 2005 WITH CONTINGENT INTEREST
TO: IBJ WHITEHALL BANK & TRUST COMPANY
THE EXCHANGE AGENT
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Hand before 4:30 p.m.:
IBJ Whitehall Bank & Trust Company IBJ Whitehall Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window, Subcellar One, (SC-1)
Attn: Reorganization Operations Department
By Facsimile:
By Overnight Courier and by Hand after 4:30 p.m.: (212) 858-2611
IBJ Whitehall Bank & Trust Company
One State Street Confirm by Telephone:
New York, New York 10004 (212) 858-2103
Attn: Securities Processing Window, Subcellar One, (SC-1)
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CARE-
FULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR EXISTING NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR
EXISTING NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
The undersigned acknowledges receipt of the Prospectus dated
________________, 1999 (the "Prospectus") of Riviera Black Hawk, Inc. (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together constitute the Company's Offer to Exchange (the "Exchange Offer")
$45,000,000 principal amount of its 13% First Mortgage Notes due 2005 With
Contingent Interest (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus is a part, for each $1,000
principal amount of its outstanding 13% First Mortgage Notes due 2005 With
Contingent Interest (the "Existing Notes"), of which $45,000,000 principal
amount is outstanding, upon the terms and conditions set forth in the Prospectus
and this Letter of Transmittal. Other capitalized terms used but not defined
herein have the meaning given to them in the Prospectus.
For each Existing Note accepted for exchange, the holder of such
Existing Note will receive a New Note having a principal amount equal to that of
the surrendered Existing Note. Interest on the New Notes will accrue from the
last interest payment date on which interest was paid on the Existing Notes
surrendered in exchange therefor. Holders of Existing Notes accepted for
exchange will be deemed to have waived the right to receive any other payments
or accrued interest on the Existing Notes. The Company reserves the right, at
any time or from time to time, to extend the Exchange Offer at its discretion,
in which event the term "Expiration Date" shall mean the latest time and date to
which the Exchange Offer is extended. The Company shall notify holders of the
Existing Notes
<PAGE>
of any extension by means of a press release or other public announcement prior
to 9:00 A.M., New York City time, on the next business day after the previously
scheduled Expiration Date.
This Letter of Transmittal is to be used by Holders if: (i)
certificates representing Existing Notes are to be physically delivered to the
Exchange Agent herewith by Holders; (ii) tender of Existing Notes is to be made
by book-entry transfer to the Exchange Agent's account at The Depository Trust
Company ("DTC"), pursuant to the procedures set forth in the Prospectus under
"The Exchange Offer _ Procedures for Tendering Existing Notes" by any financial
institution that is a participant in DTC and whose name appears on a security
position listing as the owner of Existing Notes or (iii) tender of Existing
Notes is to be made according to the guaranteed delivery procedures set forth in
the Prospectus under "The Exchange Offer - Guaranteed Delivery Procedures."
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person:
(i) in whose name Existing Notes are registered on the books of the Company or
any other person who has obtained a properly completed bond power from the
registered Holder; or (ii) whose Existing Notes are held of record by DTC (or
its nominee) who desires to deliver such Existing Notes by book-entry transfer
at DTC. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
Holders of Existing Notes that are tendering by book-entry transfer to
the Exchange Agent's account at DTC can execute the tender through the DTC
Automated Tender Offer Program ("ATOP"), for which the transaction will be
eligible. DTC participants that are accepting the Exchange Offer must transmit
their acceptance to DTC, which will verify the acceptance and execute a
book-entry delivery to the Exchange Agent's DTC account. DTC will then send an
Agent's Message to the Exchange Agent for its acceptance. DTC participants may
also accept the Exchange Offer prior to the Expiration Date by submitting a
Notice of Guaranteed Delivery or Agent's Message relating thereto as described
herein under Instruction 1, "Guaranteed Delivery Procedures."
The instructions included with this Letter of Transmittal must be
followed. Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 11 herein.
