SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 13, 1997
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Riviera Holdings Corporation
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(Exact Name of Registrant as Specified in Charter)
Nevada 00021430 88-0296885
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(State or Other Commission File (IRS Employer
Jurisdiction Number) Identification
Incorporation No.)
2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (702) 734-5110
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5 Other Events
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On August 13, 1997, the registrant closed a $175 million 10%
First Mortgage Notes due 2004 private placement and defeased its
$100 million 11% First Mortgage Notes due December 31, 2002. See
Press Release dated August 13, 1997 attached as Exhibit 99.1.
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Item 7 Financial Statements, Pro Forma Financial Information
and Exhibits
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(c) Exhibits
1.1 Purchase Agreement, dated August 8, 1997, by and among Riviera Holdings
Corporation, Riviera Operating Corporation, Riviera Gaming Management,
Inc., Riviera Gaming Management of Colorado, Inc., Riviera Gaming
Management-Elsinore, Inc., Jefferies & Company, Inc. and Ladenburg
Thalmann & Co. Inc.
4.1 Registration Rights Agreement, dated August 13, 1997, by and among
Riviera Holdings Corporation, Riviera Operating Corporation, Riviera
Gaming Management, Inc., Riviera Gaming Management of Colorado, Inc.,
Riviera Gaming Management- Elsinore, Inc., Jefferies & Company, Inc.
and Ladenburg Thalmann & Co. Inc.
4.2 Indenture, dated August 13, 1997, by and among Riviera Holdings
Corporation, Riviera Operating Corporation, Riviera Gaming Management,
Inc., Riviera Gaming Management-Elsinore, Inc., Riviera Gaming
Management of Colorado, Inc. and Norwest Bank Minnesota, National
Association.
10.1 Deed of Trust, Assignment of Rents, Leases, Fixture Filing and Security
Agreement, dated August 13, 1997, executed by Riviera Holdings
Corporation for the benefit of Norwest Bank Minnesota, National
Association.
10.2 Security Agreement, dated August 13, 1997, by and between Riviera
Holdings Corporation, Riviera Operating Corporation, Riviera Gaming
Management, Inc., Riviera Gaming Management of Colorado, Inc., Riviera
Gaming Management-Elsinore, Inc. and Norwest Bank Minnesota, National
Association.
10.3 Stock Pledge and Security Agreement, dated August 13, 1997, executed by
Riviera Holdings Corporation.
10.4 Stock Pledge and Security Agreement, dated August 13, 1997, executed by
Riviera Operating Corporation.
10.5 Stock Pledge and Security Agreement, dated August 13, 1997, executed by
Riviera Gaming Management, Inc.
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10.6 Restricted Account Agreement, dated August 13, 1997, by and among
Riviera Holdings Corporation, Norwest Bank Minnesota, National
Association and U.S. Bank of Nevada.
10.7 First Amendment to Revolving Line of Credit Loan Agreement, dated
August 12, 1997, between Riviera Holdings Corporation, Riviera
Operating Corporation and U.S. Bank.
99.1 Press Release, dated August 13, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RIVIERA HOLDINGS CORPORATION
(Registrant)
Date: August 18, 1997 s/Duane Krohn
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(Signature)
Duane Krohn,
Treasurer and Chief Financial Officer
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EXHIBITS INDEX
Exhibit
Number Description Page
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1.1 Purchase Agreement, dated August 8, 1997, by and among
Riviera Holdings Corporation, Riviera Operating
Corporation, Riviera Gaming Management, Inc., Riviera
Gaming Management of Colorado, Inc., Riviera Gaming
Management- Elsinore, Inc., Jefferies & Company, Inc.
and Ladenburg Thalmann & Co. Inc.
4.1 Registration Rights Agreement, dated August 13, 1997, by
and among Riviera Holdings Corporation, Riviera
Operating Corporation, Riviera Gaming Management, Inc.,
Riviera Gaming Management of Colorado, Inc., Riviera
Gaming Management-Elsinore, Inc., Jefferies & Company,
Inc. and Ladenburg Thalmann & Co. Inc.
4.2 Indenture, dated August 13, 1997, by and among Riviera
Holdings Corporation, Riviera Operating Corporation,
Riviera Gaming Management, Inc., Riviera Gaming
Management-Elsinore, Inc., Riviera Gaming Management of
Colorado, Inc. and Norwest Bank Minnesota, National
Association.
10.1 Deed of Trust, Assignment of Rents, Leases, Fixture
Filing and Security Agreement, dated August 13, 1997,
executed by Riviera Holdings Corporation for the benefit
of Norwest Bank Minnesota, National Association.
10.2 Security Agreement, dated August 13, 1997, by and
between Riviera Holdings Corporation, Riviera Operating
Corporation, Riviera Gaming Management, Inc., Riviera
Gaming Management of Colorado, Inc., Riviera Gaming
Management- Elsinore, Inc. and Norwest Bank Minnesota,
National Association.
10.3 Stock Pledge and Security Agreement, dated August 13,
1997, executed by Riviera Holdings Corporation.
10.4 Stock Pledge and Security Agreement, dated August 13,
1997, executed by Riviera Operating Corporation.
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Exhibit
Number Description Page
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10.5 Stock Pledge and Security Agreement, dated August 13,
1997, executed by Riviera Gaming Management, Inc.
10.6 Restricted Account Agreement, dated August 13, 1997, by
and among Riviera Holdings Corporation, Norwest Bank
Minnesota, National Association and U.S. Bank of Nevada.
10.7 First Amendment to Revolving Line of Credit Loan
Agreement, dated August 12, 1997, between Riviera
Holdings Corporation, Riviera Operating Corporation and
U.S. Bank.
99.1 Press Release, dated August 13, 1997.
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Riviera Holdings Corporation
And
The Guarantors Named Herein
$175,000,000
10% First Mortgage Notes due 2004
PURCHASE AGREEMENT
August 8, 1997
JEFFERIES & COMPANY, INC.
LADENBURG THALMANN & CO. INC.
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$175,000,000
10% First Mortgage Notes Due 2004
of Riviera Holdings Corporation
PURCHASE AGREEMENT
August 8, 1997
Jefferies & Company, Inc.
Ladenburg Thalmann & Co. Inc.
c/o Jefferies & Company, Inc.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Dear Sirs:
Riviera Holdings Corporation, a Nevada corporation (the
"Company"), proposes to issue and sell to Jefferies & Company, Inc. and
Ladenburg Thalmann & Co. Inc. (the "Initial Purchasers") an aggregate of
$175,000,000 in principal amount of its 10% First Mortgage Notes due 2004 (the
"Series A Notes"), subject to the terms and conditions set forth herein. The
Series A Notes are to be issued pursuant to the provisions of an indenture (the
"Indenture"), to be dated as of the Closing Date (as defined below), among the
Company, the Guarantors (as defined below) and Norwest Bank Minnesota, N.A., as
trustee (the "Trustee"). The Series A Notes and the Series B Notes (as defined
below) issuable in exchange therefor are collectively referred to herein as the
"Notes." The Series A Notes will be guaranteed (the "Subsidiary Guarantees") by
each of the Company's subsidiaries (as defined in the Indenture) listed on
Schedule A hereto (each, a "Guarantor" and collectively, the "Guarantors") and
the Series B Notes will be guaranteed (also, the "Subsidiary Guarantees"),
subject to the receipt of required gaming regulatory approvals, by each of the
Guarantors. The obligations under the Notes and the Subsidiary Guarantees will
be secured by security interests in or pledges of (the "Security Interests")
certain assets (the "Collateral") as set forth in the Offering Circular (as
defined below). Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Indenture. As used herein, the term "Notes"
shall include the Subsidiary Guarantees whenever the context permits.
1. Offering Circular. The Series A Notes will be offered and
sold to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"Act"). The Company and the Guarantors have prepared a preliminary offering
circular, dated July 28, 1997 (the "Preliminary Offering Circular") and a final
offering circular, dated August 8, 1997 (the "Offering Circular"), relating to
the Series A Notes and the Subsidiary Guarantees.
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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 SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE THAT IS TWO
YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE
144(K) AS PERMITTING RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES
WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL CLOSING DATE
HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUY TO WHO NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(A)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT THAT IS PURCHASING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE."
2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers agree,
severally and not jointly, to purchase from the Company, the principal amounts
of Series A Notes set
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forth opposite the name of such Initial Purchaser on Schedule B hereto at a
purchase price equal to 95.313% of the principal amount thereof (the "Purchase
Price").
3. Terms of Offering. The Initial Purchasers have advised the
Company that the Initial Purchasers 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
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBs"), and (ii) not more than ten other
institutional "accredited investors," as defined in Rule 501(a) (1), (2), (3) or
(7) under the Act, who execute a letter containing certain representations and
agreements in the form set forth as Annex A to the Offering Circular (each, an
"Accredited Institution") (such persons specified in clauses (i) and (ii) being
referred to herein as the "Eligible Purchasers"). The Initial Purchasers will
offer the Series A Notes to Eligible Purchasers initially at a price equal to
98.770% of the principal amount thereof. Such price may be changed at any time
without notice.
Holders (as defined in the Indenture, 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, 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 and the Guarantors 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 10% First Mortgage
Notes due 2004 to be offered in exchange for the Series A Notes (the "Series B
Notes") (such offer to exchange being referred to as the "Exchange Offer") and
the Subsidiary Guarantees thereof 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 are or will be secured
obligations and the Company and the Guarantors (to the extent they are a party
thereto) will enter into a security agreement, a deed of trust, stock pledge and
security agreements, and certain other agreements (collectively, the "Security
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 and the Guarantors under the Indenture, the Notes and the Security
Documents. This Agreement, the Indenture, the Notes, the Subsidiary Guarantees,
the Registration Rights Agreement and the Security Documents are hereinafter
sometimes referred to collectively as the "Operative Documents."
4. Delivery and Payment.
(a) Delivery of, and payment of the Purchase Price
for, the Series A Notes shall be made at the offices of Dechert Price & Rhoads,
30 Rockefeller Plaza, New York, New York 10112 or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 1:00 p.m. New
York City time, on August 13, 1997 or at such other time as shall be agreed upon
by the Initial Purchasers and the Company. The time and date of such delivery
and the payment are herein called the "Closing Date."
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(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 Purchasers (or as the
Initial Purchasers direct) in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial Purchasers of the Purchase
Price thereof by wire transfer in same day funds to the order of the Company.
The Global Note shall be made available to the Initial Purchasers for inspection
not later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.
5. Agreements of the Company and the Guarantors. Each of the
Company and the Guarantors hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, 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 offering
or sale in any jurisdiction designated by the Initial Purchasers pursuant to
Section 5(e) hereof, or the initiation of any proceeding by any state securities
commission or any 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) below that makes any statement of a material fact made in the Preliminary
Offering Circular or the Offering Circular untrue or that requires any additions
to or changes in the Preliminary Offering Circular or the 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 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 Purchasers and those
persons identified by the Initial Purchasers to the Company as many copies of
the Preliminary Offering Circular and the Offering Circular, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request.
Subject to the Initial Purchasers' compliance with its representations and
warranties and agreements set forth in Section 7 hereof, the Company consents to
the use of the Preliminary Offering Circular and the Offering Circular, and any
amendments and supplements thereto required pursuant hereto, by the Initial
Purchasers in connection with Exempt Resales.
(c) Not to make any amendment or supplement to the
Offering Circular prior to the Closing Date or during the period referred to in
Section 5(d) below unless the Initial Purchasers shall previously have been
advised of, and shall not have reasonably objected to, such amendment or
supplement within a reasonable time, but in any event not longer than five days
after being furnished a copy of such amendment or supplement. The Company shall
prepare promptly upon the Initial Purchasers' reasonable request, any amendment
or supplement to the Offering Circular which may be necessary or advisable in
connection with such Exempt Resales or any market-making activities of the
Initial Purchasers with respect to the Series A Notes.
(d) If, in connection with any Exempt Resales or
market making transactions after the date of this Agreement and prior to the
consummation of the Exchange Offer, any event shall occur or condition shall
exist as a result of which, in the opinion of counsel to the Initial Purchasers,
it becomes necessary to amend or supplement the Offering Circular in order to
make the statements therein,
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in the light of the circumstances when such Offering Circular is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering Circular
to comply with any applicable law, forthwith 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 Purchasers and such other persons
as the Initial Purchasers may designate such number of copies thereof as the
Initial Purchasers may reasonably request.
(e) Prior to the sale of all Series A Notes pursuant
to Exempt Resales as contemplated hereby, to cooperate with the Initial
Purchasers and counsel to the Initial Purchasers in connection with the
registration or qualification of the Series A Notes for offer and sale to the
Initial Purchasers and pursuant to Exempt Resales under the securities or Blue
Sky laws of such jurisdictions as the Initial Purchasers 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 neither the Company nor any Guarantor shall 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 Offering Circular or Exempt Resales, in any jurisdiction in which it is not
now so subject.
(f) Whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to the Trustee and the holders of Notes (i) 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 the Company were required to file
such Forms that describe the financial condition and results of the Company and
its consolidated subsidiaries (showing in reasonable detail, 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," the
financial condition and results of operations of the Company and its Restricted
Subsidiaries (as defined in the Indenture) separate from the financial condition
and results of operations of the Unrestricted Subsidiaries (as defined in the
Indenture) of the Company) 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 Commission on Form
8-K if the Company were required to file such reports. In addition, whether or
not required by the rules and regulations of the Commission, the Company will
file a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request.
(g) So long as the Notes are outstanding, to furnish
to the Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Company or any of the Guarantors 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 or any of the
Guarantors is listed and such other publicly available information concerning
the Company and/or its subsidiaries as the Initial Purchasers may reasonably
request.
(h) So long as any of the Series A Notes remain
outstanding and during any period in which the Company and the Guarantors are
not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to furnish to any holder of Series A Notes,
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and prospective investors designated by the holders of the Series A Notes, upon
their request, the information ("Rule 144A Information") required by Rule
144A(d)(4) under the Act.
(i) 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 and the Guarantors under this Agreement, including: (i) the fees,
disbursements and expenses of counsel to the Company and the Guarantors, counsel
to the Initial Purchasers and accountants of the Company and the Guarantors in
connection with the sale and delivery of the Series A Notes to the Initial
Purchasers 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 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(d), including the mailing and delivering of copies thereof to the Initial
Purchasers and persons designated by it in the quantities specified herein, (ii)
other out-of-pocket expenses incurred by the Initial Purchasers in connection
with their performance hereunder (including, without limitation, travel and
lodging expenses, word processing charges, messenger and duplicating services,
facsimile expenses and other customary expenditures, subject in each case to
receipt of appropriate supporting documentation), (iii) all costs and expenses
related to the transfer and delivery of the Series A Notes to the Initial
Purchasers and pursuant to Exempt Resales, including any transfer or other taxes
payable thereon, (iv) 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, (v) all
expenses in connection with the registration or qualification of the Series A
Notes and the Subsidiary Guarantees 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
Purchasers in connection with such registration or qualification and memoranda
relating thereto), (vi) the cost of printing certificates representing the
Series A Notes and the Subsidiary Guarantees, (vii) all expenses and listing
fees in connection with the application for quotation of the Series A Notes in
the National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (viii) the fees and expenses of the
Trustee and the Trustee's counsel in connection with the Indenture, the Notes,
the Subsidiary Guarantees and the Security Agreements, (ix) the costs and
charges of any transfer agent, registrar and/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, and (xii) all other costs and expenses
incident to the performance of the obligations of the Company and the Guarantors
under this Agreement and the other Operative Documents for which provision is
not otherwise made in this Section.
(j) 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 the Series A Notes are outstanding.
(k) 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.
(l) Except as contemplated in the Preliminary
Offering Circular and the Offering Circular, 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 Guarantor or any warrants, rights or options to purchase
or otherwise acquire debt
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securities of the Company or any Guarantor substantially similar to the Notes
and the Subsidiary Guarantees (other than the Notes and the Subsidiary
Guarantees), without the prior written consent of the Initial Purchasers.
(m) 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
Purchasers 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.
(n) 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.
(o) To cause the Exchange Offer to be made in the
appropriate form to permit Series B Notes and guarantees thereof by the
Guarantors registered pursuant to the Act to be offered in exchange for the
Series A Notes and the Subsidiary Guarantees and to comply with all applicable
federal and state securities, gaming and other laws in connection with the
Exchange Offer.
(p) To comply with all of its agreements set forth in
the Registration Rights Agreement.
(q) 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 and the Subsidiary Guarantees.
(r) To use the net proceeds from the sale of the
Series A Notes in the manner described in the Offering Circular under the
caption "Use of Proceeds."
(s) To timely file reports with the Nevada State
Gaming Control Board (the "Nevada Board") pursuant to Nevada Board and Nevada
Gaming Commission Regulation 8.130 in respect to the sale of the Notes and
receipt of the proceeds therefrom.
6. Representations, Warranties and Agreements of the Company
and the Guarantors. As of the date hereof, each of the Company and the
Guarantors represents and warrants to, and agrees with, the Initial Purchasers
that:
(a) The Preliminary Offering Circular and the
Offering Circular do not, and any supplement or amendment to 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 Offering Circular (or any supplement or amendment thereto) based
upon information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein. No stop order
preventing the use of the Preliminary Offering Circular or the Offering
Circular, or any 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.
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(b) Each of the Company and its subsidiaries has been
duly incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Preliminary Offering
Circular and the Offering Circular and to own, lease and operate its properties,
and each 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 the failure to be so qualified would not have a material adverse
effect on the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole (a "Material Adverse Effect").
(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) Except for the subsidiaries referred to in
Section 4.23 of the Indenture which subsidiaries, taken together, are immaterial
to the Company and its other subsidiaries, taken as a whole, the entities listed
on Schedule A hereto are the only subsidiaries, direct or indirect, of the
Company. All of the outstanding shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, directly or indirectly through one
or more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature held by a third party (each, a
"Lien"), except for any Lien established on voting rights or otherwise imposed
pursuant to applicable gaming laws.
(e) This Agreement has been duly authorized, executed
and delivered by the Company and each of the Guarantors.
(f) The Indenture has been duly authorized by the
Company and each of the Guarantors and, on the Closing Date, will have been
validly executed and delivered by the Company and each of the Guarantors. When
the Indenture has been duly executed and delivered by the Company and each of
the Guarantors, and assuming due authorization, execution and delivery by the
Trustee, the Indenture will be a valid and binding agreement of the Company and
each Guarantor, enforceable against the Company and each Guarantor in accordance
with its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and an
implied covenant of good faith and fair dealing and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability and, in the case of the Guarantors, subject
to the receipt of all necessary gaming approvals.
(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 Purchasers 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 in accordance with
their terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and an
implied covenant of good faith and fair dealing 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 as to legal matters to the description thereof contained in the
Offering Circular.
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(h) On the Closing Date, the Series B Notes will have
been duly authorized by the Company. When the 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, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and an implied covenant of good faith and fair
dealing and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(i) The Subsidiary Guarantee to be endorsed on the
Series A Notes by each Guarantor has been duly authorized by such Guarantor and,
on the Closing Date, will have been duly executed and delivered by each such
Guarantor. When the Series A Notes have been issued, executed and authenticated
in accordance with the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Subsidiary
Guarantee of each Guarantor endorsed thereon will be entitled to the benefits of
the Indenture and will be the valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and an implied covenant of good faith and fair
dealing and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability and
subject to the receipt of all necessary gaming approvals. On the Closing Date,
the Subsidiary Guarantees to be endorsed on the Series A Notes will conform as
to legal matters to the description thereof contained in the Offering Circular.
(j) The Subsidiary Guarantee to be endorsed on the
Series B Notes by each Guarantor has been duly authorized by such Guarantor and,
when issued, will have been duly executed and delivered by each such Guarantor.
When the Series B Notes have been issued, executed and authenticated in
accordance with the terms of the Exchange Offer and the Indenture, the
Subsidiary Guarantee of each Guarantor endorsed thereon will be entitled to the
benefits of the Indenture and will be the valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and an implied covenant
of good faith and fair dealing and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability and subject to the receipt of all necessary gaming
approvals. When the Series B Notes are issued, authenticated and delivered, the
Subsidiary Guarantees to be endorsed on the Series B Notes will conform as to
legal matters to the description thereof in the Offering Circular.
(k) The Registration Rights Agreement has been duly
authorized by the Company and each of the Guarantors and, on the Closing Date,
will have been duly executed and delivered by the Company and each of the
Guarantors. When the Registration Rights Agreement has been duly executed and
delivered, and assuming due authorization, execution and delivery by the Initial
Purchasers, the Registration Rights Agreement will be a valid and binding
agreement of the Company and each of the Guarantors, enforceable against the
Company and each Guarantor in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and an implied covenant of good faith and fair
dealing and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability and, in
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the case of the Guarantors, subject to the receipt of all necessary gaming
approvals. On the Closing Date, the Registration Rights Agreement will conform
as to legal matters to the description thereof in the Offering Circular.
(l) Each of the Security Documents to which the
Company or any Guarantor is a party has been duly and validly authorized by each
of the Company and such Guarantor, as the case may be, and when duly executed
and delivered by each of them, and assuming due authorization, execution and
delivery by any other parties thereto, will create valid and perfected first
priority security interests in the Collateral, subject to Permitted Liens (as
defined in the Indenture) and certain exclusions (as set forth in the Indenture)
and will be the legally valid and binding obligation of each of them enforceable
against each of them in accordance with their respective terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and an implied covenant of good faith and fair
dealing and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability and
subject to, in the case of the Guarantors, the receipt of all necessary gaming
approvals.
(m) Neither the Company nor any of the Guarantors is
in violation of its respective charter or by-laws 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 and the Guarantors, taken as a whole, to which the
Company or any of the Guarantors is a party or by which the Company or any of
the Guarantors or their respective property is bound.
(n) After giving effect to all consents that will be
obtained on or prior to the Closing Date, the execution, delivery and
performance of this Agreement and the other Operative Documents by the Company
and each of the Guarantors party thereto, compliance by the Company and each of
the Guarantors party hereto and thereto 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 or,
insofar as performance of the Registration Rights Agreement is concerned, except
such as may be required by the rules of the Nevada Gaming Control Board), (ii)
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, the charter or by-laws of the Company or any of its subsidiaries
or any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries, taken as a
whole, to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries or their respective property is bound
except to the extent such conflict, breach or default will not have a Material
Adverse Effect, (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, any of its subsidiaries or their
respective property, 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 or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or their respective property is bound (except as
provided in the Security Documents and 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 (as defined below) of the Company
or any of its subsidiaries 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.
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(o) There are no legal or governmental proceedings
pending, or to the knowledge of the Company, or threatened to which the Company
or any of its subsidiaries is or could be a party or to which any of their
respective property is or could be subject, which might result, singly or in the
aggregate, in a Material Adverse Effect.
(p) Neither the Company nor any of its subsidiaries
has violated any 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.
(q) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(r) Each of the Company and its subsidiaries 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 respective properties and to conduct its business in the manner
described in the Offering Circular, except where the failure to have any such
Authorization or to make any such filing or notice would not, singly or in the
aggregate, have a Material Adverse Effect. Each such Authorization is valid and
in full force and effect and each of the Company and its subsidiaries is in
material 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; and 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 material impairment of the rights of the
holder of any such Authorization, subject in each case to such qualification as
may be set forth in the Offering Circular and except to the extent that any such
revocation, suspension, termination or other impairment would not have a
Material Adverse Effect; and such Authorizations contain no restrictions that
are materially burdensome to the Company or any of its subsidiaries; except
where such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a Material Adverse
Effect.
(s) The accountants, Deloitte & Touche, that have
certified the financial statements and supporting schedules included in the
Preliminary Offering Circular and the Offering Circular are independent public
accountants with respect to the Company and the Guarantors, 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 Offering Circular comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.
(t) The historical financial statements, together
with related schedules and notes forming part of the Preliminary Offering
Circular and the Offering Circular (and any amendment or supplement thereto),
present fairly the consolidated financial position, results of operations and
changes
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in financial position of the Company and its subsidiaries on the basis stated in
the Preliminary Offering Circular and 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 Preliminary Offering Circular and 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.
(u) 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 Preliminary Offering Circular and the
Offering Circular, will not be, an "investment company," as such term is defined
in the Investment Company Act of 1940, as amended.
(v) After giving effect to the consummation of the
Offering and related transactions on the Closing Date, there will be no
contracts, agreements or understandings between the Company or any Guarantor and
any person granting such person (i) the right to require the Company or such
Guarantor to file a registration statement under the Act with respect to any
securities of the Company or such Guarantor except for the Equity Registration
Rights Agreement dated June 30, 1993, among the Company and the holders of
registrable shares referred to therein or (ii) the right to require the Company
or such Guarantor to include such securities with the Notes and Subsidiary
Guarantees registered pursuant to any Registration Statement.
(w) Neither the Company nor any of its subsidiaries
nor any agent thereof acting on the behalf of them 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 or
Regulation M (17 C.F.R. Part 242.100) of the Commission.
(x) Since the respective dates as of which
information is given in the Preliminary Offering Circular and the Offering
Circular, other than as set forth in the Preliminary Offering Circular and 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 and its subsidiaries, taken as a whole, (ii) there has
not been any material adverse change in the capital stock or in the long-term
debt of the Company or any of its subsidiaries and (iii) neither the Company nor
any of its subsidiaries has incurred any material liability or obligation,
direct or contingent, except in the ordinary course of business.
(y) Each of the Preliminary Offering Circular and the
Offering Circular, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Act.
(z) When the Series A Notes and the Subsidiary
Guarantees are issued and delivered pursuant to this Agreement, neither the
Series A Notes nor the Subsidiary Guarantees will be of the same class (within
the meaning of Rule 144A under the Act) as any security of the Company or the
Guarantors 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.
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(aa) No form of general solicitation or general
advertising (as defined in Regulation D under the Act) was used by the Company,
the Guarantors or any of their respective representatives (other than the
Initial Purchasers, as to whom the Company and the Guarantors make 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.
(ab) Prior to the effectiveness of any Registration
Statement, the Indenture is not required to be qualified under the Trust
Indenture Act of 1939, as amended.
(ac) 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 Purchasers' representations and
warranties in Section 7 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 Purchasers with their
covenants set forth in Section 7 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 Purchasers pursuant hereto and the initial resale of the
Series A Notes pursuant hereto pursuant to the Exempt Resales is exempt from the
registration requirements of the Act.
(ad) 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 or any Guarantor that it is
considering imposing) any condition (financial or otherwise) on the Company's or
any Guarantor's retaining any rating assigned as of the date hereof to the
Company, any Guarantor or any securities of the Company or any Guarantor or (ii)
has indicated to the Company or any Guarantor 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 or any
Guarantor.
(ae) Each certificate signed by any authorized
officer of the Company or any Guarantor and delivered to the Initial Purchasers
or counsel for the Initial Purchasers shall be deemed to be a representation and
warranty by the Company or such Guarantor to the Initial Purchasers as to the
matters covered thereby.
(af) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its subsidiaries, in each case free and clear of all Liens
and defects, except such as are described in the Preliminary Offering Circular
and the Offering Circular 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 and its subsidiaries.
(ag) The Company and its subsidiaries own or possess,
or can acquire on reasonable terms, all patents, patent rights, licenses,
inventions, copyrights, know-h w (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names ("intellectual property")
currently employed by them in connection with the business now operated by them
except where the failure to own or possess or otherwise be able to acquire such
intellectual property would not, singly or in the aggregate, have a
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Material Adverse Effect; and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of such intellectual property which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.
(ah) The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and n such amounts as are reasonably prudent and customary in the
businesses in which they are engaged; and neither the Company nor any of its
subsidiaries (i) has received notice from any insurer or agent of such insurer
that substantial capital improvements or other material expenditures will have
to be made in order to continue such insurance or (ii) has any reason to believe
that it will not be able to renew its 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.
(ai) Except as disclosed in the Preliminary Offering
Circular and the Offering Circular, no material relationship, direct or
indirect, exists between or among the Company or any of its subsidiaries on the
one hand, and the directors, officers, stockholders, customers or suppliers of
the Company or any of its subsidiaries on the other hand, which would be requi
ed by the Act to be described in the Preliminary Offering Circular and the
Offering Circular if the Preliminary Offering Circular and the Offering Circular
were a prospectus included in a registration statement on Form S-1 filed with
the Commission.
(aj) There is no (i) significant unfair labor
practice complaint, grievance or arbitration proceeding pending or, to the
Company's knowledge, threatened against the Company or any of its ubsidiaries
before the National Labor Relations Board or any state or local labor relations
board, (ii) strike, labor dispute, slowdown or stoppage pending or, to the
Company's knowledge, threatened against the Company or any of its subsidiaries
or (iii) union representation question existing with respect to the employees of
the Company or any of its subsidiaries, except in the case of clauses (i), (ii)
and (iii) for such actions which, singly or in the aggregate, would not have a
Material Adverse Effect.
(ak) The Company and each of its subsidiaries
maintain 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.
(al) All material tax returns required to be filed by
the Company and each of its subsidiaries in any jurisdiction have been filed,
other than those filings eing 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 or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(am) All indebtedness of the Company and its
subsidiaries that will be repaid with the proceeds of the issuance and sale of
the Series A Notes was incurred, and the indebtedness represented by the Series
A Notes is being incurred, for proper purposes and in good faith and each of
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the Company and its subsidiaries will be on the Closing Date (after giving
effect to the application of the proceeds from the issuance of the Series A
Notes) solvent, and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Notes) sufficient
capital for carrying on their respective business and will be on the Closing
Date (after giving effect to the application of the proceeds from the issuance
of the Series A Notes) able to pay their respective debts as they mature.
(an) No action has been taken and no law, statute,
rule or regulation or order has been enacted, adopted or issued by any
governmental agency or body which prevents the execution, delivery and
performance of any of the Operative Documents, the issuance of the Series A
Notes or the Subsidiary Guarantees, or suspends the sale of the Series A Notes
or the Subsidiary Guarantees in any jurisdiction referred to in Section 5(e);
and no injunction, restraining order or other order or relief of any nature by a
federal or state court or other tribunal of competent jurisdiction has been
issued with respect to the Company or any of its subsidiaries which would
prevent or suspend the issuance or sale of the Series A Notes or the Subsidiary
Guarantees in any jurisdiction referred to in Section 5(e).
The Company acknowledges that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 9 hereof, counsel to the Company and the Guarantors and counsel to the
Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. Initial Purchasers' Representations and Warranties. Each of
the Initial Purchasers, severally and not jointly, represent and warrant to, and
agrees with, the Company and the Guarantors that:
(a) Such Initial Purchaser is either a QIB or an
Accredited Institution, in either case, with such knowledge and experience in
financial and business matters as is necessary in order to evaluate the merits
and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) 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 (B) will be reoffering and reselling
the Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A, and (y) not more
than ten 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) Such 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 such Initial Purchaser or any of its
representatives in connection with the offer and sale 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 any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection
with Exempt Resales, such Initial Purchaser will solicit offers to buy the
Series A Notes only from, and will offer to sell the Series A Notes only to,
Eligible Purchasers. Each 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 (A) Eligible Purchasers that the Initial Purchaser reasonably
believes are QIBs, and (B) Accredited Institutions who
15
<PAGE>
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 (x) 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 (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 under the Act, (III) in an offshore transaction (as defined in Rule
902 under the Act) meeting the requirements of Rule 904 of the Act, (IV) in a
transaction meeting the requirements of Rule 144 under the Act, (V) 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, (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 (y) 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) Such Initial Purchaser agrees that it will not
offer, sell or deliver any of the Series A Notes in any jurisdiction outside the
United States except under circumstances that will result in compliance with the
applicable laws thereof, and that it will take at its own expense whatever
action is required to permit its purchase and resale of the Series A Notes in
such jurisdictions. Such Initial Purchaser understands that no action has been
taken to permit a public offering in any jurisdiction outside the United States
where action would be required for such purpose.
Each of the Initial Purchaser acknowledges that the
Company and the Guarantors and, for purposes of the opinions to be delivered to
each Initial Purchaser pursuant to Section 9 hereof, counsel to the Company and
the Guarantors 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.
8. Indemnification.
(a) The Company and each Guarantor agree, jointly and
severally, to indemnify and hold harmless the Initial Purchasers, their
directors, their officers and each person, if any, who controls such Initial
Purchasers 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 Offering Circular (or any amendment or supplement
thereto), the Preliminary Offering Circular or any Rule 144A Information
provided by the Company or any Guarantor to any holder or prospective purchaser
of Series A Notes pursuant to Section 5(h) 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 Purchasers furnished in writing to the
Company by such Initial Purchasers.
16
<PAGE>
(b) Each of the Initial Purchasers, severally and not
jointly, agrees to indemnify and hold harmless the Company and the Guarantors,
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) the Company or the Guarantors, to the same extent as the foregoing
indemnity from the Company and the Guarantors to such Initial Purchasers but
only with reference to information relating to such Initial Purchasers furnished
in writing to the Company by such Initial Purchasers expressly for use in the
Preliminary Offering Circular or the Offering Circular.
(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 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 8(a) and 8(b), the Initial Purchasers 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 Initial Purchasers). 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 Jefferies & Company, Inc. 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 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.
17
<PAGE>
(d) To the extent the indemnification provided for in
this Section 8 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 and the Guarantors, on the one hand, and the Initial Purchasers on the
other hand from the offering of the Series A Notes or (ii) if the allocation
provided by clause 8(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 8(d)(i) above but also the relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchasers, 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 and the
Guarantors, on the one hand and the Initial Purchasers, 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 (before deducting expenses) received by the
Company, and the total discounts and commissions received by the Initial
Purchasers 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 and the Guarantors, on the one hand, and the
Initial Purchasers, 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 or the Guarantors, on the one hand, or the
Initial Purchasers, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Guarantors, and the Initial
Purchasers 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 Initial Purchaser were treated as 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 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, the Initial Purchasers shall not be required to
contribute any amount in excess of the amount by which the total price of the
Series A Notes purchased by it were sold to investors in Exempt Resales exceeds
the amount of any damages which the Initial Purchasers 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 representation. The Initial
Purchasers' obligation to contribute pursuant to this Section 8(d) are several
in proportion to the respective principal amount of Series A Notes purchased by
each of the Initial Purchasers hereunder and not joint.
(e) The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. Conditions of Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase the Series A Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
18
<PAGE>
(a) All the representations and warranties of the
Company and the Guarantors contained in this Agreement shall be true and correct
on the date hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and on the Closing Date, respectively.
(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 Guarantor or any securities of the Company or
any Guarantor (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 or any Guarantor 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, or the earnings, business, management or operations of
the Company and its subsidiaries, taken as a whole, and (ii) there shall not
have been any change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(c)(i),
9(c)(ii) or 9(c)(iii), in the Initial Purchasers' reasonable judgment, is
material and adverse and, in the Initial Purchasers' reasonable judgment, makes
it impracticable to market the Series A Notes on the terms and in the manner
contemplated in the Offering Circular.
(d) The Initial Purchasers shall have received on the
Closing Date a certificate dated the Closing Date, signed by the Chief Executive
Officer and the Treasurer of the Company and the Guarantors, confirming the
matters set forth in Sections 9(a) and 9(c).
(e) The Initial Purchasers shall have received on the
Closing Date an opinion (in form and substance satisfactory to the Initial
Purchasers and counsel for the Initial Purchasers), dated the Closing Date, of
Dechert Price & Rhoads, counsel for the Company and the Guarantors, in the form
attached hereto as Exhibit B. In providing such opinion, such counsel shall
opine as to the federal laws of the United States and the laws of the State of
New York.
(f) The Initial Purchasers shall have received on the
Closing Date an opinion (in form and substance satisfactory to the Initial
Purchasers and counsel to the Initial Purchasers), dated the Closing Date, of
Schreck Morris, Nevada counsel to the Company and each of the Guarantors,
substantially to the effect set forth in Exhibit C hereto. In providing such
opinion, such counsel shall opine as to the laws of the State of Nevada.
(g) The Initial Purchasers shall have received on the
Closing Date an opinion (in form and substance satisfactory to the Initial
Purchasers and counsel to the Initial Purchasers), dated the Closing Date, of
Holme, Roberts & Owen LLP, Colorado counsel to the Company and each of the
19
<PAGE>
Guarantors, substantially to the effect set forth in Exhibit D hereto. In
providing such opinion, such counsel shall opine as to the laws of the State of
Colorado.
(h) The Initial Purchasers shall have received on the
Closing Date an opinion, dated the Closing Date, of Latham & Watkins, counsel
for the Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers.
(i) The Initial Purchasers 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 Purchasers from Deloitte & Touche, independent
public accountants, containing the information and statements of the type
ordinarily included in accountants' "comfort letters" to the Initial Purchasers
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 Initial Purchasers shall have received a
counterpart, conformed as executed, of the Indenture which shall have been
entered into by the Company, the Guarantors and the Trustee.
(l) The Company and the Guarantors shall have
executed the Registration Rights Agreement and the Initial Purchasers shall have
received an original copy thereof, duly executed by the Company and the
Guarantors.
(m) The Company shall not 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 at or
prior to the Closing Date.
(n) Counsel to the Initial Purchasers shall have been
furnished with such documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 9 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(o) All proceedings taken in connection with the sale
of the Notes as herein contemplated shall be reasonably satisfactory in form and
substance to the Initial Purchasers, and, prior to the Closing Date, the Company
and the Guarantors shall have furnished to the Initial Purchasers such further
information, certificates and documents as the Initial Purchasers may reasonably
request.
(p) On the Closing Date, the Initial Purchasers shall
have received certificates of solvency, giving effect to the offering of the
Series A Notes contemplated hereby, signed by the treasurer of each of the
Company and the Guarantors substantially in the form previously approved by the
Initial Purchasers.
(q) The Trustee shall have received (i) a certificate
of insurance demonstrating insurance coverage of types, in amounts, with
insurers and with other terms required by the terms of the Operative Documents,
(ii) executed copies of each UCC-1 financing statement signed by the Company and
each Guarantor, naming the Trustee as secured party and filed in such
jurisdictions as the Initial
20
<PAGE>
Purchasers may reasonably require, and (iii) to the extent required by the
Operative Documents, the original stock certificates, promissory notes and other
instruments pledged to the Trustee pursuant to the Operative Documents, together
with undated stock powers or endorsements duly executed in blank in connection
therewith.
(r) 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 of the Company and the
Guarantors, and to accord the Trustee the priorities over other creditors of
either of the Company or the Guarantors as contemplated by the Offering Circular
and the Operative Documents.
(s) The Trustee shall have received irrevocable
commitments for title insurance from Chicago Title Insurance Company, in a form
and substance reasonably satisfactory to the Initial Purchasers, subject only to
Liens permitted under the Indenture, for the title insurance for the Company's
Riviera Hotel & Casino property in Las Vegas, Nevada.
(t) Counsel for the Initial Purchasers shall have
been furnished with such documents as are necessary to confirm that there are no
Liens against any of the personal or real property of the Company or the
Guarantors unless such liens are permitted under the Indenture or have otherwise
been approved by the Initial Purchasers.
(u) The Trustee shall have received such appraisals,
surveys and estoppel certificates as the Initial Purchasers reasonably require.
(v) The trustee for the Company's 11% First Mortgage
Notes Due 2002 (the "Existing First Mortgage Notes"), shall have notified the
Company and the Initial Purchasers that upon the defeasance of the Existing
First Mortgage Notes using approximately $109.0 million of the offering proceeds
of the Notes, it shall release all liens and security interests in the
collateral under the Existing First Mortgage Notes and terminate the security
documents related thereto effective as of the Closing Date.
(w) The Company and Riviera Operating Corporation
shall have entered into the First Amendment to Revolving Line of Credit Loan
Agreement with U.S. Bank of Nevada (the "Bank of Nevada"), which amendment shall
provide for, among other things, the release of all liens and security interests
in favor of the Bank of Nevada under the Revolving Line of Credit Agreement
dated February 28, 1997 and the termination of the security agreement related
thereto effective as of the Closing Date.
10. Effectiveness 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 Purchasers 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 Purchasers' reasonable judgment, is material and adverse and, in
the Initial Purchasers' 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
21
<PAGE>
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 or any Guarantor 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 the Initial Purchasers'
reasonable opinion materially and adversely affects, or will materially and
adversely affect, the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, (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 the
Initial Purchasers' reasonable opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date any one or more of the Initial
Purchasers shall fail or refuse to purchase the Series A Notes which it or they
have agreed to purchase hereunder on such date and the aggregate principal
amount of the Series A Notes which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase is not
more than one-tenth of the aggregate principal amount of the Series A Notes to
be purchased on such date by all Initial Purchasers, each non-defaulting Initial
Purchaser shall be obligated severally, in the proportion which the principal
amount of the Series A Notes set forth opposite its name in Schedule B bears to
the aggregate principal amount of the Series A Notes which all the
non-defaulting Initial Purchasers, as the case may be, have agreed to purchase,
or in such other proportion as the Initial Purchasers may specify, to purchase
the Series A Notes which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase on such
date; provided that in no event shall the aggregate principal amount of the
Series A Notes which any Initial Purchaser has agreed to purchase pursuant to
Section 2 hereof be increased pursuant to this Section 10 by an amount in excess
of one-ninth of such principal amount of the Series A Notes without the written
consent of such Initial Purchaser. If on the Closing Date any Initial Purchaser
or Initial Purchasers shall fail or refuse to purchase the Series A Notes and
the aggregate principal amount of the Series A Notes with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of the
Series A Notes to be purchased by all Initial Purchasers and arrangements
satisfactory to the Initial Purchasers and the Company for purchase of such the
Series A Notes are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Initial
Purchaser, the Company or the Guarantors. In any such case which does not result
in termination of this Agreement, either the Initial Purchasers or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Offering
Circular or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of any such Initial Purchaser under
this Agreement.
11. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company or any
Guarantor, to 2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109; (702)
734-5110; Attention: William L. Westerman and (ii) if to the Initial Purchasers,
Jefferies & Company, Inc., 11100 Santa Monica Boulevard, 10th Floor, Los
Angeles, California 90025 ((310) 575-5200) Attention: Syndicate Department, or
in any case to such other address as the person to be notified may have
requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, the Guarantors
and the Initial Purchasers 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,
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<PAGE>
made by or on behalf of the Initial Purchasers, the officers or directors of the
Initial Purchasers, any person controlling the Initial Purchasers, the Company,
any Guarantor, the officers or directors of the Company or any Guarantor, or any
person controlling the Company or any Guarantor, (ii) acceptance of the Series A
Notes and payment for them hereunder and (iii) termination of this Agreement.
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 10), the Company and each
Guarantor, jointly and severally, agree to reimburse the Initial Purchasers for
all out-of-pocket expenses (including the fees and disbursements of counsel)
incurred by them. Notwithstanding any termination of this Agreement, the Company
shall be liable for all expenses which it has agreed to pay pursuant to Section
5(i) hereof. The Company and each Guarantor also agree, jointly and severally,
to reimburse the Initial Purchasers and its officers, directors and each person,
if any, who controls such Initial Purchasers 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 this Section 11).
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Guarantors, the Initial Purchasers, the Initial Purchasers' directors and
officers, any controlling persons referred to herein, the directors of the
Company and the Guarantors and their respective 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 Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
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<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
RIVIERA HOLDINGS CORPORATION
By: Name: Title:
RIVIERA OPERATING CORPORATION
RIVIERA GAMING MANAGEMENT, INC.
RIVIERA GAMING MANAGEMENT OF COLORADO, INC.
RIVIERA GAMING MANAGEMENT-ELSINORE, INC.
By:________________________________
Name:_________________________
Title:________________________
JEFFERIES & COMPANY, INC.
By:_____________________________
Name:________________________
Title:_______________________
LADENBURG THALMANN & CO. INC.
By:_____________________________
Name:________________________
Title:_______________________
24
<PAGE>
SCHEDULE A
GUARANTORS
Riviera Operating Corporation
Riviera Gaming Management, Inc.
Riviera Gaming Management of Colorado, Inc.
Riviera Gaming Management-Elsinore, Inc.
S-1
<PAGE>
SCHEDULE B
Initial Purchasers Principal Amount of Notes
Jefferies & Company, Inc.
Ladenburg Thalmann & Co. Inc.
Total $175,000,000
S-2
<PAGE>
EXHIBIT A
Form of Registration Rights Agreement
A-1
<PAGE>
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of August 13, 1997
by and among
Riviera Holdings Corporation
The Guarantors Named Herein
and
Jefferies & Company, Inc.
Ladenburg Thalmann & Co. Inc.
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
entered into as of August 13, 1997 by and among Riviera Holdings Corporation, a
Nevada corporation (the "Company"), Riviera Operation Corporation, Riviera
Gaming Management, Inc., Riviera Gaming Management-Elsinore, Inc., Nevada
corporations, and Riviera Gaming Management of Colorado, Inc., a Colorado
corporation, (each a "Guarantor" and, collectively, the "Guarantors"), and
Jefferies & Company, Inc. and Ladenburg Thalmann & Co. Inc. (each a "Purchaser"
and, collectively, the "Purchasers"), each of whom has agreed to purchase the
Company's 10% Series A First Mortgage Notes due 2004 (the "Series A Notes")
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
August 13, 1997 (the "Purchase Agreement"), by and among the Company, the
Guarantors and the Purchasers. In order to induce the Purchasers 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 Purchasers set forth in Section 9 of the
Purchase Agreement.
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.
Broker-Dealer: Any broker or dealer registered under the Exchange
Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (i) 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, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) 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 that were
tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each
Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
Equity Registration Rights Agreement: The Equity Registration Rights
Agreement, dated as of June 30, 1993, among the Company and the holders of
securities of the Company named on Schedule 1 therein.
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Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the
Series B Notes pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Purchasers propose 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 institutional
"accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) and
(7) of Regulation D under the Act ("Accredited Institutions").
Holders: As defined in Section 2(b) hereof.
Indemnified Party: As defined in Section 8(c) hereof.
Indemnifying Party: As defined in Section 8(c) hereof.
Indenture: The Indenture, dated as of August 13, 1997, by and among
the Company, Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"), and the Guarantors, pursuant to which the Notes are to be issued, as
such Indenture is amended or supplemented from time to time in accordance with
the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in a Registration Statement, 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.
Purchaser: As defined in the preamble hereto.
Record Holder: With respect to any Damages Payment Date relating to
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
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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, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Series B Notes: The Company's 10% Series B First Mortgage Notes due
2004 to be issued pursuant to the Indenture in the Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 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 Series A Note, until the
earliest to occur of (a) the date on which such Series A Note is exchanged in
the Exchange Offer and entitled to be resold to the public by the Holder thereof
without complying with the prospectus delivery requirements of the Act, (b) the
date on which such Series A Note has been effectively registered under the Act
and disposed of in accordance with a Shelf Registration Statement and (c) the
date on which such Series A Note is distributed to the public pursuant to Rule
144 under the Act or by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including delivery of
the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. 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 permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Company and the Guarantors shall (i)
cause to be filed with the Commission as soon as practicable after the Closing
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Date, but in no event later than 60 days after the Closing Date, a Registration
Statement under the Act relating to the Series B Notes and the Exchange Offer,
(ii) use their best efforts to cause such Registration Statement to become
effective at the earliest possible time, but in no event later than 120 days
after the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings 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 Registration
Statement, commence the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Series B Notes to be offered in
exchange for the Transfer Restricted Securities and to permit resales of Notes
held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration Statement
to be effective continuously and shall keep the Exchange Offer open for a period
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 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.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Series A Notes pursuant to the Exchange Offer; however, 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 any resales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission as a result of a change in policy after the
date of this Agreement.
The Company and the Guarantors shall use their best efforts to keep
the Exchange Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that it conforms 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
date on which the Exchange Offer Registration Statement is declared effective.
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The Company shall provide sufficient copies of the latest version of
such Prospectus to Broker- Dealers promptly upon request at any time during such
one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 business days of the Consummation of the Exchange Offer (A)
that such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) that such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Notes
acquired directly from the Company or one of its affiliates, then the Company
and the Guarantors shall:
(x) cause to be filed a shelf registration statement pursuant to
Rule 415 under the Act, which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
Statement") on or prior to the earliest to occur of (1) the 60th day after
the date on which the Company determines that it is not required to file
the Exchange Offer Registration Statement, (2) the 60th day after the date
on which the Company receives notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above and (3) the 90th day after
the Closing Date (such earliest date being the "Shelf Filing Deadline"),
which Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities the Holders of which shall have provided
the information required pursuant to Section 4(b) hereof; and
(y) use their best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission on or before the
120th day after the Shelf Filing Deadline.
The Company and the Guarantors shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for resales of Notes by the Holders of
Transfer Restricted Securities entitled to the benefit of this Section 4(a), and
to ensure that it conforms 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 following the Closing Date.
(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 business days after receipt of a request
therefor, such information as the Company may reasonably request 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
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Holder shall have used its best efforts to provide all such reasonably requested
information. Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement
is not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement 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 immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company and the
Guarantors hereby jointly and severally agree to pay liquidated damages to each
Holder of Transfer Restricted Securities with respect to the first 90-day period
immediately following the occurrence of such Registration Default, in an amount
equal to $.05 per week per $1,000 principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. 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 principal amount of Transfer
Restricted Securities. All accrued liquidated damages shall be paid to Record
Holders by the Company by wire transfer of immediately available funds or by
federal funds check on each Damages Payment Date, as provided in the Indenture.
Following the cure of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of liquidated damages with respect
to such Transfer Restricted Securities will cease.
All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with all of the
provisions of Section 6(c) below, shall use their best efforts to effect such
exchange to permit the sale of Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
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(i) If in the reasonable opinion of counsel to the Company there
is a question as to whether the Exchange Offer is permitted by applicable
law, the Company and the Guarantors hereby agree to seek a no-action
letter or other favorable decision from the Commission allowing the
Company and the Guarantors to Consummate an Exchange Offer for such Series
A Notes. Both the Company and the Guarantors hereby agree to pursue the
issuance of such a decision to the Commission staff level but shall not be
required to take commercially unreasonable action to effect a change of
Commission policy. Each of the Company and the Guarantors hereby agrees,
however, to (A) participate in telephonic conferences with the Commission,
(B) deliver 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 pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation thereof, 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. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Company's preparations for the
Exchange Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(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 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 should 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
if the resales are of Series B Notes obtained by such Holder in exchange
for Series A Notes acquired by such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are 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) and, if
applicable, any no-action letter obtained pursuant to clause (i) above and
(B) including a representation that neither the Company nor the Guarantors
has 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.
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(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their 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, and
pursuant thereto the Company will as expeditiously as possible 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.
