SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
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) June 11, 1999
Riviera Holdings Corporation
(Exact Name of Registrant as Specified in Charter)
Nevada 00021430 88-0296885
(State or Other Commission File (IRS Employer
Jurisdiction Number) Identification
Incorporation No.)
2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (702) 734-5110
_____________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
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Item 5 Other Events
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On June 3, 1999, the registrant's wholly-owned subsidiary, Riviera Black Hawk,
Inc., closed a private placement of $45 million 13% First Mortgage Notes due
2005. See Press Release dated June 4, 1999 attached as Exhibit 99.1.
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Item 7 Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
10.1 Completion Capital Commitment dated as of June 3, 1999 between Riviera
Holdings Corporation, a Nevada corporation, and Riviera Black Hawk,
Inc., a Colorado Corporation.
10.2 Keep-Well Agreement dated as of June 3, 1999, between Riviera Holdings
Corporation, a Nevada corporation, and Riviera Black Hawk, Inc.,
a Colorado corporation.
10.3 Purchase Agreement dated as of May 27, 1999, among Riviera Holdings
Corporation, Riviera Black Hawk, Inc. and Jefferies & Company, Inc.
10.4 Management Agreement, dated as of June 1, 1999, by and between Riviera
Black Hawk, Inc., a Colorado corporation, and Riviera Gaming Management
of Colorado, Inc., a Colorado corporation.
99.1 Press Release, dated June 4, 1999, announcing the signing of an
Indenture Agreement for $45 million 13% First Mortgage Notes due 2005
by Riviera Black Hawk, Inc., the wholly-owned subsidiary of Riviera
Holdings Corporation, Inc.
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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: June 11, 1999 s/Duane Krohn________________________
(Signature)
Duane Krohn,
Treasurer and Chief Financial Officer
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EXHIBITS INDEX
Exhibit
Number Description Page
- ------- ----------- ----
10.1 Completion Capital Commitment dated as of June 3, 1999 between Riviera
Holdings Corporation, a Nevada corporation, and Riviera Black Hawk,
Inc., a Colorado Corporation.
10.2 Keep-Well Agreement dated as of June 3, 1999, between Riviera Holdings
Corporation, a Nevada corporation, and Riviera Black Hawk, Inc.,
a Colorado corporation.
10.3 Purchase Agreement dated as of May 27, 1999, among Riviera Holdings
Corporation, Riviera Black Hawk, Inc. and Jefferies & Company, Inc.
10.4 Management Agreement, dated as of June 1, 1999, by and between Riviera
Black Hawk, Inc., a Colorado corporation, and Riviera Gaming Management
of Colorado, Inc., a Colorado corporation.
99.1 Press Release, dated June 4, 1999, announcing the signing of an
Indenture Agreement for $45 million 13% First Mortgage Notes due 2005
by Riviera Black Hawk, Inc., the wholly-owned subsidiary of Riviera
Holdings Corporation, Inc.
Exhibit 10.1
COMPLETION CAPITAL COMMITMENT
COMPLETION CAPITAL COMMITMENT (this "Commitment") dated as of
June 3, 1999, between RIVIERA HOLDINGS CORPORATION, a Nevada corporation
("Riveria Holdings"), and RIVIERA BLACK HAWK, INC., a Colorado corporation (the
"Company").
RECITALS
A. First Mortgage Notes. The Company has issued $45,000,000
aggregate principal amount of 13% First Mortgage Notes due 2005 With Contingent
Interest (together with all notes issued in exchange or replacement therefor,
the "Notes") pursuant to an Indenture (as amended, supplemented or otherwise
modified from time to time, the "Indenture") dated as of the date hereof between
the Company and IBJ Whitehall Bank & Trust Company, a New York banking
association, as trustee (the "Trustee"), for the benefit of the holders from
time to time (the "Holders") of the Notes.
B. Proceeds of the Notes. The Company will use the proceeds of
the Notes for the development, construction, equipping and operation of the
Riviera Black Hawk (as defined in the Indenture) upon certain real property
located in Black Hawk, Colorado (the "Property") and for certain other purposes
described in the Indenture.
C. Riviera Holdings' Benefit. The Company is a wholly-owned
subsidiary of Riviera Holdings and, as a result, Riviera Holdings will
significantly benefit from the construction and operation of the Riviera Black
Hawk.
D. Material Inducement. It is a condition precedent and
material inducement to the purchase of the Notes that (1) Riviera Holdings and
the Company shall have executed and delivered this Commitment whereby Riviera
Holdings has agreed that it will commit, subject to the limitations set forth
herein, for the benefit of the Company and the Holders, to make capital
contributions to the Company upon the terms, conditions and limitations provided
herein, (2) the Company shall have executed the Collateral Assignment assigning
this Commitment, among other things, to the Trustee, and (3) Riviera Holdings
shall have executed and delivered the Consent to Collateral Assignment of
Completion Capital Commitment pursuant to which, among other things, Riviera
Holdings consents to the Company's assignment of this Commitment to the Trustee.
E. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Indenture.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Riviera Holdings and the Company hereby agree as
follows:
1. Funding Amounts. Upon the occurrence of each Contribution Event (as
defined below), Riviera Holdings shall pay, after receipt of the notice
described in Sections 3 or 4 below, the applicable Funding Amounts (as defined
below) into the Construction Disbursement Account for disbursement in accordance
with the Cash Collateral and Disbursement Agreement. For the purposes of
Sections 2(i), 2(ii) and 2(iii) below, the "Funding Amounts" shall be equal to
the amount in immediately available cash determined by the Independent
Construction Consultant, based upon the Construction Disbursement Budget, to be
necessary to cause a Contribution Event to no longer exist; provided, however,
that in no event shall the aggregate amount of all Funding Amounts paid pursuant
hereto exceed $10,000,000; provided, further, that for purposes of Sections
2(iv), 2(v) and 2(vi) below, the Funding Amounts shall be equal to the
difference between $10,000,000 and the aggregate Funding Amounts, if any,
previously paid under Section 2. Such proceeds shall be used for the
development, construction, equipping and operations of the Riviera Black Hawk
pursuant to the terms of the Indenture, the Cash Collateral and Disbursement
Agreement and the other Collateral Documents.
2. Contribution Event. A "Contribution Event" means any of the
following: (i) there are insufficient Available Funds (as defined in the Cash
Collateral and Disbursement Agreement) to complete the development,
construction, equipping and opening of the Riviera Black Hawk so that it is
Operating by the Operating Deadline; (ii) the Company has provided the Trustee
and the Independent Construction Consultant with a written notice that it is
unlikely that there shall be sufficient Available Funds to complete the
development, construction, equipping and opening of the Riviera Black Hawk so
that it is Operating by the Operating Deadline; (iii) (a) the Independent
Construction Consultant has provided the Trustee and the Company with a written
notice that it is unlikely that there will be sufficient Available Funds
(excluding any Additional Revenues (as defined in the Cash Collateral and
Disbursement Agreement)) to complete the development, construction, equipping
and opening of the Riviera Black Hawk so that it is Operating by the Operating
Deadline and (b) within ten days of the Company receiving notice described in
clause (a) above, the Company has not provided evidence satisfactory to the
Independent Construction Consultant that there shall be sufficient Additional
Funds (including the amount of Additional Revenues) to complete the development,
construction, equipping and opening of the Riviera Black Hawk so that it is
Operating by the Operating Deadline; (iv) the Riviera Black Hawk is not
Operating by the Operating Deadline; (v) the commencement of any voluntary
bankruptcy case by the Company on or prior to May 31, 2000; or (vi) the
commencement of an involuntary bankruptcy case against the Company which is not
dismissed, bonded or discharged on or prior to the earlier of (A) 60 days after
the commencement and (B) May 31, 2000, or (3) the entry of an order for relief
against the Company prior to May 31, 2000, under any bankruptcy law in effect at
any time.
3. Independent Construction Consultant Certificate. Upon the occurrence
of each Contribution Event occuring under Sections 2(i), 2(ii) and 2(iii) above
(after, with respect to Section 2(iii) only, the expiration of the ten day
period set forth in subsection (b) thereof), the Independent Construction
Consultant shall provide the Company and Riviera Holdings with written notice
setting forth its determination of the Funding Amounts required to be
contributed to the Company pursuant to Section 1 hereof with respect to such
Contribution Event and the basis of its determination.
4. Company's Certificate. Upon the occurrence of each Contribution
Event occuring under Sections 2(iv), 2(v) and 2(vi) above, the Company shall
provide written notice to Riviera Holdings of such Contribution Event setting
forth its determination of the Funding Amounts required to be contributed to the
Company pursuant to Section 1 hereof with respect to such Contribution Event and
the basis of its determination.
5. Cooperation. In connection with this Agreement, Riviera Holdings
agrees, at its sole cost and expense, to fully cooperate with the Company and to
timely provide such documents, agreements and information as may be required in
connection herewith.
6. Ability to Comply With This Agreement. Riviera Holdings shall, at
all times prior to the fulfillment of all of its obligations under this
Agreement, ensure that it has the ability to fulfill all of such obligations
under all other agreements to which it is a party, including the Indenture dated
as of August 13, 1997, among Riviera Holdings, the subsidiary guarantors
identified therein and Norwest Bank Minnesota, National Association, as trustee,
relating to the issuance of $175,000,000 principal amount of 10% First Mortgage
Notes due 2004 of Riviera Holdings.
In addition, Riviera Holdings shall not, at any time prior to
the fulfillment of all of its obligations under this Agreement, permit any other
agreement to which it is a party to in any way prohibit or interfere with its
ability to fulfill its obligations under this Agreement.
7. Alteration of Obligations. Riviera Holdings acknowledges and agrees
that none of the following shall release, impair, reduce, diminish or otherwise
affect Riviera Holdings' obligations under this Commitment: (i) any alteration,
compromise, acceleration or extension of, or any change to, (a) the Company's
obligations to complete the development, construction and equipping of the
Riviera Black Hawk and to commence operation thereof or (b) the payment or
performance by the Company or any guarantor under any debt instrument or other
financing for the development, construction, equipping or operation of the
Riviera Black Hawk (the foregoing, collectively, the "Obligations"), in each
case in such manner, upon such terms and at such times as any Person (including,
without limitation, the Trustee or any Holder) (each such Person, an "Obligee")
deems best, and without notice to Riviera Holdings; (ii) the release of the
Company or any guarantor from any or all of the Obligations by acceptance of a
deed in lieu of foreclosure or otherwise, as to all or any portion of the
Obligations; (iii) the release, substitution or addition of any one or more
guarantors or endorsers of the Funding Amounts or the Obligations; (iv) the
acceptance of additional or substitute security for the Funding Amounts or the
Obligations; or (v) the release or subordination of any security for the Funding
Amounts or the Obligations. No exercise (including, without limitation,
foreclosure of the Property) or non-exercise of any right under any document
relating to the Obligations (collectively, the "Obligation Documents") by an
Obligee, no dealing by an Obligee hereunder or under any Obligation Document or
any other document with Riviera Holdings, the Company or any other guarantors or
any other Person, and no change, impairment or release of all or any portion of
the Funding Amounts or the Obligations or suspension of any right or remedy of
an Obligee against any other Person, including, without limitation, the Company
or any other such guarantor, endorser or other Person, shall in any way affect
any of the obligations of Riviera Holdings hereunder or any security furnished
by Riviera Holdings or give Riviera Holdings any recourse against an Obligee
(including, without limitation, the Trustee). If an Obligee has exculpated or
hereafter exculpates the Company from liability in whole or in part, or has
agreed or hereafter agrees to look solely to the Property or any other property
for the satisfaction of the Company's Obligations (including, without limitation
the Company's obligations under the Indenture, the Notes or any Collateral
Document), such exculpation and agreement shall not affect the obligations of
Riviera Holdings hereunder. Riviera Holdings further acknowledges that any such
exculpation or agreement that has been given or that is hereafter given to the
Company with respect to the Notes, the Indenture or any Collateral Document has
been given or is given in reliance upon the covenants of Riviera Holdings
contained herein.
8. Obligations Absolute; Waiver. The obligations of Riviera Holdings
hereunder shall be unconditional (except as to any condition set forth under
Sections 1 and 2), absolute and continuing and, without limiting the generality
of the foregoing, shall not be released, discharged or otherwise affected by and
shall survive, and Riviera Holdings hereby waives and relinquishes all rights
and remedies accorded by applicable law to sureties or guarantors and agrees not
to assert or take advantage of any such rights or remedies, including, without
limitation, (a) any right to require any holder or recipient of the benefit of
any of the Obligations (including, without limitation, the Trustee or the
Holders) (each a "Benefited Party") to proceed against the Company or any other
Person or entity or to proceed against or exhaust any security held by a
Benefited Party at any time or to pursue any other remedy in the power of a
Benefited Party before proceeding against Riviera Holdings; (b) the defense of
the statute of limitations in any action hereunder or in any action for the
collection or performance of the Funding Amounts or the Obligations; (c) any
defense that may arise by reason of the incapacity, lack of authority, death or
disability of any other Person or the failure of a Benefited Party to file or
enforce a claim against the estate (in administration, bankruptcy or any other
proceeding) of any other Person; (d) appraisal, valuation, stay, extension,
marshaling of assets, redemption, exemption, diligence, demand, presentment,
protest and notice of any kind, including, without limitation, notice of the
existence, creation or incurring of any new or additional indebtedness or
obligation or of any action, non-action, performance or failure to perform on
the part of a Benefited Party, the Company, any endorser or creditor of the
Company or Riviera Holdings or on the part of any other Person under this or any
other instrument in connection with any obligation or evidence of indebtedness
held by a Benefited Party as collateral or in connection with the Funding
Amounts or the Obligations; (e) any defense based upon any exercise of remedies,
including without limitation, foreclosure of the Property, or upon an election
of remedies by a Benefited Party, including, without limitation, an election to
proceed by non-judicial rather than judicial foreclosure, which destroys or
otherwise impairs the subrogation rights of Riviera Holdings, the right of
Riviera Holdings to proceed against the Company or any other person for
reimbursement, or both; (f) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (g) any duty
on the part of a Benefited Party to disclose to Riviera Holdings any facts a
Benefited Party may now or hereafter know about the Company or any other Person,
regardless of whether a Benefited Party has reason to believe that any such
facts materially increase the risk beyond that which Riviera Holdings intends to
assume, or has reason to believe that such facts are unknown to Riviera
Holdings, or has a reasonable opportunity to communicate such facts to Riviera
Holdings, since Riviera Holdings acknowledges that Riviera Holdings is fully
responsible for being and keeping informed of the financial condition of the
Company or any other Person and of all circumstances bearing on the risk of
non-payment of any Funding Amounts; (h) any defense arising because of the
election of a Benefited Party, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code; (i) any defense based upon any borrowing or grant of a security
interest under Section 364 of the Federal Bankruptcy Code; (j) any claim or
other rights which it may now or hereafter acquire against the Company or any
other Person that arises from the existence or performance of Riviera Holdings'
obligations under this Commitment or any other Obligation Document, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
by a Benefited Party against the Company or any collateral which a Benefited
Party now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, by any payment made
hereunder or otherwise, including, without limitation, the right to take or
receive from the Company or any other Person or entity, directly or indirectly,
in cash or other property or by set-off or in any other manner, payment or
security on account of such claim or other rights; (k) any rights which it may
acquire by way of contribution under this Commitment or any Obligation Document,
by any payment made hereunder or otherwise, including, without limitation, the
right to take or receive from any other Person, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such contribution rights; (l) any defense based on one-action laws
and any other anti-deficiency protections granted to guarantors by applicable
law; (m) any merger or consolidation of the Company into or with any other
Person, or any sale, lease or transfer of any or all of the assets of the
Company to any other Person; (n) any circumstance which might constitute a
defense available to, or a discharge of, the Company, Riviera Holdings or a
surety; (o) any lack of genuiness, validity, regularity, enforceability or value
of any Funding Amounts, this Commitment or any Obligation Document; and (p) any
other fact or circumstance, including, without limitation, any construction
delays or any contests or claims relating to the construction of the Riviera
Black Hawk. Any proceeds of a foreclosure or similar sale may be applied first
to any obligations of the Company that do not also constitute Funding Amounts or
Obligations. Riviera Holdings acknowledges and agrees that any nonrecourse or
exculpation provided for in any Obligation Document, or any other provision of
an Obligation Document limiting each respective Benefited Party's recourse to
specific collateral or limiting such Benefited Party's right to enforce a
deficiency judgment against the Company, shall have absolutely no application to
Riviera Holdings's liability under this Commitment. To the extent that any
Benefited Party (including, without limitation, the Trustee) collects or
receives any sums or payments from the Company or from any guarantor, endorser
or other Person under any Obligation Document or realized from any security,
such Benefited Party shall have the right, but not the obligation, to apply such
amounts first to that portion of the Company's indebtedness and obligations, if
any, to such Benefited Party that is not covered by this Commitment, regardless
of the manner in which any such payments or amounts are characterized by the
Person making payment. Nothing herein shall be construed to be a waiver by
Riviera Holdings of any defense based on the occurrence or non-occurrence of a
Contribution Event or as to the Funding Amount.