<PAGE>
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR
EXISTING NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS
ENTIRETY. PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF 13% FIRST MORTGAGE NOTE DUE 2005 WITH CONTINGENT INTEREST (EXISTING NOTES)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Principal Amount
Name(s) and Address(es) of Registered Holder(s) Certificate Aggregate Principal Amount Tendered (If Less
(Please fill in, if blank) Number(s)* Represented by Than All)**
Certificate(s)
- -----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of Existing Notes will be deemed to have tendered the
entire aggregate principal amount represented by the column labeled
"Aggregate Principal Amount Represented by Certificate(s)." If the space
provided above is inadequate, list the certificate numbers and principal
amounts on a separate signed schedule and affix the list to this Letter of
Transmittal.
- -----------------------------------------------------------------------------------------------------------------------------
The minimum permitted tender is $1,000 in principal amount of Existing Notes.
All other tenders must be integral multiples of $1,000.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
--------------------------------------------------------- ----------------------------------------------------------
| | | |
| SPECIAL ISSUANCE INSTRUCTIONS | | SPECIAL DELIVERY INSTRUCTIONS |
| (SEE INSTRUCTIONS 4, 5, AND 6) | | (SEE INSTRUCTIONS 4, 5 AND 6) |
| | | |
| To be completed ONLY if certificates for New | | To be completed ONLY if certificates for Existing |
| Notes issued in exchange for Existing Notes accepted | | in a principal amount not tendered or not |
| for exchange, or Existing Notes not tendered or not | | accepted for exchange, are to be sent to someone |
| accepted for exchange, are to be issued in the name of | | other than the undersigned, or to the undersigned at |
| someone other than the undersigned or, if such | | an address other than that shown above. |
| Existing Notes are being tendered by book-entry | | |
| transfer, to someone other than DTC or to another | | |
| account maintained by DTC. | | |
| | | |
| Issue certificate(s) to: | | |
| | | Mail certificate(s) to: |
| Name: | | |
| -------------------------------------------------- | | |
| | | Name: |
| Address: | | --------------------------------------------------- |
| --------------------------------------------- | | |
| --------------------------------------------- | | Address: |
| (Include Zip Code) | | ------------------------------------------------ |
| | | |
| ------------------------------------------------------ | | -------------------------------------------------------- |
| (Taxpayer Identification or Social Security No.) | | (Include Zip Code) |
| | | |
| | | -------------------------------------------------------- |
| | | (Taxpayer Identification or Social Security No.) |
| DTC Acct. No. | | |
--------------------------------------------------------- ----------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
-------------------------------------------
DTC Book-Entry Account No.:
----------------------------------------------
Transaction Code No.:
----------------------------------------------------
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
----------------------------------------
Window Ticket Number (if any):
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, PLEASE COMPLETE THE FOLLOWING:
Account Number: Transaction Code Number:
------------ ---------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND ARE RECEIVING NEW NOTES FOR
YOUR OWN ACCOUNT IN EXCHANGE FOR EXISTING NOTES THAT WERE ACQUIRED AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES.
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
<PAGE>
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Existing Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Existing Notes tendered in accordance with this Letter
of Transmittal, the undersigned sells, assigns and transfers to, or upon the
order of, the Company all right, title and interest in and to the Existing Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company and as Trustee under the
Indenture for the Existing Notes and New Notes) with respect to the tendered
Existing Notes with full power of substitution to (i) deliver certificates for
such Existing Notes to the Company, or transfer ownership of such Existing Notes
on the account books maintained by DTC and deliver all accompanying evidence of
transfer and authenticity to, or upon the order of, the Company and (ii) present
such Existing Notes for transfer on the books of the Company and receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Existing Notes, all in accordance with the terms and subject to the conditions
of the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Existing Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, when the same are acquired by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Existing Notes tendered hereby will have been acquired in the ordinary
course of business of the Holder receiving such New Notes, whether or not such
person is the Holder, that neither the Holder nor any such other person has any
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the Holder nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company or
any of its subsidiaries.