(c) General Provisions. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Notes by
Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder, financial
statements of the Guarantors) 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 a material misstatement or omission 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, in the
case of clause (A), correcting any such misstatement or omission, and, in
the case of either clause (A) or (B), use its best efforts to cause such
amendment to be declared effective and such Registration Statement and the
related Prospectus to become usable for their intended purpose(s) as soon
as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as applicable, or such shorter
period as will terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold; 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
the applicable provisions of Rules 424 and 430A 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 the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to 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
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
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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 or the Prospectus in order to make the statements therein 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 and the Guarantors shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), 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 Prospectus
(including all documents incorporated by reference after the initial
filing of such Registration Statement), which documents will be subject to
the review of such Holders and underwriter(s), 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 a selling Holder of Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s), if any, shall reasonably object within five business days
after the receipt thereof. A selling Holder or underwriter, if any, 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;
(v) 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 the selling Holders and to the
underwriter(s), if any, make the Company's representatives available (and
representatives of the Guarantors) 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 selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Company and
the Guarantors and cause the officers, directors and employees of the
Company and the Guarantors to supply all information reasonably requested
by any such Holder, underwriter, attorney or accountant in connection with
such Registration Statement subsequent to the filing thereof and prior to
its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s),
if any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the principal
amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid
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therefor and any other terms of the offering of the Transfer Restricted
Securities to be sold in such offering; 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
incorporated in such Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies,
if so requested by the Holders of a majority in aggregate principal amount
of Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, 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 selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company and the
Guarantors hereby consent to the use of the Prospectus and any amendment
or supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) in connection with a Shelf Registration Statement, enter
into, and cause the Guarantors to enter into, such agreements (including
an underwriting agreement), and make, and cause the Guarantors to 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 Shelf Registration
Statement contemplated by this Agreement, all to such extent as may be
requested by any Purchaser or by any Holder of Transfer Restricted
Securities or underwriter in connection with any sale or resale pursuant
to any Shelf Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or
not the registration is an Underwritten Registration, the Company and the
Guarantors shall:
(A) furnish to each Purchaser, each selling Holder and each
underwriter, if any, in such substance and scope as they may request
and as are customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of the Consummation of the
Exchange Offer and, if applicable, the effectiveness of the Shelf
Registration Statement:
(1) a certificate, dated the date of effectiveness of the
Shelf Registration Statement, signed by (y) the President or any
Vice President and (z) a principal financial or accounting
officer of each of the Company and the Guarantors, confirming,
as of the date thereof, the matters set forth in paragraphs (a),
(b) and (c) of Section 9 of the Purchase Agreement and such
other matters as such parties may reasonably request;
(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement, of counsel for the Company and the
Guarantors, covering the matters set forth in paragraphs (e),
(f) and (g) of Section 9 of the Purchase Agreement and such
other matter as such
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parties 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, the Purchasers' representatives and the
Purchasers' counsel in connection with the preparation of such
Registration Statement and the related Prospectus and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel is not
passing upon and does not assume any responsibility for 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 a large extent upon facts provided
to such counsel by 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, 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 contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in 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 (i) the financial statements, notes and schedules thereto,
(ii) other financial, statistical and accounting data, and (iii)
the Form T-1, in each case, included in or omitted from any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 9(i) of the Purchase
Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Company or
the Guarantors contemplated in clause (A)(1) above cease to be true and
correct, the Company or the Guarantors shall so advise the Purchasers and
the underwriter(s), if any, and each selling Holder promptly and, if
requested by such Persons, shall confirm such advice in writing;
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(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with, and cause the Guarantors to cooperate with,
the selling Holders, the underwriter(s), if any, and their respective
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 or underwriter(s) 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 Shelf Registration Statement; provided, however,
that neither the Company nor any of the Guarantors shall 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) shall issue, upon the request of any Holder of Series A
Notes covered by the Shelf Registration Statement, Series B Notes, having
an aggregate principal amount equal to the aggregate principal amount of
Series A Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Series B Notes to be
registered in the name of such Holder or in the name of the purchaser(s)
of such Notes, as the case may be; in return, the Series A Notes held by
such Holder shall be surrendered to the Company for cancellation;
(xiv) cooperate with, and cause the Guarantors to cooperate
with, the selling Holders and the underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive legends;
and enable such Transfer Restricted Securities to be in such denominations
and registered in such names as the Holders or the underwriter(s), if any,
may request at least two business days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use its best efforts to cause 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 or the underwriter(s),
if any, to consummate the disposition of such Transfer Restricted
Securities, subject to the proviso contained in clause (viii) above;
(xvi) if any fact or event contemplated by clause (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 not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration Statement
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 Depositary Trust Company;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified
12
<PAGE>
independent underwriter") that is required to be retained in accordance
with the rules and regulations of the NASD, and use its reasonable best
efforts to cause such Registration Statement to become effective and
approved by such governmental agencies or authorities as may be necessary
to enable the Holders selling Transfer Restricted Securities to consummate
the disposition of such Transfer Restricted Securities;
(xix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm or best efforts Underwritten Offering or (B) if not
sold to underwriters in such an offering, beginning with the first month
of the Company's first fiscal quarter commencing after the effective date
of the Registration Statement;
(xx) 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, and cause the
Guarantors to cooperate, with the Trustee and the Holders of Notes 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 cause the Guarantors to 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;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by
the Holders of a majority in aggregate principal amount of Series A Notes
or the managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") 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. If so
directed by the Company, each Holder will 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 such notice. In the event
the Company shall give any such 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 the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received
13
<PAGE>
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company or the Guarantors'
performance of or compliance with this Agreement will be borne by the Company or
the Guarantors, respectively, regardless of whether a Registration Statement
becomes effective, including without limitation: (i) all registration and filing
fees and expenses (including filings made by any Purchaser or Holder with the
NASD (and, if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (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, the Guarantors and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing 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 and the Guarantors (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 and the Guarantors' 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
Purchasers and the Holders of Transfer Restricted Securities being tendered in
the Exchange Offer and/or resold pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or registered pursuant to
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins or
such other counsel as may 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 and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding
14
<PAGE>
by any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Holder) directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (or any amendment or
supplement thereto), or 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 expenses are caused by an untrue statement or omission or alleged
untrue statement or omission that is made in reliance upon and in conformity
with information relating to any of the Holders furnished in writing to the
Company by any of the Holders expressly for use therein.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
of the Indemnified Holders with respect to which indemnity may be sought against
the Company or any Guarantor, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company and the
Guarantors in writing (provided, that the failure to give such notice shall not
relieve the Company or any Guarantor of its obligations pursuant to this
Agreement). Such Indemnified Holder shall have the right to employ its own
counsel in any such action and the fees and expenses of such counsel shall be
paid, as incurred, by the Company and the Guarantors (regardless of whether it
is ultimately determined that an Indemnified Holder is not entitled to
indemnification hereunder). Neither the Company nor any Guarantor shall, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for such Indemnified Holders, which firm shall be
designated by the Holders. The Company shall be liable for any settlement of any
such action or proceeding effected with the Company's prior written consent,
which consent shall not be withheld unreasonably, and the Company agrees to
indemnify and hold harmless any Indemnified Holder from and against any loss,
claim, damage, liability or expense by reason of any settlement of any action
effected with the written consent of the Company. The Company shall not, without
the prior written consent of each Indemnified Holder, settle or compromise or
consent to the entry of judgment in or otherwise seek to terminate any pending
or threatened action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company and the Guarantors,
and their respective directors, officers, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company,
and the respective officers, directors, partners, employees, representatives and
agents of each such person, to the same extent as the foregoing indemnity from
the Company and the Guarantors to each of the Indemnified Holders, but only with
respect to claims and actions based on information relating to such Holder
furnished in writing by such Holder expressly for use in any Registration
Statement. In case any action or proceeding shall be brought against the Company
or its directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted Securities, such
Holder shall have the rights and duties given the Company and the Company or its
directors or officers or such controlling person shall have the rights and
duties given to
15
<PAGE>
each Holder by the preceding paragraph. In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable 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 expenses 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 if such allocation is not permitted by
applicable law, the relative fault of the Company on the one hand and of the
Indemnified Holder on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Guarantors on the one hand and of the Indemnified Holder on the
other 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
or the Guarantors or by the Indemnified Holder 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 expenses 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, the Guarantors and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) 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 expenses 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 such action or claim. Notwithstanding the
provisions of this Section 8, none of the Holders (and its related Indemnified
Holders) shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total discount received by such Holder with respect
to the Series A Notes exceeds 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
Series A Notes held by each of the Holders hereunder and not joint.
16
<PAGE>
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from 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.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors agree that monetary
damages (including the liquidated damages contemplated hereby) would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree 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, and will cause
the Guarantors not to, 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. Neither the Company nor any of the Guarantors has previously
entered into any agreement granting any registration rights with respect to its
securities to any Person, except the Equity Registration Rights Agreement. 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, including the Equity Registration Rights
Agreements in effect on the date hereof.
17
<PAGE>
(c) Adjustments Affecting the Notes. The Company will not take any
action, or permit any change to occur, with respect to the Notes that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.
(d) 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 the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose 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 being tendered or registered.
(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), telex, 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 or to any Guarantor:
Riviera Holdings Corporation
2901 Las Vegas Boulevard, South
Las Vegas, NV 89109
Telecopier No.: (702) 734-5110
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
Telecopier No.: (212) 698-3537
Attention: Fredric Klink
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
answered back, if telexed; 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.
18
<PAGE>
(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 the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(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 together with the other
Operative Documents (as defined in the Purchase 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 by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
RIVIERA HOLDINGS CORPORATION
By:________________________________________
Name:
Title:
RIVIERA OPERATING CORPORATION
By:________________________________________
Name:
Title:
RIVIERA GAMING MANAGEMENT, INC.
By:________________________________________
Name:
Title:
RIVIERA GAMING MANAGEMENT--ELSINORE, INC.
By:________________________________________
Name:
Title:
RIVIERA GAMING MANAGEMENT OF COLORADO, INC.
By:________________________________________
Name:
Title:
20
<PAGE>
JEFFERIES & COMPANY, INC.
By:________________________________________
Name:
Title:
LADENBURG THALMANN & CO. INC.
By:________________________________________
Name:
Title:
21
Execution Version
================================================================================
RIVIERA HOLDINGS CORPORATION
SERIES A AND SERIES B
10% FIRST MORTGAGE NOTES DUE 2004
-----------------
INDENTURE
Dated as of August 13, 1997
-----------------
Norwest Bank Minnesota, National Association
-----------------
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) .................................................. 12.03
(c) .................................................. 12.03
313 (a) .................................................. 7.06
(b)(1) ............................................... 10.03
(b)(2) ............................................... 7.07
(c) .................................................. 7:06;12.02
(d) .................................................. 7.06
314 (a) .................................................. 4:03;12.02
(b) .................................................. 10.02
(c)(1) ............................................... 12.04
(c)(2) ............................................... 12.04
(c)(3) ............................................... N.A.
(d) .................................................. 10:03; 10:04; 10.05
(e) .................................................. 12.05
(f) .................................................. N.A.
315 (a) .................................................. 7.01
(b) .................................................. 7:05;12.02
(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) .................................................. 12.01
(b) .................................................. N.A.
(c) .................................................. 12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..........................1
Section 1.01. Definitions............................................1
Section 1.02. Other Definitions.....................................15
Section 1.03. Incorporation by Reference of Trust Indenture Act.....15
Section 1.04. Rules of Construction.................................16
ARTICLE 2 THE NOTES..........................................................16
Section 2.01. Form and Dating.......................................16
Section 2.02. Execution and Authentication..........................17
Section 2.03. Registrar and Paying Agent............................17
Section 2.04. Paying Agent to Hold Money in Trust...................18
Section 2.05. Holder Lists..........................................18
Section 2.06. Transfer and Exchange.................................18
Section 2.07. Replacement Notes.....................................24
Section 2.08. Outstanding Notes.....................................24
Section 2.09. Treasury Notes........................................24
Section 2.10. Temporary Notes.......................................25
Section 2.11. Cancellation..........................................25
Section 2.12. Defaulted Interest....................................25
Section 2.13. CUSIP Number..........................................25
Section 2.14. Exchange Registration.................................25
ARTICLE 3 REDEMPTION AND PREPAYMENT..........................................26
Section 3.01. Notices to Trustee....................................26
Section 3.02. Selection of Notes to Be Redeemed.....................26
Section 3.03. Notice of Redemption..................................26
Section 3.04. Effect of Notice of Redemption........................27
Section 3.05. Deposit of Redemption Price...........................27
Section 3.06. Notes Redeemed in Part................................27
Section 3.07. Optional Redemption...................................28
Section 3.08. Redemption Pursuant to Gaming Law.....................28
Section 3.09. Mandatory Redemption..................................29
Section 3.10. Other Mandatory Offer to Purchase.....................29
ARTICLE 4 COVENANTS......................................................... 31
Section 4.01. Payment of Notes......................................31
Section 4.02. Maintenance of Office or Agency.......................31
Section 4.03. Reports...............................................31
Section 4.04. Compliance Certificate................................32
Section 4.05. Taxes.................................................32
Section 4.06. Stay, Extension and Usury Laws........................33
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Section 4.07. Restricted Payments...................................33
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries..............................................35
Section 4.09. Conversion of Black Hawk Operating Company to a
Restricted Subsidiary...............................................36
Section 4.10. Incurrence of Indebtedness and Issuance of
Preferred Stock.....................................................36
Section 4.11. Asset Sales...........................................38
Section 4.12. Transactions with Affiliates..........................39
Section 4.13. Liens.................................................40
Section 4.14. Business Activities...................................40
Section 4.15. Corporate Existence...................................40
Section 4.16. Offer to Repurchase Upon Change of Control............40
Section 4.17. Use of Proceeds.......................................41
Section 4.18. Additional Subsidiary Guarantees......................41
Section 4.19. Collateral Documents..................................42
Section 4.20. Maintenance of Insurance..............................42
Section 4.21. Limitation on Status as Investment Company............42
Section 4.22. Further Assurances....................................42
Section 4.23. Dissolution of Subsidiaries...........................43
ARTICLE 5 SUCCESSORS.........................................................43
Section 5.01. Merger, Consolidation, or Sale of Assets..............43
Section 5.02. Successor Corporation Substituted.....................43
ARTICLE 6 DEFAULTS AND REMEDIES..............................................44
Section 6.01. Events of Default.....................................44
Section 6.02. Acceleration..........................................45
Section 6.03. Other Remedies........................................46
Section 6.04. Waiver of Past Defaults...............................46
Section 6.05. Control by Majority...................................47
Section 6.06. Limitation on Suits...................................47
Section 6.07. Rights of Holders of Notes to Receive Payment.........47
Section 6.08. Collection Suit by Trustee............................47
Section 6.09. Trustee May File Proofs of Claim......................48
Section 6.10. Priorities............................................48
Section 6.11. Undertaking for Costs.................................48
Section 6.12. Management of Casinos.................................48
ARTICLE 7 TRUSTEE........................................................... 49
Section 7.01. Duties of Trustee.....................................49
Section 7.02. Rights of Trustee.....................................50
Section 7.03. Individual Rights of Trustee..........................50
Section 7.04. Trustee's Disclaimer..................................50
Section 7.05. Notice of Defaults....................................51
Section 7.06. Reports by Trustee to Holders of the Notes............51
Section 7.07. Compensation and Indemnity............................52
Section 7.08. Replacement of Trustee................................53
Section 7.09. Successor Trustee by Merger, etc......................54
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<PAGE>
Section 7.10. Eligibility; Disqualification.........................54
Section 7.11. Preferential Collection of Claims Against Company.....54
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE...........................54
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance..........................................................54
Section 8.02. Legal Defeasance and Discharge........................54
Section 8.03. Covenant Defeasance...................................55
Section 8.04. Conditions to Legal or Covenant Defeasance............55
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions............................56
Section 8.06. Repayment to Company..................................57
Section 8.07. Reinstatement.........................................57
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER...................................57
Section 9.01. Without Consent of Holders of Notes...................57
Section 9.02. With Consent of Holders of Notes......................58
Section 9.03. Compliance with Trust Indenture Act...................59
Section 9.04. Revocation and Effect of Consents.....................59
Section 9.05. Notation on or Exchange of Notes......................59
Section 9.06. Trustee to Sign Amendments, etc.......................60
ARTICLE 10 COLLATERAL AND SECURITY...........................................60
Section 10.01. Collateral Documents.................................60
Section 10.02. Recording and Opinions...............................61
Section 10.03. Release of Collateral................................62
Section 10.04. Certificates of the Company..........................62
Section 10.05. Certificates of the Trustee..........................63
Section 10.06. Authorization of Actions to Be Taken by the Trustee
Under the Collateral Documents......................................63
Section 10.07. Authorization of Receipt of Funds by the Trustee
Under the Collateral Documents......................................63
Section 10.08. Termination of Security Interest.....................64
Section. 10.09. Cooperation of Trustee..............................64
Section. 10.10. Collateral Agent....................................64
ARTICLE 11 SUBSIDIARY GUARANTEES.............................................64
Section 11.01. Subsidiary Guarantees................................64
Section 11.02. Execution and Delivery of Subsidiary Guarantees......66
Section 11.03. Limitation of Guarantors' Liability..................66
Section 11.04. Merger or Consolidation of Guarantors................67
Section 11.05. Releases of Subsidiary Guarantees....................67
Section 11.06. "Trustee" To Include Paying Agent....................68
ARTICLE 12 MISCELLANEOUS.....................................................68
Section 12.01. Trust Indenture Act Controls.........................68
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Section 12.02. Notices..............................................68
Section 12.03. Communication by Holders of Notes with Other
Holders of Notes.....................................69
Section 12.04. Certificate and Opinion as to Conditions Precedent...69
Section 12.05. Statements Required in Certificate or Opinion........69
Section 12.06. Rules by Trustee and Agents..........................70
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders...........................70
Section 12.08. Governing Law........................................70
Section 12.09. No Adverse Interpretation of Other Agreements........70
Section 12.10. Successors...........................................70
Section 12.11. Severability.........................................70
Section 12.12. Counterpart Originals................................70
Section 12.13. Acts of Holders......................................71
Section 12.14. Legal Holidays.......................................72
Section 12.15. Qualification of Indenture...........................72
Section 12.16. Table of Contents, Headings, etc.....................72
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF SUBSIDIARY GUARANTEE
Exhibit C CERTIFICATE OF TRANSFEROR
iv
1 This paragraph should be included only if the Note is issued in global form.
2 This paragraph should be included only if the Note is a Transfer Restricted
Security.
3 This should only be included if the Note is issued in global form.
<PAGE>
INDENTURE dated as of August 13, 1997 among Riviera Holdings
Corporation, a Nevada corporation (the "Company"), the Guarantors (as defined)
and Norwest Bank Minnesota, National Association, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders (as defined) of the Company's
10% Series A First Mortgage Notes due 2004 (the "Series A Notes") and the 10%
Series B First Mortgage Notes due 2004 (the "Series B Notes" and, together with
the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"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, including,
without limitation, Indebtedness 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.
"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"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), 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 securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition
by the Company or a Restricted Subsidiary of any assets or rights (including,
without limitation, by way of a sale and leaseback) other than sales of assets
(excluding capital assets) or rights in the ordinary course of business
consistent with past practices (provided that the sale, lease, 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 the provisions
of Section 4.16 hereof and/or the provisions of Section 5.01 hereof and not by
the provisions of Section 4.11 hereof), and (ii) the issuance of Equity
Interests by the Company or any Restricted Subsidiary, or the sale by the
Company or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Subsidiaries (other than directors' qualifying shares), in the case of
either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $1.0 million
or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a Restricted Subsidiary or
by a Restricted Subsidiary to the Company or to another Restricted Subsidiary,
(ii) an issuance of Equity Interests by a Restricted Subsidiary to the Company
or to another Restricted Subsidiary, (iii) a Restricted Payment that is
permitted by Section 4.07 hereof, (iv) the surrender or waiver of contract
rights or the settlement, release or surrender of contract, tort or other claims
of any kind, and (v) the grant in the ordinary course of business of any
non-exclusive license of patents, trademarks, registrations therefor and other
similar intellectual property, will not be
<PAGE>
deemed to be Asset Sales. In addition, no sale or disposition of the Riviera
Property (except a sale or disposition of the Six Acre Tracts) shall be a
permitted Asset Sale.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) 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).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Black Hawk Land" means that certain 71,000 square foot parcel of real
property in Black Hawk, Colorado that may be purchased by the Company as
described in the Offering Circular.
"Black Hawk Operating Company" means any Subsidiary or Subsidiaries of
the Company owning the Black Hawk Land or through which the Black Hawk Project
is operated, but excluding any Restricted Subsidiary which acts as a holding
company of any such Subsidiary or Subsidiaries.
"Black Hawk Project" means the pending project to develop, construct,
equip, open and operate a casino, substantially as described in the Offering
Circular, which will be located on the Black Hawk Land.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"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 such 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 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 having maturities of not
more than twelve 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
twelve months and overnight bank deposits, in each case with any domestic
commercial bank having capital and surplus in excess of $500 million and a Keefe
Bank Watch Rating of "B" or better, provided that any deposit accounts with
balances at all times less than $250,000 individually or $1,000,000 in the
aggregate need not meet such capital, surplus or rating requirements, (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 Corporation and in each
case maturing within
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twelve months after the date of acquisition, and (vi) money market funds,
substantially all the assets of which comprise securities of the types described
in clauses (ii) through (v) above.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, 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 assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than any Controlling Person or its Related Parties, (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) 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 any Controlling Person and its Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
35% of the outstanding Voting Stock of the Company (measured by voting power
rather than number of shares) and a greater percentage of the outstanding Voting
Stock of the Company than the percentage of such Voting Stock beneficially owned
by the Controlling Person and its Related Parties, holding the largest such
percentage, (iv) the first day prior to the Merger, if any, on which a majority
of the members of the Board of Directors of the Company are not Continuing
Directors, or (v) the Company 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, the Company, in any such event pursuant to a
transaction in which any of the outstanding Voting Stock of the Company is
converted into or exchanged for cash, securities or other property, other than
any such transaction where the Voting Stock of the Company 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). Notwithstanding the foregoing clauses (i) through (v), neither the
consummation of the Merger nor any acquisition of Elsinore by the Company
(whether effected by way of merger, stock or asset purchase, or otherwise) will
constitute an event of "Change of Control."
"Collateral" means the Riviera Property and other collateral granted
pursuant to the granting provisions (A) through (P) of the Deed of Trust, the
Collateral (as defined in the Security Agreements), the Collateral (as defined
in the Pledge Agreements), the Account (as defined in the Restricted Account
Agreement) and all similar real or personal property of any Person that becomes
a Restricted Subsidiary of the Company after the date hereof, except as
otherwise provided in Sections 4.09 and 4.18, and excluding in all cases any
Excluded Assets (as defined in any of the Collateral Documents).
"Collateral Agent" means the party named as such under Section 10.10
hereof.
"Collateral Documents" means the Deed of Trust, the Pledge Agreements,
the Security Agreements and the Restricted Account Agreement, together with any
documents creating security interests or Liens in Collateral which are executed
after the date hereof pursuant to Section 4.18 hereof.
"Consolidated Cash Flow" means, with respect to any 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 in connection
with an Asset Sale (to the extent such losses were deducted in computing such
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<PAGE>
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its 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 payments (if any) 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, other than pre-opening 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 preopening expenses, that was paid in a prior period) of such Person
and its Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income, plus (v) all expenses relating to the defeasance and
redemption of the Company's 11% First Mortgage Notes due 2002, including any
redemption premium and the excess, if any, of interest expense over interest
income earned from the amounts deposited in trust for the defeasance, to the
extent such expenses were deducted in computing such Consolidated Net Income,
minus (vi) non-cash items increasing such Consolidated Net Income for such
period, in each case, on a consolidated basis and determined in accordance with
GAAP. Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash charges
of, a Subsidiary of the referent Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Subsidiary was included in calculating
the Consolidated Net Income of such Person and only if a corresponding amount
would be permitted at the date of determination to be dividended to the Company
by such 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.
"Consolidated Net Income" means, with respect to any 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 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 referent 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 cumulative effect of a change in accounting principles
shall be excluded and (v) the Net Income of any Unrestricted Subsidiary will be
excluded, whether or not distributed to the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any 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), but
only to the extent of any cash received by such Person upon issuance of such
preferred stock, less (x) all write-ups (other than write-ups resulting
4
<PAGE>
from foreign currency translations and write-ups of tangible assets of a going
concern business made within 12 months after the acquisition of such business)
subsequent to the date of this Indenture in the book value of any asset owned by
such Person or a consolidated Subsidiary of such Person, (y) all investments as
of such date in unconsolidated Subsidiaries and in Persons that are not
Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture 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.
"Controlling Person" means Mr. Allen Paulson, Morgens Waterfall or the
"Morgens Entities" referred to in the Offering Circular, Sun America Life
Insurance Company, or Keyport Life Insurance Co.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Deed of Trust" means the Deed of Trust and Collateral Assignment of
Rents, dated as of the date hereof, by the Company in favor of the Collateral
Agent, as amended and supplemented from time to time.
"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 Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 3 thereof.
"Depository" 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 Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"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), 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.
"Elsinore" means Elsinore Corporation, a Nevada corporation.
"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).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Notes for the
Series A Notes.
"Event of Loss" means, with respect to any property or asset (tangible
or intangible, real or personal) constituting Collateral owned by the Company or
any Restricted Subsidiary, any of the following:
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(i) any loss, destruction or damage of such property or asset; (ii) 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 (iii) any settlement
in lieu of clause (ii) above, in the case of clause (i), (ii) or (iii), whether
in a single event or a series of related events, which results in Net Proceeds
in excess of $500,000.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense, 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 Offering and costs of extinguishing Indebtedness to be
repaid with proceeds of the Offering, but including, without limitation,
amortization of other 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 payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period, and (iii) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or any of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or any of its Restricted Subsidiaries (whether or not such Guarantee
or Lien is called upon) and (iv) the product of (a) all dividend payments,
whether or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests 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 Charge Coverage Ratio" means with respect to any 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 or
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but 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 or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company 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 though they had occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (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 on a pro forma basis, 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 on a
pro forma basis, but only to the extent that the obligations giving rise to such
Fixed Charges will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
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"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 on the date of this Indenture.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States of America or foreign government, any state, province or any
city or other political subdivision, whether now or hereafter existing, or any
officer or official thereof, including without limitation, the Nevada Gaming
Commission, the Nevada State Gaming Control Board, the Colorado Limited Gaming
Control Commission and any other agency with authority to regulate any gaming
operation (or proposed gaming operation) owned, managed or operated by the
Company or any of its Subsidiaries.
"Gaming Equipment" means slot machines, gaming tables and other gaming
devices, including, without limitation, gaming devices as defined in Nevada
Revised Statutes Section 463.0155, and related equipment.
"Gaming Law" means the gaming laws of any jurisdiction or jurisdictions
to which the Company, any of its Subsidiaries or any of the Guarantors is, or
may at any time after the date of this Indenture, be subject.
"Gaming License" means every material license, franchise or other
authorization required to own, lease, operate or otherwise conduct gaming
activities of the Company or any of its Subsidiaries, including without
limitation all such licenses granted under the Nevada Gaming Control Act, the
regulations promulgated pursuant thereto, and other applicable federal, state,
foreign or local laws.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 3 to the form of
the Note attached hereto as Exhibit A, and that is deposited with and registered
in the name of the Depository.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantors" means each of (i) ROC, RGM, RGMC and Riviera Gaming
Management -- Elsinore, Inc. and (ii) any other Restricted Subsidiary that
executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any 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.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued
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expense or trade payable, if and to the extent any of the foregoing indebtedness
(other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
as well as all indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such Person) and, to the
extent not otherwise included, the guarantee by such Person of any indebtedness
of any other Person but excluding the Company's 11% First Mortgage Notes due
2002 and any guaranty by ROC of payment thereof. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value thereof, in the case
of any Indebtedness that does not require current payments of interest, 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.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness 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.
Investments do not include amounts deposited in trust for employee benefit
plans, and without limiting the generality of the foregoing, do not include
amounts deposited by the Company in any "rabbi" trust for the benefit of
executive officers or other employees of the Company. If the Company or any
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
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 Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in Las Vegas, 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 for the intervening period.
"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 owed, if any, by the
Company to each Holder of Notes, pursuant to Section 5 of the Registration
Rights Agreement.
"Management Agreement" means an agreement providing for the management
by the Company or any of its Restricted Subsidiaries of a Person engaged in
Permitted Businesses, provided that the only cash consideration payable
thereunder shall be payable to the Company or a Restricted Subsidiary.
"Merger" means the acquisition of the Company by one or more entities
controlled by Mr. Allen Paulson.
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"Net Income" means, with respect to any 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 net gain or
loss, together with any related provision for taxes on such gain or loss,
realized in connection with (a) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) 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 or nonrecurring net gain or loss,
together with any related provision for taxes on such extraordinary or
nonrecurring net gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale or
Event of Loss or in respect of the initial issuance and sale of the Notes
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale or Event of
Loss and insurance proceeds), net of the direct costs relating to such Asset
Sale, Event of Loss or sale of Notes (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than the Revolving Credit Facility) 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,
or for liabilities retained by the Company or its Restricted Subsidiaries at the
time of the Asset Sale, in each case established in accordance with GAAP.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Non-Recourse Debt" means Indebtedness 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.
"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 Notes by the Company.
"Offering Circular" means the Offering Circular dated August 8, 1997
pursuant to which the Offering was made.
"Officer" means, with respect to any Person, the Chairman of the Board
of Directors, 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.
"Officers' Certificate" means a certificate signed on behalf of the
Company or a Guarantor, as the case may be, by two Officers of the Company or a
Guarantor, as the case may be, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company or a Guarantor, as the case may be, that meets
the requirements set forth in Section 12.05 hereof.
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"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements set forth in
Section 12.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company, any Guarantor or the Trustee.
"Permitted Black Hawk Debt" means third-party financing for the Black
Hawk Project.
"Permitted Businesses" means the lines of business engaged in by the
Company and its Subsidiaries on the date of this Indenture, and all businesses
related, complementary, or incidental thereto, including but not limited to
gaming, lodging, entertainment and food and beverage service, retail store
leasing and concessions, licensing products, services and trade names, and
consulting with and managing third parties who are engaged in the foregoing and
similar lines of businesses.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company that is a Guarantor; (b) any Investment in
Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary
of the Company in a Person if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company and a Guarantor; or (ii) 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 Restricted Subsidiary of the Company that is a Guarantor; (d) 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 4.11 hereof;
(e) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company; (f) Hedging
Obligations; (g) any Investment in the Black Hawk Project (or an alternative
project as to which the Company is permitted to invest Net Proceeds of the
Offering pursuant to Section 4.17) not to exceed $30.0 million; (h) any
Investment in an entity formed for the purpose of developing the Six Acre Tracts
not to exceed $5.0 million (plus the value of the underlying real property, if
contributed to such entity); and (i) credit extensions to gaming customers.
"Permitted Liens" means (i) Liens created or permitted by the
Collateral Documents; (ii) Liens on Gaming Equipment, inventory and receivables
securing Indebtedness that was permitted by the terms of this Indenture to be
incurred; (iii) Liens in favor of the Company; (iv) Liens on property of a
Person existing at the time such Person is merged into, consolidated with or
acquired by the Company or any Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such merger, consolidation
or acquisition and do not extend to any assets other than those of the Person
merged into, consolidated with or acquired by the Company; (v) Liens on property
(other than the Black Hawk Land) existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition and do not extend to
any property other than the property acquired; (vi) Liens to secure the
performance of statutory obligations, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary course of
business; (vii) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by Section 4.10 hereof (and any refinancing thereof)
covering only the assets acquired, constructed or improved with such
Indebtedness; (viii) Liens existing on the date of this Indenture; (ix) 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 conducted, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (x) Liens incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that do not
exceed $5.0 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the
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operation of business by the Company or such Subsidiary; (xi) Liens incurred in
the ordinary course of business in respect of Hedging Obligations; (xii) Liens
arising by reason of any judgment, decree or order of any court with respect to
which the Company or any of its Restricted Subsidiaries is then in good faith
diligently prosecuting an appeal or other proceedings for review, provided that
the existence of such judgment, decree or order is not a Default or Event of
Default under this Indenture and any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor; (xiii)
Liens securing the Permitted Black Hawk Debt in existence on the date, if any,
on which Black Hawk Operating Company becomes a Restricted Subsidiary pursuant
to Section 4.09 hereof; (xiv) carriers' liens, warehousemen's liens, repairmen's
liens, vendors' liens, and similar encumbrances, rights or restrictions on
personal property, not in existence on the date of this Indenture and not
interfering in any material respect with the ordinary conduct of the business of
the Company or any of its Subsidiaries and not impairing in any material respect
the value of the Collateral; (xv) leases, subleases, easements, licenses and
rights of way not in existence on the date of this Indenture and not interfering
in any material respect with the ordinary conduct of the business of the Company
or any of its Subsidiaries and not impairing in any material respect the value
of the Collateral; (xvi) mechanics' liens incurred in the ordinary course of
business, provided that the same are being contested in good faith by
appropriate proceedings and (if required) bonded in an amount sufficient to
cover the amount of any such lien; (xvii) Liens securing Permitted Refinancing
Indebtedness in compliance with this Indenture with respect to secured
Indebtedness, provided that the Liens securing such Permitted Refinancing
Indebtedness do not extend to any assets other than those that secured the
Indebtedness refinanced; (xviii) with respect to any vessel included in the
Collateral, certain maritime liens, including liens for crew's wages and
salvage; and (xix) any extension, renewal, or replacement (or successive
extensions, renewals or replacements) in whole or in part, of Liens described in
clauses (i) through (xviii) above.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its 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; provided
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) except for
revolving credit Indebtedness, such Permitted Refinancing Indebtedness has no
mandatory obligation to pay principal on a date earlier 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 is subordinated in right of payment to the Notes on terms at least
as favorable to the Holders of Notes 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 or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
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"Pledge Agreements" mean the respective Stock Pledge and Security
Agreements, dated as of the date hereof, by the Company and the Guarantors in
favor of the Collateral Agent, as amended and supplemented from time to time.
"pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act of 1933, as amended,
as interpreted by the Company's chief financial officer or Board of Directors in
consultation with its independent certified public accountants.
"RGM" means Riviera Gaming Management, Inc., a Nevada corporation.
"RGMC" means Riviera Gaming Management of Colorado, Inc., a Colorado
corporation.
"ROC" means Riviera Operating Corporation, a Nevada corporation.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 13, 1997, by and 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.
"Related Party" with respect to any Controlling Person means (a) any
Affiliate, or spouse or immediate family member (in the case of an individual)
of such Controlling Person, or (b) any trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding a majority interest of which consist of such Controlling
Person and/or such other Persons referred to in the immediately preceding clause
(a), or (c) any trustee, executor or receiver appointed to manage or administer
the assets of a Controlling Person 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 Account Agreement" means the Restricted Account Agreement,
dated as of the date hereof, by the Company in favor of the Collateral Agent, as
amended and supplemented from time to time.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the Revolving Line of Credit Loan
Agreement, entered into on February 28, 1997 between the Company and the lender
named therein, as the same may be further amended, modified, renewed, refunded,
replaced or refinanced from time to time, including (i) any related notes,
letters of credit, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time, and (ii) any notes,
guarantees, collateral documents, instruments and agreements executed in
connection with such amendments, modification, renewal, refunding, replacement
or refinancing.
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"Riviera Property" means the real property owned by the Company and
located at 2901 Las Vegas Boulevard South, Las Vegas, Nevada, and all additions
thereto and improvements thereon, which are subject to the Lien created by the
Deed of Trust.
"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.
"Security Agreements" means the respective Security Agreements, dated
as of the date hereof, by the Company and the Guarantors in favor of the
Collateral Agent, as amended and supplemented from time to time.
"Significant Subsidiary" means any Restricted 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 of this Indenture.
"Six Acre Tracts" shall have the meaning specified in the Deed of
Trust.
"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 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 partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary 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, letters of
credit and reimbursement agreements in respect thereof), by any Guarantor
pursuant to Section 11.01 hereof (including by virtue of Section 4.18 hereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"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.
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"Unrestricted Subsidiary" means (i) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) 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; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation, except as permitted pursuant to clause (xv) of Section 4.10 hereof,
(x) to subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries. Any such designation by the Board
of Directors 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
foregoing conditions and was permitted by the Section 4.07 hereof. If, at any
time, any Unrestricted Subsidiary would fail to meet the foregoing requirements
as an Unrestricted 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 4.10, 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 4.10, 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 will 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 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.
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Section 1.02. Other Definitions.
Defined in
Term Section
"Accredited Investors"....................... 2.01
"Affiliate Transaction"...................... 4.12
"Asset Sale Offer"........................... 4.11
"Benefitted Party"........................... 11.01
"Change of Control Offer".................... 4.16
"Change of Control Payment".................. 4.16
"Change of Control Payment Date"............. 4.16
"Covenant Defeasance"........................ 8.03
"DTC"........................................ 2.03
"Disqualified Holder"........................ 3.08
"Excess Proceeds"............................ 4.11
"incur"...................................... 4.10
"Legal Defeasance"........................... 8.02
"Mandatory Offer"............................ 3.10
"New Subsidiary"............................. 4.18
"Note Custodian"............................. 2.03
"Offer Amount"............................... 3.10
"Offer Period"............................... 3.10
"Paying Agent"............................... 2.03
"Payment Default"............................ 6.01
"Purchase Date".............................. 3.10
"QIB"...................................... 2.01
"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 and the Subsidiary Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, the Guarantors and any
successor obligor upon the Notes or any Subsidiary Guarantee, as the case may
be.
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.
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Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) 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.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Subsidiary Guarantees shall
be substantially in the form of Exhibit B 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.
(a) Global Notes. Notes offered and sold within the United States
to qualified institutional buyers as defined in Rule 144A ("QIBs") in reliance
on Rule 144A shall be issued initially in the form of Global Notes, which shall
be deposited on behalf of the purchasers of the Notes represented thereby with
the Depository or its custodian at its New York office (or at an office of the
Trustee, if authorized to have custody of the Global Notes), and registered in
the name of the Depository or a nominee of the Depository, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depository
or its nominee as hereinafter provided. Notes offered and sold within the United
States to accredited investors as defined in Rule 501(a)(1), (2), (3), (4) or
(7) under the Securities Act who are not QIBs ("Accredited Investors") may be
issued initially in the form of Global Notes as specified above, or may be
issued initially in the form of Definitive Notes, registered in the name of the
Accredited Investor or its nominee, duly executed by the Company and
authenticated by the Trustee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only
to Global Notes deposited with or on behalf of the Depository. The Company shall
execute and the Trustee shall, in accordance with this Section 2.01(b) and
Section 2.02, authenticate and deliver the Global Note that (i) shall be
registered in
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the name of the Depository or the nominee of the Depository and (ii) shall be
delivered by the Trustee to the Depository or pursuant to the Depository's
instructions or held by the Trustee as custodian for the Depository.
(c) Definitive Notes. Any Person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Definitive Notes substantially in the form of
Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 3 thereto).
(d) Global Notes Generally. Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including the text
referred to in footnotes 1 and 3 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 amount of outstanding Notes from time to
time endorsed thereon and that the aggregate 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 amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
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 of the Company shall sign the Notes on behalf of the Company
by manual or facsimile signature. If an Officer whose signature is on a Note no
longer holds that office at the time such Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated 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, 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 the 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 the Company or
an Affiliate of the Company. Section 2.03. Registrar and Paying Agent.
Section 2.03. Registrar and Paying Agent
The Company shall maintain an office or agency where (i) Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii)
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.
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The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Notes. The Company shall register
the Global Notes in the name of Cede & Co., as nominee of DTC. 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 ("Note Custodian").
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 such Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by such Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, and interest on the Notes, and
shall notify the Trustee of any default by the Company or any Guarantor 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. At any time,
the Company may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment of such monies 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 or any Guarantor, 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 with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company or the Guarantors 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 and the Guarantors shall otherwise comply with
TIA ss. 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented by a Holder to the Registrar with a request:
(i) to register the transfer of the Definitive Notes; or
(ii) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar
duly executed by such Holder or by his attorney, duly
authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be accompanied by the
following additional information and documents, as
applicable:
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(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification
to that effect from such Holder (in substantially the
form of Exhibit C hereto); or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A or
pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit C hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit C hereto) and an
Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a
Global Note. A Definitive Note may not be exchanged for a beneficial interest in
a Global Note except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted Security,
a certification from the Holder thereof (in substantially
the form of Exhibit C hereto) to the effect that such
Definitive Note is being transferred by such Holder to a
QIB in accordance with Rule 144A; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Security, written instructions from the Holder
thereof directing the Trustee to make, or to direct the
Note Custodian to make, an endorsement on the Global Note
to reflect an increase in the aggregate principal amount
of the Notes represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depository and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depository, in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a Definitive
Note.
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(i) Any Person having a beneficial interest in a Global Note
may upon request to the Trustee exchange such beneficial
interest for a Definitive Note. Upon receipt by the
Trustee of written instructions or such other form of
instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having
a beneficial interest in a Global Note, and, in the case
of a Transfer Restricted Security, the following
additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred
to the Person designated by the Depository as
being the beneficial owner, a certification to
that effect from such Person (in substantially the
form of Exhibit C hereto); or
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A or pursuant
to an exemption from registration in accordance
with Rule 144 or Rule 904 under the Securities Act
or pursuant to an effective registration statement
under the Securities Act, a certification to that
effect from the transferor (in substantially the
form of Exhibit C hereto); or
(C) if such beneficial interest is being transferred
in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor
(in substantially the form of Exhibit C hereto)
and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company
and to the Registrar to the effect that such
transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depository and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced
accordingly and, following such reduction, the Company
shall execute and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee
shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section
2.06(d) shall be registered in such names and in such
authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Notes to the Persons in whose
names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of Depository.
If at any time:
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(i) the Depository for the Global Notes notifies the Company
that the Depository is unwilling or unable to continue as
Depository for the Global Notes and a successor
Depository for the Global Notes is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of
Definitive Notes under this Indenture,
then, upon surrender by the Global Note Holder of its Global Note, the Company
shall execute, and the Trustee shall, upon receipt of an authentication order in
accordance with Section 2.02 hereof, authenticate and deliver to each Person
that the Global Note Holder and the Depository identify as being the beneficial
owner of the related Notes, Definitive Notes in an aggregate principal amount
equal to the principal amount of the Global Notes exchanged for such Definitive
Notes. Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depository in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depository for all purposes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Note certificate evidencing Global Notes and
Definitive Notes (and all Notes issued in exchange
therefor or substitution thereof) shall bear legends in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY, PRIOR TO THE DATE THAT IS TWO
YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(K) AS PERMITTING RESALES BY
NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT
RESTRICTION) AFTER THE LATER OF THE ORIGINAL CLOSING DATE
HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN
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THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501 (A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
THAT IS PURCHASING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E)
OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Note) pursuant to Rule 144 under
the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall
permit the Holder thereof to exchange such
Transfer Restricted Security for a Definitive Note
that does not bear the legend set forth in (i)
above and rescind any restriction on the transfer
of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer
Restricted Security shall not be required to bear
the legend set forth in (i) above, but shall
continue to be subject to the provisions of
Section 2.06(c) hereof; provided, however, that
with respect to any request for an exchange of a
Transfer Restricted Security that is represented
by a Global Note for a Definitive Note that does
not bear the legend set forth in (i) above, which
request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant
to Rule 144 (such certification to be
substantially in the form of Exhibit C hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt
of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate Series B
Notes in exchange for Series A Notes accepted for
exchange in the Exchange Offer, which Series B Notes
shall not bear the legend set forth in (i) above, and the
Registrar
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shall rescind any restriction on the transfer of such
Notes, in each case unless the Holder of such Series A
Notes is either (A) a broker-dealer, (B) a Person
participating in the distribution of the Series A Notes
or (C) a Person who is an affiliate (as defined in Rule
144A) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in Global Notes have been exchanged for Definitive Notes,
redeemed, repurchased or canceled, all Global Notes 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 Definitive Notes, redeemed, repurchased or canceled, 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 the Notes Custodian, at the direction of the Trustee, to reflect such
reduction.
(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
Definitive Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder 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 3.07, 3.08, 4.11, or 4.16 hereof).
(iii) The Registrar shall not be required to register the
transfer or exchange of any Note selected for redemption
in whole or in part, except the unredeemed portion of any
Note being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes
or Global Notes shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Definitive
Notes or Global 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 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; or
(B) to register the transfer or exchange of 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.
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(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 neither the Trustee, any
Agent nor the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Definitive Notes and
Global Notes in accordance with the provisions of Section
2.02 hereof.
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 the written
order of the Company signed by two Officers of the Company, 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
the Guarantors 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 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, a Subsidiary or an Affiliate of the
Company holds the Note.
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, other obligor or any Affiliate of the Company shall be considered as
though they are 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. Notwithstanding the foregoing, Notes that are to be acquired by the
Company, other obligor or an Affiliate of the Company pursuant to an
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exchange offer, tender offer or other agreement shall not be deemed to be owned
by the Company, the obligor or Affiliate of the Company until legal title to
such Notes passes to the Company or Affiliate, as the case may be.
Section 2.10. Temporary Notes.
Until Definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of Definitive 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 shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall dispose of canceled
Notes as the Company directs. 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
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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.
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 or is otherwise required to redeem
Notes pursuant to any other provision of this Indenture, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date (or
such lesser period as may be acceptable to the Trustee), 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, selection
of the Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, 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; provided
that 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 the 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 such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof 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 the Notes or portions of them
called for redemption. Except as provided in the preceding sentence, provisions
of this Indenture that apply to Notes called for redemption also apply to
portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.10 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;
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(e) hat 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, accrued interest and Liquidated Damages, if any, 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, respectively, by the Company in excess of the amounts necessary to
pay the redemption price of, accrued interest and Liquidated Damages, if any, 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
an interest 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, to the person in whose name such Note was registered at the
close of business on such record date.
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.
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Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the
Notes will not be redeemable at the Company's option pursuant to this Section
3.07 prior to August 15, 2001. Thereafter, the Notes will be subject to
redemption at any time at the option of the Company, in whole or in part, 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, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
15 of the years indicated below:
Year Percentage
2001.......................... 105.000%
2002.......................... 102.500%
2003 and thereafter........... 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section
3.07, during the period commencing upon issuance of the Notes and ending on
August 15, 2000, the Company may redeem up to one-third of the principal amount
of Notes at a redemption price of 110.0% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date with the net cash proceeds of an offering of common stock of the
Company; provided that at least $116.7 million in aggregate principal amount of
the Notes remain outstanding immediately after the occurrence of such
redemption; and provided further that the call for such redemption shall occur
within 30 days of the date of the closing of such offering.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
Section 3.08. Redemption Pursuant to Gaming Law.
(a) Notwithstanding the foregoing or any other provisions of this
Indenture, if any Gaming Authority requires that a Holder or beneficial owner of
the Notes must be licensed, qualified or found suitable under any applicable
Gaming Law in order to maintain any or obtain any applied-for Gaming License or
franchise of the Company or any of its Subsidiaries 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 Gaming Law) or if such Holder or beneficial owner is
not so licensed, qualified or found suitable by such Gaming Authority (a
"Disqualified Holder"), the Company shall have the right, at its option, (i) to
require such Disqualified Holder or beneficial owner to dispose of such
Disqualified Holder's or beneficial owner's Notes within 30 days of notice of
such finding by the applicable Gaming Authority that such Disqualified Holder or
beneficial owner will not be licensed, qualified or found suitable as directed
by such Gaming Authority (or such earlier date as may be required by the
applicable Gaming Authority or Gaming Law) or (ii) to call for redemption of the
Notes of such Holder or beneficial owner at a redemption price equal to the
lesser of 100% of the principal amount thereof or the price at which the 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 the date of the finding of unsuitability by such
Gaming Authority, which may be less than 30
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days following the notice of redemption if so ordered by such Gaming Authority.
Immediately upon a determination of unsuitability, the Disqualified Holder shall
have no further rights whatsoever with respect to the Notes (i) to exercise,
directly or indirectly, through any trustee, nominee or any other Person or
entity, any right conferred by the Notes or (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 is 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 of such
application including investigatory costs. Such expenses will, therefore, be the
obligation of such Holder or beneficial owner.
(b) Any redemption pursuant to this Section 3.08 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof (except to the
extent otherwise required by a Gaming Authority or Gaming Law).
Section 3.09. Mandatory Redemption.
Except as set forth under Sections 4.11 and 4.16 hereof, the Company
shall not be required to make mandatory redemption payments with respect to the
Notes.
Section 3.10. Other Mandatory Offer to Purchase.
In the event that, pursuant to Section 4.11 or 4.16 hereof, the Company
shall be required to commence an offer to all Holders to purchase Notes (each
such type of offer, a "Mandatory Offer"), it shall follow the procedures
specified below.
The Mandatory Offer shall remain open for a period of at least 20
Business Days following its commencement until a termination date specified by
the Company (the "Offer Period"). Following the expiration of the Offer Period,
on a date not more than 60 days after commencement of the Mandatory Offer (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.11 or 4.16 hereof, as the case
may be (the "Offer Amount"), or, if less than the Offer Amount has been
tendered, all Notes tendered in response to the Mandatory 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 an interest 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 Mandatory Offer.
Upon the commencement of a Mandatory 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 Mandatory
Offer. The Mandatory Offer shall be made to all Holders. The notice, which shall
govern the terms of the Mandatory Offer, shall state:
(a) that the Mandatory Offer is being made pursuant to this
Section 3.10 and Section 4.11 or 4.16 hereof and the length of time the
Mandatory 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 accrue interest;
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(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Mandatory Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any
Mandatory 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 depository, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(f) that Holders shall be entitled to withdraw their election if
the Company, the depository 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;
(g) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Offer Amount, the Company 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
(h) 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 Mandatory
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
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 depository 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 Mandatory 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. Notwithstanding any other provision of this
Indenture, any Change of Control Offer or Asset Sale Offer will be conducted in
compliance with applicable regulations under the federal securities laws,
including Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent that such laws and regulations are
applicable.
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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. 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.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York (or at such other location where the Trustee maintains an office), 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
upon the Company or the Guarantors 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.
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 will furnish to the
Trustee and 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 that
describe the financial condition and results of the Company and its consolidated
Subsidiaries (showing in reasonable detail, 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," 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) 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
addition, whether or not required by the rules and regulations of the SEC, the
Company will file a copy of
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all such information and reports with the SEC for public availability (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 and
Guarantors shall furnish to the Trustee and all Holders and prospective
investors designated by the Holders of Transfer Restricted Securities, upon
their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
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 and each obligor 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 any Collateral
Document (or, if a Default or Event of Default (as defined) 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,
premium or Liquidated Damages, if any, or interest, on the Notes is prohibited
or if such event has occurred, a description of the event and what action the
Company or such obligor 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, 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.
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Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors 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 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 and
each of the Guarantors (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 Restricted
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 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 payments, dividends or distributions payable
in Equity Interests (other than Disqualified Stock) of the Company or payments,
dividends or distributions payable to the Company or any Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any Restricted Subsidiary (other than any such
Equity Interests owned by the Company or any Restricted Subsidiary); (iii) make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is subordinated to the Notes,
except for payment of interest when due or principal at Stated Maturity; 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) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto (in the case of a Restricted Investment,
as if such Restricted Investment 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 Section 4.10 hereof; and
(c) 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 clauses (ii) through (xi) of the next succeeding paragraph), is
less than the sum 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
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the date of this Indenture of Equity
Interests of the Company (other than Disqualified Stock) or of Disqualified
Stock or debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or convertible debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted Investment
that was made
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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, plus (iv) 50% of any
dividends received by the Company or a Wholly Owned Restricted Subsidiary after
the date of this Indenture from an Unrestricted Subsidiary of the Company, to
the extent that such dividends were not otherwise included in Consolidated Net
Income for such period.
The foregoing provisions will 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, or (ii) the redemption, repurchase, retirement or other acquisition
of any subordinated Indebtedness of the Company or a Restricted Subsidiary 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, other 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 (c) (ii) of the preceding paragraph; (iii) the
redemption, repurchase, retirement, defeasance or other acquisition of
subordinated Indebtedness of the Company or a Restricted Subsidiary or
Disqualified Stock of the Company, in either case in exchange for or with the
net cash proceeds from an incurrence of Permitted Refinancing Indebtedness or
from the issuance of Disqualified Stock; (iv) the redemption, repurchase,
retirement, defeasance or other acquisition, substantially concurrently with the
consummation of the Offering, of subordinated Indebtedness of the Company or a
Restricted Subsidiary with Net Proceeds of the Offering; (v) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company or any Restricted Subsidiary of the Company held by any employee
of the Company (or any of its Restricted Subsidiaries); provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests under this clause (v) will not exceed $1.0 million in any
calendar year, provided further that commencing the second full calendar year
following the date of this Indenture, the aggregate price that may be so paid
shall be increased by any amount of such $1.0 million that was not used for the
repurchase of Equity Interests in the immediately preceding calendar year; (vi)
loans or advances to employees of the Company or its Restricted Subsidiaries;
provided that all such loans and advances will not exceed $1.0 million in any
twelve-month period; (vii) payment of dividends on preferred stock of the
Company that was permitted to be issued pursuant to this Indenture; (viii) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company held by any member of the Company's management,
in connection with the Merger and provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests under this
clause (viii) will not exceed $6.0 million; (ix) Restricted Investments in an
aggregate amount, taken together since the date of this Indenture, of not more
than $10,000,000 (it being understood that if any Restricted Investment acquired
with a Restricted Payment after the date of original issuance of the Notes
pursuant to this clause (ix) is sold, transferred or otherwise conveyed to any
person other than the Company or a Restricted Subsidiary, the portion of the net
cash proceeds or fair market value of securities or properties paid to the
Company and its Restricted Subsidiaries in connection with such sale, transfer
or conveyance that relates or corresponds to the repayment or return of the
original cost of such a Restricted Investment will replenish or increase the
amount of Restricted Investments permitted to be made pursuant to this clause
(ix), so that up to $10,000,000 of Restricted Investments may be outstanding
under this clause (ix) at any given time); (x) following the Merger,
distributions, loans or payments from the Company or its Restricted Subsidiaries
to the Company's direct parent corporation pursuant to intercompany
Indebtedness, intercompany tax sharing agreements (so long as the distributions,
loans or payments thereunder by the Company and its Subsidiaries shall not
exceed the amount of taxes the Company would be required to pay if it were the
filing person for all applicable taxes, and other intercompany payments for the
purpose of enabling the parent corporation to perform accounting, legal,
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corporate reporting and administrative functions (including, without limitation,
amounts necessary to pay fees and expenses in connection with the Merger); and
(xi) additional Restricted Payments in an aggregate amount, taken together since
the date of this Indenture, of not more than $5,000,000; provided that with
respect to the actions described in clauses (i), (v), (vii), (viii), (ix) and
(xi), no Default or Event of Default shall have occurred and be continuing, or
would occur as a consequence of such actions.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; provided
that in no event shall the business currently operated by ROC or RGM be
transferred to or held by an Unrestricted Subsidiary, and provided, further that
following any conversion of Black Hawk Operating Company to a Restricted
Subsidiary pursuant to Section 4.09 hereof, in no event shall the Black Hawk
Project or related business thereafter operated by Black Hawk Operating Company
be transferred to or held by an Unrestricted Subsidiary. For purposes of making
such determination, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this Section 4.07. All such outstanding Investments will
be deemed to constitute Investments in an amount equal to the greatest of (x)
the net book value of such Investments at the time of such designation, (y) the
fair market value of such Investments at the time of such designation and (z)
the original fair market value of such Investments at the time they were made.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) will 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
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment 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 Restricted
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 (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) 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 reason of (a) this Indenture and the Notes,
(b) Indebtedness outstanding upon the acquisition of a Subsidiary, or upon the
conversion of Black Hawk Operating Company to a Restricted Subsidiary pursuant
to the provisions of Section 4.09 hereof, provided, that such Indebtedness was
not incurred in connection with, or in contemplation of, such acquisition or
conversion, and such encumbrance or restriction is not applicable to any Person
or the property or assets of any Person other than the new Restricted
Subsidiary, (c) a Permitted Lien, solely to the extent that such Lien limits the
sale, disposition or transfer of the property which is the subject thereof,
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(d) applicable law, (e) by reason of customary non-assignment, subletting and
net worth provisions in leases entered into in the ordinary course of business
and consistent with past practices, (f) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, or (g)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced.
