SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
RIVIERA HOLDINGS CORPORATION
(Name of Issuer)
Common stock, par value $.001 per share
(Title of Class of Securities)
769627100
(CUSIP Number)
Stacy Winick, Stein Roe & Farnham Incorporated, One S.
Wacker Drive, Chicago, Illinois 60606. Telephone: (312)
368-7731
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 16, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [X].
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided
in a prior cover page.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 769627100
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of above person
STEIN ROE & FARNHAM INCORPORATED
36-3447638
2. Check the appropriate box if a member of a group
(a) -----
(b) -----
3. SEC USE ONLY
4. Source of Funds (See Instructions) NA
5. Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e)
6. Citizenship or place of organization
Delaware Corporation
Number of shares beneficially owned by each reporting person with
7. Sole voting power 857,160
8. Shared voting power -0-
9. Sole dispositive power 857,160
10. Shared dispositive power -0-
11. Aggregate amount beneficially owned by each reporting
person 857,160
12. Check box if the aggregate amount in Row (11) excludes
certain shares not applicable
13. Percent of class represented by amount in Row 9 17.4%
14. Type of Reporting Person IA
CUSIP No. 769627100
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of above person
KEYPORT LIFE INSURANCE COMPANY
05-0302931
2. Check the appropriate box if a member of a group
(a) -----
(b) -----
3. SEC USE ONLY
4. Source of Funds (See Instructions) NA
5. Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e)
6. Number of shares beneficially owned by each reporting person
with
7. Sole voting power 857,160
8. Shared voting power -0-
9. Sole dispositive power 857,160
10. Shared dispositive power -0-
11. Aggregate amount beneficially owned by each reporting
person 857,160
12. Check box if the aggregate amount in Row (9) excludes
certain shares not applicable
13. Percent of class represented by amount in Row 9 17.4%
14. Type of Reporting Person IC
INTRODUCTION
This is amendment No. 1 to the Schedule 13D filed jointly by
Stein Roe & Farnham Incorporated ("Stein Roe") and Keyport Life
Insurance Company ("Keyport") (collectively, the "Reporting
Persons") relating to the Common Stock, par value $.001 per share
("Common Stock") of Riviera Holdings Corporation, a Nevada
corporation ("Riviera"). The cover page, Item 4 and Item 6 are
hereby amended. All other items remain unchanged from previous
filing of this Schedule 13D. In its capacity as investment
adviser for Keyport, Stein Roe has investment authority over the
disposition of the Riviera Common Stock and Stein Roe may be
deemed to be a "beneficial owner" within the meaning of Rule 13d-
3 under the Securities Exchange Act of 1934 of such Common Stock.
Stein Roe, however, disclaims actual beneficial ownership of the
Riviera Common Stock covered by this report and held by Keyport.
Item 4. Purpose of Transaction.
The response to Item 6 is incorporated herein.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
In connection with the Agreement and Plan of Merger dated
September 16, 1997 (the "Merger Agreement") pursuant to which
Riviera is to be acquired by R&E Gaming Corp. (the "Purchaser"),
subject to shareholder and regulatory approvals, on September 16,
1997, Keyport entered into an Option and Voting Agreement (the
"Option Agreement") by and among R&E Gaming Corp., as Purchaser,
and Morgens, Waterfall, Vintiadis & Company, Keyport Life
Insurance Company and SunAmerica Life Insurance Company (each a
"Selling Shareholder"). Pursuant to the Option Agreement, which
is subject to regulatory approvals, Keyport and each Selling
Shareholder granted the Purchaser an option to purchase all of
its shares totaling approximately 56% of the Common Shares of
Riviera. In addition, Keyport and each other Selling Shareholder
agreed to vote in favor of the acquisition of Riviera by the
Purchaser pursuant to the terms of the Merger Agreement. If the
transactions contemplated by the Option Agreement and Merger
Agreement are consummated, the Purchaser will become the owner of
100% of the Riviera shares of Riviera. The Option Agreement will
impede the acquisition of control of Riviera by another person
pending consummation of the transaction contemplated by the
Merger Agreement.
The Option Agreement is incorporated by reference and a copy is
attached as Exhibit A hereto.
Item 7. Exhibits.
Exhibit A - Option and Voting Agreement by and among R&E Gaming
Corp., as Purchaser, and Morgens, Waterfall, Vintiadis & Company,
Inc., Keyport Life Insurance Company and SunAmerica Life
Insurance Company dated as of September 16, 1997.
Exhibit B - Joint Filing Agreement between Stein Roe and Keyport
dated April 11, 1997.
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of
each entity set forth below, each such entity certifies that the
information set forth in this state is true, complete and
correct.
STEIN ROE & FARNHAM INCORPORATED
Jilaine Hummel Bauer
Senior Vice President and General Counsel
KEYPORT LIFE INSURANCE COMPANY
Bernard R. Beckerlegge
Senior Vice President and General Counsel
Exhibit A
OPTION AND VOTING AGREEMENT
by
and
among
R&E GAMING CORP.,
as Purchaser,
and
MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.,
KEYPORT LIFE INSURANCE COMPANY
SUNAMERICA LIFE INSURANCE COMPANY,
on behalf of certain investment accounts,
as Sellers
Dated as of September ___, 1997
OPTION AND VOTING AGREEMENT
OPTION AND VOTING AGREEMENT (this "Agreement"), dated as of
September ___, 1997, by and among R&E Gaming Corp., a Delaware
corporation (together with its assignees or designees, the
"Purchaser"), Morgens, Waterfall, Vintiadis & Company, Inc., on
behalf of certain investment accounts identified on the signature
pages hereto ("Morgens, Waterfall"), Keyport Life Insurance
Company, ("Keyport"), and SunAmerica Life Insurance Company, an
Arizona corporation ("SunAmerica," and together with Morgens,
Waterfall and Keyport, the "Sellers").