9. Bankruptcy and Related Proceedings. The obligations of Riviera
Holdings under this Commitment shall not be altered, limited or affected by or
as a result of any action taken by the Company in any proceeding, voluntary or
involuntary, involving the bankruptcy, reorganization, insolvency, receivership,
or liquidation of the Company, or by any defense which the Company may have by
reason of any order, decree or decision of any court or administrative body
resulting from any such proceeding.
10. Interest. If Riviera Holdings fails to pay all or any portion of
the Funding Amounts in accordance with the provisions hereof, the amount of such
Funding Amounts and all other sums payable by Riviera Holdings hereunder shall
bear interest from the date of demand at the highest rate applicable to the
principal balance of the Notes.
11. Independent Obligations. The obligations of Riviera Holdings
hereunder are independent of the obligations of the Company or any other Person,
and, in the event of any default hereunder, a separate action or actions may be
brought and prosecuted against Riviera Holdings, whether or not the Company or
such other Person is joined therein or a separate action or actions are brought
against the Company.
12. Notices. Whenever Riviera Holdings or the Company shall desire to
give or serve any notice, demand, request or other communication with respect to
this Commitment, each such notice shall be in writing and shall be effective
only if the same is delivered by hand-delivery, first-class mail (registered or
certified, return receipt requested), telecopier or air courier guaranteeing
overnight delivery, addressed as follows:
To Riviera Holdings:
Riviera Holdings Corporation
2701 Las Vegas Boulvard South
Las Vegas, Nevada 89109
Attention: Executive Vice President of Finance
Telephone: (702) 734-5110
Facsimile: (702) 734-9277
To the Company:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Attention: Executive Vice President of Finance
Telephone: (702) 734-5110
Facsimile: (702) 734-9277
and, in either case, with a copy to the Trustee at:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Thomas S. Moser
Telephone: (212) 858-2558
Facsimile: (212) 858-2956
Any such notice delivered personally shall be deemed to have been received upon
delivery. Any such notice sent by telegram shall be presumed to have been
received by the addressee one business day after its acceptance for sending by
an authorized carrier thereof. Any such notice sent by mail shall be presumed to
have been received by the addressee three business days after posting in the
United States mail. Riviera Holdings or the Company may change its address by
giving the other and the Trustee a written notice of the new address as herein
provided.
13. Successors and Assigns. This Commitment shall inure to the benefit
of the Company, its successors and assigns, and shall bind the successors and
assigns of Riviera Holdings.
14. Termination. This Commitment shall expire upon the later of (i) the
final disbursement of amounts in the Cash Collateral Accounts in accordance with
the Cash Collateral and Disbursement Agreement and (ii) May 31, 2000.
15. No Guarantee. Nothing contained in this Commitment shall be deemed
to be a guarantee by Riviera Holdings of any obligations of the Company under
the Notes.
16. Miscellaneous Provisions.
16.1 This Commitment shall be governed by and construed in
accordance with the laws of the State of New York. Riviera Holdings
hereby consents to the jurisdiction of the courts of the State of New
York and consents to service of process by any means authorized by New
York law in any action brought under or arising from this Commitment.
16.2 Riviera Holdings acknowledges that it is aware of the
Indenture entered into by the Company and the Trustee, the Notes issues
thereunder and the Collateral Documents executed in connection
therewith and is generally familiar with the terms and provisions
thereof.
16.3 This Commitment shall constitute the entire agreement of
Riviera Holdings with the Company with respect to the subject matter
hereof, and no representation, understanding, promise or condition
concerning the subject matter hereof shall be binding upon the Company
unless expressed herein.
16.4 Should any term, covenant, condition or provision of this
Commitment be determined to be illegal or unenforceable, all other
terms, covenants, conditions and provisions hereof shall nevertheless
remain in full force and effect.
16.5 When the context and construction so require, all words
used in the singular herein shall be deemed to include the plural, the
masculine shall include the feminine and neuter, and vice versa.
16.6 No provision of this Commitment or right granted to the
Company hereunder can be waived in whole or in part, nor can Riviera
Holdings be released from its obligations hereunder, except by a
writing duly executed by an authorized officer of the Company.
16.7 The headings of this Commitment are inserted for
convenience only and shall have no effect upon the construction or
interpretation hereof.
(Signature Page Follows)
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[Signature Page to Completion Capital Commitment]
LA_DOCS\356153.5 DRAFT 06/02/99 IN WITNESS WHEREOF, the parties have executed
this Commitment as of the date first written above.
RIVIERA HOLDINGS CORPORATION,
a Nevada corporation
By:
Name:
Title:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
Name:
Title:
Exhibit 10.2
KEEP-WELL AGREEMENT
Keep-Well Agreement (this "Agreement") dated as of June 3,
1999, between Riviera Holdings Corporation, a Nevada corporation ("Riviera
Holdings"), and RIVIERA BLACK HAWK, INC., a Colorado corporation (the
"Company").
R E C I T A L S
A. First Mortgage Notes. The Company has issued $45,000,000
aggregate principal amount of 13% First Mortgage Notes due 2005 With Contingent
Interest (together with all notes issued in exchange or replacement therefor,
the "Notes") pursuant to an Indenture (as amended, supplemented or otherwise
modified from time to time, the "Indenture") dated as of the date hereof between
the Company and IBJ Whitehall Bank & Trust Company, a New York banking
association, as trustee (the "Trustee"), for the benefit of the holders from
time to time (the "Holders") of the Notes.
B. Proceeds of the Notes. The Company will use the proceeds of
the Notes for the development, construction, equipping and operation of the
Riviera Black Hawk (as defined in the Indenture) upon certain real property
located in Black Hawk, Colorado (the "Property") and for certain other purposes
described in the Indenture.
C. Riviera Holdings' Benefit. The Company is a wholly-owned
subsidiary of Riviera Holdings and, as a result, Riviera Holdings will
significantly benefit from the construction and operation of the Riviera Black
Hawk.
D. Material Inducement. It is a condition precedent and
material inducement to the purchase of the Notes that (1) Riviera Holdings and
the Company shall have executed and delivered this Agreement whereby Riviera
Holdings has agreed that it will commit, subject to the limitations set forth
herein, for the benefit of the Company and the Holders, to make capital
contributions to the Company upon the terms, conditions and limitations provided
herein, (2) the Company shall have executed the Collateral Assignment assigning
this Agreement, among other things, to the Trustee, and (3) Riviera Holdings
shall have executed and delivered the Consent to Collateral Assignment of
Keep-Well Agreement pursuant to which, among other things, Riviera Holdings
consents to the Company's assignment of this Agreement to the Trustee.
E. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Indenture.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Riviera Holdings and the Company hereby agree as
follows:
1. Definitions.
"Contribution Limitation" means the product of (i) $1.25
million and (ii) the number of fiscal quarters of Riviera Holdings contained in
the relevant Operating Period.
"First Operating Period" means the period beginning on the
first day of Riviera Holdings' first full fiscal quarter after the Riviera Black
Hawk becomes Operating through and including the last day of the fiscal year of
which such fiscal quarter is a part.
"Fourth Operating Period" means the period beginning
immediately following the end of the Third Operating Period through and
including the last day of the full fiscal quarter of Riviera Holdings ending
after the third anniversary of the date on which the Riviera Black Hawk became
Operating.
"Funding Amounts" means the Interest Contribution Amount (as
defined below) and the Cash Flow Contribution Amount (as defined below).
"Operating Period" means any of the First Operating Period,
Second Operating Period, Third Operating Period or Fourth Operating Period.
"Second Operating Period" means the first fiscal year of
Riviera Holdings after the First Operating Period.
"Target Consolidated Cash Flow" means, for any Operating
Period, the product of (i) $2.25 million and (ii) the number of fiscal quarters
of Riviera Holdings contained in such Operating Period.
"Third Operating Period" means the first fiscal year of
Riviera Holdings after the Second Operating Period.
2. Riviera Holdings' Commitments.
2.1. Fixed Interest Contribution Commitment. Subject to
Section 2.3 below, at least ten days prior to each date on which the
Company is required to pay the fixed interest payable on the Notes (the
"Fixed Interest Payment") which occurs before the end of the Fourth
Operating Period (each an "Fixed Interest Payment Date"), if the
Company does not have sufficient funds to make the required Fixed
Interest Payment on the Notes, the Company shall deliver to Riviera
Holdings (with a copy to the Trustee) a certificate stating:
(i) the amount of the Fixed Interest Payment
required to be made;
(ii) the amount of funds the Company has available to
make the Fixed Interest Payment (after taking into account
amounts on deposit in the Interest Reserve Account); and
(iii) the amount of additional cash that is needed in
order for the Company to make the Fixed Interest Payment (the
"Fixed Interest Contribution Amount").
Subject to Section 2.3 below, Riviera Holdings hereby unconditionally
and irrevocably agrees that, at least one business day prior to the
relevant Fixed Interest Payment Date, Riviera Holdings will make a
capital contribution in cash to the Company in an amount equal to any
Fixed Interest Contribution Amount.
2.2. Cash Flow Commitment. Subject to Section 2.3 below,
within 30 days after the end of each Operating Period, the Company
shall deliver to Riviera Holdings (with a copy to the Trustee) a
certificate stating:
(i) the amount of the Target Consolidated Cash
Flow for such Operating Period;
(ii) the Company's estimate, through its regular
internal accounting procedures, of its Consolidated Cash Flow
for such Operating Period (the "Applicable Consolidated Cash
Flow"); and
(iii) the amount of the Target Consolidated Cash Flow
for such Operating Period less the Applicable Consolidated
Cash Flow for such period determined as set forth in clause
(ii) above (the "Cash Flow Contribution Amount").
Subject to Section 2.3 below, Riviera Holdings hereby unconditionally
and irrevocably agrees that, within 45 days of the end of each
Operating Period, if the Cash Flow Contribution Amount for such
Operating Period is a positive number, Riviera Holdings will make a
capital contribution in cash to the Company in an amount equal to such
Cash Flow Contribution Amount, less any amounts previously contributed
by Riviera Holdings to the Company during such Operating Period
pursuant to Section 2.1 hereof.
2.3. Contribution Limitations. Notwithstanding any other terms
of this Agreement to the contrary, (i) the aggregate amount that
Riviera Holdings shall be required to contribute to the Company in any
Operating Period pursuant to Section 2.1 hereof and with respect to any
such Operating Period pursuant to Section 2.2 hereof will not exceed
the applicable Contribution Limitation for such Operating Period and
(ii) the aggregate amount that Riviera Holdings shall be required to
contribute to the Company in and with respect to all Operating Periods
pursuant to Sections 2.1 and 2.2 hereof will not exceed $10.0 million.
3. Cooperation. In connection with this Agreement, Riviera Holdings
agrees, at its sole cost and expense, to fully cooperate with the Company and to
timely provide such documents, agreements and information as may be required in
connection herewith.
4. Ability to Comply With This Agreement. Riviera Holdings shall, at
all times prior to the fulfillment of all of its obligations under this
Agreement, ensure that it has the ability to fulfill all of such obligations
under all other agreements to which it is a party, including the Indenture dated
as of August 13, 1997, among Riviera Holdings, the subsidiary guarantors
identified therein and Norwest Bank Minnesota, National Association, as trustee,
relating to the issuance of $175,000,000 principal amount of 10% First Mortgage
Notes due 2004 of Riviera Holdings.
In addition, Riviera Holdings shall not, at any time prior to
the fulfillment of all of its obligations under this Agreement, permit any other
agreement to which it is a party to in any way prohibit or interfere with its
ability to fulfill its obligations under this Agreement.
5. Alteration of Obligations. Riviera Holdings acknowledges and agrees
that none of the following shall release, impair, reduce, diminish or otherwise
affect Riviera Holdings' obligations under this Agreement: (i) any alteration,
compromise, acceleration or extension of, or any change to, (a) the Company's
obligations to complete the development, construction and equipping of the
Riviera Black Hawk and to commence operation thereof or (b) the payment or
performance by the Company or any guarantor under any debt instrument or other
financing for the development, construction, equipping or operation of the
Riviera Black Hawk (the foregoing, collectively, the "Obligations"), in each
case in such manner, upon such terms and at such times as any Person (including,
without limitation, the Trustee or any Holder) (each such Person, an "Obligee")
deems best, and without notice to Riviera Holdings; (ii) the release of the
Company or any guarantor from any or all of the Obligations by acceptance of a
deed in lieu of foreclosure or otherwise, as to all or any portion of the
Obligations; (iii) the release, substitution or addition of any one or more
guarantors or endorsers of the Funding Amounts or the Obligations; (iv) the
acceptance of additional or substitute security for the Funding Amounts or the
Obligations; or (v) the release or subordination of any security for the Funding
Amounts or the Obligations. No exercise (including, without limitation,
foreclosure of the Property) or non-exercise of any right under any document
relating to the Obligations (collectively, the "Obligation Documents") by an
Obligee, no dealing by an Obligee hereunder or under any Obligation Document or
any other document with Riviera Holdings, the Company or any other guarantors or
any other Person, and no change, impairment or release of all or any portion of
the Funding Amounts or the Obligations or suspension of any right or remedy of
an Obligee against any other Person, including, without limitation, the Company
or any other such guarantor, endorser or other Person, shall in any way affect
any of the obligations of Riviera Holdings hereunder or any security furnished
by Riviera Holdings or give Riviera Holdings any recourse against an Obligee
(including, without limitation, the Trustee). If an Obligee has exculpated or
hereafter exculpates the Company from liability in whole or in part, or has
agreed or hereafter agrees to look solely to the Property or any other property
for the satisfaction of the Company's Obligations (including, without limitation
the Company's obligations under the Indenture, the Notes or any Collateral
Document), such exculpation and agreement shall not affect the obligations of
Riviera Holdings hereunder. Riviera Holdings further acknowledges that any such
exculpation or agreement that has been given or that is hereafter given to the
Company with respect to the Notes, the Indenture or any Collateral Document has
been given or is given in reliance upon the covenants of Riviera Holdings
contained herein.
6. Obligations Absolute; Waiver. The obligations of Riviera Holdings
hereunder shall be unconditional (in accordance with the terms hereof), absolute
and continuing and, without limiting the generality of the foregoing, shall not
be released, discharged or otherwise affected by, and shall survive, and Riviera
Holdings hereby waives and relinquishes all rights and remedies accorded by
applicable law to sureties or guarantors and agrees not to assert or take
advantage of any such rights or remedies, including, without limitation, (a) any
right to require any holder or recipient of the benefit of any of the
Obligations (including, without limitation, the Trustee or the Holders) (each a
"Benefited Party") to proceed against the Company or any other Person or entity
or to proceed against or exhaust any security held by a Benefited Party at any
time or to pursue any other remedy in the power of a Benefited Party before
proceeding against Riviera Holdings; (b) the defense of the statute of
limitations in any action hereunder or in any action for the collection or
performance of the Funding Amounts or the Obligations; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of any
other Person or the failure of a Benefited Party to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other Person; (d) appraisal, valuation, stay, extension, marshaling of
assets, redemption, exemption, diligence, demand, presentment, protest and
notice of any kind, including, without limitation, notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or of
any action, non-action, performance or failure to perform on the part of a
Benefited Party, the Company, any endorser or creditor of the Company or Riviera
Holdings or on the part of any other Person under this or any other instrument
in connection with any obligation or evidence of indebtedness held by a
Benefited Party as collateral or in connection with the Funding Amounts or the
Obligations; (e) any defense based upon any exercise of remedies, including,
without limitation, foreclosure of the Property, or upon an election of remedies
by a Benefited Party, including, without limitation, an election to proceed by
non-judicial rather than judicial foreclosure, which destroys or otherwise
impairs the subrogation rights of Riviera Holdings, the right of Riviera
Holdings to proceed against the Company or any other person for reimbursement,
or both; (f) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal; (g) any duty on the part of
a Benefited Party to disclose to Riviera Holdings any facts a Benefited Party
may now or hereafter know about the Company or any other Person, regardless of
whether a Benefited Party has reason to believe that any such facts materially
increase the risk beyond that which Riviera Holdings intends to assume, or has
reason to believe that such facts are unknown to Riviera Holdings, or has a
reasonable opportunity to communicate such facts to Riviera Holdings, since
Riviera Holdings acknowledges that Riviera Holdings is fully responsible for
being and keeping informed of the financial condition of the Company or any
other Person and of all circumstances bearing on the risk of non-payment of any
Funding Amounts; (h) any defense arising because of the election of a Benefited
Party, in any proceeding instituted under the Federal Bankruptcy Code, of the
application of Section 1111(b)(2) of the Federal Bankruptcy Code; (i) any
defense based upon any borrowing or grant of a security interest under Section
364 of the Federal Bankruptcy Code; (j) any claim or other rights which it may
now or hereafter acquire against the Company or any other Person that arises
from the existence or performance of Riviera Holdings' obligations under this
Agreement or any other Obligation Document, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
any right to participate in any claim or remedy by a Benefited Party against the
Company or any collateral which a Benefited Party now has or hereafter acquires,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, by any payment made hereunder or otherwise, including,
without limitation, the right to take or receive from the Company or any other
Person or entity, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim or
other rights; (k) any rights which it may acquire by way of contribution under
this Agreement or any Obligation Document, by any payment made hereunder or
otherwise, including, without limitation, the right to take or receive from any
other Person, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such contribution rights;
(l) any defense based on one-action laws and any other anti-deficiency
protections granted to guarantors by applicable law; (m) any merger or
consolidation of the Company into or with any other Person, or any sale, lease
or transfer of any or all of the assets of the Company to any other Person; (n)
any circumstance which might constitute a defense available to, or a discharge
of, the Company, Riviera Holdings or a surety; (o) any lack of genuiness,
validity, regularity, enforceability or value of any Funding Amounts, this
Agreement or any Obligation Document; and (p) any other fact or circumstance,
including, without limitation, any fact or circumstance having an impact on the
cash flow of or the availability of funds to the Company. Any proceeds of a
foreclosure or similar sale may be applied first to any obligations of the
Company that do not also constitute Funding Amounts or Obligations.
Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to
impair or modify the rights or obligations otherwise expressly given to or
agreed to by Riviera Holdings in any of the Loan Documents. Riviera Holdings
acknowledges and agrees that any nonrecourse or exculpation provided for in any
Obligation Document, or any other provision of an Obligation Document limiting
each respective Benefited Party's recourse to specific collateral or limiting
such Benefited Party's right to enforce a deficiency judgment against the
Company, shall have absolutely no application to Riviera Holdings's liability
under this Agreement. To the extent that any Benefited Party (including, without
limitation, the Trustee) collects or receives any sums or payments from the
Company or from any guarantor, endorser or other Person under any Obligation
Document or realized from any security, such Benefited Party shall have the
right, but not the obligation, to apply such amounts first to that portion of
the Company's indebtedness and obligations, if any, to such Benefited Party that
is not covered by this Agreement, regardless of the manner in which any such
payments or amounts are characterized by the Person making payment.
7. Bankruptcy and Related Proceedings. The obligations of Riviera
Holdings under this Agreement shall not be altered, limited or affected by or as
a result of any action taken by the Company in any proceeding, voluntary or
involuntary, involving the bankruptcy, reorganization, insolvency, receivership,
or liquidation of the Company, or by any defense which the Company may have by
reason of any order, decree or decision of any court or administrative body
resulting from any such proceeding.
8. Interest. If Riviera Holdings fails to pay all or any portion of the
Funding Amounts in accordance with the provisions hereof, the amount of such
Funding Amounts and all other sums payable by Riviera Holdings hereunder shall
bear interest from the date of demand at the highest rate applicable to the
principal balance of the Notes or, if the Notes have been fully repaid, at the
highest rate that would be applicable if the Notes had not been fully repaid.
9. Independent Obligations. The obligations of Riviera Holdings
hereunder are independent of the obligations of the Company or any other Person
and, in the event of any default hereunder, a separate action or actions may be
brought and prosecuted against Riviera Holdings, whether or not the Company or
such other Person is joined therein or a separate action or actions are brought
against the Company.
10. Notices. Whenever Riviera Holdings or the Company shall desire to
give or serve any notice, demand, request or other communication with respect to
this Agreement, each such notice shall be in writing and shall be effective only
if the same is delivered by hand-delivery, first-class mail (registered or
certified, return receipt requested), telecopier or air courier guaranteeing
overnight delivery, addressed as follows:
To Riviera Holdings:
Riviera Holdings Corporation
2701 Las Vegas Boulvard South
Las Vegas, Nevada 89109
Attention: Executive Vice President of Finance
Telephone: (702) 734-5110
Facsimile: (702) 734-9277
To the Company:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Attention: Executive Vice President of Finance
Telephone: (702) 734-5110
Facsimile: (702) 734-9277
and, in either case, with a copy to the Trustee at:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Thomas S. Moser
Telephone: (212) 858-2558
Facsimile: (212) 858-2956
Any such notice delivered personally shall be deemed to have been received upon
delivery. Any such notice sent by telegram shall be presumed to have been
received by the addressee one business day after its acceptance for sending by
an authorized carrier thereof. Any such notice sent by mail shall be presumed to
have been received by the addressee three business days after posting in the
United States mail. Riviera Holdings or the Company may change its address by
giving the other and the Trustee a written notice of the new address as herein
provided.
11. Successors and Assigns. This Agreement shall inure to the benefit
of the Company, its successors and assigns, and shall bind the successors and
assigns of Riviera Holdings.
12. No Guarantee. Nothing contained in this Agreement shall be deemed
to be a guarantee by Riviera Holdings of any obligations of the Company under
the Notes.
13. Miscellaneous Provisions.
13.1. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Riviera Holdings
hereby consents to the jurisdiction of the courts of the State of New
York and consents to service of process by any means authorized by New
York law in any action brought under or arising from this Agreement.
13.2. Riviera Holdings acknowledges that it is aware of the
Indenture entered into by the Company and the Trustee, the Notes issues
thereunder and the Collateral Documents executed in connection
therewith and is generally familiar with the terms and provisions
thereof.
13.3. This Agreement shall constitute the entire agreement of
Riviera Holdings with the Company with respect to the subject matter
hereof, and no representation, understanding, promise or condition
concerning the subject matter hereof shall be binding upon the Company
unless expressed herein.
13.4. Should any term, covenant, condition or provision of
this Agreement be determined to be illegal or unenforceable, all other
terms, covenants, conditions and provisions hereof shall nevertheless
remain in full force and effect.
13.5. When the context and construction so require, all words
used in the singular herein shall be deemed to include the plural, the
masculine shall include the feminine and neuter, and vice versa.
13.6. No provision of this Agreement or right granted to the
Company hereunder can be waived in whole or in part, nor can Riviera
Holdings be released from its obligations hereunder, except by a
writing duly executed by an authorized officer of the Company.
13.7. The headings of this Agreement are inserted for
convenience only and shall have no effect upon the construction or
interpretation hereof.
(Signature Page Follows)
<PAGE>
[Signature Page to Keep-Well Agreement]
LA_DOCS\356151.4
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
RIVIERA HOLDINGS CORPORATION,
a Nevada corporation
By:
Name:
Title:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
Name:
Title:
RIVIERA BLACK HAWK, INC.
$45,000,000
13% FIRST MORTGAGE NOTES DUE 2005 WITH CONTINGENT INTEREST
PURCHASE AGREEMENT
May 27, 1999
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
Riviera Black Hawk, Inc., a Colorado corporation (the "Company"),
proposes to issue and sell to Jefferies & Company, Inc. (the "Initial
Purchaser") an aggregate of $45.0 million principal amount of its 13% First
Mortgage Notes due 2005 With Contingent Interest (the "Series A Notes"), subject
to the terms and conditions set forth herein. The Series A Notes and the Series
B Notes (as defined below) (the Series A Notes and the Series B Notes being
collectively referred to herein as the "Notes") will be issued pursuant to an
Indenture dated as of June 3, 1999 (the "Indenture"), between the Company and
IBJ Whitehall Bank & Trust Company, as trustee (the "Trustee"). The obligations
of the Company under the Notes will be secured by security interests in or
pledges of (the "Security Interests") certain of the Company's assets (the
"Collateral") as set forth in the Indenture. Capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Indenture.
1. Offering Circular.
The Series A Notes will be offered and sold to the Initial Purchaser
pursuant to one or more exemptions from the registration requirements under the
Securities Act of 1933, as amended (the "Act"). The Company has prepared a
preliminary offering circular dated May 14, 1999 (the "Preliminary Offering
Circular"), and a final offering circular dated May 27, 1999 (the "Final
Offering Circular" and, together with the Preliminary Offering Circular, the
"Offering Circular"), relating to the Series A Notes.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (the "ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (i) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(as defined in Rule 144A under the Act)(a "QIB"), (ii) IT HAS
ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE ACT OR (iii) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (as defined in Rule 501(A)(1), (2), (3) OR
(7) of Regulation D under the Act (an "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (i) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (ii) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (iii) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
ACT, (iv) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE ACT, (v) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
NOTE (the form of which can be obtained from the Trustee) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE ACT, (vi) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (vii) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE
TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2. Agreements To Sell And Purchase.
On the basis of the representations, warranties and covenants contained
in this Purchase Agreement (this "Agreement"), and subject to its terms and
conditions, the Company agrees to issue and sell to the Initial Purchaser and
the Initial Purchaser agrees to purchase from the Company, an aggregate
principal amount of $45.0 million of Series A Notes at a purchase price equal to
96.0% of the principal amount thereof (the "Purchase Price").
3. Terms of Offering.
The Initial Purchaser has advised the Company that the Initial
Purchaser will make offers (the "Exempt Resales") of the Series A Notes
purchased hereunder on the terms set forth in the Offering Circular, as amended
or supplemented, solely to (i) persons whom the Initial Purchaser reasonably
believe to be "qualified institutional buyers" as defined in Rule 144A under the
Act ("QIBs") and (ii) a limited number of other institutional "accredited
investors," as defined in Rule 501(a) (1), (2), (3) or (7) under the Act, that
make certain representations and agreements to the Company as set forth as Annex
A to the Offering Circular (each, an "Accredited Institution", and together with
the QIBs, the "Eligible Purchasers"). The Initial Purchaser will offer the
Series A Notes to Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement") to be dated the Closing Date (as defined
below), in substantially the form of Exhibit A hereto, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Company's 13% Series B First Mortgage Notes due 2005 With Contingent
Interest (the "Series B Notes") to be offered in exchange for the Series A Notes
and (ii) a shelf registration statement pursuant to Rule 415 under the Act (the
"Shelf Registration Statement" and, together with the Exchange Offer
Registration Statement, the "Registration Statements") relating to the resale by
certain holders of the Series A Notes, and to use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer.
The Notes will be secured obligations and the Company will enter into a
deed of trust, a security agreement, a collateral assignment, a cash collateral
and disbursement agreement, a pledge agreement, uniform commercial code
financing and fixture statements and certain other collateral agreements
(collectively the "Collateral Documents") dated as of the Closing Date in favor
of the Trustee that will provide for the grant of Security Interests in the
Collateral to the Trustee for the benefit of the holders of the Notes. The
Security Interests will secure the payment and performance when due of all the
respective obligations of the Company under the Notes, the Indenture and the
Collateral Documents. The following documents are hereinafter collectively
referred to as "Operative Documents": (i) this Agreement, (ii) the Indenture,
(iii) the Notes, (iv) the Registration Rights Agreement, (v) the Collateral
Documents, (vi) the Completion Capital Commitment (the "Completion Capital
Commitment") to be dated as of the Closing Date by Riviera Holdings Corporation,
a Nevada corporation ("Riviera Holdings"), and the Company, (vii) the Keep-Well
Agreement (the "Keep-Well Agreement") to be dated as of the Closing Date by
Riviera Holdings and the Company, (viii) the Standard Form of Agreement Between
Owner and Contractor for the construction of the Riviera Black Hawk Casino dated
December 29, 1997 (the "Construction Agreement"), executed by The Weitz Company,
Inc. and the Company (as amended, modified or supplemented from time to time),
(ix) the Standard Form of Agreement Between Owner and Architect for the design
of the Riviera Black Hawk Casino dated July 29, 1998 (the "Architect Agreement")
executed by Melick Associates, Inc. and the Company (as amended, modified or
supplemented from time to time), (x) the Management Agreement (the "Management
Agreement") to be dated as of the Closing Date between the Company and Riviera
Gaming Management of Colorado, Inc., a Colorado corporation ("Riviera Gaming
Management"), as Manager, (xi) the Manager Subordination Agreement (the "Manager
Subordination Agreement") to be dated as of the Closing Date by Riviera Gaming
Management in favor of the Trustee, (xii) the Trademark License Agreement (the
"License Agreement") to be dated as of the Closing Date between the Company and
Riviera Operating Corporation, a Nevada corporation ("Riviera Operating
Corporation") and (xiii) the Tax Sharing Agreement (the "Tax Sharing Agreement")
to be dated as of the Closing Date between the Company and Riviera Holdings.
4. Delivery and Payment.
(a) Delivery of, and payment of the Purchase Price for, the Series A
Notes (the "Closing") shall be made at 7:00 a.m., Los Angeles time, on June 3,
1999 (the "Closing Date"), at the offices of Latham & Watkins, 633 West Fifth
Street, Suite 4000, Los Angeles, California 90071, or such other time or place
as the Initial Purchaser and the Company shall designate.
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the aggregate
principal amount of the Series A Notes (collectively, the "Global Note"), shall
be delivered by the Company to the Initial Purchaser (or as the Initial
Purchaser directs) in each case with any transfer taxes thereon duly paid by the
Company against payment by the Initial Purchaser of the Purchase Price therefor
by wire transfer in same day funds to the order of the Company, provided that
the Company shall give at least two business days' prior written notice of the
information required to effect such wire transfer. The Global Note shall be made
available to the Initial Purchaser for inspection not later than 10:00 a.m., Los
Angeles time, on the business day immediately preceding the Closing Date.
5. Agreements of the Company.
The Company hereby agrees with the Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by the
Initial Purchaser, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Series A Notes for offering or sale in any
jurisdiction designated by the Initial Purchaser pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or other federal or state regulatory authority for such purpose and (ii) of the
happening of any event during the period referred to in Section 5(c) hereof that
makes any statement of a material fact made in the Preliminary Offering Circular
or the Final Offering Circular untrue or that requires the making of any
additions to or changes in the Preliminary Offering Circular or the Final
Offering Circular in order to make the statements therein not misleading. The
Company shall use its best efforts to prevent the issuance of any stop order or
order suspending the qualification or exemption of any of Series A Notes under
any state securities or Blue Sky laws, and if at any time any state securities
commission or other federal or state regulatory authority shall issue an order
suspending the qualification or exemption of any Series A Notes under any state
securities or Blue Sky laws, the Company shall use its best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchaser and those persons identified by
the Initial Purchaser to the Company as many copies of the Preliminary Offering
Circular and the Final Offering Circular, and any amendments or supplements
thereto, as the Initial Purchaser may reasonably request. Subject to the Initial
Purchaser's compliance with its representations and warranties and agreements
set forth in Section 8 hereof, the Company consents to the use of the
Preliminary Offering Circular and the Final Offering Circular, and any
amendments and supplements thereto required pursuant hereto, by the Initial
Purchaser in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchaser an Offering Circular is required by law to be delivered in connection
with Exempt Resales by the Initial Purchaser and in connection with
market-making activities of the Initial Purchaser for so long as any Series A
Notes are outstanding, (i) not to make any amendment or supplement to the
Offering Circular of which the Initial Purchaser shall not previously have been
advised or to which the Initial Purchaser shall reasonably object after being so
advised and (ii) to prepare promptly upon the Initial Purchaser's reasonable
request, any amendment or supplement to the Offering Circular which may be
necessary or advisable in connection with such Exempt Resales or such
market-making activities.
(d) If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the judgment of
the Company or in the reasonable judgment of counsel to the Initial Purchaser,
it becomes necessary to amend or supplement the Offering Circular in order to
make the statements therein, in the light of the circumstances when such
Offering Circular is delivered to an Eligible Purchaser, not misleading, or if,
in the reasonable judgment of counsel to the Initial Purchaser, it is necessary
to amend or supplement the Offering Circular to comply with any applicable law,
forthwith to notify the Initial Purchaser and to prepare an appropriate
amendment or supplement to such Offering Circular so that the statements
therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Circular will comply with applicable law, and to furnish to the Initial
Purchaser and such other persons as the Initial Purchaser may designate such
number of copies thereof as the Initial Purchaser may reasonably request.
(e) Prior to the sale of all Series A Notes pursuant to Exempt Resales
as contemplated hereby, to cooperate with the Initial Purchaser and counsel to
the Initial Purchaser in connection with the registration or qualification of
the Series A Notes for offer and sale to the Initial Purchaser and pursuant to
Exempt Resales under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchaser may request and to continue such qualification in effect
so long as required for Exempt Resales and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that the Company shall not be
required in connection therewith to register or qualify as a foreign corporation
in any jurisdiction in which it is not now so qualified or to take any action
that would subject it to general consent to service of process or taxation,
other than as to matters and transactions relating to the Preliminary Offering
Circular, the Final Offering Circular or Exempt Resales, in any jurisdiction in
which it is not now so subject.
(f) To apply the proceeds from the sale of the Series A Notes as set
forth under the caption "Use of Proceeds" in the Offering Circular and to comply
with the provisions of the Collateral Documents concerning disbursement of
funds, subject to such procedural modifications that are permitted under the
Cash Collateral and Disbursement Agreement (as defined in the Indenture).
(g) So long as any Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(h) So long as the Notes are outstanding, to furnish to the Initial
Purchaser as soon as available copies of all reports or other communications
furnished by the Company to its security holders or furnished to or filed with
the Commission or any national securities exchange on which any class of
securities of the Company is listed and such other publicly available
information concerning the Company or its subsidiaries as the Initial Purchaser
may reasonably request.