Section 4.09. Conversion of Black Hawk Operating Company to a Restricted
Subsidiary.
Immediately upon release of any quarterly financial statements required
by Section 4.03 during any period in which Black Hawk Operating Company is an
Unrestricted Subsidiary, the Company shall cause its accountants to calculate,
for the four full fiscal quarters most recently ended, (i) the Fixed Charge
Coverage Ratio of the Company and its Restricted Subsidiaries and (ii) the pro
forma Fixed Charge Coverage Ratio of the Company and its Restricted Subsidiaries
as though Black Hawk Operating Company were a Restricted Subsidiary. The Company
shall deliver to the Trustee an Officers' Certificate setting forth such
calculations. If the pro forma Fixed Charge Coverage Ratio described in clause
(ii) of the second preceding sentence is greater than the Fixed Charge Coverage
Ratio described in clause (i) of the second preceding sentence, provided that no
Default or Event of Default shall have occurred and be continuing and provided
that a Default or Event of Default would not thereby be created, Black Hawk
Operating Company (i) automatically will become and remain a Restricted
Subsidiary, and (ii) shall execute a Subsidiary Guarantee and such Collateral
Documents as are necessary to create and convey to the Trustee or other
Collateral Agent, for the benefit of the Holders, a perfected first-priority
Lien on all the Black Hawk Land and other Collateral (subject to Permitted
Liens) held by such Restricted Subsidiary; provided, that no such Subsidiary
Guarantee shall be executed, and no such Lien shall be created or conveyed with
respect to the Black Hawk Land or other real or personal property owned by Black
Hawk Operating Company, if the execution, creation or conveyance thereof would
violate or conflict with any law or the provisions of any Permitted Black Hawk
Debt outstanding at the time of such conversion. Notwithstanding the foregoing,
if the execution, creation or conveyance thereof would satisfy the conditions in
the preceding sentence but for any filing with or approval of any Gaming
Authority or other regulatory entity, the Company shall use, and shall cause
Black Hawk Operating Company to use, its best efforts to make all such required
filings and obtain all such required approvals in order to permit such
execution, creation and conveyance.
Section 4.10. Incurrence of Indebtedness and Issuance of Preferred Stock.
Following the issuance of the Notes and Subsidiary Guarantees, 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 Restricted Subsidiary to
issue any shares of preferred stock, provided, however, that the Company or its
subsidiaries may incur Indebtedness (including Acquired Debt), and the Company
may issue shares of Disqualified Stock if (i) 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 stock is issued would
have been at least equal to 2.00 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 stock had been issued, as the
case may be, at the beginning of such four-quarter period and (ii) except with
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respect to revolving credit Indebtedness, 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 4.10 will not
apply to the incurrence of any of the following items of Indebtedness, so long
as after giving effect to such incurrence, no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof
(collectively, "Permitted Debt"):
(i) the incurrence of revolving credit Indebtedness and letters of
credit (with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of the Company and its Subsidiaries
thereunder) under the Revolving Credit Facility; provided that the aggregate
principal amount outstanding under the Revolving Credit Facility after
giving effect to such incurrence, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (i), does not exceed an amount equal to
$20.0 million;
(ii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred for
the purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment (including slot
machines and other gaming equipment) used in the business of the Company or
such Restricted Subsidiary, in an aggregate principal amount not to exceed
$15.0 million at any time outstanding;
(iii) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was
permitted by this Indenture to be incurred or was existing on the date of
this Indenture;
(iv) the incurrence by the Company or any of its 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 guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this Section 4.10;
(vi) the incurrence 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 other Indebtedness incurred pursuant to this clause
(vi), not to exceed $10.0 million;
(vii) the incurrence by the Company of additional Indebtedness that
is subordinated to the Notes pursuant to customary subordination provisions,
that has no mandatory obligation to pay principal on a date earlier 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 Notes, and
that is 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 other Indebtedness incurred
pursuant to this clause (vii), not to exceed $10.0 million;
(viii) the incurrence by Black Hawk Operating Company of Permitted
Black Hawk Debt;
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(ix) the incurrence by the Company's Unrestricted Subsidiaries
(other than Black Hawk Operating Company) of Non-Recourse Debt, provided,
however, that if any such Indebtedness ceases to be Non-Recourse Debt, such
event will be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company; and provided, further, that any
Permitted Black Hawk Debt outstanding at the time, if at all, that Black
Hawk Operating Company becomes a Restricted Subsidiary pursuant to the
provisions of Section 4.09 hereof shall not be deemed at such time to
constitute an incurrence of Indebtedness for purposes of this Section 4.10
so long as such Indebtedness is taken into account in the calculation of the
Fixed Charge Coverage Ratio of the Company as described in Section 4.09
hereof;
(x) reimbursement obligations with respect to letters of credit
issued in the ordinary course of business, indemnifications, adjustments of
purchase prices, performance bonds, appeal bonds, surety bonds, workers'
compensation obligations, insurance obligations or bonds, completion
guaranties and other similar bonds or obligations incurred in the ordinary
course of business;
(xi) Indebtedness owed by (i) a Restricted Subsidiary to the
Company or to another Restricted Subsidiary or (ii) the Company to a
Restricted Subsidiary;
(xii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business;
(xiii) Indebtedness representing the balance deferred and unpaid of
the purchase price of any property or services used in the ordinary course
of the business of the Company and its Restricted Subsidiaries that would
constitute ordinarily a trade payable to trade creditors;
(xiv) a bond or surety obligation posted in order to prevent the
loss or material impairment of a Gaming License or as otherwise required by
an order of any Gaming Authority, in each case to the extent required by
applicable law and consistent in character and amount with customary
industry practice; and
(xv) guarantees, "keep well" provisions or other evidences of
credit support by the Company or its Restricted Subsidiaries of Permitted
Black Hawk Debt, provided that the terms of such guarantees or other
instruments shall not require or permit payments thereunder by the Company
or its Restricted Subsidiaries in an amount greater than $5.0 million in any
twelve-month period.
For purposes of determining compliance with this Section 4.10, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xv) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.10,
the Company will, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.10 and such item of Indebtedness
will be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest and the accretion of
accreted value will not be deemed to be an incurrence of Indebtedness for
purposes of this Section 4.10.
Section 4.11. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) 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
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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 and (ii)
at least 80% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash; provided that the amount of (x)
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 or any Subsidiary Guarantee thereof) that are assumed by the
transferee of any such assets and (y) any securities, notes or other Obligations
received by the Company or any such Restricted Subsidiary from such transferee
that, within 30 days of such receipt, are converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received), will be
deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale or Event of Loss, the Company may apply such Net Proceeds to the
acquisition of an interest in another business, the making of a capital
expenditure, cost of construction or real property improvements or the
acquisition of other assets, in each case, in the same line of business as the
Permitted Businesses. Any Net Proceeds received from the sale of assets that do
not constitute Collateral may be applied also to the repayment of any senior
debt secured by such assets. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce the Revolving Credit Facility or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the first two sentences of this paragraph will be deemed to
constitute "Excess Proceeds." Within fifteen days of each date on which the
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be
required to commence an offer to all Holders of Notes (an "Asset Sale Offer") 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, if any, thereon, to the date of purchase, in accordance with the
procedures set forth in Section 3.10 hereof. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee will select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds will be reset at zero.
Section 4.12. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
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 foregoing, an "Affiliate Transaction"), unless
(i) 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 (ii) the Company delivers 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 the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million (except with respect to any
Management Agreement, in which case the following requirement will not apply),
an opinion as to the fairness to the Holders of such Affiliate Transaction from
a financial point of view issued by an
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accounting, appraisal or investment banking firm of national standing; provided
that (u) purchases of goods and services in the ordinary course of business, (v)
any employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Restricted Subsidiary, (w) registration rights
agreements, existing on the date of this Indenture, (x) transactions between or
among the Company and/or its Restricted Subsidiaries, (y) Restricted Payments
that are permitted by the provisions of this Indenture described in Section 4.07
hereof, and (z) reasonable fees and compensation (including, without limitation,
bonuses, retirement plans and securities, stock options and stock ownership
plans) paid or issued to and indemnity provided on behalf of, officers,
directors, employees or consultants of the Company or any Restricted Subsidiary
in the ordinary course of business, in each case, shall not be deemed Affiliate
Transactions.
Section 4.13. Liens.
The Company shall not, and shall not permit any of its Restricted
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. So long as Black Hawk Operating Company is an
Unrestricted Subsidiary, Black Hawk Operating Company may create, incur, assume
or suffer to exist (i) Liens (in addition to Permitted Liens) on the Black Hawk
Land only in respect of Permitted Black Hawk Debt and (ii) Liens upon any other
assets without restriction.
Section 4.14. Business Activities.
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than Permitted Businesses, except to such
extent as would not be material to the Company and its Restricted Subsidiaries
taken as a whole.
Section 4.15. 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. If any Subsidiary that is a Guarantor is
dissolved pursuant to this Section 4.15, any Collateral owned by such Guarantor
shall be distributed to the Company or another Guarantor. Upon such dissolution,
its Subsidiary Guarantee will be released, and any Collateral owned by such
Guarantor prior to its dissolution shall become subject to the Collateral
Documents executed by the Company or such other Guarantor that acquires such
Collateral.
Section 4.16. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in
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cash 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 30 days following any Change of
Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date 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"), pursuant to the procedures
required by Section 3.10 hereof and described in such notice.
(b) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) 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 (3) 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 the Change of Control Payment for such Notes and the Trustee will
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, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable
whether or not any other provisions of this Indenture are applicable.
The Company will 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 4.17. Use of Proceeds.
The Company and its Subsidiaries will apply the Net Proceeds from the
Offering in accordance with the provisions set forth in the Offering Circular
under "Use of Proceeds."
Section 4.18. Additional Subsidiary Guarantees.
If the Company or any of its Restricted Subsidiaries acquire or create
another Subsidiary after the date of this Indenture, then such newly acquired or
created Subsidiary shall execute a supplemental indenture setting forth its
Subsidiary Guarantee, together with such Collateral Documents as are necessary
to create and convey to the Trustee or other Collateral Agent, for the Benefit
of the Holders, a perfected first-priority Lien on all Collateral (subject to
Permitted Liens) held by such Subsidiary, provided such Subsidiary shall have
first obtained all approvals required, if any, by Gaming Authorities to execute
the supplemental indenture and such Collateral Documents, and deliver an Opinion
of Counsel, in accordance with the terms of this Indenture, except in either
case for all Subsidiaries that have properly been designated as Unrestricted
Subsidiaries in accordance with this Indenture for so long as they continue to
constitute Unrestricted Subsidiaries. Upon any conversion of (i) Black Hawk
Operating Company from an Unrestricted Subsidiary to a Restricted Subsidiary
pursuant to the provisions of Section 4.09 hereof, or (ii) any other
Unrestricted Subsidiary to a Restricted Subsidiary pursuant to the definition of
"Unrestricted Subsidiary," the newly-created Restricted Subsidiary also be
subject to the requirements of the preceding sentence; provided, that no such
Subsidiary Guarantee shall be executed, and no such Lien shall be created
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or conveyed with respect to the Black Hawk Land or other real or personal
property owned by Black Hawk Operating Company, if the execution, creation or
conveyance thereof would violate or conflict with any law or the provisions of
any Permitted Black Hawk Debt outstanding at the time of such conversion. In
addition, if the Company or any of its Restricted Subsidiaries acquires or
creates another Subsidiary (such Subsidiary, a "New Subsidiary") after the date
of this Indenture, whether the New Subsidiary is a Restricted Subsidiary or an
Unrestricted Subsidiary, the Company or such Restricted Subsidiary that is the
owner of Capital Stock of the New Subsidiary shall execute a Pledge Agreement
with respect to such Capital Stock, in substantially the same form as the Pledge
Agreements executed as of the date of this Indenture, pledging to the Trustee or
other Collateral Agent designated by the Trustee all of such Capital Stock owned
by pledgor.
Section 4.19. Collateral Documents.
Neither the Company nor any of its 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 the Collateral Documents, to the
extent that such amendment, waiver, modification or action could have an adverse
effect on the rights of the Trustee or the Holders of the Notes; provided, that:
(i) the Collateral may be released or modified as expressly provided in this
Indenture and in the Collateral Documents; (ii) any Subsidiary Guarantee and
pledges may be released as expressly provided in this Indenture and in the
Collateral Documents; 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 4.20. Maintenance of Insurance.
On the date of this Indenture and at all times until the Notes have
been paid in full, the Company and the Guarantors shall, and shall cause their
Restricted Subsidiaries to, have and maintain in effect 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.
Section 4.21. Limitation on Status as Investment Company.
None of the Company or any of the Guarantors shall become subject to
registration as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or otherwise become subject to
regulation under the Investment Company Act of 1940.
Section 4.22. Further Assurances.
The Company shall (and shall cause each of its Subsidiaries to) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, 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 (i) to carry out more effectively the purposes of the
Collateral Documents, (ii) to 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 or now or
hereafter intended by the parties thereto to be granted to the Trustee or under
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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 4.23. Dissolution of Subsidiaries.
Not later than 120 days following the initial issuance of the Notes,
the Company shall cause Riviera Gaming Management - Three, Inc., Riviera Splash,
Inc. and Riviera Gaming Management - Treasure Bay, Inc. to be dissolved or
merged into the Company or any Guarantor.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation) or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, 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 entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the Obligations of the Company under the Notes
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) except in the case of a merger of the Company with or into a Wholly
Owned Restricted Subsidiary of the Company, the Company or the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will 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) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction 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 Section
4.10 hereof; and (v) 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. The foregoing provision will
not prohibit the Merger.
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
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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 or substantially 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 if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes and such default continues for a
period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply with any of the provisions of Section
4.16 or 5.01 hereof;
(d) the Company or any Guarantor breaches in any material respect any
representation or warranty set forth in this Indenture, the Notes, the
Subsidiary Guarantees or the Collateral Documents, or defaults in the
performance of any covenant set forth in this Indenture, the Notes, the
Subsidiary Guarantees or the Collateral Documents, and in either case, such
breach or default continues for 60 days after notice to the Company by the
Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding;
(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, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest 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 (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of 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) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $5 million;
(g) the Company or any Guarantor repudiates its respective Obligations
under any of the Collateral Documents, or any of the Collateral Documents is
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect;
(h) the Company or any of its Significant Subsidiaries or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
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(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 Restricted
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 Restricted
Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary or for all or substantially all of
the property of the Company or any of its Significant
Subsidiaries or any group of Restricted 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 Restricted
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) any Subsidiary 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 its Subsidiary Guarantee; or
(k) any Gaming License of the Company or any of its Restricted
Subsidiaries is revoked, terminated or suspended or otherwise ceases to be
effective, resulting in the cessation or suspension of operation for a period of
more than 90 days of the casino business of any casino-hotel owned, leased or
operated directly or indirectly by the Company or any of its Restricted
Subsidiaries (other than any voluntary relinquishment of a Gaming License if
such relinquishment is, in the reasonable, good faith judgment of the Board of
Directors of the Company, evidenced by a resolution of such Board, both
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries, taken as a whole, and not disadvantageous in any material respect
to the Holders).
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) 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 of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a
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Significant Subsidiary, all outstanding Notes shall be due and payable
immediately without further action or notice. Holders of the Notes may not
enforce this Indenture or the Notes except as provided in this Indenture.
If an Event of Default occurs 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,
then, upon acceleration of the Notes, an equivalent premium shall also become
and be immediately due and payable, to the extent permitted by law, anything in
this Indenture or in the Notes to the contrary notwithstanding. If an Event of
Default occurs prior to August 15, 2001 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Notes prior to such date, then,
upon acceleration of the Notes, an additional premium shall also become and be
immediately due and payable in an amount, for each of the years beginning on
August 15 of the years set forth below, as set forth below (expressed as a
percentage of the principal amount):
Year Percentage
1997................... 110.0%
1998................... 110.0%
1999................... 110.0%
2000................... 107.5%
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.
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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,
the Notes or the Subsidiary Guarantees only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(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, 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.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) 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.
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Section 6.09. Trustee May File Proofs of Claim.
The Trustee may 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 and
the Holders allowed in any judicial proceedings relative to the Company or any
other obligor or their respective creditors or property. 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
thereof, 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 for amounts due under Section 7.07 hereof,
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 any obligors on the Notes, as their interests
may appear 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.
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 6.11 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.
Section 6.12. Management of Casinos.
Notwithstanding any provision of this Article 6 to the contrary, and
subject to all applicable Gaming Laws, following an Event of Default that
permits the taking of possession of any casino that constitutes Collateral by
the Trustee or Collateral Agent or the appointment of a receiver of either such
Collateral or any part thereof, or after such taking of possession or such
appointment, the Trustee, Collateral Agent or any such receiver shall be
authorized, in addition to the rights and powers of the Trustee, Collateral
Agent and such receiver set forth elsewhere in this Indenture and the Collateral
Documents, to retain one or more experienced operators of casinos to manage such
casino on behalf of the Holders of Notes; provided, however, that any such
operator shall have all necessary legal qualifications, including all Gaming
Licenses to manage such casino.
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 in its exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his 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 and except for money held in trust pursuant to Section
8.04(a), which money will be so segregated.
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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) 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
an Officers' Certificate or an Opinion of Counsel (in either case complying with
Section 12.04) or both, as the Trustee may require. 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, make loans to, accept deposits from, perform services
and 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 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.
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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, or
interest 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;
(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 or the Subsidiary Guarantees 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.
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(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, except to the extent attributable to the Trustee's
negligence, willful misconduct or bad faith.
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, 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 shall have the right to employ separate counsel in any such claim and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Trustee unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense of such action or (iii) the
named parties to any such action (including any impleaded parties) include both
the Trustee and the Company, and the Trustee 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 Company (in which case
the Company shall not have the right to assume the defense of such action on
behalf of the Trustee). 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.
To secure the Company's payment Obligations to the Trustee under this
Section, the Trustee shall, until such Obligations are paid, have a Lien prior
to the Notes on the Collateral and on all money or property held or collected by
the Trustee, except that held in trust to pay principal and interest on
particular Notes.
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.
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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 and only upon any requisite approval
from all Gaming Authorities.
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 Notes 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 either the Company or the Guarantors 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 so
approved, licensed or qualified.
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 Notes 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 of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note 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 of the Notes. 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.
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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, provided such corporation is otherwise eligible and qualified under
this Article 7.
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 ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(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 ss. 311(a) to the extent indicated therein.
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 8. Upon either
Legal Defeasance or Covenant Defeasance, the security interests in Collateral
shall be terminated pursuant to Section 10.08.
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 (ii) 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: (i) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of, premium, if any, and interest and
Liquidated Damages on such Notes when such payments are due from the trust
referred to below, (ii) the Company's Obligations with respect to the Notes
under Article 2 and Section 4.02 hereof, (iii) the rights, powers, trusts,
duties and immunities of the Trustee, and the Company's Obligations in
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connection therewith and (iv) the provisions of this Article 8. Subject to
compliance with this Article 8, 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 and 4.16 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below 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 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(d) through
6.01(g) 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 United States 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, premium, if any, and Liquidated Damages,
if any, and interest 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 an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) 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;
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(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for U.S. 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);
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others; and
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that, subject to certain
factual assumptions and to Bankruptcy Law, insolvency and similar exceptions,
all conditions precedent provided for or 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.
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
or results from any action or inaction of the Trustee that is not consistent
with the Trustee's obligations under this Indenture.
Anything in this Article 8 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.
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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, 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, as a
secured creditor, 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
will 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 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, or shall be entitled to receive a refund of money so
held in an amount equal to such payment of principal, premium or interest made
by the Company following such reinstatement.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the Notes,
the Subsidiary Guarantees or the Collateral Documents without the consent of any
Holder of a Note:
(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 in the case of a merger, consolidation or sale of assets
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 release Collateral that is permitted to be released under this
Indenture; or
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(f) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
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, the
Guarantors and the Trustee may amend or supplement this Indenture (including
Sections 3.10, 4.11 and 4.16 hereof), the Notes, the Subsidiary Guarantees or
the Collateral Documents with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding (including consents obtained
in connection with a purchase of, or tender offer or exchange offer for, 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, the Notes, the Subsidiary Guarantees or
the Collateral Documents 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 the Notes).
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 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.
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 or the Guarantors with any
provision of this Indenture, the Notes, the Subsidiary Guarantees or the
Collateral Documents. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
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(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 timing of, and payment
with respect to, redemption of the Notes except as provided above with respect
to Sections 3.10, 4.11 and 4.16 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 premium, if any, or interest 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 then outstanding 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 principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.10, 4.11 or 4.16); or
(h) make any change in the foregoing amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture, the Notes, the
Subsidiary Guarantees or the Collateral Documents shall be set forth in an
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 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 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.
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Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 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 its 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) shall be fully
protected in relying upon, 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. Collateral Documents.
The due and punctual payment of the principal of, premium and
Liquidated Damages, if any, and interest 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, the Notes, the Subsidiary Guarantees and the Collateral Documents,
according to the terms hereunder or thereunder, shall be secured by the
Collateral owned by the Company or the Guarantor executing such Collateral
Documents, respectively, whether now owned or hereafter acquired 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 Collateral Agent 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 delivered to the Collateral Agent (if the
Collateral Agent is not also the Trustee) pursuant to 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 and the Collateral Agent the security interest
in the Collateral contemplated hereby, by the Collateral Documents or any part
thereof, 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 the Guarantors to take, upon request of the Trustee, any and all
actions reasonably required to cause the Collateral Documents to create and
maintain, as security for the Obligations of the Company and Guarantors
hereunder, a valid and enforceable perfected first priority Lien in and on all
the Collateral, in favor of the Collateral Agent 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.
So long as no Event of Default shall have occurred and be continuing,
and subject to this Indenture and the terms of the Collateral Documents, the
Company and its Restricted Subsidiaries will be entitled to receive all cash
dividends, interest and other payments made upon or with respect to the
Collateral pledged by them and to exercise any voting and other consensual
rights pertaining to the Collateral pledged by them. Upon the occurrence and
during the continuance of an Event of Default, and subject to the prior approval
of Nevada Gaming Authorities, (a) all rights of the Company and its Restricted
Subsidiaries to exercise such voting or other consensual rights will cease, and
all such rights will become vested in the Collateral Agent, which, to the extent
permitted by law, will have the sole right to exercise such voting and
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other consensual rights and (b) all rights of the Company and its Restricted
Subsidiaries to receive all cash dividends, interest and other payments made
upon or with respect to the Collateral will cease and such cash dividends,
interest and other payments will be paid to the Collateral Agent, and (c) the
Collateral Agent may sell the Collateral or any part thereof in accordance with
the terms of the Collateral Documents. All funds distributed under the
Collateral Documents and received by the Collateral Agent for the benefit of the
Holders of the Notes will be distributed by the Collateral Agent in accordance
with the provisions of this Indenture.
Section 10.02. Recording and Opinions.
(a) The Company and the Guarantors shall cause the applicable
Collateral Documents including the Deed of Trust and any financing statements,
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 securing the Obligations under the Notes
and the Subsidiary Guarantees pursuant to the Collateral Documents and to
effectuate and preserve the security of the Holders of Notes and all rights of
the Trustee.
(b) The Company, the Guarantors and any other obligor shall furnish to
the Trustee:
(i) promptly after the execution and delivery of this
Indenture, and promptly after the execution and delivery
of any other instrument of further assurance or amendment,
an Opinion of Counsel either (x) stating that in the
opinion of such counsel, this Indenture, the Deed of Trust
and other applicable 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 stating that, as
to such Collateral Documents and such other instruments
such recording, registering and filing are the only
recordings, registerings and filings necessary to give
notice thereof and further stating that all financing
statements and continuation statements have been executed
and filed that are necessary fully to perfect the Liens
intended to be created by the Collateral Documents, or (y)
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 August 30, in each year beginning with the year 1998,
an Opinion of Counsel, dated as of such date, either (x)
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 or other instruments
of further assurance as is necessary to maintain the Lien
of this Indenture and the Collateral Documents until the
next Opinion of Counsel is required to be rendered
pursuant to this paragraph, and stating that all financing
statements and continuation statements have been executed
and filed that are necessary fully to perfect the Liens
intended to be created by the Collateral Documents or (y)
stating that in the opinion of such counsel, no such
action is necessary to maintain such Lien, until the next
Opinion of Counsel is required to be rendered pursuant to
this paragraph.
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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 the
Collateral Documents at any time or from time to time in accordance with the
provisions of the Collateral Documents or as provided by this Indenture. Upon
the request of the Company pursuant to an Officers' Certificate certifying that
all conditions precedent hereunder have been met and that no Default or Event of
Default shall have occurred and be continuing or would occur as a result
thereof, and stating whether or not such release is in connection with an Asset
Sale (and at the sole cost and expense of the Company), the Collateral Agent
shall release Collateral that is sold, conveyed or disposed of in compliance
with the provisions of this Indenture, or that is otherwise authorized to be
released by this Indenture or the Collateral Documents; provided, that if such
sale, conveyance or disposition constitutes an Asset Sale, the Company shall
apply the Net Proceeds in accordance with Section 4.11 hereof, and the Officers'
Certificate referred to above shall certify that the Net Proceeds have been or
will be so applied; and provided further, that in no event shall the Riviera
Property (except for the Six Acre Tracts) be sold or released from such Lien.
Upon receipt of such Officers' Certificate the Collateral Agent 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 this Indenture
or 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 received a
notice of acceleration, no release of 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 of the Collateral Documents. 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 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 and the Collateral Agent,
prior to each proposed release of Collateral pursuant to the Collateral
Documents, an Opinion of Counsel, which may be rendered by internal counsel to
the Company, to the effect specified in Section 12.04 hereof. 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.
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Section 10.05. Certificates of the Trustee.
In the event that the Company wishes to release Collateral in
accordance with this Indenture or 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 in connection with such release and, based on such
determination and the Opinion of Counsel delivered pursuant to Section 10.04,
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 Sections 7.01 and 7.02 hereof, and only
upon any requisite approval of all Gaming Authorities, the Trustee may, in its
sole discretion and without the consent of the Holders of Notes, on behalf of
the Holders of Notes, take 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 and Guarantors 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
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 15 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.
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Section 10.08. Termination of Security Interest.
Upon the payment in full of all Obligations of the Company and
Guarantors under this Indenture, the Notes and Subsidiary Guarantees, 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 (except as otherwise provided in Article 8), and shall
execute all terminations and other documents, 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 or any Guarantor is required to pledge or
grant a security interest in additional Collateral, the Trustee shall cooperate
with the Company or such Guarantor 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,
pledged or granted. To the extent practicable, the terms of any security
agreement, deed of trust or other instrument or document necessitated by any
such substitution, pledge or grant 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 or any Guarantor engages in any transaction pursuant
to Section 10.03 hereof, the Trustee shall cooperate with the Company or such
Guarantor in order to facilitate such transaction in accordance with any
reasonable time schedule proposed by the Company, including by delivering and
releasing the Collateral in a prompt and reasonable manner.
Section. 10.10. Collateral Agent.
The Collateral Agent initially shall be the Trustee. The Trustee may,
from time to time, appoint one or more additional or substitute Collateral
Agents hereunder. 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, 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
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantees.
(a) Each of the Guarantors, jointly and severally, hereby
unconditionally guarantees, on a senior secured basis 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 or enforceability of this Indenture,
the Notes or the Obligations of the Company under this Indenture or the Notes,
that: (i) the principal of, premium, if any, and Liquidated Damages, if any and
interest on the Notes shall be paid in full when due, whether at the maturity or
interest payment or mandatory redemption date, by acceleration, call for
redemption or otherwise, and interest on the overdue principal, premium and
Liquidated Damages, if any, and (to the extent permitted by law) interest, if
any, of the Notes and all other Obligations of the Company to the Holders or the
Trustee under this Indenture or the Notes shall be promptly paid in full or
performed, all in accordance with the terms of this Indenture and the Notes; and
(ii) in case of any extension of time of payment or renewal of any Notes or any
of such other Obligations, they shall be paid in full when due or
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performed in accordance with the terms of the extension or renewal, whether at
maturity, by acceleration, redemption or otherwise. Failing payment when due of
any amount so guaranteed or failing performance of any other Obligation of the
Company to the Holders, for whatever reason, each Guarantor shall be jointly and
severally obligated to pay, or to perform or to cause the performance of, the
same immediately, whether or not such failure to pay or perform has become an
Event of Default that could cause acceleration pursuant to Section 6.02 hereof.
An Event of Default under this Indenture or the Notes shall constitute an event
of default under this Subsidiary Guarantee, and shall entitle the Holders of
Notes to accelerate the Obligations of each Guarantor hereunder in the same
manner and to the same extent as the Obligations of the Company.
(b) Each Guarantor hereby agrees that its Obligations with regard to
each Subsidiary Guarantee shall be joint and several and unconditional,
irrespective of the validity 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 Notes with respect to any provision hereof or thereof, the recovery of
any judgment against the Company or any other obligor with respect to this
Indenture, the Notes or the Obligations of the Company under this Indenture or
the Notes, any action to enforce the same or any other circumstances that might
otherwise constitute a legal or equitable discharge or defense of a Guarantor
except for payment in full of the Obligations. Each Guarantor, to the extent
permitted by law, hereby waives and relinquishes all claims, rights and remedies
accorded by applicable law to guarantors and agrees not to assert or take
advantage of any such claims, rights or remedies, including but not limited to:
(i) any right to require the Trustee, the Holders or the Company (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 any Benefitted Party's power before proceeding
against such Guarantor; (ii) the defense of the statute of limitations in any
action hereunder or in any action for the collection of any Indebtedness or the
performance of any Obligation hereby guaranteed; (iii) 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 Benefitted Party to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other Person; (iv) diligence, presentment, demand, protest and notice of any
kind including but not limited to 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 such Guarantor, the Company, any Benefitted Party, any
creditor of such Guarantor, the Company or on the part of any other Person
whomsoever in connection with any Indebtedness or Obligations hereby guaranteed;
(v) any defense based upon an election of remedies by a Benefitted Party,
including but not limited to an election to proceed against such Guarantor for
reimbursement; (vi) any defense based upon any statute or rule of law that
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal; (vii) any defense
arising because of a Benefitted Party's election, in any proceeding instituted
under Bankruptcy Law, of the application of Section 1111(b)(2) of the Bankruptcy
Law; (viii) any defense based on any borrowing or grant of a security interest
under Section 364 of the Bankruptcy Law; or (ix) the provisions of Nevada
Revised Statutes 40.430 or similar laws of Nevada or other states limiting a
debtor or lien holder to one form of action for the recovery of debt or
enforcement of a right. Each Guarantor hereby covenants that its Subsidiary
Guarantee will not be discharged except by complete performance of the
Obligations contained in the Notes and this Indenture or as otherwise expressly
provided herein.
(c) If any Holder or the Trustee is required by any court or otherwise
to return to either the Company or any Guarantor, or any custodian, trustee, or
similar official acting in relation to either the Company or such Guarantor, any
amount paid by the Company or such Guarantor to the Trustee or such Holder, the
applicable Subsidiary Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that it will not be
entitled to any right of subrogation in relation to
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the Holders in respect of any Obligations guaranteed hereby until payment in
full of all Obligations guaranteed hereby.
(d) Each Guarantor further agrees that, as between such Guarantor, on
the one hand, and the Holders and the Trustee, on the other hand, (i) the
maturity of the Obligations guaranteed hereby may be accelerated as provided in
Section 6.02 hereof for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration as to the Company or any other obligor on the Notes of the
Obligations guaranteed hereby and (ii) in the event of any declaration of
acceleration of those Obligations as provided in Section 6.02 hereof, those
Obligations shall forthwith become due and payable by such Guarantor for the
purpose of this Subsidiary Guarantee.
Section 11.02. Execution and Delivery of Subsidiary Guarantees.
To evidence the Subsidiary Guarantees set forth in Section 11.01
hereof, each of the Guarantors agrees that a notation of the Subsidiary
Guarantees substantially in the form included in Exhibit B shall be endorsed on
each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of each of the Guarantors by the Chairman of the
Board, any Vice Chairman, the President or one of the Vice Presidents of each of
the Guarantors. Notwithstanding the foregoing, in the event additional
Subsidiary Guarantees are created pursuant to Section 4.18 hereof, any Notes
issued prior to the existence of any such additional Subsidiary Guarantees need
not be reissued by the Company to include the names of such additional
Guarantors.
Each of the Guarantors agree that the Subsidiary Guarantees set forth
in Section 11.01 hereof shall remain in full force and effect and apply to all
the Notes notwithstanding any failure to endorse on each Note a notation of the
Subsidiary Guarantees.
If an Officer whose facsimile signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note on which the
Subsidiary Guarantees are endorsed, the Subsidiary Guarantees shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantees
set forth in this Indenture on behalf of the Guarantors.
Section 11.03. Limitation of Guarantors' Liability.
Each Guarantor, and by its acceptance hereof, each Holder, hereby
confirms that it is its intention that the Subsidiary Guarantee by such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
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
of the Subsidiary Guarantees. To effectuate the foregoing intention, each such
Holder hereby irrevocably agrees that the obligation of such Guarantor under its
Subsidiary Guarantee under this Article 11 shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other
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 11, result in the
Obligations of such Guarantor in respect of such maximum amount not constituting
a fraudulent conveyance. Each beneficiary under the Subsidiary Guarantees, by
accepting the benefits hereof, confirms its intention that, in the event of a
bankruptcy, reorganization or other similar proceeding of the Company or any
Guarantor in which concurrent claims are made upon any Guarantor hereunder, to
the extent such claims will not be fully
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satisfied, each such claimant with a valid claim against the Company shall be
entitled to a ratable share of all payments by such Guarantor in respect of such
concurrent claims.
Section 11.04. Merger or Consolidation of Guarantors.
No Guarantor shall 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 (other than any other
Guarantor or the Company) unless (i) subject to the provisions of the following
paragraph, the Person formed by or surviving any such consolidation or merger
(if other than such Guarantor, any other Guarantor or the Company) assumes all
the Obligations of such Guarantor pursuant to a supplemental indenture and
appropriate Collateral Documents in form and substance reasonably satisfactory
to the Trustee, under the Notes, this Indenture and the Collateral Documents;
(ii) immediately after giving effect to such transaction, no Default or Event of
Default exists; (iii) such Guarantor, or any Person formed by or surviving any
such consolidation or merger, would have Consolidated Net Worth (immediately
after giving effect to such transaction but without giving effect to purchase
accounting adjustments), equal to or greater than the Consolidated Net Worth of
such Guarantor immediately preceding the transaction; (iv) the Company would be
permitted by virtue of the Company's pro forma Fixed Charge Coverage Ratio,
immediately after giving effect to such transaction, to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.10 hereof, and (v) such transaction would not result in the
loss or suspension or material impairment of any Gaming License (unless a
replacement Gaming License is effective prior to or simultaneously with such
loss, suspension or material impairment).
Section 11.05. Releases of Subsidiary Guarantees.
In the event of a sale or other disposition of all of the assets of any
Guarantor (other than ROC), by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the Capital Stock of any Guarantor (other
than ROC), then such Guarantor (in the event of a sale or other disposition, by
way of such a 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 of the assets of such Guarantor) shall be
released and relieved of any Obligations under its Subsidiary Guarantee and any
Liens in favor of the Collateral Agent upon the Collateral owned by such
Guarantor will be released; provided that (i) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof and (ii) the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture. Additionally, in the event that a Guarantor that
is a Restricted Subsidiary is properly designated as an Unrestricted Subsidiary
in accordance with this Indenture, then such Guarantor will be released and
relieved of any Obligations under its Subsidiary Guarantee, and any Liens in
favor of the Collateral Agent upon the Collateral owned by such Guarantor will
be released. Upon delivery by the Company to the Trustee of an Officers'
Certificate and Opinion of Counsel, to the effect that such sale or other
disposition or designation of an Unrestricted Subsidiary was made by the Company
in accordance with all applicable provisions of this Indenture, the Trustee
shall execute any documents reasonably required in order to evidence the release
of any such Guarantor from its Obligations under its Subsidiary Guarantee. Any
Guarantor not released from its Obligations under its Subsidiary Guarantee shall
remain liable for the full amount of principal of, premium and Liquidated
Damages, if any, and interest on the Notes and for the other Obligations of such
Guarantor under this Indenture as provided in this Article 11. Nothing herein
shall relieve the Company from its Obligations to apply the proceeds of an Asset
Sale as provided in Section 4.11 hereof.
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Section 11.06. "Trustee" To Include Paying Agent.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company, Guarantors 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 or the Guarantors:
Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
If to the Trustee:
Norwest Bank Minnesota, N.A.
Corporate Trust Department
6th and Marquette
Minneapolis, MN 55479
Telecopier No.: (612) 667-9825
Attention: Raymond S. Haverstock
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
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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.
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 12.03. 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 12.04. 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 12.05 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 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants, and all other applicable legal requirements, including,
without limitation, all requirements of the TIA and the rules thereunder, have
been satisfied.
Section 12.05. 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;
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(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 12.06. 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 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, Subsidiary or an Affiliate thereof, as such, shall
have any liability for any Obligations of the Company or Guarantors under the
Notes, the Subsidiary Guarantees, this Indenture or 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.
Section 12.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT REGARD
TO THE CONFLICTS OF LAW PROVISIONS REQUIRING THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION.
Section 12.09. 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 12.10. Successors.
All agreements of the Company and the Guarantors in this Indenture, the
Notes and the Subsidiary Guarantees, as applicable, shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 12.11. Severability.
In case any provision in this Indenture, in the Notes or in the
Subsidiary Guarantees 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.
Section 12.12. 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.
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Section 12.13. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by the
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company and
the Guarantors. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee, the Company
and the Guarantors, if made in the manner provided in this Section 13.13.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such witness, notary or officer the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of authority. The fact and date of the execution of
any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any
Holder, and the date of holding the same, shall be proved by the register of the
Notes maintained by the Registrar as provided in Section 2.03.
(d) If the Company shall solicit from the Holders of the Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a resolution of the Company's
Board of Directors, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding TIA ss. 316(c), such record date shall be the record date
specified in or pursuant to such resolution, which shall be a date not earlier
than the date 30 days prior to the first solicitation of Holders generally in
connection therewith or the date of the most recent list of Holders forwarded to
the Trustee prior to such solicitation pursuant to Section 2.05 and not later
than the date such solicitation is completed. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of the then outstanding Notes have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the then outstanding Notes shall be computed as
of such record date; provided, that no such authorization, agreement or consent
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
eleven months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
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(f) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Note may do so itself with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 12.14. Legal Holidays.
If any date specified in this Indenture, the Notes, Subsidiary
Guarantees or the Collateral Documents for the occurrence of any event
(including the giving of notice and the making of a payment) shall not be a
Business Day, then such event shall occur on the next succeeding date that is a
Business Day with the same force and effect as if such event had occurred on the
date originally specified and, if such event is a payment day in respect of the
Notes, no interest shall accrue for the intervening period.
Section 12.15. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA and shall pay
all costs and expenses (including attorneys' fees for the Company, the Trustee
and the Holders of the Notes) incurred in connection therewith, including, but
not limited to, costs and expenses of qualification of this Indenture and the
Notes and printing this Indenture and the Notes. In connection with any such
qualification of this Indenture under the TIA, the Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request.
Section 12.16. 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.
[Signatures on following page]
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<PAGE>
SIGNATURES
Dated as of August __, 1997 RIVIERA HOLDINGS CORPORATION
By: _______________________________
Name: William L. Westerman
Title: Chief Executive Officer
Dated as of August __, 1997 RIVIERA OPERATING CORPORATION
By: _______________________________
Name:
Title:
Dated as of August __, 1997 RIVIERA GAMING MANAGEMENT, INC.
By: _______________________________
Name:
Title:
Dated as of August __, 1997 RIVIERA GAMING MANAGEMENT -
ELSINORE, INC.
By: _______________________________
Name:
Title:
Dated as of August __, 1997 RIVIERA GAMING MANAGEMENT
OF COLORADO, INC.
By: _______________________________
Name:
Title:
S-1
<PAGE>
Dated as of August __, 1997 NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By: _______________________________
Name:
Title:
S-2
<PAGE>
================================================================================
EXHIBIT A
(Face of Note)
10% First Mortgage Notes due 2004
No. $__________
RIVIERA HOLDINGS CORPORATION
promises to pay to
or registered assigns,
the principal sum of
Dollars on August 15, 2004.
Interest Payment Dates: February 15, and August 15
Record Dates: February 1, and August 1
Dated: August __, 1997
RIVIERA HOLDINGS CORPORATION
By: ___________________________
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Trustee
By:__________________________________
================================================================================
A-1
<PAGE>
(Back of Note)
10% First Mortgage Notes due 2004
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]1
[THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY
HEREAFTER BE PROVIDED UNDER RULE 144(K) AS PERMITTING
RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES
WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL
CLOSING DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT
- ------------------------
1 This paragraph should be included only if the Note is issued in global form.
A-2
<PAGE>
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501 (A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS PURCHASING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE.]2
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Riviera Holdings Corporation, a Nevada corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 10%
per annum from August 13, 1997 until maturity and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Notes will mature on August 15, 2004. The
Company will pay interest and Liquidated Damages semi-annually on February 15
and August 15 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date"), commencing on
February 15, 1998. Interest on the Notes will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the date
of original issuance. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to Holders of record
at the close of business on the February 1 or August 1 immediately 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 will be payable
as to principal, premium, if any, interest and
- ------------------------
2 This paragraph should be included only if the Note is a Transfer
Restricted Security.
A-3
<PAGE>
Liquidated Damages, if any, at the office or agency of the Company maintained
for such purpose within the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages, if any, may be made by
check mailed to the Holders at their respective addresses set forth in the
register of Holders of the Notes, provided that payment by wire transfer of
immediately available funds will be required with respect to principal, premium
and Liquidated Damages, if any, and interest on, all Notes, the Holders of which
shall have provided wire transfer instructions to the Company. 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, Norwest Bank Minnesota,
National Association, the Trustee under the Indenture, will 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 August 13, 1997 ("Indenture") between the
Company, the Guarantors 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 ss.ss. 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. The Notes are secured obligations of
the Company limited to $175.0 million in aggregate principal amount. The Notes
are secured pursuant to the Collateral Documents referred to in the Indenture by
a first lien on the Collateral owned by the Company or any Guarantor,
respectively, whether now owned or hereafter acquired, subject to Permitted
Liens.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) or (d) of this Paragraph 5,
the Company shall not have the option to redeem the Notes prior to August 15,
2001. Thereafter, the Company shall have the option to redeem the Notes, in
whole or in part, 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 thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 15 of the years
indicated below:
Year Percentage
2001........................ 105.000%
2002........................ 102.500%
2003 and thereafter......... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, during the period commencing upon issuance of the Notes and ending
on August 15, 2000, the Company may redeem up to one-third of the principal
amount of Notes at a redemption price of 110.0% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date with the net cash proceeds of an offering of common stock of the
Company; provided that at least $116.7 million in aggregate principal amount of
the Notes remain outstanding immediately after the occurrence of such
redemption; and provided further that the call for such redemption shall occur
within 30 days of the date of the closing of such offering.
A-4
<PAGE>
(c) Any redemption pursuant to subparagraph (a) or (b) of this
Paragraph 5 shall be made pursuant to the provisions of Sections 3.01 through
3.06 of the Indenture.
(d) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, if any Gaming Authority requires that a Holder or beneficial owner
of the Notes must be licensed, qualified or found suitable under any applicable
Gaming Law in order to maintain any or obtain any applied-for Gaming License or
franchise of the Company or any of its Subsidiaries 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 Gaming Law) or if such Holder or beneficial owner is
not so licensed, qualified or found suitable by such Gaming Authority (a
"Disqualified Holder"), the Company shall have the right, at its option, (i) to
require such Disqualified Holder or beneficial owner to dispose of such
Disqualified Holder's or beneficial owner's Notes within 30 days of notice of
such finding by the applicable Gaming Authority that such Disqualified Holder or
beneficial owner will not be licensed, qualified or found suitable as directed
by such Gaming Authority (or such earlier date as may be required by the
applicable Gaming Authority or Gaming Law) or (ii) to call for redemption of the
Notes of such Holder or beneficial owner at a redemption price equal to the
lesser of 100% of the principal amount thereof or the price at which the 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 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 of unsuitability, the Disqualified Holder shall have no further
rights whatsoever with respect to the Notes (i) to exercise, directly or
indirectly, through any trustee, nominee or any other Person or entity, any
right conferred by the Notes or (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 is 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 of such application
including investigatory costs. Such expenses will, therefore, be the obligation
of such Holder or beneficial owner. Any redemption pursuant to this subparagraph
(d) of this Paragraph 5 shall be made pursuant to the provisions of Sections
3.01 through 3.06 of the Indenture (except to the extent otherwise required by a
Gaming Authority or Gaming Law).
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. 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 an offer
price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and setting
forth the procedures governing the Change of Control Offer as required by the
Indenture. 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
A-5
<PAGE>
requirements set forth in Sections 3.10 and 4.16 of the Indenture and purchases
all Notes validly tendered and not withdrawn under such Change of Control Offer.
(b) If the Company or a Subsidiary consummates any Asset Sales, within
fifteen 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 (as "Asset Sale Offer") pursuant to Sections 3.10 and 4.11 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, if any, thereon to the date of purchase, 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 may use any remaining Excess Proceeds 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. Upon completion of such offer to
purchase, the amount of Excess Proceeds will be reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will 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.
9. 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, it 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.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. 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
in case of a merger, consolidation, or sale of assets, 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 release Collateral that is permitted to be released under the
Indenture, or to comply with requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
A-6
<PAGE>
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes; (ii) default in payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise, (iii) failure by the Company to comply with Sections 4.16 or 5.01 of
the Indenture; (iv) failure by the Company for 60 days after notice to the
Company by the Trustee or the Holders of at least 25% in principal amount of the
Notes then outstanding to comply with certain other agreements in the Indenture,
the Notes or the Collateral Documents; (v) default under certain other
agreements relating to Indebtedness of the Company, which default (a) is caused
by failure to pay principal of, premium, or interest on such Indebtedness prior
to the applicable grace period or (b) results in the acceleration of such
Indebtedness prior to its express maturity; (vi) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; (vii) the
Company or any Guarantor repudiates its respective Obligations under its
Subsidiary Guarantee any of the Collateral Documents; (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; (ix) any Subsidiary Guarantee shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect and (x) any Gaming License of the Company or any
Restricted Subsidiary is revoked, terminated or suspended, resulting in the
cessation of operation for a period of more than 90 days of the casino business
owned or operated by the Company or any of its Restricted Subsidiaries. If any
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. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes 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 of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal of, premium, if any, or interest on any Note) if a committee of the
Trustee's Responsible Officers in good faith determines that withholding the
notice is in the Holders' interest. The Holders of at least 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 on, or the
principal of, the Notes.
13. 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.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder of the Company, Subsidiary or Affiliate, as such,
shall not have any liability for any Obligations of the Company or Guarantors
under the Notes, the Subsidiary Guarantees, the Indenture or 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 the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. 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 (=
A-7
<PAGE>
joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of August __, 1997, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will 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 Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, NV 89109
Attention: Chief Executive Officer
A-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(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 the Note)
Signature Guarantee.
A-9
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.11 or 4.16 of the Indenture, check the box below:
[GRAPHIC OMITTED] Section 4.11 [GRAPHIC OMITTED] Section 4.16
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.11 or Section 4.16 of the Indenture, state the
amount you elect to have purchased: $___________
Date: _____________________
Your Signature:__________________________________
(Sign exactly as your name appears
on the face of the Note)
Tax Identification No.:
(Signature Guarantee)
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE3
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ------------------------ ---------------------
<S> <C> <C> <C> <C>
<FN>
- ------------------------
3 This should only be included if the Note is issued in global form.
</FN>
</TABLE>
A-11
<PAGE>
================================================================================
EXHIBIT B
SUBSIDIARY GUARANTEES
Riviera Operating Corporation, a Nevada corporation, Riviera Gaming
Management, Inc., a Nevada Corporation, Riviera Gaming Management - Elsinore,
Inc., a Nevada corporation, and Riviera Gaming Management of Colorado, Inc., a
Colorado corporation (each a "Guarantor" and, together with any successor or
additional Guarantor under the Indenture (the "Indenture") referred to in the
Note upon which this notation is endorsed, the "Guarantors"), have jointly and
severally and unconditionally guaranteed the Obligations of the Company under
the Notes and the Indenture, on a senior secured basis (each such guarantee
being a "Subsidiary Guarantee"), to each Holder of a Note authenticated and
delivered by the Trustee, or its successors or assigns, irrespective of the
validity or enforceability of the Indenture, the Notes or the Obligations of the
Company under the Indenture or the Notes, that: (i) the principal of, premium,
if any, interest and Liquidated Damages, if any, on the Notes shall be paid in
full when due, whether at the maturity or interest payment or redemption date,
by acceleration, call for redemption or otherwise, and interest on the overdue
principal, premium and Liquidated Damages, if any, and (to the extent permitted
by law) interest, if any, on the Notes and all other Obligations of the Company
to the Holders of the Notes or the Trustee under the Indenture or the Notes
shall be promptly paid in full or performed, all in accordance with the terms of
the Indenture and the Notes; and (ii) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, they shall be
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at maturity, by acceleration, redemption or otherwise.
Failing payment when due of any amount so guaranteed or failing performance of
any other Obligation of the Company to the Holders, for whatever reason, each
Guarantor shall be jointly and severally obligated to pay, or to perform or to
cause the performance of, the same immediately, whether or not such failure to
pay has become an Event of Default that could cause acceleration pursuant to
Section 6.02 of the Indenture. An Event of Default under the Indenture or the
Notes shall constitute an event of default under this Subsidiary Guarantee, and
shall entitle the Holders of Notes to accelerate the Obligations of each
Guarantor hereunder in the same manner and to the same extent as the Obligations
of the Company. Each Guarantor agrees that this is a guarantee of payment not a
guarantee of collection. Capitalized terms used herein have the meanings
assigned to them in the Indenture unless otherwise indicated, and the
Obligations of the Guarantors pursuant to the Subsidiary Guarantees are subject
to the terms of the Indenture, to which reference is hereby made for the precise
terms thereof.
Each Guarantor, to the extent permitted by law, hereby waives and
relinquishes all claims, rights and remedies accorded by applicable law to
guarantors and agrees not to assert or take advantage of any such claims, rights
or remedies, including but not limited to: (i) any right to require the Trustee,
the Holders or the Company (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 any
Benefitted Party's power before proceeding against such Guarantor; (ii) the
defense of the statute of limitations in any action hereunder or in any action
for the collection of any Indebtedness or the performance of any Obligation
hereby guaranteed; (iii) 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
Benefitted Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other Person; (iv)
diligence, presentment, demand, protest and notice of any kind including but not
limited to 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 such Guarantor, the Company, any Benefitted Party, any creditor of such
Guarantor, the Company or on the part of any other Person whomsoever in
connection with any Indebtedness or Obligations hereby guaranteed; (v) any
defense based upon an election of remedies by a Benefitted Party, including but
not limited to an election to proceed against such Guarantor for reimbursement;
(vi) any defense based upon any statute or rule of law that provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (vii) any defense arising because of
a Benefitted Party's election, in any proceeding instituted under Bankruptcy
Law, of the application of Section 1111(b)(2) of the Bankruptcy Law; (viii) any
defense based on any borrowing or grant of a security interest under Section 364
of the
B-1
<PAGE>
Bankruptcy Law or (ix) the provisions of Nevada Revised Statutes 40.430 or
similar laws of Nevada or other states limiting a debtor or lien holder to one
form of action for the recovery of debt or enforcement of a right. Each
Guarantor hereby covenants that its Subsidiary Guarantee will not be discharged
except by complete performance of the Obligations contained in the Notes and the
Indenture or as otherwise expressly provided herein.