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Purchaser is entering into an Agreement and Plan
of Merger (the "Riviera Merger Agreement") with Riviera
Acquisition Sub, Inc., a Nevada corporation and a wholly owned
subsidiary of the Purchaser ("Acquisition Sub"), and Riviera
Holdings Corporation, a Nevada corporation ("RHC"), pursuant to
which the Acquisition Sub shall merge with and into RHC (the
"Riviera Merger"), upon the terms and conditions set forth
therein;
WHEREAS, each Seller desires that the Purchaser, Acquisition Sub
and RHC enter into the Riviera Merger Agreement;
WHEREAS, as partial consideration for the grant by the Sellers of
the option hereunder, the Purchaser agrees to pay to each Seller
an amount equal to 20% of the Purchase Price (as defined in
Section 1.2(a) hereof) for the shares of common stock, par value
$.001 per share, of RHC (the "Common Stock") owned by such
Seller, if the transactions contemplated by the Riviera Merger
Agreement are not consummated, other than as a result of certain
circumstances specified herein;
WHEREAS, in order to ensure payment of the obligation described
in the immediately preceding paragraph, concurrently with the
execution and delivery of this Agreement and the Riviera Merger
Agreement, the Purchaser has delivered a letter of credit in the
face amount of $3,817,680 to Morgens, Waterfall, a letter of
credit in the face amount of $2,571,480 to Keyport, and a letter
of credit in the face amount of $2,285,760 to SunAmerica, each of
which is substantially in the form of Exhibit A hereto
(collectively, the "Letters of Credit"), each of which shall
provide that it may be drawn on in the event the transactions
contemplated by the Riviera Merger Agreement are not consummated,
other than as a result of certain circumstances as specified
herein;
WHEREAS, Morgens, Waterfall beneficially owns 1,272,560 shares of
Common Stock, which shares represent approximately 25.9% of the
issued and outstanding shares of Common Stock, Keyport
beneficially owns 857,160 shares of Common Stock, which Shares
represent approximately 17.5% of the issued and outstanding
shares of Common Stock and SunAmerica beneficially owns 761,920
shares of Common Stock, which shares represent approximately
15.5% of the issued and outstanding shares of Common Stock (such
shares of Common Stock owned by the Sellers being the "Shares");
and
WHEREAS, in consideration for entering into the Riviera Merger
Agreement, the Sellers desire to (i) grant to the Purchaser
options to purchase, from the Sellers, all (but not less than
all) of the Shares held by them as set forth above upon the terms
and subject to the conditions set forth herein and (ii) vote the
Shares in the manner set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and
the agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE I
GRANT OF OPTION
SECTION 1.1 Grant of Option. Upon the terms and subject to the
conditions set forth herein, each Seller hereby grants to the
Purchaser an irrevocable option (individually, a "Purchase
Option" and, together with each Purchase Option granted by each
of the other Sellers, the "Purchase Options") to purchase the
Shares owned by such Seller.
The Purchase Option shall be exercisable, in whole and not in
part, by written notice (the "Exercise Notice") by the Purchaser
delivered to each Seller, at any time after the date hereof, but
not later than the date on which the Riviera Merger Agreement is
terminated pursuant to Section 6.1(c) thereof or, if the Riviera
Merger Agreement has otherwise been terminated, then June 1, 1998
(such period being hereinafter referred to as the "Exercise
Period"). No one Purchase Option shall be exercised individually
unless all Purchase Options are exercised. In addition, in the
event the Riviera Merger is consummated, the Purchase Options
shall terminate automatically, the Shares shall be converted into
the right to receive the Merger Consideration set forth in the
Riviera Merger Agreement; it being understood that the Riviera
Merger Agreement provides for a reduction of the consideration
payable, upon consummation of the Riviera Merger, to each of the
Sellers on account of any interest previously paid to the Sellers
pursuant to Section 1.2(b) hereof. Each of the Sellers hereby
consents to the reduction of the consideration payable to them
under the terms of the Riviera Merger Agreement by the amount of
the interest paid to them pursuant to Section 1.2(b) hereof.
Upon exercise of the Purchase Options, subject to the conditions
contained in Article V hereof, each of the Sellers shall sell,
assign, transfer, convey and deliver to the Purchaser, and the
Purchaser shall purchase and accept from each such Seller at the
closing (the "Closing") to be held as soon as possible after the
satisfaction or waiver of the conditions set forth in this
Agreement (the date on which the Closing occurs shall be referred
to herein as the "Closing Date"), such Seller's rights, title and
interest in and to the Shares in exchange for the Purchase Price
(as defined below).
SECTION 1.2 Purchase Price.
(a) Upon exercise of the Purchase Options, the Purchaser agrees
to pay to each of the Sellers, on the Closing Date, in
consideration for the purchase of the Shares, an aggregate amount
equal to $15 per Share, (the "Initial Purchase Price" and, when
adjusted as provided in this Section 1.2, the "Purchase Price"),
for an aggregate amount of $43,374,600 payable as follows: (i)
$19,088,400 shall be paid to Morgens, Waterfall, (ii) $12,857,400
shall be paid to Keyport and (iii) $11,428,800 shall be paid to
SunAmerica, in addition to any accrued but unpaid interest
payments required by Section 1.2(b).