(i) So long as any of the Series A Notes remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder of Series A Notes in connection with any sale thereof
and any prospective purchaser of such Series A Notes from such holder, the
information ("Rule 144A Information") required by Rule 144A(d)(4) under the Act.
(j) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Company and accountants of the Company in connection with the sale and
delivery of the Series A Notes to the Initial Purchaser and pursuant to Exempt
Resales, and all other fees or expenses in connection with the preparation,
printing, filing and distribution of the Preliminary Offering Circular, the
Final Offering Circular and all amendments and supplements to any of the
foregoing (including financial statements) specified in Section 5(b) and 5(c)
prior to or during the period specified in Section 5(c), including the mailing
and delivering of copies thereof to the Initial Purchaser and persons designated
by it in the quantities specified herein, (ii) all costs and expenses related to
the transfer and delivery of the Series A Notes to the Initial Purchaser and
pursuant to Exempt Resales, including any transfer or other taxes payable
thereon, (iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in connection with the
offering, purchase, sale or delivery of the Series A Notes, (iv) the performance
by the Company of its other obligations under this Agreement and the other
Operative Documents, (v) all expenses in connection with the registration or
qualification of the Series A Notes for offer and sale under the securities or
Blue Sky laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky memoranda in connection therewith
(including the filing fees and fees and disbursements of counsel for the Initial
Purchaser in connection with such registration or qualification and memoranda
relating thereto), (vi) the cost of printing certificates representing the
Series A Notes, (vii) all expenses and listing fees in connection with the
application for quotation of the Series A Notes on the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") system of the National
Association of Securities Dealers, Inc. ("NASD"), (viii) the fees and expenses
of the Trustee and the Trustee's counsel in connection with the Indenture and
the Notes, (ix) the costs and charges of any transfer agent, registrar or
depositary (including DTC), (x) any fees charged by rating agencies for the
rating of the Notes, (xi) all costs and expenses of the Exchange Offer and any
Registration Statement, as set forth in the Registration Rights Agreement, (xii)
the fees and expenses of the Disbursement Agent (as defined in the Indenture)
pursuant to the Cash Collateral and Disbursement Agreement, (xiii) "roadshow"
travel and other expenses incurred in connection with the marketing and sale of
the Notes, (xiv) all fees, disbursements and out-of-pocket expenses incurred by
the Initial Purchaser (including, without limitation, the fees and disbursements
of counsel for the Initial Purchaser up to $450,000 unless otherwise agreed to
in writing by the Company, travel and lodging expenses, word processing charges,
messenger and duplicating services, facsimile expenses and other customary
expenditures) and (xv) and all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section.
(k) To use its reasonable best efforts to effect the inclusion of the
Series A Notes in PORTAL and to maintain the listing of the Series A Notes on
PORTAL for so long as any Series A Notes are outstanding.
(l) To obtain the approval of DTC for "book-entry" transfer of the
Notes, and to comply with all of its agreements set forth in the representation
letters of the Company to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(m) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
warrants, rights or options to purchase or otherwise acquire debt securities of
the Company substantially similar to the Notes (other than the Notes), without
the prior written consent of the Initial Purchaser.
(n) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchaser or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Series A Notes under the Act.
(o) To the extent it may lawfully do so, not to voluntarily claim, and
to actively resist any attempts to claim, the benefit of any usury laws against
the holders of any Notes.
(p) To cause the Exchange Offer to be made in the appropriate form to
permit the Series B Notes registered pursuant to the Act to be offered in
exchange for the Series A Notes and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(q) To comply with all of its agreements set forth in the Registration
Rights Agreement.
(r) To diligently seek the issuance of any Authorization (as defined
herein) which is necessary for the Company to develop, own and operate the
Riviera Black Hawk (as defined in the Indenture) to be issued, including without
limitation, any necessary Authorization to be issued by any Gaming Authority (as
defined in the Indenture) or Liquor Licensing Authority (as defined in the
Indenture).
(s) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes.
6. Representations and Warranties of the Company
As of the date hereof, the Company represents and warrants to, and
agrees with, the Initial Purchaser that:
(a) The Preliminary Offering Circular as of its date does not and the
Final Offering Circular as of its date and the date hereof does not and as of
the Closing Date will not, and any supplement or amendment to either of them
will not, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in this
paragraph (a) shall not apply to statements in or omissions from the Preliminary
Offering Circular or the Final Offering Circular (or any supplement or amendment
thereto) based upon information relating to the Initial Purchaser furnished to
the Company by the Initial Purchaser expressly for use therein. No stop order
preventing the use of the Preliminary Offering Circular or the Final Offering
Circular, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued and no proceeding for that
purpose has commenced or is pending or, to the knowledge of the Company, is
contemplated.
(b) The Company is duly organized, validly existing as a corporation
and in good standing under the laws of the State of Colorado and has all
corporate power and authority to carry on its business as described in the
Preliminary Offering Circular and the Final Offering Circular and to own, lease
and operate its properties, and is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where failure to be so qualified and in good standing
would not have a material adverse effect. The Company does not have any
subsidiaries.
(c) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.
(d) The Company does not have any outstanding options to purchase, or
any preemptive rights or other rights to subscribe for or purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, equity interests or any such options, rights, convertible
securities or obligations.
(e) This Agreement has been duly authorized, executed and delivered by
the Company.
(f) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been validly executed and delivered by the Company. When
the Indenture has been duly executed and delivered by the Company, the Indenture
will be a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as (A) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (B) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(g) The Series A Notes have been duly authorized and, on the Closing
Date, will have been validly executed and delivered by the Company. When the
Series A Notes have been issued, executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the Closing Date,
the Series A Notes will conform to the description thereof contained in the
Offering Circular.
(h) The Series B Notes have been duly authorized by the Company. When
the Series B Notes are issued, executed and authenticated in accordance with the
terms of the Exchange Offer and the Indenture, the Series B Notes will be
entitled to the benefits of the Indenture and will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(i) When issued, the Notes will rank pari passu in rights of payment
with all of the Company's other senior indebtedness and will rank senior in
right of payment to all subordinated indebtedness of the Company.
(j) Each of the Operative Documents to which the Company is a party has
been duly authorized by the Company and, on the Closing Date, will have been
duly executed and delivered by the Company. When each of the Operative Documents
to which the Company is a party has been duly executed and delivered, each of
them will be a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, each of the Registration Rights Agreement,
the Collateral Documents, the Completion Capital Commitment, the Keep-Well
Agreement, the Construction Agreement, the Architect Agreement, the Management
Agreement, the License Agreement and the Tax Sharing Agreement will conform in
all material respects to the description thereof contained in the Offering
Circular.
(k) The execution, delivery and performance by the Company of the
Operative Documents to which the Company is a party, compliance by the Company
with all provisions thereof and the consummation of the transactions
contemplated thereby do not and will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states, those that the Company would not
customarily possess at the date hereof but which will be obtained in the
ordinary course of development of the Riviera Black Hawk and those to be issued
by any Gaming Authority or Liquor Licensing Authority which are necessary for
the Company to own and operate the Riviera Black Hawk), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or bylaws of the Company, or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the
Company, to which the Company is a party or by which the Company or its property
is bound, except to the extent such conflict, breach or default will not have a
Material Adverse Effect (as defined below), (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over the Company or its
property (including, without limitation, any Gaming Law), except to the extent
such violation or conflict will not have a Material Adverse Effect (iv) result
in the imposition or creation of (or the obligation to create or impose) a Lien
under, any agreement or instrument to which the Company is a party or by which
the Company or its property is bound, except to the extent such imposition or
creation will not have a Material Adverse Effect or (v) result in the
termination or revocation of any Authorization of the Company or result in any
other impairment of the rights of the holder of any such Authorization, except
to the extent such termination, revocation or impairment will not have a
Material Adverse Effect.
(l) The Company is not in violation of its charter or bylaws or in
default in the performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other agreement
or instrument that is material to the Company to which the Company is a party or
by which the Company or its property is bound. There does not exist any state of
facts which constitutes an event of default on the part of the Company as
defined in such documents or which, with notice or lapse of time or both, would
constitute such an event of default.
(m) There are no legal or governmental proceedings pending or
threatened to which the Company is or could be a party or to which any of its
property is or could be subject, which could reasonably be expected to (i)
result, singly or in the aggregate, in a material adverse effect on the
business, financial condition or results of operations of the Company, (ii)
interfere with the issuance or marketability of the Notes or (iii) draw into
question the validity of any of the Operative Documents (the occurrence of any
events which causes a result described in clause (i), (ii) or (iii) above is
referred to herein as a "Material Adverse Effect").
(n) The Company has not violated any foreign, federal, state or local
law or regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws") or any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(o) Other than as disclosed in the Offering Circular, there exists no
fact, and no event has occurred, which has or is reasonably likely to result in
material liability (including, without limitation, alleged or potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damages, personal injuries or penalties) of
the Company arising out of, based on or resulting from the presence or release
into the environment of any hazardous material (including without limitation any
pollutant or contaminant or hazardous, dangerous or toxic chemical, material,
waste or substance regulated under or within the meaning of any Environmental
Law) or any violation of any Environmental Law, except such as could not
reasonably be expected to have a Material Adverse Effect.
(p) The Company has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an "Authorization") of,
and has made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its properties and to
conduct its business in the manner described in the Offering Circular, except
for Authorizations which the Company would not customarily possess at the date
hereof but which will be obtained in the ordinary course of development of the
Riviera Black Hawk and those to be issued by any Gaming Authority or Liquor
Licensing Authority which are necessary for the Company to own and operate the
Riviera Black Hawk. No such Authorization contains, or will upon the issuance
thereof contain, a materially burdensome restriction. Each such Authorization is
valid and in full force and effect and the Company is in compliance with all the
terms and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto. No
event has occurred (including, without limitation, the receipt of any notice
from any authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such Authorization.
The Company has no reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization. The Company
has no reason to believe that any such Authorization necessary in the future to
own or operate the Riviera Black Hawk in the manner described in the Offering
Circular, including without limitation, any Gaming License or Liquor License,
will not be granted upon application (or, alternatively, that the necessity to
obtain such license, permit or approval will not be waived), or that any Gaming
Authority or Liquor Licensing Authority or any other governmental agencies are
investigating the Company or related parties, other than in ordinary course
administrative reviews or any ordinary course review of the transactions
contemplated hereby.
(q) The accountants, Deloitte & Touche LLP, that have certified the
financial statements and supporting schedules included in the Preliminary
Offering Circular and the Final Offering Circular are independent public
accountants with respect to the Company, as required by the Act and the Exchange
Act. The historical financial statements, together with related schedules and
notes, set forth in the Preliminary Offering Circular and the Final Offering
Circular comply as to form in all material respects with the requirements
applicable to registration statements on Form S-1 under the Act.
(r) The historical financial statements, together with related
schedules and notes forming part of the Offering Circular (and any amendment or
supplement thereto), present fairly the financial position, results of
operations and changes in financial position of the Company on the basis stated
in the Offering Circular at the respective dates or for the respective periods
to which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set forth
in the Offering Circular (and any amendment or supplement thereto) are, in all
material respects, accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company. The
forward-looking statements contained in the Offering Circular are based upon
good faith estimates and assumptions believed by the Company to be reasonable
when made.
(s) The Company is not and, after giving effect to the offering and
sale of the Series A Notes and the application of the net proceeds thereof as
described in the Offering Circular, will not be, an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended.
(t) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with the Notes
registered pursuant to any Registration Statement.
(u) Neither the Company nor any agent thereof acting on the Company's
behalf has taken, and none of them will take, any action that might cause this
Agreement or the issuance or sale of the Series A Notes to violate Regulation G
(12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(v) Since the respective dates as of which information is given in the
Offering Circular other than as set forth in the Offering Circular (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there has not occurred any material adverse change in the financial
condition, or the earnings, business, management or operations of the Company,
(ii) there has not been any material adverse change in the capital stock or in
the long-term debt of the Company and (iii) the Company has not incurred any
material liability or obligation, direct or contingent which has not been
disclosed therein.
(w) Each of the Preliminary Offering Circular and the Final Offering
Circular, as of its date, contains all the information specified in, and meeting
the requirements of, Rule 144A(d)(4) under the Act.
(x) When the Series A Notes are issued and delivered pursuant to this
Agreement, the Series A Notes will not be of the same class (within the meaning
of Rule 144A under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated inter-dealer quotation system.
(y) No form of general solicitation or general advertising (as defined
in Regulation D under the Act) was used by the Company, or any of its
representatives (other than the Initial Purchaser, as to whom the Company makes
no representation) in connection with the offer and sale of the Series A Notes
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold by
the Company within the six-month period immediately prior to the date hereof.
(z) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(aa) Assuming (i) that the Series A Notes are issued, sold and
delivered under the circumstances contemplated by the Offering Circular and this
Agreement, (ii) that the Initial Purchaser's representations and warranties in
Section 8 hereof are true, (iii) that the representations of the Accredited
Institutions in the form set forth in Annex A to the Offering Circular are true,
(iv) compliance by the Initial Purchaser with its covenants set forth in Section
8 hereof and (v) that each of the Eligible Purchasers is a QIB or an Accredited
Institution, the purchase of the Series A Notes by the Initial Purchaser
pursuant hereto and the initial resale of the Series A Notes pursuant hereto
pursuant to the Exempt Resales is exempt from the registration requirements of
the Act.
(bb) No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act (i) has imposed (or
has informed the Company that it is considering imposing) any condition
(financial or otherwise) on the Company's retaining any rating assigned as of
the date hereof to the Company or any securities of the Company or (ii) has
indicated to the Company that it is considering (A) the downgrading, suspension
or withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (B) any change in
the outlook for any rating of the Company.
(cc) Each certificate signed by any officer of the Company and
delivered to the Initial Purchaser or counsel for the Initial Purchaser shall be
deemed to be a representation and warranty of the Company to the Initial
Purchaser as to the matters covered thereby.
(dd) The Company has good and marketable title in fee simple to all
real property (including, without limitation, the real property constituting the
Riviera Black Hawk) and good and marketable title to all personal property owned
by the Company which is material to the business of the Company, free and clear
of Liens and defects, except such as are described in the Offering Circular, or
such as are contemplated under the Operative Documents, or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company. Any real property
held under lease or sublease by the Company is held under valid, subsisting and
enforceable leases or subleases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such property by the
Company, except as described in the Offering Circular. Except as would not,
singly or in the aggregate, have a Material Adverse Effect, the Company does not
have any notice of any default or material claim of any sort that has been
asserted by anyone adverse to the rights of the Company under any of the leases
or subleases mentioned above, or affecting or questioning the rights of the
Company to the continued possession of the leased or subleased premises under
any such lease or sublease.
(ee) The Company owns or possesses, or, upon the execution of the
License Agreement dated as of the Closing Date between the Company and Riviera
Operating Corporation, and subject to the terms thereof, will have a license for
the use of all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names ("Intellectual Property") to be employed by it in
connection with the operation of its business in the manner described in the
Offering Circular, except where the failure to own or possess or license such
intellectual property would not, singly or in the aggregate, have a Material
Adverse Effect; and the Company has not received any notice of infringement of
or conflict with asserted rights of others with respect to any such Intellectual
Property.
(ff) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged. The Company has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers at a cost that would not have a Material Adverse Effect.
(gg) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(hh) All material tax returns required to be filed by the Company in
any jurisdiction have been filed, other than those filings being contested in
good faith, and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company have been paid, other than
those being contested in good faith and for which adequate reserves have been
provided.
(ii) The contemplated operation and use of the Riviera Black Hawk,
including the construction of the Riviera Black Hawk, will be (giving effect to
any waivers or variances which may be obtained) in compliance with all
applicable municipal, county, state and federal laws, regulations, ordinances,
standards, orders, and other regulations, where the failure to comply therewith
could have a Material Adverse Effect. Under applicable zoning and use laws,
ordinances, rules and regulations, the Riviera Black Hawk may be used for the
purposes contemplated in the Offering Circular, the Indenture and the Collateral
Documents, and all necessary approvals have been obtained therefor, except for
approvals which the Company would not customarily possess at the date hereof but
which will be obtained in the ordinary course of development of the Riviera
Black Hawk.
(jj) Upon execution and delivery of the Collateral Documents (other
than the Pledge Agreement and the Pledge and Assignment Agreement) by the
parties thereto and completion of the filings and recordings contemplated
thereby, the security interests created for the benefit of the Trustee and the
holders of the Notes pursuant to the Collateral Documents (other than the Pledge
Agreement and the Pledge and Assignment Agreement) will constitute valid,
perfected first priority security interests in the collateral subject thereto
subject to "Permitted Liens" as defined in the Indenture.
(kk) All notice filings to be made pursuant to the Collateral Documents
(including without limitation all financing statements) are in proper form to be
filed in order to perfect a security interest in the collateral described
therein.