Pursuant to Section 11.03 of the Indenture, the Obligation of each
Guarantor under its Guarantee is limited to the maximum amount as will, after
giving effect to such maximum amount and all other liabilities of such Guarantor
that are relevant for purposes of fraudulent transfer or conveyance under the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law, 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 11 of the Indenture, result in the Obligations of such
Guarantor in respect of such maximum amount not constituting a fraudulent
conveyance, all subject to the terms of the Indenture, to which reference is
hereby made for the precise terms thereof.
As set forth in the Indenture, the Obligation of each Guarantor under
its Subsidiary Guarantee may be released under certain circumstances, including
the sale of all or substantially all of the assets of a Guarantor or such
Guarantor becoming an Unrestricted Subsidiary of the Company, all subject to the
terms of the Indenture, to which reference is hereby made for the precise terms
thereof.
The Subsidiary Guarantees shall be binding upon the Guarantors and
their successors and assigns and shall inure to the benefit of the successors
and assigns of the Trustee and the Holders of the Notes and, in the event of any
transfer or assignment of rights by any Holder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms of the
Indenture.
The Subsidiary Guarantees shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note on which the
Subsidiary Guarantees are noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
B-2
<PAGE>
By each of the following, and any other Guarantor as may be added or
substituted from time to time, as Guarantors:
Dated as of August __, 1997 RIVIERA OPERATING CORPORATION
By: _______________________________
Name:
Title:
Dated as of August __, 1997 RIVIERA GAMING MANAGEMENT, INC.
By: _______________________________
Name:
Title:
Dated as of August __, 1997 RIVIERA GAMING MANAGEMENT -
ELSINORE, INC.
By: _______________________________
Name:
Title:
Dated as of August __, 1997 RIVIERA GAMING MANAGEMENT
OF COLORADO, INC.
By: _______________________________
Name:
Title:
B-3
<PAGE>
================================================================================
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF NOTES
Re: ___% First Mortgage Notes due 2004 of Riviera Holdings Corporation.
This Certificate relates to $_____ principal amount of Notes held in *
* ________ book-entry or *_______ definitive form by ________________
(the "Transferor").
The Transferor*:
[GRAPHIC OMITTED] has requested the Trustee by written order to deliver
in exchange for its beneficial interest in the Global Note held by the
Depository a Note or Notes in definitive, registered form of authorized
denominations in an aggregate principal amount equal to its beneficial interest
in such Global Note (or the portion thereof indicated above); or
[GRAPHIC OMITTED] has requested the Trustee by written order to
exchange or register the transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
[GRAPHIC OMITTED] Such Note is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
[GRAPHIC OMITTED] Such Note is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A (in satisfaction of
Section 2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i)(B) of the
Indenture) or pursuant to an exemption from registration in accordance with Rule
904 under the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or
Section 2.06(d)(i)(B) of the Indenture.)
- ---------------
*Check applicable box.
C-1
<PAGE>
[GRAPHIC OMITTED] Such Note is being transferred in accordance with
Rule 144 under the Securities Act, or pursuant to an effective registration
statement under the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or
Section 2.06(d)(i)(B) of the Indenture).
[GRAPHIC OMITTED] Such Note is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A, 144 or Rule 904 under the Securities Act.
An Opinion of Counsel (as defined in the Indenture) to the effect that such
transfer does not require registration under the Securities Act accompanies this
Certificate (in satisfaction of Section 2.06(a)(ii)(C) or Section 2.06(d)(i)(C)
of the Indenture).
------------------------------
[INSERT NAME OF TRANSFEROR]
By:___________________________
Date:______________________________
- ---------------
*Check applicable box.
C-2
<PAGE>
Recording Requested By and recorded counterparts should be returned to:
Gregory O. Lunt
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071-2007
DEED OF TRUST, ASSIGNMENT OF RENTS, LEASES, FIXTURE FILING AND
SECURITY AGREEMENT
MADE BY
RIVIERA HOLDINGS CORPORATION
a Nevada corporation,
as Trustor,
to
UNITED TITLE OF NEVADA
a Nevada corporation,
as Trustee,
for the benefit of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
collateral agent,
as Beneficiary
********************************************************************************
THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL ESTATE RECORDS
AND IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS OF CLARK COUNTY,
NEVADA UNDER THE NAMES OF RIVIERA HOLDINGS CORPORATION AS DEBTOR AND NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, AS SECURED PARTY.
<PAGE>
DEED OF TRUST, ASSIGNMENT OF RENTS, LEASES, FIXTURE FILING AND
SECURITY AGREEMENT
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, LEASES, FIXTURE FILING AND
SECURITY AGREEMENT (hereinafter called "Deed of Trust") is made and effective as
of August 13, 1997, by RIVIERA HOLDINGS CORPORATION, a Nevada corporation, as
Trustor, whose address is 2901 Las Vegas Boulevard South, Las Vegas, Nevada
89109, to UNITED TITLE OF NEVADA, a Nevada corporation, whose address is 3980
Howard Hughes Parkway, #200, Las Vegas, Nevada 89109, as Trustee, for the
benefit of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as collateral agent
under that certain Indenture dated as of even date herewith among Norwest Bank
Minnesota, National Association, as trustee, Trustor as issuer, and the
Guarantors (as defined below), whose address is 6th and Marquette, Minneapolis,
Minnesota 55479 ("Beneficiary").
DEFINITIONS - As used in this Deed of Trust, the following terms
have the meanings hereinafter set forth:
"Account Agreement" means that Restricted Account Agreement which
shall be entered into by and between Trustor, Beneficiary and the U.S. Bank of
Nevada.
"Appurtenant Rights" means all and single tenements,
hereditaments, rights, reversions, remainders, development rights, privileges,
benefits, easements (in gross or appurtenant), rights-of-way, gores or strips of
land, streets, ways, alleys, passages, sewer rights, water courses, water rights
and powers, and all appurtenances whatsoever and claims or demands of Trustor at
law or in equity in any way belonging, benefitting, relating or appertaining to
the Land, the airspace over the Land, the Improvements or any of the Trust
Estate encumbered by this Deed of Trust, or which hereinafter shall in any way
belong, relate or be appurtenant thereto, whether now owned or hereafter
acquired by Trustor.
"Bankruptcy" means, with respect to any Person, that such Person
is or becomes bankrupt or Insolvent or: (a) is the subject of any order for
relief under any Bankruptcy Law; (b) commences a voluntary proceeding under any
Bankruptcy Law; (c) consents to the entry of an order for relief in an
involuntary proceeding under any Bankruptcy Law; (d) consents to the appointment
of, or taking possession by any Receiver; (e) makes any assignment for the
benefit of creditors; (f) is unable or fails, or admits in writing its
inability, to pay its debts as such debts become due; (g) is the subject of any
involuntary proceeding under any Bankruptcy Law or involuntary appointment of a
Receiver, and such involuntary proceeding or appointment is not dismissed and
terminated within 60 days; (h) is the subject of any other proceeding or relief
similar to any of the foregoing under any law; (i) is the subject of a warrant
of attachment, execution, or similar process with respect to such Person or any
substantial part of such Person's property, which warrant or similar process
remains in effect for sixty days without having been bonded or discharged; or
(j) otherwise ceases to do business as a going concern.
"Beneficiary" means Norwest Bank Minnesota, National Association,
as the collateral agent under the Indenture and any additional or substitute
collateral agent designated from time to time under the Indenture.
"Business Day" means any day that is not a Saturday, a Sunday or a
day on which banking institutions in the State of Nevada or the City of New York
are authorized by law, regulation or executive order to remain closed.
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"Collateral Documents" means this Deed of Trust, the Security
Agreement, the Stock Pledge Agreement, and the Account Agreement, together with
any similar documents executed after the date hereof pursuant to Section 4.18 of
the Indenture.
"Deed of Trust" means this Deed of Trust as it may be amended,
increased or modified from time to time.
"Environmental Laws" means any and all laws and Legal Requirements
relating to environmental matters, pollution, or hazardous substances,
including: the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. ss.ss. 9601-9657; the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. ss.ss. 6901 et seq.; the Hazardous Materials
Transportation Act (49 U.S.C. ss.ss. 1801 et seq.); the Nevada Hazardous
Materials Act (NRS Chapter 459); any other Laws that may form the basis of any
claim, action, demand, suit, proceeding, hearing, or notice of violation that is
based on or related to the generation, manufacture, processing, distribution,
use, existence, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release, or threatened release into the environment, of any
hazardous substance, or other threat to the environment.
"Event of Default" has the meaning set forth in Section 3.1
hereof.
"Excluded Assets" means (i) any accounts, as such term is defined
in Section 9-106 (NRS 104.9106) of the UCC, and any credit instruments, as such
term is defined in NRS 463.01467; (ii) Gaming Equipment wherever located; (iii)
any inventory, as such term is defined in Section 9-109 (NRS 104.9109) of the
UCC, wherever located; (iv) any FF&E subject to Liens in existence as of the
date of the Indenture (as defined in the Indenture) securing indebtedness in
existence as of the date of the Indenture; (v) any agreement with a third party
that, pursuant to its terms, prohibits the grant of a lien on such agreement, to
the extent that such third party has not consented to the liens created hereby;
(vi) any Collateral (as such term is defined in the Security Agreement) which is
subject to an agreement with a third party that, pursuant to its terms,
prohibits the grant of a lien on such Collateral, to the extent that such third
party has not consented to the liens created hereby; (vii) Gaming Licenses (as
defined in the Indenture) or 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 Beneficiary without the
approval of the relevant governmental authority, to the extent that such
approval has not been obtained; (viii) any FF&E (A) the purchase of which was
not financed with the proceeds of the Notes and (B) that a Grantor is permitted
to encumber and has encumbered pursuant to clause (ii) of the second paragraph
of Section 4.10 of the Indenture and (C) in which Secured Party is prohibited
from maintaining a security interest pursuant to the terms of the FF&E Financing
Agreement encumbering such FF&E; and (ix) any personal property which Trustor is
prohibited from pledging under applicable law.
"FF&E" means all of Trustor's personal property, equipment,
supplies, building and other materials of every nature whatsoever and all other
personal property wherever located, including, but not limited to, all general
equipment and devices which are or are to be installed and used in connection
with the operation of the Riviera and the Land, all computer equipment,
calculators, adding machines, and any other electronic equipment of every nature
used or located at the Riviera, all fixtures, 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 Riviera or the Land, whether or
not the same constitutes real property or fixtures in the State of Nevada,
including, without limitation, all removable window and floor coverings, all
furniture and furnishings, heating, lighting, plumbing, ventilating, air
conditioning, refrigerating,
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incinerating and elevator and escalator plants, machinery, equipment and
appliances, cooking facilities, vacuum cleaning systems, telephone, television,
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, cleaning apparatus, mirrors, lamps, ornaments, cooling apparatus and
equipment, ranges and ovens, garbage disposals, dishwashers, mantels, and any
and all such property, including, without limitation, all parts thereof and
accessions thereto, which is at any time installed in, affixed to or placed upon
the Riviera or the Land.
"FF&E Financing Agreement" shall have the meaning ascribed to that
term in Section 1.9(d) hereof.
"Gaming Equipment" means any slot machines, gaming tables and
other gaming devices, as defined in NRS 463.0155, any cashless wagering system
as defined in NRS 463.014 and associated equipment as defined in NRS 463.0136.
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office, public entity, or instrumentality of any
nature whatsoever of the federal government of the United States or any foreign
government, any state, province or any city or other political subdivision or
otherwise, whether now or hereafter in existence, or any officer or official
thereof, including, without limitation, any Gaming Authority.
"Guarantor(s)" means each of (i) ROC, RGM, RGMC and Riviera Gaming
Management- Elsinore, Inc. and (ii) any other Affiliate of Trustor that executes
a guarantee in accordance with the provisions of the Indenture, and their
respective successors and assigns.
"Imposition" means any taxes, assessments, water rates, sewer
rates, maintenance charges, other governmental impositions and other charges now
or hereafter levied or assessed or imposed against the Trust Estate or any part
thereof.
"Improvements" means (1) all the buildings, structures, facilities
and improvements of every nature whatsoever now or hereafter situated on the
Land or any real property encumbered hereby, and (2) all fixtures, machinery,
appliances, goods, building or other materials, equipment, including without
limitation all gaming equipment and devices, and all machinery, equipment,
engines, appliances and 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 wall-beds, wall-safes, built-in furniture and
installations, shelving, lockers, partitions, doorstops, vaults, motors,
elevators, dumb-waiters, awnings, window shades, venetian blinds, light
fixtures, fire hoses and brackets and boxes for the same, fire sprinklers,
alarm, surveillance and security systems, computers, drapes, drapery rods and
brackets, mirrors, mantels, screens, linoleum, carpets and carpeting, plumbing,
bathtubs, sinks, basins, pipes, faucets, water closets, laundry equipment,
washers, dryers, ice-boxes and heating units; all kitchen and restaurant
equipment, including but not limited to silverware, dishes, menus, cooking
utensils, stoves, refrigerators, ovens, ranges, dishwashers, disposals, water
heaters, incinerators, furniture, fixtures and furnishings, communication
systems, and equipment; all cocktail lounge supplies, including but not limited
to bars, glassware, bottles and tables used in connection with the Land; all
chaise lounges, hot tubs, swimming pool heaters and equipment and all other
recreational equipment (computerized and otherwise), beauty and barber
equipment, and maintenance supplies used in connection with the Land; all
amusement rides and attractions attached to the Land, all specifically designed
installations and furnishings, and all furniture, furnishings and personal
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property of every nature whatsoever now or hereafter owned or leased by Trustor
or in which Trustor has any rights or interest and located in or on, or attached
to, or used or intended to be used or which are now or may hereafter be
appropriated for use on or in connection with the operation of the Land or any
real or personal property encumbered hereby or any other Improvements, or in
connection with any construction being conducted or which may be conducted
thereon, and all extensions, additions, accessions, improvements, betterments,
renewals, substitutions, and replacements to any of the foregoing, and all of
the right, title and interest of Trustor in and to any such property, which, to
the fullest extent permitted by law, shall be conclusively deemed fixtures and
improvements and a part of the real property hereby encumbered.
"Indenture" means that certain Indenture, dated as of August 13,
1997, by and among Beneficiary, as trustee, Trustor, as issuer, and Guarantors,
as such Indenture is amended or supplemented from time to time in accordance
with the terms thereof.
"Insolvent" means with respect to any person or entity, that such
person or entity shall be deemed to be insolvent if he or it is unable to pay
his or its debts as they become due and/or if the fair market value of his or
its assets does not exceed his or its aggregate liabilities.
"Intangible Collateral" means (a) all of Trustor's chattel paper,
including writings that evidence both a monetary obligation and a security
interest in or lease of specific goods, instruments, promissory notes,
acceptances, drafts, checks, certificates of deposit and other writings that
evidence a right to the payment of money by any other Person, in each case
whether now existing or hereafter arising and wherever arising and whether or
not earned by performance, other general intangibles, documents of title,
warehouse receipts, leases, 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
Trustor necessary to operate the Riviera or conduct business on the Land (other
than any gaming or other licenses in which a security interest cannot be granted
without the consent of third parties and no such consent has been given),
franchises, certificates, stock, and all rights in, to and under all security
agreements, mortgages, deeds of trust, guarantees, leases and other agreements
or contracts securing or otherwise relating to any of the foregoing; (b) all of
the trademarks and service marks now held or hereafter acquired by Trustor,
which are registered in the United States Patent and Trademark Office or in any
similar office or agency of the United States or any state thereof or any
political subdivision thereof and any application for such trademarks and
service marks, as well as any unregistered marks used by such Grantor in the
United States (the "Marks") and trade dress including logos, designs, trade
names, business names, fictitious business names and other business identifiers
in connection with which any of these registered or unregistered marks are used
in the United States together with the registration and right to renewals
thereof, and the goodwill of the business of such Grantor symbolized by the
Marks and all licenses associated therewith; (c) all United States copyrights
which each Trustor now or hereafter has registered with the United States
Copyright Office, as well as any application for a United States copyright
registration now or hereafter made with the United States Copyright Office by
Trustor; (d) all patents and patent applications of Trustor, which are now or
hereafter pending or granted by the United States Patent and Trademark Office or
any successor thereto or to which Trustor now or hereafter has title and any
divisions or continuations thereof, as well as all renewals thereof; (e) all
computer programs created by or for Trustor and which Trustor owns the copyright
with respect thereto and all intellectual property rights therein and all other
proprietary information of Trustor, including, but not limited to, trade
secrets; (f) all of the agreements to which Trustor may be a party from time to
time, as such agreements may be amended or otherwise modified from time to time
(collectively, the "Assigned Agreements"), including, without limitation, (i)
all rights of Trustor to receive moneys due and to become due under or pursuant
to the Assigned Agreements, (ii)
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all rights of Trustor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to any of the Trust Estate or the Assigned Agreements,
(iii) claims of Trustor for damages arising out of or for breach of or default
under the Assigned Agreements, and (iv) the right of Trustor to terminate the
Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder; (g) subject to the absolute
assignment contained herein, the Rents; (g) all securities of Trustor's
subsidiaries, whether now in existence of hereafter incorporated or formed; (h)
all replacements, additions, accessions, substitutions, proceeds, products,
offspring, rents and profits, relating to any of the foregoing, and all
documents, records, ledger sheets and files of such Grantor relating thereto.
"Land" means the real property situated in the County of Clark,
State of Nevada, more specifically described in Schedule A attached hereto and
incorporated herein by reference, including any after acquired title thereto.
"Legal Requirements" means all applicable restrictive covenants,
applicable zoning and subdivision ordinances and building codes, all applicable
health and Environmental Laws and regulations, all applicable gaming laws and
regulations, and all other applicable laws, ordinances, rules, regulations,
judicial decisions, administrative orders, and other requirements of any
Governmental Authority having jurisdiction over Trustor, the Trust Estate and/or
any Affiliate of Trustor, in effect either at the time of execution of this Deed
of Trust or at any time during the term hereof, including, without limitation,
all Environmental Laws and Gaming Control Acts.
"Loan Documents" means the Indenture, the Notes, and the
Collateral Documents, together with any similar documents executed after the
date hereof pursuant to Section 4.18 of the Indenture.
"Noteholders" means the holders of the Notes.
"Notes" means Trustor's $175,000,000 10% First Mortgage Notes due
2004, issued pursuant to the Indenture.
"NRS" means the Nevada Revised Statutes as in effect from time to
time.
"Offering Circular" means that certain Offering Circular, dated as
of August 8, 1997, relating to the offering of the Notes, and all supplements,
schedules or other attachments thereto.
"Permitted Dispositions" means the sale, transfer, lease or other
disposition of assets in the Trust Estate, in the ordinary course of business,
and other sales, transfers, lease or other dispositions of assets in the Trust
Estate; provided that all provisions of the Indenture are complied with,
including Section 10.03, and provided further that no sale, lease or other
disposition of the Land or any portion thereof (excluding the Six Acre Tracts)
shall be a Permitted Disposition.
"Personal Property" has the meaning set forth in Section 1.12.
"Proceeds" has the meaning assigned to it under the UCC and, in
any event, subject to the provisions of the Indenture, shall include but not be
limited to (i) any and all proceeds of any insurance (including without
limitation property casualty and title insurance), indemnity, warranty or
guaranty payable from time to time with respect to any of the Trust Estate; (ii)
any and all proceeds in the form of accounts, security deposits, tax escrows (if
any), down payments (to the extent the same may
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be pledged under applicable law and subject to the prior rights of tenants under
the Space Leases), collections, contract rights, documents, instruments, chattel
paper, liens and security instruments, guarantees or general intangibles
relating in whole or in part to the Riviera and all rights and remedies of
whatever kind or nature Trustor may hold or acquire for the purpose of securing
or enforcing any obligation due Trustor thereunder; (iii) any and all payments
in any form whatsoever made or due and payable from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Trust Estate by any Governmental Authority; (iv) subject to
the absolute assignment contained herein, the Rents or other benefits arising
out of, in connection with or pursuant to any Space Lease of the Trust Estate;
and (v) any and all other amounts from time to time paid or payable in
connection with any of the Trust Estate; provided, however, that Trustor is not
authorized to dispose of any of the Trust Estate unless such disposition is a
Permitted Disposition.
"Receiver" means, with respect to any Person (including Trustor),
any receiver, trustee, custodian, debtor in possession, liquidator,
sequestrator, administrator, conservator, or other successor appointed (whether
by a court or otherwise) pursuant to any creditor's exercise of remedies against
such Person, or pursuant to a Bankruptcy of such Person, or for purposes of
reorganization or liquidation, or otherwise for the benefit of such Person's
creditors, or under any similar circumstances, or otherwise having similar
powers over such Person or its property, whether such Receiver acts on an
interim, temporary, or final basis and whether such appointment applies to all
or any significant portion of such Person's assets or property, including or not
including any of the Trust Estate.
"Rents" means all rents, room revenues, income, receipts, issues,
profits, revenues and maintenance fees, room, food and beverage revenues,
license and concession fees, income, proceeds and other benefits to which
Trustor may now or hereafter be entitled from the Land, the Improvements, the
Space Leases or any property encumbered hereby or any business or other activity
conducted by Trustor at the Land or the Improvements.
"Restricted Account" means that certain account no. 8470105316 of
Trustor at the U.S. Bank of Nevada into which the proceeds from the sale of the
Notes have been or will be deposited and in which the Beneficiary will have a
security interest pursuant to the Account Agreement.
"RGMC" means Riviera Gaming Management of Colorado, Inc., a
Colorado corporation and Guarantor under the Indenture.
"Riviera" means the Riviera Hotel & Casino and any other hotel,
casino or resort constructed on the Land in the future.
"Riviera Financing" means the transactions related to the Notes,
the Indenture, and the Collateral Documents.
"RGM" means Riviera Gaming Management, Inc., a Nevada corporation
and Guarantor under the Indenture.
"ROC" means Riviera Operating Corporation, a Nevada corporation
and Guarantor under the Indenture.
"Secured Obligations" means (i) the payment by Trustor to the
Noteholders or Beneficiary of all indebtedness now or hereafter owed to
Beneficiary by Trustor in connection with the Riviera Financing, whether at
stated maturity, by acceleration or otherwise, including, without limitation,
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Trustor's obligations under the Indenture, the Notes, the Collateral Documents
or any related documents securing the obligations thereunder, together with any
interest thereon, fees, expenses, Liquidated Damages, indemnification or
otherwise, in connection therewith and extensions, modifications and renewals
thereof, (ii) the performance by Trustor of all other obligations and the
discharge of all other liabilities of Trustor to Beneficiary of every kind and
character arising from the Riviera Financing, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
joint, several and joint and several, and whether created under this Deed of
Trust, the other Collateral Documents or any other agreement to which Trustor
and Beneficiary are parties, (iii) any and all sums advanced by Beneficiary in
order to preserve the Trust Estate or preserve Beneficiary's security interest
in the Trust Estate (or the priority thereof) and (iv) the expenses of retaking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Trust Estate, of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of Beneficiary
referred to above, or of any exercise by Beneficiary of its rights hereunder,
together with reasonable attorneys' fees and disbursements and court costs
"Security Agreement" means that certain Security Agreement,
entered into as of August 13, 1997, by and between Trustor, Beneficiary and the
Guarantors.
"Six Acre Tracts" means those portions of the Land subject to the
partial release provisions of Section 1.10 of the Indenture consisting of
approximately six-acres fronting Riviera Boulevard which Trustor intends to
subdivide and develop as a hotel, time share facility or gaming area, together
with all improvements and fixtures thereon, and any easements appurtenant
thereto.
"Space Leases" means any and all leases, subleases, lettings,
licenses, concessions, operating agreements, management agreements, and all
other agreements affecting the Trust Estate that Trustor has entered into, taken
by assignment, taken subject to, or assumed, or has otherwise become bound by,
now or in the future, that give any person the right to conduct its business on,
or otherwise use, operate or occupy, all or any portion of the Land or
Improvements and any leases, agreements or arrangements permitting anyone to
enter upon or use any of the Trust Estate to extract or remove natural resources
of any kind, together with all amendments, extensions, and renewals of the
foregoing entered into in compliance with this Deed of Trust, together with all
rental, occupancy, service, maintenance or any other similar agreements
pertaining to use or occupation of, or the rendering of services at the Land,
the Improvements or any part thereof.
"Space Lessee(s)" means any and all tenants, licensees, or other
grantees of the Space Leases and any and all guarantors, sureties, endorsers or
others having primary or secondary liability with respect to such Space Lease.
"Stock Pledge Agreements" means, collectively, (i) that certain
Stock Pledge Agreement, dated as of even date herewith, executed by Trustor on
behalf of Beneficiary, pursuant to which Trustor pledged to Beneficiary its 100%
interest in ROC, (ii) that certain Stock Pledge Agreement, dated as of even date
herewith, executed by ROC on behalf of Beneficiary, pursuant to which ROC
pledged to Beneficiary its 100% interest in RGM, (iii) that certain Stock Pledge
Agreement, dated as of even date herewith, executed by RGM on behalf of
Beneficiary pursuant to which RGM pledged to Beneficiary its 100% interest in
Riviera Gaming Management-Elsinore, Inc. and its 100% interest in RGMC; and (iv)
any other stock pledge agreements executed after the date hereof pursuant to
Section 4.18 of the Indenture.
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"Tangible Collateral" means all of Trustor's personal property,
goods, equipment, supplies, building and other materials of every nature
whatsoever, including, without limitation, FF&E, and all other tangible personal
property constituting a part or portion of the Riviera and/or used in the
operation of the hotels, casinos, restaurants, stores, parking facilities and
all other commercial operations on the Land or Improvements, including but not
limited to communication systems, visual and electronic surveillance systems and
transportation systems and not constituting a part of the real property subject
to the real property lien of this Deed of Trust and including all property and
materials stored therein in which Trustor has an interest and all tools,
utensils, uniforms, linens, housekeeping and maintenance supplies, vehicles,
fuel, advertising and promotional material, blueprints, surveys, plans and other
documents relating to the Land or Improvements, and all construction materials
and all furnishings, fixtures and equipment, including, but not limited to,
those items of furniture, fixtures and equipment which are to be purchased or
leased by Trustor, machinery and any other item of personal property in which
Trustor now or hereafter own or acquire an interest or right, and which are used
or useful in the construction, operation, use and occupancy of the Riviera; to
the extent permitted by the applicable contract or applicable law, all financial
equipment, computer equipment, calculators, adding machines, and any other
electronic equipment of every nature used or located on any part of the Land or
Improvements, and all present and future right, title and interest of Trustor in
and to any casino operator's agreement, license agreement or sublease agreement
used in connection with the Land or Improvements; provided, however, that
Tangible Collateral does not include Excluded Assets.
"Title Insurer" means Chicago Title Insurance Company.
"Trust Estate" means all of the property described in Granting
Clauses (A) through (P) below, inclusive, and each item of property therein
described, provided, however, that such term shall not include the property
described in Granting Clause (P) below.
"Trustee" means United Title of Nevada, a Nevada corporation, or
any successor thereto appointed in accordance with this Deed of Trust.
"Trustor" means Riviera Holdings Corporation, a Nevada
corporation, and includes not only the original Trustor hereunder, but also any
successors or assigns of the Trust Estate, or any part thereof, at any time and
from time to time, as the case requires.
"UCC" means the Uniform Commercial Code in effect in the State of
Nevada from time to time, NRS chapters 104 and 104A.
The following terms shall have the meaning assigned to such terms
in the Indenture:
Affiliate
Bankruptcy Law
Cash Equivalents
Covenant Defeasance
Event of Loss
Gaming Authority
Gaming Laws
Gaming License
Holder
Legal Defeasance
Lien
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Liquidated Damages
Permitted Liens
Person
In addition, any capitalized terms used in this Deed of Trust which are not
otherwise defined herein shall have the meaning ascribed to such terms in the
Indenture.
W I T N E S S E T H:
IN CONSIDERATION OF TEN DOLLARS AND OTHER GOOD AND VALUABLE
CONSIDERATION; THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, AND
FOR THE PURPOSE OF SECURING in favor of Beneficiary the Secured Obligations,
Trustor, in consideration of the premises, and for the purposes aforesaid, does
hereby ASSIGN, BARGAIN, CONVEY, PLEDGE, RELEASE, HYPOTHECATE, WARRANT, AND
TRANSFER UNTO TRUSTEE IN TRUST FOR THE BENEFIT OF BENEFICIARY AND THE
NOTEHOLDERS each of the following:
(A) The Land;
(B) TOGETHER WITH the Improvements;
(C) TOGETHER WITH all Appurtenant Rights;
(D) TOGETHER WITH the Tangible Collateral;
(E) TOGETHER WITH the Intangible Collateral;
(F) TOGETHER WITH, subject to the provisions of the Indenture, (i)
all the estate, right, title and interest of Trustor of, in and to all judgments
and decrees, insurance proceeds, awards of damages and settlements hereafter
made resulting from condemnation proceedings or the taking of any of the
property described in Granting Clauses (A), (B), (C), (D) and (E) hereof or any
part thereof under the power of eminent domain, or for any damage (whether
caused by such taking or otherwise) to the property described in Granting
Clauses (A), (B), (C), (D) and (E) hereof or any part thereof, or to any
Appurtenant Rights thereto, and Beneficiary is hereby authorized to collect and
receive said awards and proceeds and to give proper receipts and acquittance
therefor, and (subject to the terms hereof) to apply the same toward the payment
of the indebtedness and other sums secured hereby, notwithstanding the fact that
the amount owing thereon may not then be due and payable; (ii) all proceeds of
any sales or other dispositions of the property or rights described in Granting
Clauses (A), (B), (C), (D) and (E) hereof 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; and (iii) whether arising from any voluntary or involuntary
disposition of the property described in Granting Clauses (A), (B), (C), (D) and
(E), all Proceeds, products, replacements, additions, substitutions, renewals
and accessions, remainders, reversions and after-acquired interest in, of and to
such property;
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(G) TOGETHER WITH the absolute assignment of any Space Leases or
any part thereof that Trustor has entered into, taken by assignment, taken
subject to, or assumed, or has otherwise become bound by, now or in the future,
together with all of the following (including all "Cash Collateral" within the
meaning of the Bankruptcy Law) arising from the Space Leases: (a) Rents
(subject, however, to the aforesaid absolute assignment to Beneficiary and the
conditional permission hereinbelow given to Trustor to collect the Rents), (b)
all guarantees, letters of credit, security deposits, collateral, cash deposits,
and other credit enhancement documents, arrangements and other measures with
respect to the Space Leases, (c) all of Trustor's right, title, and interest
under the Space Leases, including the following: (i) the right to receive and
collect the Rents from the lessee, sublessee or licensee, or their Successor(s),
under any Space Lease(s) and (ii) the right to enforce against any tenants
thereunder and otherwise any and all remedies under the Space Leases, including
Trustor's right to evict from possession any tenant thereunder or to retain,
apply, use, draw upon, pursue, enforce or realize upon any guaranty of any Space
Lease; to terminate, modify, or amend the Space Leases; to obtain possession of,
use, or occupy, any of the real or personal property subject to the Space
Leases; and to enforce or exercise, whether at law or in equity or by any other
means, all provisions of the Space Leases and all obligations of the tenants
thereunder based upon (A) any breach by such tenant under the applicable Space
Lease (including any claim that Trustor may have by reason of a termination,
rejection, or disaffirmance of such Space Lease pursuant to any Bankruptcy Law)
and (B) the use and occupancy of the premises demised, whether or not pursuant
to the applicable Space Lease (including any claim for use and occupancy arising
under landlord- tenant law of the State of Nevada or any Bankruptcy Law).
Permission is hereby given to Trustor, so long as no Event of Default has
occurred and is continuing hereunder, to collect and use the Rents, as they
become due and payable, but not in advance thereof, and to exercise the
administrative rights specified in (c)(ii) above. Upon the occurrence of an
Event of Default, the permission hereby given to Trustor to collect the Rents
and to exercise the administrative rights specified in (c)(ii) above shall
automatically terminate, but such permission shall be reinstated upon a cure of
such Event of Default. Beneficiary shall have the right, at any time and from
time to time, to notify any Space Lessee of the rights of Beneficiary as
provided by this section; Notwithstanding anything to the contrary contained
herein, the foregoing provisions of this Paragraph (G) shall not constitute an
assignment for purposes of security but shall constitute an absolute and present
assignment of the Rents to Beneficiary, subject, however, to the conditional
license given to Trustor to collect and use the Rents as hereinabove provided;
and the existence or exercise of such right of Trustor shall not operate to
subordinate this assignment to any subsequent assignment, in whole or in part,
by Trustor;
(H) TOGETHER WITH all of Trustor's right, title and interest in
and to any and all maps, plans, specifications, surveys, studies, tests,
reports, data and drawings relating to the Riviera, including, without
limitation, all marketing plans, feasibility studies, soils tests, design
contracts and all contracts and agreements of Trustor 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 Land or Riviera or the construction,
renovation or restoration of any of the Improvements or the extraction of
minerals, sand, gravel or other valuable substances from the Land and purchase
contracts or any agreement granting Trustor a right to acquire any land situated
within the County of Clark, State of Nevada; provided, however, that Trustor
shall maintain custody and control over same prior to the occurrence of an Event
of Default;
(I) TOGETHER WITH, to the extent permitted by applicable law, 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,
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subdivision 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 Riviera, or any other element of the Trust Estate or providing
access thereto, or the operation of any business on, at, or from the Land;
(J) TOGETHER WITH all water stock, water permits and other water
rights of any kind or nature relating to or appurtenant to the Land;
(K) TOGETHER WITH all oil and gas and other mineral rights, if
any, in or pertaining to the Land and all royalty, leasehold and other rights of
Trustor pertaining thereto;
(L) TOGETHER WITH, but subject to the provisions of the Indenture,
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 Trustee or Beneficiary pursuant to this Deed of Trust or any Loan
Document, including, without limitation, any protective advances under this Deed
of Trust; and all of Trustor's right, title, and interest in and to all
extensions, improvements, betterments, renewals, substitutes for and
replacements of, and all additions, accessions, and appurtenances to, any of the
foregoing that Trustor may subsequently acquire or obtain by any means, or
construct, assemble, or otherwise place on any of the Trust Estate, and all
conversions of any of the foregoing; it being the intention of Trustor that all
property hereafter acquired by Trustor and required by any Loan Document or this
Deed of Trust to be subject to the lien of this Deed of Trust or intended so to
be shall forthwith upon the acquisition thereof by Trustor be subject to the
lien of this Deed of Trust as if such property were now owned by Trustor and
were specifically described in this Deed of Trust and granted hereby or pursuant
hereto, and Trustee and Beneficiary are hereby authorized, subject to Gaming
Laws, to receive any and all such property as and for additional security for
the obligations secured or intended to be secured hereby. Trustor agrees to take
any action as may reasonably be necessary to evidence and perfect such liens or
security interests, including, without limitation, the execution of any
documents necessary to evidence and perfect such liens or security interests;
(M) TOGETHER WITH the Restricted Account, and all royalties,
earnings, income, proceeds, products, rents, revenues, reversions, remainders,
issues, profits, avails, production payments, and other benefits directly or
indirectly derived or otherwise arising from any of the foregoing, all of which
are hereby assigned to Beneficiary, who, except as otherwise expressly provided
in this Deed of Trust, is authorized to collect and receive the same, to give
receipts and acquittances therefor and to apply the same to the Secured
Obligations hereunder, whether or not then due and payable;
(N) TOGETHER WITH Proceeds of the foregoing property described in
Granting Clauses (A) through (M);
(O) TOGETHER WITH Trustor's rights further to assign, sell, lease,
encumber or otherwise transfer or dispose of the property described in Granting
Clauses (A) through (N) inclusive, above, for debt or otherwise, except to the
extent expressly reserved by Trustor pursuant to Section 10.03 of the Indenture,
or to evidence or secure a Permitted Lien or Permitted Disposition;
(P) EXPRESSLY EXCLUDING, HOWEVER, the Excluded Assets and FF&E (to
the extent that (i) the purchase of such FF&E was not financed with the proceeds
of the Notes and (ii) Trustor is permitted to enter into a FF&E Financing
Agreement for such FF&E under clause (ii) of the second paragraph of Section
4.10 of the Indenture and clauses (v) and (vii) of the definition of "Permitted
Liens" in the Indenture.
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Trustor, for itself and its successors and assigns, covenants and
agrees to and with Trustee 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
Estate in the manner and form as aforesaid, and that the Trust Estate is free
and clear of all liens and encumbrances whatsoever, except the Permitted Liens,
and Trustor shall warrant and forever defend the Trust Estate in the quiet and
peaceable possession of Trustee 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. Trustor agrees that any
greater title to the Trust Estate hereafter acquired by Trustor during the term
hereof shall be automatically subject hereto.
ARTICLE ONE
COVENANTS OF TRUSTOR
The purchasers of the Notes have been induced to purchase the Notes on
the basis of the following material covenants, all agreed to by Trustor:
1.1 Performance of Loan Documents. Trustor shall perform, observe and
comply with each and every provision hereof, and with each and every provision
contained in the Loan Documents and shall promptly pay to Beneficiary, when
payment shall become due, the principal with interest thereon and all other sums
required to be paid by Trustor under this Deed of Trust and the other Loan
Documents.
1.2 General Representations, Covenants and Warranties. Trustor
represents, covenants and warrants that: (a) Trustor has good and marketable
title to an indefeasible fee estate in the Land, free and clear of all
encumbrances except Permitted Liens, and that it has the right to hold, occupy
and enjoy its interest in the Trust Estate, and has good right, full power and
lawful authority to subject the Trust Estate to the Lien of this Deed of Trust
and pledge the same as provided herein and Beneficiary may at all times
peaceably and quietly enter upon, hold, occupy and enjoy the entire Trust Estate
in accordance with the terms hereof; (b) neither Trustor nor any Affiliate of
Trustor is Insolvent and no bankruptcy or insolvency proceedings are pending or
contemplated by or, to the best of Trustor's knowledge, against Trustor or any
Affiliate of Trustor; (c) all costs arising from construction of any
Improvements, the performance of any labor and the purchase of all Tangible
Collateral and Improvements have been or shall be paid when due; (d) the Land
has frontage on, and direct access for ingress and egress to dedicated
street(s), either directly or through an easement; (e) Trustor shall at all
times conduct and operate the Trust Estate in a manner so as not to lose the
right to conduct gaming activities at the Riviera; (f) no material part of the
Trust Estate has been damaged, destroyed, condemned or abandoned, other than
those portions of the Trust Estate that have been the subject of condemnation
proceedings that have resulted in the conveyance of such portion of the Trust
Estate to Trustor; (g) no part of the Trust Estate is the subject of
condemnation proceedings, and Trustor has no knowledge of any contemplated or
pending condemnation proceeding with respect to any portion of the Trust Estate;
and (h) the Trust Estate and all structures, equipment, fixtures or activities
thereon are in compliance with all applicable zoning and land use ordinances and
regulations, building codes, and fire codes except where failure to comply would
not have a material adverse effect on Trustor's business, finances or
operations.
1.3 Compliance with Legal Requirements. Trustor shall promptly, fully,
and faithfully comply with all Legal Requirements and shall cause all portions
of the Trust Estate and its use and occupancy
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to fully comply with Legal Requirements at all times, whether or not such
compliance requires work or remedial measures that are ordinary or
extraordinary, foreseen or unforeseen, structural or nonstructural, or that
interfere with the use or enjoyment of the Trust Estate.
1.4 Taxes. Trustor shall pay all Impositions prior to delinquency and
shall deliver to Beneficiary promptly upon Beneficiary's request, evidence
satisfactory to Beneficiary that the Impositions have been paid or are not
delinquent; provided that Trustor may contest, in good faith any Imposition so
long as Trustor posts an adequate bond therefor. Trustor shall not suffer to
exist, permit or initiate the joint assessment of the real and personal
property, or any other procedure whereby the lien of the real property taxes and
the lien of the personal property taxes shall be assessed, levied or charged to
the Land as a single lien, except as may be required by law. In the event of the
passage of any law deducting from the value of real property for the purposes of
taxation any lien thereon, or changing in any way the taxation of deeds of trust
or obligations secured thereby for state or local purposes, or the manner of
collecting such taxes and imposing a tax, either directly or indirectly, on this
Deed of Trust or the Notes, Trustor shall pay all such taxes.
1.5 Insurance.
(a) Hazard Insurance Requirements and Proceeds.
(1) Hazard Insurance. Trustor shall at its sole expense obtain
for, deliver to, assign and maintain for the benefit of Beneficiary, during the
term of this Deed of Trust, insurance policies insuring the Trust Estate and
liability insurance policies, all in accordance with the requirements of Section
4.20 of the Indenture. Trustor shall pay promptly when due any premiums on such
insurance policies and on any renewals thereof. The forms of such policies and
the companies issuing them shall be reasonably acceptable to Beneficiary. Copies
of all such policies and renewals thereof shall be given to Beneficiary and all
such policies shall contain a noncontributory standard mortgagee or beneficiary
endorsement (Form 438 BFU or its equivalent) making losses payable to
Beneficiary as its interest may appear and shall name the Beneficiary as an
additional insured. At least thirty (30) days prior to the expiration date of
all such policies, evidence of the renewal thereof satisfactory to Beneficiary
shall be delivered to Beneficiary together with receipts evidencing the payment
of all premiums on such insurance policies and renewals. In the event of loss,
Trustor shall give immediate written notice to Beneficiary and Beneficiary may
make proof of loss if not made promptly by Trustor. In the event of the
foreclosure of this Deed of Trust or any other transfer of title to the Trust
Estate in extinguishment of the indebtedness and other sums secured hereby, all
right, title and interest of Beneficiary in and to all insurance policies and
renewals thereof then in force shall pass to the purchaser or grantee, upon
delivery of written notice to Beneficiary within thirty (30) days following the
occurrence of such loss.
(2) Handling of Proceeds. Pursuant to its rights granted
hereunder in all Proceeds from any insurance policies, Beneficiary is hereby
authorized and empowered at its option to adjust or compromise any loss, under
any insurance policies on the Trust Estate and to collect and receive the
Proceeds from any such policy or policies. Each insurance company is hereby
authorized and directed to make payment for all such losses directly to
Beneficiary alone and not to Trustor and Beneficiary jointly. After deducting
from such Proceeds any reasonable expenses incurred by Beneficiary in the
collection or handling such funds, including reasonable attorneys' fees,
Beneficiary shall apply such insurance proceeds in accordance with the terms of
the Indenture and the following provisions:
(A) Such Proceeds shall be invested in Cash Equivalents
and held in an account in which the Beneficiary or its designee shall
have a first priority security interest (subject
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to Permitted Liens) for the benefit of the Holders of Notes as
depository for the disbursement thereof in accordance with (B) below.
If an Event of Default occurs prior to disbursement of the Proceeds,
Beneficiary at its option shall have the right to either apply all or
any portion of such account toward restoration of the Riviera or toward
any amounts secured hereby.
(B) Trustor shall (and Beneficiary hereby authorizes
Trustor to) use the Proceeds in accordance with Section 4.11 of the
Indenture.
(C) In the event that Trustor uses the Proceeds to restore
the Riviera, the restoration work and the performance thereof shall be
subject to and performed in accordance with each of the following
provisions: (1) such work and the performance thereof shall be
conducted in a first-class, workmanlike manner, shall not permanently
weaken nor impair the structural strength of any existing Improvements,
nor change the character thereof or the purpose for which the same may
be used, nor lessen the value of the Trust Estate; (2) before the
commencement of any such work, the plans and specifications therefor
(the "Restoration Plans") shall be filed with and approved by all
Governmental Authorities having jurisdiction and all necessary
licenses, permits and/or authorizations from all Governmental
Authorities shall have been obtained, and all such work shall be done
subject to and in accordance with all applicable Legal Requirements;
and (3) before commencing any such work, Trustor shall, at Trustor's
expense, have delivered to Beneficiary the Restoration Plans and a line
item budget setting forth with reasonable particularity the cost of
completing such work, together with a written opinion from a reputable
architect certifying (a) that the execution of the work described in
the Restoration Plans will substantially restore the Riviera, and (b)
that the budget constitutes a reasonable approximation of the cost of
so restoring the Riviera in accordance with the Restoration Plans.
(b) Insurance Escrow. In order to secure the performance and
discharge of the Trustor's obligations under this Section 1.5, but not in lieu
of such obligations, Trustor shall, upon a failure to pay or provide such
insurance, at the times and in the manner required herein, pay over to
Beneficiary an amount equal to one-twelfth (1/12th) of the next maturing annual
insurance premiums for each month that has elapsed since the last date to which
such premiums were paid; and Trustor shall, in addition, pay over to
Beneficiary, on the first day of each month, sufficient funds (as estimated from
time to time) to permit Beneficiary to pay said premiums when due. Such deposits
shall not be, nor be deemed to be, trust funds but may be commingled with the
general funds of Beneficiary, and no interest shall be payable in respect
thereof except as required by law. Upon demand by Beneficiary, Trustor shall
deliver to Beneficiary such additional monies as are necessary to make up any
deficiencies in the amounts necessary to enable Beneficiary to pay such premiums
when due.
(c) Compliance with Insurance Policies. Trustor shall not violate
or permit to be violated any of the conditions or provisions of any policy of
insurance required by the Indenture or this Deed of Trust and Trustor shall so
perform and satisfy the requirements of the companies writing such policies
that, at all times, companies of good standing shall be willing to write and/or
continue such insurance. Trustor further covenants to promptly send to
Beneficiary copies of all notices relating to any material violation of such
policies or otherwise materially adversely affecting Trustor's insurance
coverage or ability to obtain and maintain such insurance coverage.
1.6 Condemnation. Beneficiary is hereby authorized, at its option, to
commence, appear in and prosecute in its own or Trustor's name any action or
proceeding relating to any condemnation, seizure or taking by the exercise of
the power of eminent domain of any of the Trust Estate and to settle or
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compromise any claim in connection therewith, and Trustor hereby appoints
Beneficiary as its attorney-in-fact to take any action in Trustor's name
pursuant to Beneficiary's rights hereunder. Immediately upon obtaining knowledge
of the institution of any proceedings for the condemnation of the Trust Estate
or any portion thereof, Trustor shall notify the Trustee and Beneficiary of the
pendency of such proceedings. Trustor from time to time shall execute and
deliver to Beneficiary all instruments requested by it to permit such
participation; provided, however, that such instruments shall be deemed as
supplemental to the foregoing grant of permission to Trustee and Beneficiary,
and unless otherwise required, the foregoing permission shall, without more, be
deemed sufficient to permit Trustee and/or Beneficiary to participate in such
proceedings on behalf of Trustor. All such compensation awards, damages, claims,
rights of action and Proceeds, and any other payments or relief, and the right
thereto, are included in the Trust Estate. To the extent such condemnation,
seizure or taking constitutes an Event of Loss, Beneficiary, after deducting
therefrom all its expenses, including reasonable attorneys fees, shall, or shall
authorize Trustor to apply such Proceeds in accordance with the provisions of
Section 4.11 of the Indenture.
1.7 Care of Trust Estate.
(a) Trustor shall preserve and maintain the Trust Estate in good
condition and repair, reasonable wear and tear excepted. Trustor shall not
permit, commit or suffer to exist any waste, impairment or deterioration of the
Trust Estate or of any part thereof that in any manner materially impairs
Beneficiary's security hereunder and shall not take any action which will
increase the risk of fire or other hazard to the Trust Estate or to any part
thereof.
(b) Except for Permitted Dispositions, no part of the Improvements
shall be removed, demolished or (except for existing construction projects and
the construction projects described as Nickel Plaza and the convention center
expansion in the Offering Circular) materially altered without the prior written
consent of Beneficiary, which consent shall not be unreasonably withheld.
Trustor shall have the right, without such consent, to remove and dispose of
free from the lien of this Deed of Trust any part of the Improvements as from
time to time may become worn out or obsolete, provided that either (i) such
removal or disposition does not materially affect the value of the Trust Estate
or (ii) prior to or promptly following such removal, any such property shall be
replaced with other property of substantially equal utility and of a value at
least substantially equal to that of the replaced property when first acquired
and free from any security interest of any other person (subject only to
Permitted Liens), and by such removal and replacement Trustor shall be deemed to
have subjected such replacement property to the lien of this Deed of Trust.
(c) Notwithstanding the foregoing provisions of this Section 1.7,
Trustor may develop the Six Acre Tracts, to the extent permitted by the
Indenture.
(d) To the fullest extent permitted by law, Trustor hereby waives
the benefits of the provisions of NRS 37.115.
1.8 Space Leases
(a) Trustor represents and warrants that
(i) Trustor has delivered to Beneficiary true, correct and
complete copies of all Space Leases, including all amendments and modifications,
written or oral existing as of the date hereof;
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(ii) Trustor has not executed or entered into any modifications
or amendments of the Space Leases, either orally or in writing, other than
amendments that have been disclosed to Beneficiary in writing;
(iii) no default now exists under any Space Lease;
(iv) no event has occurred that, with the giving of notice or
the passage of time or both, would constitute such a default or would entitle
Trustor or any other party under such Space Lease to cancel the same or
otherwise avoid its obligations;
(v) Trustor has not accepted prepayments of installments of
Rent under any Space Leases more than thirty days in advance of the due date
therefor and except for security deposits not in excess of one month's Rent;
(vi) except for the assignment effected hereby, Trustor has not
executed any assignment or pledge of any of Space Leases, the Rents, or of
Trustor's right, title and interest in the same; and
(vii) this Deed of Trust conforms and complies with all Space
Leases, does not constitute a violation or default under any Space Lease, and is
and shall at all times constitute a valid lien on Trustor's interests in the
Space Leases.
1.9 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 1.10 or as otherwise permitted under the
Indenture, 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 Estate, including,
without limitation, the Rents. 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 Estate which have been granted by
Trustor and are reasonably necessary to the construction, maintenance or
operation of the Riviera.
(b) Any Permitted Lien described in the definition of "Permitted
Liens" set forth in Section 1.01 of the Indenture which is junior to the lien of
Beneficiary granted by Trustor pursuant to the Collateral Documents (a
"Subordinate Deed of Trust") shall be permitted hereunder so long as there shall
have been delivered to Beneficiary, not less than thirty (30) days prior to the
date thereof, a copy thereof which shall contain express covenants in form and
substance satisfactory to Beneficiary to the effect that: (i) the Subordinate
Deed of Trust is in all respects subject and subordinate to this Deed of Trust;
(ii) if any action or proceeding shall be brought to foreclose the Subordinate
Deed of Trust (regardless of whether the same is a judicial proceeding or
pursuant to a power of sale contained therein), no tenant of any portion of the
Trust Estate shall be named as a party defendant nor shall any action be taken
with respect to the Trust Estate which would terminate any occupancy or tenancy
of the Trust Estate, or any portion thereof, without the consent of Beneficiary;
(iii) any Rents, if collected through a receiver or by the holder of the
Subordinate Deed of Trust, shall be applied first to the obligations secured by
this Deed of Trust, including principal and interest due and owing on or to
become due and owing on the Notes, and then to the payment of maintenance
expenses, operating charges, taxes, assessments, and disbursements incurred in
connection with the ownership, operation, and maintenance
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of the Trust Estate; and (iv) if any action or proceeding shall be brought to
foreclose the Subordinate Deed of Trust, prompt notice of the commencement
thereof shall be given to Beneficiary.
(c) Trustor agrees that in the event the ownership of the Trust
Estate 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 Secured Obligations without in any way vitiating or discharging Trustor's
or any guarantor's, surety's or endorser's liability hereunder or upon the
obligations hereby secured. No sale of the Trust Estate and 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 hereby secured 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.
(d) This Deed of Trust, as applied to property subject to an FF&E
Financing Agreement, shall be subordinated to the liens of any FF&E Financing
Agreements (as hereinafter defined in this Section 1.9(d) (or if required by an
FF&E Financing Agreement, it shall be released) and any future or further
advances made thereunder and to any modifications, renewals or extensions
thereof to which the lien of this Deed of Trust attaches, provided, however,
that any such FF&E Financing Agreement shall encumber only that FF&E
specifically subject to the FF&E Financing Agreement. Trustor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreement. If Trustor shall fail to make any payment of principal of
or pursuant to any FF&E Financing Agreement on its part to be performed or
observed, except where Trustor is 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
Agreement on Trustor's part to be performed or observed and any and all sums so
expended by Beneficiary or Trustee shall be secured by this Deed of Trust and
shall be repaid by Trustor upon demand, together with interest thereon at the
interest rate on the Notes from the date of advance. In furtherance of such
subordination or release, as applicable, Beneficiary, upon receipt of an
officer's certificate from Trustor certifying that the requirements of this
Section 1.9(d) have been satisfied, shall execute, acknowledge and deliver to
Trustor, at Trustor's expense, any and all such evidence and documents necessary
to evidence the subordination or release of this Deed of Trust in accordance
with the foregoing provisions of this Section 1.9(d). As used herein, "FF&E
Financing Agreement" shall mean (A) any financing (i) as to which the lender
holds a security interest in only the assets purchased, constructed or leased by
such financing for the payment of principal, interest and other amounts in
connection therewith, (ii) which is permitted by the Indenture to be incurred
and (iii) the proceeds of which are used to acquire, construct or lease the FF&E
subject to such security interest, and (B) any refinancing or renewal of any
financing under clause (A).