(b) During the period commencing on June 1, 1997 and ending on
the date immediately preceding the earlier of the Closing Date or
the date this Agreement is terminated in accordance with its
terms, the Purchaser agrees to pay to each of the Sellers their
pro rata portion, based on the number of Shares owned, of the
daily interest of $8,318.42 per day, which represents interest
calculated at 7% per annum on the Initial Purchase Price for all
Shares, payable monthly in arrears no later than 5 days after the
date of each monthly anniversary of such execution, unless
otherwise provided in this Section 1.2(b). The first payment to
be made by the Purchaser shall be made on the date of execution
and shall consist of all amounts due and payable until such date
under this Section 1.2(b). All payments required to be made in
accordance with this Section 1.2(b) shall be made by wire
transfer of immediately available funds to such account as each
Seller shall have designated on Exhibit B hereto.
(c) If, between the date of this Agreement and the Closing Date,
the number of issued and outstanding shares of Common Stock shall
have been changed (or RHC shall have declared a record date with
respect to a prospective change of the Common Stock) into a
different number of shares or a different class of shares by
reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, this
Agreement (including the terms "Share" and "Common Stock") will
be deemed to relate to all securities issued with respect to the
Common Stock, and the Purchase Price shall be correspondingly
adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or
exchange of shares.
(d) If, between the date of this Agreement and the Closing Date,
any dividend or other distribution (other than a stock dividend,
which shall require the adjustment set forth in clause (c) above)
is declared or paid upon the Common Stock (whether in cash,
property or securities), the Purchase Price shall be reduced by
the per share amount of such dividend or distribution (in the
case of non-cash dividends or distributions, by an amount equal
to the fair market value thereof).
(e) If, between the date of this Agreement and the Closing Date,
RHC or any of its subsidiaries shall repurchase or otherwise
acquire any shares of Common Stock (other than shares issued
pursuant to warrants, options, convertible securities and other
rights to acquire shares of Common Stock referred to in Section
2.2 of the Riviera Merger Agreement or issued in accordance with
Section 4.1 thereof), and the per share consideration paid by RHC
or its subsidiaries (in the case of non-cash consideration,
valued of the fair market value thereof) exceeds the Purchase
Price, the total Purchase Price for all Shares shall be reduced
to the price determined by dividing (i) the difference between
(A) the number of shares of Common Stock outstanding immediately
prior to such repurchase or redemption multiplied by the Purchase
Price in effect immediately prior to such purchase or redemption
minus (B) the consideration, if any, paid by RHC for such
repurchase or redemption, by (ii) the total number of shares of
Common Stock outstanding immediately after such repurchase or
redemption.
SECTION 1.3 Termination of Riviera Merger Agreement.
(a) The Sellers shall be entitled to receive, as partial
consideration for the grant by the Sellers of the Purchase
Options to the Purchaser hereunder, an amount equal to $3,817,680
(in the case of Morgens, Waterfall), $2,571,480 (in the case of
Keyport) and $2,285,760 (in the case of SunAmerica), if (A) the
Riviera Merger Agreement is terminated (except pursuant to a Non-
Payment Termination Event (as defined herein) or (B) the Riviera
Merger does not occur in accordance with the terms thereof on or
before April 2, 1998 (or, if the termination date of the Riviera
Merger Agreement is extended in accordance with Section 6.1(c)
thereof, June 2, 1998) for any reason other than the occurrence
of a Non-Payment Termination Event, provided that the Sellers
shall be entitled to the consideration described above if the
Riviera Merger is not consummated as a result of the breach of
the Riviera Merger Agreement by Purchaser, Acquisition Sub, or
Allen E. Paulson of any covenants or warranties made by or about
them in the Riviera Merger Agreement; and provided further, in
any event, that no Seller shall be entitled to such compensation
if the Riviera Merger Agreement is not consummated as a result of
the breach of this Agreement by such Seller. A "Non-Payment
Termination Event" shall mean the termination of the Riviera
Merger Agreement pursuant to Sections 6.1(a), 6.1(b), 6.1(c)
(because of the failure to satisfy Sections 5.1(a), 5.1(c),
5.1(d), 5.2(b) or 5.2(c)), 6.1(d), 6.1(e)(iii) or 6.1(e)(iv)
thereof. In addition, in the event that the Riviera Merger
Agreement is terminated pursuant to Section 6.1(c) because of the
failure of Purchaser, Acquisition Sub or Mr. Allen E. Paulson to
obtain the required approvals of the Gaming Authorities, then
such event shall constitute a Non-Payment Termination Event,
unless Mr. Allen E. Paulson is in breach of his representation
and covenant contained in Section 6.2(c) of the Riviera Merger
Agreement.
(b) In order to ensure payment of the obligation described in
Section 1.3(a) hereof, concurrently with the execution and
delivery of this Agreement, the Purchaser shall deliver a Letter
of Credit in the face amount of $3,817,680 to Morgens, Waterfall,
a Letter of Credit in the face amount of $2,571,480 to Keyport
and a Letter of Credit in the face amount of $2,285,760 to
SunAmerica. In the event that any Seller shall be entitled to
receive compensation pursuant to Section 1.3(a) hereof, such
Seller shall be entitled to receive demand payment under the
Letter of Credit issued to such Seller.
(c) In the event that the Riviera Merger Agreement is terminated
pursuant to a Non-Payment Termination Event other than Sections
6.1(a) or 6.1(c) thereof, each Seller shall immediately pay to
the Purchaser an amount equal to all payments received by such
Seller pursuant to this Agreement (each such payment, an "Option
Payment"); provided, that the Sellers shall be entitled to retain
such payments if either (i) all Shares shall be purchased
pursuant to this Agreement or (ii) the Riviera Merger is not
consummated as a result of the breach by the Purchaser,
Acquisition Sub, or Allen E. Paulson of any covenants or
warranties made by or about them in the Riviera Merger Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 Representations and Warranties of the Sellers.