The undersigned also acknowledges that this Exchange Offer is being
made in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "SEC") that the New Notes issued in exchange for the
Existing Notes pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by holders thereof (other than any such holder that is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders' business and such holders have
no arrangements or understandings with any person to participate in the
distribution of such New Notes. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of New Notes. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Existing Notes that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such New Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment, transfer and purchase of the Existing
Notes tendered hereby. All authority conferred or agreed to be conferred by this
Letter of Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns, trustees in bankruptcy or other legal
representatives of the undersigned. This tender may be withdrawn only in
accordance with the procedures set forth in "The Exchange Offer - Withdrawal
Rights" section of the Prospectus.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Existing Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
If any tendered Existing Notes are not accepted for exchange pursuant
to the Exchange Offer for any reason, certificates for any such unaccepted
Existing Notes will be returned (except as noted below with respect to
<PAGE>
tenders through DTC), without expense, to the undersigned at the address shown
below or at such different address as may be indicated under "Special Delivery
Instructions" as promptly as practicable after the Expiration Date.
The undersigned understands that tenders of Existing Notes pursuant to
the procedures described under the caption "The Exchange Offer - Procedures for
Tendering Existing Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions,"
please issue the certificates representing the New Notes issued in exchange for
the Existing Notes accepted for exchange and return any Existing Notes not
tendered or not accepted for exchange in the name(s) of the undersigned (or in
either such event in the case of the Existing Notes tendered through DTC, by
credit to the undersigned's account at DTC). Similarly, unless otherwise
indicated under "Special Delivery Instructions," please send the certificates
representing the New Notes issued in exchange for the Existing Notes accepted
for exchange and any certificates for Existing Notes not tendered or not
accepted for exchange (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s), unless,
in either event, tender is being made through DTC. In the event that both
"Special Issuance Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the New Notes issued in
exchange for the Existing Notes accepted for exchange and return any Existing
Notes not tendered or not accepted for exchange in the name(s) of, and send said
certificates to, the person(s) so indicated. The undersigned recognizes that the
Company has no obligation pursuant to the "Special Issuance Instructions" and
"Special Delivery Instructions" to transfer any Existing Notes from the name of
the registered Holder(s) thereof if the Company does not accept for exchange any
of the Existing Notes so tendered.
Holders of Existing Notes who wish to tender their Existing Notes and
(i) whose Existing Notes are not immediately available or (ii) who cannot
deliver their Existing Notes, this Letter of Transmittal or any other documents
required hereby to the Exchange Agent, or cannot complete the procedure for
book-entry transfer, prior to the Expiration Date, may tender their Existing
Notes according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer - Guaranteed Delivery
Procedures." See Instruction 1 regarding the completion of the Letter of
Transmittal printed below.
<PAGE>
SIGNATURE PAGE
PLEASE SIGN HERE WHETHER OR NOT
EXISTING NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X , 1999
------------------------------------ --------------
Date
X , 1999
------------------------------------ --------------
Signature(s) of Registered Holder(s) Date
or Authorized Signatory
Area Code and Telephone Number:
------------------------
The above lines must be signed by the registered Holder(s) of Existing
Notes as their name(s) appear(s) on the Existing Notes or, if the Existing Notes
are tendered by a participant in DTC, as such participant's name appears on a
security position listing as the owner of Existing Notes, or by a person or
persons authorized to become registered Holder(s) by a properly completed bond
power from the registered Holder(s), a copy of which must be transmitted with
this Letter of Transmittal. If Existing Notes to which this Letter of
Transmittal relates are held of record by two or more joint Holders, then all
such holders must sign this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person must
(i) set forth his or her full title below and (ii) unless waived by the Company,
submit evidence satisfactory to the Company of such person's authority to act.
See Instruction 4 regarding the completion of this Letter of Transmittal printed
below.