1.10 Partial Releases of Trust Estate.
(a) Trustor may from time to time (i) transfer a portion of the
Trust Estate (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 Riviera, which grant or transfer is for the benefit of the
Trust Estate. In each such case, 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:
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(1) Beneficiary and Trustee shall have received an Officer's
Certificate required by Section 10.03(a) of the Indenture;
(2) No Event of Default shall have occurred hereunder, and no
event which with notice or lapse of time or both would constitute such
Event of Default, has occurred and is continuing and that the
conditions of this Section 1.10 have been fulfilled, and such transfer,
grant or release is permitted by the Indenture;
(3) Beneficiary and Trustee 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 or Trustee is
requested to execute in order to effectuate or confirm such transfer,
grant or release;
(4) In the case of a transfer to a person legally empowered to
exercise the power of eminent domain, which transfer involves property
whose value is greater than $5,000,000, Beneficiary and Trustee shall
have received an opinion of counsel, who may be counsel to Trustor, to
the effect that the assignee or grantee of the portion of the Trust
Estate being transferred is legally empowered to take such portion
under the power of eminent domain; and
(5) Beneficiary and Trustee shall have received such other
instruments, certificates (including evidence of authority) and
opinions as Beneficiary or Trustee may reasonably request, including,
but not limited to, opinions that the proposed release is permitted by
this Section 1.10.
(b) Trustor may transfer all or part of the Six Acre Tracts at any
time or times. In such event, Beneficiary shall execute and deliver any
instruments necessary or appropriate to effectuate or confirm such transfer,
free from the lien of this Deed of Trust, without the payment of any partial
release for, or any other prepayment with respect to, the Notes, provided,
however, that Beneficiary shall execute a lien release only if:
(1) Beneficiary and Trustee shall have received an Officer's
Certificate required by Section 10.03(a) of the Indenture;
(2) no Event of Default shall have occurred hereunder, and no
event which with notice or lapse of time or both would constitute such
Event of Default, has occurred and is continuing and that the
conditions of this Section 1.10 have been fulfilled, and such transfer
and release is permitted by the Indenture;
(3) Beneficiary and Trustee shall have received a counterpart
of the instrument pursuant to which such transfer or release is to be
made, and each instrument which Beneficiary or Trustee is requested to
execute in order to effectuate or confirm such transfer or release;
(4) Trustee and Beneficiary shall have been provided a legal
description of the portion or all of the Six Acre Tracts, as
applicable, in form reasonably acceptable to Trustee and Beneficiary;
(5) the release of the lien of this Deed of Trust on the
portion or all of the Six Acre Tracts, as applicable, shall not
constitute or result in a violation of any subdivision,
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subdivided lands or other governmental law or regulation nor of any
private restrictions affecting the Land;
(6) upon release of this Deed of Trust on a portion or all of
the Six Acre Tracts, as applicable, the Title Insurer, as the title
insurance company insuring Beneficiary's interest under this Deed of
Trust, shall issue to Beneficiary an endorsement to such policy, in
form and substance satisfactory to Beneficiary in its sole discretion,
confirming the continued priority of the lien of this Deed of Trust
with respect to the remainder of the Land and the Title Insurer's
continuing liability under such policy;
(7) Trustor shall pay promptly to Beneficiary all costs and
expenses incurred by or on behalf of Beneficiary in connection with the
release of the lien of this Deed of Trust on the Six Acre Tracts,
including without limitation all reasonable fees and expenses of
counsel, all recordation fees, the costs of any endorsement to
Beneficiary's title insurance policy required by Beneficiary, and any
reasonable costs and expenses of Trustee;
(8) Trustor and Beneficiary shall have executed and recorded
such reciprocal easement agreements, and such declarations of
covenants, conditions, restrictions or other agreements, the effect of
which would be to burden and benefit the Six Acre Tracts with rights of
access, ingress, and egress, among other things, as Beneficiary and
Trustor shall reasonably request, in such form and content as shall be
satisfactory to Beneficiary and Trustor, and Trustee shall have
received evidence that all easements, cost sharing and similar
arrangements benefitting the Land and Improvements, which in the
reasonable judgment of Trustee are necessary to continue the operations
at the Riviera, have been entered into (or alternatively, Trustee's
receipt of satisfactory assurance that such agreements will be entered
into in due course);
(9) Trustee shall have received evidence that all other
parties that have the right to consent to such release have given such
consent;
(10) Trustee shall have received evidence that the conveyance
of the Six Acre Tracts, or any part thereof, will not have a material
adverse effect on the Riviera;
(11) Trustee shall have received evidence that the balance of
the Land remaining after such severance constitutes (or will
constitute, as a right) a separate parcel for purposes of taxes;
(12) all real property and personal property security for the
payment of the Notes and other Obligations, fees, costs and expenses
described herein, other than the real property comprising the Six Acre
Tracts, is and shall remain subject to the lien of this Deed of Trust;
and
(13) Trustee shall have received such other documents,
opinions and assurances as Trustee may reasonably request (all of the
foregoing to be in a form and substance satisfactory to Trustee).
(c) Any consideration received for a transfer to any person
empowered to exercise the right of eminent domain shall be subject to Section
1.6 hereof.
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1.11 Further Assurances.
(a) At its sole cost and without expense to Trustee or
Beneficiary, Trustor shall do, execute, acknowledge and deliver any and all such
further acts, deeds, conveyances, notices, requests for notices, financing
statements, continuation statements, certificates, assignments, notices of
assignments, agreements, instruments and further assurances, and shall mark any
chattel paper, deliver any chattel paper or instruments to Beneficiary and take
any other actions that are necessary, prudent, or requested by Beneficiary or
Trustee to perfect or continue the perfection and first priority of
Beneficiary's security interest in the Trust Estate, (except as expressly
provided in the Security Agreement), to protect the Trust Estate against the
rights, claims, or interests of third persons other than holders of Permitted
Liens or to effect the purposes of this Deed of Trust, including the security
agreement and the absolute assignment of Rents contained herein, or for the
filing, registering or recording thereof.
(b) Trustor shall forthwith upon the execution and delivery of
this Deed of Trust, and thereafter from time to time, cause this Deed of Trust
and each instrument of further assurance to be filed, indexed, registered,
recorded, given or delivered in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien hereof upon, and the title of Trustee and/or Beneficiary to,
the Trust Estate.
1.12 Security Agreement and Financing Statements. Trustor (as debtor)
hereby grants to Beneficiary (as creditor and secured party) a present and
future security interest in all Tangible Collateral, Intangible Collateral, FF&E
(to the extent Beneficiary is permitted, in each applicable FF&E Financing
Agreement, to maintain a security interest therein), Improvements, all other
personal property now or hereafter owned or leased by Trustor or in which
Trustor has or will have any interest, to the extent that such property
constitutes a part of the Trust Estate (whether or not such items are stored on
the premises or elsewhere), Proceeds of the foregoing comprising a portion of
the Trust Estate and all proceeds of insurance policies and consideration awards
arising therefrom and all proceeds, products, substitutions, and accessions
therefor and thereto, subject to Beneficiary's rights to treat such property as
real property as herein provided (collectively, the "Personal Property").
Trustor shall execute any and all documents and writings, including without
limitation financing statements pursuant to the UCC, as may be necessary or
prudent to preserve and maintain the priority of the security interest granted
hereby on property which may be deemed subject to the foregoing security
agreement or as Beneficiary may reasonably request, (other than as expressly
provided in the Security Agreement), and shall pay to Beneficiary on demand any
reasonable expenses incurred by Beneficiary in connection with the preparation,
execution and filing of any such documents. Trustor hereby authorizes and
empowers Beneficiary to execute and file, on Trustor's behalf, all financing
statements and refiling and continuations thereof as advisable to create,
preserve and protect said security interest. This Deed of Trust constitutes both
a real property deed of trust and a "security agreement," within the meaning of
the UCC, and the Trust Estate includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of Trustor
in the Trust Estate. Trustor by executing and delivering this Deed of Trust has
granted to Beneficiary, as security for the Secured Obligations, a security
interest in the Trust Estate.
(a) Fixture Filing. Without in any way limiting the generality of
the immediately preceding paragraph or of the definition of the Trust Estate,
this Deed of Trust constitutes a fixture filing under Section 9-402 of the UCC
(NRS 104.9402). For such purposes, (i) the "debtor" is Trustor and its address
is the address given for it in the initial paragraph of this Deed of Trust; (ii)
the "secured party" is Beneficiary, and its address for the purpose of obtaining
information is the address given for it in the initial paragraph of this Deed of
Trust; (iii) the real estate to which the fixtures are or are to become attached
is Trustor's interest in the land; and (v) the record owner of such real estate
is Trustor.
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(b) Remedies. This Deed of Trust shall be deemed a security
agreement as defined in the UCC and the remedies for any violation of the
covenants, terms and conditions of the agreements herein contained shall include
any or all of (i) those prescribed herein, and (ii) those available under
applicable law, and (iii) those available under the UCC, all at Beneficiary's
sole election. In addition, a photographic or other reproduction of this Deed of
Trust shall be sufficient as a financing statement for filing wherever filing
may be necessary to perfect or continue the security interest granted herein.
(c) Derogation of Real Property. It is the intention of the
parties that the filing of a financing statement in the records normally having
to do with personal property shall never be construed as in any way derogating
from or impairing the express declaration and intention of the parties hereto as
hereinabove stated that everything used in connection with the production of
income from the Trust Estate and/or adapted for use therein and/or which is
described or reflected in this Deed of Trust is, and at all times and for all
purposes and in all proceedings both legal or equitable, shall be regarded as
part of the real property encumbered by this Deed of Trust irrespective of
whether (i) any such item is physically attached to the Improvements, (ii)
serial numbers are used for the better identification of certain equipment items
capable of being thus identified in a recital contained herein or in any list
filed with Beneficiary, or (iii) any such item is referred to or reflected in
any such financing statement so filed at any time. It is the intention of the
parties that the mention in any such financing statement of (1) rights in or to
the proceeds of any fire and/or hazard insurance policy, or (2) any award in
eminent domain proceedings for a taking or for loss of value, or (3) Trustor's
interest as lessors in any present or future Space Lease or rights to Rents,
shall never be construed as in any way altering any of the rights of Beneficiary
as determined by this Deed of Trust or impugning the priority of Beneficiary's
real property lien granted hereby or by any other recorded document, but such
mention in the financing statement is declared to be for the protection of
Beneficiary in the event any court or judge shall at any time hold with respect
to the matters set forth in the foregoing clauses (1), (2) and (3) that notice
of Beneficiary's priority of interest to be effective against a particular class
of persons, including but not limited to, the federal government and any
subdivisions or entity of the federal government, must be filed in the UCC
records.
(d) Priority; Permitted Financing of Tangible Collateral. Except
as provided in Section 1.9(d) hereof or as otherwise permitted by the Indenture
or the other Collateral Documents, all Personal Property of any nature
whatsoever, which is subject to the provisions of this security agreement, shall
be purchased or obtained by Trustor in its name and free and clear of any lien
or encumbrance, except for Permitted Liens and the lien hereof, for use only in
connection with the business and operation of the Riviera, and shall be and at
all times remain free and clear of any lease or similar arrangement, chattel
financing, installment sale agreement, security agreement and any encumbrance of
like kind, so that Beneficiary's security interest shall attach to and vest in
Trustor for the benefit of Beneficiary, with the priority herein specified,
immediately upon the installation or use of the Personal Property at the Land
and Trustor warrants and represents that Beneficiary's security interest in the
Personal Property is a validly attached and binding security interest, properly
perfected and prior to all other security interests therein except as otherwise
permitted in this Agreement. The foregoing shall not be construed as limiting
Trustor's rights to transfer Personal Property pursuant to Permitted
Dispositions or to obtain releases of Personal Property from the Lien of this
Deed of Trust pursuant to Section 1.10 hereof.
(e) Preservation of Contractual Rights of Collateral. Trustor
shall, prior to delinquency, default, or forfeiture, perform all obligations and
satisfy all material conditions required on its part to be satisfied to preserve
its rights and privileges under any contract, lease, license, permit, or other
authorization (i) under which it holds any Tangible Collateral or (ii) which
constitutes part of the Intangible Collateral except where Trustor is contesting
such obligations in good faith.
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(f) Removal of Collateral. Except as otherwise permitted herein or
as otherwise permitted by the Indenture or the other Collateral Documents, none
of the Tangible Collateral shall be removed from the Trust Estate without
Beneficiary's prior written consent, and except damaged or obsolete Tangible
Collateral which is either no longer usable or which is removed temporarily for
repair or improvement or removed for replacement on the Trust Estate with
Tangible Collateral of similar function.
(g) Change of Name. Except as permitted by the Indenture or the
other Collateral Documents, Trustor shall not change its corporate or business
name, or do business within the State of Nevada under any name other than such
name, or any trade name(s) other than those as to which Trustor gives prior
written notice to Beneficiary of its intent to use such trade names, or any
other business names (if any) specified in the financing statements delivered to
Beneficiary for filing in connection with the execution hereof, without
providing Beneficiary with the additional financing statement(s) and any other
similar documents deemed reasonably necessary by Beneficiary to assure that its
security interest remains perfected and of undiminished priority in all such
Personal Property notwithstanding such name change.
1.13 Assignment of Rents. The assignment of Space Leases and Rents set
out above in Granting Clause (G) shall constitute an absolute and present
assignment to Beneficiary, subject to the license herein given to Trustor to
collect the Rents and to the provisions of the Indenture, and shall be fully
operative without any further action on the part of any party, and specifically
Beneficiary shall be entitled upon the occurrence of an Event of Default
hereunder to all Rents, whether or not Beneficiary takes possession of the Trust
Estate, or any portion thereof. The absolute assignment contained in Granting
Clause (G) shall not be deemed to impose upon Beneficiary any of the obligations
or duties of Trustor provided in any such Space Lease (including, without
limitation, any liability under the covenant of quiet enjoyment contained in any
lease in the event that any lessee shall have been joined as a party defendant
in any action to foreclose this Deed of Trust and shall have been barred and
foreclosed thereby of all right, title and interest and equity of redemption in
the Trust Estate or any part thereof).
1.14 Expenses.
(a) Trustor shall pay when due and payable all costs, including
without limitation, those reasonable appraisal fees, recording fees, taxes,
brokerage fees and commissions, abstract fees, title policy fees, escrow fees,
attorneys' and paralegal fees, travel expenses, fees for inspecting architect(s)
and engineer(s) and all other costs and expenses of every character which have
been incurred or which may hereafter be incurred by Beneficiary or any assignee
of Beneficiary in connection with the preparation and
(b) Trustor shall, upon demand by Beneficiary, reimburse
Beneficiary or any assignee of Beneficiary for all such reasonable expenses
described in Section 1.14(a) which have been incurred or which shall be incurred
by it; and
(c) Trustor shall indemnify Beneficiary with respect to any
transaction or matter in any way connected with any portion of the Trust Estate,
this Deed of Trust, including any occurrence at, in, on, upon or about the Trust
Estate (including any personal injury, loss of life, or property damage), or
Trustor's use, occupancy, or operation of the Trust Estate, or the filing or
enforcement of any mechanic's lien, or otherwise caused in whole or in part by
any act, omission or negligence occurring on or at the Trust Estate, including
failure to comply with any Legal Requirement or with any requirement of this
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Deed of Trust be paid or performed by Trustor, unless caused by the gross
negligence or willful misconduct of Beneficiary. If Beneficiary is a party to
any litigation as to which either Trustor is required to indemnify Beneficiary
(or is made a defendant in any action of any kind against Trustor or relating
directly or indirectly to any portion of the Trust Estate) then, at
Beneficiary's option, Trustor shall undertake Beneficiary's defense, using
counsel satisfactory to Beneficiary (and any settlement shall be subject to
Beneficiary's consent, and in any case shall indemnify Beneficiary against such
litigation. Trustor shall pay all reasonable costs and expenses, including
reasonable legal costs, that Beneficiary pays or incurs in connection with any
such litigation. Any amount payable under any indemnity in this Deed of Trust
shall be a demand obligation, shall be added to, and become a part of, the
secured obligations under this Deed of Trust, shall be secured by this Deed of
Trust, and shall bear interest at the interest rate on the Notes. Such indemnity
shall survive any release of this Deed of Trust and any Foreclosure.
1.15 Beneficiary's Cure of Trustor's Default. If Trustor defaults in
the payment of any tax, assessment, lien, encumbrance or other Imposition, in
its obligation to furnish insurance hereunder, or in the performance or
observance of any other covenant, condition or term of this Deed of Trust or any
other Loan Document, Beneficiary may, but is not obligated to, to preserve its
interest in the Trust Estate, perform or observe the same, and all payments made
(whether such payments are regular or accelerated payments) and reasonable costs
and expenses incurred or paid by Beneficiary in connection therewith shall
become due and payable immediately. The amounts so incurred or paid by
Beneficiary, together with interest thereon at the interest rate on the Notes
from the date incurred until paid by Trustor, shall be added to the indebtedness
and secured by the lien of this Deed of Trust. Beneficiary is hereby empowered
to enter and to authorize others to enter upon the Land or any part thereof for
the purpose of performing or observing any such defaulted covenant, condition or
term, without thereby becoming liable to Trustor or any person in possession
holding under Trustor. No exercise of any rights under this Section by
Beneficiary shall cure or waive any Event of Default or notice of default
hereunder or invalidate any act done pursuant hereto or to any such notice, but
shall be cumulative of all other rights and remedies.
1.16 Use of Trust Estate. Trustor covenants that the Trust Estate shall
be used and operated in a manner consistent with the description of the Riviera
in the Offering Circular and shall be open during such days and hours as are
customarily observed by casino-hotels located in Las Vegas, Nevada.
1.17 Compliance with Permitted Lien Agreements. Trustor or any
Affiliate of Trustor shall comply with each and every obligation contained in
any agreement pertaining to a Permitted Lien.
1.18 Defense of Actions. Trustor shall appear in and defend any action
or proceeding affecting or purporting to affect the security hereof or the
rights or powers of Beneficiary or Trustee, and shall pay all costs and
expenses, including cost of title search and insurance or other evidence of
title, preparation of survey, and reasonable attorneys' fees in any such action
or proceeding in which Beneficiary or Trustee may appear or may be joined as a
party and in any suit brought by Beneficiary based upon or in connection with
this Deed of Trust or any other Loan Document. Nothing contained in this section
shall, however, limit the right of Beneficiary to appear in such action or
proceeding with counsel of its own choice, either on its own behalf or on behalf
of Trustor.
1.19 Affiliates.
(a) Subject to Trust Deed. Trustor shall cause all of its
Affiliates in any way involved with the operation of the Trust Estate or the
Riviera to observe the covenants and conditions of this Deed of Trust to the
extent necessary to give the full intended effect to such covenants and
conditions and to
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protect and preserve the security of Beneficiary hereunder. Trustor shall, at
Beneficiary's request, cause any such Affiliate to execute and deliver to
Beneficiary or Trustee such further instruments or documents as Beneficiary may
reasonably deem necessary to effectuate the terms of this Section 1.19.
(b) Restriction on Use of Subsidiary or Affiliate. Trustor shall
not use any Affiliate in the operation of the Trust Estate or the Riviera if
such use would in any way impair the security for the Notes and the Indenture or
circumvent any covenant or condition of this Deed of Trust or of any other Loan
Document.
1.20 Title Insurance. Concurrently with the execution and delivery of
this Deed of Trust, Trustor shall cause to be delivered to Beneficiary at
Trustor's expense, an ALTA extended coverage Lender's Policies of Title
Insurance (1992) in the amount of $175,000,000, showing fee title to the Land
vested in Trustor and the lien of this Deed of Trust to be a first priority
perfected lien, subject only to the standard printed exceptions and such typed
exceptions as Beneficiary may approve, and including such endorsements and
provisions for reinsurance as Beneficiary may request.
ARTICLE TWO
CORPORATE LOAN PROVISIONS
2.1 Interaction with Indenture.
(a) Incorporation by Reference. All terms, covenants, conditions,
provisions and requirements of the Indenture are incorporated by reference in
this Deed of Trust. 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, 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.
2.2 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 Loan Documents and securing the Secured Obligations
hereunder. All potential junior Lien claimants are placed on notice that, under
any of the Collateral Documents or otherwise (such as by separate future
unrecorded agreement between Trustor and Beneficiary), other collateral for the
Secured Obligations hereunder (i.e., collateral other than the Trust Estate)
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
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on the remaining Trust Estate 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 Estate, 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.
ARTICLE THREE
DEFAULTS AND REMEDIES
3.0.1 Event of Default. The term "Event of Default," wherever used in
this Deed of Trust, shall mean any one or more of the events of default listed
in Section 6.01 of the Indenture, subject to such cure rights as may be
expressly set forth in the Indenture (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body).
3.1 Acceleration of Maturity. If an Event of Default occurs,
Beneficiary may (except that such acceleration shall be automatic if the Event
of Default is caused by a Trustor's Bankruptcy), in accordance with Section 6.02
of the Indenture, declare the Notes and all indebtedness or sums secured hereby,
to be due and payable immediately, and upon such declaration such principal and
interest and other sums shall immediately become due and payable without demand,
presentment, notice or other requirements of any kind (all of which Trustor
waives) notwithstanding anything in this Deed of Trust or any other Loan
Document or applicable law to the contrary.
3.2 Protective Advances. If Trustor fails to make any payment or
perform any other obligation under the Notes or any other Loan Document, then
without thereby limiting Beneficiary's other rights or remedies, waiving or
releasing any of Trustor's obligations, or imposing any obligation on
Beneficiary, Beneficiary may either advance any amount owing or perform any or
all actions that Beneficiary considers necessary or appropriate to cure such
default. All such advances shall constitute "Protective Advances." No sums
advanced or performance rendered by Beneficiary shall cure, or be deemed a
waiver of any Event of Default.
3.3 Institution of Equity Proceedings. If an Event of Default occurs,
Beneficiary may institute an action, suit or proceeding in equity for specific
performance of this Deed of Trust, the Notes or any other Loan Document, all of
which shall be specifically enforceable by injunction or other equitable remedy.
Trustor waives any defense based on laches or any applicable statute of
limitations.
3.4 Beneficiary's Power of Enforcement.
(a) If an Event of Default occurs, Beneficiary shall be entitled,
at its option and in its sole and absolute discretion, to prepare and record on
its own behalf, or to deliver to Trustee for recording, if appropriate, written
declaration of default and demand for sale and written Notice of Breach and
Election to Sell (or other statutory notice) to cause the Trust Estate to be
sold to satisfy the obligations hereof, and in the case of delivery to Trustee,
Trustee shall cause said notice to be filed for record.
(b) After the lapse of such time as may then be required by law
following the recordation of said Notice of Breach and Election to Sell, and
notice of sale having been given as then required by
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law, including compliance with all applicable Gaming Laws, Trustee without
demand on Trustor, shall sell the Trust Estate or any portion thereof at the
time and place fixed by it in said notice, either as a whole or in separate
parcels, and in such order as it may determine, at public auction to the highest
bidder, of cash in lawful money of the United States payable at the time of
sale. Trustee may, for any cause it deems expedient, postpone the sale of all or
any portion of said property until it shall be completed and, in every case,
notice of postponement shall be given by public announcement thereof at the time
and place last appointed for the sale and from time to time thereafter Trustee
may postpone such sale by public announcement at the time fixed by the preceding
postponement. Trustee shall execute and deliver to the purchaser its Deed, Bill
of Sale, or other instrument conveying said property so sold, but without any
covenant or warranty, express or implied. The recitals in such instrument of
conveyance of any matters or facts shall be conclusive proof of the truthfulness
thereof. Any person, including Beneficiary, may bid at the sale.
(c) After deducting all costs, fees and expenses of Trustee and of
this Deed of Trust, including, without limitation, costs of evidence of title
and reasonable attorneys' fees of Trustee or Beneficiary in connection with a
sale, Trustee shall apply the proceeds of such sale to payment of all sums
expended under the terms hereof not then repaid in accordance with the terms of
the Indenture, with accrued interest at the interest rate on the Notes then to
the payment of all other sums then secured hereby and the remainder, if any, to
the person or persons legally entitled thereto as provided in NRS 40.462.
(d) Subject to compliance with applicable Gaming Laws, if any Event
of Default occurs, Beneficiary may, either with or without entry or taking
possession of the Trust Estate, and without regard to whether or not the
indebtedness and other sums secured hereby shall be due and without prejudice to
the right of Beneficiary thereafter to bring an action or proceeding to
foreclose or any other action for any default existing at the time such earlier
action was commenced, proceed by any appropriate action or proceeding: (1) to
enforce payment of the Notes, to the extent permitted by law, or the performance
of any term hereof or any other right; (2) to foreclose this Deed of Trust in
any manner provided by law for the foreclosure of mortgages or deeds of trust on
real property and to sell, as an entirety or in separate lots or parcels, the
Trust Estate or any portion thereof pursuant to the laws of the State of Nevada
or under the judgment or decree of a court or courts of competent jurisdiction,
and Beneficiary shall be entitled to recover in any such proceeding all costs
and expenses incident thereto, including reasonable attorneys' fees in such
amount as shall be awarded by the court; (3) to exercise any or all of the
rights and remedies available to it under the Indenture; and (4) to pursue any
other remedy available to it. Beneficiary shall take action either by such
proceedings or by the exercise of its powers with respect to entry or taking
possession, or both, as Beneficiary may determine.
(e) The remedies described in this Section 3.5 may be exercised
with respect to all or any portion of the Personal Property, either
simultaneously with the sale of any real property encumbered hereby or
independent thereof. Beneficiary shall at any time be permitted to proceed with
respect to all or any portion of the Personal Property in any manner permitted
by the UCC and Section 3.17. Trustor agrees that Beneficiary's inclusion of all
or any portion of the Personal Property in a sale or other remedy exercised with
respect to the real property encumbered hereby, as permitted by the UCC, is a
commercially reasonable disposition of such property.
3.5 Beneficiary's Right to Enter and Take Possession, Operate and Apply
Income.
(a) Subject to compliance with applicable Gaming Laws, if an Event
of Default occurs, (i) Trustor, upon demand of Beneficiary, shall forthwith
surrender to Beneficiary the actual possession and, if and to the extent
permitted by law, Beneficiary itself, or by such officers or agents as it may
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appoint, may enter and take possession of all the Trust Estate including the
Personal Property, without liability for trespass, damages or otherwise, and may
exclude Trustor and its agents and employees wholly therefrom and may have joint
access with Trustor to the books, papers and accounts of Trustor; and (ii)
Trustor shall pay monthly in advance to Beneficiary on Beneficiary's entry into
possession, or to any receiver appointed to collect the Rents, all Rents then
due and payable.
(b) If Trustor shall for any reason fail to surrender or deliver
the Trust Estate, the Personal Property or any part thereof after Beneficiary's
demand, Beneficiary may obtain a judgment or decree conferring on Beneficiary or
Trustee the right to immediate possession or requiring Trustor to deliver
immediate possession of all or part of such property to Beneficiary or Trustee
and Trustor hereby specifically consents to the entry of such judgment or
decree. Trustor shall pay to Beneficiary or Trustee, upon demand, all costs and
expenses of obtaining such judgment or decree and reasonable compensation to
Beneficiary or Trustee, their attorneys and agents, and all such costs, expenses
and compensation shall, until paid, be secured by the lien of this Deed of
Trust.
(c) Subject to compliance with applicable Gaming Laws, upon every
such entering upon or taking of possession, Beneficiary or Trustee may hold,
store, use, operate, manage and control the Trust Estate and conduct the
business thereof, and, from time to time in its sole and absolute discretion and
without being under any duty to so act:
(1) make all necessary and proper maintenance, repairs,
renewals, replacements, additions, betterments and improvements thereto and
thereon and purchase or otherwise acquire additional fixtures, personalty and
other property;
(2) insure or keep the Trust Estate insured;
(3) manage and operate the Trust Estate and exercise all the
rights and powers of Trustor in their name or otherwise with respect to the
same;
(4) enter into agreements with others to exercise the powers
herein granted Beneficiary or Trustee, all as Beneficiary or Trustee from time
to time may determine; and, subject to the absolute assignment of the Space
Leases and Rents to Beneficiary, Beneficiary or Trustee may collect and receive
all the Rents, including those past due as well as those accruing thereafter;
and shall apply the monies so received by Beneficiary or Trustee in such
priority as Beneficiary may determine to (1) the payment of interest and
principal due and payable on the Notes, (2) the deposits for taxes and
assessments and insurance premiums due, (3) the cost of insurance, taxes,
assessments and other proper charges upon the Trust Estate or any part thereof;
(4) the compensation, expenses and disbursements of the agents, attorneys and
other representatives of Beneficiary or Trustee; and (5) any other charges or
costs required to be paid by Trustor under the terms hereof.
(5) rent or sublet the Trust Estate or any portion thereof for
any purpose permitted by this Deed of Trust.
Beneficiary or Trustee shall surrender possession of the Trust Estate
and the Personal Property to Trustor only when all that is due upon such
interest and principal, tax and insurance deposits, and all amounts under any of
the terms of the Indenture or this Deed of Trust, shall have been paid and all
defaults made good. The same right of taking possession, however, shall exist if
any subsequent Event of Default shall occur and be continuing.
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3.6 Space Leases. Beneficiary is authorized to foreclose this Deed of
Trust subject to the rights of any tenants of the Trust Estate, and the failure
to make any such tenants parties defendant to any such foreclosure proceedings
and to foreclose their rights shall not be, nor be asserted by Trustor to be, a
defense to any proceedings instituted by Beneficiary to collect the sums secured
hereby or to collect any deficiency remaining unpaid after the foreclosure sale
of the Trust Estate, or any portion thereof. Unless otherwise agreed by
Beneficiary in writing, all Space Leases executed subsequent to the date hereof,
or any part thereof, shall be subordinate and inferior to the lien of this Deed
of Trust; provided, however that (i) Beneficiary shall at Trustor's request
execute a non-disturbance and attornment agreement in connection with applicable
lease transactions; and (ii) from time to time Beneficiary may execute and
record among the land records of the jurisdiction where this Deed of Trust is
recorded, subordination statements with respect to such of said Space Leases as
Beneficiary may designate in its sole discretion, whereby the Space Leases so
designated by Beneficiary shall be made superior to the lien of this Deed of
Trust for the term set forth in such subordination statement. From and after the
recordation of such subordination statements, and for the respective periods as
may be set forth therein, the Space Leases therein referred to shall be superior
to the lien of this Deed of Trust and shall not be affected by any foreclosure
hereof. All such Space Leases shall contain a provision to the effect that the
Trustor and Space Lessee recognize the right of Beneficiary to elect and to
effect such subordination of this Deed of Trust and consents thereto.
3.7 Purchase by Beneficiary. Upon any foreclosure sale (whether
judicial or nonjudicial), Beneficiary may bid for and purchase the property
subject to such sale and, upon compliance with the terms of sale, may hold,
retain and possess and dispose of such property in its own absolute right
without further accountability.
3.8 Waiver of Appraisement, Valuation, Stay, Extension and Redemption
Laws. Trustor agrees to the full extent permitted by law that if an Event of
Default occurs, neither Trustor nor anyone claiming through or under it shall or
will set up, claim or seek to take advantage of any appraisement, valuation,
stay, extension or redemption laws now or hereafter in force, in order to
prevent or hinder the enforcement or foreclosure of this Deed of Trust or the
absolute sale of the Trust Estate or any portion thereof or the final and
absolute putting into possession thereof, immediately after such sale, of the
purchasers thereof, and Trustor for itself and all who may at any time claim
through or under it, hereby waives, to the full extent that it may lawfully so
do, the benefit of all such laws, and any and all right to have the assets
comprising the Trust Estate marshalled upon any foreclosure of the lien hereof
and agrees that Trustee or any court having jurisdiction to foreclose such lien
may sell the Trust Estate in part or as an entirety.
3.9 Receiver. If an Event of Default occurs, Beneficiary, to the extent
permitted by law and in accordance with all applicable Gaming Laws, and without
regard to the value, adequacy or occupancy of the security for the indebtedness
and other sums secured hereby, shall be entitled as a matter of right if it so
elects to the appointment of a receiver to enter upon and take possession of the
Trust Estate and to collect all Rents and apply the same as the court may
direct, and such receiver may be appointed by any court of competent
jurisdiction upon application by Beneficiary. Beneficiary may have a receiver
appointed and shall promptly notify Trustor of such appointment of a receiver,
and Beneficiary may waive any requirement that the receiver post a bond;
provided, however, that failure to notify Trustor or any other third party shall
not affect the enforceability of any actions taken by the receiver. Beneficiary
shall have the power to designate and select the Person who shall serve as the
receiver and to negotiate all terms and conditions under which such receiver
shall serve. Any receiver appointed on Beneficiary's behalf may be an Affiliate
of Beneficiary. The expenses, including receiver's fees, attorneys' fees, costs
and agent's compensation, incurred pursuant to the powers herein contained shall
be secured by this Deed
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of Trust. The right to enter and take possession of and to manage and operate
the Trust Estate and to collect all Rents, whether by a receiver or otherwise,
shall be cumulative to any other right or remedy available to Beneficiary under
this Deed of Trust, the Indenture or otherwise available to Beneficiary and may
be exercised concurrently therewith or independently thereof. Beneficiary shall
be liable to account only for such Rents (including, without limitation,
security deposits) actually received by Beneficiary, whether received pursuant
to this section or any other provision hereof. Notwithstanding the appointment
of any receiver or other custodian, Beneficiary shall be entitled as pledgee to
the possession and control of any cash, deposits, or instruments at the time
held by, or payable or deliverable under the terms of this Deed of Trust to,
Beneficiary.
3.10 Suits to Protect the Trust Estate. Beneficiary shall have the
power and authority to institute and maintain any suits and proceedings as
Beneficiary, in its sole and absolute discretion, may deem advisable (a) to
prevent any impairment of the Trust Estate by any acts which may be unlawful or
any violation of this Deed of Trust, (b) to preserve or protect its interest in
the Trust Estate, or (c) to restrain the enforcement of or compliance with any
legislation or other Legal Requirement that may be unconstitutional or otherwise
invalid, if the enforcement of or compliance with such enactment, rule or order
might impair the security hereunder or be prejudicial to Beneficiary's interest
3.11 Proofs of Claim. In the case of any receivership, Insolvency,
Bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings affecting Trustor, any Affiliate or any guarantor, co-maker
or endorser of any of Trustor's obligations, its creditors or its property,
Beneficiary, to the extent permitted by law, shall be entitled to file such
proofs of claim or other documents as it may deem to be necessary or advisable
in order to have its claims allowed in such proceedings for the entire amount
due and payable by Trustor under the Notes or any other Loan Document, at the
date of the institution of such proceedings, and for any additional amounts
which may become due and payable by Trustor after such date.
3.12 Trustor to Pay the Notes on Any Default in Payment; Application of
Monies by Beneficiary.
(a) In case of a foreclosure sale of all or any part of the Trust
Estate and of the application of the proceeds of sale to the payment of the sums
secured hereby, Beneficiary shall be entitled to enforce payment from Trustor of
any additional amounts then remaining due and unpaid and to recover judgment
against Trustor for any portion thereof remaining unpaid, with interest at the
interest rate on the Notes, in accordance with NRS 40.451 et seq..
(b) Trustor hereby agrees to the extent permitted by law, that no
recovery of any such judgment by Beneficiary or other action by Beneficiary and
no attachment or levy of any execution upon any of the Trust Estate or any other
property shall in any way affect the Lien and security interest of this Deed of
Trust upon the Trust Estate or any part thereof or any Lien, rights, powers or
remedies of Beneficiary hereunder, but such Lien, rights, powers and remedies
shall continue unimpaired as before.
(c) Any monies collected or received by Beneficiary under this
Section 3.13 shall be first applied to the payment of compensation, expenses and
disbursements of the agents, attorneys and other representatives of Beneficiary,
and the balance remaining shall be applied to the payment of amounts due and
unpaid under the Notes.
(d) The provisions of this section shall not be deemed to limit or
otherwise modify the provisions of any guaranty of the indebtedness evidenced by
the Notes.
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3.13 Delay or Omission; No Waiver. No delay or omission of Beneficiary
or Noteholder to exercise any right, power or remedy upon any Event of Default
shall exhaust or impair any such right, power or remedy or shall be construed to
waive any such Event of Default or to constitute acquiescence therein. Every
right, power and remedy given to Beneficiary whether contained herein or in the
Indenture or otherwise available to Beneficiary may be exercised from time to
time and as often as may be deemed expedient by Beneficiary.
3.14 No Waiver of One Default to Affect Another. No waiver of any Event
of Default hereunder shall extend to or affect any subsequent or any other Event
of Default then existing, or impair any rights, powers or remedies consequent
thereon. If Beneficiary or a majority of Noteholders, to the extent applicable
under the Indenture, (a) grants forbearance or an extension of time for the
payment of any sums secured hereby; (b) takes other or additional security for
the payment thereof; (c) waives or does not exercise any right granted in the
Notes, the Indenture, this Deed of Trust or any other Loan Document; (d)
releases any part of the Trust Estate from the lien or security interest of this
Deed of Trust or any other instrument securing the Notes; (e) consents to the
filing of any map, plat or replat of the Land; (f) consents to the granting of
any easement on the Land; or (g) makes or consents to any agreement changing the
terms of this Deed of Trust or any other Loan Document subordinating the lien or
any charge hereof, no such act or omission shall release, discharge, modify,
change or affect the original liability under the Notes, this Deed of Trust or
any other Loan Document or otherwise of Trustor, or any subsequent purchaser of
the Trust Estate or any part thereof or any maker, co-signer, surety or
guarantor. No such act or omission shall preclude Beneficiary from exercising
any right, power or privilege herein granted or intended to be granted in case
of any Event of Default then existing or of any subsequent Event of Default,
nor, except as otherwise expressly provided in an instrument or instruments
executed by Beneficiary, shall the lien or security interest of this Deed of
Trust be altered thereby, except to the extent expressly provided in any
releases, maps, easements or subordinations described in clause (d), (e), (f) or
(g) above of this Section 3.15. In the event of the sale or transfer by
operation of law or otherwise of all or any part of the Trust Estate,
Beneficiary, without notice to any person, firm or corporation, is hereby
authorized and empowered to deal with any such vendee or transferee with
reference to the Trust Estate or the indebtedness secured hereby, or with
reference to any of the terms or conditions hereof, as fully and to the same
extent as it might deal with the original parties hereto and without in any way
releasing or discharging any of the liabilities or undertakings hereunder, or
waiving its right to declare such sale or transfer an Event of Default as
provided herein. Notwithstanding anything to the contrary contained in this Deed
of Trust or any other Loan Document, (i) in the case of any non-monetary Event
of Default, Beneficiary may continue to accept payments due hereunder without
thereby waiving the existence of such or any other Event of Default and (ii) in
the case of any monetary Event of Default, Beneficiary may accept partial
payments of any sums due hereunder without thereby waiving the existence of such
Event of Default if the partial payment is not sufficient to completely cure
such Event of Default.
3.15 Discontinuance of Proceedings; Position of Parties Restored. If
Beneficiary shall have proceeded to enforce any right or remedy under this Deed
of Trust by foreclosure, entry of judgement or otherwise and such proceedings
shall have been discontinued or abandoned for any reason, then and in every such
case Trustor and Beneficiary shall be restored to their former positions and
rights hereunder, and all rights, powers and remedies of Beneficiary shall
continue as if no such proceedings had occurred or had been taken.
3.16 Remedies Cumulative. No right, power or remedy, including without
limitation remedies with respect to any security for the Notes, conferred upon
or reserved to Beneficiary by the Note Guarantees, this Deed of Trust or any
other Loan Document is exclusive of any other right, power or
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remedy, but each and every such right, power and remedy shall be cumulative and
concurrent and shall be in addition to any other right, power and remedy given
hereunder or under any other Loan Document, now or hereafter existing at law, in
equity or by statute, and Beneficiary shall be entitled to resort to such
rights, powers, remedies or security as Beneficiary shall in its sole and
absolute discretion deem advisable, subject to the terms of the Indenture. The
rights and remedies of Beneficiary upon the occurrence of one or more defaults
by Trustor may be exercised by Beneficiary, in the sole discretion of
Beneficiary, either alternatively, concurrently, or consecutively in any order.
The exercise by Beneficiary or Trustee, of any one or more of such rights and
remedies shall not be construed to be an election of remedies nor a waiver of
any other rights and remedies Beneficiary might have unless, and limited to the
extent that, Beneficiary shall so elect or so waive by an instrument in writing
delivered to Trustee. Without limiting the generality of the foregoing, to the
extent that this Deed of Trust covers the real property and personal property,
Beneficiary may, in the sole discretion of Beneficiary, either alternatively,
concurrently, or consecutively in any order:
(a) Proceed as to both the real property, the personal property
and other collateral in accordance with Beneficiary's rights and
remedies in respect to the real property; or
(b) Proceed as to the real property in accordance with
Beneficiary's rights and remedies in respect to the real property and
proceed as to the personal property and other collateral in accordance
with Beneficiary's rights and remedies in respect to the personal
property and other collateral;
Beneficiary may in the sole discretion of Beneficiary, appoint Trustee as the
agent of Beneficiary for the purpose of disposition of the personal property and
other collateral in accordance with the Nevada Uniform Commercial Code--Secured
Transactions.
If Beneficiary should elect to proceed as to both the real
property, the personal property and other collateral in accordance with
Beneficiary's rights and remedies in respect to real property:
(a) All the real property and all the personal property and other
collateral may be sold, in the manner and at the time and place
provided in this Deed of Trust, in one lot, or in separate lots
consisting of any combination or combinations of the real property, the
personal property and other collateral, as the Beneficiary may elect,
in the sole discretion of Beneficiary.
(b) Trustor acknowledges and agrees that a disposition of the
personal property and other collateral in accordance with Beneficiary's
rights and remedies in respect to real property, as hereinabove
provided, is a commercially reasonable disposition of the collateral.
If Beneficiary should elect to proceed as to the personal property
and other collateral in accordance with Beneficiary's rights and remedies in
respect to personal property and other collateral, Beneficiary shall have all
the rights and remedies conferred on a secured party by NRS 104.9501 to NRS
104.9507, both inclusive.
3.17 Interest After Event of Default. If an Event of Default shall have
occurred and is continuing, all sums outstanding and unpaid under the Notes and
this Deed of Trust shall bear interest at the interest rate on the Notes until
such Event of Default has been cured. Trustor's obligation to pay such interest
shall be secured by this Deed of Trust.
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3.18 Foreclosure; Expenses of Litigation. If Trustee forecloses,
reasonable attorneys' fees for services in the supervision of said foreclosure
proceeding shall be allowed to the Trustee and Beneficiary as part of the
foreclosure costs. In the event of foreclosure of the lien hereof, there shall
be allowed and included as additional indebtedness all reasonable expenditures
and expenses which may be paid or incurred by or on behalf of Beneficiary for
attorneys' fees, appraiser's fees, outlays for documentary and expert evidence,
stenographers' charges, publication costs, and costs (which may be estimated as
to items to be expended after foreclosure sale or entry of the decree) of
procuring all such abstracts of title, title searches and examinations, title
insurance policies and guarantees, and similar data and assurances with respect
to title as Beneficiary may deem reasonably advisable either to prosecute such
suit or to evidence to a bidder at any sale which may be had pursuant to such
decree the true condition of the title to or the value of the Trust Estate or
any portion thereof. All expenditures and expenses of the nature in this section
mentioned, and such expenses and fees as may be incurred in the protection of
the Trust Estate and the maintenance of the lien and security interest of this
Deed of Trust, including the fees of any attorney employed by Beneficiary in any
litigation or proceeding affecting this Deed of Trust or any other Loan
Document, the Trust Estate or any portion thereof, including, without
limitation, civil, probate, appellate and bankruptcy proceedings, or in
preparation for the commencement or defense of any proceeding or threatened suit
or proceeding, shall be immediately due and payable by Trustor, with interest
thereon at the interest rate on the Notes, and shall be secured by this Deed of
Trust. Trustee waives its right to any statutory fee in connection with any
judicial or nonjudicial foreclosure of the lien hereof and agrees to accept a
reasonable fee for such services.
3.19 Deficiency Judgments. If after foreclosure of this Deed of Trust
or Trustee's sale hereunder, there shall remain any deficiency with respect to
any amounts payable under the Notes or hereunder or any amounts secured hereby,
and Beneficiary shall institute any proceedings to recover such deficiency or
deficiencies, all such amounts shall continue to bear interest at the interest
rate on the Notes. To the fullest extent permitted by law, Trustor waives any
defense to Beneficiary's recovery against Trustor of any deficiency after any
foreclosure sale of the Trust Estate. Trustor expressly waives any defense or
benefits that may be derived from any statute granting Trustor any defense to
any such recovery by Beneficiary. In addition, Beneficiary and Trustee shall be
entitled to recovery of all of their reasonable costs and expenditures
(including without limitation any court imposed costs) in connection with such
proceedings, including their reasonable attorneys' fees, appraisal fees and the
other costs, fees and expenditures referred to in Section 3.19 above. This
provision shall survive any foreclosure or sale of the Trust Estate, any portion
thereof and/or the extinguishment of the lien hereof.
3.20 Waiver of Jury Trial. To the fullest extent permitted by law,
Beneficiary and Trustor each waive any right to have a jury participate in
resolving any dispute whether sounding in contract, tort or otherwise arising
out of, connected with, related to or incidental to the relationship established
between them in connection with the Notes, this Deed of Trust or any other Loan
Document. Any such disputes shall be resolved in a bench trial without a jury.
3.21 Exculpation of Beneficiary. The acceptance by Beneficiary of the
assignment contained herein with all of the rights, powers, privileges and
authority created hereby shall not, prior to entry upon and taking possession of
the Trust Estate by Beneficiary, be deemed or construed to make 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 Space Leases, the Rents or the Trust Estate, or to take any action hereunder
or to expend any money or incur any expenses or perform or discharge any
obligation, duty or liability under any Space Lease or to assume any obligation
or responsibility for any security deposits or other deposits except to the
extent such deposits are actually received by Beneficiary,
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nor shall Beneficiary, prior to such entry and taking, be liable in any way for
any injury or damage to person or property sustained by any Person in or about
the Trust Estate.
3.22 Approval of Gaming Authority. Beneficiary and Trustee acknowledge,
understand and agree that, to the extent prior approval of the Gaming Authority
is required pursuant to the Gaming Control Acts for the exercise, operation and
effectiveness of any remedy hereunder or under any other Loan Document for the
taking of any action that may be taken by Beneficiary or Trustee hereunder or
under any other Loan Document, such remedy or action shall be subject to such
prior approval of the Gaming Authority of the State of Nevada.
ARTICLE FOUR
RIGHTS AND RESPONSIBILITIES OF TRUSTEE;
OTHER PROVISIONS RELATING TO TRUSTEE
Notwithstanding anything to the contrary in this Deed of Trust, Trustor
and Beneficiary agree as follows.
4.1 Exercise of Remedies by Trustee. To the extent that this Deed of
Trust or applicable law, including all applicable Gaming Laws, authorizes or
empowers Beneficiary to exercise any remedies set forth in Article Four hereof
or otherwise, or perform any acts in connection therewith, Trustee (but not to
the exclusion of Beneficiary unless so required under the law of the State of
Nevada) shall have the power to exercise any or all such remedies, and to
perform any acts provided for in this Deed of Trust in connection therewith, all
for the benefit of Beneficiary and on Beneficiary's behalf in accordance with
applicable law of the State of Nevada. In connection therewith, Trustee: (a)
shall not exercise, or waive the exercise of, any Beneficiary's Remedies (other
than any rights or Trustee to any indemnity or reimbursement), except at
Beneficiary's request, and (b) shall exercise, or waive the exercise of, any or
all of Beneficiary's remedies at Beneficiary's request, and in accordance with
Beneficiary's directions as to the manner of such exercise or waiver. Trustee
may, however, decline to follow Beneficiary's request or direction if Trustee
shall be advised by counsel that the action or proceeding, or manner thereof, so
directed may not lawfully be taken or waived.
4.2 Rights and Privileges of Trustee. To the extent that this Deed of
Trust requires Trustor to indemnify Beneficiary or reimburse Beneficiary for any
expenditures Beneficiary may incur, Trustee shall be entitled to the same
indemnity and the same rights to reimbursement of expenses as Beneficiary,
subject to such limitations and conditions as would apply in the case of
Beneficiary. To the extent that this Deed of Trust negates or limits
Beneficiary's liability as to any matter, Trustee shall be entitled to the same
negation or limitation of liability. To the extent that Trustor, pursuant to
this Deed of Trust, appoints Beneficiary as Trustor's attorney in fact for any
purpose, Beneficiary or (when so instructed by Beneficiary) Trustee shall be
entitled to act on Trustor's behalf without joinder or confirmation by the
other.
4.3 Resignation or Replacement of Trustee. Trustee may resign by an
instrument in writing addressed to Beneficiary, and Trustee may be removed at
any time with or without cause (i.e., in Beneficiary's sole and absolute
discretion) by an instrument in writing executed by Beneficiary. In case of the
death, resignation, removal or disqualification of Trustee or if for any reason
Beneficiary shall deem it desirable to appoint a substitute, successor or
replacement Trustee to act instead of Trustee originally named (or in place of
any substitute, successor or replacement Trustee), then Beneficiary shall have
the right and is hereby authorized and empowered to appoint a successor,
substitute or replacement
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Trustee, without any formality other than appointment and designation in writing
executed by Beneficiary, which instrument shall be recorded if required by the
law of the State of Nevada. The law of the State of Nevada shall govern the
qualifications of any Trustee. The authority conferred upon Trustee by this Deed
of Trust shall automatically extend to any and all other successor, substitute
and replacement Trustee(s) successively until the Secured Obligations have been
paid in full or the Trust Estate has been sold hereunder or released in
accordance with the provisions of the Loan Documents. Beneficiary's written
appointment and designation of any Trustee shall be full evidence of
Beneficiary's right and authority to make the same and of all facts therein
recited. No confirmation, authorization, approval or other action by Trustor
shall be required in connection with any resignation or other replacement of
Trustee.
4.4 Authority of Beneficiary. If Beneficiary is a banking corporation,
state banking corporation or a national banking association and the instrument
of appointment of any successor or replacement Trustee is executed on
Beneficiary's behalf by an officer of such corporation, state banking
corporation or national banking association, then such appointment shall be
conclusively presumed to be executed with authority and shall be valid and
sufficient without proof of any action by the board of directors or any superior
officer of Beneficiary.
4.5 Effect of Appointment of Successor Trustee. Upon the appointment
and designation of any successor, substitute or replacement Trustee, Trustee's
entire estate and title in the Trust Estate shall vest in the designated
successor, substitute or replacement Trustee. Such successor, substitute or
replacement Trustee shall thereupon succeed to and shall hold, possess and
execute all the rights, powers, privileges, immunities and duties herein
conferred upon Trustee. All references herein to Trustee shall be deemed to
refer to Trustee (including any successor or substitute appointed and designated
as herein provided) from time to time acting hereunder.
4.6 Confirmation of Transfer and Succession. Upon the written request
of Beneficiary or of any successor, substitute or replacement Trustee, any
former Trustee ceasing to act shall execute and deliver an instrument
transferring to such successor, substitute or replacement Trustee all of the
right, title, estate and interest in the Trust Estate of Trustee so ceasing to
act, together with all the rights, powers, privileges, immunities and duties
herein conferred upon Trustee, and shall duly assign, transfer and deliver all
properties and moneys held by said Trustee hereunder to said successor,
substitute or replacement Trustee.
4.7 Ratification. Trustor hereby ratifies and confirms any and all acts
that any Trustee may take or perform by virtue of this Deed of Trust.
4.8 Exculpation. Trustee shall not be liable for any error of judgment
or act done by Trustee in good faith, or otherwise be responsible or accountable
under any circumstances whatsoever, except for Trustee's gross negligence,
willful misconduct or knowing violation of law. Trustee shall have the right to
rely on any instrument, document or signature authorizing or supporting any
action taken or proposed to be taken by it hereunder, believed by it in good
faith to be genuine. All moneys received by Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were
received, but need not be segregated in any manner from any other moneys (except
to the extent required by law). Trustee shall be under no liability for interest
on any moneys received by it hereunder.