Each of the Sellers severally and not jointly represents and
warrants to the Purchaser as follows:
(a) Organization and Standing. Such Seller is duly organized,
validly existing and in good standing under the laws of its state
of organization, and has all requisite power and authority to
enter into and perform its obligations under this Agreement.
(b) Authority. The execution and delivery of this Agreement, and
the performance by such Seller of its obligations hereunder, have
been duly authorized by all necessary action on the part of such
Seller and the owners of the investment accounts, if any, as to
which it is acting. This Agreement has been duly executed and
delivered by such Seller and, assuming the due execution and
delivery hereof by the Purchaser and assuming that approval of
this Agreement by RHC remains effective, this Agreement
constitutes a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms.
(c) The Stock. Such Seller is the record and beneficial owner
of, and has good and valid title to, the number of Shares recited
to be owned by it in the recitals hereof, free and clear of all
liens, encumbrances, claims, charges, security interests,
pledges, restrictions, assessments and limitations (including
voting limitations) of every kind whatsoever (collectively,
"Liens"). Assuming that approval of this Agreement by RHC
remains effective, such Seller shall deliver to the Purchaser,
and the Purchaser will acquire, good and valid title in such
Shares, with full voting rights, free and clear of any Liens.
Except for this Agreement, there are no outstanding warrants,
subscriptions, rights (including preemptive rights), options,
calls, commitments or other agreements or Liens to encumber,
purchase or acquire any of the Shares of such Seller or
securities convertible into the Shares of such Seller. Neither
such Seller nor any of its affiliates or associates (as such
terms are defined in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended, or the rules and regulations
thereunder) holds either of record or beneficially any securities
or capital stock of RHC or any of RHC's direct or indirect
subsidiaries other than such Seller's Shares.
(d) No Conflict. Assuming that approval of this Agreement by RHC
remains effective, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not
require notice to, or the consent of, any party to any contract,
lease, agreement, mortgage or indenture (each a "Contract") to
which such Seller is a party or by which it is bound, or the
consent, approval, order or authorization of, or the
registration, declaration or filing with, any governmental
authority, except for those (i) required under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), if any, (ii) required by the Nevada Gaming Commission (the
"Gaming Commission"), the Nevada State Gaming Control Board (the
"Control Board"), the City of Las Vegas ("Las Vegas") and the
Clark County Liquor and Gaming Licensing Board (the "CCB") (the
Gaming Commission, the Control Board, Las Vegas and the CCB are
collectively referred to as the "Gaming Authorities"), including,
without limitation, approvals under the Nevada Gaming Control
Act, as amended, and the rules and regulations promulgated
thereunder (the "Nevada Act") or (iii) set forth on Schedule
2.1(d) hereto. Assuming that the notices, consents and approvals
referred to in the preceding sentence have been given, made or
obtained and remain effective, the execution, delivery and
performance by such Seller of this Agreement and the consummation
of the transactions contemplated hereby will not (i) violate any
law, statute, ordinance, regulation, rule or order of any Federal
or Nevada authority (collectively, "Laws"), (ii) result in a
breach or violation of any provision of, constitute a default
under, or result in the termination of, or an acceleration of
indebtedness or creation of any Lien under, any material contract
to which such Seller is a party or by which it is bound or (iii)
conflict with or violate any provision of the organizational
documents of such Seller.
(e) Brokers, Finders, etc. Such Seller is not a party to any
agreement or understanding that would make it subject to any
valid claim of any broker, investment banker, finding or other
intermediary in connection with the transactions contemplated by
this Agreement.
SECTION 2.2 Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to each of the
Sellers as follows:
(a) Organization and Standing. The Purchaser is duly organized,
validly existing and in good standing under the laws of its state
of incorporation, and has all requisite power and authority to
enter into and perform its obligations under this Agreement.
(b) Authority. The execution and delivery of this Agreement, and
the performance by the Purchaser of its obligations hereunder,
have been duly authorized by all necessary action on the part of
the Purchaser. This Agreement has been duly executed and
delivered on behalf of the Purchaser and, assuming the due
execution and delivery hereof by the Sellers and assuming that
approval of this Agreement by RHC remains effective, this
Agreement constitutes a valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with
its terms.
(c) No Conflict. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not
require notice to, or the consent of, any party to any Contract
to which the Purchaser or any of its affiliates is a party or by
which any of them is bound, or the consent, approval, order or
authorization of, or the registration, declaration or filing
with, any governmental authority, except for (i) those required
under the HSR Act, if any, (ii) approvals, as necessary, by the
Gaming Authorities, including, without limitation, approvals
under the Nevada Act, (iii) approval by the RHC Board of
Directors (which the Sellers represent has been granted); and
(iv) set forth on Schedule 2.2(c) hereto. Assuming that the
notices, consents and approvals referred to in the preceding
sentence have been given, made or obtained and remain effective,
the execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the transactions contemplated
hereby will not (i) violate any Laws, (ii) result in a breach or
violation of any provision of, or constitute a default under, any
contract to which the Purchaser is a party or by which it is
bound or (iii) conflict with any provision of the certificate of
incorporation or bylaws of the Purchaser.
(d) Purchase For Investment. Upon exercising the Purchase
Options, the Purchaser represents and warrants that it intends to
acquire the Shares for its own account, not as a nominee or
agent, and not with a view to, or for offer or resale in
connection with, any distribution thereof in violation of the
Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act"), without prejudice, however, to
the Purchaser's right at all times to sell or otherwise dispose
of all or any part of said Shares pursuant to an effective
registration statement under the Securities Act and any
applicable state securities laws, or under an exemption from
registration available under the Securities Act and such other
applicable state securities laws. The Purchaser represents and
warrants that it (i) is knowledgeable, sophisticated and
experienced in business and financial matters, and fully
understands the limitations on transfer described above, and (ii)
is an "accredited investor" as such term is defined in Rule
501(a) of Regulation D under the Securities Act.