Name(s):
------------------------------------------------------------------------
(Please Print)
Capacity:
-----------------------------------------------------------------------
(Title)
Address:
------------------------------------------------------------------------
(Include Zip Code)
Signature(s) Guaranteed by an Eligible Institution (if required by Instruction
4):
---------------------------------------------
(Authorized Signature)
---------------------------------------------
(Title)
---------------------------------------------
(Name of Firm)
Dated: , 1999
------------------------------------
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer
1. Delivery of this Letter of Transmittal and Existing Notes;
Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed by
Holders, either if certificates are to be forwarded herewith or if tenders are
to be made pursuant to the procedures for delivery by book-entry transfer set
forth in "The Exchange Offer - Book-Entry Transfer" section of the Prospectus.
Certificates for all physically tendered Existing Notes, or Book-Entry
Confirmation, as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile hereof) and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at one of the addresses set forth herein on or prior to the
Expiration Date, or the tendering Holder must comply with the guaranteed
delivery procedures set forth below. Existing Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Existing Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Existing Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer - Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through an
Eligible Institution (as defined in Instruction 4 below), (ii) prior to the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery), substantially in the form provided by the Company, setting forth
the name and address of the Holder of Existing Notes and the amount of Existing
Notes tendered, stating that the tender is being made thereby and guaranteeing
that, within five New York Stock Exchange ("NYSE") trading days after the date
of execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Existing Notes, or a Book-Entry Confirmation, and any other
documents required by this Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Existing Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter of Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE EXISTING
NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
TENDERING HOLDERS, BUT THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF EXISTING NOTES ARE SENT BY MAIL,
IT IS SUGGESTED THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE TO PERMIT THE DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE.
See "The Exchange Offer" section in the Prospectus.
2. Tender by Holder. Only a Holder of Existing Notes may tender such
Existing Notes in the Exchange Offer. Any beneficial holder of Existing Notes
who is not the registered Holder and who wishes to tender should arrange with
the registered Holder to execute and deliver this Letter of Transmittal on his
or her behalf or must, prior to completing and executing this Letter of
Transmittal and delivering his or her Existing Notes, either make appropriate
arrangements to register ownership of the Existing Notes in such holder's name
or obtain a properly completed bond power from the registered Holder.
3. Partial Tenders. Tenders of Existing Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Existing Notes is tendered, the tendering Holder should fill in the principal
amount tendered in the fourth column of the box entitled "Description of 13%
First Mortgage Notes due 2005 With Contingent Interest (Existing Notes)" above.
The entire principal amount of Existing Notes delivered
<PAGE>
to the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire principal amount of a Holder's Existing Notes is not
tendered, then Existing Notes for the principal amount of Existing Notes not
tendered and a certificate or certificates representing New Notes issued in
exchange for any Existing Notes accepted for exchange will be sent to the Holder
at his or her registered address (unless a different address is provided in the
appropriate box on this Letter of Transmittal) promptly after the Existing Notes
are accepted for exchange.
4. Signatures on this Letter of Transmittal; Endorsements and Powers of
Attorney; Guarantee of Signatures. If this Letter of Transmittal is signed by
the registered Holder of the Existing Notes tendered hereby, the signature must
correspond exactly with the name as written on the face of the certificates
without any change whatsoever.
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any tendered Existing Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal as there are different
registrations of certificates.
When this Letter of Transmittal is signed by the registered Holder(s)
of the Existing Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the New Notes
are to be issued, or any Existing Notes not tendered or not accepted for
exchange are to be reissued, to a person or persons other than the registered
Holder(s), then endorsements of any certificate(s) transmitted hereby or
separate bond powers are required. Signatures on such certificate(s) or power(s)
must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered Holder(s) of any certificate(s) specified herein, such certificate(s)
must be endorsed or accompanied by appropriate bond powers or powers of
attorney, in each case signed exactly as the name or names on the registered
Holder(s) appear(s) on the certificate(s) and signatures on such certificate(s)
or power(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates, bond powers or
powers of attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
Endorsements on certificates for Existing Notes or signatures on bond
powers or powers of attorney required by this Instruction 4 must be guaranteed
by a firm which is a participant in a recognized signature guarantee medallion
program (an "Eligible Institution").
Signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution unless the Existing Notes are tendered (i) by a registered
Holder of Existing Notes (which term, for purposes of the Exchange Offer,
includes any DTC participant whose name appears on a security position listing
as the Holder of such Existing Notes) who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on this
Letter of Transmittal, or (ii) for the account of an Eligible Institution.
5. Special Issuance and Delivery Instructions. Tendering Holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Existing Notes not tendered or not accepted for exchange are
to be issued or sent, if different from the name and address of the person
signing this Letter of Transmittal (or in the case of a tender of Existing Notes
through DTC, if different from DTC). In the case of issuance in a different
name, the taxpayer identification or social security number of the person named
must also be indicated. Holders tendering Existing Notes by book-entry transfer
may request that New Notes issued in exchange for Existing Notes accepted for
exchange or Existing Notes not tendered or accepted for exchange exchanged be
<PAGE>
credited to such account maintained at DTC as such Holder may designate hereon.
If no such instructions are given, such New Notes or Existing Notes not
exchanged will be returned to the name and address of the person signing this
Letter of Transmittal.
6. Tax Identification Number. Federal income tax law requires that a
Holder whose Existing Notes are accepted for exchange must provide the Company
(as payer ) with his, her or its correct Taxpayer Identification Number ("TIN"),
which, in the case of an exchanging Holder who is an individual, is his or her
social security number. If the Company is not provided with the correct TIN or
an adequate basis for exemption, such Holder may be subject to a $50 penalty
imposed by the Internal Revenue Service (the "IRS"), and payments made with
respect to the New Notes or Exchange Offer may be subject to backup withholding
at a 31% rate. If withholding results in an overpayment of taxes, a refund may
be obtained. Exempt Holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9."
To prevent backup withholding, each exchanging Holder must provide his,
her or its correct TIN by completing the Substitute Form W-9 included below in
this Letter of Transmittal, certifying that the TIN provided is correct (or that
such Holder is awaiting a TIN) and that the Holder is exempt from backup
withholding because (i) the Holder has not been notified by the IRS that he, she
or it is subject to backup withholding as a result of a failure to report all
interest or dividends, or (ii) the IRS has notified the Holder that he, she or
it is no longer subject to backup withholding. In order to satisfy the Company
that a foreign individual qualifies as an exempt recipient, such Holder must
submit a statement signed under penalty of perjury attesting to such exempt
status. Such statements may be obtained from the Exchange Agent. If the Existing
Notes are in more than one name or are not in the name of the actual owner,
consult the substitute Form W-9 for information on which TIN to report. If you
do not provide your TIN to the Company within 60 days, backup withholding may
begin and continue until you furnish your TIN to the Company.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Existing Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Existing Notes not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person(s) other than the registered Holder(s) of the
Existing Notes tendered hereby, or if tendered Existing Notes are registered in
the name of any person other than the person signing this Letter of Transmittal,
or if a transfer tax is imposed for any reason other than the exchange of
Existing Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered Holder(s) or on any other
person(s)) will be payable by the tendering Holder(s). If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering
Holder(s).
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Existing Notes listed in this Letter of
Transmittal.
8. Waiver of Conditions. The Company reserves the absolute right to
amend, waive or modify conditions to in the Exchange Offer in the case of any
Existing Notes tendered (and to refuse to do so).
9. No Conditional Transfers. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering Holders of Existing Notes, by
execution of this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of their Existing Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Existing Notes, nor shall any of them incur any liability for failure
to give any such notice.
<PAGE>
10. Mutilated, Lost, Stolen or Destroyed Existing Notes. Any tendering
Holder whose Existing Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at one of the addresses indicated herein for
further instructions.
11. Requests for Assistance or Additional Copies. Questions and
requests for assistance for additional copies of the Prospectus, this Letter of
Transmittal, the Notice of Guaranteed Delivery or the "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Exchange Agent at one of the addresses specified in the
Prospectus.