4.9 Endorsement and Execution of Documents. Upon Beneficiary's written
request, Trustee shall, without liability or notice to Trustor, execute, consent
to, or join in any instrument or agreement
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in connection with or necessary to effectuate the purposes of the Loan
Documents. Trustor hereby irrevocably designates Trustee as its attorney in fact
to execute, acknowledge and deliver, on Trustor's behalf and in Trustor's name,
all instruments or agreements necessary to implement any provision(s) of this
Deed of Trust or to further perfect the lien created by this Deed of Trust on
the Trust Property. This power of attorney shall be deemed to be coupled with an
interest and shall survive any disability of Trustor.
4.10 Multiple Trustees. If Beneficiary appoints multiple trustees, then
any Trustee, individually, may exercise all powers granted to Trustee under this
instrument, without the need for action by any other Trustee(s).
4.11 Terms of Trustee's Acceptance. Trustee accepts the trust created
by this Deed of Trust upon the following terms and conditions:
(a) Delegation. Trustee may exercise any of its powers through
appointment of attorney(s) in fact or agents.
(b) Counsel. Trustee may select and employ legal counsel
(including any law firm representing Beneficiary). Trustor shall reimburse all
reasonable legal fees and expenses that Trustee may thereby incur.]
(c) Security. Trustee shall be under no obligation to take any
action upon any Event of Default unless furnished security or indemnity, in form
satisfactory to Trustee, against costs, expenses, and liabilities that Trustee
may incur.
(d) Costs and Expenses. Trustor shall reimburse Trustee, as part
of the Secured Obligations hereunder, for all reasonable disbursements and
expenses (including reasonable legal fees and expenses) incurred by reason of
and as provided for in this Deed of Trust, including any of the foregoing
incurred in Trustee's administering and executing the trust created by this Deed
of Trust and performing Trustee's duties and exercising Trustee's powers under
this Deed of Trust.
(e) Release. Pursuant to the terms in this Section 4.11(e) and
Section 5.10, upon payment of the Secured Obligations hereunder, Beneficiary
shall request Trustee to reconvey this Deed of Trust and shall surrender all the
Secured Obligations hereunder to Trustee. Trustee shall release this Deed of
Trust without charge to Trustor. Trustor shall pay all costs of recordation, if
any.
ARTICLE FIVE
MISCELLANEOUS PROVISIONS
5.1 Heirs, Successors and Assigns Included in Parties. Whenever
one of the parties hereto is named or referred to herein, the heirs, successors
and assigns of such party shall be included, and subject to the limitations set
forth in Section 1.10, all covenants and agreements contained in this Deed of
Trust, by or on behalf of Trustor or Beneficiary shall bind and inure to the
benefit of its heirs, successors and assigns, whether so expressed or not.
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5.2 Addresses for Notices, Etc. Any notice, report, demand or
other instrument authorized or required to be given or furnished under this Deed
of Trust to Trustor or Beneficiary shall be deemed given or furnished (i) when
addressed to the party intended to receive the same, at the address of such
party set forth below, and delivered at such address or (ii) three (3) days
after the same is deposited in the United States mail as first class certified
mail, return receipt requested, postage paid, whether or not the same is
actually received by such party:
Beneficiary: Norwest Bank Minnesota, National Association
Corporate Trust Department
6th and Marquette
Minneapolis, Minnesota 55479
Telecopier No.: (612) 667-9825
Attention: Raymond S. Haverstock
Trustor: Riviera Holdings Corporation 2901
Las Vegas Boulevard South Las Vegas, Nevada
89109 Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads 30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
Trustee: United Title of Nevada 3980 Howard
Hughes Parkway, #200
Las Vegas, Nevada 89109
Telecopier: (702) 836-8122
Attention: Steve Dover
5.3 Change of Notice Address. Any person may change the address to
which any such notice, report, demand or other instrument is to be delivered or
mailed to that person, by furnishing written notice of such change to the other
party, but no such notice of change shall be effective unless and until received
by such other party.
5.4 Headings. The headings of the articles, sections, paragraphs and
subdivisions of this Deed of Trust are for convenience of reference only, are
not to be considered a part hereof, and shall not limit or expand or otherwise
affect any of the terms hereof.
5.5 Invalid Provisions to Affect No Others. In the event that any of
the covenants, agreements, terms or provisions contained herein or in the Notes,
the Indenture
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or any other Loan Document shall be invalid, illegal or unenforceable in any
respect, the validity of the lien hereof and the remaining covenants,
agreements, terms or provisions contained herein or in the Notes, the Indenture,
the Subsidiary Guarantees or any other Loan Document shall be in no way
affected, prejudiced or disturbed thereby. To the extent permitted by law,
Trustor waives any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
5.6 Changes and Priority Over Intervening Liens. Neither this Deed of
Trust nor any term hereof may be changed, waived, discharged or terminated
orally, or by any action or inaction, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. Any agreement hereafter made by Trustor and
Beneficiary relating to this Deed of Trust shall be superior to the rights of
the holder of any intervening lien or encumbrance.
5.7 Estoppel Certificates. Within ten Business Days after Beneficiary's
written request, Trustor shall from time to time, but no more than twice per any
twelve (12) month period, execute a certificate, in recordable form (an
"Estoppel Certificate"), stating, except to the extent it would be inaccurate to
so state: (a) the current amount of the Secured Obligations hereunder and all
elements thereof, including principal, interest, and all other elements; (b)
Trustor has no defense, offset, claim, counterclaim, right of recoupment,
deduction, or reduction against any of the Secured Obligations hereunder; (c)
none of the Loan Documents have been amended, whether orally or in writing; (d)
Trustor has no claims against Beneficiary of any kind; (e) any Power of Attorney
granted to Beneficiary is in full force and effect; and (f) such other matters
relating to this Deed of Trust, any Loan Documents and the relationship of
Trustor and Beneficiary as Beneficiary shall request. In addition, the Estoppel
Certificate shall set forth the reasons why it would be inaccurate to make any
of the foregoing assurances ("a" through "f").
5.8 Governing Law. This Deed of Trust shall be construed, interpreted,
enforced and governed by and in accordance with the laws of the State of Nevada,
without regard to its choice of law provisions.
5.9 Required Notices. Trustor shall notify Beneficiary promptly of the
occurrence of any of the following and shall immediately provide Beneficiary a
copy of the notice or documents referred to: (i) receipt of notice from any
Governmental Authority relating to all or any material part of the Trust Estate
if such notice relates to a default or act, omission or circumstance which would
result in a default after notice or passage of time or both; (ii) receipt of any
notice from any tenant leasing all or any material portion of the Trust Estate
or responsible for any material portion of the aggregate periodic rent collected
by Trustor under the Space Leases if such notice relates to a default or act,
omission or circumstance which would result in a default after notice or passage
of time or both under such Space Leases which would have a material adverse
affect on the Trustor's business, finances or operations; (iii) receipt of
notice from the holder of any Permitted Lien relating to a default or act,
omission or circumstance which would result in a default after notice or passage
of time or both under any Permitted Lien; (iv) the commencement of any
proceedings or the entry of any judgment, decree or order materially affecting
all or any portion of the Trust Estate or which involve the potential liability
of Trustor or its Affiliates in an amount in excess of $1,000,000 (other than
for personal injury actions and related property damage suits which have been
acknowledged by the insurer to be covered by such insurance); or (v)
commencement of any judicial or administrative proceedings or the entry of any
judgment, decree or order by or against or otherwise affecting Trustor or any
Affiliate of Trustor, a material portion of the Trust Estate, or a material
portion of the Personal Property, or any other action by any creditor or lessor
thereof as a result of any default under the terms of any lease.
5.10 Reconveyance. Upon written request of Beneficiary certifying the
payment in full of all of the Secured Obligations or Legal Defeasance or
Covenant Defeasance, and upon surrender of this Deed of Trust to Trustee for
cancellation and retention and upon payment of its fees, Trustee shall reconvey,
without warranty, the property then held hereunder.
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The recitals in 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."
5.11 Attorneys' Fees. Without limiting any other provision contained
herein, Trustor agrees to pay all costs of Beneficiary or Trustee incurred in
connection with the enforcement of this Deed of Trust or the taking of this Deed
of Trust as security for the repayment of the Notes, including without
limitation all reasonable attorneys' fees whether or not suit is commenced, and
including, without limitation, fees incurred in connection with any probate,
appellate, bankruptcy, deficiency or any other litigation proceedings, all of
which sums shall be secured hereby.
5.12 Late Charges. By accepting payment of any sum secured hereby after
its due date, Beneficiary does not waive its right to collect any late charge
thereon or interest thereon at the interest rate on the Notes, if so provided,
not then paid or its right either to require prompt payment when due of all
other sums so secured or to declare default for failure to pay any amounts not
so paid.
5.13 Cost of Accounting. Trustor shall pay to Beneficiary, for and on
account of the preparation and rendition of any accounting, which Trustor may be
entitled to require under any law or statute now or hereafter providing
therefor, the reasonable costs thereof.
5.14 Right of Entry. Subject to compliance with applicable Gaming Laws,
Beneficiary may at any reasonable time or times upon prior written notice make
or cause to be made entry upon and inspections of the Trust Estate or any part
thereof in person or by agent.
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 acknowledgement hereof, and shall
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 Statute of Limitations. To the fullest extent allowed by the 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.
5.17 Subrogation. Should the proceeds of the loan made by Beneficiary
to Trustor, repayment of which is hereby secured, or any part thereof, or any
amount paid out or advanced by Beneficiary, be used directly or indirectly to
pay off, discharge, or satisfy, in whole or in part, any prior or superior lien
or encumbrance upon the Trust Estate, or any part thereof, then, as additional
security hereunder, Trustee, on behalf of Beneficiary, shall be subrogated to
any and all rights, superior titles, liens, and equities owned or claimed by any
owner or holder of said outstanding liens, charges, and indebtedness, however
remote, regardless of whether said liens, charges, and indebtedness are acquired
by assignment or have been released of record by the holder thereof upon
payment.
5.18 Joint and Several Liability. All obligations of Trustor hereunder,
if more than one, are joint and several. Recourse for deficiency after sale
hereunder may be had against the property of Trustor, without, however, creating
a present or other lien or charge thereon.
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5.19 Context. In this Deed of Trust, whenever the context so requires,
the neuter includes the masculine and feminine, and the singular including the
plural, and vice versa.
5.20 Time. Time is of the essence of each and every term, covenant and
condition hereof. Unless otherwise specified herein, any reference to "days" in
this Deed of Trust shall be deemed to mean "calendar days."
5.21 Interpretation. As used in this Deed of Trust unless the context
clearly requires otherwise: The terms "herein" or "hereunder" and similar terms
without reference to a particular section shall refer to the entire Deed of
Trust and not just to the section in which such terms appear; the term "lien"
shall also mean a security interest, and the term "security interest" shall also
mean a lien.
5.22 Effect of NRS ss. 107.030. To the extent not inconsistent
herewith, the provisions of NRS ss. 107.030 are included herein by reference.
5.23 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 and only as permitted by the provisions of the Indenture.
5.24 No Conflicts. In the event that any of the provisions contained
herein conflict with the Security Agreement, the provisions contained in the
Security Agreement shall prevail.
ARTICLE SIX
POWER OF ATTORNEY
6.1 Grant of Power. Trustor irrevocably appoints Beneficiary and any
successor thereto as its attorney-in-fact, with full power and authority,
including the power of substitution, exercisable only during the continuance of
an Event of Default to act for Trustor in its name, place and stead as
hereinafter provided:
6.2 Possession and Completion. To take possession of the Land and the
Riviera, remove all employees, contractors and agents of Trustor therefrom,
complete or attempt to complete any of the developments or improvements on the
Land described in the Offering Circular, and market, sell or lease the Land and
the Riviera.
6.3 Plans and Specifications. To make such additions, changes and
corrections in their current Plans and Specifications as may be necessary or
desirable, in Beneficiary's reasonable discretion, or as it deems proper to
complete the restoration or expansion of the Riviera.
6.4 Employment of Others. To employ such contractors, subcontractors,
suppliers, architects, inspectors, consultants, property managers and other
agents as Beneficiary, in its discretion, deems proper for the restoration or
expansion of the Riviera, for the protection or clearance of title to the Land
or Personal Property, or for the protection of Beneficiary's interests with
respect thereto.
6.5 Security Guards. To employ watchmen to protect the Land and the
Riviera from injury.
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6.6 Compromise Claims. To pay, settle or compromise all bills and
claims then existing or thereafter arising against Trustor, which Beneficiary,
in its discretion, deems proper for the protection or clearance of title to the
Land or Personal Property, or for the protection of Beneficiary's interests with
respect thereto.
6.7 Legal Proceedings. To prosecute and defend all actions and
proceedings in connection with the Land or the Riviera.
6.8 Other Acts. To execute, acknowledge and deliver all other
instruments and documents in the name of Trustor that are necessary or
desirable, to exercise Trustor's rights under all contracts concerning the Land
or the Riviera, including, without limitation, under any Space Leases, and to do
all other acts with respect to the Land or the Riviera that Trustor might do on
its own behalf, as Beneficiary, in its reasonable discretion, deems proper.
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IN WITNESS WHEREOF, Trustor has executed this Deed of Trust, Assignment
of Rents, Leases, Fixture Filing and Security Agreement the day and year first
above written.
RIVIERA HOLDINGS CORPORATION
a Nevada corporation,
as Trustor
By:______________________________
Name:____________________________
Title:___________________________
S-1
<PAGE>
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
This instrument was acknowledged before me on _____________________
by _____________________________ as _________________________________________ of
___________________________________.
__________________________________________
(Signature of notarial officer)
S-2
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SCHEDULE A
(Real Property Description of the Land
A-1
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE: COVENANTS OF TRUSTOR............................................11
1.1 Performance of Loan Documents.........................................11
1.2 General Representations, Covenants and Warranties.....................11
1.3 Compliance with Legal Requirements....................................11
1.4 Taxes.................................................................12
1.5 Insurance.............................................................12
1.6 Condemnation..........................................................14
1.7 Care of Trust Estate..................................................14
1.8 Space Leases..........................................................15
1.9 Further Encumbrance...................................................15
1.10 Partial Releases of Trust Estate......................................16
1.11 Further Assurances....................................................18
1.12 Security Agreement and Financing Statements...........................19
1.13 Assignment of Rents...................................................21
1.14 Expenses..............................................................21
1.15 Beneficiary's Cure of Trustor's Default...............................22
1.16 Use of Trust Estate...................................................22
1.17 Compliance with Permitted Lien Agreements.............................22
1.18 Defense of Actions....................................................22
1.19 Affiliates............................................................22
1.20 Title Insurance.......................................................22
ARTICLE TWO: CORPORATE LOAN PROVISIONS.......................................23
2.1 Interaction with Indenture............................................23
2.2 Other Collateral......................................................23
ARTICLE THREE: DEFAULTS AND REMEDIES.........................................23
3.1 Event of Default......................................................23
3.2 Acceleration of Maturity..............................................24
3.3 Protective Advances...................................................24
3.4 Institution of Equity Proceedings.....................................24
3.5 Beneficiary's Power of Enforcement....................................24
3.6 Beneficiary's Right to Enter and Take Possession,
Operate and Apply Income..............................................25
3.7 Space Leases..........................................................26
3.8 Purchase by Beneficiary...............................................26
3.9 Waiver of Appraisement, Valuation, Stay, Extension
and Redemption Laws...................................................27
3.10 Receiver..............................................................27
3.11 Suits to Protect the Trust Estate.....................................27
3.12 Proofs of Claim.......................................................27
3.13 Trustor to Pay the Notes on Any Default in Payment;
Application of Monies by Beneficiary .................................28
3.14 Delay or Omission; No Waiver..........................................28
3.15 No Waiver of One Default to Affect Another............................28
3.16 Discontinuance of Proceedings; Position of Parties Restored...........29
3.17 Remedies Cumulative...................................................29
3.18 Interest After Event of Default.......................................30
3.19 Foreclosure; Expenses of Litigation...................................30
3.20 Deficiency Judgments..................................................30
3.21 Waiver of Jury Trial..................................................31
3.22 Exculpation of Beneficiary............................................31
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ARTICLE FOUR: RIGHTS AND RESPONSIBILITIES OF TRUSTEE;
OTHER PROVISIONS RELATING TO TRUSTEE...........................31
4.1 Exercise of Remedies by Trustee.......................................31
4.2 Rights and Privileges of Trustee......................................31
4.3 Resignation or Replacement of Trustee.................................32
4.4 Authority of Beneficiary..............................................32
4.5 Effect of Appointment of Successor Trustee............................32
4.6 Confirmation of Transfer and Succession...............................32
4.7 Ratification..........................................................32
4.8 Exculpation...........................................................32
4.9 Endorsement and Execution of Documents................................33
4.10 Multiple Trustees.....................................................33
4.11 Terms of Trustee's Acceptance.........................................33
ARTICLE FIVE: MISCELLANEOUS PROVISIONS.......................................33
5.1 Heirs, Successors and Assigns Included in Parties.....................33
5.2 Addresses for Notices, Etc............................................34
5.3 Change of Notice Address..............................................34
5.4 Headings..............................................................34
5.5 Invalid Provisions to Affect No Others................................34
5.6 Changes and Priority Over Intervening Liens...........................35
5.7 Estoppel Certificates.................................................35
5.8 Governing Law.........................................................35
5.9 Required Notices......................................................35
5.10 Reconveyance..........................................................35
5.11 Attorneys' Fees.......................................................36
5.12 Late Charges..........................................................36
5.13 Cost of Accounting....................................................36
5.14 Right of Entry........................................................36
5.15 Corrections...........................................................36
5.16 Statute of Limitations................................................36
5.17 Subrogation...........................................................36
5.18 Joint and Several Liability...........................................36
5.19 Context...............................................................36
5.20 Time..................................................................37
5.21 Interpretation........................................................37
5.22 Effect of NRS ss. 107.030.............................................37
ARTICLE SIX: POWER OF ATTORNEY...............................................37
6.1 Grant of Power........................................................37
6.2 Possession and Completion.............................................37
6.3 Plans and Specifications..............................................37
6.4 Employment of Others..................................................37
6.5 Security Guards.......................................................37
6.6 Compromise Claims.....................................................37
6.7 Legal Proceedings.....................................................37
6.8 Other Acts............................................................38
SCHEDULE A REAL ESTATE DESCRIPTION FOR THE LAND
ii
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into this 13th day
of August, 1997 (as amended from time to time, the "Security Agreement"), by and
between RIVIERA HOLDINGS CORPORATION, a Nevada corporation ("Company"), RIVIERA
OPERATING CORPORATION, a Nevada corporation ("ROC"), RIVIERA GAMING MANAGEMENT,
INC., a Nevada corporation ("RGM"), RIVIERA GAMING MANAGEMENT OF COLORADO, INC.,
a Colorado corporation ("RGMC"), and RIVIERA GAMING MANAGEMENT-ELSINORE, INC., a
Nevada corporation ("Riviera-Elsinore") (each individually, a "Grantor", and
collectively "Grantors") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
collateral agent under the Indenture (as defined below) for the benefit of the
holders of the Notes (as defined below) ("Secured Party").
RECITALS
A. Notes. Company is the issuer of those certain $175,000,000 10%
First Mortgage Notes due 2004 (the "Notes") pursuant to that certain Indenture
dated as of August 13, 1997 (together with all Subsidiary Guarantees executed in
connection therewith, the "Indenture") by and among Secured Party, Company, and
ROC, RGM, RGMC, and Riviera-Elsinore, as guarantors. Any capitalized term used
in this Security Agreement without definition, but defined in the Indenture,
shall have the same meaning here as in the Indenture.
B. Deed of Trust. Secured Party is the beneficiary under a Deed of
Trust, Assignment of Rents, Leases, Fixture Filing and Security Agreement, dated
of even date herewith (the "Deed of Trust"), by and among Secured Party, United
Title Company of Nevada, a Nevada corporation, as Trustee thereunder, and the
Company, as Trustor thereunder, pursuant to which the Company granted to United
Title Company of Nevada for the benefit of Secured Party a security interest in
certain real property owned by the Company and located at 2901 Las Vegas
Boulevard South, Las Vegas, Nevada, and all additions thereto and improvements
thereon (the "Riviera Property").
C. Stock Pledge Agreements. Secured Party is the trustee under (i)
a Stock Pledge Agreement, dated as of even date herewith (the "Company Stock
Pledge Agreement"), executed by Company on behalf of Secured Party, pursuant to
which Company pledged to Secured Party its 100% interest in ROC, (ii) a Stock
Pledge Agreement, dated as of even date herewith (the "ROC Stock Pledge
Agreement"), executed by ROC on behalf of Secured Party, pursuant to which ROC
pledged to Secured Party its 100% interest in RGM, and (iii) a Stock Pledge
Agreement, dated as of even date herewith (the "RGM Stock Pledge Agreement" and
together with the Company Stock Pledge Agreement and the ROC Stock Pledge
Agreement, the "Stock Pledge Agreements"), executed by RGM on behalf of Secured
Party pursuant to which RGM pledged to Secured Party its 100% interest in
Riviera-Elsinore, and its 100% interest in RGMC.
D. Account Agreement. Secured Party, Company and U.S. Bank of
Nevada (the "Bank") shall enter into a Restricted Account Agreement (the
"Account Agreement"), pursuant to which the Company shall create a restricted
account at the Bank for the deposit of the
<PAGE>
proceeds from the sale of the Notes and shall grant Secured Party a security
interest in such account. This Security Agreement, the Deed of Trust, the Stock
Pledge Agreements, and the Account Agreement, together with any similar
documents executed after the date hereof pursuant to Section 4.18 of the
Indenture, are referred to herein as the "Collateral Documents."
E. Purpose. As a material inducement to Secured Party to enter into
the Indenture, Grantors have agreed to execute this Security Agreement in favor
of Secured Party and to jointly and severally pledge all of their right, title
and interest in the property described herein to Secured Party.
AGREEMENT
Now therefore, in consideration of the above recitals and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Creation of Security Interest. Each Grantor hereby assigns,
pledges and grants to Secured Party a security interest in all of such Grantor's
right, title and interest in and to the collateral described in Section 2
hereinbelow (the "Collateral") in each case whether now owned or hereafter
acquired by such Grantor in order to secure the payment and performance of the
obligations of such Grantor to Secured Party described in Section 3 hereinbelow.
2. Collateral. The Collateral under this Security Agreement
is:
(a) all of each Grantor's personal property, equipment,
supplies, building and other materials of every nature whatsoever and all other
personal property wherever located, including, but not limited to, all general
equipment and devices which are or are to be installed and used in connection
with the operation of the Riviera Hotel & Casino and the Riviera Property, all
computer equipment, calculators, adding machines, and any other electronic
equipment of every nature used or located at the Riviera Property, all fixtures,
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
Riviera Property, whether or not the same constitutes real property or fixtures
in the State of Nevada, 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, machinery, equipment and appliances, cooking facilities,
vacuum cleaning systems, telephone, television, 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,
cleaning apparatus, mirrors, lamps, ornaments, cooling apparatus and equipment,
ranges and ovens, garbage disposals, dishwashers, mantels, and any and all such
property, including, without limitation, all parts thereof and accessions
thereto, which is at any time installed in, affixed to or placed upon the
Riviera Property (all of the foregoing property and similar or after-acquired
property included as Collateral under Section 2(h) below being hereinafter
referred to as "FF&E");
2
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(b) all of each Grantor's chattel paper, including writings
that evidence both a monetary obligation and a security interest in or lease of
specific goods, instruments, promissory notes, acceptances, drafts, checks,
certificates of deposit and other writings that evidence a right to the payment
of money by an other Person, in each case whether now existing or hereafter
arising and wherever arising and whether or not earned by performance
(collectively, the "Receivables"), other general intangibles, documents of
title, warehouse receipts, leases, 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 such
Grantor necessary to operate the Riviera Hotel & Casino or conduct business on
the Riviera Property (other than any gaming or other licenses in which a
security interest cannot be granted without the consent of third parties and no
such consent has been given), franchises, certificates, stock, and all rights
in, to and under all security agreements, mortgages, deeds of trust, guarantees,
leases and other agreements or contracts securing or otherwise relating to any
of the foregoing (all of the foregoing property, including, without limitation,
the Receivables, and similar or after-acquired property included as Collateral
under Section 2(h) below being hereinafter referred to as "Intangibles");
(c) all of the trademarks and service marks now held or
hereafter acquired by each Grantor, which are registered in the United States
Patent and Trademark Office or in any similar office or agency of the United
States or any state thereof or any political subdivision thereof and any
application for such trademarks and service marks, as well as any unregistered
marks used by such Grantor in the United States and trade dress including logos,
designs, trade names, business names, fictitious business names and other
business identifiers in connection with which any of these registered or
unregistered marks are used in the United States ("Marks") together with the
registration and right to renewals thereof, and the goodwill of the business of
such Grantor symbolized by the Marks and all licenses associated therewith;
(d) all United States copyrights which each Grantor now or
hereafter has registered with the United States Copyright Office, as well as any
application for a United States copyright registration now or hereafter made
with the United States Copyright Office by such Grantor ("Copyrights");
(e) all patents and patent applications of each Grantor,
which are now or hereafter pending or granted by the United States Patent and
Trademark Office or any successor thereto ("Patents") or to which such Grantor
now or hereafter has title and any divisions or continuations thereof, as well
as all renewals thereof;
(f) all computer programs created by or for each Grantor and
which such Grantor owns the copyright with respect thereto and all intellectual
property rights therein and all other proprietary information of such Grantor,
including, but not limited to, trade secrets;
(g) all of the agreements to which each Grantor may be a
party from time to time, as such agreements may be amended or otherwise modified
from time to time (collectively, the "Assigned Agreements"), including, without
limitation, (i) all rights of such Grantor to receive moneys due and to become
due under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity,
3
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warranty or guaranty with respect to any of the Collateral or the Assigned
Agreements, (iii) claims of such Grantor for damages arising out of or for
breach of or default under the Assigned Agreements, and (iv) the right of such
Grantor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder; and
(h) the Collateral includes all items described in this
Section 2, whether now owned or hereafter at any time acquired by each Grantor
and wherever located, and includes all replacements, additions, parts,
appurtenances, accessions, substitutions, repairs, proceeds, products,
offspring, rents and profits, relating thereto or therefrom, and all documents,
records, ledger sheets and files of such Grantor relating thereto. Proceeds
hereunder include (i) whatever is now or hereafter receivable or received by
each Grantor upon the sale, exchange, collection or other disposition of any
item of Collateral, whether voluntary or involuntary, whether such proceeds
constitute FF&E, Intangibles, or other assets; (ii) any such items which are now
or hereafter acquired by such Grantor with any proceeds of Collateral hereunder;
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 item of Collateral or any proceeds thereof.
Notwithstanding the foregoing, "Collateral", "FF&E", "Receivables" and
"Intangibles" shall not include any of the following assets (the "Excluded
Assets"): (i) any accounts, as such term is defined in Section 9-106 (Nevada
Revised Statute ("NRS") 104.9106) of the UCC, and any credit instruments, as
such term is defined in NRS 463.01467; (ii) any slot machines, gaming tables and
other gaming devices, as defined in NRS 463.0155, any cashless wagering system
as defined in NRS 463.014 and associated equipment as defined in NRS 463.0136
(collectively, the "Gaming Equipment") wherever located; (iii) any inventory, as
such term is defined in Section 9-109 (NRS 104.9109) of the Uniform Commercial
Code (the "UCC"), wherever located; (iv) any FF&E subject to Liens in existence
as of the date of the Indenture (as defined in the Indenture) securing
indebtedness in existence as of the date of the Indenture; (v) any agreement
with a third party that, pursuant to its terms, prohibits the grant of a lien on
such agreement, to the extent that such third party has not consented to the
liens created hereby; (vi) any Collateral which is subject to an agreement with
a third party that, pursuant to its terms, prohibits the grant of a lien on such
Collateral, to the extent that such third party has not consented to the liens
created hereby; (vii) Gaming Licenses (as defined in the Indenture) or 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 Secured Party without the approval of the relevant
governmental authority, to the extent that such approval has not been obtained;
(viii) any FF&E (A) the purchase of which was not financed with the proceeds of
the Notes and (B) that a Grantor is permitted to encumber and has encumbered
pursuant to clause (ii) of the second paragraph of Section 4.10 of the Indenture
and subject to clauses (v) and (vii) of the definition of "Permitted Liens" in
the Indenture; and (ix) any personal property which any Grantor is prohibited
from pledging under applicable law.
3. Secured Obligations of Grantor. The Collateral of each
Grantor secures and shall hereafter secure (i) the payment by such Grantor to
the Holders or Secured Party of all indebtedness now or hereafter owed to
Secured Party by such Grantor in connection with the Notes, the Indenture, and
the Collateral Documents executed by such Grantor (the "Riviera
4
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Financing"), whether at stated maturity, by acceleration or otherwise,
including, without limitation, each Grantor's obligations under the Indenture,
the Notes, the Collateral Documents or any related documents securing the
obligations thereunder, together with any interest thereon, fees, expenses,
Liquidated Damages, indemnification or otherwise, in connection therewith and
extensions, modifications and renewals thereof, (ii) the performance by each
Grantor of all other obligations and the discharge of all other liabilities of
such Grantor to Secured Party of every kind and character arising from the
Riviera Financing, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, joint, several and joint and
several, and whether created under this Security Agreement, the other Collateral
Documents or any other agreement to which such Grantor and Secured Party are
parties, (iii) any and all sums advanced by Secured Party in order to preserve
the Collateral or preserve Secured Party's security interest in the Collateral
(or the priority thereof) and (iv) the expenses of retaking, holding, preparing
for sale or lease, selling or otherwise disposing of or realizing on the
Collateral, of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of Secured Party referred to above, or
of any exercise by Secured Party of its rights hereunder, together with
reasonable attorneys' fees and disbursements and court costs (collectively, the
"Secured Obligations"). All payments and performance by each Grantor with
respect to any Secured Obligations shall be in accordance with the terms under
which said indebtedness, obligations and liabilities were or are hereafter
incurred or created.
4. Grantors' Representations and Warranties. Each Grantor
represents and warrants that:
(a) with respect to Collateral other than Marks, such Grantor
is (or, to the extent that the Collateral is acquired after the date hereof,
will be) the sole legal and beneficial owner of the Collateral to the extent of
its respective interest therein; with respect to the Marks listed in Annex C (as
such Annex may be amended from time to time), such Grantor is the registrant or
applicant of record, and with respect to registered Marks has the exclusive
right to use the Marks in commerce in the United States on or in connection with
the goods or services specified in the certificate of registration; there are no
security interests in, liens, charges or encumbrances on, or adverse claims of
title to, or any other interest whatsoever in, the Collateral to the extent of
its respective interest therein or any portion thereof except Permitted Liens
(as defined in the Indenture, including without limitation Liens that are
created by this Security Agreement); and no financing statement, notice of lien,
mortgage, deed of trust or instrument similar in effect covering the Collateral
to the extent of its respective interest thereof or any portion thereof or any
proceeds thereof ("Lien Notice") exists or is on file in any public office,
except as relates to Permitted Liens, including without limitation liens as may
have been filed in favor of Secured Party relating to this Security Agreement or
related agreements, or for which duly executed termination statements have been
delivered to Secured Party for filing;
(b) such Grantor has full right, power and authority to
execute, deliver and perform this Security Agreement. This Security Agreement
constitutes a legally valid and binding obligation of such Grantor, enforceable
against such Grantor in accordance with its terms. Subject to the completion of
the items identified in Section 4(c) below (and except to the extent that
registration of motor vehicles, possession of checks and instruments not
required to be delivered under Sections 4(g) and 5(c) are required for
perfection), the provisions of this
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Security Agreement are effective to create in favor of Secured Party a valid and
enforceable first, prior and perfected security interest in the Collateral to
the extent of such Grantor's interest therein subject only to Permitted Liens;
(c) except for (i) the filing or recording of the financing
statements and fixture filings done concurrently with the execution and delivery
hereof and the filing of any continuation statements and replacement financing
statements as required in Section 5 below, (ii) the actual taking of possession
of instruments constituting Collateral by the Secured Party hereunder, (iii) all
consents received and actions taken in connection with the closing of the
offering of the Notes, (iv) the actions contemplated by the parenthetical in the
third sentence of Section 4(b), and (vi) any filings necessary to perfect
Secured Party's security interest in any Patent, Trademark or Copyright, no
authorization, approval or other action by, no notice to or registration or
filing with, any person or entity, including without limitation, any stockholder
or creditor of such Grantor or any governmental authority or regulatory body is
required (x) for the grant by such Grantor of the security interest in the
Collateral to the extent of its interest therein pursuant to this Security
Agreement or for the execution, delivery or performance of this Security
Agreement by such Grantor, (y) for the perfection or maintenance of such
security interest created hereby, including the first priority nature of such
security interest subject to Permitted Liens, or (except for notices required
under the UCC) the exercise by Secured Party of the rights and remedies provided
for in this Security Agreement (other than any required governmental consent or
filing with respect to any Patents, Trademarks, Copyrights, governmental claims,
tax refunds, licenses or permits; or the exercise of remedies requiring prior
court approval, notices, consents, approvals or authorizations in connection
with the sale of any securities under laws affecting the offering and sale of
securities generally), or (z) for the enforceability of such security interest
against third parties, including, without limitation, judgment lien creditors;
(d) except as indicated on Annex A, such Grantor does not do
business, and for the previous five years has not done business, under any
fictitious business names or trade names;
(e) the Collateral, to the extent of such Grantor's interest
therein, has not been and will not be used or bought by such Grantor for
personal, family or household purposes. In addition, the Collateral does not
include crops, timber, farm products, minerals or the like or accounts resulting
from the sale of such minerals at the wellhead or minehead;
(f) (i) such Grantor's chief executive office is located at
2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109, such Grantor has no
places of business other than such address and other places of business
indicated on Annex B (as such Annex may be amended from time to time) and the
Collateral, to the extent of such Grantor's interest therein, is now and will at
all times hereafter be located at such Grantor's places of business or as such
Grantor may otherwise notify Secured Party in writing;
(g) all originals of all promissory notes, other instruments
or chattel paper which evidence the Receivables with a face or fair market value
in each case in excess of $1,000,000 have been or shall be delivered to Secured
Party (with all necessary or appropriate endorsements);
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(h) none of the execution, delivery and performance of this
Security Agreement by such Grantor, the consummation of the transactions herein
contemplated, the fulfillment of the terms hereof or the exercise by Secured
Party of any rights or remedies hereunder will constitute or result in a breach
of any of the terms or provisions of, or constitute a default under, or
constitute an event which with notice or lapse of time or both will result in a
breach of or constitute a default under, any material agreement, indenture,
mortgage, deed of trust, equipment lease, instrument or other document to which
such Grantor is a party, conflict with or require approval, authorization,
notice or consent under any material law, order, rule, regulation, license or
permit applicable to such Grantor of any court or any federal or state
government, regulatory body or administrative agency, or any other governmental
body having jurisdiction over such Grantor or its properties or require notice,
consent, approval or authorization by or registration or filing with any person
or entity (including, without limitation, any stockholder or creditor of such
Grantor) other than (i) any notices to such Grantor or any Guarantor from
Secured Party required hereunder, (ii) notices and filings in connection with
the perfection of Liens hereunder and (iii) notices, consents, approvals or
authorizations in connection with the sale of any securities under laws
affecting the offering and sale of securities generally. Except for documents
entered into in connection with Permitted Liens or Indebtedness permitted under
Section 4.10 of the Indenture, none of the Collateral, to the extent of such
Grantor's interest therein, is subject to any material agreement, indenture,
mortgage, deed of trust, equipment lease, instrument or other document to which
such Grantor is a party which may restrict or inhibit Secured Party's rights or
ability to sell or dispose of the Collateral, to the extent of such Grantor's
interest therein, or any part thereof after the occurrence of an Event of
Default (as defined herein);
(i) the Marks listed in Annex C (as such Annex may be amended
from time to time) include all the United States federal registrations or
applications filed in the United States Patent and Trademark Office by such
Grantor and said registered Marks are valid, subsisting and have not been
cancelled. Such Grantor represents and warrants that except as indicated on
Annex C, to the best of its knowledge, it has common law trademark rights in or
is licensed to use or not prohibited from using all material Marks that it uses.
Such Grantor further warrants that except as indicated on Annex C, it is aware
of no third party claim that any material aspect of such Grantor's present or
contemplated business operations infringes or will infringe such Grantor's Mark;
and
(j) such Grantor represents and warrants that it is the true
and lawful exclusive owner or licensee of all rights in the Patents listed in
Annex D hereto (as such Annex may be amended from time to time) and in the
Copyrights listed in Annex E hereto (as such Annex may be amended from time to
time), that said Patents include all the United States patents and applications
for United States patents that such Grantor owns and that said Copyrights
constitute all the United States copyrights registered in the United States
Copyright Office and applications for United States copyrights that it now uses
or practices under. Such Grantor further warrants that, except as indicated on
Annex D or Annex E, it is aware of no third party claim that any material aspect
of such Grantor's present or contemplated business operations infringes or will
infringe any Patent or any copyright.
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5. Covenants of Grantor. Each Grantor covenants and agrees
that:
(a) such Grantor will not move or permit to be moved the
Collateral, to the extent of its interest therein, or any portion thereof to any
location other than that set forth in or referred in Section 4(f) hereof or
locations established in compliance with Section 5(b) hereof without the prior
written notice to Secured Party and the prior filing of a financing statement
with the proper office and in the proper form, to the extent necessary or
appropriate, to perfect or continue the perfection (without loss of priority) of
the security interests created herein, which filing shall be satisfactory in
form, substance and location to Secured Party prior to such filing; provided,
however that (i) such Grantor shall be permitted to move assets pursuant to
Section 4.11 of the Indenture and (ii) the foregoing shall not apply to
intangible Collateral or any vehicles included in the Collateral;
(b) such Grantor will not voluntarily or involuntarily change
its name, identity, corporate structure, or location of its chief executive
office or any of its other places of business, unless in any such case (i) such
Grantor shall have delivered written notice to Secured Party, (ii) such Grantor
shall have executed and caused to be filed financing statements with the proper
offices and in the proper form, to the extent necessary or appropriate, to
perfect or continue the perfection (without loss of priority) of the security
interests created herein, which filing shall be satisfactory in form, substance
and location to Secured Party prior to such filing, and (iii) such Grantor shall
have delivered to Secured Party any other documents that may be required by
Secured Party in a form and substance reasonably satisfactory to Secured Party
to perfect or continue the perfection (without loss of priority) of the security
interest created herein.;
(c) such Grantor will promptly take any action which is
necessary or, in the judgment of Secured Party, desirable or appropriate to
perfect or to continue the perfection, priority and enforceability of Secured
Party's security interests in the Collateral, to the extent of such Grantor's
interests therein, to enable Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Collateral, to protect the Collateral
against the rights, claims or interests of third persons (other than holders of
Permitted Liens), or to effect or to assure further the purposes and provisions
of this Security Agreement, and will pay all costs incurred in connection
therewith. Without limiting the generality of the foregoing, such Grantor will:
(i) mark conspicuously each item of chattel paper included in the Collateral, to
the extent of its interests therein, with a legend, in form and substance
satisfactory to Secured Party, indicating that such chattel paper and other
contracts are subject to the security interests granted hereby; (ii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices as may be necessary or desirable, which Secured
Party may reasonably request in order to perfect and preserve the perfection and
priority of the security interests granted or purported to be granted hereby;
(iii) if any amounts due such Grantor shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to Secured Party such note
or instrument or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to Secured Party; (iv) if any Collateral, to the extent of such
Grantor's interests therein, is at any time in the possession or control of any
warehouseman, bailee, consignee or any of such Grantor's agents or processors,
such Grantor shall notify such warehouseman, bailee, consignee, agent or
processor of the security interests created or
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purported to be created hereby, shall cause such warehouseman, bailee,
consignee, agent or processor to execute any financing statements or other
documents which Secured Party may request, and, upon the request of Secured
Party after the occurrence and during the continuation of an Event of Default,
shall instruct such person to hold all such Collateral, to the extent of such
Grantor's interests therein, for Secured Party's account subject to Secured
Party's instructions; (v) deliver and pledge to Secured Party all securities and
instruments (other than checks received by such Grantor in the ordinary course
of business) constituting Collateral duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Secured Party; and (vi) at the request of Secured Party
following the occurrence of a default that, with the passage of time would
result in an Event of Default, deliver to Secured Party any and all certificates
of title, applications for title or similar evidence of ownership of all FF&E
and shall cause Secured Party to be named as lienholder on any such certificate
of title or other evidence of ownership; provided, however, that notwithstanding
anything to the contrary in this Security Agreement, the actions under clauses
(iii) and (v) shall not be required with respect to promissory notes, other
instruments, securities and chattel paper with a face or fair market value not
to exceed $1,000,000;
(d) without the prior written consent of Secured Party or as
otherwise expressly permitted by the Indenture, such 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, to the extent of its respective interests therein, except for
Permitted Liens, including without limitation encumbrances permitted by the
Indenture and the liens created by this Security Agreement, and such Grantor
will defend the Collateral, to the extent of its interests therein, 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. Such Grantor will not permit any Lien Notices to exist or be on file in
any public office with respect to all or any portion of the Collateral, to the
extent of such Grantor's interests therein, except, in each case, for Lien
Notices of holders of Permitted Liens including without limitation encumbrances
permitted by the Indenture or except as may have been filed by or for the
benefit of Secured Party relating to this Security Agreement or related
agreements. Such Grantor shall promptly notify Secured Party of any material
attachment or other legal process levied against any of the Collateral, to the
extent of its interests therein, and any information received by such Grantor
relative to the Collateral, which may in any material way affect the value of
the Collateral or the rights and remedies of Secured Party in respect thereto;
(e) without the prior written consent of Secured Party, such
Grantor will not sell, transfer, assign (by operation of law or otherwise),
exchange or otherwise dispose of all or any portion of the Collateral, to the
extent of its interests therein, or any interest therein, except as permitted by
the Indenture and the Collateral Documents. If the proceeds of any such
prohibited sale are notes, instruments, documents of title, letters of credit or
chattel paper, such proceeds shall be promptly delivered to Secured Party to be
held as Collateral hereunder (with all necessary or appropriate endorsements).
If the Collateral, to the extent of such Grantor's interests therein, or any
part thereof or interest therein, is sold, transferred, assigned, exchanged, or
otherwise disposed of in violation of these provisions, the security interest of
Secured Party shall continue in such Collateral or part thereof notwithstanding
such sale, transfer, assignment, exchange or other disposition, and such Grantor
will hold the
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proceeds thereof in a separate account for Secured Party's benefit. Such Grantor
will, at Secured Party's request, transfer such proceeds to Secured Party in
kind;
(f) Secured Party is hereby authorized to file one or more
financing statements or fixture filings, and continuations thereof and
amendments thereto, relative to all or any part of the Collateral, to the extent
of such Grantor's interests therein, without the signature of such Grantor where
permitted by law;
(g) except as expressly permitted by the Indenture, such
Grantor will not enter into any indenture, mortgage, deed of trust, contract,
undertaking, document, instrument or other agreement, except for the Indenture
and any documents, instruments or agreements related thereto or issue any
securities which may restrict or inhibit Secured Party's rights or ability to
sell or otherwise dispose of the Collateral or any part thereof after the
occurrence of an Event of Default;
(h) except as expressly permitted by the Indenture, such
Grantor will pay and discharge all taxes, assessments and governmental charges
or levies against the Collateral, to the extent of its interests therein, prior
to delinquency thereof and will keep the Collateral, to the extent of its
interests therein, free of all unpaid claims and charges (including claims for
labor, materials and supplies) whatsoever;
(i) such Grantor will keep and maintain the Collateral, to the
extent of its interests therein, in good 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, in such Grantor's judgment, necessary or desirable toward such end.
Such Grantor will 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 such Grantor's business in accordance with such Grantor's policies as then in
effect (provided that no changes are made to such Grantor's policies as in
effect on the date hereof that would be materially adverse to the interests of
the Secured Party), and will comply with all laws, statutes and regulations
pertaining to the use or ownership of the Collateral where failure to comply
would have a material adverse effect on the Collateral or Secured Party's
interest therein. Such Grantor will promptly notify Secured Party regarding any
loss or damage to any material portion of the Collateral or portion thereof;
(j) upon the occurrence and during the continuation of an
Event of Default, (i) such Grantor will take all actions directed by Secured
Party in Secured Party's sole and absolute discretion (subject to applicable
gaming laws), to create, preserve and enforce any liens or guaranties available
to secure or guaranty payments due such Grantor under any contracts or other
agreements with third parties, will not voluntarily permit any such payments to
become more than thirty (30) days delinquent and will in a timely manner record
and assign to Secured Party, to the extent and at the earliest time permitted by
law, any such liens and rights under such guaranties and (ii) such Grantor will
give Secured Party written notice of any payments due Grantor within five (5)
days after any such payments become thirty (30) days delinquent;
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(k) except as otherwise provided in this Section 5(k), such
Grantor shall continue to collect, at its own expense, all amounts due or to be
become due such Grantor under the Receivables. In connection with such
collections, such Grantor may take (and upon the occurrence and during the
continuation of an Event of Default, at Secured Party's direction, shall take)
such action as such Grantor may deem necessary or advisable to enforce
collection of the Receivables; provided, however, that such Grantor shall not
adjust, settle or compromise the amount or payment of any Receivable, or release
wholly or partly any debtor or obligor thereof, or allow any credit or discount
thereon, other than adjustments, settlements, or discounts that are in
accordance with such Grantor's policies as then in effect. Secured Party shall
have the right at any time after the occurrence and during the continuation of
an Event of Default to notify the debtors or obligors under any of the
Receivables of the assignment of such Receivables to Secured Party and to direct
such debtors or obligors to make payment of all amounts due or to become due to
such Grantor thereunder directly to Secured Party and, upon such notification
and at the expense of such Grantor, to enforce collection of any such
Receivables, and to adjust, settle or compromise the amount or payment thereof,
as Secured Party may deem appropriate in its sole discretion. After the
occurrence and during the continuation of an Event of Default (i) all amounts
and proceeds (including instruments) received by such Grantor in respect of the
Receivables shall be received in trust for the benefit of Secured Party
hereunder and, upon notice from Secured Party, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to Secured Party in the
same form as so received (with all necessary or appropriate endorsements) to be
held as cash collateral and applied as provided by the Indenture, and (ii) such
Grantor shall not adjust, settle or compromise the amount or payment of any
Receivable, or release wholly or partly any debtor or obligor thereof, or allow
any credit or discount thereon;
(l) upon Secured Party's request, such Grantor will promptly
deliver to Secured Party records and schedules that show the status, condition
and location of the Collateral, to the extent of its interests therein,
including reports reasonably requested by Secured Party, all in reasonable
detail; will promptly notify Secured Party in writing of any event, or change of
law, regulation, business practice, or business condition that may materially
adversely affect the value of the Collateral. Secured Party shall have the right
to review and verify such records, schedules, and notices, and such Grantor will
reimburse Secured Party for all costs incurred thereby;
(m) Secured Party shall have the right during regular business
hours and upon prior reasonable notice to such Grantor to enter into and upon
any premises where any of the Collateral or records with respect thereto are
located for the purpose of inspecting the same, performing any audit, making
copies of records, observing the use of any part of the Collateral, or otherwise
protecting its security interest in the Collateral. Such Grantor will hold and
preserve all records concerning the Receivables and all originals of all chattel
paper that evidences any Receivables;
(n) Secured Party shall have the right at any time while an
Event of Default exists, but shall not be obligated, to make any payments and do
any other acts Secured Party may deem necessary or desirable to protect its
security interest in the Collateral, including, without limitation, the right to
pay, purchase, contest or compromise any encumbrance, charge or lien (excluding
any Permitted Liens) applicable or purported to be applicable to any Collateral
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hereunder, and appear in and defend any action or proceeding purporting to
affect its security interest in and/or the value of any Collateral, and in
exercising any such powers or authority, the right to pay all expenses incurred
in connection therewith, including attorneys' fees. Such Grantor hereby agrees
that it shall be bound by any such payment made or incurred or act taken by
Secured Party hereunder and shall reimburse Secured Party for all payments made
and expenses incurred under this Security Agreement, which amounts shall be
secured under this Security Agreement. Secured Party shall have no obligation to
make any of the foregoing payments or perform any of the foregoing acts;
(o) subject to the provisions of Section 4(g) above, if such
Grantor shall become entitled to receive or shall receive any instrument,
whether as an addition to, in substitution of, or in exchange for any or all of
the Collateral, to the extent of its interests therein, or any part thereof, or
otherwise, such Grantor shall accept any such instruments as Secured Party's
agent, shall hold them in trust for Secured Party, and shall deliver them
forthwith to Secured Party in the exact form received, with such Grantor's
endorsement when necessary or appropriate, or accompanied by duly executed
instruments of transfer or assignment in blank or, if requested by Secured
Party, an additional pledge agreement or security agreement executed and
delivered by such Grantor, all in form and substance satisfactory to Secured
Party, to be held by Secured Party, subject to the terms hereof, as additional
Collateral to secure the obligations hereunder;
(p) Secured Party is hereby authorized to pay all reasonable
costs and expenses incurred in the exercise or enforcement of its rights
hereunder, including reasonable attorneys' fees, and, while an Event of Default
exists to apply any Collateral or proceeds thereof against such amounts, and
then to credit or use any further proceeds of the Collateral in accordance
herewith;
(q) Secured Party may take any actions permitted hereunder or
in connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters;
(r) such Grantor hereby agrees to take all actions necessary
to maintain Secured Party's first prior security interest (subject to Permitted
Liens) in all Marks, Patents and Copyrights, to the extent of its interests
therein (if any), and such Grantor further agrees to take all actions that it
deems necessary in its reasonable business judgment with respect to any material
Marks, Patents and Copyrights used in and material to its business, to (i)
preserve the value of all such Marks, Patents and Copyrights, to the extent of
its interests therein (if any), (ii) prosecute and defend such Marks, Patents
and Copyrights against infringement, and (iii) provide Secured Party with notice
of any material pertinent information regarding any such infringement, any
material actions with the United States Patent and Trademark Office and any
other information which could have a material adverse effect on such Marks,
Patents and Copyrights. In furtherance of the foregoing:
(i) such Grantor hereby agrees not to assign to a third party
any material Mark absent prior written approval of the Secured Party but such
Grantor may cease using any Mark which it determines is no longer necessary or
desirable in the conduct of its business or is no longer advisable to use;
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(ii) such Grantor shall, at its own expense, diligently
process all documents required by the Trademark Act of 1946, 15 U.S.C. ss.ss.
1051 et seq. to maintain trademark registration, including but not limited to
affidavits of use and applications for renewals of registration in the United
States Patent and Trademark Office for all of its registered Marks pursuant to
15 U.S.C. ss.ss. 1058(a), 1059 and 1065, and shall pay all fees and
disbursements in connection therewith; provided, that such Grantor shall not be
obligated to maintain any Mark in the event that such Grantor determines, in its
reasonable business judgment, that the maintenance of such Mark is no longer
necessary or desirable in the conduct of its business or is no longer advisable
to use. Such Grantor agrees to notify the Secured Party with respect to any
registered Mark that the affidavits of use or the renewal is being processed or
being abandoned, as the case may be;
(iii) if any Mark registration issues hereafter to such
Grantor as a result of any application now or hereafter pending before the
United States Patent and Trademark office such Grantor shall amend Annex C to
this Agreement, confirming the grant thereof hereunder;
(iv) at its own expense, such Grantor shall make timely
payment of all post-issuance fees required pursuant to 35 U.S.C. ss. 41 to
maintain in force rights under each significant Patent owned by such Grantor for
any inventions which it is then using;
(v) at its own expense, such Grantor shall diligently
prosecute all applications for significant Patents owned by such Grantor, if
any, listed in Annex D hereto for any inventions which it is then using;
(vi) within 30 days of acquisition of a Patent or Copyright,
or of filing of an application for a Patent or Copyright, such Grantor shall
deliver to the Secured Party a copy of said Patent or Copyright or such
application, as the case may be, with a grant of security as to such Patent or
Copyright, as the case may be, confirming the grant thereof hereunder; and
(vii) such Grantor hereby agrees not to divest itself of any
right under any significant Copyright absent prior written approval of the
Secured Party.
(s) This Security Agreement, as applied to FF&E subject to an
FF&E Financing Agreement (as defined below), shall be subordinated to the liens
of any FF&E Financing Agreements (or if required by an FF&E Financing Agreement,
it shall be released) and any future or further advances made thereunder and to
any modifications, renewals or extensions thereof to which the lien of this
Security Agreement attaches, provided, however, that any such FF&E Financing
Agreement shall encumber only that FF&E specifically subject to the FF&E
Financing Agreement. Such Grantor covenants and agrees to comply with all of the
terms and conditions set forth in any FF&E Financing Agreement covering FF&E in
which Secured Party has taken a lien hereunder. If, under any FF&E Financing
Agreement covering FF&E in which Secured Party has taken a lien hereunder, such
Grantor shall fail to make any payment of principal of or interest, except where
such Grantor is contesting such payment in
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good faith, then Secured Party 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 such FF&E Financing Agreement on such Grantor's part to be performed or
observed and any and all sums so expended by Secured Party shall be secured by
this Security Agreement and shall be repaid by such Grantor upon demand,
together with interest thereon at the interest rate on the Notes from the date
of advance. In furtherance of such subordination or release, as applicable,
Secured Party, upon receipt of an officer's certificate from such Grantor
certifying that the requirements of this Section 5(s)) have been satisfied,
shall execute, acknowledge and deliver to such Grantor, at such Grantor's
expense, any and all such evidence and documents necessary to evidence the
subordination or release of this Security Agreement in accordance with the
foregoing provisions of this Section 5(s). As used herein, "FF&E Financing
Agreement" shall mean (A) any financing (i) as to which the lender holds a
security interest in only the assets purchased, fabricated or leased by such
financing for the payment of principal, interest and other amounts in connection
therewith, (ii) which is permitted by the Indenture to be incurred and (iii) the
proceeds of which are used to acquire, construct or lease the FF&E subject to
such security interest, and (B) any refinancing or renewal of any financing
under clause (A).