(e) No Brokers. Except for Jeffries & Co., Inc., whose fee will
be paid by the Purchaser, neither the Purchaser nor Acquisition
Sub has employed any broker or finder, nor has it incurred any
liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement
or the Riviera Merger Agreement.
ARTICLE III
VOTING AGREEMENTS
SECTION 3.1 Merger. Each Seller severally agrees and covenants
to each party hereto that at any meeting of stockholders of RHC
called to vote upon the Riviera Merger and the Riviera Merger
Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with
respect to the Riviera Merger and the Riviera Merger Agreement is
sought, such Seller shall cause its Shares to be present for
quorum purposes and to vote (or caused to be voted) its Shares in
favor of the terms thereof and each of the other transactions
contemplated by the Riviera Merger Agreement.
SECTION 3.2 Competing Transaction. Each Seller severally agrees
and covenants to each party hereto that at any meeting of
stockholders of RHC or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is
sought, such Seller shall vote (or cause to be voted) its Shares
against (i) any merger agreement or merger (other than the
Riviera Merger Agreement and the Riviera Merger), consolidation,
combination, sale of substantial assets, sale or issuance of
securities of RHC or its subsidiaries, reorganization, joint
venture, recapitalization, dissolution, liquidation or winding up
of or by RHC or its subsidiaries and (ii) any amendment of RHC's
Second Amended and Restated Articles of Incorporation (the
"Articles of Incorporation") or Bylaws or other proposal or
transaction involving RHC or any of its subsidiaries which
amendment or other proposal or transaction would in any manner
impede, frustrate, prevent or nullify or result in a breach of
any covenant, representation or warranty or any other obligation
or agreement of RHC under or with respect to, the Riviera Merger,
the Riviera Merger Agreement or any of the other transactions
contemplated by the Riviera Merger Agreement or by this Agreement
(each of the foregoing in clause (i) or (ii) above, a "Competing
Transaction").
ARTICLE IV
COVENANTS
SECTION 4.1 Exclusive Dealing. Each Seller agrees that it will
not, directly or indirectly, through any director, officer,
agent, partner, shareholder, affiliate, representative or
otherwise:
(a) solicit, initiate, encourage submission of offers or
proposals from, or participate in any discussions, negotiations,
agreements, arrangements or understandings with, any person in
respect of a Competing Transaction; or
(b) participate in any discussions or negotiations with, or
furnish or afford access to any information to, any other person
regarding a Competing Transaction, or otherwise cooperate in any
manner with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to engage in
any Competing Transaction.
SECTION 4.2 No Sale. Without limiting the foregoing, each
Seller agrees that it will not, directly or indirectly, (i) sell,
transfer, assign, pledge, hypothecate or otherwise encumber or
dispose of, (ii) give a proxy with respect to, or (iii) limit the
right to vote in any manner, any of the Shares owned by it,
except pursuant to the express terms of this Agreement.
SECTION 4.3 Further Assurances. From time to time, whether
before, at, or after the Closing, each party hereto agrees to
execute and deliver, or cause to be executed and delivered, such
additional instruments, certificates and other documents, and to
take such other action, as any other party hereto may reasonably
require in order to carry out the terms and provisions of this
Agreement and the transactions contemplated hereby (including,
without limitation, voting the Shares in favor of any such
transaction).
SECTION 4.4 Expenses. All reasonable actual out of pocket costs
and expenses, including reasonable legal fees incurred solely and
directly in connection with the negotiation, execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the Purchaser
upon receipt of reasonably detailed statements or invoices
therefor.
SECTION 4.5 Publicity. Each Seller and the Purchaser agree
that, prior to the Closing, no public release or announcement
concerning this Agreement shall be issued by any such party
without the prior written consent (which consent shall not be
unreasonably withheld) of the other parties hereto, except as
such release or announcement may be required by law (in which
event the other parties hereto shall have reasonable opportunity
to comment on the form and content of the disclosure).
SECTION 4.6 Notice of Certain Events. Each Seller and the
Purchaser each agrees to notify each other party hereto promptly
of (a) any event or condition that, with or without notice or
lapse of time, would cause any of the representations and
warranties made by such party herein to be no longer complete and
accurate as of any date on or before the Closing Date, (b) any
failure, with or without notice or lapse of time, on the part of
such party to comply with any of the covenants or agreements on
its part contained herein at any time on or before the Closing
Date or (c) the occurrence of any event, with or without notice
or lapse of time, that may make the satisfaction of any of the
conditions set forth in Section 5.1 hereof impossible or
unlikely.