<PAGE>
(DO NOT WRITE IN THE SPACE BELOW)
Account Number: Transaction Code Number:
--------------------- ------------
Certificate Existing Existing
Surrendered Notes Tendered Notes Accepted
- ----------------------- -------------------------- -----------------------
- ----------------------- -------------------------- -----------------------
- ----------------------- -------------------------- -----------------------
- ----------------------- -------------------------- -----------------------
Delivery Prepared by:
------------------------------------------
Checked by:
----------------------------------------------------
Date:
----------------------------------------------------------
<PAGE>
PAYER'S NAME: RIVIERA BLACK HAWK, INC.
- -------------------------------------------------------------------------------
| | |
| | Name (if joint names, list first and circle the name |
| | of the person or entity whose number you enter in Part |
| | 1 below. See instructions if your name has changed.) |
| | |
|SUBSTITUTE | |
| | |
|FORM W-9 | |
|Department | |
|of the | |
|Treasury | |
|Internal | |
|Revenue | |
|Service | |
|Payer's | |
|Request | |
|for TIN | |
| |---------------------------------------------------------------|
| | |
| | Address |
| | ------------------------------------------------------ |
| | City, state and ZIP code |
| | ------------------------------------- |
| | List account number(s) here (optional) |
| | ----------------------- |
| |---------------------------------------------------------------|
| | | |
| | Part 1 PLEASE PROVIDE YOUR TAXPAYER | Social Security Number |
| | IDENTIFICATION NUMBER ("TIN") IN THE | or TIN |
| | BOX AT RIGHT AND CERTIFY BY SIGNING | ------------- |
| | AND DATING BELOW. | |
| |---------------------------------------------------------------|
| | |
| | Part 2 Check the box if you are not subject to backup |
| | withholding under the provisions of section 3408(a)(1)(c) of |
| | the Internal Revenue Code because (1) you have not been |
| | notified that you are subject to backup withholding as a |
| | result of failure to report all interest or dividends or (2) |
| | the Internal Revenue Service has notified you that you are |
| | no longer subject to backup withholding / /. |
| |---------------------------------------------------------------|
| | | |
| | CERTIFICATION - UNDER THE PENALTIES | |
| | OF PERJURY, I CERTIFY THAT THE | Part 3 |
| | INFORMATION PROVIDED ON THIS FORM | |
| | IS TRUE, CORRECT AND COMPLETE. | |
| | | AWAITING TIN / / |
| | | |
| | Signature Date | |
| | ---------------- ------ | |
| | | |
- --------------------------------------------------------------------------------
NOTE:FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
NOTICE OF GUARANTEED DELIVERY
FOR
13% FIRST MORTGAGE NOTES DUE 2005 WITH CONTINGENT INTEREST
OF
RIVIERA BLACK HAWK, INC.
As set forth in the Prospectus dated _____________, 1999 (the
"Prospectus") of Riviera Black Hawk, Inc. (the "Company") and in the
accompanying Letter of Transmittal (the "Letter of Transmittal"), this form or
one substantially equivalent hereto must be used to accept the Company's offer
to exchange (the "Exchange Offer") all of its outstanding 13% First Mortgage
Notes due 2005 With Contingent Interest (the "Existing Notes") for its 13% First
Mortgage Notes due 2005 With Contingent Interest which have been registered
under the Securities Act of 1933, as amended, if certificates for the Existing
Notes are not immediately available or if the Existing Notes, the Letter of
Transmittal or any other documents required thereby cannot be delivered to the
Exchange Agent, or the procedure for book-entry transfer cannot be completed,
prior to 5:00 P.M., New York City time, on the Expiration Date (as defined
below). This form may be delivered by an Eligible Institution by hand or
transmitted by facsimile transmission, overnight courier or mail to the Exchange
Agent as set forth below. Capitalized terms used but not defined herein have the
meaning given to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_____________, 1998, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE").