6. Defaults and Remedies
(a) The occurrence of any "Event of Default" listed
in Section 6.01 of the Indenture shall constitute an Event of Default under this
Security Agreement.
(b) Upon the occurrence and continuation of an Event
of Default hereunder, each Grantor expressly covenants and agrees that Secured
Party may, at its option, subject to the terms of the Indenture, in addition to
other rights and remedies provided herein or otherwise available to it, without
notice to or demand upon such Grantor (except as otherwise required herein),
exercise any one or more of the rights as set forth as follows:
i) in accordance with the provisions in the
Indenture, declare all advances made by Secured Party to such Grantor hereunder,
all other indebtedness owed by such Grantor to Secured Party and all Secured
Obligations to be immediately due and payable, whereupon all unpaid principal
and interest on said advances and other indebtedness and Secured Obligations
shall become and be immediately due and payable;
ii) immediately take possession of any of the
Collateral wherever it may be found or require such Grantor to assemble the
Collateral, to the extent of its respective interests therein, or any part
thereof and make it available at one or more places as Secured Party may
designate, and to deliver possession of the Collateral, to the extent of its
interests therein, or any part thereof to Secured Party, who shall have full
right to enter upon any or all of such Grantor's places of business, premises
and property to exercise Secured Party's rights hereunder;
iii) exercise any or all of the rights and remedies
provided for by the Nevada Uniform Commercial Code, specifically including,
without limitation, the right to recover the attorneys' fees and other expenses
incurred by Secured Party in the enforcement
14
<PAGE>
of this Security Agreement or in connection with any Grantor's redemption of the
Collateral. Secured Party may exercise its rights under this Security Agreement
independently of any other collateral or guaranty that any Grantor may have
granted or provided to Secured Party in order to secure payment and performance
of the Secured Obligations, and Secured Party shall be under no obligation or
duty to foreclose or levy upon any other collateral given by such Grantor to
secure any Secured Obligation or to proceed against any guarantor or other
Grantor before enforcing its rights under this Security Agreement against such
Grantor;
iv) use, manage, operate and control the Collateral
and such Grantor's business and property to preserve the Collateral or its
value, or to pay the indebtedness secured hereunder, including, without
limitation, the rights to take possession of all of such Grantor's premises and
property, to exclude such Grantor and any third parties, whether or not claiming
under such Grantor, from such premises and property, to make repairs,
replacements, alterations, additions and improvements to the Collateral and to
dispose of all or any portion of the Collateral in the ordinary course of such
Grantor's business;
v) without notice (except as specified below), sell
the Collateral or any part thereof in one or more parcels at one or more public
or private sales, at any of Secured Party's offices or elsewhere, at such time
or times, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as shall be commercially reasonable. Such
Grantor acknowledges and agrees that, to the extent notice of sale shall be
required by law, at least fifteen (15) days' written notice to such Grantor of
the time and place of any public sale or of the date on or after which any
private sale is to be made shall constitute reasonable notification. Any public
sale shall be held at such time or times during ordinary business hours and at
such place or places as Secured Party may fix in the notice of such sale.
Notwithstanding the foregoing, Secured Party shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Secured Party
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 such Grantor, and such
Grantor hereby waives, to the full extent permitted by law, all rights of stay
and/or appraisal which such Grantor now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted. Such
Grantor also hereby waives any claims against Secured Party 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 Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree. The parties 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 Security Agreement are commercially reasonable;
vi) proceed by an action or actions at law or in
equity to recover the indebtedness secured hereunder or to foreclose this
Security Agreement and sell the Collateral, or any portion thereof, pursuant to
a judgment or decree of a court or courts of competent jurisdiction in any
manner permitted by law, or provided for herein;
15
<PAGE>
vii) in the event Secured Party recovers possession
of all or any part of the Collateral pursuant to a writ of possession or other
judicial process, whether prejudgment or otherwise, Secured Party may retain,
sell or otherwise dispose of such Collateral in accordance with this Security
Agreement or the Nevada Uniform Commercial Code, and following such retention,
sale or other disposition, Secured Party may voluntarily dismiss without
prejudice the judicial action in which such writ of possession or other judicial
process was issued. Such Grantor hereby consents to the voluntary dismissal
without prejudice by Secured Party of such judicial action, and such Grantor
further consents to the exoneration of any bond which Secured Party files in
such action;
viii) with respect to the sale of securities
constituting Collateral, to the extent Secured Party deems it advisable to do
so, in its sole discretion or as may be required by applicable law, restrict the
prospective bidders or purchasers to persons who in Secured Party'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, Secured Party shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
securities constituting Collateral so sold;
ix) Secured Party, in its sole discretion, if
permitted by law, may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for and purchase for its account the whole or any
part of the Collateral at any public sale or sale on any securities exchange or
other recognized market;
x) to the full extent provided 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. Such
Grantor shall irrevocably consent and shall be deemed to have hereby irrevocably
consented to the appointment thereof, and upon such appointment, such Grantor
shall immediately deliver possession of such Collateral, to the extent of its
interests therein, to the receiver. Such Grantor also irrevocably consents to
the entry of an order authorizing such receiver to invest upon interest any
funds held or received by the receiver in connection with such receivership.
Secured Party shall be entitled to such appointment as a matter of right, if it
shall so elect, without the giving of notice to any other party and without
regard to the adequacy of the security of the Collateral;
xi) enforce one or more remedies hereunder,
successively or concurrently, and such action shall not operate to estop or
prevent Secured Party from pursuing any other or further remedy which it may
have hereunder or by law, and any repossession or retaking or sale of the
Collateral pursuant to the terms hereof shall not operate to release such
Grantor until full and final payment of any deficiency has been made in cash.
Such Grantor shall reimburse Secured Party upon demand for, or Secured Party may
apply any proceeds of Collateral to, the costs and expenses (including
attorneys' fees, transfer taxes and any other charges) incurred by Secured Party
in connection with any sale, disposition, repair, replacement, alteration,
addition, improvement or retention of any Collateral hereunder;
16
<PAGE>
xii) upon the occurrence of a default hereunder, any
cash held by Secured Party as Collateral and all cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral may, in the discretion of Secured Party,
be held by Secured Party as collateral for and/or then or at any time thereafter
applied (including application to the payment of any costs, expenses,
indemnification and other amounts payable to Secured Party hereunder, which
amounts may be paid in whole or in part prior to the other obligations secured
hereby) in whole or in part by Secured Party against all or any part of the
obligations secured hereby in such order as Secured Party shall elect. Any
surplus of such cash or cash proceeds held by Secured Party and remaining after
payment in full of all the obligations secured hereby shall be paid over to such
Grantor, to the extent of its interests therein, or to whomever may be lawfully
entitled to receive such surplus or as a court of competent jurisdiction may
direct, provided, however, that in the event that all of the conditions to
termination of this Security Agreement under Section 7(l) shall have not been
fulfilled, such balance shall be held as additional Collateral hereunder and
applied from time to time to Secured Party's costs and expenses and as otherwise
provided hereunder until all such conditions shall have been fulfilled; and
xiii) effect an absolute assignment of all of such
Grantor's right, title and interest in and to each Mark (and the goodwill of the
business of such Grantor associated therewith), Patent and Copyright, to the
extent of such Grantor's interest therein.
7. Miscellaneous Provisions
(a) Notices. All notices, requests, approvals,
consents and other communications required or permitted to be made hereunder
shall, except as otherwise provided, be in writing and may be delivered
personally or sent by telegram, telecopy, facsimile, telex, first class mail or
overnight courier, postage prepaid, to the parties addressed as follows:
To Grantors: Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
17
<PAGE>
To Secured Party: Norwest Bank Minnesota, National Association
Corporate Trust Department
6th and Marquette
Minneapolis, Minnesota 55479-0069
Telecopier No.: (612) 667-9825
Attention: Raymond S. Haverstock
Such notices, requests and other communications sent as provided hereinabove
shall be effective when received by the addressee thereof, unless sent by
registered or certified mail, postage prepaid, in which case they shall be
effective exactly three (3) business days after being deposited in the United
States mail. The parties hereto may change their addresses by giving notice
thereof to the other parties hereto in conformity with this section.
(b) Headings. The various headings in this Security
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or any provision hereof.
(c) Amendments. This Security Agreement or any
provision hereof may be changed, waived, or terminated only by a statement in
writing signed by the party against which such change, waiver or termination is
sought to be enforced, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
(d) No Waiver. No failure on the part of Secured
Party to exercise, and no delay in exercising, and no course of dealing with
respect to, any power, privilege or right under this Security Agreement or any
related agreement shall operate as a waiver thereof nor shall any single or
partial exercise by Secured Party of any power, privilege or right under this
Security Agreement or any related agreement preclude any other or further
exercise thereof or the exercise of any other power, privilege or right. The
powers, privileges and rights in this Security Agreement are cumulative and are
not exclusive of any other remedies provided by law. No waiver by Secured Party
of any default hereunder shall be effective unless in writing, nor shall any
waiver operate as a waiver of any other default or of the same default on a
future occasion.
(e) Binding Agreement. All rights of Secured Party
hereunder shall inure to the benefit of its successors and assigns. No Grantor
shall assign any of its interest under this Security Agreement without the prior
written consent of Secured Party. Any purported assignment inconsistent with
this provision shall, at the option of Secured Party, be null and void.
(f) Entire Agreement. This Security Agreement,
together with any other agreement executed in connection herewith, is intended
by the parties as a final expression of their agreement and is intended as a
complete and exclusive statement of the terms and conditions thereof. Acceptance
of or acquiescence in a course of performance rendered under this Security
Agreement shall not be relevant to determine the meaning of this Security
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
18
<PAGE>
(g) Choice of Law. The existence, validity,
construction, operation and effect of any and all terms and provisions of this
Security Agreement shall be determined in accordance with and governed by the
substantive laws of the State of Nevada, without giving effect to its conflicts
of law principles.
(h) Severability. If any provision or obligation of
this Security Agreement 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.
(i) Survival of Provisions. All representations,
warranties and covenants of each Grantor contained herein shall survive the
execution and delivery of this Security Agreement, and shall terminate only upon
the termination of this Security Agreement pursuant to Subsection 7(l) hereof.
(j) Power of Attorney. Subject to applicable gaming
laws, each Grantor hereby irrevocably appoints Secured Party its
attorney-in-fact, which appointment is coupled with an interest, with full
authority in the place and stead of such Grantor and in the name of such
Grantor, Secured Party or otherwise, from time to time in Secured Party's
discretion (a) to execute and file financing and continuation statements (and
amendments thereto and modifications thereof) on behalf and in the name of such
Grantor with respect to the security interests granted or purported to be
granted hereby, (b) to take any action and to execute any instrument which
Secured Party may deem necessary or advisable to exercise its rights under
Section 5(p) hereunder, and (c) upon the occurrence and during the continuance
of an Event of Default, to take any action and to execute any instrument which
Secured Party may deem necessary or advisable to accomplish the purposes of this
Security Agreement, including, without limitation:
(i) to obtain and adjust insurance required to be
paid to Secured Party pursuant hereto;
(ii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(iii) to receive, endorse and collect any drafts or
other instruments, documents and chattel paper, in connection with clauses (i)
and (ii) above;
(iv) to sell, convey or otherwise transfer any item
of Collateral to any purchaser thereof; and
(v) to file any claims or take any action or
institute any proceedings which Secured Party may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Collateral.
19
<PAGE>
(k) Counterparts. This Security Agreement and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which shall together constitute one and the same agreement.
(l) Termination of Agreement. Subject to Sections
10.01 and 10.03 ------------------------ of the Indenture, this Security
Agreement and the security interest hereunder shall not terminate until (i) full
and final payment and performance of all indebtedness and obligations secured
hereunder or (ii) Legal Defeasance or Covenant Defeasance. At such time, Secured
Party shall reassign and redeliver to Grantors all of the Collateral hereunder
which has not been sold, disposed of, retained or applied by Secured Party in
accordance with the terms hereof, and execute and deliver to Grantors such
documents as Grantors may reasonably request to evidence such termination. Such
reassignment and redelivery shall be without warranty by or recourse to Secured
Party, and shall be at the expense of Grantors; provided, however, that this
Security Agreement (including all representations, warranties and covenants
contained herein) shall continue to be effective or be reinstated, as the case
may be, if at any time any amount received by Secured Party in respect of the
indebtedness and obligations secured hereunder is rescinded or must otherwise be
restored or returned by Secured Party upon or in connection with the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Grantor or any
other person or upon or in connection with the appointment of any intervenor or
conservator of, or trustee or similar official for, any Grantor or any other
person or any substantial part of its assets, or otherwise, all as though such
payments had not been made.
(m) Release of Collateral. Notwithstanding anything
to the contrary contained herein upon a release of any part of the Collateral
pursuant to Section 10.03 of the Indenture, the Secured Party shall execute,
deliver or acknowledge any necessary or proper instruments of termination,
satisfaction or release to evidence such release; provided, however, that no
part of the Collateral will be released except as expressly set forth in Section
10.03 of the Indenture.
(n) Successors and Assigns. This Security Agreement
shall inure to the benefit of Secured Party, its successors and assigns,
including the assignees of any Secured Obligation or of the benefit of any
Secured Obligation and shall bind the heirs, executors, administrators,
successors and assigns of each Grantor. This Security Agreement is assignable by
Secured Party with respect to all or any portion of the Secured Obligations, and
when so assigned, each Grantor shall be liable to the assignees under this
Security Agreement without in any manner affecting the liability of such Grantor
hereunder with respect to any of the Secured Obligations retained by Secured
Party. Each reference herein to powers or rights of Secured Party shall also be
deemed a reference to the same power or right of such assignees, to the extent
of the interest assigned to them.
(o) Interaction with Financing Documents.
(i) Incorporation by Reference. All terms, covenants,
conditions, provisions and requirements of the Indenture are incorporated by
reference in this Security Agreement.
20
<PAGE>
(ii) Conflicts with Indenture. Notwithstanding any
other provision of this Security Agreement, the terms and provisions of this
Security 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 Secured
Party's actions with regard to a particular set of facts, each Grantor shall be
entitled to the same cure periods and notice periods, and Secured Party 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 Security
Agreement. In the event of any conflict or inconsistency between the provisions
of this Security Agreement 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.
(iii) Conflicts with the Deed of Trust. In the event
of any conflict or inconsistency between the provisions of this Security
Agreement (as they apply to the Collateral) and those of the Deed of Trust (as
they apply to the Collateral), including, without limitation, any conflicts or
inconsistencies in any definitions herein or therein, the provisions or
definitions of this Security Agreement shall govern.
(p) Limitation by Law. All rights, remedies and
powers in this Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of the Nevada Gaming Control
Act and the rules and regulations promulgated thereunder, and all of the
provisions of this Agreement are intended to be subject to all applicable
mandatory provisions of such laws, rules and regulations which may be
controlling and to be limited to the extent necessary so that they will not
render this Agreement invalid or unenforceable, in whole or in part.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed and delivered by their respective
undersigned duly authorized officers as of the date first above written.
GRANTORS:
RIVIERA HOLDINGS CORPORATION,
a Nevada corporation
By:___________________________________
Name:_________________________________
Title:________________________________
RIVIERA OPERATING CORPORATION,
a Nevada corporation
By:___________________________________
Name:_________________________________
Title:________________________________
RIVIERA GAMING MANAGEMENT, INC.,
a Nevada corporation
By:___________________________________
Name:_________________________________
Title:________________________________
RIVIERA GAMING MANAGEMENT OF
COLORADO, INC., a Colorado corporation
By:___________________________________
Name:_________________________________
Title:________________________________
S-1
<PAGE>
RIVIERA GAMING MANAGEMENT-ELSINORE,
INC., a Nevada corporation
By:___________________________________
Name:_________________________________
Title:________________________________
S-2
<PAGE>
SECURED PARTY:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:___________________________________
Name:_________________________________
Title:________________________________
S-3
<PAGE>
ANNEX A
SCHEDULE OF FICTITIOUS NAMES
Riviera
Riv
Riviera Hotel
Riviera Hotel and Casino
Black Hawk
A-1
<PAGE>
ANNEX B
PLACES OF BUSINESS
B-1
<PAGE>
ANNEX C
TRADEMARKS AND APPLICATIONS
A. SCHEDULE OF PENDING APPLICATIONS FOR U.S. TRADEMARK
REGISTRATIONS ON THE BASIS OF USE IN COMMERCE UNDER 17 U.S.C.
ss. 1051(a)
Trademark Serial No. Owner
SPLASH & Design 75/280,775 Riviera Operating Corporation
$40 OF SLOT PLAY FOR $20 75/207,453 Riviera Operating Corporation
$40 FOR $20 75/194,182 Riviera Operating Corporation
RIVIERA 74/646,349 Riviera Operating Corporation
RIVIERA 74/645,950 Riviera Operating Corporation
B. SCHEDULE OF PENDING APPLICATIONS FOR U.S. TRADEMARK
REGISTRATIONS ON THE BASIS OF INTENT TO USE THE MARK IN
COMMERCE UNDER 17 USC ss. 1051(b)
Trademark Serial No. Owner
BONUS 21 PLUS 75/152,286 Riviera Operating Corporation
C. SCHEDULE OF U.S. TRADEMARK REGISTRATIONS
Trademark Registration No. Owner
THE STAR OF LAS VEGAS 1,588,239 Riviera Holdings Corporation
GAMBLER'S SPREE 1,579,483 Riviera Holdings Corporation
PULL FOR THE GOLD 1,575,681 Riviera Holdings Corporation
SPLASH 1,964,935 Riviera Holdings Corporation
C-1
<PAGE>
ANNEX D
SCHEDULE OF PATENTS AND APPLICATIONS
None
D-1
<PAGE>
ANNEX E
SCHEDULE OF COPYRIGHTS AND APPLICATIONS
None
E-1
<PAGE>
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (the "Stock Pledge Agreement"),
dated as of August 13, 1997, is executed by RIVIERA HOLDINGS CORPORATION, a
Nevada corporation ("Shareholder"), in favor of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as collateral agent ("Agent") for the holders of those certain
$175,000,000 10% First Mortgage Notes due 2004 (the "Notes", and the holders of
such, the "Noteholders") under that certain Indenture dated as of August 13,
1997 (together with all Subsidiary Guarantees executed in connection therewith,
the "Indenture") by and among Agent, as trustee, Shareholder, as borrower, and
Riviera Operating Corporation, a Nevada corporation ("ROC"), Riviera Gaming
Management, Inc., a Nevada corporation, Riviera Gaming Management-Elsinore,
Inc., a Nevada corporation, and Riviera Gaming Management of Colorado, Inc., a
Colorado corporation, as guarantors.
RECITALS
A. Shareholder owns 100% of the outstanding stock of ROC.
B. The Noteholders are willing to purchase the Notes for the purposes of,
among other things, providing funds to the Shareholder to repay existing
indebtedness and to fund the development of Shareholder's proposed construction
project in Black Hawk, Colorado, the development of certain projects at its
property in Las Vegas, Nevada and for the Shareholder's general business
purposes.
C. Shareholder will derive substantial benefit from the purchase of the
Notes by the Noteholders.
D. It is a condition precedent to purchasing the Notes that Shareholder
pledge 100% of its interest in ROC, for the benefit of the Noteholders, as
security for the Obligations (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Shareholder hereby agrees with Agent as follows:
1. Definitions and Interpretation. When used in this Stock Pledge
Agreement, the following terms shall have the following respective meanings:
<PAGE>
"Collateral" shall have the meaning given to that
term in Paragraph 2 hereof.
"Nevada Gaming Authorities" shall mean the Nevada
Gaming Commission, the Nevada State Gaming Control
Board and any other agency with authority to regulate
any gaming operation (or proposed gaming operation)
owned, managed or operated by the Shareholder or ROC.
"Obligations" shall mean (i) the payment by
Shareholder to the Noteholders or Agent of all
indebtedness now or hereafter owed to Agent by
Shareholder in connection with the Notes, the
Indenture, this Stock Pledge Agreement and the other
Collateral Documents executed by Shareholder (the
"Riviera Financing"), whether at stated maturity, by
acceleration or otherwise, including, without
limitation, Shareholder's obligations under the
Indenture, the Notes, the Collateral Documents or any
related documents securing the obligations
thereunder, together with any interest thereon, fees,
expenses, Liquidated Damages, indemnification or
otherwise, in connection therewith and extensions,
modifications and renewals thereof, (ii) the
performance by Shareholder of all other obligations
and the discharge of all other liabilities of
Shareholder to Agent of every kind and character
arising from the Riviera Financing, whether direct or
indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, joint,
several and joint and several, and whether created
under this Stock Pledge Agreement, the other
Collateral Documents or any other agreement to which
Shareholder and Agent are parties, (iii) any and all
sums advanced by Agent in order to preserve the
Collateral or preserve Agent's security interest in
the Collateral (or the priority thereof) and (iv) the
expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing
on the Collateral, of any proceeding for the
collection or enforcement of any indebtedness,
obligations or liabilities of Agent referred to
above, or of any exercise by Agent of its rights
hereunder, together with reasonable attorneys' fees
and disbursements and court costs.
"ROC" means Riviera Operating Corporation, a Nevada
corporation.
"Stock" shall mean all shares, options, warrants,
interests, participations or other equivalents
(regardless of how designated) of or in ROC, whether
voting or nonvoting, including, without limitation,
common stock, preferred stock, or any other equity
ownership interest in ROC.
2
<PAGE>
"UCC" shall mean the Uniform Commercial Code as the
same may, from time to time, be in effect in the
State of Nevada.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Indenture shall have the respective meanings given to those terms
in the Indenture, and all terms defined in the UCC shall have the respective
meanings given to those terms in the UCC. To the extent the meanings given
herein are inconsistent with those given in the UCC, the meanings given herein
shall govern.
2. Pledge. As security for the Obligations, subject to the receipt of all
necessary gaming approvals from the Nevada Gaming Authorities, Shareholder
hereby pledges and assigns to Agent, for the equal and ratable benefit of the
Noteholders and grants to Agent, for the equal and ratable benefit of the
Noteholders, a security interest in all right, title and interests of
Shareholder in and to the Stock, whether now owned or hereafter acquired
(collectively, the "Shareholder's Stock"), including without limitation the
Shareholder's Stock described in Exhibit "A" hereto, and all proceeds thereof,
including, without limitation, dividends and other property received and
receivable by Shareholder in connection with the Shareholder's Stock other than
dividends and other distributions made by ROC which are expressly permitted by
the Indenture, if any (the Shareholder's Stock and such proceeds to be referred
to herein collectively as the "Collateral").
3. Representations and Warranties. Shareholder represents and warrants to
Agent, for the benefit of the Noteholders, that: (a) subject to the receipt of
all necessary gaming approvals from the Nevada Gaming Authorities, the
execution, delivery and performance by Shareholder of this Stock Pledge
Agreement are within the power of Shareholder and have been duly authorized by
all necessary actions on the part of Shareholder; (b) this Stock Pledge
Agreement has been duly executed and delivered by Shareholder and constitutes a
legal, valid and binding obligation of Shareholder, enforceable against it in
accordance with its terms, except as limited by gaming, bankruptcy, insolvency
or other laws of general application relating to or affecting the enforcement of
creditors' rights generally and general principles of equity; (c) the execution,
delivery and performance of this Stock Pledge Agreement do not (i) subject to
the receipt of all necessary gaming approvals from the Nevada Gaming
Authorities, violate any requirement of law, regulation or statute, (ii) violate
any provision of, or result in the breach or the acceleration of or entitle any
Person to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, any indenture, mortgage, lien, lease, agreement,
license, instrument, guaranty, or other document to which Shareholder is a party
or by which Shareholder or its property is bound, or (iii) result in the
creation or imposition of any lien upon any property, asset or revenue of
Shareholder (except such liens as may be created in favor of Agent, for the
benefit of the Noteholders, pursuant to this Stock Pledge Agreement); (d) except
as set forth herein, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution, delivery and performance by the
Shareholder of this Stock Pledge Agreement, except such consents,
3
<PAGE>
approvals, orders, authorizations, registrations, declarations and filings that
are so required and which have been obtained and are in full force and effect;
(e) Shareholder is the beneficial and, in the case of capital stock, record
owner of the Collateral (or, in the case of after-acquired Collateral, at the
time Shareholder acquires rights in the Collateral, will be the beneficial and,
in the case of capital stock, record owner thereof) and no other Person has (or,
in the case of after-acquired Collateral, at the time Shareholder acquires
rights therein, will have) any right, title, claim or interest (by way of lien
or otherwise) in, against or to the Collateral, other than "Permitted Liens" (as
such term is defined in the Indenture); (f) all of the Collateral which are
shares of capital stock are and such future Collateral will be validly issued,
fully paid and nonassessable securities of ROC; (g) the Collateral includes all
of the issued and outstanding shares of capital stock of ROC; (h) except for the
Collateral, there are no outstanding options, warrants or other rights to
subscribe for or purchase voting or non-voting capital stock of ROC, nor any
notes, bonds, debentures or other evidences of indebtedness that (1) are at any
time convertible into capital stock of ROC, or (2) have or at any time would
have voting rights with respect to ROC; (i) upon transfer to Agent of all
Collateral consisting of securities and continuous maintenance of possession
thereof, Agent (on behalf of the Noteholders) will have a first priority
perfected security interest in such Collateral, and (or in the case of all other
after-acquired Collateral, at the time Shareholder acquires rights therein, will
have) a first priority perfected security interest in all other Collateral,
subject to Permitted Liens; (j) all information heretofore, herein or hereafter
supplied in writing to Agent, taken as a whole, by or on behalf of Shareholder
with respect to the Collateral does not contain and will not contain any untrue
statements of a material fact and does not omit and will not omit to state any
material fact necessary to make any information so supplied, in light of the
circumstances under which they were supplied, not misleading; and (k)
Shareholder's principal place of business is 2901 Las Vegas Boulevard South, Las
Vegas, Nevada.
4. Covenants. Shareholder hereby agrees: (a) to perform all acts requested
by Agent that are necessary to maintain, preserve, protect and perfect the
Collateral, the lien granted to Agent hereunder and the first priority of such
lien, subject only to Permitted Liens; (b) subject to the receipt of all
necessary gaming approvals from the Nevada Gaming Authorities, to promptly
deliver to Agent all originals of certificates and other documents, instruments
and agreements evidencing the Collateral which are now held or hereafter
received by Shareholder, together with such blank stock powers executed by
Shareholder as Agent may request; (c) to procure, execute and deliver from time
to time any endorsements, assignments, financing statements and other documents,
instruments and agreements and take other actions deemed necessary, as Agent may
request, to perfect, maintain and protect its lien hereunder and the priority
thereof; (d) to defend its title to or Agent's interest in the Collateral; (e)
to keep the Collateral free of all liens except those created hereunder and the
Permitted Liens; (f) not to vote to enable, or take any other action to permit,
ROC to issue any Stock except for Stock permitted to be issued by the Indenture;
(g) to pay, and to save Agent and the Noteholders harmless from, any and all
liabilities with respect to, or resulting from any delay by Shareholder in
paying, any and all stamps, excise, sales or other similar taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions
4
<PAGE>
contemplated by this Stock Pledge Agreement; and (h) not to, without the written
consent of the Agent pursuant to or otherwise expressly permitted by the
Indenture, sell, dispose of or transfer (directly or indirectly) or covenant to
sell, dispose of or transfer (directly or indirectly) the Collateral.
5. Dividends and Voting Rights Prior to Default. Until an Event of Default
(as defined in the Indenture) shall have occurred and be continuing and Agent
shall have given notice to Shareholder of Agent's intent to exercise its rights
pursuant to Subparagraph 6(b) below, Shareholder shall be permitted (a) to
receive all dividends paid on Shareholder's Stock (other than dividends paid in
additional Stock unless such additional Stock is pledged to Agent, for the
benefit of the Noteholders, pursuant to this Stock Pledge Agreement) which are
permitted by the Indenture and (b) to exercise all voting and corporate rights
with respect to the Stock; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which would be reasonably likely
to impair the Collateral or result in any violation of any provision of the
Indenture.
6. Default and Remedies.
(a) Event of Default. The occurrence (whether as a result of acts or
omissions by ROC or any other Person) of an Event of Default under the
Indenture (subject to such cure rights as may be expressly set forth in
such Indenture), whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body, shall constitute
an "Event of Default" hereunder.
(b) Dividends and Voting Rights. Upon the occurrence and during the
continuance of any Event of Default hereunder and subject to the receipt of
all necessary gaming approvals from the Nevada Gaming Authorities, Agent
may, upon notice to Shareholder, (i) notify ROC to pay all dividends on
Shareholder's Stock to Agent, for the benefit of the Noteholders, receive
and collect all such dividends and make application thereof to the
Obligations in the order set forth in Section 6.10 of the Indenture, and
(ii) register all of Shareholder's Stock in the name of Agent or its
nominee, for the benefit of the Noteholders, and Agent or its nominee may
thereafter exercise (A) all voting, corporate and other rights pertaining
to Shareholder's Stock at any meeting of shareholders of ROC or otherwise
and (B) any and all rights of conversion, exchange, subscription and any
other rights, privileges or options pertaining to Shareholder's Stock as if
it were the absolute owner thereof (including, without limitation, after
Agent has commenced to exercise remedies (or such remedies are deemed
commenced) under the Indenture, the right to exchange at its discretion any
and all of Shareholder's Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the
corporate structure of ROC, or upon the exercise by Shareholder or Agent of
any right, privilege or option pertaining to Shareholder's Stock,
5
<PAGE>
and in connection therewith, the right to deposit and deliver any and all
of Shareholder's Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it
may determine), all without liability except to account for property
actually received by it, but Agent shall have no duty to Shareholder to
exercise any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing. Promptly after the waiver or
cure of the Event of Default giving rise to Agent's election under this
Paragraph 6(b), Agent shall notify Shareholder and ROC of such waiver or
cure and for so long as no subsequent continuing Event of Default exists,
Shareholder shall have all rights as a shareholder it had prior to the
occurrence of such Event of Default, the Shareholder's Stock shall again be
registered in the name of Shareholder and ROC shall again make all payments
and distributions with respect to Shareholder's Stock to Shareholder.
(c) Additional Remedies. Subject to the terms of the Indenture, upon
the occurrence and during the continuance of an Event of Default and
subject to the receipt of all necessary gaming approvals from the Nevada
Gaming Authorities, Agent may exercise, in addition to all other rights and
remedies granted in this Stock Pledge Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, any and
all rights and remedies at law, including, without limitation, all rights
and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, Agent may, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind to
or upon Shareholder, ROC or any other Person (except notice of time and
place of sale and any other notice required by law and any notice referred
to below or in the Indenture) forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith
sell, assign, give 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,
in the over-the-counter market, at any exchange, broker's board or office
of Agent or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem commercially reasonable, for
cash or on credit or for future delivery without assumption of any credit
risk. Agent shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in Shareholder, which right or equity is hereby
waived and released. Agent shall apply any proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs
and expenses of every kind incurred in respect thereof or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of Agent hereunder, including, without limitation,
attorneys' fees and disbursements of counsel to Agent, to the payment in
whole or in part of the Obligations, in such order as specified by the
Indenture, and only after such application and after the payment by Agent
of any other amount required by any provision of law, need Agent account
for the surplus, if any, to
6
<PAGE>
Shareholder. To the extent permitted by applicable law, Shareholder waives
all claims, damages and demands it may acquire against Agent arising out of
the exercise by it of any rights hereunder except as may arise solely from
Agent's negligence or willful misconduct. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 15 business days
before such sale or other disposition. Shareholder further waives and
agrees not to assert any rights or privileges which it may acquire under
paragraphs (a) through (e) of Section 9112 of the UCC.
7. Limitation on Duties Regarding Collateral. Agent'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 or otherwise, shall be to deal
with it in the same manner as Agent deals with similar securities and property
for its own account and as would be dealt by a prudent person in the reasonable
administration of its affairs. Neither Agent nor any of its directors, officers,
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
Shareholder or otherwise. Notwithstanding the foregoing, nothing contained
herein shall be deemed a waiver or release of the provisions of Section 7.01 of
the Indenture.
8. Nevada Gaming Law. This agreement will be governed by the Gaming Control
Act. Without limiting the generality of the foregoing, the parties agree that:
(a) the pledge of the Stock provided for herein will be subject to the
approval of the Nevada Gaming Authorities (as defined herein);
(b) Notwithstanding approval by the Nevada Gaming Authorities pursuant to
paragraph (a), other approvals of the Gaming Authorities may, and in some cases
will, be required before certain transactions relating to this Agreement may
occur, including but not limited to the following:
(i) any re-registration or action similar to re-registration of the
Stock (or any distribution in respect of, in addition to, in substitution
of, or in exchange for, the Stock or any part thereof);
(ii) any foreclosure, sale, transfer or other disposition of the
Stock; and
(iii) pursuant to Regulation 8.050 of the Nevada Gaming Commission,
the payment or receipt of any money or other thing of value constituting
any part of the consideration for the transfer or acquisition of the Stock,
except that such consideration may be placed in escrow pending the
necessary approvals; and
7
<PAGE>
(c) the Agent, through an agent or representative, shall retain all
evidence of ownership in the Stock or any distribution of additional securities
in respect of, in addition to, in substitution of, or in exchange for, such
Stock or any part thereof, in the State of Nevada. Such agent or representative
shall be located in and authorized to do business in the State of Nevada, and
designated to the Nevada State Gaming Control Board, and shall make all
certificates evidencing stock available for inspection by agents of the Nevada
Gaming Authorities immediately upon request during normal business hours.
9. Termination. This Stock Pledge Agreement shall terminate upon the
satisfaction of all Obligations or upon Legal Defeasance or Covenant Defeasance,
and Agent shall promptly thereafter deliver the Stock certificates held by it
hereunder to Shareholder and, at Shareholder's expense, execute and deliver to
Shareholder such documents as Shareholder shall reasonably request to evidence
such termination.
10. Power of Attorney. Shareholder hereby appoints and constitutes Agent as
Shareholder's attorney-in-fact for purposes of, at any time while an Event of
Default exists, (a) collecting any Collateral, (b) conveying any item of
Collateral to any purchaser thereof, and (c) making any payments or taking any
acts under Paragraph 6 hereof. Subject to the receipt of all necessary gaming
approvals from the Nevada Gaming Authorities, Agent's authority hereunder shall
include, without limitation, upon the occurrence and during the continuance of
an Event of Default, the authority to endorse and negotiate, for Agent's own
account, any checks or instruments in the name of Agent, to execute or receipt
for any document, to transfer title to any item of Collateral, and to take any
other actions necessary or incident to the powers granted to Agent in this Stock
Pledge Agreement. This power of attorney is coupled with an interest and is
irrevocable by Shareholder.
11. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands of other communications to or upon the parties hereto
shall be addressed to the parties at the respective addresses indicated
below or at such other address as either party hereto may designate by
written notice to the other party, and shall be deemed to have been given
(i) in the case of notice by letter, three (3) days after deposited in the
mails registered and return receipt requested, or (ii) in the case of
notice given by telecommunication, when sent:
8
<PAGE>
Agent: Norwest Bank Minnesota, National Association
Corporate Trust Department
6th and Marquette
Minneapolis, Minnesota 55479-0069
Telecopier No.: (612) 667-9825
Attention: Raymond Haverstock
Shareholder: Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
ROC: Riviera Operating Corporation
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
(b) Nonwaiver. No failure or delay on Agent's part in exercising any
right hereunder shall operate as a waiver thereof or of any other right nor
shall any single or partial exercise of any such right preclude any other
further exercise thereof or of any other right.
(c) Amendments and Waivers. This Stock Pledge Agreement may not be
amended or modified, nor may any of its terms be waived, except by written
instruments signed by the party or parties against which enforcement
thereof is sought.
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<PAGE>
Each waiver or consent under any provision hereof shall be effective only
in the specific instances for the purpose for which given.
(d) Assignment. This Stock Pledge Agreement shall be binding upon
inure to the benefit of Agent, the Noteholders and Shareholder and their
respective successors and assigns; provided, however, that Shareholder may
not assign its rights or delegate its duties hereunder without the prior
written consent of Agent. To the extent permitted in the Indenture and
subject to the receipt of all necessary gaming approvals from the Nevada
Gaming Authorities, Agent may assign or otherwise transfer all or any part
of its interest under this Stock Pledge Agreement, upon notice to
Shareholder. Agent may disclose this Stock Pledge Agreement and any
financial or other information relating to Shareholder to any potential
assignee or participant.
(e) Cumulative Rights, etc. The rights, powers and remedies of Agent
under this Stock Pledge Agreement shall be in addition to all rights,
powers and remedies given to Agent by virtue of the Indenture, any
applicable governmental rule or regulation or any other agreement, all of
which rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Agent's lien in the
Collateral. Shareholder waives any right to require Agent to proceed
against any Person or to exhaust any Collateral or to pursue any remedy in
Agent's power.
(f) Governing Law. This Stock Pledge Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada.
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<PAGE>
IN WITNESS WHEREOF, Shareholder has caused this Stock Pledge and Security
Agreement to be executed in favor of Agent as of the day and year first above
written.
SHAREHOLDER:
RIVIERA HOLDINGS CORPORATION, a Nevada
corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
S-1
<PAGE>
ACKNOWLEDGMENT AND
CONSENT OF ROC
Riviera Operating Corporation, a Nevada corporation ("ROC"), hereby
acknowledges receipt of a copy of the above Stock Pledge and Security Agreement,
agrees to be bound by and comply with the terms thereof, including, without
limitation, Paragraph 6 thereof and agrees to perform all covenants and
obligations therein which, by their terms are to be performed by ROC.
RIVIERA HOLDINGS CORPORATION, a Nevada
corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
S-2
<PAGE>
EXHIBIT "A"
DESCRIPTION OF SHAREHOLDER'S STOCK
<TABLE>
<CAPTION>
Percentage of
Issuer Class of Stock Certificate No. No. of Shares Outstanding Shares
- ------ -------------- --------------- ------------- ------------------
<S> <C> <C> <C> <C>
Riviera Operating Common 1 1,000 100%
Corporation
</TABLE>
<PAGE>
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (the "Stock Pledge Agreement"),
dated as of August 13, 1997, is executed by RIVIERA OPERATING CORPORATION, a
Nevada corporation ("Shareholder"), in favor of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as collateral agent ("Agent") for the holders of those certain
$175,000,000 10% First Mortgage Notes due 2004 (the "Notes", and the holders of
such, the "Noteholders") under that certain Indenture dated as of August 13,
1997 (together with all Subsidiary Guarantees executed in connection therewith,
the "Indenture") by and among Agent, as trustee, Riviera Holdings Corporation,
as borrower (the "Borrower"), and Shareholder, Riviera Gaming Management, Inc.,
a Nevada corporation ("RGM"), Riviera Gaming Management-Elsinore, Inc., a Nevada
corporation, and Riviera Gaming Management of Colorado, Inc. a Colorado
corporation, as guarantors.
RECITALS
A. Shareholder owns 100% of the outstanding stock of RGM.
B. The Noteholders are willing to purchase the Notes for the purposes of,
among other things, providing funds to the Borrower to repay existing
indebtedness and to fund the development of Shareholder's proposed construction
project in Black Hawk, Colorado, the development of certain projects at its
property in Las Vegas, Nevada and for the Shareholder's general business
purposes.
C. Shareholder will derive substantial benefit from the purchase of the
Notes by the Noteholders.
D. It is a condition precedent to purchasing the Notes that Shareholder
pledge 100% of its interest in RGM, for the benefit of the Noteholders, as
security for the Obligations (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Shareholder hereby agrees with Agent as follows:
1. Definitions and Interpretation. When used in this Stock Pledge
Agreement, the following terms shall have the following respective meanings:
<PAGE>
"Collateral" shall have the meaning given to that
term in Paragraph 2 hereof.
"Nevada Gaming Authorities" shall mean the Nevada
Gaming Commission, the Nevada State Gaming Control
Board and any other agency with authority to regulate
any gaming operation (or proposed gaming operation)
owned, managed or operated by the Shareholder or RGM.
"Obligations" shall mean (i) the payment by
Shareholder to the Noteholders or Agent of all
indebtedness now or hereafter owed to Agent by
Shareholder in connection with the Notes, the
Indenture, this Stock Pledge Agreement and the other
Collateral Documents executed by Shareholder (the
"Riviera Financing"), whether at stated maturity, by
acceleration or otherwise, including, without
limitation, Shareholder's obligations under the
Indenture, the Notes, the Collateral Documents or any
related documents securing the obligations
thereunder, together with any interest thereon, fees,
expenses, Liquidated Damages, indemnification or
otherwise, in connection therewith and extensions,
modifications and renewals thereof, (ii) the
performance by Shareholder of all other obligations
and the discharge of all other liabilities of
Shareholder to Agent of every kind and character
arising from the Riviera Financing, whether direct or
indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, joint,
several and joint and several, and whether created
under this Stock Pledge Agreement, the other
Collateral Documents or any other agreement to which
Shareholder and Agent are parties, (iii) any and all
sums advanced by Agent in order to preserve the
Collateral or preserve Agent's security interest in
the Collateral (or the priority thereof) and (iv) the
expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing
on the Collateral, of any proceeding for the
collection or enforcement of any indebtedness,
obligations or liabilities of Agent referred to
above, or of any exercise by Agent of its rights
hereunder, together with reasonable attorneys' fees
and disbursements and court costs.
"RGM" means Riviera Gaming Management, Inc., a Nevada
corporation.
"Stock" shall mean all shares, options, warrants,
interests, participations or other equivalents
(regardless of how designated) of or in RGM, whether
voting or nonvoting, including, without limitation,
common stock, preferred stock, or any other equity
ownership interest in RGM.
2
<PAGE>
"UCC" shall mean the Uniform Commercial Code as the
same may, from time to time, be in effect in the
State of Nevada.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Indenture shall have the respective meanings given to those terms
in the Indenture, and all terms defined in the UCC shall have the respective
meanings given to those terms in the UCC. To the extent the meanings given
herein are inconsistent with those given in the UCC, the meanings given herein
shall govern. Shareholder has previously received a copy of the Indenture.
2. Pledge. As security for the Obligations, subject to the receipt of all
necessary gaming approvals from the Nevada Gaming Authorities, Shareholder
hereby pledges and assigns to Agent, for the equal and ratable benefit of the
Noteholders and grants to Agent, for the equal and ratable benefit of the
Noteholders, a security interest in all right, title and interests of
Shareholder in and to the Stock, whether now owned or hereafter acquired
(collectively, the "Shareholder's Stock"), including without limitation the
Shareholder's Stock described in Exhibit "A" hereto, and all proceeds thereof,
including, without limitation, dividends and other property received and
receivable by Shareholder in connection with the Shareholder's Stock other than
dividends and other distributions made by RGM which are expressly permitted by
the Indenture, if any (the Shareholder's Stock and such proceeds to be referred
to herein collectively as the "Collateral").
3. Representations and Warranties. Shareholder represents and warrants to
Agent, for the benefit of the Noteholders, that: (a) subject to the receipt of
all necessary gaming approvals from the Nevada Gaming Authorities, the
execution, delivery and performance by Shareholder of this Stock Pledge
Agreement are within the power of Shareholder and have been duly authorized by
all necessary actions on the part of Shareholder; (b) this Stock Pledge
Agreement has been duly executed and delivered by Shareholder and constitutes a
legal, valid and binding obligation of Shareholder, enforceable against it in
accordance with its terms, except as limited by gaming, bankruptcy, insolvency
or other laws of general application relating to or affecting the enforcement of
creditors' rights generally and general principles of equity; (c) the execution,
delivery and performance of this Stock Pledge Agreement do not (i) subject to
the receipt of all necessary gaming approvals from the Nevada Gaming
Authorities, violate any requirement of law, regulation or statute, (ii) violate
any provision of, or result in the breach or the acceleration of or entitle any
Person to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, any indenture, mortgage, lien, lease, agreement,
license, instrument, guaranty, or other document to which Shareholder is a party
or by which Shareholder or its property is bound, or (iii) result in the
creation or imposition of any lien upon any property, asset or revenue of
Shareholder (except such liens as may be created in favor of Agent, for the
benefit of the Noteholders, pursuant to this Stock Pledge Agreement); (d) except
as set forth herein, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution, delivery and
3
<PAGE>
performance by the Shareholder of this Stock Pledge Agreement, except such
consents, approvals, orders, authorizations, registrations, declarations and
filings that are so required and which have been obtained and are in full force
and effect; (e) Shareholder is the beneficial and, in the case of capital stock,
record owner of the Collateral (or, in the case of after-acquired Collateral, at
the time Shareholder acquires rights in the Collateral, will be the beneficial
and, in the case of capital stock, record owner thereof) and no other Person has
(or, in the case of after-acquired Collateral, at the time Shareholder acquires
rights therein, will have) any right, title, claim or interest (by way of lien
or otherwise) in, against or to the Collateral, other than "Permitted Liens" (as
such term is defined in the Indenture); (f) all of the Collateral which are
shares of capital stock are and such future Collateral will be validly issued,
fully paid and nonassessable securities of RGM; (g) the Collateral includes all
of the issued and outstanding shares of capital stock of RGM; (h) except for the
Collateral, there are no outstanding options, warrants or other rights to
subscribe for or purchase voting or non-voting capital stock of RGM, nor any
notes, bonds, debentures or other evidences of indebtedness that (1) are at any
time convertible into capital stock of RGM, or (2) have or at any time would
have voting rights with respect to RGM; (i) upon transfer to Agent of all
Collateral consisting of securities and continuous maintenance of possession
thereof, Agent (on behalf of the Noteholders) will have a first priority
perfected security interest in such Collateral, and (or in the case of all other
after-acquired Collateral, at the time Shareholder acquires rights therein, will
have) a first priority perfected security interest in all other Collateral,
subject to Permitted Liens; (j) all information heretofore, herein or hereafter
supplied in writing to Agent, taken as a whole, by or on behalf of Shareholder
with respect to the Collateral does not contain and will not contain any untrue
statements of a material fact and does not omit and will not omit to state any
material fact necessary to make any information so supplied, in light of the
circumstances under which they were supplied, not misleading; and (k)
Shareholder's principal place of business is 2901 Las Vegas Boulevard South, Las
Vegas, Nevada.
4. Covenants. Shareholder hereby agrees: (a) to perform all acts requested
by Agent that are necessary to maintain, preserve, protect and perfect the
Collateral, the lien granted to Agent hereunder and the first priority of such
lien, subject only to Permitted Liens; (b) subject to the receipt of all
necessary gaming approvals from the Nevada Gaming Authorities, to promptly
deliver to Agent all originals of certificates and other documents, instruments
and agreements evidencing the Collateral which are now held or hereafter
received by Shareholder, together with such blank stock powers executed by
Shareholder as Agent may request; (c) to procure, execute and deliver from time
to time any endorsements, assignments, financing statements and other documents,
instruments and agreements and take other actions deemed necessary, as Agent may
request, to perfect, maintain and protect its lien hereunder and the priority
thereof; (d) to defend its title to or Agent's interest in the Collateral; (e)
to keep the Collateral free of all liens except those created hereunder and the
Permitted Liens; (f) not to vote to enable, or take any other action to permit,
RGM to issue any Stock except for Stock permitted to be issued by the Indenture;
(g) to pay, and to save Agent and the Noteholders harmless from, any and all
liabilities with respect to, or resulting from any delay by Shareholder in
paying, any and all stamps, excise, sales or other similar taxes which may be
payable or determined to be
4
<PAGE>
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Stock Pledge Agreement; and (h) not to,
without the written consent of the Agent pursuant to or otherwise expressly
permitted by the Indenture, sell, dispose of or transfer (directly or
indirectly) or covenant to sell, dispose of or transfer (directly or indirectly)
the Collateral.
5. Dividends and Voting Rights Prior to Default. Until an Event of Default
(as defined in the Indenture) shall have occurred and be continuing and Agent
shall have given notice to Shareholder of Agent's intent to exercise its rights
pursuant to Subparagraph 6(b) below, Shareholder shall be permitted (a) to
receive all dividends paid on Shareholder's Stock (other than dividends paid in
additional Stock unless such additional Stock is pledged to Agent, for the
benefit of the Noteholders, pursuant to this Stock Pledge Agreement) which are
permitted by the Indenture and (b) to exercise all voting and corporate rights
with respect to the Stock; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which would be reasonably likely
to impair the Collateral or result in any violation of any provision of the
Indenture.
6. Default and Remedies.
(a) Event of Default. The occurrence (whether as a result of acts or
omissions by Borrower, RGM or any other Person) of an Event of Default
under the Indenture (subject to such cure rights as may be expressly set
forth in such Indenture), whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body, shall
constitute an "Event of Default" hereunder.
(b) Dividends and Voting Rights. Upon the occurrence and during the
continuance of any Event of Default hereunder and subject to the receipt of
all necessary gaming approvals from the Nevada Gaming Authorities, Agent
may, upon notice to Shareholder, (i) notify RGM to pay all dividends on
Shareholder's Stock to Agent, for the benefit of the Noteholders, receive
and collect all such dividends and make application thereof to the
Obligations in the order set forth in Section 6.10 of the Indenture, and
(ii) register all of Shareholder's Stock in the name of Agent or its
nominee, for the benefit of the Noteholders, and Agent or its nominee may
thereafter exercise (A) all voting, corporate and other rights pertaining
to Shareholder's Stock at any meeting of shareholders of RGM or otherwise
and (B) any and all rights of conversion, exchange, subscription and any
other rights, privileges or options pertaining to Shareholder's Stock as if
it were the absolute owner thereof (including, without limitation, after
Agent has commenced to exercise remedies (or such remedies are deemed
commenced) under the Indenture, the right to exchange at its discretion any
and all of Shareholder's Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the
corporate structure of RGM, or upon the exercise by
5
<PAGE>
Shareholder or Agent of any right, privilege or option pertaining to
Shareholder's Stock, and in connection therewith, the right to deposit and
deliver any and all of Shareholder's Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as it may determine), all without liability except to account
for property actually received by it, but Agent shall have no duty to
Shareholder to exercise any such right, privilege or option and shall not
be responsible for any failure to do so or delay in so doing. Promptly
after the waiver or cure of the Event of Default giving rise to Agent's
election under this Paragraph 6(b), Agent shall notify Shareholder and RGM
of such waiver or cure and for so long as no subsequent continuing Event of
Default exists, Shareholder shall have all rights as a shareholder it had
prior to the occurrence of such Event of Default, the Shareholder's Stock
shall again be registered in the name of Shareholder and RGM shall again
make all payments and distributions with respect to Shareholder's Stock to
Shareholder.
(c) Additional Remedies. Subject to the terms of the Indenture, upon
the occurrence and during the continuance of an Event of Default and
subject to the receipt of all necessary gaming approvals from the Nevada
Gaming Authorities, Agent may exercise, in addition to all other rights and
remedies granted in this Stock Pledge Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, any and
all rights and remedies at law, including, without limitation, all rights
and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, Agent may, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind to
or upon Shareholder, RGM or any other Person (except notice of time and
place of sale and any other notice required by law and any notice referred
to below or in the Indenture) forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith
sell, assign, give 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,
in the over-the-counter market, at any exchange, broker's board or office
of Agent or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem commercially reasonable, for
cash or on credit or for future delivery without assumption of any credit
risk. Agent shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in Shareholder, which right or equity is hereby
waived and released. Agent shall apply any proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs
and expenses of every kind incurred in respect thereof or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of Agent hereunder, including, without limitation,
attorneys' fees and disbursements of counsel to Agent, to the payment in
whole or in part of the Obligations, in such order as specified by the
Indenture, and only after such application and after the payment by Agent
of any other
6
<PAGE>
amount required by any provision of law, need Agent account for the
surplus, if any, to Shareholder. To the extent permitted by applicable law,
Shareholder waives all claims, damages and demands it may acquire against
Agent arising out of the exercise by it of any rights hereunder except as
may arise solely from Agent's negligence or willful misconduct. If any
notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given
at least 15 business days before such sale or other disposition.
Shareholder further waives and agrees not to assert any rights or
privileges which it may acquire under paragraphs (a) through (e) of Section
9112 of the UCC.