SECTION 4.7 Excess Proceeds. Morgens, Waterfall hereby
acknowledges its satisfaction with the price per Share provided
herein and in the Riviera Merger Agreement and, in recognition
thereof, hereby agrees to pay to the Purchaser an amount equal to
100% of the fair market value of the net after tax proceeds per
Share from any sale, transfer or other disposition of its Shares
(other than pursuant to the Purchase Option, the Riviera Merger
or the transactions contemplated thereby) in excess of the
Purchase Price, if all of the following conditions are satisfied:
(i) such sale, transfer or other disposition (x) occurs prior to
the date which is 12 months subsequent to the date of the
termination of the Riviera Merger Agreement pursuant to Sections
6.1(d)(iii), 6.1(d)(iv), 6.1(e)(iii), or 6.1(e)(iv) of the
Riviera Merger Agreement or (y) is effected pursuant to an
agreement or understanding, oral or written, which is entered
into prior to such date;
(ii) Morgens, Waterfall shall have also sold, transferred or
disposed (including by way of merger) of its shares of common
stock in Elsinore Corporation, a Nevada Corporation ("Elsinore"),
for consideration equal to or greater than $3.16 per share, which
sale, transfer or other disposition of shares in Elsinore (x)
occurs prior to the date which is 12 months subsequent to the
date of the termination of the Riviera Merger Agreement pursuant
to Sections 6.1(d)(iii), 6.1(d)(iv), 6.1(e)(iii) or 6.1(e)(iv) of
the Riviera Merger Agreement or (y) is effected pursuant to an
agreement or understanding, oral or written, which is entered
into prior to such date; and
(iii) the purchaser was not able to exercise the Purchase Options
because of the failure to satisfy (but not by waiver) the
conditions set forth in Sections 5.2(a), 5.2(b), 5.2(c), or
5.2(d) hereof.
Morgens, Waterfall shall make the payment referenced herein
within two business days of receipt of such proceeds.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions Precedent to Exercise of Purchase
Options. The Purchaser shall have no obligation to exercise the
Purchase Options. Upon exercise of the Purchase Options, the
obligation of the Purchaser to purchase the Shares shall be
subject to the satisfaction or (except in the case of Section
5.1(c)(i), which may not be waived) waiver by the Purchaser on
the Closing Date of each of the following conditions precedent:
(a) HSR Act. The waiting period under the HSR Act, if
applicable, shall have expired or been terminated.
(b) No Injunctions or Restraints. No temporary restraining order
or preliminary or permanent injunction of any court or
administrative agency of competent jurisdiction prohibiting the
transactions contemplated by this Agreement, the Riviera Merger
Agreement, the Agreement and Plan of Merger, by and among the
Purchaser, Elsinore Acquisition Sub, Inc., a Nevada corporation,
and Elsinore, or the Option and Voting Agreement by and between
the Purchaser and Morgens, Waterfall with respect to Elsinore,
shall be in effect or shall be threatened.
(c) Consents. All consents, approvals, authorizations and
waivers from third parties and governmental and regulatory
authorities required or advisable to consummate the transactions
contemplated hereby (the "Approvals") shall have been obtained
before the Closing Date and, in the case of clauses (ii) and
(iii) below, before the execution of this Agreement and shall not
have expired or been rescinded, including the following:
(i) All necessary gaming approvals, including, without
limitation, licensing or finding of suitability of the Purchaser
and approval of a change of control of RHC by the Gaming
Authorities;
(ii) Waiver by the Board of Directors of RHC of any voting
restrictions under the Articles of Incorporation that are
applicable to a purchaser of greater than ten percent of the
issued and outstanding shares of Common Stock; and
(iii) All approvals and waivers necessary to exempt the Purchaser
for purposes of the transactions contemplated hereby from
applicable merger moratorium statutes and control share
acquisition statutes, including, without limitation, Nevada
Revised Statutes Sections 78.411-.444 and 78.378-.3793;
(d) Representations and Warranties. The representations and
warranties of each Seller set forth in this Agreement shall be
true and correct in all material respects on and as of the
Closing Date, as though made on and as of the Closing Date (and
by delivery of the Shares each Seller shall be deemed to affirm
the satisfaction of this condition).
(e) Performance of Obligations of Sellers. Each Seller shall
have performed all obligations required to be performed by it
under this Agreement on or prior to the Closing Date (and by
delivery of the Shares each Seller shall be deemed to affirm the
satisfaction of this condition).
(f) Death and Disability. There shall not have occurred the
death or the Disability of Mr. Allen E. Paulson. As used herein,
"Disability" means Mr. Allen E. Paulson's incapacity due to
physical or mental illness, injury or disease, which incapacity
renders him unable to perform the requisite duties of the chief
executive officer of the Purchaser for a consecutive period of 90
days or more. Any question as to the existence, extent or
potentiality of Mr. Allen E. Paulson's disability upon which the
Purchaser and the Sellers cannot agree, such question shall be
determined by a qualified, independent physician selected by RHC
and approved by the Purchaser and the disputing Sellers (each of
whose approval shall not be unreasonably withheld or delayed).
The determination of such physician shall be final and conclusive
for all purposes of this Agreement.
(g) No Violation of Law. The consummation of the Purchase
Options shall not constitute a violation of any Laws.
SECTION 5.2 Conditions Precedent to the Seller's Obligation.
The obligation of each of the Sellers to sell, assign, transfer,
convey and deliver the Shares owned by it or the investment
accounts it manages, as applicable, upon exercise of the Purchase
Options by the Purchaser shall be subject to the satisfaction or
(except in the case of Sections 5.2(a) and 5.2(c), which may not
be waived), waiver on the Closing Date of each of the following
conditions precedent:
(a) HSR Act. The waiting period under the HSR Act, if applicable
to the Purchaser, shall have expired or been terminated.
(b) No Injunctions or Restraints. No temporary restraining order
or preliminary or permanent injunction of any court or
administrative agency of competent jurisdiction prohibiting the
transactions contemplated by this Agreement shall be in effect.
(c) Consents. All Approvals shall have been obtained and shall
not have expired or been rescinded, including those set forth in
Section 5.1(c).
(d) No Violation of Law. The consummation of the Purchase
Options shall not constitute a violation of any Laws.
(e) Representations and Warranties. The representations and
warranties of the Purchaser set forth in this Agreement shall be
true and correct in all material respects on and as of the
Closing Date, as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement (and by its
acceptance of the Shares, the Purchaser shall be deemed to
reaffirm the accuracy of such representations and warranties).