(ll) At all times after execution and delivery of the Pledge and
Assignment and the Account Agreement (as defined therein) and completion of the
filings and recordings contemplated thereby, the security interests created for
the benefit of the Trustee and the holders of the Notes pursuant to the Pledge
and Assignment Agreement will constitute valid, perfected first priority
security interests in the collateral subject thereto.
(mm) The Initial Purchaser has been furnished with a copy of the plans
and specifications for the construction of the improvements of the Riviera Black
Hawk and other necessary expenditures. Such plans and specifications are
satisfactory to the Company. The anticipated cost of such improvements
(including interest, legal, architectural, engineering, planning, zoning and
other similar costs) does not exceed the amounts for such costs set forth under
the caption "Use of Proceeds" in the Offering Circular. The Company is not aware
of any material defects in such improvements. In addition, each of the other
amounts set forth in the section entitled "Sources and Uses of Funds" under the
caption "Use of Proceeds" in the Offering Circular are based upon reasonable
assumptions as to all matters material to the estimates set forth therein and
are not expected by the Company to exceed the amounts set forth for such items.
(nn) The Company has prepared the Construction Disbursement Budget (as
defined in the Cash Collateral and Disbursement Agreement) and the Construction
Schedule (as defined in the Cash Collateral and Disbursement Agreement) and has
developed the assumptions on which the Construction Disbursement Budget and
Construction Schedule are based. The Construction Disbursement Budget and the
Construction Schedule are, as of the Closing Date, (i) in the opinion of the
Company, based on reasonable assumptions as to all legal and factual matters
material to the estimates set forth therein, (ii) call for the construction of
the Minimum Facilities (as defined in the Indenture) on or prior to the
Operating Deadline and (iii) consistent with the provisions of the Indenture and
the other Operative Documents.
(oo) The Company acknowledges that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 10 hereof, counsel to the Company and counsel to the Initial Purchaser,
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
7. Representations and Warranties of Riviera Holdings
As of the date hereof, Riviera Holdings represents and warrants to, and
agrees with, the Initial Purchaser that:
(a) Each of Riviera Holdings, Riviera Gaming Management and Riviera
Operating Corporation is duly organized, validly existing as a corporation and
in good standing under the laws of its jurisdiction of incorporation and has all
corporate power and authority to carry on its business and to own, lease and
operate its properties, and is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification. Riviera Holdings indirectly owns all of the outstanding capital
stock of Riviera Gaming Management and Riviera Operating Corporation.
(b) This Agreement has been duly authorized, executed and delivered by
Riviera Holdings.
(c) Each of the Collateral Documents to which Riviera Holdings is a
party, the Completion Capital Commitment, the Keep-Well Agreement, and the Tax
Sharing Agreement has been duly authorized by Riviera Holdings and, on the
Closing Date, will have been validly executed and delivered by Riviera Holdings.
When the Collateral Documents to which Riviera Holdings is a party, the
Completion Capital Commitment, the Keep-Well Agreement, and the Tax Sharing
Agreement have been duly executed and delivered by Riviera Holdings, each of
them will be a valid and binding agreement of Riviera Holdings, enforceable
against Riviera Holdings in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, each of the Completion Capital
Commitment, the Keep-Well Agreement, and the Tax Sharing Agreement will conform
to the description thereof contained in the Offering Circular.
(d) The execution, delivery and performance of this Agreement, the
Collateral Documents to which Riviera Holdings is a party, the Completion
Capital Commitment, the Keep-Well Agreement and the Tax Sharing Agreement and
compliance by Riviera Holdings with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not (i)
require any consent, approval, authorization or other order of, or qualification
with, any court or governmental body or agency (except such as may be required
under the securities or Blue Sky laws of the various states), (ii) conflict with
or constitute a breach of any of the terms or provisions of, or a default under,
the operating agreement, charter or bylaws of Riviera Holdings, or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to Riviera Holdings, to which Riviera Holdings is a party or by
which Riviera Holdings or its property is bound, (iii) violate or conflict with
any applicable law or any rule, regulation, judgment, order or decree of any
court or any governmental body or agency having jurisdiction over Riviera
Holdings or its property or (iv) result in the imposition or creation of (or the
obligation to create or impose) a Lien under, any agreement or instrument to
which Riviera Holdings is a party or by which Riviera Holdings or its property
is bound.
(e) Each of the Collateral Documents to which Riviera Gaming Management
is a party, the Management Agreement and the Manager Subordination Agreement has
been duly authorized by Riviera Gaming Management and, on the Closing Date, will
have been validly executed and delivered by Riviera Gaming Management. When each
of the Collateral Documents to which Riviera Gaming Management is a party, the
Management Agreement and the Manager Subordination Agreement has been duly
executed and delivered by Riviera Gaming Management, each of them will be a
valid and binding agreement of Riviera Gaming Management, enforceable against
Riviera Gaming Management in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the Management Agreement will
conform to the description thereof contained in the Offering Circular.
(f) The execution, delivery and performance of the Collateral Documents
to which Riviera Gaming Management is a party, the Management Agreement, and the
Manager Subordination Agreement and compliance by Riviera Gaming Management with
all provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) require any consent,
approval, authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states and as may be required by a Gaming
Authority which is necessary for Riviera Gaming Management to perform its
obligations under the Management Agreement), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the operating
agreement, charter or bylaws of Riviera Gaming Management, or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to Riviera Gaming Management, to which Riviera Gaming Management is a
party or by which Riviera Gaming Management or its property is bound, (iii)
violate or conflict with any applicable law or any rule, regulation, judgment,
order or decree of any court or any governmental body or agency having
jurisdiction over Riviera Gaming Management or its property (including, without
limitation, any Gaming Law) or (iv) result in the imposition or creation of (or
the obligation to create or impose) a Lien under, any agreement or instrument to
which Riviera Gaming Management is a party or by which Riviera Gaming Management
or its property is bound.
(g) The License Agreement has been duly authorized by Riviera Operating
Corporation and, on the Closing Date, will have been validly executed and
delivered by Riviera Operating Corporation. When the License Agreement has been
duly executed and delivered by Riviera Operating Corporation, it will be a valid
and binding agreement of Riviera Operating Corporation, enforceable against
Riviera Operating Corporation in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the License Agreement will conform
to the description thereof contained in the Offering Circular.
(h) The execution, delivery and performance of the License Agreement
and compliance by Riviera Operating Corporation with all provisions hereof and
thereof and the consummation of the transactions contemplated hereby and thereby
do not and will not (i) require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky laws of the
various states), (ii) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the operating agreement, charter or bylaws
of Riviera Operating Corporation, or any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to Riviera Operating
Corporation, to which Riviera Operating Corporation is a party or by which
Riviera Operating Corporation or its property is bound, (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
Riviera Operating Corporation or its property or (iv) result in the imposition
or creation of (or the obligation to create or impose) a Lien under, any
agreement or instrument to which Riviera Operating Corporation is a party or by
which Riviera Operating Corporation or its property is bound.
(i) Riviera Operating Corporation owns all trademarks which are to be
licensed to the Company pursuant to the terms of the License Agreement for use
by the Company at the Riviera Black Hawk and Riviera Operating Corporation has
not received any notice of, and is not otherwise aware of, any infringement of,
or conflict with, asserted rights of others with respect to the foregoing.
(j) As of the Closing Date, neither Riviera Holdings nor any of its
subsidiaries will have any debts or liabilities other than (i) the Notes, (ii)
the Keep-Well Agreement, (iii) the Completion Capital Commitment and (iv) as
described in its Form 10-K for the fiscal year ended December 31, 1998.
(k) Set forth on Exhibit C is a schedule of the nature of and the
amount of pre-development and construction costs which have been or will be
incurred by Riviera Holdings with respect to the Riviera Black Hawk prior to the
Closing Date as described in the Offering Circular.
8. Representations and Warranties of the Initial Purchaser.
The Initial Purchaser represents and warrants to, and agrees with, the
Company that:
(a) The Initial Purchaser is either a QIB or an Accredited Institution
with such knowledge and experience in financial and business matters as are
necessary in order to evaluate the merits and risks of an investment in the
Series A Notes.
(b) The Initial Purchaser (i) is not acquiring the Series A Notes with
a view to any distribution thereof or with any present intention of offering or
selling any of the Series A Notes in a transaction that would violate the Act or
the securities laws of any State of the United States or any other applicable
jurisdiction and (ii) will be reoffering and reselling the Series A Notes only
to QIBs in reliance on the exemption from the registration requirements of the
Act provided by Rule 144A and to a limited number of Accredited Institutions
that execute and deliver a letter containing certain representations and
agreements in the form attached as Annex A to the Offering Circular.
(c) The Initial Purchaser agrees that no form of general solicitation
or general advertising (within the meaning of Regulation D under the Act) has
been or will be used by the Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Series A Notes pursuant hereto,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium, or broadcast over
television or radio, or transmitted over the internet, or communicated in any
seminar or meeting whose attendees have been invited by any general solicitation
or general advertising.
(d) The Initial Purchaser agrees that, in connection with Exempt
Resales, it will solicit offers to buy the Series A Notes only from, and will
offer to sell the Series A Notes only to, Eligible Purchasers. The Initial
Purchaser further agrees that it will offer to sell the Series A Notes only to,
and will solicit offers to buy the Series A Notes only from (i) Eligible
Purchasers that the Initial Purchaser reasonably believes are QIBs and (ii)
Accredited Institutions who make the representations contained in, and execute
and return to the Initial Purchaser, a certificate in the form of Annex A
attached to the Offering Circular, in each case, that agree that (A) the Series
A Notes purchased by them may be resold, pledged or otherwise transferred within
the time period referred to under Rule 144(k) (taking into account the
provisions of Rule 144(d) under the Act, if applicable) under the Act, as in
effect on the date of the transfer of such Series A Notes, only (1) to the
Company, (2) to a person whom the seller reasonably believes is a QIB purchasing
for its own account or for the account of a QIB in a transaction meeting the
requirements of Rule 144A under the Act, (3) in an offshore transaction (as
defined in Rule 902 under the Act) meeting the requirements of Rule 904 of the
Act, (4) in a transaction meeting the requirements of Rule 144 under the Act,
(5) to an Accredited Institution that, prior to such transfer, furnishes the
Trustee a signed letter containing certain representations and agreements
relating to the registration of transfer of such Series A Note (the form of
which is substantially the same as Annex A to the Offering Circular) and, if
such transfer is in respect of an aggregate principal amount of Series A Notes
less than $250,000, an opinion of counsel acceptable to the Company that such
transfer is in compliance with the Act, (6) in accordance with another exemption
from the registration requirements of the Act (and based upon an opinion of
counsel acceptable to the Company) or (7) pursuant to an effective registration
statement and, in each case, in accordance with the applicable securities laws
of any state of the United States or any other applicable jurisdiction and (B)
they will deliver to each person to whom such Series A Notes or an interest
therein is transferred a notice substantially to the effect of the foregoing.
(e) None of such Initial Purchaser nor any of its affiliates or any
person acting on its or their behalf has engaged or will engage in any directed
selling efforts within the meaning of Regulation S with respect to the Series A
Notes.
The Initial Purchaser acknowledges that the Company and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 10
hereof, counsel to the Company and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchaser hereby consents to such reliance.
9. Indemnification
(a) The Company and Riviera Holdings (collectively, the "Riviera
Entities"), jointly and severally, agree to indemnify and hold harmless the
Initial Purchaser, its directors, its officers and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and judgments (including, without limitation, any legal or
other expenses incurred in connection with investigating or defending any
matter, including any action, that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Final Offering Circular (or
any amendment or supplement thereto), the Preliminary Offering Circular or any
Rule 144A Information provided by the Company to any holder or prospective
purchaser of Series A Notes pursuant to Section 5(i) hereof or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Initial Purchaser furnished in
writing to the Company by such Initial Purchaser.
(b) The Initial Purchaser agrees to indemnify and hold harmless each of
the Riviera Entities, and their respective directors and officers and each
person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) any of the Riviera Entities, to the same extent
as the foregoing indemnity from the Riviera Entities to the Initial Purchaser
but only with reference to information relating to the Initial Purchaser
furnished in writing to the Company by the Initial Purchaser expressly for use
in the Preliminary Offering Circular or the Final Offering Circular, which
includes only the first sentence of the third paragraph, the third sentence of
the fourth paragraph and the fifth paragraph, in each case under the caption
"Plan of Distribution" appearing of page 98 of the Final Offering Circular.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 9(a) or 9(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 9(a) and 9(b), the Initial Purchaser shall not be required to
assume the defense of such action pursuant to this Section 9(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchaser). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by the Initial Purchaser, in the case of the parties indemnified
pursuant to Section 9(a), and by the Riviera Entities, in the case of parties
indemnified pursuant to Section 9(b). The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 9 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchaser on the other hand from the
offering of the Series A Notes or (ii) if the allocation provided by clause
9(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
9(d)(i) above but also the relative fault of the Company, on the one hand, and
the Initial Purchaser, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand and the Initial Purchaser, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Series A Notes (after underwriting discounts
and commissions, but before deducting expenses) received by the Company, and the
total discounts and commissions received by the Initial Purchaser bear to the
total price to investors of the Series A Notes, in each case as set forth in the
table on the cover page of the Offering Circular. The relative fault of the
Company, on the one hand, and the Initial Purchaser, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or the Initial Purchaser, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Riviera Entities and the Initial Purchaser agree that it would
not be just and equitable if contribution pursuant to Section 9(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 9, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchaser exceeds the amount of any damages which the Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) The remedies provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
10. Conditions of Initial Purchaser's Obligations
The obligations of the Initial Purchaser to purchase the Series A Notes
under this Agreement are subject to the satisfaction of each of the following
conditions:
(a) All the representations and warranties of the Company and Riviera
Holdings contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating of the Company
or any securities of the Company (including, without limitation, the placing of
any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any "nationally
recognized statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Act, (ii) there shall not have occurred any change,
nor shall notice have been given of any potential or intended change, in the
outlook for any rating of the Company by any such rating organization and (iii)
no such rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the Notes
were marketed.
(c) Since the respective dates as of which information is given in the
Offering Circular other than as set forth in the Offering Circular (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there shall not have occurred any change in the financial condition,
earnings, business, management or operations of the Company, (ii) there shall
not have been any change or any development involving a prospective change in
the equity interests or in the long-term debt of the Company and (iii) the
Company shall not have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 10(c)(i),
10(c)(ii) or 10(c)(iii), in your reasonable judgment, is material and adverse
and, in your reasonable judgment, makes it impracticable to market the Series A
Notes on the terms and in the manner contemplated in the Offering Circular.
(d) You shall have received on the Closing Date (A) a certificate dated
the Closing Date, signed by the President and the Chief Financial Officer of the
Company (i) stating that the representations and warranties of the Company
contained in this Agreement are true and correct with the same force and effect
as if made on and as of the Closing Date; (ii) confirming the matters set forth
in clause 10(b) and 10(c) hereof and (iii) stating that the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date and (B) a certificate dated the
Closing Date, signed by the President and the Chief Financial Officer of Riviera
Holdings (i) stating that the representations and warranties of Riviera Holdings
contained in this Agreement are true and correct with the same force and effect
as if made on and as of the Closing Date; (ii) confirming the matters set forth
in clause 10(b) and 10(c) hereof and (iii) stating that Riviera Holdings has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of Dechert Price & Rhoads, counsel for the Company, substantially the form
of Exhibit C hereto.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of Holme Roberts & Owens LLP, Colorado counsel for the Company and Riviera
Holdings, substantially the form of Exhibit D hereto.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of Schreck Morris, Nevada counsel for the Company and Riviera Holdings,
substantially the form of Exhibit E hereto.
(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Latham & Watkins, counsel for the Initial Purchaser, in form
and substance reasonably satisfactory to the Initial Purchaser.
(i) You shall have received, at the time this Agreement is executed and
at the Closing Date, letters dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Initial Purchaser from
Deloitte & Touche LLP, independent public accountants, containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to the Initial Purchaser with respect to the financial
statements and certain financial information contained in the Offering Circular.
(j) The Series A Notes shall have been approved by the NASD for trading
and duly listed in PORTAL.
(k) The Company, Riviera Holdings, Riviera Operating Corporation and
Riviera Gaming Management shall each have executed and delivered the Operative
Documents to which it is a party and the Initial Purchasers shall have received
fully executed copies thereof. The Operative Documents shall be in full force
and effect. The Company shall have received the requisite governmental and
regulatory approval in connection with each of the Operative Documents and
transactions contemplated by the Offering Circular to be completed on or before
the Closing Date.
(l) Neither the Company nor Riviera Holdings shall have failed at or
prior to the Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company or
Riviera Holdings at or prior to the Closing Date.
(m) The Trustee shall have received (i) a certificate of insurance
demonstrating insurance coverages of types, in amounts, with insurers and with
other terms required by the terms of the Operative Documents and (ii) executed
copies of each UCC-1 financing statement signed by the Company, naming the
Trustee as secured party and filed in such jurisdictions as the Initial
Purchaser may reasonably require.