TENDERS OF EXISTING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE
EXPIRATION DATE.
To: IBJ Whitehall Bank & Trust Company
The Exchange Agent
<TABLE>
<S> <C>
By Mail: By Hand before 4:30 p.m.:
IBJ Whitehall Bank & Trust Company IBJ Whitehall Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attn: Securities Processing Window, Subcellar One, (SC-1)
Attn: Reorganization Operations Department
By Facsimile:
By Overnight Courier and by Hand after 4:30 p.m.: (212) 858-2611
IBJ Whitehall Bank & Trust Company
One State Street Confirm by Telephone:
New York, New York 10004 (212) 858-2103
Attn: Securities Processing Window, Subcellar One, (SC-1)
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal to be used to tender Existing Notes is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the space provided therefor in the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
are hereby acknowledged, (fill in number of Existing Notes) Existing Notes
pursuant to the guaranteed delivery procedures set forth in the Prospectus and
Instruction 1 of the Letter of Transmittal.
The undersigned understands that tenders of Existing Notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. The undersigned understands that tenders of Existing Notes pursuant to
the Exchange Offer may not be withdrawn after 5:00 p.m., New York City time, on
the Expiration Date.
All authority herein conferred or agreed to be conferred by this
Notice of Guaranteed Delivery shall survive the death, incapacity or dissolution
of the undersigned and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and other
legal representatives of the undersigned.
NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW.
Certificate No(s). for Existing Notes Name(s) of Record Holder(s):
(if available):
- -------------------------------------- ---------------------------------
- -------------------------------------- ---------------------------------
PLEASE PRINT OR TYPE
Principal Amount of Existing Notes:
Address:
- -------------------------------------- ---------------------------------
---------------------------------
If Existing Notes will be delivered Area code and Tel. No.
by book-entry transfer at the -----------
Depository Trust Company,
Depository Account No.:
Signature(s):
- --------------------------------------
---------------------------------
---------------------------------
Dated: , 1999
--------------------
<PAGE>
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Existing Notes exactly as its (their) name(s) appear(s) on the
certificate(s) for Existing Notes covered hereby or on a DTC security position
listing naming it (them) as the owner of such Existing Notes, or by person(s)
authorized to become registered holder(s) by endorsements and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person(s) must
provide the following information:
Please print name(s), title(s) and address(es)
Name(s):
------------------------------------------------------------------------
Capacity(ies):
------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United
States or an "Eligible Guarantor Institution" as defined in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), hereby (a)
represents that the tender of Existing Notes effected hereby complies with Rule
14e-4 under the Exchange Act and (b) guarantees to deliver to the Exchange Agent
a certificate or certificates representing the Existing Notes tendered hereby,
in proper form for transfer (or a confirmation of the book-entry transfer of
such Existing Notes into the Exchange Agent's account at DTC, pursuant to the
procedures for book-entry transfer set forth in the Prospectus), and a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof) together with any required signatures and any other required documents,
at one of the Exchange Agent's addresses set forth above, within five New York
Stock Exchange trading days after the date of execution of this Notice of
Guaranteed Delivery.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF
TRANSMITTAL AND EXISTING NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE
TIME PERIOD SPECIFIED FORTH ABOVE AND THAT ANY FAILURE TO DO SO COULD RESULT IN
FINANCIAL LOSS TO THE UNDERSIGNED.
Name of Firm:
---------------------------- ------------------------------------
Authorized Signatures
Address: Name:
--------------------------------- -------------------------------
Please Print or Type
Title:
- ----------------------------------------- ------------------------------
Zip Code
Area Code
and Tel. No.: Date: , 1998
---------------------------- -------------------------
NOTE: DO NOT SEND EXISTING NOTES WITH THIS FORM; EXISTING NOTES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL SO THAT THEY ARE RECEIVED BY THE
EXCHANGE AGENT WITHIN THE TIME PERIOD SET FORTH ABOVE.