(f) Performance of Obligations of the Purchaser. The Purchaser
shall have performed all obligations required to be performed by
it under this Agreement on or prior to the Closing Date (and by
its acceptance of the Shares, the Purchaser shall be deemed to
affirm the satisfaction of this condition), including the payment
of the Purchase Price and all unpaid amounts, if any payable
under Section 1.2(b).
ARTICLE VI
TERMINATION AND AMENDMENT
SECTION 6.1 Termination. This Agreement shall terminate without
any further action on the part of the Purchaser or any of the
Sellers if (i) the Purchase Options have been exercised and the
Closing has occurred, (ii) the Purchase Options have not been
exercised and either (x) the Riviera Merger has been consummated
or (y) the Riviera Merger Agreement has been terminated pursuant
to Sections 6.1(a), (b), (c), (d), (e)(i) or (e)(ii) thereof or
(iii) June 1, 1998 shall have occurred.
SECTION 6.2 Effect of Termination. In the event this Agreement
shall have been terminated in accordance with Section 6.1 of this
Agreement, this Agreement shall forthwith become void and have no
effect, except (i) to the extent such termination results from a
breach by any of the parties hereto of any of its obligations
hereunder (in which case such breaching party shall be liable for
all damages allowable at law and any relief available in equity),
(ii) as otherwise set forth in any written termination agreement,
if any, (iii) that Sections 1.3 and 4.7 shall survive the
termination of this Agreement, and (iv) that the provisions of
Sections 3.1 and 3.2 hereof shall survive the termination of the
Riviera Merger Agreement until the earlier of (A) the consent of
the Sellers to the termination of the provisions of Sections 3.1
and 3.2 hereof and (B) June 1, 1998.
SECTION 6.3 Amendment. This Agreement and the Schedules and
Exhibits hereto may not be amended except by an instrument or
instruments in writing signed and delivered on behalf of each of
the parties hereto. At any time prior to the Closing Date, any
party hereto which is entitled to the benefits hereof may (a)
extend the time for the performance of any of the obligations or
other acts of any other party, (b) waive any inaccuracy in the
representations and warranties of any other party contained
herein, in any Schedule and Exhibit hereto, or in any document
delivered pursuant hereto, and (c), subject to applicable law,
waive compliance with any of the agreements of any other party
hereto or any conditions contained herein. Any agreement on the
part of any of the parties hereto to any such extension or waiver
(i) shall be valid only if set forth in an instrument in writing
signed and delivered on behalf of each such party, and (ii) shall
not be construed as a waiver or extension of any subsequent
breach or time for performance hereunder.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt)
by delivery in person, by overnight courier with receipt
requested, by facsimile transmission (with receipt confirmed by
automatic transmission report), or two business days after being
sent by registered or certified mail (postage prepaid, return
receipt requested) to the other party as follows:
(a) if to the Purchaser to:
P. O. Box 9660
Rancho Sante Fe, CA 92067
Attention: Mr. Allen E. Paulson
Telephone: (619) 759-5990
Telecopy:(619) 756-3194
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Brian J. McCarthy, Esq.
Telephone:(213) 687-5070
Telecopy:(213) 687-5600
(b) if to Morgens, Waterfall, to:
Swiss Bank Tower
10 East 50th Street
New York, New York 10022
Attention: Mr. Bruce Waterfall
Telephone:(212) 705-0500
Telecopy:(212) 838-5540
with a copy to:
O'Melveny & Myers, LLP
400 South Hope Street
Los Angeles, CA 90071-2899
Attention: C. James Levin, Esq.
Telephone:(213) 669-6578
Telecopy:(213) 669-6407
(c) if to Keyport, to:
Mr. Steve Lockman
Stein Roe & Farnham Incorporated
One South Wacker Drive
33rd Floor
Chicago, Illinois 60606-4685
Telephone:(312) 368-7788
Telecopy:(312) 368-8144
with a copy to:
Stacy Winick
Stein Roe & Farnham Incorporated
One South Wacker Drive
33rd Floor
Chicago, Illinois 60606-4885
(d) if to SunAmerica, to:
Mr. Peter McMillan
SunAmerica, Inc.
One SunAmerica Center
Century City, California 90067
Telephone:(310) 772-6101
Telecopy:(310) 772-6150
with a copy to:
Mr. Alan Nussenblatt
SunAmerica, Inc.
One SunAmerica Center
Century City, California 90067
Telephone:(310) 772-6110
Telecopy:(310) 772-6030
SECTION 7.2 Release. Upon the exercise of the option by the
Purchaser to acquire the Shares, the Purchaser shall hereby
release on behalf of itself and RHC all claims, causes of
actions, rights and liabilities held by the Purchaser or RHC
against each Seller based on or arising from such Seller's
ownership of the Shares or actions as a Stockholder of RHC at all
times to and including the Closing Date, and the sale of the
Shares to the Purchaser, except for the representations and
warranties of each Seller set forth in Sections 2.1(b) and 2.1(c)
hereof which shall survive indefinitely.
SECTION 7.3 Interpretation. When a reference is made in this
Agreement to a Section, Schedule or Exhibit, such reference shall
be to the applicable Section, Schedule or Exhibit of this
Agreement unless otherwise indicated. The headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. When the words "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words
"without limitation." All accounting terms not defined in this
Agreement shall have the meanings determined by generally
accepted accounting principles as of the date hereof. All
capitalized terms defined herein are equally applicable to both
the singular and plural forms of such terms.
SECTION 7.4 Severability. If any provision of this Agreement or
the application of any such provision shall be held invalid,
illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof. In lieu of any such
invalid, illegal or unenforceable provision, the parties hereto
intend that there shall be added as part of this Agreement a
valid, legal and enforceable provision as similar in terms to
such invalid, illegal or unenforceable provision as may be
possible or practicable under the circumstances.