(n) All documents and agreements shall have been filed, and other
actions shall have been taken, as may be required to perfect the Security
Interests of the Trustee in the Collateral, and to accord the Trustee the
priorities over other creditors of the Company as contemplated by the Offering
Circular and the Operative Documents.
(o) The Trustee shall have received irrevocable commitments for title
insurance from First American Title Company, in a form and substance reasonably
satisfactory to the Initial Purchaser, subject only to Liens permitted under the
Indenture.
11. Effective Date of Agreement and Termination.
This Agreement shall become effective upon the execution and delivery
of this Agreement by the parties hereto.
This Agreement may be terminated at any time prior to the Closing Date
by the Initial Purchaser by written notice to the Company if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchaser's judgment, is material and adverse and, in the Initial Purchaser's
reasonable judgment, makes it impracticable to market the Series A Notes on the
terms and in the manner contemplated in the Offering Circular, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your reasonable opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the
Company, (v) the declaration of a banking moratorium by either federal or New
York State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
your reasonable opinion has a material adverse effect on the financial markets
in the United States.
12. Representations and Indemnities to Survive
The respective indemnities, contribution agreements, representations,
warranties and other statements of each of the Company, Riviera Holdings and the
Initial Purchaser set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of the Initial Purchaser, the officers
or directors of the Initial Purchaser, any person controlling the Initial
Purchaser, the Company, Riviera Holding, the officers or directors of each of
them, or any person controlling any of them, (ii) acceptance of the Series A
Notes and payment for them hereunder and (iii) termination of this Agreement.
13. Notices
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. All statements, requests notices and agreements
(each a "Notice") hereunder shall be in writing, and:
(a) If to the Initial Purchaser, Notices shall be delivered or sent by
mail, telex or facsimile transmission to the Initial Purchaser as follows:
Jefferies & Company, Inc.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Attention: Brent Stevens
Fax: (310) 575-5166
(b) If to the Company, Notices shall be delivered or sent by mail,
telex, or facsimile transmission to the address of the Company as follows:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Attention: President
Fax: (303) 582-5693
(c) If to Riviera Holdings, Notices shall be delivered or sent by mail,
telex, or facsimile transmission to the address of Riviera Holdings as follows:
Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: President
Fax: (702) 794-9277
14. Applicable Law
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
15. Counterparts
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
16. Third Parties
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, Riviera
Holdings, the Initial Purchaser, the Initial Purchaser's directors and officers,
any controlling persons referred to herein, the directors of the Company and its
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Series A Notes from the Initial Purchaser merely because of such
purchase.
17. Other Fees and Expenses
If for any reason the Series A Notes are not delivered by or on behalf
of the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 11 hereof), the Company agrees to reimburse
the Initial Purchaser for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by it. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has agreed
to pay pursuant to Section 5(j) hereof. The Company also agrees to reimburse the
Initial Purchaser and its officers, directors and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all fees and expenses (including
without limitation the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including without
limitation its rights under Section 9 hereof).
(Signature Page Follows)
<PAGE>
(Signature Page to Purchase Agreement)
LA_DOCS\332603.9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Very truly yours,
RIVIERA BLACK HAWK, INC.
By:________________________________________
Name: Duane Krohn
Title: Chief Financial Officer, Treasurer
and Secretary
RIVIERA HOLDINGS CORPORATION
By:________________________________________
Name: Duane Krohn
Title: Treasurer
Accepted and Agreed to:
Jefferies & Company, Inc.
By:_________________________________________
Name:____M. Brent Stevens
Title: __Managing Director
<PAGE>
A-1
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
E-1
EXHIBIT B
SCHEDULE OF COSTS
Through the date hereof, Riviera Holdings Corporation, a Nevada
corporation, has advanced $30,121,526 (consisting of an equity contribution of
$20,000,000 and a loan of $10,121,526) to Riviera Black Hawk, Inc., a Colorado
corporation. All of these amounts were used by Riviera Black Hawk Inc. for the
purchase of land upon which the Riviera Black Hawk Casino is being constructed
and to pay for hard and soft construction costs relating to the Riviera Black
Hawk Casino.
MANAGEMENT AGREEMENT (this "Agreement") dated as of June 1, 1999, by
and between Riviera Black Hawk, Inc., a Colorado corporation (the "Company") and
Riviera Gaming Management of Colorado Inc., a Colorado corporation ("Manager").
The Company is constructing a gaming casino and related facilities in
Black Hawk, Colorado and has requested that Manager manage the casino on the
terms hereinafter set forth.
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties to this Agreement hereby agree as
follows:
ARTICLE I. DEFINITIONS
The following defined terms are used in this Agreement:
"Affiliate" shall mean a person that directly or indirectly, or through
one or more intermediaries, controls, is controlled by, or is under common
control with the person in question and any stockholder or partner of any person
referred to in the preceding clause owning 10% or more of such entity.
"Audit Day" is defined in Section 3.7(a).
"Audited Statements" is defined in Section 3.7(a).
"Business Days" shall mean all weekdays except those that are official
holidays of the State of Colorado or the U.S. Government. Unless specifically
stated as "Business Days," a reference to "days" means calendar days.
"Capital Budget" is defined in Section 3.10.
"Casino" shall mean the Riviera(R) Black Hawk Casino in Black Hawk,
Colorado, including (i) those areas reserved for the operation of slot machines,
table games and any other legal forms of gaming permitted under applicable law,
and such additional ancillary service areas including reservations and
admissions, cage, vault, count room, surveillance room and any other room or
area or activities therein regulated or taxed by the Colorado Gaming Authorities
by reason of gaming operations and (ii) all necessary ancillary facilities to
the Casino, including, but not limited to, vehicular parking area, entertainment
facilities, hotel, restaurants, waiting areas, restrooms, administrative offices
for, but not limited to, accounting, purchasing, and management information
services (including offices for Manager management personnel) and other areas
utilized in support of the operations of the Casino.
"Casino Bankroll" shall mean an amount reasonably determined by Manager
as funding required to bankroll the Casino Gaming Activities but in no case less
than the amount required by Colorado gaming law or Colorado Gaming Authorities.
In no event shall such Casino Bankroll include any amount necessary to cover
Operating Expenses or Operating Capital. Casino Bankroll shall include the funds
located on the casino tables, in the gaming devices, cages, vault, counting
rooms, or in any other location in the Casino where funds may be found and funds
in a bank account identified by the Company for any additional amount required
by Colorado gaming law or Colorado Gaming Authorities or such other amount as is
reasonably determined by Manager and the Company.
"Casino Gaming Activities" shall mean the Casino cage, table games,
slot machines, video machines, and other forms of gaming managed by Manager in
the Casino.
"Casino Operating Expenses" shall mean expenses incurred in the
management of the Casino, including, but not limited to, gaming supplies,
maintenance of the Casino area, gaming marketing materials, uniforms,
complimentaries, Casino employee training, Casino employee compensation and
entitlements, and Gaming Taxes.
"Colorado Gaming Authorities" shall mean the Colorado Gaming
Commission, State Gaming Control Board and all other gaming regulatory bodies,
including, but not limited to, any municipality, political subdivision, board,
commission, agency or other public body now in existence or hereafter created to
regulate gaming in the State of Colorado.
"Company's Advances" is defined in Section 3.12.
"Covered Services" shall mean the services furnished by Manager or its
Affiliates pursuant to Section 3.3.
"Default" or "Event of Default" is defined in Section 5.1.
"EBITDA" shall mean revenues derived from the operation of the Casino,
less all costs of operating the Casino (including the Quarterly Fee) excluding
(i) any expenses of the Company over which Manager has no control and (ii) the
Performance Fee, all before (a) interest on indebtedness, (b) all taxes on
income other than Gaming Taxes, (c) depreciation of tangible assets and (d)
amortization of goodwill and other intangible assets, all as determined by the
independent certified public accountant of the Company in accordance with
generally accepted accounting principles applied on a consistent basis, subject,
however, to the dispute provisions of Section 3.7(b).
"Extended Term" is defined in Section 2.3.
"Extension Option" is defined in Section 2.3.
"Gaming Taxes" shall mean any tax imposed by the Colorado Gaming
Authorities on Gross Gaming Revenues.
"Governmental Authorities" shall mean the United States, the State of
Colorado and any court or political subdivision agency, commission, board or
instrumentality or officer thereof, whether federal, state or local, having or
exercising jurisdiction over the Company, Manager or the Casino.
"Gross Gaming Revenues" shall mean all of the revenue from the
operation of the Casino (which is taxed by the Colorado Gaming Authorities) from
all business conducted upon, related to or from the Casino in accordance with
generally accepted accounting principles and shall include, but not be limited
to, the net win from gaming activities, which is the difference between gaming
wins and losses before deducting Gaming Taxes, and plus or minus, as
appropriate, deposits made in respect of progressive slot machines and other
similar games.
"Gross Revenues" shall mean Gross Gaming Revenues, plus all other
revenues resulting from the operation of the Casino.
"Inter-Company Services" shall mean those services furnished by Manager
or its Affiliates to the Company on a cost reimbursement basis pursuant to
Section 3.4.
"Lender" shall mean the party or parties who shall have lent the
Company money pursuant to the Project Financing.
"Management Fee" shall mean the Quarterly Fee and the Performance Fee,
if any.
"Manager Conduct Standard" is defined in Section 3.1.
"Monthly Financial Statements" is defined in Section 3.8.
"Net Revenues" shall mean Gross Revenues minus complimentaries.
"Opening Date" shall mean the date the Casino opens for gaming by the
public.
"Operating Bank Accounts" is defined in Section 3.11.
"Operating Budget" is defined in Section 3.10.
"Operating Capital" shall mean such amount in the Operating Bank
Accounts as will be reasonably sufficient to assure the timely payment of all
current liabilities of the Casino, including the operations of the Casino,
during the term of this Agreement, and to permit Manager to perform its
management responsibilities and obligations hereunder, with reasonable reserves
for unanticipated contingencies and for short term business fluctuations
resulting from monthly variations from the Operating Budget.
"Operating Expenses" shall mean actual expenses incurred in operating
the Casino, including the Casino Operating Expenses, employee compensation and
entitlements, Operating Supplies, maintenance costs, fuel costs, utilities,
taxes and the Quarterly Fee.
"Operating Supplies" shall mean gaming supplies, paper supplies,
cleaning materials, marketing materials, maintenance supplies, uniforms and all
other materials used in the operation of the Casino.
"Performance Fee" is defined in Section 4.1(a).
"Performance Fee Statement" is defined in Section 3.7(a).
"Project Financing" shall mean the issuance of $45.0 million of First
Mortgage Notes pursuant to the Indenture date as of June 1, 1999, between the
Company and IBJ Whitehall Bank & Trust Company
"Quarterly Fee" is defined in Section 4.1(a).
"Selected Arbitrator" is defined in Section 8.1.
"Term" is defined in Section 2.2.
ARTICLE II: ENGAGEMENT OF MANAGER AND TERM OF AGREEMENT
Section 2.1 Engagement of Manager. The Company hereby engages and
employs Manager to act as its exclusive agent for the supervision and control of
the management of the Casino and to provide certain Covered Services and
Inter-Company Services to the Company as detailed in Sections 3.3 and 3.4 of
this Agreement in connection with the Casino, and Manager hereby accepts such
engagement and employment, on the terms and conditions hereinafter set forth.
Section 2.2 Term. Manager shall manage the Casino from the period (the
"Term") commencing on the date hereof and ending 60 days after the tenth full
year's audited results of the Company after the Opening Date are available,
subject to termination prior to the end of such period as hereinafter specified
or extension as hereinafter provided.
Section 2.3 Options to Extend Term. The Term may be extended at the
option (the "Extension Option") of Manager for up to four additional terms of
five years each (the "Extended Term")(or a total of up to 20 years of Extended
Term). Manager shall give written notice of its exercise of an Extension Option
no later than 180 days prior to the expiration of the Term or a prior five year
Extended Term.
ARTICLE III: RESPONSIBILITIES OF THE PARTIES.
Section 3.1 Standards. With respect to the operation of the Casino
pursuant to this Agreement, Manager shall manage and maintain the Casino in a
manner reasonably consistent with the average of standards and procedures
exercised by other casino/hotel operators in the management of other
casino/hotels of the same or similar type, class and quality as the Casino and
located in Black Hawk, Colorado ("Manager Conduct Standard").
Section 3.2 No Interference; Board Representation. In order for Manager
to meet its responsibilities under Section 3.1 of this Agreement in a
professional manner, and to comply with any legal requirements and the terms of
this Agreement, the Company hereby agrees that during the Term and Extended Term
(i) Manager shall have uninterrupted control of and responsibility for the
operation of the Casino and (ii) the Company will not interfere or be involved
with the operation of the Casino and that Manager may operate the Casino free of
molestation, eviction or disturbance by the Company or any third party claiming
by, through or under the Company. Notwithstanding the foregoing, during normal
business hours and upon reasonable notice to Manager, the Company's Board of
Directors and/or officers and their agents may visit the Casino and may ask the
Manager about various aspects of the Company's business, operations and
financial results. Examples of the matters which Manager shall determine from
time to time hereunder include, but are not limited to food and beverage menu
prices, gaming, commercial purposes (if applicable) and entertainment,
entertainment policies and specific entertainment obligations, the labor
policies of the Casino and the type and character of publicity and promotion.
Manager agrees, however, that it will in good faith use its best efforts to
perform its obligations and discharge its responsibilities in the control and
operation of the Casino. Nothing contained in this Section 3.2 shall prohibit
the Company's management from exercising its fiduciary duties if Manager shall
default in its obligations under this Agreement pursuant to Section 6.2 and such
default shall continue after any required notice and/or cure period.
Section 3.3 Covered Services. Manager covenants and agrees to
perform, or cause to be performed, the following services in connection with the
Casino at no additional charge to the Company:
(a) Permits. Manager, on behalf of and with the cooperation of
the Company, shall oversee obtaining and maintaining all necessary
licenses, findings of suitability, approvals and permits required by
any law, rule or regulation of the Colorado Gaming Authorities, as may
be required for the operation of the Casino, including, without
limitation, gaming, liquor, bar, restaurant, signage and hotel licenses
(if applicable). Manager shall comply with the rules, regulations and
orders of the Colorado Gaming Authorities and with any conditions set
out in any such licenses and permits issued by any such authorities
and, with the cooperation of the Company, shall provide any
information, report or access to records reasonably required by the
Colorado Gaming Authorities.
(b) Personnel. Manager shall maintain such level of staffing
as shall be required to carry out its duties hereunder.
(i) Except as otherwise expressly provided in paragraph (iv)
of this Section 3.3(b), all personnel employed at the Casino shall be
employees of the Company. Manager shall hire, terminate, advance,
demote, supervise, direct the work of and determine the compensation
and other benefits of all personnel working at the Casino, and the
Company shall not interfere with or give orders or instructions to
personnel employed at the Casino. The parties hereto agree that all
wages, bonuses, compensation and benefits (including, without
limitation, severance and termination pay) of personnel at the Casino
are the exclusive obligation of the Company.
(ii) All wages, salaries, benefits, compensation and
entitlements of the Casino employees, including the General Manager,
and any consultants and independent contractors approved by the Company
and Manager, shall be paid from the Operating Bank Accounts by Manager.
Notwithstanding the foregoing, Manager shall not be liable to any of
the Company's personnel for wages, compensation or other employee
benefit including without limitation to health care, insurance
benefits, worker's compensation, severance or termination pay.
(iii) Manager shall be responsible for the training of all
personnel and shall cooperate with all personnel in an effort to obtain
and maintain all required licenses issued by the Colorado Gaming
Authorities, and will hire only persons with valid employee licenses,
if under the rules and regulations of the Colorado Gaming Authorities,
such employee licenses are a condition of employment.
(iv) The employees necessary to discharge Manager's
obligations and responsibilities hereunder shall be employees of
Manager (or its Affiliates) and shall be hired, paid and discharged by
Manager in its sole and absolute discretion. Manager shall in good
faith determine the number of employees necessary to discharge
Manager's obligations and responsibilities hereunder, the salaries and
other compensation arrangements of such employees shall be the
responsibility of Manager and Manager shall not have any right of
reimbursement from the Company in respect thereof.
Section 3.4 Inter-Company Services. The parties agree that Affiliates
of the Manager will supply services to the Company on a cost reimbursement basis
(some of which are part of the budgeted costs for construction, equipment and
start-up of the Casino) including, but not limited to, the following:
(a) Benefits administration, including 401(K) plan, health
plan, workmen's compensation and profit-sharing.
(b) Computer systems, including (i) JD Edwards, based on a
charge per terminal, (ii) InfoGenesis, (iii) casino system, and (iv)
special programs.
(c) Computer hardware, including (i) centralized buying, (ii)
initial installation, and (iii) phone support to on-site tech.
(d) Administration, including (i) Human Resources, (ii)
payroll, (iii) general ledger, and (iv) accounts payable.
(e) Purchase of Goods for (i) 40-for-20 and similar marketing
programs and (ii) gift shops.
(f) Insurance coverage under umbrella policy.