7. Authorized Actions. Shareholder acknowledges that the Obligations
hereunder may be supplemented, augmented and otherwise increased as a result of
changes in the underlying obligations of Shareholder or Borrower under the Notes
or the Indenture or the other Collateral Documents. In that regard but subject
to the receipt of all necessary gaming approvals from the Nevada Gaming
Authorities, Shareholder authorizes Agent, in its discretion, without notice to
Shareholder, irrespective of any change in the financial condition of Borrower,
RGM or Shareholder since the date hereof, and without affecting or impairing in
any way the liability of Shareholder hereunder, from time to time to (a) create
new Obligations, and, either before or after receipt of notice of revocation,
renew, compromise, extend, accelerate or otherwise change the time for payment
or performance of, or otherwise change the terms of the Obligations or any part
thereof, including increase or decrease of the rate of interest thereon; (b)
take and hold additional security for the payment or performance of the
Obligations and exchange, enforce, waive or release any such additional
security; (c) apply such additional security and direct the order or manner of
sale thereof; (d) purchase such additional security at public or private sale;
(e) upon the occurrence and during the continuance of an Event of Default, make
any payments and do any other acts Agent shall deem necessary to protect the
Noteholders' security interest in the Collateral, including, without limitation,
pay, purchase, contest or compromise any encumbrance, charge or lien (other than
a Permitted Lien) which in the judgment of Agent appears to be prior to or
superior to the security interest granted hereunder, and appear in and defend
any action or proceeding purporting to affect its security interest in and/or
the value of the Collateral, and in exercising any such powers or authority, pay
all expenses incurred in connection therewith, including attorneys' fees, and
Shareholder hereby agrees it shall be bound by any such payment made or act
taken by Agent hereunder and shall reimburse Agent for all payments made and
expenses incurred, which amounts shall be secured under this Stock Pledge
Agreement; provided, however, that Agent shall have no obligation to make any of
the foregoing payments or perform any of the foregoing acts; (f) otherwise
exercise any right or remedy it may have against Borrower, Shareholder, RGM or
any security, including, without limitation, the right to foreclose upon any
such security by judicial or nonjudicial sale; (g) settle, compromise with,
release or substitute any one or more makers, endorsers or guarantors of the
Obligations; and (h) assign the Obligations or this Stock Pledge Agreement in
whole or in part (subject to the terms and conditions of the Indenture).
7
<PAGE>
8. Waivers. Shareholder waives (a) any right to require Agent or the
Noteholders to (i) proceed against Borrower or RGM, (ii) proceed against or
exhaust any security received from Borrower or RGM or (iii) pursue any other
remedy in Agent's power whatsoever; (b) any defense resulting from the absence,
impairment or loss of any right of reimbursement or subrogation or other right
or remedy of Shareholder against Borrower or RGM or any security, whether
resulting from an election by Agent to foreclose upon security by nonjudicial
sale, or otherwise; (c) any setoff or counterclaim of Borrower or RGM or any
defense which results from any disability or other defense of Borrower or RGM or
the cessation or stay of enforcement from any cause whatsoever of the liability
of Borrower or RGM; (d) any right to exoneration of sureties which would
otherwise be applicable; (e) except to the extent prohibited by NRS 40.495, any
right of subrogation or reimbursement and any right of contribution, and right
to enforce any remedy which Agent now has or may hereafter have against Borrower
or RGM, and any benefit of, and any right to participate in, any security now or
hereafter received by Agent until the Obligations have been paid in full; (f)
all presentments, demands for performance, notices of non-performance, protests,
notice of dishonor, and notices of acceptance of the Stock Pledge Agreement and
of the existence, creation or incurrence of new or additional Obligations; (g)
the benefit of any statute of limitations (to the extent permitted by law) and
(h) any right to be informed by Agent of the financial condition of Borrower or
RGM or any change therein or any other circumstances bearing upon the risk of
nonpayment or nonperformance of the Obligations. Shareholder has the ability and
assumes the responsibility for keeping informed of the financial condition of
Borrower or RGM and of other circumstances affecting such nonpayment and
nonperformance risks.
9. Limitation on Duties Regarding Collateral. Agent'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 or otherwise, shall be to deal
with it in the same manner as Agent deals with similar securities and property
for its own account and as would be dealt by a prudent person in the reasonable
administration of its affairs. Neither Agent nor any of its directors, officers,
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
Shareholder or otherwise. Notwithstanding the foregoing, nothing contained
herein shall be deemed a waiver or release of the provisions of Section 7.01 of
the Indenture.
10. Nevada Gaming Law. This agreement will be governed by the Gaming
Control Act. Without limiting the generality of the foregoing, the parties agree
that:
(a) the pledge of the Stock provided for herein will be subject to the
approval of the Nevada Gaming Authorities (as defined herein);
(b) Notwithstanding approval by the Nevada Gaming Authorities pursuant to
paragraph (a), other approvals of the Nevada Gaming Authorities may, and in some
cases will,
8
<PAGE>
be required before certain transactions relating to this Agreement may occur,
including but not limited to the following:
(i) any re-registration or action similar to re-registration of the
Stock (or any distribution in respect of, in addition to, in substitution
of, or in exchange for, the Stock or any part thereof);
(ii) any foreclosure, sale, transfer or other disposition of the
Stock; and
(iii) pursuant to Regulation 8.050 of the Nevada Gaming Commission,
the payment or receipt of any money or other thing of value constituting
any part of the consideration for the transfer or acquisition of the Stock,
except that such consideration may be placed in escrow pending the
necessary approvals; and
(c) the Agent, through an agent or representative, shall retain all
evidence of ownership in the Stock or any distribution of additional securities
in respect of, in addition to, in substitution of, or in exchange for, such
Stock or any part thereof, in the State of Nevada. Such agent or representative
shall be located in and authorized to do business in the State of Nevada, and
designated to the Nevada State Gaming Control Board, and shall make all
certificates evidencing stock available for inspection by agents of the Nevada
Gaming Authorities immediately upon request during normal business hours.
11. Termination. This Stock Pledge Agreement shall terminate upon the
satisfaction of all Obligations or upon Legal Defeasance or Covenant Defeasance,
and Agent shall promptly thereafter deliver the Stock certificates held by it
hereunder to Shareholder and, at Shareholder's expense, execute and deliver to
Shareholder such documents as Shareholder shall reasonably request to evidence
such termination.
12. Power of Attorney. Shareholder hereby appoints and constitutes Agent as
Shareholder's attorney-in-fact for purposes of, at any time while an Event of
Default exists, (a) collecting any Collateral, (b) conveying any item of
Collateral to any purchaser thereof, and (c) making any payments or taking any
acts under Paragraph 7 hereof. Subject to the receipt of all necessary gaming
approvals from the Nevada Gaming Authorities, Agent's authority hereunder shall
include, without limitation, upon the occurrence and during the continuance of
an Event of Default, the authority to endorse and negotiate, for Agent's own
account, any checks or instruments in the name of Agent, to execute or receipt
for any document, to transfer title to any item of Collateral, and to take any
other actions necessary or incident to the powers granted to Agent in this Stock
Pledge Agreement. This power of attorney is coupled with an interest and is
irrevocable by Shareholder.
9
<PAGE>
13. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands of other communications to or upon the parties hereto
shall be addressed to the parties at the respective addresses indicated
below or at such other address as either party hereto may designate by
written notice to the other party, and shall be deemed to have been given
(i) in the case of notice by letter, three (3) days after deposited in the
mails registered and return receipt requested, or (ii) in the case of
notice given by telecommunication, when sent:
Agent: Norwest Bank Minnesota, National Association
Corporate Trust Department
6th and Marquette
Minneapolis, Minnesota 55479-0069
Telecopier No.: (612) 667-9825
Attention: Raymond Haverstock
Shareholder: Riviera Operating Corporation
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
RGM: Riviera Gaming Management, Inc.
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
10
<PAGE>
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
(b) Nonwaiver. No failure or delay on Agent's part in exercising any
right hereunder shall operate as a waiver thereof or of any other right nor
shall any single or partial exercise of any such right preclude any other
further exercise thereof or of any other right.
(c) Amendments and Waivers. This Stock Pledge Agreement may not be
amended or modified, nor may any of its terms be waived, except by written
instruments signed by the party or parties against which enforcement
thereof is sought. Each waiver or consent under any provision hereof shall
be effective only in the specific instances for the purpose for which
given.
(d) Assignment. This Stock Pledge Agreement shall be binding upon
inure to the benefit of Agent, the Noteholders and Shareholder and their
respective successors and assigns; provided, however, that Shareholder may
not assign its rights or delegate its duties hereunder without the prior
written consent of Agent. To the extent permitted in the Indenture and
subject to the receipt of all necessary gaming approvals from the Nevada
Gaming Authorities, Agent may assign or otherwise transfer all or any part
of its interest under this Stock Pledge Agreement, upon notice to
Shareholder. Agent may disclose this Stock Pledge Agreement and any
financial or other information relating to Shareholder to any potential
assignee or participant.
(e) Cumulative Rights, etc. The rights, powers and remedies of Agent
under this Stock Pledge Agreement shall be in addition to all rights,
powers and remedies given to Agent by virtue of the Indenture, any
applicable governmental rule or regulation or any other agreement, all of
which rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Agent's lien in the
Collateral. Shareholder waives any right to require Agent to proceed
against any Person or to exhaust any Collateral or to pursue any remedy in
Agent's power.
(f) Governing Law. This Stock Pledge Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada.
11
<PAGE>
IN WITNESS WHEREOF, Shareholder has caused this Stock Pledge and Security
Agreement to be executed in favor of Agent as of the day and year first above
written.
SHAREHOLDER:
RIVIERA OPERATING CORPORATION, a Nevada
corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
S-1
<PAGE>
ACKNOWLEDGMENT AND
CONSENT OF RGM
Riviera Gaming Management, Inc., a Nevada corporation ("RGM"), hereby
acknowledges receipt of a copy of the above Stock Pledge and Security Agreement,
agrees to be bound by and comply with the terms thereof, including, without
limitation, Paragraph 6 thereof and agrees to perform all covenants and
obligations therein which, by their terms are to be performed by RGM.
RIVIERA GAMING MANAGEMENT, INC.,
a Nevada corporation
By:_____________________________
Name:___________________________
Title:__________________________
S-2
<PAGE>
EXHIBIT "A"
DESCRIPTION OF SHAREHOLDER'S STOCK
<TABLE>
<CAPTION>
Percentage of
Issuer Class of Stock Certificate No. of Shares Outstanding Shares
- ------ -------------- ----------- ------------- ------------------
<S> <C> <C> <C> <C>
Riviera Gaming Common 1 10,000 100%
Management,
Inc.
</TABLE>
<PAGE>
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (the "Stock Pledge
Agreement"), dated as of August 13, 1997, is executed by RIVIERA GAMING
MANAGEMENT, INC., a Nevada corporation ("Shareholder"), in favor of NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, as collateral agent ("Agent") for the holders
of those certain $175,000,000 10% First Mortgage Notes due 2004 (the "Notes",
and the holders of such, the "Noteholders") under that certain Indenture dated
as of August 13, 1997 (together with all Subsidiary Guarantees executed in
connection therewith, the "Indenture") by and among Agent, as trustee, Riviera
Holdings Corporation, as borrower (the "Borrower"), and Riviera Operating
Corporation, a Nevada corporation, Shareholder, Riviera Gaming
Management-Elsinore, Inc., a Nevada corporation ("RGM-Elsinore"), and Riviera
Gaming Management of Colorado, Inc. a Colorado corporation ("RGM-Colorado"), as
guarantors.
RECITALS
A. Shareholder owns 100% of the outstanding stock of
RGM-Elsinore and RGM-Colorado.
B. The Noteholders are willing to purchase the Notes for the
purposes of, among other things, providing funds to the Borrower to repay
existing indebtedness and to fund the development of Shareholder's proposed
construction project in Black Hawk, Colorado, the development of certain
projects at its property in Las Vegas, Nevada and for the Shareholder's general
business purposes.
C. Shareholder will derive substantial benefit from the
purchase of the Notes by the Noteholders.
D. It is a condition precedent to purchasing the Notes that
Shareholder pledge 100% of its interest in RGM-Elsinore and RGM-Colorado, for
the benefit of the Noteholders, as security for the Obligations (as defined
below).
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Shareholder hereby agrees with Agent as follows:
<PAGE>
1. Definitions and Interpretation. When used in this Stock
Pledge Agreement, the following terms shall have the following respective
meanings:
"Collateral" shall have the meaning given to that
term in Paragraph 2 hereof.
"Gaming Authorities" shall mean the Nevada Gaming
Commission, the Nevada State Gaming Control Board,
the Colorado Limited Gaming Control Commission and
any other agency with authority to regulate any
gaming operation (or proposed gaming operation)
owned, managed or operated by the Shareholder,
RGM-Elsinore or RGM-
Colorado.
"Obligations" shall mean (i) the payment by
Shareholder to the Noteholders or Agent of all
indebtedness now or hereafter owed to Agent by
Shareholder in connection with the Notes, the
Indenture, this Stock Pledge Agreement and the other
Collateral Documents executed by Shareholder (the
"Riviera Financing"), whether at stated maturity, by
acceleration or otherwise, including, without
limitation, Shareholder's obligations under the
Indenture, the Notes, the Collateral Documents or any
related documents securing the obligations
thereunder, together with any interest thereon, fees,
expenses, Liquidated Damages, indemnification or
otherwise, in connection therewith and extensions,
modifications and renewals thereof, (ii) the
performance by Shareholder of all other obligations
and the discharge of all other liabilities of
Shareholder to Agent of every kind and character
arising from the Riviera Financing, whether direct or
indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, joint,
several and joint and several, and whether created
under this Stock Pledge Agreement, the other
Collateral Documents or any other agreement to which
Shareholder and Agent are parties, (iii) any and all
sums advanced by Agent in order to preserve the
Collateral or preserve Agent's security interest in
the Collateral (or the priority thereof) and (iv) the
expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing
on the Collateral, of any proceeding for the
collection or enforcement of any indebtedness,
obligations or liabilities of Agent referred to
above, or of any exercise by Agent of its rights
hereunder, together with reasonable attorneys' fees
and disbursements and court costs.
"RGM-Colorado" means Riviera Gaming Management of
Colorado, Inc., a Colorado corporation.
2
<PAGE>
"RGM-Elsinore" means Riviera Gaming Management-
Elsinore, Inc., a Nevada corporation.
"Stock" shall mean all shares, options, warrants,
interests, participations or other equivalents
(regardless of how designated) of or in RGM- Elsinore
and RGM-Colorado, whether voting or nonvoting,
including, without limitation, common stock,
preferred stock, or any other equity ownership
interest in RGM-Elsinore and RGM-Colorado.
"UCC" shall mean the Uniform Commercial Code as the
same may, from time to time, be in effect in the
State of Nevada.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Indenture shall have the respective meanings given to those terms
in the Indenture, and all terms defined in the UCC shall have the respective
meanings given to those terms in the UCC. To the extent the meanings given
herein are inconsistent with those given in the UCC, the meanings given herein
shall govern. Shareholder has previously received a copy of the Indenture.
2. Pledge. As security for the Obligations, subject to the
receipt of all necessary gaming approvals from the Gaming Authorities,
Shareholder hereby pledges and assigns to Agent, for the equal and ratable
benefit of the Noteholders and grants to Agent, for the equal and ratable
benefit of the Noteholders, a security interest in all right, title and
interests of Shareholder in and to the Stock, whether now owned or hereafter
acquired (collectively, the "Shareholder's Stock"), including without limitation
the Shareholder's Stock described in Exhibit "A" hereto, and all proceeds
thereof, including, without limitation, dividends and other property received
and receivable by Shareholder in connection with the Shareholder's Stock other
than dividends and other distributions made by RGM-Elsinore and/or RGM-Colorado
which are expressly permitted by the Indenture, if any (the Shareholder's Stock
and such proceeds to be referred to herein collectively as the "Collateral").
3. Representations and Warranties. Shareholder represents and
warrants to Agent, for the benefit of the Noteholders, that: (a) subject to the
receipt of all necessary gaming approvals from the Gaming Authorities, the
execution, delivery and performance by Shareholder of this Stock Pledge
Agreement are within the power of Shareholder and have been duly authorized by
all necessary actions on the part of Shareholder; (b) this Stock Pledge
Agreement has been duly executed and delivered by Shareholder and constitutes a
legal, valid and binding obligation of Shareholder, enforceable against it in
accordance with its terms, except as limited by gaming, bankruptcy, insolvency
or other laws of general application relating to or affecting the enforcement of
creditors' rights generally and general principles of equity; (c) the execution,
delivery and performance of this Stock Pledge
3
<PAGE>
Agreement do not (i) subject to the receipt of all necessary gaming approvals
from the Gaming Authorities, violate any requirement of law, regulation or
statute, (ii) violate any provision of, or result in the breach or the
acceleration of or entitle any Person to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, any indenture, mortgage,
lien, lease, agreement, license, instrument, guaranty, or other document to
which Shareholder is a party or by which Shareholder or its property is bound,
or (iii) result in the creation or imposition of any lien upon any property,
asset or revenue of Shareholder (except such liens as may be created in favor of
Agent, for the benefit of the Noteholders, pursuant to this Stock Pledge
Agreement); (d) except as set forth herein, no consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
authority or other Person (including, without limitation, the shareholders of
any Person) is required in connection with the execution, delivery and
performance by the Shareholder of this Stock Pledge Agreement, except such
consents, approvals, orders, authorizations, registrations, declarations and
filings that are so required and which have been obtained and are in full force
and effect; (e) Shareholder is the beneficial and, in the case of capital stock,
record owner of the Collateral (or, in the case of after-acquired Collateral, at
the time Shareholder acquires rights in the Collateral, will be the beneficial
and, in the case of capital stock, record owner thereof) and no other Person has
(or, in the case of after-acquired Collateral, at the time Shareholder acquires
rights therein, will have) any right, title, claim or interest (by way of lien
or otherwise) in, against or to the Collateral, other than "Permitted Liens" (as
such term is defined in the Indenture); (f) all of the Collateral which are
shares of capital stock are and such future Collateral will be validly issued,
fully paid and nonassessable securities of RGM-Elsinore and RGM-Colorado; (g)
the Collateral includes all of the issued and outstanding shares of capital
stock of RGM-Elsinore and RGM-Colorado; (h) except for the Collateral, there are
no outstanding options, warrants or other rights to subscribe for or purchase
voting or non-voting capital stock of RGM-Elsinore or RGM-Colorado, nor any
notes, bonds, debentures or other evidences of indebtedness that (1) are at any
time convertible into capital stock of RGM-Elsinore or RGM-Colorado, or (2) have
or at any time would have voting rights with respect to RGM- Elsinore or
RGM-Colorado; (i) upon transfer to Agent of all Collateral consisting of
securities and continuous maintenance of possession thereof, Agent (on behalf of
the Noteholders) will have a first priority perfected security interest in such
Collateral, and (or in the case of all other after-acquired Collateral, at the
time Shareholder acquires rights therein, will have) a first priority perfected
security interest in all other Collateral, subject to Permitted Liens; (j) all
information heretofore, herein or hereafter supplied in writing to Agent, taken
as a whole, by or on behalf of Shareholder with respect to the Collateral does
not contain and will not contain any untrue statements of a material fact and
does not omit and will not omit to state any material fact necessary to make any
information so supplied, in light of the circumstances under which they were
supplied, not misleading; and (k) Shareholder's principal place of business is
2901 Las Vegas Boulevard South, Las Vegas, Nevada.
4
<PAGE>
4. Covenants. Shareholder hereby agrees: (a) to perform all
acts requested by Agent that are necessary to maintain, preserve, protect and
perfect the Collateral, the lien granted to Agent hereunder and the first
priority of such lien, subject only to Permitted Liens; (b) subject to the
receipt of all necessary gaming approvals from the Nevada Gaming Authorities, to
promptly deliver to Agent all originals of certificates and other documents,
instruments and agreements evidencing the Collateral which are now held or
hereafter received by Shareholder, together with such blank stock powers
executed by Shareholder as Agent may request; (c) to procure, execute and
deliver from time to time any endorsements, assignments, financing statements
and other documents, instruments and agreements and take other actions deemed
necessary, as Agent may request, to perfect, maintain and protect its lien
hereunder and the priority thereof; (d) to defend its title to or Agent's
interest in the Collateral; (e) to keep the Collateral free of all liens except
those created hereunder and the Permitted Liens; (f) not to vote to enable, or
take any other action to permit, RGM-Elsinore or RGM-Colorado to issue any Stock
except for Stock permitted to be issued by the Indenture; (g) to pay, and to
save Agent and the Noteholders harmless from, any and all liabilities with
respect to, or resulting from any delay by Shareholder in paying, any and all
stamps, excise, sales or other similar taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Stock Pledge Agreement; and (h) not to,
without the written consent of the Agent pursuant to or otherwise expressly
permitted by the Indenture, sell, dispose of or transfer (directly or
indirectly) or covenant to sell, dispose of or transfer (directly or indirectly)
the Collateral.
5. Dividends and Voting Rights Prior to Default. Until an
Event of Default (as defined in the Indenture) shall have occurred and be
continuing and Agent shall have given notice to Shareholder of Agent's intent to
exercise its rights pursuant to Subparagraph 6(b) below, Shareholder shall be
permitted (a) to receive all dividends paid on Shareholder's Stock (other than
dividends paid in additional Stock unless such additional Stock is pledged to
Agent, for the benefit of the Noteholders, pursuant to this Stock Pledge
Agreement) which are permitted by the Indenture and (b) to exercise all voting
and corporate rights with respect to the Stock; provided, however, that no vote
shall be cast or corporate right exercised or other action taken which would be
reasonably likely to impair the Collateral or result in any violation of any
provision of the Indenture.
6. Default and Remedies.
(a) Event of Default. The occurrence (whether as a
result of acts or omissions by Borrower, RGM-Elsinore or RGM-Colorado
or any other Person) of an Event of Default under the Indenture
(subject to such cure rights as may be expressly set forth in such
Indenture), whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order,
rule or
5
<PAGE>
regulation of any administrative or governmental body, shall constitute
an "Event of Default" hereunder.
(b) Dividends and Voting Rights. Upon the occurrence
and during the continuance of any Event of Default hereunder and
subject to the receipt of all necessary gaming approvals from the
Gaming Authorities, Agent may, upon notice to Shareholder, (i) notify
RGM-Elsinore and RGM-Colorado to pay all dividends on Shareholder's
Stock to Agent, for the benefit of the Noteholders, receive and collect
all such dividends and make application thereof to the Obligations in
the order set forth in Section 6.10 of the Indenture, and (ii) register
all of Shareholder's Stock in the name of Agent or its nominee, for the
benefit of the Noteholders, and Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to
Shareholder's Stock at any meeting of shareholders of RGM-Elsinore or
RGM-Colorado or otherwise and (B) any and all rights of conversion,
exchange, subscription and any other rights, privileges or options
pertaining to Shareholder's Stock as if it were the absolute owner
thereof (including, without limitation, after Agent has commenced to
exercise remedies (or such remedies are deemed commenced) under the
Indenture, the right to exchange at its discretion any and all of
Shareholder's Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure
of RGM- Elsinore or RGM-Colorado, or upon the exercise by Shareholder
or Agent of any right, privilege or option pertaining to Shareholder's
Stock, and in connection therewith, the right to deposit and deliver
any and all of Shareholder's Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine), all without liability except to
account for property actually received by it, but Agent shall have no
duty to Shareholder to exercise any such right, privilege or option and
shall not be responsible for any failure to do so or delay in so doing.
Promptly after the waiver or cure of the Event of Default giving rise
to Agent's election under this Paragraph 6(b), Agent shall notify
Shareholder and RGM-Elsinore and RGM-Colorado of such waiver or cure
and for so long as no subsequent continuing Event of Default exists,
Shareholder shall have all rights as a shareholder it had prior to the
occurrence of such Event of Default, the Shareholder's Stock shall
again be registered in the name of Shareholder and RGM- Elsinore and
RGM-Colorado shall again make all payments and distributions with
respect to Shareholder's Stock to Shareholder.
(c) Additional Remedies. Subject to the terms of the
Indenture, upon the occurrence and during the continuance of an Event
of Default and subject to the receipt of all necessary gaming approvals
from the Gaming Authorities, Agent may exercise, in addition to all
other rights and remedies granted in this Stock Pledge Agreement and in
any other instrument or agreement securing, evidencing or relating to
the Obligations, any and all rights and remedies at law, including,
without limitation, all rights and remedies of a secured party under
the UCC. Without
6
<PAGE>
limiting the generality of the foregoing, Agent may, without demand of
performance or other demand, presentment, protest, advertisement or
notice of any kind to or upon Shareholder, RGM-Elsinore, RGM-Colorado
or any other Person (except notice of time and place of sale and any
other notice required by law and any notice referred to below or in the
Indenture) forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign,
give 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,
in the over-the-counter market, at any exchange, broker's board or
office of Agent or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem commercially
reasonable, for cash or on credit or for future delivery without
assumption of any credit risk. Agent shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in
Shareholder, which right or equity is hereby waived and released. Agent
shall apply any proceeds from time to time held by it and the net
proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses
of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of Agent hereunder, including, without
limitation, attorneys' fees and disbursements of counsel to Agent, to
the payment in whole or in part of the Obligations, in such order as
specified by the Indenture, and only after such application and after
the payment by Agent of any other amount required by any provision of
law, need Agent account for the surplus, if any, to Shareholder. To the
extent permitted by applicable law, Shareholder waives all claims,
damages and demands it may acquire against Agent arising out of the
exercise by it of any rights hereunder except as may arise solely from
Agent's negligence or willful misconduct. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 15
business days before such sale or other disposition. Shareholder
further waives and agrees not to assert any rights or privileges which
it may acquire under paragraphs (a) through (e) of Section 9112 of the
UCC.
7. Authorized Actions. Shareholder acknowledges that the
Obligations hereunder may be supplemented, augmented and otherwise increased as
a result of changes in the underlying obligations of Shareholder or Borrower
under the Notes or the Indenture or the other Collateral Documents. In that
regard but subject to receipt of all necessary gaming approvals from the Gaming
Authorities, Shareholder authorizes Agent, in its discretion, without notice to
Shareholder, irrespective of any change in the financial condition of Borrower,
RGM-Elsinore, RGM-Colorado or Shareholder since the date hereof, and without
affecting or impairing in any way the liability of Shareholder hereunder, from
time to time to (a) create new Obligations, and, either before or after receipt
of notice of
7
<PAGE>
revocation, renew, compromise, extend, accelerate or otherwise change the time
for payment or performance of, or otherwise change the terms of the Obligations
or any part thereof, including increase or decrease of the rate of interest
thereon; (b) take and hold additional security for the payment or performance of
the Obligations and exchange, enforce, waive or release any such additional
security; (c) apply such additional security and direct the order or manner of
sale thereof; (d) purchase such additional security at public or private sale;
(e) upon the occurrence and during the continuance of an Event of Default, make
any payments and do any other acts Agent shall deem necessary to protect the
Noteholders' security interest in the Collateral, including, without limitation,
pay, purchase, contest or compromise any encumbrance, charge or lien (other than
a Permitted Lien) which in the judgment of Agent appears to be prior to or
superior to the security interest granted hereunder, and appear in and defend
any action or proceeding purporting to affect its security interest in and/or
the value of the Collateral, and in exercising any such powers or authority, pay
all expenses incurred in connection therewith, including attorneys' fees, and
Shareholder hereby agrees it shall be bound by any such payment made or act
taken by Agent hereunder and shall reimburse Agent for all payments made and
expenses incurred, which amounts shall be secured under this Stock Pledge
Agreement; provided, however, that Agent shall have no obligation to make any of
the foregoing payments or perform any of the foregoing acts; (f) otherwise
exercise any right or remedy it may have against Borrower, Shareholder,
RGM-Elsinore, RGM-Colorado or any security, including, without limitation, the
right to foreclose upon any such security by judicial or nonjudicial sale; (g)
settle, compromise with, release or substitute any one or more makers, endorsers
or guarantors of the Obligations; and (h) assign the Obligations or this Stock
Pledge Agreement in whole or in part (subject to the terms and conditions of the
Indenture).
8. Waivers. Shareholder waives (a) any right to require Agent
or the Noteholders to (i) proceed against Borrower, RGM-Elsinore or
RGM-Colorado, (ii) proceed against or exhaust any security received from
Borrower, RGM-Elsinore or RGM-Colorado or (iii) pursue any other remedy in
Agent's power whatsoever; (b) any defense resulting from the absence, impairment
or loss of any right of reimbursement or subrogation or other right or remedy of
Shareholder against Borrower, RGM-Elsinore or RGM-Colorado or any security,
whether resulting from an election by Agent to foreclose upon security by
nonjudicial sale, or otherwise; (c) any setoff or counterclaim of Borrower,
RGM-Elsinore or RGM-Colorado or any defense which results from any disability or
other defense of Borrower, RGM-Elsinore or RGM-Colorado or the cessation or stay
of enforcement from any cause whatsoever of the liability of Borrower,
RGM-Elsinore or RGM-Colorado; (d) any right to exoneration of sureties which
would otherwise be applicable; (e) except to the extent prohibited by NRS
40.495, any right of subrogation or reimbursement and any right of contribution,
and right to enforce any remedy which Agent now has or may hereafter have
against Borrower, RGM-Elsinore or RGM-Colorado, and any benefit of, and any
right to participate in, any security now or hereafter received by Agent until
the Obligations have been paid in full; (f) all presentments, demands for
performance, notices of non-performance, protests, notice of dishonor, and
notices of acceptance of the Stock Pledge
8
<PAGE>
Agreement and of the existence, creation or incurrence of new or additional
Obligations; (g) the benefit of any statute of limitations (to the extent
permitted by law) and (h) any right to be informed by Agent of the financial
condition of Borrower, RGM-Elsinore or RGM- Colorado or any change therein or
any other circumstances bearing upon the risk of nonpayment or nonperformance of
the Obligations. Shareholder has the ability and assumes the responsibility for
keeping informed of the financial condition of Borrower, RGM- Elsinore or
RGM-Colorado and of other circumstances affecting such nonpayment and
nonperformance risks.
9. Limitation on Duties Regarding Collateral. Agent'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 or otherwise, shall
be to deal with it in the same manner as Agent deals with similar securities and
property for its own account and as would be dealt by a prudent person in the
reasonable administration of its affairs. Neither Agent nor any of its
directors, officers, 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 Shareholder or otherwise. Notwithstanding the foregoing,
nothing contained herein shall be deemed a waiver or release of the provisions
of Section 7.01 of the Indenture.
10. Gaming Law. This agreement will be governed by the Gaming
Control Act and, to the extent applicable to RGM-Colorado, any similar laws in
effect in Colorado. Without limiting the generality of the foregoing, the
parties agree that:
(a) the pledge of the Stock provided for herein will
be subject to the approval of the Gaming Authorities (as defined
herein);
(b) Notwithstanding approval by the Gaming
Authorities pursuant to paragraph (a), other approvals of the Gaming
Authorities may, and in some cases will, be required before certain
transactions relating to this Agreement may occur, including but not
limited to the following:
(i) any re-registration or action similar to
re-registration of the Stock (or any distribution in respect of, in
addition to, in substitution of, or in exchange for, the Stock or any
part thereof);
(ii) any foreclosure, sale, transfer or other
disposition of the Stock; and
(iii) with respect to RGM-Elsinore, pursuant to
Regulation 8.050 of the Nevada Gaming Commission, the payment or
receipt of any money or other thing of value constituting any part of
the consideration for the transfer or acquisition of
9
<PAGE>
the Stock, except that such consideration may be placed in escrow
pending the necessary approvals; and
(c) the Agent, through an agent or representative,
shall retain all evidence of ownership in the Stock or any distribution
of additional securities in respect of, in addition to, in substitution
of, or in exchange for, such Stock or any part thereof, in the State of
Nevada. Such agent or representative shall be located in and authorized
to do business in the State of Nevada, and designated to the Nevada
State Gaming Control Board, and shall make all certificates evidencing
stock available for inspection by agents of the Nevada Gaming
Authorities immediately upon request during normal business hours.
11. Termination. This Stock Pledge Agreement shall terminate
upon the satisfaction of all Obligations or upon Legal Defeasance or Covenant
Defeasance, and Agent shall promptly thereafter deliver the Stock certificates
held by it hereunder to Shareholder and, at Shareholder's expense, execute and
deliver to Shareholder such documents as Shareholder shall reasonably request to
evidence such termination.
12. Power of Attorney. Shareholder hereby appoints and
constitutes Agent as Shareholder's attorney-in-fact for purposes of, at any time
while an Event of Default exists, (a) collecting any Collateral, (b) conveying
any item of Collateral to any purchaser thereof, and (c) making any payments or
taking any acts under Paragraph 7 hereof. Subject to the receipt of all
necessary gaming approvals from the Gaming Authorities, Agent's authority
hereunder shall include, without limitation, upon the occurrence and during the
continuance of an Event of Default, the authority to endorse and negotiate, for
Agent's own account, any checks or instruments in the name of Agent, to execute
or receipt for any document, to transfer title to any item of Collateral, and to
take any other actions necessary or incident to the powers granted to Agent in
this Stock Pledge Agreement. This power of attorney is coupled with an interest
and is irrevocable by Shareholder.
13. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all
notices, requests, demands of other communications to or upon the
parties hereto shall be addressed to the parties at the respective
addresses indicated below or at such other address as either party
hereto may designate by written notice to the other party, and shall be
deemed to have been given (i) in the case of notice by letter, three
(3) days after deposited in the mails registered and return receipt
requested, or (ii) in the case of notice given by telecommunication,
when sent:
10
<PAGE>
Agent: Norwest Bank Minnesota, National Association
Corporate Trust Department
6th and Marquette
Minneapolis, Minnesota 55479-0069
Telecopier No.: (612) 667-9825
Attention: Raymond Haverstock
Shareholder: Riviera Gaming Management, Inc.
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
RGM-Elsinore: Riviera Gaming Management-Elsinore, Inc.
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
RGM-Colorado: Riviera Gaming Management of Colorado, Inc.
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopier No.: (702) 794-9277
Attention: Chief Executive Officer
11
<PAGE>
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Fredric J. Klink
(b) Nonwaiver. No failure or delay on Agent's part in
exercising any right hereunder shall operate as a waiver thereof or of
any other right nor shall any single or partial exercise of any such
right preclude any other further exercise thereof or of any other
right.
(c) Amendments and Waivers. This Stock Pledge
Agreement may not be amended or modified, nor may any of its terms be
waived, except by written instruments signed by the party or parties
against which enforcement thereof is sought. Each waiver or consent
under any provision hereof shall be effective only in the specific
instances for the purpose for which given.
(d) Assignment. This Stock Pledge Agreement shall be
binding upon inure to the benefit of Agent, the Noteholders and
Shareholder and their respective successors and assigns; provided,
however, that Shareholder may not assign its rights or delegate its
duties hereunder without the prior written consent of Agent. To the
extent permitted in the Indenture and subject to the receipt of all
necessary gaming approvals from the Nevada Gaming Authorities, Agent
may assign or otherwise transfer all or any part of its interest under
this Stock Pledge Agreement, upon notice to Shareholder. Agent may
disclose this Stock Pledge Agreement and any financial or other
information relating to Shareholder to any potential assignee or
participant.
(e) Cumulative Rights, etc. The rights, powers and
remedies of Agent under this Stock Pledge Agreement shall be in
addition to all rights, powers and remedies given to Agent by virtue of
the Indenture, any applicable governmental rule or regulation or any
other agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without
impairing Agent's lien in the Collateral. Shareholder waives any right
to require Agent to proceed against any Person or to exhaust any
Collateral or to pursue any remedy in Agent's power.
(f) Governing Law. This Stock Pledge Agreement shall
be governed by and construed in accordance with the laws of the State
of Nevada.
12
<PAGE>
IN WITNESS WHEREOF, Shareholder has caused this Stock Pledge
and Security Agreement to be executed in favor of Agent as of the day and year
first above written.
SHAREHOLDER:
RIVIERA GAMING MANAGEMENT, INC.,
a Nevada corporation
By:________________________________
Name:______________________________
Title:_____________________________
S-1
<PAGE>
ACKNOWLEDGMENT AND
CONSENT OF RGM-ELSINORE AND RGM-COLORADO
Each of Riviera Gaming Management-Elsinore, Inc., a Nevada
corporation ("RGM-Elsinore"), and Riviera Gaming Management of Colorado, Inc., a
Colorado corporation ("RGM-Colorado"), hereby acknowledges receipt of a copy of
the above Stock Pledge and Security Agreement, agrees to be bound by and comply
with the terms thereof, including, without limitation, Paragraph 6 thereof and
agrees to perform all covenants and obligations therein which, by their terms
are to be performed by RGM-Elsinore and/or RGM-Colorado.
RIVIERA GAMING MANAGEMENT- ELSINORE,
INC., a Nevada corporation
By:________________________________
Name:______________________________
Title:_____________________________
RIVIERA GAMING MANAGEMENT OF
COLORADO, INC., a Colorado corporation
By:________________________________
Name:______________________________
Title:_____________________________
S-2
<PAGE>
EXHIBIT "A"
DESCRIPTION OF SHAREHOLDER'S STOCK
<TABLE>
<CAPTION>
Percentage of Percentage of
Issuer Class of Stock Certificate No. No. of Shares Outstanding Shares
- ------ ---------------- ---------------- --------------- --------------------------------
<S> <C> <C> <C> <C>
Riviera Gaming Common 1 10,000 100%
Management-
Elsinore, Inc.
Riviera Gaming Common 1 1,000 100%
Management of
Colorado, Inc.
</TABLE>
<PAGE>
RESTRICTED ACCOUNT AGREEMENT
This RESTRICTED ACCOUNT AGREEMENT ("Agreement"), dated as of August 13,
1997, is made by and among RIVIERA HOLDINGS CORPORATION, a Nevada corporation
(the "Company"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee and
collateral agent under the Indenture (as defined below) ("Secured Party"), and
U.S. BANK OF NEVADA (the "Bank").
R E C I T A L S
A. The Company is the issuer of those certain $175,000,000 10% First
Mortgage Notes due 2004 (the "Notes") pursuant to that certain Indenture dated
as of August 13, 1997 (the "Indenture") by and among the Secured Party, the
Company, and Riviera Operating Company, Riviera Gaming Management, Inc., Riviera
Gaming Management of Colorado, Inc., and Riviera Gaming Management-Elsinore,
Inc., as guarantors. Any capitalized term used in this Agreement without
definition, but defined in the Indenture, shall have the same meaning here as in
the Indenture.
B. It is a condition precedent to the issuance of the Notes that the
Company and the Secured Party shall have entered into an agreement with a
financial institution selected by the Company and acceptable to the Secured
Party for the creation of a restricted account (the "Account") at such
institution for the deposit of the proceeds from the sale of the Notes.
C. The Company has selected and the Secured Party has approved the
selection of the Bank for the establishment and maintenance of the Account. The
Bank has established Account No. 8470105316 as the Account and is willing to
maintain the Account, all pursuant to and in accordance with the terms and
conditions of this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and other good and
adequate consideration, the receipt of which is hereby acknowledged, the
Company, the Secured Party and the Bank agree as follows:
ARTICLE I
SECTION I.1. The Company and the Bank acknowledge and confirm that the
Secured Party holds a security interest in the Account and in all funds now or
at any time hereafter deposited to the Account and all of the Company's rights
with respect to the Account and such funds and that the same constitute part of
the Collateral granted to the Secured Party to secure performance and repayment
of the Obligations. After a notice is given pursuant to Section 1.4 below, the
Company hereby irrevocably authorizes the Bank to comply with any requests of
the Secured Party with regard to deposits in and withdrawals from the Account.
<PAGE>
SECTION I.2. Such funds shall not be subject to banker's lien, setoff,
deductions or any other right in favor of any person (including the Bank) other
than the Secured Party, except as expressly provided for herein with respect to
the Bank.
SECTION I.3. All expenses for the maintenance of the Account are the
responsibility of the Company and are not to be deducted from funds in the
Account or remittances to the Secured Party.
SECTION I.4. The Secured Party hereby directs and the Bank agrees (and
the Company hereby irrevocably authorizes and instructs the Bank) that upon
receipt of a notice in the form of Exhibit A certifying that an event of default
under the Indenture has occurred, the Bank shall take the actions set forth in
such notice. These actions may include, at the sole discretion of the Secured
Party, any or all of the following:
(a) Cease honoring all drafts, demands, withdrawal,
remittance or other requests and instructions by the Company, whether
made before or after the demand, unless consented to in writing by the
Secured Party.
(b) Hold solely for the account of the Secured Party all
funds which may be on deposit in the Account at the time of and after
the notice.
(c) Remit all such funds directly to the Secured Party, as
soon as collected, by electronic transfer to such accounts as the
Secured Party may instruct in writing in such notice or at any time
thereafter.
SECTION I.5. The Company hereby agrees to indemnify and save the Bank
harmless from and against any and all liabilities, losses, costs or expenses
(including reasonable attorneys' fees) which it suffers or incurs in connection
with this Agreement (except those arising out of the Bank's gross negligence or
willful misconduct), including claims that the Bank was not properly authorized
to turn over funds on deposit in the Account to the Secured Party.
SECTION I.6. After a notice is given pursuant to Section 1.4 above, the
Bank shall send to the Secured Party, at its address shown below, a copy of each
periodic statement produced for the Account, as and when such statement is sent
to the Company, at its address shown below.
SECTION I.7. Unless and until an event of default under the Indenture
shall occur, the Company shall be entitled to withdraw funds from the Account
and take any actions with respect to the Account as it sees fit. The Bank is
hereby authorized, until any such event of default shall occur, to follow all
instructions with respect to the Account as shall be given by the Company, and
to follow all standard banking procedures which govern the Account.
SECTION I.8. This Agreement shall continue in full force and effect
until the earlier of (a) withdrawal of all funds in the Account and (b)
termination by the Bank on thirty (30) days' prior written notice to all other
parties. The Secured Party may terminate this Agreement at any time which
termination shall be effective on receipt of written notice by the Bank. The
Company shall have no right to unilaterally terminate this Agreement.
2
<PAGE>
SECTION I.9. This Agreement is binding upon the Bank and the Company
and their respective successors and assigns and is enforceable by the Secured
Party and its successors and assigns. It supersedes any and all prior agreements
relating to the Account other than the agreement between the Bank and the
Company pertaining to the Account ("Account Agreement"). If there are any
inconsistencies between this Agreement and the Account Agreement, this Agreement
shall control. Neither this Agreement nor any other agreement relating to the
Account may be altered, amended or otherwise modified without the prior written
consent of the Secured Party. This Agreement may be executed in one or more
counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instruments.
SECTION I.10. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.
[Remainder of page intentionally blank]
3
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
RIVIERA HOLDINGS CORPORATION
By: _________________________________________
Name: ______________________________________
Title: ______________________________________
Address: 2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: Chief Executive Officer
Telecopy: (702) 794-9277
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By: _________________________________________
Name: ______________________________________
Title: ______________________________________
Address: Corporate Trust Department
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Raymond Haverstock
Telecopy: (612) 667-9825
S-1
<PAGE>
U.S. BANK OF NEVADA
By: _________________________________________
Name: ______________________________________
Title: ______________________________________
Address: U.S. Bank of Nevada
__________________________________
__________________________________
Attention: ______________________
Telecopy: ______________________
S-2
<PAGE>
EXHIBIT A
[Letterhead of Secured Party]
----------------, ------
U.S. Bank of Nevada
[Address of Bank]
Attn: _________________________
Re: Account No. 8470105316 (the "Account") in the name of Riviera
Holdings Corporation
Ladies and Gentlemen:
Reference is made to that certain Restricted Account Agreement dated as
of August 13, 1997 (the "Agreement") among you, us and Riviera Holdings
Corporation (the "Company"), pursuant to which we, for the benefit of the
holders of those certain $175,000,000 10% First Mortgage Notes due 2004 issued
by the Company, were given a security interest in the Account. This notice is
given in accordance with the terms of the Agreement. We hereby notify you that
an event of default has occurred under that certain Indenture dated as of August
13, 1997 (the "Indenture") by and among the Company, us and Riviera Operating
Company, Riviera Gaming Management, Inc., Riviera Gaming Management of Colorado,
Inc., and Riviera Gaming Management-Elsinore, Inc., as guarantors.
Accordingly, effective immediately and continuing until we shall
authorize you in writing to do otherwise, the Account is now subject to the
additional restrictions set forth in Sections 1.4 and 1.5 of the Agreement, and
the Bank is directed, pursuant to Section 1.4 of the Agreement, to take the
following actions:
(a) Cease honoring all drafts, demands, withdrawal, remittance
or other requests and instructions by the Company, whether made before
or after the demand, unless consented to in writing by the Secured
Party.
(b) Hold solely for the account of the Secured Party all funds
which may be on deposit in the Account at the time of and after the
notice.
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[(c) Remit all such funds directly to the Secured Party, as
soon as collected, by electronic transfer to such accounts as the
Secured Party may instruct in writing in such notice or at any time
thereafter.]
Very truly yours,
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:______________________________________
Its:_____________________________________
cc: Riviera Holdings Corporation
A-2
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FIRST AMENDMENT TO REVOLVING LINE OF CREDIT LOAN AGREEMENT (this
"Amendment"), dated as of August 12, 1997, is entered into between RIVIERA
HOLDINGS CORPORATION, a Nevada corporation, and RIVIERA OPERATING CORPORATION, a
Nevada corporation (collectively with Riviera Holdings Corporation, "Borrower")
and U.S. BANK (formerly known as U.S. BANK OF NEVADA, a Nevada state-chartered
commercial bank) (the "Lender").
WHEREAS, Borrower and the Lender are parties to the Revolving Line of
Credit Loan Agreement, dated as of February 28, 1997 (the "Loan Agreement");
WHEREAS, Borrower has requested that the Lender make certain changes to
the Loan Agreement and terminate the Security Agreement, dated February 28, 1997
(the "Security Agreement"), between Borrower and the Lender;
WHEREAS, the Lender is willing, on the terms set forth herein, to agree
to such changes and termination.
NOW, THEREFORE, the parties hereto agree, for good and valuable
consideration, receipt of which is hereby acknowledged, as follows:
1. Effective on and as of the Effective Date, the Lender agrees to
terminate the security interest in favor of the lender which was created under
the Security Agreement and Borrower and the Lender agree to terminate the
Security Agreement. The Lender agrees to deliver to Borrower, on or prior to the
Effective Date, all such financing statements and other executed documents
evidencing the termination of such security interest as are requested by
Borrower.
2. Effective on and as of the Effective Date, the Loan Agreement shall
be amended as follows:
(a) The "WHEREAS" clause in the preamble to the Loan Agreement shall
be revised by inserting a period after "(the `Maximum Loan
Amount')" and deleting the remainder of such clause thereafter.
(b) The "NOW, THEREFORE" clause in the preamble to the Loan Agreement
shall be amended by deleting (i) the phrase beginning with "and be
secured by" and ending with "(the `Collateral')", and (ii) the
phrase "or secure payment of" in the ninth line thereof, and
placing a period after "herewith" in the fifth line thereof.
(c) All references in the Loan Agreement to the Security Agreement
shall be deleted.
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(d) Section A.3 shall be amended by deleting: (a) "the lesser of (a)"
in the second line thereof and (b) the text of such Section
beginning with the semi-colon in the third line thereof through
and including "(100%)" in the last line of the last paragraph
thereof.
(e) Section A.4 shall be amended by (a) inserting a period after
"party" on the first line of page 3 and deleting the remainder of
such Section; and (b) adding the following as new paragraphs
thereto:
"Lender shall be under no obligation to make any disbursement
under the Loan unless Borrower is, as of the date of such Loan, in
compliance with the following:
(a) Borrower shall maintain a Maximum Leverage Ratio (defined
as [average funded debt as of the last day of each month for the
quarter then ended] /[earnings before interest, taxes,
depreciation and amortization ("EBITDA"), calculated on a rolling
four (4) quarter average]) of not greater than 4.75 to 1.00 tested
for compliance as of the last day of the most recently ended
fiscal quarter of Borrower. The term "funded debt" means, as of
any date of determination, without duplication, the sum of (i) all
principal indebtedness of Borrower for borrowed money (including
debt securities issued by Borrower) on that date, plus (ii) the
aggregate amount of the net present value of principal payable by
Borrower in respect of capital leases on that date, each as
determined in accordance with generally accepted accounting
principles; and
(b) Borrower shall maintain a Minimum Times Fixed Charge
Coverage Ratio (defined as [EBITDA, calculated on a rolling four
(4) quarter basis] / [the prior year's current portion of long
term debt, plus the prior year's current portion of capital lease
obligations, plus interest expense calculated on a rolling four
(4) quarter basis, including capitalized interest and excluding
interest on intercompany debt, plus short-term loans (with
maturities of twelve (12) months or less]) of not less than 1.50
to 1.00 tested for compliance as of the last day of the most
recently ended fiscal quarter of Borrower."
(f) Clause (v) of Section C.3 shall be deleted and clause (vi) shall
be renumbered as clause (v).
(g) Paragraphs (a) and (b) of Section C.5 shall be deleted.
(h) Paragraph (c) of Section C.5 shall be amended by: (a) re-lettering
it as paragraph (a), (b) deleting "or additional liens or
encumbrances
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on Borrower's real or personal property," in the first and second
line thereof and (c) inserting the words "for each of Riviera
Holdings Corporation and Riviera Operating Corporation" after
"$10,000,000" in the second line thereof, and (d) inserting, after
"Indenture Agreement" in the third line thereof, the phrase dated
as of August 13,1997, between the Borrower and Norwest Bank
Minnesota, N.A., as trustee, as the same may be extended,
refinanced, renewed, replaced, defeased or refunded (collectively,
the `Indenture Agreement') and except for indebtedness permitted
to be incurred pursuant to the terms of the Indenture Agreement".
(i) Paragraph (d) of Section C.5 shall be amended by (a) re-lettering
it as paragraph (b) and (b) inserting the following after the word
"entity" on the second line thereof: "or mergers which are
otherwise permitted pursuant to the Indenture Agreement".
(j) The final paragraph of Section C.5 shall be amended by deleting ",
or which are secured by any of the other Loan Documents,".
(k) The following new Section C.7 shall be added to the Loan
Agreement:
"C.7 Repayment of Loans. If, as of the last day of any fiscal
quarterof the Borrower during which any Loans are outstanding
under this Agreement, the Borrower is not in compliance with the
ratio described in paragraph (a) of Section A.4 of this Agreement
(the "Leverage Ratio"), the Borrower shall, within five (5)
business days following written demand by Lender, make a principal
reduction payment under the Loan in the amount reasonably
determined by the Lender to be necessary to place the Borrower in
compliance with the Leverage Ratio (the "Compliance Amount"). In
the event that Borrower cannot, as the result of making such
principal reduction payment, return to compliance with the
Leverage Ratio, of if the Compliance Amount exceeds the then
outstanding principal amount of the Loan, together with accrued
interest thereon, the Borrower shall, within five (5) business
days following written demand by Lender, repay the then
outstanding principal amount of the Loan, together with accrued
interest thereon. In no event shall any repayment required in this
Section reduce the Maximum Loan Amount under this Agreement."
(l) The text of Section E.3 shall be deleted and replaced by
"[Reserved]."
3. This Amendment shall become effective on the date on which Riviera
Holdings Corporation issues its 10% First Mortgage Notes due 2004 pursuant to
the Indenture Agreement.
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4. Except as amended hereby, the Loan Agreement shall continue in full
force and effect in accordance with its terms.
5. This Amendment shall be governed by and construed in accordance with
the laws of Nevada.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the day and year first above written.
RIVIERA HOLDINGS CORPORATION
By: _______________________________
RIVERA OPERATING CORPORATION
By: _______________________________
U.S. BANK
By: _______________________________
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Exhibit 99.1
Press Release Dated August 13, 1997
Riviera Holdings Corporation (RHC) announced today (August 13, 1997)
that it had closed a $175 million private placement of 10% First Mortgage Notes
due August 15, 2004 (New Notes). The net proceeds of the placement will be used
to (1) defease $100 million principal amount of RHC 11% Mortgage Notes due
December 31, 2002, (2) fund the development of a new casino in Black Hawk,
Colorado, (3) accelerate certain capital projects including a new "Nickel Plaza"
(expected to be completed by the end of 1997) and an expanded "state of the art"
convention center (expected to be completed by the end of 1998) and (4) increase
working capital.
The New Notes have not been registered under the Securities Act of
1933 and may not be offered or sold in the United States absent registration or
an applicable exemption from registration requirements.
Riviera Holdings Corporation operates the Riviera Hotel and Casino
and, through its wholly-owned subsidiary Riviera Gaming Management, operates the
Four Queens Hotel/Casino. Riviera Holdings Corporation is traded on the American
Stock Exchange under the symbol RIV.
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