SECTION 7.5. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, and all of which, when taken together, shall be deemed
to constitute but one and the same instrument.
SECTION 7.6. Entire Agreement. This Agreement and the Schedules
and Exhibits hereto constitute the entire agreement, and
supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter
hereof.
SECTION 7.7. Governing Law.This Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada,
regardless of the laws that otherwise might govern under any
applicable principles of conflicts of law, except that gaming
approval requirements shall be governed by and construed in
accordance with the laws of the State of Nevada.
SECTION 7.8. Assignment.This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and assigns. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned or delegated by any of the parties hereto without the
prior written consent of the other parties; provided, that the
Purchaser may assign the Purchase Options and the obligations
under this Agreement to any other person who is designated by the
Purchaser and; further provided, that the Purchaser shall remain
responsible for the performance of such designee's obligations.
SECTION 7.9 No Third-Party Beneficiaries. Nothing herein
expressed or implied shall be construed to give any person other
than the parties hereto (and their respective successors and
assigns) any legal or equitable rights hereunder.
SECTION 7.10 Obligations Several and Not Joint. The obligations
of the Sellers hereunder are several and not joint, and no Seller
shall be liable for the breach or default hereunder by any other
Seller.
IN WITNESS WHEREOF, each of the parties hereto has caused its
duly authorized officers to execute this Agreement as of the date
first above written.
R&E GAMING CORP.
By:
Name:
Title:
MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.
By:
Name:
Title:
on behalf of the investment accounts for the entities listed
below
BETJE PARTNERS
THE COMMON FUND
MORGENS WATERFALL INCOME PARTNERS
PHOENIX PARTNERS, L.P.
MWV EMPLOYEE RETIREMENT PLAN GROUP TRUST
RESTART PARTNERS, L.P.
RESTART PARTNERS II, L.P.
RESTART PARTNERS III, L.P.
KEYPORT LIFE INSURANCE COMPANY
By:
Name:
Title:
SUNAMERICA LIFE INSURANCE COMPANY
By:
Name:
Title:
EXHIBIT A
CERTIFICATE FOR DRAWING WITH RESPECT TO
IRREVOCABLE LETTER OF CREDIT NO. _____
DATED _________________, 1997
The undersigned, a duly authorized officer of [Morgens,
Waterfall, Vintiadis & Company, Inc. ("Morgens, Waterfall")]
[Keyport Life Insurance Company ("Keyport")] [SunAmerica Life
Insurance Company ("SunAmerica")] (the "Seller") hereby certifies
to City National Bank (the "Bank"), with reference to irrevocable
letter of credit No. _____ (the "Letter of Credit"; any
capitalized term used herein and not defined shall have its
respective meaning as set forth in the Letter of Credit) issued
by the Bank in favor of the Seller that all of the following has
occurred:
(1) Either (x) the agreement and Plan of Merger, dated as of
September ___, 1997 (the "Riviera Merger Agreement"), by and
among R&E Gaming Corp., a Delaware corporation ("Gaming"),
Riviera Acquisition Sub, Inc., a Nevada corporation, and Riviera
Holdings Corporation, a Nevada corporation, has terminated or (y)
the Riviera Merger (as defined in the Riviera Merger Agreement)
has not occurred in accordance with the terms thereof on or
before April 1, 1998 (or, if the termination date of the Riviera
Merger Agreement is extended in accordance with Section 6.1(c)
thereof, June 1, 1998); and
(2) The Seller is entitled to payment in the amount of $_______
in accordance with the terms of Section 1.3(a) of the Option and
Voting Agreement dated September ___, 1997, by and among Gaming,
Morgens, Waterfall, Keyport and SunAmerica.
Demand is hereby made under the Letter of Credit for $______.
Please remit payment to the Seller, account number
________________, at _________________, ABA No.
_________________________, REF.: ________________________.
EXHIBIT B
Seller Account
Morgens, Waterfall Citibank N.Y.
ABA #: 021000089
For: Morgan Stanley & Co.
Account #: 38890774
Credit To: Edwin Morgens and
Bruce Waterfall as Agents
Sub-Account #:038-30008
Ref: Elsinore/Riviera Option
Agreement Interest
Keyport Federal Reserve Bank of Boston
011001234/Bos Safe Dep/Cust
DDA #108111
For: Keyport/KeyF0005002
SunAmerica Citibank
New York, New York
ABA #021000089
SunAmerica Life Insurance
Company
Account # 40573831
SCHEDULE 2.1(d)
Any other consents, approvals, orders, authorization of, or
registration, declaration or filing with, any Nevada state or
local authority.
SCHEDULE 2.2(c)
Any other consents, approvals, orders, authorization of, or
registration, declaration or filing with, any Nevada state or
local authority.
EXHIBIT B
Joint Filing Agreement
Agreement with regard to joint filing of Schedule 13D made this
11th day of April, 1997, by and between STEIN ROE & FARNHAM
INCORPORATED, a Delaware corporation ("Stein Roe"), and KEYPORT
LIFE INSURANCE COMPANY, a Rhode Island corporation ("Keyport"):
In accordance with Rule 13d-1(f)(1)(iii) under the Securities
Exchange Act of 1934, Stein Roe and Keyport each acknowledge that
this report on Schedule 13D dated April 11, 1997 and any
amendment thereto is filed on behalf of each of them.
STEIN ROE & FARNHAM INCORPORATED
Jilaine Hummel Bauer
Senior Vice President and General Counsel
KEYPORT LIFE INSURANCE COMPANY
Bernard R. Beckerlegge
Senior Vice President and General Counsel