(g) Services and Payments pursuant to the Tax-Sharing
Agreement of even date herewith.
It is expressly understood that the Company shall continue to make
payment to the Manager for Inter-Company Services despite the occurrence and
continuation of any Default or Event of Default under the Project Financing,
including a failure to make any payment due thereunder.
Section 3.5 Sales and Promotions. Manager shall formulate, coordinate
and implement promotion, marketing and sales programs, and shall cause the
Casino to participate in promotional, marketing and sales campaigns and, as
appropriate, activities involving complimentary rooms (if applicable) and food
and beverages to bona fide travel agents, tourist officials and airlines
representatives, and to all other individuals and entities whatsoever which, in
the exercise of good management practice, is deemed to be beneficial to the
Casino.
Credit facilities shall be granted by Manager in its reasonable
discretion and in accordance with good management practices and Manager's and
its Affiliates standard procedures; provided that except for extending credit
for the purchase of goods, services, gaming or entertainment at the Casino and
except as otherwise permitted herein, Manager shall not be authorized to make
any loans or extensions of credit for or on behalf of the Company without the
prior approval of the Company's management.
Section 3.6 Books and Records. Manager shall maintain, or cause to be
maintained, a complete accounting system for and on behalf of the Company in
connection with Manager's management of the Casino. The books and records shall
be kept in accordance with generally accepted accounting principles consistently
applied and in accordance with the uniform system of accounts for casinos. Such
books and records shall be kept on the basis of a calendar year. Books and
accounts shall be maintained at the Casino or at the principal office of Manager
with a duplicate copy thereof at the Casino. The Company shall have the right
and privilege of examining and copying said books and records, including all
daily reports prepared by Manager for internal use at the Casino, during regular
business hours. Manager shall comply with all requirements with respect to
internal controls and accounting and shall prepare and provide all required
reports under the rules and regulations of the Colorado Gaming Authorities.
Section 3.7 Audits. Manager shall engage Deloitte & Touche LLP, unless
a different auditor is agreed upon by the Company and Manager ("Regular
Auditor"), to audit the operations of the Casino, (i) for the purpose of
calculating the Performance Fee ("Performance Fee Statements") and (ii) as of
and at the end of each year occurring after the Opening Date (the "Audited
Statements"). A sufficient number of copies of the Performance Fee Statements
and the Audited Statements shall be furnished to the Company and Manager as soon
as available, but in no event later than ninety (90) days following the end of
each year (such 90th day to be the "Audit Day").
Any cost of such statements shall be deemed an Operating Expense.
Section 3.8 Monthly and Quarterly Financial Statements. On or before
the 20th day of each month, Manager shall prepare an unaudited operating
statement for the preceding calendar month detailing the Gross Revenues, Net
Revenues, Gaming Taxes and expenses incurred in the Casino's operation (the
"Monthly Financial Statements"). The Monthly Financial Statements shall include
a statement detailing drop figure accounts on all Gross Gaming Revenues. On or
before the 45th day after the end of each quarter, Manager shall prepare an
unaudited report for the preceding quarter detailing the capitalized
expenditures and marketing expenses incurred in the Casino's operation.
Section 3.9 Expenses. All costs, expenses, funding or operating
deficits and Operating Capital, real property and personal property taxes,
insurance premiums and other liabilities incurred due to the gaming and
nongaming operations of the Casino shall be the sole and exclusive financial
responsibility of the Company.
Section 3.10 Budgets.
(a) Manager shall prepare and submit to the Company at least
60 days before the start of each new year for its approval a capital
budget for the expenditure of capital improvements ("Capital Budget").
To the extent practical, a reserve shall be established for this
purpose. The parties agree that any "material" expenditure not
contemplated by the Capital Budget shall require the consent of both
Manager and the Company. For the foregoing purposes, "material" shall
mean $20,000 in the case of any such individual item and an aggregate
of $250,000 in the case of all such items. Manager shall also prepare
and submit to the Company at least 60 days before the start of each new
year for its approval an operating budget projecting revenues, expenses
and EBITDA for the next year ("Operating Budget"). Manager shall have
the responsibility to manage the Casino in accordance with the
Operating Budget except for expenses necessitated by circumstances
beyond Manager's reasonable control. Any dispute as to the Capital
Budget or the Operating Budget shall be resolved solely by arbitration
pursuant to Article VIII.
(b) At least 30 days prior to the Opening Date Manager will
prepare a Capital Budget and an Operating Budget for the remainder of
the year after the Opening Date.
Section 3.11 Operating and Other Bank Accounts.
(a) Manager shall establish bank accounts that are necessary
for the operation of the Casino, including an account for the Casino
Bankroll, at various banking institutions chosen by Manager (such
accounts are hereinafter collectively referred to as the "Operating
Bank Accounts"). The Operating Bank Accounts shall be named in such a
manner as to identify the Casino and particular uses for the account as
the Company and Manager may determine. All instructions to and checks
drawn on the Operating Bank Accounts shall be signed only by
representatives of the Company or Manager who are covered by fidelity
insurance and designated the Company or Manager personnel may be the
only authorizing signing persons on checks drawn on the Operating Bank
Accounts. All checks shall be drawn only in accordance with established
normal and customary accounting policies and procedures. The Operating
Bank Accounts shall be interest bearing accounts if such accounts are
reasonably available and all interest thereon shall be credited to the
Operating Bank Accounts. All Gross Revenues (excluding noncash items)
shall be deposited in the Operating Bank Accounts, and Manager shall
pay out of the Operating Bank Accounts, to the extent of the funds
therein, from time to time, all Operating Expenses and other amounts
required by Manager to perform its obligations under this Agreement.
All funds in the Operating Bank Accounts shall be separate from any
other funds of any of Manager's Affiliates and the Company's Affiliates
and neither the Company nor Manager may commingle such funds in the
Operating Bank Accounts with the funds of any other bank accounts.
(b) Manager agrees that it will not use any Operating Bank
Accounts as compensating balances related to the extension of credit to
Manager or grant any right of set-off or bankers' lien on any such
accounts in respect of any amounts owed by Manager to such
depositories. Manager shall seek to obtain reasonable rates of interest
for the Operating Bank Accounts, with due regard to the financial
stability of and services offered by the depositories with which such
accounts are kept. The parties to this Agreement agree that all funds
held from time to time in the Operating Bank Accounts are solely the
property of the Company, and upon the expiration or Termination (as
defined below) of this Agreement for any reason, Manager shall cease to
withdraw funds from all Operating Bank Accounts and shall take such
steps as shall be necessary to (1) remove Manager's designees as
signatories to the Operating Bank Accounts and (2) authorize the
Company's designees to become the sole signatories to the Operating
Bank Accounts. This provision shall survive Termination. It is
understood and agreed that Manager may maintain petty cash funds at the
Casino and make payments therefrom as the same are customarily made in
the casino/hotel business.
(c) Any funds which are generated from the Casino and are not
required for the operation of the Casino or for reserves as Manager
shall reasonably determine are necessary to cover liabilities or
obligations of the Casino, will be transferred to such bank account as
the Company shall designate. Any dispute as to whether funds should be
so transferred will be resolved solely by arbitration pursuant to
Article VIII.
Section 3.12 Payment of Expenses.
(a) Manager shall pay from the Gross Revenues the following
items in the order of priority listed below, on or before their
applicable due date: (i) required payments to the Governmental
Authorities, including federal, state or local payroll taxes ("Payroll
Taxes"), (ii) Operating Expenses, including taxes (other than Payroll
Taxes) and the Management Fee, and (iii) emergency expenditures to
correct a condition of an emergency nature, including structural
repairs, which require immediate repairs to preserve and protect the
Casino. In the event that funds are not available for payment of the
Operating Expenses in their entirety, all Payroll Taxes or withholding
taxes shall be paid first from the available funds.
(b) During the Term of this Agreement, within five (5)
Business Days after receipt of written notice from Manager, the Company
shall fund the Operating Bank Accounts designated by Manager (the
"Company's Advances") in such a fashion so as to adequately insure that
the Operating Capital set forth in the Operating Budget as revised is
sufficient to support the uninterrupted and efficient ongoing operation
of the Casino. The written request for any additional Operating Capital
shall be submitted by Manager to the Company on a monthly basis based
on the interim statements and the Operating Budget, as revised.
Section 3.13 Cooperation of the Company and Manager. The Company and
Manager shall cooperate fully with each other during the Term and the Extended
Term to facilitate the performance by Manager of Manager's obligations and
responsibilities set forth in this Agreement.
Section 3.14 Financing Matters.
(a) In no event may either party represent that the other
party or any Affiliate of such party is or in any way may be liable for
the obligations of such party in connection with (i) any financing
agreement, or (ii) any public or private offering or sale of
securities. If the Company, or any Affiliate of the Company shall, at
any time, sell or offer to sell any securities issued by the Company or
any Affiliate of the Company through the medium of any prospectus or
otherwise and which relates to the Casino or its operation, it shall do
so only in compliance with all applicable laws, and shall clearly
disclose to all purchasers and offerees that (i) neither Manager nor
any of its Affiliates, officers, directors, agents or employees shall
in any way be deemed to be an issuer of such securities, and (ii)
Manager and its Affiliates, officers, directors, agents and employees
have not assumed and shall not have any liability arising out of or
related to the sale or offer of such securities, including without
limitation, any liability or responsibility for any financial
statements, projections or other information contained in any
prospectus or similar written or oral communication. Manager shall have
the right to approve any description of Manager or its Affiliates, or
any description of this Agreement or of the Company's relationship with
Manager hereunder, which may be contained in any prospectus or other
communications (unless such information is furnished to the Company by
Manager in writing), and the Company agrees to furnish copies of all
such materials to Manager for such purposes within a reasonable time
prior to the delivery thereof to any prospective purchaser or offeree.
The Company agrees to indemnify, defend or hold Manager and its
Affiliates, officers, directors, agents and employees, free and
harmless from any and all liabilities, costs, damages, claims or
expenses arising out of or related to the breach of the Company's
obligations under this Section 3.14. Manager agrees to reasonably
cooperate with the [Companies] in the preparation of such agreements
and offerings.
(b) Notwithstanding the above restrictions, subject to
Manager's right of review set forth in this Section 3.14, the Company
may represent that the Casino is managed by Manager and Manager may
represent that it manages the Casino and both may describe the terms of
this Agreement and the physical characteristics of the Casino in
regulatory filings and public or private offerings. Moreover, nothing
in this Section shall preclude the disclosure of (i) already public
information, or (ii) audited or unaudited financial statements from the
Casino required by the terms of this Agreement or (iii) any information
or documents required to be disclosed to or filed with the Colorado
Gaming Authorities. Both parties shall use their best efforts to
consult with the other concerning disclosures as to the Casino. The
Company and Manager shall cooperate with each other in providing
financial information concerning the Casino and Manager that may be
required by any lender or required by any Governmental Authority.
Section 3.15 Taxes and Insurance. Throughout the Term and the Extended
Term, the Company shall furnish Manager with copies of all tax statements and
insurance policies and all financing documents (including notes and mortgages)
relating to the Company. Manager shall cause all federal and state income and
sales tax returns of the Company to be prepared and shall cooperate with taxing
authorities in connection with any inquiries or audits that relate to the
Company. Manager will also assist the Company in procuring and maintaining
liability, property and such other insurance in at least such amounts and
covering such risks as is currently maintained with respect to the Company and
in such additional amounts and covering such additional risks, if any, as
Manager and the Company determine is necessary in connection with the operation
of the Company, with responsible and reputable insurance companies or
associations. All such insurance policies shall name Manager as an additional
insured and all insurers thereon shall be required to issue to Manager a
certificate of insurance providing that such insurer shall deliver to Manager
reasonable prior notice of termination of any such policy or the coverage
provided thereby and, if and to the extent the same shall be available without
adversely affecting the Company's coverage and without additional premiums or
charges, waiving the rights of such insurer, if any, of subrogation against
Manager. Without in any way diminishing the Company's responsibility hereunder,
Manager is hereby authorized and directed to pay from the Operating Bank
Accounts all taxes and insurance fees including, without limitation, withholding
taxes and insurance premiums, and all other items of expense relating to the
ownership or operation of the Company.
Section 3.16 Concessions.Manager shall consummate, if in Manager's
reasonable discretion it deems the same to be in the best interest of the
Casino, in the name of and for the benefit of the Company, reasonable
arms-length arrangements and leases with concessionaires, licensees, tenants and
other intended users of any facilities related to the Casino. Copies of all such
arrangements shall be furnished to the Company.
Section 3.17 Material Agreements. Manager, as exclusive agent for the
Company, is authorized to make and enter into any agreements (including, without
limitation, agreement with Manager's Affiliates, provided such agreements
represent the equivalent of reasonable arms, length negotiations) as are, in
Manager's opinion, necessary or desirable for the operation, supply and
maintenance of the Casino, as required by this Agreement. Manager shall be
required to obtain the prior written approval of the Company before entering
into any agreement not contemplated by the approved Annual Budget. Manager shall
not enter into any agreement involving the incurrence of debt obligations on
behalf of the Company, or for Manager's own account, with respect to the
operations of the Casino, over any amounts therefor set forth in the approved
Annual Budget.
Section 3.18 Trademarks. The Company acknowledges that its rights to
use the trademark and trade name Riviera(R) in reference to the Casino arise
solely out of the trademark license agreement between Riviera Holdings
Corporation and the Company.
ARTICLE IV: MANAGEMENT FEE
Section 4.1 Fees Payable to Manager.
(a) Subject to Section 4.3, Manager shall be paid a fee of 1%
of Net Revenues of the Casino, payable quarterly in arrears, promptly
following each quarter (or portion thereof) after the Opening Date
("Quarterly Fee").
(b) Manager shall be paid within 30 days following the receipt
of quarterly financial statements (subject to appropriate adjustment
upon receipt of the Audited Statements) a fee ("Performance Fee") equal
to the following percentages of EBITDA for the preceding year (subject
to annualization on a quarterly basis):
Percentage EBITDA
0% up to $5 million
10% from $5 million to $10 million
15% from $10 million to $15 million
20% more than $15 million
Section 4.2 Interest on Overdue Amounts; Collection Costs. If for any
reason the Management Fee (both the Quarterly Fee or Performance Fee) or any
other amount due to Manager under this Agreement is not paid on a timely basis,
such amount shall bear interest at the rate of 12% per annum until paid in full.
Manager shall also be entitled to reimbursement for the costs of collection,
including counsel fees and disbursements, with respect to amounts due to it
under this Agreement but which are unpaid.
Section 4.3 Deferred payment of Management Fee. Manager hereby agrees
that, after receipt from the Lender of notice that the Company has failed to pay
any amount due to the Lender under the Project Financing ("Payment Default") and
for so long as a Payment Default shall continue, Manager will not be entitled to
receive payment of either the Quarterly Fee or the Performance Fee but the same
will (i) accrue, (ii) bear interest as specified in Section 4.2, and (iii)
become payable when the Payment Default shall be cured.
ARTICLE V. DEFAULT
Section 5.1 Definition. The occurrence of any one or more of the events
described in the Sections 5.2, 5.3, 5.4 or 5.5 which is not cured within the
time permitted, shall constitute a default under this Agreement (hereinafter
referred to as a "Default" or an "Event of Default") as to the party failing in
the performance or effecting the breaching act.
Section 5.2 Manager's Defaults. If Manager shall (a) fail to perform or
materially comply with any of the covenants, agreements, terms or conditions
contained in this Agreement applicable to Manager and such failure shall
continue for a period of thirty (30) days after written notice thereof from the
Company to Manager specifying in detail the nature of such failure, or, in the
case such failure is of a nature that it cannot, with due diligence and good
faith, be cured within thirty (30) days, if Manager fails to proceed promptly
and with all due diligence and in good faith to cure the same and thereafter to
prosecute the curing of such failure to completion with all due diligence within
ninety (90) days thereafter, or (b) take or fail to take any action to the
extent required of Manager by the Colorado Gaming Authorities unless Manager
cures such default or breach prior to the expiration of applicable notice, grace
and cure periods, if any, provided, however, that Manager shall only be required
to cure any defaults with respect to which Manager has a duty hereunder.
Section 5.3 The Company's Default. If the Company shall (a) fail to
make any monetary payment required under this Agreement, including, but not
limited to, the Company's Advances, on or before the due date recited herein and
said failure continues for five (5) Business Days after written notice from
Manager specifying such failure, or (b) fail to perform or materially comply
with any of the other covenants, agreements, terms or conditions contained in
this Agreement applicable to the Company (other than monetary payments) and
which failure shall continue for a period of thirty (30) days after written
notice thereof from Manager to the Company specifying in detail the nature of
such failure, or, in the case such failure is of a nature that it cannot, with
due diligence and good faith, cure within thirty (30) days, if the Company fails
to proceed promptly and with all due diligence and in good faith to cure the
same and thereafter to prosecute the curing of such failure to completion with
all due diligence within ninety (90) days thereafter.
Section 5.4 Bankruptcy. If either party (a) applies for or consents to
the appointment of a receiver, trustee or liquidator of itself or any of its
property, (b) makes a general assignment for the benefit of creditors, (c) is
adjudicated a bankrupt or insolvent, or (d) files a voluntary petition in
bankruptcy or a petition or an answer seeking reorganization or an arrangement
with creditors, takes advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law, or admits the material
allegations of a petition filed against it in any proceedings under any such
law.
Section 5.5 Reorganization/Receiver. If an order, judgment or decree is
entered by any court of competent jurisdiction approving a petition seeking
reorganization of Manager or the Company, as the case may be, or appointing a
receiver, trustee or liquidator of Manager or the Company, as the case may be,
or of all or a substantial part of any of the assets of Manager or the Company,
as the case may be, and such order, judgment or decree continues unstayed and in
effect for a period of sixty (60) days from the date of entry thereof.
Section 5.6 Delays and Omissions. No delay or omission as to the
exercise of any right or power accruing upon any Event of Default shall impair
the non-defaulting party's exercise of any right or power or shall be construed
to be a waiver of any Event of Default or acquiescence therein.
Section 5.7 Disputes in Arbitration. Notwithstanding the provisions of
this Article V, any occurrence which would otherwise constitute an Event of
Default hereunder shall not constitute an Event of Default for so long as such
dispute is in arbitration pursuant to the arbitration provisions of Article
VIII.
ARTICLE VI. TERMINATION
Section 6.1 Termination Events. This Agreement may be terminated by the
non-defaulting party upon the occurrence of an Event of Default and the lapsing
of the time to cure.
Section 6.2 Notice of Termination. In the event of the occurrence and
continuation for the relevant cure period of an Event of Default, either Manager
or the Company, as appropriate, may terminate ("Termination") this Agreement by
giving ten (10) days written notice, and the Term or the Extended Term of this
Agreement shall expire by limitation at the expiration of said last day
specified in the notice as if said date was the date herein originally fixed for
the expiration of the Term or the Extended Term hereof.
Section 6.3 Payments Upon Termination. The Company shall pay to Manager
all accrued but unpaid Management Fees and expenses of Manager and any other sum
owed Manager pursuant to this Agreement.
Section 6.4 Post Termination. Upon a Termination:
(a) Manager shall promptly deliver to the Company any books,
records, instruments or other documentation relating to the Casino and
the Company in Manager's possession or under Manager's control;
(b) Manager and its Affiliates shall release and waive all
rights, claims, interests and relationships they may have to control,
retain, or discharge any matter of management with respect to the
Casino, or any other benefit thereunder or in connection therewith,
except as specified in Section 6.3 and for the provisions of Article
VII which shall survive Termination; and
(c) Manager shall peacefully vacate and surrender possession
to the Company, and shall fully cooperate in the prompt and efficient
transfer of the management of the Casino from Manager to the Company or
a person or entity designated by the Company. In connection with the
foregoing, Manager shall act in good faith to avoid any breach or
disruption of any contract involving the Casino or the lapse of any
insurance policy covering or pertaining to the Casino.
Section 6.5 Transfer of Permits and Gaming Licenses Upon Termination.
To the fullest extent permissible under applicable law, upon termination or
expiration of this Agreement, Manager shall cooperate in the transfer of any and
all permits, licenses or similar authorizations issued by any governmental body
(including, without limitation, the Colorado Gaming Authorities) relating to the
operation or management of any or all of the Casino to the new manager.
ARTICLE VII: EXCULPATION AND INDEMNIFICATION.
Section 7.1 Exculpation. Manager, its Affiliates and each of their
respective officers, partners, directors, employees and agents shall not be
liable to the Company or any person who has acquired an interest in the Company
for any losses sustained or liabilities incurred, including monetary damages, as
a result of any act or omission of Manager, its Affiliates or any of their
respective officers, partners, directors, employees or agents, if the conduct of
Manager or such other person did not constitute actual fraud, gross negligence
or willful or wanton misconduct ("Manager Conduct Standard"). The negative
disposition of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not, of
itself, create a presumption that Manager, its Affiliates or any of their
respective officers, partners, directors, employees or agents acted in a manner
contrary to the Manager Conduct Standard. Nothing contained in this Agreement
shall exculpate or limit Manager's liability for unlawful misappropriation of
the Company's assets.
Section 7.2 Indemnification.
(a) Subject to the provisions of Section 7.2(b) hereof, the
Company shall indemnify and hold harmless Manager, its Affiliates and
any of their respective officers, partners, directors, employees and
agents (each individually, an "Indemnitee"), from and against any and
all losses, claims, damages, liabilities, expenses (including
reasonable legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative, in
which an Indemnitee may be involved, or threatened to be involved, as a
party or otherwise, which relates to, or arises out of, the performance
of any duties and services for or on behalf of the Company pursuant to
the terms and within the scope of this Agreement, regardless of whether
the liability or expense accrued at or relates to, in whole or in part,
any time before, on or after the date hereof. The negative disposition
of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall
not, of itself, create a presumption that an Indemnitee acted in a
manner contrary to the Manager Conduct Standard.
(b) An Indemnitee shall not be entitled to indemnification
under this Section 7.2 with respect to any claim, issue or matter in
which it has been finally adjudged in a nonappealable order that such
Indemnitee has breached the Manager Conduct Standard unless and only to
the extent that the court in which such action was brought, or another
court of competent jurisdiction, determines upon application that,
despite the adjudication of liability, in view of all of the
circumstances of the case, the Indemnitee is fairly and reasonably
entitled to indemnification for such liabilities and expenses as the
court may deem proper. In addition, notwithstanding anything to the
contrary contained in this Article VII, an Indemnitee shall not be
entitled to indemnification under this Section 7.2 against losses
sustained or liabilities incurred if such losses or liabilities are
finally determined by a court of competent jurisdiction to have been
the direct result of the Manager Conduct Standard.
(c) In the event that any legal proceedings shall be
instituted or any claim or demand shall be asserted by any person in
respect of which payment may be sought by an Indemnitee under the
provisions of this Section 7.2, the Indemnitee shall promptly cause
written notice of the assertion of any such proceeding or claim of
which it has actual knowledge to be forwarded to the Company. Upon
receipt of such notice, the Company shall have the right, at their
option and expense, to be represented by counsel of their choice, and
to defend against, negotiate, settle or otherwise deal with any
proceeding, claim or demand which relates to any loss, liability,
damage or deficiency indemnified against hereunder; provided, however,
that no settlement shall be made without prior written consent of the
Indemnitee which shall not be unreasonably withheld; and provided
further, that the Indemnitee may participate in any such proceeding
with counsel of its choice and at its expense. The Indemnitee and the
Company agrees to cooperate fully with each other in connection with
the defense, negotiation or settlement of any such legal proceeding,
claim or demand.
After any final judgment or award shall have been rendered by
a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement shall have been consummated, or the
Indemnitee and the Company shall have arrived at a mutually binding
agreement with respect to each separate matter indemnified by the
Company hereunder, the Indemnitee shall forward to the Company notice
of any sums due and owing by it pursuant to this Agreement with respect
to such matter and the Company shall be required to pay all of the sums
so owing to the Indemnitee in immediately available funds, thirty (30)
days after the date of such notice.
(d) The indemnification provided by this Section 7.2 shall be
in addition to any other rights to which an Indemnitee may be entitled
under any agreement, bylaw or vote of Managing Members of the Company,
or as a matter of law or otherwise, both as to action in the
Indemnitee's capacity as Manager, an Affiliate thereof or an officer,
partner, director, employee or agent of Manager or its Affiliates and
as to action in any other capacity, shall continue as to an Indemnitee
who has ceased to serve in such capacity and shall inure to the benefit
of the heirs, successors, assigns and administrators of an Indemnitee.
ARTICLE VIII: ARBITRATION
Section 8.1 Appointment of Arbitrators. All disputes arising out of or
connected with the subject matter of this Agreement are to be referred first to
a committee of four (4) persons who shall meet in an attempt to resolve said
dispute or open issue. The committee shall consist of two (2) persons appointed
by the Company and two (2) persons appointed by Manager. If an agreement cannot
be reached to resolve the dispute by the committee, the dispute or open issue
will be resolved by binding arbitration. Any award of the arbitrators may be
filed in a court of law as a final judgment. Any such arbitration shall be
conducted in Denver, Colorado in accordance with the rules and regulations
adopted by the American Arbitration Association. Either party may serve upon the
other party a written notice of the dispute to be resolved pursuant to this
Article VIII. Within thirty (30) days after the giving of such notice, each of
the parties hereto shall nominate and appoint an arbitrator and shall notify the
other party in writing of the name and address of the arbitrator so chosen. Upon
the appointment of the two (2) arbitrators as hereinabove provided, said two (2)
arbitrators shall forthwith, within fifteen (15) days after the appointment of
the second arbitrator, and before exchanging views as to the question at issue,
appoint in writing a third arbitrator who shall be experienced in the operation
of a gaming casino (the "Selected Arbitrator") and give written notice of such
appointment to each of the parties hereto. In the event that the two (2)
arbitrators shall fail to appoint or agree upon the Selected Arbitrator within
said fifteen (15) day period, the Selected Arbitrator shall be selected by the
parties themselves if they so agree upon such Selected Arbitrator within a
further period of ten (10) days. If a Selected Arbitrator shall not be appointed
or agreed upon within the time herein provided, then either party on behalf of
both may request such appointment by the American Arbitration Association (or
its successor or similar organization if the American Arbitration Association is
no longer in existence). Said arbitrators shall be sworn faithfully and fairly
to determine the question at issue. The arbitrators shall afford to the Company
and Manager a hearing and the right to submit evidence, with the privilege of
cross-examination, on the question at issue, and shall with all possible speed
make their determination in writing and shall give notice to the parties hereto
of such determination. The concurring determination of any two (2) of said three
(3) arbitrators shall be binding upon the parties, or, in case no two (2) of the
arbitrators shall render a concurring determination, then the determination of
the Selected Arbitrator shall be binding upon the parties hereto. Each party
shall pay the fees of the arbitrator appointed by it, and the fees of the
Selected Arbitrator shall be divided equally between the Company and Manager.
Section 8.2 Inability to Act. In the event that an arbitrator appointed
as aforesaid shall thereafter die or become unable or unwilling to act, his
successor shall be appointed in the same manner provided in this Article VIII
for the appointment of the arbitrator so dying or becoming unable or unwilling
to act.
ARTICLE IX: NOTICES
Notice given by a party under this Agreement shall be in writing and
shall be deemed duly given (i) when delivered by hand, (ii) when three (3) days
have elapsed after its transmittal by registered or certified mail, postage
prepaid, return receipt requested, or two (2) days have elapsed after its
transmittal by nationally recognized air courier service; or (iii) when
delivered by telephonic facsimile transmission (with a copy thereof so delivered
by hand, mail or air courier if recipient does not acknowledge receipt of the
transmission). Notices shall be sent to the addresses set forth below, or
another as to which that party has given notice, in each case with a copy
provided in the same manner and at the same time to the persons shown below
if to the Company to:
Riviera Black Hawk, Inc.
444 Main Street
Black Hawk, Colorado 80422
Facsimile No: (303) 582-5469
if to Manager to:
Riviera Gaming Management of Colorado, Inc.
c/o William L. Westerman
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109-1935
Facsimile No: (702) 794-9277
Any party may change the name and/or address by written notice given in
each instance to the other parties.
ARTICLE X: MISCELLANEOUS
Section 10.1 Colorado Gaming Control Act and Colorado Gaming
Authorities. Notwithstanding anything to the contrary contained in this
Agreement, this Agreement shall be deemed to include all provisions required by
the Colorado Gaming Control Act, as amended, and the regulations promulgated
thereunder (the "Act"), and shall be conditioned upon the approval of the
Colorado Gaming Authorities as required by the Act. To the extent that any term
or provision contained in this Agreement shall be inconsistent with the Act, the
provisions of the Act shall govern. All provisions of the Act, to the extent
required by law to be included in this Agreement, are incorporated herein by
reference as if fully restated in this Agreement.
Section 10.2 Entire Agreement. This Agreement contains the entire
understanding of the parties to this Agreement in respect of its subject matter
and supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
Section 10.3 Amendment; Waiver. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all of the parties to this Agreement. No failure to exercise, and no
delay in exercising, any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision,
nor shall any waiver be implied from any course of dealing between or among the
parties. No extension of time for performance of any obligations or other acts
hereunder or under any other agreement shall be deemed to be an extension of the
time for performance of any other obligations or any other acts.
Section 10.4 Binding Effect; Assignment. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties (including
their respective officers, directors, employees, agents and Affiliates) and
their respective heirs, executors, successors and assigns. No party to this
Agreement shall have the right to assign this Agreement and its respective
rights and obligations hereunder without the consent of each other party to this
Agreement.
Section 10.5 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
Section 10.6 Terminology. The headings contained in this Agreement are
for convenience of reference only and are not to be given any legal effect and
shall not affect the meaning or interpretation of this Agreement.
Section 10.7 Governing Law. This Agreement shall be construed in
accordance with and governed for all purposes by the laws and public policy of
the State of Colorado applicable to contracts executed and to be wholly
performed within such State.
Section 10.8 Severability. If any provision of this Agreement, or the
application of any such provision to any person or circumstance, is held to be
inconsistent with any present or future law, ruling, rule or regulation of any
court or governmental or regulatory authority having jurisdiction over the
subject matter of this Agreement, such provision shall be deemed to be modified
to the minimum extent necessary to comply with such law, ruling, rule or
regulation, and the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
inconsistent, shall not be affected. If any provision is determined to be
illegal, unenforceable, or void, which provision does not relate to any payments
made hereunder and the payments made hereunder shall not be affected by such
determination and this Agreement is capable of substantial performance, then
such void provision shall be deemed rescinded and each provision not so affected
shall be enforced to the extent permitted by law.
Section 10.9 No Third Party Benefits. This Agreement is for the benefit
of the parties hereto and their respective permitted successors and assigns. The
parties neither intend to confer any benefit hereunder on any person, firm or
corporation other than the parties hereto, nor shall any such third party have
any rights hereunder.
Section 10.10 Drafting Ambiguities. Each party to this Agreement and
its counsel have had an opportunity to review and revise this Agreement. The
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement or of any amendments or exhibits to this Agreement.
Section 10.11 Attorneys' Fees. Should either party institute an
arbitration, action or proceeding to enforce any provisions hereof or for other
relief due to an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to receive from the other party all costs of
the action or proceeding and reasonable attorneys' fees.
Section 10.12 Limitations on Responsibilities of Manager. Manager shall
use its best efforts to render the services contemplated by this Agreement in
good faith to the Company, but notwithstanding anything to the contrary which
may be expressed or implied in this Agreement, Manager hereby explicitly
disclaims any and all warranties, express or implied, including but not limited
to the success or profitability of the Casino. In the performance of the
services contemplated by this Agreement, Manager shall not be liable to the
Company for any acts or omissions in connection therewith, except acts or
omissions which constitute a breach of the Manager Conduct Standard and then
only to the extent of the Management Fees actually received by Manager.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by an authorized representative thereof, all as of
the day and year first above written.
RIVIERA BLACK HAWK, INC.
By: ______________________________
Name:
Title:
MANAGER:
RIVIERA GAMING OF COLORADO, INC.
By: __________________________________
Name:
Title:
Riviera Announces Black Hawk Project Finance
June 4, 1999 08:30 AM LAS VEGAS, June 4 /PRNewswire/ -- Riviera Holdings
Corporation (Amex: RIV) announced today that its wholly owned indirect
subsidiary, Riviera Black Hawk, Inc. had closed a $45 million private placement
of 13 percent First Mortgage Notes due May 1, 2005. The net proceeds of the
placement will be used to fund the completion of Riviera Black Hawk's casino
project in Black Hawk, Colo. Upon the closing of the transaction, Riviera
Holdings had also invested $20 million in cash equity in the casino project,
which is scheduled to open in January 2000.
According to William L. Westerman, Riviera's Chairman and Chief Executive
Officer, "We have a guaranteed maximum price construction contract based on 100
percent completed drawings, approved by the Planning Commission. The contract
also has penalties for late completion, and incentives for finishing early. All
excavation and foundation work has been completed, and that is the phase which
poses the most uncertainty with regard to cost overruns. We began erecting steel
the first of April, and that will be completed in July. We expect to have the
building completely enclosed by September. We are looking forward to this
important diversification in Colorado, which will enhance the value of the
company."
The First Mortgage 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.
About Riviera Holdings:
Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino on
the Las Vegas Strip, operates the Four Queens Hotel/Casino in downtown Las Vegas
and is developing a casino in Black Hawk, Colo. Riviera is traded on the
American Stock Exchange under symbol, RIV.
The forward-looking statements included in this news release, which reflect
management's best judgment based on factors currently known, involve risks and
uncertainties including expansion timetables, hotel and casino market conditions
and other risks detailed from time to time in the Company's SEC reports,
including the Report on Form 10-K for December 31, 1998 and Form 10-Q for March
31, 1999. Actual results may differ.
SOURCE Riviera Holdings Corporation
